ASIC has today released its updated regulatory guidance for external administrators and controllers when reporting and lodging statutory reports about alleged misconduct.
The updates to Regulatory Guide 16 External administrators and controllers: Reporting of possible offences and misconduct (RG 16) follow an extensive consultation process that included targeted industry roundtables to seek input into our proposed changes.
ASIC released Consultation Paper 377 Guidance for reporting by external administrators and controllers: Updates to RG 16 (CP 377) in April 2024.
Our responses to the key issues raised by respondents in CP 377 included:
- Creating a dedicated contact point for external administrators and controllers to raise questions with ASIC in relation to the preparation and lodgement of reports of misconduct. We encourage external administrators and controllers to raise questions through our new dedicated e-mail address – ISRandSSR.Questions@asic.gov.au
- Retaining ASIC’s existing guidance that external administrators and controllers can lodge multiple initial statutory reports to enable flexibility in reporting.
- Retaining indicative timeframes given the importance of timely reporting. While we do not require lodgement within these timeframes, we encourage this approach.
- Clarifying in the guidance that an external administrator or controller may use their professional judgement to form the view that it is necessary to undertake further inquiries to meet their reporting obligations in the particular circumstances. Our guidance is now focused on the minimum steps required to comply with the reporting obligations, and we have not included prescriptive guidance through checklists or examples for that reason.
Report 793 Response to submissions on CP 377 Guidance for reporting by external administrators and controllers (REP 793) provides more detail on responses to the submissions received during the consultation process.
ASIC Deputy Chair Sarah Court said, ‘We appreciate the valuable feedback we received during the consultation on RG 16 which has sharpened the updates to our guidance.
‘Our expectation is that external administrators and controllers will exercise their professional judgement in reporting misconduct to ASIC. Our updates to RG 16 are intended to clarify what external administrators and controllers need to report on and when, so that they can apply professional judgement with greater confidence.’
Ms Court added, ‘We are also working on a comprehensive review of our internal processes for ingesting, screening, analysing and, where required, acting on the reports we receive. We will consider the issues raised in the feedback we received during the consultation on RG 16 as part of that review.’
ASIC will support members of the profession as they transition to the updated guidance through ongoing industry liaison. We will also continue to monitor whether we require any additional updates to RG 16 in response to law reform, case law or stakeholder feedback.
Background
RG 16 provides guidance to external administrators and controllers on their obligation to report to ASIC possible offences and misconduct, and for liquidations where the company may be unable to pay its unsecured creditors more than 50 cents in the dollar.
There have been a number of developments that have influenced the need for updates to RG 16. These include the expansion of case law, legislative reforms (including simplified liquidation reporting), and feedback from the inquiry into corporate insolvency in Australia by the Parliamentary Joint Committee on Corporations and Financial Services (the Committee).
In particular, the Committee recommended that until a comprehensive review of the current statutory reporting obligations can occur, ASIC should consider whether any timely changes can be made to the reporting thresholds and how it responds to insolvency practitioner reports.