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Chapter 6 - Conclusions and Recommendations
6.1
The regulatory environment within which
corporate Australia operates has the potential to influence every area of the
Australian economy. It is, therefore, of considerable importance to Australia
that the Corporations Law provides an effective framework for corporate
activity. This is reflected in the stated objectives of the Corporate Law
Economic Reform Program which has led to the introduction of this Bill.
The objective of the Program, therefore, is to promote business
and market activity leading to important economic outcomes including increased
employment, by enhancing market efficiency and integrity and investor
confidence. Corporate regulation will be revamped to provide a clear and
consistent framework which reflects the contemporary business environment and
encourages businesses, large and small, to create wealth, prosperity and jobs. [1]
6.2
Having reviewed and considered the issues raised
during its inquiry the Committee concludes that this Bill will make a significant
contribution to achieving these objectives. Despite the size and complexity of
the Bill the Committee received comments on only a limited number of issues. In
many of those cases the concerns which were raised with the Committee involved
questions of where the appropriate balance lay between the different viewpoints
about what the Bill should require. After considering the evidence put before
it the Committee has concluded that, with a few exceptions outlined below, the
provisions contained in the Bill are appropriate.
Recommendation 1
The Committee recommends that, with the exceptions mentioned
below, the Bill be passed in its current form.
Nominee for foreign holders of securities
Recommendation 2
The Committee recommends that sections 615 and 619 of the
Bill be amended to require that the nominee be approved in all cases by the
ASIC. (Para 3.83.)
Compulsory Acquisitions
Recommendation 3
The Committee recommends that section 664A be amended so
that a compulsory acquisition can only occur within 6 months of the
proclamation of the legislation or within 6 months of person seeking to make
the acquisition becoming a 90% holder. (Para 3.58.)
Recommendation 4
The Committee recommends that the compulsory acquisition
notice required by section 661B be required to draw the readers’ attention to
their rights under sections 661E and 661D. (Para 3.67.)
Recommendation 5
The Committee recommends that a notice to the
holders of convertible securities under section 665B be required to include the
additional information given to recipients of compulsory acquisition notices
under the compulsory acquisition powers set out in section 664C(1)(c)-(e).
(Para 3.69.)
Recommendation 6
The Committee recommends that sections 663C and 665C be
amended so that any court order made under those sections applies to all
securities of the same class. (Para 3.71.)
Capital Gains Tax
Recommendation 7
The Committee recommends that roll over relief from Capital
Gains Tax be provided where shares are compulsorily acquired and when a
takeover offer for a publicly listed company is accepted on a scrip for scrip
basis. An amending tax bill should be introduced urgently to accompany debate
on this legislation to give effect to this recommendation. Failing this, the
legislation should be amended so that a potential, unwanted capital gains tax
liability provides an absolute defence against compulsory acquisition. (Para
3.79.)
Sophisticated Investors
Recommendation 8
6.3
The Committee recommends that the legislation
should clarify the sanctions applicable to a licensed dealer who breaches
section 708(8)(c) and such sanctions should be given further consideration
under CLERP 6. (Para 4.20)
Return of Securities
Recommendation 9
The Committee recommends that sections
724(2)(b) and 724(2)(c) be amended to replace the term ‘reasonable opportunity’
with a minimum period of 10 working days. (Para 4.40.)
Quotation of Securities
Recommendation 10
The Committee recommends that the Bill be
amended to revert to the position under the current law on the quotation of securities.
An issue of securities should be void if the disclosure document states that
the securities will be quoted on a securities exchange and the securities are
not admitted for quotation. The Bill should also require the return of
application monies to investors under those circumstances. (Para 4.40.)
Consideration offered and collateral benefits
6.4
Based on the evidence available to it the
Committee accepts the recommendations of CASAC that the operation of section
621(4) be extended to all bids, including non-cash-only bids; and that sections
623(2) and 623(3) be removed from the Bill. However, the Committee has not had
an opportunity to take evidence on this issue from other parties. The
Government may therefore care to accept those recommendations, or proceed with
the Bill as drafted and refer this matter to the Committee for further
consideration.
Senator Grant Chapman
Chairman
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