I OVERVIEW

i Sources of law

The primary source of securities law in Australia is the Corporations Act 2001 (Cth) (the Corporations Act), which covers matters such as members' rights and remedies, takeovers, continuous disclosure, fundraising and financial services and markets.

The Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) creates a number of bodies relevant to the regulation of securities markets, including the Australian Securities and Investments Commission (ASIC). The Act also imposes a number of statutory prohibitions applicable to financial services and markets.

Australia's main securities exchange is the Australian Securities Exchange (ASX). As a result, the ASX Listing Rules (governing the manner in which entities listed on the ASX must operate) and the various guidance notes supporting these rules are an important source of regulation.

ASIC supervises conduct on the ASX. Under the Corporations Act, ASIC promulgates and enforces 'market integrity rules', which impose obligations on market participants and operators.

ii Regulatory authorities

ASIC, as the securities regulator in Australia, is responsible for securities market supervision and enforcement. ASIC has administrative, civil and criminal enforcement powers.

ASIC's civil proceedings normally take the form of enforcement of 'civil penalty' provisions. Civil penalties are a hybrid sanction combining both civil and criminal remedies subject to the civil burden of proof. The regime provides a way of enforcing the law when it is not possible or appropriate to bring criminal actions against corporations and their officers. ASIC can also seek coercive civil relief from a court, for instance, to protect assets, compel compliance or to require a correction to a prior misleading statement.

In addition to seeking civil enforcement through the courts, ASIC is able to take administrative action, which includes suspension, cancellation or variation of an Australian Financial Services Licence, banning orders against individuals or accepting an enforceable undertaking (a form of negotiated administrative settlement).2

As part of its administrative jurisdiction, ASIC can refer matters involving alleged breaches of market integrity rules by market participants or operators to the Markets Disciplinary Panel (the Panel). The Panel is a peer-review body that operates, as far as is practicable, independently of ASIC and is capable of issuing infringement notices.3

ASIC's administrative powers also extend to issuing infringement notices to listed entities for breaches of their continuous disclosure obligations as an alternative to commencing civil penalty proceedings in less serious cases.4

The Office of the Commonwealth Director of Public Prosecutions (CDPP) prosecutes criminal breaches of securities laws. The CDPP is an independent prosecution service responsible for the prosecution of alleged offences against Commonwealth law. As most securities laws are Commonwealth laws, the CDPP is generally responsible for the prosecution of securities crimes. Although ASIC prosecutes some minor regulatory offences on its own behalf, it refers most criminal cases to the CDPP, which determines whether to commence criminal proceedings and prosecute any case that goes to trial.5

iii Common securities claims

Insider trading and market manipulation

Insider trading and market manipulation are prohibited under Australian law.6 Insider trading consists of trading in securities while in possession of non-public information that, if it were made public, a reasonable person would expect to have a material effect on the price or value of the securities. It is the possession of material non-public information that makes a person an insider. It is not necessary for the trader to be an insider in the sense of having a fiduciary or other relationship with the issuer of the securities. The application of the prohibitions on insider trading are broad, covering any financial product that is able to be traded on a financial market.

Market manipulation occurs when a person engages in activity that has or is likely to have the effect of creating or maintaining an artificial price for trading in financial products or on a financial market. As for what constitutes an artificial price, it is sufficient to show that the sole or dominant purpose of a trade was to create or maintain a particular price for those securities.7

The prohibitions on insider trading and market manipulation extend beyond equity securities markets. The application of the provisions is broad, covering any financial product that is able to be traded on a financial market.

Liability for misstatements and non-disclosure

Civil or criminal liability for either making statements relating to securities that are misleading or for failing to disclose information relating to securities in circumstances where disclosure is required can arise under a variety of statutory prohibitions.8 Although civil liability for losses resulting from a wrong committed in relation to securities disclosures can exist under common law and equity, statutory claims are generally more advantageous for prospective plaintiffs. In particular, a claim for statutory misleading or deceptive conduct generally depends on the effect or probable effect of the conduct rather than on the state of mind of, or lack of care by, the person engaging in the misleading or deceptive conduct.9

A listed issuer has a continuous disclosure obligation, which requires it to immediately notify the exchange of any information of which it is aware that a reasonable person would expect to have a material effect on the price or value of the issuer's securities.10

Breach of this obligation is often relied upon as a basis for the commencement of securities litigation, both by the regulator and by private litigants.

Secondary liability and gatekeepers

Civil liability for certain breaches of duty under the Corporations Act, including a company's continuous disclosure obligation, can extend to any party 'involved' in the contravention.11 Criminal liability can also extend to accomplices.12 Similarly, where conduct involves the breach of a director or officer's duties to the company of care, diligence, good faith or fidelity, that director or officer and anyone involved in the contravention will be liable.13 This includes liability for a civil penalty from public enforcement and for damages from a private action.

Directors, auditors and professional advisers are viewed by ASIC as 'gatekeepers', in the sense that they are an independent corporate monitor capable of 'closing the gate' on wrongdoing. In this respect, gatekeepers are expected to play an almost co-regulatory role with ASIC. For this reason, ASIC has been clear that it will take enforcement action against gatekeepers who do not take their responsibilities seriously and discharge their duties carefully where this has permitted wrongdoing to occur.14

ASIC has brought a number of high-profile civil penalty actions against directors, management and individual auditors for alleged breaches of duty in connection with corporate disclosure.15 Directors and auditors have also had to contribute to compensation for affected investors as a result of class actions or ASIC proceedings.16

II PRIVATE ENFORCEMENT

i Forms of action

In Australia, shareholder class actions17 are the most prevalent and significant type of private securities litigation, although securities litigation can also take the form of individual or derivative action.

Shareholder class actions

Shareholder class actions can be commenced via the opt-out representative procedure that exists in Australia under Commonwealth legislation18 and under the almost identical Victorian,19 New South Wales20 and Queensland21 legislation.22 A similar regime has been recommended for introduction in Western Australia by the Law Reform Commission of Western Australia,23 but is yet to be introduced.

The most common causes of action relied upon are breach by a company of the continuous disclosure provisions of the Corporations Act24 and breach by a company of the misleading or deceptive conduct provisions of the Corporations Act and ASIC Act.25 These causes of action are often pleaded together.

Shareholders who suffer loss as a result of this corporate misconduct may bring an action for damages either individually or by way of a class action (the latter often being the more commercial option).26

A shareholder class action is typically brought by a representative party on behalf of a group of shareholders who have purchased shares in a listed company during a specified period. Typically, the representative party will allege that:

  1. the company was aware of material, price-sensitive information that it failed to disclose to the market;
  2. the failure to disclose caused the company's share price to trade on the market at an inflated price during the period of non-disclosure; and
  3. it and other group members acquired shares during the period of non-disclosure at an inflated price and, as a result, suffered loss by 'overpaying' for the shares they acquired.

The Australian third-party funding industry is well established. The majority of shareholder class actions in recent years have been funded by a third party (although there are exceptions). The industry has enjoyed significant growth, in particular since a 2006 High Court of Australia (the High Court) ruling that held that litigation funding was not an abuse of process27 and a 2007 Federal Court of Australia (the Federal Court) ruling that permitted a class to be defined by reference to whether members had signed a funding agreement, thus effectively permitting opt-in or 'closed' classes (and excluding 'free riders').28 Where previously the major obstacle for litigation funders was the requirement to enter into separate funding agreements with every claimant, a 2016 decision of the Full Court of the Federal Court confirmed that the Court had the power to make a 'common fund' order.29 This position was recently confirmed at an appellate level.30 Under a 'common fund' order, all claimants in a class action funded by a litigation funder would be obliged to contribute to the 'common fund' out of any proceeds received (regardless of whether they had entered into the funding agreement) and that the contribution amount was to be determined by the Court, not the funder. This is likely to result in an increase in both the frequency and scale of shareholder class action proceedings: common fund orders reduce transaction costs for litigation funders and incentivise litigation funders to bring 'open' shareholder class actions.

Statutory derivative action

The Corporations Act provides individual shareholders with the right to bring a statutory derivative action on behalf of a company in respect of any cause of action that the company has.31 The action is commenced with the company as the plaintiff. Actions against one or more directors for breach of directors' duties are commonly brought as a derivative action by shareholders.32

ii Procedure

Shareholder class actions

To commence a class action in the Federal Court, the following threshold criteria must be satisfied:

  1. seven or more persons must have claims against the same person or persons;
  2. the claims must be in respect of the same, similar or related circumstances; and
  3. the claims must give rise to a substantial common issue of law or fact.33

In circumstances where there are multiple respondents, every group member is not required to have a claim against each of the respondents to the proceeding.34 Further:

  1. one or more representative parties (known as the applicant) bring the action against a respondent on behalf of the entire group;
  2. there is no certification requirement;
  3. the consent of the group members is not required,35 and group members are not required to be individually identified; and
  4. before the trial of common issues, group members must be notified of the proceedings and have the right to opt out (any judgment will bind all group members who have not opted out).36

The threshold for commencing a class action is low and easy to satisfy. However, a respondent may bring an interlocutory application to challenge a class action for failing to meet the threshold criteria. A respondent may also challenge a class action on the basis that:

  1. the costs that would be incurred if the proceeding continued as a class action are likely to exceed the costs that would be incurred if each group member commenced separate proceedings;
  2. all the relief sought can be obtained by means of proceedings other than a class action;
  3. the class action will not provide an efficient and effective means of dealing with the claims of group members; or
  4. it is otherwise inappropriate for claims to be pursued by means of a class action.37

The Federal Court may also, of its own motion, order the discontinuance of the proceeding in these circumstances.38 A class action in the Federal Court progresses in the same way as any other Federal Court proceeding but with a number of procedural overlays. These include:

  1. certain notifications to group members;
  2. court approval for any settlement (see Section II.iii) and distribution regimes; and
  3. if settlement is not reached, trial of common issues and following the trial of common issues, the determination of individual claims (which may involve separate individual trials).39

In October 2016, the Federal Court introduced a new general practice note on class actions (GPN-CA), which sets out the Court's approach to case management of class actions and representative proceedings. This includes:

  1. the process by which class actions are allocated to a docket judge and, in appropriate cases, to a designated case management judge or a registrar, or both;
  2. case management procedures;
  3. disclosure requirements relating to costs agreements and litigation funding agreements, which regulate disclosures to class members, the Court and other parties; and
  4. guidance on communication with class members.40

As group members are not parties to the class action proceeding, their role in the proceeding is generally passive until the conclusion of the trial of common issues.41 Accordingly, discovery is usually limited to documents in the possession, custody or control of the representative party. As such, attempts by respondents to seek information regarding the identity of group members and the quantum of their individual claims is an emerging feature of shareholder class actions in Australia. This information may be sought through several means, including requests for further and better particulars of the applicant's statement of claim, an application for discovery, or by agreement between the parties.42

Statutory derivative action

To commence a derivative action, an individual shareholder must obtain the leave of the court. Leave must be granted where the court is satisfied of the following matters:

  1. it is probable that the company will not itself bring, or take proper responsibility for, the proceeding;
  2. the applicant is acting in good faith;
  3. it is in the best interests of the company that the applicant be granted leave;
  4. there is a serious question to be tried; and
  5. either the applicant gave 14 days' notice of the application to the company or it is appropriate to grant leave even though the applicant did not give the required notice.43

Assuming that an applicant has obtained the leave of the court to bring a statutory derivative action, the usual Australian litigation procedure applies.

iii Settlements

Shareholder class actions

Settlement of a class action in the Federal Court must be approved by the Court at a settlement approval hearing. Notice must be given to group members of the proposed settlement.44

In exercising its discretion to approve a settlement agreement, the Court performs a protective function in the interests of group members. Approval will only be granted to a settlement where the settlement is fair and reasonable having regard to the claims of the group members who will be bound by it (both as between the parties to the litigation and as between individual group members).45 The Court is unlikely to approve a proposed settlement that does not take into account the relative strengths and weaknesses of each individual group member's claim.46

Statutory derivative action

A statutory derivative action brought under the Corporations Act can only be settled or discontinued with the leave of the court.47 This aims to prevent the defendant and applicant from agreeing to settle the proceedings where it would not be in the best interests of the company (as may occur if the defendant provides a personal incentive, such as a monetary payment, to the applicant to settle).48

iv Damages and remedies

Shareholder class actions

To succeed in a shareholder class action seeking damages for breach of continuous disclosure obligations or misleading or deceptive conduct by a company, the applicant must show a causal connection between the loss suffered and the alleged misconduct. The loss must 'result from',49 or a person must suffer loss 'by',50 the conduct that has contravened the relevant statutory provisions.

In the context of Australian shareholder class actions, applicants have adopted two different theories to satisfy this requirement:

  1. applicants allege that they detrimentally relied on the misrepresentations or omissions of the company; or
  2. a 'mere inflation' approach or 'market-based' causation (which is based on elements of the US 'fraud on the market' theory), where applicants assert that they suffered loss by purchasing shares at a price that was artificially inflated as a result of the misrepresentations or omissions of the company. This approach does not require the applicant to plead that he or she actually read and relied on the disclosures or representations.

The appropriate test for causation in the context of a shareholder class action remains controversial.51 While the reliance-based approach is consistent with ordinary Australian principles of causation, most shareholder class action claims also plead market-based causation. However, market-based causation has received recent judicial support,52 and there now seems to be tentative judicial encouragement to its proponents, potentially signalling further cases that rely on an indirect causation argument.

In Australia, damages are generally limited to economic loss; punitive damages are not generally available.

It is likely an Australian court would calculate loss as being the difference between the price at which the shareholder acquired their interest and an alternative measure of the value of the security, such as its 'true' or 'market' value in the absence of the contravening conduct by the company.53 Shareholder class action claims traditionally plead several different loss methodologies.

Statutory derivative action

In the context of statutory derivative actions, the remedy available to the company depends upon the cause of action claimed in the proceedings. Where derivative proceedings allege a breach of a civil penalty provision of the Corporations Act (such as a breach of directors' duties), the company may apply for a statutory compensation order requiring the defendant to compensate the company for damage suffered as a result of the breach.54 In calculating the damage suffered for a breach of directors' duties, the court may include profits made by the director or any other person resulting from the breach.55

III PUBLIC ENFORCEMENT

i Forms of action

ASIC has a broad range of criminal, civil and administrative enforcement options available to it to address securities market misconduct, including:

  1. commencing criminal prosecutions or referring matters to the CDPP to commence a criminal prosecution;
  2. commencing civil proceedings for a pecuniary penalty;
  3. applying to the court for an extensive range of non-pecuniary remedies, including declarations of contravention, compensation orders and injunctions;
  4. intervening in other civil proceedings;
  5. administrative action, such as issuing an infringement notice, suspending, cancelling or varying an Australian Financial Services Licence, banning individuals, referring a matter to the Panel or accepting an enforceable undertaking; and
  6. reporting serious contraventions of the law to the Minister responsible for ASIC (currently the Treasurer), Australian Federal Police, the CEO of the Australian Criminal Intelligence Commission, the CDPP or a prescribed agency.56

ii Procedure

Civil and criminal proceedings

When considering whether to initiate civil proceedings, ASIC must be satisfied, after obtaining written legal advice, that it is the most suitable method of enforcement.57

ASIC has a unique information advantage when making this determination as compared to private litigants. ASIC has the ability to extensively investigate alleged contraventions before commencing enforcement action, using its broad information-gathering powers,58 which include the power to:

  1. issue notices to produce;
  2. execute search warrants; and
  3. conduct compelled witness examinations under oath (transcripts of which are admissible in certain civil proceedings).59

ASIC does not have the power to apply for warrants to intercept phone calls. However, it may conduct joint investigations into suspected insider trading and market manipulation offences with the Australian Federal Police, which does have the power to apply for warrants to intercept telecommunications.

In the context of compelled witness examinations and notices to produce, individuals cannot rely on the privilege against self-incrimination as a basis for refusing or failing to provide the information requested by ASIC. However, such information will generally be inadmissible as evidence in any criminal proceeding or proceeding for the imposition of a penalty against the individual.60 It should be noted that corporations are not protected by the privilege against self-incrimination.61

ASIC cannot compel the production of documents protected by legal professional privilege; however, ASIC may seek voluntary disclosure of privileged communications.62

ASIC has adopted a policy of first considering whether it can prosecute market misconduct such as insider trading and market manipulation criminally, and will only consider civil proceedings if this is unavailable.63 It is of note that ASIC prosecuted Australia's first successful criminal conviction relating to breaches of continuous disclosure obligations in 2017.64

If ASIC considers that it has sufficient evidence of a criminal offence, it will normally refer the matter to the CDPP. ASIC will seek to deal with matters through the criminal process where serious conduct is identified that is dishonest, intentional or reckless and where there is sufficient admissible evidence. The CDPP ultimately determines whether to commence a criminal prosecution.65

To ensure a fair trial, the CDPP is subject to higher disclosure obligations than parties to civil litigation. This generally includes informing the accused of:

  1. the case to be made against them;
  2. information relating to the credibility or reliability of prosecution witnesses; and
  3. information that has been gathered through the investigation but on which the prosecution does not intend to rely, or that runs counter to the prosecution case.66

At trial, the CDPP must meet the criminal standard of proof for each charge (beyond reasonable doubt).

In civil penalty proceedings, ASIC must first apply to the court for a declaration that the defendant has contravened a 'financial services civil penalty provision'.67 Following the declaration, ASIC can then pursue a pecuniary penalty order, which may be granted if the contravention:

  1. materially prejudices the interest of acquirers or disposers of the relevant security;
  2. materially prejudices the issuer of the relevant security or its members; or
  3. is serious.68

Civil actions only require proof on 'the balance of probabilities'. This lower threshold makes it easier for ASIC to obtain an enforcement outcome in civil cases.69

The court cannot make a declaration of contravention or order a pecuniary penalty if the defendant has already been convicted of an offence for substantially the same conduct.70 There is no reverse prohibition for criminal proceedings following a civil action, although evidence given in civil penalty proceedings is not admissible in subsequent criminal proceedings.71

Civil penalty and criminal prosecution of contraventions of securities laws may affect the outcome of private proceedings because ASIC regularly provides transcripts of its compelled examinations to class action law firms and liquidators,72 and findings of fact made by a court in a civil penalty proceeding may be used as evidence of that fact in certain private actions for damages.73

Infringement notices

ASIC may issue an infringement notice to a listed entity for less serious breaches of its continuous disclosure obligations under the Corporations Act if it has reasonable grounds to believe the entity has contravened those obligations.74 The infringement notice will provide for the payment of a penalty.75

In March 2019, the infringement notice regime was expanded to include all strict and absolute liability offences in the Corporations Act, and certain other provisions.76

In determining whether to issue an infringement notice, ASIC will generally consider the seriousness of the alleged breach and the view of the relevant market operator.77

ASIC will only issue the infringement notice after conducting a private hearing at which the entity may give evidence and make submissions.78

The entity can elect whether or not to comply with the infringement notice and pay the penalty. If the entity does comply, ASIC cannot commence civil or criminal proceedings against the entity (subject to certain exceptions),79 and the entity will not be regarded as having contravened the provision specified in the notice.80 However, ASIC will publish details of the notice and the entity's compliance.81 If the entity does not comply with the infringement notice, this fact will not ordinarily be published by ASIC. However, if ASIC commences proceedings against an entity following withdrawal of, or failure to comply with, a notice, ASIC will issue a media release on the fact of commencement and details of the outcome of the proceedings.82

iii Settlements

Civil penalty proceedings brought by ASIC are in some instances settled out of court, with the parties subsequently approaching the court with an agreed statement of facts and 'agreed penalty', to request the penalty be converted into an order. In such instances, the court will generally accept a penalty that was within a 'permissible range' even if the court would have arrived at a different figure.83 While this practice has attracted judicial criticism,84 a series of judgments from the High Court have now confirmed that in civil penalty proceedings a court is not precluded from receiving and, if appropriate, accepting an agreed (or other) civil penalty submission.85 The High Court has observed that there is an important public policy involved in promoting predictability of outcomes in civil penalty proceedings and that 'the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and respondents'.86

However, recent case law demonstrates that courts will not always approve agreed settlements. In a widely reported 2018 decision, the Federal Court refused to approve a A$35 million settlement agreed between ASIC and a major Australian bank, in relation to breaches of Australia's responsible lending laws. The Court's key reason for declining to approve the agreement was that the parties did not agree on how or how many times the bank had contravened the National Consumer Credit Protection Act 2009 (Cth), which meant that the Court was unable to assess the reasonableness of the settlement.87

In criminal prosecutions, charge negotiation can take place at any stage.88 This may result in the defendant ultimately pleading guilty to fewer or lesser charges.89 However, criminal prosecutors are not permitted to make submissions to the sentencing judge on the specific sentencing result or the range within which it should fall.90

Following an investigation, ASIC may also be open to negotiating an enforceable undertaking, a form of administrative settlement that ASIC accepts as an alternative to civil or other administrative action.91 An enforceable undertaking is a very flexible enforcement outcome and may include:

  1. details of the misconduct;
  2. details of how the promisor will address the misconduct, such as through the implementation of monitoring and reporting mechanisms; and
  3. details of any agreed compensation to third parties or agreement to perform community services, such as funding an education programme.92

ASIC will require that the terms of the enforceable undertaking are publicised.93 Separately, ASIC has noted that it will generally not accept an undertaking that does not acknowledge that its views in relation to the alleged misconduct are reasonably held nor any undertaking containing clauses denying liability or omitting details of the alleged misconduct.94 As a general rule, ASIC will issue a media release regarding the enforceable undertaking and make it publicly available.95 In relation to reports drafted by independent experts, it will publish a summary of the final report or a statement referring to its content (and will generally also publish a summary of, or statement referring to the content of, any interim report).96 ASIC has stated that it will only accept an enforceable undertaking if it considers that it provides a 'more effective regulatory outcome than non-negotiated, administrative or civil sanctions'.97 Importantly, ASIC will not consider an enforceable undertaking unless it has reason to believe there has been a breach of the law and it has commenced an investigation or surveillance in relation to the conduct,98 or as an alternative to commencing criminal proceedings.99

iv Sentencing and liability

Criminal proceedings

The criminal penalties for securities laws contraventions imposed by courts are increasingly severe,100 reflecting the gravity with which the courts regard such offences.

For individuals, conviction of certain serious securities market offences carries a sentence of up to 15 years' imprisonment; a fine that is the greater of (1) A$945,000 (4,500 penalty units) or (2) three times the total value of the benefits obtained that are reasonably attributable to the commission of the offence; or both imprisonment and a fine.101

Corporations that commit such offences can be fined the greater of:

  1. A$9.45 million (45,000 penalty units);
  2. three times the total value of the benefits obtained that are reasonably attributable to the commission of the offence; or
  3. if the court cannot determine the total value of the benefits for (b) above, 10 per cent of the corporation's annual turnover during the year preceding the commission of the offence.102

Civil penalty proceedings

In civil penalty cases, for individuals, the court may impose a pecuniary penalty of up to the greater of:

  1. A$1.05 million; and
  2. the benefit derived or determinant avoided because of the contravention, multiplied by three.103

For corporates, the court may impose a pecuniary penalty of up to the greater of:

  1. A$10.5 million for a corporation for each breach;
  2. the benefit derived or determinant avoided because of the contravention, multiplied by three; and
  3. 10 per cent of the annual turnover of the body corporate, up to a maximum of A$525 million.104

Infringement notices

The maximum penalty payable under an infringement notice issued in relation to continuous disclosure is A$100,000 for entities with a market capitalisation over A$1 billion.105 Following the coming into effect of the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Cth) in March 2019, for other provisions to which infringement notices apply, ASIC may impose a maximum penalty of half the maximum penalty that a court could impose multiplied by the number of contraventions. For civil penalty provisions, the maximum penalty payable is 12 penalty units (A$2,520) for an individual and 60 penalty units (A$12,600) for a corporation, multiplied by the number of contraventions.106

IV CROSS-BORDER ISSUES

i Jurisdictional issues

The amenability of a foreign issuer to public or private securities actions in Australia will depend largely on:

  1. the foreign issuer's legal presence in Australia;
  2. whether the foreign issuer is listed on an Australian exchange and the type of listing it has; and
  3. the nature and location of the foreign issuer's relevant conduct that may form the basis of potential securities actions.

Legal presence in Australia

One aspect of Australian courts' jurisdiction is the amenability of a defendant to the court's writ.107 Once a defendant has been legally served, a court has jurisdiction to entertain the action against that defendant.108 Service can be effected on those present within the relevant Commonwealth, state or territory jurisdiction. A foreign issuer's presence in the jurisdiction, and thus amenability to a court's writ, may be necessitated by either of the following:

  1. a foreign company carrying on business in Australia is required to register with ASIC and appoint a local agent109 who, among other things, must accept service on behalf of that foreign company;110 or
  2. a foreign entity listed on the ASX, whether as an ASX Listing, an ASX Foreign Exempt Listing or an ASX Debt Listing, must appoint an agent for service of process in Australia.111

Listing on an Australian exchange

Listing on an Australian exchange creates certain disclosure obligations on a foreign issuer, although these will differ depending on the nature of that listing.

The listing rules regarding continuous disclosure, the foundation of shareholder class actions and ASIC enforcement relating to market disclosure, apply to foreign entities who have a standard ASX Listing and to those who have an ASX Debt Listing in relation to their debt securities.112

Those issuers with an ASX Foreign Exempt Listing, while only required to comply with the disclosure obligations of their home exchange, are nonetheless required to provide the ASX with any information that they provide to their home exchange.113 The provision of such information will still be subject to statutory prohibitions on engaging in misleading conduct.114

Location of relevant conduct

Another aspect of Australian courts' jurisdiction relevant to foreign issuers is the power of a court to determine a matter,115 which becomes complex where conduct in that matter occurs outside Australia.

Although the provisions in the Corporations Act typically relied on in shareholder class actions do not operate in relation to extraterritorial conduct, there are other statutory prohibitions on engaging in misleading conduct that do.116 Ministerial consent is required to rely on evidence of foreign conduct in any private action claiming damages pursuant to the consumer protection provisions of the ASIC Act, and the Treasury has published guidance to assist in this process.117 However, such consent is generally no longer required by private individuals relying on evidence of foreign conduct to bring an action pursuant to the Australian Consumer Law.118

ii Insider trading

Australia's insider trading provisions have extraterritorial effect. They apply to:

  1. conduct within Australia in relation to financial products regardless of where the issuer of the product is formed, resides or is located, or of where the issuer carries on business; and
  2. conduct outside Australia in relation to financial products issued by a person who carries on business in Australia or a company that is formed in Australia.119

iii Cross-border investigations

ASIC continues to cultivate its relationships with overseas regulators to facilitate investigations and enforcement action. The challenge of globalisation was recognised by ASIC in its 2016–2017 to 2019–2020 Corporate Plan as presenting a number of 'key risks' that may compromise investor outcomes. The Corporate Plan notes that ASIC will 'support cross-border activities', including by:

  1. facilitating the development and application of consistent standards and requirements across borders, by contributing to the work of international regulatory bodies, principally the International Organization of Securities Commissions;
  2. supporting equivalence assessments with counterpart regulators;
  3. negotiating and implementing bilateral and multilateral agreements and understandings, including fintech-related agreements; and
  4. supporting initiatives that help the capabilities of regulators in our region.120

ASIC is also increasingly coordinating with securities regulators in other jurisdictions on cross-border issues.121

V YEAR IN REVIEW

i Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Commission) was established on 14 December 2017, to conduct a broad ranging inquiry into misconduct and conduct falling below community standards in the Australian financial services industry.

The Commission, led by Commissioner Kenneth Hayne AC QC (a former High Court justice) was conducted over the course of 2018. In its examination of the conduct of retail banks, superannuation fund trustees and administrators, insurance companies and other financial service providers, the Commission employed a range of investigatory powers, including the issue of document production notices, notices requiring the submission of witness statements, and the conduct of public hearings involving the examination of representatives of the relevant financial institutions. Seven rounds of public hearings were conducted across 14 weeks between March and November 2018. The Commission culminated in the publication of an interim report (in September 2018) and a final report (in February 2019) which made 24 referrals for potential criminal prosecution and many findings of admitted or possible misconduct or conduct falling below community expectations.

Commissioner Hayne was not only critical of the financial services entities, but the industry regulators ASIC and APRA too. He found that ASIC had too infrequently commenced civil penalty proceedings and had confined its enforcement efforts in relation to criminal contraventions to individuals. In particular, he criticised ASIC for its practice of first resorting to entering into negotiated outcomes with accused parties, resulting in out-of-court settlements involving the payment of pecuniary penalties, carefully curated public announcements and no admission of guilt, rather than commencing court proceedings for higher and more meaningful penalties and public censure.

One of the most significant outcomes of the Royal Commission, and the uncovering of various instances of misconduct during the course of the hearings, has been greater scrutiny over the activities of financial service providers (both general business activities and specific instances of conduct). This has already led, and is expected to continue to lead, to a large volume of civil penalty proceedings and class action litigation being instituted by regulators (primarily ASIC and APRA) and private claimants respectively. The regulators and courts have been provided with an increase in resources to deal with the anticipated volume of further litigation.

The Commission, and its criticism of ASIC and APRA's reluctance to litigate and substantial reliance on 'soft enforcement tools' (such as the issue of infringement notices) has, no doubt, incited a shift in the attitude of the regulators towards enforcement through the commencement of civil penalty or criminal prosecution proceedings. ASIC has announced the adoption of a 'why not litigate' regulatory stance. The volume of regulatory proceedings has already increased and this trend is expected to continue for some time. By way of example, in late 2018, following hearings concerning consumer financial advice and superannuation, ASIC commenced civil penalty proceedings against two superannuation trustees in relation to the charging of fees for advisory services that were not provided. There has also been an increased appetite to criminally prosecute corporate offences in the course of 2018, which, no doubt, has been precipitated by the findings of and regulatory climate attributable to the Royal Commission. In tandem, the Australian Parliament introduced, and has now passed, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth), an amending statute providing for augmented enforcement powers and more severe criminal and civil penalties for misconduct by financial service providers (see below).

ii Greater court scrutiny over settlements with regulators

The aforementioned decision of the Federal Court not to approve a settlement between ASIC and a bank in relation to contraventions of the National Consumer Credit Protection Act 2009 (Cth)122 may have a profound impact on the course and strategy adopted by defendants in regulatory enforcement litigation, and the prospect of reaching an early settlement with ASIC. The decision sets a precedential expectation that the Court may not support vague settlements that do not precisely identify each instance of the conduct complained about, both because the Court is unable to assess the reasonableness of the settlement and because the settlement will not be clear and unambiguous as to the conduct that it covers. This presents some boundaries to parties seeking to minimise admissions and mitigate reputational damage.

iii Increasing civil penalties

In October 2018, the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Cth) was introduced to Parliament. The Bill passed both Houses of Parliament on 18 February 2019 and received royal assent on 12 March 2019 and has commenced operation. The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth) provides for:

  1. increased maximum criminal and civil penalties for certain offences and contraventions of civil penalty provisions under the Corporations Act 2001 (Cth), National Consumer Credit Protection Act 2009 (Cth), Insurance Contracts Act 1984 (Cth) and National Credit Code by bodies corporate and individuals;
  2. a consolidated and more uniform penalties framework in these Acts;
  3. an extension of the civil penalty regime to apply provisions that were not previously civil penalties provisions, including Section 912A (which imposes a duty on financial services licensees to provide financial services efficiently, honestly and fairly) and Section 912D (which imposes a duty on financial services licensees to report breaches or likely breaches of Sections 912A and 912B) of the Corporations Act 2001 (Cth);
  4. an increased range of circumstances in which an infringement notice may be issued; and
  5. a lower threshold for establishing 'dishonesty' in relation to dishonesty offences under the Corporations Act 2001 (Cth) by removing the subjective limb of the test.

Further, the amending legalisation introduces a provision to deal with the consequences of continuing contraventions of civil penalty provisions. Section 1317QA of the Corporations Act 2001 (Cth) prescribes that where an act or thing is required to be done by under a civil penalty provision within a certain period or before a specified time, a person who contravenes the provision commits a separate contravention of that provision in respect of each day during which the contravention occurs. In combination with the aforementioned increase in the maximum civil penalty for which a contravener may be liable, ASIC is equipped to prosecute claims for civil penalties of a substantial magnitude, which may significantly increase the gravity of proceedings relating to 'administrative contraventions' such as breach reporting under Section 912D.

iv Market integrity enforcement statistics

During the financial year ending 30 June 2018, market integrity remained at the forefront of ASIC's enforcement agenda. ASIC has reported the following enforcement outcomes under the umbrella of 'market integrity' for the financial year ending 30 June 2018.123

Area Criminal Civil Administrative Enforceable undertaking Negotiated outcome Total
Market integrity rules 0 0 7 1 1 9
Market manipulation 1 0 2 0 0 3
Other market misconduct 1 5 9 4 0 19
Total 2 5 18 5 1 31

VI OUTLOOK AND CONCLUSIONS

Securities litigation, both public and private, continues to be a significant risk facing both issuers and financial market participants. Key areas to watch in the coming year are discussed below.

i ASIC's litigate-first enforcement strategy

A clear message from the Financial Services Royal Commission was that ASIC has not been aggressive enough in its approach to enforcement. ASIC was criticised by the Commission for rarely going to court to seek public denunciation of, and punishment for, misconduct. Commissioner Kenneth Hayne observed in his Interim Report issued in September 2018 that if ASIC had a 'reasonable prospect of proving contravention, the starting point must be that the consequences of contravention should be determined by a court'.124

In response, ASIC confirmed that it has 'very clearly heard' that the community expects it to use court processes as much as possible,125 and formally adopted 'a why not litigate?' enforcement approach.126 Under this approach, if ASIC is satisfied that breaches of the law are more likely than not, and it is evident from the facts of the case that the pursuit of the matter would be in the public interest, ASIC will actively ask itself 'why not litigate this matter?'127 ASIC's adoption of this enforcement stance is supported by the expansion of its powers and increased penalties, under the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Cth), which came into effect in March 2019. Accordingly, in 2019 and going forward, it is expected that ASIC will pursue more enforcement litigation, make an increased number of referrals to the Director of Public Prosecutions, impose increased penalties and be more reluctant to reach agreed outcomes.

ii Courts' power to resolve competing class actions

In recent years, as a result of the increased availability of litigation funding and the advent of common fund orders, competing class actions have become more common in Australia. Competing actions occur when more than one class proceeding is commenced against a single defendant based on the same factual circumstances and involving substantially identical allegations. The existence of competing classes undermines a fundamental objective of the class actions regime, which is the efficient resolution of multiple claims. It also burdens defendants with the cost and inefficiency of engaging with multiple sets of plaintiffs and litigation funders.

In November 2018, the Full Federal Court handed down its decision in Perera v. GetSwift Limited [2018] FCA 732, confirming that in circumstances where multiple claims have been filed, the court has power to select one of the class actions as the 'winner', and allow only that claim to proceed. This may prove to be a popular solution to the issue of competing class actions in 2019 and going forward, because it has the advantage of limiting the burden on the resources of both the court and the defendant while maintaining the claimants' rights to have their claims heard, albeit in one proceeding with one set of legal advisers. However, while the court has confirmed a willingness to address the problem that competing class actions raises, inevitably the solution in each situation will depend on the individual issues involved. Defendants facing multiple class actions must raise these issues on each occasion and the result is not entirely predictable.

iii Potential reform of class action regime

During 2018, the Australian Law Reform Commission (ALRC) conducted an inquiry into and prepared a report in respect of Australia's class actions regime (the ALRC Report), which was tabled before Parliament on 24 January 2019.128 Among other things, the Report recommends that there be greater court oversight over third-party litigation funding, to be examined on a case-by-case basis.129 ASIC has expressed a consistent view in its proposal in its submission to the ALRC. Whether the ALRC's recommendation is heeded by the legislature, and whether regulatory oversight or a licensing regime is enacted by the legislature, will have an impact on the volume of shareholder class actions and how well resourced they are going forward.


Footnotes

1 Luke Hastings and Andrew Eastwood are partners at Herbert Smith Freehills. The authors wish to thank Alison Cranney, Leila Khaze, Mark Khunnithi and Jordan Phoustanis for their assistance in producing this chapter.

2 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 4.

3 ASIC, 'Regulatory Guide 216: Markets Disciplinary Panel' (July 2010), Paragraphs 1–3; ASIC, 'Regulatory Guide 225: Markets Disciplinary Panel practices and procedures' (May 2011), Paragraphs 1–4.

4 Corporations Act 2001 (Cth) Section 1317DAC. See also ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraphs 1–4.

5 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 5.

6 Corporations Act 2001 (Cth) Part 7.10, Divisions 2, 3.

7 Director of Public Prosecutions (Cth) v. JM (2013) 250 CLR 135, 168 at [76] (per French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ).

8 See, for example: Corporations Act 2001 (Cth) Sections 670A, 670B, 674, 728, 729, 1041E, 1041G, 1041H, 1041I; Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA; Competition and Consumer Act 2010 (Cth) Schedule 2 Australian Consumer Law Section 18. See generally, Baxt, Black and Hanrahan, Securities and Financial Services Law (8th edn, LexisNexis Butterworths, 2012), Chapter 5.

9 Google Inc v. Australian Competition and Consumer Commission (2013) 249 CLR 435 at [7] and [9] (per French CJ, Crennan and Kiefel JJ).

10 ASX, Listing Rules (14 April 2014) Rule 3.1 (given statutory force by the Corporations Act 2001 (Cth) Section 674). Exceptions to this obligation arise under Rule 3.1A if the information is confidential, a reasonable person would not expect it to be disclosed and one or more of the following situations applies:

a it would be a breach of a law to disclose the information;

b the information concerns an incomplete proposal or negotiation;

c the information comprises matters of supposition or is insufficiently definite to warrant disclosure;

d the information is generated for the internal management purposes of the entity; or

e the information is a trade secret.

11 Corporations Act 2001 (Cth) Sections 79, 181 and 674.

12 Under Section 11.2 of the Schedule to the Criminal Code Act 1995 (Cth), a person who 'aids, abets, counsels or procures the commission of the offence by another person' is taken to have committed the offence.

13 Corporations Act 2001 (Cth) Section 181.

14 See, for example: ASIC, 'Decision in Centro civil penalty case' (11-125MR, 24 June 2011); ASIC, 'ASIC enforcement outcomes: January to June 2015' (Report No. 444, August 2015), p. 19; ASIC, 'ASIC enforcement outcomes: July to December 2015' (Report No. 476, March 2016); 'ASIC enforcement outcomes: January to June 2017' (Report No. 536, August 2017); Medcraft, 'ASIC explained: who is the corporate watchdog, what does it do and why should Australians care?' (speech delivered at the National Press Club of Australia, Canberra, 3 December 2014).

15 See, for example: ASIC, 'Macquarie Investment Management penalised over Corporations Act contraventions' (16-271MR, 24 August 2016); ASIC, 'Former Kleenmaid director sentenced to nine years imprisonment for fraud and insolvent trading' (16-257MR, 15 August 2016); ASIC, 'MFS executives found to have dishonestly breached duties' (16-158MR, 23 May 2016); ASIC, 'ASIC bans former director of Provident Capital Limited' (15-199MR, 28 July 2015); ASIC, 'Former Chief Financial Officer of ABC Learning Centres sentenced' (15-073MR, 31 March 2015); and the following ASIC media releases on the Centro, James Hardie and Fortescue Metals Group cases: 'ASIC commences proceedings against current and former officers of Centro' (09-202AD, 21 October 2009); 'Decision in Centro civil penalty case' (11-125MR , 24 June 2011); 'Centro civil penalty proceedings' (11-188MR, 31 August 2011); 'Former Centro auditor suspended' (12-288MR, 19 November 2012); 'James Hardie civil penalty proceedings' (09-152, 20 August 2009); 'Decisions in James Hardie civil penalty case' (10-273MR, 17 December 2010); 'Decision in James Hardie penalty proceedings' (12-275MR, 13 November 2012); 'ASIC commences proceedings against Fortescue Metals Group and Andrew Forrest' (06-062, 2 March 2006); 'ASIC takes action against Fortescue Metals and CEO Andrew Forrest' (MR09-55, 3 April 2009); 'ASIC's proceedings against Fortescue Metals Group Ltd and Andrew Forrest dismissed' (09-268AD, 23 December 2009); 'Decision in High Court appeal by Fortescue Metals Group and Andrew Forrest' (12-244MR, 2 October 2012).

16 See, for example: Andrew Main, 'Gwalia administrators get $125m to settle damages case', The Australian, 5 September 2009; Patrick Durkin, 'KPMG to pay $67m over Westpoint', The Australian Financial Review, 1 February 2011; Nick Lenaghan, 'Centro, PwC take record $200m legal hit', The Australian Financial Review, 9 May 2012.

17 For the purposes of this chapter, representative proceedings will be referred to by the more commonly understood title of 'class actions'.

18 Federal Court of Australia Act 1976 (Cth) Part IVA, which was introduced in 1992.

19 Supreme Court Act 1986 (Vic) Part 4A, which was introduced in 2000.

20 Civil Procedure Act 2005 (NSW) Part 10, which was introduced in 2010.

21 Civil Proceedings Act 2011 (QLD) Part 13A, which was introduced in 2016.

22 See generally, Grave, Adams and Betts, Class Actions in Australia (2nd edn, Thomson Reuters, 2012).

23 Law Reform Commission of Western Australia, Representative Proceedings: Project 103 – Final Report (June 2015).

24 Corporations Act 2001 (Cth) Section 674(2).

25 Corporations Act 2001 (Cth) Section 1041H; Australian Securities and Investments Commission Act (Cth) Section 12DA.

26 Corporations Act 2001 (Cth) Sections 1041I and 1317HA.

27 Campbells Cash and Carry Pty Ltd v. Fostif Pty Ltd (2006) 229 CLR 386.

28 Multiplex Funds Management Ltd v. P Dawson Nominees Pty Ltd (2007) 164 FCR 275.

29 Money Max Int Pty Ltd (trustee) v. QBE Insurance Group Limited (2016) 245 FCR 191.

30 Lenthall v. Westpac Life Insurance Services Limited [2019] FCAFC 34; Brewster v. BMW Australia Ltd [2019] NSWCA 35.

31 Corporations Act 2001 (Cth) Sections 236 and 237.

32 See Ramsay and Saunders, 'Litigation by shareholders and directors: an empirical study of the statutory derivative action' (Research Report, Centre for Corporate Law and Securities Regulation, The University of Melbourne, 2006), p. 29.

33 Federal Court of Australia Act 1976 (Cth) Section 33C. While the Federal Court is the most popular forum for class actions in Australia, there are also class action regimes in the Supreme Court of Victoria, the Supreme Court of New South Wales and the Supreme Court of Queensland, which are almost identical to the federal regime: see Supreme Court Act 1986 (Vic) Part 4A, Civil Procedure Act 2005 (NSW) Part 10 and Civil Proceedings Act 2011 (QLD) Part 13A.

34 Cash Converters International Limited v. Gray (2014) 223 FCR 139 at 144 [21] (per Jacobson, Middleton and Gordon JJ).

35 Unless the group member is a governmental or quasi-governmental body or officer, in which case written consent is required pursuant to Section 33E(2).

36 See generally, Federal Court of Australia Act 1976 (Cth) Part IVA and, in particular, Sections 33E, 33H, 33J, 33X and 33ZB.

37 See Federal Court of Australia Act 1976 (Cth), in particular Section 33N(1). For the equivalent state provisions, see Supreme Court Act 1986 (Vic) Section 33N(1), Civil Procedure Act 2005 (NSW) Section 166(1) and Civil Proceedings Act 2011 (QLD) Section 103(K).

38 See Federal Court of Australia Act 1976 (Cth) Section 33N(1).

39 See generally, ibid., Part IVA and, in particular, Sections 33Q, 33R, 33V and 33X.

40 See Federal Court of Australia Practice Note GPN-CA.

41 Earglow Pty Ltd v. Newcrest Mining Ltd and Others (2015) 230 FCR 469 at 479 [32] (per Beach J).

42 To date such applications for discovery have generally been unsuccessful: Pathway Investments Pty Ltd & Anor v. National Australia Bank Limited [2012] VSC 72.

43 Corporations Act 2001 (Cth) Section 237.

44 Federal Court of Australia Act 1976 (Cth) Sections 33V and 33X.

45 Australian Securities and Investments Commission v. Richards [2013] FCAFC 89, 89 at [7]–[8] (per Jacobson, Middleton and Gordon JJ); Hodges v. Waters (No. 7) (2015) 232 FCR 97 at [70] (per Perram J); Kelly v. Willmott Forests Ltd (in liq) (No. 4) [2016] FCA 323.

46 Peterson v. Merck Sharp & Dohme (Australia) Pty Ltd (No. 6) [2013] FCA 447 at [16]–[20] (per Jessup J).

47 Corporations Act 2001 (Cth) Section 240.

48 See Ford, Austin and Ramsay, Ford's Principles of Corporations Law (16th edn, LexisNexis Butterworths), Part III 'The Law of Corporate Governance', Chapter 10 'Members' Remedies' at [10.240].

49 In the context of continuous disclosure provisions, Corporations Act 2001 (Cth) Section 1317HA states relevantly: 'A Court may order a person . . . to compensate another person . . . for damage suffered . . . if: . . . the damage resulted from the contravention' (emphasis added).

50 In the context of misleading or deceptive conduct provisions, Corporations Act 2001 (Cth) Section 1041I provides: 'A person who suffers loss or damage by conduct of another person that was engaged in contravention of Section 1041E, 1041F, 1041G or 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention'.

51 See Grave, Watterson and Mould, 'Causation, Loss and Damage: Challenges for the New Shareholder Class Action' (2009), 27 Company and Securities Law Journal 483.

52 HIH Insurance Limited (in liquidation) & Ors (2016) 335 ALR 320; Caason Investments Pty Ltd v. Cao (2015) 236 FCR 322; see also Earglow Pty Ltd v. Newcrest Mining Ltd [2016] FCA 1433 and Newstart 123 Pty Ltd v. Billabong International Ltd [2016] FCA 1194.

53 See Grave, Adams and Betts, Class Actions in Australia (2nd edn, Thomson Reuters, 2012), pp. 920–928.

54 Corporations Act 2001 (Cth) Sections 1317H(1) and 1317J(2).

55 ibid., Section 1317H(2).

56 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013); Australian Securities and Investments Commission Act 2001 (Cth) Section 18.

57 Legal Services Directions 2017 (Cth) Schedule 1, Parts 1 and 4; Senate Economics References Committee, Parliament of Australia, Performance of the Australian Securities and Investments Commission (June 2014), p. 261.

58 ASIC, 'Information Sheet 145: ASIC's compulsory information gathering powers' (September 2015).

59 Australian Securities and Investments Commission v. ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; Australian Securities and Investments Commission Act 2001 (Cth) Sections 19 and 76.

60 Australian Securities and Investments Commission Act 2001 (Cth) Section 68.

61 Corporations Act 2001 (Cth) Section 1316A.

62 See ASIC, 'Information Sheet 165: Claims of legal professional privilege' (December 2012); and Eastwood, 'Providing your legal advice to the regulator' (2013), 41 Australian Business Law Review 66.

63 ASIC, 'ASIC enforcement outcomes: January to June 2017' (Report No. 536, August 2017), Paragraph 15; ASIC, 'ASIC enforcement outcomes: July to December 2016' (Report No. 513, March 2017), Paragraph 16; ASIC, 'ASIC supervision of markets and participants: July to December 2014' (Report No. 425, March 2015), Paragraph 96; Tony D'Aloisio, 'Insider trading and market manipulation' (speech delivered at the Supreme Court of Victoria Law Conference, Melbourne, 13 August 2010).

64 ASIC, 'ASIC enforcement outcomes: January to June 2017' (Report No. 536, August 2017), Paragraphs 40–42.

65 ASIC, 'Information Sheet 151: ASIC's approach to enforcement' (September 2013), p. 5.

66 See Commonwealth Director of Public Prosecutions, Statement on disclosure in prosecutions conducted by the Commonwealth (22 March 2017), pp. 3–5.

67 Corporations Act 2001 (Cth) Section 1317G(1A).

68 Ibid.

69 It should be noted that ASIC is bound by a 'model litigant obligation' when conducting civil proceedings – see Legal Services Directions 2017 (Cth) Schedule 1, Parts 1 and 4.

70 Corporations Act 2001 (Cth) Section 1317M.

71 ibid., Sections 1317P and 1317Q.

72 Australian Securities and Investments Commission Act 2001 (Cth) Section 25; see generally Eastwood, 'Potential Uses of Transcripts of ASIC Examinations' (2009) 27 Company and Securities Law Journal 555.

73 Australian Securities and Investments Commission Act 2001 (Cth) Section 12GG.

74 Corporations Act 2001 (Cth) Section 1317DAC; ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraph 21.

75 ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraph 23(e).

76 The infringement notice regime was expanded by the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Cth), which received royal assent on 12 March 2019.

77 ibid., Paragraph 6.

78 ibid., table 1 and Paragraphs 13–20.

79 Corporations Act 2001 (Cth) Sections 1317DAF and 1317DAU.

80 ibid., Section 1317DAF(4) and 1317DAU(1)(e).

81 ibid., Section 1317DAJ; ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), table 1 and Paragraphs 39–40.

82 ASIC, 'Regulatory Guide 73: Continuous disclosure obligations: infringement notices' (October 2017), Paragraph 41.

83 NW Frozen Foods Pty Ltd v. Australian Competition and Consumer Commission (1996) 71 FCR 285, 291 (per Burchett and Kiefel JJ) and 298–299 (per Carr J).

84 Director, Fair Work Building Industry Inspectorate v. Construction, Forestry, Mining and Energy Union (2015) 229 FCR 331.

85 Commonwealth v. Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [1] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ). This is in contrast to criminal proceedings, in which prosecutors cannot make a submission as to the appropriate sentence or sentencing range: Barbaro v. The Queen (2014) 253 CLR 58.

86 Commonwealth v. Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 at [46] (per French CJ, Kiefel, Bell, Nettle and Gordon JJ).

87 Australian Securities and Investments Commission v. Westpac Banking Corporation [2018] FCA 1733 at [32] (per Perram J).

88 Commonwealth Director of Public Prosecutions, Prosecution Policy of the Commonwealth: Guidelines for the Making of Decisions in the Prosecution Process, 9 September 2014, Paragraph 6.17 (CDPP Prosecution Policy).

89 ibid., Paragraph 6.14.

90 Barbaro v. The Queen (2014) 253 CLR 58.

91 ASIC, 'Regulatory Guide 100: Enforceable undertakings' (February 2015), Paragraph 4.

92 ibid., table 4.

93 ibid., Paragraphs 43–44.

94 ibid., Paragraphs 39–40.

95 ibid., Paragraph 42.

96 ibid., Paragraphs 78–85.

97 ibid., Paragraph 18.

98 ibid., Paragraph 17.

99 ibid., Paragraph 21.

100 See, for example: Xiao v. Regina [2018] NSWCCA 4 (where the Court of Criminal Appeal quashed the sentence imposed by the trial judge in Regina v. Xiao [2016] NSWSC 240 but did not accept that the original sentence was manifestly excessive and nevertheless imposed a lengthy effective overall sentence of seven years' imprisonment with a non-parole period of four years and six months); Regina v. Glynatsis (2013) 230 A Crim R 99; The Queen v. Jacobson [2014] VSC 592; Commonwealth Director of Public Prosecutions v. Hill and Kamay [2015] VSC 86.

101 Corporations Act 2001 (Cth) Section 1311B.

102 ibid., Section 1311C.

103 ibid., Section 1317G(3).

104 ibid., Section 1317G(4).

105 ibid., Section 1317DAE.

106 ibid., Section 1317DAP.

107 Lipohar v. The Queen (1999) 200 CLR 485, 516–517 (per Gaudron, Gummow and Hayne JJ).

108 Copping v. Tobin Brothers Canberra Marine Centre Pty Ltd [1980] 1 NSWLR 183; Laurie v. Carroll (1958) 98 CLR 310. See also, for example: the Uniform Civil Procedure Rules 2005 (NSW) Rule 6.2; Supreme Court (General Civil Procedure) Rules 2015 (Vic) Rule 6.02; Federal Court Rules 1979 (Cth) Rule 7.1.

109 Corporations Act 2001 (Cth) Section 601CF.

110 ibid., Section 601CX.

111 ASX, Listing Rules (19 December 2016), Rule 1.1 conditions 4 and 5(b) (ASX listings), Rule 1.11 conditions 7 and 8(b) (ASX foreign exempt listings), Rule 1.8 conditions 7 and 8(d) (ASX debt listings); ASX, ASX Listing Rules Guidance Note 4 – Foreign entities listing on ASX (1 December 2017), p. 23.

112 ASX, Listing Rules (1 December 2017), Rule 1.10.1; ASX, Listing Rules (14 April 2014), Rules 3.1–3.1B; ASX, ASX Listing Rules Guidance Note 8 – Continuous Disclosure: Listing Rules 3.1–3.1B (19 December 2016).

113 ASX, ASX Listing Rules (1 December 2017), Rules 1.15.2, 1.15.3; ASX, ASX Listing Rules Guidance Note 8 – Continuous Disclosure: Listing Rules 3.1–3.1B (19 December 2016).

114 Such as the Corporations Act 2001 (Cth) Section 1041H and the Australian Securities and Investments Commission Act 2001 (Cth) Section 12DA.

115 Lipohar v. The Queen (1999) 200 CLR 485.

116 Under the Competition and Consumer Act 2010 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth).

117 Australian Securities and Investments Commission Act 2001 (Cth) Section 12AC; Australian Treasury, 'Guidance on obtaining ministerial consent to rely on extraterritorial conduct in private proceedings' (3 April 2012), https://treasury.gov.au/the-department/accountability-reporting/information-publication-scheme/guidance-on-obtaining-ministerial-consent-to-rely-on-extraterritorial-conduct-in-private-proceedings/.

118 Competition and Consumer Act 2010 (Cth) Section 5; Australian Securities and Investments Commission Act 2001 (Cth) Section 12AC.

119 Corporations Act 2001 (Cth) Section 1042B.

120 ASIC, 'ASIC's Corporate Plan 2016–2017 to 2019–20', p. 30.

121 See, for example: ASIC, 'ASIC enforcement outcomes: January to June 2016' (Report No. 485, August 2016), [17]–[19]; ASIC, 'ASIC enforcement outcomes: July to December 2015' (Report No. 476, March 2016), [17]–[18]; ASIC, 'ASIC enforcement outcomes: January to June 2014' (Report No. 402, July 2014), p. 9.

122 Australian Securities & Investments Commission v. Westpac Banking Corporation [2018] FCA 1733.

123 ASIC, 'ASIC enforcement outcomes: June to December 2017 (Report No. 568, August 2018); ASIC, 'ASIC enforcement outcomes: January to June 2018' (Report No. 585, February 2018).

124 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 'Interim Report: Volume 1',(28 September 2018) p. 278.

125 Speech by Cathie Armour, ASIC Commissioner, at the Australian Securitisation Conference 2018 (Sydney, Australia) 27 November 2018.

126 ASIC, 'Response to Interim Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry',(2 November 2018) p. 9.

127 Speech by James Shipton, ASIC Chair, Conduct Regulator's Address, the AFR Banking and Wealth Summit (Sydney, Australia) 27 March 2019.

128 Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report 134, 2018).

129 ibid., at [157] to [163].