Div 40Disciplinary and other action

Division 40—Disciplinary and other action 40‑1  Simplified outline of this Division Remedying failure to lodge documents or give information or documents The Inspector‑General may direct a registered trustee to comply with a requirement to lodge a document, or give any information or document, to the Inspector‑General. If the trustee fails to comply with the direction, the Inspector‑General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply. Correcting and completing information given to the Inspector‑General If the Inspector‑General reasonably suspects that information that a registered trustee is required to give the Inspector‑General under this Act is incomplete or inaccurate, the Inspector‑General can direct the trustee to confirm, complete or correct the information. The Inspector‑General can also direct the trustee to tell someone about the defect in the information. If the trustee fails to comply with a direction, the Inspector‑General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply. Other grounds for a direction not to accept further appointments There are other grounds on which the Inspector‑General can issue a direction not to accept further appointments, for example, if the registered trustee fails to comply with a direction to convene a meeting. Suspending or cancelling registration An individual’s registration as a trustee can be suspended or cancelled. The registration is automatically cancelled if the registered trustee becomes an insolvent under administration or dies. In some circumstances, the Inspector‑General can suspend or cancel the registration of a person as a trustee. The Inspector‑General can also give a registered trustee notice to show‑cause why the trustee should continue to be registered. If the Inspector‑General is not satisfied with the answer, the Inspector‑General can refer the matter to a committee which will make a decision on what action should be taken. An industry body can give the Inspector‑General notice of possible grounds for disciplinary action. If a registration is suspended, the trustee can apply to the Inspector‑General to have the suspension lifted or shortened. A decision about the suspension or cancellation of the registration of a trustee is reviewable by the Administrative Appeals Tribunal (see Division 96 of this Schedule). Subdivision B—Direction to comply 40‑5  Registered trustee to remedy failure to lodge documents or give information or documents  (1) This section applies if a registered trustee fails to comply with a requirement to lodge any document, or give any information or document, that the trustee is required under this Act to lodge with or give to the Inspector‑General. Inspector‑General may give direction to comply  (2) The Inspector‑General may, in writing, direct the trustee to comply with the requirement within 10 business days after the notice is given.  (3) The Inspector‑General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.  (4) If the trustee does not comply within the period, the Inspector‑General may do either or both of the following:  (b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45‑1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.  (6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector‑General. 40‑10  Registered trustee to correct inaccuracies etc.  (1) This section applies if the Inspector‑General reasonably suspects that information that a registered trustee is required under this Act to give the Inspector‑General (whether in a document lodged or given to the Inspector‑General or otherwise) is incomplete or incorrect in any particular. Inspector‑General may give direction to correct information etc.  (2) The Inspector‑General may, in writing, direct the trustee to do one or more of the following within a period of 10 business days after the direction is given:  (a) confirm to the Inspector‑General that the information is complete and correct;  (b) complete or correct the information (as the case requires);  (c) notify any persons specified by the Inspector‑General in the direction of the addition or correction.  (3) The Inspector‑General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.  (4) If the trustee does not comply within the period, the Inspector‑General may do either or both of the following:  (b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45‑1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.  (6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person giving incomplete or incorrect information. 40‑15  Direction not to accept further appointments Inspector‑General may give direction not to accept further appointments  (1) The Inspector‑General may, in writing, direct a registered trustee not to accept any further appointments as a trustee, or not to accept any further appointments as a trustee during a period specified in the direction, if:  (a) the trustee has failed to comply with a direction given to the trustee under section 40‑5 (direction to remedy failure to lodge documents, or give information or documents); or  (b) the trustee has failed to comply with a direction given to the trustee under section 40‑10 (direction to correct inaccuracies); or  (c) a committee has decided under paragraph 40‑55(1)(d) that the Inspector‑General should give the direction referred to in that paragraph; or  (d) the trustee has failed to comply with a direction given to the trustee under section 70‑70 (direction to give relevant material); or  (e) the trustee has failed to comply with a direction given to the trustee under subsection 75‑20(1) or (2) (direction to convene a meeting of creditors or comply with requirements in relation to such a meeting). Condition of registration to comply with direction  (2) If the Inspector‑General gives a direction to a registered trustee under subsection (1), it is a condition of the trustee’s registration that the trustee must comply with the direction. Withdrawal of direction  (3) The Inspector‑General may withdraw a direction given under subsection (1).  (4) The condition is removed from the trustee’s registration if the Inspector‑General withdraws the direction.  (5) A direction under subsection (1) is not a legislative instrument.  (6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to:  (a) a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector‑General; or  (b) a person giving incomplete or incorrect information; or  (c) any matter in relation to which a committee makes a decision under subsection 40‑55(1).  (7) Nothing in this section limits the power of the Inspector‑General under this Act, or any other law, to apply to the Court for an order in relation to a failure to comply with a direction mentioned in subsection (1). Subdivision C—Automatic cancellation 40‑20  Automatic cancellation  (1) The registration of a person as a trustee is cancelled if:  (a) the person becomes an insolvent under administration; or  (b) the person dies.  (2) The cancellation takes effect on the day the event mentioned in subsection (1) happens. Subdivision D—Inspector‑General may suspend or cancel registration 40‑25  Inspector‑General may suspend registration  (1) The Inspector‑General may suspend the registration of a person as a trustee if:  (a) the person is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001, or under a law of an external Territory or a law of a foreign country; or  (c) the person’s registration as a liquidator under the Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the person to cancel or suspend the registration; or  (d) the person owes more than the prescribed amount of notified estate charges; or  (e) if the Court has made an order under section 90‑15 that the person repay remuneration—the person has failed to repay the remuneration; or  (f) the person has been convicted of an offence involving fraud or dishonesty; or  (g) the person lodges a request with the Inspector‑General in the approved form to have the registration suspended. Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them. 40‑30  Inspector‑General may cancel registration  (1) The Inspector‑General may cancel the registration of a person as a trustee if:  (a) the person is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001, or under a law of an external Territory or a law of a foreign country; or  (c) the person’s registration as a liquidator under the Corporations Act 2001 has been cancelled, other than in compliance with a written request by the person to cancel the registration; or  (d) the person owes more than the prescribed amount of notified estate charges; or  (e) if the Court has made an order under section 90‑15 that the person repay remuneration—the person has failed to repay the remuneration; or  (f) the person has been convicted of an offence involving fraud or dishonesty; or  (g) the person lodges a request with the Inspector‑General in the approved form to have the registration cancelled. Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them. 40‑35  Notice of suspension or cancellation  (1) This section applies if the Inspector‑General decides under section 40‑25 or 40‑30 to suspend or cancel the registration of a person as a trustee. Inspector‑General must give notice of decision  (2) The Inspector‑General must, within 10 business days after making the decision, give the person a written notice setting out the decision, and the reasons for the decision. When decision comes into effect  (3) The decision comes into effect on the day after the notice is given to the person. Failure to give notice does not affect validity of decision  (4) A failure by the Inspector‑General to give the notice under subsection (2) within 10 business days does not affect the validity of the decision. Subdivision E—Disciplinary action by committee 40‑40  Inspector‑General may give a show‑cause notice  (1) The Inspector‑General may give a registered trustee notice in writing asking the trustee to give the Inspector‑General a written explanation why the trustee should continue to be registered, if the Inspector‑General believes that:  (a) the trustee no longer has the qualifications, experience, knowledge and abilities prescribed under paragraph 20‑20(4)(a); or  (b) the trustee has committed an act of bankruptcy within the meaning of this Act or a corresponding law of an external Territory or a foreign country; or  (c) the trustee is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001, or under a law of an external Territory or a law of a foreign country; or  (d) the trustee has ceased to have:  (e) the trustee has breached a current condition imposed on the trustee; or  (f) the trustee has contravened a provision of this Act; or  (g) the trustee’s registration as a liquidator under the Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the trustee to cancel or suspend the registration; or  (h) the trustee owes more than the prescribed amount of notified estate charges; or  (i) if the Court has made an order under section 90‑15 that the trustee repay remuneration—the trustee has failed to repay the remuneration; or  (j) the trustee has been convicted of an offence involving fraud or dishonesty; or  (k) the trustee is permanently or temporarily unable to perform the functions and duties of a trustee because of physical or mental incapacity; or  (l) the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country):  (i) the duties of a trustee; or  (ii) any other duties or functions that a registered trustee is required to carry out under a law of the Commonwealth or of a State or Territory, or under the general law; or  (m) if the trustee is or was the administrator of a debt agreement—the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country) the duties of an administrator in relation to a debt agreement; or  (n) the trustee is not a fit and proper person; or  (o) the trustee is not resident in Australia or in another prescribed country; or  (p) the trustee has failed to comply with a standard prescribed for the purposes of subsection (4).  (2) A notice under subsection (1) is not a legislative instrument.  (3) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914. Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.  (4) The Insolvency Practice Rules may prescribe standards applicable to the exercise of powers, or the carrying out of duties, of registered trustees. 40‑45  Inspector‑General may convene a committee  (1) The Inspector‑General may convene a committee to make a decision of a kind mentioned in section 40‑55 in relation to a registered trustee, or registered trustees. Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b). Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c). 40‑50  Inspector‑General may refer matters to the committee   The Inspector‑General may refer a registered trustee to a committee convened under section 40‑45 if the Inspector‑General:  (a) gives the trustee a notice under section 40‑40 (a show‑cause notice); and  (i) does not receive an explanation within 20 business days after the notice is given; or  (ii) is not satisfied by the explanation. 40‑55  Decision of the committee  (1) If a registered trustee is referred to a committee under section 40‑50, the committee must decide one or more of the following:  (a) that the trustee should continue to be registered;  (b) that the trustee’s registration should be suspended for a period, or until the occurrence of an event, specified in the decision;  (c) that the trustee’s registration should be cancelled;  (d) that the Inspector‑General should direct the trustee not to accept any further appointments as trustee, or not to accept any further appointments as trustee during the period specified in the decision;  (e) that the trustee should be publicly admonished or reprimanded;  (f) that a condition specified in the decision should be imposed on the trustee;  (g) that a condition should be imposed on all other registered trustees that they must not allow the trustee to carry out any of the functions or duties, or exercise any of the powers, of a trustee on their behalf (whether as employee, agent, consultant or otherwise) for a period specified in the decision of no more than 10 years;  (h) that the Inspector‑General should publish specified information in relation to the committee’s decision and the reasons for that decision.  (2) Without limiting paragraph (1)(f), conditions imposed under that paragraph may include one or more of the following:  (a) a condition that the trustee engage in, or refrain from engaging in, specified conduct;  (b) a condition that the trustee engage in, or refrain from engaging in, specified conduct except in specified circumstances;  (c) a condition that the trustee publish specified information;  (d) a condition that the trustee notify a specified person or class of persons of specified information;  (e) a condition that the trustee publish a specified statement;  (f) a condition that the trustee make a specified statement to a specified person or class of persons.  (3) In making its decision, the committee may have regard to:  (a) any information provided to the committee by the Inspector‑General; and  (b) any explanation given by the trustee; and  (c) any other information given by the trustee to the committee; and  (d) if the trustee is or was also a registered liquidator under the Corporations Act 2001—any information in relation to the trustee given to the committee by ASIC or a committee convened under the Insolvency Practice Schedule (Corporations); and  (e) any other matter that the committee considers relevant. 40‑60  Committee to report   The committee must give the registered trustee and the Inspector‑General a report setting out:  (a) the committee’s decision in relation to the trustee; and  (c) if the committee decides under paragraph 40‑55(1)(f) that the trustee should be registered subject to a condition:  (ii) the committee’s reasons for imposing the condition; and  (d) if the committee decides under paragraph 40‑55(1)(g) that a condition should be imposed on all other registered trustees in relation to the trustee: 40‑65  Inspector‑General must give effect to the committee’s decision   The Inspector‑General must give effect to the committee’s decision. Subdivision F—Lifting or shortening suspension 40‑70  Application to lift or shorten suspension  (1) This section applies if a person’s registration as a trustee has been suspended. Suspended trustee may apply to the Inspector‑General  (2) The person may apply to the Inspector‑General:  (a) for the suspension to be lifted; or  (b) for the period of the suspension to be shortened.  (3) The application must be lodged with the Inspector‑General in the approved form.  (4) The application is properly made if subsection (3) is complied with. 40‑75  Inspector‑General may convene a committee to consider applications  (1) The Inspector‑General may convene a committee for the purposes of considering an application, or applications, made under section 40‑70. Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b). Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c). 40‑80  Inspector‑General must refer applications to a committee  (1) The Inspector‑General must refer an application that is properly made under section 40‑70 to a committee convened under section 40‑75 for consideration. 40‑85  Committee to consider applications  (1) If an application is referred to a committee, the committee must consider the application.  (2) Unless the applicant otherwise agrees, the committee must interview the applicant for the purposes of considering the application.  (3) Within 10 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2), the committee must:  (a) decide whether the suspension should be lifted, or the period of the suspension shortened; and  (b) if the period of the suspension is to be shortened—specify when the suspension is to end. 40‑90  Committee to report  (c) if the committee decides that the period of the suspension should be shortened—when the suspension is to end. 40‑95  Committee’s decision given effect   If the committee decides that a suspension is to be lifted or shortened, the suspension is lifted or shortened in accordance with the decision. Subdivision G—Action initiated by industry body 40‑100  Notice by industry bodies of possible grounds for disciplinary action Industry body may lodge notice  (1) An industry body may lodge with the Inspector‑General a notice in the approved form (an industry notice):  (a) stating that the body reasonably suspects that there are grounds for the Inspector‑General:  (i) to suspend the registration of a registered trustee under section 40‑25; or  (ii) to cancel the registration of a registered trustee under section 40‑30; or  (iii) to give a registered trustee a notice under section 40‑40 (a show‑cause notice); or  (iv) to impose a condition on a registered trustee under another provision of this Schedule; and  (b) identifying the registered trustee; and  (c) including the information and copies of any documents upon which the suspicion is founded. Inspector‑General must consider information and documents  (2) The Inspector‑General must consider the information and the copies of any documents included with the industry notice. Inspector‑General must give notice if no action to be taken  (3) If, after such consideration, the Inspector‑General decides to take no action in relation to the matters raised by the industry notice, the Inspector‑General must give the industry body written notice of that fact. 45 business days to consider and decide  (4) The consideration of the information and the copies of any documents included with the industry notice must be completed and, if the Inspector‑General decides to take no action, a notice under subsection (3) given, within 45 business days after the industry notice is lodged. Inspector‑General not precluded from taking action  (5) The Inspector‑General is not precluded from:  (a) suspending the registration of a registered trustee under section 40‑25; or  (b) cancelling the registration of a registered trustee under section 40‑30; or  (c) giving a registered trustee a notice under section 40‑40 (a show‑cause notice); or  (d) imposing a condition on a registered trustee under another provision of this Schedule; wholly or partly on the basis of information or a copy of a document included with the industry notice, merely because the Inspector‑General has given a notice under subsection (3) in relation to the matters raised by the industry notice. Notice to industry body if Inspector‑General takes action  (6) If the Inspector‑General does take action of the kind mentioned in subsection (5) wholly or partly on the basis of information or a copy of a document included with the industry notice, the Inspector‑General must give the industry body notice of that fact.  (7) A notice under subsection (3) or (6) is not a legislative instrument. 40‑105  No liability for notice given in good faith etc.  (1) An industry body is not liable civilly, criminally or under any administrative process for giving a notice under subsection 40‑100(1) if:  (a) the body acted in good faith in giving the notice; and  (b) the suspicion that is the subject of the notice is a reasonable suspicion.  (2) A person who, in good faith, makes a decision as a result of which the industry body gives a notice under subsection 40‑100(1) is not liable civilly, criminally or under any administrative process for making the decision.  (3) A person who, in good faith, gives information or a document to an industry body that is included, or a copy of which is included, in a notice under subsection 40‑100(1) is not liable civilly, criminally or under any administrative process for giving the information or document. 40‑110  Meaning of industry bodies   The Insolvency Practice Rules may prescribe industry bodies for the purposes of this Subdivision.