Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2)

In the case of Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd, the Australian Securities and Investments Commission (ASIC) brought proceedings against Australian Investors Forum Pty Ltd (AIF) and its directors. ASIC alleged that AIF had contravened disclosure requirements under the Corporations Act, failed to bring investors within an exemption, breached the conditions of its securities dealer's licence, and that one of the directors, an undischarged bankrupt, managed the corporation. ASIC further alleged that certain transactions were conducted dishonestly and for improper purposes, contravening the statutory duties of the directors and officers.

The legal issues the court needed to address included whether AIF had contravened the disclosure requirements and failed to bring investors within the exemption, whether these breaches constituted a contravention of the Corporations Act, and if the director was knowingly involved. The court also needed to determine whether AIF had breached the conditions of its securities dealer's licence, if such a breach constituted a contravention of the Corporations Act, and if the director was knowingly involved. Additionally, the court had to decide whether the evidence proved that the undischarged bankrupt managed the corporation and if the subsequent annulment of bankruptcy retrospectively expunged the contravention. Finally, the court had to assess whether the various transactions were dishonest and for improper purposes, and if the director and officer contravened their statutory duties to the corporation.

In its judgment, the court found that AIF had indeed contravened the disclosure requirements and failed to bring investors within the exemption, and that these breaches constituted a contravention of the Corporations Act. The court also determined that the director was knowingly involved in these contraventions. Regarding the securities dealer's licence, the court found that AIF breached the conditions of the licence and that such a breach constituted a contravention of the Corporations Act, with the director being knowingly involved. The court held that the evidence proved that the undischarged bankrupt managed the corporation, but the annulment of bankruptcy retrospectively expunged the contravention. Lastly, the court found that the transactions were conducted for improper purposes and that the director and officer contravened their statutory duties to the corporation.

The court ordered that AIF be disqualified from managing corporations for a period of five years, that the director and officer be disqualified for a period of five years, and that the undischarged bankrupt be disqualified from managing corporations for a period of three years. The court also ordered that AIF pay a penalty of $500,000 and that the director and officer pay a penalty of $100,000 each.