June 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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.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 Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) has been enacted and will come into effect on 1 July 2004. For a copy of the Act and its explanatory memorandum, go to:
http://scaleplus.law.gov.au/html/comact/12/6855/top.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2003120806.htm
The Age Discrimination Act 2004 (Cth), which will outlaw aged based discrimination at the Federal level, has passed into law. For a copy of the Act and its explanatory memoranda, go to:
http://scaleplus.law.gov.au/html/comact/11/6823/top.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2003062606.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2003092319.htm
The Government's choice of superannuation reforms have finally been enacted by Parliament and will come into effect on 1 July 2005. For a copy of the Superannuation Legislation Amendment (Choice of Superannuation Funds) 2004 (Cth) and its explanatory memoranda, go to:
http://scaleplus.law.gov.au/html/comact/12/6859/top.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2004042202.htm
http://scaleplus.law.gov.au/html/ems/0/2003/0/2004042203.htm
Two more sets of FSR related regulations have been made. The Corporations Amendment Regulations 2004 (No. 5) 2004 No. 145 amend various regulations in order to implement the Government's policy initiatives announced in the 25 February 2004 statement A More Flexible and Adaptable Retirement Income System. The Corporations Amendment Regulations 2004 (No. 6) 2004 No. 149 require licensees and product issuers to disclose various fees, benefits, costs and interests as dollar amounts in statements of advice, product disclosure statements and periodic statements with effect from 1 January 2005 unless they obtain an ASIC exemption. For a copy of the regulations and their explanatory statements, go to:
http://scaleplus.law.gov.au/html/numrul/20/10173/top.htm
http://scaleplus.law.gov.au/html/ess/0/2004/N/20040625145.htm
http://scaleplus.law.gov.au/html/numrul/20/10177/top.htm
http://scaleplus.law.gov.au/html/ess/0/2004/N/20040625149.htm
Regulations have also been proposed to amend the Corporations Regulations and Payment Systems and Netting Regulations to reflect the recent restructures of the ASX and SFE and recent variations to the licences issued to several market and clearing and settlement facility licensees. For a copy of the draft regulations and an explanatory statement, go to:
http://www.treasury.gov.au/documents/847/PDF/Corporations Regulations.pdf
http://www.treasury.gov.au/documents/847/PDF/explanation of proposed regulations.pdf
http://www.treasury.gov.au/documents/847/PDF/PSNA regulation.pdf
The Government has also released a package of fee disclosure initiatives containing a standardised approach for the disclosure of fees and costs for superannuation and managed investment products. It is made up of several elements including the mandating of the ASIC Fee Template (see below), a single-figure disclosure model and a ‘consumer advisory warning’ box. Draft regulations to implement the initiatives are intended to be released for public exposure in the near future. For a copy of the information booklet explaining the new initiatives, go to:
http://www.treasury.gov.au/documents/850/PDF/Fees_Disclosure_Information_Booklet.pdf
An example of ACCC’s cartel busting leniency policy at work - in 2002, Boral approached ACCC and voluntarily disclosed arrangements its subsidiary Midland Brick had entered into the previous year with a competitor, Bristile, fixing the price of clay bricks in Western Australia. In subsequent proceedings, Bristile was ordered to pay a pecuniary penalty of $1 million, and one of its senior manager $25,000, for breaching the Trade Practices Act 1974 (Cth). By consent, the court made a declaration that Midland Brick had contravened the Act, granted an injunction restraining it from engaging in similar conduct for 5 years, and ordered it to pay ACCC’s costs. However, no pecuniary penalty was sought from Midland Brick or from its senior manager involved in the conduct. See Media Release 094/04:
http://www.accc.gov.au/content/index.phtml/itemId/514226/fromItemId/2332
ACCC has succeeded in forcing Westfield to amend a standard form of release of liability used in deeds settling litigation with retail tenants. The standard form of release had previously required that tenants not only desist in any litigation, but also not commence, recommence or continue any administrative or governmental investigation against Westfield. ACCC had sued Westfield alleging that the release was unconscionable because it might have impeded the tenants from approaching or assisting ACCC in any investigation into Westfield’s conduct, it was not reasonably necessary for the protection of Westfield’s legitimate interests in ensuring the finality of litigation, and arose in circumstances where there was a significant difference in the relative bargaining strengths of the parties. Westfield acknowledged that the condition may have had the effect of discouraging tenants from approaching or assisting the ACCC, but apparently said that this effect was not intended. See Media Release 096/04:
http://www.accc.gov.au/content/index.phtml/itemId/515829/fromItemId/2332
APRA has released guidance material for the new superannuation licensing regime, including an explanatory guide on licensing and registration, application forms and information on those forms. The material can be accessed at:
http://www.apra.gov.au/Superannuation/Superannuation-Licensing.cfm
ASIC has amended Class Order 98/1418 (which exempts certain wholly-owned companies from the requirement to prepare and lodge audited financial statements under Chapter 2M of the Corporations Act where they enter into deeds of cross guarantee with their parent entity and meet certain other conditions) to remove the need for ASIC to approve a deed of cross guarantee or an assumption deed joining a company to an existing deed of cross guarantee. Now all that is required is that the deed be lodged with ASIC with a certification that: (i) the deed wording is exactly the same as that in the relevant ASIC pro-forma, and it has been properly executed by the parties to the deed and binds the parties in accordance with the terms of the deed; (ii) the audit reports of each company for the last 3 years were unqualified; and (iii) the financial reports of each company for the last 3 years were lodged with ASIC on time. The certification required in (i) must be provided by a legal practitioner holding a current practising certificate, which should include most in-house lawyers. The certifications in (ii) and (iii) must be provided by such a legal practitioner or by a registered company auditor. See Information Release IR 04-26:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/89A6A2B8F053C46DCA256EBD0007FEF7?opendocument
ASIC has issued revised guidelines on how Australian listed companies should disclose the value of options when disclosing directors' and executive officers' emoluments in their annual directors' reports. For a copy of the new guidelines, go to:
ASIC has released for comment a draft guidance paper entitled Authorised audit companies: Insurance arrangements, dealing with the obligation in CLERP 9 for companies wishing to register as company auditors to have adequate and appropriate professional indemnity insurance. For a copy of the draft paper, go to:
ASIC has released a research report on soft dollar benefits in the financial planning industry. The research explores the types of benefits that are offered to financial planning firms and how they are disclosed to clients. For a copy of the report, go to:
ASIC has released a revised version of the good practice model for fee disclosure in product disclosure statements for investment products. For a copy of the revised model, go to:
ASIC has clarified the auditing and other procedural requirements for investor-directed portfolio services (IDPS) and IDPS-like schemes by amending Class Order 02/294 (IDPS), Class Order 02/296 (IDPS-like schemes) and Class Order 02/295 (nominee and custody services). See Information Release IR 04-24:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/6EEEA735A52197FECA256EB600160F34?opendocument
ASIC has extended the transitional period under Class Order 04/194 for operators of managed discretionary accounts to achieve full compliance with Policy Statement 179, from 11 June 2004 to 10 December 2004. See information Release IR 04-21:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/57EA9A8D9E46F468CA256EB00023E3FF?opendocument
ASIC has issued Class Order 04/631 to clarify the scope of the 'associate' concept in section 12 of the Corporations Act and Class Order CO 04/523 providing takeovers and substantial holdings relief to operators of IDPS. See Information Release IR 04-22:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/94B1322FFD152479CA256EB5000A6A2A?opendocument
ASX has amended Market Rule Procedure 3.5.5 in relation to the initial recognition requirements for responsible executives and issued a new Guidance Note on the ongoing compliance and supervision responsibilities of responsible executives. See Participant Circular 291/04 and attachment:
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 305/04 and attachment:
ASX has released a new Guidance Note on the process followed by ASX’s Disciplinary Tribunal when imposing a penalty for a breach of its Market Rules. For a copy of the new Guidance Note, go to:
SFE has issued the individual contract specifications and various determinations for the New Zealand Broad Wool Futures Contract. See SFE Bulletin 30/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_030.pdf
Subject to regulatory approval, SFE proposes to launch a range of international bond spread futures contracts on 6 July 2004. The initial three contracts to be launched are 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 26/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_026.pdf
SFE has amended its operating rules to clarify the meaning of "contract unit" as it applies to an option contract. See SFE Bulletin 31/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_031.pdf
For a summary of the CLERP 9 reforms, see Mallesons, Mergers and Acquisitions Alert - 25 June 2004:
http://www.mallesons.com/publications/alerts/Mergers_and_Acquisitions_Alert_25_June_2004.pdf
For a general discussion of recent developments in employee relations law, see Allens Arthur Robinson, Focus: Workplace Relations – June 2004 and Blake Dawson Waldron, IR Bulletin (Labour Hire Special Edition) - June 2004:
http://www.aar.com.au/pubs/wr/fowrjun04.htm
http://www.bdw.com.au/publications/ir/ir062004.pdf
New offences are proposed in New South Wales for workplace surveillance and for blocking employee access to emails and the internet. For a summary of the Workplace Surveillance Bill (NSW), see Blake Dawson Waldron, Privacy Update - June 2004:
http://www.bdw.com.au/publications/privacy/privacy06-04.pdf
For a review of the recently proposed amendments to the Bankruptcy Act 1966 aimed at high-income earners who use bankruptcy to avoid paying their debts, see Allens Arthur Robinson, Focus: Insolvency - 1 June 2004:
http://www.aar.com.au/pubs/pdf/insol/foinsjun04.pdf
For a summary of reforms proposed in the Trade Practices Legislation Amendment Bill 2004, which implements the changes recommended by the Dawson Committee and which was introduced into the House of Representatives on 24 June 2004, see Gilbert & Tobin, Competition Law Update - 29 June 2004:
In Cole v South Tweed Heads Rugby League Football Club Limited [2004] HCA 29, the appellant was seriously injured by a motor vehicle shortly after leaving the respondent's premises in an inebriated state. She sued the respondent asserting that it had breached a duty to take reasonable care to monitor and moderate the amount of alcohol served to her and to ensure that she travelled safely away from the respondent's premises. A majority of the High Court held that the duty of care of a club to its patrons did not extend to taking reasonable care to protect persons from harm caused by intoxication following a deliberate and voluntary decision on their part to drink to excess. You have been warned! A copy of the judgment is available at:
http://www.austlii.edu.au/au/cases/cth/high_ct/2004/29.html
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