Footnotes

Chapter 1 - Introduction

[1]           See Corporate Law Economic Reform Program, Proposals for Reform: Paper No.1 (Accounting Standards – Building international opportunities for Australian business): Paper No. 2 (Fundraising – Capital raising initiatives to build enterprise and employment); Paper No. 3 (Directors’ Duties and Corporate Governance – Facilitating innovation and protecting investors); Paper No. 4 (Takeovers – Corporate control: a better environment for productive investment); Paper No. 5 (Electronic Commerce: Cutting cybertape – building business).

[2]           See Financial System Inquiry, Final Report, March 1997.

[3]           Investment and Financial Services Association, Submission 12, p 2.

[4]           Australian Accounting Standards Board, Submission 11, p 1.

[5]           Securities Institute of Australia, Submission 9, p 1.

[6]           Australian Stock Exchange, Submission 5, p 2,

[7]           Australian Chamber of Commerce and Industry, Submission 3, pp 1-2.

Chapter 2 - Directors' Duties and Corporate Governance

[1]           Subsection 180(2) clarifies and confirms the common law position that the Courts will rarely review bona fide business decisions. The Explanatory Memorandum observes that “the statutory formulation will provide a clear presumption in favour of a director’s judgement” (para 6.4).

[2]           The statutory business judgement rule does not extend protection to directors from liability for decisions made in connection with areas of the Law already governed by a separate liability regime, such as insolvent trading or a defective prospectus.

[3]           Subsection 180(1).

[4]           Explanatory Memorandum, paras 6.93-94.

[5]           Explanatory Memorandum, para 6.93.

[6]           Section 191. The exceptions relate to certain insurance contracts. The changes proposed in the Bill bring into line the disclosure obligation of directors of public and proprietary companies.

[7]           Australian Stock Exchange, Submission 5, pp 12–13.

[8]           Dr Greg Bateman, Submission 29, pp 2-3.

Chapter 3 - Takeovers

[1]           Explanatory Memorandum, para 1.4.

[2]           Section 611.

[3]           Section 659B. Since the Panel was established in 1991, only three matters have been brought before it for adjudication.

[4]           Section 657C.

[5]           Sections 657D and 657E.

[6]           Section 664F.

[7]           Sections 51AAB and 51AF of the Trade Practices Act 1974. The definition of financial service is the same as that used in Section 12BA of the ASIC Act and includes providing financial products such as securities and futures contracts.

[8]           Section 995A.

[9]           Section 621(2).

[10]         Section 611, Item 5.

[11]         Section 655A.

[12]         Australian Institute of Company Directors, Submission 22, p 2.

[13]         Explanatory Memorandum, para 7.10.

[14]         Australian Institute of Company Directors, Submission 22, p 4.

[15]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 105.

[16]         Section 622(2).

[17]         Companies and Securities Advisory Committee, Recommendations for reform of ss 621(4) and 623(2) & (3) of the Corporate Law Economic Reform Program Bill 1998, December 1998, p 4.

[18]         Australian Institute of Company Directors, Submission 22, p 2.

[19]         This refers to the paper produced by the Legal Committee of the Companies and Securities Advisory Committee, Anomolies in the Takeover Provisions of the Corporations Law, March 1994.

[20]         Mr Ronald Forster, Australian Institute of Company Directors, Committee Hansard, 22 January 1999, p 139-140.

[21]         See ASIC Information Release 95/31 and section 641 of the Corporations Law.

[22]         CASAC’s view that, in principle, a bidder should be free to acquire up to 20 per cent unfettered by takeover regulation is consistent with the CLERP Bill policy underlying the mandatory bid rule; that is, to allow bidders to build up a strategic stake before making their bid and to minimise the uncertainty surrounding the takeover bid process.

[23]         Australian Institute of Company Directors, Submission 22, p 3.

[24]         Australian Institute of Company Directors, Submission 22, p 3.

[25]         Explanatory Memorandum, paras 7.92-93.

[26]         Securities Institute of Australia, Submission 9.

[27]         Australian Institute of Company Directors, Submission 22, pp 4-5.

[28]         Mr Peter Lee, Deputy Director-General, UK Panel on Takeovers and Mergers, Hansard 22 March 1999, p 175.

[29]         Mr Peter Lee, Deputy Director-General, UK Panel on Takeovers and Mergers, Hansard 22 March 1999, p 178-179.

[30]         Mr Peter Lee, Deputy Director-General, UK Panel on Takeovers and Mergers, Hansard 22 March 1999, p 179.

[31]         Mr Peter Lee, Deputy Director-General, UK Panel on Takeovers and Mergers, Hansard 22 March 1999, p 179.

[32]         Explanatory Memorandum, para 2.41.

[33]         Dr Gordon Elkington, Submission 13, p 4.

[34]         Explanatory Memorandum, para 7.31.

[35]         Companies and Securities Advisory Committee, Compulsory Acquisitions and Buy-outs, March 1999, p 2.

[36]         Companies and Securities Advisory Committee, Compulsory Acquisitions and Buy-outs, March 1999, p 3.

[37]         Section 664F.

[38]         Mr John Jarrett, Mr Gordon Elkington, Mr Ted Rofe, Dr Gordon Elkington; Committee Hansard, 22 January 1999.

[39]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 109.

[40]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 110.

[41]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 110.

[42]         Mr Ted Rofe, Australian Shareholders’ Association, Committee Hansard, 22 January 1999, p 154.

[43]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 110.

[44]         Mr Ronald Forster, Australian Institute of Company Directors, Committee Hansard, 22 January 1998, p 139.

[45]         Mr John Jarrett, Securities Institute, Committee Hansard, 22 January 1999, p 109.

[46]         Review of Business Taxation, A Platform for Consultation, Discussion Paper 2 Volume 1, February 1999, pp 294-298.

[47]         Review of Business Taxation, A Platform for Consultation, Discussion Paper 2 Volume 1, February 1999, p 294.

[48]         Section 621(3).

[49]         Sections 615(a) and 619(3).

[50]         Australian Stock Exchange, Submission 5c.

[51]         Australian Shareholders Association, Submission 20b, p 5.

Chapter 4 - Fundraising

[1]           Explanatory Memorandum, para 1.5.

[2]           The introduction of shorter prospectuses gives effect to Recommendation 10 of the Wallis Inquiry. Issuers will be able to omit material that only professional analysts and advisers would be interested in.

[3]           Subsections 709(2) and (3) of the Bill.

[4]           Sections 709, 715.

[5]           Subsection 734(5)(a). The Explanatory Memorandum notes that “Relaxing the advertising restrictions for quoted securities will not compromise investor protection as information regarding the issuer and the nature of the securities is publicly available” (para 8.16).

[6]           This reform originates in the Simplification Program (see Corporations Law Simplification Program, Fundraising – Trade Practices Act, s 52, November 1995, pp 18-21). The Wallis inquiry also examined this issue and similarly recommended that section 52 of the Act (and State Fair Trading provisions) should no longer apply. The Wallis inquiry concluded that the balance struck in the Corporations Law between positive disclosure obligations and liability for non-compliance was undermined by the superimposed Trade Practices Act liability (Financial Systems Inquiry, March 1997, pp 45-48).

[7]           Subsection 729(1).

[8]           Sections 731 and 732. Under the current law, different defences apply to different persons associated with the prospectus.

[9]           See subsections 708 (1)-(7). The provisions include a new fundraising mechanism for these enterprises: an Offer Information Statement (OIS). They will be able to raise up to $5 million by way of an OIS rather than a prospectus.

[10]         The  CLERP Discussion Paper stated that “Maintenance of the current immunity for government fundraising would be inconsistent with the principles of competitive neutrality agreed by the Commonwealth, State and Territory Governments, arising out of the National Competition Policy report.” (Proposal for Reform: Paper No. 2 Fundraising, p 68).

[11]         Section 720.

[12]         Mr Robin Brown, Submission 4, p 4.

[13]         Mr Alan Cameron, Committee Hansard, 4 June 1998, CS4-CS7, CS24-CS27.

[14]         Australian Institute of Company Directors, Submission 22a.

[15]         Australian Consumers Association, Submission 36.

[16]         Section 707.

[17]         Section 708.

[18]         Section 707(3).

[19]         Section 707(4).

[20]         Australian Stock Exchange, Submission 20.

[21]         Australian Stock Exchange, Submission 20.

[22]         Australian Stock Exchange, Submission 5c.

[23]         Securities Institute of Australia, Submission 9b.

[24]         Investment and Financial Services Association, Submission 12a.

[25]         Australian Shareholders’ Association, Submission 20b, p 5.

[26]         Australian Investors Association, Submission 37.

[27]         Minister for Financial Services and Regulation, the Hon Joe Hockey, Committee Correspondence.

[28]         Australian Stock Exchange, Submission 5b.

[29]         Section 724(2).

[30]         Section 737.

[31]         Sections 736 and 738.

[32]         Australian Stock Exchange, Submission 5b.

[33]         Australian Stock Exchange, Submission 5b.

[34]         Australian Stock Exchange, Submission 5b.

[35]         Australian Stock Exchange, Submission 5c.

[36]         Australian Shareholders’ Association, Submission 20b, p 3.

[37]         Minister for Financial Services and Regulation, the Hon Joe Hockey, Committee Correspondence.

[38]         Section 741.

[39]         Investment and Financial Services Association, Submission 12a.

[40]         Investment and Financial Services Association, Submission 12a.

[41]         Section 722(1).

[42]         Section 723(3).

[43]         Australian Shareholders’ Association, Submission 20b, p 4.

[44]         Minister for Financial Services and Regulation, the Hon Joe Hockey, committee correspondence.

[45]         Section 1031(1).

[46]         Sections 723(3) and 625(3).

[47]         Australian Shareholders’ Association, Submission 20b, p 4.

[48]         Securities Institute of Australia, Submission 9. See Corporate Law Economic Reform Program, Draft Legislative Provisions, section 28, p 42.

[49]         Explanatory Memorandum, paras 8.68-69.

Chapter 5 - Accounting standards

[1]           Sections 225(1), (2).

[2]           Under sections 229 and 231 of the accounting standards provisions of the Bill, any standard made or formulated by the AASB must have been developed with regard to its suitability for different types of entities and must have been the subject of a prior cost/benefit analysis by the AASB of the likely effect on the entity to which it applies.

[3]           Mr David Boymal, Committee Hansard, 13 July 1998, p 22

[4]           Mr David Boymal, Committee Hansard, 13 July 1998, p 31

[5]           Mr David Boymal, Committee Hansard, 13 July 1998, p 23.

[6]           See AASB, Policy Statement 6 – ‘International Harmonisation Policy’. The recent Wallis Inquiry reaffirmed the view that the AASB should, where practicable, harmonise Australia’s accounting standards with international standards (Recommendation 12 of the Financial System Inquiry, Final Report, March 1997).

[7]           Subsection 225(2)(e).

[8]           Mr David Boymal, Australian Accounting Standards Board, Committee Hansard, 13 July 1998, p 64.

[9]           Australian Society of Certified Practising Accountants and the Institute of Charted Accountants in Australia, Submission 6, p 11.

[10]         Frank Micallef, Committee Hansard, 13 July 1998, p 74-75.

[11]         Explanatory Memorandum, para 9.6.

[12]         Explanatory Memorandum, para 9.31.

[13]         Explanatory Memorandum, paras 9.42-43.

[14]         Explanatory Memorandum, para 9.51.

Chapter 6 - Conclusions and recommendations

[1]           Policy Framework, Corporate Law Economic Reform Program.

Australian Labor Party Members' Report

[1] “How to make mergers work.” The Economist. 9 January 1999. Page 13-14.

[2] “How to merge: After the deal.” The Economist. 9 January 1999. Page 19-21.

[3] Mergers and Acquisitions Index.  Ernst & Young Corporate Finance Pty Limited. 1999.

[4] Submission to the Inquiry by Mr AEF Rofe, Chairman of the Australian Shareholders’ Association Limited. Submission number 20.  19 January 1999.

[5] Submission to the Inquiry by Australian Institute of Company Directors.  Submission number 22.  8 December 1998.

[6] Submission to the Inquiry by Deacons Graham & James.  Submission number 23.  11 December 1998.

[7] Evidence provided by Mr John Dallas Jarrett, National Policy Manager of the Securities Institute of Australia, in a hearing in Sydney on Friday 22 January 1999.

[8] Submission to the Inquiry by Dr GP Stapledon, Senior Lecturer, Law School, University of Melbourne.  Submission number 1.  5 May 1998.

[9] For example, AWA Ltd v Daniels t/a Deloitte Haskins ans Sells (1992) 10 ACLC 933.

[10] Evidence provided by Mr John Dallas Jarrett, National Policy Manager of the Securities Institute of Australia, in a hearing in Sydney on Friday 22 January 1999.

Supplementary Report by Senator Andrew Murray

[1] First Report of the Committee on Standards in Public Life (the Nolan Committee), (1995) Cm 2850-I, para. 30.

[2] Ibid, para. 32.

[3] Ibid, para. 36.

[4] Ibid, para. 41.

[5] Ibid, para. 46.

[6] Ibid, para. 46.

[7] Ibid, para. 46.