News & Articles
Articles | April 2024
Litigation Explained: ASIC Notices Explained
By: Rosemary Kanan
ASIC holds significant powers under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), which works alongside the Corporations Act 2001 (Cth) (Corporations Act). These powers allow ASIC to investigate any conduct it believes may breach laws under the Corporations Act or any other laws of the Commonwealth, States, or Territories that primarily deal with fraud, dishonesty, or financial services.
Section 19 examinations
As part of its investigative function, ASIC can require an individual to attend a private examination, commonly known as a section 19 examination. ASIC may compel an individual to participate if it has reasonable grounds to believe that the person holds information relevant to a formal investigation. The ASIC Act outlines three grounds for initiating such an investigation:
- Suspicion of a contravention or unacceptable circumstances (Section 13).
- Ministerial discretion (Sections 14 –14A).
- Report from a receiver or liquidator (Section 15).
The examination process and your rights
It is important to understand your rights and responsibilities during this process in order to protect your interests effectively.
- Confidentiality: The examination content is confidential and will take place in private. You have the right to legal representation during the examination.
- Disclosure restrictions: Typically, you are prohibited from disclosing the examination’s content to anyone except your lawyer for a specified period of time.
- Obligation to answer: You are required to answer all questions posed, even if the answers may incriminate you. However, you can claim privilege against self-incrimination, meaning that any evidence you provide cannot be used in proceedings against you, except in perjury cases.
- Legal professional privilege: If an answer is protected by legal professional privilege, you may reasonably refuse to answer, but you should consult your lawyer to understand the limitations.
Failure to comply with a section 19 examination requirement can lead to penalties, imprisonment, or both. These are not optional invitations. Additionally, providing false or misleading information is a serious offense, carrying substantial penalties.
Section 30 and 33 Notices and Your Rights
ASIC can also issue section 30 and section 33 Notices, which compel the production of documents for the purpose of a formal investigation and to ensure compliance with Corporations Act. These notices will specify the documents required, the general reason for the request, and the time and place for their submission.
- Right to refuse: Your right to refuse is limited to documents protected by legal professional privilege. As with the examination process, the burden is on you to prove that privilege applies.
- Return of documents: Once the investigation is concluded, the documents will generally be returned to you. While ASIC holds the documents, it must allow access to individuals who would typically be entitled to inspect them, such as the document owner or a liquidator in the event of company liquidation.
For more information contact Rosemary Kanan
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice and should not be relied upon as legal advice. Formal legal advice should be sought in relation to particular transactions or on matters of interest arising from this communication.