In their last major policy announcement of 2015, the federal government announced the establishment of the National Innovation and Science Agenda (NISA), designed to support innovation in Australian companies and assist the nation’s businesses head into the future.
As part of the agenda, the government is taking a look at how companies deal with insolvency, should the situation call for it. Now the dust has settled on the NISA announcement, industry observers are beginning to forecast the impact of the proposed legislation. So, what could the new laws mean for your business?
Greater powers for ASIC
One of the organisations to see the most significant change from the NISA will be the Australian Securities and Investments Commission (ASIC).
Legal firm Colin Biggers & Paisley (CBP) have broken down the insolvency reform aspects of the agenda. They have found several new rules put in place to boost efficiency in the insolvency process, increasing communication between stakeholders and enhancing the powers of ASIC to regulate the corporate insolvency market.
Harsher penalties for non-compliance
While the Corporations Act of 2001 already requires registered liquidators to hold appropriate professional indemnity and fidelity insurance, under the reformed legislation the penalties for non-compliance are set to be much stronger.
According to CBP, upon the introduction of the NISA, failure to meet the strict insurance obligations will result in fines from just over $10,000, all the way up to $180,000 for particularly reckless or intentional infringements. These increased penalties reinforce the importance of maintaining adequate insurance cover, and should ensure there are no gaps between policy periods. This careful regulation highlights the importance of expert insolvency practitioners, who know the laws inside and out.
Should my business be concerned?
The NISA has certainly left Australian businesses with a lot to digest, and any changes to insolvency laws will likely be of interest to SMEs who might find themselves in financial trouble in the coming year. Identifying potential issues early can be a crucial factor in how your company reacts to difficulties with cashflow, so it’s important to keep yourself up to date with the most current legislation.
The first step is admitting your business has a problem, so seeking help from an experienced and knowledgeable insolvency expert is the smartest thing you can do. If you think your business could be affected by changes in the NISA, or you would simply like to speak to an expert about insolvency, make an appointment with Corporate Lifeline today.