Second Reading Speech
Hon Nick Sherry (Minister for Superannuation and Corporate Law)Today I introduce a Bill that will amend the Corporations Act 2001 to fulfil a requirement under the Australian Government's Memorandum of Understanding with the New Zealand Government on Business Law Co-ordination. Fulfilling this requirement moves us another step closer to achieving the goal of a single, trans-Tasman economic market, based on common regulatory frameworks.
The Bill provides a mechanism for the recognition of a disqualification from managing companies that occurs in a foreign country by Australia. This will close a regulatory gap where currently disqualification can be avoided simply by moving jurisdictions.
The Corporations Act currently provides a range of circumstances in which a person will be automatically disqualified from managing corporations, and circumstances in which the Australian Securities and Investments Commission can apply to a court to have a person disqualified.
The Bill adds to the automatic disqualification provisions and also provides the Courts with an additional disqualification power.
First, a person will be automatically disqualified from managing corporations where they have been so disqualified by a court in a prescribed foreign country.
Second, an Australian court will have the power to disqualify a person from managing corporations, on application by ASIC, where the person has been disqualified under the law of a prescribed foreign country. This provision will cover situations where, for example, a person has been disqualified automatically by operation of law in a foreign country, or by a foreign regulator.
In this situation the Australian Court must be satisfied that the disqualification is justified before they can disqualify the person in Australia.
These arrangements will ensure that all people disqualified in Australia on the basis that they have been disqualified in a prescribed foreign country, have had their disqualification scrutinised by a court.
Prescribed foreign countries will be named in the Corporations Regulations. Initially it is envisaged that only New Zealand will be named. The mechanism will, however, allow for other countries to be added at a later date if it is considered that there is sufficient similarity with Australia's regulatory regime, as is the case with New Zealand.
New Zealand enacted its complementary provisions in 2007.
In the interests of cross-border consistency these amendments have been modelled on those of New Zealand.
This Bill addresses concerns that people who are disqualified from managing corporations in New Zealand could still manage corporations in Australia simply by crossing the Tasman. As such, it will enhance protection for investors and the integrity of Australia's markets.
Finally, I can inform the chamber that the Ministerial Council for Corporations (MINCO) was consulted in relation to these amendments to the laws in the national corporate regulation scheme, and has approved them as required under the Corporations Agreement.
I have also commenced consultation with MINCO on the accompanying regulations. Provided that approval is received, the Regulations should be ready to commence contemporaneously with the provisions of the Bill.
I commend the Bill to the Senate.