The Government has released draft legislation to take steps in order to crack down on company directors that are engaged in 'phoenix' company activities.
Why new legislation?
Among the changes are rules that deal with situations were a new company is incorporated with a similar name to a previous company that has been liquidated without satisfying its employment obligations.
Directors of these companies aim to avoid paying workers' and other non-secured creditors' entitlements by liquidating their companies and setting up new companies that use a similar name and often operate from the same premises, use the same staff and retain the same customers.
Under these new rules, directors of such companies would be held personally liable for such debts by removing the limitation of liability protections of the Corporations Act.
New ASIC powers
Importantly, the new legislation will also provide powers to ASIC to wind up companies that appear to be no longer trading to allow employees to immediately access entitlements under the Government's General Employee Entitlements and Redundancy Scheme.
Contact us on (02) 9957 4033 or via email for me information about your liabilities as a director.
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Last updated January 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.