ASIC has lost a major appeal against the directors of a retirement home investment scheme.

A full sitting of the Federal Court has overturned a lower court decision to disqualify and fine five former directors of Australian Property Custodian Holdings (APCH) – a group that includes Howard-era health minister Michael Wooldridge - for breaches under the Corporations Act.

APCH ran the Prime Retirement and Aged Care Property Trust, which themselves ran retirement properties across Queensland, NSW and Victoria.

The company began liquidation in November 2011 holding $550 million in funds from about 9,700 investors.

ASIC had argued that the directors amended Prime Trust's constitution to pay a $33 million fee to the trust's founder and director, Bill Lewski.

The ruling in the original case disqualified Mr Lewski from managing a company for 15 years and issued a fine of over $200,000.

Mr Wooldridge was disqualified for two years and fined $20,000.

The court then upheld an appeal by the former directors saying they did not break the law.

Instead, ASIC was told it should have filed the case within the six-year statute of limitations under the corporate law.

A final judgment this week scrapped the declarations of wrongdoing against the directors.

The court also ordered ASIC to pay the costs of the former directors’ trial and appeal.

The regulator says it is considering the decision.