April 2002
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In this edition:
Note: All hyperlinks below were correct at the time of publication. Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.
Amendments to Corporations Act
The Financial Services Reform (Consequential Provisions) Bill 2002, mentioned in last month's update, received Royal Assent on 5 April 2002 and is now operative. For the text of the Act, go to:
http://scaleplus.law.gov.au/html/comact/11/6485/top.htm
Proposed Amendments to Corporations Regulations
Treasury has proposed a regulation to revive the effect of the arrangements in Part 7.8 of the Corporations Act (deposits by participants with the ASX), which was repealed by the Financial Services Reform Act. The proposed regulation will apply to ASX participants only until they opt into the FSR regulatory regime. For a copy of the proposed regulation, go to:
http://www.treasury.gov.au/fsr_regulations/Submissions/10-2-20B.pdf
ACCC - enforcement action - tobacco litigation
ACCC has announced that it will investigate whether there has been any misleading, deceptive or unconscionable conduct in breach of the Trade Practices Act following the recent Victorian Supreme Court decision that British American Tobacco and its lawyers had engaged in a process of document destruction to withhold information relevant to possible litigation. No doubt with one eye on the Daniels appeal before the High Court, there is also a thinly veiled criticism of the use of legal professional privilege initially to avoid disclosure of incriminating information that came to light only after the court had ruled that BAT had impliedly waived legal professional privilege. See media release 76/02:
http://203.6.251.7/accc.internet/digest/view_media.cfm?RecordID=650
APRA - policy - draft prudential standard for life companies
APRA has released for public comment a draft prudential standard setting out minimum prescribed capital amounts for registered life companies. For a copy of the draft standard, go to:
http://www.apra.gov.au/Policy/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=4448
ASIC - guide - transitioning pre-FSR licences and registrations
ASIC has released a guidance paper for holders of pre-FSR licences and insurance broker registrations setting out the basic assessment processes ASIC will use to determine whether an applicant is able to legislatively streamline a particular activity. For a copy of the paper, go to:
ASIC - EFT Code
The revised Electronic Funds Transfer (EFT) Code came into effect on 1 April 2000. For a copy of the revised Code and for a plain English summary of its provisions, go to:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/eft_code.pdf/$file/eft_code.pdf
http://www.asic.gov.au/fido/fido.nsf/byid/CA256AFA0080A5DECA256AFB00050D3E?opendocument
ASX - amendments to Business Rules
ASX has amended its Business Rules to fix an anomaly regarding trading during the after hours adjust phase and to introduce new trading strategies for tailor-made ETO combinations. It has also proposed an amendment to increase the potential issue size for warrants. See circulars 200/02, 211/02 and 221/02 and the accompanying rule amendments:
http://www.asx.com.au/pdf/Circular200_02.pdf
http://www.asx.com.au/pdf/Attachment_afterhoursadjust.pdf
http://www.asx.com.au/pdf/BlueCircular_211_02.pdf
http://www.asx.com.au/pdf/Attachment211_2.pdf
http://www.asx.com.au/pdf/BlueCircular221_02.pdf
http://www.asx.com.au/pdf/Attachment_WarrantRule.pdf
ASX - guidance note - cancellation of error trades on the DTF
ASX has published a guidance note (03/02) on the rights and obligations of trading participants in relation to trading errors that occur when using the Derivatives Trading Facility. For a copy of the guidance note, go to:
http://www.asx.com.au/pdf/GuidanceNote_03_02.pdf
SFE - further minor amendments to FSR transitional Business Rules
Since the issue of Bulletins 17/02 and 26/02, SFE has made some further minor amendments to the transitional Business Rules introduced for the Financial Services Reform Act. For details, see Bulletin 35/02:
http://www.sfe.com.au/Content/bulletins/sfe/2002/sfe2002_035.pdf
For an interesting discussion of the regulatory implications of the Enron collapse, see Freehills, Tidying up after Enron: Regulatory Issues:
The Human Rights and Equal Opportunity Commission recently ordered the removal of materials on the web site of a South Australian organisation, on the basis that they were an unlawful breach of the racial hatred provisions of the Racial Discrimination Act. The Commission also ordered the organisation to post a detailed apology on its homepage. The case is the first finding of unlawful racial hatred in relation to materials published on a web site in Australia. For details, see Gilbert & Tobin, Racial Hatred Provisions Applied to the Internet:
http://www.gtlaw.com.au/t/publications/default.jsp?pubid=325
For news of changes to superannuation laws that will allow executives who come to Australia on temporary visas from overseas to access their accrued superannuation entitlements when they go home, see Allens Arthur Robinson, Focus Superannuation - 15 April 2002:
http://www.aar.com.au/publications/pdf/fosapr02.pdf
For a discussion of safeguards that should be implemented in relation to employee share plans in light of recent NSW "unfair contracts" litigation under section 106 of the Industrial Relations Act 1996 (NSW), see Minter Ellison, Employee Share Plan Safeguards:
http://www.minters.com.au/mintersV2/uploads/files/HR&IRUpdate050402.pdf
And for a summary of amendments proposed to that section by the Industrial Relations Amendment (Unfair Contracts) Bill 2002 (NSW) released on 9 April 2002, see Corrs, Westgarth Chambers, Renewed Plans to Wind Back Unfair Contracts Jurisdiction:
http://www.corrs.com.au/WebStreamer?page_id=2909
For a discussion of FSR provisions affecting insurers, agents and brokers that are already in operation without any 2 year transition period, see Allens Arthur Robinson, Focus Insurance – 30 April 2002:
http://www.aar.com.au/publications/foi2apr02.htm
For a discussion of the new anti-terrorism measures introduced earlier this year that prohibit the holding or making available of assets for prescribed organisations suspected of involvement in terrorist activities, see Allens Arthur Robinson, Focus Insurance – 12 April 2002:
http://www.aar.com.au/publications/pdf/foiapr02.pdf
For a very useful discussion of the trade mark issues that need to be addressed within a corporate group, including when new trade marks are being developed and registered, when new trade marks are purchased and when the operations of a corporate group are being restructured, see Gilbert & Tobin, Corporate Trade Marks - Ownership and Licensing Within a Corporate Group:
http://www.gtlaw.com.au/t/publications/default.jsp?pubid=336
For an analysis of the changes made to the Australian patent system on 1 April with the Patents Amendment Act 2001 and Patents Amendments Regulations 2002 coming into force (especially the new duty of disclosure and grace period provisions), see Allens Arthur Robinson, Focus - Patents 16 April 2002:
http://www.aar.com.au/publications/pdf/ptaapr02.pdf
For a discussion of the proposed NSW Health Records Information Privacy Bill 2001 and how it is likely to present compliance issues not only for health providers, but also for a range of organisations and industry sectors that have business dealings in NSW, including insurers and major employers, see Phillips Fox, New NSW Privacy Bill – another privacy compliance issue?:
http://www.phillipsfox.com.au/vbscript/displaydoc.asp?ndocid=93593
Corporations - accounting standards
For an interesting judgment on the proper construction of Accounting Standard AASB 1015 (accounting for assets acquired on reconstruction within an economic entity) and the effect of the partial disallowance of that Standard by the Senate, see Australian Securities and Investments Commission v MYOB Ltd [2002] VSC 34, a copy of which can be downloaded from:
http://cclsr.law.unimelb.edu.au/judgments/states/vic/2002/april/2002vsc34.htm
Corporations - voting under power of attorney
The New South Wales Henry George Foundation v Booth [2002] NSWSC 245 contains an interesting discussion of the right to vote under power of attorney as distinct from by proxy. In that case, the NSW Supreme Court treated a power of attorney as the equivalent of a proxy for the purposes of those provisions in the applicant's constitution dealing with the form and procedural requirements for proxies. It also held that a provision in its constitution requiring a proxy to be a member of the company was void as being contrary to section 249X of the Corporations Act. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2002/april/2002nswsc245.html
Litigation - access by journalists to court files
In ASIC v Rich [2002] NSWSC 198, the NSW Supreme Court has denied journalists access to an amended statement of claim on court files because of the perceived dangers associated with prematurely releasing untested allegations to the media for reporting, holding that the principles of open justice in this case were outweighed by the potential prejudice to the parties in the proceeding. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2002/march/2002nswsc198.html
Trade Practices - misleading and deceptive conduct - contribution by negligent solicitor
In Burke v LFOT Pty Limited [2002] HCA 17, the respondent made false representations to B, a director of and solicitor to a prospective purchaser of a property, about the creditworthiness of the tenant and neglected to disclose the payment of an incentive to the tenant. A contract of purchase was signed, containing a clause denying any representations about the financial standing of tenants. The purchaser sued successfully for breach of section 52 of the Trade Practices Act and was awarded $750,000 in damages as being the difference between the value of the property at the time of purchase and what it paid for the property. However, an order was made for B to contribute one half of this amount, on the basis that he had been negligent in not advising the purchaser about the effect of the clause in the contract and that his negligence had contributed to the loss suffered by the purchaser. The High Court, in a split decision, allowed B's appeal against the contribution order, holding that it would be unjust for B to have to contribute to the judgment as that would lead to the unjust enrichment of the party responsible for the misleading and deceptive conduct. For the full text of the judgment, go to:
http://www.austlii.edu.au/au/cases/cth/high_ct/2002/17.html
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