Is Phoenix activity legal in Australia?

What is illegal phoenix activity? The Australian Taxation Office (ATO) defines illegal phoenix activity as “when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements”.

Are Phoenix Companies illegal?

Yes! This process is entirely legal, so long that rules are followed and behaviour is not misleading or wrongful. Phoenix companies do have some negative connotations with trade creditors who are awaiting monies owed and then see their debtors (the directors) starting out again, debt free!

What is a Phoenix transaction?

A Phoenix transaction typically involves the illegal transfer of the assets from one company (usually with overwhelming debt) into another (without debt), for little or no consideration, for the purpose of avoiding or defeating the claims of creditors.

How do I report a phoenix activity?

If you have information about someone you think may be involved in phoenix activity, you can report it confidentially to the ATO. You can: phone us on 1800 060 062.

Are shadow directors legal?

In short, yes! Shadow directors will in most situations still be subject to the same duties under the Companies Act as directors are. If you satisfy the conditions of a shadow director then you will be subject to a range of duties towards the company.

How do you prove Phoenixing?

The liquidator must prove that, in conducting the phoenix activity, the director breached his or her duties; or that the activity gave rise to an unfair preference or uncommercial transaction; or that the director traded while insolvent.

What is the meaning of a phoenix company?

Phoenixing, or phoenixism, are terms used to describe the practice of carrying on the same business or trade successively through a series of companies where each becomes insolvent (cannot pay their debts) in turn.

What is meant by a phoenix company?

A phoenix company is a company that has been registered to take over a failed or insolvent business of another company. The new company rises from the remains or ashes of the failed company usually with the same (or related) directors.

What is the Phoenix taskforce?

About the Phoenix Taskforce. The Phoenix Taskforce was established in 2014 to detect, deter and disrupt illegal phoenixing. We provide education and advice on how businesses can protect themselves and not break the law. We also work with specific industries and supply chains to close off opportunities.

What is a shadow director Australia?

Under the Corporations Act 2001 (the Act) a person may be considered a director if: they act in the position of a director – referred to as a “de-facto director”; or. the directors of the company are accustomed to act in accordance with the person’s instructions or wishes – referred to as a “shadow director”.

Can you be a director without being registered at Companies House?

The reality is that, despite neat legal theory, businesses can be run (or influenced by) individuals who are not legal directors registered at Companies House.