Received an ASIC s 19 Notice? What You Need to Do Next

Caroline Skeoch

Principal LawyerAitken PartnersView Profile

Joel Parsons

LawyerAitken PartnersView Profile

Facing an ASIC s 19 notice? Learn what to expect, your legal obligations and how to approach the examination process.

Receiving a section 19 notice from the Australian Securities and Investments Commission (ASIC) can be confronting. This notice requires you to attend an examination, answer questions under oath, and potentially provide documents as part of an ASIC investigation. While serious, receiving a s 19 notice does not necessarily mean you have done anything wrong. In this article, we explain what a s 19 notice is, your obligations, your legal rights, and how to prepare for an ASIC examination.

What is an ASIC s 19 notice?

A s 19 notice is a notice that ASIC is empowered to issue under section 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), requiring a person to:

• give all reasonable assistance in connection with an investigation; and

• appear before ASIC personnel to answer questions under oath or affirmation (in the same way that you would give evidence before a Court).

Why Have I Received a s 19 Notice?

ASIC is empowered to issue a s 19 notice if they suspect or believe, on reasonable grounds, that a person can provide information relevant to a matter that ASIC is investigating, or is planning to investigate, such as breaches of the ASIC Act. This doesn’t mean you, as the recipient, have been accused of any breach of the ASIC Act, and it may mean that you are receiving the s 19 notice because ASIC believes that you can provide them with information about someone else’s breach of the ASIC Act or similar.

Do You Need to Comply?

It is a criminal offence to fail to attend an ASIC examination without a reasonable excuse.

The ability to challenge a s 19 notice is extremely limited and is based on evidence that the notice has been issued beyond ASIC’s powers or for an improper purpose. However, there is generally very little scope to challenge the issuance of a s 19 notice given the broad range of powers available to ASIC under the ASIC Act. As such, if you receive a s 19 notice, you should comply with it in the same manner as you would if you had been issued a subpoena to attend Court.

What Happens During an ASIC Examination?

Although an ASIC examination may be held in-person or virtually (or via a combination of both), the ASIC examination will be conducted at ASIC’s head office.

You can attend an ASIC examination alone, however, a recipient’s solicitor may also be present at the examination and may, pursuant to s 23 of the ASIC Act andat the inspector’s discretion, address the inspector and examine the recipient on matters already raised.

Pursuant to s 22 of the ASIC Act, the examination must occur in private, and the only attendees allowed are:

• the recipient of the s 19 notice;

• the recipient’s solicitor(s);

• the inspector(s);

• any ASIC staff members; and

• any other person permitted to attend by a direction given by the inspector(s).

S 21 of the ASIC Act provides that you must either take an oath or make an affirmation that the information that you will give will be true. This is similar to the process adopted in a Court, and as such, you should approach the taking of the oath or affirmation as if you were giving evidence in a legal proceeding.

You should also not discuss any of the questions asked or answers given during any breaks in the examination with any person other than your solicitor, unless and until directed otherwise by your solicitor.

Further, pursuant to s 24 of the ASIC Act, should you request it, a record will be made of the statements provided at the examination. You may be required to sign such a record, and should you wish to be provided with a copy of the same, you must make a written request.

You will also be required to bring a form of photographic identification to the examination which states your full name and date of birth (e.g. current driver’s licence, passport, etc).

Your Rights: Privilege against Self-Incrimination and Legal Professional Privilege

Pursuant to s 68 of the ASIC Act, if:

• before making an oral statement or signing a record, you claim that making such a statement or signing such a record might tend to incriminate you or expose you to a penalty; and

• making the statement or signing the record might in fact tend to incriminate you or expose you to a penalty,

Then such a statement or the fact that you have signed the record is not admissible in evidence in any criminal proceedings, or proceedings for the imposition of a penalty, against you, other than proceedings in respect of the falsity of such statement or record.

If you wish to make a claim that an answer might tend to incriminate you or make you liable to a penalty, before you answer a question, say the word "privilege", and then answer the question.

A recipient may not simply refuse a question put to them.

A recipient may also make a claim of legal professional privilege should they wish not to provide certain information during the examination, or in response to a request for reasonable assistance. Such a claim may only be made if the confidential information was brought into existence for the dominant purpose of:

1. Giving or obtaining legal advice (in relation to you specifically); or
2. You are being provided with professional legal services in relation to actual or anticipated legal proceedings involving you as a party.

Given that potential claims of legal professional privilege may be difficult to identify, it is best practice to have a lawyer present who can appropriately advise you in relation to the same.

Penalties for Non-Compliance

There are various offences under the ASIC Act, which can result in severe penalties, including both fines and imprisonment. Offences include, but are not limited to, acts such as:

• intentionally or recklessly, without reasonable excuse, failing to comply with a requirement made under s 19 of the ASIC Act;

• giving information or making a statement that is false or misleading; and

• without reasonable excuse, obstructing or hindering a person exercising a power under Part 3 of the ASIC Act (including s 19).

Pursuant to ss 71-74 of the ASIC Act, should ASIC need to find out information but is unable to because the recipient has failed to comply with a requirement made under the ASIC Act, ASIC may also make orders in relation to securities of a body corporate, financial products, and trust property.

Key Tips Before Attending an ASIC Examination

Below are key takeaways that you should bear in mind if you have an upcoming ASIC examination:

1. Seek early legal advice and instruct a lawyer to be present at your examination to assist you with the questioning;
2. Be polite and cooperative during the process. An unnecessarily aggressive attitude or demeanour will just make for a more uncomfortable and confrontational experience for all involved;
3. Answer all questions honestly, concisely, and take the time you need to answer completely;
4. If you do not understand a question, do not guess - ask for it to be rephrased;
5. If you do not recollect events or circumstances relating to a question, state that to be the case;
6. If you are given documents as part of a question, or to refresh your memory after being asked a question, read the document carefully and, if needed, ask for the question to be rephrased;
7. If you are unable to answer a question because you do not know the answer, do not guess or offer an opinion - simply state that you do not know the answer;
8. Begin every answer to every question with the word “privilege”.

How Aitken Partners Can Help

At Aitken Partners, we have deep expertise in both advising clients and representing them in ASIC examinations. If you have received an s 19 notice and want to ensure that you are best prepared to respond, please contact us on (03) 8600 6000.