Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)General outline and financial impact
Corporations Amendment (Corporate Insolvency Reforms) Bill 2020
The Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 implements the insolvency reforms to support small business announced by the Government on 24 September 2020. The reforms are intended to reduce the costs of external administration for small businesses and the compliance burden for insolvency practitioners, helping more businesses remain viable and improving the returns to creditors and employees when the business is unviable.
Schedule 1 to the Bill creates a debt restructuring process for eligible small companies.
Schedule 2 to the Bill provides temporary relief for eligible companies seeking to enter the formal debt restructuring process created in Schedule 1.
Schedule 3 to the Bill creates a simplified liquidation process for a creditors' voluntary winding up of an insolvent company and amends the Insolvency Practice Schedule to refine the registration requirements for a liquidator.
Schedule 4 to the Bill expands the situations where documents relating to the external administration of a company may be given electronically. It also allows documents relating to the external administration of a company to be signed electronically.
Date of effect: Schedules 1 and 3 commence on 1 January 2021. Schedule 2 commences immediately after Schedule 1 commences on 1 January 2021.
Schedule 4 commences the day after the Bill receives Royal Assent.
Proposal announced: This Bill partially implements the measure JobMaker Plan - supporting small business and responsible lending from the 2020-21 Budget.
Financial impact: Nil.
Human rights implications: This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 6.
Compliance cost impact: The Government's proposed reform package as a whole is expected to deliver significant regulatory savings for impacted businesses and individuals.
Summary of regulation impact statement
This Explanatory Memorandum does not include a Regulation Impact Statement. The Regulation Impact Statement will be included in the explanatory statement accompanying the related subordinate legislation.
Regulation impact on business
It is anticipated that the Government's proposed reform package as a whole will deliver significant regulatory savings for impacted businesses and individuals.
Regulatory impact analysis on the proposed reforms will be informed by consultation on this Bill, as well as consultation that will take place prior to the making of the final Regulations and Rules.
This will ensure that the analysis accurately reflects the scope and impact of the reforms, as well as the views of stakeholders.
A Regulation Impact Statement will be included in the explanatory statement accompanying the related subordinate legislation.