Coalition Senators' Additional Comments

Background

1.1Coalition Senators note that the bill revives and expands upon measures introduced in the 46th Parliament but lapsed before the last federal election.[1]

1.2The bill implements initial recommendations from the Australian Law Reform Commission’s review into financial services legislation, which was commissioned by the former Coalition Government.

1.3Coalition Senators note the significant work of the last government in modernising business communications, particularly reforms that were recommended by the Select Committee on Australia as Technology and Financial Centre.[2]

1.4Further to that, we note the Corporations Amendment (Meetings and Documents) Act 2022, which was introduced by the previous government and came into effect on 22 February 2022.

1.5Stakeholders have noted that since this legislation came into effect, businesses have saved millions of dollars that would otherwise be required for expenditure on having company documents signed and distributed physically.[3]

1.6Compliance costs have been flagged by submitters as a key issue, and the reason why the bill currently before the committee enjoys wide support.[4]It expands upon previous legislation, by expanding the amount of documents that can be signed electronically to all documents in the Corporations Act 2001.[5]We welcome the regulatory cost reduction, which the Explanatory Memorandum estimates would be an average of $59.3 million.[6]

1.7This bill provides clarity to industry on which documents can and cannot be signed electronically. The bill is also an important step in implementing much needed rationalisation of our corporate law, by simplifying the Corporations Act 2001 and rationalising ASIC instruments into primary law, amongst other things.

Potential issues and opportunities for further reform

1.8Chartered Accountants Australia and New Zealand have noted that there is more to be done in this area to reduce costs, and the government should move quickly on this in addition to working with state and territory governments to streamline laws across jurisdictions.[7]

1.9As an example of further reform, Clubs Australia have recommended extending the ‘electronic communications regime to include documents that the company is required to give or send to members pursuant to its constitution’.[8]

1.10Some submitters flagged some potential unintended consequences that could come about as a result of the proposed changes, and also noted some options for further policy development coming out of these schedules.

1.11The Australian Payments Network has said they support the bill’s repeal of certain requirements for cheque payments in the Excise Act 1901 and the Small Superannuation Accounts Act 1995, but advocate for further proposals to change the Cheques Act 1986 and other Commonwealth legislation in line with this policy reform programme.[9]

1.12The Australian Institute of Company Directors (AICD) have noted the need for the appropriate safeguards to ensure there is not a misuse of personal information by bidders in relation to takeover bid documents that are sent electronically between entities. They argue that there should be an additional requirement that personal information should be disposed of by a bidder entity when such information is no longer required for the takeover bid.[10]

1.13Several submitters raised some concerns with respect to changes which enable regulators to conduct hearings and examinations virtually.

1.14It was noted that in order to ensure procedural fairness, and to reduce the risk of technical difficulties prejudicing the presentation of evidence, there may be a need for a ‘clear set of public principles for determining when procedural fairness considerations will favour physical attendance’.[11]

1.15The Law Council of Australia (Law Council) said that it ‘would be appropriate to reconsider the breadth of circumstances in which virtual technology methods should be permitted’ out of concerns for procedural fairness.[12]They note that there should be consideration given to whether a participant can request a hearing take place in person and whether the regulator should be required to accept that request. Further to that, the Law Council note that the phrase ‘reasonable opportunity to participate’ may not be appropriate given an examination by a regulator is not voluntary.[13]

1.16In Schedule 2, there is also the issue regarding a proposed change to the definition of ‘special resolution’ in the Corporations Act 2001, which the Law Council has said is an erroneous change based on a misreading of their recommendation.[14]

1.17We note and welcome an amendment put forward and agreed to in the House of Representatives to rectify this error.[15]

1.18The Australian Retail Credit Association has suggested that the publication requirements in Schedule 1 do not adequately address situations where an ‘IT or technological issue impacts the visibility or access to the relevant notice’.[16]

1.19These are but some among several issues that have been identified by submitters and looked at in the majority report.

Conclusion

1.20Coalition Senators note the various concerns raised by submitters, and other technical concerns over certain phrases used in the drafting of this legislation that may bring about unintended consequences.

1.21On balance, these reforms significantly advance the work of the previous Coalition Government in reducing the complexity of Australia’s corporate law, and in reducing compliance costs and onerous red tape for businesses as they go about their business.

1.22Coalition Senators agree with the committee view that these further matters should be considered and addressed by further changes made through Treasury’s ongoing Law Improvement Program. We call upon the government to engage with stakeholders to ensure these issues are considered in future legislation.

1.23Coalition Senators recommend that the bill be passed.

Senator Andrew Bragg

Deputy Chair

Liberal Senator for New South Wales

Senator Dean Smith

Member

Liberal Senator for Western Australia

Footnotes

[1]Parliament of Australia, Treasury Laws Amendment (Modernising Business Communications) Bill 2022, https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6852 (accessed 1 March 2023).

[2]Select Committee on Financial Technology and Regulatory Technology, Interim Report, September 2020, pp. vii–xi.

[3]DocuSign, Submission 3, p. 2.

[4]Financial Services Council, Submission 1, p. 1; Australian Institute of Company Directors (AICD), Submission 9, p. 2.

[5]DocuSign, Submission 3, p. 2.

[6]Revised Explanatory Memorandum, p. 2.

[7]Chartered Accountants Australia and New Zealand, Submission 6, p. 1.

[8]Clubs Australia, Submission 8, p. 2.

[9]Australian Payments Network, Submission 4, pp. 2–4.

[10]AICD, Submission 9, pp. 2–3.

[11]AICD, Submission 9, p. 3.

[12]Law Council of Australia, Submission 7—Attachment 1, p. 2.

[13]Law Council of Australia, Submission 7—Attachment 1, p. 2.

[14]Law Council of Australia, Submission 7, pp. 2–3.

[15]See Supplementary Explanatory Memorandum, pp. 1 and 3.

[16]Australian Retail Credit Association, Submission 5, pp. 5–6.