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Wednesday, 30 November 1983
Page: 3041

Mr LIONEL BOWEN (Minister for Trade)(11.50) —in reply-I thank the honourable member for North Sydney (Mr Spender) and the honourable member for Hawker (Mr Jacobi) for their contributions. We are debating a Companies and Securities Legislation (Miscellaneous Amendments) Bill which we cannot even alter because of what has happened. It is quite ridiculous really. We have become virtually a rubber stamp of a well-meaning and a very intelligent group called a Ministerial Council for Companies and Securities. But it does make the Parliament a bit redundant to think that we have a piece of legislation in which very forthright and worthwhile views are put which we cannot implement because if we were to do so our counterparts in the State would say 'We do not agree with that', or 'We cannot necessarily do it at this time'. So in that context I can well understand the problems raised by all speakers. Turning to what is called Schedule 2 of the Bill, honourable members will see the number of amendments already to this collection of Acts: The Companies (Acquisition of Shares) Act, the Companies Act, the Companies (Transitional Provisions) Act and the Companies and Securities (Interpretation and Miscellaneous Provisions) Act, and so it goes on. I notice that 17 separate Bills have had to be introduced in a relatively short space of time. We wonder how long this can go on.

If we go back to the thrust of what we were about when the Senate took unto itself the right to have a look at the securities law-at that stage we in the House of Representatives did not agree with any committees; I think that was a defect of this House-we see that the Senate did a worthwhile job because it established the fact that there was a need to do something. But the interesting thing about that is that the Senate established the fact that there was only one market in Australia for corporate transactions, shareholdings, et cetera, and not six or seven different markets. At the same time it suggested that there ought to be some national approach to this matter. I understand, though, that Senator Peter Rae did not agree with that in the final analysis.

As the honourable member for Hawker said, we tried both in government and in opposition to introduce a national Bill, but that was defeated and we now have a Bill which is grappling with some of the problems that have been addressed here today. We understand the background of what we now have to look at. The interesting thing is that there is some co-operation. It is unfortunate to think that we cannot get co-operation without having to look at it in the terms of having to deal with seven parliaments.

The honourable member for North Sydney is entitled to say with some validity that there is over-regulation. The biggest problem in this whole structure, I think, if we look back at the history of law is that law naturally follows the commercial habit, transactions or customs. If we look at mercantile law we see that it has developed through the process of traders themselves having established certain ideas which then needed regulation. But we are now becoming bedevilled by the plethora of Acts, regulations and interpretations, which I think is probably counterproductive from the point of view of assisting business .

One of the great problems I find-I speak personally-is that the equity of a company shareholder is related not to a person having one brain and one pair of hands but to the amount of money that a person might have. If a person is large enough to have a lot of money he will have a lot of votes. One person can control a whole group simply because he has a great number of shares and uses them as equity. It is interesting to note, without delaying the House, that that was not the case or was not very likely to be the case with partnerships. A partner had personal liability and personal accountability. Over history corporate structures have been able to cloak many frauds. They have been able to cheat and deceive people through corporate theft and the inability to face up to liability.

There is no real mystique about corporations. They have just become an effective mechanism to allow a multiple number of people to obtain an indentity. But we must always ask ourselves: Can we not get a better law that will meet the obligations of society from the point of view of accountability, honesty and integrity? What the honourable member for Hawker said is perfectly true. If directors have a very poor record of not meeting their liabilities, of continual liquidation, why should they be allowed to continue to incorporate companies and to become directors? They have as bad a record as any criminal who keeps going to goal on the basis of his lack of credibility.

I shall now deal with the specific matters that were raised. There is a problem with over-regulation. It leads to a great deal of litigation. Every technical point is taken, and this is a problem. But I am reminded that clause 132 of the Bill provides for the courts to interpret this legislation having regard to the provision now in section 15AA of the Acts Interpretation Act; in other words, to interpret this legislation having regard to its purpose. If the courts are able to adopt a commercial approach it may be possible to get legislation in more general terms and then, as the honourable member for North Sydney suggested, leave it to the courts' interpretation.

The takeover power was raised by the honourable member for North Sydney. Again, apparently this was considered by the Ministerial Council for Companies and Securities. It is suggested that we do not seem to have a body of status and influence comparable to that of the Bank of England. I do not suppose we will ever have that. It is also suggested that the capital market-I think this is more to the point-is geographically diversified with rival financial centres. I still think there is a great deal of merit in what the honourable member for North Sydney said. The London panel was considered by the Senate Select Committee on Securities and Exchange, the Rae Committee, which concluded that it would not be effective.

The disallowance of accounting standards was the subject of amendments moved by Senator Durack in the Senate. I return to what I said at the outset: It is impossible to disallow any of those standards. We would have to get the enabling legislation through every parliament in Australia. The legislation would have to go through seven parliaments in 15 sitting days. One can imagine the commercial uncertainty that that would lead to, yet there is a great deal of merit in the proposal. There is a problem here, with which I think the Ministerial Council has grappled as best it can, but the disallowance procedure would be a real problem. The Government indicated in its business regulation policy that the scheme is not in the hands of any single responsible body so that no single parliament or government is accountable. It is ironic that the Opposition concerns itself with accountability when the Ministerial Council has already provided adequate safeguards. The Opposition apparently sees no difficulty in business accountability and the listing of rules of stock exchanges as being merely subject to ministerial council disallowance even though the legislation obliges companies whose shares are listed to be accountable. All these comments have been made in answer to what has been suggested but the overriding factor is that, as the honourable member for Hawker said, we need to have boards that can effectively deliver the goods in terms of what we are about. These boards need to be well equipped, as the honourable member said. They need to have the appropriate criteria, the confidence and the staff.

I have noticed some criticism of some aspects recently-apparently an individual 's criticism. I am told that this piece of legislation virtually was introduced by the previous Government and allowed to lay on the table, and that a number of submissions-some 120 or 130 in all-were made about it. Those submissions basically have been taken up and adopted. Some of the people making the submissions, of course, would have represented the various corporate security areas in the States. Majority and minority views would have been held in those areas but the majority view was the only one that was put forward, so it is not appropriate to have individuals criticising the issue in the terms that have been used. The problem we face is that a ministerial council naturally deals with those submissions that are made. Clause 17 was referred to by the honourable member for North Sydney. He said he thought a 90-day period was too long in the case of objectionable or unacceptable conduct. What is reasonable is a matter of degree. A period of 90 days might be too long but it might be thought that 30 days is too short. We get this sort of judgment. It is thought that the amendment is necessary to enable the National Companies and Securities Commission to deal with such conduct but that a period is needed in order to assess the conduct. That is the judgment that has been mentioned.

I say no more than that we are grateful for the contributions made. I hope those made by the honourable member for Hawker in terms of what we can achieve will be noted. Quite frankly this Government looks forward to the day when, with the co-operation to the States, we can bring in a national piece of legislation that will assist everybody, will not be over-regulatory, will provide for the States' participation and will guarantee a better process than we have at present. I thank honourable members.

Question resolved in the affirmative.

Bill read a second time.