December 2004
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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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.
The Federal Government has released for public comment draft amending regulations to the Corporations Regulations to give effect to the fee disclosure package announced in June 2004 by the Government in support of the Superannuation Choice of Fund reforms. The proposed regulations also contain a number of technical amendments that will refine the operation of certain elements of the Financial Services Reform Act 2001 (Cth) and promote certainty for industry. For a copy of the draft regulations and commentary, go to:
http://www.treasury.gov.au/documents/943/PDF/Corporations_Amendment_Regulations_2005.pdf
http://www.treasury.gov.au/documents/943/PDF/Commentaries.pdf
The Federal Government has enacted legislation to ensure the validity of agreements that were certified, approved or varied under the Workplace Relations Act 1996 (Cth) prior to the decision of the High Court in Electrolux Home Products Pty Ltd v The Australian Workers' Union [2004] HCA 40. For a copy of the Workplace Relations Amendment (Agreement Validation) Act 2004 and its explanatory memorandum, go to:
http://scaleplus.law.gov.au/html/comact/12/6911/top.htm
http://scaleplus.law.gov.au/html/ems/0/2004/0/2004112326.htm
ACCC has released guides on GST pricing for consumers and business. A copy of the guides can be downloaded at:
http://www.accc.gov.au/content/item.phtml?itemId=558027&nodeId=file41cb5f0378f70&fn=GST_consumer.pdf
APRA and ASIC have jointly released a consultation paper seeking industry comment on proposed guidance for good practice in unit pricing. Comments are due by 18 February 2005. A copy of the consultation paper is available at:
http://www.apra.gov.au/Superannuation/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=8114
ASIC has released updated versions of the AFS licensing kit, its AFS licensing guides and the guide Small business and your AFS licence: Compliance with Policy Statements 164 and 181 incorporating information on the conflicts management obligation introduced by CLERP 9. For a copy of the new kit and guides, go to:
http://www.asic.gov.au/asic/asic_polprac.nsf/byheadline/Applying+for+an+AFS+licence?openDocument
ASIC has finalised its policy on compliance with the dollar disclosure regime. For a copy of Policy Statement 182: Dollar Disclosure, go to:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps182.pdf/$file/ps182.pdf
ASIC has released a policy proposal paper Non-cash Payment Facilities and is seeking comment on its proposed longer term approach to regulating such facilities. For a copy of the policy proposal paper, go to:
ASIC has granted relief to secondary service providers from the Financial Service Guide obligations, so that secondary service providers can give their clients access to FSG information in a practical manner. See Information Release IR 04-78:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/056F908FF8BD2401CA256F720009D7EE?opendocument
ASIC has issued a new class order refining the relief issued in July 2004 allowing Statements of Additional Advice to be provided to retail clients instead of a Statement of Advice in certain circumstances. See Information Release IR 04-75:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/7C45A129B65AA290CA256F720003B403?opendocument
ASIC has extended until 30 September 2005 the interim relief available for certain managed investment schemes under Class Orders 98/51: Relief from the duty to separate assets of a managed investments scheme, 98/55: Investments in unregistered schemes and 02/239: Participating property syndicates. It has also extended until 31 March 2005 the interim relief that permits fund managers in certain circumstances to provide estimates of the transaction costs, value of scheme property and other expenses in setting the application and redemption price for interests in registered managed investment schemes and granted relief to allowed managed investment schemes to change some references in their constitutions to accounting standards without a meeting of members, to help them move smoothly to the new Australian accounting standards equivalent to International Financial Reporting Standards. See Information Releases IR 04-76, IR 04-77 and IR 04-79:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/453D447F9B9BC5B6CA256F720004E623?opendocument
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/F6474B1CDD7B36D8CA256F7200063DFF?opendocument
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/A58D486073CE9FB1CA256F7200181875?opendocument
ASIC has issued final versions of the CLERP 9 policy statements and practice notes issued as 'proof' versions on 1 July 2004. For a copy of Policy Statement 180: Auditor registration, Practice Note 34: Auditors' obligations: reporting to ASIC, Practice Note 66: Transaction-specific disclosure and Policy Statement 173: Disclosure for the on-sale of securities and other financial products, go to:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps180.pdf/$file/ps180.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/pn34.pdf/$file/pn34.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/pn66.pdf/$file/pn66.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps173.pdf/$file/ps173.pdf
ASIC has provided guidance about the application of the Corporations Act to people who provide taxation related advice. The guidance is given in the form of answers to two new frequently asked questions: 'Do I need an AFS licence to provide tax advice?' (QFS 149) and 'I am a financial planner. What particular requirements apply to me under the Corporations Act when I give advice about the tax implications of financial products?' (QFS 153). See Information Release IR 04-68:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/69B5A9CB833EC373CA256F6B00110FB1?opendocument
ASIC has published guidance notes for product issuers preparing and reviewing Product Disclosure Statements. See Information Release 04-71:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/397106FFCE58CD50CA256F70007DFB3B?opendocument
ASIC has released a guide to help licensees applying to vary their Australian financial services licence. A copy of the guide can be downloaded from:
ASIC has released a report outlining some of its decisions on recent applications for relief by financial service providers from the licensing, conduct, disclosure and managed investments provisions of the Corporations Act 2001 (Cth). A copy of the report is available at:
ASX has amended its Market Rules to allow trading participants to use up to two clearing participants to clear market transactions. It has also published a circular giving guidance on the prerequisites for a trading participant to clear through more than one clearing participant. See Participant Circulars 672/04 and 673/04 and attachments:
ASX has amended Market Rule Procedure 8.3.1 in relation to the accreditation requirements for retail client advisers who give financial product advice on warrants. See Participant Circular 648/04 and attachment:
ASX has published a new Guidance Note on the revised attestation required of directors and responsible executives as to key risks and internal systems and the corresponding risk management framework document. See Participant Circular 694/04 and attachments:
ASX has released a new Guidance Note on managed discretionary accounts and has amended its Market Rules Procedures to delete Procedure 7.10.6 relating to such accounts. See Participant Circular 655/04 and attachments:
The Ministerial Council on Consumer Affairs has released for public comment a discussion paper proposing a national regulatory scheme for finance and mortgage brokers. The discussion paper calls for submissions by 15 February 2005. For details, see Mallesons Stephen Jaques, Banking and Finance Alert - 23 December 2004:
http://www.mallesons.com/publications/alerts/Banking_and_finance_alert_23_December_2004.pdf
For a general discussion of recent developments in employee relations law, see Allens Arthur Robinson, Focus: Workplace Relations – December 2004 and Blake Dawson Waldron, IR Bulletin - December 2004:
http://www.aar.com.au/pubs/pdf/wr/fowrdec04.pdf
http://www.bdw.com.au/publications/ir/ir122004.pdf
For a discussion of the changes proposed to the General Insurance Code of Practice, see Minter Ellison, Focus on Australia’s Draft General Insurance Code of Practice - 14 December 2004:
For a summary of the income tax, GST and stamp duty issues associated with the development, licensing and transfer of intellectual property, see Blake Dawson Waldron, Australian Tax Issues for Intellectual Property - December 2004:
http://www.bdw.com.au/publications/taxip/taxip200412.pdf
In Central Exchange Ltd v Rivkin Financial Services Ltd [2004] FCA 1546, the Federal Court held that a provision in a company's constitution allowing the directors to postpone or change the venue of a general meeting could be used by the directors (assuming they were acting for a proper purpose) even in relation to a meeting convened by shareholders under section 249F of the Corporations Act 2001 (Cth). The judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/federal/2004/october/2004fca1546.htm
In Rivkin Financial Services Limited v Sofcom Limited [2004] FCA 1538, it was alleged that 3 companies with interlocking shareholdings and a common managing director had infringed the prohibition against insider trading when they had acted in concert to acquire a 5% shareholding in a listed company with the intention of requisitioning a meeting of members to remove certain directors of the listed company. The Federal Court held that the 3 companies could not avail themselves of the "own intentions" defence in section 1043I of the Corporations Act 2001 (Cth) because there were 3 separate companies involved. However, having regard to the nature of that information and the ease with which the protection of section 1043I could have been made available in the circumstances, the court declined to grant any relief. The court also found, given the lack of movement in market price when information about the intentions of the 3 companies became public, that the information in question was not materially price sensitive in any event. The judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/federal/2004/november/2004fca1538.htm
In ASIC v Emu Brewery Mezzanine Limited [2004] WASC 241, a company raised money by issuing debt instruments styled as promissory notes with a face value of $50,000 or more under an information memorandum. In an application for rulings on various issues, the WA Supreme Court ruled that the instruments were promissory notes for the purposes of section 89 of the Bills of Exchange Act 1909 (Cth) and section 9 of the Corporations Act 2001 (Cth). They were therefore not debentures and accordingly were not subject to the prospectus requirements in Chapter 6D of the Corporations Act. It held however that the promissory notes were an interest in a managed investment scheme (and by implication were therefore subject to the product disclosure requirements in Part 7.9 of the Corporations Act unless the investors were all wholesale investors). Interestingly, while the questions for ruling initially included whether the promissory notes were a "financial product" for the purposes of the Corporations Act, the parties chose not to make submissions on this point and the court therefore did not address this contentious issue. The judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/wa/2004/november/2004wasc0241.htm
In Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL (Receivers and Managers Appointed) (Administrators Appointed) [2004] VSC 477, the administrators of a company in financial distress structured a sale transaction of an interest in a mining joint venture to take advantage of a provision in the joint venture agreement allowing a joint venturer to transfer its interest to a related body corporate without the consent of the other joint venturer. The mechanism chosen was the simple expedient of ensuring that the transferor was given the right to appoint a majority of the directors of the transferee company, thereby technically rendering the transferee a subsidiary of the transferor. The Supreme Court of Victoria held that this mechanism fell within the letter of the joint venture agreement and did not infringe any implied duty of co-operation or good faith. The judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/vic/2004/november/2004vsc477.htm
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