About Safe Harbour
The Time Window and the Evidence
Safe Harbour should not be approached as a decision made once and then forgotten.
The circumstances of the company can change. The financial information can change. Actions may produce different results from those expected. And a course of action that appeared reasonably likely to lead to a better outcome at one point may need to be reconsidered as new information becomes available.
That is why continuing review, current information and contemporaneous records matter.
Not Something You “Set and Forget”
Section 588GA does not provide an indefinite period simply because a director once developed a plan or obtained advice.
The legislation defines a relevant period and identifies circumstances in which that period ends. These include circumstances where the director does not take the relevant course of action within a reasonable period, stops taking that course of action, the course ceases to be reasonably likely to lead to a better outcome for the company, or an administrator or liquidator is appointed.
That makes one practical principle very important:
What was reasonable at the beginning should not simply be assumed to remain appropriate weeks or months later.
Why Regular Review Matters
A business experiencing financial difficulty is rarely standing still.
- Cash changes.
- Debtors pay — or don’t.
- Creditors become more pressing.
- Taxation obligations change.
- New work is won.
- Margins improve or deteriorate.
- Costs change.
- Actions taken by management begin producing results.
All of that information can affect the company’s position and the decisions that need to be made.
Our process is therefore designed around regular review.
- Truth
- Decision
- Action
- Measurement
- Correction
- New Truth
We establish what is happening, agree on what needs to change, measure what actually happens and then reconsider the position using the new information.
That is not simply record keeping. It is how a course of action remains connected to the reality of the business.
Evidence Matters
Section 588GA also contains important evidential provisions.
A person seeking to rely on Safe Harbour in relevant proceedings bears an evidential burden in relation to the matters required by the section.
That makes contemporaneous records important.
The objective is not to manufacture evidence after the event. It is to maintain reliable records while decisions are being made and actions are being taken.
Those records can help establish what information was available, what advice was obtained, what decisions were made, what course was being pursued and how the circumstances of the company developed over time.
Documentation does not itself establish that Safe Harbour applies. But without reliable contemporaneous information, demonstrating what actually happened can become considerably more difficult.
How We Create a Record of the Journey
Our work naturally creates a continuing record of the business and the course being pursued. That can include:
Financial visibility
Current financial information, cash movements, debtors, creditors, taxation accounts, employee entitlements and other measures relevant to the company’s position.
Decisions and actions
Recording what has been identified, what has been agreed, who is responsible and what is expected to happen next.
Measurement
Comparing the expected result with what actually happened and identifying whether further action is required.
Operational change
Recording changes to areas such as pricing, quoting, costs, debtor collection, purchasing, finance or other parts of the business where improvement is required.
Compliance
Monitoring taxation lodgements, employee entitlements, superannuation, financial records and other matters relevant to the company’s obligations.
Regular review
Revisiting the financial position and the actions being taken as new information becomes available.
Together, these records provide a contemporaneous account of the journey.
They show what we knew, what we decided, what we did and what happened next.
The Record Follows the Action
There is an important distinction.
We do not take action simply so that we can create evidence.
The first objective is to improve the position of the company and pursue the relevant course of action. The records then provide evidence of the information, decisions, actions and results that occurred along the way.
That is why our process is deliberately repetitive.
We don’t prepare a plan and return three months later to see what happened.
- We keep looking.
- We keep measuring.
- We keep asking whether agreed actions happened and whether they produced the expected result.
- And where the information tells us something needs to change, we change it.
A Continuing Process
Safe Harbour is a statutory framework whose application depends on the requirements of the legislation and the circumstances of the company and director.
Our process does not guarantee that Safe Harbour applies or continues to apply.
What it does is ensure that the business is not being managed on the basis of a document prepared months earlier and subsequently forgotten.
We help keep the information current, the actions visible, the results measured and the course under regular review.
There is a simple principle behind our approach:
Not to create a legal result — but to create an accurate record of the decisions, actions and results that formed the journey.
Not set and forget. Understand. Act. Measure. Record. Review.
Talk to us
You don’t need to diagnose the problem before speaking to us. Tell us what is happening, tell us what is worrying you, and show us the numbers. We will start by helping you understand what questions need to be answered.