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Chapter 2
Bodies established under Parts 9–11 of the ASIC Act
2.1
This chapter considers the 2013–14 annual reports of the:
-
Companies Auditors and Liquidators Disciplinary Board (CALDB);
-
Corporations and Markets Advisory Committee (CAMAC); and
-
The Takeovers Panel (the Panel).
Companies Auditors and Liquidators Disciplinary Board
2.2
CALDB was first established as an independent statutory body in 1989
and is currently established by Part 11 of the Australian Securities and
Investments Commission Act 2001. Its primary purpose, in the administration
of Australia's financial services system, is to hear applications and consider
cancellation or suspension of a liquidator's or auditor's registration. The
Board's casework is not self-generated as it holds no powers to instigate
applications. Rather, applications are brought by either ASIC or the Australian
Prudential Regulation Authority (APRA) for the Board's adjudication.[1]
Accordingly, the Board operates as an expert disciplinary body for auditors and
liquidators in Australia.
2.3
CALDB's 2013-14 annual report states:
The responsibilities conferred on CALDB by the Corporations
Act are intended to provide an incentive to registered auditors and liquidators
to maintain high professional standards. CALDB’s jurisdiction to cancel or
suspend the registration of an auditor or liquidator also has a public
protective and educative role.[2]
Annual report of CALDB
2.4
The ASIC Act directs that the annual report is to 'describe the
operations' of CALDB for the relevant financial year.[3]
2.5
New applications received by CALDB are categorised as either
'administrative' or 'conduct'. There were four new applications to CALDB by
ASIC in 2013–14. All four of these applications were conduct matters. No
administrative applications were received. Two of the matters received related
to auditors, and two related to liquidators.[4]
2.6
During 2013–14 six matters were dealt with, leading to orders being
issued for either cancellation or suspension of registration. Two matters
remained uncompleted and will carry over to the 2014–15 period.[5]
2.7
The report provides the following statistics regarding the number
of matters before the Board.
Figure 2.1: Results by nature of sanction of cases before
CALDB
Results of application
|
09–10
|
09–10
|
10–11
|
11–12
|
12–13
|
13–14
|
Registration
cancelled
|
1
|
1
|
‑
|
1
|
1
|
3
|
Registration
suspended
|
2
|
2
|
‑
|
‑
|
‑
|
3
|
Admonition
|
‑
|
‑
|
‑
|
‑
|
‑
|
‑
|
Reprimand
|
‑
|
‑
|
‑
|
‑
|
‑
|
‑
|
Undertakings
required to be given
|
2
|
2
|
‑
|
‑
|
‑
|
2
|
Dismissed
|
‑
|
‑
|
‑
|
‑
|
‑
|
‑
|
Withdrawn
by ASIC
|
‑
|
‑
|
‑
|
‑
|
‑
|
‑
|
Source: CALDB,
Annual report: 2013–14, Table: 'Results by nature of sanction', p. 7.
2.8
An analysis of data provided in previous annual reports indicates
that the Board's caseload has significantly declined since 2003–04 (see Figure
2.2). However, the annual report indicates that during 2013–14 an increased
hearings workload from 33 to 71 person days contributed to a significant
increase in member's fees, from $175 thousand in the previous year to $456
thousand in 2013–14.[6]
2.9
A decision of CALDB may be appealed to the Administrative Appeals
Tribunal (AAT) or to the Federal Court of Australia.[7]
During the 2013–14 financial year, two applications for decisions made by CALDB
were referred to the AAT. The first application was withdrawn prior to any
decision of the AAT, and the outcome of the second application is not yet
known. No applications for judicial review were made during this period.[8]
Figure 2.2: Number of cases referred: 2003–04 to 2013–14
Financial year
|
Auditors
|
Liquidators
|
2013–14
|
2
|
2
|
2012–13
|
1
|
4
|
2011–12
|
5
|
2
|
2010–11
|
2
|
1
|
2009–10
|
0
|
0
|
2008–09
|
11
|
1
|
2007–08
|
5
|
0
|
2006–07
|
7
|
0
|
2005–06
|
9
|
3
|
2004–05
|
23
|
12
|
2003–04
|
32
|
1
|
Source: CALDB, Annual report: 2013–14, p. 6; CALDB, Annual report: 2012–13, pp 7–8; CALDB, Annual
report: 2011–12, p.13; CALDB, Annual report: 2010–11, p.13; CALDB, Annual
report: 2009–10, pp 14–15; CALDB, Annual report:2008–09, pp 13–14;
CALDB, Annual report: 2007–08, pp 13–14; CALDB, Annual report:
2006–07, pp 13–14; CALDB, Annual report: 2005–06, p. 11; CALDB, Annual
report: 2004–05, p. 11; CALDB, Annual report: 2003–04, p. 10.
Committee view
2.10
The committee considers that CALDB has fulfilled its regulatory
and reporting responsibilities during the 2013–14 financial year. The committee
notes that the CALDB has implemented recommendations of the committee on CALDB
annual reports including:
-
clarifying whether matters are referred by ASIC or APRA;
-
information on whether any decisions were the subject of judicial
or Administrative Appeals Tribunal reviews; and
-
appropriate discussion of external scrutiny.[9]
2.11
The committee also notes that CALDB has implemented
recommendations of the Senate Economics Legislation Committee which suggested
that CALDB should include in the annual report a table of contents, information
on lodging Freedom of Information requests and information on salary ranges and
benefits.[10]
2.12
The committee will continue to monitor the capacity of CALDB to
operate independently from ASIC following the co-location with ASIC and the
provision of administrative support by ASIC.
Corporations and Markets Advisory Committee
2.13
The Corporations and Markets Advisory Committee (CAMAC) was first
established in 1989 and was subsequently established by Part 9 of the Australian
Securities and Investments Commission Act 2001.[11]
CAMAC's role in the administration of Australia's financial services system is
to provide informed and expert advice to the Minister about the content,
operation and administration of the corporations legislation, corporations,
financial products and markets.[12]
On its own initiative or at the Minister's request, CAMAC may provide advice or
recommendations about any matter connected with:
-
a proposal to make corporations legislation, or to make amendments
of the corporations legislation;
-
the operation or administration of the corporations legislation;
-
law reform in relation to the corporations legislation;
-
companies or a segment of the financial products and financial
services industry; or
-
a proposal to improve the efficiency of the financial markets.[13]
2.14
As detailed in the annual report, CAMAC states that its role was
'...to promote a sound and effective regulatory framework for corporate activity
and financial services and efficient financial markets'.[14]
2.15
CAMAC is divided into two committees, an Audit Committee and a Legal
Committee.[15]
During the 2013–14 financial year there were sub-committees for managed
investment schemes, crowd sourced equity funding and annual general meetings
and shareholder engagement.[16]
2.16
CAMAC was supported by a full time executive, which for the 2013–14
financial year consisted of three officers.[17]
2.17
There was interaction between ASIC and CAMAC, with CAMAC
receiving administrative assistance from ASIC's finance section, information
technology officers, payroll section and library.[18]
Proposal to abolish CAMAC
2.18
The
Commission of Audit considered that CAMAC's functions could be consolidated
into the Department of the Treasury.[19]
In May 2014 the Commonwealth Government, as part of the budget, announced
its decision to abolish CAMAC and its Legal Committee during the 2014–15
financial year.[20]
On 24 September 2014, the government released an exposure draft of legislation
to abolish CAMAC.[21]
The Australian Securities
and Investments Commission Amendment (Corporations and Markets Advisory
Committee Abolition) Bill 2014 (the CAMAC Bill) was introduced into the
Representatives on 4 December 2014. The CAMAC Bill was passed by the House of
Representatives on 2 March 2015 and introduced into the Senate on 3 March 2015.[22]
2.19
The CAMAC Bill
would amend the Australian Securities and Investments Commission Act 2001 (the
Act) to:
-
abolish the Corporations and Markets Advisory Committee (CAMAC)
by repealing Part 9 of the Act; and
-
provide transitional and savings arrangements reflecting the
cessation of CAMAC, including transferring CAMAC's records to the Department of
the Treasury.[23]
2.20
The cessation of CAMAC is expected to have a positive impact on
the fiscal balance of $2.8 million and an underlying cash of $3.1 million over
the forward estimates. These estimates make allowances for the costs of
shutting down CAMAC, such as employee redundancies and contract termination
costs.[24]
2.21
The Parliamentary Secretary to the Treasurer indicated that the business environment had also
changed and industry would continue to express its views to government on the
operation of corporations laws:
The professionalism and capacity of industry representative
groups is now much stronger, and business is quite capable of putting its views
to government without the need for an additional layer of taxpayer funded
bureaucracy.[25]
2.22
The government also indicated that the services that had been
provided by CAMAC would be provided in other ways, including:
-
the Department of the Treasury, as the policy agency that advises
the government in relation to corporate law, financial markets and financial
services;
-
the Australian Securities and Investment Commission (ASIC), which
has capacity to make recommendations on matters connected with corporate law,
financial products and service providers, and financial markets more broadly;
and
-
the Productivity Commission and the Australian Law Reform
Commission, in relation to undertaking reviews into the corporate regulatory
framework as referred by the government.[26]
2.23
On 12 February 2015, the Senate referred the provisions of the
CAMAC Bill to the Senate Economics Legislation Committee for inquiry and report
by 16 March 2015.[27]
The inquiry received evidence on issues including:
-
the high regard for CAMAC's work and processes;
-
value for money provided by CAMAC;
-
the replication of CAMAC's functions by other agencies; and
-
the continuing ability for states and territories to have input
into the reform of corporations law.[28]
2.24
While the Economics committee recognised that CAMAC had contributed
extensively to the development of reforms to corporations law in Australia, it came
to the following conclusions and supported the passage of the bill:
...the consolidation of the functions of CAMAC into the
Department of the Treasury is expected to improve coordination and
accountability and reduce the costs associated with separate governance
arrangements. It is also anticipated that this move will increase efficiency in
how public funds are used to deliver services to the community.
In addition, ASIC may on its own initiative, or when
requested by the Minister, advise or make recommendations to the Minister about
matters concerned with corporations legislation, the financial services
industry and financial markets.
The committee has considered the evidence and formed the view
that the abolition of CAMAC would generate savings as intended. It should also
be noted that the government would also retain the ability to access expert
advice on corporations legislation and related matters through the Department
of the Treasury and ASIC.[29]
Annual report of CAMAC
2.25
The annual report details CAMAC's activities during 2013–14.
Following the first stage of its inquiry into the regulation of managed
investment schemes, CAMAC published a report in August 2012. In March 2014
CAMAC published a discussion paper into proposals to improve Chapter 5C of the
Corporations Act. CAMAC invited public submissions; however, the Government
requested that this existing work be referred to Treasury.[30]
2.26
In September 2012, CAMAC published a discussion paper concerning
the future of the annual general meeting and shareholder engagement in Australia.
CAMAC conducted roundtable discussions and received submissions throughout
2013–14. CAMAC was moving toward completion of a broad-ranging report when it
was requested by government not to report but to transfer this work to Treasury.[31]
2.27
CAMAC was conducting a review of the regulation of Crowd Sourced
Equity Funding (CSEF). A discussion paper published in September 2013 took into
account the current position in Australia as well as international
developments. CAMAC delivered its report in May 2014, which noted that:
The report proposes a regulatory structure specifically designed
for CSEF, noting that this form of fundraising has the potential to encourage
and stimulate the innovative start-up and other small-scale enterprise sector,
with its significance for productivity, competitiveness and growth in the
Australian economy.
CAMAC’s proposals are deregulatory in that they seek to
overcome current legal impediments to Australian companies (issuers) raising
funds through CSEF.
In developing this structure, CAMAC closely considered recent
initiatives in key overseas jurisdictions, including the United States of
America, Canada, the United Kingdom and New Zealand, as well as developments at
the European Union level.[32]
2.28
The CAMAC annual report also noted progress towards the
implementation of its recommendations in its report, Shareholder Participation
in the Modern Listed Public Company. In April 2014 an exposure draft of the
Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014
was released which addressed CAMAC's recommendations on the obligation to hold a
general meeting on the request of 100 shareholders and improving the executive
remuneration disclosure regime in Australia.[33]
That bill was passed by the House of Representatives in November 2014 and the
Senate in March 2015.[34]
Committee view
2.29
The committee considers that CAMAC has fulfilled its regulatory
and reporting responsibilities during the 2013–14 financial year. The committee
will continue to monitor the progress of the proposal to abolish CAMAC, and the
way in which its previous functions are executed by the Treasury.
The Takeovers Panel
2.30
The Takeovers Panel (the Panel) was established by Part 10 of the
Australian Securities and Investments Commission Act 2001 as a peer
review body largely comprised of takeover experts, whose main purpose is the
resolution of takeover disputes. During a takeover bid, the Panel is able to declare
unacceptable circumstances with respect to the public interest in relation to
the affairs of a company, in addition to establishing orders to remedy those
circumstances.[35]
2.31
The Panel is also able to review decisions made by ASIC[36]
and maintains its operations with a rule making power.[37]
The Panel's annual report states that:
The Panel improves the certainty, efficiency and fairness of
Australia's takeovers market by:
-
resolving disputes in a fair, timely, consistent, informal and
sound manner; and
-
publishing clear, well-developed guidance.[38]
2.32
As at 30 June 2014, the Panel had 37 members, down from 48 at 30
June 2013.[39]
Members are nominated by the Minister and appointed by the Governor-General. Members
are chosen so that there is a mix of expertise, geographical representation and
gender.[40]
Annual Report of the Takeovers
Panel
2.33
There have been no amendments relevant to the Panel in the
current period. There was consultation on the Corporations
Legislation Amendment (Deregulatory and Other Measures) Bill 2014,
including a proposed amendment in relation to Panel members acting while
overseas.[41]
2.34
During the 2013–14 financial year, the Panel received 26
applications. This was below the yearly
average of 30 applications, though still greater than the 20 applications
received in 2012–13 and the 16 applications received in the 2011–12 year.[42]
2.35
The Panel declined to conduct proceedings for 50 per cent of the
applications it received.[43]
Over the previous decade, the proportion of applications for which the Panel
declined to conduct proceedings has grown steadily from 6% in 2001[44]
to 50% in 2013–14.[45]
The committee has
commented on this trend previously and will continue to monitor the trend in
the proportion of applications dismissed by the Panel.
2.36
Five declarations and/or orders were issued in 2013–14 and
undertakings were accepted for five matters. The Panel conducted proceedings
with five cases in which unacceptable circumstances were deemed to be present. Proceedings were
withdrawn in three cases throughout the 2013–14 year.[46] The issues raised in
applications included associations, rights issues, disclosure, lock-up devices
and shareholder intention statements.[47]
2.37
The annual report indicates an increase of time between a Panel
decision and its publication of reasons. The average number of calendar days
between a decision and the publication of reasons was 12.1 days for 2013–14, although
this is still down from the average of 36.4 calendar days for over a decade. The
time between receipt of an application and a decision also increased, with an
average of 19.2 days, up from an average of approximately 15 days since March
2000.[48]
2.38
The committee notes that during the year the Panel generated an
index of past decisions for future guidance. The
annual report indicates that the executive has undertaken a detailed
reorganisation of the Panel's database and statistics in relation to the 425
applications it has previously received. The executive is considering how this
can be published for research and comment.[49]
2.39
The Panel was subject to one judicial review regarding The
President's Club Limited. The Federal Court dismissed the proceedings with
costs on 5 June 2014. An appeal was lodged with the Full Federal
Court of Australia on 25 June 2014. The
Panel did not use its rule making power, nor
were any matters referred from the court during the financial year.[50]
2.40
The Panel maintains contact with the Australian Securities
Exchange (ASX), the Australian Competition and Consumer Commission (ACCC) and
with ASIC, with which the Panel has a Memorandum of Understanding. The annual report notes the Panel may refer
matters to ASIC that it considers ASIC should inquire into, if aspects of the
application may present concerns under the Corporations Act. The report also indicated
that the Panel was not the focus of any reports by the Australian National
Audit Office (ANAO) in 2013–14.[51]
Committee view
2.41
The committee considers that the Panel has fulfilled its
regulatory and reporting responsibilities during the 2013–14 financial year. The
committee notes that the Panel has implemented recommendations of the committee
(including commentary about external scrutiny in its annual reports) and recommendations
of the Senate Economics Legislation Committee (including statements in annual
reports on disability strategies).[52]
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