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Companies Act 1993

Offences and penalties

386B: Definitions for purpose of phoenix company provisions

You could also call this:

“Explaining terms used for companies that restart after failing”

In sections 386A to 386F, you’ll find some important words defined. These words are used when talking about phoenix companies.

A “director of a failed company” is someone who was a director of a company that failed within the last 12 months before it went into liquidation.

A “failed company” is a company that was put into liquidation when it couldn’t pay its debts.

A “phoenix company” is a new company that uses the same name or a very similar name as a failed company. This can happen before the failed company goes into liquidation or within 5 years after.

A “pre-liquidation name” is any name the failed company used in the 12 months before it went into liquidation. This includes trading names.

A “similar name” is a name that’s so close to the failed company’s name that people might think they’re connected.

For these sections, a company is known by a name if it’s the company’s official registered name or if the company does business using that name.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM323264.

Topics:

Business > Industry rules

Business > Fair trading

386A: Director of failed company must not be director, etc, of phoenix company with same or substantially similar name, or

“Failed company directors can't lead similarly named businesses for 5 years”

386C: Liability for debts of phoenix company, or

“Personal responsibility for debts when running a phoenix company”

Part 21 Offences and penalties

386BDefinitions for purpose of phoenix company provisions

In sections 386A to 386F,—
director of a failed company means a person who was a director of a failed company at any time in the period of 12 months before the commencement of its liquidation, and director of the failed company has a corresponding meaning
failed company means a company that was placed in liquidation at a time when it was unable to pay its due debts
phoenix company means, in relation to a failed company, a company that, at any time before, or within 5 years after, the commencement of the liquidation of the failed company, is known by a name that is also—
1. a pre-liquidation name of the failed company; or
2. a similar name
pre-liquidation name means any name (including any trading name) of a failed company in the 12 months before the commencement of that company's liquidation
similar name means a name that is so similar to a pre-liquidation name of a failed company as to suggest an association with that company.
For the purposes of sections 386A to 386F, a company is known by a name if that name is its registered name or if it carries on business, or carries on a part of its business, under that name.

Compare

Insolvency Act 1986 s 216(6) (UK)

Notes

Section 386B: inserted, on 1 November 2007, by section 35 of the Companies Amendment Act 2006 (2006 No 56).