Responsibilities of Company Directors
Each year the Australian Securities and Investments Commission reports on the number of reported possible misconducts by Directors. From the findings, 47% of the alleged breaches related to financial matters being; the failure to keep appropriate financial records (19.2%) and trading whilst insolvent (27.8%).
Directors obligations to keep sound financial records
The Corporations Act in s286(1) states that a company must keep written financial records that:
Financial records are defined in s9 of the Corporations Act as including:
Financial records may be kept electronically and there are numerous accounting software packages available for this purpose. Section 288 of the Corporations Act states that if financial records are kept in electronic form, they must be convertible into hard copy.
If you are a director in a company and you do not have sound financial records, we will be able to help you implement a modern process of record keeping.
Trading whilst insolvent – 5 Signs you may be trading insolvent
The ramifications for trading insolvent under Section 588G of the Corporations Act 2001 (Cth) (Act) are significant and may result in large fines or even imprisonment. Further, there is opportunity for the liquidator to seek recompense from you personally through civil proceedings.