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In Australia, the government response to the collapse of the economy and of
significant numbers of companies was the prompt introduction of the Voluntary
Liquidation Act 1891 (Vic). 187 The Act made it difficult to obtain compulsory
winding up by court order and at the same time preserved the secrecy of companies‟
dealings, which might otherwise be exposed through court‟s scrutiny. 188 The main
purpose of the Act was to defeat creditors, who may compel a company into a
premature liquidation, when it still has the potential of being rescued. 189 However,
the company could still resort to voluntary liquidation and often did so in order to
evade creditors‟ or members‟ application for winding up, which defeated the purpose
of the Act. 190 In voluntary liquidation, the company‟s dealings were not subjected to
court‟s scrutiny and directors or their associates could also be appointed as
liquidators. 191
Another reform made in the aftermath of the economic breakdown was the passing
of the Directors Liability Act 1891, modelled after the English Directors Liability
Act 1890. 192 A new company Act was also enacted in Victoria and some of its
provisions were stricter than the UK Companies Act it was based on. 193 The
additional requirements in the Companies Act 1896 included the need to obtain
approval by special resolution to mortgage the uncalled capital and the usage of the
caveat system in the registration of company charges. 194
187 Waugh “Company Law and the Crash” above n128 at 364. The urgency to pass the legislation was
apparent in that the Bill for the Act was passed through all stages in both houses in one day. See
also John Waugh “The Centenary of the Voluntary Liquidation Act 1891” (1991) 18 MULR 170 at
172 [“The Centenary”]
188 Waugh “The Centenary” above n187 at 172-173.
189 Ibid at 172.
190 Ibid, at 173.
191 Ibid.
192 Waugh “Company Law and the Crash” above n128 at 381.
193 Ibid, at 386.
194 Ibid.
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