This overview sets out some of the most significant changes to corporations law during 2017. These are insights direct from our Corporations Law and PPSA Collection 2018.
Insolvency law reform
The Insolvency Law Reform Act 2016 (ILRA) made significant amendments to the Corporations Act 2001 during 2017 by moving many of the process provisions of Ch 5 into a schedule (Schedule 2) and making remedial amendments to other provisions.
While some amendments made by the ILRA commenced on 1 March 2017, the remainder, containing much of the detail, commenced on 1 September 2017. The statutory and regulatory provisions for commencement were complex, with Pt 10.25 of the Corporations Regulations 2001 modifying the transitional provisions in Pt 10.25 of the Corporations Act and deferring the application of certain amendments made by the ILRA. For a detailed explanation, see In the matter of Glengrant Civil Pty Ltd (In Liq)  NSWSC 843 at - (Robb J).
Details of the modifications made to Pt 10.25 of the Corporations Act by Pt 10.25 of the Corporations Regulations have been included as editorial notes to the relevant provisions in the 2018 edition of Australian Corporations & Securities Legislation. The title also contains the Insolvency Practice Rules (Corporations) 2016.
Safe harbour for insolvent trading
The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017 amended the Corporations Act effective 19 September 2017 by creating a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency.
New s 588GA protects the directors of a company against personal liability under s 588G(2) and is a complementary protection to the defences in s 588H. If the directors’ efforts to restructure the company are not effective to prevent the company going into external administration, new s 588GB provides rules to prevent a director from relying on books or information as evidence of the safe harbour in a relevant proceeding where those materials have not been provided to a liquidator, administrator or controller as required.
The Corporations Amendment (Crowd-sourced Funding) Act 2017 establish a legislative framework effective 28 September 2017 for crowd-sourced funding (CSF), with the introduction of new Pt 6D.3A and associated and consequential amendments.
The new legislation deals with:
- eligibility requirements for a company to fundraise via CSF, including disclosure requirements for CSF offers
- obligations of a CSF intermediary in facilitating CSF offers
- the process for making CSF offers
- rules relating to defective disclosure as part of a CSF offer, and
- investor protection provisions.
The regime also provides new public companies that are eligible to crowd fund with temporary relief from the reporting and corporate governance requirements that would usually apply.