The PricewaterhouseCoopers (PwC) report released today, commissioned by the Government’s Phoenix Taskforce, found that the direct impact of illegal phoenixing activity is between $2.85 and $5.13 billion per year to Australia’s economy. This highlights the need for urgent action on this issue.
The AICD has previously supported the establishment of an anti-phoenixing hotline as it has the potential to yield useful information beyond information provided by liquidators to ASIC under the Corporations Act 2001.
AICD Managing Director & CEO Angus Armour said the AICD strongly supports the government’s aim of deterring and disrupting phoenixing activity.
“Employees, creditors and stakeholders pay the price when unscrupulous individuals misuse the corporate form to strip assets from one company to another to avoid paying entitlements and liabilities. The practice also damages confidence in the corporate model, to the detriment of the vast majority of responsible businesses and directors,” he said.
“For that reason the AICD welcomes the establishment of a new anti-phoenixing hotline and website to assist regulators in targeting and prosecuting illegal activity.
"In order for these measures to be effective, the agencies responsible for taking action must be appropriately resourced, and willing, to act.
“We would also welcome periodic reporting of the volume and nature of reports provided via the hotline, together with statistics on the enforcement action taken in response.
“Effective laws, vigorously enforced, with impactful and proportionate sanctions, are vital in combatting these destructive illegal activities.”
The AICD also supports the introduction of Director Identification Numbers (DINs). The effective implementation of DINs would make it easier for regulators and other stakeholders to track the corporate history of individual directors and further support targeted anti- phoenixing measures, while also addressing cybersecurity and privacy concerns.
We note that as with any electronic identification system, information confidentiality and security issues will be of paramount importance in implementing the DIN regime.
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