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Changes to Director Resignations

In February 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) (Phoenixing Act) was passed by Parliament which introduces amendments to the Corporations Act 2001 (Cth).

The Phoenixing Act is aimed at assisting regulators and liquidators to combat illegal phoenixing activities, by prohibiting directors from resigning and then improperly backdating resignations to avoid personal liability.

If ASIC receives a notice of resignation more than 28 days after the purported resignation, the effective date of resignation is the date that ASIC received notice of the resignation. For example, if a director resigns on 1 March 2021 but neither the director or the company notify ASIC until 1 August 2021, the resignation date of the director will be recorded as 1 August 2021. Please also note that late fees would apply in those circumstances.

The date of resignation can only be backdated by application to ASIC or the Court after the 28 day period if they can prove that the director did in fact resign on the purported date. Applications to ASIC must be made within 56 days of the stated resignation date whilst applications to the Court can be made within 12 months of the resignation date or a later time allowed by the Court.

This change will help to ensure that outgoing directors remain accountable for decisions that were made whilst they were a director of the company by preventing outgoing directors from backdating their resignations in an attempt to shift responsibility to any incoming or remaining directors of the company.

The Act also includes measures that seek to prevent directors from resigning where it would leave the company without a director. There are limited exceptions, including that:

  • the last director is deceased;
  • the company is being wound up or is under external administration; or
  • the director never consented to the appointment.

If you need assistance with lodging an application to change the cessation date of a director (and providing reasons) or would like further advice regarding the new changes to director resignations under the Phoenixing Act, please contact our Commercial Team at Burke & Associates Lawyers so that we can discuss this further with you.

Contacts

Meghan Warren

Principal

Meghan Warren

Principal
LL.B GAICD B.Bus (FinPlan)
Meghan is one of the few lawyers in Australia admitted in the State (Victoria) and Federal jurisdictions of Australia, and as an Attorney at Law to the New York State Bar in the United States.

Kristy Muhlhan

Principal

Kristy Muhlhan

Principal
LL.B (Hons) GRAD DIP. L.P., GAICD.
Since 2014, she has been an owner and Principal of the firm and has mastered a broad range of essential commercial and business skills which go hand in hand with the work she does for...

Rosy Roberts

Principal

Rosy Roberts

Principal
LL.B (Hons) B.A GAICD
Rosy has extensive experience in Litigation & Alternative Dispute Resolution having represented clients in all Victorian State Courts and the High Court of Australia. She is also a VCAT appointed Administrator.

Anthony Burke

Consultant

Anthony Burke

Consultant
B.A LL.B DIP.FIN. MGT
Tony is an LIV accredited business law specialist and a VCAT appointed Administrator. In 2008 he was President of the Law Institute of Victoria and served for two years as a director of the Law...

Stewart Davis

Associate

Stewart Davis

Associate
LL.B (Hons) B.Com
As well as property law, Stewart has had exposure to VCAT administration matters and commercial law, particularly servicing developer clients.

George Hanger

Associate

George Hanger

Associate
LL.B BA
George was admitted to legal practice in May 2015 after completing a Bachelor of Arts at the University of Melbourne and a Bachelor of Laws at Monash University.

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