142. Conditions for exercise of Early Intervention Powers

The AFSA may exercise one or more of its powers specified in section 143 in relation to an Authorised Person if it considers that:

(a)         an Authorised Person’s liquidity or solvency is impaired, or may soon be impaired unless there is a major improvement in its financial resources, assets, leverage exposures, risk profile, business model, risk management systems and controls, or quality of its governance and management;

(b)         one or more indicators in the Authorised Person’s Recovery Plan for taking action to restore its financial position demonstrate inadequate remedial action; or

(c)         it is otherwise necessary and desirable to meet the AFSA’s objectives.

143. Early Intervention Powers

(1)         The AFSA may by written notice require an Authorised Person to prepare and submit to the AFSA a corrective action plan that:

(a)         examines the status of its liquidity or solvency impairment;

(b)         explains in detail the corrective actions that will be taken to address and rectify identified weaknesses; and

(c)          sets out the timeframes for the corrective actions.

(2)         The AFSA may also by written notice require an Authorised Person to:

(a)         call a general meeting of shareholders, set an agenda and propose specified resolutions;

(b)         search for, and communicate with, potential purchasers of the Authorised Person’s business or part of the business;

(c)          remove directors or senior management who have failed to meet their obligations, including fiduciary duties

(d)         limit or, if appropriate, clawback compensation paid to directors and senior management;

(e)         obtain the AFSA’s written approval before making or incurring any major capital expenditure, material commitment or contingent liability;

(f)           enhance internal governance, systems, controls and risk management; or

(g)         implement one or more measures in the Authorised Person’s Recovery Plan.