For more specific guidance on the impact of this crisis on the practical application of legal duties, refer to the Australian Institute of Company Directors' COVID-19 Resources website. Of particular note, refer to COVID-19: What directors need to know about the lifting of director liability for insolvent trading.
Temporary relief for directors from personal liability for trading while insolvent
As part of a range of economic measures in response to COVID-19, the government announced in March 2020 a six-month temporary relief for directors from personal liability for trading while insolvent.
This temporary safe harbour is designed to give directors the confidence to continue to trade, pay their bills and retain staff through the COVID-19 crisis without pressure to enter their organisation into administration if there is a chance it might be insolvent. Importantly, this reform is not a 'free pass' for directors, who must continue to carefully oversee the solvency of their organisation.
Directors will be able rely on the temporary relief in relation to a debt incurred by the company if:
- the debt is incurred in the ordinary course of the company’s business;
- the debt is incurred during the six-month period (starting on the day the new law commences), or a longer period as prescribed by the regulations; and
- the debt is incurred before any appointment of an administrator or liquidator of the company during the temporary safe harbour application period.
The insolvency safe harbour explained
This director tool contains suggested steps the AICD considers likely to be relevant when pursuing a restructuring plan and attempting to trigger the safe harbour protection from civil liability for insolvent trading provided in s 588GA(1) of the Corporations Act 2001 (Cth).
Please note that these steps are intended by the AICD to be a helpful broad guide only and should not be read or interpreted as an exhaustive list of factors which will need to be considered by directors in attempting to use the safe harbour protections, or as a supplement for legal advice.
While further details and analysis is contained below, by way of a brief summary, some of the steps which we considered important when accessing the safe harbour protection in s 588GA(1) are as follows:
Suggested steps to consider when using insolvency safe harbour
- Check that any outstanding employee entitlements are paid and ensure that the company will be able to continue to pay employee entitlements by the time they fall due.
- Check that the company is meeting all its tax reporting obligations and ensure that systems are put in place to enable the company to continue meeting these obligations.
- Check that there are no outstanding issues relating to misconduct of employees and officers that needs to be resolved. Directors should focus on ensuring employees are complying with company policies and misconduct should be identified and dealt with appropriately.
- Check existing insurance and indemnity policies, including D&O insurance, is up-to-date and adequate.
- Before incurring any further company debt, consider making an initial assessment regarding whether it will lead to a better outcome for the company to immediately appoint an administrator or liquidator. At this stage, directors should consider obtaining advice from an appropriately qualified entity and ensure that the entity was given all the information required to provide advice regarding the company’s prospects.
- If the initial assessment and advice points to the likelihood of a better outcome for the company than the immediate appointment of an administrator or liquidator, directors should consider developing a restructuring plan in earnest. Directors should consider making arrangements to also ensure that relevant documents are recorded carefully and archived.
- Consider placing the following items on the agenda of the board as ‘standing’ items for consideration and discussion:
a) the adequacy of financial records and how these financial records might be improved;
b) the financial position of the company, and whether it has deteriorated or improved, and how this might impact the availability of the safe harbour;
c) whether further advice needs to be obtained from an appropriately qualified entity;
d) whether the restructuring plan is being implemented, and whether adjustments will be required to ensure that the desired outcome will be achieved; and
e) whether, all things considered, it would be better for the company to immediately appoint an administrator or liquidator.
- When implementing a restructuring plan, directors should continually assess whether their chosen course of action will still lead to a better outcome for the company to pursue the restructure, when compared with the immediate appointment of an administrator or liquidator. Where necessary, directors should obtain new advice from an appropriately qualified professional regarding these steps.
- If the company is placed into formal insolvency, directors should ensure compliance with any obligations relating to the provision of books and information to a liquidator, administrator or controller. In addition, directors should ensure they are compliant with their obligations to provide assistance to a liquidator, administrator, or controller.
What is the safe harbour?
The Corporations Act provides directors with a protection from civil insolvent trading liability in certain circumstances.
Ordinarily, pursuant to the insolvent trading provisions in s 588G(2) of the Corporations Act, company directors will be personally liable for certain debts which are incurred if:
- they are a director at the time when the company incurs the debt;
- the company is insolvent at that time, or becomes insolvent by incurring that debt; and
- at that time, there are reasonable grounds for suspecting that the company is insolvent or would become insolvent.
However, the “safe harbour” provisions in s 588GA of the Corporations Act essentially provide directors with a form of “defence” or exception to this provision in some circumstances.
Section 588GA(1) of the Corporations Act excludes liability for insolvent trading under s 588G(2) of the Corporations Act if:
- at a particular time after a person starts to suspect a company may become or be insolvent, he or she starts developing one or more courses of action that are reasonably likely to lead to a better outcome for the company; and
- the debt is incurred directly or indirectly in connection with that course of action and during a specified time period.
The safe harbour laws commenced on 19 September 2017 and a number of aspects relating to these laws remain unclear. 1 However, we suggest that directors make every effort to familiarise themselves with these laws, and if necessary, make use of the mechanism to ensure they are protected when making decisions about their company.
When do I need to start thinking about the safe harbour?
We suggest that directors start considering the safe harbour provisions when a director has reason to suspect their company is approaching insolvency, that is to say, when a company is approaching a state of financial distress and risks being unable to pay its debts as they fall due.
Given that the safe harbour is directed at protecting the interests of directors in circumstances where they otherwise risk being personally liable for insolvent trading, it is in a director’s interest to begin considering measures which need to be put in place to ensure that the safe harbour protection can be relied upon in later proceedings at the earliest opportunity.
In particular, if a company is in financial distress, directors should seek to delay or defer the taking on of any further debts until the directors are satisfied that they have considered the need for safe harbour protections.
Crucially though, the best thing directors can do is to act early at the first signs of financial stress. Taking early and appropriate action to deal with a company’s financial difficulties will put the board in the best position to turn a company around and avoid administration and liquidation, as well as to trigger safe harbour protection, should that be necessary.
When does the safe harbour actually start protection directors?
The safe harbour only starts to apply from the time the directors, after beginning to suspect that the company may become insolvent, starts developing one or more courses of action, and one of those courses of action is reasonably likely to lead to a better outcome for the company that the immediate appointment of an administrator or liquidator.
However, the time taken between considering what should be done and actually going ahead and doing it is not limitless, and the safe harbour will only protect directors during a “reasonable period” between the consideration of the various courses of action and their implementation. The Explanatory Memorandum notes that “the duration of the reasonable period will vary on a case-by-case basis”.
This suggests that directors can be protected by the safe harbour even if their course of action has not been put into action but is still in a planning or development phase. Indeed, the directors may wish to consider a variety of potential options for the company’s future.
However, the Explanatory Memorandum notes that this is “not an excuse to tarry” and “directors should move promptly and decisively towards implementing a suitable course of action (or entering the company into formal insolvency) as is responsible in the circumstances”. 2
What if I am a director of a company in financial distress?
From the outset, directors should consider the prospect of insolvency and financial distress at board level. Directors should bear in mind that their common law and statutory duties are to the company itself, and not to themselves.
For this reason, gaining the protection of the safe harbour for themselves cannot be the main focus of directors. Instead, directors must consider first and foremost the interests of the company itself, and what will be required to promote the company’s interests. The purpose of the safe harbour is to empower directors to take actions which will promote the company’s interests by protecting them from personal liability.
Once directors are aware the company is in financial distress and insolvency may be “around the corner”, directors should take some form of action to ascertain the extent of the company’s difficulties. In some circumstances, this may require directors to commission or undertake an audit of the company’s solvency.
If we suspect insolvency, what should we do next?
If the directors suspect the company is insolvent, or may become insolvent, it is in the interests of directors to take measures to ensure the safe harbour protections are in place before incurring any further debts.
Once insolvency is suspected, directors should take positive steps towards developing a course of action for the company that is reasonably likely to lead to a better outcome, or alternatively, immediately appointing an administrator or liquidator.
To determine whether to appoint an administrator or liquidator or embark on a course of action, some of the steps that directors may be required to undertake are as follows:
- Properly inform yourself of the company’s financial position by, for instance, engaging an auditor to assess the company’s solvency.
- Take measures to ensure that the company is keeping appropriate financial records. This may, for instance, involve the board examining current management processes with a critical eye. The maintenance of appropriate records is important if directors will rely on the safe harbour in legal proceedings.
- Obtain advice from one or more appropriately qualified entities regarding the company’s restructuring options, financial position, and legal exposure. In particular, directors should look to obtain an advice which considers potential courses of action and compares them with the result that follow from the immediate appointment of an administrator or liquidator.
- Assess whether the company will continue to be in a position to meet all payments to employees on time, or whether this will prove impossible. If impossible, directors will not be able to rely on the safe harbour protections.
- Assess whether there is any employee fraud, theft, or other misconduct of employees, and addressing it immediately. The continued presence of employee misconduct may jeopardise the protection of the safe harbour.
What is a better outcome?
The protection of safe harbour is contingent on directors developing and implementing a course of action that will lead to a better outcome for the company, and the term “better outcome” is defined in comparative terms: a better outcome for the company is one that will be “better” for the company than “the immediate appointment of an administrator or liquidator”.
In other words, the legislation does not appear to prescribe the precise criteria of what a “better outcome” will look like for the company. It does not say, for instance, whether the directors will need to demonstrate a clear “cents in the dollar” differential between the course of action, and the immediate appointment of an administrator or liquidator.
For this reason, it appears directors are given a significant degree of latitude regarding the kind of action that they can take, provided it is reasonably likely to lead to a better outcome for the company than the immediate appointment of an administrator or liquidator. This flexibility appears to be recognised in the Explanatory Memorandum, which recognises that not all restructuring attempts will be successful and that administration or liquidation may occur despite the attempt. 3
Having said this, bearing in mind their duty to act in good faith in the best interests of the company, and having regard for creditors, directors may consider the following questions when assessing whether to pursue a “course of action”, or to immediately appoint an administrator or liquidator:
- Will a delay or deferral of administration or liquidation to a later dated be likely to result in a better cents-in-the-dollar return to shareholders and creditors?
- Will the immediate appointment of an administrator or liquidator result in an undesirable diminution of the company’s assets, including its goodwill? Will a delay or deferral make any meaningful difference to the end result?
- Are the company’s financial difficulties the result of a short-term issue? Or are they more likely the result of irreversible decline?
- To what extent are the financial difficulties the result of factors which are beyond the control of the directors? If they are beyond the control of the directors, are these factors likely to change?
- Can the company’s liabilities be reduced over a reasonable period of time? Or will interest on debt simply cause the company to be in even further debt?
- Can key contracts with creditors be re-negotiated on better terms? Would a restructure be more successful through external administration?
What is “reasonably likely” to lead to a better outcome?
To ensure that the safe harbour continues to apply to any new debts which are incurred, directors will likely need to continuously assess whether the course of action they have undertaken is, and remains, “reasonably likely” to lead to a better outcome.
The test involves an objective assessment of the course of action. In other words, the subjective opinion of the board is irrelevant in assessing whether a course of action was sufficiently meritorious to engage the safe harbour protection.
If a board of company directors hopes to rely on the safe harbour and trades while insolvent, directors will likely need to ensure that there is materials and evidence which would indicate a likelihood that their course of action would lead to a “better outcome”.
The legislation provides some guidance regarding what is expected of directors when seeking to rely on the safe harbour, and what evidence might be required if directors are called to defend themselves in court. While these expectations (or factors) are not mandatory or exhaustive, in working out whether a course of action is reasonably likely to lead to a better outcome for the company, a director (individually) will likely be expected to: 4
a) properly inform himself or herself of the company’s financial position;
b) take appropriate steps to prevent any misconduct by officers or employees of the company that could adversely affect the company’s ability to pay all its debts;
c) take appropriate steps to ensure that the company is keeping appropriate financial records consistent with the size and nature of the company;
d) obtain advice from an appropriately qualified entity who was given sufficient information to give appropriate advice; and
e) develop or implement a plan for restructuring the company to improve its financial position.
These factors are a guide, and it is likely to be critical that the directors continue to monitor the performance of the company, and the viability of the course of action adopted, with a view to ensuring that it is still reasonably likely to lead to a better outcome or, if that is not possible, place the company into voluntary administration.
How long will the safe harbour protect me?
The safe harbour will apply to a director until: 5
- the person or company stops taking the course of action;
- the person fails to take the course of action within a reasonable period after they start developing the course of action;
- the course of action stops being reasonably likely to lead to a better outcome; or
- the company goes into administration or liquidation.
That means that, depending on the circumstances and the course of action taken, a safe harbour may be available to a director for a significant period of time. For example, if a course of action encompasses a significant debt restructure which involved numerous phase-gates over many months if not years, it is possible that the safe harbour could extend for that entire period.
What debts are included in the safe harbour protection? Is it all debts?
The safe harbour protection does not apply to all debts. It only applies to debts which are incurred “directly or indirectly in connection with” developing and taking the course of action.
One obvious concern is whether debts which are incurred as part of “ordinary business” will be included. While it is a matter of some uncertainty as to the boundaries of the safe harbour with respect to the necessary degree of connection between the debt and the course of action, the Explanatory Memorandum states that debts would include “ordinary trade debts incurred in the usual course of the business”, and “debts taken on for the specific purpose of affecting a restructure as part of that course…” 6
Having said this, there will possibly be circumstances which could arise where some kinds of debts which will have no connection, whether directly or indirectly, with the course of action. These kinds of debts were not discussed in the Explanatory Memorandum, and so it is difficult to predict how the courts will construe this section.
One example would likely be a debt which is incurred that is inconsistent with the course of action which had been adopted by the directors.
Given the uncertainty regarding the necessary connection between the course of action and the debt, directors should be alert to the question and ensure that there is, at least, a defensible connection between the debt and the course of action. New debts which are incurred subsequent to the commencement of the implementation of a course of action will need to be scrutinised to ensure they can still be said to be connected with the course of action, or are a necessary step towards the achievement of the course of action.
What advice do I need to get, and from whom should I get it?
One of the important steps to take in achieving the protection of the safe harbour is obtaining “appropriate advice from an appropriate qualified entity”. 7
While obtaining advice is not mandatory to gain the protection of the safe harbour, directors should proceed on the assumption that it will be extremely difficult to provide convincing evidence to a court that a course of action was going to result in a better outcome for the company without being able to point to some form of advice which was obtained from an appropriately qualified entity.
The legislation, quite deliberately, does not define what “appropriate” advice might be, or who might be an “appropriately qualified entity”. However, the word “appropriate” clearly suggests that directors should take a critical perspective to any advice they procure. Directors should:
- Scrutinise the underlying assumptions relied upon in the advice to ensure that the conclusions are sound.
- Test the conclusions of the advice with regard to the various risks which might materialise going forward, particularly risks which relate to prevailing economic conditions.
- If possible, obtain an alternative opinion from another adviser to scrutinise the views taken in the advice.
- Ensure that the adviser is “appropriate qualified” (see below).
In terms of who is an appropriately qualified entity, while the legislation provides no express definition of this, the Explanatory Memorandum does provide guidance for directors in determining whether the entity is “appropriately qualified”. In appointing an adviser, regard should be had to issues such as: 8
- the nature, size, complexity, and financial position of the business to be restructured;
- the adviser’s independence, professional qualifications, good standing and membership of appropriate professional bodies (or in the case of an advising entity, those of its people);
- the adviser’s experience; and
- whether the adviser has adequate levels of professional indemnity insurance to cover the advice being given.
In other words, the right adviser to engage will depend on the underlying issues contributing to the financial distress of the organisation, as well as the size of the business, the extent to which it has progressed towards insolvency, and the complexity of the business.
In addition, the Explanatory Memorandum makes clear that it is expected that any business which is larger or more complex will be required to obtain advice from an appropriate professional with the following attributes: 9
- Possession of minimum educational qualifications as a condition of eligibility to practise or give that advice (and who is subject to Continuing Professional Development obligations whether by law or by membership of a professional association);
- Possession of appropriate levels of professional indemnity insurance to cover their advice; and
- Being bound by an enforced code of conduct or similar professional standards (whether under the law or by membership of a professional body).
What evidence will I be expected to provide to show I am entitled to safe harbour protection?
If a director was called upon to demonstrate why the ordinary insolvent trading liability provisions in s 588G(2) should not apply in legal proceedings, a director relying on the safe harbour protections bears the “evidentiary burden”. 10
The meaning of this requirement, in technical terms, is that the director would be expected to raise evidence that was sufficient to suggest that the facts relied on for the defence exist.
By way of example, if the director asserted certain facts – that is, that a proposed particular course of action was likely to lead to a better outcome for the company through the preservation of asset value, the repayment of creditors, and the stimulation of growth of the business – the director would also need to provide evidence that suggested a reasonable possibility that these facts existed as a matter of truth.
Importantly, our interpretation of the legislation is that directors are not required to prove that their course of action was reasonably likely to lead to a better outcome. Once they have provided sufficient evidence suggesting a reasonably possibility that a fact exists or does not exist, the onus shifts to the other party in the proceedings to demonstrate why the safe harbour should not apply.
Having said this, it is likely to be critical that directors ensure that a course of action taken is adequately documented and recorded. Directors should consider documenting the following at the time the course of action is being developed, and before any significant new debts are incurred by the company:
- A “turnaround” or restructuring plan, which contains, at minimum, the actions or strategies that will cause the company to be in a better position than its current state. This might simply document, for instance, a plan of negotiations with creditors to obtain better terms, which would be impossible if the company had to be placed into immediate liquidation or administration.
- A business review document, which contains a detailed consideration of the company’s current situation, way in which the proposed course or courses of action will impact on the company’s financial position, the company’s shareholders and stakeholders, and the company’s creditors. This advice should also include a SWAT analysis, and a consideration of the merits of both the proposed course or courses of action, and the merits and drawbacks of the immediate appointment of a liquidator or administrator.
- Advice obtained from an appropriately qualified entity. If the advice is provided to the company informally, or even if provided to the directors on an informal basis, processes must be put in place to document this so there is an adequate record of the advice obtained.
What employment and tax thresholds must be met to rely on the safe harbour?
The safe harbour legislation contains certain safeguards which are designed to protect the interests of employees and promote compliance with tax reporting obligations. Before incurring any new debt, we suggest that directors take measures to ensure their company is fully compliant with its obligations to employees and will continue to be compliant and has systems in place to ensure ongoing compliance with tax reporting obligations.
This is likely to be critically important because for the period where a company is non-compliant with these obligations, the safe harbour will not apply in relation to any debts incurred during the period the company is non-compliant. Directors could therefore be exposed to significant personal liability should these matters not be addressed.
The safe harbour will not apply if, when a debt is incurred:
- The company is failing to pay the entitlements of employees by the time they fall due, and that failure “amounts to less than substantial” compliance or is one of two or more failures by the company during the 12-month period prior to incurring the debt.
- The company is failing to meet its taxation reporting obligations, and that failure “amounts to less than substantial” compliance or is one of two or more failures by the company during the 12-month period prior to incurring the debt.
In practical terms, this means directors will likely need to take steps to satisfy themselves that employee entitlements have been paid and will continue to be paid, and tax reporting obligations have been met and will continue to be met.
Employee entitlements include wages, superannuation, injury compensation, “leave of absence” entitlements under an industrial instrument, and retrenchment payments payable under an industrial instrument (s 596AA(2) of the Corporations Act).
However, some employee entitlements are unlikely to be included:
- customs and practices which do not form part of an express or implied term of a contract;
- benefits which are purely discretionary and not referred to in the contract (which will often include bonuses);
- unregistered agreements with unions which are typically not enforceable (although it might be arguable that an unregistered agreement still constitutes an agreement as per paragraph (b) of the definition;
- non-monetary benefits –such as a car or a mobile phone; and
- possibly, common law workers compensation claims.
An "industrial instrument" means a contract of employment, or a law, award, determination, or agreement relating to terms or conditions of employment (s 9 of the Corporations Act).
Tax reporting obligations
Directors should ensure that the company has lodged all tax reporting documents, including Business Activity Statements, company tax returns, any fringe benefit tax returns, and so forth. It does not require up-to-date payment to the ATO, only that reporting itself is up to date.
When does the safe harbour apply to holding companies when a subsidiary is in danger of trading while insolvent?
Section 588WA provides that a holding company will not be liable for insolvent trading under s 588V to compensate creditors of its subsidiary for losses that arise as a result of debts incurred by the subsidiary if:
- the corporation takes reasonable steps to ensure that the safe harbour applies to each of the directors and the debt of the subsidiary company in question; and
- the safe harbour does apply in relation to the directors of the subsidiary company.
It is not clear what “reasonable steps” would be required to ensure that the safe harbour is available to the directors and the debt of the subsidiary, and the Courts will inevitably need to provide some guidance on this point. However, it is likely that this section requires the directors of the holding company to take positive actions to ensure that the directors of the subsidiary can avail themselves of the safe harbour protection, such as ensuring that the holding company providing advice and financial information to the subsidiary directors to enable them to make a determination as to whether to place the company into administration or liquidation.
What if I am a director of a subsidiary company?
While the safe harbour does apply to subsidiary directors as a general principle, it is important to note that a subsidiary director who enables the subsidiary to incur further debts while insolvent where this course of action will only provide a benefit to the holding company or the corporate group at the expense of the subsidiary will not be entitled to the safe harbour defence. The safe harbour requires directors to develop and implement a course of action that will lead to a better outcome for the company they direct, and not its corporate group. The exception to this is if the company is a holding company (see above).
In addition, directors of subsidiaries should be aware that they will not be entitled to rely on the deeming mechanism in s 187 of the Corporations Act if the subsidiary is insolvent. This means that directors of insolvent subsidiary companies need to be particularly mindful to exercise their powers and discharge their duties in good faith in the best interests of the subsidiary company and scrutinise each decision and transaction with that lens.
Does the safe harbour apply to not-for-profit companies and charities? What about incorporated associations?
The safe harbour applies to any director of a company which is subject to the insolvency provisions of the Corporations Act. For this reason, the safe harbour applies to companies limited by guarantee, including those registered with the Australian Charities and Not-For-Profits Commission (ACNC). Incorporated associations that are registered with the ACNC may also be entitled to safe harbour protection. This will depend on the provisions of the specific state or territory legislation under which the entity is incorporated. ACNC-registered incorporated associations should seek legal advice in this regard.
What happens if the company is placed into formal insolvency after a period of “safe harbour”?
If the company enters formal insolvency processes, it is essential that directors comply with obligations relating to the provision of materials to a liquidator, administrator, or controller, as required, and comply with obligations to assist an administrator, liquidator or controller.
If a liquidator, administrator, or controller is denied access to a company’s books or information about a company, a director will not be able to later use these books or the information to support or evidence a safe harbour defence. Of course, this restriction does not apply to directors if they prove they did not possess the relevant books or information, and there were no reasonable steps that could have bene taken to obtain the materials. 11
In addition, the safe harbour will not be taken to have been available if a director fails to substantially comply with their obligations to provide assistance or information to an administrator, liquidator, or controller in a formal insolvency under ss 429(2)(b), 475(1), 497(4), or 530A(1) of the Corporations Act. 12
Does the safe harbour apply to the board collectively?
The safe harbour applies to each individual director. For this reason, each director needs to take personally responsibility to ensure that they are satisfied that any course of action is reasonably likely to lead to a better outcome, and all the other preconditions for the safe harbour protections are being met, prior to taking the step of incurring debts while insolvent or approaching insolvency.
ASX guidance on safe harbour
ASX Guidance Note 8 contains commentary with respect to the need to disclose an intention to rely on the safe harbour:
“[The] ASX has been asked whether the fact that the entity's directors are relying on the insolvent trading safe harbour in section 588GA of the Corporations Act requires disclosure to the market. Section 588GA is a conditional carve-out from a director's potential liability for insolvent trading that does not affect an entity's continuous disclosure obligations or reduce the entity's obligation to disclose the extent of its financial difficulties. The fact that an entity’s directors are relying on the insolvent trading safe harbour to develop a course of action that may lead to a better outcome for the entity than an insolvent administration, in and of itself, is not something that ASX would generally require an entity to disclose under Listing Rule 3.1. Most investors would expect directors of an entity in financial difficulty to be considering whether there is a better alternative for the entity and its stakeholders than an insolvent administration. The fact that they are doing so is not likely to require disclosure unless it ceases to be confidential or a definitive course of action has been determined.”
Guidance Note 8 makes clear, however, that if there is an adverse development affecting the financial condition or prospects of an entity that falls outside the care-outs to immediate disclosure in Listing Rule 3.1A and a reasonable person would expect information about that development to have a material effect on the price or value of its securities, the entity must immediately disclose that information under Listing Rule 3.1.
1 D Stacey, 2018, “How is ‘Safe Harbour’ playing out on the ground?”, The Boardroom Report, Volume 16, Issue 9, 12 September, https://aicd.companydirectors.com.au/membership/the-boardroom-report/volume-16-issue-9/safe-harbour, (accessed 10 May 2020).
2 Explanatory Memorandum 12.
3 Explanatory Memorandum 21.
4 Corporations Act 2001, s 588GA(2).
5 Corporations Act 2001, s 588GA(1)(b).
6 Explanatory Memorandum 13.
7 Corporations Act 2001, s 588GA(2)(d).
8 Explanatory Memorandum 16-19.
9 Explanatory Memorandum 17-18.
10 Corporations Act 2001, s 588GA(3).
11 Corporations Act 2001, s 588GA(3)(a).
12 Corporations Act 2001, s 588GA(5).
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This document is part of a Director Tool series prepared by the Australian Institute of Company Directors. This series has been designed to provide general background information and as a starting point for undertaking a board-related activity. It is not designed to replace a detailed review of the subject matter. The material in this document does not constitute legal, accounting or other professional advice. While reasonable care has been taken in its preparation, the Australian Institute of Company Directors does not make any express or implied representations or warranties as to the completeness, currency, reliability or accuracy of the material in this document. This document should not be used or relied upon as a substitute for professional advice or as a basis for formulating business decisions. To the extent permitted by law, the Australian Institute of Company Directors excludes all liability for any loss or damage arising out of the use of the material in this document. Any links to third-party websites are provided for convenience only and do not represent endorsement, sponsorship or approval of those third parties, or any products and/or services offered by third parties, or any comment on the accuracy or currency of the information included in third party websites. The opinions of those quoted do not necessarily represent the view of the Australian Institute of Company Directors.
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