Advisors must ensure their clients' activities are not
'in-flight phoenix'.
The Federal Government is working on introducing a Director
Identification Number (DIN) for individuals to use when seeking to
incorporate a company to reduce phoenix activity. The DIN will
enable government agencies and databases to track company directors
and their relationships to other companies and people. The new laws
will also target "pre-insolvency advisors" who assist in
carrying out illegal phoenixing.
Phoenix companies are a major economic problem in Australia and
has resulted in several project teams being formed over recent
years to investigate ways to better mitigate phoenix activity's
impact. Now, more than ever, directors are using phoenixing as a
means of dodging financial obligations, and to date, there has been
a lack of controls to temper and punish this behaviour.
