List of Recommendations
Recommendation 1
11.9 The
committee recommends that the corporate insolvency arm of ASIC be transferred
to ITSA to form the Australian Insolvency Practitioners Authority (AIPA). The
agency should be governed by the Financial Management and
Accountability Act under the Attorney General's portfolio.
11.10 The
Memorandum of Understanding between ASIC and ITSA should be updated to ensure
that ASIC provides to the new agency adequate resources and the expertise
needed to support the oversight of corporate insolvency sector.
Recommendation 2
11.12 The
committee recommends that the government commission the Australian Law Reform
Commission to inquire into the opportunities to harmonise Australia's personal
insolvency and corporate insolvency legislation. The Commission must report to
the government within 12 months of the tabling of this report.
Recommendation 3
11.18 The
committee recommends that a 'flying squad' be established within the new
insolvency regulator. The unit should be responsible for conducting
investigations of a sample of insolvency practitioners, some selected at
random, others with the aid of a risk profiling system and market intelligence.
Recommendation 4
11.27 The
committee recommends that section 213 of the Australian Securities and
Investment Commission Act 2001 be replaced with the following:
All hearings, evidence and reasons shall be heard or
given in open session unless otherwise ordered by a judge of a Court of any
State or Territory or the Federal Court of Australia who may, at any time
during or after the hearing of a proceeding in the Court, make such order
forbidding or restricting the publication of particular evidence, or the name
of a party or witness, as appears to the Court to be necessary in order to
prevent prejudice to the administration of justice or the security of the
Commonwealth. Subject to section 216(2), any past hearings, evidence and/or
reasons shall be open to inspection by any person, and a register of past
matters with the names of parties shall be published and made available for
inspection by the public by means of the internet.
Recommendation 5
11.29 The
committee recommends that the new Insolvency Practitioners Authority establish
a licensing system for corporate insolvency practitioners similar to the system
currently used by ITSA. Practitioners should be required to renew their license
every three years.
11.30 The
new regulator should have the power to suspend a practitioner's license if they
are not adequately insured or if a matter referred to the CALDB is of
sufficient concern as to warrant suspension.
Recommendation 6
11.32 The committee recommends that as part of the licensing
and re-licensing processes, all corporate insolvency practitioners are required
to pay a licensing fee.
Recommendation 7
11.34 The
committee recommends that it be a condition of a practitioner's first license
renewal (ie: after three years of registration) that he or she has completed
the IPAA's Insolvency Education Program.
Recommendation 8
11.36 The
committee recommends that the new Australian Insolvency Practitioners Authority
set and administer a 'closed book' written examination. The passing of this
examination should be a pre-requisite for gaining a license as a corporate
insolvency practitioner.
Recommendation 9
11.38 The
committee recommends that the new Australian Insolvency Practitioners Authority
convene an eight person advisory panel to devise a written examination. The
panel should be chaired by the Chairman of the Authority and should also
include:
- a
representative from the Institute of Chartered Accountants of Australia;
- a
representative from the Insolvency Practitioners Association (IPAA);
- an
insolvency practitioner nominated by the IPAA;
- two
academic experts on insolvency law chosen by the Authority;
- a
person nominated by the Australian Bankers' Association;
- a
person nominated by the Council of Small Business Organisations of Australia;
and
- a
person nominated by a consumer advocacy group.
Recommendation 10
11.42 The
committee recommends that the new insolvency regulator work with the insurance
industry to ensure that insurance companies notify the regulator if a
practitioner's insurance lapses or expires. In these cases, the regulator
should contact the practitioner immediately and allow the practitioner 14 days
to acquire the policy. If this is not done, the regulator must suspend the
practitioner's license.
11.43 The
regulator should sight the insurance documents of practitioners as part of its
'flying squad' activities.
Recommendation 11
11.44 The
committee recommends that the Corporations Act 2001 be amended to impose
a penalty on registered insolvency practitioners who operate without PI
insurance.
Recommendation 12
11.46 The
committee recommends that the major accountancy bodies—the Institute of
Chartered Accountants of Australia, CPA Australia and the National Institute of
Accountants—establish a fidelity fund to ensure that creditors are insured for
fraud and wrongdoing.
Recommendation 13
11.55 The
committee recommends that section 1282(2)(a)(i) of the Corporations Act is amended
to read:
...is an Australian Legal
Practitioner holding a current practising certificate with at least five years'
post admission experience as a practising commercial lawyer;
and / or
...holds a Masters of Business
Administration with at least five years' commercial experience.
Recommendation 14
11.57 The
committee recommends that as part of the proposed licensing system, the
insolvency regulator can suspend a liquidator's license if they believe
overcharging has occurred.
Recommendation 15
11.59 The
committee recommends that section 503 of the Corporations Act 2001 be
amended to insert the following provision:
For purposes of this section,
cause shown includes:
(a) A
vote of no confidence by a majority of creditors;
(b) Where it appears time
based charging of the incumbent liquidator has not or will not result in a
reasonable cost-benefit analysis for the company.
Recommendation 16
11.62 The
committee recommends that the new insolvency regulator work with the IPAA and
the Institute of Chartered Accountants to ensure that insolvency practitioners
comply with the remuneration report template set out in the IPAA Code of
Professional Practice.
Recommendation 17
11.64 The
committee recommends that within the new Insolvency Practitioners Authority,
there is a unit established that is responsible for gathering, collating and
analysing data on a range of corporate and personal insolvency matters. The
data must be made publicly available in the Authority's Annual Report and
online. There should be no charge for accessing these data.
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