In February 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was enacted 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.
The laws prohibit company directors from improperly backdating their resignation or leaving their company with no directors.
Date of resignation
From 18 February 2021, if you resign as director, you or the company need to notify ASIC within 28 days of resignation. Where you or the company do not notify ASIC within 28 days, the effective resignation date will be the lodgement date. For example, if you resign on 1 March 2021 but neither you or the company notify ASIC until 1 August 2021, your resignation date will be recorded as 1 August 2021. Late fees will still apply.
To fix the resignation date to a date earlier than 28 days, applications must be made to ASIC or the court.
To fix a resignation date that is more than 28 days but is 56 days or less, you or the company may make the application to ASIC within 56 days from the claimed resignation date and provide reasons. A fee will apply. If ASIC accepts the application, the resignation date will be fixed as the claimed resignation date, subject to the last director requirements below.
Applications to the court must be made within 12 months of the claimed resignation date unless the Court allows a longer period. If the court fixes an earlier resignation date, the Order must be lodged with ASIC by the applicant within two business days of the court making the order. Failure to do so is an offence of strict liability and late fees will apply.
Last director resignation has no effect
Unless a company is being wound up, directors will also no longer be able to resign if they are the last remaining director on ASIC records, leaving a company with no directors. Accordingly, submissions using a 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 will be rejected.
Company director duties and obligations
As a company director, you are responsible for the management of the affairs of your company and must comply with legal obligations under the Corporations Act 2001 and other laws, including general law. This is the case even when you appoint an agent to look after your company’s administrative affairs. For a summary of director’s legal obligations and responsibilities, you can read our article on Director Duties.
Need further help?
Marsh & Partners are committed to working with company directors to help them meet their goals and stay compliant.
You can contact a Marsh & Partners advisor for clarification on any information in this article. You can reach us on (07) 3023 4800 or at firstname.lastname@example.org .
This article is intended to give an overview and is not a substitute for legal advice.
Article Source: © Australian Securities & Investments Commission. Reproduced with permission.
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