Latest Shouts In The Shoutbox -- View The Shoutbox · Rules Collapse  

Add Reply
New Topic
New Poll

 ASIC Failing Our Small Businesses
 Posted: Oct 22 2017, 01:06 PM

Rana Capillum

Group: Featured Blogers
Posts: 8788
Member No.: 17
Joined: 17-January 12

Status: Offline
Rep: 142 pts

Why ASIC is failing our small businesses

Sean Smith
Saturday, 21 October 2017 11:30AM

user posted image

Out-of-pocket small firms are entitled to ask if the watchdog has their backs.Picture: Getty Images/BananaStock RF

Australia’s under-resourced corporate regulator has emerged from the US lawsuit against Rio Tinto as an irrelevancy when it comes to exposing and prosecuting wrongdoing at the big end of town.

But out-of-pocket small businesses are also entitled to ask whether the Australian Securities and Investments Commission has their backs.

The most vulnerable victims of a company collapse are the trade creditors. In many cases, they’re small businesses that can ill-afford the loss. Sometimes that unrecoverable debt is enough to also force them under.

On occasions, the stricken company has traded while insolvent, racking up bills even though it didn’t have the money to pay its debts as they fell due.

Yet for all the hundreds of millions of dollars lost every year because of insolvent trading, there seems to be little justice available for the victims.

Insolvent trading can be a tricky area. A business may not be able to pay its debts from cash flow but still be technically solvent because it retains the support of its bank. Until the lender pulls the pin, the company continues to incur credit even though it is unable to pay its suppliers.

The Corporations Act has some statutory defences for directors involved in insolvent trading. But it also details civil and criminal penalties for breaches, including up to five years jail for directors who act dishonestly by allowing a company to incur debts while insolvent.

But those penalties are seemingly employed sparingly by ASIC. The regulator’s 2015-16 annual report — its next update is imminent — showed receivers, administrators and liquidators of failed companies filed 8258 cases of alleged misconduct for the period under review, up 20 per cent on the year earlier.

ASIC determined that 89 per cent of them required no further action. It sought supplementary information on 679 cases, eventually deciding to take no action on 543 of those because of insufficient evidence.

So, just 129 of those more than 8000 initial cases of alleged misconduct were referred for compliance, investigation or surveillance. Any wonder that dodgy operators think they can get away with bad behaviour?

Once again our bureaucracy fails to look after the little man.

"Show respect to all people and grovel to none. When you arise in the morning, give thanks for the food and for the joy of living. If you see no reason for giving thanks, the fault lies only in yourself." - Tecumseh (March 1768 – October 5, 1813) Shawnee Chief
 Posted: Oct 22 2017, 04:48 PM

Supremo Poster

Group: Moderators
Posts: 16194
Member No.: 3
Joined: 21-July 11

Status: Offline
Rep: 65 pts

Australia’s under-resourced corporate regulator

I wonder how under resourced they really are, or is it just an excuse?

If they really are under resourced, it is a failure by God knows how many successive governments. It would go back decades. Probably always been the way.

Everybody is Willing:
Some are willing to work, the rest are willing to let them!

The older I get, the better I was.
1 User(s) are reading this topic (1 Guests and 0 Anonymous Users)
0 Members:

Topic Options
Add Reply
New Topic
New Poll