A critical plank of the Safe Harbour regime is the confidentiality it affords to the directors of the company as they assess, plan, implement, test and re-align any safe harbour plan for the benefit of the company.

That confidentiality operates in different ways, for different periods and for the benefit of both the company (for example during the restructuring period where the fact of safe harbour does not necessarily have to be disclosed – see ASX Listing Rules Guidance Note 8 (27 May 2024) at 43) and potentially all the way through to circumstances where the company ultimately enters liquidation and the directors of the company may be able to assert continued confidentiality in advice they have previously taken in relation to the safe harbour period by asserting legal professional privilege.

The decision of Justice Markovic in McCabe v Mosaic Brands Limited, in the matter of Mosaic Brands Limited (In Liquidation) (Receivers and Managers Appointed) [2026] FCA 1569 (Decision) provides the first in-depth consideration of how far legal privilege extends beyond the safe harbour engagement and when directors can lose that benefit.

In the Decision, the Court has held that safe harbour has a dual purpose where:

1. section 588GA of the Corporations Act 2001 (Cth) is for the company and is intended for its benefit; and
2. the protection afforded by section 588GA and its related provisions is for the directors, enlivened when the company goes into liquidation and a liquidator brings an insolvent trading claim.

Helpfully, the Decision also provides very helpful practical guidance to directors on what they can (and should not) do if they wish to maintain the benefit of legal professional privilege in the advice they take during a safe harbour engagement.

Management of privilege at the start of a safe harbour process, throughout the process and then determining whether or not to waive privilege if external administrators are later appointed to the company is complicated. Below we’ve distilled practical matters for Directors to consider, based on the Decision.

1. Document your retainers

Safe harbour advice is taken for the benefit of the directors and so, to prevent having to rely on an ‘inferred’ retainer, a written retainer should be put in place between the directors and the law firm providing safe harbour advice and any experts that are relied on (typically an insolvency practitioner to provide ‘better outcome testing’ advice).

Even if the company is actually paying for the advice (as a third party payor, rather than the directors personally), the legal retainer should be with the directors.

2. Limit and control disclosure to employees

When seeking information from the business for the purpose of taking safe harbour advice, it is important for directors to emphasise the confidentiality of those requests or circulation of any materials that are part of safe harbour advice.

Practically speaking, during safe harbour engagements it is not uncommon (and in fact it is useful) for executives such as the CEO or CFO to be involved in providing the directors and their advisors the information required for safe harbour advice to be prepared and finalised.

The Mosaic decision shows that limited circulation of safe harbour advice, confined to senior employees or those tasked with assisting the directors, will not necessarily result in a waiver of privilege.

3. Board packs are for company business

The decision indicates that preparation of board packs which include safe harbour, by a non-director will not necessarily waive privilege.

That said, board packs are part of the books and records of the company and so a practical way for any risk of waiver to be reduced is for the chair of the board to separately circulate a ‘safe harbour pack’ to directors.

4. Keep discussion of safe harbour advice ‘in camera’

Any discussion of safe harbour advice in board meetings must be ‘in camera’ and directors should carefully consider whether non-directors are required to be a part of that discussion. Minutes should not include records of discussion of safe harbour advice. Recording safe harbour advice in the minutes of a board meeting of the company will result in waiver. Instead, directors should adopt an ‘in camera‘ approach and limit any record of discussions of safe harbour advice in a board meeting to a mere reference to the fact of a discussion without recording its detail.

5. Compliance with external administrators’ demands

If you receive a section 438B(1) notice, the Decision indicates that safe harbour advice given for the benefit of the directors, does not need to be produced. Further, it’s important that if the directors do want to waive privilege and provide the advice to an external administration, very carefully consider whether all of the directors are comfortable to waive privilege it’s important that all relevant directors (being the directors who took the advice at the relevant time) are consulted even if they have subsequently retired from that role – the privilege is a joint privilege.

This article was written by Melissa Ferreira, Partner.