The Australian Institute of Company Directors today reiterated its support for reforms announced in the Budget aimed at combatting illegal phoenixing activity.
Phoenix companies “rise from the ashes” with a new corporate structure that derives its assets and directors from an old entity, but in some cases improperly leave behind its debts.
The reforms include new offences for those that engage in illegal phoenix activity and an extension of the Director Penalty Regime.
AICD Managing Director and CEO Angus Armour said the AICD has supported a crackdown on illegal phoenix activity for some time including advocating for the introduction of Director Identification Numbers.
“Fraudulent phoenix activity by a small number of people hurts employees, creditors and the broader economy,” he said.
“Directors who are proven to engage in this illegal activity should feel the full strength of the law.
“During the 2017 public consultation on these issues the AICD said effective laws that are vigorously enforced are essential to combatting these destructive activities.”
Mr Armour said the AICD was looking forward to seeing the detail of the proposals to ensure they appropriately target those doing the wrong thing.
"We need to make sure that honest directors won’t be caught up in the crackdown, and that the law will effectively stamp out poor behaviour,” said Mr Armour.
“In our view, penalising directors who weren’t at the company at the time of the breach is inappropriate.
“We want to ensure the law targets directors engaged in unethical and illegal activity to deter this behaviour, so that the vast majority of directors in the community are not discredited by the actions of a few.”
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