One of the first steps in an ASIC investigation will be to serve a notice for the delivery of books and documents of the company being investigation.
This notice is compulsory.
Regardless of whether this information incriminates you or others, you must comply.
Division 3 Part 3 of the ASIC Act outlines ASIC’s power to seek these records. Most often the notice will be addressed directly to the company or to an eligible addressee, usually a director, and will order the delivery of specified books and documents. The term ‘books’, as outlined in the Act is a broad term that can be defined as any form of stored information.
Should the books be in the possession of a third party, such as an accountant or in storage, the order will be made under section 33 of the ACT. This is the only difference and your obligation to comply still stands.
After receiving a notice from ASIC you should:
- Read the notice thoroughly.
- Ensure the person undertaking the task understands the importance of adhering to the specific instructions outlined.
- If you have received multiple notices, ensure each is dealt with separately and individually.
- Take note of the specific documents and timeframes of information requested. Ensure you only provide the documents that have been outlined in the notice. You are being investigated. Providing ASIC with more information than they requested is rarely a good idea.
- The timeframe that ASIC provides for the delivery can often be too short to compile lengthy or complex documentation. If you feel that you cannot provide the documents within the given timeframe, then you must communicate with ASIC and request an extension or risk being charged with non-compliance.
- Consider legal professional privilege. This will require you to provide information to ASIC that will justify your request and they will assess your submission.
- Get proper legal advice. Involving a lawyer early on can safeguard you against providing ASIC with sensitive information that could be damaging to the company.
- Ensure you create copies of everything you provide to ASIC. As ASIC require you to furnish all original copies, you need to ensure you have a copy of everything you have provided.
What happens next?
- After you have complied with ASIC’s notice, it is not uncommon for there to be a long delay before hearing a response, if you receive on at all. No response is good news and may indicate that the investigation has ceased. However, you may receive further notices to produce additional documents or ASIC may employ other means within their power to gather information.
What would non-compliance mean?
- Failure to comply with the notice to produce may result in ASIC issuing a final notice to comply. After issuing a final notice, ASIC have the power to obtain warrants to seize the required documents from your premises. Should the documents not be in your possession, ASIC can demand that you divulge where they are being kept. Intentionally or recklessly failing to comply with the notice is an offence under s63 ASIC Act and carries a maximum penalty of two years imprisonment.
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