Navigation: Previous Page | Contents | Next Page
Chapter 3 - Submissions and evidence received
3.1
As noted earlier, the
Committee received 14 submissions on the Bill. Given the short time in which
it was required to report, the Committee was pleased with the range of the
submissions and of the evidence of witnesses at its public hearing on the
Bill. This Chapter sets out the main points made by the submissions and
witnesses.
3.2
The submissions and
evidence reflected wide and diverse views.
Section 588G -
Extension of existing duty on directors not to engage in insolvent trading
3.3
Most submissions
addressed the proposed amendment of s.588G. The Shop, Distributive and Allied
Employees’ Association (SDAEA) submitted that the amendment is a positive move
in extending the liability of directors for insolvent trading. However, the
real problem is that this does not lead automatically of itself to a protection
of entitlements. The amendment provides only an onerous procedure for the
liquidator or a creditor to obtain compensation from a director who has
breached the provision. This compensation, given that employees are unsecured
creditors, may not be enough to meet all entitlements.
3.4
The SDAEA also
submitted that the Bill does not address the priority of employee entitlements
in a liquidation. The Corporations Law provides that secured creditors always
have priority over unsecured. This results in employees being in a second rate
position. Accordingly, it is imperative that the Bill provides for employee
entitlements to rank as a first priority in a liquidation, even before secured
creditors, to the full extent of all entitlements. Until this is done no
amount of tinkering will guarantee entitlements.
3.5
The SDAEA finally
submitted that employees should be able to recover entitlements directly from
directors who breach s.588G. This right should be absolute and not depend on
the consent of a liquidator or court.
3.6
The Australian Catholic
Commission for Industrial Relations (ACCIR) supported the uncommercial
transaction provision, because the current legislation protects the rights of
creditors only where a company incurs a debt. However, there may also be merit
in treating employee entitlements as ranking with secured creditors.
3.7
The Textile Clothing
and Footwear Union of Australia (Victorian Branch) (TCFUA) submitted that the
Bill did not address the existing very weak insolvent trading provisions. At
present a company may trade well beyond the point when it is able to pay
entitlements, but an action for insolvent trading seldom ensues.
3.8
The NSW
Attorney-General and Minister for Industrial Relations, the Hon J W Shaw QC
MLC, submitted that the s.588G amendment was not a specific measure to address
employee entitlements, because it only extended the scope of an existing
provision which provides general protection to creditors. It was difficult to
see how this will assist the payment of entitlements; it is arguable that the
Corporations Law already imposes a duty on directors not to engage in an
uncommercial transaction.
3.9
Mr David Noakes
submitted that the proposed s.588G amendment did not address situations where
there is no insolvent trading and no uncommercial transaction. It is true that
the threat of criminal penalty for those who break the new duty knowingly,
intentionally or recklessly may ensure that directors make timely payments
prior to insolvency. The problem with this ex post facto approach, however, is
that the company is already insolvent and this does little to recover
entitlements. Also, the use of civil penalties does not prevent insolvency or
ensure that entitlements are met; civil penalties are generally unsatisfactory.
3.10
Mr Ian Parsonage
submitted that the amendment to s.588G resulted in a questionable extension of
liability. The existing definition of uncommercial transaction in the
Corporation Law is already extremely broad, and to extend it further would go
beyond the purposes of the Bill.
3.11
Mr ARM Taylor, of
Horwath Chartered Accountants, submitted that applying sanctions to impecunious
directors will do little or nothing to increase the funds available in a
company failure; the directors may have no money and the company’s affairs may
have been legally and properly refinanced with the active approval of leading
banking and finance lawyers, bankers and other advisers. The fundamental
problem is that employee entitlements are paid from assets that are subject to
a floating charge, such assets being mainly a company’s debtors and stock. In
recent years, however, banks are other lenders have encouraged companies in
difficulties to “factor” their debtors. This is a growing financial product
which banks are actively promoting. The result is that a major floating charge
asset, debtors, is no longer available in an insolvency to meet employee
entitlements.
3.12
Mr Taylor submitted
that stock is the next most significant floating charge asset in a corporate
insolvency. However, trade creditors, usually suppliers, are by now quite
sophisticated in developing “retention of title” (ROT) clauses in their
contracts to supply stock. The effect of these ROT clauses is that, in a
corporate insolvency, title to stock reverts to the supplier. Little is left
for priority claimants such as employees. Floating charge assets at the end of
a receivership are further reduced by the costs and charges of the insolvency
administration, including the inevitable losses incurred in trading-on an
insolvent company. It is not surprising that there is little or nothing left
for employee entitlements.
3.13
Mr Taylor submitted
that the solution was not to penalise directors, but to make lenders
accountable. The Corporations Law should provide that employee entitlements
are payable from fixed as well as floating charges. Lenders would then ensure
that their net security position reflects the prior claims of employees. It is
not enough to leave employee entitlements to the whims of factoring, ROT
clauses and trading-on costs.
3.14
The Law Council of
Australia (Corporations Law Committee) submitted that it objects strongly to
the extension of the insolvent trading provisions, advising that it is unnecessary
both in the light of existing prohibitions and the proposed new Part 5.8A.
Australian insolvency legislation has provided employees with increasing levels
of protection, but there is a delicate balance to be struck. Employee
protection must be included within a wider policy framework, which also takes
account of the legitimate (and sometimes competing) interests of financiers,
equity investors and trade creditors. That policy must promote and facilitate
the free flows of capital and credit.
3.15
The Law Council
submitted that the change has potential possibly unintended consequences beyond
employee entitlements. In addition, the artificial extension of the insolvent
funding provisions may adversely affect the proper functioning of boards of
directors and is inconsistent with the recently introduced business judgment
rule. All of the present circumstances in s.588G which are taken to constitute
the incurring of a debt involve some form of outflow of money or value from the
company. This extended definition was intended to deal with potential abuses
resulting from share buy backs and reductions of capital. The proposed
inclusion of uncommercial transactions, however, is quite different in
character; instead of dealing with very specific circumstances the proposal is
extremely broad and need not involve any outflow of money or value.
3.16
The Law Council also
submitted that the present provisions dealing with voidable transactions
provide more appropriate remedies for insolvent or uncommercial transactions.
In fact, unfair laws are already included within the voidable transaction
provisions, protecting the rights of all creditors including employees. Such
transactions are voidable if the company is wound up within 10 years of the
transaction. Also, the general directors’ duties provisions, including the new
“business judgment rule”, provide adequate and appropriate criminal and
quasi-criminal sanctions. It is difficult to justify an additional layer of
complexity.
3.17
The Australian
Institute of Company Directors (AICD) submitted that it objected strongly to
the amendment to s.588G because it introduces further potential for directors
to be judged with the benefit of hindsight for decisions taken in good faith
and with diligence, at anearlier time. The result is that directors would be
exposed to unreasonable risk of further personal liability in addition to the
onerous obligations already placed upon them. The amendment is unfair,
unnecessary and damaging to the economy, in that it has the potential to prevent
directors from effectively carrying out their duties.
3.18
The AICD suggested a
different way of dealing with the situation. The AICD submitted that there is
a tendency to lump together all employee entitlements, but whereas unpaid
wages, annual leave and long service pay are accrued benefits, pay in lieu of
notice and redundancy pay are not. In fact, these two categories should be
treated differently. The Corporation Law should place accrued benefits above
the debts secured by a floating charge, or even above other secured creditors,
so that employees would be near the head of the queue in a voluntary
liquidation or receivership. There should be a maximum limit for claims, with
a Court discretion to raise the limit. The AICD submitted that those proposals
may have some adverse implications for capital raising, but companies and their
lenders would adjust to the proposal, which would introduce greater discipline
into bank lending and credit practices. However, non-accrued benefits should
not be the responsibility of the Corporations Law.
3.19
The Department of the
Treasury submitted that the rationale for s.588G extending the duty on
directors to prevent insolvent trading to include uncommercial transactions is
that such transactions impact directly on amounts payable to creditors,
including employees. There is at present a perceived gap in the present
insolvent trading provisions, which do not include all transactions which could
impact upon creditors; in particular, the transfer of assets away from the company
for an uncommercial consideration. Such transactions, which effectively amount
to asset stripping, can impact adversely on creditors just as much as incurring
debts or paying dividends out of company funds. The intention of the amendment
is that directors will need to be vigilant in ensuring that a company does not
enter into an uncommercial transaction while insolvent. Similarly, directors
will be under a duty to ensure that a company does not enter into any
uncommercial transaction if it would result in the insolvency of the company.
This would be in addition to the existing duty not to incur debts, pay
dividends or take similar action, in those circumstances.
3.20
The Treasury noted that
a breach of the new provisions would result in the same sanctions as a breach
of the current s.588G; that is, personal liability of directors for losses
suffered by creditors as a result of the transaction, as well as civil and
criminal penalties. Similarly, defences available to directors under the
present s.588G will be available, including that the director reasonably
expected that the company was solvent at the time of the transaction.
Section 596AB –
Entering into agreements or transactions to avoid employee entitlements
3.21
Almost all submissions
addressed proposed new s.596AB. The Australian Council of Trade Unions (ACTU)
supported a strengthened Corporations Law framework but noted that under
s.596AB an offence is committed only where a person intends to enter
into a transaction to prevent or significantly reduce the recovery of
entitlements. The ACTU submitted that, given the evidentiary difficulties with
establishing intention, this standard of proof is an impossible burden that
significantly reduces the effect of the section. The intention requirement
will defeat the objects of the new Part. Instead, the section should provide
that the mere existence of an agreement or transaction that has the effect of
avoiding or reducing liability for employee entitlements gives rise to the
offence. However, such an offence should include defences such as lack of
intention or the exercise of appropriate diligence to try to ensure that there
was no breach. This strict liability approach is based on provisions of the
Queensland Workplace Relations Act 1999. The results would be a
positive incentive to directors to ensure the protection of entitlements; a
standard of proof that is fair, given the relative positions of directors and
employees; and protection for directors who act diligently and in good faith.
3.22
The NSW Attorney General
and Minister for Industrial Relations, the Hon J W Shaw QC MLC, submitted that
in practice there might be few successful prosecutions under S.596AB . The
criminal standard of proof, combined with the necessity to prove intent, is a
high hurdle. However, the bar need not be so high. Civil penalties are
already an important sanction within the Corporations Law. Civil penalties
allow a court to fine or make orders against a person who has, on the balance
of probabilities, contravened specified sections of the Law. These provisions
already apply in such areas as directors’ duties, protection for shareholders
and certain dealings in relation to managed investment schemes. The provisions
include fines of up to $200,000 and orders disqualifying offenders from being
involved in managing a corporation. Mr Shaw submitted that this would also
discourage the “phoenix company” phenomenon where one company fails, but sells
its remaining assets to a new company that has the same directors as the
earlier failed company. The proposed new offence should be a civil penalty,
which would make the new laws more effective than their present form and deter
undesirable corporate behaviour.
3.23
Mr Shaw also submitted
that “intention” in s.596AB would be difficult to establish. However, this
could be remedied by replacing “intention” with “effect”, so that it is an
offence if the effect of the agreement or transaction is to prevent payment of
entitlements. This would place an onus on directors and others to ensure the
security of entitlements. There could be an exception where the person was not
in a position to influence the conduct that led to the failure to pay, or used
all diligence to provide for entitlements. The qualification “significantly”
is uncertain in effect and should be removed to avoid legal argument.
3.24
Mr Shaw submitted that
a crucial question is whether the phrase “relevant agreement or transaction” is
broad enough to include all circumstances that should be covered. The
provisions should be wide. For instance, the Income Tax Assessment Act 1936
uses the word “schemes” to cover the various forms of tax avoidance. “Schemes”
are defined more widely than agreement or transaction and s.596AB should be
extended to include schemes. Also, “agreement or transaction” is deficient in
that it does not include unilateral steps. In other words, there may
not always be two parties involved and unilateral steps may not always come
within the present drafting.
3.25
The SDAEA submitted
that the purpose of the Part is commendable, but it fails in that it applies
only when there is a deliberate intention to defeat the recovery of employee
entitlements. The SDAEA viewed the Part as a “toothless tiger” in that it may
be very difficult, if not impossible, to prove the necessary intent. The
reality is that the offence will be so hard to prove that nobody will be
effectively prosecuted. The solution is to expand the Part to catch any
agreement that has the effect of preventing or significantly reducing recovery
of entitlements.
3.26
Ms Nicola Roxon MP,
Federal Labor Member for Gellibrand, submitted that the provision aims only at
prosecuting directors who take action with deliberate intent to avoid paying
employee entitlements. It does not punish irresponsible or incompetent
directors, yet the potential harm to employees is the same. Consideration
should be given to reviewing the onus of proof where there is prima facia
evidence of a failure to pay employee entitlements.
3.27
The TCFUA submitted
that s.596AB will be too difficult to prove, because the offence requires an
intention. Instead, the offence should be based on the results of a
transaction. Any agreement that results in failure to pay entitlements should
constitute an offence. Also, the offence should not be limited to “preventing”
or “significantly reducing” entitlements; it should include anything that
reduces entitlements to any extent. Finally, because the offence must
be proved beyond reasonable doubt, establishing intention will be nearly
impossible. The offence should really be based on outcome, not intention.
3.28
The ACCIR submitted
that the evidentiary requirements of the criminal standard of proof might
defeat the intention of the provision. It may be appropriate to extend
liability to cases where directors do not exercise reasonable diligence to
ensure payment of employee entitlements.
3.29
Mr David Noakes
submitted that s.596AB is well drafted in that its provisions cannot be avoided
by arranging the prohibited transactions through non-related parties. However,
there is a problem in that the court must determine ex post facto the intention
of a person. The relevant agreement or transaction could have been made months
before a voluntary administration, possibly at full commercial value, with
assets sold at a price reached by an independent valuer. Also, the provisions
would be easy to circumvent, because the focus on intention would give rise to
numerous problems of interpretation. Corporations would be advised not to
record their deliberate or real intention at any stage of a corporate
restructure.
3.30
Mr Ian Parsonage
submitted that s.596AB has a number of drawbacks. The provision is too broad,
with ordinary commercial transactions arguably in breach of the section. This
will promote litigation and inhibit companies, particularly small business,
from raising finance. At the very least, the intention test in the section
should be a predominant intention. Also, the section is not qualified by
restricting it to an uncommercial transaction (which, as submitted above, is
itself too broad) or even (which, it is submitted, would be a more preferable
qualification) to an insolvent transaction. There are no such qualifications
even though the section imposes criminal liability. Finally, the section fails
to take into account the fact that many choices by directors otherwise
authorised by the Corporations Law may be adversely affected. For instance, if
a lender took a fixed charge over an asset (fixed charges are not subject to
employee claims and lenders are aware of this) then the lender (as well as the
directors) may be in breach of the section.
3.31
7The Law Council of
Australia (Corporations Law Committee) submitted that it does not object in
principle to the intent based provisions in proposed Part 5.8A, but has
concerns with unintended application and some technical aspects. The rationale
for placing fixed charge creditors ahead of employees in a winding up is that
it is important to facilitate the flow of loan capital by providing
unimpeachable first ranking security. Otherwise lending would be greatly
impaired and freedom of access to and movement of capital would be hindered.
Also company directors should be free to take calculated risks with capital to
the advantage of all stakeholders, including the company’s present and future employees.
Present employee priority on the other hand arguably operates to the detriment
of small and medium businesses who are unsecured trading creditors and who
cannot afford to have unpaid debts. The legislation must balance these company
interests. The difficulty here is that s.596AB, which extends criminal
liability to agreements or transactions which significantly reduce the
entitlements that can be recovered, may include a range of otherwise acceptable
transactions. For instance, the provision may catch a financier who takes a
fixed charge (which has priority over employee entitlements) as opposed to a
floating charge (which does not have priority). It would also include entering
into a deed of company arrangement, which is the clearest possible case of
intentional reduction of employee entitlements and which would seem to be
within the new provision even if approved by a court, creditors and the
affected employees. The Law Council advised that many other instances would
arise in practice.
3.32
The Law Council of
Australia also noted that s.596AB is expressed to apply even if the agreement
or transaction is approved by a court. The Law Council submitted that in fact
court approval is the best means to determine a balance between the competing
interests of potential creditors; court approval ought to put to rest any
outstanding concerns as to the validity of a transaction. The Law Council
noted (as did a number of other submissions) that the provision is inconsistent
with the amendments to the insolvent trading provisions, where court approved
transactions are expressly exempted.
3.33
The AICD submitted that
it had no objection to s.596AB.
3.34
The Department of the
Treasury submission addressed the suggestion that the offence provision would
be improved if it was included within the existing civil penalty regime in the
Corporations Law, with the object of expanding the remedies for breach.
However, the civil penalty provisions are based on the premise that
contravention of those provisions causes damage to the corporation. The
proposed Part 5.8A, on the other hand, focuses on damage to employees
caused by prohibited transactions, and any person may be in contravention. The
civil penalty provisions would need to be modified in these and other areas to
apply to the proposed provision.
3.35
The Treasury submission
also described how s.596AB would operate in the context of a deed of company
arrangement (DCA). The submission advised that concern has been expressed that
the proposed offence provision may prohibit any DCA which affects employee
entitlements. However, this is not the case. For instance, if persons enter
into a DCA by way of a moderate compromise considered necessary to preserve the
company’s business, then the provision would not automatically be breached.
If, on the other hand, the intention of those persons in entering the DCA is to
avoid employee entitlements, then they may be in breach of s.596AB.
Section 596AC - Persons
who contravene section 596AB liable to compensate for loss
3.36
Almost all submissions addressed
proposed new s.596AC and its associated provisions. The ACTU noted that
s.596AC liability was conditional upon breach of s.596AB, the company being
wound up, and the employees suffering loss or damage. However, this
unnecessarily limits the protection that the Bill affords to employees; action
should not be conditional on either a breach or on winding up proceedings. As
a minimum, proceedings should be available where the company has been put
generally into external administration. In fact, failure to pay entitlements
often occurs prior to external administration; the objects of the Part would be
facilitated if proceedings could be instituted both prior to external
administration and at any point during external administration.
3.37
The ACTU also submitted
that the intention requirement in s.596AB affected adversely the ability of
employees to make directors personally liable for employee entitlements. The
intention requirements of the trading when insolvent provisions of the
Corporations Law illustrate the difficulties of successful litigation where
intention must be proved. Sections 596AB and 596AC are strong on their face
but the threshold intention requirement has made them paper tigers. Instead,
company directors and management should be personally liable without the
intention test, subject to the same defences as those suggested earlier by the
ACTU for its proposed strict liability offence provision.
3.38
The ACTU also submitted
that in practice employees have limited financial and organisational resources
and are not in a position to initiate litigation, particularly where they have
just lost their jobs and substantial amounts of money through unpaid
entitlements. The requirement that a breach must have occurred will further
reduce the likelihood of successful litigation.
3.39
The ACTU also made a
number of suggestions relating to the procedural aspects of compensation
actions. The ACTU submitted that the requirement in the recovery provisions
for the written consent of the liquidator or approval of the court for an
employee to institute proceedings, derive from Part 5.8A limiting actions to
circumstances where a company is being wound up. Such consent is inappropriate
if the Part is amended to provide for personal strict liability of directors
and managers. In addition, under s.596AC only the liquidator or an employee
may recover compensation. Instead, however, there should be subrogation of
rights so that others beside employees may take action, including employee
representatives such as a union, or ASIC or other government agencies.
3.40
The ACTU further
submitted that it is acceptable to avoid double penalties, but s.596AI may
reduce further the limited protection for employees. The blanket prohibitions
in that section on employees commencing action where the liquidator has
instituted or intervened in proceedings under other provisions of the
Corporations Law are inappropriate in a scheme designed to protect employee
entitlements. The section should provide for the Court to exercise discretion
in these cases.
3.41
The TCFUA submitted
that directors should be personally liable for employee entitlements, with
strict liability. Numbers of other common law jurisdictions do this, notably
in Canada. Also, corporate litigation is enormously lengthy and expensive and
prohibitive for most employees. The costs of such litigation will usually
outweigh the amounts owed; most cases in the TCFUA experience involve small
companies with few workers, which owe relatively small amounts in total to
employee creditors. The TCFUA also submitted that employees may only proceed
for compensation where a company is being wound up, but the recent trend is for
a company to trade its way out of difficulties rather than be wound up.
Finally, related companies within the corporate group should be responsible for
employee entitlements of an insolvent company within the group.
3.42
Ms Nicola Roxon MP,
Federal Labor Member for Gellibrand, submitted that the reach of the Bill
should be extended, to allow employees and their representatives to take
effective action against directors and related parties who have failed to
provide for employee entitlements. Under the proposed arrangements the
employee must prove intent, and litigation is expensive and can be taken only
six months after the company commences to be wound up, with the consent of the
liquidator. Also, the director may not have sufficient funds to pay the
compensation because he or she may have placed personal assets beyond the reach
of the Bill. Instead of the proposed s.596AC, employees or their
representatives should be able to recover compensation from directors whenever
they fail to make proper provision for employee entitlements, whether by
deliberate avoidance, uncommercial decisions, incompetence or matters outside
their control. In addition, employees should be able to recover compensation
from corporations related to the insolvent corporation.
3.43
The NSW
Attorney-General and Minister for Industrial Relations, the Hon J W Shaw QC
MLC, submitted that employees who have lost their jobs in a company failure
will not have the resources to pursue their former employer in the courts. The
resources of the liquidator may also be strained. Also, it is inappropriate
for employees to have to rely on the liquidator to take action. Accordingly,
the Bill should be amended to allow an employee’s union to initiate
proceedings.
3.44
Mr David Noakes
submitted that, while s.596AC was practical in that it requires only a civil
rather than a criminal standard of proof, only persons in contravention of s.596AB
are liable to pay compensation. The result is that employees would be
reluctant to pay for costly litigation. Also, liquidators may be reluctant to
intervene in what, in any case, is an impractical remedy because it only gives
priority over other unsecured creditors. Personal liability could be a
solution; the present insolvent trading provisions provide penalties for
directors who allow a company to trade into insolvency. Another solution may
be court sanctioned contributions orders against related companies
3.45
The ACCIR submitted
that proceedings under the provisions of the Bill are costly and complex and
out of the financial reach of almost all employees.
3.46
The AICD submitted that
it had no objection to s.596AC.
3.47
The Department of the
Treasury submission addressed a number of suggested alternative approaches in
relation to employee entitlements. One of these was to give employees a
super-priority over all other creditors. Treasury, however, submitted that
there are a number of serious concerns with this approach. These included
increases in the costs, and limitations on the availability, of credit; the
likelihood of borrowing and lending entities finding other ways of ensuring
that the lender’s funds are not put at risk; difficulties with application to
existing securities; and the likely need for complex and intrusive regulatory
devices.
3.48
The Treasury submission
also addressed the suggestion that there should be absolute liability on
directors for employee entitlements, irrespective of any wrongdoing. In this
context the Treasury queried whether it was reasonable to effectively require
directors to guarantee significant obligations of the owners to the employees,
in the absence of any wrongdoing; suggested that this may have undesirable
effects on the conduct of business and upon costs; and questioned the
proportion of directors who would be able to fund entitlements if found liable.
3.49
The Treasury submission
also examined the suggestion that related corporations should be required to
contribute to employee’s entitlements. The Treasury submitted that this would
impinge on the long established doctrine that each company is a separate legal
entity with its own creditors. It would be a challenge to ensure that
individual creditors and shareholders of other group companies are not unfairly
disadvantaged. The issues here are complex, due to the way in which ownership
of companies is often split between numerous owners who may or may not own part
of the employing company.
3.50
The Department of the
Treasury submission expressly addressed the suggestion that s.596AC should
focus on the result of the transaction, rather than the intent behind it. In
other words, it has been suggested that the provision should target any
transaction that results in the loss of employee entitlements. Treasury
noted that result oriented provisions already in the insolvent trading
provisions are workable in that context because they are linked to insolvency
of the company and target only the directors of the company. The proposed Part
5.8A, however, is much broader in scope, in that it targets any person
knowingly concerned in a prohibited transaction, not merely directors of the
employer company. Also, it is not necessary to establish that the company was
insolvent, or became insolvent as a result of the transaction.
3.51
The Treasury submitted
that a fundamental difficulty with a results-based approach to the proposed
provision is that all expenditure can potentially reduce the amount of money
available to pay creditors, including employees. It would clearly be
unreasonable and unworkable to make all persons involved with those
transactions (such as contractors and suppliers) guilty of an offence and
liable to pay compensation. In order to make a results-based provision
workable, it would be necessary to limit the provision to transactions where
the company was already insolvent. It would also be necessary to exclude third
parties that do not have knowledge of the financial position of the company.
The result would likely be a resultant provision very similar to the existing
s.588G, except that it would operate only to protect employees rather than all
creditors.
3.52
Finally, the Treasury
submitted that the actions available for a breach of the provisions are not as
limited as some commentators have suggested. For instance, actions under
s.596AC are not the only means by which compensation may be received; ASIC
could apply for an injunction or order for payment in relation to a breach of
the provision, or commence proceedings on behalf of persons with their
permission in relation to default or misconduct. Also, actions under s.596AC
require proof only to the civil, not the criminal, standard. In addition,
limitations on actions by employees while a company is in liquidation are
necessary to ensure liquidations are conducted in an orderly manner. All such
safeguards and protections are based on similar existing provisions in relation
to insolvent trading actions.
Navigation: Previous Page | Contents | Next Page
Top
|