2010‑2011‑2012

The Parliament of the
Commonwealth of Australia

HOUSE OF REPRESENTATIVES/THE SENATE

EXPOSURE DRAFT (20/12/2011)

Corporations Amendment (Similar Names) Bill 2012

No.      , 2012

(Treasury)

A Bill for an Act to amend the Corporations Act 2001, and for related purposes

Contents
1	Short title	1
2	Commencement	1
3	Schedule(s)	2
Schedule 1—Amendments	3
Corporations Act 2001	3

A Bill for an Act to amend the Corporations Act 2001, and for related purposes
The Parliament of Australia enacts:
1  Short title
		This Act may be cited as the Corporations Amendment (Similar Names) Act 2012.
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 this Act receives the Royal Assent.		
2.  Schedule 1	A single day to be fixed by Proclamation.
However, if the provision(s) do not commence within the period of 6 months beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period.		
Note: 	This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
	(2)	Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be 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		Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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—Amendments
  
Corporations Act 2001
1  After Part 5.8A
Insert:
Part 5.8B—Personal liability of directors for the debts of certain companies
  
596AJ  Personal liability of directors for the debts of certain companies
	(1)	A person is liable to discharge the liability of a company (the debtor company) for a debt incurred by the debtor company if:
	(a)	when the debt was incurred, the person was a director of the debtor company; and
	(b)	the person was a director of a failed company at any time during the 12‑month period ending at the start of the relevant date in relation to the winding up of the failed company; and
	(c)	when the debt was incurred, the debtor company was known by a name that:
	(i)	is the same as a pre‑liquidation name of the failed company; or
	(ii)	is so similar to a pre‑liquidation name of the failed company as to suggest an association with the failed company; and
	(d)	the debt was incurred during the 5‑year period beginning at the start of the relevant date in relation to the winding up of the failed company; and
	(e)	the debt was incurred after the commencement of this section; and
	(f)	the person is not exempt from this section in relation to the debt.
Note 1:	For failed company, see section 596AO.
Note 2:	For pre‑liquidation name, see section 596AP.
Note 3:	For the name by which a company is known, see section 596AQ.
	(2)	The person is liable both:
	(a)	individually; and
	(b)	jointly with the debtor company and anyone else who is liable under this section in relation to the same debt.
596AK  Exemption for a person covered by court order
	(1)	The Court may, on the application of a person, make an order exempting the person from section 596AJ in relation to a specified debt, or a specified class of debts, that has been, or may be, incurred by the debtor company mentioned in that section.
	(2)	The exemption may be:
	(a)	unconditional; or
	(b)	subject to such conditions (if any) as are specified in the order.
	(3)	The Court must not make an order under subsection (1) unless the Court is satisfied that:
	(a)	the person has acted honestly; and
	(b)	having regard to all the circumstances of the case, the person ought fairly to be exempt from section 596AJ in relation to the debt or debts covered by the order.
	(4)	In exercising its powers under subsection (1), the Court must have regard to the following matters:
	(a)	whether:
	(i)	at a time when the person was a director of the failed company mentioned in section 596AJ, the failed company incurred a debt; and
	(ii)	immediately before the time when the debt was incurred, there were no reasonable grounds to expect that the failed company would be able to pay the debt;
	(b)	the extent to which, and the circumstances in which, any assets of the failed company have become assets of the debtor company;
	(c)	the extent to which, and the circumstances in which, any individuals who were employed by the failed company have become employees of the debtor company;
	(d)	the extent to which, and the circumstances in which, any premises that were used by the failed company have become premises used by the debtor company;
	(e)	the extent to which, and the circumstances in which, any contact details that were used by the failed company have become contact details used by the debtor company;
	(f)	whether anything done, or omitted to be done, by the person or the debtor company is likely to create the misleading impression that the failed company and the debtor company are the same entity;
	(g)	whether the person has previously been liable under section 596AJ;
	(h)	any other relevant matters.
	(5)	As soon as practicable after a person makes an application under subsection (1), the person must lodge with ASIC notice of the making of the application. The notice must be in the prescribed form.
596AL  Exemption granted by the liquidator of a failed company
	(1)	The liquidator of the failed company mentioned in section 596AJ may, on the application of a person, make a determination exempting the person from that section in relation to a specified debt, or a specified class of debts, that has been, or may be, incurred by the debtor company mentioned in that section.
	(2)	The exemption may be:
	(a)	unconditional; or
	(b)	subject to such conditions (if any) as are specified in the determination.
	(3)	The liquidator must not make a determination under subsection (1) unless the liquidator is satisfied that:
	(a)	the person has acted honestly; and
	(b)	having regard to all the circumstances of the case, the person ought fairly to be exempt from section 596AJ in relation to the debt or debts covered by the determination.
	(4)	In exercising his or her powers under subsection (1), the liquidator must have regard to the following matters:
	(a)	whether:
	(i)	at a time when the person was a director of the failed company, the failed company incurred a debt; and
	(ii)	immediately before the time when the debt was incurred, there were no reasonable grounds to expect that the failed company would be able to pay the debt;
	(b)	the extent to which, and the circumstances in which, any assets of the failed company have become assets of the debtor company;
	(c)	the extent to which, and the circumstances in which, any individuals who were employed by the failed company have become employees of the debtor company;
	(d)	the extent to which, and the circumstances in which, any premises that were used by the failed company have become premises used by the debtor company;
	(e)	the extent to which, and the circumstances in which, any contact details that were used by the failed company have become contact details used by the debtor company;
	(f)	whether anything done, or omitted to be done, by the person or the debtor company is likely to create the misleading impression that the failed company and the debtor company are the same entity;
	(g)	whether the person has previously been liable under section 596AJ;
	(h)	any other relevant matters.
	(5)	If the person has made an application under subsection 596AK(1) for an order exempting the person from section 596AJ in relation to a debt, or a particular class of debts, that has been, or may be, incurred by the debtor company, the person’s application under subsection (1) of this section must be accompanied by:
	(a)	a copy of the application under subsection 596AK(1); and
	(b)	if the Court made an order in response to the application under subsection 596AK(1)—a copy of the order; and
	(c)	if the Court decided not to make an order in response to the application under subsection 596AK(1)—a copy of the Court’s decision.
	(6)	The liquidator must not exercise the power conferred by subsection (1) of this section in a manner contrary to a decision of the Court in proceedings under section 596AK.
	(7)	The liquidator is entitled to be paid reasonable remuneration by the person for making a determination under subsection (1).
	(8)	As soon as practicable after the liquidator makes a determination under subsection (1), the liquidator must:
	(a)	give a copy of the determination to the person; and
	(b)	lodge with ASIC notice of the making of the determination.
The notice lodged with ASIC must be in the prescribed form.
596AM  Exemption for directors of non‑dormant companies
	(1)	A person is exempt from section 596AJ in relation to any debts incurred by the debtor company mentioned in that section if:
	(a)	throughout the 12‑month period ending at the start of the relevant date in relation to the winding up of the failed company, the debtor company was known by a name that is:
	(i)	the same as a pre‑liquidation name of the failed company mentioned in that section; or
	(ii)	so similar to a pre‑liquidation name of the failed company as to suggest an association with the failed company mentioned in that section; and
	(b)	the debtor company was not dormant at any time during that period.
	(2)	For the purposes of this section, a company is dormant if, and only if, the company is not carrying on business.
596AN  Exemption if failed company has paid all of its debts in full
		A person is exempt from section 596AJ in relation to any debts incurred by the debtor company mentioned in that section if the failed company mentioned in that section has paid all of its debts in full.
596AO  Failed company
		For the purposes of this Part, if:
	(a)	a company has been wound up; and
	(b)	an unsecured debt or claim was proved in the winding up; and
	(c)	the relevant date is after the day on which this section commenced;
the company is, and is taken always to have been, a failed company.
596AP  Pre‑liquidation name
		For the purposes of this Part, a pre‑liquidation name of a failed company is a name by which the company was known at any time during the 12‑month period ending at the start of the relevant date in relation to the winding up of the company.
596AQ  Names by which a company is known
		For the purposes of this Part, a company is known by each of the following names:
	(a)	the name of the company;
	(b)	if the company carries on its business, or a part of its business, under a particular name—that name.
596AR  Contact details
		For the purposes of this Part, contact details includes the following:
	(a)	a telephone number;
	(b)	a fax number;
	(c)	an email address;
	(d)	an internet domain name;
	(e)	an internet URL.