Tuesday, 13 March 2012
Corporations Amendment (Phoenixing and Other Measures) Bill 2012, Financial Framework Legislation Amendment Bill (No. 1) 2012; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speeches read as follows—
CORPORATIONS AMENDMENT (PHOENIXING AND OTHER MEASURES) BILL 2012
Administrative winding up of abandoned companies
The first set of measures contained in this Bill strengthens the powers of the Australian Securities and Investments Commission (ASIC) to place companies into liquidation when they have been abandoned by their directors.
This Bill delivers part of the Gillard Government's Protecting Workers' Entitlements Package election commitments.
When a company fails, employees can often end up missing out on some or all of their entitlements – such as unpaid wages and certain other accrued benefits. The Government's employee assistance scheme, the General Employee Entitlements and Redundancy Scheme or 'GEERS', aims to protect workers' entitlements in these situations, so that employees of failed companies can recoup many of their unpaid entitlements as quickly as possible.
Under GEERS, employees of a failed company are only able to access the scheme where the company that has employed them fails and is placed into liquidation. However, sometimes the directors of a failed company simply abandon the company, rather than go through the appropriate processes to wind-up the company. At present where this occurs, employees are not able to access their unpaid entitlements under GEERS.
If a company has been abandoned but has not yet been deregistered, employees (or ASIC on their behalf) currently have to apply to the courts and incur legal costs in order to place the abandoned company into liquidation before they can access GEERS.
This is further complicated by the fact that where the abandoned company has been deregistered by ASIC or by its members, ASIC or the company's employees have to apply to the courts to reinstate the company and, only once the company is reinstated so that it can be placed into liquidation, could any potential employee eligibility for GEERS be triggered.
To address this impediment and safeguard the rights of employees of failed companies to access GEERS, today I introduce legislation that will provide ASIC with the following discretionary powers:
I anticipate that ASIC will issue guidance to industry on the circumstances in which this power will be used.
Publication of corporate insolvency notices
The second set of measures in the Bill will facilitate the future requirement of public notices in corporate external administrations to be published on a single publicly available website.
There are a range of notices that, in the course of external administrations, must be published in the print media or the ASIC Gazette. These public disclosure obligations are in addition to obligations for petitioning creditors and for external administrators to communicate directly with known creditors to inform them of certain events.
There are significant costs to external administrations in complying with these obligations. These costs are ultimately borne by creditors through reduced returns. There are also costs to creditors in monitoring numerous newspapers for relevant notifications – particularly as there is no set newspaper or day of the week on which notices must be published.
The Bill will amend the Corporations Act to remove the requirement for these notices to be published in newspapers or the ASIC Gazette. Instead, the Bill requires these notices to be published in a "prescribed manner" and provides a power for regulations to be made that will prescribe that manner. These amendments will facilitate the future provision of corporate external administration notices via a single website.
As part of the reform package to modernise and harmonise Australia's insolvency industry, which I released together with the Attorney-General on 14 December 2011, the Government announced that ASIC would establish a corporate external administration notices website by 1 July 2012. Online publication of notices will replace approximately 53,000 newspaper advertisements over the next four years, saving external administrations around $15 million over that same period.
The reforms will apply to both advertisement requirements and gazettal requirements.
Removing the requirement for these notices to be published in newspapers, and instead enabling them to be published in a prescribed manner, facilitates the publication of these notices on a single website. Requiring all public notices to be lodged on a single website ensures that these notices are publicly accessible at one location; and able to be searched and accessed by stakeholders quickly and easily.
In addition to the two key reforms I have outlined, the Bill also contains some miscellaneous amendments in relation to paid parental leave and the powers of the Court in relation to company reinstatements.
The Ministerial Council for Corporations has been consulted and has approved the amendments contained in this Bill.
This Bill delivers part of the Gillard Government's Protecting Workers Entitlements Package election commitments.
It strengthens ASIC's powers to place companies into liquidation when they have been abandoned by their directors. This Bill will benefit the employees of these abandoned companies, by enabling quicker access to their unpaid entitlements through the Government's employee assistance scheme.
The Bill also paves the way for a more streamlined and cost-effective process involving the publication of insolvency notices via a single, publicly available website. This will benefit creditors of companies in external administration, by reducing the costs of complying with these regulatory obligations.
The Financial Framework Legislation Amendment Bill (No. 1) 2012 would, if enacted, amend 4 Acts and repeal 2 Acts across 3 portfolios. This will help to clarify aspects of the Commonwealth's financial framework.
It is the ninth Financial Framework Legislation Amendment Bill since 2004. It forms part of an ongoing program to address financial framework issues as they are identified, taking a collaborative and whole-of-Government approach.
The breadth of appropriation, governance and financial management issues across the Government compels continued attention. For this reason, the Department of Finance and Deregulation works with all parts of Government, in a strong culture of collaboration, to promptly address financial framework issues in legislation once issues emerge and solutions are designed.
Specifically, this Bill would amend 4 Acts, as follows.
First, the Bill would amend the Auditor-General Act 1997 to clarify that the Auditor General may accept an appointment under the Corporations Act 2001 as the auditor of any company that the Commonwealth controls. This will align the Auditor-General Act 1997 with amendments made to expand the meaning of Commonwealth control, which were made in 2008 to the Commonwealth Authorities and Companies Act 1997.
Second, the Bill would amend the Commonwealth Authorities and Companies Act 1997 itself to:
Third, the Bill would amend 2 minor misdescribed provisions that appear in the Financial Framework Legislation Amendment Act 2010, which sought to update the Commonwealth Authorities and Companies Act 1997 (to replace references to "common law and in equity", and "common law or in equity", with the phrase "under the general law").
This short Bill is, accordingly, another step to help ensure that specific areas of the Commonwealth's financial framework remain effective and up-to-date.
Ordered that further consideration of the second reading of these bills be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.
Ordered that the bills be listed on the Notice Paper as separate orders of the day.