ASIC to propose guidance on Insolvent Trading for directors

The proposed guidance sets out the key principles that ASIC considers directors need to take into account in performing their duty to prevent insolvent trading.

Those principles are that a director:

• must keep him or herself informed about the financial affairs of the company and regularly assess the company’s solvency. This means preparing financial information and reviewing same regularly;
• immediately on identifying concerns about the company’s viability, should take positive steps to confirm the company’s financial position and realistically assess the options available to deal with the company’s financial difficulties;
• should obtain appropriate advice from a suitably qualified person; and
• should consider and act appropriately on the advice received in a timely manner.

By providing guidance, ASIC seeks to assist directors both understand their duty to prevent insolvent trading and also, what they can do to minimise the risk that they will breach their duty.

If you need advice regarding your company, call our 24 hour insolvency advice line on 1300 100 285.