University Business Law Report: ASIC Enforceable Undertakings Analysis

This report provides a detailed analysis of enforceable undertakings within the context of Australian business law, specifically focusing on the role of the Australian Securities and Investments Commission (ASIC). The report addresses key questions, including the benefits and criticisms of enforceable undertakings, recommendations for their improvement, and why certain recommendations might be ineffective. It compares enforceable undertakings with litigation as regulatory enforcement tools, offering an opinion on their relative effectiveness. The report also examines specific aspects of enforceable undertakings, such as the parties involved, alleged offenses, types of undertakings, the extent of self-monitoring in enforcement, and the potential effectiveness of implementation. The analysis draws upon relevant legislation, official websites, and academic sources to provide a comprehensive overview of the topic.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer 1....................................................................................................................................2
a) Benefits of Enforceable Undertakings............................................................................2
b) Criticism of Enforceable Undertakings...........................................................................2
c) Recommendations for the improvement of Enforceable Undertakings..........................3
d) Ineffective recommendations..........................................................................................3
e) Superiority between EU and Litigation...........................................................................3
Answer 2....................................................................................................................................4
a) Parties involved...............................................................................................................4
b) Alleged offences..............................................................................................................4
c) Type of undertakings.......................................................................................................5
d) Enforcement of EU based on self monitoring.................................................................5
e) Effectiveness of the implementation of EU....................................................................6
Bibliography...............................................................................................................................7

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Answer 1
a) Benefits of Enforceable Undertakings
Enforceable undertakings help to secure effective and quick remedies for contravening
regulatory provisions devoid of court proceedings. Enforceable undertakings have the power
to provide constructive and non adversarial resolutions to compliance issues related to
regulations. According to the Australian Securities and Investments Commission (ASIC),
enforceable undertakings are beneficial for providing remedies for influencing a culture of
compliance which in return helps the participants of the market regulated by ASIC. As stated
by Macrory in context to the United kingdom's regulatory sanction system, enforceable
undertaking is an effective alternative to the coercive and orthodox regulatory enforcement
action, more convenient for both the victim and the offender of non-compliance1.
b) Criticism of Enforceable Undertakings
Enforceable undertakings are a kind of settlements that are negotiated by ASIC with
organisations and individuals, and acts as an alternative to regulatory actions like trials in the
courts or tribunals. However, it takes a long course to enter into an enforceable undertaking
as it is not the first thing that comes to ASIC's mind in case of any dispute. Thus, it can be
said that enforceable undertakings are the last resort for critical circumstances. Therefore, as
enforceable undertakings are the last resort, they are heavily relied upon as an enforcement
tool pertaining to disputes concerning large organisations and it is said that the negotiation
process lacks transparency.
1 Macrory, Richard. Regulatory justice: Making sanctions effective. (2006) Cabinet Office

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c) Recommendations for the improvement of Enforceable Undertakings
It is recommended that ASIC should hire an expert who would be independent to
supervise the terms of the enforceable undertakings that are implemented. It is also
recommended that the compliance of the enforceable undertakings should be monitored so
that the proceedings are much more transparent like the introduction of the public progress
report. it is recommended that the enforceable undertakings must deal with it serious
limitations in regards to dealing with uncooperative organisations and individuals. ASIC
needs to implement stricter enforceable undertakings as a response to non-compliance2.
d) Ineffective recommendations
The recommendation pertaining to the proceedings of enforceable undertakings by ASIC
to be more transparent is quite vague. ASIC Bing an important regulatory body cannot deal
with critical disputes involving large organisations in front of the public eyes for it may
create havoc among the common people. Therefore it needs to maintain secrecy and
confidentiality in its proceedings and orders. Thus, asking ASIC to be transparent with the
enforceable undertaking proceedings is ineffective and impossible3.
e) Superiority between EU and Litigation
ASIC has conducted a study judging the effectiveness of enforceable undertakings in
comparison to litigation and it has come to the conclusion that enforceable undertakings are
much more effective in detouring organisations and individuals in case of non compliance. it
has been proven that enforceable undertaking has a greater impact of deterrence in case of
disputes relating to credit providers and financial services involved in unlawful activities. It
2 "About The Enforceable Undertakings Register | ASIC - Australian Securities And Investments
Commission", Asic.Gov.Au(Webpage, 2019) <https://asic.gov.au/about-asic/asic-investigations-and-
enforcement/about-the-enforceable-undertakings-register/>.
3 Nehme, Marina. "Enforceable undertakings: A new form of settlement to resolve alleged breaches of the law."
(2007) 11 UW Sydney L. Rev. 104.

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influences the financial institutions as well as individuals to comply with their statutory
obligations for avoiding deterrent actions of the enforceable undertakings. In addition
enforceable undertakings are considered as an alternative to administrative or civil actions
pertaining to disputes there is a case of contravention of statutory legislations. Thus it
naturally has a better impact than ordinary litigation held in the court. Enforceable
undertaking proceedings are also speedier than the regular Court proceedings4.
Answer 2
a) Parties involved
Enforceable undertaking can be both given by an individual as well as a company. ASIC
accepts enforceable undertakings given by the individuals as well as the companies under
section 93AA or 93A of the Australian securities and Investments Commission Act 2001
(ASIC Act)5. It also involves section 332 of the National Consumer Credit Protection Act
20096. Individuals as well as companies approach the ASIC for an unenforceable undertaking
proceeding as an alternative resolution two administrative of civil action7.
b) Alleged offences
Enforceable undertaking involves different kinds of legal breaches for the parties to get
ASIC involved in that disputes. It may involve concerns regarding compliance issues
involved between two companies or between a company and an individual that involves
serious breaches of duties or companies portraying misleading advertisements. As per the
4 Nehme, Marina. "Enforceable undertakings and the court system." (2008) 26.3 Marina Nehme,‘Enforceable
Undertakings and the Court System’ 147-171.
5 93A of the Australian securities and Investments Commission Act 200.
6 332 of the National Consumer Credit Protection Act 2009.
7 "About The Enforceable Undertakings Register | ASIC - Australian Securities And Investments
Commission", Asic.Gov.Au(Webpage, 2019) <https://asic.gov.au/about-asic/asic-investigations-and-
enforcement/about-the-enforceable-undertakings-register/>.

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study of ASIC, the subject matter of enforceable undertakings may vary from case to case.
However, there has been report of breach of duties or policies by individuals and not by
companies in most cases. In most cases, the enforceable undertakings that are given by
individuals are mostly related to breach of duties of other individuals pertaining to securities
and investment. While in case of companies, the consistent type of enforceable undertakings
cases are relating to misleading advertisements and statements presented by companies8.
c) Type of undertakings
Most type of enforceable undertakings comprise of directions that the individuals are
companies promises to do or not to do certain activities. While, the content of the undertaking
may vary from one case to the other9. Most undertakings involve:
 Prevention of the commitment of the alleged offence
 Setting up a necessary compliance program
 Parties agree to a self imposed Ban voluntarily
 To compensate the party affected in the dispute
 Participation in community service
d) Enforcement of EU based on self monitoring
In most cases, ASIC allows the enforcement of enforceable undertakings to be self
monitored by the parties to the dispute. This involves a provision which was undertaken by
the parties while they had lodged for enforceable undertaking proceedings with ASIC.
However this is looked down upon as a weakness of the enforceable undertaking as ASIC
8 Ibid.
9 Nehme, Marina. "Enforceable undertakings: A new form of settlement to resolve alleged breaches of the law."
(2007) 11 UW Sydney L. Rev. 104.

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does not take the responsibility of looking into the matter deeply unless the individuals are
the companies approach ASIC for further intervention10.
e) Effectiveness of the implementation of EU
With the compliance of all the necessary standards, implementation of enforceable
undertaking is a success. The implementation of enforceable undertaking has a great impact
on the parties for the prevalence of the deterrence factor involved in the order of the ASIC.
The enforceable undertaking proceedings ensure that the credit sectors and the financial
services are aware of their breach of regulations which has given rise to a dispute11.
10 Nehme, Marina. "Enforceable undertaking: A restorative sanction." (2010) 36 Monash UL Rev. 108.
11 "About The Enforceable Undertakings Register | ASIC - Australian Securities And Investments
Commission", Asic.Gov.Au(Webpage, 2019) <https://asic.gov.au/about-asic/asic-investigations-and-
enforcement/about-the-enforceable-undertakings-register/>.

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Bibliography
Books/Journal articles
Macrory, Richard. Regulatory justice: Making sanctions effective. (2006) Cabinet Office
Nehme, Marina. "Enforceable undertaking: A restorative sanction." (2010) 36 Monash UL
Rev. 108
Nehme, Marina. "Enforceable undertakings and the court system." (2008) 26.3 Marina
Nehme,‘Enforceable Undertakings and the Court System’ 147-171
Nehme, Marina. "Enforceable undertakings: A new form of settlement to resolve alleged
breaches of the law." (2007) 11 UW Sydney L. Rev. 104
Legislation
Australian securities and Investments Commission Act 2001
National Consumer Credit Protection Act 2009
Official websites
"About The Enforceable Undertakings Register | ASIC - Australian Securities And
Investments Commission", Asic.Gov.Au (Webpage, 2019) https://asic.gov.au/about-asic/asic-
investigations-and-enforcement/about-the-enforceable-undertakings-register/