High Court imposes permanent prohibition under Companies Act
9 May 2019
High Court imposes first permanent prohibition under Companies Act
The High Court has permanently prohibited Lance Jared Ryan from being involved in the management of a company. The prohibition order was made on the application of the Registrar of Companies and a former co-defendant of Mr Ryan, David Blake, has also been prohibited from being involved in the management of a company for 12 years.
These High Court prohibitions are the two longest bans ever imposed under the Companies Act 1993. These bans can only end with the consent of the High Court.
The Registrar of Companies sought that Mr Ryan and Mr Blake be prohibited under the Act as he considered their offending and misconduct to be among the most serious cases of non-compliance with the Act that he had seen.
In 2018, Mr Ryan was sentenced to seven years and six months’ imprisonment for dishonesty offending prosecuted by the Serious Fraud Office, which related to his involvement with Arena Capital Ltd, a Ponzi scheme whereby Mr Ryan and an associate received more than $8 million from approximately 900 investors.
In 2017, Mr Blake was prosecuted by the Companies Office for being involved in the promotion and management of companies whilst prohibited. Mr Ryan was also prosecuted and convicted of three charges of aiding Mr Blake to commit this offending. This related to Mr Blake and Mr Ryan operating two businesses, Hygiene Foundation Ltd and Q Technology Ltd, which were both ultimately placed into liquidation owing more than $700,000 and $600,000 to creditors respectively. As a result of this offending, Mr Blake was sentenced to two years and four months’ imprisonment and Mr Ryan was sentenced to two years and two months’ imprisonment.
Both have also been adjudicated bankrupt on multiple occasions and are at present undischarged bankrupts.
In determining that it was appropriate to impose a lifetime prohibition on Mr Ryan, Justice Venning noted that “Mr Ryan has been guilty of persistent and ongoing dishonest behaviour involving the use of company structures to obtain money from the public. His case is one of the most serious cases and is an appropriate case for a lifetime ban.”
In relation to Mr Blake, Justice Venning noted that “Mr Blake has displayed an arrogant disregard for the law and the compliance obligations, ….Mr Blake’s conduct was wilful and deliberate. He set out to circumvent the statutory ban imposed on him as a result of his earlier convictions. Despite his protestations of ignorance, the pattern of behaviour was clear and deliberate”.
“The imposition of these prohibitions should serve as a strong message to the public that the Registrar will take action in appropriate cases where there is serious and repeated misconduct in relation to the management of companies which causes loss” says the Registrar of Companies Ross van der Schyff.
While the prohibition of Mr Blake and Mr Ryan was made by the Court under s383 of the Companies Act, the Registrar of Companies also has a power to prohibit directors under s385. In the 2018 financial year, the Registrar of Companies prohibited 47 individuals from being directors or managers of limited liability companies under s 385 of the Act. Under s 385, the Registrar of Companies can prohibit an individual for a period of up to 10 years, if companies they have been involved in as a director or manager have failed due to their mismanagement.
The Registrar continues to consider further cases where misconduct has occurred and where applications to the High Court for prohibitions in excess of 10 years may be warranted.