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20-008MR ASIC bans former Guvera director
ASIC has disqualified Mr Darren Russel Herft, of Sanctuary Cove, Queensland, from managing corporations for a period of two years.
The disqualification follows the failure of four companies within the Guvera Group, which operated and developed a worldwide music streaming platform. An additional three failed companies were also considered by the ASIC.
The seven failed companies of which Mr Herft was a director were:
- Guvera Australia Pty Ltd (In Liquidation) (Guvera Australia)
- Guvera Operations Pty Ltd (In Liquidation)
- Guv Services Pty Ltd (In Liquidation) (Guv Services)
- Professional IPO Management Pty Ltd (Deregistered)
- KwikTV Australia Services Pty Ltd (In Liquidation) (KwikTV)
- The Product People (International) Pty Limited (In Liquidation)
- WWP Accounting Group Pty Ltd (Deregistered)
An ASIC delegate found Mr Herft:
- failed to ensure that Guvera Australia met its statutory obligations relating to debts owed to the Australian Taxation Office and the Office of State Revenue;
- failed to ensure that Guv Services met its statutory obligations;
- caused Guvera Australia to enter into a management agreement with Guvera Limited (Guvera Group’s parent company) to provide research and development services, resulting in all expenses relating to generating a refund from research and development activities being incurred by Guvera Australia, yet any tax refund flowing to Guvera Limited, leading to the ongoing viability of Guvera Australia being significantly affected;
- did not act in good faith and for a proper purpose in the management of Guv Services, given that Guv Services’ primary source of revenue was from Guvera Australia and that Guvera Australia’s financial viability was affected by the agreement that Mr Herft had caused it to enter into with Guvera Limited; and
- improperly used the Guvera Group structure for his gain and the gain of others in circumstances where there were significant conflicts of interest in the operation of the companies within the group.
Mr Herft’s disqualification took effect from 19 December 2019 and will continue until 18 December 2021.
In making the decision to disqualify Mr Herft, the ASIC delegate relied on reports lodged by the liquidators of the failed companies.
Guvera Limited (the holding company in the Guvera Group), undertook an initial public offering in order to list on the Australian Securities Exchange. An initial prospectus was lodged with ASIC on 31 May 2016 and a replacement prospectus was issued on 16 June 2016. The replacement prospectus was rejected by the Australian Securities Exchange on 16 June 2016.
On 27 June 2016, two Guvera Group companies—namely, Guvera Australia and Guv Services—were placed into administration and subsequently entered into liquidation.
Section 206F of the Corporations Act empowers ASIC to disqualify a person from managing corporations for up to 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 the company’s inability to pay its debts.
In making its decision to disqualify Mr Herft, ASIC relied on supplementary reports lodged by the liquidators of Guvera Australia, Guv Services, and KwikTV. Funding from the Assetless Administration Fund was also provided to the liquidator of KwikTV to assist in preparing a supplementary report.
ASIC also 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
- practicing in the financial services of credit industry.
Editor's note 1:
This media release was edited on 14 January 2020 to correct the reference to the Australian Securities Exchange.
Editor's note 2:
The ASIC delegate gave Mr Herft permission to manage a corporation until 31 January 2020 for the sole purpose of organising a replacement director. The permission did not extend to any other duties relating to the management of a company and will lapse on 1 February 2020.