May 22, 2014

Privatising ASIC register would be a blow to transparency — and victims

Charging fees to search the ASIC register is outrageous enough. Privatising the register, which would lead to higher costs, would be worse still.

Paddy Manning

Crikey business editor

As any business journalist knows, the ASIC search is the lifeblood of transparency and accountability in corporate Australia. There are 2 million companies in Australia. Only 2000 of those are listed on the ASX and subject to continuous disclosure obligations. For the rest, we are reliant on the reporting requirements set out in the corporations law, which establishes the national companies register administered by the corporate regulator, the Australian Securities and Investments Commission, and spells out who must file what. It is absolutely vital to be able to discover who a company's shareholders and directors are and, in the case of public companies, access financial details in annual returns (however late they've been filed), loans and offer documents. Unfortunately, searching ASIC's companies register is also hugely expensive, and the cost will only increase if the companies register is sold off, as was proposed in last week's federal budget. As widely flagged, the government set aside $12 million for scoping studies into the privatisation of the Defence Housing Authority, the Mint, Australian Hearing and the registry function of ASIC. The idea has been canvassed since chairman Greg Medcraft described the registry as a "technology business" that could be hived off without any impact on ASIC's regulatory responsibilities. The graph below shows ASIC's registry business has enjoyed explosive growth over the last 20 years, pulling in revenue of some $680 million in 2012-13, of which about half was generated by the $232 annual fee all companies have to pay, year-in, year-out. Prices are recommended by ASIC but set by the government, and bear absolutely no relation to the $142 million cost of administration ...

Revenue and costs -- companies, business names and searches 1991-2013 (nominal terms)

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4 thoughts on “Privatising ASIC register would be a blow to transparency — and victims

  1. SusieQ

    So true, so true.

  2. 64magpies

    Good article.

  3. Bob's Uncle

    As a regular purchaser of searches, this just sounds like short-term stupidity.

    Many searches are already carried out through external providers (SAI Glabal as an example) who charge additional costs for additional services. To my mind, this is the ideal place for private companies to get involved. They can innovate and compete based on service and price, while leaving the no-frills “raw feed” of information to come from ASIC.

    Privatising a monopoly is always risky, but privatising a monopoly information source which is vital to check and discover any meaningful information on companies and their directors/shareholders risks eroding transparency and therefore confidence in commercial dealings.

    What is next for the auction block? The AEC perhaps?

  4. douglasennis

    Bobs Uncle suggested the AEC as a possible privatization target, but I think we would get a better price for the police force. I can think of a number of organizations and businesses that would think that a good buy at almost any price!
    The selling of ASIC and putting regulatory and public record functions into private hands is almost as bad.

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