ASIC has imposed a four-year disqualification on AM and his son, DLM, both residing in Martinsville, NSW, barring them from managing corporations. This action follows their involvement in the management of two companies that ultimately failed. Specifically, between 2007 and 2019, AM served as a director for two defunct companies: MKD Custom Stainless & Design Pty Ltd (ACN 615 206 025) and Site Engineering Solutions Pty Ltd (ACN 128 274 724). DLM, between 2014 and 2019, held directorship in SES and another failed company, Custom Stainless and Design Pty Ltd (ACN 602 858 846). All three enterprises were located on the NSW Central Coast, with MKD and CSD providing fabrication and installation services for both commercial and residential applications, while SES catered to the mining, construction, and manufacturing sectors with construction services.
ASIC’s disqualification decision stemmed from concerns about the directors’ failure to ensure adequate record-keeping within their respective companies. AM allowed SES to continue trading despite its insolvency, and subsequently, DM permitted SES to accumulate debts it could not meet. ASIC also expressed apprehension over the directors’ involvement in unlawful phoenix activity, characterised by asset transfers from an unrelated company, Dr McCool Pty Ltd (ACN 135 921 694), to CSD, and later to MKD. This left the original company incapable of satisfying its debts, resulting in a combined debt across the three companies amounting to $1.6 million, including a total of $748,000 owed to the ATO.
Both individuals are prohibited from managing corporations until October 16, 2027.
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.
ASIC maintains a register of banned and disqualified individuals, encompassing those excluded from corporate management, auditing self-managed superannuation funds (SMSFs), or practicing in the financial services or credit industry.
ASIC paid the respective liquidators to produce reports about the directors conduct and then used those reports to pursue the above action. Namely Travis Pullen of TJP Advisory Pty Ltd, Brisbane (liquidator of MKD); Chad Rapsey of Rapsey Griffiths (liquidator of SES); and Simon Cathro of Worrells (liquidator of CSD) were provided support by ASIC through the Assetless Administration Fund in preparing their supplementary reports.