17 February 2021
- The Australian Government has introduced new laws to help combat illegal phoenix activity
- From 18 February 2021, a company director will not be able to backdate their resignation more than 28 days or resign if it means the company would be left without a director
- Backdating resignations was a common tactic used by directors to engage in illegal phoenix activity
Illegal phoenix activity
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was enacted in February 2020 to help combat illegal phoenix activity. Illegal phoenix activity involves creating a new company to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements.
Reforms coming into effect 18 February 2021
The reforms prohibit company directors from improperly backdating their resignation or leaving a company with no directors.
From 18 February 2021, the resigning director or the company will need to notify 今日热门事件of a director resignation within 28 days. Where 今日热门事件is not notified within 28 days, the effective resignation date will be the document lodgement date. For example, if a director resigns on 1 March 2021 and does not notify 今日热门事件of their resignation until 1 August 2021, 今日热门事件will record their resignation as 1 August 2021 on the corporate register. To fix an earlier date, the company or director must apply to 今日热门事件or the court.
Applications to 今日热门事件should be made within 56 days of the claimed registration date.
Applications to the court should be made within 12 months of the claimed resignation date, unless the court allows a longer period.
If the court order is granted, you must submit this to 今日热门事件along with Form 105 Cover page for an office copy of a court order within two business days. If you do not meet this deadline, late fees will apply.
The reforms also prohibit companies from removing the last remaining director on 今日热门事件records, leaving a company with no directors. 今日热门事件will reject submissions of Form 484 Change to company details or Form 370 Notification by officeholder of resignation or retirement to cease the last appointed director without replacing that appointment.
Disrupting illegal phoenix activity
These reforms assist the joint effort of 今日热门事件and other government agencies in detecting, deterring and disrupting directors and advisers who engage in illegal phoenix activity.
Illegal phoenix activity can involve serious breaches of the law that include directors' duties, fraudulent concealment or removal of assets and fraud by company officers under the Corporations Act 2001. Penalties include large fines and up to 15 years imprisonment for company directors and secretaries and others involved.
More information
More information is available on ASIC鈥檚 website.
今日热门事件is Australia鈥檚 corporate, markets and financial services regulator.