March 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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.
Further minor amendments to the FSR Regulations have been promulgated - the Corporations Amendment Regulations 2004 (No 4) SR 36/2004. For a copy of the regulations and their explanatory statement, go to:
http://scaleplus.law.gov.au/html/numrul/20/10064/top.htm
http://scaleplus.law.gov.au/html/ess/0/2004/0/20040318036.htm
The Workplace Relations Amendment (Transmission of Business) Act 2004 (Cth) has finally been passed by Parliament. The Act amends the Workplace Relations Act 1996 (Cth) to empower the Australian Industrial Relations Commission to make an order that a certified agreement does not bind an employer as a result of a transmission of business, or only binds the employer to a specified extent or for a specified period. For a copy of the Act and its explanatory statement, go to:
http://scaleplus.law.gov.au/html/comact/11/6765/top.htm
http://scaleplus.law.gov.au/html/ems/0/2002/0/2002032511.htm
ACCC has warned advertising agencies and media outlets that it is launching a major campaign to bring to account those involved in the preparation and publication of misleading advertising content, including advertorials, infomercials and the promotion of products in the guise of current affairs reportage or lifestyle programs, in particular where the program purports to be credible investigative journalism but is simply promoting products. See Media Release 034/04:
http://www.accc.gov.au/content/index.phtml/itemId/489650/fromItemId/2332
APRA has released for public consultation proposed “fit and proper” prudential standards for authorised deposit taking, general insurance and life insurance institutions. A copy of the consultation paper and draft prudential standards are available on the APRA website at:
http://www.apra.gov.au/Policy/Draft-Prudential-Standards-Fit-and-Proper.cfm
ASIC has released version 5 of the AFS Licensing Kit, deleting information on the streamlining and composite assessment processes, as these are no longer available. To access the new licensing kit, go to:
http://www.asic.gov.au/asic/asic_polprac.nsf/byheadline/Applying+for+an+AFS+licence?openDocument
ASIC has released a new Policy Statement 179 on the regulation of managed discretionary account services. For a copy of the new Policy Statement, go to:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps179.pdf/$file/ps179.pdf
ASIC has put out a release saying that some industry participants have told it that their lawyers are advising them to produce Statements of Advice running to 80 or 90 pages in order to comply with the requirements of financial services regulation. ASIC says that this is not what it would expect to see under the law and it is not helpful to consumers. ASIC has confirmed that it expects key disclosure documents produced by financial services providers to be clear, concise and effective. See Media Release 04-062:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/67F913475FCE4D8DCA256E530020723D?opendocument
ASIC has issued two class orders that clarify the category of wholesale clients in the Corporations Act, Class Order 04/150: Wholly-owned subsidiaries of professional investors to be treated as wholesale clients and Class Order 04/173: Qualified accountant - amendment. See Information Release IR 04-12:
http://www.asic.gov.au/asic/asic_pub.nsf/byid/406F875DF717FE99CA256E620016756E?opendocument
ASIC has announced the extension of interim relief available for foreign collective investment schemes until 1 June 2004, to allow additional time to review its policy on foreign collective investment schemes in Policy Statement 65. See Information Release IR 04-014:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/74F36CA0A8BF4050CA256E670013F270?opendocument
The provisions in the ASX Listing Rules dealing with capital raisings have been amended with effect from 31 March 2004. There have also been a number of technical amendments to the Listing Rules that took effect on 11 March 2004 consequential upon the introduction of the new ASX Market Rules, ASTC Settlement Rules and ACH Clearing Rules. In addition, a number of ASX Guidance Notes have been updated to reflect these technical changes. For details, see:
http://www.asx.com.au/ListingRules/LRIntro.shtm
ASX has confirmed that the new ASX Market Rules, ACH Clearing Rules and ASTC Settlement Rules have now come into effect, following the expiry of the statutory disallowance period. The changes to the rules have a number of implications for ASX participants in terms of their AFS licences and client agreements. On the former, ASX has reached agreement with ASIC to treat outdated references in AFS licences to old rules and terminology as references to the corresponding new rules and terminology until such time as licences are varied accordingly. On the latter, ASX participants have been advised to review their existing contractual arrangements to make sure that they are consistent with the terminology and numbering changes in the new rules. See Participant Circulars 109/04 and 083/04 respectively:
ASX has also warned that the new ASX Market Rules and ACH Clearing Rules have a number of practical implications for the capital requirements of ASX participants and of a potential issue relating to approved subordinated debt that may require their immediate attention. See Participant Circular 105/04 and attachment:
ASX has issued a blanket “no action” letter in relation to changes introduced in the new ASX Market Rules and the ACH Clearing Rules which require client agreements for wholesale clients trading in derivatives on ASX markets. See Participant Circular 116/04:
ASX has advised that the ASX World Link Custody Terms & Conditions have been updated to reflect the recent FSR changes that came into effect on 11 March 2004. See Participant Circular 139/04:
ASX has recommended that market participants review their policies and procedures for discretionary accounts in light of the release of ASIC Policy Statement 179, mentioned above. See ASX Participant Circular 128/04:
ASX has released a new Guidance Note on Trade Errors, Cancellations and Dealing Disputes. For a copy of the new Guidance Note, go to:
SFE has issued a reminder about the need to self report inadvertent wash trades (ie where both sides of a trade are for the same account). See SFE Bulletin 15/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_015.pdf
SFE has issued a warning about the increasing tendency for participants to enter opposing orders into SYCOM for execution either simultaneously or within one second. It has noted that certain participants’ third party order systems enable the generation of multiple order entry screens that allow the pre-preparation of certain types of orders for fast release into the market. Legitimate uses of this functionality include the preparation of ‘stop loss’ or ‘market on close’ orders for immediate release into the trading platform. It is, however, deemed to be inappropriate to use such functionality (including the use of ‘mass release’ functionality) for the purpose of executing opposing orders in an attempt to exclude other market participants in contravention of Operating Rule 3.1.14 (Trading to the Exclusion of Others). See SFE Bulletin 14/04:
http://www.sfe.com.au/Content/bulletins/sfe/2004/sfe2004_014.pdf
For a general discussion of recent developments in banking and finance, see Clayton Utz, Insights: Banking & Financial Services - 18 March 2004:
http://www.claytonutz.com/areas_of_law/controller.asp?aolstring=&ns=111
For a summary of the ASX capital raising initiatives that came into effect on 31 March 2004 and those that have been deferred, see Mallesons, Capital Markets Alert - 16 March 2004:
http://www.mallesons.com/publications/alerts/Capital_Markets_Alert_16_March_2004.pdf
For a general discussion of recent developments in employee relations law (including the significance of the Workplace Relations Amendment (Transmission of Business) Act 2004 (Cth) mentioned above), see Allens Arthur Robinson, Focus: Workplace Relations – March 2004:
http://www.aar.com.au/pubs/wr/fowrmar04.htm
The Federal government's recently announced changes in superannuation may lead to many employers have to significantly restructure their payroll systems. For details, see Deacons, Legal Update: Super Reforms - Payroll Changes Required - 3 March 2004:
http://www.deacons.com.au/news/article.asp?nID=539
For a helpful summary of the current privacy rules governing employee records, see Minter Ellison, HR & IR Update - 1 March 2004:
http://www.minterellison.com/ajpe/resources/file/eb00280147c9a2b/HR&IR-Update_040227.pdf
In the recent case of Hanel v O'Neill [2003] SASC 409, a majority of the South Australian Supreme Court held that a director of a corporate trustee of a trading trust was personally liable for the trust's debts under section 197 of the Corporations Act 2001 (Cth) because the trust had insufficient assets to indemnify the trustee for liabilities incurred. For a discussion of the ramifications of the case, see Allens Arthur Robinson, Focus: Funds Management - Real Estate & Superannuation - March 2004 (#1):
http://www.aar.com.au/pubs/fmres/fofmresmar04.htm
The Federal Government's decision to reform Australia's anti-money laundering system in line with the revised Forty Recommendations of the Financial Action Task Force on Money Laundering will result in significant changes to Australia's money laundering legislation. See Allens Arthur Robinson, Focus: Funds Management - Real Estate & Superannuation - March 2004 (#2):
http://www.aar.com.au/pubs/pdf/fmres/fofmres2mar04.pdf
For a summary of the requirement for the holders of Australian financial services licences to include their licence number on various documents, see Phillips Fox, When do You Need to Include Your AFS Licence Number on Documents? - 23 March 2003:
http://www.phillipsfox.com/vbscript/displaydoc.asp?ndocid=114147886
Allens Arthur Robinson, Insureds, Interested and Named Parties examines the difference and significance of being listed as an interested or named party on a policy of insurance, rather than being named as an insured. For a copy, go to:
http://www.aar.com.au/pubs/pdf/insur/ins18feb04.pdf
For a discussion of how to protect designs under the new Designs Act 2003, which comes into force on 17 June 2004, see Freehills, Changes to Australian Designs Law - 22 March 2004 and Gilbert & Tobin, Looks are Everything: Protecting Designs - 15 March 2004:
http://www.gtlaw.com.au/binaries/pdf/publications/LooksAreEverything.pdf
For commentaries on the full text of the Australia-United States Free Trade Agreement, see Allens Arthur Robinson, Client Update: Free Trade Agreement - 4 March 2004 and Blake Dawson Waldron, Australia - US Free Trade Agreement:
http://www.aar.com.au/pubs/intl/cuftamar04.htm
http://www.bdw.com.au/publications/fta/fta03-2004.pdf
For a summary of significant recent amendments to stamp duty legislation in several Australian states, particularly the land rich provisions in New South Wales and Western Australia, see Allens Arthur Robinson, Focus: Stamp Duty – March 2004:
http://www.aar.com.au/pubs/pdf/fmres/fosdmar04.pdf
For a discussion of the Federal Government's proposed uniform defamation law and its ramifications for free speech and freedom of the press, see Allens Arthur Robinson, Focus: Defamation - March 2004:
http://www.aar.com.au/pubs/pdf/ldr/fodefmar04.pdf
For a discussion of the recommendations of the recent Senate Economics References Committee report, which unanimously concluded that the Trade Practices Act needs amending to protect small businesses from anti-competitive conduct, see Blake Dawson Waldron, Competition Law News - March 2004:
http://www.bdw.com.au/publications/competition/competition%20032004.pdf
Those following the continuing HIH saga will be interested in the latest instalment, R v Adler [2004] NSWSC 108. In that case Rodney Adler applied for a permanent stay of criminal proceedings brought against him for stock market manipulation and making false or misleading statements in relation to securities. He argued that the criminal proceedings infringed the rule against double jeopardy and constituted an abuse of process because he had already been punished for the same conduct in earlier civil penalty proceedings. The application was refused. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2004/march/2004nswsc108.htm
In ASIC v Drury Management Pty Ltd, it was held that two accountants who had obtained loans from private investors, guaranteeing returns in the range of 12% to 15% per annum, were conducting an unlawful managed investment scheme without the requisite licence. The pair raised nearly $8 million from 118 investors, mainly by way of promissory notes. The money was paid in each instance to Drury Management Pty Ltd, which received the money into one or other of two trust accounts, and then applied by it for a variety of purposes, including the purchase of stocks and bonds, the purchase of real estate and the financing of loans to proprietary companies controlled by various associates of the respondents. The fact that contributions from investors were in fact pooled in the two trust accounts and that 3 of the contributors had been told by one or other of the respondents that their money was to be pooled with the funds of other people, was held to be sufficient to satisfy the requirement for pooling of funds in the definition of managed investment scheme. The case demonstrates just how easy it is to fall on the wrong side of the line of the laws regulating managed investment schemes. The full text of the judgment is available at:
http://cclsr.law.unimelb.edu.au/judgments/states/qld/2004/march/2004qsc068.htm
In Network Ten Pty Limited v TCN Channel Nine Pty Limited [2004] HCA 14, Channel 9 sued Channel 10 alleging that the broadcasting of excerpts from its programs on Channel 10's TV show The Panel infringed its copyright in those programs. A majority of the High Court held that the protection afforded by section 87 of the Copyright Act 1968 (Cth) to television broadcasts did not extend copyright to each visual image capable of being observed as a separate image on a television screen and that a substantial part of a television program had to be copied to constitute infringement. The matter was remitted back to the Full Federal Court to determine whether the excerpts broadcast by Channel 10 met the test of substantiality. The judgment is available online at:
http://www.austlii.edu.au/au/cases/cth/HCA/2004/14.html
In Cassidy v Saatchi & Saatchi Australia Pty Ltd [2004] FCAFC 34, the Full Federal Court agreed with the court at first instance that an advertising agency which had prepared misleading advertisements for a client, which were vetted and approved by the client and then published by various newspapers, did not make the representations contained in the advertisements and was not guilty of misleading conduct in breach of section 12DA of Australian Securities & Investments Commission Act 2001 (Cth). The judgment is available online at:
http://cclsr.law.unimelb.edu.au/judgments/states/federal/2004/february/2004fcafc34.htm
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