Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016

The Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 is a Commonwealth legislative instrument made to support the insolvency reforms introduced by the Insolvency Law Reform Act 2016. Its job is to amend other regulations so that the broader reform package operates consistently.

That matters because the insolvency framework does not sit in one place. Company insolvency rules interact with ASIC administration, bankruptcy rules, industry codes and sector-specific regulations. This instrument updates those connected regulations so they use the right concepts, cross-references and procedures after the reform Act commenced.

The Regulation therefore has a much wider reach than its title might first suggest. It does amend the Corporations Regulations 2001, but it also amends the Bankruptcy Regulations 1996, the Australian Securities and Investments Commission Regulations 2001, the Corporations (Aboriginal and Torres Strait Islander) Regulations 2007, the Franchising and Oil industry code regulations, and a range of other regulations in agriculture, aviation, tax, energy, emissions reporting, product stewardship, dairy and migration.

The instrument is made under a long list of Acts, including the Corporations Act 2001, Bankruptcy Act 1966, ASIC Act 2001, Competition and Consumer Act 2010, Corporations (Aboriginal and Torres Strait Islander) Act 2006, GST law, Civil Aviation Act 1988, National Greenhouse and Energy Reporting Act 2007, Renewable Energy (Electricity) Act 2000, Product Stewardship Act 2011, Agricultural and Veterinary Chemicals legislation, Dairy Produce Act 1986 and Migration Act 1958.

In practical terms, that means insolvency reform was carried through into many places where a business's insolvency status can affect licensing, code compliance, reporting, eligibility or disclosure. If your business operates in a regulated sector, do not assume insolvency terminology only matters inside the Corporations Act itself.

The businesses most likely to feel the effect of this Regulation are those dealing with insolvency events, formal appointments or regulated industry codes. A company does not need to be insolvent today to be affected. The changes also matter to businesses that maintain standard forms, disclosure documents, governance manuals or compliance systems that refer to insolvency status.

Professional advisers are squarely in scope. The Regulation updates parts of the bankruptcy framework for trustees and controlling trustees, prescribes professional disciplinary bodies for ASIC and bankruptcy purposes, and changes some notice and publication requirements in the corporate winding up context.

Businesses usually outside the day-to-day impact are those with no insolvency exposure and no regulated documents that refer to insolvency status. Even then, directors and advisers should still be aware of the terminology changes because they can appear in contracts, code disclosures and regulator-facing documents.

You are most likely to need this Regulation when one of the following happens: your company enters a Chapter 5 process, a liquidator is appointed, a court orders winding up, a trustee or controlling trustee is being appointed or replaced in a personal insolvency matter, or your business is preparing documents under an industry code or sector regulation that refers to insolvency status.

Another trigger point is a document review. If your templates still refer to an "externally administered body corporate", older forms, repealed provisions or outdated filing assumptions may need updating. The Regulation also matters when checking whether an insolvency practitioner is eligible to act and whether required notices have been given to the Official Receiver or published on time.

One of the clearest themes in the instrument is terminology alignment. Across many regulations, the phrase "externally administered body corporate" is replaced with "Chapter 5 body corporate". This occurs in regulations well beyond the Corporations Regulations, including GST, agriculture, aviation, coal mining long service leave, franchising, oilcode, dairy, emissions reporting, product stewardship and renewable energy regulations.

For businesses, this is more than a drafting tidy-up. Insolvency status is often used as a trigger for rights, disclosures, eligibility or compliance consequences. If your contracts, disclosure documents or internal policies still use the older term, check whether the governing regulation now uses the newer Chapter 5 language.

The Bankruptcy Regulations were also updated in several places to replace "working days" with "business days". If you are calculating time for bankruptcy-related steps, use the wording in the current regulation rather than relying on older precedents.

The Regulation replaces ASIC regulation 8AA and prescribes a detailed list of professional disciplinary bodies for the purposes of subparagraph 127(4)(d)(i) of the ASIC Act. It also prescribes the Australian Restructuring Insolvency and Turnaround Association, or ARITA, for the purposes of subparagraph 127(4)(d)(ii) in relation to performing a disciplinary function for a member of the Association.

The prescribed bodies listed in the Regulation are: Australian Restructuring Insolvency and Turnaround Association, CPA Australia, Chartered Accountants Australia and New Zealand, Institute of Public Accountants, New South Wales Bar Association, Law Society of New South Wales, Victorian Legal Services Commissioner, Victorian Legal Services Board, Bar Association of Queensland, Queensland Law Society, Legal Practice Board of Western Australia, Law Society of South Australia, Legal Profession Conduct Commissioner of South Australia, Law Society of Tasmania, Law Society of the Australian Capital Territory and Law Society Northern Territory.

From 1 September 2017, the Bankruptcy Regulations also prescribe the same list of professional disciplinary bodies for the purposes of paragraph 12(4)(b) of the Bankruptcy Act. This is one of the clearest examples of the Regulation affecting both corporate and personal insolvency frameworks.

The Regulation makes substantial amendments to the Bankruptcy Regulations 1996. These include terminology changes from working days to business days, repeal of some older items and schedules, and a rewritten Part 8 dealing with trustees.

It sets rules for consent to act as trustee under subsection 156A(1) of the Bankruptcy Act. If the Court makes a sequestration order, the signed instrument must be filed with the Official Receiver no later than 2 business days after the order. Otherwise, it must be filed as soon as practicable after signing.

The Regulation also sets eligibility rules for controlling trustees who are not the Official Trustee or registered trustees. A person is not eligible if they fall within listed disqualifying circumstances, including certain fraud or dishonesty convictions, lack of insurance, being a solicitor without a practising certificate, being an undischarged bankrupt or insolvent under administration, certain recent debt agreement or Part X history, failure to properly exercise powers or cooperate with an inquiry, or not being a full member of ARITA or not having satisfactorily completed an approved insolvency course.

The Inspector-General may approve an insolvency course by notice published on the Australian Financial Security Authority website. The Regulation also sets out a notice and response process before the Inspector-General determines that a person has failed to properly exercise powers or cooperate, and it provides for Administrative Appeals Tribunal review of those determinations.

If a controlling trustee becomes ineligible, the Official Trustee must perform the duties unless and until the debtor appoints an eligible controlling trustee.

The corporate winding up amendments include practical notice rules businesses and advisers should know. In the Corporations Regulations, the notice under subregulation 5.3A.06A(2) must be published by the end of the next business day after a liquidator is appointed to administer the winding up of the company. The same timing rule is inserted into subregulation 5.5.01(3).

The Regulation also inserts regulation 5.4.01B about notice of court-ordered winding up. The notice must include at least the court that made the order, the date of the order, the name of the liquidator appointed to administer the winding up, the company name, any business name, and any ABN and ACN.

On the personal insolvency side, the Regulation requires written notice to the Official Receiver if the trustee of a regulated debtor's estate is removed by the Court or creditors. The notice must state the trustee's name, the fact and date of removal, and whether removal was by the Court or creditors. The timing differs depending on who removed the trustee, but in each case the notice must be given as soon as practicable after the relevant order or appointment. The Regulation states that an offence against this notice rule is one of strict liability, with a penalty of 1 penalty unit.

It also requires the trustee of a regulated debtor's estate to give written notice of finalisation of the administration to the Official Receiver within 5 working days of finalising the estate. That obligation is also backed by a strict liability offence with a penalty of 1 penalty unit.

The Regulation updates the Franchising Code and Oilcode so they use the Chapter 5 body corporate concept instead of the older externally administered body corporate wording. It also inserts the Chapter 5 body corporate term into the definitions sections of those code regulations.

That means franchisors, franchisees and fuel businesses should check disclosure documents, compliance manuals and any standard wording that tracks the code language. If your business has copied older legislative wording into contracts or disclosure annexures, it may now be outdated.

Similar terminology updates appear in other sector regulations, including agricultural and veterinary chemicals, civil aviation safety, coal mining long service leave, dairy, national greenhouse and energy reporting, product stewardship and renewable energy. These changes show that insolvency status can affect compliance outcomes well beyond a formal insolvency appointment itself.

Schedule 2 of the Regulation deals with transition to Part 3 of the Insolvency Practice Schedule (Corporations). It inserts a transitional part into Chapter 10 of the Corporations Regulations.

The practical purpose of these provisions is to help bridge the move from the old corporations insolvency settings to the new Part 3 framework. Transitional rules matter because insolvency administrations often run across commencement dates, and older appointments, meetings, notices or procedural steps may need to be assessed under the law that applied at the relevant time.

If your matter began around the 1 March 2017 commencement or involved steps taken before and after the reforms, do not assume one set of rules applies to the whole administration. Check the commencement table and the transitional provisions before relying on a precedent or filing approach.

The instrument was registered in December 2016. Under its commencement table, sections 1 to 4, Schedule 1 Part 1 and Schedule 2 commenced at the same time as Schedule 1 to the Insolvency Law Reform Act 2016, which was 1 March 2017. Schedule 1 Part 2 commenced on 1 September 2017.

For current use, the key point is not just that the instrument is in force, but that different parts started on different dates. If you are reviewing an older insolvency event, appointment or notice, the commencement date can change which amendment applied at the time.