Safe Harbour/Ipso Facto model: Final consultation
Following significant consultation, the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 was introduced into the Senate on 1 June 2017 in what was widely expected to be its final form. However, the Bill has been referred to the Economics Legislation Committee for further consultation.
Submissions are being accepted until 12 July 2017 and ARITA will again be advocating that a registered liquidator, or a specially qualified sub-class thereof, must form part of the turnaround team to provide the advice necessary for ‘safe harbour’ protection.
The perils of inadequate qualifications of advisers are evident in the financial planner space, where the Government has been forced to take dramatic action across the sector to enforce qualification and continuous professional education standards. This consequence of the lack of qualifications has been significant loss to countless individuals and small businesses who were taken advantage of. We also note the current issues presented by the proliferation of unregulated ‘pre-insolvency advisers’, again to the detriment of innocent stakeholders.
We are strongly of the view that the same situation is likely to arise if adequate professional standards are not put in place requiring a qualified and regulated professional to be formally engaged for a safe harbour protection to be effective. Indeed, the simple engagement may afford directors a higher level of protection both through qualified advice and to give certainty that they are provided a safe harbour protection. Taking account of the interests of all stakeholders in a distressed entity, we do not accept that this is, or needs to be, an onerous requirement.
ARITA is aware that a number of other organisations hold similar concerns regarding the unregulated nature of an ‘appropriately qualified’ adviser in the Bill.
We urge members to consider making a submission in support of ARITA’s position, or outlining their concerns in relation to the Bill as it is anticipated to be final opportunity to do so.
Should the reforms be enacted, ARITA will provide its members with specific guidance on their operation.
Senate Economics Legislation Committee Inquiry