PHOENIX COMPANY DIRECTORS TO BE NAMED & SHAMED!

Phoenix activity is where a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts.  This activity is estimated to cost the economy $5billion per year.

Under proposed changes, the ATO will have the power to name and shame individuals and entities engaged in illegal phoenix activity and apply to ASIC to have Directors disqualified.

The Government plan to introduce a Director Identification Number (DIN) that would require directors to provide more information about themselves to ASIC at the time of registering a company.  This will also include a 100-point identification check.  Under proposed measures, directors will be required to have a DIN.  This means a director’s officeholding across companies will be linked and traced by a search. 

Civil / criminal penalties will apply for directors who fail to apply for a DIN within the required time frame. 

The DIN will aid the Government in detecting phoenix activity and cease the ability for Directors to liquidate a company to avoid paying debts, including taxes and employee entitlements. 

Please contact our office if you wish to discuss this further.