Insolvency Law Reform Act 2016

Insolvency Law Reform Act 2016

Parliament passed the Insolvency Law Reform Act 2016 (the ILRA) on 22 February 2016. The ILRA received Royal Assent on 29 February 2016. Government registered the related Insolvency Practice Rules (Corporations) 2016 (the Rules) in December 2016.

The ILRA and Rules change the law relating to the registration and discipline of liquidators and the conduct of external administrations. The Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 delayed some aspects of the reforms.

Which aspects of the reforms commence on 1 March 2017?

Parts 1 and 2 of the Schedule 2 (the Schedule) to the Corporations Act 2001 (Corporations Act), relating to the registration and discipline of registered liquidators, along with amendments to the Corporations Act consequential on these Parts;
Schedule 3 to the ILRA, containing provisions relating to matters such as notification of contravention of a DOCA and lodgement of a declaration of relevant relationships and declaration of indemnities in a voluntary administration.

Which aspects of the reforms commence on 1 September 2017?

Part 3 of Schedule 2 of the Insolvency Practice Schedule relating to the rules and conduct of external administrations, along with amendments to the Corporations Act consequential on these Parts.

Update as at听23 March 2017

Since 1 March 2017 we have received a number of questions about the requirement to lodge a declaration of relevant relationships and declaration of indemnities (DIRRI) with ASIC under s506A of the Corporations Act, and about the form of notification of contravention of a deed of company arrangement (DOCA) under s445HA of the Corporations Act. We note that:

Liquidators in a creditors' voluntary winding up will not be required to lodge their DIRRI with ASIC under s506A of the Corporations Act until on or after 1 September 2017. ASIC's current online Form 531 has been built to accommodate lodgement by a liquidator in a creditors' voluntary winding up on and from that date.
There are no regulations prescribing a form, and no provisions allowing ASIC to prescribe a form, for the purposes of notifications of contravention of a DOCA under new s445HA. ASIC intends to make available a form of document that may be used for this purpose, however it will be a matter for the person giving a notification under s445HA to ensure the notification complies with the requirements of the law.

Disclaimer

The information in the table below does not constitute legal advice. We encourage you to seek your own professional advice to find out how the proposed changes to the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations.

Any examples in the table below are purely for illustration; they are not exhaustive and not intended to impose or imply particular rules or requirements.

Insolvency practice schedule听- Key amendments commencing on 1 March 2017

听听 Item 听听	听听 Section/ASIC Form 听听	听听 Description 听听
Registration 听 Process	Section Subdivision听B of Division 20 of the Schedule and Division 20 of the Rules ASIC form New Form 903B released from听1 March 2017	An听individual may apply to ASIC for registration as a liquidator. The individual may apply to be registered to practice as: an external administrator of companies, receiver and receiver and manager; or only as a receiver, and receiver听and manager. The application must be in the approved form; that is, Form 903B - and include all听the information, statements, explanations or other matters/material the form听requires. A lodgement fee of $2,200 (subject to annual indexation) applies听(see item 4B of Schedule 1 to the Corporations (Fees) Regulations 2001). If the application is in the approved form, ASIC must refer it to a registration committee to consider. The committee must interview the applicant and may require the applicant to sit for an exam. Section 20-20(4) sets out factors the committee must consider. The Rules provide听further details about the required qualifications, experience, knowledge and听abilities. The Committee may decide听the applicant should be registered听subject to听conditions. If the Committee decides the applicant should be registered, ASIC must register听the applicant when they produce written evidence of adequate and appropriate听professional indemnity and fidelity insurance against the liabilities they may听incur working as a registered liquidator. A听fee of $1,300 (subject to annual indexation) applies for the registration by听ASIC of a person as a registered liquidator (see item 4C of Schedule 1 to the听Corporations (Fees) Regulations 2001). NOTE: 听 Where a person applied for registration as a liquidator before 1 March 2017, ASIC听had not refused that application and the person听was not registered by 1 March 2017, the application is taken never to have been made and that听person must then apply under the new regime. ASIC will refund any application fee paid (see s1552 of the Corporations Act).
Industry听wide conditions	Section Section听20-35 of the Schedule and Rule 20-5 of the Rules ASIC Form N/A	Registered liquidators must comply with conditions imposed on all registered liquidators, or on registered liquidators of the liquidator's class, under the Rules. These conditions require registered liquidators to: undertake听at least 40 hours of continuing professional education during each year the听person is registered (10 hours of which must be capable of objective verification by a competent听source); and maintain听adequate and appropriate professional indemnity and fidelity insurance during 听 any period of suspension of the person's registration These听'industry wide' conditions apply to all currently registered liquidators from听1 March 2017.
Applying听to vary or remove a condition or to lift or shorten a suspension	Section Subdivision C of Division 20 and Subdivision听F of Division 40 of the Schedule ASIC Form New听paper Form RL06 to be released听early March 2017	A registered liquidator may apply to vary or remove a condition a committee imposed听on their registration. A registered liquidator may also apply to lift or shorten the period of a suspension of their registration as a liquidator. ASIC must convene a committee to consider these applications.
Renewal of registration	Section Subdivision听D of Division 20 of the Schedule and Part 10.25 of the Corporations Act ASIC Form New听Form RL05 to be available on liquidator portal from 1 March 2017. Paper听renewal form sent to all RLs due to renew in March and April 2017.	An individual may apply to ASIC to renew their registration as a liquidator. The application must be in the approved form; that is Form RL05, and include the information, statements, explanations or other matters/materials the form requires. A lodgement fee (subject to annual indexation) applies depending on when the applicant lodges the renewal application: if lodged more than 1 month听before the renewal date听$1,700 if lodged within 1 month of the听renewal date听$1,920 (see听item 4D of Schedule 1 to the Corporations (Fees) Regulations 2001). ASIC must renew the registration if the applicant: produces听evidence in writing that the applicant maintains adequate and appropriate听professional indemnity and fidelity insurance against liabilities they may incur working as a registered liquidator; and complied听with any condition dealing with continuing professional education that听applied during the period of their current registration. The听registration of liquidators, registered immediately before 1 March 2017, expire听on the first anniversary of their original registration that occurs on or听after 1 March 2017. If the registered liquidator does not apply for renewal听of his or her registration before the expiry day, the registered liquidator听will continue to be registered subject to a condition that he or she must not听accept any further appointments as external administrator of a company. This 'transitional registration' ends automatically on the day immediately after the end of all of the registered liquidator's existing external听administrations. The听registered liquidator must continue to comply with all of his or her听obligations as a registered liquidator (including maintaining adequate and appropriate professional indemnity and fidelity insurance and lodging an annual liquidator return) during the period of any such 'transitional听registration'.
The Liquidator Register	Section Section 听 15-1 of the Schedule and section 15-1 of the Rules ASIC Form N/A	ASIC establishes and maintains the Register of Liquidators. The Register of Liquidators must include certain publicly available information听about each registered liquidator such as the person's name and date of registration and the addresses of the places where the person practises as a registered liquidator. The听information on the Register also includes particulars of any disciplinary action taken against the registered liquidator and a summary of all current听conditions imposed on their registration. 'Disciplinary action' includes听any action taken by ASIC in relation to the registered liquidator under听Division 40 of the Schedule (subject to limited exceptions), and therefore includes the referral by ASIC of a registered liquidator to a committee that听will decide whether the registered liquidator should be subject to听disciplinary action, and any disciplinary action taken by that committee.
Insurance	Section Sections 听 20-75, 25-1,30-1, 40-25 and 40-30 of the Schedule ASIC Form N/A	A听registered liquidator must maintain adequate and appropriate professional indemnity and fidelity insurance against the liabilities they may incur听working as a registered liquidator. A听person commits an offence if they fail to comply with the insurance听requirements. In addition, ASIC may cancel or suspend a registered听liquidator鈥檚 registration where they cease to have adequate and appropriate 听 professional indemnity or fidelity insurance. A听registered liquidator must provide evidence of their insurance at the time of听lodging their annual liquidator return and on applying to renew their registration.
Annual liquidator return	Section Section听30-1 of the Schedule and section 1561 of the Corporations Act ASIC Form Form 908	A听person who is a registered liquidator during all or part of a liquidator听return year for the person, must, within one month after the end of that听year, lodge with ASIC an annual liquidator return. The听annual liquidator return must be in the approved form and include written听evidence that the registered liquidator, during the whole of any period of听the year during which the person was registered as a liquidator, maintained听adequate and appropriate professional indemnity and fidelity insurance听against the liabilities they may incur working as a registered liquidator. The听liquidator return year for a person is the period of 12 months beginning on听the day on which the person's registration first began, and each subsequent 12-month听period. If听a person鈥檚 registration as a registered liquidator ceases during the liquidator听return year, the person must still lodge an annual liquidator return relating听to the part of the year for which they were registered, within one month听after the end of the liquidator return year. The requirement to lodge annual liquidator returns under s30-1 of the Schedule applies in relation to liquidator return years that begin on or after 1 March 2017. However, s1288 of the Corporations Act as in force immediately before 1 March 2017, continues to apply to liquidator return years beginning before that date. Therefore, if you are a registered liquidator that was registered before 1 March 2017: your first return on or after 1 March 2017 will be the Form 908 that was in use before 1 March 2017; subsequent returns (for full or partial years) under s30-1 will be in the new Form 908 available from the liquidator portal from 1 March 2017.
Notice听 of significant, and other, events	Section Division听35 of the Schedule, Division 35 of the Rules and section 1562 of the听Corporations Act ASIC Form New听paper Form RL 30 released from听1 March 2017 for notification of significant events. Existing Form 905A for notification of 'other' events.	A听registered liquidator must notify ASIC in the approved form of specified听events, including if the liquidator: becomes an insolvent under administration is convicted of an offence involving fraud or听dishonesty ceases to have adequate or appropriate听professional indemnity or fidelity insurance or ceases to practise as a registered liquidator Existing听registered liquidators as at 1 March 2017 are required to notify ASIC if any听of the听prescribed听'significant'听events have occurred within the previous two years (unless the听registered liquidator has already informed ASIC in writing of the event). A听registered liquidator commits an offence if the registered liquidator听intentionally or recklessly fails to comply with these notice requirements.
ASIC power to direct registered liquidator to lodge documents or give information or correct inaccuracies	Section Subdivision听B of Division 40 of the Schedule ASIC Form N/A	ASIC听may, in writing, direct a registered liquidator to comply with a requirement听to lodge any document, or give any information or document, that the听Corporations Act requires the liquidator to lodge with or give to ASIC. ASIC听may also direct a registered liquidator to correct or complete information听that the Corporations Act requires the liquidator to give to ASIC, if ASIC reasonably听suspects that the information is incomplete or inaccurate in any particular. If听a registered liquidator fails to comply with either of these types of听directions, ASIC may give a written direction that the registered liquidator not accept further appointments under Chapter 5 of the Corporations Act. It will听be a condition on the person's registration as a liquidator that they comply听with the direction. That condition is removed if ASIC withdraws the听direction.
ASIC听power to cancel or suspend a person's registration	Section Subdivision听D of Division 40 of the Schedule ASIC Form N/A	The听reforms give ASIC the power to either suspend or cancel a person's听registration on specified grounds, such as, the person: is disqualified from managing corporations under Part 2D.6 of the Corporations Act; ceases to have adequate and appropriate professional indemnity or fidelity insurance, or has their registration as a trustee under the Bankruptcy Act 1966 cancelled or听suspended other than in compliance with a written request by the person. ASIC听must provide written notice of its decision to suspend or cancel the registration of a person as a liquidator, and the reasons for that decision,听within听10 business days after making the decision.
Disciplinary听action by a committee	Section Subdivision听E of Division 40 of the Schedule ASIC Form N/A	From听1 March 2017, the Companies Auditors and Liquidators Disciplinary Board ceased its function of disciplining liquidators. A disciplinary committee, convened听under the Schedule, assumes this function. ASIC听may issue to a registered liquidator a 'show cause' notice asking the听liquidator to give ASIC a written explanation why the liquidator should听continue to be registered if ASIC believes that certain circumstances exist,听such as that the liquidator no longer has the qualifications, experience,听knowledge and abilities required, has breached a current condition of their听registration or has contravened a provision of the Act. ASIC听may refer the matter to a committee if ASIC does not receive a written听explanation within 20 business days after the notice is given or is not satisfied by the explanation it receives. The committee may decide to: cancel or suspend the person's registration as a liquidator; require ASIC to direct the liquidator not to accept further appointments; publicly admonish or reprimand听the liquidator; impose a condition on the liquidator's registration. The committee may also impose a condition on all other registered liquidators听that they must not allow the liquidator to carry out any of the functions or听duties, or exercise any of the powers of a registered liquidator, on their behalf (whether as employee, agent, consultant or otherwise). The听committee may also decide that ASIC should publish specified information听about the decision and the reasons for the decision.
Notice听by industry body of possible grounds for disciplinary action	Section Subdivision听G of Division 40 of the Schedule ASIC Form New听paper Form RL35 to be released听early March 2017	A听prescribed industry body may lodge with ASIC a notice in the approved form听stating that the body reasonably suspects grounds exist for ASIC to suspend听or cancel the registration of a liquidator, give the registered liquidator a 'show听cause' notice or impose a condition on the liquidator under another provision听of the Schedule. This听notice must include the information and copies of any documents on which the听suspicion is founded. An听industry body is not liable civilly, criminally or under any administrative听process for giving such a notice if the body acted in good faith in giving听the notice and the suspicion that is the subject of the notice is a听reasonable suspicion.
Court oversight of registered liquidators	Division听45 of the Schedule ASIC Form N/A	The听Court may make such orders as it thinks fit in relation to a registered liquidator. In making such orders, the Court may take into account a range of听matters, including whether the registered liquidator has faithfully听performed, or is faithfully performing, their duties.
Registration and disciplinary committees	Section Division 50 of the Schedule and Division 50 of the Rules ASIC Form N/A	The听committees convened to make decisions under the Schedule will consist of听ASIC, a registered liquidator chosen by ARITA and a person appointed by the听Minister. The Rules provide for how the committee is to perform its functions. The committee may determine its own procedures and must observe听natural justice. Rules of evidence do not bind the committee but the听committee may inform itself on any matter as it sees fit. Decisions of the听committee will be made by majority vote.
Administrator's notice to owner or lessor of property	Section 443B(3) ASIC Form N/A	The reforms repeal and substitute subsection 443B(3) of the Corporations Act. The subsection provides that, when notifying the owner or lessor of property that the administrator does not propose to exercise rights in relation to property, the administrator must specify the property and also the location of the property (if the administrator knows the location or could know the location, by exercising reasonable diligence).
Notice 鈥撎齧aterial contravention听of deed of company arrangement	Section 445HA ASIC Form ASIC intends to make available a document that may be used for this purpose 听	The reform introduces section 445HA of the Corporations Act to require: a director of a company subject to a deed of company arrangement to notify the deed administrator in the prescribed form as soon as practicable after becoming aware that there has been, or is likely to be, a material contravention of the deed by a person who is bound by the deed (who may be the director); a deed administrator to notify creditors in the prescribed form as soon as practicable after becoming aware that there has been, or is likely to be, a material contravention of the deed by a person who is bound by the deed (who may be the deed administrator).
Company's former name	Section 161A ASIC Form New paper form released from 1听March 2017	The reforms amend section 161A of the听Corporations Act so that an external administrator, managing controller or听receiver that applies to the Court for leave to omit the company's former听name on all of its public documents and negotiable instruments, must lodge听with ASIC a notice in the prescribed form stating that the application has听been made.
Relation back day	Section 9 and 91 ASIC Form N/A	The reforms introduce section 91 of听the Corporations Act to provide a more expansive definition of 鈥榬elation-back听day鈥� in relation to the winding up of a company or Part 5.7 body. This change听addresses a number of difficulties with the existing definition.
Lodging declarations of relevant relationships and indemnities	Section 436DA, 449CA ASIC Form New Form 531 available from 1 March 2017 on liquidator portal	The reforms amend sections 436DA and 449CA so that an external administrator must lodge a copy of their听declaration of relevant relationships and declaration of indemnities (or听replacement declarations) with ASIC as soon as practicable after making the听declaration. NOTE: The changes to s506A regarding declarations of relevant relationships and听declarations of indemnities for a听liquidator in a creditors' voluntary liquidation do not commence until 1 September 2017.
Lodgement requirements relating to听pooled groups	Section 579A, 579B and 579C ASIC Form Continue to use existing Form 1502 on听liquidator portal	The reforms amend sections 579A, 579B听and 579C so that, if the Court makes an order varying or terminating a听pooling determination, cancelling or confirming a variation to a pooling听determination or declaring a pooling determination to be void, not void or听valid, the applicant must lodge with ASIC a notice, in the prescribed form, setting听out the text of the order within two business days after the making of the听order.

听听

Item

听听

Section/ASIC Form

听听

Description

听听

Registration 听 Process

Section

Subdivision听B of Division 20 of the Schedule and Division 20 of the Rules

ASIC form

New Form 903B released from听1 March 2017

An听individual may apply to ASIC for registration as a liquidator. The individual may apply to be registered to practice as:

an external administrator of companies, receiver and receiver and manager; or
only as a receiver, and receiver听and manager.

The application must be in the approved form; that is, Form 903B - and include all听the information, statements, explanations or other matters/material the form听requires. A lodgement fee of $2,200 (subject to annual indexation) applies听(see item 4B of Schedule 1 to the Corporations (Fees) Regulations 2001).

If the application is in the approved form, ASIC must refer it to a registration committee to consider. The committee must interview the applicant and may require the applicant to sit for an exam.

Section 20-20(4) sets out factors the committee must consider. The Rules provide听further details about the required qualifications, experience, knowledge and听abilities. The Committee may decide听the applicant should be registered听subject to听conditions.

If the Committee decides the applicant should be registered, ASIC must register听the applicant when they produce written evidence of adequate and appropriate听professional indemnity and fidelity insurance against the liabilities they may听incur working as a registered liquidator.

A听fee of $1,300 (subject to annual indexation) applies for the registration by听ASIC of a person as a registered liquidator (see item 4C of Schedule 1 to the听Corporations (Fees) Regulations 2001).

NOTE: 听 Where a person applied for registration as a liquidator before 1 March 2017, ASIC听had not refused that application and the person听was not registered by 1 March 2017, the application is taken never to have been made and that听person must then apply under the new regime. ASIC will refund any application fee paid (see s1552 of the Corporations Act).

Industry听wide conditions

Section

Section听20-35 of the Schedule and Rule 20-5 of the Rules

ASIC Form

N/A

Registered liquidators must comply with conditions imposed on all registered liquidators, or on registered liquidators of the liquidator's class, under the Rules.

These conditions require registered liquidators to:

undertake听at least 40 hours of continuing professional education during each year the听person is registered (10 hours of which must be capable of objective verification by a competent听source); and
maintain听adequate and appropriate professional indemnity and fidelity insurance during 听 any period of suspension of the person's registration

These听'industry wide' conditions apply to all currently registered liquidators from听1 March 2017.

Applying听to vary or remove a condition or to lift or shorten a suspension

Section
Subdivision C of Division 20 and Subdivision听F of Division 40 of the Schedule

ASIC Form

New听paper Form RL06 to be released听early March 2017

A registered liquidator may apply to vary or remove a condition a committee imposed听on their registration.

A registered liquidator may also apply to lift or shorten the period of a suspension of their registration as a liquidator.

ASIC must convene a committee to consider these applications.

Renewal of registration

Section

Subdivision听D of Division 20 of the Schedule and Part 10.25 of the Corporations Act

ASIC Form

New听Form RL05 to be available on liquidator portal from 1 March 2017.

Paper听renewal form sent to all RLs due to renew in March and April 2017.

An individual may apply to ASIC to renew their registration as a liquidator.

The application must be in the approved form; that is Form RL05, and include the information, statements, explanations or other matters/materials the form requires. A lodgement fee (subject to annual indexation) applies depending on when the applicant lodges the renewal application:

if lodged more than 1 month听before the renewal date听$1,700
if lodged within 1 month of the听renewal date听$1,920

(see听item 4D of Schedule 1 to the Corporations (Fees) Regulations 2001).

ASIC must renew the registration if the applicant:

produces听evidence in writing that the applicant maintains adequate and appropriate听professional indemnity and fidelity insurance against liabilities they may incur working as a registered liquidator; and
complied听with any condition dealing with continuing professional education that听applied during the period of their current registration.

The听registration of liquidators, registered immediately before 1 March 2017, expire听on the first anniversary of their original registration that occurs on or听after 1 March 2017. If the registered liquidator does not apply for renewal听of his or her registration before the expiry day, the registered liquidator听will continue to be registered subject to a condition that he or she must not听accept any further appointments as external administrator of a company. This 'transitional registration' ends automatically on the day immediately after the end of all of the registered liquidator's existing external听administrations.

The听registered liquidator must continue to comply with all of his or her听obligations as a registered liquidator (including maintaining adequate and appropriate professional indemnity and fidelity insurance and lodging an annual liquidator return) during the period of any such 'transitional听registration'.

The Liquidator Register

Section

Section 听 15-1 of the Schedule and section 15-1 of the Rules

ASIC Form

N/A

ASIC establishes and maintains the Register of Liquidators.

The Register of Liquidators must include certain publicly available information听about each registered liquidator such as the person's name and date of registration and the addresses of the places where the person practises as a registered liquidator.

The听information on the Register also includes particulars of any disciplinary action taken against the registered liquidator and a summary of all current听conditions imposed on their registration.

'Disciplinary action' includes听any action taken by ASIC in relation to the registered liquidator under听Division 40 of the Schedule (subject to limited exceptions), and therefore includes the referral by ASIC of a registered liquidator to a committee that听will decide whether the registered liquidator should be subject to听disciplinary action, and any disciplinary action taken by that committee.

Insurance

Section

Sections 听 20-75, 25-1,30-1, 40-25 and 40-30 of the Schedule

ASIC Form

N/A

A听registered liquidator must maintain adequate and appropriate professional indemnity and fidelity insurance against the liabilities they may incur听working as a registered liquidator.

A听person commits an offence if they fail to comply with the insurance听requirements. In addition, ASIC may cancel or suspend a registered听liquidator鈥檚 registration where they cease to have adequate and appropriate 听 professional indemnity or fidelity insurance.

A听registered liquidator must provide evidence of their insurance at the time of听lodging their annual liquidator return and on applying to renew their registration.

Annual liquidator return

Section

Section听30-1 of the Schedule and section 1561 of the Corporations Act

ASIC Form

Form 908

A听person who is a registered liquidator during all or part of a liquidator听return year for the person, must, within one month after the end of that听year, lodge with ASIC an annual liquidator return.

The听annual liquidator return must be in the approved form and include written听evidence that the registered liquidator, during the whole of any period of听the year during which the person was registered as a liquidator, maintained听adequate and appropriate professional indemnity and fidelity insurance听against the liabilities they may incur working as a registered liquidator.

The听liquidator return year for a person is the period of 12 months beginning on听the day on which the person's registration first began, and each subsequent 12-month听period.

If听a person鈥檚 registration as a registered liquidator ceases during the liquidator听return year, the person must still lodge an annual liquidator return relating听to the part of the year for which they were registered, within one month听after the end of the liquidator return year.

The requirement to lodge annual liquidator returns under s30-1 of the Schedule applies in relation to liquidator return years that begin on or after 1 March 2017. However, s1288 of the Corporations Act as in force immediately before 1 March 2017, continues to apply to liquidator return years beginning before that date.

Therefore, if you are a registered liquidator that was registered before 1 March 2017:

your first return on or after 1 March 2017 will be the Form 908 that was in use before 1 March 2017;
subsequent returns (for full or partial years) under s30-1 will be in the new Form 908 available from the liquidator portal from 1 March 2017.

Notice听 of significant, and other, events

Section

Division听35 of the Schedule, Division 35 of the Rules and section 1562 of the听Corporations Act

ASIC Form

New听paper Form RL 30 released from听1 March 2017 for notification of significant events.

Existing Form 905A for notification of 'other' events.

A听registered liquidator must notify ASIC in the approved form of specified听events, including if the liquidator:

becomes an insolvent under administration
is convicted of an offence involving fraud or听dishonesty
ceases to have adequate or appropriate听professional indemnity or fidelity insurance
or ceases to practise as a registered liquidator

Existing听registered liquidators as at 1 March 2017 are required to notify ASIC if any听of the听prescribed听'significant'听events have occurred within the previous two years (unless the听registered liquidator has already informed ASIC in writing of the event).

A听registered liquidator commits an offence if the registered liquidator听intentionally or recklessly fails to comply with these notice requirements.

ASIC power to direct registered liquidator to lodge documents or give information or correct inaccuracies

Section

Subdivision听B of Division 40 of the Schedule

ASIC Form

N/A

ASIC听may, in writing, direct a registered liquidator to comply with a requirement听to lodge any document, or give any information or document, that the听Corporations Act requires the liquidator to lodge with or give to ASIC.

ASIC听may also direct a registered liquidator to correct or complete information听that the Corporations Act requires the liquidator to give to ASIC, if ASIC reasonably听suspects that the information is incomplete or inaccurate in any particular.

If听a registered liquidator fails to comply with either of these types of听directions, ASIC may give a written direction that the registered liquidator not accept further appointments under Chapter 5 of the Corporations Act. It will听be a condition on the person's registration as a liquidator that they comply听with the direction. That condition is removed if ASIC withdraws the听direction.

ASIC听power to cancel or suspend a person's registration

Section

Subdivision听D of Division 40 of the Schedule

ASIC Form

N/A

The听reforms give ASIC the power to either suspend or cancel a person's听registration on specified grounds, such as, the person:

is disqualified from managing corporations under Part 2D.6 of the Corporations Act; ceases to have adequate and appropriate professional indemnity or fidelity insurance, or
has their registration as a trustee under the Bankruptcy Act 1966 cancelled or听suspended other than in compliance with a written request by the person.

ASIC听must provide written notice of its decision to suspend or cancel the registration of a person as a liquidator, and the reasons for that decision,听within听10 business days after making the decision.

Disciplinary听action by a committee

Section

Subdivision听E of Division 40 of the Schedule

ASIC Form

N/A

From听1 March 2017, the Companies Auditors and Liquidators Disciplinary Board ceased its function of disciplining liquidators. A disciplinary committee, convened听under the Schedule, assumes this function.

ASIC听may issue to a registered liquidator a 'show cause' notice asking the听liquidator to give ASIC a written explanation why the liquidator should听continue to be registered if ASIC believes that certain circumstances exist,听such as that the liquidator no longer has the qualifications, experience,听knowledge and abilities required, has breached a current condition of their听registration or has contravened a provision of the Act.

ASIC听may refer the matter to a committee if ASIC does not receive a written听explanation within 20 business days after the notice is given or is not satisfied by the explanation it receives. The committee may decide to:

cancel or suspend the person's registration as a liquidator;
require ASIC to direct the liquidator not to accept further appointments;
publicly admonish or reprimand听the liquidator;
impose a condition on the liquidator's registration.

The committee may also impose a condition on all other registered liquidators听that they must not allow the liquidator to carry out any of the functions or听duties, or exercise any of the powers of a registered liquidator, on their behalf (whether as employee, agent, consultant or otherwise).

The听committee may also decide that ASIC should publish specified information听about the decision and the reasons for the decision.

Notice听by industry body of possible grounds for disciplinary action

Section

Subdivision听G of Division 40 of the Schedule

ASIC Form

New听paper Form RL35 to be released听early March 2017

A听prescribed industry body may lodge with ASIC a notice in the approved form听stating that the body reasonably suspects grounds exist for ASIC to suspend听or cancel the registration of a liquidator, give the registered liquidator a 'show听cause' notice or impose a condition on the liquidator under another provision听of the Schedule.

This听notice must include the information and copies of any documents on which the听suspicion is founded.

An听industry body is not liable civilly, criminally or under any administrative听process for giving such a notice if the body acted in good faith in giving听the notice and the suspicion that is the subject of the notice is a听reasonable suspicion.

Court oversight of registered liquidators

Division听45 of the Schedule

ASIC Form

N/A

The听Court may make such orders as it thinks fit in relation to a registered liquidator. In making such orders, the Court may take into account a range of听matters, including whether the registered liquidator has faithfully听performed, or is faithfully performing, their duties.

Registration and disciplinary committees

Section

Division 50 of the Schedule and Division 50 of the Rules

ASIC Form

N/A

The听committees convened to make decisions under the Schedule will consist of听ASIC, a registered liquidator chosen by ARITA and a person appointed by the听Minister. The Rules provide for how the committee is to perform its functions. The committee may determine its own procedures and must observe听natural justice. Rules of evidence do not bind the committee but the听committee may inform itself on any matter as it sees fit. Decisions of the听committee will be made by majority vote.

Administrator's notice to owner or lessor of property

Section

443B(3)

ASIC Form

N/A

The reforms repeal and substitute subsection 443B(3) of the Corporations Act. The subsection provides that, when notifying the owner or lessor of property that the administrator does not propose to exercise rights in relation to property, the administrator must specify the property and also the location of the property (if the administrator knows the location or could know the location, by exercising reasonable diligence).

Notice 鈥撎齧aterial contravention听of deed of company arrangement

Section

445HA

ASIC Form

ASIC
intends to make available a document that may be used for this purpose

听

The reform introduces section 445HA of the Corporations Act to require:

a director of a company subject to a deed of company arrangement to notify the deed administrator in the prescribed form as soon as practicable after becoming aware that there has been, or is likely to be, a material contravention of the deed by a person who is bound by the deed (who may be the director);
a deed administrator to notify creditors in the prescribed form as soon as practicable after becoming aware that there has been, or is likely to be, a material contravention of the deed by a person who is bound by the deed (who may be the deed administrator).

Company's former name

Section

161A

ASIC Form

New paper form released from 1听March 2017

The reforms amend section 161A of the听Corporations Act so that an external administrator, managing controller or听receiver that applies to the Court for leave to omit the company's former听name on all of its public documents and negotiable instruments, must lodge听with ASIC a notice in the prescribed form stating that the application has听been made.

Relation back day

Section

9 and 91

ASIC Form

N/A

The reforms introduce section 91 of听the Corporations Act to provide a more expansive definition of 鈥榬elation-back听day鈥� in relation to the winding up of a company or Part 5.7 body. This change听addresses a number of difficulties with the existing definition.

Lodging declarations of relevant relationships and indemnities

Section

436DA, 449CA

ASIC Form

New Form 531 available from 1 March 2017 on liquidator portal

The reforms amend sections 436DA and 449CA so that an external administrator must lodge a copy of their听declaration of relevant relationships and declaration of indemnities (or听replacement declarations) with ASIC as soon as practicable after making the听declaration.

NOTE: The changes to s506A regarding declarations of relevant relationships and听declarations of indemnities for a听liquidator in a creditors' voluntary liquidation do not commence until 1 September 2017.

Lodgement requirements relating to听pooled groups

Section

579A, 579B and 579C

ASIC Form

Continue to use existing Form 1502 on听liquidator portal

The reforms amend sections 579A, 579B听and 579C so that, if the Court makes an order varying or terminating a听pooling determination, cancelling or confirming a variation to a pooling听determination or declaring a pooling determination to be void, not void or听valid, the applicant must lodge with ASIC a notice, in the prescribed form, setting听out the text of the order within two business days after the making of the听order.

听

91AV

ASIC