Submission: ASIC RG16 Reporting of offences and misconduct

ASIC announced the release of consultation paper regarding updates to RG 16: External administrators and controllers – reporting of possible offences and misconduct, at the ARITA National Conference on 11 April 2024.

As well as attending an ASIC roundtable as part of its consultation on the proposed updates on 13 May 2024, ARITA made a submission identifying the following key points.

  • Overall support: ARITA generally supports the updating of RG 16 to provide greater clarity on ASIC’s expectations for external administrators’ and controllers’ compliance with the reporting obligations and its approach to the reports received but has some fundamental concerns regarding a number of the positions taken in RG 16.
  • Lodgement of initial report: We believe that the obligation on liquidators to lodge an initial statutory report as set out at RG 16.12 is not consistent with the requirements of section 533 of the Corporations Act 2001 (Cth) and that it is important that the guidance states that it is what is apparent to the liquidator that is the trigger, not what is apparent to other stakeholders, ASIC or more generally.
  • Voluntary reporting: We have serious concerns regarding the guidance that ASIC encourages a controller, provisional liquidator or administrator of a Deed of Company Arrangement to lodge an initial statutory report with ASIC, when possible offences or misconduct is identified, particularly as there is no statutory qualified privilege in relation to such lodgements. We also query the basis for the statement in the guidance that the reports ‘are not disclosed by ASIC unless required by law’.
  • Supplementary reporting: While the consultation paper states that ASIC has observed that in some cases external administrators are ‘preparing a supplementary report in circumstances where we do not consider this further work is required and ASIC is unable to take further action based on the information in the report’, we respectfully note that the Corporations Act clearly places the decision with the appointee. ARITA also believes that further consideration needs to be given to the process for applying to the Assetless Administration Fund for the preparation of a supplementary statutory report where one is requested by ASIC and the liquidation is without funds.