With Australia’s new insolvency laws commencing this Friday 1 September, there is a late flurry of activity from the legislature to tidy up the Acts, Schedules, Rules and Regulations that will now apply; from the Courts in updating their rules and processes; and from the regulators in issuing their new forms and guidance, if any.
An ‘issue’ may be raised by one of ASIC’s forms.
RL 35 is one of many forms that ASIC has issued – Notice by industry body of possible grounds for disciplinary action. It is a form by which an “industry body” – being 14 law and accounting bodies around the country, including ARITA and IPA – can refer a liquidator’s suspected misconduct to ASIC.
The industry body must state that it reasonably suspects that there are grounds for ASIC to take disciplinary action; and include information and copies of any documents upon which its suspicion is founded: s 40-100 Corporations Schedule. The body is protected from liability only if it has acted in good faith and its suspicion was in fact reasonable: s 40-105.
A note to Form RL 35 then says:
that under s 1274(2) of the Corporations Act 2001, a person may inspect and may require a copy of or extract from the notification (sic) once lodged with ASIC.
Section 1274(1) provides that ASIC must, subject to the Act, keep such registers as it considers necessary in such form as it thinks fit. One register is the Register of Liquidators.
Subsection 1274(2) provides that a (any) person may inspect any document lodged with ASIC, not being, relevantly, applications for registration as a liquidator, s 30-1 annual liquidator returns or s 35-1 notices by liquidators of their “significant events”.
But section 40-100 industry notices, being (mere) third party assessments of liquidator misconduct that may not at all be substantiated, are not protected from public inspection.
Nor, it seems (no guidance is issued by ASIC or any of the industry bodies), need the liquidator be notified of the lodgement of the industry notice.
Their first notification may be from a journalist or some such person who has a practice of searching the Register.
The Register of Liquidators was required to be established by ASIC from 1 March 2017: s 15‑1(3) Corporations Schedule. It must include, relevantly, “particulars of any disciplinary action taken against the (liquidator) (other than a direction given under section 40‑5 of the” Corporations Schedule. ASIC must make this information publicly available.
Whether or not a section 4-100 notice lodged by ARITA, the IPA, the Tasmanian Law Society or the WA Legal Practice Board (being some of the industrial bodies) constitutes “disciplinary action”, it seems that these notices are on public view, potentially remaining there even if ASIC takes no action under s 40-100(3).
There may be an answer to this but the public record is as stated, e&oe, and may be so intended.
It would surely not be the case with bankruptcy industry notices, coming as bankruptcy does under the Attorney’s authority, but that is for my next article.