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Corporate law reform: good in parts



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i PETER COSTELLO, M.P. SHADOW ATTORNEY GENERAL AND SHADOW MINISTER FOR JUSTICE

CORPORATE LAW REFORM: GOOD IN PARTS

"The good thing about the Corporate Law Reform Bill 1992 is that the Government retreated from its original proposals", Mr Peter Costello, Shadow Attorney General and Shadow Minister for Justice, said today.

Mr Costello was responding on behalf of the Coalition to the Corporate Law Reform Bill 1992. The Bill, which runs to over 200 pages of amendments to the Corporations Law, is to be guillotined through the Parliament on Tuesday evening.

"The Government originally proposed a check list of directors' duties. After concerted opposition, the Government abandoned it and came forward with its current proposal which it is at pains to point out does not materially differ from the existing law, which raises the question as to whether the changes achieve

anything.

"But the Bill could have been much better if the Government had adopted a business judgment rule. It is no answer to say that the rule will be developed by Australian courts. That will take years of litigation to establish.

"Australian corporate law is now overwhelmingly imposed by the statute. If a business judgment rule is to be recognised it should be recognised in the statute. The failure to

legislatively provide such a rule has more to do with saving face than any sound policy by the Government.

"Provisions governing loans to directors are much better than those originally proposed by the Companies and Securities Advisory Committee, and better than the Government's first exposure draft. Nonetheless, the proposals still replace one

section of the Corporations Law with another 33, which highlights the fact that the complexity of the Corporations Law is worsening all the time.

"Whilst the Attorney General may pay lip service to the need to simplify the Corporations Law, the fact is every time he

intervenes legislatively - as he has in November 1990, May 1991, November 1991, and now - he intervenes to increase the complexity of prolix and complicated legislation. The complicated

Corporations Law is now a major cost factor in doing business in Australia. It is out of step with comparable jurisdictions overseas.

"The main task in Corporations Law is to simplify the law and reĀ­ direct it so that it harmonises with economic policy. The law should protect creditors and investors, but at the same time

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promote investment and profit making.

"A Coalition Government will ensure there is a comprehensive review of the Corporations Law as a prelude to re-casting and simplifying those parts which are unnecessarily complicated, inhibit investment, and make Australia uncompetitive for the domicile of international business.

End release For further information: (06) 277 4750

10 November 1992