Jane Hume (Victoria, Liberal Party, Minister for Superannuation, Financial Services and the Digital Economy) Share this | Hansard source

I thank all senators for their contributions to this debate. The government is supporting the continuation of business while the coronavirus crisis continues to cause uncertainty and public health orders are imposed from time to time. Schedule 1 to the bill extends temporary relief to 31 March 2022. This relief allows companies to use technology to do three things: (1) to meet the regulatory requirements in the Corporations Act 2001 to hold meetings such as annual general meetings; (2) to distribute meeting materials, such as notices of meetings; and (3) to validly execute documents. To provide for future flexibility, the reforms give ASIC permanent powers to issue relief for requirements in respect of meetings and sending documents where beyond the control of the company. The government will continue to evaluate and improve regulatory settings. A review of annual general meetings will be conducted during the main annual general meeting season later this year. This review will assess how technology is effectively being used by companies to support engagement with shareholders and to ensure that regulatory settings support Australia's economic recovery plan.

Schedule 2 of the bill will amend our continuous disclosure laws so that companies and their officers will only be liable for civil penalty proceedings where they acted with knowledge, recklessness or negligence with respect to updates on price-sensitive information to the market. A review of the continuous disclosure reforms by an independent expert must be commissioned within six months of the second anniversary of their commencement. This will ensure that there is a legislative process for considering the effect of continuous disclosure reforms. These have been considerably contentious reforms, but I think it's important to remind the chamber that this is not undoing continuous disclosure. In fact, continuous disclosure obligations remain. It simply removes that strict liability provision.

Importantly, ASIC can pursue administrative, civil or criminal action regarding continuous disclosure. The standards for administrative and criminal action are entirely unaffected by these reforms. It is only the civil penalty standard that is changing so that ASIC must prove knowledge, recklessness or negligence. In fact, civil action can seek damages of the greater of $10.5 million or 10 per cent of a company's turnover. So you can understand that, with penalties of that magnitude—quite huge penalties, potentially—for an inadvertent breach, under continuous disclosure regimes, that is an unsustainable burden on the effective operations of these companies. It's also important to understand that, under existing standards for administrative actions by ASIC, ASIC doesn't have to prove knowledge, recklessness or negligence in order to issue infringement notices. These are up to $100,000. ASIC can, at the same time, also use enforcement tools such as court orders to require information to be disclosed.

Let me return to schedule 1. The reforms that we have introduced with schedule 1 were originally introduced on 5 May 2020 using a temporary instrument-making power which was inserted into the Corporations Act 2001 as part of the government's response to the coronavirus. That relief was extended in September 2020 for a further six months. While this relief expired on 21 March 2021, the rationale for introducing it, of course, remains. Uncertainty remains, due to COVID-19 and public health orders that are introduced from time to time. The relief that we've introduced in schedule 1 enables the continuation of businesses by allowing companies to host meetings virtually and to send meeting related materials and execute documents electronically. The extension of the relief will allow businesses to continue to comply with their regulatory obligations as they continue to deal with the uncertainty caused by the coronavirus.

There are amendments that are being introduced by the government which will, as a result of the uncertainty caused by the coronavirus crisis, extend the relief for those companies and their officers, so that they can comply with the regulatory requirements in the Corporations Act in respect of meetings, meeting related materials and document executions. Those amendments will also provide certainty to the many listed and unlisted companies that have 30 June and 30 September year ends and are expected to hold their annual general meetings in the second half of this year or early next year.

Also, to provide future flexibility, amendments are being made to provide powers to ASIC to issue relief in respect of those meetings and the sending of documents in exceptional circumstances, such as those caused by the coronavirus crisis. Requirements to notify members of their right to opt in to receive hard copy meeting material are also being removed. This is in response to feedback that these requirements would introduce unnecessary regulatory burdens. Alternative notification requirements are also being considered in the permanent reforms. Importantly, the amendments extend the relief until 31 March 2022 and will cover the majority of listed companies and many more unlisted companies which have 30 June and 30 September year-end dates and which are expected to hold AGMs in the second half of the year. The government intends to implement permanent reforms that will continue to allow companies to electronically sign company documents and send meeting related materials electronically. ASIC's relief powers are permanent and do not sunset on 31 March 2022.

To ensure future flexibility, ASIC will also be provided with powers to provide temporary relief in relation to the time frame in which an AGM must be held; in relation to whether meetings are held virtually, even if this is not permitted in the entity's constitution; as to whether documents, whether or not meeting related, can be sent electronically, regardless of standing elections to receive hard copies; and to extend the time frame for an entity to provide documents to members. ASIC can exercise this power if it considers that it may be unreasonable to expect the entity or entities to comply with legal requirements because of a situation that is beyond the control of the entities. Any determination issued by ASIC under this power will apply for a maximum of 12 months.

The government acknowledges the recommendations of the Senate Economics Legislation Committee and the Senate Economics References Committee in their reports dated 12 March 2021 and 30 June 2021, respectively. Having considered both reports, the government supports the conclusions and the recommendation in the Senate Economics Legislation Committee majority report and the Senate Economics References Committee dissenting report to pass this bill. I commend the bill to the Senate.