Regulatory & Compliance

ASIC regulates corporate activity to enforce regulations and punish offenders. The authority of ASIC stems from the Australian Securities and Investment Commission Act 2001 (the Act). As a government body, ASIC has the power to investigate, inspect and audit organisations, examine individuals and may cause prosecutions and civil actions to begin against alleged offenders. Failure to comply with ASIC investigations is also an offence. Understanding the scope of ASIC enforcement powers and the penalties for failing to comply are important in ensuring compliance. Below is a general outline of ASIC’s powers under the Act and the penalties it can impose or cause to be imposed. If you or your company have been contacted by ASIC in connection with an ongoing investigation or matter, do not hesitate in retaining legal assistance using the form below. The following is a summary of the key provisions of the Act broadly detailing ASIC enforcement powers.

Under section 13 of the Act, ASIC has authority to undertake investigations where it has reason to suspect a number of situations have arisen, most prominently:

  • a contravention of the corporations legislation;
  • a contravention of Commonwealth, state or territory law that relates to corporations or financial management; or
  • a liquidator has not or is not faithfully performing their duties.

Section 14 grants the Minister (the Commonwealth Treasurer) the authority to direct ASIC to investigate matters in a number of areas if the Minister believes it to be in the public interest to do so. Section 19 also gives ASIC the authority to require individuals to appear for examination if it is believed on reasonable grounds that they have information that may relate to an ongoing ASIC investigation. Failure to comply with an examination notice is an offence. The examination occurs under oath or affirmation and therefore requires all information given during the examination to be true.

Section 28 confers a number of powers on ASIC if they are used in connection with enforcing the corporations legislation or investigating a breach of legislation relating to corporate management or financial products. These powers relate to inspecting company books; if such books are not forthcoming, ASIC can apply for a court order to compel their production. Refusal to present books for inspection is an offence.

Division 5 of the Act gives ASIC the authority to cause criminal and civil proceedings to begin against suspected offenders. Sections 12GA to 12GO list the enforcement proceedings and remedies that ASIC can seek. Most notably, these include pecuniary penalties, community service, penalties requiring adverse publicity, orders disqualifying offenders from managing corporations and orders to compensate consumers.

Criminal penalties are generally pursued by prosecutors with evidentiary assistance from ASIC. Under sections 76 to 83, evidence attained by ASIC as part of an examination is admissible in other proceedings (subject to some exceptions).

ASIC does take into account cooperation when determining what penalties to request. In some circumstances, an alternative resolution may even be preferred. The wide range of penalties that ASIC can seek to have enforced against suspected offenders even for failure to comply highlights the need to act with proper legal advice if confronted by an ASIC notice.

ASIC investigates suspected instances of corporate and financial crime for the protection of consumers, creditors and others affected by corporate misconduct, constituting ASIC enforcement powers. Crucial to ensuring your company complies with ASIC regulations is understanding how ASIC operates and what penalties await those found guilty of contravening the law. ASIC possesses an array of investigative powers to determine whether or not misconduct has occurred and can compel cooperation on pain of prosecution. Should a breach be found, a range of statutory penalties for both companies and individuals can be brought to bear. It is therefore crucial to obtain legal advice as soon as possible in the event of an ASIC investigation. Proper navigation of proceedings (such as by cooperation) can result in less serious outcomes.

To find out more about Regulation & Compliance check out our Resources Centre. If you need any further advice about ASIC Enforcement Powers, please get in touch today.

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