Explanatory Memorandum(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Chris Pearce, MP)
1.1 The Corporations (NZ Closer Economic Relations) and other Legislation Amendment Bill (the Bill) amends the Corporations Act 2001 (the Corporations Act) as part of a series of initiatives to support closer economic relations between Australia and New Zealand through the greater co-ordination of business law. The Bill also makes amendments to the Trade Practices Act 1974 (the TP Act) following recommendations made by the Productivity Commission in its 2004 Research Report, Australian and New Zealand Competition and Consumer Protection Regimes (the Report).
1.2 The Bill addresses:
- mutual recognition of securities offerings;
- reduced filing requirements for certain foreign companies carrying on business in Australia;
- information-sharing between the Australian Competition and Consumer Commission (the Commission) and other agencies, bodies and persons; and
- the protection of certain information which is given to, or obtained by, the Commission.
1.3 These initiatives are consistent with the Australia-New Zealand Closer Economic Relations Trade Agreement which has shaped the economic and trade relationship between the two nations since 1983. They are also included in the work programme attached to the Memorandum of Understanding on Coordination of Business Law between Australia and New Zealand. Implementation of the proposals will be a further step towards a single economic market, based on common regulatory frameworks.
1.4 The mutual recognition scheme embodied in the Bill is intended to reduce duplicated regulation, and thereby facilitate investment between the two countries, enhance competition in capital markets, reduce costs for business and increase choice for investors. Mutual recognition achieves this by enabling entities from New Zealand to offer securities into Australia on the basis of compliance with the New Zealand fundraising requirements with minimal additional requirements imposed by Australian law. Mutual recognition means that Australian entities can offer securities into New Zealand under the same terms.
1.5 The mutual recognition scheme implements a Treaty agreed between Australia and New Zealand on 22 February 2006, known as the Agreement between the Government of Australia and the Government of New Zealand in relation to Mutual Recognition of Securities Offerings .
1.6 The second initiative included in the Bill is also a deregulatory move, reducing the paper burden for those companies established in New Zealand which wish to carry on business in Australia. The revised Memorandum of Understanding between the Government of New Zealand and the Government of Australia on Coordination of Business Law (MOU) calls for the closer integration of company laws, in particular managing cross-recognition of company registrations, whereby companies in Australia and New Zealand can do business in the other jurisdiction without complying with the filing requirements applicable to other foreign companies.
1.7 The first and second initiatives are framed in the context of Australia's relationship with New Zealand and are seen as two of a series of initiatives to coordinate the business law of the two countries. However, they are drafted in such a way that they could be extended to other countries if comparable arrangements were reached with them.
1.8 The third initiative enhances the Commission's ability to share certain information with other agencies, bodies and persons, including the New Zealand Commerce Commission. At present the Commission is unable to share such information with other regulators (with limited exceptions in relation to the Australian Energy Regulator). This initiative will place the Commission in a similar position to that of the Australian Securities and Investments Commission (ASIC). Section 127 of the Australian Securities and Investments Commission Act 2001 provides for the appropriate disclosure of information by the ASIC to Australian, and foreign, governments and agencies, including regulators. The Report recommended that the TP Act and the Commerce Act 1986 (NZ) (the Commerce Act) should be amended to allow the Commission and the New Zealand Commerce Commission to exchange information that has been obtained through their information gathering powers.
1.9 The fourth initiative protects certain information given, or obtained, by the Commission, including from a foreign government body such as the New Zealand Commerce Commission. The Report also recommended that safeguards should be built into the TP Act and Commerce Act to ensure against the unauthorised use and disclosure of confidential or protected information.
1.10 The third and fourth initiatives are also consistent with the OECD Guidelines for protecting consumers from fraudulent and deceptive commercial practices . These guidelines encourage member countries to strive to improve the ability of consumer protection enforcement agencies to share information within timeframes that facilitate the investigation of fraudulent and deceptive commercial practices against consumers, subject to appropriate safeguards.