QBCC Excluded Individuals: The 2026 Guide to Director Bans After a Company Collapse
- John Merlo
- 1 day ago
- 13 min read
The Australian construction landscape is turbulent. In the 2023-24 period, a staggering 2,975 construction companies entered administration nationally, a figure that jumped to 3,217 in the 2024 calendar year. These statistics are more than just numbers on a balance sheet; they represent a wave of financial failures that trigger a powerful regulatory response from the Queensland Building and Construction Commission (QBCC). For the directors, secretaries, and key decision-makers behind these companies, the consequences can be career-ending.
This regulatory power is wielded through the "Excluded Individual" framework, the QBCC's primary tool for holding key personnel accountable for corporate collapses. When a construction company fails, the QBCC doesn't just see a business shutting down; it sees a potential risk to consumers, subcontractors, and the overall integrity of the industry. The exclusion policy is designed to remove individuals associated with these failures from the industry for a set period—or even permanently—to prevent a cycle of insolvency and protect the public interest. Understanding these rules is no longer optional; it's a critical survival skill for every director in Queensland's construction sector.
Key Takeaways
What is an Excluded Individual? If you were a director, secretary, or influential person of a construction company within two years of its collapse, the QBCC can declare you an 'Excluded Individual'.
First-Time Ban is Three Years: A single insolvency event results in a three-year exclusion from holding a QBCC licence or influencing another company's operations.
Two Strikes Mean a Lifetime Ban: Being involved in two separate insolvency events can lead to a permanent, lifetime exclusion from the industry in Queensland.
Insolvency is a Major Industry Risk: With construction accounting for 27% of national corporate insolvencies, understanding these rules is critical for every director.
The Rising Tide of Insolvency in Queensland Construction
The surge in construction company collapses across Queensland is the result of a perfect storm of economic pressures. Many builders and developers are caught in a financial vice, squeezed by fixed-price contracts signed before the recent explosion in material costs. This, combined with persistent labour shortages, ongoing supply chain disruptions, and tightening credit, has eroded profit margins to unsustainable levels. This challenging environment has led to a significant increase in builders going into liquidation, creating a ripple effect of unpaid debts and unfinished projects throughout the construction industry. The high rate of corporate insolvencies is a clear indicator of the sector's fragility.
In response to this crisis, the QBCC has intensified its regulatory oversight to protect both consumers and the stability of the market. The commission's enforcement of its policies, particularly those outlined in the Queensland Building and Construction Commission Act 1991, has become more critical than ever. Rules governing the minimum financial requirements and the financial covenant between licensees and the commission are being strictly applied. For any director of a company that becomes a builder in liquidation, the QBCC's scrutiny is swift and the consequences severe, making a deep understanding of these regulations essential.
What Does It Mean to Be an "Excluded Individual"?
The term "Excluded Individual" is a formal declaration by the QBCC that has severe and lasting consequences for a person's career in the construction industry. It is a key part of the regulatory framework designed to ensure accountability when a licensed company fails.
The Official Definition Under the QBCC Act
In simple terms, an "Excluded Individual" is a person banned by the QBCC from holding a QBCC licence or influencing a licensed company due to their involvement with a construction company that has suffered an insolvency event. This is not a discretionary slap on the wrist; it is a direct and powerful sanction outlined in the QBCC Act.
The QBCC specifically targets three categories of individuals who were associated with the failed company. The most obvious is the officially appointed company director, who holds ultimate responsibility for the company's governance and financial health. The second is the company secretary, who is responsible for administrative and statutory compliance. The third, and often most complex, category is the "influential person," an individual who may not have a formal title but wields significant control over the company's affairs.
Who Qualifies as an "Influential Person"?
The "influential person" category is the QBCC's tool to catch individuals who exercise real power from behind the scenes without holding an official title. This provision ensures that those who are truly responsible for a company's decisions cannot evade accountability simply because their name isn't on the official ASIC register as a director.
To determine if someone is an influential person, the QBCC investigates the practical realities of how the company was run. They look for evidence of control, such as an individual who directs staff on a day-to-day basis, has the authority to sign cheques or control company finances, makes key decisions about which creditors to pay, or acts as a "shadow director" by giving instructions that the appointed directors are accustomed to following.
The QBCC's rationale is clear and direct: if you had the power to influence the decisions that led to the company's failure, you share in the responsibility for that failure. This prevents the use of nominal directors to shield the true decision-makers from regulatory consequences.
The Critical Two-Year Look-Back Period
Warning: Resigning from your directorship a few months before a company collapses offers no protection from being declared an Excluded Individual. The QBCC has the power to look back at your involvement.
The QBCC is empowered by a crucial two-year "look-back" period. This rule allows the commission to scrutinise the actions and roles of anyone who was a director, secretary, or influential person at any point in the 24 months leading up to the insolvency event. This means that simply resigning from a failing company is not an effective escape strategy.
This provision is a direct countermeasure against directors attempting to abandon a sinking ship to avoid accountability. The QBCC will investigate who was in control during the period when the financial distress likely took root. If you held a key position within that two-year window, you are within the scope of their investigation and can be declared an Excluded Individual, regardless of whether you were still there on the day the liquidator was appointed.
Defining the "Insolvency Event" That Triggers a Ban
For the QBCC, an "insolvency event" is not a vague term for financial trouble; it is a specific legal trigger for regulatory action. Understanding what constitutes such an event is crucial for any director navigating financial distress.
What Types of Company Collapse Count?
The term "insolvency event" has a precise legal meaning under the QBCC Act, covering several formal corporate failure scenarios. An event is officially triggered when a liquidator is appointed to wind up the company due to its inability to pay its debts, which is the most common form of liquidation. It also occurs when a voluntary administrator is appointed to take control of the company to assess its future viability, or when a receiver is appointed by a secured creditor (like a bank) to manage specific assets to recover a debt, a process known as receivership. Furthermore, if the company enters into a formal deed of company arrangement (DOCA) with its creditors as a way to avoid liquidation, this is also considered a qualifying insolvency event by the QBCC.
The Connection to Debts and Financial Requirements
The path to a formal insolvency event often begins with a fundamental breakdown in cash flow and the inability to pay debts as they fall due. In the construction industry, this can escalate rapidly. A single delayed payment from a client can prevent a builder from paying subcontractors, which in turn can lead to work stoppages, disputes, and a cascade of financial claims that the company cannot service. This is a common precursor to a formal declaration of insolvency and subsequent administration.
This situation is directly linked to QBCC regulations. A failure to pay an adjudicated amount determined under the Building Industry Fairness (Security of Payment) Act is a serious breach and a major red flag for the QBCC. Similarly, non-compliance with the commission's strict Minimum Financial Requirements (MFR) policy, which is designed to ensure licensees have the financial backing to operate, often precedes a formal collapse. The QBCC views these breaches as early warning signs of instability, and they frequently trigger a QBCC review that can lead to licence suspension even before a formal insolvency event occurs.
What Are the Consequences of an Exclusion Decision?
A QBCC exclusion decision is not a minor penalty; it is a direct and impactful QBCC ban that can fundamentally alter or end a professional's career in the Queensland construction industry. The severity of the ban depends on the individual's history of involvement with insolvent companies.
The Three-Year Ban for a First Event
For a first-time insolvency event, the consequence is a mandatory three-year ban.
This exclusion is comprehensive and strictly enforced. For the full three-year period, which commences from the date of the insolvency event itself (e.g., the date the liquidator was appointed), the individual is barred from holding any class of QBCC licence, whether as an individual, a partner, or a director of a licensed company. They are also prohibited from acting as a nominee supervisor for a licensed entity. This effectively removes them from any role that requires a licence to perform or supervise building work in Queensland.
How a Second Event Leads to a Lifetime Exclusion
The QBCC's "two strikes" policy results in a lifetime exclusion, a permanent end to an individual's career in any licensed capacity in the state.
Consider this story (illustrative example) of "David," a director whose building company entered liquidation in 2022.
The QBCC issued him an exclusion notice, and he served his three-year ban. In 2026, believing he had learned from his mistakes, David re-entered the industry as a senior manager and influential person in a new construction venture, confident he could succeed. However, due to a major client defaulting on a large payment, the new company also faced insurmountable financial pressure and was forced into administration. The QBCC, having tracked David's history, initiated another QBCC review. The second insolvency event triggered the lifetime ban provision. The notice he received was final and devastating.
David was permanently excluded from holding a licence, acting as a director, or being an influential person for any licensed builder in Queensland. His career in the industry he had worked in for decades was over for good.
The Broader Impact on Your Career and Business
The impact of a director ban extends far beyond simply being unable to hold a QBCC licence. The legislation is designed to prevent excluded individuals from wielding influence over other licensed companies. An excluded person is explicitly prohibited from being in a position to control or substantially influence the business operations of any other company that holds a QBCC licence.
This means the practical reality is severe. You cannot be a director, a company secretary, a shareholder with significant influence, or a senior manager making key operational or financial decisions. It effectively erases any legitimate path to a leadership or management role within the licensed sector of the Queensland construction industry. When facing such a critical career juncture, the guidance of an expert building and construction lawyer is not a luxury, but a necessity.
Challenging a QBCC Exclusion Notice
Receiving an excluded individual notice from the QBCC can feel like a final judgment, but it is the beginning of a formal legal process. There are specific avenues to challenge the decision, but they require a strategic, timely, and well-informed response.
Receiving the "Notice of Intention to Exclude"
The first formal communication you will receive is a "Notice of Intention to Exclude." It is crucial to understand that this is not the final decision. It is a proposal from the QBCC, giving you an opportunity to present your case before they make a final determination.
This notice triggers a strict 21-day response period. During this time, you must provide a detailed written submission arguing why you should not be excluded. This submission is your first and best chance to present evidence, explain the circumstances of the company's failure, and detail any steps you took to prevent the insolvency. A poorly drafted or emotional response can be detrimental. This initial response is a critical opportunity that should be guided by a specialist QBCC lawyer to ensure your arguments are legally sound and persuasive.
What is the Internal Review Process?
If the QBCC proceeds with an exclusion decision after considering your initial submission, you have the right to apply for an internal review. This is a formal application for a second opinion from a different, more senior decision-maker within the QBCC who was not involved in the original decision. It is a review of the facts and evidence already presented, not an opportunity to introduce an entirely new case. Strict time limits apply for lodging an internal review application, and failing to meet them will mean losing your right to this appeal, making prompt action essential.
Can You Appeal the Decision to QCAT?
A QBCC internal review decision is not the final word. You have the right to an independent hearing at the Queensland Civil and Administrative Tribunal.
If the internal review upholds the exclusion, your final avenue of appeal is to the Queensland Civil and Administrative Tribunal (QCAT). This is a significant step, as it moves the matter outside of the QBCC to an independent external body. Appealing decisions in QCAT is a formal legal process that resembles a court hearing. It involves submitting evidence, calling witnesses, and making legal arguments before a tribunal member. This is not a simple review; it is a fresh hearing of the matter where the merits of your case will be tested. Successfully navigating a QCAT appeal demands a deep understanding of administrative law and the QBCC Act, a process that requires the expertise of a seasoned construction dispute lawyer.
Proactive Governance: How Directors Can Mitigate Risk
The most effective way to avoid an exclusion notice is to prevent the corporate collapse in the first place. This requires proactive risk mitigation, strong corporate governance, and a clear understanding of a director's duties long before financial distress appears.
Maintaining Financial Viability and Records
Prevention is the most effective strategy. Directors have a non-negotiable duty to ensure their company's solvency. This involves rigorous financial management, maintaining meticulous and up-to-date records, and ensuring continuous compliance with the QBCC's Minimum Financial Requirements (MFR). Directors must have a constant, clear, and accurate view of their company's financial health, including cash flow projections, work-in-progress reports, and creditor ledgers. Ignoring financial warning signs or failing to keep proper records not only increases the risk of insolvency but also weakens any potential defence if the QBCC investigates.
When Should You Seek Professional Advice?
Early warning signs of financial distress must be acted upon immediately. These red flags include struggling to pay subcontractors or suppliers on time, accumulating significant tax debts, relying on deposits from new projects to pay for the costs of old ones, or receiving letters of demand.
The moment these signs appear is the signal to seek immediate, expert advice from both insolvency specialists and a lawyer. Insolvency professionals can assess the company's viability and explore options for restructuring or refinancing. A lawyer can provide critical advice on director duties and help navigate the complex legal landscape to minimise personal liability.
Early intervention can unlock options like voluntary administration, which may allow the business to be restructured and saved. This can prevent a formal liquidation, thereby avoiding the trigger for a QBCC exclusion notice and offering a path forward that a later-stage collapse would close off.
Understanding Your Director's Duties
The QBCC's industry-specific rules are layered on top of broader legal obligations. A fundamental duty of every company director under the Corporations Act is to prevent the company from trading while insolvent. The QBCC's excluded individual policy can be seen as a direct consequence of failing to meet this core corporate responsibility. Directors in the construction industry operate within a complex regulatory web that includes not only the QBCC Act but also legislation like the Building Act 1975. A comprehensive understanding of these duties is essential for compliant and sustainable business operations.
Why You Need Expert Legal Guidance
Facing a QBCC exclusion notice is a high-stakes legal battle, not a simple administrative issue. The process involves complex legal arguments, strict deadlines for submissions and appeals, and formal procedures in QCAT that are governed by rules of evidence. Attempting to navigate this alone exposes you to significant risk. The arguments that may seem compelling to a director—such as blaming market conditions or a defaulting client—may not meet the legal tests required to successfully challenge an exclusion.
The risk of self-representation is immense, with a potential lifetime ban from your chosen profession on the line. Engaging a firm with proven industry expertise is critical. Merlo Law provides the specialised knowledge required to build a robust defence. Our deep industry experience ensures that your case is presented with the legal precision and strategic insight necessary to protect your career and reputation. Our strict adherence to the professional standards set by bodies like the Queensland Law Society ensures you receive advice that is not only expert but also ethical and focused on your best interests.
FAQs
What is the difference between an "Excluded Individual" and a "Banned Individual" in the QBCC's terms?
An "Excluded Individual" status is specifically tied to an insolvency event. You are excluded because a company you were a director, secretary, or influential person for has failed. A "Banned Individual" status is typically a result of disciplinary action taken by the QBCC for other reasons, such as performing defective work, failing to meet compliance standards, or other breaches of the QBCC Act. While both result in being unable to hold a licence, the trigger events are different.
Can I avoid exclusion if I was a director for only a short period within the two-year look-back window?
No, the duration of your directorship within the two-year period is not a determining factor for exemption. If you held the position at any point during those 24 months prior to the insolvency event, you fall within the scope of the legislation. However, the specific circumstances and duration of your involvement can be a key part of your submission to the QBCC arguing why it would not be fair to exclude you.
Does personal bankruptcy also make me an Excluded Individual?
Personal bankruptcy is a separate issue from corporate insolvency, but it can also affect your QBCC licence. Under the QBCC Act, being an undischarged bankrupt or a discharged bankrupt who entered bankruptcy within the last three years can be grounds for licence refusal, suspension, or cancellation. It is considered a "Permitted Individual" issue, which is distinct from the "Excluded Individual" framework for corporate failure.
If I am excluded, can I still work in the construction industry in a non-licensed role?
Yes, but with significant limitations. You cannot be in a position to control or substantially influence a licensed company. This means you could potentially work in a role like a sales representative or a general labourer for a licensed builder, but you could not be a site supervisor, project manager, director, or hold any senior management position that involves making key operational or financial decisions.
What happens if my business partner's company fails, but I wasn't a director?
Your liability depends on whether the QBCC considers you an "influential person." If you were not an official director or secretary but were actively involved in managing the failed company—directing staff, controlling finances, or making key decisions—the QBCC can still deem you an influential person and issue an exclusion notice. Your formal title is less important than your actual role and level of control.
Is there any way to have a lifetime ban reviewed or overturned in the future?
A lifetime ban is intended to be permanent. While there are very limited avenues for judicial review in higher courts, these are based on errors of law by the tribunal, not on a simple disagreement with the decision. For all practical purposes, a lifetime exclusion from the QBCC should be considered a final and permanent end to a career in any licensed or influential role in the Queensland construction industry.
This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law
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