27/11/2015

Recent action taken by ASIC and ACCC has highlighted the risks of not complying with a statutory notice demanding the supply of information. Here's what to do and what not to do if you receive one.

What is a notice?

Both ASIC and the ACCC have statutory information-gathering powers under which they may serve written notices seeking documents or information in relation to a matter which they are currently investigating. Receiving such a notice does not mean that they believe you are guilty of an offence.  However, failure to comply with such a notice will lead to you committing an offence!

Both regulators have the power to issue a notice seeking the production of documents, information, attendance at an oral examination to answer questions, or even to compel your assistance with an investigation or prosecution.

What should you do?

Cooperate, cooperate, cooperate!

It is compulsory to comply with a notice seeking information from either regulator. Failure to produce information or to comply with a notice can have significant consequences, and in some cases may even lead to criminal proceedings. In order to protect yourself against further proceedings and heavy fines, it is best to be comply with their requests for your cooperation.  Obviously that doesn’t extend to self-incrimination, so if you’re not sure then only cooperate with the strict obligations under the notice.

What shouldn’t you do?

You should not ignore the notice altogether or knowingly provide false information to ASIC or ACCC. Choosing either of these courses of action can lead to criminal proceedings and fines of up to $3,600 or 12 months' imprisonment for an ACCC notice, or $18,000 or two years' imprisonment for non-compliance with an ASIC notice.

Recent court action in the Federal Court has shown that the ACCC in particular is not afraid to flex its regulatory muscles and go after directors who refuse to provide assistance.

In ACCC v Boyle [2015] FCA 1039, Mr Boyle was fined $3,500 after knowingly providing false and misleading evidence to the ACCC during their investigations of his company.

In ACCC v Davies (No 2) [2015] FCA 1017, Mr Davies was ordered to undertake 200 hours of community service and was found criminally liable for failing to comply with a notice issued by the ACCC after he made no steps to supply the information requested from him.

What about privilege?

Where either regulator has requested you undergo an oral examination, you may be able to rely on the limited defences of either legal professional privilege, or the privilege against self-incrimination.

Legal professional privilege may apply where providing the information will lead you to disclose confidential information that was discussed between yourself and your lawyer.

The privilege against self-incrimination may apply where you are required to answer questions that may incriminate you in relation to offences you may have committed. It is important to note that you cannot refuse to answer a question by saying that the answer will incriminate you, as you will still be obliged to provide the information requested. However, if you do say something incriminating and you have relied on this privilege, each regulator will be restricted in how they can use this information to pursue further proceedings against you.

But be warned - if you seek to rely on the above privileges to avoid supplying information, you will need to be ready to explain why either privilege will apply to your answer.

The bottom line is that the best line of defence if you receive such a notice is to stay calm and provide assistance to either regulator before the stipulated deadline. Compliance with an ASIC or ACCC notice is compulsory.

For further information on your obligations relating to ASIC and ACCC notices, and how to ensure compliance with such notices, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.