Clean Energy Regulator v Emerging Energy Solutions Group Pty Ltd (in liq) (No 2) [2026] FCA 12

Clean Energy Regulator v Emerging Energy Solutions Group Pty Ltd (in liq) (No 2) [2026] FCA 12 is a Federal Court decision about whether a regulator can keep pursuing civil penalty proceedings after a company enters creditors' voluntary liquidation. The Court said yes. Horan J granted the Clean Energy Regulator leave under s 500(2) of the Corporations Act to continue proceedings against Emerging Energy Solutions Group Pty Ltd.

The important point is that this was a procedural decision. The Court did not finally decide whether Emerging Energy was liable for the alleged contraventions. Instead, the Court decided that the case should continue despite the liquidation because regulator civil penalty proceedings can serve public purposes that are not met by the ordinary proof of debt process in a winding up.

For business owners, the case is useful in two ways. First, it shows that liquidation does not necessarily stop a regulator from seeking declarations and penalties. Second, it shows how internal arrangements around access to regulated accounts can become the basis of serious enforcement action if they do not match the statutory scheme.

The underlying proceeding began in March 2024. The Clean Energy Regulator sued Emerging Energy and its director, alleging contraventions of the Australian National Registry of Emissions Units Act 2011 (Cth) and the Australian National Registry of Emissions Units Regulations 2011 (Cth) over the period from 22 May 2022 to 3 May 2023. The allegations concerned the operation of the company's Registry account.

The Registry is the system that records and tracks the issuance, holding, transfer and acquisition of Australian Carbon Credit Units. The statutory scheme requires Registry accounts to be opened in the name of a particular person. If the account holder is not an individual, it must nominate an authorised representative. Access is therefore tied to identified people and regulated conditions, not just to whoever happens to know the login details.

The Regulator alleged that an employee who was not the authorised representative accessed Emerging Energy's Registry account and carried out transactions involving transfers of ACCUs. It also alleged failures to notify the Regulator of relevant changes and failures to maintain the security of usernames and passwords and prevent unauthorised access.

Emerging Energy had earlier responded to the Regulator by denying that the account had been accessed without authorisation. It said its authorised representative had been suffering from anxiety and depression and was on personal leave during the relevant period. It also said that another staff member was permitted to handle matters under a power of attorney. That explanation became important because the Regulator's case focused on whether that arrangement complied with the statutory rules governing authorised access and notification.

Before the company went into liquidation, it filed a defence. The defence denied several alleged contraventions, including the alleged breaches of reg 33(1)(d) and (e) and reg 34(2)(a) and (b). But it admitted one alleged contravention, namely a breach of reg 34(2)(c) by failing to ensure that its authorised representative did not allow another person to gain access to the Registry. The company still denied that the authorised representative's medical condition created the notification obligations alleged by the Regulator.

On or about 24 July 2024, Emerging Energy entered creditors' voluntary liquidation. That triggered the statutory stay in s 500(2) of the Corporations Act, meaning the proceeding against the company could not simply continue unless the Court granted leave. The proceeding against the director later ended separately. On 14 January 2025, the case against Mr Shaikh was dismissed by consent under a deed of resolution and undertaking.

The Regulator then sought to continue only against the company. It also narrowed parts of its case. In particular, the judgment records that the Regulator no longer pressed the allegation that the authorised representative's incapacity itself caused him to no longer pass the fit and proper person test for the purposes of reg 33(1)(e). It also no longer alleged that the power of attorney had been revoked by reason of incapacity. But it maintained its allegations about reg 33(1)(d) and reg 34(2)(a), (b) and (c).

The legal question in this judgment was narrow but important. Under s 500(2) of the Corporations Act, once a company resolves for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and on any terms the Court imposes. So the issue was whether the Clean Energy Regulator should be given leave to continue this civil penalty proceeding against Emerging Energy.

The Court explained the purpose of the stay. In broad terms, it exists to prevent a company's assets being dissipated by unnecessary litigation and to avoid a multiplicity of actions during the winding up. Usually, if a person has a claim that can be dealt with through the liquidation process, that may weigh against separate court proceedings.

But the Court also noted that some claims are different. Regulator civil penalty proceedings are not simply a substitute for a proof of debt. They often seek relief, such as declarations of contravention and civil penalties, that cannot sensibly be accommodated within the proof of debt regime. That point strongly favours leave where the proceeding serves a public enforcement function.

The Court referred to established discretionary factors relevant to leave applications of this kind, including whether the claim has a solid foundation and raises a serious question to be tried, the seriousness and complexity of the issues, the stage the proceeding has reached, and any prejudice to creditors. In regulator cases, public interest and public policy considerations can also be important, especially general deterrence.

That is why this judgment should not be read as a ruling on the merits of the alleged contraventions. The Court was deciding whether the case should continue in court, not whether the Regulator had already proved its allegations.

Horan J granted leave to proceed. The reasons show several connected grounds for that result.

First, the Court accepted the established principle that regulator civil penalty proceedings usually cannot be dealt with adequately through the proof of debt process in a liquidation. A liquidator can assess creditor claims, but that process does not perform the same function as a court proceeding seeking declarations and penalties under a statutory enforcement regime. The Court treated that as a significant factor in favour of leave.

Second, the Court gave weight to public interest considerations. The Regulator filed evidence from a senior officer explaining the importance of the ANREU Registry to the integrity of the ACCU market and to confidence in the secure acquisition, transfer and holding of emissions units. The evidence said that doubt about whether unidentified persons were making unauthorised transactions could undermine confidence in the Registry, damage the Regulator's reputation, diminish market confidence in ACCU trading, affect the value of ACCUs, and have broader consequences for Australia's climate-related commitments and market standing.

Third, the Court accepted that general deterrence remained relevant even though the company was in liquidation. The reasons cite authority that inability to pay a penalty does not weigh against granting leave in regulator civil penalty proceedings. The public record of declarations and penalties can still serve a protective and deterrent function, including by signalling the seriousness of contravening conduct to the wider regulated community.

Fourth, the Court took into account the Regulator's evidence that this was the first civil penalty proceeding it had commenced to enforce the ANREU Act in this way. The Regulator said judicial consideration would reinforce the need to keep secure access details for the registries it administers and would help build public trust in the integrity of those schemes. The Court recorded that this public interest in judicial consideration and public record outcomes supported the grant of leave.

Fifth, the practical burden on the liquidation was reduced by undertakings given by the Regulator. The Regulator undertook to indemnify the liquidators against any adverse costs order made against them in the proceeding, to refrain from joining them personally or seeking judgment against them personally, and to refrain from enforcing any pecuniary penalties against the company without obtaining further leave of the Court. The liquidators ultimately neither consented to nor opposed the application on that basis.

The combination of those factors led the Court to conclude that it was appropriate to grant leave under s 500(2).

The Court made three main orders. First, it granted the Clean Energy Regulator leave under s 500(2) of the Corporations Act to proceed against Emerging Energy. Second, it granted leave to file and serve an amended originating application and amended statement of claim reflecting the dismissal of the case against the director and the narrowed allegations against the company. Third, subject to further order, it excused the liquidators from further appearance in the proceeding.

The Court also noted the Regulator's undertakings. These were important because they limited the impact of the proceeding on the liquidation. In particular, the Regulator undertook not to enforce any pecuniary penalties against the company without obtaining further leave of the Court.

What the Court did not decide is just as important. It did not finally determine whether Emerging Energy contravened reg 33(1)(d) or reg 34(2)(a), (b) or (c). It did not finally determine whether the company's explanation about the authorised representative and the power of attorney was legally sufficient. It did not impose a penalty. And it did not decide whether any future penalty would be enforceable without another application.

So if you are reading the case for precedent, the precedent is procedural and practical. It confirms that a regulator can continue a civil penalty case against a company in liquidation where public enforcement considerations justify it. It is not a final merits ruling on the ANREU obligations themselves.

For most businesses, the practical value of this case is broader than the clean energy sector. It is really about governance around regulated accounts, key-person risk and the limits of informal delegation.

If your business uses a government registry, licensing portal, emissions account, tax portal or any other regulated online system, ask four basic questions. Who is the authorised person under the rules? Who actually has access in practice? Are usernames and passwords being shared or reused informally? What happens if the authorised person is on leave, unwell or no longer available? This case shows that those questions can become legal questions, not just operational ones.

The judgment also highlights the difference between practical authority and legal authority. A business may think it has solved a staffing problem by giving another employee permission to act, or by relying on a power of attorney. But if the statutory scheme requires access to be limited to a nominated authorised representative who has been assessed by the regulator, an internal workaround may not be enough. The legal validity of the arrangement matters.

There is also an insolvency lesson. Some business owners assume that once a company enters liquidation, existing disputes will simply be absorbed into the winding up. This case shows that assumption can be wrong where a regulator is seeking declarations and civil penalties. The Court may allow the case to continue because the proceeding serves public purposes beyond recovering money.

That can have real commercial consequences. Even if a penalty is not immediately enforceable, the business may still face a public judgment, reputational damage, legal costs, management distraction and a precedent-setting decision. In regulated industries, those consequences can matter as much as the immediate financial exposure.

Founders and directors should also notice the staffing angle. The background suggests that the authorised representative's illness and absence were central to the events that followed. Businesses often rely heavily on one trusted person to manage a critical account. When that person becomes unavailable, teams may improvise. A better approach is to have a documented backup process that fits the regulator's rules, including any notification requirements, rather than relying on convenience-based access arrangements.

After reading this case, businesses should review the documents and conduct that usually sit behind account access decisions. Start with the formal appointment of authorised representatives. Make sure the person named with the regulator is current, available and actually performing the role. Then compare that formal position with what happens in practice. If another employee is logging in, approving transfers or handling account activity, you need to know whether that is permitted under the relevant scheme.

Next, review your credential controls. The allegations in this case included failures to maintain the security of usernames and passwords. That means businesses should look at how credentials are issued, stored, changed and revoked. If access details are shared in a team inbox, spreadsheet, messaging app or handover note, that may create both security and compliance risk.

You should also review absence and succession procedures. If a key authorised person goes on leave or becomes unable to act, there should be a documented escalation path that includes checking notification obligations and any regulator approval requirements. The case shows how quickly a business can move from an internal staffing issue to a regulatory enforcement issue if those steps are not clear.

Finally, if litigation or insolvency is already in play, review pleadings, admissions and correspondence carefully. The judgment records that the Regulator foreshadowed a possible summary judgment application based in part on admissions in the company's defence. That is a reminder that statements made before liquidation can continue to matter afterwards.

The substantive proceeding was filed on 22 March 2024. Emerging Energy entered creditors' voluntary liquidation on or about 24 July 2024, which stayed the proceeding against it by operation of s 500(2) of the Corporations Act. The proceeding against the director was dismissed by consent on 14 January 2025. The Regulator's interlocutory application for leave to continue against the company was filed on 20 August 2025 and heard on 14 November 2025. Judgment was delivered on 23 January 2026.

The status of this decision is that leave was granted for the proceeding to continue against the company. The judgment itself does not finally resolve the underlying allegations. Businesses should therefore read it as authority on the continuation of regulator proceedings during liquidation, not as a final ruling on the company's liability under the ANREU scheme.