The report into Business Set-up, Transfer and Closure released on Monday 7 December, following a public inquiry into the barriers of setting up, transferring and closing businesses in Australia, closely echoes the sentiments heard in the Government’s Innovation Statement.
Key points include:
Director Identity Number
- Directors are required to obtain an individual Director Identity Number (DIN) from the Australian Securities and Investments Commission to assist in enforcement activities, including those designed to detect and prevent illegal “phoenix” activity. (The Australian Institute of Company Directors conducted a survey with over 200 of its members, with 67 percent of respondents voting in favour of the measure.)
- A “safe harbour” defence for directors of insolvent company to explore options for restructure, without liability for insolvent trading.
- Simplified liquidation processes for businesses with few or no recoverable assets.
- Option for formal company restructuring through voluntary administration should only be available when a company is capable of being a viable business in the future.
- The default exclusion period and restrictions on bankrupts in relation to access to finance, employment and overseas travel should be reduced from three years to one year.
The report shows that there is an increased focus on listed entities to provide detailed disclosures about the company’s prospects for future financial periods.
The report indicates also that companies are cautious about providing profit guidance to the market and suggest that the reasons for this may include: increased investor scrutiny, regulatory oversight and potential litigation should the profit guidance prove to be incorrect.
For more information, read the Productivity Commission’s Business Set-up, Transfer and Closure report and the AICD’ssubmission to the draft report.