The Australian Securities and Investments Commission (ASIC) has moved to ensure Australian company directors understand their obligations to ensure their companies do not lapse into insolvent trading via a new consultation paper issued this week.
The regulator said it was issuing the new paper in circumstances where there was evidence that some directors of small to medium enterprises in financial difficulty did not fully understand their duty to prevent insolvent trading.
It said that with the number of corporate insolvencies estimated to increase as a result of the current economic conditions, ASIC believed the market would benefit from clarification about the factors it considered when deciding to begin an investigation in relation to possible insolvent trading.
