ASIC, the Australian Securities and Investments Commission is responsible for investigating and prosecuting contraventions of the Commonwealth Corporations Act 2001.

ASIC administers the following pieces of legislation:

  • Australian Securities and Investments Commission Act 2001
  • Corporations Act 2001
  • Business Names Registration Act 2011
  • Business Names Registration (Transitional and Consequential Provisions) Act 2011
  • Insurance Contracts Act 1984
  • Superannuation (Resolution of Complaints) Act 1993
  • Superannuation Industry (Supervision) Act 1993
  • Retirement Savings Accounts Act 1997
  • Life Insurance Act 1995
  • National Consumer Credit Protection Act 2009, and
  • Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.

There are other associated regulators who become involved in the administration of these acts.  For example, AHPRA and other occupational discipline bodies.

The ASIC Process

ASIC, as an investigating authority, has a wide range of powers to investigate matters. ASIC has the power to compel directors, employers and employees to attend compulsory hearings where those being questioned cannot legally refuse to answer questions.

If ASIC identifies a concern in your operations, enforcement action may be taken by ASIC.  Complaints may be received from customers or clients, from routine surveillance or a referral by another regulator.

When ASIC makes a determination that the concern warrants a formal investigation, ASIC may seek out a meeting with the relevant company officer or licensee. As part of its investigations or requirements, ASIC may request the licensee to arrange for an independent review of the client files.  This can be undertaking through a voluntary process or pursuant to an enforceable undertaking.

ASIC may use section 19 interviews as a step in the investigation process.  Section 19 ASIC interviews are a compulsory examination process where you are compelled to answer questions asked of you.  Compulsory interviews may be used to obtain evidence and answers which would otherwise incriminate the person.  Because they are compulsory, you have the right to claim a privilege against self-incrimination and a claim of legal professional privilege.

The consequences to your company

Following an ASIC investigation, ASIC may then exercise a number of powers, including financial penalties, banning orders and prosecution, revocation or suspension of licenses, bans, public warnings, injunctions, corrective disclosures, compensation, infringement notices and enforceable undertakings.

In addition, if through the section 19 process, evidence is revealed that would cause a summary prosecution to be commenced, you would need to go to Court.

Summary prosecutions of companies and directors are a concerning aspect of company work.  Company directors and company officers should be aware of the prosecuting powers of ASIC.  Further, if you are untruthful during a section 19 interview you may be prosecuted.

ASIC routinely prosecutes:

  • People who are continuing to act as a company officer after a liquidator is appointed
  • Company officers who fail to assist insolvency practitioners to administer a failed company
  • Company officers and their companies for failing to update ASIC registers
  • People who are alleged to have used company titles when no such company was registered by ASIC;
  • Companies and directors who breach license regulations.