Australian Securities and Investments Commission v Shafron & Ors; Shafron v Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) brought proceedings against Mr. Shafron and others, alleging contraventions of the *Corporations Act 2001* (Cth). The dispute concerned Mr. Shafron's conduct in his role as company secretary and chief financial officer of James Hardie Industries Ltd (JHIL) and its related entities, particularly in relation to the adequacy of disclosures made to the Australian Stock Exchange (ASX) and the preparation of financial statements. The matter was heard by the High Court of Australia.

The High Court was required to determine, among other things, whether Mr. Shafron had contravened provisions of the *Corporations Act* relating to his duties as an officer of a corporation, specifically concerning his knowledge and responsibility for misleading or deceptive statements made to the ASX and the misleading nature of financial statements. A key issue was the extent to which Mr. Shafron, as company secretary, was responsible for the content and accuracy of documents lodged with the ASX and the financial reports of the company.

The High Court considered the nature of the duties owed by a company secretary and chief financial officer under the *Corporations Act*. It analysed the concept of "knowledge" for the purposes of contravening statutory provisions, particularly in the context of corporate disclosures. The Court found that Mr. Shafron had contravened the *Corporations Act* by failing to exercise his duties with the degree of care and diligence required, and by being knowingly concerned in JHIL's contraventions of its continuous disclosure obligations and its obligations regarding the preparation of financial statements. The Court emphasised that an officer's responsibility extends to ensuring that information provided to the market is accurate and not misleading, even if they are not the primary author of all such information.

The High Court upheld ASIC's appeal in part, finding Mr. Shafron liable for contraventions of the *Corporations Act*. The Court remitted the matter to the Federal Court for the determination of penalties.