ASIC’s power to conduct compulsory oral examinations is enlivened when ASIC, on reasonable grounds, believes that a person can give information that is relevant to a matter under formal investigation. The Australian Securities and Investments Commission Act 2001 (ASICA) provides three grounds for commencing this formal investigation:[1]

1. suspicion of a contravention or unacceptable circumstances (ASICA s 13);
2. ministerial discretion (ASICA ss 14–14A);
3. report of a receiver or liquidator: ASICA s 15.

Any person who is “thought to have any relevant information” may be given a notice under ASICA s 19 and/or s30.[2] To this extent, during a formal investigation, information is gathered both from people and entities that are the subject of investigation of suspected misconduct and also from people and entities that are not suspected of wrongdoing, but who may be in possession of information which will assist in the investigation.

What it means if you have received a s 19 Notice of Examination

If you have received an ASIC s 19 Notice of Examination, you fall within one of the abovementioned categories. Your responsibility in “giving information” is defined in ASICA s 6 as:

“explaining or stating a matter; identifying a person, matter or thing; disclosing information; or answering questions, on oath or affirmation”.

The notice received must state the general nature of the matter under investigation. However, ASIC is not required to inform you of the nature of the questions to be asked. Further to this, ASIC has no common law or natural justice obligation to disclose its reasons for commencing the investigation or the material on which it has acted.

Service of the notice must be within a reasonable time of the stipulated date for which you are required to appear for the examination. This is to give you the opportunity to obtain legal advice.

The examination process and your rights

The content which is discussed in the examination is confidential and will take place in private.  Nevertheless, you have a right to legal representation. Given that examinations are conducted as part of an investigation into suspected misconduct, you will generally be forbidden from disclosing the content of the examination to anyone other than your lawyer for a period of time.

Your right to refuse to answer questions put to you in the examination process is limited to those which would require disclosure of information that is covered by a valid claim of legal professional privilege. In bringing this claim, the onus will be on you to prove that privilege applies to the answer.

Notably, answering questions during an examination may constitute an abrogation of the right not to incriminate oneself. Whilst you are under an obligation to answer questions put to you irrespective of whether that answer will incriminate you, you are entitled to claim privilege against self-incrimination. This means that any evidence you provide is not admissible in any proceedings brought against you, other than in perjury proceedings.

Section 30 and 33 Notices and your rights

Section 30 and 33 Notices are issued by ASIC to compel the production of documents for the purposes of a formal investigation, as well as to ensure compliance with the corporations legislation. The notice will describe the documents sought and the general basis on which they are required, as well as the time and place for production.

As above, your right to refusal is limited to documents that are covered by a valid claim of legal professional privilege. The onus is on the claimant to prove that privilege applies.

Return of the documents can be expected upon finalization of the matter. Relevantly, while ASIC is in possession of the documents, they must provide access to anyone normally entitled to inspection of the documents (e.g. the owner of the documents, or in the event of subsequent liquidation of a company, the liquidator).

Final thoughts

If you or your business have been issued with an ASIC notice of examination or notice to produce, then you are considered to have information relevant to a matter under investigation. You should be aware that your rights to refuse compliance with the “giving of information” are limited.

Pursuant to your right to obtain legal representation, you should contact one of our expert lawyers to discuss your options.

[1] [15.1.0060] Initiation of a formal investigation https://plus.lexis.com/api/permalink/6a7b96da-204b-4571-bf05-b843d16155e8/?context=1539278&federationidp=HQT4VR35462

[2] Little River Goldfields NL v Moulds (1991) 32 FCR 456; 25 ALD 701; 6 ACSR 299; 10 ACLC 121

The content of this publication is intended to provide a summary and commentary only. It is not intended to be comprehensive nor does it constitute legal advice, and has been prepared based on applicable legislation and case authority at the date of publication. You should seek legal advice on specific circumstances before taking any action.