An enforceable undertaking, or EU, is an undertaking offered to
ASIC, by what we affectionately refer to as "the Pingee",
which sets out in writing certain actions that the Pingee is
prepared to undertake to address ASIC's concerns. Those
concerns will usually have arisen from a surveillance or
investigation conducted by ASIC. Typically that surveillance or
investigation will have involved the issue of notices by ASIC to
gather documentary and, perhaps, oral evidence.
The objective of the Pingee in offering an EU is, of course, to
prevent further action by ASIC. That action may, depending upon the
matters that ASIC is concerned about and the extent of the evidence
it has gathered, be of a criminal, civil penalty or administrative
nature. ASIC's objective in accepting an EU is to obtain a good
regulatory outcome without having to conduct proceedings which
would require it to prove its case and may result in an outcome
that is less flexible or less comprehensive. If the Pingee breaches
the enforceable undertaking, ASIC can take action for that breach
without the necessity of proving the underlying activity that led
to the undertaking.
ASIC's legislation gives ASIC the power to
"accept" an EU but not to demand one. Of course, it can
create the environment in which it is becomes attractive to offer
one. ASIC will not always accept an EU and its guidance to industry
about when it will and when it won't can be found in
Over a number of years we have been involved in various ways
with EU's entered into with ASIC and also with the ACCC. Our
roles have included: advising clients in their dealings with the
regulator, acting as expert consultants to assist clients in
meeting their obligations under the EU, acting as reviewers to
provide reports to the regulator on whether clients have met their
obligations under the EU and providing training mandated in the EU
to directors, responsible managers and staff.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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