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The Centro case - discussion by Robert Austin

by Martha.Ware 1. July 2011 16:08

Click here for a link to Robert Austin's interview with the Financial Review.

New consultation paper on debt securities

by Hilary Kincaid 30. March 2011 14:16

CP 151 Debt securities: modifying the naming provisions and advertising requirements sets out proposals to:

  • introduce class order relief to provide for a new class of debt security (in addition to the current classes of ‘debenture’, ‘mortgage debenture’ and ‘unsecured note’) called a ‘note’, providing certain conditions (including sufficiency of security) are met; and
  • revise ASIC’s advertising standards for offers of debt securities and interests in mortgage schemes, in particular the standards relating to risk of loss and comparing these types of securities with bank deposits.


Comment is open until 6 May 2011. More information is available on the ASIC site.

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ASIC | Disclosure

New Treasury discussion paper on clawback of executive remuneration

by Hilary Kincaid 7. January 2011 18:18

Treasury has released a discussion paper — The Clawback of Director and Executive Remuneration in the Event of a Material Misstatement, which is available as a pdf on the Treasury site.

The release of the discussion paper was accompanied by the release of an exposure draft bill, the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011. The Bill will implement 16 of the 17 recommendations made by the Productivity Commission in its January 2010 report Executive Remuneration in Australia.

The discussion paper relates to a proposal, not identified in the Productivity Commission report, to clawback executive remuneration where a company has made a material financial misstatement.

The clawback would impose an obligation on a director or executive to repay remuneration that flows from materially misstated financial information: Discussion Paper [2.5]. This could involve recovery of funds, or the cancellation of a vested but unpaid entitlement to reward: [2.6]. ASIC would also have the power to commence action for recovery: [2.7].

The proposed reform purports to:

  • Simplify the process for recovery of overpaid remuneration ([2.9]);
  • Provide an incentive for directors and officers to meet their CA obligations to provide a ‘true and fair view’ of the company’s financial position ([2.10]);
  • Reflect the prevalence of clawback provisions in other jurisdictions ([2.11]);
  • Limit the role of remuneration in promoting risky behaviour ([2.12]- [2.14]); and
  • Have a “moral force” behind it ([2.15]). 

The moral force argument is that it is “unfair” for executives to retain remuneration based on profits that have not been “objectively verified”. Some clarification regarding objective verification is provided by the discussion of “material misstatement” (and alternative triggers for clawback) at [3.20]-[3.24].

Implementation questions raised in the paper (Pt 3):

  • Is a clawback reform needed to improve the regulation of executive remuneration?  
  • Do the benefits outweigh the compliance costs?
  • Should the reform apply to listed companies only; or to all entities, large proprietary companies and registered schemes with s 292 reporting obligations?
  • Should the reform be implemented by amendments to the Corporations Act, amendments to the ASX Listing Rules, amendments to the Corporate Governance Principles, or a combination?  
  • Who would the obligation apply to?  
  • What would trigger the obligation?   
  • What would be the quantum of bonuses clawed back?  
  • By when would the repayment need to be made?

Interested parties are invited to make written submissions by 30 March 2011. Submissions may be made by email to clawback@treasury.gov.au.  More information is available on the official Treasury page.



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ASIC | Disclosure | Law reform

New amending class order: clarification of short positions

by Hilary Kincaid 7. January 2011 10:40

ASIC has issued a new amending class order: [CO 10/1037].  It amends class order [CO 10/29] to clarify how a person should calculate their short position in a product in circumstances where that person, acting in more than one capacity, has both products and obligations to deliver products.


The explanatory statement is available on Comlaw. The amending class order commences on 17 January 2011.


ASIC | Disclosure

Anti-competitive conduct – ACCC authorisations and notifications procedure

by Hilary Kincaid 6. January 2011 10:06

In some circumstances, the Australian Competition and Consumer Commission may grant immunity from legal action for anti-competitive conduct. Immunity may be granted under the authorisation and notification provisions of the Act where “the public benefit from the anti-competitive conduct outweighs any public detriment”.

Conduct cannot be authorised retrospectively.

The ACCC has released a summary for businesses and legal practitioners regarding how to apply for an “authorisation” or a “notification”. A complete copy is available in pdf on the ACCC site.

The summary sets out:

  • Who can apply
  • How to apply for an authorisation
    • Conduct to which an authorisation may relate (eg conduct which would otherwise constitute resale price maintenance, a secondary boycott, or a cartel provision)
    • Relevant fees and procedure for application
  • How to lodge a notification
    • Conduct which may come within the scope of a notification (third line forcing conduct, other exclusive dealing conduct, collective bargaining)
    • Relevant fees and procedure for lodgement
  • Application for review.

The process is set out in further detail in the ACCC publications Guide to authorisation, Guide to exclusive dealing notifications and Guide to collective bargaining notifications.  


Compliance | Disclosure | Takeovers and Reconstructions | ACCC

ASIC releases new regulatory guide on online financial services disclosures

by Hilary Kincaid 14. December 2010 11:05

ASIC has released a new regulatory guide regarding online financial services disclosure: RG 221 Facilitating online financial services disclosures.


In the guide, ASIC sets out its interpretation of the Corporations Act’s online financial services disclosure provisions, and the relief that it has granted in CO 10/1219. More information is available on the ASIC site. The class order commenced yesterday (13 December) and modifies s 940C in relation to all persons. The explanatory statement is available on Comlaw.


ASIC | Disclosure

ASIC opens consultation on proposed guidance for independent experts reports and related party transactions

by Hilary Kincaid 18. October 2010 16:21

ASIC released two new consultation papers earlier today.

CP 142 Related party transactions sets out proposals for updated guidance for companies and managed investment schemes on whether and when an 'arm's length' exception applies when entering into transactions with related parties, or whether the members should be given an opportunity to vote on the proposed transaction. ASIC reiterates that it believes "that details of all arrangements...are material to investors and should be fully described in prospectuses, product disclosure statements and other material sent to shareholders for approval". 

CP 143 Expert reports and independence of experts sets out some proposed guidance for experts in making their valuation methodologies clear, and setting out a reasonable basis for the conclusions reached in their report. 

Comment on the consultation papers is open until 17 December 2010.   ASIC anticipates that, subject to any issues arising from the consultation process, updated guidance will be published to the market in March 2011.  More information is available on the ASIC official site.

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ASIC | Disclosure

Dynamic Supplies Pty Ltd v ASIC [2010] FCA 806

by Hilary Kincaid 19. August 2010 15:27

This decision of Reeves J was an appeal by Dynamic Supplies from a decision of the Administrative Appeals Tribunal under s 44 of the Administrative Appeals Tribunal Act.

ASIC is able to grant relief under s 340(1) of the Corporations Act from part or all of the reporting requirements of Pts 2M.2, 2M.3, 2M.4 (other than Div 4), provided it is satisfied of the factors set out in s 342(1)(c). Dynamic had sought relief from ASIC from preparing (s 292(1)) and lodging (s 319(1)) its 2007/2008 financial report on the basis that information disclosed in that report, which is a public record, would be used to damage it by its competitors in an endemically competitive industry. 

ASIC refused relief. Dynamic applied to the AAT for review of that decision. The Tribunal considered that although there was a possibility that lodging the report may have an anti-competitive effect, that mere possibility was not enough to enliven the discretion in s 342(1)(c). The Tribunal concluded that, "on balance", compliance would not impose an unreasonable burden upon Dynamic and that the discretion should not be exercised in Dynamic's favour. ASIC's decision was therefore affirmed.

Dynamic's appeal on a question of law to the Federal Court was on the basis that the Tribunal had:

  • misconstrued the effect of the relevant provisions;
  • taken into account irrelevant considerations;
  • failed to take into account relevant considerations; and
  • failed to give proper reasons for its decision.

Justice Reeves dismissed the appeal on the basis that the Tribunal had provided adequate reasons and had taken into account proper considerations.

LexisNexis Daily Unreported Judgments Notifier brings you cases hot off the bench, twice daily, each business day - subscribe here. The notifier can be customised to your areas of law and jurisdiction.


ASIC | Disclosure


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