Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

I rise to indicate the coalition will be supporting the Corporations Amendment (No. 1) Bill 2008 [2009]. This bill prevents persons who were disqualified as company directors in New Zealand from becoming directors in Australia. The bill addresses a loophole in the existing law whereby people can effectively avoid disqualification by simply moving across the Tasman.

The objectives of this bill are in line with the principles espoused in the memorandum of understanding, or MOU, on business law harmonisation between the two countries. The benefits of mutually recognising director disqualification were raised by the former coalition government in 2006. That arose because in 1988 the Australian and New Zealand governments signed an MOU on the harmonisation of business law, thereby providing the starting point for dialogue between our two countries on business law issues. The original MOU has been subject to review every five years, the most recent of which took place in 2006 under the guidance of the then coalition Treasurer, Peter Costello. The 2006 review brought forth a revised agenda. Specific areas of business law such as director law harmonisation were identified, where it was thought that greater coordination would produce mutual benefits. New Zealand closed this regulatory gap by amending their Companies Act 1993 in 2006. The Australian bill is modelled on the New Zealand amendment of that year in order to provide cross-border consistency. This new level of harmonisation between the two nations takes us one step closer to achieving the one single economic market, the benefits of which will provide certainty and enhanced productivity and will assist cross-border entrepreneurship.

The Corporations Act will be amended by this bill to automatically disqualify someone from becoming a company director in Australia if they have been disqualified in New Zealand. The bill will extend the mechanism of Australian courts to disqualify people from becoming company directors where they have been disqualified by the law of a foreign jurisdiction. Only New Zealand will be prescribed at this point but the facility to prescribe other jurisdictions will be established by this amendment. Also, the bill will provide a facility for the Australian Securities and Investments Commission to apply to a court in order to disqualify directors of prescribed jurisdictions.

Consultation with industry reveals that key industry stakeholders are in support of these measures. The Australian Institute of Company Directors has publicly stated its support. The institute explains that these measures will provide a statutory framework which will assist its organisation in work already undertaken to exclude directors. In summary, the coalition will of course be supporting this legislation because it was by our actions in the previous government that this legislation has been brought about. I commend the bill to the Senate.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I was going to say ‘thanks to honourable senators’, but only one senator spoke, Senator Bernardi. I would like to thank him for taking part in the debate on the Corporations Amendment (No. 1) Bill 2008 [2009]. In summary, 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. New Zealand will be the first prescribed country that these provisions will operate in relation to; however, other countries will be able to be added at a later date.

The bill provides that a person will be automatically disqualified from managing corporations in Australia where they have been disqualified by a court in a prescribed country. In addition, an Australian court will have the power to disqualify a person from managing corporations on application by the Australian Securities and Investments Commission where the person has been disqualified under the law of a prescribed foreign country. This provision will cover situations where, for example, a person has been disqualified by a foreign regulator.

These arrangements will ensure that all people disqualified in Australia on the basis that they have been disqualified in a prescribed foreign country have had their disqualification scrutinised by a court. In this way, the bill addresses the specific concern that people who are disqualified from managing corporations in New Zealand could still manage corporations in Australia simply by crossing the Tasman. The bill fulfils a requirement under the Australian and New Zealand governments’ memorandum of understanding on business law coordination, moving us a step closer to achieving the policy goal of establishing a single trans-Tasman economic market based on common regulatory frameworks. New Zealand enacted its complementary provisions in 2007 and in the interest of cross-border consistency these amendments have been modelled on those of New Zealand. The regulations will be drafted in such a way as to allow other countries to be added at a later date.

Finally, I can inform the Senate that the Ministerial Council for Corporations—MINCO—was consulted in relation to these amendments to the laws and the national corporate regulation scheme and has approved them as required under the corporations agreement. I have also commenced consultation with MINCO on the accompanying regulations. Provided that approval is received, the regulation should be ready to commence contemporaneously with the provisions of the bill. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.