The article in the Australian newspaper of 2 July 2018, although typically low-brow in its heading – how ASIC gouges fees for business – gives useful coverage of ASIC’s high fees for accessing essential business and company information that it holds.
In the corporate financial governance and insolvency field, it is worse than just the high fees, as I touched upon in a session at the Association of Independent Insolvency Practitioners (AIIP) conference in Canberra last week.
Here are [some of] my views and avenues for change:
Open public access to ASIC data
There should be open access to ASIC data in the interests of assisting transparency in business dealings and in countering unlawful business conduct including phoenix activity and insolvent trading.
Sunlight is a great disinfectant.
There are other broader financial and social benefits of opening up such data, assessed in the billion$ in terms of economic value: see the Financial System Inquiry Report 2014, and the Productivity Commission Report on Access to Data and the open access arrangements for England’s Companies House.
Director identity numbers
Those directors registering companies should prove their identity through a traceable director identity number (DIN), recommended now by a number of government inquiries, and highlighted in particular by Professor Helen Anderson of the University of Melbourne, some several years ago.
Prevention is better than cure.
Like any identifier, it offers ease of access – a frequent company director card – along the lines of a frequent flyer number.
Beneficial ownership of companies and interests in them should also be on a public register, along the lines of the regime applying in the UK.
When a company is wound up in insolvency, liquidators – which ASIC calls its ‘front line investigators of insolvent companies’ – take over. They have legal requirements to investigate breaches of the law of the companies for which they are responsible, and report them to ASIC.
But, as those in the insolvency field well know, in reporting to ASIC, liquidators must pay ASIC its fees to search and obtain documents about the company in liquidation and its directors, so that they can give their reports to ASIC.
But more unsatisfactory is that, with many companies going into liquidation having no moneys or assets remaining, the liquidators must pay for their ASIC searches from their own funds, in order to fulfil their reporting obligations under the Corporations Act, with only some prospect of recouping those outlays if company moneys or assets are later found.
At any given time, a liquidator’s firm will have many thousands of dollars spent on ASIC fees with uncertain prospects of recoupment.
There is plenty, in the nature of greater transparency and open access, including from the ATO, but that is enough for the moment.
Suffice to say that government thinking in many areas of crime or misconduct control is short-sightedly focused on curing later – more powers for ASIC – rather than preventing earlier. And the perception, only, may be that ASIC supports this.
The Australian article makes good points, if readers can access it. But there is much more besides.
What was one of the most effective crime prevention measure of 19th century England?
gas lighting of the streets,
publicly funded, its costs repaid in many millions of pounds.