Corporations Amendment (Insolvency) Act 2007 (Cth)

Corporations Amendment (Insolvency) Act 2007 No. 132, 2007 An Act to amend the Corporations Act 2001, and for other purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Improving outcomes for creditors Part 1—Enhancing protection of employee entitlements Corporations Act 2001 Superannuation Guarantee (Administration) Act 1992 Part 2—Better informing creditor decisions Corporations Act 2001 Part 3—Streamlining external administration Corporations Act 2001 Part 4—Facilitating pooling in external administration Corporations Act 2001 Schedule 2—Deterring corporate misconduct Australian Securities and Investments Commission Act 2001 Corporations Act 2001 Schedule 3—Improving regulation of insolvency practitioners Corporations Act 2001 Schedule 4—Fine‑tuning voluntary administration Part 1—General Corporations Act 2001 Part 2—Rights to property during administration Corporations Act 2001 Part 3—Liquidation following administration Corporations Act 2001 Schedule 5—Miscellaneous Australian Securities and Investments Commission Act 2001 Corporations Act 2001 Schedule 6—Transitional Corporations Act 2001 Corporations Amendment (Insolvency) Act 2007 No. 132, 2007 An Act to amend the Corporations Act 2001, and for other purposes [Assented to 20 August 2007] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Corporations Amendment (Insolvency) Act 2007. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 20 August 2007 2. Schedule 1, items 1 to 48 A single day to be fixed by Proclamation. 31 December 2007 However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. (see F2007L03798) 3. Schedule 1, items 49 and 50 On the first day after the end of the period of 6 months beginning on the day on which the provision(s) covered by table item 2 commence. 1 July 2008 4. Schedule 1, items 51 to 120 At the same time as the provision(s) covered by table item 2. 31 December 2007 5. Schedule 1, item 121 At the same time as the provision(s) covered by table item 3. 1 July 2008 6. Schedule 1, items 122 to 133 At the same time as the provision(s) covered by table item 2. 31 December 2007 7. Schedule 2, items 1 to 10 At the same time as the provision(s) covered by table item 2. 31 December 2007 8. Schedule 2, item 11 At the same time as the provision(s) covered by table item 3. 1 July 2008 9. Schedule 2, item 12 At the same time as the provision(s) covered by table item 2. 31 December 2007 10. Schedules 3 to 6 At the same time as the provision(s) covered by table item 2. 31 December 2007 Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Improving outcomes for creditors Part 1—Enhancing protection of employee entitlements Corporations Act 2001 1 Section 9 Insert: eligible employee creditor, in relation to a company, means a creditor whose debt or claim would, in a winding up of the company, be payable in priority to other unsecured debts and claims in accordance with paragraph 556(1)(e), (g) or (h) or section 560 or 561. 2 Section 9 Insert: superannuation guarantee charge has the same meaning as in the Superannuation Guarantee (Administration) Act 1992. 3 Section 9 Insert: superannuation guarantee shortfall has the same meaning as in the Superannuation Guarantee (Administration) Act 1992. 4 Before section 444E Insert: 444DA Giving priority to eligible employee creditors (1) A deed of company arrangement must contain a provision to the effect that, for the purposes of the application by the administrator of the property of the company coming under his or her control under the deed, any eligible employee creditors will be entitled to a priority at least equal to what they would have been entitled if the property were applied in accordance with sections 556, 560 and 561. (2) However, the rule in subsection (1) does not apply if: (a) at a meeting of eligible employee creditors held before the meeting convened under section 439A, the eligible employee creditors pass a resolution agreeing to the non‑inclusion of such a provision; or (b) the Court makes an order under subsection (5) approving the non‑inclusion of such a provision. Meeting of eligible employee creditors (3) The administrator of the company must convene a meeting under paragraph (2)(a) by giving written notice of the meeting to as many of the eligible employee creditors as reasonably practicable at least 5 business days before the meeting. (4) A notice under subsection (3) must be accompanied by a copy of a statement setting out: (a) the administrator's opinion whether the non‑inclusion of such a provision would be likely to result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the company; and (b) his or her reasons for that opinion; and (c) such other information known to the administrator as will enable the eligible employee creditors to make an informed decision about the matter covered by paragraph (a). Court approval (5) The Court may approve the non‑inclusion of such a provision if the Court is satisfied that the non‑inclusion of the provision would be likely to result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the company. (6) The Court may only make an order under subsection (5) on the application of: (a) the administrator, or proposed administrator, of the deed; or (b) an eligible employee creditor; or (c) any interested person. (7) The Court may make an order under subsection (5) before or after the meeting convened under section 439A. 444DB Superannuation contribution debts not admissible to proof Whole of superannuation contribution debt (1) A deed of company arrangement must contain a provision to the effect that the administrator of the deed must determine that the whole of a debt by way of a superannuation contribution is not admissible to proof against the company if: (a) a debt by way of superannuation guarantee charge: (i) has been paid; or (ii) is, or is to be, admissible to proof against the company; and (b) the administrator of the deed is satisfied that the superannuation guarantee charge is attributable to the whole of the first‑mentioned debt. (2) If the administrator of a deed of company arrangement determines, under a provision covered by subsection (1), that the whole of a debt is not admissible to proof against the company, the whole of the debt is extinguished. Part of superannuation contribution debt (3) A deed of company arrangement must contain a provision to the effect that the administrator of the deed must determine that a particular part of a debt by way of a superannuation contribution is not admissible to proof against the company if: (a) a debt by way of superannuation guarantee charge: (i) has been paid; or (ii) is, or is to be, admissible to proof against the company; and (b) the administrator of the deed is satisfied that the superannuation guarantee charge is attributable to that part of the first‑mentioned debt. (4) If the administrator of a deed of company arrangement determines, under a provision covered by subsection (3), that a part of a debt is not admissible to proof against the company, that part of the debt is extinguished. Definition (5) In this section: superannuation contribution has the same meaning as in section 556. 5 After section 553AA Insert: 553AB Superannuation contribution debts not admissible to proof Whole of superannuation contribution debt (1) In a winding up, the liquidator must determine that the whole of a debt by way of a superannuation contribution is not admissible to proof against the company if: (a) a debt by way of superannuation guarantee charge: (i) has been paid; or (ii) is, or is to be, admissible to proof against the company; and (b) the liquidator is satisfied that the superannuation guarantee charge is attributable to the whole of the first‑mentioned debt. (2) If the liquidator determines, under subsection (1), that the whole of a debt is not admissible to proof against the company, the whole of the debt is extinguished. Part of superannuation contribution debt (3) In a winding up, the liquidator must determine that a particular part of a debt by way of a superannuation contribution is not admissible to proof against the company if: (a) a debt by way of superannuation guarantee charge: (i) has been paid; or (ii) is, or is to be, admissible to proof against the company; and (b) the liquidator is satisfied that the superannuation guarantee charge is attributable to that part of the first‑mentioned debt. (4) If the liquidator determines, under subsection (3), that a part of a debt is not admissible to proof against the company, that part of the debt is extinguished. Definition (5) In this section: superannuation contribution has the same meaning as in section 556. 6 Paragraph 556(1)(e) Omit "and superannuation contributions", substitute ", superannuation contributions and superannuation guarantee charge". 7 After subsection 556(1A) Insert: (1AB) For the purposes of paragraph (1)(e), if: (a) the company has a superannuation guarantee shortfall for a quarter; and (b) the shortfall relates to one or more employees; and (c) the quarter ends before the relevant date; superannuation guarantee charge in respect of the quarter is taken to be payable by the company in respect of services rendered to the company by those employees before the relevant date. (1AC) If: (a) the company has a superannuation guarantee shortfall for a quarter; and (b) the shortfall relates to one or more employees; and (c) the relevant date occurs during the quarter; and (d) the relevant date is not the first day of the quarter; then: (e) for the purposes of paragraph (1)(e), so much of the superannuation guarantee charge in respect of the quarter as is attributable to the period before the relevant date is taken to be payable by the company in respect of services rendered to the company by those employees before the relevant date; and (f) the remainder of the superannuation guarantee charge in respect of the quarter is taken: (i) to be an expense referred to in paragraph (1)(a); and (ii) not to be an amount of superannuation guarantee charge referred in paragraph (1)(e). (1AD) If: (a) the company has a superannuation guarantee shortfall for a quarter; and (b) the shortfall relates to one or more employees; and (c) the relevant date is the first day of the quarter; the superannuation guarantee charge in respect of the quarter is taken: (d) to be an expense referred to in paragraph (1)(a); and (e) not to be an amount of superannuation guarantee charge referred in paragraph (1)(e). (1AE) For the purposes of paragraph (1)(e), if: (a) the company has a superannuation guarantee shortfall for a quarter; and (b) the shortfall relates to one or more employees; and (c) the quarter begins after the relevant date; and (d) one or more payments were made by the company during the quarter on account of wages payable to those employees in respect of services rendered to the company by those employees before the relevant date; and (e) those payments were made as a result of an advance of money by a person after the relevant date for the purpose of making those payments; then: (f) for the purposes of paragraph (1)(e), so much of the superannuation guarantee charge in respect of the quarter as is attributable to those payments is taken to be payable by the company in respect of services rendered to the company by those employees before the relevant date; and (g) the remainder of the superannuation guarantee charge in respect of the quarter is taken: (i) to be an expense referred to in paragraph (1)(a); and (ii) not to be an amount of superannuation guarantee charge referred in paragraph (1)(e). (1AF) If: (a) the company has a superannuation guarantee shortfall for a quarter; and (b) the shortfall relates to one or more employees; and (c) the relevant date occurs during the quarter; and (d) one or more payments were made by the company during the quarter on account of wages payable to those employees in respect of services rendered to the company by those employees before the relevant date; and (e) those payments were made as a result of an advance of money by a person after the relevant date for the purpose of making those payments; then: (f) for the purposes of paragraph (1)(e), so much of the superannuation guarantee charge in respect of the quarter as is attributable to either or both of the following: (i) those payments; (ii) the period before the relevant date; is taken to be payable by the company in respect of services rendered to the company by those employees before the relevant date; and (g) the remainder of the superannuation guarantee charge in respect of the quarter is taken: (i) to be an expense referred to in paragraph (1)(a); and (ii) not to be an amount of superannuation guarantee charge referred in paragraph (1)(e); and (h) subsections (1AC) and (1AD) do not apply to the superannuation guarantee charge in respect of the quarter. 8 Subsection 556(2) Insert: quarter has the same meaning as in the Superannuation Guarantee (Administration) Act 1992. 9 Section 560 Repeal the section, substitute: 560 Advances for company to make priority payments in relation to employees If: (a) a payment has been made by a company: (i) on account of wages; or (ii) on account of superannuation contributions (within the meaning of section 556); or (iii) in respect of leave of absence, or termination of employment, under an industrial instrument; and (b) the payment was made as a result of an advance of money by a person (whether before, on or after the relevant date) for the purpose of making the payment; then: (c) the person by whom the money was advanced has the same rights under this Chapter as a creditor of the company; and (d) subject to paragraph (e), the person by whom the money was advanced has, in the winding up of the company, the same right of priority of payment in respect of the money so advanced and paid as the person who received the payment would have had if the payment had not been made; and (e) the right of priority conferred by paragraph (d) is not to exceed the amount by which the sum in respect of which the person who received the payment would have been entitled to priority in the winding up has been diminished by reason of the payment. 10 Paragraph 1364(2)(f) After "meetings of creditors,", insert "meetings of eligible employee creditors,". Superannuation Guarantee (Administration) Act 1992 11 Section 52 Repeal the section. 12 Subsection 64B(3) Omit "An", substitute "Subject to subsection (3A), an". 13 After subsection 64B(3) Insert: (3A) The Commissioner may vary an employee's proportion of an amount if the amount of the charge payment has been affected by: (a) the application of the monetary limit imposed by subsection 556(1A) of the Corporations Act 2001 in respect of the employee; or (b) the application of the monetary limit imposed by paragraph 109(1)(e) of the Bankruptcy Act 1966 in respect of the employee. 14 Application—section 52 of the Superannuation Guarantee (Administration) Act 1992 The repeal of section 52 of the Superannuation Guarantee (Administration) Act 1992 by this Schedule, in so far as it relates to a company that is being wound up under the Corporations Act 2001, applies if the relevant date (within the meaning of the Corporations Act 2001) is on or after the day on which this item commences. 15 Application—subsection 64B(3A) of the Superannuation Guarantee (Administration) Act 1992 (1) Paragraph 64B(3A)(a) of the Superannuation Guarantee (Administration) Act 1992 applies if the relevant date (within the meaning of the Corporations Act 2001) is on or after the day on which this item commences. (2) Paragraph 64B(3A)(b) of the Superannuation Guarantee (Administration) Act 1992, in so far as it relates to a bankruptcy, applies if the date of the bankruptcy is on or after the day on which this item commences. (3) Paragraph 64B(3A)(b) of the Superannuation Guarantee (Administration) Act 1992, in so far as it relates to a personal insolvency agreement, applies if the relevant authority under section 188 of the Bankruptcy Act 1966 became effective on or after the day on which this item commences. Part 2—Better informing creditor decisions Corporations Act 2001 16 Section 9 Insert: declaration of indemnities, in relation to an administrator of a company under administration, means a written declaration: (a) stating whether the administrator has, to any extent, been indemnified (otherwise than under section 443D), in relation to that administration, for: (i) any debts for which the administrator is, or may become, liable under Subdivision A of Division 9 of Part 5.3A; or (ii) any debts for which the administrator is, or may become, liable under a remittance provision as defined in section 443BA; or (iii) his or her remuneration as determined under section 449E; and (b) if so, stating: (i) the identity of each indemnifier; and (ii) the extent and nature of each indemnity. 17 Section 9 Insert: declaration of relevant relationships has the meaning given by section 60. 18 Section 9 Insert: firm, in relation to an administrator or liquidator, means: (a) if the administrator or liquidator is a partner or employee of a partnership (the partnership firm) that provides advice or other services in relation to externally‑administered bodies corporate—the partnership firm; or (b) if the administrator or liquidator is an officer or employee of a body corporate (the body corporate firm) that provides advice or other services in relation to externally‑administered bodies corporate—the body corporate firm. 19 After section 59 Insert: 60 Declaration of relevant relationships Administrator (1) In this Act, a declaration of relevant relationships, in relation to an administrator of a company under administration, means a written declaration: (a) stating whether any of the following: (i) the administrator; (ii) if the administrator's firm (if any) is a partnership—a partner in that partnership; (iii) if the administrator's firm (if any) is a body corporate—that body corporate or an associate of that body corporate; has, or has had within the preceding 24 months, a relationship with: (iv) the company; or (v) an associate of the company; or (vi) a former liquidator, or former provisional liquidator, of the company; or (vii) a person who is entitled to enforce a charge on the whole, or substantially the whole, of the company's property; and (b) if so, stating the administrator's reasons for believing that none of the relevant relationships result in the administrator having a conflict of interest or duty. Liquidator (2) In this Act, a declaration of relevant relationships, in relation to a liquidator of a company, means a written declaration: (a) stating whether any of the following: (i) the liquidator; (ii) if the liquidator's firm (if any) is a partnership—a partner in that partnership; (iii) if the liquidator's firm (if any) is a body corporate—that body corporate or an associate of that body corporate; has, or has had within the preceding 24 months, a relationship with: (iv) the company; or (v) an associate of the company; or (vi) a former liquidator, or former provisional liquidator, of the company; or (vii) a former administrator of the company; or (viii) a former administrator of a deed of company arrangement executed by the company; and (b) if so, stating the liquidator's reasons for believing that none of the relevant relationships result in the liquidator having a conflict of interest or duty. 20 At the end of section 425 Add: (8) In exercising its powers under this section, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters: (a) the extent to which the work performed by the receiver was reasonably necessary; (b) the extent to which the work likely to be performed by the receiver is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the receiver; (d) the quality of the work performed, or likely to be performed, by the receiver; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver; (f) the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the receiver was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case; (h) the value and nature of any property dealt with, or likely to be dealt with, by the receiver; (i) whether the receiver was, or is likely to be, required to deal with: (i) one or more other receivers; or (ii) one or more receivers and managers; or (iii) one or more liquidators; or (iv) one or more administrators; or (v) one or more administrators of deeds of company arrangement; (j) the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company's creditors; (k) if the remuneration is ascertained, in whole or in part, on a time basis: (i) the time properly taken, or likely to be properly taken, by the receiver in performing the work; and (ii) whether the total remuneration payable to the receiver is capped; (l) any other relevant matters. 21 After section 436D Insert: 436DA Declarations by administrator—indemnities and relevant relationships Scope (1) This section applies to an administrator appointed under section 436A, 436B or 436C. Declaration of relationships and indemnities (2) As soon as practicable after being appointed, the administrator must make: (a) a declaration of relevant relationships; and (b) a declaration of indemnities. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Notification of creditors (3) The administrator must: (a) give a copy of each declaration under subsection (2) to as many of the company's creditors as reasonably practicable; and (b) do so at the same time as the administrator gives those creditors notice of the meeting referred to in section 436E. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (4) The administrator must table a copy of each declaration under subsection (2) at the meeting referred to in section 436E. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Updating of declaration (5) If: (a) at a particular time, the administrator makes: (i) a declaration of relevant relationships; or (ii) a declaration of indemnities; under subsection (2) or this subsection; and (b) at a later time: (i) the declaration has become out‑of‑date; or (ii) the administrator becomes aware of an error in the declaration; the administrator must, as soon as practicable, make: (c) if subparagraph (a)(i) applies—a replacement declaration of relevant relationships; or (d) if subparagraph (a)(ii) applies—a replacement declaration of indemnities. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (6) The administrator must table a copy of a replacement declaration under subsection (5): (a) if: (i) there is a committee of creditors; and (ii) the next meeting of the committee of creditors occurs before the next meeting of the company's creditors; at the next meeting of the committee of creditors; or (b) in any other case—at the next meeting of the company's creditors. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Defence (7) In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this section, it is a defence if the defendant proves that: (a) the defendant made reasonable enquiries; and (b) after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration. 22 Subsection 446A(4) Repeal the subsection. 23 At the end of section 446A Add: Note: See also section 499 (appointment of liquidator). 24 After section 449C Insert: 449CA Declarations by administrator—indemnities and relevant relationships Scope (1) This section applies to an administrator appointed under subsection 449C(1) otherwise than by the Court. Declaration of relationships and indemnities (2) As soon as practicable after being appointed, the administrator must make: (a) a declaration of relevant relationships; and (b) a declaration of indemnities. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Notification of creditors (3) The administrator must: (a) give a copy of each declaration under subsection (2) to as many of the company's creditors as reasonably practicable; and (b) do so at the same time as the administrator gives those creditors notice of the meeting convened under subsection 449C(4). Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (4) The administrator must table a copy of each declaration under subsection (2) at the meeting convened under subsection 449C(4). Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Updating of declaration (5) If: (a) at a particular time, the administrator makes: (i) a declaration of relevant relationships; or (ii) a declaration of indemnities; under subsection (2) or this subsection; and (b) at a later time: (i) the declaration has become out‑of‑date; or (ii) the administrator becomes aware of an error in the declaration; the administrator must, as soon as practicable, make: (c) if subparagraph (a)(i) applies—a replacement declaration of relevant relationships; or (d) if subparagraph (a)(ii) applies—a replacement declaration of indemnities. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (6) The administrator must table a copy of a replacement declaration under subsection (5): (a) if: (i) there is a committee of creditors; and (ii) the next meeting of the committee of creditors occurs before the next meeting of the company's creditors; at the next meeting of the committee of creditors; or (b) in any other case—at the next meeting of the company's creditors. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Defence (7) In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this section, it is a defence if the defendant proves that: (a) the defendant made reasonable enquiries; and (b) after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration. 25 Subsection 449E(1) Repeal the subsection, substitute: (1) The administrator of a company under administration is entitled to receive such remuneration as is determined: (a) by agreement between the administrator and the committee of creditors (if any); or (b) by resolution of the company's creditors; or (c) if there is no such agreement or resolution—by the Court. (1A) The administrator of a company under a deed of company arrangement is entitled to receive such remuneration as is determined: (a) by agreement between the administrator and the committee of inspection (if any); or (b) by resolution of the company's creditors; or (c) if there is no such agreement or resolution—by the Court. (1B) To be effective, a resolution under paragraph (1)(b) or (1A)(b) must deal exclusively with remuneration of the administrator. Note: This means that the resolution must not be bundled with any other resolution. (1C) The Court may determine remuneration under paragraph (1)(c) even if: (a) there has been no meeting of the committee of creditors; or (b) there has been no meeting of the company's creditors. (1D) The Court may determine remuneration under paragraph (1A)(c) even if: (a) there has been no meeting of the committee of inspection; or (b) there has been no meeting of the company's creditors. 26 Subsection 449E(2) Omit "fixed under paragraph (1)(a)", substitute "determined under paragraph (1)(a) or (b) or paragraph (1A)(a) or (b)". 27 Subsection 449E(2) After "on the application", insert "of ASIC,". 28 At the end of section 449E Add: (4) In exercising its powers under subsection (1), (1A) or (2), the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters: (a) the extent to which the work performed by the administrator was reasonably necessary;