ASIC action on illegal phoenix activity
ASIC is committed to using its regulatory tools of engagement, surveillance and enforcement to identify, disrupt and take action against those who engage illegal phoenix activity.
ASIC is particularly is focused on director, service provider and registered liquidator misconduct which harms creditors and consumers and ultimately reduces business confidence.
This illegal practice usually happens when company directors abandon the company or transfer the business of an existing company to a new company without paying true or market value, leaving debts with the old company. Once the assets have been transferred, the old company is placed in liquidation or abandoned. If the liquidator is appointed, there are no assets to recover, which means creditors cannot be paid.
How ASIC is combating illegal phoenix activity
ASIC’s regulatory tools to combat illegal phoenix activity focus on:
ASIC uses engagement and communication tools to inform and educate stakeholders about illegal phoenix activity. ASIC’s engagement work also includes sharing information with partner agencies and working with Treasury and Government, such as:
- sharing and referring information to other Government agencies, the Serious Financial Crime Taskforce and the Phoenix Taskforce;
- sharing intelligence and information with the ATO to detect illegal phoenix activity for disruption as part of the Data Fusion Project; and
- supporting and implementing legislative tools introduced to combat illegal phoenix activity and contributing to law reform and policy.
ASIC uses various internal and external data sources and intelligence to identify and monitor those who may engage in illegal phoenix activity. ASIC’s surveillance work includes:
- director surveillance (Phoenix Surveillance Campaign): working with the ATO to identify high risk directors and jointly conducting meetings with directors who may be at risk of engaging in illegal phoenix activity; and
- registered liquidator surveillance: considering allegations of illegal phoenix activity in relation to registered liquidators including whether to appoint a reviewing liquidator funded from the Assetless Administration Fund
ASIC takes action against directors and facilitators who breach the law and engage in illegal phoenix activity by:
- taking enforcement action against directors and facilitators; civil and criminal action, administrative action (including director disqualification), and prosecution of directors through the Assistance for External Administration program;
- funding liquidators with grants from the Assetless Administration Fund; and
- taking action against registered liquidators including administrative action.