Two Western Australian company directors have been jailed for three years after being found guilty of warehousing shares.
Adrian Corp and Brian Smith were sentenced in early October by the District Court of Western Australia after an investigation by ASIC.
The pair was convicted on 29 charges relating to their directorships of listed mining companies Hallmark Gold and Welcome Stranger.
Corp and Smith did not disclose to the Australian Securities Exchange (ASX) or ASIC their true shareholdings in the two companies, which is contrary to the Corporations Act.
In a practice called share warehousing the directors' accumulated shares in the companies through nominee accounts registered overseas.
ASIC said Corp and Smith used accounts in the British Virgin Islands and Gibraltar to stockpile shares and then vote on company resolutions that benefited them financially.
It is the first time someone has been successfully prosecuted for using offshore accounts to avoid share disclosure.
ASIC director of enforcement Jan Redfern said Corp and Smith's actions undermined confidence in the market and demonstrated a blatant disregard for the law.
"Their jailing should send a message to company directors there are serious consequences for those who deliberately seek to get around the disclosure provisions and provide misleading information to the market," she said.
The men were also convicted on charges of knowingly providing misleading information to ASIC and the ASX, breaching their duties as directors by failing to act honestly, and illegally allowing voting on related party resolutions at general meetings of the shareholders.
ASIC also accused the pair of lying and obstructing the regulator during its investigation.
