July 2004
| Inhouse Home Page | Inhouse Library | Inhouse Archives | Search This Site |
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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.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 Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth) has been enacted. It amends the Trade Practices Act 1974, the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 to ensure that State and Territory professional standards legislation is not constitutionally overridden by inconsistent Federal law. For a copy of the Act and its explanatory memorandum, go to:
http://scaleplus.law.gov.au/html/comact/12/6873/top.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2003120807.htm
Regulations have been passed to implement the CLERP 9 reforms. The new regulations prescribe additional disclosure requirements in directors' annual reports, registration requirements for company auditors, auditing standards and authentication requirements for proxy appointments at meetings of members. For a copy of the Corporations Amendment Regulations 2004 (No. 7) 2004 (Cth) and their explanatory statement, go to:
http://scaleplus.law.gov.au/html/numrul/20/10237/top.htm
http://scaleplus.law.gov.au/html/ess/0/2004/0/20040709208.htm
ACCC has released an issues paper on collective bargaining and collective boycotts, which provides an insight into what the ACCC considers when businesses request an authority to engage in such activities and when it is likely to look favourably on such requests. The issues paper can be downloaded from:
A couple of interesting examples of enforcement action for misleading advertising under section 52 of the Trade Practices Act (Cth). ACCC has instituted legal proceedings against Advanced Medical Institute Pty Ltd, an advertising agent and well known television identity Mr Ian Turpie alleging misleading and deceptive conduct in relation to an advertisement for a nasal spray treating erectile dysfunction. The advertisement appeared in newspapers published in major Australian capital cities under the headline 'TV's Star's Amazing Confession!' and represented that Mr Turpie had admitted in an interview in the presence of his wife that he had been losing his sexual potency but that AMI's nasal spray had cured his malady. It is alleged that neither statement was true and that Mr Turpie was knowingly concerned in a contravention of section 52. Mr Turpie apparently has admitted his role in the alleged contravention and, as a result of his co-operation, ACCC has granted him partial immunity from prosecution. See Media Release 130/04:
http://www.accc.gov.au/content/index.phtml/itemId/525106/fromItemId/2332
With shades of the NRMA "free share" controversy, ACCC has won a court decision against Telstra finding a '$0 mobile phone' advertisement misleading and deceptive. Customers who took the $0 mobile phone option did not receive call credits that were available to other customers on monthly member plans and had to commit to a longer minimum contract term which involved higher early termination charges. ACCC asserted that the '$0 statement' was misleading because the full bundled package effectively cost more with the product offered for $0 than the remaining goods and services cost without it. See Media Release 140/04:
http://www.accc.gov.au/content/index.phtml/itemId/527589/fromItemId/2332
APRA has outlined the approach it will be taking during the implementation of International Financial Reporting Standards in Australia, which will commence operation in Australia on 1 January 2005. For details, see:
http://www.apra.gov.au/media-releases/04_25.cfm
APRA has released draft prudential standards on business continuity management for authorised deposit-taking institutions, general insurers and life insurance companies. The draft standards and related materials can be downloaded from:
http://www.apra.gov.au/Policy/Draft-Prudential-Standards-Business-Continuity-Management.cfm
APRA has determined reporting standards under the Financial Sector (Collection of Data) Act 2001 (Cth) that establish the framework for the National Claims and Policies Database. The standards have effect from 30 June 2004 and must be met by authorised general insurers, including Lloyds of London. The final data specifications are available at:
www.apra.gov.au/General/National-Claims-and-Policies-Database.cfm
ASIC has issued a new Policy Statement 180: Auditor registration and revised Practice Note 34: Auditors' obligations: reporting to ASIC, Practice Note 66: Transaction-specific disclosure and Policy Statement 173: Disclosure for the on-sale of securities and other financial products to address CLERP 9 requirements. You can download them at:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps180.pdf/$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 announced details of its procedures for dealing with the new audit notifications required under CLERP 9. See Information Release IR 04-33:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/3B549254C85DC511CA256ED70014A0A9?opendocument
ASIC has provided further guidance on how it expects licensees to prepare Statements of Advice and also published a new class order, [CO 04/0576] Statements of Additional Advice, to facilitate shorter SOAs where the adviser has an ongoing relationship with the client. The class order provides relief to permit SOAs to incorporate by reference certain information that the client has already received in a previous SOA. See Media Release 04-236 and Information Release IR 04/034:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/A1E4E0F667CE0019CA256ED800072045?opendocument
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/5F1A0B5D0C83C457CA256ED80008502D?opendocument
ASIC has announced its interim position on transaction costs for registered managed investment scheme constitutions. Until 31 December 2004, ASIC will take a no-action position with respect to any existing scheme constitution that does not make adequate provision for the transaction costs component of scheme prices and will consider granting relief, on a case-by-case basis, to remove the need for a scheme constitution to contain a mechanism that is certain, complete and independently verifiable for calculating the transaction costs component of scheme prices. In the meantime, ASIC will consult with the managed funds industry on a proposal to grant ongoing class order relief to address the issue. See Information Release IR 04-31:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/B6C071477F8F6AF2CA256ECB001CA3D9?opendocument
ASX has released 5 replacement Guidance Notes on: Automated Order Processing: Authorised Persons; Automated Order Processing: Certification; Automated Order Processing: Operational Requirements; Crossings of Traded Products: Automated Order Processing; and New Clients or Clients Trading in New Products for the First Time – Despatch of Explanatory Booklets. For a copy of the replacement Guidance Notes, go to:
In response to submissions received on its proposed changes to the Market Rules dealing with responsible executives announced in Participant Circular 253/04, ASX has decided to make a number of changes to the proposed Rules and released new supporting Procedures and a draft Guidance Note. See Participant Circular 356/04 and attachments:
SFE has introduced a 3, 4, 5 and 6 month strip trading facility on 30 Day Interbank Cash Rate Futures. It is also launching an NZSX 15 index futures (the 'ZIF'), 5 New Zealand equity options products and a new cash settled Westpac individual share futures contract. For details, see SFE Bulletins 36/04, 38/04 and 39/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_036.pdf
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_038.pdf
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_039.pdf
SFE has issued the individual contract specifications and various determinations for its recently introduced international bond spread futures contracts (Australia/US 10 Year Bond Spread Futures, New Zealand/Australia 3 Year Bond Spread Futures and New Zealand/Australia 10 Year Bond Spread Futures). See SFE Bulletin 35/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_035.pdf
Recent and proposed amendments to tax laws have implications for Australian interest withholding tax exemptions. For details, see Allens Arthur Robinson, Focus: Capital Markets – July 2004:
http://www.aar.com.au/pubs/cm/focmjul04.htm
For the first time in Australian corporate history, a director has been jailed for insolvent trading. See Deacons, Legal Update: Director Jailed for Insolvent Trading - 5 July 2004:
http://www.deacons.com.au/Upload/NewsUploads/News587.pdf
CLERP 9 Act has re-introduced a requirement into the Corporations Act 2001 (Cth) for listed companies and responsible entities of listed managed investment schemes to keep a register of information they receive under tracing notices issued under section 672A of the Act. See Freehills, Tracing Ownership - Back to the Future - 26 July 2004:
Mallesons, Information Technology Alert - July 2004 contains an interesting discussion of directors' duties in relation to outsourcing transactions. See:
For a general discussion of recent developments in employee relations law, see Allens Arthur Robinson, Focus: Workplace Relations – July 2004:
http://www.aar.com.au/pubs/pdf/wr/fowrjul04.pdf
For a brief summary of the Government’s “choice of super fund” laws embodied in the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004 (Cth) that passed into law on 30 June 2004, see Deacons, Legal Update: Choice of Fund – a New Era for Employers, Superannuation Funds and Employees - 13 July 2004:
http://www.deacons.com.au/Upload/NewsUploads/News591.pdf
For news of a recent decision handed down in the Victorian Magistrates Court that is likely to have implications for employers regarding the long service leave entitlements of long serving regular casual employees, see Deacons, Legal Update: Are You Being Too Casual About Employee Entitlements? - 21 July 2004:
http://www.deacons.com.au/Upload/NewsUploads/News596.pdf
For a summary of the new Superannuation Safety Amendment Act 2004 (Cth) and its ramifications for trustees of superannuation funds, see Allens Arthur Robinsons, Focus: Superannuation – July 2004:
http://www.aar.com.au/pubs/pdf/fmres/fosjul04.pdf
The government has decided to withdraw and revise its exposure draft of the Bankruptcy Legislation Amendment (Anti-Avoidance and Other Measures) Bill 2004 (Cth) (mentioned in last month's Inhouse Update). See Allens Arthur Robinsons, Client Update: Insolvency - Proposed Bankruptcy Amendments - July 2004:
http://www.aar.com.au/pubs/insol/cuinsoljul04.htm
For a discussion of the recently tabled report of the Parliamentary Joint Committee on Corporations and Financial Services entitled Corporate Insolvency Laws: A Stocktake (which addresses a wide range of issues and may bring substantial changes to Australia's insolvency laws), see Allens Arthur Robinsons, Focus: Insolvency - July 2004:
http://www.aar.com.au/pubs/pdf/insol/foinsoljul04.pdf
Significant changes to the merger clearance and authorisation processes in Australia are proposed under legislation recently introduced into Parliament. The Trade Practices Legislation Bill 2004 (Cth) proposes the introduction of a voluntary new regime for formal merger clearance and amendments to the Trade Practices Act 1974 (Cth) to allow firms to apply directly to the Australian Competition Tribunal to seek authorisation of anti-competitive mergers. Firms will still be able to access the long-standing informal clearance process, although it is unclear how this process will operate alongside the new formal process. See Freehills, Proposed Legislation to Introduce Formal Merger Clearance Process - 21 July 2004:
In Turnbull v NRMA [2004] NSWSC 577, the directors of NRMA, in their capacity as members, successfully brought an action under the oppression provisions in sections 232 and 233 of the Corporations Act 2001 (Cth) to prevent a meeting requisitioned by members under section 249D of the Act being held to consider a resolution to amend the objects of NRMA in a way designed to enhance the position of patrol officers involved in an industrial dispute with the NRMA. The requisition had been organised by a union representative involved in the dispute. Readers will recall from our April 2004 Inhouse Update that the court had previously ruled that the requisition was valid and that the directors were obliged to proceed with the meeting. In the meantime, the industrial dispute had been settled. The court held that to hold the meeting in the circumstances would be contrary to the interests of members of NRMA as a whole, given the considerable expense that would be incurred. A copy of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2004/june/2004nswsc577.htm
Bateman v Newhaven Park Stud Ltd [2004] NSWSC 566 contains a useful discourse on the meaning of "acting in concert" for the purposes of the associate test in section 15 of the Corporations Act 2001 (Cth). The case concerned a share buy back and the requirement that the buyback be approved by a special resolution on which no votes had been cast in favour of the resolution by a person whose shares are to be bought back or by an associate of such a person. The court held that the fact that certain shareholders had family relationships and were members of the same board of directors was not sufficient to establish an association in relation to the buyback. A copy of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2004/june/2004nswsc566.htm
In Solution 6 Holdings Limited v Industrial Relations Commission of NSW [2004] NSWCA 200, a person who had sold his company to, and became an employee of, Solution 6 initiated proceedings in the Industrial Relations Commission seeking relief under the unfair contracts regime in section 106 of the Industrial Relations Act 1996 (NSW) in relation to both the share sale agreement and his employment contract. Solution 6 sought and was granted an order by the NSW Court of Appeal in the nature of prohibition to prevent the Commission from dealing with that part of the employee’s summons for relief relating to the share sale agreement on the basis that it was not a contract for performing work in an industry and the relationship between the agreement and the performance of work was merely indirect or consequential. The majority of the same court reached a similar decision in QSR Limited v Industrial Relations Commission of NSW [2004] NSWCA 199 in relation to an option deed entered into in favour of the promoter of a company. Copies of the judgments are available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2004/july/2004nswca200.htm
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2004/july/2004nswca199.htm
In Australian Competition and Consumer Commission v Lux Pty Ltd [2004] FCA 926, the Federal Court found that the defendant engaged in unconscionable conduct in breach of the Trade Practices Act 1974 (Cth) in relation to the sale of a vacuum cleaner to a consumer on credit. The court also found that the door-to-door salesman who made the sale was knowingly concerned in and a party to the breach. The woman in question was home alone at her house when the salesman called. She was intellectually impaired and substantially illiterate, unable to understand commercial matters in any depth and unlikely to be able to make a worthwhile judgment as to whether buying the vacuum cleaner would be in her best interest. The court found that these factors should have been apparent to the salesman and that he should have insisted that a guardian, carer or other appropriate person was present to help assist her with the decision or recommended that she seek independent advice before proceeding with the transaction. A copy of the judgment is available at:
http://www.austlii.edu.au/au/cases/cth/federal_ct/2004/926.html
Copyright © 2004 Inhouse Legal Solutions Pty Limited ("ILS") ABN 16 003 663 456.
This newsletter is a summary only of the subject matter covered and is not intended to be, nor should it be relied upon as, a substitute for legal or other professional advice. It is made available without the assumption of a duty of care by ILS, or the officers, employees or agents of ILS who were involved in its preparation and without any representation or warranty as to accuracy or completeness. ILS is not responsible for, and gives no representations or warranties regarding, the source, quality, accuracy or completeness of the materials on any web site to which a hyperlink is provided above.