Receiving a compulsory statutory notice from ASIC or the ACCC should put even the most seasoned director or executive on alert for two reasons. First, you can go to gaol for not complying with a statutory notice or for knowingly providing false or misleading information. Second, you have to answer questions in an oral examination even if they incriminate you.
Recent action by the regulators has put a spotlight on the risks of not complying, or interfering with compliance.
If you are served with a statutory notice, you should seek proper advice as to its validity and scope. Both regulators encourage open dialogue with them about difficulties you face in complying, including requests for extensions of time.
Repercussions for non compliance
Not complying with a statutory notice or knowingly providing false or misleading information or statements is a criminal offence with varying penalties:
- for an ACCC notice, you may be convicted and face a fine of up to 20 penalty units ($3,600) or imprisonment for 12 months; or
- for an ASIC notice, you may be convicted and face a fine of up to 100 penalty units ($18,000) or imprisonment for 2 years or both.
The penalties are not restricted to persons named on the notice and may extend to persons who have in some way aided the offence.
In ACCC v Davies  FCA 1017, the ACCC successfully brought criminal proceedings against Mr Davies, the sole director of Natural Food Vending Pty Ltd for aiding and abetting NFV’s failure to comply with a notice. He put the company into external administration without taking steps to let the liquidator know about the ACCC notice, nor how to find the relevant information.
In another example, the Federal Court recently convicted Mr Michael Anthony Boyle of knowingly giving false or misleading evidence to the ACCC in an oral examination.
Privilege against self-incrimination
If you are required to attend an oral examination, you may want to rely upon the privilege against self-incrimination. For ASIC examinations in particular, you need to say ‘privilege’ before giving each response. Keep in mind that even if you assert this privilege, you are still required to answer the question or provide the information requested.
The protection afforded to you is limited to how regulators can later rely on your answers as evidence.
For example, whilst the ACCC cannot rely on your answers in criminal proceedings against you, it can rely on your answers as evidence in civil proceedings, including proceedings in which the ACCC is seeking a penalty.
Similarly, whilst ASIC cannot rely on your answers in criminal proceedings or civil proceedings against you where it is seeking a penalty, it can rely on your answers as evidence in civil proceedings where ASIC is seeking declarations or injunctions (but not a penalty).
Compliance with statutory notices is compulsory. We often see situations where someone has tried to ‘go it alone’ – without advice. The most common mistakes people make is not asserting the self-incrimination privilege they are entitled to, and failing to comply with notices.
The regulators pick up on the failure to comply pretty quickly – and this may unfavourably influence their attitude towards you for the balance of the investigation.
Get proper advice on your obligations and avoid the perils of not playing a straight bat. It could save you your reputation and a whole lot of money.