(2) For the purposes of paragraph (1)(f), ASIC must have regard to the matters in section 37B.
When a person has been an officer of a corporation unable to pay its debts
(3) This subsection applies to a person in relation to a corporation if, within the last 7 years:
(a) the person was an officer (within the meaning of the Corporations Act 2001) of the corporation when the corporation was:
(i) engaging in credit activities; or
(ii) carrying on a financial services business (within the meaning of the Corporations Act 2001); and
(b) the corporation was wound up either:
(i) while the person was such an officer of the corporation; or
(ii) within the 12 months after the person ceased to be such an officer of the corporation; and
(c) a liquidator lodged a report under subsection 533(1) of the Corporations Act 2001 (including that subsection as applied by section 526‑35 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006) about the corporation’s inability to pay its debts.
Person to be given an opportunity to be heard
(4) Subject to subsection (5), if ASIC has not delegated its power to make a banning order against a person to a Financial Services and Credit Panel, ASIC may make the order only after giving the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
Note: If ASIC delegates its power to make a banning order against a person to a Financial Services and Credit Panel, the panel may make the order only after holding a hearing in relation to the proposed order (see section 157 of the ASIC Act).
(5) ASIC may make a banning order against a person without giving the person the opportunities mentioned in subsection (4) if:
(a) either:
(i) ASIC has not delegated its power to make the banning order to a Financial Services and Credit Panel; or
(ii) ASIC exercises its power to make the banning order despite such a delegation; and
(b) subsection (6) or (6A) applies.
Note: See section 34AB of the Acts Interpretation Act 1901 (effect of delegation).
(6) This subsection applies if:
(a) ASIC’s grounds for making a banning order against a person include that ASIC has suspended or cancelled a licence of the person (see paragraph (1)(a)); and
(b) the suspension or cancellation took place without a hearing under section 54.
(6A) This subsection applies if:
(a) ASIC’s grounds for making a banning order against a person include that the person has been convicted of fraud (see paragraph (1)(c)); and
(b) the person has been convicted of serious fraud.
Copy of banning order to be given to the person
(7) ASIC must give a copy of a banning order to the person against whom it was made.
81 What a banning order prohibits
(1) A banning order made against a person may specify that the person is prohibited from doing one or more of the following:
(a) engaging in any credit activities;
(b) engaging in specified credit activities in specified circumstances or capacities;
(c) controlling, whether alone or in concert with one or more other entities (as defined by section 64A of the Corporations Act 2001), another person who engages in credit activities;
(d) performing any function involved in the engaging in of credit activities (including as an officer (within the meaning of the Corporations Act 2001), manager, employee, contractor or in some other capacity);
(e) performing specified functions involved in the engaging in of credit activities.
(2) The banning order may specify that a particular prohibition specified in the order applies against the person:
(a) if the sole ground for the banning order is because paragraph 80(1)(fc) applies—for a specified period of up to 5 years; or
(b) otherwise—either permanently or for a specified period.
Note: This subsection applies separately to each prohibition specified in the order.
(3) A banning order may include a provision allowing the person against whom it was made, subject to any specified conditions:
(a) to do specified acts; or
(b) to do specified acts in specified circumstances;
that the order would otherwise prohibit them from doing.
(4) A banning order is not a legislative instrument.
82 Effect of banning orders
Requirement not to engage in conduct contrary to banning order
(1) A person must not engage in conduct that is contrary to a banning order that is in force against the person.
Civil penalty: 5,000 penalty units.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 5 years imprisonment.
Note: A person against whom a banning order is in force cannot be granted a licence authorising the person to engage in a credit activity to which the banning order applies (see subsection 40(1)).
83 Variation or cancellation of banning orders
(1) ASIC may vary or cancel a banning order if ASIC is satisfied that it is appropriate to do so because of a change in any of the circumstances based on which ASIC made the order.
(2) ASIC may do so:
(a) on its own initiative; or
(b) if the person against whom the order was made lodges with ASIC an application for the variation or cancellation.
(3) The application must be in the approved form.
(4) If ASIC proposes not to vary or cancel a banning order in accordance with an application given by a person under paragraph (2)(b), ASIC must give the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and
(b) to make submissions to ASIC on the matter.
(5) ASIC must give written notice of the variation or cancellation of a banning order to the person against whom the order was made.
84 Date of effect, notice and publication of banning order, variation or cancellation
(1) A banning order comes into force when it is given to the person against whom it is made.
(2) A variation or cancellation of a banning order comes into force when written notice of the variation or cancellation is given to the person against whom the order was made.
(3) ASIC must publish a notice on ASIC’s website as soon as practicable after making, varying or cancelling a banning order. The notice must state when the banning order, or variation or cancellation of the banning order, came into force and:
(a) in the case of the making of a banning order—set out a copy of the banning order; or
(b) in the case of the variation of a banning order—set out a copy of the banning order as varied.
(4) However, if the banning order contains a provision of the kind referred to in subsection 81(3) and ASIC considers that the notice on its website would be unreasonably long if that provision were included, the notice may instead set out a summary of the provision’s effect.
85 Statement of reasons
(1) A copy of a banning order given to a person must be accompanied by a statement of reasons for the order.
(2) If ASIC varies a banning order made against a person, ASIC must, on request by the person, give the person a statement of reasons for the variation.
Division 3—Disqualification by the court
86 Disqualification by the court
(1) ASIC may apply to the court for one or more orders under subsection (2) in relation to a person if ASIC:
(a) cancels a licence of the person; or
(b) makes a banning order against the person that is to operate permanently.
(2) The court may make:
(a) one or more orders disqualifying the person, permanently or for a specified period, from doing one or more of the following:
(i) engaging in any credit activities;
(ii) engaging in specified credit activities in specified circumstances or capacities;
(iii) controlling, whether alone or in concert with one or more other entities (as defined by section 64A of the Corporations Act 2001), another person who engages in credit activities;
(iv) performing any function involved in the engaging in of credit activities (including as an officer (within the meaning of the Corporations Act 2001), manager, employee, contractor or in some other capacity);
(v) performing specified functions involved in the engaging in of credit activities; or
(b) any other order the court considers appropriate.
Note: A person against whom a disqualification order is in force cannot be granted a licence authorising the person to engage in a credit activity to which the disqualification order applies (see subsection 40(1)).
Part 2‑5—Financial records, trust accounts and audit reports
Division 1—Introduction
87 Guide to this Part
This Part is about financial records, trust accounts and matters relating to audit reports required under this Act.
Division 2 deals with the requirement for licensees to keep certain financial records, and provides for how those records must be kept.
Division 3 deals with trust accounts. Licensees that provide credit services and that receive money on behalf of others in the course of those services are required to maintain a trust account. Those licensees must also comply with requirements in relation to trust account money, trust account statements and trust account audit reports.
Division 4 has requirements relating to audit reports required by this Act, and the auditors that prepare those reports.
Division 2—Financial records of licensees
88 Obligation to keep financial records
Requirement to keep financial records
(1) A licensee must:
(a) keep financial records that correctly record and explain the transactions and financial position of any business of engaging in credit activities carried on by the licensee; and
(b) keep those records in accordance with this Division; and
(c) comply with subsection 90(2) in relation to the conversion of records into the English language; and
(d) comply with section 91 in relation to the location and production of records and particulars.
Civil penalty: 5,000 penalty units.
Meaning of financial records
(2) Financial records includes:
(a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and
(b) documents of prime entry; and
(c) any trust account statement or trust account report required under section 100.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement in relation to financial records under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes subsection (1).
Criminal penalty: 5 years imprisonment.
Financial records may be kept with other records
(4) A licensee does not contravene this Division merely because some or all of the financial records are prepared as a part of, or in conjunction with, the records relating to any other business that is carried on by the licensee.
Note: For the purposes of subsection (3), a defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
89 How financial records are to be kept
The financial records must be kept in a way that:
(a) enables true and fair profit and loss statements, and balance sheets, of the business referred to in paragraph 88(1)(a) to be prepared from time to time; and
(b) allows those statements and balance sheets to be conveniently and properly audited in accordance with the auditing standards (if any) prescribed by regulations made under section 106.
90 Language of financial records
(1) The financial records must be kept in writing in the English language, or in a manner that enables them to be readily accessible and readily converted into writing in the English language.
(2) If any of the financial records are not kept in writing in the English language, the licensee must, if required to convert the financial records concerned into writing in the English language by a person who is entitled to examine the financial records concerned, comply with the requirement within a reasonable time.
91 Location of financial records
If any of the financial records are kept outside this jurisdiction, the licensee must:
(a) cause to be sent to and retained at a place in this jurisdiction such particulars in relation to the business dealt with in those financial records as will enable true and fair profit and loss statements and balance sheets to be prepared; and
(b) if required by ASIC to produce those financial records at a place in this jurisdiction, comply with the requirement not later than 28 days after the requirement is made.
92 Information to be shown in financial records
The financial records must be kept in sufficient detail to show particulars of:
(a) all money received or paid by the licensee; and
(b) for each credit contract under which the licensee is the credit provider:
(i) the amount and day of all payments made by or on behalf of the debtor under the credit contract; and
(ii) all amounts (including principal, interest, fees and charges) owed by the debtor under the credit contract; and
(c) for each consumer lease under which the licensee is the lessor—the amount and day of all payments made by or on behalf of the lessee under the consumer lease; and
(d) for each guarantee under which the licensee is the beneficiary of the guarantee—the amount and day of all payments made by or on behalf of the guarantor under the guarantee; and
(e) all income received by the licensee from indirect remuneration, interest, and other sources, and all expenses, indirect remuneration, and interest paid by the licensee; and
(f) all the assets and liabilities (including contingent liabilities) of the licensee; and
(g) any other matters prescribed by the regulations.
93 Regulations may impose additional requirements
The regulations may impose additional requirements to be complied with in relation to the financial records including, for example:
(a) requirements for things to be contained in the records; and
(b) requirements relating to the level of detail to be shown in the records.
94 Financial records taken to be made with licensee’s authority
An entry in the records is, unless the contrary is proved, to be taken to have been made by, or with the authority of, the licensee.
95 Obligation to retain financial records for 7 years
Requirement to retain financial records
(1) A licensee that is required by this Division to make a financial record must retain it for 7 years after the transactions covered by the record are completed.
Civil penalty: 5,000 penalty units.
Regulations
(2) The regulations may prescribe financial records to which subsection (1) does not apply.
Records to be kept even if person stops carrying on business
(3) Financial records must be retained in accordance with this section, even if the person stops carrying on any business to which they relate.
Offence
(4) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 6 months imprisonment.
96 Financial records are prima facie evidence of matters
(1) In proceedings in a court, a financial record kept under this Division is admissible as prima facie evidence of any matter in the financial record.
(2) A document purporting to be a financial record kept by a licensee under this Division is, unless the contrary is proved, presumed to be a financial record kept by the licensee under this Division.
(3) If:
(a) because of subsection (1) a financial record is prima facie evidence of a matter; and
(b) the financial record, or a part of the financial, is kept or prepared by recording or storing matters (including that matter) by means of a mechanical, electronic or other device;
a written reproduction of that matter as so recorded or stored is admissible as prima facie evidence of that matter in a proceeding in a court.
(4) A written document that purports to reproduce a matter recorded or stored by means of a mechanical, electronic or other device is, unless the contrary is proved, presumed to be a reproduction of that matter.
Division 3—Trust accounts of credit service licensees
97 Application of this Division
This Division applies to a licensee (the credit service licensee) that:
(a) holds a licence that authorises the licensee to provide a credit service; and
(b) in the course of providing the credit service, receives money on behalf of another person.
98 Obligation for credit service licensees to maintain trust account
Requirement to maintain trust account
(1) The credit service licensee must maintain one more trust accounts (the trust account) in accordance with this section.
Civil penalty: 5,000 penalty units.
Requirements for trust accounts
(2) The trust account must be maintained with an Australian ADI (within the meaning of section 9 of the Corporations Act 2001).
(3) The trust account must be designated as the credit service licensee’s trust account.
Offence
(4) The credit service licensee commits an offence if:
(a) the credit service licensee is subject to a requirement under subsection (1); and
(b) the credit service licensee engages in conduct; and
(c) the conduct contravenes the requirement.
Criminal penalty: 6 months imprisonment.
99 Obligations in relation to trust account money
Requirement to pay money to credit of trust account
(1) The credit service licensee must pay to the credit of the trust account any money received by the credit service licensee on behalf of another person in relation to the credit service provided by the licensee.
Civil penalty: 5,000 penalty units.
Requirement in relation to withdrawal of money from trust account
(2) The credit service licensee must not withdraw any money paid into the trust account, other than for the purpose of paying the money in accordance with subsection (3).