Submission on Exposure Draft of the Corporations Amendment (Phoenixing and Other Measures Bill) 2012
- Date:24 Jan 2012
- Type:Policy Submission
to Treasury is in response to the exposure draft of the Corporations Amendment (Phoenixing and Other Measures) Bill 2012.
While we support effective efforts to reduce fraudulent phoenix activity, we are eager to ensure that measures adopted to curtail the activities of those involved in fraudulent phoenix activity do not unnecessarily increase the compliance burden for the vast majority of Australia’s directors who govern their companies with integrity. We are also eager to ensure that the powers given to ASIC to regulate conduct that includes suspected phoenix activity are valid and appropriate.
In summary, our submission notes that:
- Treasury should give careful consideration as to whether providing ASIC with the power to order a winding up of a company is an exercise of judicial power. If upon its proper construction, section 489F of the Exposure Draft confers a judicial power upon ASIC, it will be invalid, given that judicial powers can only be exercised by a Chapter III court under the Constitution.
- The current drafting of section 489H(3) regarding ASIC’s power to fill a vacancy in the office of a liquidator is ambiguous.
- ASIC’s increased powers in the Bill are not confined to circumstances where fraudulent phoenix activity is suspected and apply more broadly. If the purpose of particular amendments is to address phoenix behaviour then ASIC’s power should be triggered only when phoenix behaviour is suspected and the legislation should unequivocally reflect this purpose.
- If the notification requirements currently set out in the Corporations Act are to be replaced with a regulation making power, the ‘prescribed manner’ should in no way diminish the ability of creditors, members and other interested persons to have notice of a corporate winding up.
Download our Submission to Treasury in Response to the Corporations Amendment (Phoenixing and Other Measures Bill) 2012 (PDF 2MB).