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Thursday, 5 December 1974
Page: 3239


Senator MURPHY (New South WalesAttorneyGeneral) - I move:

That the Bill be now read a second time.

I ask for leave to have the second reading speech incorporated in Hansard.

The DEPUTY PRESIDENT-Is leave granted? There being no objection, leave is granted. (The speech read as follows)-

The purpose of this Bill is to provide for the securities industry in Australia to operate on a sound basis with an effective system of controls administered nationally by a commission to be called the Corporations and Exchange Commission. More specifically the Bill aims to maintain, facilitate and improve the performance of the capital market in the interests of economic development, efficiency and stability. This is in accordance with the report of the Senate Select Committee on Securities and Exchange.

The introduction of legislation to establish a commission such as the one provided for in the Bill was promised in the policy speech of the Australian Labor Party prior to the election in December 1 972. One of my first tasks on becoming Attorney-General was to put in train the preparation of the legislation. The Bill has been tailored to the requirements of the securities industry in Australia. Many of the provisions are derived from existing State and Territory legislation. But a number of changes have been made. As the classic example of a Securities and Exchange Commission is to be found in the United States of America, due regard has been paid to the laws and practices in that country. In some areas proposals have recently been made in the United Kingdom and some of those proposals have commended themselves for inclusion in the Bill. In other areas the Bill has taken the opportunity to implement changes recommended by the reports of the Company Law Advisory Committee, which was under the chairmanship of Sir Richard Eggleston.

The Bill is a lengthy one and it covers a wide range of complex matters. In its consideration of those matters my Department has been fortunate in having assistance from eminent persons from the United States of America. In the early stages of the preparation of the Bill valuable assistance was provided by Mr Sol. Freedman, a former senior officer of the United States Securities and Exchange Commission. Later on we were indeed fortunate to obtain the assistance of Professor

Louis Loss, Cromwell Professor of Law at Harvard University and the author of an authoritative work on the securities industry in the United States. Professor Loss submitted a report setting out his comments in the light of American experience. On the 12 September 1973 1 tabled that report and invited comment on it to assist in the preparation of legislation that would be suited to the needs of Australia.

Professor Loss's report was followed by the report of the Senate Select Committee on Securities and Exchange, which was tabled on 18 July 1974. The Senate Committee's report revealed a disquieting state of affairs in the way in which the securities industry was being conducted. The Committee's main finding, which underlined the need for the present Bill, was that there was a need for the immediate establishment of an Australian Securities Commission to regulate the securities market in Australia and the conduct of those engaged in that market. The Senate Committee's report has been studied closely, and changes have been made to the draft Bill that had already been prepared in the light of the matters discussed in the report and the recommendations made by the Committee.

The many detailed provisions of the Bill cover a wide range of important matters and deserve close consideration before they are passed into law. With this in mind I am introducing the Bill now at the end of the present sittings so that its provisions can be studied during the recess and the reactions and comments of interested organisations and members of the public made known. My Department has already had the benefit of much useful discussion and consultation with the stock exchange committees and other interested organisations and individuals. They have been generous in the time they have given to the task of assisting to formulate legislation that will be workable and effective. I hope that all interested persons will now take this opportunity to study the Bill and to make their comments to the Government. For its part the Government will give close consideration to any representations made to it and will make amendments where that course appears to be desirable. The aim will be to get the best possible legislation- legislation which will provide protection for the interests of investors and restore confidence in the capital markets of this country.

The Bill deals with a wide range of matters that are currently contained in the companies legislation of the States and Territories, and it therefore represents a first step towards the objective of national companies legislation, to which the Government is committed. Other matters of company law, being matters that are not so closely related to the conduct of the securities industry, will be the subject of a further National Companies Bill, which I propose to introduce next year. The further Bill will be integrated with the one I am now presenting so that the 2 Bills together will then make comprehensive provision on a national and up to date basis for both company law and the control of the securities industry.

When I moved in the Senate on 19 March 1970 for the establishment of the Senate Select Committee on Securities and Exchange I referred to the series of company crashes that had occurred in the 1960s and to the widespread evidence of improper practices during the speculative boom in mining shares in the late 1960s and early 1970s. I drew attention then to the fact that members of the public had been induced by false rumours to buy shares, that inside trading was rife and that self-regulatory bodies seemed either powerless or unwilling to act to protect the public against this and the many other market abuses that were prevalent at the time. I have heard it said that the boom time in which these market abuses prevailed is over and that there is no point now in introducing legislation which will merely lock the stable door after the horse has bolted. It would be quite irresponsible for the Government to proceed on such a short-sighted view. The need remains for effective legislation which will, so far as practicable, prevent a recurrence of such abuses at any time in the future. Before indicating the nature of the main provisions in the Bill I shall say a word or two about some of the basic requirements for such legislation.

The need for national legislation

The report of the Senate Committee on Securities and Exchange drew attention to the need for the securities industry to be subject to national legislation rather than legislation of individual States and Territories. The report made it clear that the securities industry functions on an Australiawide basis, and that control on any other basis is bound to be inadequate. The requirements of the law and the administrative procedures should be the same throughout Australia. The persons responsible for the administration of such legislation must have direct access to information in all parts of Australia. In addition, there is the consideration that there are many large corporations operating across the Austraiian continent for which the need to comply with the requirements of separate State and Territory laws involves pointless frustrations and unnecessary costs.

Uniform State and Territory legislation is not the answer. That approach has been tried and failed. Efforts to achieve uniformity are invariably slow, and seldom more than partially successful. Even where uniformity has been achieved problems arise from differences between the separate administrations of individual States and Territories. The only satisfactory course, and the course which is adopted by this Bill, is national legislation, and a single administrative agency with jurisdiction throughout Australia.

The need for continuous reform of the law

One of the problems we have had with company and securities law in Australia has been that the need for changes in the law has occurred more rapidly than the responsible legislatures have been able to make those changes. It has become increasingly evident that it is just not enough to have an expert committee examine certain aspects of company or securities law once in every 15 to 20 years or so. There is a need, which was recognised long ago in the United States and in the First Interim Report of the Eggleston Committee, for an expert body with continuity of existence to be charged with a responsibility for seeing that the laws are kept up to date at all times. There are many matters of detail with respect to which the expert body should be trusted and empowered to make rules of its own having the force of the law. It is sufficient for Parliament to have a power of disallowance over such rules. In other matters of more fundamental importance the expert body should be responsible for submitting reports recommending changes in the law which it considers desirable.

The need for a preventive approach

The experiences of recent years have made it clear that it is not sufficient for legislation with respect to securities to prescribe rules and provide remedies that are available when those rules are broken. All too often the remedies prove to be worthless, either because the trail of the offender is well-covered or because he has placed his assets beyond the reach of the persons who have been defrauded. There is a need for more emphasis to be given to the prevention of fraudulent conduct. The Bill that I now present recognises this need in a number of ways, but mainly in providing for the establishment of a strong administrative agency, which will have access to relevant information and effective powers to intervene where intervention appears to be desirable.

The self-regulatory role of stock exchanges The management of a stock exchange in Australia is in the hands of a committee elected from its members. The Committee has responsibility for a range of matters including the admission of new members, the disciplining of members who act improperly and the listing of securities to be traded on the market of the exchange. The Senate Select Committee on Securities and Exchange found that in the discharge of those regulatory responsibilities the stock exchanges in Australia had been 'seriously wanting'. In fairness to the exchanges I hasten to add that the situations they had to deal with during the boom years were anything but normal. But the fact remains that the Senate Committee's report has shown very clearly the need for some changes to be made in the self-regulatory roles of the stock exchange committees.

Criticism of the stock exchange committees should not overlook the fact that the committees perform valuable functions. But there is a need for the committees to be brought under some degree of surveillance by an official body representing the public interest generally. In the United States of America this has been recognized. The Securities and Exchange Commission has been given what has been described as a 'lookingoverthe shoulder' role. That is to say, the immediate day to day management of an exchange remains with that exchange, but the Commission is responsible for ensuring that the rules of the exchange are satisfactory, that those rules are properly enforced and that generally the exchange is conducted with due regard to the interests of the public.

The present Bill provides for a similar role for the Corporations and Exchange Commission. In doing so the Bill recognizes that the stock market of a stock exchange is like any other market in the sense that it is a place where the public may buy a commodity- in this case securities of corporations. The public needs protection as it does in any other market, and the protection should be provided by appropriate laws coupled with a strong administrative agency representative of the public interest.

The need for prompt and adequate disclosure by corporations

Legislation cannot protect the individual against his folly or lack of judgment in the making of investments in securities. But there is a need, which the legislation should recognize, to ensure that the investor has access to information which is both relevant and up to date. It should not be overlooked that the funds of public companies come from the public. Relevant information should not be regarded as the exclusive property of the controllers of such companies. There is, in particular, a need for the financial position of companies to be properly disclosed in its accounts, for information concerning matters significantly affecting a company's prospects to be promptly made available and for the identity of the persons beneficially entitled to major shareholdings to be ascertainable.

The need to prohibit undesirable market practices

The report of the Senate Committee on Securities and Exchange disclosed a number of undesirable market practices. Practices such as market manipulation, insider trading, short selling and dealing in undesirable conflict of interest situations, to name a few, are referred to in the report. They need to be dealt with effectively by the legislation if public confidence is to be restored in our stock markets.

The need for proper examination of prospectuses

It is also clear from the report of the Senate Committee on Securities and Exchange- if indeed it was not clear before the report- that there is a need for prospectuses by which the public is to be invited to contribute funds towards companies to be subjected before issue to a more through examination by the administering authorities than has been the case. The lack of adequate investigation into prospectuses during the boom years plainly led to millions of dollars being subscribed by the investing public for worthless ventures. Apart from the inevitable losses to the individuals concerned, this involved a substantial misallocation of the country's resources.

The need for appropriate investigatory powers

If one thing has been made clear in recent years it has been that the existing methods of investigating the activities of companies and the conduct of their officers is altogether too ponderous. All too often reports that are made following investigation action do little more than provide a record for history. It is of the utmost importance that company investigations be made in good time and that they are no longer impeded by the irrelevancy of state boundaries. In recognition of this fact the present Bill contains provisions which will enable the Corporations and Exchange Commission to act quickly and effectively throughout Australia in the conduct of investigations.

The provisions in the Bill

It will be convenient now for me to indicate what is provided in the Bill. Having regard, however, to the length of the Bill, and to the comprehensive explanations provided in the explanatory memorandum I have circulated, I shall confine my present observations to some of the more important provisions.

The Corporations and Exchange Commission

The Commission will be a body of high standing with a positive and on-going role in a wide range of matters with respect to the securities industry. It will be a body corporate consisting of 5 full time members appointed by the GovernorGeneral for terms of years. A member of the Commission will need to be qualified for appointment by virtue of knowledge of, or experience in, industry commerce, economics, law or public administration. He will have to make public disclosure of his financial interests. Specific duties of the Commission will be:

(a)   to ensure adequate protection of investors,

(b)   to maintain surveillance over stock exchanges and the holders of licences,

(c)   to enforce the Act,

(d)   to make relevant information available to investors and other interested persons,

(e)   to conduct research,

(   f) to develop and facilitate opportunities for persons to participate in the ownership and control of Australian industry by means of collective investment schemesand in particular to conduct an inquiry into such schemes as soon as practicable after the commencement of the legislation.

(g)   to promote the establishment of a national stock market, and

(   h ) to recommend amendments to the law.

Corporations that are public companies will have to register with the Commission and keep the Commission informed of prescribed matters. The Commission will be able to supplement this information by using powers which enable it to require information to be furnished on an ad hoc basis. The Commission will also have power to nominate an officer to attend meetings of the directors, members or debenture holders of a company. In general the records of the Commission will be available for inspection by the public, but documents of a truly confidential character will be treated as such. The Commission will have a rule-making power, which will be generally coextensive with, but subordinate to, a regulationmaking power of the Governor-General. Before the Commission makes a rule it will be required to give not less than 30 days public notice of its intention and to invite interested persons to make submissions. Either House of Parliament will be able to disallow a rule made by the Commission.

Control over stock exchanges

All stock exchanges will be required to register with the Commission. The rules of a stock exchange will have to comply with requirements in the legislation. In particular, the membership of an exchange will have to be open, without unreasonable restrictions, to any person who is the holder of a dealers licence. The Commission will be responsible for ensuring that the rules of each stock exchange make satisfactory provision with respect to the matters mentioned in the legislation. If it appears to the Commission that they do not, the Commission will be able to require appropriate changes to be made. In the last resort, if the need arises, the Commission will itself be able to make a rule to give effect to a proposed change.

A stock exchange will be required to report to the Commission each month and set out details of complaints made to it concerning the conduct of its committee, employees and dealers. The report must also state the action taken in respect of the complaints and the result of the action. Where the Commission considers it necessary or desirable for the protection of investors or in the interests of the public it will have power to prohibit trading in a specified security for up to 2 1 days. Any such action by the Commission may be cancelled by the Governor-General, who will have a power of his own to prohibit trading on a stock market. The Governor-General will be able to prohibit either all trading on a particular exchange or trading in a particular security. He will be able to exercise that power for such period as he thinks fit.

I would expect that neither the Commission nor the Governor-General would find it necessary to exercise these powers except in very special circumstances. But it is necessary that the legislation provide the powers and thereby avoid any possibility, however remote, that a stock exchange might deliberately refuse to take action of its own accord after the need for such action has been established.

The Commission will be able to nominate one of its officers to attend any meeting of the members or of the Committee of a stock exchange.

The officer is to be afforded a reasonable opportunity to be heard on any issue, but he will not have any voting rights. If a stock exchange fails to enforce its rules, the Court will be able, on application by the Commission or by a person affected by the failure, to give directions requiring due enforcement.

Licensing requirements for persons conducting business in the securities industry Licensing requirements will apply for the following 4 classes of persons: Dealers; dealers representatives; investment advisers; and investment representatives.

The power to grant suspend or revoke these licences is vested in the Commission. A licensee, and also a financial journalist, will be required to maintain a register of his interests in securities of corporations and to keep this register open for public inspection. Dealers will be required to keep appropriate accounts and the Commission will be responsible for ensuring that those requirements are properly complied with. The accounts will need to be audited by auditors registered with the Commission. A dealer will not be permitted to deposit documents of title of a client as security for a loan to the dealer unless he gives his client 3 days notice and complies with relevant requirements in the Bill.

Prohibition of certain conflicting roles

The report of the Senate Committee on Securities and Exchange made it clear that it is undesirable that dealers engage in certain classes of activities which lead to conflict of interest situations. While it is plainly not practicable to ensure that dealers conduct their businesses in such a way that conflict of interest situations never arise, certain restrictions are desirable. The approach of the Bill is to prohibit dealers from engaging in certain activities which would be bound to lead to undesirable conflicts. In addition, the Bill requires a dealer to make disclosure of his interest when a conflict of interest situation does arise.

Particular attention has been paid to dealers who are members of a stock exchange. These are the dealers to whom the general investing public resort to have their dealings transacted. They provide the public market. There is a need to ensure that the members of the public have access to dealers who will, as their agents, attend to their transactions for them free of conflicts of interest. In dealing with persons who are not members of a stock exchange, for example, merchant banks, the client is normally an institution or a sophisticated investor who is better able to look after his interests and less in need of protection from the law. A dealer who is a member of a stock exchange is required by the Bill to give his clients' orders priority over any transactions he is permitted to carry out on his own account.

The Bill also provides restrictions on the right of such a dealer to engage in trading as a principalincluding trading on behalf of an associated person, and causing or procuring an associated person to deal. The only forms of trading as a principal that will be permissibleapart from trading in accordance with regulations or rules or with the consent of the Commissionwill be:

(a)   transactions in the ordinary course of trading on the stock market of a registered stock exchange, and

(b)   transactions with a person, other than an associate, whose ordinary business or a part of whose ordinary business is or includes the purchase or sale of securities.

I would not wish the exemption in favour of floor trading to be taken as an indication that such trading does not need to be controlled in the public interest. I envisage that the Commission will give close attention to this form of trading and make rules forks regulation.

The practice of stock exchange dealers holding directorships of listed corporations has long been a matter of concern. A director inevitably acquires information about his company which is relevant to the value of its securities but which he is not then permitted to disclose. Yet in the ordinary course of his business, a stock exchange dealer is expected to advise clients in their dealings in those securities and clients should be able to expect full and unrestricted advice from their dealers. The 2 roles are plainly incompatible, and the Bill accordingly prohibits a stock exchange dealer from being a director of a listed corporation.

The right of a stock exchange dealer to act as an underwriter is also to be restricted. The restrictions apply in cases where the dealer has an interest of a specified kind in the corporation making the issue or where he may profit from the issue otherwise than by reason of acting in a professional capacity. Another provision prohibits a dealer-underwriter, whether or not he is a member of a stock exchange, from giving credit to a person to enable him to subscribe for securities the dealer has underwritten. Strong forces generally operate on an underwriter to dispose of all the securities he has underwritten and thereby avoid a shortfall. The giving of credit in such circumstances can be an undesirable means of sales promotion.

Undesirable Market Practices

The Bill contains provisions to deal with a number of undesirable market practices most of which were referred to in the Senate Select Committee on Securities and Exchange. The most important practice is probably that of insider trading. This is a practice that is engaged in by persons known as insiders who have access to confidential information of a company. They engage in the practice if, in dealing with the company's securities, they make use of such confidential information for their own purposes.

The story of the ruthless exploitation of the Australian investing public by corporate insiders during the mining boom is now well documented and it constitutes a sorry indictment of the commercial morality of some Australian businessmen. Other countries like the United States of America have long ago prohibited insider trading and this Bill now adopts a similar approach. The effect of the provisions in the Bill is that an insider is prohibited from dealing in securities while he is in possession of confidential information that would, if it were generally available, materially affect the market price of those securities. For this purpose the term insider covers a wide range of persons connected with a company. In addition to this prohibition the Bill requires directors and officers to make monthly reports to the Commission disclosing any change in their beneficial ownership of securities- irrespective of whether they possessed any confidential and price-sensitive information at the time. These monthly reports will be open to the public and this will enable checks to be made on non-observance of the trading prohibition.

Breach of the insider trading provisions will be an offence with a heavy penalty, and it also gives rise to a civil right to recover damages. It has become clear that some of the worst cases of insider trading in the past have been perpetrated by persons who have covered their traces by engaging in dealings on an Australian stock market through the agency of overseas intermediaries. The Bill makes it an offence for a person in Australian to engage in such conduct except in accordance with the regulations or by consent of the Commission. The Bill also makes it an offence for a person to engage in the practices of stock manipulation wash sales and matched orders and fraudulent by inducing a person to deal in securities. Conduct known as short selling is also prohibited except in certain defined circumstances. The provisions relating to all of these practices are explained in some detail in the explanatory memorandum.

Improved disclosure by Corporations

As I indicated earlier, there is a need for the legislation to ensure that the investor has access to information that is both relevant and up to date. The Bill provides for a number of improvements in this regard. A great deal of basic information about corporations will become available as a result of the registration provisions. These provisions apply to corporations that are public companies and require those corporations to lodge with the Commission copies of their basic documents.

The corporations are required to keep this information up to date. They are also required to lodge their annual accounts with the Commission. Their accounts will need to contain information that has not previously been required. For example, turnover will now have to be disclosed and the directors' reports will have to deal with the additional matters. These include: directors' interests, direct and indirect, in the securities of the corporation and in contracts with the corporation; the number of persons employed by the corporation; arrangements made by the corporation for protecting the safety and health of its employees and of the public and for protecting the environment; and arrangements made by the corporation for the protection of its consumers.

Another new provision will require quarterly reports to be submitted to the Commission. These reports will not have to be audited but they will, nevertheless, do much to ensure that the information available to the investing public is kept up to date. The provisions in State and Territory legislation for disclosure of substantial shareholdings have been modified in a number of important respects. For example, the threshold reporting percentage has been reduced from 10 per cent to 5 per cent of the nominal amount of voting shares. The time for notification under these provisions has also been shortened from 1 4 days to 3 days.

The substantial shareholding provisions are to be supplemented, moreover, by provisions enabling particular requirements to be made as to the persons beneficially entitled to holdings. Such requirements may be made by either the company or the Commission. These provisions will go a long way towards removing problems which are created by the holding of shares in the names of nominees.

Raising of moneys from the public

The control of public offerings of shares and debentures by companies is an important function of the Commission. It is closely related to the question of disclosure which I have just discussed. The Bill contains provisions in this area which are stronger than those of existing law.

An important question to which consideration was given in the preparation of the Bill was whether it would be practicable to define what constitutes an offer to the public. Close consideration was given to the recommendation of the Eggleston Committee, and also to the somewhat similar proposal advanced by Professor Loss. In both cases a definition in the form of a mathematical formula was proposed. The Eggleston Committee envisaged that the number of offerees would be counted; Professor Loss favoured the counting of acceptances. Each of these solutions, however, presents considerable difficulties the nature of which is outlined in the explanatory memorandum. The difficulties are probably similar to difficulties that have occurred to others engaged in law reform in the common law countries, where the concept of 'the public' has so far defied statutory definition. Pending further close consideration of the matter, the Bill has not attempted to define in this manner what constitutes an offer to the public.

Prospectus requirements

I shall mention briefly some of the more important changes that have been made with respect to prospectuses. In addition to these changes a number of the recommendations in the Fifth Interim Report of the Eggleston Committee have been implemented.

A prospectus is not to be issued unless it has been registered by the Commission after inquiry and investigation. Before registering a prospectus the Commission is to make such inquiries and investigations into it as appear to be necessary or desirable for the protection of investors or in the interests of the public. It is to refuse to register a prospectus if it is of the opinion that it contains a statement that is false or misleading in a material particular or if there is some material omission.

The Bill provides that if a registered prospectus contains an untrue statement as to a material fact, or omits to state a material fact, the persons responsible for the prospectus are guilty of an offence as well as being liable to pay compensation to a person who subscribed for securities. The civil rights of action for issuing unregistered prospectuses, or prospectuses which contain material misstatements or omissions, have been made more effective. The nature of the changes made appear from the explanatory memorandum.

Prospectuses confined to existing shareholders or debenture holders

Under the existing State and Territory legislation an offer or invitation which is confined to existing shareholders or debenture holders of a company does not have to be registered as a prospectus. Such an offer or invitation is treated as not made to the public. The Eggleston Committee in its Fifth Report concluded that this position was not satisfactory. It recommended that a prospectus be required for offers and invitations to debenture holders and that something less than a prospectus- described by the Committee as a director-proposal- be required for offers or invitations to shareholders. The Bill requires a prospectus in each of these cases. The matter is discussed in greater detail in the explanatory memorandum.

Liability of Underwriters

For the first time in Australia an underwriterbut not a sub-underwriter- of an issue is made liable in respect of the contents of a prospectus.

Oversubscriptions for debentures hot to be accepted

The Bill puts an end to the practice under existing State and Territory law of a corporation accepting oversubscriptions to an issue of debentures if a power to do so has been reserved in the prospectus. This change gives effect to a recommendation of the Eggleston Committee.

Sharehawking

Deficiencies in existing State and Territory legislation in relation to sharehawking were adverted to by the Eggleston Committee in its Sixth Interim Report. The recommendations of that Committee have been implemented in the Bill.

Interests other than securities

Existing company law contains provisions for the control of offers and invitations to the public with respect to interests that are not securities. For the purpose of these provisions an 'interest' is widely defined but so as not to include a share or debenture. The main application of the provisions is in the field of unit trusts. It has been widely felt that these existing provisions relating to 'interests' are not entirely satisfactory. It has been generally recognised for some time that the law in this area should be amended but there is a clear need for a prior inquiry into the matter. The Bill provides for the Commission to conduct such an inquiry and pending its completion the Bill largely adopts existing law.

Investment Corporations

Another area of existing State and Territory legislation that has been largely adopted without modification at this stage relates to investment companies. These provisions relate to companies that have been declared to be investment companies, and the power to make such a declaration is vested in the Commission. Experience in the United States of America has shown that this is an important area of securities legislation and I envisage that the Commission will give consideration to improved legislation at an early date.

Take-overs

The take-over code in existing State and Territory legislation gives effect to recommendations made in the Second Interim Report of the Eggleston Committee. Having regard to this recent review of the matter, the Bill has, in a large measure, adopted those existing provisions. However, experience since the provisions were enacted has indicated the need for a number of amendments and these have been made. The amendments are discussed in some detail in the explanatory memorandum, and, with 2 exceptions, I shall refrain from referring to them here.

One of the amendments applies, to a greater extent than is presently the case, the principle enunciated in the Second Interim Report of the Eggleston Committee that 'so far as practicable each shareholder should have an equal opportunity to participate in the benefits offered '. The effect of the amendment is that, in the case of a bid for less than all the shares in a company, every shareholder is entitled to accept for the same percentage of his holding.

The other amendment to which I would draw attention provides that during the period of a take-over the offeror or invitor is not to be entitled to acquire shares in the target corporation by transactions on the market. As appears in the explanatory memorandum these 2 amendments are related to each other. The latter provision is in line with the law in the United States.

There can be no doubting the need for legislation of this kind to provide for the securities industry in this country. If ever there was any doubt about the need for such legislation that doubt was finally dispelled by the report of the Senate Select Committee on Securities and Exchange. The Bill that I have presented contains a great many provisions that will have an important bearing upon the functioning of our securities industry in the future. I am confident that they will cause the industry to function much more efficiently and with better regard for the rights of investors.

A great deal of careful consideration has already been given to the provisions and I believe that the Bill will rank with the best of securities legislation in the world. But it is desirable that the detailed provisions be subjected to close study by all interested persons before final decisions are made as to the provisions that should go on to our statute book. I hope that the Bill will be subjected to close consideration. But I trust that the consideration will be on a constructive basis so that the best possible Bill can be enacted without any unnecessary delay. I commend the Bill to honourable senators.

Debate adjourned.

Notice of Motion

Senator MURPHY(New South WalesAttorneyGeneral) I ask for leave to give a notice of motion.

The DEPUTY PRESIDENT-Is leave granted? There being no objection, leave is granted.







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