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Questions and Answers
Page last updated 4/3/2008 |
Regarding Electronic Communications
Electronic communication in external administrations under chapter 5 of the Corporations Act 2001
Insolvency Practitioner’s questions
When do the electronic communication provisions take effect?
Why were the electronic communications provisions introduced?
Do the provisions apply to all types of External Administration?
Where will I find the legislation applicable to electronic communication?
To what sections of the Corporations Act do the electronic communications provisions apply?
Is it necessary to dispatch notices and documents to the recipient?
Can a creditor nominate different methods of communication for different provisions of the Act?
As company administrator I am sending a circular to creditors. Can I send it electronically?
Does the external administration have to create or provide notices and documents available in electronic format?
Does the creditor's nomination have to be made in a particular form?
Does the external administrator's invitation have to be issued in a particular form?
What happens if a creditor nominates electronic notification means even thought the external administrator has not invited such a nomination?
If a creditor nominates an electronic notification means following my invitation, is the external administrator obliged to use those means in all future communications?
When do the electronic communication provisions take effect?
31st December 2007.
Why were the electronic communication provisions introduced?
"To enhance communication with stakeholders in external administration and reduce the costs of external administrations". [ Explanatory Memorandum, paragraph 4.129]. Many Insolvency Practitioners - especially those who administer large public corporations with hundreds or thousands of creditors - have expressed concern about the impracticality and costs caused by the obligation to use a paper-based system for issuing notices, documents and reports to creditors.
Do the provisions apply to all types of External Administration?
No.
The provisions only apply to Company Administrators, Deed Administrators and Liquidators.
Receivers, Receivers and Managers and Controllers are not included.
Where will I find the legislation applicable to electronic communication?
Section 600G of the Corporations Act 2001 and Regulation 5.6.11A of the Corporations Regulations 2001.
To what sections of the Corporations Act do the electronic communications provisions apply?
Section
|
Description |
436E(3)(a) |
Administrator – First Meeting - Notice |
439A(3)(a) |
Administrator – Second Meeting - Notice |
439A(4) |
Administrator – Second Meeting - Report |
445F(2) |
Deed Administrator – Meeting to Vary or Terminate Deed – Notice |
449C(5)(a) |
Administrator – Vacancy in Office – Notice |
450A(3) |
Administrator – Notice to Chargeholders |
450B(a) |
Deed Administrator – Notice of Execution of Deed |
450C(b) |
Deed Administrator – Notice of Failure to Execute Deed |
450D(b) |
Deed Administrator – Termination of Deed |
473(4) |
Liquidator – Notice to Creditors to Consider Remuneration |
496(2) |
Liquidator – Members’ Voluntary – Meeting where company turns out to be Insolvent |
497(2)(a) |
Liquidator – Creditors’ Voluntary – First Meeting - Notice |
508(4) |
Liquidator – Notice that Annual Report Prepared |
539(5) |
Liquidator – Notice of Account of Receipts and Payments |
550(3) |
Meeting to Fill Vacancy in Committee of Inspection |
568A(1)(b) |
Liquidator – Notice of Disclaimer |
574(2) |
Liquidator – Pooling – Meeting of Eligible Unsecured Creditors |
574(3) |
Liquidator – Pooling – Statement and Report |
579J(1) |
Liquidator – Pooling – Notice of Application for Order or Website |
579J(2) |
Liquidator – Pooling – Notice of Application for Order or Website |
579K(1) |
Liquidator – Pooling – Notice of Order |
579K(2) |
Liquidator – Pooling – Notice of Order |
579K(3) |
Liquidator – Pooling – Notice of Order |
579K(4). |
Liquidator – Pooling – Notice of Order |
Regulation
|
Description |
5.6.12(1) |
(a) a meeting convened under Part 5.3A, 5.4, 5.4B, 5.5 or 5.6 of the Act that is: (i) a meeting of members, creditors or contributories of a company; or (ii) a joint meeting of creditors and members of a company; or (iii) a meeting of a committee of inspection; or (iv) a meeting of a committee of creditors; or (v) a meeting of eligible employee creditors; or (vi) a meeting, on a consolidated basis, of creditors of companies in a group; and (b) a meeting of creditors of a company held under a deed of company arrangement. |
5.6.16(6) |
Type of form to be used |
5.6.48(2)(b) |
Liquidator’s Notice to Submit Proof of Debt |
5.6.53(1) |
Liquidator – Request Further Information re Proof of Debt |
5.6.54(1) |
Liquidator – Notice of Rejection in Full or in Part of Proof of Debt |
5.6.55(3) |
Liquidator – Notice of Revocation or Amendment of decision re POD |
5.6.59(1) |
Liquidator – Notice of Settlement of List of Contributories |
5.6.62(1) |
Liquidator – Notice to Contributories |
5.6.65(1)(b) |
Liquidator – Intention to Declare a Dividend |
5.6.66(1)(d) |
Liquidator – Notice of Decision re POD |
5.6.66(3)(a) |
Liquidator – Dealing with POD |
What is electronic communication?
The heading of the relevant section of the Act [s.600G] refers to "electronic methods of giving or sending certain notices etc."
Email and Fax
A method clearly included is the transmission of notices or documents to an "electronic address", e.g., an email address. Also included under "electronic methods" is transmission by fax (telecommunication), because the legislation uses the phrase "an electronic address or facsimile number".
Other Electronic Means
Under the same heading are "any other electronic means by which the recipient may be notified of such notices or documents". Arguably this could include telephone communication. But the Explanatory Memorandum states that "this provision will allow for the take up of future technologies that may permit electronic communications without using an electronic address" [emphasis added].
Is it necessary to dispatch notices and documents to the recipient?
It depends on which delivery procedure the recipient chooses, because a recipient who desires to be notified by electronic means has the right to choose between two distinct delivery modes:
Delivery Mode 1
Notices and documents are sent to a fax number or electronic address (email address), or sent by some other electronic means.
Delivery Mode 2
Rather than sending the notices and documents, the recipient is given electronic notice that they are available for access by electronic means and told how the recipient may access them. To govern this procedure the legislation contains two new phrases: "nominated notification means" and "nominated access means".
"Nominated notification means" is defined as an electronic means nominated by the recipient "by which the recipient may be notified that such notices or documents are available". For example, the recipient (e.g., a creditor or an employee) may nominate that such notification is to be sent by fax or email.
"Nominated access means" is defined as an electronic means nominated by the recipient that "the recipient may use to access such notices or documents". For example, the recipient may nominate that he or she will access the notices via the internet.
As can be seen, if the recipient chooses delivery mode 2 the only document sent is notice that notices and documents are available.
Once a recipient (e.g., a creditor) nominates an electronic number or address, may all communication with the recipient be sent to that number or address?
No. Only if the notice or document is sent pursuant to one of the specified provisions of the Corporations Act. However, in most external administrations these provisions are likely to cover all communications with creditors.
As company administrator I am sending a circular to creditors. Can I send it electronically?
Not if it is the first circular to creditors.
A company administrator (or liquidator, etc.) who wants to use electronic communications must first invite creditors to use that method. It follows, that this invitation must be in paper form.
If such an invitation is issued, subsequent circulars to those creditors who have accepted the invitation and supplied the relevant information may be sent electronically .
Does the external administration have to create or provide notices and documents available in electronic format?
No.
Does the creditor's nomination have to be made in a particular form?
There is no simple answer to this question.
Section 109X of the Corporations Act 2001 requires that service of a document on a liquidator or administrator of a company be made as follows:
"(c) if a liquidator of the company has been appointed—leaving it at, or posting it to, the address of the liquidator’s office in the most recent notice of that address lodged with ASIC; or
(d) if an administrator of the company has been appointed—leaving it at, or posting it to, the address of the administrator in the most recent notice of that address lodged with ASIC."
The address referred to in section 109X is the address under section 537 (liquidator) prescribed form does not make provision for including an email address
There appears to be nothing in the Act, including its electronic communications provisions, which would release creditors from this requirement. So it appears that creditors may be required to put their nomination of an electronic address in writing, and leave the written document at, or post it to, the official address of the liquidator/administrator.
No. It can be made verbally or in writing. (No form is approved or prescribed in the Corporations Act or Corporations Regulations.)
Note however, that
Does the external administrator's invitation have to be issued in a particular form?
No. It can be issued verbally or in writing, but probably not in an electronic form. (No form is approved or prescribed in the Corporations Act or Corporations Regulations.)
The legislation's Explanatory Memorandum states: "It is expected that external administrators would seek the nomination in a form that could be substantiated later in the event a dispute were to occur about its content."
What happens if a creditor nominates electronic notification means even thought the external administrator has not invited such a nomination?
The administrator could ignore or reject the creditor's nomination, because the provision or use of electronic communication facilities is not mandatory.
If a creditor nominates an electronic notification means following my invitation, is the external administrator obliged to use those means in all future communications?
No. The legislation states that an external administrator MAY use the nominated electronic address, etc. In other words, it is not obligatory.
This flexibility probably has something to do with the unreliable nature of electronic communication. If, at a critical time, the administrator's file server crashes, or his or her Internet Service Provider is not operating, or the telephone/digital communication system is down, the resultant interruption to electronic communication may mean that the administrator has to revert to postal mail.