Section 30 and Section 33 Notices – ASIC’s Power to Compel Production of Books

The Australian Securities and Investments Act 2001 (ASIC Act) gives ASIC the power to issue section 30 and section 33 notices compelling the production of certain books.

Section 30 and section 33 notices are tools that ASIC can use when undertaking surveillances.  ASIC may also issue these notices when conducting investigations into suspected breaches of the law in order to obtain information and documents from those that are the subject of the investigation as well as from those who are not.

When can ASIC issue a section 30 and section 33 notice?

ASIC may only issue section 30 and section 33 notices for limited purposes.  These purposes include:

1. for the performance or exercise of any of ASIC’s functions or powers under the Corporations Act 2001 and the ASIC Act (Corporations Legislation);
2. to ensure compliance with the Corporations Legislation;
3. in relation to an alleged or suspected contravention of:
   1. the Corporations Legislation; or
   2. a law of the Commonwealth or of a State or Territory that concerns the management or affairs of a body corporate or involves fraud or dishonesty and relates to a body corporate or a financial product; or
4. for the purposes of a formal investigation.

What is a section 30 notice?

By issuing a section 30 notice, ASIC can compel a person, company or responsible entity to produce specific books relating to the affairs of a company or registered scheme.  Although the word “books” produces a mental picture of physical books and a visit to the library, the word is defined very broadly and includes any record of information.  So, a section 30 notice may also require the production of electronic data and files. This would cover messages sent as SMSs or through other instant messaging applications. To extend its reach even further, the word “books” includes a “document” and the definition of a “document” includes any article or material from which sounds, images or writings are capable of being reproduced with or without the aid of any other article or device. This would cover such things as voice recorded memos, flow charts and org charts to name a few.

What is a section 33 notice?

Amongst other things, by issuing a section 33 notice, ASIC can compel a person to produce specific books in their possession and which relate to, amongst other things:

• the affairs of a company
• the affairs of a registered scheme; and
• a financial service.

A section 33 notice shares the same definitions of “books” and “document” to a section 30 notice, and so a section 33 notice may require the production of electronic data and files.

What must be set out in a section 30 notice and a section 33 notice?

A section 30 notice and a section 33 notice must be issued by ASIC in writing and must:

• describe the books sought by ASIC; and
• set out the time and place for the production of the books and the ASIC staff member to whom they should be produced.

The time and place for the production of the books must be a reasonable time from the date of service of the notice, and factor in the books required for production and the type of inquiry being undertaken.

The notice must also explain in general terms the basis upon which ASIC requires production of the books.

ASIC has released document production guidelines

In March 2020, ASIC issued document production guidelines which outline ASIC’s preferred methods for the production of books.

In Information Sheet 242, ASIC says: “If you do not produce books in accordance with the guidelines, ASIC may ask you to produce the books again following the guidelines.”

The guideline also set out how ASIC can help the recipient of a section 30 or section 33 notice.

You must comply with section 30 and 33 notices

You commit an offence if you intentionally or recklessly fail to comply with a section 30 or 33 notice.

However, you do not have to provide ASIC with books or parts of books that attract legal professional privilege.  ASIC sets out the process for claiming legal professional privilege over books in Information Sheet 165.

You should therefore carefully examine any books that fall within the scope of a section 30 or section 33 notice to determine whether they attract legal professional privilege and therefore do not need to be provided to ASIC.  You may, and should, seek advice in this regard.

Recent case law

A case  brought by ASIC in the Federal Court of Australia (ASIC v Maxi EFX Global AU Pty Ltd [2020] FCA 1263) confirmed ASIC’s broad power to compel parties it regulates to provide it with books.  This case also demonstrates that ASIC will enlist the Court’s assistance to ensure compliance with a section 33 notice it has issued.

As part of an investigation, ASIC issued a section 33 notice to Maxi EFX Global AU Pty Ltd (Maxi EFX) requiring it to produce books.  While a large number of books were produced to ASIC pursuant to the notice, not all of the required books were produced.  ASIC sought an order from the Court requiring Maxi EFX to comply fully with the section 33 notice.

Maxi EFX opposed the order sought by ASIC and argued that the section 33 notice was invalid as it was unclear, sought an unreasonably broad range of books, and that certain books were in the physical possession of overseas third-party service providers and were therefore unable to be produced.

The Court held that the notice was validly issued and was not too broad.  The Court also held that documents held by overseas third-party providers were held “on behalf of, or on account of” Maxi EFX and were therefore still in Maxi EFX’s “possession, custody or control”.

The Court noted the distinction between ASIC’s information-gathering powers and the discovery and subpoena regimes of various courts.  The former is more far-reaching and, unlike the latter, cannot be objected to on the basis that ASIC is on a “fishing expedition”.

Justice Wigney also stated that “…it is tolerably clear that mere inconvenience and expense would not ordinarily provide a reasonable excuse for non-compliance.”

Maxi EFX appealed this decision to the Full Federal Court of Australia (Maxi EFX Global AU Pty Ltd v ASIC [2021] FCAFC 59]. The appeal was dismissed, with costs.

A case recently brought by ASIC in the Federal Court of Australia (ASIC v Provide Nominees Pty Ltd [2023] FCA 1137) is yet another example of ASIC enlisting the courts assistance to ensure compliance with a section 33 notice.

As part of an investigation, ASIC issued a section 33 notice to Provide Nominees Pty Ltd requiring it to produce books as specified in 15 categories of documents set out in the schedule to the notice.  While some of the required books were produced, not all of the books were produced and of those that were produced, some were redacted.

Provide Nominees Pty Ltd explained to ASIC that it had redacted the personal information of its clients in certain documents produced in compliance with its obligations under contract and under the Privacy Act 1988.

Provide Nominees Pty Ltd opposed the order sought by ASIC and argued that the court did not have jurisdiction to hear and determine ASIC’s application.

The Court held that it had jurisdiction in the matter, and ordered that Provide Capital Pty Ltd produce documents in accordance with 4 categories of the documents set out in the schedule to the notice.

The Court noted that “any obligation of confidentiality that exists with respect to the specified books must cede to the statutory requirements to comply with a notice issued under s 33” .

The Court also stated “I have previously described…..purported justification for redacting the documents as spurious.  Subsequently, Provide agreed to provide unredacted copies of the documents to ASIC, but that had not occurred by the time of the hearing.  The failure to produce the unredacted documents was unexplained. There is also a complete failure to explain the non-production of client documents that the evidence shows would have existed during the Relevant Period as defined in the Notice.  The evidence gives rise to a strong suspicion that Provide has deliberately refrained from searching for, or obtaining from other persons such as ….., all documents that are responsive to the Notice.”

Provide Capital Pty Ltd appealed this decision to the Full Federal Court of Australia (Provide Nominees Pty Ltd v Australian Securities and Investments Commission [2024] FCAFC 25).  The appeal was dismissed with costs.

What should you do if you receive a section 30 or section 33 notice?

As it is an offence to intentionally or recklessly fail to comply, you must take a section 30 and section 33 notice seriously.  It may indicate that ASIC has reason to suspect that you may have contravened the Corporations Act 2001 and is actively investigating you.

If you receive a section 30 or section 33 notice (or any other notice), you should seek advice as soon as possible, and in particular in relation to:

• the scope of the notice i.e. what is covered by the notice and whether the notice is oppressive with regard to the volume of books required and the length of time provided to produce them; and
• whether any of the books required to be produced attract legal professional privilege.

Holley Nethercote Lawyers can assist you in this regard.

Do you have any more question?

Author: Rachel Erlich (Senior Associate)