02 May 2017

ASIC actively monitoring independence


2 min

Regulators ensuring compliance.

In an effort to increase the transparency of insolvency practitioners’ activities, the Australian Securities and Investments Commission (ASIC) now requires practitioners to lodge a Declaration of Relevant Relationships and/or the Declaration of Indemnities, known in the industry as a DIRRI. Insolvency practitioners declare their independence relating to the company they have accepted a voluntary administration appointment for on this official ASIC document. While currently DIRRIs are only required for voluntary administration appointments, the next round of changes scheduled for September is predicted to include all other corporate appointment types.

Though practitioners have been required to declare their independence, the difference is that this information will now be actively reviewed and assessed by the regulatory body.

What does this mean?

Creditors, directors and other parties with vested interest in the outcome of an insolvency appointment like a voluntary administration can be secure in the knowledge that the appointed insolvency practitioner has no conflicts of interest and therefore not likely to be susceptible to undue influence or relationships. Advisors who refer their clients to insolvency firms like Worrells are also assured that any advice given will be in their clients’ interest or they cannot accept the appointment.

A voluntary administrator must declare the following:

  • If they received or are entitled to receive an indemnity or an upfront payment for remuneration.

  • If they provided any professional advice to the company or to an associate of the company, other than advice on the company’s insolvency and/or the administration processes for insolvent companies under the Corporations Act 2001.

  • If within a two-year period prior to the appointment to the current company they were appointed to any other company that was an associated company, or had common directors with the current company, or a related body corporate of the current company.

At Worrells we have built and maintained a systemised approach for over five years to identify any possible conflicts within the Worrells Group network of 26 offices across Qld, NSW, ACT, Vic, SA, and WA in both corporate and personal insolvency administrations that relate to any of our 24 Worrells Partners who are registered liquidators/bankruptcy trustees.

If advisors and their clients would like more information on how liquidators perform prudent internal checks and declare their independence, or to get advice on any insolvency matter, please contact your local Worrells office.

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