What happens to your builder’s license if your company goes into liquidation?

If you are in the building industry in Queensland, chances are you or your company holds a license issued by the Queensland Building and Construction Commission (“QBCC”). The QBCC is a statutory body set up to regulate the construction or building industry.

The QBCC Act (Qld) 1991 contains provisions that allow the QBCC to exclude and individual or company from holding a builder’s license. The intention is to prevent individuals with poor financial history from running another business in the industry.

QBCC Requirements

The QBCC requires building companies to meet minimum financial requirements in order to maintain a building license. If a building company cannot meet the minimum financial requirements of the license they require they may no longer be able to be licenced.

The QBCC also excludes a company from holding a builder’s license if an insolvency event has occurred. An insolvency event occurs (in terms of a company) where a liquidator, provisional liquidator, administrator or controller is appointed to the company. The occurrence of these events will also likely result in the director and any influential persons for the company losing their building license.

Using the new small business restructuring regime may also pose a problem. Whilst it appears that there may be no automatic exclusion for a company if it enters small business restructuring, it is possible that a company may lose its license as a result of the QBCC assessing that it no longer meets the minimum financial requirements for licencing. It is also possible that relevant legislation may be updated to exclude companies and their directors who enter into small business restructuring.

Excluded Individual

The QBCC’s rules also exclude an individual from holding a building license where a where a liquidator, provisional liquidator, administrator or controller has been appointed to a company that person has been a director, secretary or influential person of within 12 months of the event occurring. In these circumstances an individual is excluded from the following for 3 years:

• Holding a license themselves;

• Being a director, secretary or influential person of another QBCC licenced company; or

• Be in partnership with a QBCC licensed company.

How are individuals excluded?

Once an insolvency event of they types mentioned above has occurred, the director is automatically excluded for 3 years. The QBCC will issue a letter to the director to show cause why the director’s license should not be cancelled, and should be excluded from running a licensed company.

If more than 1 insolvency event has occurred, the director may be excluded from holding a license for life.

Contact us for assistance

As the repercussions of an insolvency event are serious, any director of a building company with significant debts should take steps to prevent an insolvency event. There are steps that a director can take to prevent that, for example negotiating payment arrangements and settlements with the ATO and/or other creditors, or by restructuring the business.

Contact us at our Brisbane or Gold Coast offices for a free no-obligation consultation to discuss the circumstance of your company.