Australia's Safe Harbour Law - A Better Outcome for Restructuring and Entrepreneurship?

On 19 September 2017, s 588GA of the Corporations Act 2001 (Cth) became law providing company directors a "safe harbor" from liability for trading while insolvent in certain circumstances. The policy behind the safe harbour law seeks to promote a culture of entrepreneurship and restructuring. Whether the safe harbour law will have the desired effect is a critical issue because Australia's insolvency laws are among the strictest in the world. Directors of companies in the zone of insolvency attempting a restructure face the prospect of being liable for trading while insolvent under the current strict liability provisions if a restructure does not succeed. This article analyses how the safe harbour law may interact with other laws, in particular directors' duties under ss 180-181 of the Corporations Act, tax laws and disclosure laws for publicly listed companies. It is argued that while the new law is a step in the right direction, further reforms will be necessary to achieve a culture of restructuring and entrepreneurship in Australia. [ABSTRACT FROM AUTHOR]