In the last two years over 2000 construction companies across the country have gone into liquidation. That’s over two a day. Between July 2022 and April 2023 alone, 1,709 construction companies entered administration.
In the wake of rate hikes and the slew of liquidations and bankruptcies, it is important to keep in mind the impact on your QBCC licence if you are facing insolvency or bankruptcy.
To protect, ensure, and promote security of payment and the QBCC licencing system, the Queensland Building and Construction Commission Act 1991 contains provisions designed to prevent those responsible for poor financial management of a business or company from running a business in the building industry and to prevent individuals who:
- Become bankrupt or enter into a debt or personal insolvency agreement under the Bankruptcy Act 1966; or,
- Are a director, secretary, or “influential person” of a construction company within the two years before the company experiences a company failure such as entering liquidation or administration,
from holding a QBCC contractor licence, nominee supervisor, or site supervisor licence, or being a director, secretary, or “influential person” for a company holding a QBCC licence.
An influential person is someone with the ability to control or influence the decision making or conduct of a company and can include any individual who participates in making decisions such as a director, secretary, shareholder, or even the spouses of directors.
Becoming an Excluded Individual
If you become bankrupt or take advantage of the laws of bankruptcy, also known as a relevant event, you become an excluded individual and your QBCC licence will be cancelled. You cannot reapply for another licence until the exclusion period ends. You are also prevented from being a director, secretary, or influential person for a QBCC-licensed company during this time.
If you are a director, secretary, or influential person for a construction company that directly or indirectly carried out building work or building work services up to 2 years before the company has a provisional liquidator, liquidator, administrator, or controller appointed, or is wound up or ordered to be wound up, also known as a relevant event, you become an excluded individual and the company’s QBCC licence will be cancelled. The company cannot reapply for another licence until the exclusion period ends or the excluded individual stops being a director, secretary, or influential person.
For the first relevant event, the period of exclusion is 3 years from the relevant event.
If you or your company suffer a second relevant event, you will become a “permanently excluded individual” and you can never hold a QBCC licence as an individual or be a director, secretary, or influential person of a QBCC licenced construction company.
Defences to Exclusion
If you are issued with a written notice identifying you as an excluded individual, you have an opportunity to respond and the QBCC may not consider you an excluded individual if you can show:
- You ceased to be an influential person, director, or secretary for the construction company while the company was solvent; or.
- The first relevant event directly caused the second relevant event.
If you would like to know more, or if you need assistance in a residential or commercial construction matter, please contact WGC Lawyers on 4046 1111 today.