5 Year Ban for 7 Fails

In Sydney, New South Wales, ASIC has banned AEH from overseeing corporations for a period of 5 years due to his involvement in the collapse of seven companies that were liquidated between 2018 and 2019.  This is not bad luck or bad corporate skills.  As ASIC found, this is a nominal director shielding the true directors from personal liability associated with the companies’ significant statutory liabilities!  Perhaps there is more to come from this story and the true directors or shadow directors as they are known, may have some serious questions to answer.

AEH served as a director for seven companies spanning various sectors such as hospitality, construction, cleaning, and electrical services, including:

  • AHS Trading Trading Australia Pty Ltd (ACN 153 753 756)
  • Rentile Management Services Pty Ltd (ACN 160 321 433)
  • MZ Superior Cleaning Pty Ltd (ACN 143 106 441)
  • Seacliff Functions Pty Ltd (ACN 145 066 084)
  • Unique Cleaning Australia Pty Ltd (ACN 616 277 975)
  • M.O. Electromaster Group Pty Ltd (ACN 149 213 329)
  • FF Investments Australia Pty Ltd (ACN 159 748 026).

At the time of ASIC’s decision, these seven companies collectively owed $3,723,402.16 to unsecured creditors.  Among these debts were $2,879,671.46 owed to the ATO, $547,346 owed to Revenue NSW, and $23,246 owed to former employees, which included $21,246 in unpaid superannuation.

ASIC determined that AEH had acted improperly and failed to fulfill his duties as an officer by:

  • Neglecting to ensure tax debts were settled by the companies (except Rentile Management Services Pty Ltd)
  • Failing to maintain adequate financial records for AHS Trading Trading Pty Ltd and MZ Superior Cleaning Pty Ltd
  • Not exercising directorial responsibilities for AHS Trading Trading Pty Ltd when the company sold its primary income-generating assets without receiving any proceeds
  • Serving as a nominal director to shield the true directors from personal liability associated with the companies’ significant statutory liabilities
  • Failing to ensure compliance with statutory lodgment requirements with the ATO for AHS Trading Trading Pty Ltd, MZ Superior Cleaning Pty Ltd, and Seacliff Functions Pty Ltd
  • Being convicted and fined a total of $800 on December 10, 2019, for breaching section 530A of the Corporations Act regarding the failure to provide all books and records of Rentile Management Services, and subsequently being fined $3000 on June 15, 2021, for continuing to neglect these obligations.

AEH is prohibited from managing corporations until February 14, 2029, and retains the right to contest ASIC’s decision through the Administrative Appeals Tribunal.

The Law Under Section 206F of the Corporations Act, ASIC is authorized to disqualify an individual from managing corporations for a maximum of five years if, within a seven-year timeframe, that person served as an officer in two or more companies that were wound up with a liquidator’s report attesting to their inability to meet debts.

Through targeted enforcement actions against certain directors violating s206F, ASIC underscores the repercussions for mismanaging companies, regardless of size.  This approach aims to safeguard the broader public, employees, and other businesses from potential future mismanagement.

Read the full ASIC media release here.