Annual reports nowadays are more marketing publications as to various achievements of the relevant agencies and their compliance with statutory and financial reporting requirements. The reports must be laid before each house of the Parliament on or before 21 October 2019. All Commonwealth reports are collected at this link.
ASIC for one is required by s 136 of the ASIC Act 2001 to report on particular issues in its annual report.
Section 136(1) of the ASIC Act 2001 requires ASIC’s annual report to include details among others, of
“(ca) information about the activities that ASIC has undertaken” under Chapter 5 or Schedule 2 [External insolvency administration] of the Corporations Act.
This includes the new powers given to ASIC by the Insolvency Law Reform Act 2016, with parallel powers given by the Act to the bankruptcy regulator, AFSA, and to ARITA and other industry bodies.
ASIC’s 2018-2019 annual report provides these insolvency relates issues under s 136(1)(ca):
Assetless Administration Fund
- Under the AA Fund, ASIC paid and committed the amount of $3.651 million to liquidators in 2018–19.
- ASIC received 724 applications for funding comprising: 582 banning applications (226 granted); 141 ‘matters other than s 206F – director banning’ applications (69 granted); and only 1 application for a liquidator to recover assets, which was granted.
- Reports funded by the AA Fund assisted in approximately 88% of director bannings (44 out of 50).
Abandoned companies – s 489EA
- ASIC appointed and funded 15 liquidators to the windings up of abandoned companies, and 2 reviewing liquidators to report on eight matters.
- The 2018-2019 year saw 8,105 companies entering external administration.
- ASIC assessed 93% of whistleblower reports as requiring no further action “often due to insufficient evidence”, and referred the remainder to its compliance, surveillance or investigation team. Interestingly, ASIC says that in some cases, it referred the matter to a liquidator who “was better placed to deal with the issue or was already taking action”.
- ASIC received 8,106 initial reports from external administrators, under s 533 and related sections. Over 7,200 of these reported suspected offences by company officers, with the rest lodged because the return to unsecured creditors may have been less than 50 cents/$.
- Of the 7,200 that reported misconduct, ASIC requested supplementary reports in 1,008 cases. These supplementary reports typically set out the results of the external administrator’s inquiries and the evidence to support the alleged offences.
- ASIC referred 24% of supplementary reports for compliance, investigation or surveillance action, compared to 20% in 2017–18.
Liquidator registrations, and cancellations
- There were 651 registered liquidators
- During 2018–19, ASIC registered a total of 12 liquidators. ASIC received and referred 11 new applications for registration as a liquidator to committees under Div 20 of Schedule 2.
- Seven of these new applicants were registered, two were registered with conditions, two were not registered, and the outcome of the remaining two applications is yet to be determined.
- A disciplinary committee heard one matter and determined to cancel the registration of a Brisbane‑based registered liquidator, who was jailed for fraud.
- A further three registered liquidators were referred to a committee and the referrals had not been heard by 30 June 2019.
- Two liquidators had their remuneration reduced on ASIC’s intervention.
Section 30B notices
- Under s 30B, ASIC Act, 6 notices were issued to registered liquidators requiring information or books.
What didn’t happen?
It seems that apart from the disciplinary matters, there were no directions to liquidators to comply under ss 40-5, 40-10, 40-15 as there were in the previous year. See my review of the 2017-2018 report.
Nor, as with the 2017-2018 report, were there any industry notices from ARITA or others under s 100-5 of the Corporations Schedule, or any confidential information conveyed by or to ARITA or other bodies.
There is no legislative equivalent for AFSA to report on the exercise of its powers and its annual report does not do so in any detail.
Attorney-General’s Department – the one year bankruptcy
The Attorney-General’s Department annual report 2018-2019 refers to its consultation on amendments to the Bankruptcy Amendment (Enterprise Incentives) Bill 2017, which would reduce the default period of bankruptcy from three years to one. AGD reports that the bill lapsed on the dissolution of the 45th Parliament and that it “will continue to progress this work in the coming year”.
ATO simply reports on the amount of its on-going “insolvency debt”.
As to the Fair Entitlements Guarantee, formerly with the Department of Employment, Skills, Small and Family Business, see comments on its Annual Report for 2018-2019 here.
ARITA reports on its nine member Professional Conduct Committee which met seven times in 2018 both to consider complaints against and concerns about ARITA members and to provide ‘guidance on matters involving the professional conduct of members’. It appears that no exercise of ARITA’s powers under Schedule 2 were necessary.