Backdating a director's resignation to over 28 days

Backdating a director's resignation to over 28 days

ASIC have implemented strict changes to director resignations to combat illegal phoenixing

  1. In February 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 was enacted to help combat illegal phoenix activity.
  2. 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.
  3. The law prohibits company directors from improperly backdating their resignation or leaving their company with no directors. 

Date of resignation

From 18 February 2021, if you resign a director, the company needs to notify ASIC within 28 days of resignation.
If the company does not notify ASIC within 28 days, the effective resignation date will be the lodgement date.

For example, if a director is resigned on 1 March 2021 but the company has not notified ASIC until 1 August 2021, the director resignation date will be recorded as 1 August 2021.
Late fees will still apply.

To fix the resignation date to a date earlier than 28 days, applications must be made to ASIC or the court.

To fix a resignation date that is more than 28 days but is 56 days or less, the company may make an application to ASIC.
You will need to submit a Form 502 Application to change the cessation date of a director, providing reasons, within 56 days from the claimed resignation date.
A fee will apply.
If ASIC accept the application, the resignation date will be fixed as the claimed resignation date, subject to the last director requirements below:

You must make your application to the court within 12 months of the claimed resignation date, unless the court allows a longer period.
If the court fixes an earlier resignation date, you must lodge the order with ASIC using Form 105 'Cover page for office copy of a court order'.
You must lodge the order within two business days of the court making the order.

Failure to do so is an offence of strict liability and late fees will apply.

For more information please click on this link to direct you to the ASIC website.