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the power to apply for a compensation order but not the pecuniary penalty or the
disqualification order.
The pecuniary penalty refers to the payment of a sum up to $200,000 which a
director 107 could be liable to pay, a concept similar to a ‗fine‘ in criminal sanctions.
The basis of a director‘s liability under this provision depends on his or her
culpability, unlike a civil remedy which generally is decided on the losses suffered as
a consequence of the breach. Although the liability is criminal in nature, directors
will be subjected to civil rules of evidence and procedures. Hence, the standard of
proof applicable under the section is a balance of probabilities and not, beyond
reasonable doubt.
11.3.1.3 Criminal Penalties
A criminal penalty is imposed on a person who has committed an act considered to
be harmful to the public at large. The aims of the criminal penalty are twofold, to
punish the offender, and to deter the offender as well as members of the public from
committing the same act. Thus it is important that the punishment meted out to the
offenders corresponds to the severity of their acts. A criminal penalty requires the
offender to have an intention to commit an act and an example can be found in the
fraudulent trading and insolvent trading provisions which require dishonest
intention. 108
105 See section 1317G of the Australian Corporations Act 2001.
106 See section 588J and section 1317H of the Australian Corporations Act 2001.
107 Civil Penalty is defined in section 9 as ―Civil penalty order means by of the following:
(a) a declaration of contravention under section 1317E;
(b) a pecuniary penalty order under section 1317G;
(c) a compensation order under section 1317H or section 1317HA;
(d) an order under section 206C disqualifying a person from managing corporations."
108 See section 993 of the UK Companies Act 2006; section 588G(3) Australian Corporations Act and
section 304(5) of the Malaysian Companies Act 1965.
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