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Thursday, 15 May 2014
Page: 3838

Mr CIOBO (MoncrieffParliamentary Secretary to the Treasurer) (09:28): I move:

That this bill be now read a second time.

The establishment of a deep and liquid retail corporate bond market will provide benefits to businesses and investors.

A strong retail corporate bond market will provide a viable funding source for Australian companies without foreign currency risk and frees up space on lending institutions' balance sheets for investment in other parts of the economy.

For investors, the reforms in this bill will provide an opportunity for them to diversify their risk and access a new source of fixed income which is increasingly in demand by older Australians.

The bill is further evidence of the government's commitment to reduce regulatory burdens on business and reduce unnecessary costs.

The measures in the bill require companies to offer simple corporate bonds through an offer-specific prospectus, provided they have lodged a base prospectus with ASIC for the purpose of making an offer under the new two-part simple corporate bond prospectus regime.

This new disclosure regime will reduce costs for bond issuers as it will enable the bond issuer to incorporate or refer to information already disclosed by the bond issuer as part of the disclosure material.

The base prospectus will also be able to be used for up to three years for subsequent tranches of bond issues where the information remains current.

The bill also removes the deemed civil liability that applies to company directors and provides clarification around the reasonable steps required to satisfy the due diligence requirements in respect of directors' criminal liability.

Thirdly, the bill contains amendments to the Corporations Act which will put in place architecture to enable parallel trading of simple corporate bonds in the wholesale and retail markets.

Unlike the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 that was brought forward by the previous government last year, this bill will apply the less burdensome disclosure obligations to bonds with a maturity of up to 15 years.

The reforms in the bill before us today are a significant advance on the government's goal of providing opportunities for business and encouraging the development of a deep and liquid bond market in Australia.

While the bill will reduce the regulatory burden on issuers of corporate bonds, it also ensures that appropriate standards of consumer protection are maintained.

This bill delivers on the recommendation in the Johnson report, Australia as a financial centre: building on our strengths, which recommended that government 'reduce regulatory requirements on corporate debt issuance to retail investors'.

Full details of this bill are contained in the explanatory memorandum.

Debate adjourned.