In July 2026, the Federal Court imposed a $20.5 million penalty on ASX Limited for misleading conduct. The lesson is not just for listed companies. Every business that makes statements — to investors, customers, suppliers, or the public — faces the same legal exposure under the Australian Securities and Investments Commission Act 2001 (Cth). Here is what happened, why it matters, and what your business should do about it.
Key Takeaways
- The Federal Court penalised ASX Limited $20.5 million for statements about its CHESS replacement project that its own audit committee had flagged as high-risk — just one week earlier.
- Misleading conduct under ss 12DA and 12DB of the ASIC Act 2001 (Cth) does not require dishonest intent — creating a false impression is enough.
- The same prohibitions apply to statements made by any business: product claims, financial projections, project updates, tender representations, and social media posts.
- Courts apply an objective test — what would a reasonable person in the audience understand from the statement? Literal accuracy is not a complete defence.
- Directors and officers can face personal liability under accessory liability provisions where they are knowingly concerned in misleading conduct by their company.
What Happened: The ASX and CHESS Replacement
ASX Limited operates Australia’s primary securities exchange. In 2016, it announced a landmark project to replace its settlement and clearing system (known as CHESS) with blockchain-based technology. For years, ASX publicly described the project as progressing well and on schedule.
The Federal Court found a stark disconnect between those public statements and what ASX’s internal audit committee was reporting. In November 2022, just one week before ASX published an update describing the project as progressing, the audit committee had assessed the project status as RED — the highest risk rating on its own internal scale.
The Court found that ASX’s public statements contravened ss 12DA and 12DB(1)(a) and (e) of the Australian Securities and Investments Commission Act 2001 (Cth) — the prohibitions on misleading or deceptive conduct and false representations in connection with financial services. ASX admitted the contraventions. The penalty: $20.5 million.
The CHESS project was eventually abandoned after costs exceeded $250 million. The penalty is separate from that financial loss. It is a direct consequence of the gap between what ASX told the market and what its own leadership knew.
The Legal Framework: Misleading Conduct Under Australian Law
The ASX case involved the ASIC Act, which applies specifically to financial services. But the equivalent prohibition applies to virtually every business transaction under the Competition and Consumer Act 2010 (Cth), specifically s 18 of the Australian Consumer Law (ACL):
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
There is no requirement for intention. A business does not need to set out to deceive anyone. If the conduct — whether a statement, an omission, or a half-truth — creates a false impression in the mind of a reasonable person in the audience, that can be enough.
Courts apply an objective test: would the conduct mislead or deceive a reasonable person in the position of those to whom it was directed? This is assessed at the time the conduct occurred, not with the benefit of hindsight. The test is well established in Australian jurisprudence following Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45.
Five Business Scenarios Where Misleading Conduct Risk Is High
The ASX case involved a listed company and investor communications. But the same principles apply to any business statement made in trade or commerce. Here are five scenarios where Queensland businesses face real exposure:
1. Financial Projections and Business Sales
A business owner selling their company provides financial projections to prospective buyers. If those projections are based on assumptions the owner knows are optimistic — or omit material risks — a buyer who relies on them and suffers loss may have a claim under s 18 ACL. This is one of the most common sources of commercial litigation in Queensland.
2. Marketing and Product Claims
Statements about product performance, safety, or compliance that are not substantiated can constitute misleading conduct. This applies to websites, social media posts, catalogues, and verbal representations made by sales staff. The ACCC has imposed penalties exceeding $100 million across sectors for exactly this type of conduct in the past 18 months.
3. Construction and Development Representations
Builders, developers, and contractors regularly make representations about timelines, specifications, and regulatory compliance. If those statements are later shown to have been inaccurate — even if made in good faith — they can found a misleading conduct claim. Queensland’s building and construction sector has seen significant litigation in this area following recent insolvencies, including cases involving representations made to subcontractors and principals about a contractor’s financial position.
4. Internal Communications That Contradict Public Statements
This is the direct lesson from ASX. When a business’s internal records — emails, board minutes, audit reports, risk registers — contradict what the business has said publicly or to contracting parties, those internal documents become powerful evidence in litigation. Courts and regulators have subpoena powers and will use them. Discovery in commercial litigation proceedings routinely surfaces internal documents that were never intended to be seen by the other side.
5. Tender and Procurement Representations
Representations made in response to a tender — about capability, experience, staffing, or project approach — are statements in trade or commerce. If they are misleading and the contract is awarded on that basis, the counterparty may have remedies under the ACL including damages under s 236 and orders under s 243.
What the ASX Penalty Tells Us About Enforcement Appetite
ASIC imposed its largest penalty against a market infrastructure provider. The $20.5 million figure reflects the Court’s assessment of the seriousness of the conduct and ASIC’s current enforcement posture.
ASIC has been explicit about its shift toward higher-penalty outcomes. In H2 2025, ASIC reported $349.8 million in total civil penalties obtained — a record. Investigations have doubled year-on-year. The regulator is running more matters to judgment rather than settling, and courts are responding with larger penalties.
The ACCC is running an equivalent enforcement programme under the ACL. For Queensland businesses, the practical consequence is this: the era of a warning letter followed by an undertaking to change practices is largely over. Regulators are litigating, and courts are responding with penalties calibrated to deter.
Director Personal Liability for Misleading Conduct
In the ASX matter, the Court made findings about the conduct of the corporation. Director liability for misleading conduct is a separate but related question.
Under s 75B of the Competition and Consumer Act 2010 (Cth), a person who is knowingly concerned in a contravention of the ACL can be held personally liable. ASIC has equivalent accessory liability provisions under the ASIC Act. This means directors, officers, and senior managers can face personal penalties where they had knowledge of the misleading conduct and were involved in it.
The practical implication: if your business makes a public statement, and you know or suspect it may be inaccurate, the risk attaches to you personally — not just to the company. This is a critical reason why directors should take compliance with communication obligations as seriously as any other director duty.
Practical Steps: Reducing Misleading Conduct Risk in Your Business
- Audit your external statements. Review what your business says to customers, investors, suppliers, and the public. Test each statement against what your internal records actually show.
- Address inconsistencies immediately. If your internal position has changed, your external communications need to change too. The gap between internal knowledge and public statement is exactly what regulators and opposing counsel exploit in discovery.
- Document your reasonable basis. For any material representation — particularly in mergers and acquisitions, tenders, and financial communications — document the basis for the statement at the time it is made. This contemporaneous evidence is critical if the statement is challenged.
- Train your team. Staff who make representations on behalf of the business — in sales, marketing, project management, and operations — can personally contribute to the company’s exposure. The knowledge of employees can be attributed to the business.
- Get legal advice before litigation is threatened. If you receive a letter of demand alleging misleading conduct, the response window matters. How you respond and what you say can significantly affect your position. Contact a commercial litigation lawyer before you reply.
How Boss Lawyers Can Help
Boss Lawyers acts for Queensland businesses in misleading conduct disputes on both sides — defending businesses against claims and pursuing compensation for those who have suffered loss from misleading conduct by a counterparty. We also advise directors and officers on personal liability exposure in ASIC enforcement contexts.
Our commercial litigation practice covers the full lifecycle: from pre-litigation strategy and letter of demand through to Federal Court and Queensland Supreme Court proceedings. We understand the ACL and ASIC Act frameworks, and we know how regulators and courts approach these cases in 2026.
If your business has received a claim involving misleading conduct, or if you are concerned about representations your business has made, call Boss Lawyers on 1300 267 711 or contact us through our commercial litigation page.
Frequently Asked Questions
Does misleading conduct require dishonest intent?
No. Under s 18 of the Australian Consumer Law and ss 12DA and 12DB of the ASIC Act, conduct is misleading if it is likely to mislead a reasonable person — regardless of whether the maker intended to mislead. Good faith is not a defence, although it may be considered in penalty.
What penalties apply to misleading conduct under Australian law?
For corporations, the maximum civil penalty under the ACL is the greater of: $50 million, three times the benefit obtained from the contravention, or 30% of adjusted turnover during the breach period. For individuals, the maximum is $2.5 million per contravention. ASIC Act penalties are comparable. The ASX penalty of $20.5 million reflects a serious, sustained contravention by a systemically important institution.
Can I be personally liable as a director for my company’s misleading conduct?
Yes. Under the accessory liability provisions of the ACL (s 75B) and the ASIC Act, directors and officers who are knowingly concerned in a contravention can be held personally liable and face civil penalties. This makes internal document consistency a critical risk management issue.
What is the limitation period for a misleading conduct claim?
Under the ACL, claims for compensation must generally be brought within six years of the date the cause of action accrued. Private litigation has a six-year window from when the loss was suffered or could reasonably have been discovered. ASIC’s penalty enforcement timeline operates differently.
What should I do if I receive a letter of demand alleging misleading conduct?
Do not ignore it and do not respond without legal advice. The letter sets the factual and legal framing for any subsequent proceedings. Contact a commercial litigation lawyer immediately. Call Boss Lawyers on 1300 267 711.
This article provides general information only and does not constitute legal advice. You should obtain specific legal advice relevant to your circumstances before taking any action. For advice on misleading conduct claims or commercial litigation in Queensland, contact Boss Lawyers on 1300 267 711.
Mark Harley is the Principal Solicitor of Boss Lawyers, a Brisbane boutique firm focused on commercial litigation and insolvency. He has practised in Queensland courts for over 17 years, regularly acting for directors, creditors, and businesses in Federal Court and Supreme Court proceedings. Boss Lawyers is listed in the Doyle’s Guide for Commercial Litigation (Queensland) 2026. Level 27, Santos Place, 32 Turbot Street, Brisbane.
