A guide to the Australian Securities and Investment Commission’s (ASIC) new power to wind up an abandoned company has been released.
Deputy Chairman of ASIC, Belinda Gibson said the guidance provided clarity to insolvency practitioners about how the Commission would be using the powers.
‘The provision of guidance about how we will use our power to wind up companies is important to assist employees of those companies who are owed certain entitlements,” Ms Gibson said.
“We are making clear our approach to facilitating access for employees affected by corporate failures to the Federal Government’s General Employee Entitlements Redundancy Scheme (GEERS).”
ASIC clarifies new powers
She said GEERS was a Government-funded scheme to assist employees of companies that had gone into liquidation and who were owed certain entitlements.
She said however that companies were sometimes abandoned by their directors without being put into liquidation which could result in the employees being unable to access GEERS.
Ms Gibson said ASIC now had a discretionary power to order the winding up of an abandoned company where it would facilitate employee access to GEERS.
She said ASIC had also taken the opportunity to expand its policy to assist liquidators wishing to pursue a recovery action where they suspected fraudulent or unlawful activity.
“This will further increase the transparency of our approach to enforcement’, Ms Gibson said.
She said that in order to do this, ASIC had updated its guidance on funding liquidator investigations and reports out of the Assetless Administration Fund (AA Fund).
The AA Fund finances preliminary investigations and reports into the failure of companies with few or no assets.
The scope of the AA Fund has been expanded so that it may also provide funds to a liquidator to recover assets in certain circumstances.