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Monday, 27 June 1994
Page: 2054

Senator SPINDLER (7.02 p.m.) —The Senate tonight is discussing the Corporations Legislation Amendment Bill. There is no central theme to the bill. The amendments are largely designed to finetune certain aspects of the corporations law and, to a limited extent, streamline its provisions.

  The bill is divided into seven schedules. The first schedule confers jurisdiction on lower courts for matters arising under corporations law. Currently, there is concern that the magistrates and district courts do not have such jurisdiction and this could well thwart the initiation of legitimate actions because people cannot afford to bring action in the superior courts. These concerns are addressed in schedule 1 conferring on lower and intermediate courts, civil jurisdiction in respect of corporate law claims. However, jurisdiction will not be granted where it involves high level discretionary powers.

  Schedule 2 makes changes to the clearing house electronic subregister system known as CHESS. The Corporate Law Reform Act 1992 provides for the electronic settlement of the transaction on the Australian Stock Exchange. It enables the Stock Exchange to introduce a new clearing house electronic subregister system through the establishment of an approved securities clearing house.

  Schedule 3 implements a decision of the Ministerial Council for Corporations and the Ministerial Council for Financial Institutions who agreed on the principles by which the interface of corporations law and the financial institutions legislation should be rationalised. At present, the activities of financial institutions are regulated by both the corporations law and state and territory financial institutions legislation. These financial institutions are principally building societies and credit unions. Schedule 3 then makes provision to implement the rationalisation decision in relation to the companies and securities law schemes.

  The amendments that the government is making in this bill will mean that: the fundraising and market offence provisions of the corporations law are to apply to financial institutions with certain specified exemptions; the duties of officers and charges over the property of financial institutions are to be regulated solely by financial institutions legislation; and the registration of financial institutions under the corporations law as registrable Australian bodies will no longer be required. These appear to be basically worthwhile micro-economic reforms, except one should perhaps note that we are, in one sense, fragmenting the system again and moving away from a central corporation system in this respect and giving some jurisdiction to state based legislation. No doubt the system will need to be monitored on this aspect to ensure that the move has been adequately prepared and that it will function adequately in future.

  Schedule 4 contains provisions in relation to the operations of the corporations and securities panel. The amendments are designed to change the way the panel makes its decisions in a number of ways. Currently, upon application by the Australian Securities Commission, the panel examines such matters as corporate takeover conduct and can make a declaration of unacceptable conduct. The panel may also make an order prohibiting certain conduct and its orders are enforceable in the Federal Court.

  This panel was created as a fact-finding body to assess market standards and market behaviour and not matters of a technical or legal nature. However, in the panel's first case, the Titan Hills matter, there was a perceived inadequacy in the panel's procedure and its inability to deal with matters expeditiously. It is for this reason that the government has reviewed the panel's procedures. One of the provisions which has provoked some extensive comment and which we have looked at very closely is the suggestion that parties before the panel should not have, as of right, the possibility of having a representative on their behalf address the panel.

  The provisions do not exclude an adviser being present and do not prohibit the provision of advice and assistance while the matter is before the panel. It merely excludes, as of right, the possibility of having the panel addressed by that separate representative, except by leave of the panel. This is a provision that the government has agreed to following concerns expressed on this matter. The Australian Democrats have given this some considerable consideration and weighed up the balance between allowing the panel as a fact-finding body to proceed quickly and expeditiously, relying on the knowledge of its panel members of the securities industry in a practical sense, rather than being held up and bogged down in complicated legal argument. This provision therefore, in our view, has some merit and the Australian Democrats will be supporting the government on this and not supporting the amendment that has been foreshadowed by the coalition parties.

  We are cognisant of the fact that where a matter before the panel is, in the view of one of the parties, dealt with in an unsatisfactory way, in a way that it is felt legal representation is required, the matter can be brought before the Federal Court where legal representation is available as a matter of course. If that avenue had not been available, our decision may well have been different.

  The other matter that has agitated a number of people—and this is a weighty matter—is the exclusion of the rules of natural justice. The government has modified once again its position on this issue and has inserted a provision which reads:

It is intended that this division and the regulations will set out procedural requirements that equate to the rules of natural justice.

We are concerned about this provision. It is certainly better than the original one that the government sought to include, which simply would have excluded the operation of the rules of natural justice and which the Australian Democrats certainly would have opposed.

  In the current configuration we do not raise an objection and will not vote against this clause, as amended by the government. But we would like to foreshadow that we will certainly monitor very closely the regulations that are made under this scheme to ensure that basically the principles of natural justice are observed within the objectives of the panel that will operate under this legislation. We want to ensure that parties before the panel do not lose their proper legal rights under the rules of natural justice. As indicated, the Australian Democrats will be supporting this legislation.