Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I speak in support of the Corporations Amendment (No. 1) Bill 2008 [2009]. The bill proposes to amend the Corporations Act 2001 to provide a mechanism for recognising in Australia disqualifications from managing corporations that occur in prescribed foreign jurisdictions. This is a particularly important piece of legislation to close a regulatory gap and prevent people from avoiding disqualification simply by moving jurisdiction from an overseas country to Australia. It is anticipated that our trans-Tasman brethren in New Zealand will actually be the first cab off the rank.

Initially it is suggested that mutual recognition will apply to New Zealand only, but the bill provides the tool, or the mechanism, by which other jurisdictions can later be added. It really is all about ensuring our relationship with New Zealand and other countries in terms of the consistency of corporations law being achieved. Our relationship with New Zealand is a longstanding one, as everyone in this House knows. In fact, New Zealand is actually mentioned in our Constitution. It was anticipated that New Zealand might actually become a state of Australia, and some would say that might have been a good thing. They are our natural allies, and they are our natural adversaries on the sporting field. But in terms of migration, trade, defence ties and people-to-people links we are very close and there are many Australians who travel to New Zealand for business and for holidays and who have relationships and relatives over there.

As someone who was in business for a long time before being elected, in 2007, I had many business relationships with people in New Zealand. In fact, I was part of a group of lawyers and law firms called the Southern Cross Legal Alliance. We had relationships with New Zealand firms in Auckland and Christchurch, and I visited New Zealand on many occasions with court cases overseas. Our firm had cases in New Zealand, and it was quite common to deal with New Zealand law firms on corporations, family law, personal injuries and other areas of law.

New Zealand, a country of about 4.2 million people, is our natural friend. It is like a brother to us as a country. We have cooperated well in international relations for a long time. In fact, we have looked to standardise our relationships in terms of the statute of limitations provisions, legal procedures, partnership laws, family law, the service of legal proceedings, evidence law, the standards of products, legal obstacles to greater federal-state and New Zealand-Australia cooperation—we have identified all these areas where we can work harmoniously together. We are part of the Pacific region. At the Pacific Islands Forum, APEC and the ASEAN regional security forum, we have dealt with New Zealand as part of our defence arrangements for a long time. New Zealand has been part of ANZUS. We have cooperated with New Zealand in East Timor, Bougainville and the Solomon Islands. And it is just natural to cooperate with New Zealand in the area of corporations law.

About 62,000 Australians live in New Zealand, many of them for business reasons. At last count—I think it was 30 June last year—there were 521,000 New Zealanders living in Australia. That is more New Zealanders, more Kiwis, living here in Australia than there are people who reside on the Gold Coast, in south-east Queensland, one of the biggest cities in our country. That goes to show just how many New Zealanders come to Australia to live and how many Australians go to New Zealand to live.

Australia makes up about 20 per cent of New Zealand’s trade. In fact, when you consider all the trade that goes on between the countries, the area of law that we are currently standardising is very important. The total trade between the country of Australia and the country of New Zealand is $16½ billion. That is an enormous sum of money that we are trading in imports and exports between the countries. Corporations deal with this all the time. So we have people from New Zealand coming to Australia and working in companies over here, and we have Australians working in companies in New Zealand. It is a bit like travelling across the Tweed River from Queensland to New South Wales or travelling across the Murray River: it is just natural for us to have relations with New Zealand.

We find from time to time that people who have been disqualified in our jurisdiction want to go and practise as managers and as directors in New Zealand and vice versa. New Zealand in 2007 closed this loophole. It is important to understand what the current law is in this regard, particularly in relation to managers and directors. In relation to the circumstances under which someone could be disqualified from a position as a director, the current Corporations Law in Australia does not provide for automatic recognition under Australian law of disqualification from being a director in another country. Only in circumstances where there are serious crimes, where a person has been convicted of an indictable offence in relation to the management of a financial company, do you find that they are disqualified. That is one of the key features of the old law. In circumstances where people are involved in offences of dishonesty punishable by imprisonment of at least three months, you might be disqualified, but disqualification is only a rare occurrence. Where people are managing corporations, the current law does not actually provide a mechanism by which a court in Australia can recognise a disqualification of a person from managing corporations that occurred in a foreign jurisdiction. So there is a real gap in our law in this area.

We entered into an agreement with New Zealand that was important in business law. It was a memorandum of understanding on business law coordination. What we are doing here, as has been said on numerous occasions, is taking yet another step along the way to cooperation with New Zealand in what has been described by many people as our greatest aspiration—that is, a single trans-Tasman economic market based on a common regulatory framework. That has been the aspiration of governments of both persuasions for a long time.

The relevant minister, Senator Sherry, the Minister for Superannuation and Corporate Law, in his second reading speech on 3 February this year said:

… the bill establishes a framework by which individuals who are disqualified from managing companies in prescribed foreign countries can also be disqualified in Australia either automatically or by court order. As such, the bill will improve protection for investors and the integrity of Australia’s markets.

It is just natural that New Zealand is the first prescribed country. Under the law change that we are talking about there is a mandatory aspect and a discretionary aspect. For example, the first proposed provision will result in a person being automatically disqualified from managing a corporation in Australia if they are disqualified from being a director or being concerned in the management of a foreign company by a court in a prescribed country. In other words, a court over there has looked at all the facts and said, ‘Well, this person should not be involved as a director or a manager in this country.’ A court of law in New Zealand has examined the facts and the law as it applies to that particular circumstance in that particular case and has decided against the director or manager. So there is a mandatory aspect to it: we have the protection of the New Zealand courts—and that is quite common. We commonly recognise New Zealand decisions in areas such as child support and family law and in other areas, where their judgements are recognised in our courts and then enforced. It is a common thing that we do in Australia.

The second proposed provision extends the power of Australian courts to disqualify people from managing corporations, an application made by ASIC. That means that a person has been disqualified under the law of a prescribed foreign jurisdiction, but a court of law has not actually looked at the facts of the case, so they are just automatically disqualified. In those circumstances, our courts will have a discretion to consider the disqualification and make a decision accordingly as to whether they think it is justified in all the circumstances. So whether people are automatically disqualified as a result of a court of law in New Zealand deciding the matter and Australia just recognising it or whether they are automatically disqualified in New Zealand and then come to Australia, our courts will act as a protection in the circumstance, with a discretionary aspect to the law change. This is important.

So, whatever the circumstance, a court of law, presided over by a New Zealand judge or an Australian judge, will consider the issue. Of course, we expect in future our OECD partners to also be engaged in this sort of process. It is closing the gap so that someone who is disqualified in New Zealand does not come over here and start practising as a manager or as a director. We simply do not want people who have been judged by our peers in New Zealand as not being capable or worthy of serving in those corporate capacities doing their job here in Australia. We do not want that to happen. We want our companies to be managed well, we want directors to fulfil their duties under the Corporations Law. We do not want directors and managers in those circumstances simply jumping ship, crossing the Tasman, and doing here in Australia what they have done in New Zealand and what the courts and the law of New Zealand have found they have done.

As I said, this amending legislation fulfils a requirement that the Australian and New Zealand governments have undertaken as part of the memorandum of understanding on business law coordination. In 2007 New Zealand did what we are doing here today. It is an important law change. It is important because we want integrity in our corporate law, in our managers. At this particular time we want as much honesty and probity amongst our corporate managers and directors as possible.

This amending legislation of course has the support of the Australian Institute of Company Directors, who have supported the law change. They supported the automatic disqualification initiative and they look forward to the further development of the law in this area. The legislation has also been through the process which is commonly known as MINCO—that is the Ministerial Council for Corporations. That body has been consulted and, in the circumstances, this particularly worthy legislative reform deserves the support of both chambers of this parliament, as does so much other legislation. As someone who has practised as a lawyer and who has dealt with cases in Australia and New Zealand, I am very pleased to support this bill.

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