New director resignation laws preventing illegal phoenixing have commenced

  • Amendment to the Corporations Act 2001 has been passed that assists regulators and liquidators to combat illegal phoenix activity.
  • ASIC states that new measures will assist in detecting, deterring and disrupting illegal phoenix activity by preventing directors from backdating their resignations or leaving a company with no directors.
  • All company directors should ensure that ASIC is promptly notified of their resignation within 28 days of the date of their formal resignation from the company.

Director resignations are no longer effective if ASIC is not properly notified of the resignation within 28 days or if the resignation would leave the company with no directors.

The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was passed to amend the Corporations Act 2001 and assist regulators and liquidators to 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, amounts owed to creditors and employee entitlements.

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