Explanatory Memorandum
(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP)Chapter 3
Foreign Acquisitions and Takeovers Act 1975
Outline of chapter
3.1 The Bill amends the Foreign Acquisitions and Takeovers Act 1975 (FATA) to assist officers of a corporation to be aware of the situations in which personal liability may be imposed by making it clear on the face of the legislation.
Context of amendments
3.2 Section 30 is potentially a blanket liability provision. Blanket liability provisions are referred to in the COAG Principlesand Guidelines as provisions that create personal liability which applies to contraventions of all relevant offences located within the Act. In conjunction with section 31, section 30 creates personal liability for breaches of a number of provisions in the FATA. The COAG Principles do not consider blanket liability provisions to be appropriate because they result in personal criminal liability being applied by default to the rest of an Act, and make the full extent of potential liability for the company breaching a requirement difficult to ascertain. In turn, this may make it more difficult for company officers to ascertain exactly what their legal obligations and the required standard of conduct are.
Summary of new law
3.3 The Bill amends the FATA to clarify that subsection 31(1) will only make an officer of the corporation who authorised or permitted the commission of an offence by a corporation personally liable for the breach of the law.
Comparison of key features of new law and current law
| New law | Current law |
|---|---|
| Where an offence against the FATA is committed by a corporation, only an officer of a corporation who authorised or permitted the commission of the offence is guilty of an offence. | Where an offence against the FATA is committed by a corporation, an officer of a corporation who is in default is guilty of an offence. An officer who is in default includes an officer who authorises or permits the commission of the offence. |
| Where offences specifically apply personal criminal liability for corporate fault, notes in the FATA draw attention to this fact. | Provisions in the FATA do not explicitly highlight where personal criminal liability is imposed for corporate fault. |
Detailed explanation of new law
3.4 Subsection 30(1) of the FATA provides that a person who contravenes or fails to comply with an order under Part II of the FATA is guilty of an offence. Subsection 30(2) makes it an offence to continue to fail to comply with an order under Part II of the FATA after conviction for the initial offence.
3.5 Under the existing section 31 of the FATA, where an offence against the Act is committed by a corporation, an officer of the corporation who is in default is guilty of an offence. A reference to an officer who is in default is defined to include a reference to an officer who authorises or permits the commission of the offence.
3.6 The current wording in section 31 is ambiguous, providing the potential for an officer who did not authorise or permit the commission of the offence to nonetheless be liable in some situations. The Bill therefore amends Section 31 to clearly apply personal liability only to an officer who authorised or permitted the commission of the offence. [ Schedule 2, Items 2, 3 and 4 ]
3.7 The Bill amends the heading of section 30 to include a reference to orders under Part II. [ Schedule 2, Item 1 ]
3.8 A number of sections in the FATA apply personal liability to a person who is involved in a contravention of the section. The Bill annotates the FATA to make clear upon the reading of those offence provisions that personal liability willapply. [ Schedule 2, Items 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 ]
Application and transitional provisions
3.9 These amendments apply from the day after Royal Assent. [ Section 2 ]
3.10 The amendments apply only in relation to acts or omissions occurring on or after the day the Bill commences. [ Schedule 7, Item 1 ]