Australian corporations legislation provides ASIC with compulsory information-gathering powers which enable it to obtain documents so it can monitor compliance with the law and then take enforcement action where necessary.
ASIC may issue a section 33 notice to an individual or company that compels them to produce the specified documents that are in their possession.
The term ‘possession’ has a broad meaning and may require the recipient to instruct third parties to provide them with documents for production in order to properly comply with the ASIC section 33 notice.
Where you fail to comply with a valid section 33 notice, ASIC can apply to the court to enforce compliance with the notice.
Intentional and reckless failure to comply with a valid section 33 notice constitutes an offence and carries a maximum penalty for individuals of two years imprisonment.
Where you are in receipt of an ASIC section 33 notice, it is important to consider whether the notice has been issued for a proper purpose and its terms are sufficiently clear.
You must also consider whether any claims for privilege should be made over documents caught by the section 33 notice. Failure to make a claim of privilege at the right time and in the prescribed way may result in a waiver of privilege over a document caught by the section 33 notice and can have serious consequences that cannot be later rectified.
ASIC regulates Australian companies, financial markets, and financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit.
One of the ways ASIC monitors compliance with the law is by conducting investigations. To this end, Australian corporations legislation provides ASIC with the power to compel a person to appear before the Commission for an examination in order to answer ASIC’s questions and/or to provide ASIC with reasonable assistance.
ASIC may issue a section 19 notice to any person it believes, or suspects, can provide information that is relevant to an investigation it is conducting, or intends to conduct.
Where you fail to comply with a valid ASIC section 19 notice, ASIC can apply to the court to enforce compliance with the notice.
Failure to comply with a valid ASIC section 19 notice constitutes an offence and carries a maximum penalty for individuals of two years imprisonment.
For an ASIC section 19 notice to be validly issued, the notice must contain specific information, such as:
Where you are in receipt of an ASIC section 19 notice, it is important to consider whether the notice is valid, and whether you should engage a lawyer to protect your interests throughout the examination process.
In Australia, directors’ duties are derived from various sources, including the common law and various statutes, such as the Corporations Act.
The Corporations Act stipulates that directors must:
Offences under the Corporations Act carry both civil and criminal sanctions.
Directors who breach their duties under the common law and Corporations Act can be subject to serious penalties, including:
The ASIC Act empowers ASIC to conduct formal investigations where it suspects a breach of the corporations’ legislation is being committed.
Companies or individuals can be the subject of an ASIC investigation or prosecution.
If ASIC has asked you to produce documents, or attend an examination, it may be that ASIC suspects that you have breached the law or committed an offence. Alternatively, ASIC may have formed a view that you can provide information relevant to an investigation.
As a starting point, it is important to identify the nature and scope of the ASIC investigation.
As this is not always a straightforward step, a lawyer can help you navigate your way through this process and make the relevant enquiries to the relevant ASIC officer on your behalf.
A lawyer can also assist you to identify your role in the investigation, which will impact upon how you should act in relation to the investigation. It is important to determine whether you are the subject of an ASIC investigation, or whether ASIC has formed a view that you can assist their investigation in some way. It is also important to consider the risks of assisting ASIC with an investigation on an informal basis, as compared to a formal basis.
ASIC is empowered under the Crimes Act, the Corporations Act, and the ASIC Act to apply for and execute search warrants to search premises for books and records relevant to an investigation.
Search warrant issued at ASIC’s request are executed by the Australian Federal Police (AFP), with ASIC officers assisting.
Often ASIC will exercise ancillary powers attached to certain warrants to enable it to make video recordings of the search and operate electronic equipment on the premises to access data.
Whether ASIC can then use seized material in administrative, civil or criminal proceedings, will depend on the Act under which the warrant was obtained, and the nature of the offence being investigated.