From 18 February 2020 new laws encompassed within the Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 (Bill) commenced having passed through Parliament and receiving royal assent on 17 February 2020.
These laws included:
- Creditor defeating dispositions
- Director resignations
- DPNs for GST, WET and LVT
- Retention of tax refunds.
Please refer to our previous Blogs regarding some of the measures already in effect.
Despite the law commencing on 18 February 2020, the laws surrounding director resignations do not take effect until 18 February 2021
From 18 February 2021 directors will have 28 days to lodge their notice of resignation with Australian Securities and Investments Commission (“ASIC”), otherwise the resignation will be taken to have effect from the date that the notice is lodged.
If the notice is lodged outside of the 28 days a director can make an application can to ASIC within 56 days of resignation to remedy the date that the resignation takes effect.
Beyond this the only remedy is an application to the Court within 12 months of a resignation to remedy the date the resignation takes effect, or later if the Court allows.
Directors will also be unable to resign or be removed by a company if that resignation or removal results in the company being left without a director. It could make for an interesting time if there are mass director resignations, the last one will be left holding the baby.
It is also worth noting that resignation or removal does not end one’s duties to a company, nor does it absolve a director for any breaches of duties or other exposures which could include:
- Insolvent trading for the period that they were directors
- Personable liability associated with director penalty notices relating to the period they were directors
- Personal liabilities attaching to guarantees executed by them, albeit that they are no longer directors
ASIC has a helpful guide for directors/boards relating to resignation and removal. ASIC: Resigning or Removing a Director Guide
As always, if you or your client has any queries in relation to this blog or any matter related to personal or corporate turnaround or insolvency, do not hesitate to contact anyone of our 5 registered liquidators or 2 bankruptcy trustees by using our Contact Us page or by clicking on the contact buttons of your Dye & Co contact at Our People.