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An updated version of RG 16 will set out ASIC’s expectations for how external administrators and controllers should report possible offences and misconduct.
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ASIC to publish revised regulatory guidance for liquidators next month
27 August 2024
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In a recent address, ASIC commissioner Kate O’Rourke said ASIC has revised its regulatory guidance for registered liquidators and commenced a review of its internal processes.
O’Rourke said ASIC has made a raft of changes to its guidance for insolvency practitioners for reporting possible misconduct and how practitioners should exercise professional judgement.
“ASIC became aware over time that some registered liquidators are doing more than is required of them to satisfy their reporting obligation – driven by concerns over disciplinary action from ASIC,” she said.
“We can see this in the volume of information contained within the reports we receive – and have heard firsthand, from registered liquidators themselves, that uncertainty around requirements is a cause of this.”
O’Rourke reminded practitioners that under the reporting obligations, they are required to lodge an initial statutory report (ISR) with ASIC if it appears to you there is potential misconduct.
“A supplementary statutory report (SSR) may also be lodged to provide additional information,” she said.
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“ASIC’s expectation is that you will exercise your professional judgement on these matters. We also recognise that regulatory guidance is one of a range of inputs that inform that professional judgement.”
ASIC, she said, has therefore made a number of changes to RG 16 to further guide practitioners in deciding what they need to report on and when, so that they can apply their professional judgement with greater confidence.
The corporate regulator expects to publish the revised RG 16 and feedback report in September.
“Importantly, that revised guidance now clarifies that extensive investigations and significant costs are not required to complete an ISR. It also clarifies that, in most cases, we would not expect that an SSR is required,” said O’Rourke.
“It appears some registered liquidators may be operating under a misapprehension that section 533 of the Corporations Act imposes an obligation on you to carry out an investigation in order to form a view that it appears to you that misconduct has possibly occurred.”
In line with the case law, O’Rourke said the revised guidance makes clear that practitioners must form a genuinely held view as to whether it appears misconduct has possibly occurred.
“How you arrive at that view – and the level of investigation of misconduct and offending undertaken to get there – is a matter for your professional judgement,” she said.
O’Rourke said that as part of a practitioners’ duties and functions, they will investigate the company’s affairs to identify property that may be recovered to form part of the funds in the administration to be distributed in accordance with the law.
“As part of these investigations, you may identify information or evidence that enables you to form a view that it appears an offence has been committed or misconduct has occurred that must be reported,” she said.
“To reiterate, you may not need to carry out separate or new inquiries to be able to report offences under section 533, if your asset investigations provide sufficient information for you to form your opinion.”
ASIC said it is also working on a comprehensive review of our processes for ingesting, screening, analysing, and acting on the reports it receives.
“We will take into consideration the issues raised in the submissions received through the RG 16 consultation,” said O’Rourke.
“Another common piece of feedback was a request for a dedicated contact to respond to inquiries from registered liquidators about ISRs and SSRs. I’m pleased to let you know that we will be making that available.”
ASIC said the updates to RG 16 are aimed at supporting an improved process that helps reduce the time and costs associated with reporting.
“It seeks to do so by focusing registered liquidators’ inquiries – and the content of reports – on misconduct and offences. Thereby assisting our ability to use this information,” said O’Rourke.
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