Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 (Cth)

Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 Act No. 101 of 2007 as amended This compilation was prepared on 16 July 2008 [This Act was amended by Act No. 73 of 2008] Amendments from Act No. 73 of 2008 [Schedule 2 (item 3) amended item 108 of Schedule 1 Schedule 2 (item 4) amended item 112 of Schedule 1 Schedule 2 (items 3 and 4) commenced immediately after 28 June 2007] Prepared by the Office of Legislative Drafting and Publishing, Attorney‑General's Department, Canberra Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Amendments Part 1—Amendments commencing on Royal Assent Corporations Act 2001 Social Security Act 1991 Veterans' Entitlements Act 1986 Part 2—Amendments commencing on 1 July 2007 Corporations Act 2001 Part 3—Amendments commencing on Proclamation Corporations Act 2001 Income Tax Assessment Act 1936 Part 4—Amendment commencing on 1 July 2008 Corporations Act 2001 Part 5—Amendments commencing on 1 January 2009 Corporations Act 2001 Part 6—Application and saving provisions An Act to amend the law relating to corporations, and for related purposes [Assented to 28 June 2007] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 28 June 2007 2. Schedule 1, Part 1 The day on which this Act receives the Royal Assent. 28 June 2007 3. Schedule 1, Part 2 1 July 2007. 1 July 2007 4. Schedule 1, Part 3 A day or days to be fixed by Proclamation. items 198–215, 221 and 222: 1 September 2007 However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. (see F2007L02629) items 216–220: 28 December 2007 5. Schedule 1, Part 4 1 July 2008. 1 July 2008 6. Schedule 1, Part 5 1 January 2009. 1 January 2009 7. Schedule 1, Part 6 The day on which this Act receives the Royal Assent. 28 June 2007 Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Amendments Part 1—Amendments commencing on Royal Assent Corporations Act 2001 1 Section 9 (paragraph (a) of the definition of continuously quoted securities) Omit "12 months", substitute "3 months". 2 Section 9 (paragraph (b) of the definition of continuously quoted securities) Repeal the paragraph, substitute: (b) are securities of an entity in relation to which the following subparagraphs are satisfied during the shorter of the period during which the class of securities were quoted, and the period of 12 months before the date of the prospectus or Product Disclosure Statement: (i) no exemption under section 111AS or 111AT, or modification under section 111AV, covered the entity, or any person as director or auditor of the entity; (ii) no exemption under paragraph 741(1)(a), or declaration under paragraph 741(1)(b), relating to a provision that is a disclosing entity provision for the purposes of Division 4 of Part 1.2A covered the entity, or any person as director or auditor of the entity; (iii) no order under section 340 or 341 covered the entity, or any person as director or auditor of the entity; 3 Section 9 Insert: contribution plan means a plan in respect of which the following conditions are met: (a) regular deductions are made from the wages or salary of an employee or director (the contributor) to acquire financial products that are offered for issue or sale to the contributor under an eligible employee share scheme; (b) the deductions are authorised by the contributor in a form which is included in, or accompanies, the disclosure document or the Product Disclosure Statement for the scheme; (c) before acquiring the financial products under the scheme, the deductions are held on trust in an account with an Australian ADI that is kept solely for that purpose; (d) the contributor may elect to discontinue the deductions at any time; (e) if the contributor so elects, the amount of the deductions standing, at that time, to the credit of the account for the contributor, and any interest on that amount, is repaid to the contributor; (f) the scheme does not involve the offer to the contributor of a loan or similar financial assistance for the purpose of, or in connection with, the acquisition of the financial products that are offered under the scheme. 4 Section 9 Insert: eligible employee share scheme means an employee share scheme for a body corporate in respect of which the following conditions are met: (a) the scheme is offered only to employees or directors mentioned in paragraph (a) of the definition of employee share scheme; (b) the financial products that are offered under the scheme are offered: (i) under a disclosure document or Product Disclosure Statement; or (ii) without disclosure under Part 6D.2 in accordance with subsection 708(12); (c) the financial products which may be acquired under the scheme are the following: (i) fully paid ordinary shares; (ii) options, offered for no more than nominal consideration, for the issue or transfer of fully paid ordinary shares; (iii) units in fully paid ordinary shares. 5 Section 9 (definition of employee share scheme) After "or units in shares", insert "or options to acquire unissued shares". 6 Section 9 (after paragraph (m) of the definition of managed investment scheme) Insert: (ma) a contribution plan; 7 Section 9 (at the end of the definition of Product Disclosure Statement) Add: Note: For the effect of the lodgment of a Replacement Product Disclosure Statement, see section 1014J. 8 Section 9 Insert: Replacement Product Disclosure Statement, when used in a provision outside Chapter 7, has the same meaning it has in Chapter 7. 9 Section 9 Insert: rights issue has the meaning given by subsections 9A(1) and (2). 10 At the end of Division 1 of Part 1.2 Add: 9A Meaning of rights issue (1) A rights issue is an offer of a body's securities for issue in respect of which the following conditions are met: (a) the securities being offered for issue are in a particular class; (b) either: (i) the offer is made to every person who holds securities in that class to issue them, or their assignee, with the percentage of the securities to be issued that is the same as the percentage of the securities in that class that they hold before the offer; or (ii) if the conditions in subsection (3) are met—such an offer is made to every person with a registered address in Australia or New Zealand who holds securities in that class; (c) the terms of each offer are the same. (2) A rights issue is an offer of interests in a managed investment scheme for issue in respect of which the following conditions are met: (a) the interests being offered for issue are in a particular class; (b) either: (i) the offer is made to every person who holds interests in that class to issue them, or their assignee, with the percentage of the interests to be issued that is the same as the percentage of the interests in that class that they hold before the offer; or (ii) if the conditions in subsection (3) are met—such an offer is made to every person with a registered address in Australia or New Zealand who holds interests in that class; (c) the terms of each offer are the same. (3) The conditions in this subsection are met if: (a) the body or responsible entity (as the case requires) decides that it is unreasonable to offer securities or interests (as the case requires) for issue to persons (the non‑residents) with a registered address in a place outside Australia or New Zealand, after taking into account the following matters: (i) the number of non‑residents, in that place, to whom offers would otherwise be made; (ii) the number and value of the securities or interests that would otherwise be offered for issue; (iii) the cost of complying with the laws, and any requirements of any regulatory authority, of the place where the securities or interests would otherwise be offered for issue; and (b) the body or responsible entity: (i) sends details of the offer to each non‑resident in that place; and (ii) advises each non‑resident in that place that the non‑resident will not be offered the securities or interests; and (c) if the invitation to apply for, or the right to be issued with, the securities or interests is able to be assigned—the body or responsible entity: (i) advises each non‑resident in that place that a nominee will be appointed to sell the invitation or right that would otherwise have been offered to the non‑resident; and (ii) advises each non‑resident that the nominee will send the non‑resident any net proceeds from the sale of that invitation or those rights; and (iii) appoints a nominee in Australia to carry out the obligations referred to in subparagraphs (i) and (ii). (4) For the purposes of this section, a reference to an offer of securities includes a reference to an invitation to apply for the issue of securities. 11 Paragraph 45A(2)(a) Omit "consolidated gross operating revenue", substitute "consolidated revenue". 12 Paragraph 45A(2)(a) Omit "$10 million", substitute "$25 million, or any other amount prescribed by the regulations for the purposes of this paragraph". 13 Paragraph 45A(2)(b) Omit "$5 million", substitute "$12.5 million, or any other amount prescribed by the regulations for the purposes of this paragraph". 14 Paragraph 45A(2)(c) After "50", insert ", or any other number prescribed by the regulations for the purposes of this paragraph,". 15 Paragraph 45A(3)(a) Omit "consolidated gross operating revenue", substitute "consolidated revenue". 16 Paragraph 45A(3)(a) Omit "$10 million", substitute "$25 million, or any other amount prescribed by the regulations for the purposes of paragraph (2)(a),". 17 Paragraph 45A(3)(b) Omit "$5 million", substitute "$12.5 million, or any other amount prescribed by the regulations for the purposes of paragraph (2)(b),". 18 Paragraph 45A(3)(c) After "50", insert ", or any other number prescribed by the regulations for the purposes of paragraph (2)(c),". 19 Subsection 45A(6) Omit "Consolidated gross operating revenue", substitute "Consolidated revenue". 20 Subsection 163(3) (note) After "708", insert ", 708AA". 21 Subsection 283AA(1) (note) After "708", insert ", 708AA". 22 Subsection 285(1) (table item 4) Omit "send", substitute "provide". 23 Subsection 285(1) (table item 4) Omit "sent", substitute "provided". 24 Subparagraph 300A(1)(a)(i) Omit "directors, secretaries and senior managers of", substitute "the key management personnel for". 25 Subparagraph 300A(1)(a)(ii) Omit "other group executives", substitute "the key management personnel". 26 Paragraph 300A(1)(ba) Omit "director, secretary or senior manager", substitute "member of the key management personnel for the company, or if consolidated financial statements are required, for the consolidated entity". 27 Paragraph 300A(1)(c) Repeal the paragraph, substitute: (c) the prescribed details in relation to the remuneration of: (i) if consolidated financial statements are required—each member of the key management personnel for the consolidated entity; and (ii) if consolidated financial statements are not required—each member of the key management personnel for the company; and (iii) if consolidated financial statements are required—each of the 5 named relevant group executives who receive the highest remuneration for that year; and (iv) in any case—each of the 5 named company executives who receive the highest remuneration for that year; and 28 After paragraph 300A(1)(d) Insert: (da) if an element of the remuneration of a person referred to in paragraph (c) consists of securities of a body—discussion of board policy in relation to the person limiting his or her exposure to risk in relation to the securities, and the mechanism to enforce the policy; and 29 Subparagraph 300A(1)(e)(iv) Repeal the subparagraph, substitute: (iv) if options granted to the person as part of their remuneration lapse during the financial year because a condition required for the options to vest was not satisfied—the value of those options (worked out as at the time the options lapse, but assuming that the condition was satisfied); and 30 Subparagraph 300A(1)(e)(v) Repeal the subparagraph. 31 Subsection 300A(1) Omit all the words from and including "If a person" to and including "under subparagraph (c)(iii).", substitute "If a person is covered by more than one subparagraph in paragraph (c), details of the person's remuneration are only required in the report under one subparagraph of that paragraph.". 32 After subsection 300A(1A) Insert: (1AAA) For the purposes of subsection (1), key management personnel has the same meaning as in the accounting standards. 33 Subsection 300A(2) Repeal the subsection, substitute: (2) This section applies to any disclosing entity that is a company. 34 Paragraph 307C(5)(a) Repeal the paragraph, substitute: (a) either: (i) must be given when the audit report is given to the directors of the company, registered scheme or disclosing entity; or (ii) must satisfy the conditions in subsection (5A); and 35 After subsection 307C(5) Insert: (5A) A declaration under subsection (1) or (3) in relation to a financial report for a financial year or half‑year satisfies the conditions in this subsection if: (a) the declaration is given to the directors of the company, registered scheme or disclosing entity before the directors pass a resolution under subsection 298(2) or 306(3) (as the case requires) in relation to the directors' report for the financial year or half‑year; and (b) a director signs the directors' report within 7 days after the declaration is given to the directors; and (c) the auditor's report on the financial report is made within 7 days after the directors' report is signed; and (d) the auditor's report includes either of the following statements: (i) a statement to the effect that the declaration would be in the same terms if it had been given to the directors at the time the auditor's report was made; (ii) a statement to the effect that circumstances have changed since the declaration was given to the directors, and setting out how the declaration would differ if it had been given to the directors at the time the auditor's report was made. (5B) An individual auditor or a lead auditor is not required to give a declaration under subsection (1) or (3) in respect of a contravention if: (a) the contravention was a contravention by a person of subsection 324CE(2), 324CF(2) or 324CG(2); and (b) the person does not commit an offence because of subsection 324CE(4), 324CF(4) or 324CG(4). 36 After subsection 308(3B) Insert: (3C) If the directors' report for the financial year includes a remuneration report, the auditor must also report to members on whether the auditor is of the opinion that the remuneration report complies with section 300A. If not of that opinion, the auditor's report must say why. 37 Subsection 308(5) After "(3A)", insert ", (3C)". 38 Subsection 314(1) Repeal the subsection, substitute: (1) A company, registered scheme or disclosing entity must report to members for a financial year by providing either of the following in accordance with subsection (1AA) or (1AE): (a) all of the following reports: (i) the financial report for the year; (ii) the directors' report for the year (see sections 298 to 300A); (iii) the auditor's report on the financial report; (b) a concise report for the year that complies with subsection (2). (1AA) A company, registered scheme or disclosing entity may provide the reports, or the concise report, for a financial year by doing all of the following: (a) sending, to each member who has made the election referred to in paragraph (1AB)(a): (i) a hard copy of the reports, or the concise report; or (ii) if the member has elected to receive the reports, or the concise report, as an electronic copy in accordance paragraph (1AB)(c)—an electronic copy of the reports, or the concise reports; (b) making a copy of the reports, or the concise report, readily accessible on a web site; (c) directly notifying, in writing, all members who did not make the election referred to in paragraph (1AB)(a) that the copy is accessible on the web site, and specifying the direct address on the web site where the reports, or the concise report, may be accessed. Note: A direct address may be specified, for example, by specifying the URL of the reports or the concise report. (1AB) For the purposes of paragraph (1AA)(a), a company, registered scheme or disclosing entity must, on at least one occasion, directly notify in writing each member that: (a) the member may elect to receive, free of charge, a copy of the reports for each financial year, or a copy of the concise report for each financial year; and (b) if the member does not so elect—the member may access the reports, or the concise report, on a specified web site; and (c) if the member does so elect and the company, scheme or entity offers to send the report either as a hard copy or an electronic copy—the member may elect to receive the copy as either a hard copy or an electronic copy. (1AC) An election made under subsection (1AB) is a standing election for each later financial year until the member changes his, her or its election. Note: The member may request, under section 316, the company, registered scheme or disclosing entity not to send them material under this section. (1AD) A member may, for the purposes of paragraph (1AA)(c) or subsection (1AB), be notified by electronic means only if the member has previously nominated that means as one by which the member may be notified. (1AE) A company, registered scheme or disclosing entity may provide the reports, or the concise report, by sending each member: (a) a hard copy of the reports, or the concise report; or (b) an electronic copy of the reports, or the concise report, if the member has nominated that means as one by which the member may be sent the reports or the concise report. 39 Subsection 314(1A) After "subsection (1)", insert "or (1AB)". 40 Subsections 314(4), (5) and (6) Repeal the subsections. 41 At the end of section 315 Add: (5) For the purposes of this section, a company, registered scheme or disclosing entity that reports in accordance with subsection 314(1AA) is taken to report at the time that the company, scheme or entity has fully complied with the requirements of that subsection. 42 Paragraph 318(2)(a) Omit "sent", substitute "provided". 43 Subsection 319(1) Omit "sent", substitute "provided". 44 At the end of section 324AE Add: ; and (d) any person who recommends or decides what the lead auditor is to be paid in connection with the performance of the audit; and (e) any person who provides, or takes part in providing, quality control for the audit. 45 Subsections 324CA(1A), 324CB(1A) and 324CC(1A) (note 2) After "21 days", insert "(or a longer period that has been approved by ASIC)". 46 Subsection 324CE(1A) (note) After "21 days", insert "(or a longer period that has been approved by ASIC)". 47 Subsection 324CE(5) (table item 2) Omit "firm", substitute "individual auditor". 48 Subsection 324CE(5) (table items 3 and 4) Repeal the items, substitute: 3 a professional member of the audit team conducting the audit of the audited body 1 to 6 8 to 19 4 an immediate family member of a professional member of the audit team conducting the audit of the audited body 1 and 2 10 to 19 49 Subsection 324CF(1A) (note) After "21 days", insert "(or a longer period that has been approved by ASIC)". 50 Subsection 324CF(5) (table items 3, 4 and 5) Repeal the items, substitute: 3 a member of the firm 1 to 7 9 15 4 a professional member of the audit team conducting the audit of the audited body 1 to 6 8 to 19 5 an immediate family member of a professional member of the audit team conducting the audit of the audited body 1 and 2 10 to 19 51 Subsections 324CG(1A) and (5A) (note) After "21 days", insert "(or a longer period that has been approved by ASIC)". 52 Subsection 324CG(9) (table items 3, 4 and 5) Repeal the items, substitute: 3 a director or senior manager of the audit company 1 to 7 9 15 4 a professional member of the audit team conducting the audit of the audited body 1 to 6 8 to 19 5 an immediate family member of a professional member of the audit team conducting the audit of the audited body 1 and 2 10 to 19 53 Subsection 324CH(1) (table item 15) Repeal the item, substitute: 15 owes an amount to: (a) the audited body; or (b) a related body corporate; or (c) an entity that the audited body controls; unless the debt is disregarded under subsection (5), (5A) or (5B) 54 Subsection 324CH(1) (table item 16) After "subsection (6)", insert "or (6A)". 55 Subsection 324CH(1) (table item 18) Repeal the item. 56 After subsection 324CH(5) Insert: Goods and services exception (5A) For the purposes of item 15 of the table in subsection (1), disregard a debt owed by a person or firm to a body corporate or entity if: (a) the debt arises from the acquisition of goods or services from: (i) the audited body; or (ii) an entity that the audited body controls; or (iii) a related body corporate; and (b) the acquisition of goods and services was on the terms and conditions that would normally apply to goods or services acquired from the body, entity or related body corporate; and (c) the debt is owed on the terms and conditions that would normally apply to a debt owing to the body, entity or related body corporate; and (d) the goods or services will be used by the person or firm: (i) for the personal use of the person or firm; or (ii) in the ordinary course of business of the person or firm. Ordinary commercial loan exception (5B) For the purposes of item 15 of the table in subsection (1), disregard a debt owed under a loan that: (a) is made or given in the ordinary course of business of: (i) the audited body; or (ii) the related body corporate; or (iii) the controlled entity; and (b) is made or given on the terms and conditions that would normally apply to a loan made or given by the audited body, the related body corporate or the controlled entity. 57 After subsection 324CH(6) Insert: (6A) For the purposes of item 16 in the table in subsection (1), disregard an amount owed under a loan to a person or firm by the audited body, a related body corporate or an entity that the audited body controls if: (a) the body, body corporate or entity is an Australian ADI; and (b) the amount is deposited in a basic deposit product (within the meaning of section 761A) provided by the body, body corporate or entity; and (c) the amount was deposited, in the ordinary course of business of the audited body, body corporate or entity, on the terms and conditions that would normally apply to a basic deposit product provided by the body, body corporate or entity. 58 Subsection 324CH(7) Repeal the subsection. 59 After subsection 324CH(8) Insert: Future debts and liabilities (8A) In this section: (a) a reference to a debt or amount that is owed by one entity to another entity includes a reference to a debt or amount that will (or may) be owed by the first entity to the other entity under an existing agreement between the entities; and (b) a reference to a liability under a guarantee of a loan includes a reference to a liability that will arise under the guarantee if the loan is not repaid. 60 Paragraph 324CI(d) Omit "at the departure time", substitute "on the date the report under section 308 or 309 was made on the latest audit to which paragraphs (b) and (c) apply". 61 Paragraph 324CJ(d) Omit "at the departure time", substitute "on the date the report under section 308 or 309 was made on the latest audit to which paragraphs (b) and (c) apply". 62 Paragraph 324CK(c) After "audited body", insert "within a period of 5 years after the person ceased (or last ceased) to be a member of the audit firm or a director of the audit company (as the case may be)". 63 Paragraphs 327B(2A)(b), (2B)(b) and (2C)(b) After "21 days", insert ", or such longer period as ASIC approves in writing,". 64 Paragraphs 331AAA(2A)(b), (2B)(b) and (2C)(b) After "21 days", insert ", or such longer period as ASIC approves in writing,". 65 After section 342 Insert: 342AA Exemption orders—non‑auditor members and former members of audit firms; former employees of audit companies (1) On an application made in accordance with subsection (3) by any of the following, ASIC may make an order in writing relieving the applicant from all or specified requirements of Division 3 of Part 2M.4 (auditor independence): (a) a member of the firm who is not a registered company auditor; (b) a person who has ceased to be: (i) a member of an audit firm; or (ii) a director of an audit company; or (iii) a professional employee of an audit company. Note: For the criteria for making orders under this section, see section 342AC. (2) The order may: (a) be expressed to be subject to conditions; and (b) be indefinite or limited to a specified period. (3) The application must be: (a) in writing and signed by the applicant; and (b) lodged with ASIC. (4) ASIC must give the applicant written notice of the making, revocation or suspension of the order. (5) An order under subsection (1) is not a legislative instrument. 342AB Exemption orders—class orders for non‑auditor members etc. (1) ASIC may make an order in writing in respect of a specified class of audit firms or audit companies, relieving any of the following from all or specified requirements of Division 3 of Part 2M.4 (auditor independence): (a) members of firms who are not registered company auditors; (b) persons who have ceased to be: (i) members of audit firms; or (ii) directors of audit companies; or (iii) professional employees of audit companies. Note: For the criteria for making orders under this section, see section 342AC. (2) The order may: (a) be expressed to be subject to conditions; and (b) be indefinite or limited to a specified period. (3) An order under subsection (1) is a legislative instrument. 342AC Exemption orders—criteria for orders for non‑auditor members etc. To make an order under section 342AA or 342AB, ASIC must be satisfied that complying with the relevant requirements of Division 3 of Part 2M.4 would: (a) make the financial report or other reports misleading; or (b) be inappropriate in the circumstances; or (c) impose unreasonable burdens. Note 1: The heading to section 340 is replaced by the heading "Exemption orders—companies, registered schemes and disclosing entities". Note 2: The heading to section 341 is replaced by the heading "Exemption orders—class orders for companies, registered schemes and disclosing entities". Note 3: The heading to section 342 is replaced by the heading "Exemption orders—criteria for orders for companies, registered schemes and disclosing entities". 66 Subsection 601FC(4) Repeal the subsection. 67 Subsections 601HG(1) and (2) Repeal the subsections, substitute: (1) The responsible entity of a registered scheme must ensure that at all times a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the scheme's compliance plan in accordance with this section. This auditor, firm or company is referred to as the auditor of the compliance plan. (2) A person is not eligible to act as the individual auditor, lead auditor or review auditor of the compliance plan