Grant Chapman (SA, Liberal Party) Share this | Hansard source

Mr Acting Deputy President, I seek leave to incorporate the remainder of my speech.

Leave granted.

The speech read as follows—

As many would be aware, regarding the Vizard matter, there have been suggestions that this statement possibly contradicted earlier evidence he provided to a Magistrate’s Court committal hearing in 2003. We were informed that ASIC had assisted the Victorian Police in passing on to them this agreed statement.

The committee notes in its report that ASIC’s consideration of the perjury question when negotiating their agreed statement of facts remains somewhat unclear.

I also note that despite reports to the contrary, Mr Vizard’s former accountant, Mr Greg Lay, has continued to refuse to assist ASIC with their investigations on this matter.

Proposed business judgment rule

The committee also questioned ASIC on a proposal by the Parliamentary Secretary to the Treasurer, the Hon. Chris Pearce MP to extend a defence contained in the Corporations Act known as the ‘business judgment rule’.

The business judgment rule is based on the well established legal principle that the courts are reluctant to pass judgment on the merits of business decisions taken in good faith.

Currently the business judgment rule only operates in relation to the duty of care and diligence and not to any other provisions of the Corporations Act or under any other law. That is, the business judgment rule does not currently apply, for example, to the duty of good faith, the duty not to misuse position or company information, and the duty to prevent insolvent trading.

The proposed extension of the business judgment rule would significantly broaden the defence by providing a general protection for directors, excusing them from liability under the Corporations Act, subject to certain conditions.

ASIC officials raised concerns about the practical operation of the proposed extension. They said that the proposed change could make it harder for ASIC to enforce the law and that ‘if there is a suggestion that the rule itself is somehow different [from the existing business judgment rule], our position is that we do not support that.’

It was also acknowledged that ASIC has not been asked for advice on this proposal.

Given the broad nature of the proposed extension to the business judgment rule and the enforcement concerns raised by ASIC, the committee formed the view that these concerns should be provided directly to the government so that it fully understands the enforcement issues when it considers the merits of the proposal.

Accordingly the committee has recommended that ASIC provide advice to the Australian Government on its concerns regarding the enforcement effects of the proposal to broaden the ‘business judgment rule’ as well as any other proposals that would have significant enforcement implications.

I note that earlier this week the Parliamentary Secretary to the Treasurer announced that the proposed extension to the business judgment rule is one of several topics that ‘merit a more focused approach, because of the scope and complexity of the policy issues they raise’. Accordingly the proposed extension will be progressed in conjunction with other reviews by Treasury, at which stage ASIC’s enforcement concerns should be given due consideration.

I conclude by thanking the committee secretariat for its good work and I commend this report to the Senate.