The Corporations Amendment (Phoenixing and Other Measures) Bill 2012 (the Phoenixing Bill) passed the Senate last week, on 9 May 2012. It is currently awaiting Royal Assent. For a more detailed discussion of the Phoenixing Bill as well as the Similar Names Bill, see my earlier post here .
In essence, the key amendments to the Corporations Act 2001 (Cth) introduced by the Phoenixing Bill are twofold -
1. Conferring upon ASIC administrative power to wind up abandoned companies. This power will be triggered when -
- it appears to ASIC that the company is no longer carrying on its business, based upon certain failures to lodge documents with ASIC (s 489F(1));
- the company has not paid its annual review fee within 12 months of the due date (s 489F(2));
- the company’s registration was reinstated by ASIC under s 601AH(1) (s 489F(3));
- ASIC is of the view that the company is no longer carrying on business, and has provided notice of its intention to the directors and received no objection (s 489F(4)).
2. Allowing for publication of insolvency notices on a central, public, ASIC-operated website, rather than in the print media or the ASIC gazette. Note that this is intended to go live as soon as 1 July 2012. See my other post from earlier this evening (link) in relation to the new draft regulations just released in this regard.
In relation to ASIC’s new power under the amendments -
Note that if ASIC orders under s 489F that a company be wound up, the company is deemed to have passed a resolution that it be wound up voluntarily under s 491 of the Corporations Act 2001 (Cth).
The stated aim of the main thrust of the Phoenixing Bill (ASIC’s new power) is the protection of workers’ entitlements in the context of phoenix activity. ASIC’s new power should enable employees of abandoned companies to access payment of some of their unpaid entitlements under GEERS, where before they were unable to do so because the company had not been placed into liquidation. Note that as part of its election commitments to workers package, the Government has indicated that it intends to replace GEERS, an administrative scheme, with a revised, but similar, legislative scheme.
An additional benefit of ASIC’s new power will be to enable a liquidator to investigate the affairs of an abandoned company, including suspected phoenix activity or other misconduct.
ASIC is expected to release draft guidance for public comment on how and when it will exercise this new power.