ASIC has disqualified Mr Kevin Prakash Verapen, of Montmorency, Victoria, from managing corporations for three years due to his involvement in the failure of three companies.
Between August 2015 and April 2017 Mr Verapen was the director of:
Hygrade Management & Software Pty Ltd ACN 133 366 453 (HMS);
A&S Services Australia Pty Ltd ACN 165 857 321 (A&S); and
E&A Logistics Pty Ltd ACN 607 498 555 (E&A).
HMS was involved in the laser cutting business, E&A operated a truck rental business and A&S operated a pre-insolvency and advisory business.
ASIC found that Mr Verapen:
failed to exercise his powers and discharge his duties with a degree of care and diligence that a reasonable person would exercise if they were a director of the companies;
failed to exercise his powers and discharge his duties in good faith and in the best interests of the companies and for a proper purpose;
received $24,500 in cash to become a director of eighteen companies between 21 August 2014 and 7 January 2016, including HMS, A&S and E&A, while other persons performed the role of directors and managed the companies;
had limited involvement and oversight of companies or otherwise perform any functions of a director;
signed documents without reading them and assisted in opening bank accounts as signatory without having any involvement in these accounts and received cash payments for his services;
failed to take all reasonable steps to comply with the companies obligations to to keep written financial records;
failed to comply with the companies statutory obligations to lodge Business Activity Statements, Income Tax Returns and make Pay As You Go (PAYG) payments to the Australian Taxation Office or make payments to employee’s superannuation funds; and
failed to prevent HMS from incurring debt totalling approximately $1,058,835 when the company was most likely insolvent.
At the time of ASIC’s decision, the three companies owed a combined total of $8,625,879 to unsecured creditors, including $7,678,177 owing to the Australian Taxation Office.
In disqualifying Mr Verapen, ASIC relied on supplementary reports lodged by HMS’s and A&S’s liquidators, David Vasudevan and Andrew Yeo of Pitcher Partners and E&A’s liquidator, Bruce Mulvaney of Bruce Mulvaney & Co. ASIC assisted the liquidators to prepare their reports by providing funding from the Assetless Administration Fund.
Mr Verapen is disqualified from managing corporations until 18 January 2026.
Mr Verapen has the right to seek a review of ASIC’s decision by the Administrative Appeals Tribunal.
Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC about each of the company’s inability to pay its debts.
ASIC maintains a banned and disqualified persons register that provides information about people who have been disqualified from:
involvement in the management of a corporation;
auditing self-managed superannuation funds (SMSFs); or
practising in the financial services or credit industry.