Regulators could be granted more power to address and prosecute dodgy directors who deliberately bring down companies to avoid paying liabilities.
Assistant Treasurer Stuart Robert says the proposed legislation would also be paired with $8.7 million over four years to help the Australian Securities and Investments Commission investigate the behaviour, known as phoenix activity.
"This bill will give our regulators better enforcement regulatory tools to better detect and address illegal phoenix activity and to prosecute and penalise directors and others who facilitate this illegal activity," he told the lower house on Wednesday.
Mr Robert also introduced proposed legislation to implement director identification numbers, which will allow agencies and regulators to map the relationships between individuals and entities and individuals and other people.
Directors will have the same identification number throughout their career even if they move companies.
"This will allow tracking of a person's director profile over time and improve integrity by preventing the use of fictitious identities which facilitate phoenixing and other fraudulent activity," the assistant treasurer said.