Landmark legislation passed by Parliament in September 2017 called ‘Safe Harbour’ includes provisions that empower directors to remain at the helm instead of ceding control – in many cases prematurely – to external Administrators or Liquidators.
These laws also mean that directors of companies in financial distress will have Safe Harbour protection from civil liability under Section 588G(2) of the Corporations Act 2001 (Cth) for incurring debts when they start developing an action plan that is “reasonably likely” to lead to a better outcome for the company than becoming insolvent.
Safe Harbour does not apply where Australian Tax Office (ATO) penalties arise from recklessness or intentional disregard of the tax law by negligent directors, nor does it affect other administrative penalties, including when tax avoidance schemes are involved.
Company directors seeking Safe Harbour protection need to engage an Appropriately Qualified Entity (AQE) such as Jirsch Sutherland to take on the role.
Our nationwide team of experts offer professional advice and assistance throughout the entire Safe Harbour procedure, from initial consideration through to developing a Restructuring Plan, including:
- Implementing steps to prevent misconduct by employees and directors
- Preventing job losses, contract terminations, destruction of goodwill and asset diminution
- Ensuring the company meets employee entitlements, tax reporting obligations and keeps appropriate financial records
- Formulating a Better Outcome or Restructuring Plan
- Assisting directors to fulfil existing statutory obligations to aid in the event of Administration or Liquidation