Submission to Treasury on Corporations Amendment (Similar Names) Bill 2012
- Date:29 Feb 2012
- Type:Policy Submission
to Treasury is in response to the Exposure Draft
of the Corporations Amendment (Similar Names) Bill 2012.
The purpose of the Bill is to prevent operators of phoenix companies from exploiting the concept of limited liability by setting up new companies for the purpose of defrauding creditors of a failed company. Company Directors supports effective efforts to reduce fraudulent phoenix activity. However, measures adopted to prevent fraudulent phoenix activity should not unnecessarily increase the compliance burden for the vast majority of Australia’s directors who govern their companies with integrity. In our view, it is essential for an appropriate and well formulated definition of ‘fraudulent phoenix activity’ to be included in the Draft Bill. This definition should require there to be a dishonest intention on the part of the directors to defraud or deceive creditors before the provisions apply.
Our submission notes that it is critical for policy makers to understand the difference between companies that fail and companies that are placed into liquidation for the purpose of engaging in fraudulent phoenix activity. This distinction is not reflected in the Draft Bill. Company Directors is eager to ensure that the proposed legislation does not provide a disincentive for entrepreneurs who may wish to start their businesses again, should they fail initially.
Download our Submission to Treasury on Corporations Amendment (Similar Names) Bill 2012 (PDF 4MB)