House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business, Assistant Treasurer, the Hon Kelly O'Dwyer MP and the Attorney-General, the Hon Senator George Brandis)

Chapter 5 - Registration and discipline of registered liquidators

Outline of chapter

5.1 The Insolvency Practice Schedule (Corporations) introduces new rules for the registration, regulation, discipline and deregistration of registered liquidators. These rules are similar to the corresponding rules for registered trustees which are introduced by the Insolvency Practice Schedule (Bankruptcy).

5.2 The Schedule covers:

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the application to ASIC to be registered as a liquidator;

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the referral of an application by ASIC to a committee for assessment against specified criteria;

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the registration of the liquidator by ASIC, which may be subject to conditions;

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a requirement that a registered liquidator lodge an annual return with ASIC;

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a requirement that a registered liquidator give ASIC notice if their circumstances change or if certain specified events occur;

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ASIC's powers where a registered liquidator fails to lodge a document or give information;

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ASIC's powers to suspend or cancel a liquidator's registration in certain circumstances;

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ASIC's powers to give a show-cause notice and if no sufficient explanation is given, its powers to take further disciplinary action on the decision of a committee;

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a committee's powers to take disciplinary action and ASIC's obligation to give effect to the committee's decision;

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the Court's powers to make orders in relation to a registered liquidator; and

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a right given to industry bodies to notify ASIC where they suspect there are grounds for disciplinary action to be taken against a registered liquidator.

Context of amendments

5.3 The regulation of insolvency practitioners, particularly corporate insolvency practitioners, has been the subject of a number of reviews in the past two decades by a range of bodies including the Australian Law Reform Commission; the Working Party to review the regulation of corporate insolvency practitioners; the Parliamentary Joint Committee on Corporations and Financial Services; and most recently the Senate Economics References Committee (Senate Committee) in 2010.

5.4 The 2010 Senate Inquiry was particularly concerned with the high profile cases of misconduct by members of the corporate insolvency industry before 2009 and the questions that this raised for the adequacy of efforts to oversee and regulate the insolvency system. In the period following the 2010 Senate Report confidence in the insolvency profession has not recovered.

5.5 The insolvency profession must be skilled, honest and accountable in order for the insolvency regime to operate efficiently. Creditors and stakeholders are often unable to tell how the overall result of a liquidation or administration corresponded to the quality of the service provided by the insolvency practitioner and whether the costs incurred are reasonable. They must therefore be able to place a high degree of trust in the insolvency practitioner's integrity. Regulation that promotes a high level of professionalism and competence of insolvency practitioners is therefore essential to retaining confidence in the insolvency system as a whole.

5.6 Underpinning the Senate Committee's recommendations for changes to the registration, discipline and regulator oversight of the corporate insolvency profession, was a recognition that the regulatory framework applying to personal insolvency practitioners should be applied to regulating corporate insolvency practitioners.

Summary of new law

5.7 The Schedule introduces a new framework for regulating registered liquidators based on the current framework for regulating registered trustees provided for under the Bankruptcy Act.

5.8 Under the new law, the process for the registration of corporate insolvency practitioners will be aligned with the current personal insolvency process in order to improve the integrity of the registration process. Applications for registration will be determined by committees composed of a regulator representative, an industry representative and a third person selected from a panel appointed by the relevant Minister. Corporate insolvency practitioners will no longer be registered for life, but be required to renew their registration every three years.

5.9 The framework for standards of entry will allow for conditions to be placed upon insolvency practitioners. Registration or disciplinary committees will therefore be able to impose conditions on the registration of a particular practitioner; while ASIC will be able to impose industry-wide conditions in relation to continuing education, quality assurance or review programs, insurance, complaint handling, residency, and inactive practice.

5.10 The disciplinary mechanisms for insolvency practitioners will be aligned across both corporate and personal insolvency through the adoption of enhanced personal insolvency style disciplinary committees in both systems. As a result, the Companies Auditors and Liquidators Disciplinary Board will no longer have jurisdiction over liquidators.

5.11 ASIC will also be empowered to take direct action against practitioners who breach their duties in more circumstances, without having to refer the matter to a disciplinary committee or the court. Those powers will include the ability to directly suspend or deregister offending practitioners in limited circumstances; or to prevent practitioners from taking on new appointments where certain lodgement obligations remain unsatisfied.

5.12 The penalties for a corporate insolvency practitioner failing to hold insurance will be significantly increased to better reflect the seriousness of the breach and to represent a stronger deterrent effect. In order to ensure regulators are aware of the insurance coverage of practitioners in the market, practitioners will also be obligated to inform the regulator when their insurance has lapsed.

Comparison of key features of new law and current law

Detailed explanation of new law

Working cooperatively with the Inspector-General in Bankruptcy

5.13 ASIC must work cooperatively with the Inspector-General in Bankruptcy in relation to persons who are, have been or may become both registered liquidators under the Corporations Act and registered trustees under the Bankruptcy Act. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 10-5]

Register of liquidators

5.14 ASIC must establish and maintain a Register of Liquidators and keep it in an appropriate form. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, sections 15-1(1) and 15(2)]

5.15 The Insolvency Practice Rules may provide for rules relating to what details may be kept on the Register and the parts of the Register that are to be made available to the public. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 15-5(3)]

5.16 The Register may also include details of any disciplinary action recommended by a committee against a registered liquidator and the details of persons who have had their registration suspended or cancelled. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 15-5(4) and (5))]

Registration

5.17 Individuals may apply to ASIC to be registered as a liquidator. An application is properly made if it is lodged with ASIC in the approved form. [Schedule 2, item 150, Insolvency Practice Schedule (Corporations), Part 2, section 20-5]

5.18 If an application is properly made, ASIC must refer it to a committee for consideration. ASIC must convene a committee for this purpose within two months of receiving the application. The committee must consist of an ASIC official, a registered liquidator chosen by a prescribed body (ARITA) and a person appointed from a pool selected by the Minister. The committee must interview the applicant and may also require the applicant to sit for an exam [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, sections 20-1, 20-20 and 20-15]

5.19 The committee should make its decision on whether to register the applicant within 45 business days after interviewing the applicant. The committee must decide that the applicant should be registered if it is satisfied that the applicant:

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has the qualifications, experience, knowledge and abilities prescribed in the Insolvency Practice Rules;

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will take out adequate and appropriate professional indemnity and fidelity insurance;

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has not been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty;

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is not, and has not been within 10 years before making the application, an insolvent under administration;

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has not had his or her registration as a liquidator under the Corporations Act cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled;

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has not had his or her registration as a trustee under the Bankruptcy Act cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled;

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is not disqualified from managing corporations under the Corporations Act, or under a law of an external Territory or a law of a foreign country;

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is otherwise a fit and proper person; and

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is resident in Australia or a prescribed country. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 20-20(3) and (4)]

5.20 The committee may register an applicant, even if it is not satisfied that the applicant has the qualifications, experience, knowledge and abilities prescribed in the Insolvency Practice Rules or is not resident in Australia, provided that the committee is satisfied that the applicant would be suitable to be registered if the applicant complied with certain conditions. [Schedule 2, item 2,Insolvency Practice Schedule (Corporations), Part 2, subsection 20-20(5) and (6)]

5.21 The committee may decide that the applicant's registration is to be subject to other conditions. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 20-20(6)]

5.22 The registration requirements do not affect the operation of Part VIIC of the Crimes Act 1914 which in certain circumstances relieves a person from disclosing spent convictions. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 20-20(7)]

5.23 Following the committee's decision, it must give the applicant and ASIC a report setting out the committee's decision, the reasons for the decision and if the committee decides that the registration should be subject to conditions:

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the condition; and

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the committee's reasons for imposing the condition. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-25]

5.24 ASIC must register the person if the committee decides that the applicant should be registered and the applicant produces evidence that he or she has taken out adequate and appropriate professional indemnity and fidelity insurance against the liabilities that may be incurred working as a registered liquidator. The registration is subject to any conditions imposed on the registered liquidator. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 20-30(1) and (2)]

5.25 ASIC registers an applicant by entering on the Register of Liquidators the details relating to the applicant prescribed in the Insolvency Practice Rules. After registering a person, ASIC must give the person a certificate of registration. The registration has effect for three years. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 20-30(2), (4), (5) and (6)]

5.26 The Insolvency Practice Rules may prescribe conditions applying to the registration of all registered liquidators or registered liquidators of a specified class. Conditions may be imposed to limit the kinds of activity in which a liquidator may engage, either for the duration of the registration or for a shorter period. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-35]

5.27 A registered liquidator whose registration has conditions imposed on it may apply to ASIC to have those conditions varied or removed, in the approved form. However, an application cannot be made if the person's registration is suspended; the condition is of a prescribed kind or is imposed in a prescribed circumstance. An application may include more than one condition. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-40]

5.28 Within two months of receiving an application to vary a condition, ASIC must refer the application to a committee. The committee must consist of ASIC, a registered liquidator chosen by a prescribed body (ARITA) and a person appointed from a pool selected by the Minister. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, sections 20-45 and 20-50]

5.29 The committee must interview the applicant (unless the applicant agrees otherwise) and within 20 business days after the interview, decide whether the condition should be varied or removed and if the condition is to be varied and specify the way in which it is to be varied. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-55]

5.30 Following the committee's decision, the committee must give the applicant and ASIC a report setting out the committee's decision and the reasons for the decision. If the committee decides that a condition should be varied, the committee must set out the variation that is to be made. The condition is then varied or removed according to that decision. [Schedule 2, item 2, Schedule 2, the Act, Part 2, sections 20-60 and 20-65]

5.31 If a registered liquidator wishes to continue practising after the current registration period, the individual must apply to have their registration renewed. The application must be lodged with ASIC in the approved form and must be made before the applicant's registration as a liquidator expires unless it is made before the time specified in a Court order. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-70]

5.32 ASIC must renew the registration where the application is properly made, evidence is provided to ASIC that the applicant maintains adequate and appropriate professional indemnity and fidelity insurance and that the applicant has complied with any continuing professional education obligations. The renewed registration is subject to the current conditions imposed on the registered liquidator. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 20-75(1) and(3)]

5.33 ASIC renews the registration by entering or maintaining the applicant's details in the Register of Liquidators. After renewing the registration, ASIC must give the person a certificate of registration. The renewed registration has effect for three years. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 20-75(2), (4), (5) and (6)]

5.34 A person commits an offence if the person falsely represents that he or she is a registered liquidator . The penalty for the offence is 30 penalty units. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 20-80]

Insurance

5.35 A registered liquidator must maintain adequate and appropriate professional indemnity and fidelity insurance. The insurance should cover the liabilities that the liquidator may incur working as a registered liquidator. If a registered liquidator fails to comply with this requirement, he or she commits an offence. Where the registered liquidator intentionally or recklessly fails to comply, the maximum penalty is 1,000 penalty units, otherwise there is a strict liability offence with a maximum penalty of 60 penalty units. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 25-1(1), (3) and (4)]

5.36 The new maximum penalty for intentionally or recklessly failing to comply with a registered liquidator's insurance obligations is a significant increase over the current five penalty unit penalty provided for under the Corporations Act. The new penalty provides an appropriate deterrent to non-compliance with these important obligations and more appropriately reflects the possible magnitude of the loss third parties may suffer due to a breach.

5.37 ASIC may determine what constitutes adequate and appropriate professional indemnity and fidelity insurance. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 25-1(2)]

Annual liquidator returns

5.38 A registered liquidator must lodge an annual liquidator return with ASIC within one month of the end of the liquidator return year. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 30-1(1)]

5.39 A liquidator return year for a registered liquidator is the period of 12 months beginning on the day on which that registration first began and each subsequent period of 12 months. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 30-1(2)]

5.40 Each year, a practitioner must include evidence that adequate and appropriate professional indemnity and fidelity insurance against the liabilities that the person may incur working as a registered liquidator was maintained throughout the year as part of the process for lodging the individual's annual return. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 30-1(3)]

5.41 ASIC may extend the period for lodging the annual liquidator return following an application from the registered liquidator. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, 30-1(4)]

5.42 A registered liquidator commits a strict liability offence, with a penalty of 5 penalty units, if he or she fails to lodge a return. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 30-1(5)]

Notice requirements

5.43 A registered liquidator must notify ASIC, in the approved form, where any of the following events occur that would affect the ability of the registered liquidator to continue to practice:

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the liquidator becomes an insolvent under administration;

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a bankruptcy notice is issued under the Bankruptcy Act 1966 in relation to the liquidator as a debtor, or a corresponding notice is issued in relation to the liquidator as debtor under a law of an external Territory or a law of a foreign country;

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the liquidator is convicted of an offence involving fraud or dishonesty;

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the liquidator is disqualified from managing corporations under the Act, or under a law of an external Territory or a law of a foreign country;

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the liquidator ceases to have adequate and appropriate professional indemnity insurance or fidelity insurance against the liabilities that the liquidator may incur working as a registered liquidator;

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the liquidator is issued with a show-cause notice under the Bankruptcy Act in relation to the liquidator's registration as a trustee under that Act; or

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the liquidator's registration as a trustee under the Bankruptcy Act is suspended or cancelled;

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any other prescribed event. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 35-1(1)]

5.44 The notice must be lodged by the registered liquidator within five business days after the liquidator could reasonably be aware that the event has occurred. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 35-1(1)]

5.45 Where a liquidator intentionally or recklessly fails to notify ASIC that a specified event has occurred, the liquidator commits an offence punishable by a maximum penalty of 100 penalty units. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 35-1(2)]

5.46 A registered liquidator must notify ASIC, in the approved form, if information, prepared by or on behalf of the liquidator, and included in an annual liquidator return or in an annual administration return, is or becomes inaccurate in a material particular. A registered liquidator must also notify ASIC if any prescribed event occurs. Failure to notify ASIC within 10 business days after the registered liquidator could reasonably be expected to be aware that the event has occurred commits an offence punishable by a maximum penalty of five penalty units. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 35-5]

Disciplinary and other action

Direction to comply

5.47 ASIC may give a registered liquidator a direction in writing to comply with a requirement under the Corporations Act to lodge documents or provide information required under the Corporations Act within 10 business days after the direction is given. On the application of the registered liquidator, ASIC may extend that period. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-5(1), (2) and (3)]

5.48 Where the document or information is not provided within 10 business days after the direction has been given (or that period as extended), ASIC may give a direction that the registered liquidator not accept any further appointments or apply to the Court for an order that the registered liquidator comply with ASIC's direction. The ASIC direction is not a legislative instrument. Section 40-5 does not affect the operation of any other law. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-5(4), (5) and (6)]

5.49 Where ASIC reasonably suspects that any information that a registered liquidator is required to give it under the Corporations Act is incomplete or incorrect in any particular, ASIC may direct the liquidator to do one or more of the following within 10 business days after the direction is given :

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confirm to ASIC that the information is complete and correct;

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complete or correct the information;

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notify any person specified by ASIC in the direction of the addition or correction. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-10(1), (2) and (3)]

5.50 Where the registered liquidator is suspected of providing incomplete or incorrect information in any particular, ASIC may give a direction to the liquidator to confirm to ASIC that the information is complete and correct, complete or correct the information and notify any persons. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-10(1), (2), and (3)]

5.51 Should the liquidator fail to comply with the ASIC direction, ASIC may either further direct the practitioner, or apply for a Court order. The ASIC direction is not a legislative instrument. Section 40-5 does not affect the operation of any other law. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-10(4), (5), and (6)]

5.52 ASIC may, in writing, direct a registered liquidator not to accept any further appointments under Chapter 5 of the Act or not to accept any further appointments under Chapter 5 for a period specified in the direction if:

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the liquidator has failed to comply with a direction to remedy a failure to lodge documents, or give information or documents; or

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the liquidator has failed to comply with a direction to correct inaccuracies; or

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a committee has decided that ASIC should direct a liquidator not to accept any further appointments as a liquidator, or not to accept any further appointments as a liquidator during the period specified in the direction; or LI>

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the liquidator has failed to comply with a direction to give relevant information to ASIC. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-15(1)]

5.53 A liquidator must comply with ASIC's direction. ASIC may withdraw a direction not to accept further appointments and the condition is removed from the liquidator's registration. ASIC's power to direct a registered liquidator not to accept further appointments, does not limit the operation of any other provision of the Corporations Act, or any other law, relating to the lodgement of a document or a person giving incomplete or incorrect information or any matter relating to a decision by a committee in relation to ASIC giving a direction that a liquidator not to accept further appointments. ASIC's power to apply to a Court for an order that a registered liquidator comply with a direction to give relevant material is also not affected. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-15(2), (3),(4), (5), (6) and (7)]

Automatic cancellation

5.54 The registration of a registered liquidator is automatically cancelled if:

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the person becomes an insolvent under administration; or

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the person dies.

5.55 The cancellation takes effect on the day that the person becomes an insolvent under administration or the day that the person dies. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-20]

ASIC may suspend or cancel registration

5.56 ASIC may suspend or cancel the registration of a registered liquidator if:

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the person is disqualified from managing corporations under a law of the Commonwealth, an external Territory or foreign country;

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the person ceases to have adequate and appropriate professional indemnity and fidelity insurance against the liabilities that the person may incur working as a registered liquidator;

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the person's registration as a trustee under the Bankruptcy Act has been cancelled or suspended, unless it was requested by the person;

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the person fails to repay remuneration in accordance with an order of the Court;

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the person has been convicted of an offence involving fraud or dishonesty;

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the person lodges a request with ASIC in the approved form to have the registration suspended or cancelled. [Schedule 2,item 2, Schedule to the Act, Part 2, subsections 40-25(1) and 40-30(1)]

5.57 ASIC's powers to suspend or cancel a person's registration as a liquidator does not affect the operation of Part VIIC of the Crimes Act 1914 which in certain circumstances relieves a person from disclosing spent convictions. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-25(2) and 40-30(2)]

5.58 Where ASIC decides to suspend or cancel a person's registration as a liquidator, ASIC must, within 10 business days of making the decision, give the person a written notice setting out the decision and the reasons. The decision takes effect the day after the notice is given to the person. However, a failure by ASIC to give the notice within 10 business days, does not affect the validity of the decision. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), section 40-35]

Disciplinary action by committee

5.59 ASIC may issue a show-cause notice to a registered liquidator where, in ASIC's opinion:

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the liquidator no longer has the qualifications, experience, knowledge and abilities required under initial registration;

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the liquidator has committed an act of bankruptcy, within the meaning of the Bankruptcy Act or a corresponding law of an external Territory or a foreign country;

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the liquidator is disqualified from managing corporations under Part 2D.6 of the Corporations Act, or under a law of an external Territory or a law of a foreign country;

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the liquidator has ceased to have adequate and appropriate professional indemnity or fidelity insurance against the liabilities that the person may incur working as a registered liquidator;

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the liquidator has breached a condition imposed on the liquidator;

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the liquidator has contravened a provision of the Corporations Act;

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the liquidator has failed to properly perform the duties of a reviewing liquidator;

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the liquidator's registration as a trustee under the Bankruptcy Act has been cancelled or suspended, other than in compliance with a written request by the liquidator to cancel or suspend the registration;

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the liquidator fails to repay remuneration in accordance with an order of the Court;

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the liquidator has been convicted of an offence involving fraud or dishonesty;

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the liquidator is permanently or temporarily unable to perform the functions and duties of a liquidator because of physical or mental incapacity;

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the liquidator has failed to carry out adequately and properly the duties of a liquidator or any other duties or functions a registered liquidator is required to carry out under a law of the Commonwealth or of a State or Territory, or the general law;

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the liquidator is not a fit and proper person; or

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the liquidator is not resident in Australia or a prescribed country. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-40(1)]

5.60 A show-cause notice issued by ASIC is not a legislative instrument. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-40(2)]

5.61 ASIC's powers to issue a show-cause notice do not affect the operation of Part VIIC of the Crimes Act 1914 which in certain circumstances relieves a person from disclosing spent convictions. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-40(3)]

5.62 ASIC may refer a registered liquidator to a committee which it has convened if ASIC has given a show-cause notice to the liquidator and either:

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ASIC does not receive an explanation within 20 business days after the notice is given; or

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ASIC is not satisfied with the explanation from the liquidator. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, Subsection 40-45(1) and section 40-50]

5.63 The committee convened by ASIC must consist of an ASIC official, a registered liquidator chosen by a prescribed body (ARITA) and a person appointed by the Minister. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-45]

5.64 Where a registered liquidator is referred to a committee, the committee must decide one or more of the following:

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that the liquidator should continue to be registered;

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that the liquidator's registration should be cancelled;

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that the liquidator's registration should be suspended for a period, or until the occurrence of an event, specified in the decision;

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that ASIC should direct the liquidator not to accept any further appointments as liquidator, or not to accept any further appointments as liquidator during the period specified in the decision;

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that the liquidator should be publicly admonished or reprimanded;

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that a condition specified in the decision should be imposed on the liquidator;

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that a condition should be imposed on all other registered liquidators that they must not allow the liquidator to carry out any of the functions or duties, or exercise any of the powers, of a registered liquidator on their behalf for a period specified in the decision of no more than 10 years;

•

that ASIC should publish specified information in relation to the committee's decision and the reasons for that decision .[Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-55]

5.65 The conditions imposed by a committee on a liquidator may include one or more of the following:

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a condition that the liquidator engage in, or refrain from engaging in, specified conduct;

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a condition that the liquidator engage in, or refrain from engaging in, specified conduct except in specified circumstances;

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a condition that the liquidator publish specified information;

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a condition that the liquidator notify a specified person or class of persons of specified information;

•

a condition that the liquidator publish a specified statement;

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a condition that the liquidator make a specified statement to a specified person or class of persons. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-55(2)]

5.66 In making its decision, the committee may have regard to:

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any information provided to the committee by ASIC;

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any explanation given by the liquidator;

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any other information given by the liquidator to the committee;

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if the liquidator is or was also a registered trustee under the Bankruptcy Act - any information in relation to the liquidator given to the committee by the Inspector-General in Bankruptcy or a committee convened under the Insolvency Practice Schedule (Bankruptcy); and

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any other matter that the committee considers relevant. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-5(3)]

5.67 The committee is required to give the registered liquidator and ASIC a report setting out:

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the committee's decision;

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the committee's reasons for the decision;

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if the committee decides that the liquidator should be registered subject to a condition:

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the condition; and

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the committee's reasons for imposing the condition; and

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if the committee decides that a condition should be imposed on all other registered liquidators in relation to the liquidator:

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the condition; and

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the committee's reasons for the decision. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-60]

5.68 ASIC is required to give effect to the committee's decision. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-60]

Lifting or shortening suspension

5.69 A person whose registration as a liquidator has been suspended may apply to ASIC for the suspension to be lifted or for the period of the suspension to be shortened. ASIC must refer an application to a committee which it has convened within two months after receiving the application. The committee must consist of ASIC, a registered liquidator chosen by a prescribed body (ARITA) and a person appointed from a pool selected by the Minister. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, sections 40-70, 40-75 and 40-80]

5.70 The committee must consider the application referred to it and, unless the applicant otherwise agrees, the committee must interview the applicant for the purposes of considering the application. Within 10 business days after the interview the committee must decide whether the suspension should be lifted, or the period of the suspension shortened, and if it is to be shortened, specify when the suspension is to end. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-85]

5.71 The committee must give the applicant and ASIC a report setting out the committee's decision, the committee's reasons for the decision and if the committee has decided that the period of suspension should be shortened, when the suspension is to end. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), section 40-90]

5.72 If the committee decides that a suspension should be lifted or the period of suspension shortened, the lifting or shortening of the suspension comes into effect in accordance with the decision. [Schedule 2, item 150, Insolvency Practice Schedule (Corporations), Part 2, section 40-95]

Action initiated by industry body

5.73 An industry body (prescribed in the Insolvency Practice Rules) may lodge a notice (an industry notice) stating that the body reasonably suspects that there are grounds for ASIC to take disciplinary action against a registered liquidator. The industry body must identify the registered liquidator and include the information and copies of any documents upon which the suspicion is grounded. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-100(1)]

5.74 ASIC must consider the information and documents included in the industry notice and take action as follows:

•

if ASIC decides to take no action, it must give the industry body a notice of that decision within 45 business days after the industry notice is lodged;

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however, such a notice does not preclude ASIC from taking action based wholly or partly on the basis of information in the industry notice of the following kind:

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suspending or cancelling the registration of the registered liquidator;

-

giving the registered liquidator a show cause notice; or

-

imposing a condition on the registered liquidator;

•

if ASIC does take action based wholly or partly on the information included in an industry notice, ASIC must give the industry body notice of that fact. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 40-100(2), (3), (4),(5) and (6)]

5.75 An industry notice is not a legislative instrument. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 40-100(7)]

5.76 An industry body is not liable civilly, criminally or under any administrative process for giving an industry notice if the body acted in good faith and the suspicion that the body holds in relation to the subject of the notice is a reasonable suspicion. A person who makes a decision in good faith as a result of which an industry body gives an industry notice is not civilly, criminally or under any administrative process for making the decision. A person who gives information or a document in good faith which is included, or a copy of which is included, in an industry notice is not liable civilly, criminally or under any administrative process for giving the information or document. [Schedule 2,item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-105]

Consequences of certain disciplinary and other action

5.77 ASIC may appoint another registered liquidator to conduct an external administration of a company if the registration of a registered liquidator who is conducting the external administration is suspended or cancelled. ASIC may also appoint another registered liquidator if a liquidator fails to renew their registration and no orders have been made to extend the period under subsection 20-70(3). This ASIC power does not apply to a liquidator appointed by the Court, a winding up ordered by ASIC under section 489EA or to a members' voluntary winding up. The registered liquidator appointed by ASIC must consent to his or her appointment. Should no registered liquidator be willing to act, ASIC may use its powers under section 601AB to initiate deregistration of the company. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 40-111]

Court oversight of registered liquidators

5.78 Without limiting the Court's powers under provisions of the Act or under any other law, the Court may make such orders as it thinks fit in relation to a registered liquidator. The Court may exercise this power on its own initiative or on the application of the registered liquidator or ASIC. Without limiting the matters the Court may take into account, the Court may take into account:

•

whether an action or failure to act by the registered liquidator may affect public confidence in registered liquidators as a group; and

•

whether an order that the Court proposes to make would promote public confidence in registered liquidators as a group. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 45-1]

5.79 The Court may also make orders in relation to a registered liquidator that deal with the costs of a matter considered by the Court. The orders may include/specify that the registered liquidator is liable for some or all of the costs and that the registered liquidator is not entitled to be reimbursed by a company or its creditors in relation to some or all of those costs. [Schedule 2, item 2, Schedule2 to the Act, Part 2, section 45-5]

Committees under this Part

5.80 If a prescribed body appoints a person to a committee, that person must have the knowledge or experience prescribed in the Insolvency Practice Rules or, if no knowledge is prescribed, the knowledge and experience necessary to carry out the functions to be performed. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 50-5]

5.81 If the Minister appoints a person to a committee, that person must have knowledge or experience in one or more fields of business, law (including corporate insolvency laws), economics, accounting and public policy relating to corporate insolvency and administration of companies, including insolvent companies. To avoid any actual or perceived bias, the Minister must not appoint a staff member of ASIC to be a member of the committee. The Minister may delegate the Minister's powers to appoint a person to a committee to:

•

ASIC;

•

a member of ASIC; or

•

a staff member of ASIC who:

-

is an SES employee or acting SES employee;

-

is an APS employee who holds, or is acting in, an Executive Level 2 position; or

-

holds, or is acting in, an office or position that is equivalent to an SES employee, or an Executive Level 2. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsections 50-10(1)(2) and (3)}

5.82 The delegate, in exercising powers under a delegation, must comply with any directions of the Minister. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 50-10(4)]

5.83 A single committee may consider more than one matter relating to the application for registration of one or more applicants for registration as a liquidator and a matter or matters relating to one or more registered liquidators. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 50-15]

5.84 The consideration of a matter is not affected by a change in the membership of the committee. A matter may be adjourned or transferred to another committee. The Insolvency Practice Rules may prescribe procedures and make rules for committees. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, sections 50-15 and 50-20]

5.85 A member of a committee is entitled to receive the remuneration that is determined by the Remuneration Tribunal but if no determination by the Tribunal is in operation, the member is entitled to receive such remuneration as the Minister determines in writing. A member is entitled to receive such allowances as the Minister determines in writing. The operation of the requirements in relation to the remuneration of a member of a committee has effect subject to the Remuneration Tribunal Act 1973 [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, section 50-30]

5.86 A member of a committee commits an offence if information or a document is given to the member for the purposes of exercising powers or functions as a member of the committee and the member uses or discloses the information or document for any other purpose. The maximum penalty is 50 penalty units. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 50-35(1)]

5.87 The restriction on the use of information or a document disclosed to a member of a committee does not apply if the information is disclosed:

•

to enable the committee convened under this part, to seek legal advice;

•

to the Inspector-General in Bankruptcy to assist the Inspector-General to exercise his or her powers or perform his or her functions under the Bankruptcy Act;

•

to a committee convened under Part 2 of the Insolvency Practice Schedule (Bankruptcy) to assist the committee to exercise its powers or perform its functions under that Part;

•

to another committee convened under this Part to assist the committee to exercise its powers or perform its functions under this Part;

•

to enable or assist a prescribed body to perform its disciplinary function in relation to its members;

•

in order to enable or assist an authority or person in a State or Territory or a foreign country to perform or exercise a function or power that corresponds, or is analogous, to any of the committee's or ASIC's functions and powers; or

•

to a court or tribunal in relation to proceedings before the court or tribunal. [Schedule 2, item 2, Insolvency Practice Schedule (Corporations), Part 2, subsection 50-35(2)]

Consequential amendments

Australian Securities and Investments Commission Act 2001

5.88 Amendments are required consequential on the removal of CALDB's responsibility for the discipline of liquidators. [Schedule 2, Part 2, item 5, paragraph1(1)(d), item 7, subsection 5(1)(definition of Disciplinary Board), item 24, Part 11(heading), item 25, subparagraph 203(2A)(b)(ii), item 26, paragraphs 210A(1)(b) and (c), item 27, paragraph 223(1)(b), item 28, paragraph 223(2)(b)]

5.89 The confidentiality restrictions imposed on ASIC are amended to permit ASIC to provide certain information to a committee convened under Part 2 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 17, paragraph 127(4)(a)]

5.90 The confidentiality restrictions imposed on ASIC are amended:

•

to permit ASIC to disclose information to a prescribed body (that is not a disciplinary body) that would enable or assist that body to perform a function in relation to registered liquidators; and

•

to permit ASIC to provide information that will enable a committee convened under Part 2 of Insolvency Practice Schedule (Corporations) to perform its functions under the corporations legislation. [Schedule 2, Part 2, item 19, paragraph 127(4)(d)]

5.91 The confidentiality restrictions imposed on the FRC, the AASB, the Office of the AASB, the AUASB and the Office of the AUASB are amended to permit these bodies to disclose information to a committee convened under Part 2 of the Insolvency Practice Schedule (Corporations) for the purposes of the committee's functions under the corporations legislation. [Schedule 2, Part 2, item 29, paragraph 237(2)(d)]

5.92 A consequential amendment is necessary in order to provide protection to an officer or employee of an Agency or of an authority of the Commonwealth whose services are made available to a committee convened under Part 2 of Schedule 2, to the Corporations Act from liability for an action or other proceedings for damages for or in relation to an act done or omitted in good faith in performance or purported performance of any function or the exercise of any power conferred on the committee under the corporations legislation or a prescribed law of the Commonwealth, a State or Territory .[Schedule 2, Part 2, item 30, paragraph 246(1)(k)] Banking Act

5.93 An amendment is required consequential on the removal of liquidator functions from CALDB. [Schedule 2, Part 2, item 33, paragraph 18(1)(c)] Corporations Act

5.94 Amendments are required consequential on the removal of the liquidator functions from CALDB. [Schedule 2, Part 2, item 63, section 9 (definition of Board), item 230, subsections 1292(2) to (6), item 231, subsection 1292(7), item232, subsection 1292(7), item 233, subsection 1292(8), item 234, subsection 1292(9), item 235, subsection 1292(9), item 236, subsection 1292(9), item 224, 237 1292(9), item 238, subsection 1292(10),item 239, paragraph 1294(1)(a), item 240, subsection 1297(1), item 247, paragraph 1317B, item 249, subsection 1317B(2), item 252, subsection 1317D(1)]

5.95 The definition of registered liquidator is amended to refer to the definition in Schedule 2 to the Act consequential on the registration requirements for registered liquidators now being dealt with in Schedule 2. [Schedule 2, Part 2, item 78, section9 (definition of registered liquidator)]

5.96 Paragraph 532(1)(b) is repealed because a person can no longer be registered as a liquidator in relation to a specific company. [Schedule 2, Part 2, item 173, subsection 532(1)]

5.97 Subsection 532(7) is repealed because the registration of a person who is insolvent under administration is automatically cancelled under the Insolvency Practice Schedule (Corporations) and a person who is not a registered liquidator cannot be appointed to act as a liquidator of a company under subsection 532(1). [Schedule 2, Part 2, item 174, subsection 532(7)]

5.98 An amendment is necessary to ensure that an application for registration as a liquidator under section 20-5 of Schedule 2, is not available for public inspection. [Schedule 2, Part 2, item 214, subparagraph 1274(2)(a)(i)]

5.99 An amendment is necessary to ensure that annual liquidator returns lodged under section 12-5 of Schedule 2, or notices of significant events lodged under section 14-5 of Schedule 2, are not available for public inspection. [Schedule 2, Part 2, item 215, subparagraph 1274(2)(a)(ii)]

5.100 The heading to Part 9.2 and section 1279 refers only to the registration of auditors because the registration of liquidators is dealt with under Part 2 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 217, Part 9.2 (heading), item165, section 1279 (heading)]

5.101 An amendment is necessary to limit section 1279 to the registration of auditors because the registration of liquidators is dealt with under Part 2 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 219, subsection 1279(1)]

5.102 Section 1282 is repealed and replaced by the provisions in Schedule 2, relating to the registration of liquidators. Section 1283 is repealed because there is no category of official liquidator. Section 1284 is repealed and replaced by requirements in Schedule 2, requiring a liquidator to maintain adequate insurance. [Schedule 2, Part 2, item 220, sections 1282 to 1284]

5.103 Section 1286 is repealed and replaced by provisions in Schedule 2, relating to the Register of Liquidators. [Schedule 2, Part 2, item 221, section 1286]

5.104 Subsection 1287(2) is repealed and replaced by the notice requirements imposed on registered liquidators in Schedule 2. Subsection 1287(3) is repealed because there is no longer a category of a registered liquidator of a specified body corporate. [Schedule 2, Part 2, item 222, subsections 1287(2) and (3)]

5.105 The references to liquidators in section 1287(4) are removed because requirements relating to the registration of liquidators are dealt with in Schedule 2. [Schedule 2, Part2, item 223, subsection 1287(4)]

5.106 Section 1288 is repealed and replaced by the requirement in Schedule 2, for a registered liquidator to lodge an annual return. [Schedule 2, Part 2, item 224, section 1288]

5.107 The references to requests for cancellation of a person's registration as a liquidator, a liquidator of a specified body corporate and as an official liquidator are removed. A request for the cancellation of a person's registration as a liquidator is dealt with in the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, items 225, 226 and 227, subsections 1290(1) and 1290(2)]

5.108 Section 1290A is repealed and replaced by the rules in Schedule 2, relating to the cancellation of a liquidator's registration. Section 1291 is repealed because there is no separate category of official liquidator. [Schedule 2, Part 2, item 228, sections 1290A and 1291]

5.109 The reference to liquidators is removed from the heading to section 1292 because CALDB no longer has functions in relation to liquidators. [Schedule 2, Part 2, item 229, section 1292 (heading)]

5.110 Section 1298 is repealed and replaced by a provision which only deals with the suspension of a person's registration as an auditor. The suspension of a person's registration as a liquidator is dealt with in the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 242, section 1298]

5.111 Section 1298A is repealed consequential on the requirement for the transfer of books of a liquidator whose registration is cancelled or suspended being dealt with in the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 243, section 1298A]

5.112 Subsection 1300(3) is amended consequential on the right of a former external administrator to inspect the books that have been transferred to the new external administrator now being dealt with in section 70-30 of Schedule 2. [Schedule 2, Part 2, item 245, subsection 1300(3)]

5.113 A note is inserted at the end of subsection 1300(3) to sign post that section 70-30 of Schedule 2, is about books relating to an external administrator. [Schedule 2, Part 2, item 246, at the end of subsection 1300(3)]

5.114 A decision made by a committee convened under Part 2 of Schedule 2, is reviewable by the AAT. [Schedule 2, Part 2, item 248, at the end of subsection 1317B(1)]

5.115 Subsection 1317D(1) is amended consequential on the removal of liquidator functions from CALDB and the decisions of a committee convened under Part 2 of Schedule 2, being made reviewable by the AAT. [Schedule 2, Part 2, item 252, subsection 1317D(1)]

5.116 Section 1349 was inserted by the Corporations Amendment (Insolvency) Act 2007 and was designed to address the consequences of the High Court's decision in Rich v Australian Securities and Investments Commission [2004] HCA 42. Prior to the High Court's decision, the use of banning or disqualification as a remedy for corporate misconduct was viewed as protective rather than penal in nature. However, in that case, the High Court found that a banning or disqualification order was a penalty and, as a direct consequence, allowed people to invoke the common law privileges protecting the disclosure of information that may expose a person to a penalty in a banning or disqualification proceeding.

5.117 Banning and disqualification orders and orders to cancel or suspend a licence under the Corporations Act are important tools for deterring corporate misconduct. They allow the removal of unwanted participants from the corporations and financial services market and thereby maintain the integrity of the market. One of their main benefits is that they allow for an expeditious response to corporate misconduct.

5.118 Subsection 1349(1) removed penalty privilege for proceedings where a disqualification, banning, suspension or cancellation order, or a declaration to that effect, is being sought. A person in such an administrative, civil or criminal proceeding will not be entitled to refuse or fail to comply with a requirement on the grounds that to do so might tend to make the person liable for a penalty by way of a disqualification, banning, suspension or cancellation order, or a declaration to that effect. The effect of subsection 1349(1) was to restore the longstanding position that penalty privilege does not apply to these types of proceedings.

5.119 Three of the penalties covered by subsection 1349(1) are cancellation or suspension under Division 3 of Part 9.2 (paragraph 1349(1)(j) refers) and a requirement to give an undertaking under paragraph 1292(9)(b) or (c) of the Corporations Act (paragraph 1349(1)(m) refers). Division 3 of Part 9.2 and paragraphs 1292(9)(b) and (c) deal with registered auditors and registered liquidators. All the rules about cancellation and suspension of liquidators and penalties that can be imposed on liquidators relating to the refraining from engaging in specified conduct (conduct penalties), are now dealt with in Schedule 2. It is therefore necessary for subsection 1349(1) to refer to the relevant provisions relating to liquidators in Schedule 2. The effect of these consequential amendments is simply to continue existing policy. [Schedule 2, Part 2, item 254, after paragraph 1349(1)(n)]

5.120 Subsection 1349(3) removes penalty privilege in relation to a person complying with a statutory requirement under the Corporations Act or the ASIC Act on the grounds that to do so might tend to make the person liable for a penalty by way of a disqualification, banning, suspension or cancellation order, or a declaration to that effect. The policy rationale underlying section 1349 is explained above.

5.121 Three of the penalties covered by subsection 1349(3) are cancellation or suspension under Division 3 of Part 9.2 (paragraph 1349(3)(j) refers) and a requirement to give an undertaking under paragraph 1292(9)(b) or (c) of the Corporations Act (paragraph 1349(3)(k) refers). Division 3 of Part 9.2 and paragraphs 1292(9)(b) and (c) deal with registered auditors and registered liquidators. All the rules about cancellation and suspension of liquidators and penalties that can be imposed on liquidators relating to the refraining from engaging in specified conduct (conduct penalties), are now dealt with in Schedule 2. It is therefore necessary for subsection 1349(3) to refer to the relevant provisions relating to liquidators in Schedule 2. The effect of these consequential amendments is simply to continue existing policy. [Schedule 2, Part 2, item 255, after paragraph 1349(3)(l)]

5.122 Subsection 1349(4) ensures that when ASIC receives information during an investigation pursuant to its powers in Part 3 of the ASIC Act or from a Court examination in relation to an external administration over which penalty privilege is claimed, ASIC may make use of this information in the proceedings for a disqualification, banning, suspension or cancellation order, or a declaration to that effect.

5.123 Three of the penalties covered by subsection 1349(4) are cancellation or suspension under Division 3 of Part 9.2 (paragraph 1349(4)(g) refers) and a requirement to give an undertaking under paragraph 1292(9)(b) or (c) of the Corporations Act (paragraph 1349(4)(h) refers). Division 3 of Part 9.2 and paragraphs 1292(9)(b) and (c) deal with registered auditors and registered liquidators. All the rules about cancellation and suspension of liquidators and penalties that can be imposed on liquidators relating to the refraining from engaging in specified conduct (conduct penalties), are now dealt with in Schedule 2. It is therefore necessary for subsection 1349(4) to refer to the relevant provisions relating to liquidators in Schedule 2. The effect of these consequential amendments is simply to continue existing policy. [Schedule 2, Part 2, item 256, after paragraph 1349(4)(i)]

Insurance Act 1973

5.124 The amendment is consequential on the removal of liquidator functions from CALDB. [Schedule 2, Part 2, item 278, paragraph 48(1)(c)]

5.125 The amendments are consequential on there no longer being a category of official liquidator. [Schedule 2, Part 2, items 282 and 283, subsections 92(4) and (5)]

Life Insurance Act 1995

5.126 The amendment is consequential on the removal of liquidator functions from CALDB. [Schedule 2, Part 2, item 284, paragraph 125(1)(c)]

Private Health Insurance (Prudential Supervision) Act 2015

5.127 The amendments are consequential on there no longer being a category of official liquidator. [Schedule 2, Part 2, item 308 , paragraph 50(1)(b), item 309, paragraph 50(4)(b), item 310, paragraph 51(2)(a), item 311, at the end of section 51, item 312, subsection 65(7)]

Application and transitional provisions

Australian Securities and Investments Commission Act 2001

5.128 The amendment of section 203 of the Act, which removes the knowledge and experience field of the 'administration of companies', applies to appointments made to CALDB on or after the commencement day. [Schedule 2, Part 3, item 321, section 307] Corporations Act

5.129 The general rule for a registered liquidator before the commencement of this Bill is that they will continue to be registered and must comply with the requirements and duties under Part 2 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 3, item 322, section 1550 Simplified outline of this Part]

5.130 The general rule applying to a proceeding already begun in the Court or the AAT before the commencement of the amendments made by this Bill will continue under the old Act. Orders of the Court under the old Act continue to have effect. [Schedule 2, Part 3, item 322, section 1550 Simplified outline of this Part]

5.131 Key definitions for the purposes of Part 3 include:

•

new external administration means an external administration of a company that starts on or after the commencement day;

•

old Act means the Corporations Act as in force immediately before the commencement day and includes the old regulations;

•

ongoing external administration of a company means an external administration of a company that started before the commencement day and ends after that day. [Schedule 2, Part 3, item 322, section 1551 Definitions]

5.132 If, before the commencement day, a person has applied to be registered as a liquidator and the application has not been refused but the person's application has not been completed, the application is taken never to have been made and ASIC must refund any fee paid in relation to the application. [Schedule 2, Part 3, item 322, section 1553]

5.133 A person registered as a liquidator, or as a liquidator of a specified corporation under the old Act, immediately before the commencement day, continues to be registered as a liquidator under Subdivision B of Division 8 of the Insolvency Practice Schedule (Corporations). Such a person is referred to as an old Act registrant. [Schedule 2, Part 3, item 322, subsections 1552(2), and 1553(1) and (4)]

5.134 A person who is registered under the old Act but whose registration is suspended and the period of the suspension does not expire before the commencement day is taken to be registered under the Insolvency Practice Schedule (Corporations) on the commencement day but the person is taken to be suspended for a period that ends when the suspension under the old Act would have ended. The person could, however, apply under Subdivision F of Division 40 of the Insolvency Practice Schedule (Corporations) to have the suspension lifted or shortened. [Schedule 2, Part 3, item 322, subsection 1553(2)]

5.135 A person who is registered as a liquidator, or as a liquidator of a specified body corporate, immediately before the commencement day but the person is an insolvent under administration or is dead, the person is not taken to be registered as a liquidator under the Insolvency Practice Rules (Corporations). [Schedule 2, Part 3, item 22, subsection 1553(3)]

5.136 ASIC must enter on the Register of Liquidators, in relation to each old Act registrant, the details prescribed under subsection 15-1(3) of the Insolvency Practice Schedule (Corporations) that relate to that old registrant. ASIC may use and disclose information it holds in relation to an old Act registrant before the commencement day for the purpose of establishing and maintaining the Register of Liquidators. [Schedule 2, Part 3, item 22, section 1554]

5.137 The registration of an old Act registrant under the Insolvency Practice Schedule (Corporations) is for a period ending on the first anniversary of the old registration day for that person that occurs on or after the commencement day. The old registration day is the day on which the registration under the old Act in relation to the person began. To avoid any doubt, the registration of an old Act registrant may be renewed in accordance with the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 3, item 322, section 1555]

5.138 To avoid doubt, a condition may be imposed on an old Act registrant under the Insolvency Practice Schedule (Corporations) in accordance with that Schedule. [Schedule 2, Part 3, item 322, section 1556]

5.139 Where an old Act registrant has given an undertaking under paragraph 1292(9)(b) or (c) of the old Act and the undertaking is still in force immediately before the commencement day, it is a current condition of the old Act registrant's registration under the Insolvency Practice Schedule (Corporations) that the old Act registrant gives and complies with the undertaking. The requirements in the Insolvency Practice Schedule (Corporations) applying to the variation or removal of a condition, imposed by a committee under the Insolvency Practice Schedule (Corporations), apply to a condition imposed on an old Act registrant. [Schedule 2, Part 3, item 322, section 1557]

5.140 Where an old Act registrant has given ASIC an undertaking under section 93AA of the ASIC Act to engage in, or refrain from engaging in, conduct as a liquidator, or as a liquidator of a specified body corporate, and the undertaking is in force immediately before the commencement day, then it is a current condition of the old Act registrant's registration under the Insolvency Practice Schedule (Corporations) that the old registrant should comply with the undertaking. The enforcement of an undertaking given under section 93AA of the ASIC Act is not affected by these new requirements .[Schedule 2, Part 3, item 322, section 1558]

5.141 There is no longer a category of a liquidator of a specified body corporate. The following rules apply to an old Act registrant who was registered as a liquidator of a specified body corporate immediately before the commencement day:

•

it is a current condition of the old Act registrant's registration under the Insolvency Practice Schedule (Corporations) that the old registrant must not accept any further appointments as external administrator of a company;

•

on the day immediately after the external administration of the body corporate ends, the old Act registrant is taken to have lodged a request to have his or her registration as a liquidator cancelled and ASIC is taken to have cancelled the registration. [Schedule 2, Part 3, item 322, subsections 1559(1), (2) and (3)]

5.142 The special rules applying to an old Act registrant who was a liquidator of a specified body corporate do not apply where the old Act registrant applies to be registered as a liquidator under section 20-5 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 3, item 322, subsection 1559(4)]

5.143 Where an old Act registrant does not apply for renewal of his or her registration under the Insolvency Practice Schedule (Corporations) before his or her period of registration ends (the expiry day), then the following special rules apply:

•

the old Act registrant is taken to be registered under the Insolvency Practice Schedule (Corporations) on the current condition that he or she must not accept any further appointments as external administrator of a company;

•

on the day after all the external administrations that the old Act registrant is entitled to carry out ends, the old Act registrant is taken to have lodged a request to have his or her registration as a liquidator cancelled and ASIC is taken to have cancelled the registration. [Schedule 2, Part 3, item 322, section 1560]

5.144 The obligation to lodge an annual liquidator return in accordance with section 30-1 of the Insolvency Practice Schedule (Corporations) applies to an old Act registrant. For the purpose of working out the return year for an old Act registrant under subsection 30-1(2), 'the day on which that registration first began' means the 'old Act registration day' as defined under section 1551. [Schedule 2, Part 3, item 322, subsections 1561(1) and (2)]

5.145 The repeal of section 1288 (annual statements by registered liquidators) applies in relation to return years beginning on or after the commencement day. Schedule 2, Part 3, item 322, subsection 1561(3)]

5.146 Specific notification rules apply to an old Act registrant in relation to significant events mentioned in subsection 35-1(1) of the Insolvency Practice Schedule (Corporations) where the old Act registrant has not already notified ASIC in writing of the event before the commencement day:

•

the significant event must have occurred within two years before the commencement day;

•

if the old Act registrant is or could reasonably be expected to be aware of the event before the commencement day, the old Act registrant must lodge with ASIC a notice, in the approved form, within one month after the commencement day;

•

if the old Act registrant is or could reasonably be expected to be aware of the event after the commencement day, the old Act registrant must lodge with ASIC a notice, in the approved form, within one month after the first day on which the old Act registrant is or could reasonably be expected to be aware of the event;

•

a person who intentionally or recklessly fails to comply with the notice requirements is guilty of an offence punishable by a maximum penalty of 100 penalty units. [Schedule 2, Part 3, item 322, section 1562]

5.147 ASIC may not cancel the registration of a liquidator or a liquidator of a specified body corporate under section 1290 where the person has requested, before the commencement day, to have his her registration cancelled and no decision by ASIC to cancel the registration has come into effect before the commencement day. However, for purposes of paragraph 40-30(1)(f), the person is taken to have made a request to have his or her registration cancelled under the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 3, item 322, subsections 1563(1),(2) and (3)]

5.148 The amendment of section 1290, which removes the references to a liquidator, liquidator of a specified body corporate and an official liquidator, apply in relation to requests made to ASIC under section 1290 on or after the commencement day. [Schedule 2, Part 3, item 322, subsection 1563(4)]

5.149 Where ASIC has made a decision before the commencement day to cancel the registration of a person as a liquidator or as a liquidator of a specified body corporate but the decision has not come into effect before the commencement day, then the following rules apply:

•

on the commencement day, ASIC is taken to have cancelled the registration of the person as a liquidator under section 40-30 of the Insolvency Practice Schedule (Corporations);

•

the notice obligations imposed on ASIC under section 40-35 of the Insolvency Practice Schedule (Corporations) apply in relation to the decision as if the decision were made on the commencement day. [Schedule 2, Part 3, item 322, section 1564]

5.150 Where an application has been made to CALDB under section 1292 before the commencement day and CALDB has not, before the commencement day, made an order in relation to the person's registration as a liquidator under subsections 1292(2), (3), (4), (6) or (7) of the old Act or dealt with the person under subsection 1292(9) or held a conference in relation to the application under section 1294A, then the Board must cease its consideration of the matter on the commencement day without making such an order, dealing with the person under subsection 1292(9) of the old Act or convening such a conference under section 1294A. If a matter has been ceased and a conference has been convened but not yet held, the Chairperson of the Board need not give notice of the conference and it need not be held. The matter may be dealt with under Division 40. [Schedule 2, Part 3, item 322, section 1565]

5.151 Where an application has been made to CALDB under section 1292 before the commencement day and CALDB has, before the commencement day, made an order in relation to the person's registration as a liquidator under subsections 1292(2), (3), (4), (6) or (7) of the old Act, dealt with the person under subsection 1292(9) or held a conference in relation to the application under section 1294A, then the old Act continues to apply in relation to the decision to make the order under subsection 1292(2), (3), (4), (5), (6) or (7) deal with the matter under subsection 1292(9) in response to the application or convene the conference under section 1294A.

5.152 Where an application has been made to CALDB under section 1292 before the commencement day and CALDB has, before the commencement day, refused to make an order in relation to the person's registration as a liquidator under subsections 1292(2), (3), (4), (6) or (7) of the old Act, dealt with the person under subsection 1292(9) or convene a conference in relation to the application under section 1294A, then the old Act continues to apply in relation to the decision to refuse to make the order under subsection 1292(2), (3), (4), (5), (6) or (7) deal with the matter under subsection 1292(9) in response to the application or convene the conference under section 1294A.

5.153 Where an application has been made under section 1295 of the old Act to terminate the suspension of the registration of a person as a liquidator and CALDB has neither refused the application nor, by order, terminated the suspension before the commencement day, then CALDB must cease its consideration of the matter on the commencement day without making such an order. [Schedule 2, Part 3, item 322, section 1568]

5.154 Where CALDB under section 1295 of the old Act is considering on its own motion whether to terminate the suspension of the registration of a person registered as a liquidator and CALDB has not, by order, terminated the suspension before the commencement day, then CALDB must cease its consideration of the matter on the commencement day without making such an order. [Schedule 2, Part 3, item 322, subsection 1568(2)]

5.155 The fact that CALDB has ceased to consider the matter under section 1295 of the old Act does not preclude the matter from being dealt with under Division 40 of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 3, item 322, subsection 1568(3)]

5.156 The Chairperson of a committee under Part 2 of the Insolvency Practice Schedule (Corporations) may request the Chairperson of the Board to give the committee any information or document in the Board's possession or control in relation to a registered liquidator under the Schedule or under the old Act. [Schedule 2, Part 3, item 322, subsection 1569]

5.157 ASIC's power to require a registered liquidator to lodge a document or give information under Subdivision B of Division 40 of the Insolvency Practice Schedule applies whether or not a requirement mentioned in that Subdivision to lodge a document or give information arises before, on or after the commencement day. [Schedule 2, Part 3, item 322, section 1570]

5.158 ASIC may suspend a person's registration as a liquidator under subsection 40-25 of the Insolvency Practice Schedule (Corporations) on the basis of a number of specified grounds. The general rule is that ASIC's power to suspend a person's registration as a liquidator applies whether or not an event mentioned in subsection 40-25(1) occurs before, on or after the commencement day. However, the general rule does not apply in relation to the cancellation of the registration of a person as a trustee under the Bankruptcy Act, as in force at any time before the commencement day. The reason for this exception to the general rule is that ASIC has no power under the legislation, prior to the commencement day, to suspend a person's registration as a liquidator on the grounds that the person's registration as a trustee under the Bankruptcy Act has been cancelled. [Schedule 2, Part 3, item 322, section 1571]

5.159 ASIC may cancel a person's registration as a liquidator under subsection 40-30 of the Insolvency Practice Schedule (Corporations) on the basis of a number of specified grounds. The general rule is that ASIC's power to suspend a person's registration as a liquidator applies whether or not an event mentioned in subsection 40-30(1) occurs before, on or after the commencement day. However, the general rule does not apply in relation to the cancellation of the registration of a person as a trustee under the Bankruptcy Act, as in force at any time before the commencement day. The reason for this exception to the general rule is that ASIC has no power under the legislation, prior to the commencement day, to cancel a person's registration as a liquidator on the grounds that the person's registration as a trustee under the Bankruptcy Act has been cancelled. [Schedule 2, Part 2, item 322, section 1572]

5.160 ASIC may give a registered liquidator a written notice under subsection 40-40(1) on the Insolvency Practice Schedule (Corporations) asking the liquidator to explain to ASIC in writing why the liquidator should continue to be registered where ASIC believes that certain specified circumstances exist. Subdivision E of Division 40 of the Insolvency Practice Schedule (Corporations) applies whether or not an event mentioned in subsection 40-40(1) occurs before, on or after the commencement day. [Schedule 2, Part 2, item 322, section 1573]

5.161 Subdivision F of Division 40 of the Insolvency Practice Schedule (Corporations) deals with the lifting or shortening of a person's suspension as a liquidator. The Subdivision applies whether or not a person's registration as a liquidator is suspended under a provision of the old Act or of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 322, section 1574]

5.162 An industry body can give ASIC notice of possible grounds for disciplinary action under section 40-100 of the Insolvency Practice Schedule (Corporations). The industry body may give ASIC such a notice whether or not the grounds to which a notice relates arise because of an action, a failure to act or circumstance that occurs before, on or after the commencement day. [Schedule 2, Part 2, item 322, section 1575]

5.163 The Court is given powers under section 45-1 of the Insolvency Practice Schedule (Corporations) to make orders in relation to registered liquidators. The Court may exercise these powers whether or not an event in relation to which, or because of which, the order is made occurs before, on or after the commencement day. [Schedule 2, Part 2, item 322, section 1576]

5.164 Where as a result of the continued application of the old Act, a relevant body (including ASIC, the AAT and the Court) would have the power to register a person, suspend or cancel the registration of a person as a liquidator or as a liquidator of a specified body corporate under the old Act, the relevant body is expressly given the power:

•

to register the person, or suspend or cancel the registration of the person, as a liquidator under the Insolvency Practice Schedule (Corporations); and

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for this purpose, by order, modify the application of the Insolvency Practice Schedule (Corporations). [Schedule 2, Part 2, item 322, section 1577]