Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

The shadow minister for financial services—thank you, shadow Treasurer—and member for Oxley. He is my next door neighbour and a great guy. He gave the example of the NRMA, which in two years was forced to call 12 extraordinary general meetings to consider motions about removing directors. The meetings cost several million dollars and resulted in none of the directors being removed from the NRMA board. It is hard to justify such behaviour.

Items 3 to 5 and 10 of schedule 1 of this bill amend the Corporations Act to improve and streamline remuneration reporting requirements. Currently disclosing entities that are companies must disclose the value of options that lapsed during a financial year for each member of the key management personnel. So disclosing entities that are companies must also disclose the percentage value of remuneration that consists of options for each member of the key management personnel.

Item 6 of schedule 1 of this bill amends the Corporations Act 2001 to clarify the circumstances in which a financial year may be less than 12 months. This sounds like something out of Yes Minister, but it is actually good business practice every now and then to change the year. There is confusion about the conditions under which directors may determine that a financial year be shorter that 12 months. Currently section 323D sets out how companies, registered schemes and disclosing entities may determine the length of their financial year. While an entity's financial year is expected to be approximately 12 months long, entities can determine otherwise in cases where an entity needs to modify its financial year by up to seven days to accommodate week based internal reporting frameworks or an entity needs to synchronise its financial year in order to prepare consolidated financial reports.

Items 7 to 9 of schedule 1 of this bill amend the legislation to exempt certain companies limited by guarantee from the need to appoint or retain an auditor. Obviously there are significant costs associated with auditors. They perform an important role. Normally when companies get into trouble you find that the auditor has not been doing an appropriate job. Currently all public companies, including companies limited by guarantee, are required to appoint and retain an auditor. This bill amends this so that the small companies limited by guarantee and those companies limited by guarantee that have their financial reports reviewed are not required to appoint or retain an auditor. This means that companies that are not required to undertake an audit are no longer required to appoint and retain an auditor. All other public companies, however, are required to appoint and retain an auditor. So the public has that security, knowing that auditors will be looking through the books of those companies.

Part 1, items 1 and 2, of schedule 2 of this bill amend the Australian Securities and Investments Commission Act to improve the operation of the Takeovers Panel by allowing takeover matters to be dealt with more efficiently. Currently the president and members of the Takeovers Panel may only participate in proceedings if they are within Australia. This bill makes amendments so that the president of the Takeovers Panel may give a direction in respect of members who are to constitute the panel whether or not the president is in Australia. Further, members of the Takeovers Panel may participate in proceedings whether or not they are in Australia.

Part 1, items 3 to 8, and part 2, item 9, of schedule 2 of this bill amend the Australian Securities and Investments Commission Act 2001 to extend the Remuneration Tribunal's remuneration setting responsibility to include certain Corporations Act bodies. The ASIC Act currently provides that the responsible Treasury portfolio minister determines the terms and conditions, including the remuneration of the chairs and members of the Financial Reporting Council, the chair of the Australian Accounting Standards Board and the chair of the Auditing and Assurance Standards Board. The ASIC Act also provides that the FRC is responsible for determining the terms and conditions, including remuneration, of the offices held by the members of the AASB and the AUASB.

This bill brings responsibility for determining the remuneration and full-time member recreation leave entitlements of the chair and member positions of the FRC, the AASB and the AUASB within the Remuneration Tribunal's direction. The Remuneration Tribunal has specialist skills in reviewing and determining remuneration. It looks after members of parliament's remuneration as well, and it does a good job. It is therefore better placed to determine the remuneration of these officers. Moreover, it will ensure consistency in the remuneration setting arrangements between the three bodies and other statutory office holders.

One of the controversial items in this legislation which has bipartisan support will be the one about 100 members. I revisit that item because so many campaigns are organised when a corporation is perhaps doing something that people are not happy with. We have seen it with union campaigns in the past where perhaps inappropriate workplace practices are taking place. We have seen it when corporations are selling something, farming, mining or doing something that members of the community are not happy with. The 100 shareholders practice has often been used in the past in these cases. I want to stress again that, when compared with other common law jurisdictions that utilise corporations or even civil countries that use corporations and all the benefits that come with corporations, Australia has been a bit stand-alone in letting 100 shareholders, as I said, irrespective of the value of the shares held by those 100 shareholders, take control and basically impose a cost on other shareholders.

That would be the more controversial point, but the other aspects, such as improving remuneration reporting, clarifying the financial year, streamlining the auditor appointments, improving the efficiency of takeover panels and improving the government remuneration process, are not particularly controversial. This is normal, run-of-the-mill government business. I am happy to support this legislation before the chamber.

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