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Q. Name based definition of phoenix activity?
The approach taken in New Zealand has been to define phoenix activity in terms of the re-use of the name, or a name similar, to the former company. Such a definition is simple, making it easily understandable and interpretable for the community. However, many stakeholders noted that a name based definition (such as that enshrined in legislation in New Zealand) is quiet ‘superficial' in that it defines phoenix activity in terms of one of the common indictors, and does not address many of the other indictors. It was also highlighted that such an approach could create a moral hazard whereby companies still engage in phoenix activity, however change their name significantly in order to avoid fitting the legislative definition of phoenix activity.
Additionally in some industries, for example the building and construction industry, the trading name is not of significant importance and therefore, is not always reused in cases of fraudulent phoenix activity.
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