Failure to report to shareholders or take action in relation to director's conduct
The IPA highlighted to the complainant that a liquidator does not have a statutory obligation to report to shareholders on the conduct of the liquidation, although in this instance the liquidator had chosen to issue two reports to shareholders despite a lack of funds. It was noted that a communication to shareholders regarding a declaration regarding the value of the shares should be issued prior to the finalisation of the liquidation.
Reports issued by the liquidator to the creditors and shareholders provided details of the liquidator's investigations into the director's conduct and noted that a public examination of the director may be beneficial and sought an indemnity in respect of any further actions. The failure to secure an indemnity or engage a solicitor on a contingency basis resulted in no further action being pursued.
The complainant was referred to the provisions of section 545 of the Corporations Act 2001 which specifically notes that, with the exception of statutory reporting, a liquidator is not liable to incur any expense in relation to a liquidation unless there is sufficient property. The director's conduct was reported to ASIC in accordance with the liquidator's statutory obligation.
No further action was taken by the IPA in relation to the complaint.