New Phoenix Offences and Improving the Accountability of Resigning Directors
Treasury Law Amendments (combating Illegal Phoenixing) Act 2020, was passed and received Royal Assent on the 17th of February 2020.
Two of the measures to combat illegal phoenix activity commenced on the 18th February 2020:
New Phoenix Offences
Introduces new phoenix offences to prohibit creditor – defeating dispositions of company property, penalise those who engage in or facilitate such dispositions, and allow Liquidators and ASIC to recover such property.
A creditor – defeating disposition, in very simple terms, is the transfer of a company’s asset/s for less than market value or otherwise the best price attainable at the time of disposition.
A transaction may be voidable if it is a creditor-defeating disposition and is made when the company is insolvent, or, because of the disposition becomes insolvent or enters external administration within the following 12 months.
Improving the Accountability of Resigning Directors
Ensures directors are held accountable for misconduct by preventing directors from improperly backdating resignations or ceasing to be a director when this would leave the company with no directors.
In the event a director reports to ASIC more than 28 days after the purported resignation, the resignation takes effect from the day it is reported to ASIC.
A company or a director may apply to ASIC or the Court to give effect to the resignation if they believe they have sufficient evidence to prove the resignation actually occurred in the earlier timeframe.
A director may not be removed from a company, if doing so would leave the company without a director (unless the company is being wound up)
Should you have any questions about these new measures, please do not hesitate to contact us on 8538 7266.