May 2007
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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 Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.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 Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007, Corporations (Fees) Amendment Bill 2007 and the Corporations (Review Fees) Amendment Bill 2007 have been introduced into Federal Parliament. The Bills implement previously announced changes to the regulation of financial services and corporations. They can be downloaded from:
The trustee of a number of superannuation schemes and operator of IDPS services has been convicted and fined after pleading guilty to charges of failing to report to ASIC breaches of their obligations under Chapter 7 of the Corporations Act. See ASIC Media Release 07-136:
The NSW Supreme Court has found that super switching advice given by First Capital, a Sydney-based financial planning firm, was misleading or deceptive and did not have a reasonable basis. The advice was given to 170 teachers encouraging them to switch from their state government superannuation scheme to a superannuation fund recommended by First Capital. The Court found the advice misleading because it did not properly explain the differences in fees between the 2 funds and, in most cases, did not deal with the insurance advantages for the teachers in remaining with their existing fund. It further failed to highlight the impact higher fees and costs have on potential returns and, in some cases, contained misleading comparisons between the past performance of the 2 funds. See ASIC Media Release 07-128:
ASIC has released a consultation paper outlining its proposed policy on licensing relief for trustees of wholesale equity schemes. For a copy, go to:
ASIC has released technical updates to three ASIC policy statements: PS 168 Disclosure: Product disclosure statements (and other disclosure obligations), PS 175 Licensing: Financial product advisers - Conduct and disclosure and PS 182 Dollar disclosure. It has also updated its guidance papers Licensing: The Scope of the Licensing Regime: Financial Product Advice and Dealing and Enhanced fee disclosure regulations: Questions and Answers. For a copy, go to:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps168.pdf/$file/ps168.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps175.pdf/$file/ps175.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps182.pdf/$file/ps182.pdf
ASIC has released its quarterly report outlining its decisions on applications for relief from the corporate finance, financial services and managed investment provisions of the Corporations Act over the last quarter of 2006. For a copy, go to:
ASX and Standard & Poor’s Index Services have announced changes to their Australian index methodology to allow foreign domiciled companies to be considered for inclusion in the S&P/ASX indices. To cater for those investors who want a purely Australian benchmark (i.e. excluding foreign-domiciled companies) two new indices will be created consisting exclusively of Australian domestic companies: the S&P/ASX All Australian 50 XAF Large-cap index (akin to the S&P/ASX 50) and the S&P/ASX All Australian 200 XAT Liquid benchmark index (akin to the S&P/ASX 200). The new S&P/ASX All Australian 50 index will replace the S&P/ASX 50 as the Australian market representation within the S&P Global 1200. See ASX Media Release 17 May 2007:
http://www.asx.com.au/about/pdf/mr20070517_new_indices.pdf
ASX has released its 2006 share ownership study. For a copy, go to:
http://www.asx.com.au/about/pdf/mr20070517_share_ownership_study.pdf
http://www.asx.com.au/about/pdf/shareownership_study_2006.pdf
http://www.asx.com.au/about/pdf/shareownership_study_2006_presentation_170507.pdf
ASX has released a new Guidance Note 34 explaining its approach to the addition and removal of cash market products and ETF securities to and from the list of approved short sale products and approved short sale ETFs. See Market Circular 226/07 and attachment:
ASX has released for public comment a draft policy on trade error resolution. The draft policy is available at:
https://www.asxonline.com/documents/trade_error_resolution_policy_may_2007.pdf
AUSTRAC has released 5 policies outlining its approach to education, monitoring, exemptions, enforcement and supervisory capability under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). For a copy, go to:
http://www.austrac.gov.au/education_policy.html
http://www.austrac.gov.au/monitoring_policy.html
http://www.austrac.gov.au/exemption_policy.html
http://www.austrac.gov.au/enforcement_policy.html
http://www.austrac.gov.au/supervisory_framework.html
AUSTRAC has released draft rules for consultation setting out the reporting and lodgement periods for the first compliance report required by providers of financial services, bullion and gambling services captured under new anti-money laundering laws. The draft rules can be viewed at:
http://www.austrac.gov.au/files/draft_amlctf_rules_com_report030507.pdf
AUSTRAC has issued draft Rules for consultation on the definition of 'approved third-party bill payment system' in section 5 of the AML/CTF Act. The draft rules can be viewed at:
http://www.austrac.gov.au/files/draft_amlctf_approved_3party_billpay290507.pdf
AUSTRAC has issued draft Rules for consultation on the particular type of electronic funds transfer instruction under section 70(a)(i) of the AML/CTF Act, to which tracing information applies. The draft rules can be viewed at:
http://www.austrac.gov.au/files/draft_amlctf_rules_s70efti_circum_re_credi290507.pdf
AUSTRAC has produced a self assessment questionnaire to assist the financial services sector, bullion dealers and gambling establishments meet their obligations under the incoming anti-money laundering and counter-terrorism financing system. For a copy go to:
http://www.austrac.gov.au/saq.html
SFE has published guidance on the obligations of participants under give up agreements. See SFE Notice 59/07:
http://www.sfe.com.au/content/notices/2007/notice2007_059.pdf
A recent report of SFE disciplinary action has some useful guidance on the prohibition against post allocation of trades. See SFE Notice 55/07:
http://www.sfe.com.au/content/notices/2007/notice2007_055.pdf
Recent budget changes affect finance leases, film incentives, Australian property trusts and personal property security reform. Legislation has also been introduced into Parliament concerning exemptions for withholding tax for certain syndicated loan facilities. For details, see Mallesons, Asset Finance - Budget and Interest Withholding Tax Legislation - 15 May 2007:
http://www.mallesons.com/publications/2007/May/8925479W.htm
And for more detail on the proposed amendments narrowing the scope of the interest withholding tax exemption in section 128F of the Income Tax Assessment Act 1936 for “debt interests” which are not in the form of debentures, see Mallesons, Latest Proposed Changes to the Section 128F Interest Withholding Tax Exemption - 16 May 2007:
http://www.mallesons.com/publications/2007/May/8931702W.htm
The Reserve Bank has released a paper beginning the formal process of consultation on the Bank’s review of the payments system reforms of recent years. See RBA media release 29 May 2007:
http://www.rba.gov.au/MediaReleases/2007/mr_07_09.html
http://www.rba.gov.au/PaymentsSystem/Reforms/RevCardPaySys/Pdf/issues_for_the_2007_2008_review.pdf
In the wake of the AWB Iraq wheat payments scandal, the Australian Federal Government has announced an overhaul and strengthening of Australia's foreign bribery laws. See Minter Ellison, Revision of Australia's Foreign Bribery Laws - 4 May 2007:
The Communications Legislation Amendment (Content Services) Bill 2007 (Cth) proposes to establish a new Australian regulatory regime for media content transmitted over telecommunications networks, including mobile networks and the internet. The fundamental purpose of the new regulatory framework is to reduce the risk of children being exposed to offensive or harmful material. See Mallesons, New Australian Regulatory Regime for Internet and Mobile Content - 24 May 2007:
http://www.mallesons.com/publications/2007/May/8943191W.htm
For a general discussion of recent developments in employee relations law, see Allens Arthur Robinson, Focus: Workplace Relations - May 2007:
http://www.aar.com.au/pubs/wr/fowrmay07.htm
For more detail on the Government's new "fairness test", see Minter Ellison, Federal Government Introduces New ‘Fairness Test’ Bill into Parliament - 29 May 2007:
http://www.minterellison.com/public/resources/file/eb4a890da672acf/HR%26IRUpdate_070529.pdf
And for more detail on Labor's plan for a new workplace relations system, see Blake Dawson Waldron, Industrial Relations & Employment Alert - May 2007:
http://www.bdw.com/publications/irca/irca052007.pdf
For a summary of the holdings of the High Court's recent decision in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (see below), see Blake Dawson Waldron, Litigation Update - 28 May 2007:
http://www.bdw.com.au/publications/litupdate/litupdate052007.pdf
The Native Title Amendment Act 2007 (Cth) has now come into effect and is designed to increase flexibility and certainty in the native title system. The amendments encourage the parties to resolve claims through agreement rather than litigation. See Allens Arthur Robinson, Focus: Native Title – May 2007:
http://www.aar.com.au/pubs/pdf/nat/fonat10may07.pdf
A new system of Aboriginal heritage protection in Victoria came into force on 28 May 2007. Cultural heritage management plans are a significant feature of the new regime. See Allens Arthur Robinson, Focus: Aboriginal Cultural Heritage – May 2007:
http://www.aar.com.au/pubs/pdf/nat/fonatmay07.pdf
The position adopted by the Australian Taxation Office in a draft class ruling issued to Hutchison Telecommunications (Australia) Limited on the income tax treatment of its current renounceable rights issue has significant implications for the ability of listed entities to raise capital. See Deacons, Legal Update: ATO to Tax Shareholders on the Market Value of Renounceable Rights - 8 May 2007:
In General Motors Acceptance Corp Australia v Southbank Traders Pty Ltd [2007] HCA 19, the High Court unanimously held that a vendor of motor vehicles sold by way of conditional sale on terms that property in the vehicles did not pass to the purchaser until the purchase price was paid in full, had a "security interest" in the vehicles within the meaning of the Chattel Securities Act 1987 (Vic) that required registration to protect the vendor from claims of subsequent purchasers. The decision has important ramifications for vendors who seek to protect the unpaid purchase price for goods by way of a 'Romalpa clause'. It can be viewed at:
http://www.austlii.edu.au/au/cases/cth/high_ct/2007/19.html
The High Court has held that section 206F of the Corporations Act 2001, which empowers ASIC to disqualify miscreants from managing corporations, is constitutionally valid. The decision in Visnic v Australian Securities and Investments Commission [2007] HCA 24 can be viewed at:
http://www.austlii.edu.au/au/cases/cth/high_ct/2007/24.html
The High Court has confirmed that for a third party to be liable for knowingly assisting a breach of fiduciary duty under the second limb of Barnes v Addy, the primary breach must be dishonest and fraudulent and that this head of liability should not be expanded to encompass non-fault principles of unjust enrichment or restitution. The decision in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 can be viewed at:
http://www.austlii.edu.au/au/cases/cth/high_ct/2007/22.html
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