Will you be called to Court to give an account of your conduct as a Director?
Lowest Cost Company Liquidation
The power to publicly examine is most often utilised to encourage recalcitrant or vague company officers to cooperate. You can avoid the possibility by getting professional advice.
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What is a Public Examination?
A public examination is a formal process conducted by a Liquidator in an open court in which the liquidator can ask any question in relation to the management, promotion and transactions of the company and its officers.
A public examination is a formal examination process which is conducted in an open court.
Liquidators or the Australian Securities and Investments Commission (ASIC) can apply to court for a public examination to be held.
During the conduct of the examination, Liquidators or the ASIC can ask any question in relation to the management, promotion and transactions of the company and its officers or about the personal circumstances of the people involved with the company.
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What is the purpose of a Public Examination?
Usually liquidators and the ASIC will hold public examinations to gather information on the circumstances leading up to the failure of a company.
One purpose of a public examination is to gather information and to establish if any other litigation can be commenced for the benefit of creditors. For example the liquidator will most likely try to understand if the company directors continued to trade the company whilst it was insolvent. If this can be established the liquidator may then commence proceedings against the company directors for insolvent trading.
Liquidators or the ASIC may also ask questions to establish if the company directors committed any offences under the Corporations Act. If the ASIC obtain the necessary evidence from the liquidators, they may then ban the company directors from acting as directors of other companies.
Who can be called to be examined at a Public Examination
Usually company directors are publicly examined by liquidators or the ASIC, however, other people can be publicly examined if the liquidator or the ASIC can establish that the examinee was involved in the management or promotion of the company.
A warrant of arrest may be issued where an examinee fails to attend the examination, refuses to answer questions, fails to produce the summonsed documents or absconds in advance of the examination.