The Safe Harbour reforms are now law, coming into effect on September 19.

The intention of the Safe Harbour provisions is to allow directors some comfort and breathing space to attempt to turn around a company where there are real prospects of rehabilitation and there is a realistic turnaround plan.

The factors that may be taken into consideration in determining whether Safe Harbour applies are whether the director:

  1. properly informed himself or herself of the company’s financial position;
  2. took appropriate steps to prevent any misconduct by officers or employees of the company that could adversely affect the company’s ability to pay all its debts;
  3. took appropriate steps to ensure that the company was keeping appropriate financial records consistent with the size and nature of the company;
  4. obtained advice from an appropriately qualified entity who was given sufficient information to give appropriate advice; or
  5. developed or implemented a plan for restructuring the company to improve its financial position.

We encourage early engagement when problems arise as the available options are limited once a company’s business becomes terminal.

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