Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

Today I introduce the 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 coordination. The Corporations Act currently provides a range of circumstances in which a person will automatically be disqualified from managing corporations and circumstances in which the Australian Securities and Investments Commission can apply to the 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 automatically be 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.

The provision will cover situations where, for example, a person has been disqualified automatically by operation of a law in a foreign country 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. The 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. I commend the bill to the House.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

The coalition will be supporting the Corporations Amendment (No. 1) Bill 2008 [2009]. The purpose of this bill is to ensure that individuals who are disqualified as company directors in New Zealand are unable to become directors of commercial operations in Australia. The bill seeks to close a loophole in current legislation that enables a director in New Zealand facing disqualification to effectively avoid such a fate by moving offshore to Australia. The purpose of this bill follows through on the principles addressed in the memorandum of understanding on business law harmonisation between Australia and New Zealand.

The former coalition government took the lead in this area back in 2006 when we foresaw the benefits of ensuring director disqualification consistency across the Tasman. There is a history to this matter that goes back some time. In 1988, the Australian and New Zealand governments agreed on a memorandum of understanding to realise the benefits of harmonisation of business law. This provided the platform for mutually beneficial dialogue between our two nations on corporate legislation. The original MOU has since been reviewed every five years and the last review was under the stewardship of the then Treasurer, the Hon. Peter Costello, the member for Higgins. He reviewed that in 2006.

The 2006 review produced new courses of actions to implement, and on this occasion individual areas of business law were delineated, including director law harmonisation. This was pursued with the intention that greater coordination would of course produce mutual benefits for both nations. New Zealand has taken the initiative and has already closed this regulatory gap by amending the Companies Act 1993, which they did in 2006.

The bill before the House is modelled on the New Zealand legislation that was introduced in 2006 in order to inculcate trans-Tasman parity. The ultimate outcome is to unite our commercial activities into a single economic market. The benefits of this legislation will be numerous and include the provision of increased certainty, reduced waste and red tape, and enhanced productivity. The effect of the Corporations Act will be to automatically disqualify someone from becoming a company director in Australia if they have been disqualified in New Zealand. The bill will enable Australian courts to disqualify people from becoming company directors where they have also been disqualified by a competent court in a jurisdiction overseas. At this point, New Zealand is the only jurisdiction that will be prescribed, but the capacity to determine other jurisdictions as suitable will be established by this amendment. I commend the bill to the House.

Debate (on motion by Mr Albanese) adjourned.