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Thursday, 12 February 2009
Page: 1198

Mr BOWEN (Minister for Competition Policy and Consumer Affairs, and Assistant Treasurer) (4:23 PM) —I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

Today I introduce the bill that will amend the Corporations Act 2001 to fulfil a requirement under the Australian government’s memorandum of understanding with the New Zealand government on business law coordination. The Corporations Act currently provides a range of circumstances in which a person will automatically be disqualified from managing corporations and circumstances in which the Australian Securities and Investments Commission can apply to the court to have a person disqualified.

The bill adds to the automatic disqualification provisions and also provides the courts with an additional disqualification power. First, a person will automatically be disqualified from managing corporations where they have been so disqualified by a court in a prescribed foreign country. Second, an Australian court will have the power to disqualify a person from managing corporations on application by ASIC where the person has been disqualified under the law of a prescribed foreign country.

The provision will cover situations where, for example, a person has been disqualified automatically by operation of a law in a foreign country by a foreign regulator. In this situation the Australian court must be satisfied that the disqualification is justified before they can disqualify the person in Australia. These arrangements will ensure that all people disqualified in Australia on the basis that they have been disqualified in a prescribed foreign country have had their disqualification scrutinised by a court.

Prescribed foreign countries will be named in the Corporations Regulations. Initially, it is envisaged that only New Zealand will be named. The mechanism will however allow for other countries to be added at a later date, if it is considered that there is sufficient similarity with Australia’s regulatory regime, as is the case with New Zealand.

New Zealand enacted its complementary provisions in 2007. The bill addresses concerns that people who are disqualified from managing corporations in New Zealand could still manage corporations in Australia simply by crossing the Tasman. As such, it will enhance protection for investors and the integrity of Australia’s markets. I commend the bill to the House.