ASIC misconduct within a company

In the realm of corporate governance, addressing misconduct within a company becomes particularly critical when an insolvency practitioner is appointed. The Australian Securities and Investments Commission (ASIC) sheds light on the intricacies of this scenario, outlining key points for stakeholders to be aware of and steps to take.


Understanding misconduct within a company

Misconduct within a company arises when directors or company officers breach their duties. This breach extends to individuals not formally holding such positions, commonly known as “shadow directors.” Breaches of duties encompass a spectrum of actions, including unauthorised use of company funds or property, failure to maintain accurate company records, falsification or destruction of records, and the improper transfer of company property.


What to do if you have concerns about a company


Find the insolvency practitioner

Before taking any action, it’s essential to identify the insolvency practitioner appointed to the company. This information is accessible by searching for the company name on ASIC’s Insolvency Notices, which provides details about the insolvency practitioner and any lodged insolvency notices.


Contacting the insolvency practitioner

Once the insolvency practitioner is identified, individuals with concerns should report them directly to the appointed professional. Insolvency practitioners are well-placed to investigate such matters and are legally obligated to report any discovered offences to ASIC during their inquiry.


ASIC’s role and response

ASIC assumes a pivotal role in overseeing corporate conduct, particularly in cases of alleged misconduct after an insolvency practitioner’s appointment. Key points include:


Limited involvement

ASIC generally refrains from direct involvement in reported misconduct cases until receiving a formal report from the insolvency practitioner.


Insolvency practitioner reporting

The insolvency practitioner is mandated to report to ASIC if there are suspicions of any offences committed by individuals connected to the company that is under external administration. These reports, however, remain confidential and are not accessible to the public.


Selective action

ASIC commits to taking action only when there is sufficient evidence, and such action promises a significant regulatory impact, benefiting the broader public. The focus is on punishing misconduct or imposing bans on directors managing companies.


Addressing concerns about insolvency practitioner conduct

For concerns related to the conduct of an insolvency practitioner, complaints can be lodged with ASIC.


Key takeaways

Navigating misconduct within a company during external administration requires a strategic approach. Stakeholders must be proactive in identifying the insolvency practitioner, reporting concerns promptly, and understanding ASIC’s role in addressing such issues. By adhering to these guidelines, individuals contribute to upholding corporate integrity and safeguarding the interests of the wider public.

Nyman Gibson Miralis provides expert advice and representation in cases of alleged corporate misconduct.

Contact us if you require assistance.