The information below comes from the Australian Securities and Investments Commission.
Since 18 February 2021, a company director cannot backdate their resignation more than 28 days or resign if it means the company would be left without a director. Backdating resignations was a common tactic used by directors to engage in illegal phoenix activity.
Illegal phoenix activity involves creating a new company to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts, including taxes, creditors and employee entitlements.
The resigning director or the company will now need to notify the Australian Securities and Investments Commission (ASIC) of a director resignation within 28 days. If ASIC is not notified within 28 days, the effective resignation date will be the document lodgement date.
For example, if a director resigns on 1 March 2021 and does not notify ASIC of their resignation until 1 August 2021, ASIC will record their resignation as 1 August 2021 on the corporate register.
The company or director must apply to ASIC or the court to fix an earlier date. You can find out the timeframes and process for this on ASIC’s website.
The reforms also prohibit companies from removing the last remaining director on ASIC records, leaving a company with no directors. ASIC will reject submissions of Form 484 Change to company details or Form 370 Notification by officeholder of resignation or retirement to cease the last appointed director without replacing that appointment.
These reforms assist the joint effort of ASIC and other government agencies in detecting, deterring and disrupting directors and advisers who engage in illegal phoenix activity.
More information is available on ASIC’s website.