Monday, 9 August 2021
Treasury Laws Amendment (2021 Measures No. 1) Bill 2021; Second Reading
[by video link] I rise to speak on the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021. Let's be clear on what this legislation represents: changing the law to help businesses hammered by lockdowns. The destruction being caused by hair-trigger lockdowns is the only reason I can support this bill.
Schedule 1 of this legislation will make temporary amendments to the rules relating to meetings of company directors and shareholders to facilitate the use of electronic technology. This is so they can hold virtual meetings and allow documents to be provided and signed electronically. One Nation considers this is a sensible temporary measure for businesses and an economy plagued by the uncertainty of lockdowns.
Schedule 2 of the bill would make permanent the government's temporary measure, introduced and extended last year, to relax continuous disclosure rules. This would provide that all civil penalty proceedings commenced under the continuous disclosure and misleading and deceptive conduct provisions of the Corporations Act 2001 must prove that an entity or officer acted with knowledge, recklessness or negligence in respect of an alleged contravention. This places the burden of proof squarely onto litigants involving breaches of continuous disclosure.
The Treasurer has said that the uncertainty created by the pandemic has made it more difficult for companies to release reliable, forward-looking guidance to the market. He said it was recognised that companies may hold back from making forecasts of future earnings or other forward-looking estimates in the chaos. My concern is that in practice it would be very difficult to prove a breach of continuous disclosure rules was done with intent. All a director has to do or say is it wasn't intentional or they weren't aware. So this could potentially improve protection for the directors of big corporations at the expense of small mum-and-dad investors, but it won't be a free pass for the big corporations. Under the rules of the Australian Stock Exchange, listed companies will still be required to immediately disclose any information that a reasonable person would expect to have a material effect on the price or value of their securities.
Continuous disclosure laws exist for good reasons. They promote better informed and more efficient securities markets and they help limit opportunities for insider trading at the expense of small and medium mum-and-dad investors. That's who One Nation supports in this space—mum-and-dad investors seeking to invest their hard-earned money in an Australian company. Continuous disclosure helps to level the playing field for the small investor. We should be promoting and encouraging this sort of investment—Australians investing in Australian companies—ensuring that more profits and dividends stay here instead of going offshore. One way to encourage it is to give small investors the confidence they can make an informed investment decision and ensure companies aren't withholding information that could influence their decision. Continuous disclosure laws provide that confidence to the small investors who need it.
Naturally, the Business Council of Australia supports this measure being made permanent, as its members struggle with the uncertainty created by lockdowns. As the Australian Stock Exchange has noted in response to the pandemic, a listed company's continuous disclosure obligations don't extend to predicting the unpredictable. It's important to note that the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission have cautioned against weakening continuous disclosure laws. But we are living in very different times, with businesses that employ millions of Australians reeling under sudden lockdowns that they have no way to predict or prevent. This climate of uncertainty has no end in sight.
One Nation considers the business community will need time for the current situation to return to something resembling normality, when the impact of these amendments can be determined. That's why I've asked the government to amend this legislation and insert a statutory review mechanism. The review will be conducted within six months after the second anniversary of the bill's commencement. The review will be conducted by an independent expert. The government must table the review and must make a response within three months of tabling it. This amendment will also insert a sunset clause. In the event the review does not take place or the report is not acted upon then the amendments to schedule 2 will lapse at the end of the review and implementation period. We must make sure small mum-and-dad investors are protected from the predations of insider trading. One Nation will support the bill with those important amendments.