Those regulated by ASIC are to pay ASIC for the privilege

An idea put forward by the Australian Government about a year ago has almost become a reality with the introduction into Parliament on 30 March 2017 of the ASIC Supervisory Cost Recovery Levy Act 2017 to establish an industry funding model for the Australian Securities and Investments Commission (ASIC) and with the release on 4 May 2017 of draft regulations for consultation.

The idea –  to enable the recovery of the regulatory costs of ASIC by imposing a levy on persons regulated by ASIC – was described in Parliament by the Assistant Minister to the Treasurer (Mr Sukkar) as follows:

Industry funding of ASIC will mean that … those entities that create the need for that regulation will be the ones who pay for it—as opposed to Australian taxpayers—who too often bear the cost of financial sector misconduct.  Further, because each regulated subsector will only ever pay an amount equal to its costs of supervision, industry funding will promote equity between different regulated entities. This is because certain industry subsectors will no longer cross-subsidise the costs of the regulation of other sectors.

The laws are due to take effect on 1 July 2017.  General news article: “Companies face levy in ASIC funding overhaul”.

ASIC Supervisory Cost Recovery Levy Regulations 2017

The closing date for submissions regarding the proposed Regulations is 26 May 2017.

In releasing its consultation paper for the Regulations the Treasury department said:

The Government is seeking stakeholder views on the draft regulations necessary to support the industry funding model, which will recover (the Australian Securities and Investments Commission’s)  regulatory costs though annual levies and fees-for-service. The proposed regulations are to establish the mechanisms that will be used to calculate the levies payable by each class of regulated entity, each financial year.

There are 6 industry sectors covered by the Regulations. Each sector has several industry subsectors.  In all there are 48 industry subsectors. Each subsector  describes the “leviable entity” that is included in the industry subsector.

Registered liquidators levy

Registered liquidators are in the industry sector named Corporate, and are leviable entities in a subsector named, not surprisingly, registered liquidators.

The levy to be imposed on each registered liquidator in a financial year is the sum of:

(a)  the minimum levy component (which is proposed to be $2,500); and

(b)  the graduated levy component.  The graduated levy component is a variable amount depending on each entity’s share of the total number of notifiable events for the subsector.  The Regulations define what constitutes a notifiable event (see below).  ASIC will prescribe its regulatory costs and the total number of these notifiable events for the subsector as part of its annual legislative instrument.

Notifiable events (entity metric) for liquidators

The main category of events or entity metrics for registered liquidators will be the number of appointments accepted during the financial year in the following roles:

1.   controller;
2.   liquidator;
3.   managing controller;
4.   receiver;
5.   receiver and manager;
6.   scheme manager;
7.   voluntary administrator;
8.   administrator of a deed of company arrangement.

Ongoing appointments of this types that were accepted in an earlier financial year and are still going at the start of the current financial year will also be included in the numbers.

So too will the following events/notices that are published for the entity during the financial year on the publication website maintained by ASIC :

• notice of meetings;
• notice of disclaimer of property;
• notice to submit particulars of debt or claims;
• notice to creditors to submit formal proof;
• notice of intention to declare dividend; and
• subject to certain conditions:
  • notice of the outcome of a proposal to pass a resolution without a meeting; and
  • an executed deed of company arrangement.

If the Regulations are enacted in their present form, registered liquidators will have to pay a minimum levy of $2,500 plus a variable amount depending on each entity’s share of the total number of notifiable events for the subsector.

Background

For background on this subject see my previous post  – written on 2 December 2016 and updated on 1 April 2017 – titled “Levy on registered liquidators and other ‘industries’ to help fund ASIC”.  To see that post CLICK HERE.

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