Bodies established under Parts 9–11 of the
ASIC Act
2.1
This chapter considers
the 2015–16 annual reports of the:
-
Companies Auditors and
Liquidators Disciplinary Board (CALDB); and
-
The Takeovers Panel
(the Panel).
2.2
This chapter also
provides an update on the status of the Corporations and Markets Advisory
Committee (CAMAC).
Companies Auditors and
Liquidators Disciplinary Board
2.3
CALDB
was first established as an independent statutory body in 1989 and is currently
established by Part 11 of the ASIC Act. Its primary purpose, in the
administration of Australia's financial services system, is to hear
applications and consider cancellation or suspension of a liquidator's or auditor's
registration. The Board's casework is not self-generated as it holds no powers
to instigate applications. Rather, applications are brought by either ASIC or
the Australian Prudential Regulation Authority (APRA) for the Board's
adjudication.1 Accordingly, the Board operates as an expert disciplinary body
for auditors and liquidators in Australia.
2.4
CALDB's 2015–16 annual
report states:
CALDB's
powers under the Corporations Act to cancel or suspend the registration of an
auditor or liquidator...has a public protection element insofar as it both
encourages the maintenance of high professional standards amongst auditors and
liquidators and provides the means for a transparent disciplinary outcome with
respect to those practitioners who do not meet appropriate standards.2
Annual report of CALDB
2.5
Since the committee
last reported on CALDB, the passage and partial commencement of the Insolvency
Law Reform Act 2015 has removed responsibility for the discipline of
liquidators from CALDB:
The new Act will
transfer CALDB's disciplinary powers in respect of liquidators to:
-
ASIC in the
circumstances specified by [the Insolvency Law Reform Act 2015]; and
-
Disciplinary committees
convened by ASIC and comprising ASIC, a registered liquidator chosen by a
prescribed body such as [the Australian Restructuring Insolvency & Turnaround
Association] and a Ministerial appointee.3
2.6
The ASIC Act directs
that the annual report is to 'describe the operations' of CALDB for the
relevant financial year.4
2.7
New applications
received by CALDB are categorised as either 'administrative' or 'conduct'.
There was one new application to CALDB from ASIC in 2015–16 which related to a
conduct matter to do with a liquidator. No new administrative applications were received.
2.8
During
2015–16, three matters were dealt with leading to orders being issued for the
cancellation of registration, the suspension of registration, and an order for
undertakings to be given respectively.5
2.9
An
analysis of data provided in previous annual reports indicates that the number
of cases referred has continued to decline since 2005–06 (see Table 2.1).
CALDB's annual report indicates that during 2015–16 an increased hearing
workload in relation to liquidators from 26 to 30 person days contributed to an
increase in membership fees, from $349 166 to $365 390 during the year.6
The committee
notes that for this reporting period the Board continues to operate without its
full complement of 14 members.7
Table 2.1: Number of cases referred:
2005–06 to 2015–168
Financial Year |
Auditors |
Liquidators |
2015–16 |
0 |
1 |
2014–15 |
1 |
1 |
2013–14 |
2 |
2 |
2012–13 |
0 |
4 |
2011–12 |
0 |
0 |
2010–11 |
2 |
1 |
2009–10 |
0 |
0 |
2008–09 |
11 |
1 |
2007–08 |
5 |
0 |
2006–07 |
7 |
0 |
2005–06 |
9 |
3 |
2.10
A
decision of CALDB may be appealed to the Administrative Appeals Tribunal (AAT)
or to the Federal Court of Australia. During the 2015–16 financial year, one
application for decisions made by CALDB was referred to the AAT.9
The Board
notes that two matters appealed to the AAT in previous reporting years were
finalised in 2015–16. The AAT upheld CALDB's decision in the first matter and
dismissed the appeal in the second matter.10
Committee view
2.11
The committee considers
that CALDB has fulfilled its regulatory and reporting responsibilities during
the 2015–16 financial year.
2.12
The committee will
continue to monitor the effect of the passage of the Insolvency Law
Reform Act 2015 on CALDB's
responsibilities and functions.
The Takeovers Panel
2.13
The
Panel was established by Part 10 of the ASIC Act as a peer review body largely
composed of takeover experts, whose main purpose is the resolution of takeover
disputes. During a takeover bid, the Panel is able to declare unacceptable
circumstances with respect to the public interest in relation to the affairs of
a company, in addition to establishing orders to remedy those circumstances.11
2.14
The Panel is also able
to review decisions made by ASIC12 and
maintains its operations with a rule making power.13 The Panel's annual report states that:
The Panel improves the certainty, efficiency and
fairness of Australia's takeovers market by:
- resolving disputes in a fair,
timely, consistent, informal and sound manner; and
- publishing clear, well-developed guidance.14
2.15
As at
30 June 2016, the Panel had 39 members, up from 38 at 30 June 2015.15
Members are
nominated by the Minister and appointed by the Governor-General.16
Members are
chosen so that there is a mix of expertise, geographical representation and gender.17
Annual Report of the Takeovers Panel
2.16
During
the 2015–16 financial year, the Panel received 20 applications. This was below
the yearly average of 28.7 applications since July 2000 and is the same number
as those received in the 2014–15 financial year.18
2.17
As
noted in the committee's previous report, the proportion of applications for
which the Panel declined to conduct proceedings grew steadily from 6 per cent
in 2001 to 60 per cent in 2014–15.19
2.18
The
Panel indicated that this financial year saw a reversal of this trend, with the
proportion of applications where the Panel declined to conduct proceedings
dropping to 30 per cent in the 2015–16 financial year.20
2.19
The committee will
continue to monitor the proportion of applications for which the Panel declines
to conduct proceedings.
2.20
Nine declarations
and/or orders were issued in 2015–16 and undertakings were accepted for two
matters. The Panel conducted proceedings with nine cases in which unacceptable
circumstances were deemed to be present and proceedings were withdrawn in one
case.21 The issues raised in applications included association/breach
of section 606, disclosure, rights issues and trust schemes.22
2.21
The annual report
indicates faster action between a Panel decision and its publication of
reasons, with the average number of calendar days between a decision and the
publication of reasons being 17.1 days for 2015–16. This is below the average
of 35.9 calendar days since March 2000. The time between receipt
of an application and a decision increased, with an average of 19.2 days, up from an
average of 16.1 days since March 2000.23
2.22
The
Panel was subject to one judicial review regarding Queensland North Australia
Pty Limited. Following the Full Federal Court's decision to allow an appeal on
22 May 2015, the court on 4 September 2015 set aside the Panel's decision and
remitted the matter to the Panel for decision. The Panel then sought and was
granted additional time to consider the application and make a declaration. The
Federal Court dismissed a judicial review by Palmer Leisure Coolum Pty Ltd for
the Panel's decision to extend time.24 The Panel did not use its rule making
power, nor were any matters referred from the court during the financial year.25
2.23
The
committee notes that the Panel executive has issued an index of past decisions
for future guidance. The Australian Government Takeovers Panel Index of Reasons
2000–2016 is ordered by topic and by legislation. It was published on the
Panel's website on 23 September 2016.26
2.24
The Panel maintains
contact with the Australian Securities Exchange (ASX), the Foreign Investment
Review Board (FIRB) and with ASIC, with which the Panel has a Memorandum of
Understanding. The annual report notes the Panel may refer matters to ASIC
because aspects of the application might give rise to concerns under the
Corporations Act or the Panel wants ASIC to consider whether to make an
application. There were three referrals to ASIC during 2015–1627
The report also indicated that the Panel was not
subject to any reports by the Australian National Audit Office (ANAO) in 2015–16.28
Committee view
2.25
The committee considers
that the Panel has fulfilled its regulatory and reporting responsibilities
during the 2015–16 financial year.
Corporations and Markets Advisory
Committee
2.26
CAMAC was first
established in 1989 and was subsequently established by Part 9 of the ASIC Act.
CAMAC's role in the administration of Australia's financial services system is
to provide informed and expert advice to the Minister about the content,
operation and administration of the corporations legislation, corporations,
financial products and markets. On its own initiative or at the Minister's
request, CAMAC may provide advice or recommendations about any matter connected with:
-
a proposal to make
corporations legislation, or to make amendments of the corporations legislation;
-
the operation or
administration of the corporations legislation;
- law reform in relation
to the corporations legislation;
-
companies or a segment
of the financial products and financial services industry; or
-
a proposal to improve
the efficiency of the financial markets.
Proposal to abolish CAMAC
2.27
In March 2014, the
National Commission of Audit considered that CAMAC's functions could be
consolidated into the Department of the Treasury (the Treasury). In May 2014
the Commonwealth Government, as part of the budget, announced its decision
to abolish CAMAC and its Legal Committee during the 2014–15
financial year. On 24 September 2014, the government released an exposure draft
of legislation to abolish CAMAC. The Australian Securities and Investments
Commission Amendment (Corporations and Markets Advisory Committee Abolition)
Bill 2014 (the CAMAC Bill) was introduced into the House of Representatives on
4 December 2014. The CAMAC Bill was passed by the House of Representatives on 2
March 2015 and introduced into the Senate on 3 March 2015. The Bill lapsed when Parliament was prorogued on 17 April 2016.
2.28
On 12 February 2015,
the Senate referred the provisions of the CAMAC Bill to the Senate Economics
Legislation Committee for inquiry and report by 16 March 2015. While the
Economics committee recognised that CAMAC had contributed extensively to the
development of reforms to corporations law in Australia, it supported the
passage of the bill.
2.29
At the time of
reporting, the CAMAC Bill has not been reintroduced in the 45th Parliament.
2.30
The committee will
continue to monitor developments in relation both to CAMAC and the ongoing
effectiveness of the development of reforms to corporations law in Australia.
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1 Corporations Act 2001, Part 9.2, Division 3.
2 CALDB, Annual Report: 2015–16, p. 4.
3 CALDB, Annual Report: 2015–16, p. 4.
4 ASIC
Act 2001, s. 214.
5 CALDB, Annual Report: 2015–16, p. 8.
6 CALDB, Annual Report: 2015–16, pp. 7, 10.
7 CALDB, Annual Report: 2015–16, p. 2.
8 CALDB, Annual report: 2015–16, p.7;
CALDB, Annual report: 2014–15, p. 7; CALDB, Annual report: 2013–14,
p. 6; CALDB, Annual report: 2012–13, pp. 7–8; CALDB, Annual report:
2011–12, p. 12; CALDB, Annual report: 2010–11, p.13; CALDB, Annual
report: 2009–10, pp. 14–15; CALDB, Annual report:2008–09, pp. 13–14;
CALDB, Annual report: 2007–08, pp. 13–14; CALDB, Annual report:
2006–07, pp. 13–14; CALDB, Annual report: 2005–06, p. 11
9
CALDB, Annual Report: 2015–16, p. 1.
10
CALDB, Annual Report: 2015–16, p. 1.
11 Corporations Act 2001, s. 657A.
12 Corporations Act 2001, s. Part 6.10, Division 2.
13 Corporations Act 2001, s. 658C.
14
Takeovers Panel, Annual Report 2015–16,
p. 7.
15
Takeovers Panel, Annual Report 2015–16,
p. 4.
16 ASIC Act 2001, s. 172.
17
Takeovers Panel, Annual Report 2015–16,
p. 12.
18
Takeovers Panel, Annual Report 2015–16, p. 5.
19
Parliamentary Joint Committee on Corporations
and Financial Services, Report on the 2014– 2015 annual reports of bodies
established under the ASIC Act, May 2016, p. 6.
20
Takeovers Panel, Annual Report 2015–16,
pp. 5, 18.
21
Takeovers Panel, Annual Report 2015–16,
pp. 5, 18.
22
Takeovers Panel, Annual Report 2015–16,
p. 19.
23
Takeovers Panel, Annual Report 2015–16,
p. 5.
24 Takeovers Panel, Annual Report 2015–16, p. 21.
25 Takeovers Panel, Annual Report 2015–16, p. 8.
26 Australian Government Takeovers Panel, Index of Reasons, http://www.takeovers.gov.au/content/index_of_reasons/default.aspx, (accessed 22 March 2017).
27 Takeovers Panel, Annual Report 2015–16, p. 23.
28 Takeovers Panel, Annual Report 2015–16, p. 31.