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Thursday, 25 November 1993
Page: 3750

Senator BEAHAN —I present the following three reports of the Joint Statutory Committee on Corporations and Securities: The Role of Audit Committees in Corporate Governance, a progress report; Trading of Shares in Jupiter's Limited; and Committee Exchange with the New Zealand Parliament.

  Ordered that the reports be printed.

Senator BEAHAN —by leave—I move:

  That the Senate take note of the reports.

I was going to make a short statement, but in the interests of time—I would have loved to have got involved in that other debate on the lithographs to correct a few incorrect statements—I seek leave to incorporate three short statements in Hansard in relation to those reports.

  Leave granted.

  The speeches read as follows—

The Role of Audit Committees in Corporate Governance

  The Committee's report to the Parliament on this matter arises from a Committee decision to inquire into the current role of audit committees in Australian corporate governance in late 1992.

  The Committee initiated discussion on audit committees by publishing and circulating a discussion paper late in 1992 to organisations and individuals who the Committee considered would be interested in the subject; particularly the accounting and auditing professions.

  As the Committee reports, its preliminary inquiries into the role of audit committees were greatly assisted—as is the case for the introduction of audit committees to all public companies—by the Arthur Anderson/Institute of Company Directors 1992 survey of all Australian listed companies. The Committee has annexed the executive summary of this excellent and important survey to its report; I recommend it to all interested in this important area.

  The Committee notes that the Australian Stock Exchange's exposure draft on current listing rules which was circulated during late 1992 raised the question of making the existence of audit committees a condition of listing on the exchange. The ASX advised the Committee that this question is currently being pursued in discussions with the Attorney-General.

  The Committee, as the report notes, will assess whether it will re-open its inquiry on audit committees in Australian public companies in 1994.

Trading of Shares in Jupiter's Limited

  The Committee's report to the Parliament on this matter results from a reference to the Committee from the Senate in November 1992; a reference made on the motion of Senator Spindler.

  The Committee's report notes that the Committee sought and obtained detailed advice from the Australian Securities Commission and the Australian Stock Exchange, the bodies which are responsible for ensuring proper and honest trading of shares on the Australian securities market.

  As the Committee reports, and having considered the submissions from both the ASC and the ASX, the Committee considers there is no grounds for it to make further inquiry into the matter; a conclusion unanimously agreed to by all members of the Committee.

  A final point can be made about this matter. The Committee's inquiry demonstrates that market monitoring and surveillance systems set up by the ASX—and the ASC—can be used to ensure movements in the trading of securities which may be sensitive to extra-market considerations, are detected.

Committee Exchange with the New Zealand Parliament

This report deals with the visit of the Joint Committee on Corporations and Securities to New Zealand in July this year. The Committee was invited to travel to New Zealand by the New Zealand Parliament as a part of the program of regular committee exchanges between the two countries. The overall aim of the visit was to discuss the harmonisation of law between the countries, with a particular focus on corporations law.

The Committee was hosted by the New Zealand Parliament's Justice and Law Reform Select Committee and Commerce Select Committee. The Committee also took the opportunity to meet with government agencies business organisations.

The discussions we held in New Zealand were very valuable. New Zealand has taken a much different approach to Australia in reforming its company law and in some ways has made more progress than Australia. I was particularly impressed by the commitment to a simplified, principled, drafting style that New Zealand has adopted and their apparently well founded confidence in the ability of the courts to understand and act upon the principles set out in legislation. In developing its new legislation New Zealand has also review many of the basic, and outdated, concepts which entered company law in the last century and whose value has never been properly re-assessed. This is a matter which we in Australia are only now addressing.

The discussions the Committee held extended far beyond company law issues. The report briefly outlines those discussion and I draw the attention of honourable senators to the report for more detail on the range of issues examined. Of course the harmonisation of business laws between different countries should extend beyond the already significant progress that has been made by Australia and New Zealand. But the success of the visit and the progress that has already been made between these two countries indicates the potential benefits to Australia of extending this process to include our trading partners in Asia.

The success of a visit like this depends, to a great extent, on the organisation by the host country and the enthusiasm of the people the Committee meets. I must say that on this occasion the organisation by the Committee's hosts in New Zealand was excellent. We were able to meet with everyone we wished to and all of the arrangements went like clockwork. Everyone with whom we met extended the utmost courtesy to the Committee and the discussions we had were invariably wide ranging and interesting. I would therefore like to place on record the Committee's thanks to everyone we met in New Zealand.

I would particularly like to thank; the Honourable Robin Gray, Speaker of the House of Representatives; Mr Rob Munro and the other members and staff of the Justice and Law Reform Select Committee; Mr Wayne Kimber and the other members and staff of the Commerce Select Committee; Professor Richard Sutton of the New Zealand Law Commission; and Mr Max Simmons from the Distinguished Visitors Branch of the Department of Internal Affairs. There is insufficient time to acknowledge everyone here so I will draw the attention of honourable senators to acknowledgments contained in he report.