Investigations look for offences; inquiries look at a problem. When the Securities Commission wants to understand why a fund collapsed, whether a market practice is harming investors or how a sector should be regulated, Division 3 of Part V of the Securities Commission Act 2015 gives it a procedure modelled on a commission of inquiry.
The power to inquire
The Commission “may conduct inquiries for the purposes of the performance of any of its powers and functions, under this Act or any other law, if the Commission considers an inquiry is necessary or desirable for the purposes of carrying out its regulatory functions”.
The trigger is the Commission’s own judgment; no suspicion of wrongdoing is needed. Where the issues go beyond the capital markets, section 72(2) allows the Commission to ask the National Government to convene a full inquiry under the Commission of Inquiry Act 1951 instead. A fund whose trustee has lost its licence, as the Pacific Balance Fund did in 2023, is the kind of matter an inquiry into what went wrong might address.
Notice and terms of reference
Section 73 lets the Commission publish a notice of inquiry in the National Gazette and a daily newspaper. The notice must state the purpose of the inquiry, the period during which it will be held, the period and form for public submissions including details of any public hearings, and the matters the Commission would like submissions to address. The terms of reference may also be gazetted. Separately, section 77 requires the Commission to fix a place and time and give written notice to every person entitled to be at a hearing. A person who does not wish to appear may lodge written submissions beforehand, but anyone served with a summons must attend until discharged.
Public or private, and publication
Section 74 gives the Commission a general discretion to hold an inquiry in public or in private. It must weigh whether the evidence is confidential or relates to a suspected offence, any unfair prejudice to a person’s reputation, whether the public interest favours a public hearing, and any other relevant matter. Section 75 lets it direct that evidence given, or material in documents lodged, not be published or be published only in part, applying the same considerations. Where a hearing is private, section 76 (as amended in 2023) limits attendance to Board members, approved staff, persons the Commission directs may attend and interested parties, and a lawyer representing an interested person may always appear. Being present without entitlement is an offence carrying a fine of up to K500,000 or three years’ imprisonment, or both.
Summonses, oaths and procedure
Section 78 lets the Commission issue a written summons requiring a person to appear, give evidence, produce specified documents and attend from day to day until released. It may take evidence on oath or affirmation and administer the oath itself. The presiding member may require a witness to answer a question and a summoned person to produce a document (section 78(4), as amended), and may accept a written statement verified on oath in place of oral evidence.
Section 79 sets the tone of the hearing. It must be conducted “with as little formality and technicality and with as much expedition” as proper consideration allows. The Commission is not bound by the rules of evidence, may permit a person to intervene on conditions, and “must observe the rules of natural justice”. One member may preside alone. A natural person may appear in person or with a lawyer of choice; a company may be represented by an officer, employee or lawyer; an unincorporated association by a member, officer, employee or lawyer. Natural justice means at least that a person whose conduct is in question knows the allegations and can answer them before any adverse finding.
If a question of law arises, section 80 lets the Commission, on its own motion or at a party’s request, refer it to the National Court. While the reference is pending the Commission may not rule on any matter to which the question is relevant, and afterwards it may not act inconsistently with the Court’s opinion.
The report and its consequences
Section 82 requires the Commission to deliver its final report to the Minister, who must table it in the next session of Parliament. The Commission must identify confidential information and, where it is excluded, leave a note at the place of exclusion. Findings from an inquiry may lead to a prosecution under section 83, to civil proceedings under section 84 and to administrative action under the Capital Market Act 2015; see administrative penalties. Section 81, which gave members and witnesses the same protection as judges and witnesses in the National Court, was repealed in 2023; the good-faith immunity for Board members, the CEO and officers now sits in section 115, and section 115(4) still privileges anything said or produced in proceedings before the Commission as if in court.
| Conduct | Section | Maximum penalty |
|---|---|---|
| Refusing to appear, take an oath, answer or produce documents after notice; deceiving the Commission; obstructing it under Part V; breaching a condition it imposed | 93 | K5,000,000 or 7 years, or both |
| False or misleading evidence at a hearing | 94(2) | K10,000,000 or 10 years, or both |
| Contempt: obstructing or hindering the Commission or a member, disrupting a hearing, or defying a direction, order or decision | 96 | K10,000,000 or 10 years, or both |
A summons under section 78 is not optional and evidence is on oath, so treat an inquiry hearing as seriously as a court appearance. Ask for the terms of reference, request a private hearing or a publication restriction if reputations are at stake, and have a lawyer review any written submissions.
Sources
- Securities Commission Act 2015 — ss 72–80, 82, 83, 84, 93, 94, 96, 115 (ss 76(3), 78(4) as amended and s 81 repealed by the Securities Commission (Amendment) Act 2023)
- Capital Market Act 2015 — Part XV
Before relying on anything here, read the current text of the Capital Market Act 2015 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.