A Guide to ASIC Notices - Section 19, Section 30 and Section 33 Notices

The Australian Securities and Investments Commission (ASIC) is a regulatory body responsible for the oversight of corporate activity and regulatory compliance in Australia.

ASIC has a wide range of powers at is disposal to gather information and document under compulsion.

When you receive a notice issued by ASIC, it is crucial that you understand what obligations you are under, and the extent of those obligations. Our lawyers have extensive regulatory law experience and routinely act for businesses and individuals the subject of investigations and prosecutions by the Australian Securities and Investment Commission (ASIC), or those to whom ASIC has issued a notice compelling production of certain documents or participation in an examination.

Below, we summarise section 19, section 30 and section 33 Notices which are commonly issued by ASIC.

Section 19 Notices – ASIC’s Power to compel an examination / interview

Do I have to comply?

ASIC can issue a notice under section 19 of the Australian Securities and Investment Commission Act 2001 (ASIC Act) requiring a person to provide it with reasonable assistance in connection with an investigation and require that person to appear at ASIC to answer questions, on oath or affirmation. ASIC can do this if it has reasonable grounds to believe that a person is able to offer information to aid a current ASIC investigation. If you are issued with a section 19 Notice, you must attend the interview and answer the questions asked of you. During section 19 examinations, it is not a reasonable excuse to refuse to answer a question or give information or produce a document on the basis that doing so might tend to incriminate you or expose you to liability for a penalty.

What are my rights?

Answering questions during an ASIC examination may constitute an abrogation of the right not to incriminate oneself however, in circumstances where the answer may tend to incriminate you, you are entitled to claim privilege against self-incrimination, before answering the question. In doing so, the answer or statement is not admissible in evidence against you in a criminal proceeding or a proceeding for the imposition of a penalty. However, the claim for privilege will not protect you if you make a false statement after claiming privilege. A false statement may be used against you as evidence of failing to comply with the requirements of section 19.

Can I be represented during the section 19 examination?

Section 19 examinations occur in private. However, you are able to be represented by a lawyer. Your lawyer may attend and be present during the examination. They cannot answer the questions on your behalf but can, with the permission of the ASIC inspector, address the ASIC inspector and ask questions of you with a view to clarifying certain questions or answers given by you. They can also assist where the examiner’s questions or conduct become improper or the examination becomes overwhelming. Given examinations are private, recipient’s of section 19 Notices are not ordinarily permitted to have a support person (as opposed to a lawyer) present.

What happens after the section 19 examination?

Following the completion of the examination, ASIC will provide a copy or transcript of the examination and request that you sign it. It is important that the content of the transcript Is reviewed closely to ensure that any errors are corrected particularly given its contents may be used as evidence against you or others in civil and criminal proceedings. In particular, it is key to ensure that your claims of privilege are accurately reflected in the copy or transcript of the examination.

The copy or transcript of the examination is subject to confidentiality and cannot be shared with others.

Non-compliance with a section 19 Notice

A person must not intentionally or recklessly fail to comply with a section 19 Notice. Where a person is found guilty of failing to comply, they may face a maximum penalty of 2 years imprisonment. Defences for failing to comply if the person:

• Has a reasonable excuse; or

• Has stated the matter to the best of his or her knowledge or belief.

General Advice

Given the ramifications of section 19 examinations, the potential for self-incrimination and non-compliance with a section 19 Notice, it is recommended that company directors and other company officers seek assistance and representation during an examination.

Section 30 and section 33 Notices – ASIC’s power to compel production of books

Two types of notices are generally used by ASIC to compel production of “books”, meaning any record of information (including electronic records). These are section 30 Notices and section 33 Notices and can be issued when ASIC thinks it necessary for the due administration of the corporations legislation, where is has reason to suspect that there may have been:

1. A contravention of the Corporations Act 2001 or ASIC Act;

2. A contravention of a law of the Commonwealth, State or Territory that concerns the management or affairs of a body corporate or managed investment scheme, or involves fraud or dishonesty relating to a body corporate or managed investment scheme or financial products.

What is a Section 30 Notice?

A section 30 Notice may be issued to a person, corporation or to an eligible person in relation to a body corporate. An eligible person includes a current or former officer of a corporation or an employee, agent, solicitor, banker or auditor of a body corporate. ASIC can compel the recipient (being you, a company or responsibility entity) to produce specified books relating to the affairs of a body corporate.

What is a section 33 Notice?

A section 33 Notice may be issued to any person for the production of specified books in the possession of that person relating to the affairs of a body corporate or financial services. Possession means books that are in the custody and control of a person. This means that the recipient of a section 33 Notice may need to make enquiries with others to whom they have provided responsive documents or over which they have a right to control or access (e.g. a person’s financial institution).

Do I have to comply with a section 30 Notice and/or section 33 Notice?

Yes. Failure to comply with either a section 30 Notice or section 33 Notice, whether intentionally or recklessly amounts to an offence. It is important that you consider the terms of the section 30 or section 33 Notice to ensure that you understand the breadth and scope of it and produce only those books required to be produced. Additionally, you do not have to produce ASIC with books over which a legal professional privilege claim exists. This should be considered as quickly as possible and so hat the claim for legal professional privilege can be made carefully and accurately.

What should you do if you receive a section 30 or section 33 Notice?

There are a number of steps that you should take if you are served with a section 30 or section 33 Notice.

• Firstly, consider whether or not the Notice indicates that ASIC has reason to suspect that you may have contravened the corporations legislation and is actively investigating you.

• Secondly, you should consider the description of the books required to be produced. It is commonplace for the notices to call for production of books falling within certain categories. From time to time, the categories of documents required to be produced are unclear or vague and in such instances, it may be necessary to contact the relevant ASIC officer to seek clarification on the category or seek to confine or limit the category some way.

• Thirdly, the scope and breadth of the notice should be considered against the timeframe or period for compliance with the Notice. The period for compliance can vary from notice to notice and will range from days to weeks. In instances where the categories are broad and require voluminous production (or are oppressive), require review of archived records or necessitate enquiries of third parties, the timeframe may not be sufficient and an extension of the period for compliance may be sought. When requesting an extension of time, you should set out the reasons for needing it (e.g. books are archived, located in a remote area or are held by third parties) as this will assist ASIC in understanding the need for the additional time and may assist if the reasonableness of the request is questioned at a later time. Relevantly, whilst compliance with such a notice is compulsory, failure to comply is not an offence where the person had a reasonable excuse.

• Consideration of any claim for legal professional privilege in respect of any books should be made in accordance with the regime implemented by ASIC.

• Finally, production of the books should be given to ASIC in the manner and by the timeframe set out in the Notice (unless otherwise varied).

Section 30 and section 33 Notices should be considered carefully and treated seriously given it is an offence to intentionally or recklessly fail to comply with a notice.

If you are served with a section 30 or section 33 Notice, we recommend contacting BlackBay Lawyers for advice as soon as possible in order that consideration can be given to whether you are being investigated, the scope and any need to seek clarification or an extension of time and to making any claim for legal professional privilege.

BlackBay Lawyers also defend clients who have been charged by ASIC (and other regulatory authorities) with criminal offenses related to corporate or commercial misconduct, such as fraud or other dishonesty. Our team can help you obtain direct and effective advice if you have any concerns about a potential or actual ASIC investigation or receive any section 19 Notice, section 30 Notice or a section 33 Notice. We can help you navigate the ASIC process and protect your rights.

Contact BlackBay Lawyers on hello@blackbaylawyers.com or call (02) 0889 9100.