David Bradbury (Lindsay, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I present a supplementary explanatory memorandum to the bill. I seek leave to move government amendments Nos (1) to (6), as circulated, together.

Leave granted.

I move:

(1)    Schedule 1, page 3 (after line 15), after item 1, insert:

1A  After subsection 411(5)

Insert:

     (5A)    If the compromise or arrangement:

             (a)    involves creditors of the Part 5.1 body with subordinate claims (within the meaning of subsection 563A(2)); and

             (b)    is approved by the Court;

those creditors are also bound by the compromise or arrangement despite the fact that a meeting of those creditors has not been ordered by the Court under subsection (1) or (1A).

(2)    Schedule 1, item 2, page 3 (lines 19 to 27), omit subsections 563A(1) and (2), substitute:

        (1)    The payment of a subordinate claim against a company is to be postponed until all other debts payable by, and claims against, the company are satisfied.

        (2)    In this section:

claim means a claim that is admissible to proof against the company (within the meaning of section 553).

debt means a debt that is admissible to proof against the company (within the meaning of section 553).

subordinate claim means:

             (a)    a claim for a debt owed by the company to a person in the person’s capacity as a member of the company (whether by way of dividends, profits or otherwise); or

             (b)    any other claim that arises from buying, holding, selling or otherwise dealing in shares in the company.

(3)    Schedule 1, page 3 (after line 27), after item 2, insert:

2A  Subsection 563B(2)

Omit “debts owed to members of the company as members of the company (whether by way of dividends, profits or otherwise)”, substitute “subordinate claims (within the meaning of section 563A)”.

(4)    Schedule 1, item 3, page 4 (line 2), before “A person”, insert “(1)”.

(5)    Schedule 1, item 3, page 4 (line 8), after “company,”, insert “at a meeting ordered under subsection 411(1) or”.

(6)    Schedule 1, item 3, page 4 (after line 10), at the end of section 600H, add:

        (2)    In this section:

external administration includes the following:

             (a)    voluntary administration;

             (b)    a compromise or arrangement under part 5.1;

             (c)    administration under a deed of company arrangement;

             (d)    winding up by the Court;

             (e)    voluntary winding up.

This is a matter that has received much consideration from the Senate committee and a number of useful contributions were made to that process, in particular from the Law Council of Australia. The amendments as proposed seek to address some of the technical and drafting matters that have been identified by the Law Council in relation to this bill.

Specifically there are a number of amendments that go to finer technical and drafting considerations but of interest to note to the House are the provisions that relate to those external administrations that would otherwise fall within the terms of a scheme of arrangement. One of the issues that had been raised was the context of a scheme of arrangement where particular creditors or individuals, in this case subordinated interest holders, were not granted the opportunity to be bound by a vote by virtue of these provisions. The intention of these amendments is to ensure that, notwithstanding that, they will be bound by the terms of this process. This is something that was raised by the Law Council and we acknowledge that it is an issue that should be addressed. These amendments seek to address that specifically.

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

As the parliamentary secretary has outlined, this bill was sent to a Senate committee and the Law Council of Australia in particular made a number of important suggestions regarding technical amendments. They have been outlined in the Senate report. They are as follows: the inclusion of debts as well as claims in relevant proposed new sections to ensure the consistent use of terminology in the Corporations Act; secondly, the amendment of proposed new subsection 563A(1) to clarify the types of claims which rank above subordinated claims; thirdly, the amendment of proposed new paragraph 563A(2)(b) to clarify that a claim by a person against a company must arise from that person’s involvement in dealing in the relevant company’s shares; fourthly, the amendment of current section 563B of the Corporations Act to clarify that statutory interest on non-subordinated claims will rank above subordinated claims under proposed section 563A; fifthly, the insertion of a new definition of the term ‘external administration’ in proposed new section 600H; and, finally, amendments to ensure that the bill does not disturb the effective operation of the creditors’ schemes of arrangement.

It was important that the Senate committee examine this bill. It reported on 18 November. The parliamentary secretary has just told the House that Treasury has advised him that all of the suggestions from the Senate committee have been picked up with the government amendments, which were circulated I think yesterday and just moved by the parliamentary secretary. We support these amendments and we make the point again that this is another very good example of why the government should not rush with legislation but should ensure that it gets its drafting right and should not rush ahead of Senate committees. As it turns out, the Senate committee reported just a few days ago prior to this debate. That is not always the case. I say to the new parliamentary secretary it is a good practice he has adopted and it is one that he should try and encourage his colleagues to adopt on so many other pieces of legislation.

This legislation was first introduced by the former Assistant Treasurer, Mr Bowen, I think in January of this year and was reintroduced in September by the parliamentary secretary following the election. So it is strange that it took so long for those recommendations on amendments to be accepted by the government. Perhaps they only found out about them during the course of the Senate inquiry, and if that is the case then that again reinforces the importance of those Senate inquiries on pieces of legislation.

Question agreed to.

Bill, as amended, agreed to.