AICD submission on ASIC guidance for directors on insolvency

The AICD broadly supported the proposed Insolvency Safe Harbour (Safe Harbour) focused amendments to RG 217. However, we recommended that ASIC assess how it can provide more guidance on its website on the restructuring options that are available to directors. An elevation of messaging on restructuring options would be consistent with Government policy to encourage directors to consider how to turnaround financial struggling businesses rather than prematurely placing them into voluntary administration or liquidation.

The AICD also recommended the following changes to RG 217 to improve accessibility and awareness of the insolvency obligations and the Safe Harbour:

• Guidance focused on the obligations and expectations on directors and responsible persons of charities and not-for-profits as it relates to insolvency;
• Enhanced use of visual aids, diagrams and additional examples to improve accessibility and understanding, particularly for directors of family-owned SMEs; and
• Targeted additions to the proposed Safe Harbour guidance, including expanding the guidance on ‘reasonably likely’ consistent with the Explanatory Memorandum.