ASIC Investigations

ASIC’s powers under the ASIC Act 

The Australian Securities and Investments Commission (ASIC) has wide-ranging statutory powers to gather information, compel assistance and enforce Australia’s corporate, markets and financial services laws. 

ASIC will exercise its investigative powers when it: 

1. opens a formal investigation (section 13 of the ASIC Act)
2. compels a person to attend a private examination and answer questions (section 19 of the ASIC Act), and 
3. issues a notice to produce documents (section 33 of the ASIC Act).

If you receive a notice from ASIC notice, early legal advice can be critical. The scope of the notice, the way documents are handled, and how any examination is approached can materially affect legal, commercial and reputational risk.

When and how ASIC commences a formal investigation

ASIC has broad investigative powers. It does not need to prove wrongdoing before using its formal powers. It is enough that there is an objectively reasonable “reason to suspect” a relevant contravention or misconduct.

Reasons which may give rise to such suspicion include: 

• a contravention of the corporations legislation; 
• a contravention of another Commonwealth, State or Territory law that concerns the management or affairs of a corporation or scheme, or 
• fraud or dishonesty relating to a corporation or financial product.

If ASIC has a “reason to suspect” it can use formal powers to compel information, documents, or interviews in an investigation. 

Compulsory examinations 

If ASIC suspects or believes on reasonable grounds that a person can give information relevant to a matter it is investigating (or intends to investigate), it may serve a written notice under section 19 of the ASIC Act such notice compels that person to appear before an ASIC member or staff member to be examined on oath/affirmation and answer questions. 

The examinee must answer questions even if the answers may tend to be incriminating. A claim of statutory use immunity can be made, meaning the answers generally cannot be used against them in criminal or penalty proceedings (except for false or misleading statements).

Careful preparation before a section 19 examination is important. Examinees are required to answer questions under oath, with limited grounds for refusal, and inconsistent, incomplete or poorly prepared responses can create significant forensic risk. Early legal advice can help an examinee understand the scope of ASIC’s investigation, assess privilege issues, anticipate likely lines of questioning and approach the examination in a considered way.

In addition to requiring compulsory attendance and an examination, a section 19 notice can also compel the recipient ‘to provide all reasonable assistance in connection with the investigation’.

This requirement is deliberately broad and extends beyond answering questions.  It can also include: 

• explaining documents or transactions
• identifying documents and information 
• access to systems and data
• assisting with document production 

What is “reasonable” depends on the circumstances, including the person’s role, knowledge, and control over information. While ASIC cannot require assistance that is impossible or wholly unreasonable, non-compliance can expose an individual to potential criminal consequences.

Non-compliance with a notice under section 19 of the ASIC Act

It is important to note that ASIC may issue a notice to a person even if they are not suspected of wrongdoing, provided ASIC reasonably believes that person has information relevant to their investigation.  

Irrespective of why ASIC issues such a notice, failure to comply is a criminal offence. Convictions are punishable by up to 2 years imprisonment.  Providing false or misleading information during an examination can attract a fine of 100 penalty units (in excess of $32,000.00), or 2 years imprisonment. 

Early advice is essential if you are uncertain about the validity or scope of a notice.

Notices to produce documents in a person’s possession under section 33 of the ASIC Act

Separately from examinations, ASIC may require a person to produce specified ‘books’ in their possession at a stated place and time. ‘Books’ is defined broadly and includes electronic records. Section 33 of the ASIC Act is commonly used in both surveillance and investigations to obtain company records, materials relating to registered schemes, and information about the provision of financial services. 

Notices must be in writing and will generally describe the documents sought and the basis on which ASIC requires production. ASIC’s Document Production Guidelines set out preferred formats and metadata for electronic productions and explain how to make and particularise claims of legal professional privilege. 

How we can help

Gilshenan & Luton assists organisations, directors, officers and individuals on responding to ASIC notices, preparing for compulsory examinations, managing privilege and confidentiality issues, coordinating document production, and engaging with ASIC on scope, timing and process.