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ASIC v William Stephen Vizard

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Case Introduction-

The given assignment is about ASIC v Stephen William Vizard (2005) legal court case concerned the responsibilities and duties of a director to abstain from using the confidential information which is acquired during the course of his directorship in the company for the personal benefit.

Australian Securities and Investment (ASIC) is a prestigious national body which has the significant responsibility to govern the corporation securities and legislation regulation in Australia. ASIC is a commonwealth authority which is also responsible for ruling the corporation act and provided ASIC owned such important functions and power that is gifted by the corporation legislation. It also has the power to bring prosecution for criminal offences or can also apply for the corporate legislations penalties order if they found that there is a presence of contravention of law.  

Mr. Vizard was a non-executive director of Telstra Corporation Limited in year of 2000 and has been appointed as a director in 1996. It is to be believed that there are mainly three occasions where Mr. Vizard has used the confidential information which he obtained from the Telstra during his working tenure.

He was highly aware of market sensitive information related to the Telstra Company and disclosing the important information in the market. As a result of this, ASIC has played a significant role to initiate a trial against the company director for using the confidential information for the personal benefit in order to ensure corporation and related parties to remain authentic and trustworthy in the corporate world.

In this given paper, it will also exemplify the duties and responsibilities breached along with the reason why these were breached. Court decisions will also evaluate in accordance with the several laws and how the court decision will impact the corporate world of Australia. The conclusion will be added in the end to find the findings of the fact.

The duties/responsibilities breached (ex. CA sections 181 or 588G) and explain why the duties were breached:

Being a non-executive director of Telstra Company, Mr. Vizard has been appealed guilty to breaches of Section 183 (1) of the corporation act which states any person who is working in company obtained the confidential information unethically for personal use when they have been appointed as a director or nay other job post must be sued to ensure the safety of the corporations.

The fiduciary responsibilities and duties of directors and other officers of corporations are given significant statuary powers by the provisions contained in the chapter 2 (D) of the corporation act. Recently, Federal court of Australia serves as a timely reminder of  the control and power given to ASIC to pursue suspected breaches by appropriate amount of penalty and other proceedings against the company director of big holdings.   

These actions have been taken only to gain advantage and cause harm to the corporation for their own personal benefit at all levels. It is to be believed that Mr. Vizard has personally used the information regarding probably between the Telstra and a company named Sausage software to purchase the sausage shares when it is arguably said that merger would drove the share price of the company high. According to the Section 232 and Section 183, director must not use any information of company for his/her own use (Raghunandan, 2017).

Mr. Vizard has breached his duties for his personal benefit. He has improperly used the important information by basing his decisions to buy and sell the shares on the basis of that information. In 1999, Brigham Pvt. Limited which was a trustee company and the shares of the company were beneficially owned by Mr. Vizard and his family. Being a director of a company, it is the duty of the appointed direction to safeguard the company interest at any cost to ensure their authenticity in their working tenure.

According to Section 181, a company director should exercise their control and power in good faith where it’s in the best interest of the corporation and ensures the ethical corporate governance.  It is to be believed that Mr. Vizard has also admitted to carrying out the business dealings regarding the company shares for his benefit and continue to use that information while working as a non-executive director of Telstra.

When these secret matters came to ASIC attention, then it undertook an investigation on 4th July 2005 to safe their company from conduction of fraud and also to ensure that these fraud actions could not be taken lightly and the fraud person must be punished at all levels. ASIC also has a power to ban a director for a certain period of time if they did not perform their duties and responsibility effectively and efficiently. The company director is very played a significant part and he is the person who is mainly appointed to govern the affairs and manage control of a corporation (Larsson and Alalehto, 2019).

Discuss and critically ANALYSE the court/tribunal decision and the reason for the decision in view of the Corporations Act:

In considering if the breaches were serious, court noticed that the white collar crimes are continuously increasing and the cost of these crimes are extremely high and can cause suffer to many people greatly.

According to the section 206C of the CA provides ASIC the power to inquire the court to disqualify a person from managing corporate cooperation for a period of time if a declaration of a civil penalty procedures is framed and the court is quite satisfied about the disqualification. The high court decision held that disqualification order can be imposed by way of punishment, to protect the company shareholder against the further fraud and ensures their safety at all level along with this maintaining the dignity of the company.

There are many factors that high court considered was relevant in this case are; the lack of profit share was the result of a decline in the share market along with this fact that no gains were realized from the breaches was irrelevant. General deterrence of conduct should be considered in imposing penalties upon the fraudulent. Shaming is also considered as the form of punishment and it is not an alternative for formal reprisal (Bright Law, 2019).

ASIC and the high court accepted Mr. Vizard statement that he would not involve himself in such kind of activities again. Mr. Vizard expressed contrition and he also shows indication for his good character which includes his philanthropic roles and his valuable services to the society.

Court also gives his views on discount in penalties is appropriate if the accused person has been acknowledged for his wrongdoing and cooperation during his working tenure. ASIC submitted that the suitable penalty for each breaches was $130,000. The high court of Australia has ordered the Mr. Vizard pay penalties in the amount of $390,000, but also noted that it would have imposed a higher penalty if it left uninstructed.

ASIC submitted that the six – year disqualification was suitable. The main concern for the court is punishment for revengeful purposes and the message must be sent to the business communities about the demerits of the white collar crimes. The court has asked to follow the ASIC recommendation and also imposed ten-year disqualification order on Mr. Vizard. Both section 232 and 183 has been applied in Mr. Vizard case.

People need to establish a balanced behavior that is necessary for the proper conduct of commercial world and in this way, people would have got the confidence that the market is running under the safe hands. The contravention involved in this case is breach of trust by manipulating the Telstra and purchasing the shares of the Sausage and Keycorp were purchased to get good amount of profit.

According to section 180, the director of the company must exercise their power and discharge their duties in a manner with the diligence and care. Director must not improperly use their information to obtain benefit for themselves or that can cause harm to the particular company. High court may order the person to compensate the company where they have suffered with the major loss because the person has breaches a corporation civil penalty provision (Larsson, 2013).

Where possible and applicable, the relevance of the decision to the development of Australian corporations law or the impact of the decision on the operation of companies in Australian:

The decision taken by the Australian high court is highly appreciating and shows good example what could be done if this kind of criminal activity continues. Mr. William Stephen Vizard has given six year of disqualification or banned to be appointed as a director of any company for next six years along with this the penalty of $130,000 has been imposed for the wrongdoing.

The court decision will ensure the corporate sector to be in safe hands and these kinds of activities will not be tolerated at any cost. This decision has created a social media storm which will be likely to influence the people who are committing these mistakes or are going to indulging in such kind of mistakes. The extreme level of punishment will put the corporate people to work according to the corporation act to be safe and secure.

It is to be believed that white collar crimes are quite common and the court has asked the companies to make sure their company is under the safe hands and try to maintain the level of secrecy while making new deals. This is a serious kind of crime which can ruined the setting of a big company so, penalty imposed on the accused according the level the company suffered with this matter. The court decision will help the big multinational companies to change their policies and procedures accordingly.

CONCLUSION:

The given report discussed the ASIC v Stephen William Vizard (2005) legal court case concerned the responsibilities and duties of a director to abstain from using the confidential information which is acquired during the course of his directorship in the company for the personal benefit. The high court of Australia has ordered the Mr. Vizard pay penalties in the amount of $390,000, but also noted that it would have imposed a higher penalty if it left uninstructed.

Mr. Vizard has breached his duties for his personal benefit. He has improperly used the important information by basing his decisions to buy and sell the shares on the basis of that information. The high court decision held that disqualification order can be imposed by way of punishment, to protect the company shareholder against the further fraud and ensures their safety at all level along with this maintaining the dignity of the company.

ASIC is a commonwealth authority which is also responsible for ruling the corporation act and provided ASIC owned such important functions and power that is gifted by the corporation legislation. As a result of this, ASIC has played a significant role to initiate a trial against the company director for using the confidential information for the personal benefit in order to ensure corporation and related parties to remain authentic and trustworthy in the corporate world.

It also has the power to bring prosecution for criminal offences or can also apply for the corporate legislations penalties order if they found that there is a presence of contravention of law.  Being a non-executive director of Telstra Company, Mr. Vizard has been appealed guilty to breaches of Section 183 (1) of the corporation act which states any person who is working in company obtained the confidential information unethically for personal use when they have been appointed as a director or nay other job post must be sued to ensure the safety of the corporations.

REFERENCERS-

Raghunandan, A. (2017). Government Subsidies and Corporate Fraud. SSRN Electronic Journal5(2), 23-56. doi: 10.2139/ssrn.3035254

Larsson, D. (2013). The Reaction Towards White Collar Crime: When White Collar Crime Matters. The Open Criminology Journal6(1), 1-9. doi: 10.2174/1874917801306010001

Larsson, D. and Alalehto, T. (2019). The Reaction Towards White Collar Crime: When White Collar Crime Matters. [online] Benthamopen.com. Available at: https://benthamopen.com/ABSTRACT/TOCRIJ-6-1 [Accessed 9 Jan. 2019].

Bright Law (2019). ASIC v Vizard - Bright Law. [online] Bright Law. Available at: https://www.brightlaw.com.au/asic-v-vizard/ [Accessed 9 Jan. 2019].

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