Tom Birch.
Kate Conneely.
When a person listed as a director on the ASIC companies database gives their residential address as a chunk of forest you know something’s up.
And when that director is found to be a Chinese national who’s never set foot in Australia, well you might, being an insolvency practitioner who spends a bomb annually purchasing information from ASIC, wonder what the hell you’re paying for.
iNO put a more formally articulated version of this question to the corporate regulator yesterday after the conclusion of a case management hearing in the matter of Australian Securities and Investments Commission and 24-U PTY LTD (ACN 660 136 603) and others.
To say the regulator is keeping its cards close to its chest in respect of this matter would be a gross understatement.
When it first came before Justice Angus Stewart of the Federal Court of Australia (FCA) on November 1, the application for the appointment of provisional liquidators to 95 corporate entities was heard ex-parte and in closed court.
Almost all of the material filed in support of the application was placed out of reach under a blanket of non-publication, suppression and non-party access orders.
The non-publication orders also applied to almost every aspect of the individuals referred to in the proceedings.
Their addresses, email, addresses, telephone numbers, passport numbers, drivers license details, proof of age or other identity documents and the criminal histories were all ruled off limits.
The only information of interest that could be made public from the November 1 orders was the names of the 95 corporate defendants.
These at least could be searched on the ASIC companies register and the names of any directors and shareholders, current or former that emerged from such searches would not be subject to the suppression orders. Which brings us to yesterday’s hearing.
Appearing for ASIC barrister Joanne Shepard of 12 Wentworth Selborne Chambers explained to the court that ASIC was having difficulty providing potentially interested persons with material they’d require if they wanted to be joined to the proceedings.
As an example she said that one of the defendant companies boasted a Chinese born-director who’d never set foot in Australia and whose residential address had been identified as a forest area in Victoria.
It was all well and good for ASIC to be required to serve its originating process and supporting documents on potential interested persons but the circumstances of the case raised the potential for significant expense and delay when ASIC wants to be able to act swiftly once it receives the initial report of ProvLiqs Tom Birch and Kate Conneely of Cor Cordis.
Delivery of the report is imminent and Shepard told the court that ASIC had received a significant number of return to sender responses from the defendant entities.
ASIC is seeking to have the defendant entities wound up but a hearing on that question is at this stage not likely before March 2025.
In the meantime the insolvency profession is left to question what it’s paying for when it conducts company and similar searches.
An ASIC spokeswoman confirmed ASIC doesn’t check the information provided in the myriad categories of forms submitted by company secretaries, directors and so-called ASIC agents that together generate hundreds of millions for the Commonwealth and realistically how could it?
There’s almost 3.5 million companies. The labour involved in verifying and confirming every detail would devour every cent.
The only hypothetical restraint is a penalty for the provision of false information. iNO suspects enforcement isn’t a priority. As the 24-U case demonstrates, its buyer beware.
Further reading:
Whatever happened to the DIN procedures and requirements? Surely, any lack of a DIN would have been picked up by the regulator – or perhaps not.