The Review of the Insolvent Trading Safe Harbour, tabled in Parliament this week, makes a number of key recommendations, including:
- a holistic review of Australia’s insolvency regime;
- simplifying and clarifying the wording of the Safe Harbour provisions; and
- the development of regulator best practice guidance on the Safe Harbour, in conjunction with industry groups, including the AICD.
The Review found that the Safe Harbour provisions have been a positive corporate law reform that has improved governance and economic outcomes and delivered real turnaround options to directors of listed, large, and some medium companies.
The findings are consistent with the AICD joint submission with the Business Council of Australia (BCA) to the Review which reflected our view that the Safe Harbour has been a successful insolvency policy reform that has driven changes in director behaviour to focus on restructuring businesses to the benefit of shareholders, employees and creditors.
AICD Managing Director and CEO, Angus Armour, said “We welcome this Review and its recommendations which will provide greater certainty for directors who may be able to save otherwise financially viable companies in uncertain times.
“It is crucial, however, that directors remember that their duties remain intact and that safe harbour provisions are in no way a ‘free pass’. Directors must continue to assess the ongoing financial liability of their organisation, and, critically, the impact of incurring further debts when considering this course of action.”
The AICD welcomes the opportunity to consult with stakeholders on the details of these reforms.
The AICD has also produced a Director Tool to assist directors with understanding and complying with the safe harbour provisions, available here.
