Former director sentenced for non-disclosure of interests in shares

A former listed company director has been sentenced to six months imprisonment for failing to disclose shares he controlled in the company, contrary to legal requirements.

In brief

• A former company director has been given six months imprisonment and fined $2,000 for failing to disclose shares he controlled in a listed company.
• The gaol sentence was suspended on payment of the fine and on condition that he be of good behaviour for 12 months.
• The example underscores that ASIC is serious in enforcing parts of the Corporations Act intended to promote Australia’s securities markets.

Failure to disclose

Former Copper Strike Limited director, Mr Harry Hatch (Hatgikyriazis), of North Melbourne, Victoria, was charged with multiple offences relating to his time as director of the listed company.

Mr Hatch was charged with:

• three counts of failing to take reasonable steps to comply with disclosing his interests in shares of a publicly listed company;
• two counts of making available or giving false information in a document lodged with ASX; and
• one count of making a false or misleading statement in a form submitted to Copper Strike Limited (ASX:CSE).

Mr Hatch was a non-executive director of Copper Strike Limited from 6 September 2016 to 3 January 2020.

Mr Hatch held shares in Copper Strike through Gasmere Pty Limited, a company which Mr Hatch was the sole director and secretary of since 21 May 1996. These shares were disclosed as required under the Corporations Act.

Prior to and during his directorship, Mr Hatch used a brokering account belonging to an associate, to purchase additional Copper Strike shares, which were not disclosed to the market or to other officers of the company.

In order to pay for the undisclosed shares in Copper Strike, Mr Hatch used the bank account of Arden Health Supplies Pty Ltd. Mr Hatch has been the sole director and secretary of Arden Health Supplies Pty Ltd since 21 May 1996.

Charges laid

ASIC alleged that, in the period 17 July 2016 to 3 January 2020, Mr Hatch failed to disclose his relevant interests in Copper Strike shares as required under the Corporations Act.

Mr Hatch appeared in the Melbourne Magistrate Court on 19 November 2024 and pleaded guilty to one charge of authorising omissions in documents required by the Corporations Act of his relevant interest in shares held in Copper Strike.

The Court heard that on six occasions between 6 September 2016 and 26 September 2019, Mr Hatch, as a director of Copper Strike, authorised the release of substantial holding notices and annual reports that were materially misleading.

Conviction

ASIC Deputy Chair, Sarah Court said:

As a director, Mr Hatch failed to fulfil his legal obligations, acted dishonestly and made false and misleading representations. Disclosure is fundamental to protecting Australian investors and ASIC will take action where these protections are ignored.’

Her Honour Magistrate Hartnett remarked that this type of offending committed by directors of publicly listed companies, will attract a sentence that would deter others from engaging in the same conduct, as they hold a position of trust.

Due to his conviction for the offence, Mr Hatch is disqualified from managing corporations for a period of five years.

Comment

This case is a stark reminder that ASIC has increased its surveillance and enforcement of laws designed to protect the integrity of Australia’s securities markets.

The laws are complex and often difficult to apply in any given fact scenario, but, in cases where there has been deliberate non-disclosure, serious consequences can follow.