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Schedule 2—Improving the accountability of resigning directors

Schedule 2 Improving the accountability of resigning directors

   

Corporations Act 2001

1  After paragraph 188(1)(e)

Insert:

                    (ea)  subsection 203AA(6) (notification of resignation day);

2  After section 203A

Insert:

203AA   Resignation of directors—when resignation takes effect

When resignation takes effect

             (1)  A person’s resignation as a director of a company takes effect on:

                     (a)  if, within 28 days after the day the person stopped being a director of the company, ASIC is notified of that fact under subsection 205A(1) or 205B(5)—the day the person stopped being a director of the company; or

                     (b)  in any other case—the day written notice is lodged with ASIC stating that the person has stopped being a director of the company.

Note 1:       A director includes a person appointed to the position of alternate director, see the definition of director in section 9.

Note 2:       For the application of this section, see Part 10.37.

             (2)  However, if:

                     (a)  because of paragraph (1)(b), the person’s resignation takes effect on a day that is not the day the person stopped being a director of the company; and

                     (b)  the person or the company applies to ASIC or the Court for it to fix, as the day the person’s resignation takes effect, the day (the resignation day ) that the person stopped being a director of the company; and

                     (c)  the application is made in accordance with subsection (5); and

                     (d)  the applicant satisfies ASIC or the Court that the person stopped being a director of the company on the resignation day;

ASIC or the Court may fix the resignation day as the day the person’s resignation takes effect.

             (3)  The Court must not fix the resignation day as the day the person’s resignation takes effect unless it is satisfied that it is just and equitable to do so.

             (4)  ASIC must not fix the resignation day as the day the person’s resignation takes effect unless it has had regard to:

                     (a)  any conduct, act, omission or representation of the applicant in relation to notifying ASIC of the resignation; and

                     (b)  the reasons for any delay in notifying ASIC of the resignation.

Application to ASIC or the Court

             (5)  For the purposes of paragraph (2)(c), the application:

                     (a)  if made to ASIC—must:

                              (i)  be made within 56 days after the day the person stopped being a director of the company; and

                             (ii)  be lodged in the prescribed form; or

                     (b)  if made to the Court—must be made within either:

                              (i)  12 months after the day the person stopped being a director of the company; or

                             (ii)  such longer period as the Court allows.

Notification to ASIC

             (6)  If the Court fixes the resignation day as the day the person’s resignation takes effect, the applicant must, within 2 business days after the Court fixes the resignation day, lodge with ASIC a copy of the order made by the Court that fixes the day.

             (7)  An offence based on subsection (6) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code .

Company must be left with at least 1 director

             (8)  This section has effect subject to section 203AB.

203AB   Resignation of directors—resignation has no effect if company has no other directors

             (1)  The resignation of a director of a company does not take effect if, at the end of the day that the resignation is to take effect, the company does not have at least one director.

Note:          For the application of this section, see Part 10.37.

             (2)  However, subsection (1) does not prevent the resignation of a director of a company taking effect if the resignation is to take effect on or after the day that the winding up of the company is taken, because of Division 1A of Part 5.6, to have begun.

3  After section 203C

Insert:

203CA   Resolution to remove directors—resolution is void if proprietary company has no other directors

             (1)  A resolution by members of a proprietary company to remove a director of the company is void if, at the end of the day that the resolution is to take effect, the company does not have at least one director.

Note:          For the application of this section, see Part 10.37.

             (2)  However, subsection (1) does not affect the validity of a resolution by members of a proprietary company to remove a director of the company if the resolution is to take effect on or after the day that the winding up of the company is taken, because of Division 1A of Part 5.6, to have begun.

4  In the appropriate position in Chapter 10

Insert:

Part 10.37 Transitional provisions relating to the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019

   

1661   Application of amendments

             (1)  The amendments of section 588H by Schedule 1 to the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 apply in relation to debts incurred, and dispositions made, after the commencement of those amendments.

             (2)  Sections 203AA and 203AB, as inserted by Schedule 2 to the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 , apply in relation to a person’s resignation as a director of a company if the person stopped being a director of the company on or after the day that is 12 months after the day those sections commence.

             (3)  Section 203CA, as inserted by Schedule 2 to the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 , applies in relation to a resolution that is to take effect on or after the day that is 12 months after the day that section commences.

5  In the appropriate position in Schedule 3

Insert:

Subsection 203AA(6)

120 penalty units