Author: Bill Doogue
Practice area: ASIC Offences
Bill is a founding Director of Doogue + George, ranked by Doyle's Guide as a Preeminent Criminal Defence Lawyer in Victoria (2026) and an LIV Accredited Criminal Law Specialist since 1998 with over 30 years of experience in complex criminal and corporate matters. His depth of experience in this area means clients receive accurate, considered advice.
View full profile →Bill authored this content and last revised it for accuracy on 5th August 2026.
What is the offence of Consequences of failing to comply with section 260A?
Consequences of failing to comply with section 260A is an offence under s260D of the Corporations Act 2001. It applies where a company provides financial assistance for the purchase of its shares in circumstances that materially prejudice the company, its shareholders or creditors, the assistance is not shareholder-approved, and a person involved in the transaction is dishonest.
Key points
- Prosecution must prove financial assistance for share purchase, material prejudice, lack of shareholder approval, and dishonesty by a person involved.
- Conduct involves involvement in a company’s contravention of s260A when providing financial assistance.
- Usual court level: County Court (indictable offence).
The maximum penalty for Consequences of failing to comply with section 260A is a fine of 2000 penalty units ($418,200) or imprisonment for five years, or both.
Common defences may include not being aware of any dishonesty; someone else being dishonest.
Have you been accused of Consequences of Failing to Comply With Section 260A? You must make time to arrange a confidential conference with one of our experienced defence lawyers as soon as you become aware of this allegation to get onto the front foot. There may be important documents which need to be preserved.
Interview
If you have been contacted by an ASIC investigator, it is important you obtain legal advice straight away. The interview forms part of the investigation into allegations made against you. The Investigator will be looking for further evidence to support charging you. It is vital that you understand your rights and options before attending the interview.
One of our lawyers can attend the interview with you if you rather have someone present on your side. This gives your lawyer an opportunity to speak with the investigator and find out more information about the allegations.
Pleading Not Guilty
If you are charged with Failing to Comply with Section 260A, it is important that you are represented by lawyers who understand the complexities of commercial businesses. In matters of this kind, your interests may not align with those of your employer or the company you are alleged to have been involved with. We can conduct our own investigation into the allegations made, gathering material that assists in your defence. This may include engaging experts to assist in gathering evidence to assist your defence.
Pleading Guilty
If you decide to resolve the case against you, we can work to achieve the best possible outcome. This may involve negotiating the charge/s or the summary of alleged facts. We also work with you to prepare for a plea, understanding your personal circumstances and gathering material to put forward on your behalf. This preparation helps to achieve the best sentence possible.
Examples of Consequences of Failing to Comply With Section 260A
- Two directors of Newco lend a large amount of Newco’s money to Oldco. The loan is for Oldco to buy shares in Newco. Oldco is bordering on insolvency. The directors are aware of the potential insolvency, but tell the other directors that Oldco is financially sound.
- The CFO of Newco authorises guaranteeing a loan to Blueco. Blueco is about to default. The CFO knows of the default, but tells shareholders that Blueco is a healthy business.
Defences
- The person was not aware of any dishonesty.
- Someone else was dishonest.
There are other possible defences, depending on the circumstances surrounding the alleged offending. Each matter is unique and requires an individual approach and strategy.
Did you really understand the situation?
Questions in cases like this
- How can they prove dishonesty was involved?
- Was someone else dishonest?
Maximum penalty and Court that deals with this charge
The maximum penalty for Consequences of Failing to Comply With Section 260A (s260D of the Corporations Act 2001) is a fine of 2000 penalty units (As at 2026–27, the maximum fine is $418,200) or imprisonment for five years, or both.
It is an indictable offence. This means it will be in the County Court.
What can you be sentenced to for this charge?
A guilty finding can lead to a range of penalties. The least severe offences will result in a fine, whereas the most severe will mean time in prison.
What is the legal definition of Consequences of Failing to Comply With Section 260A?
The legal definition of Consequences of Failing to Comply with Section 260A has several parts:
- A company provides financial assistance to someone to buy shares in the company; and
- The assistance materially prejudices the interests of the company, shareholders, or creditors; and
- The assistance was not approved by shareholders; and
- A person involved in the transaction was dishonest.
Legislation
The section that covers this offence is 260D of the Corporations Act 2001.1
