February 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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.
SCALEplus has prepared a helpful mock-up of the Corporations Act 2001 incorporating the amendments made by the Financial Services Reform Act 2001 as if they were already in force. The mock-up can be downloaded in PDF format (in 5 volumes) from:
http://scaleplus.law.gov.au/docs/CorpsMockup/Corp01Vol1mockup.pdf
http://scaleplus.law.gov.au/docs/CorpsMockup/Corp01Vol2mockup.pdf
http://scaleplus.law.gov.au/docs/CorpsMockup/Corp01Vol3mockup.pdf
http://scaleplus.law.gov.au/docs/CorpsMockup/Corp01Vol4mockup.pdf
http://scaleplus.law.gov.au/docs/CorpsMockup/Corp01Vol5mockup.pdf
The Governor General has made two additional sets of amending regulations amending the Corporations Regulations to give effect to the FSR reforms. The regulations can be downloaded in PDF format from:
http://www.treasury.gov.au/fsr_regs/download/regs1.pdf
http://www.treasury.gov.au/fsr_regs/download/corp_amend.pdf
FSR Banking (Foreign Exchange) Regulations
The Governor General has also made regulations amending the Banking (Foreign Exchange) Regulations to give effect to the FSR reforms. The regulations can be downloaded in PDF format from:
http://www.treasury.gov.au/fsr_regs/download/foreign.pdf
APRA - policy - general insurance prudential standards
APRA has released 6 new prudential standards for general insurance companies: GPS 110 Capital Adequacy; GPS 120 Assets in Australia; GPS 210 Liability Valuation; GPS 220 Risk Management; GPS 230 Reinsurance; and GPS 410 Transfer and Amalgamation of Insurance Business. It has also released a transitional standard GPS 900, dealing with the early appointment of auditors and actuaries. You can download the entire set of prudential standards and accompanying guidance notes from:
http://www.apra.gov.au/General/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=4206
ASIC- policy - FSR licensing kit
ASIC has released its Financial Services Licensing Kit and an electronic licence application system. The licensing kit can be downloaded in 3 sections and the electronic licence system can be accessed respectively from:
http://www.asic.gov.au/asic/asic_polprac.nsf/byheadline/Applying+for+an+AFS+licence?openDocument
ASIC- enforcement action - lifetime banning orders
ASIC has made 3 life banning orders against advisers in the past month for various frauds and defalcations. See media releases 38, 58 and 68 of 2002:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/1E402E83239D975ACA256B590000BE69?opendocument
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/AEA9019AB5F18AF6CA256B66000997D3?opendocument
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/7F166D63942F1B25CA256B6E0005362B?opendocument
ASX - guidance note - BR 5.10 waivers
ASX has released Guidance Note 02/02 dealing with waivers from Business Rule 5.10 (transactions for employees of another trading participant). For a copy of the Guidance Note, go to:
http://www.asx.com.au/pdf/02-02.pdf
For a summary of the latest developments in banking and finance, see Allens Arthur Robinson, Banking & Finance Update - February 2002:
http://www.aar.com.au/publications/fabrfeb02.htm
Australian banks with offshore operations need to review their funding to ensure that they will not be denied tax deductions for interest expenses under Australia’s new thin capitalisation rules. See Allens Arthur Robinson, Focus: Banking & Finance Update - February 2002:
http://www.aar.com.au/publications/fofinfeb02b.htm
Phillips Fox's Corporate Alert February 2002 includes a summary of the Takeovers Panel guidance note on lock up devices and the new ASX proxy form requirements that came into effect on 1 January 2002. See:
http://www.phillipsfox.com.au/vbscript/displaydoc.asp?ndocid=93008
Allens Arthur Robinson's Focus: Workplace Relations - February 2002 considers three recent judgments: one that casts light on the dangers of not adhering to your own employment policies, one on the calculation of compensation in unfair contracts cases and one on varying an award retrospectively:
http://www.aar.com.au/publications/fowrfeb02.htm
Amendments to sections 707(3) and (4) of the Corporations Act 2001 due to take effect on 11 March 2002 had potentially serious consequences for the securities placement market. However, it now appears likely that ASIC will provide meaningful relief from the new provisions, at least for a six month trial period. See Freehills, Placements after 11 March 2002 – Some good news (28 February 2002):
For a summary of general insurance developments over the past year, see Allens Arthur Robinson, 2001 Annual Review of Insurance Law - General Insurance Law:
http://www.aar.com.au/publications/ari/general.htm
For a discussion of the recent High Court decision in Maggbury Pty Ltd v Hafele Australia Pty Ltd on confidentiality agreements (mentioned in our December 2001 Update), see Blake Dawson Waldron, Is Your Confidentiality Agreement Enforceable?:
http://www.bdw.com.au/areas/ip/Confidentiality_Agreement_01-02.pdf
For some helpful tips on how, in a post-Enron environment, companies can properly guard against the risk of unhelpful or damaging documents coming to light if they become involved in litigation, see Allens Arthur Robinson, Focus: Commercial Litigation - February 2002:
http://www.aar.com.au/publications/foclfeb02.htm
The Federal Court has ruled that Queensland’s alternate native title laws are partially invalid. See Clayton Utz, Federal Court declares part of alternative state provisions to be invalid - validity of certain mineral titles now in question (11 February 2002):
http://www.claytonutz.com.au/issalert/A_02/020211.htm
For an outline of the new takeovers telephone monitoring requirements due shortly to come into effect, see Freehills, Telephone Monitoring in Takeovers - 25 February 2002:
For a concise and helpful summary of the proposed new tax rules for consolidation, see Minter Ellison, Fast Facts: Getting Ready for Consolidation 14 February 2002:
http://www.minters.com.au/mintersV2/uploads/files/GettingReadyForConsolidation.pdf
For an interesting discussion of the recent decisions in ACCC v Universal Music/Warner Music (held that a 15% market share amounted to substantial market power) and ACCC v Safeways (held that it was acceptable for a retailer with substantial market power to refuse to stock products from suppliers until it was given equivalent terms to its competitors provided it did not do so for a purpose proscribed by section 46 of the Trade Practices Act), see Blake Dawson Waldron, Competitition Law News - February 2002:
http://www.bdw.com.au/publications/competition/competition022002.pdf
Corporations - fraudulently inducing a person to deal in securities
In R v Albuino [2001] SASC 397, it was held that section 1000 of the Corporations Act (fraudulently inducing a person to deal in securities by dishonest concealment of facts) is not limited in its application to listed public companies and applied to a negotiated sale of shares in a proprietary company. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/sa/2001/december/2001sasc397.html
Corporations - liability of foreign directors to insolvent trading
In James v Andrews [2001] NSWSC 1149, the issue arose whether a director of a NSW company at all times resident in New Zealand could be liable for the company's insolvent trading and therefore amenable to service of process outside of the jurisdiction. Young CJ held that he could. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2001/december/2001nswsc1149.htm
Employees - exemplary damages for breach of fiduciary duty
In Digital Pulse Pty Limited v Christopher Harris [2002] NSWSC 33, two employees who had decided to go into business for themselves in competition with their employer gave their new venture a head start by remaining in employment and diverting to themselves their employer’s business opportunities until they were economically secure enough to declare their hands, throw in their employment and compete openly. Held that the employees had breached their contractual and fiduciary duties of loyalty to their employer and that they were therefore liable for damages for breach of contract and an account of profits or equitable compensation for breach of fiduciary duty. The court also awarded exemplary damages for the employees’ breach of fiduciary duty, which is apparently the first time a court of equity has done this in Australia. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2002/february/2002nswsc33.html
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