Chapter 2Views on the bill
2.1This chapter examines stakeholder views presented in submissions received on the provisions of the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 (the bill). An indicative, although not exhaustive, account of the submitters’ comments relating to the bill is provided, concluding with the committee’s views and recommendations.
2.2Detailed comments in submissions tended to be limited to a single schedule or, indeed, a single part of a schedule. Consequently, views in this chapter have been summarised under each of the four schedules that make up the bill.
Comments on Schedule 1
2.1Overall, submitters were broadly supportive of the measures in the bill and the government’s ongoing efforts to modernise business communications, reduce regulatory burden, and simplify legislation for the benefit of businesses and consumers.
2.2The Financial Services Council (FSC) was welcoming of the steps taken by the bill to modernise business communications, noting that the proposed amendments will remove previous risks associated with the validity and enforceability of electronically signed documents.
2.3Further commenting on the benefits that implementing technology neutral communication requirements will provide consumers, the FSC submitted that the measure will create:
…faster turnaround times and improved accessibility of advice to clients in rural and regional locations, and to clients who, for various reasons, find it difficult to travel and attend appointments in person.
2.4The Australian Retail Credit Association (ARCA) noted its strong support for the government’s reform of the Corporations Act 2001 (Corporations Act), such as that proposed by the bill, which will make permanent measures that were put in place to assist businesses during the Coronavirus pandemic.
2.5Similarly, Chartered Accountants Australia and New Zealand (CA ANZ) welcomed the ‘next iteration’ of legislative changes to modernise business communications. However, CA ANZ emphasised that ‘there is more to be done in this area’ and encouraged the government to proceed with as quickly as possible with developments on this legislative project.
2.6Clubs Australia also noted its support for the proposed amendments in Schedule 1 to the bill. In particular, Clubs Australia commented that as one of the largest not-for-profit employers in their respective communities, any regulatory savings ‘will be used by clubs to retain employees and make contributions to their community’.
2.7The Australian Institute of Company Directors (AICD) expressed its strong support for the measures in the bill that propose to permanently modernise the Corporations Act by allowing for documents to be signed and sent electronically. The AICD reflected that while the amendments ‘may seem minor in nature, they will improve efficiency and reduce costs’.
2.8DocuSign also noted the significant reduction costs and time facilitated by the ability to electronically sign and distribute documents. However, while previous amendments—implemented by the Corporations Amendment (Meetings and Documents) Act 2022—have enabled Australian companies to execute most documents electronically, DocuSign submitted that ‘we are aware of some specific cases where there has been some uncertainty around the ability to electronically sign some specific documents’.
Given permanent clarity the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022 will provide, we anticipate that those signing company documents under the Corporations Act will be extremely pleased with the certainty that the amendment brings.
Documents required by company constitution
2.10Clubs Australia observed that, in addition to the documents clubs are required to send to members under the Corporations Act, clubs are also required to send members certain documents under their constitutions. Clubs Australia pointed out that the flexibility to use electronic means to execute documents required by the Corporations Act, as proposed by the bill, does not extend to communications required by club constitutions, thereby imposing a barrier to modernising this category of company communications.
2.11Clubs Australia recommended that the electronic communications regime be extended ‘to include documents that the company is required to give or send to members pursuant to its constitution’.
2.12As noted in Chapter 1, amendments under Part 1 of Schedule 1 (proposed section 110JA) to the bill include the provision of relief from the obligation to send certain types of documents under the Corporations Act, provided that certain conditions are met that are taken to confirm addresses held for a recipient are not current.
2.13Clubs Australia noted its general support for removing the requirement for companies to continue to communicate with ‘lost members’. However, Clubs Australia expressed the view that the conditions for relief ‘are onerous and longer than necessary’.
2.14Elaborating on this view, Clubs Australia explained that to meet the three conditions for relief as presently proposed by the bill:
…not only would a club need to receive a notification separately for each of the addresses it holds, but the club must also “reasonably believe” the address is not current. Moreover, if the club is required to communicate with the member using each of the addresses, it is unclear how the club would satisfy the requirement to take reasonable steps to contact the member.
2.15In light of this, Clubs Australia recommended that the government either consider options to remove redundant requirements under proposed section 110JA, or otherwise set out an objective relief condition.
2.16Conversely, the AICD expressed its support for:
…the flexibility proposed in the bill to enable entities to use all contact details and methods of communication for the member that are known to the sender, irrespective of the member’s election to receive documents in a particular form.
2.17The AICD took the view that the proposed changes relating to lost members provide a ‘workable balance’ between entities undertaking due diligence and a suitable limit on continuing attempts to contact members.
Virtual hearings and examinations
2.18While generally supportive of measures to enable regulators to use virtual enquiry technology to conduct hearings and examinations, some submitters raised concerns relating to potential risks and consequences that may arise as a result of these changes.
2.19AICD submitted that potential technological challenges could pose an integrity risk to a hearing; providing the example of an unstable internet connection distorting accurate communication and thereby prejudicing the presentation of evidence.
2.20Explaining its view, the AICD commented that, while the bill provides that a regulator:
…must ensure that the use of technology is ‘objectively reasonable’, this does not allow for a subjective assessment of an individual’s circumstances. There is a wide range of technological maturity levels in the Australian population which may make a virtual attendance at a hearing or examination prejudicial to an individual’s interests.
2.21The AICD further submitted that ‘technology should not be used to weaken the legal safeguards afforded to individuals’; advocating that a party should have the right to elect for an in-person hearing or examination or, alternatively, ‘have a clear set of public principles for determining when procedural fairness considerations will favour physical attendance’.
2.22The potential for technological issues to compromise participants’ engagement with a hearing or examination was also raised by ARCA in its submission. In particular, ARCA argued that Part 2 of Schedule 1 to the bill as drafted does not address consequences that could arise, including what impact, if any, a technological issue will have on outcomes or decisions made during a hearing or examination.
2.23Similarly, in relation to Part 4 of Schedule 1— the proposed introduction of technology neutral publication requirements—ARCA asserted that the bill does not address issues that may arise should a technological issue impact visibility or access to an electronically advertised notice.
2.24However, ARCA acknowledged that addressing matters pertaining to the numerous circumstances that could result through the use of virtual enquiry technology may not be practical within the bill itself. Alternatively, ARCA noted that it:
…would be supportive of their inclusion in a format such as guideline or guidance document which sits separate to the Bill. However, if this approach is adopted than we consider that the Bill will need to be amended to ensure that the matters dealt with by such a guideline or guidance document are binding and of legal force.
Modernising cheque payments
2.25As previously outlined, Part 3 of Schedule 1 to the bill aims to facilitate the greater use of electronic payments by removing outdated restrictions that dictate where or how a payment may be made.
2.26While supportive of these measures, the Australian Payments Network (AusPayNet) suggested that Treasury’s ongoing Law Improvement Program be extended to the Cheques Act 1986 and other remaining Commonwealth legislation that prescribe the use of cheques, bank cheques or money orders.
2.27AusPayNet submitted that updating relevant legislation to reflect payment method neutrality would ‘ensure that it is future-proof’, noting that cheque payments now constitute less than 0.2 percent of non-cash retail payments.
Comments on Schedule 2
2.28Of those submitters that commented on Schedule 2 to the bill, the majority noted their support of the government’s implementation of the Australian Law Reform Commission’s recommendations to simplify the Corporations Act and encouraged the continuing work in this area.
Definition of ‘special resolution’
2.29Items 112 and 113 of Schedule 2 to the bill would insert revised requirements for a resolution of a company or the members of a registered scheme (proposed sections 250MA and 253LA respectively) to have effect as a ‘special resolution’ under the Corporations Act. The wording in the bill as introduced to Parliament on 23 November 2022 included that ‘the resolution must be passed by at least 75 percent of the votes that may be cast by members…’ (emphasis added).
2.30The Law Council of Australia (LCA) raised specific concern regarding the inclusion of the words ‘that may be’ pertaining to the requirements for a special resolution in proposed sections 250MA and 253LA. In particular, the LCA submitted that the bill—as drafted on its introduction to Parliament—would have the unintended consequence of altering the approval thresholds required for a special resolution to be passed at a given meeting by members entitled to vote on the resolution.
2.31The LCA strongly recommended that the words ‘that may be’ be omitted from the definition of ‘special resolution’ in proposed sections 250MA and 253LA of the Corporations Act.
2.32As noted in Chapter 1, on 6 February 2023, the House of Representatives agreed to amendments to omit the words ‘that may be’ from items 112 and 113, thereby addressing the LCA’s main concerns. The amendments correct a drafting error in Schedule 2 to preserve the existing policy settings; that is, to ensure that the threshold for when a special resolution has effect remains as 75 percent of the votes cast by members.
Comments on Schedule 3
2.33Submitters that commented on Schedule 3 to the bill were supportive of the proposed amendments to move matters presently in legislative instruments of the Australian Securities and Investments Commission (ASIC) into primary legislation.
2.34ARCA summarised some of the benefits of the amendments, submitting that such changes:
reduce the overall complexity of the legal framework, making it easier for entities to determine and comply with their obligations;
mitigate against the risk that the legislative instruments will not be fully considered by subsequent law reforms, leading to inconsistencies and practical challenges for industry;
reduce the effort required by ASIC, and others, to maintain the status quo and review/re-make the instruments as required; and
provide additional certainty to all parties about whether the exemptions and modifications will be retained.
2.3ARCA also commented that there are likely many more legislative instruments that are suitable for transfer to primary law and noted its support of further work by the government to review and transfer additional instruments in this manner.
2.4Likewise, CA ANZ expressed its support for the Schedule 3 changes and encouraged the government ‘to further simplify the law by ensuring as many ASIC instruments are inserted into the Corporations Act as soon as practicably possible’.
Comments on Schedule 4
2.35Specific comment on Schedule 4 to the bill was made by one submission; from the Mortgage and Finance Association of Australia (MFAA).
2.36The MFAA sought to express its support for Division 18 of Schedule 4 which amends the National Consumer Credit Protection Act 2009 and Corporations Act to ensure the Reference Checking and Information Sharing Protocol (the Protocol)—an ASIC legislative instrument with which Australian financial services licensees and Australian credit licensees must comply—operates as intended.
2.37The Protocol is intended to ensure there are controls in place in the mortgage broking industry to prevent individuals responsible for poor conduct moving between organisations and industries. However, contrary to the policy intention,mortgage intermediaries such as aggregators (who are also Australian credit licensees) may not be required to comply with the Protocol in certain circumstances under the existing legislative framework.
2.38The MFAA submitted that ‘the provisions within the draft bill meets the intended policy objective and as such we strongly support the proposed amendments’.
2.39The Coronavirus pandemic and protracted lockdowns throughout 2020 and 2021 created significant hurdles for businesses and consumers alike in meeting requirements for physical paper-based communications and wet-ink signatures. These disruptions highlighted the need to permanently modernise Australia’s legislative requirements relating to document execution and communications, in order to adapt to ever-changing technology and patterns of work.
2.40While the committee acknowledges that notable advancements have already been made in this area, some Treasury portfolio legislation still contains outdated provisions or lacks clarity around requirements for hard-copy, physical communications and wet-ink signatures. Such requirements have significant impacts on time, effort and resources. As estimated by the Financial Services Council, physical communications cost businesses between $1.50 and $3.00 to distribute, as compared to $0.10 for an electronic equivalent.
2.41The committee is hopeful that the regulatory savings that would be implemented by this bill will be better used by businesses for purposes such as hiring and retaining employees and otherwise contributing to their communities.
2.42The committee also welcomes the amendments in Schedules 2–4 of the bill and is confident that these measures will reduce the overall complexity of Australia’s Treasury laws, thereby making it easier for entities to understand and comply with their obligations.
2.43The committee is encouraged by the broad support received for the bill in submissions and is of the view that, should the small number of matters raised prove to require additional consideration, these can be suitably addressed by further changes made through Treasury’s ongoing Law Improvement Program.
2.44The committee recommends that the bill be passed.
Senator Jess Walsh
Labor Senator for Victoria