ASIC today released its annual report for the 2013 calendar year into the supervision of registered liquidators.
Report 389 ASIC regulation of registered liquidators: January to December 2013 (REP 389) outlines the supervisory, enforcement, stakeholder liaison and educative work ASIC undertook in its commitment to continue improving regulation of the insolvency and restructuring sector.
Key points:
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ASIC completed more than 250 reviews covering practitioner independence, competence and remuneration. This is up from close to 200 reviews in 2012
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More than 70% of all independence declarations reviewed in 2013 were adequate, compared to less than 50% in 2012
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Reports of alleged misconduct about registered liquidators has dropped from 539 in 2011 to 446 in 2013, showing a positive downward trend
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61% of reports of alleged misconduct against registered liquidators resulted in educative outcomes for those making the report
ASIC Commissioner John Price said, 'ASIC will take strong action against registered liquidators who neglect their responsibilities and obligations. As the report highlights, liquidators who did not adhere to their obligations have been removed from the industry'.
Key enforcement outcomes include:
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At the end of December 2013, 19 registered liquidators were subject to formal investigation or enforcement action.
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ASIC made 5 applications to the Companies, Auditors and Liquidators Disciplinary Board (CALDB), resulting in the registration cancellation of Mark Darren Levi (refer: 13-227MR) and Avitus Thomas Fernandez (refer: 13-308MR). Two of the three remaining applications have been heard and the remaining application is expected to be heard in the first half of 2014.
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[This MR was redacted on 20/02/2023 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]
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[This media release was withdrawn in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]
The report also highlights an improvement in the disclosures made in declarations by registered liquidators about their independence.
Liquidators must make full disclosure to creditors about their independence. The Australian Restructuring Insolvency and Turnaround Association released a third edition of its code of professional conduct effective from 1 January this year. ASIC was pleased to be able to contribute to the enhanced guidance on independence in this code and will continue to focus on independence throughout 2014.
In 2014, another area of focus for ASIC is the unregulated, pre-insolvency advice market including the potential impact on registered liquidators' independence, especially through referrals to the registered liquidators by pre insolvency advisers.
Background
At the end of 2013, there were 689 registered liquidators (of which 583 were also official liquidators).
ASIC's proactive reviews target external administrations that exhibit certain risk criteria – for example, potential illegal phoenix activity, related party transactions, possible director misconduct and/or independence concerns.
ASIC also regularly conducts project work, including checking compliance with independence declarations, remuneration disclosure and compliance with relief provisions for preparing accounts for public and certain large proprietary companies.
An educational outcome involves educating the person (often a creditor) about the applicable law or practice, or providing information about the normal practice of the insolvency process.
REP 389 follows the release of Report 342ASIC regulation of registered liquidators: January to December 2012 (REP 342) and Report 287 ASIC regulation of registered liquidators: January to December 2011 (REP 287).
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