Having a team you can trust is essential to running a business. But what happens when a business partner acts dishonestly? What are your rights and what steps should you take to safeguard yourself as well as your business?
What are the risks?
There are many ways your business partner or a company director can put your company and good name at risk. The code of conduct, obligations and legalities can vary depending on the type of company you have registered but generally speaking, any acts involving fraud, embezzlement, bribery, assault, harassment or any other illegal activity leave you and your company vulnerable to legal action which could result in hefty fines or even incarceration.
In fact, earlier this year, the Royal Commission proposed reforms which could see the maximum criminal penalties for white collar criminals doubled to 10 years’ jail time and company fines of up to $9.45million. Under proposed reforms to civil sanction, individuals could face more than $1.05million in fines and companies up to $210million.
What to do if you suspect your business partner is up to something?
Contact a lawyer
If you believe that your business partner is acting dishonestly or illegally, contact a legal professional immediately. This will help make sure that you comply with all your legal obligations moving forward whilst also ensuring that the situation is dealt with as professionally and efficiently as possible. It could also help minimise the damage caused to your company and protect you from being liable for your business partner’s actions.
Alert the authorities
If you believe your business partner has broken the law, you must, with the assistance of your chosen legal advisor, alert The Australian Securities and Investments Commission (ASIC). In this case, you could be considered and protected as a whistle-blower under the Corporations Act 2001.
To be considered a whistle-blower and protected as such, you must meet the following criteria:
- Your role
You must be:
- a current officer (usually that means a director or secretary) of the company your disclosure is about
- a current employee of the company your disclosure is about, or
- a contractor, or the employee of a contractor, who has a current contract to supply goods or services to the company your disclosure is about.
- Who the disclosure is made to
You must make your disclosure to:
- the company’s auditor, or a member of the company’s audit team
- a director, secretary or senior manager of the company
- a person authorised by the company to receive whistle-blower disclosures, or
- Providing your name
You must give your name to the person or authority you are making the disclosure to.
- Reasonable grounds to suspect breach
You must have reasonable grounds to suspect that the information you are disclosing indicates that the company or company officer may have breached the Corporations Act or the Australian Securities and Investments Commission Act 2001 (ASIC Act).
- Made in good faith
You must make the disclosure in ‘good faith’. That means your disclosure must be honest and genuine, and motivated by wanting to disclose misconduct. Your disclosure will not be ‘in good faith’ if you have any other secret or unrelated reason for making the disclosure.
For more information on whistleblowing, please see the ASIC website.
Ready to take action?
Commercial and corporate law can be difficult to navigate. Whether you believe your business partner has been dishonest with you or has committed a serious crime, your best course of action is to contact a team of lawyers specialising in commercial law.
Trying to resolve the issue yourself by accusing your partner or even reporting them to the authorities without first getting some legal advice specific to your circumstances could make matters worse and leave you vulnerable to all sorts of legal action.
So if you’re concerned about your business partner’s actions, contact our team of lawyers today for a confidential discussion. With our clear, smart and comprehensive advice, we can help you navigate the situation and minimise any damages.