Chapter 12
Additional proposed reforms
12.1
In light of the scale and incidence of the problem of insolvency
in the construction industry, it is unsurprising that a number of submissions
and witnesses identified additional areas of reform. These ideas are the
culmination of sustained and engaged thinking by participants within the
industry and are worthy of consideration. This chapter will examine five areas
for reform:
-
whether a legal obligation should be placed on individuals or
organisations to warn the regulators of impending insolvency events;
-
measures to enhance transparency surrounding the identity of
beneficial owners and directors;
-
the pressing problem of unscrupulous pre-insolvency advice;
-
whether debt assignments should be valued in a different manner
for the purpose of voting in creditors meetings; and
-
whether the Federal Circuit Court of Australia should have
jurisdiction over corporate insolvencies.
Legal obligation to warn of impending insolvency
12.2
Chapters 3 and 4 explored the terrible effects—both economic and
social—that insolvency has on participants within the industry, their families
and the broader community. Preventing these devastating consequences from
affecting more Australians is the driving force behind this inquiry.
12.3
Chapter 6 illustrated that some businesses connected to Walton
Constructions may have been aware of the perilous state of the Walton companies
before their sudden collapse. Companies with either inside knowledge or strong
suspicion of Walton's situation then acted to limit their exposure to Walton.
Unfortunately, evidence presented before the committee suggests that this is an
all too common occurrence. Associate Professor Michelle Walsh explained that
the research team from Melbourne and Monash universities 'suspect that...it is
going on across a whole lot of different scales'.[1]
12.4
Some witnesses discussed one potential legislative reform that
seeks to combine these two strands of thought. At present there is no legal
obligation on any person that knows or suspects that a company is almost
insolvent to advise the regulator. Rather, as Mr John Winter, ARITA, explained,
banks and other commercial parties are presently 'limited in what they can
disclose, outside of having to report a criminal act'.[2]
The creation of such an obligation will improve the regulators' ability to
detect insolvency in real time and thus better protect unsecured creditors. The
question raised before this inquiry is, therefore: should a legal obligation to
warn of impending insolvency be placed on individuals or organisations?
12.5
Economists recognise that information asymmetry—where one person
in a market knows more than another person, i.e. a person selling a car knows
more about the car than a buyer—leads to incomplete and inefficient markets.
Joseph Stiglitz has drawn on this fact to explain that within a market economy
certain government intervention—through appropriately designed regulations—can
lead to more efficient outcomes.[3]
12.6
While regulation generally focuses on preventing harmful
behaviour, it can also be used to promote constructive behaviour. In this case,
an obligation on financial institutions to inform the regulator that a business
is in financial distress, may lead to a more efficient allocation of capital.
That is, a struggling company may enter administration earlier, undergo a
restructure, and emerge in a more efficient form, or the business' expedient
closure will allow for redeployment of capital and employees to more productive
uses.
12.7
Asymmetries of information naturally create power imbalances.
Removing the asymmetry by imposing a duty on those with more information to
inform other participants in the market will reduce power imbalances and lead
to a more effective market overall.
12.8
As noted in chapter 6, without endorsing the proposal, Mr Michael
Chesterman, QBCC, acknowledged that information is critical and any information
'which raises issues about whether or not a licensee meets the financial
requirements for licensing is gold'.[4]
12.9
Making a similar point, Mr Michael Cranston, ATO, noted that
without commenting on legislation or policy, the ATO encourages people 'as good
citizens' to bring any relevant information 'to the Tax Office'.[5]
12.10
Nevertheless, despite the attraction of this proposal, the
committee is concerned that it may not be workable.
12.11
In particular, blurring the distinction between financial
difficulty and insolvency runs the risk of critically damaging companies that
may otherwise trade themselves out of trouble. In this regard Mr Matthew
Strassberg, Veda, noted, a company in financial difficulty is in a very
different position from one trading while insolvent: 'obviously some companies
will work their way back out of a period of difficulty; that is a somewhat
different proposition from a company that is trading whilst bankrupt'.[6]
12.12
The act of informing the regulators that a company may be close
to insolvency is likely to spread throughout the industry and drain confidence
in that company, thereby speeding its descent into insolvency. Paradoxically,
this would make the situation worse for the company's creditors, as it ensures
that the company will not be able to turn around. Mr Price, ASIC, explained:
In some circumstances possibly initiatives like that may
help. They may also, however, result in companies entering into administration
at the first sign of any possible problem.[7]
12.13
Mr Price posed the question:
...if you were to provide that level of information, generally,
in the market, might it have an unintended consequence of a greater level of
business failure and impact on economic development and employment and all
those sorts of issues?[8]
12.14
Noting this, Mr Winter considered that a more beneficial approach
would be to promote 'a far more positive connotation to restructuring
turnaround in Australia'. Mr Winter explained his position:
That is that if directors sought expert advice early on and
did not get their businesses into this level of distress, and there was a
framework for them to work through that period to achieve the protection of
jobs and to achieve as great a protection of creditors as possible, that would
be one of the most significant reforms that could be undertaken to the
Australian insolvency regime.[9]
Committee's views
12.15
The committee believes that information is critical in inhibiting
illegal phoenix activity and in preventing small-scale insolvencies turning
into larger collapses. The committee recognises that government intervention
through appropriate regulation can remove information asymmetries, leading to
more efficient operation of the market. Thus, the committee is supportive, in
principle, of requiring banks to warn respective regulators if they have
reasonable grounds to suspect that a business is in financial distress and may
be about to trade insolvent. However, the committee accepts that imposing a
legal obligation on banks would be largely counterproductive and may force
companies that otherwise could survive into insolvency. The committee suggests
that participants in the industry who provide goods or services on credit
should seek as much information about the financial situation of the trading
partner as early as possible, in order to protect their own interests.
Increasing transparency and verifying company directors
12.16
To register a company, a person must lodge an application with
ASIC. Under section 117(2) of the Corporations Act, the application must
include the name and address of each director of the company.[10]
However, little is done to verify that information and consequently there is a
lack of transparency surrounding the identity of company directors. Several
submissions and witnesses identified this failing as a contributing factor to
the scale and incidence of illegal phoenix activity and the misuse of corporate
vehicles more generally. Two complementary solutions were proposed: a
beneficial owners' register; and, a director identification number.
Beneficial owners' register
12.17
Veda considered that a beneficial owners' register may be
effective in reducing the incidence of illegal phoenix activity. In Veda's
view, the inability of regulators and participants in the building and
construction industry to identify and track individuals suspected of illegal
activity was a significant cause of the scale and incidence of the problem. A
lack of transparency around company directors has the consequence that regulators
are slower in clamping down on illegal phoenix operators and therefore those at
the acute end of the information asymmetry become tangled in schemes, suffering
significant economic and social effects.
12.18
Veda explained the advantages of a beneficial owners' register.
In its view, such a register:
...would enable the ability to distinguish between the legal
owner and the actual beneficial or controlling owner. Such a register, coupled
with a requirement for companies to hold information on their beneficial
owners, will reveal who owns and controls an entity, making money laundering,
tax evasion and the creation of phoenix entities more difficult.[11]
12.19
At the Sydney hearing, Mr Jonathon Newton, Veda, explained why a
beneficial owners' register would assist regulators:
With regard to phoenix companies, you need to determine who
the beneficial owners are before you can start making links to other companies
that may have folded previously or who is related within those companies...[12]
12.20
Mr Strassberg, Veda, continued, noting that a beneficial owners'
register would save a significant amount of time for regulators trying to draw
links between companies.[13]
12.21
Such a register would also have significant benefits for
participants within the industry. Mr Newton noted that the current system lacks
transparency and weakens participants' ability to identify if companies they
are planning to contract with are involved in suspected illegal activity:
...we are finding that the market is really struggling to wade
through the information that is available. They do not trust the information
that is available on the ASIC register. They have reservations as to how people
are registering with ASIC before they can really trust the information that is
presented to them when opening accounts and performing financial transactions.[14]
12.22
However, witnesses noted that a beneficial owners' register may
be difficult to implement for two major reasons. First, a register is unlikely
to be comprehensive; and second, all information it contains would have to be verified,
potentially at significant cost to the party seeking verification.
12.23
For a register to be effective it must be comprehensive,
containing all information about individuals and business structures. However,
in practice this would be difficult to ensure. As Mr Newton explained the
register would have to 'span across federal and state registries' and encompass
the full gamut of legal persons, some of whom are not centrally registered at
present:
A 'legal person' can take the form of a propriety company, a
trust, an incorporated entity or a partnership. They all have various ways of
registering. Some, such as trusts, have no central registry. You have to rely
on the trustee. That trust may have a corporate trustee. [15]
12.24
Even domestic proprietary companies can have complex ownership
structures. Mr Strassberg provided statistics on proprietary companies in
Australia that engage with the banking industry:
...around 70 to 80 per cent of domestic proprietary companies
are what we would deem to be simple companies, a company owned by natural
persons—a mum and dad or something like that. The remaining 20 to 30 per cent
that they are facing are complex entities, companies that are owned by
non-individuals. They are owned by other companies. They are owned by trusts.
They might be owned by sole traders. They might be owned by people who declare
that they do not beneficially own the shares—so we have the issue of bearer
shares and so forth, where there is no public register of who those shares
actually belong to. That level of complexity can really blow out. We have seen
instances of companies that have up to 21 non-individual owners listed in their
ownership structure, in their corporate structure.[16]
12.25
Additionally, a beneficial owners' register would only be useful
and effective if the names entered on the register are accurate and up-to-date.
As Mr Strassberg explained, there would need to be some form of independent
verification; there 'must be checks and balances as to people submitting names,
putting their hands up and saying they are a beneficial owner; they would need
to prove that as well'.[17]
12.26
Unfortunately, as Mr John Price, ASIC, explained, at present
'there is no independent identity-checking mechanism that is required in
Australia when you become a company director'.[18]
Mr Strassberg considered that ASIC, as the collector of company information,
should be required to verify the information:
...if you are going to put information on ASIC, what are the
obligations on the collector of the register to check? Also, what are the
obligations on the discloser if you do not have any statements that you have to
sign, if you can simply lodge these things without taking any steps?[19]
12.27
Mr Strassberg argued that any verification system would not be
difficult, costly or timely to implement, naming the 'Document Verification
Service' (DVS) as a useful model.[20]
A creation of COAG, this service is managed by the Attorney-General's
Department on behalf of all jurisdictions. The DVS is not a database and it
does not store any information; rather, information is verified against data
held by relevant state or territory agencies. The design and operation of the
DVS has been informed by a rigorous, independent Privacy Information
Assessment, and it has led to increased confidence and efficiency in making
identity-related decisions.[21]
Director identification number
12.28
A complementary reform designed to ensure greater transparency,
endorsed by a number of witnesses, was the use of director identification
numbers. Witnesses explained that a director identification number could assist
in maintaining an accurate and complete database of all company directors,
including tracking individuals' involvement with companies no longer trading. Implementing
this would require a straightforward amendment to section 117(2) of the
Corporations Act. Mr Strassberg explained how it might operate:
...at your first directorship...there would be an obligation to
provide identity...as well as to self-attest that you have read material, that
is, as I understand it, appended to any lodgement form, on the obligations of a
director. At that point some basics would be covered and your director
identification number would attach to you, and that would then be used any
other time you become a director of a company.[22]
12.29
Associate Professor Michelle Welsh noted that this would enable ASIC
to track people who are directors of multiple companies.[23]
12.30
Mr John Winter, ARITA, strongly supported the introduction of a
director identification number regime. Mr Winter stated that ARITA considered
this a 'critical reform' in addressing illegal phoenix activity, stating that 'we
cannot emphasise enough how important we think the director identity number
is'.[24]
12.31
Indeed, evidence before the committee suggested that it was very
simple for individuals to register several companies in multiple names. Mr
Frank Nadinic acknowledged registering between 32–33 companies, under 'Frank'
Nadinic, 'Frane' Nadinic and Frank 'Nadimic'.[25]
In particular, when registering 'Royal Como Pty Ltd' in August 1995 he provided
ASIC with all 3 names. Mr Nadinic emphasised, and the committee accepts, that
he did not make these registrations with any improper intent. However, that
might not always be the case. Associate Professor Welsh explained further that
she could register a business in the name of 'Michelle Welsh' and another as
'Michelle A Welsh' and it was unlikely that that 'it would ever be put together
that it was the same'.[26]
12.32
The committee notes that the draft report of the Productivity
Commission into Business Set-up, Transfer and Closure, recommended the
introduction of Director Identity Numbers. The Productivity Commission
explained that 'this would ensure that directors of companies that enter
external administration can be clearly identified; and would assist in
investigations of a director's involvement in what may be repeated unlawful
phoenix activity'.[27]
The Commission considered that a 100 point identity proof test should be
adopted to verify a person's identity.[28]
12.33
However, introducing a director identification number may not
entirely ameliorate the issue. Mr Price explained that unscrupulous individuals
may simply appoint shadow directors—people appointed as directors but not
actually performing the role—to disguise their involvement.[29]
Committee's views
12.34
The committee considers that any measure to increase transparency
of company directors is beneficial in preventing illegal phoenix activity. The
committee is very supportive of measures to introduce a beneficial owners'
register and Director Identification Numbers. Further, the committee notes that
the introduction of Direction Identification Numbers accords with the
recommendation of the Productivity Commission in its draft report into Business
Set-up, Transfer and Closure. The committee considers that an analysis of
the potential advantages and disadvantages of a beneficial owners' register
should be conducted by the Legislative and Governance Forum for Corporations,
the body with oversight of corporate and financial services regulation.
12.35
The committee appreciates, however, that both a beneficial
owners' register and a Director Identification Number will only be effective if
there is an independent verification system to ensure that information provided
to ASIC when an individual becomes a company director is accurate. As the
collector of company information, the committee believes that ASIC should be
required to verify it.
12.36
The committee notes further that while some ASIC information
about registered businesses is publically available, the information which
shows company dealings—some of which could indicate the financial health of a
company—is only available for a fee and is generally obtained through an
information broker. If all ASIC and Australian Financial Security Authority
company records were available free of charge, small business operators would
be able to do their own due diligence and might be better placed to avoid
companies which have unlawfully phoenixed or which are going through financial
difficulties or whose directors have a history of bankruptcy.
Recommendation 35
12.37 The committee recommends that the government,
through the work of the Legislative and Governance Forum for Corporations establish
a beneficial owners' register.
Recommendation 36
12.38 The committee recommends that section 117 of the Corporations
Act 2001 (Cth) be amended to require that, at the time of company
registration, directors must also provide a Director Identification Number.
Recommendation 37
12.39 The committee recommends that a Director
Identification Number should be obtained from ASIC after an individual proves
their identity in line with the National Identity Proofing Guidelines.
Recommendation 38
12.40 The committee recommends that the Australian
Securities and Investment Commission Act 2001 (Cth) be amended to require
ASIC to verify company information.
Recommendation 39
12.41 The committee recommends that ASIC and Australian
Financial Security Authority company records be available online without
payment of a fee.
Problem of pre-insolvency advice
12.42
The committee heard that many corporate advisory firms engage in
pre‑insolvency advice about how companies in financial stress can
restructure. This is legal and can be beneficial in ensuring that a business remains
an ongoing concern. However, the committee also heard evidence from
contractors,[30]
liquidators,[31]
academics,[32]
and the regulator that some of these firms may advise companies 'how to
phoenix', or how to avoid paying their debts.
12.43
ASIC informed the committee that unscrupulous liquidators and
businesses advisors 'can and do facilitate illegal phoenix activity'. They can
do so by:
-
advising directors or officeholders on how to remove assets fraudulently
from one company to another;
-
advising the directors or officeholders on how to structure
companies to avoid paying their liabilities; or
-
registered liquidators not meeting their statutory duty to
investigate a failed company's affairs properly, adequately record their
external administration and report offences to ASIC.[33]
12.44
Mr John Price, ASIC, explained that ASIC has taken action against
people who have facilitated illegal phoenix activity in the past. These persons
are not limited to insolvency practitioners or liquidators:
There was a fellow called Mr Somerville, a lawyer, who was
providing advice on effectively structuring things as phoenix transactions. We
took action against him, banning him from being a director for a number of
years. There have also been a number of insolvency practitioners in recent times
who are playing that role. Mr Andrew Dunner is one such person. Mr Pino
Fiorentino is another such person.[34]
12.45
Mr Price explained further that pre-insolvency advice is 'not a
specifically regulated activity at the moment', which accentuates the
difficulties faced by ASIC in clamping down on unscrupulous advisors. Mr Price
continued:
In fact, there are a number of insolvency professionals who
have been removed from registration by ASIC for disciplinary reasons who are
currently playing that pre-insolvency role. In playing that role, they often
frustrate the actions of honest and hardworking insolvency practitioners who
are subsequently appointed to the companies and need to clean up the mess.[35]
12.46
Associate Professor Welsh agreed that dishonest pre-insolvency advisors
are an 'emerging business model'.[36]
With reference to the phoenix typology,[37]
she explained that they are 'becoming a real problem' in relation to illegal
type 1 and illegal type 2 phoenix operations.[38]
Associate Professor Welsh stated further:
What we are saying is that if that person goes to one of
these turnaround specialists for advice and has never thought about this
before, and then it is presented to them as an idea, that is an issue. But it
is also an issue at number 4 if people are doing this as a business model and
with the assistance of someone.[39]
12.47
Mr Glenn Franklin, PKF Lawler, noted that pre-insolvency advice
is an issue that ASIC and ARITA has 'struggled with'. In Mr Franklin's opinion,
this is because 'they are not really regulated. They are not caught by the
legislation', even though corporate restructuring impacts into insolvency.[40]
12.48
The absence of regulation was reiterated by many witnesses and
seen as the fundamental issue. Associate Professor Welsh considered that the
'problem is that...these turnaround specialists are not regulated in any way'.[41]
Mr John Winter, ARITA, agreed, explaining that pre-insolvency advisors
constitute a 'large and growing market' who are 'completely unregulated'. Mr
Winter continued:
They give advice to people in distressed businesses on how to
strip assets out. Their recommendation, by and large, could be summed up as
saying, 'If you strip all the assets out, ASIC won't do anything.' Because
there is nothing left, they will not be able to pursue it, and ASIC has a track
record of not following those things up.[42]
12.49
Mr Winter restated his position that the solution is greater
enforcement action against directors and individuals engaged in illegal
practices. Certainly, advice that aids and abets a breach of the directors'
duties is against the law:[43]
...in stark contrast, in New Zealand or in
the UK, every day there are announcements of substantial actions against
directors that send a market signal that says that the regulator will pursue
people who undertake this illegal activity. We do not get that market signal
here in Australia.[44]
12.50
Associate Professor Welsh agreed that lack of enforcement was
part of the problem, but considered that education is also part of the
solution. Associate Professor Welsh noted that 'there are probably a lot of
people out there who do not realise that what they are doing could be a breach
of the director's duties'. When a turnaround specialist says "I can fix
your problem for you", it is likely that they will follow that advice.[45]
Committee's views
12.51
The committee is concerned with the growing trend of corporate
advisory firms advising companies on how to restructure their business prior to
the company entering administration with the result that, in the event the
company or related companies enter administration, creditors—especially
unsecured creditors—are left in worse position than they would have otherwise
been. While corporate restructuring is often a necessary and beneficial
strategy to either ensure the ongoing viability of a business or to provide the
greatest value to creditors, it appears that unscrupulous advisors are, in some
cases, facilitating illegal phoenix activity. The committee appreciates that
pre-insolvency advisors are largely unregulated and considers that greater
enforcement action by ASIC is the best prospect to deter such pre-insolvency
advice.
Recommendation 40
12.52
The committee recommends that ASIC focus enforcement action on
business advisors specialising in pre-insolvency advice who advise firms to
restructure in order to avoid paying their debts and obligations.
Recommendation 41
12.53
The committee recommends that ASIC publish a regulatory guide in
relation to the nature and scope of pre-appointment advice given or taken by
companies.
Valuing debt assignments fairly
12.54
The question of debt assignments was raised in relation to Walton
Constructions. As chapter 6 noted, QHT Investments (QHT) bought $18.5 million
of Walton's debt for $30,000. As also noted in chapter 6, QHT was owned by a
member of the Mawson Group, the firm recommended by NAB and engaged by Craig
Walton to provide turnaround advice to Mr Walton. Mr Green, NAB, explained that
there are two reasons why a person would buy a debt:
One would be to move the voting outcome in a creditors'
meeting that is decided on the value of debts; the other would be somebody
saying to themselves, 'that is a bargain; I believe that it will be worth more
than that'.[46]
12.55
In this case, QHT bought Walton's debt to influence the voting
outcome. At a creditor's meeting QHT's vote was worth $18.5 million, not the
$30,000 QHT had paid for it. Evidence strongly suggested that this value was
used to ensure that PKF Lawler remained the liquidators of Walton
Constructions––though the purchase of this debt was apparently not necessary
for that outcome.[47]
12.56
Mr Franklin, PKF Lawler, considered that there is a 'disconnect'
between the Corporations Act and the Bankruptcy Act over the value of debt
assignments. Mr Franklin explained that, under section 64ZB(8) of the Bankruptcy
Act 1966, if you undertake a debt assignment you can only vote for the
amount that you have assigned for it, not the original value of the debt. In
relation to Walton Constructions, this approach would mean that the value of
QHT's vote at the creditor's meeting would only be $30,000 and not $18.5
million—significantly reducing the value of QHT's vote.
12.57
Mr Franklin argued that 'there needs to be an alignment between
the Bankruptcy Act and the Corporations Act' on this point.[48]
Mr Green agreed, calling the situation under the Corporations Act 'an anomaly'.[49]
12.58
Indeed, it appears that the situation under the Corporations Act
is incongruous. As early as 1999, the Federal Court considered the intention of
s 64ZB(8) of the Bankruptcy Act:
The explanatory
memorandum explains the mischief that ss 64D(aa) and 64ZB(8) were designed to deal with, namely, the
activities of persons favourably disposed towards a bankrupt in procuring, for
only a fraction of their value, the assignment to them of debts due by the
bankrupt to creditors and thereby obtaining control over voting at meetings of
creditor...The stated object of these provisions is to ensure that a creditor
claiming assignee of a debt due by the bankrupt can vote at a meeting of creditors
only for the amount of the consideration that he gave to the assigning
creditor.[50]
12.59
Aligning the approach under the Corporations Act with the
Bankruptcy Act would mean that a person could still gamble in terms of buying
debt cheap and hoping that it increases in value, but would no longer be able
to shift the outcome of voting.
Committee's views
12.60
The committee believes that there is no cogent reason for debt
assignments to be valued differently for the purposes of the Corporations Act
and Bankruptcy Act. This anomaly should be rectified.
Recommendation 42
12.61
The committee recommends that the Corporations Act 2001 be
amended to align with section 64ZB(8) of the Bankruptcy Act 1966.
Recommendation 43
12.62
The committee recommends that firms who provide business advice be
prohibited by way of an amendment to the Corporations Act from buying into the
companies they are advising via debt acquisitions.
Transfer of jurisdiction of insolvency matters
12.63
The Law Council of Australia recommended that the jurisdiction of
the Federal Circuit Court of Australia (FCCA) be expanded to include corporate
insolvency matters. In the Council's view, the proposed expansion would enable
a range of Corporations Law matters to be determined 'more quickly and cost
effectively than is currently the case', as well as 'improve the efficiency and
effectiveness of the allocation of federal court funding'.[51]
12.64
The FCCA was established in 1999 as the Federal Magistrates
Court. The Court is intended to relieve the workload of superior federal courts
by resolving less complex disputes. It has a substantial jurisdiction in
personal bankruptcy, and comprises a significant proportion of the Court's
workload. The Law Council of Australia cited the FCCA's 2013–14 Annual Report:
The 2013–14 Annual Report for the FCCA notes that the Court received filings in
4285 bankruptcy matters that financial year, and finalised 4010, up from 3984
filings and 4105 finalisations in 2012–13. The total number of filings in the
Court was 8665, and finalisations 7508 in 2013–14. Bankruptcy applications
comprised 49.5% of the FCCA's general federal law applications, and 5% of its
total workload in 2013–14.[52]
12.65
The FCCA does not, however, have jurisdiction in corporate
insolvency matters under the Corporations Act. This is a discrepancy identified
by the Court itself. In its 2013–14 Annual Report, it noted: 'the conferral of
some insolvency corporations law jurisdiction is seen as desirable to
complement the significant personal bankruptcy jurisdiction exercised by the
court'.[53]
As the Law Council noted, the FCCA made similar comments in its 2011–12 and
2012–13 Annual Reports.[54]
12.66
Furthermore, the FCCA fee structure is substantially less than
that of the Federal Court of Australia. Transfer of jurisdiction to the FCCA,
therefore, offers a significant cost advantage and may potentially improve
access to justice for litigants—particularly for routine matters, such as
appointment of receivers and applications for the winding up of companies.
Committee's views
12.67
The committee received only one submission on this issue but
notes its appeal. The committee considers that reasonably strong arguments can
be made for the extension of the jurisdiction of the Federal Circuit Court of
Australia's to include corporate insolvency matters under the Corporations Law.
The committee believes that further consideration on this point could be conducted
by the Legislative and Governance Forum for Corporations, the body with
oversight of corporate and financial services regulation.
Recommendation 44
12.68
The committee recommends that the government, through the work of
the Legislative and Governance Forum for Corporations, give serious
consideration to extending the jurisdiction of the Federal Circuit Court of
Australia to include corporate insolvencies under the Corporations Act.
Senator Chris Ketter
Chair
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