What is said to be the limited response by ASIC to corporate misconduct reports by liquidators is the subject of some on-going attention.
Recommendation 19 of the July 2023 PJC Report on corporate insolvency was that any comprehensive review of insolvency law should consider whether the current statutory reporting obligations for insolvency practitioners are best serving the integrity, efficiency, and efficacy of the Australian corporate insolvency framework, including (but not limited to) the ability of ASIC to appropriately process, use and respond to initial statutory reports from liquidators on its current resources; and including the appropriateness of existing reporting thresholds, having regard to their regulatory value as well as the burden imposed on insolvency practitioners.
The committee further recommended that in the interim, the government and ASIC consider whether any timely changes can be made to the law on reporting thresholds, and ASIC’s response to insolvency practitioner reports.
That same PJC is separately reviewing “ASIC’s capacity and capability to respond to reports of alleged misconduct” with a report due by June 2024. Also, the Senate Economics References Committee is reviewing ASIC in similar terms to the PJC, as to “the capacity and capability of the Australian Securities and Investments Commission to undertake proportionate investigation and enforcement action …”, with a report due June 2024.
In my 2019 article Offence reporting by insolvency practitioners, I discussed the offence reporting requirements of liquidators and trustees, and their history, including relevant case law.
It’s all rather bad law.
What sort of provision is s 533 Corporations Act that requires liquidators to report to ASIC whether officers and others may have been guilty of offences under any law of the Commonwealth or States or Territories in relation to the company, and so on, and so on? The breadth of the section needs to be changed, with some materiality threshold, and other limiting criteria discussed in the article. It’s no wonder that reports with such a low threshold are not actioned.
First, we need to settle upon the validity of any policy reasons supporting the need for IP investigations and reports in all cases, including who funds them. No doubt any comprehensive insolvency law review will provide a forum for that debate, as well as the two current parliamentary inquiries into ASIC, due to report in 2024.
Without going further, and for anyone’s interest, my article is attached: Offence reporting by insolvency practitioners (2019) 20(4&5) INSLB 88. Offence reporting by insolvency practitioners — (2019) 20(4&5) INSLB 88.pdf Murray