2013‑2014

The Parliament of the
Commonwealth of Australia

HOUSE OF REPRESENTATIVES

EXPOSURE DRAFT

Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014

No.      , 2014

(Treasury)

A Bill for an Act to amend the law relating to corporations, and for related purposes

Contents
1	Short title	1
2	Commencement	1
3	Schedule(s)	1
Schedule 1—Amendment of the Corporations Act 2001	2
Part 1—Amendments	2
Part 2—Application provisions	7
Schedule 2—Amendment of the Australian Securities and Investments Commission Act 2001	9
Part 1—Amendments	9
Part 2—Application provisions	13
Schedule 3—Consequential amendments	16
Financial Sector (Business Transfer and Group Restructure) Act 1999	16

A Bill for an Act to amend the law relating to corporations, and for related purposes
The Parliament of Australia enacts:
1  Short title
		This Act may be cited as the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2014.
2  Commencement
		This Act commences on the day this Act receives the Royal Assent.
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		Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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—Amendment of the Corporations Act 2001
Part 1—Amendments
1  Paragraph 9.1 of the small business guide in Part 1.5
Repeal the paragraph, substitute:
9.1 Dividends
		Dividends are payments to shareholders.
		Dividends can only be declared if, immediately before the dividend is declared, the directors of the company reasonably believe that the company will, immediately after the dividend is declared, be solvent.
		If dividends are not declared, they can only be paid if, immediately before the dividend is paid, the directors of the company reasonably believe that the company will, immediately after the dividend is paid, be solvent.
		It is a replaceable rule (see 1.6) that the directors decide whether the company should pay a dividend.
[sections 254T, 254U]
2  Subsection 249D(1)
Omit all the words after “the request”, substitute “of members with at least 5% of the votes that may be cast at the general meeting”.
3  Subsection 249D(1A)
Repeal the subsection.
4  Section 254T
Repeal the section, substitute:
254T  Circumstances in which a dividend may be declared or paid
Declaration of dividends
	(1)	A company must not declare a dividend unless, immediately before the dividend is declared, the directors of the company reasonably believe that the company will, immediately after the dividend is declared, be solvent.
Note:	For a director’s duty to prevent insolvent trading on payment of dividends, see section 588G.
Payment of dividends without declaration
	(2)	A company must not pay a dividend unless, immediately before the dividend is paid, the directors of the company reasonably believe that the company will, immediately after the dividend is paid, be solvent.
Note:	For a director’s duty to prevent insolvent trading on payment of dividends, see section 588G.
	(3)	Subsection (2) does not apply to a dividend that is declared.
254TA  Share capital reductions by way of dividends
	(1)	A company may reduce its share capital by declaring or paying a dividend, if:
	(a)	the dividend is declared or paid, as the case may be, in accordance with section 254T; and
	(b)	the reduction in share capital is an equal reduction.
	(2)	For the purposes of paragraph (1)(b), the reduction is an equal reduction if:
	(a)	it relates only to ordinary shares; and
	(b)	it applies to each holder of ordinary shares in proportion to the number of ordinary shares they hold; and
	(c)	the terms of the reduction are the same for each holder of ordinary shares, disregarding differences that are:
	(i)	attributable to the fact that shares have different accrued dividend entitlements; or
	(ii)	attributable to the fact that shares have different amounts unpaid on them; or
	(iii)	introduced solely to ensure that each shareholder is left with a whole number of shares; or
	(iv)	attributable to the use of dividend reinvestment plans.
5  Subsection 256B(1) (note 2)
After “preference shares”, insert “, section 254TA authorises reductions involved in the declaration or payment of dividends”.
6  Subsection 256B(1) (note 2)
Omit “subsection 257A(2)”, substitute “section 257A”.
7  Paragraph 300(1)(a)
Repeal the paragraph, substitute:
	(a)	dividends or distributions paid to members during the year, including details of the source of any dividends paid otherwise than out of profits; and
8  After paragraph 300(1)(b)
Insert:
	(ba)	if dividends were paid to members during the year, and the dividends were paid otherwise than out of profits—board policy for determining the amount and source of dividends; and
9  Before paragraph 300A(1)(a)
Insert:
	(aa)	either:
	(i)	a description of the company’s process (the remuneration governance framework) for determining remuneration in relation to the key management personnel for the company or, if consolidated financial statements are required, for the consolidated entity; or
	(ii)	if that remuneration governance framework is set out in the financial report for the financial year or in another section of the directors’ report for the financial year—details of where it is set out; and
10  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—the number of those options, and the year in which those options were granted; and
11  Subparagraph 300A(1)(e)(vi)
Repeal the subparagraph.
12  Subsection 300A(2)
Omit “disclosing entity”, substitute “listed disclosing entity”.
13  At the end of subsection 323D(2A)
Add:
Note:	For the purposes of paragraph (b), financial years that, in reliance on subsection (2) or (4), were less than 12 months are disregarded.
14  After subsection 327A(1)
Insert:
	(1A)	Subsection (1) does not apply in relation to a company if:
	(a)	the directors reasonably believe that subsection 301(3) will apply to the company’s financial reports; or
	(b)	the company is a small company limited by guarantee.
15  After subsection 327B(1)
Insert:
	(1A)	Subsection (1) does not apply in relation to a company if:
	(a)	subsection 301(3) applies to the company’s financial reports; or
	(b)	the company is a small company limited by guarantee.
16  At the end of subsection 327C(1)
Add:
Note:	Certain public companies are not required to appoint an auditor: see subsections 327A(1A) and 327B(1A).
Part 2—Application provisions
17  At the end of Chapter 10
Add:
Part 10.24—Transitional provisions relating to the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2014
  
1547  Definition
		In this Part:
amending Act means the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2014.
1548  Application of amendments relating to calling of general meetings
		The amendments of section 249D made by the amending Act do not apply in relation to a request made under that section before the commencement of this section.
1549  Application of amendment relating to declaration or payment of dividends
	(1)	This section applies if:
	(a)	before the commencement of this section, a company declared a dividend; and
	(b)	as at the commencement of this section, the dividend has not been paid.
	(2)	Despite the repeal and substitution of section 254T by the amending Act, that section continues to apply, in relation to the dividend, as if it had not been so repealed and substituted.
1550  Application of section 254TA (share capital reductions by way of dividends)
		Section 254TA applies in relation to dividends declared or paid, as the case may be, in accordance with section 254T as repealed and substituted by the amending Act.
1551  Application of amendments relating to directors’ reports
		The amendments of sections 300 and 300A made by the amending Act apply in relation to directors’ reports for financial years starting on or after the commencement of this section.
Schedule 2—Amendment of the Australian Securities and Investments Commission Act 2001
Part 1—Amendments
1  Section 174
Before “The Panel”, insert “(1)”.
2  At the end of section 174
Add:
	(2)	The functions and powers of the Panel may be exercised within or outside Australia.
	(3)	Any exercise of a function or power of the Panel outside Australia is subject to the obligations of Australia under international law, including obligations under any agreement or arrangement between Australian and another country or countries.
3  Subsection 235A(2)
Repeal the subsection.
4  After section 235A
Insert:
235AA  Terms and conditions of appointment of FRC members
Remuneration and allowances
	(1)	A member of the FRC is to be paid the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is to be paid such remuneration as the Minister determines in writing.
	(2)	A member of the FRC is to be paid such allowances as the Minister determines in writing.
	(3)	Subsections (1) and (2) have effect subject to the Remuneration Tribunal Act 1973.
Leave—full‑time members
	(4)	A full‑time member of the FRC has the recreation leave entitlements that are determined by the Remuneration Tribunal.
	(5)	The Minister may grant a full‑time member of the FRC leave of absence, other than recreation leave, on such terms and conditions as to remuneration or otherwise as the Minister determines.
Other terms and conditions
	(6)	A member of the FRC holds office on the terms and conditions (if any) in relation to matters not covered by this Act as the Minister determines in writing.
5  Subsection 236B(6)
Repeal the subsection.
6  After section 236B
Insert:
236BA  Terms and conditions of appointment of members of the AASB
Remuneration and allowances
	(1)	A member of the AASB is to be paid the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is to be paid such remuneration as the Minister determines in writing.
	(2)	A member of the AASB is to be paid such allowances as the Minister determines in writing.
	(3)	Subsections (1) and (2) have effect subject to the Remuneration Tribunal Act 1973.
Leave—full‑time members
	(4)	A full‑time member of the AASB has the recreation leave entitlements that are determined by the Remuneration Tribunal.
	(5)	The Minister may grant a full‑time member of the AASB leave of absence, other than recreation leave, on such terms and conditions as to remuneration or otherwise as the Minister determines.
Other terms and conditions
	(6)	A member of the AASB holds office on such terms and conditions (if any) in relation to matters not covered by this Act as the Minister determines in writing.
7  Subsections 236F(8) and (9)
Repeal the subsections.
8  After section 236F
Insert:
236FA  Terms and conditions of appointment of members of the AUASB
Remuneration and allowances
	(1)	A member of the AUASB is to be paid the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is to be paid such remuneration as the Minister determines in writing.
	(2)	A member of the AUASB is to be paid such allowances as the Minister determines in writing.
	(3)	Subsections (1) and (2) have effect subject to the Remuneration Tribunal Act 1973.
Leave—full‑time members
	(4)	A full‑time member of the AUASB has the recreation leave entitlements that are determined by the Remuneration Tribunal.
	(5)	The Minister may grant a full‑time member of the AUASB leave of absence, other than recreation leave, on such terms and conditions as to remuneration or otherwise as the Minister determines.
Other terms and conditions
	(6)	A member of the AUASB holds office on such terms and conditions (if any) in relation to matters not covered by this Act as the Minister determines in writing.
Part 2—Application provisions
9  At the end of the Act
Add:
Part 21—Transitional provisions relating to the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2014
  
297  Definitions
		In this Part:
amending Act means the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2014.
commencement means the commencement of Schedule 2 to the amending Act.
298  Takeovers Panel
		The amendment of section 174 made by Schedule 2 to the amending Act applies in relation to the exercise of functions and powers of the Panel after commencement, whether or not the exercise of the function or power relates to a Panel proceeding started before, on or after commencement.
299  FRC members
	(1)	If:
	(a)	immediately before commencement, a person is a member of the FRC; or
	(b)	a person is appointed as a member of the FRC during the transition period;
this Act applies to the member, during the transition period, as if the amendments made by Schedule 2 to the amending Act had not been made.
	(2)	For the purposes of this section, transition period means the period:
	(a)	beginning on commencement; and
	(b)	ending when the Remuneration Tribunal makes a determination under subsection 235AA(1) as inserted by the amending Act.
300  AASB members
	(1)	If:
	(a)	immediately before commencement, a person is a member of the AASB; or
	(b)	a person is appointed as a member of the AASB during the transition period;
this Act applies to the member, during the transition period, as if the amendments made by Schedule 2 to the amending Act had not been made.
	(2)	For the purposes of this section, transition period means the period:
	(a)	beginning on commencement; and
	(b)	ending when the Remuneration Tribunal makes a determination under subsection 236BA(1) as inserted by the amending Act.
301  AUASB members
	(1)	If:
	(a)	immediately before commencement, a person is a member of the AUASB; or
	(b)	a person is appointed as a member of the AUASB during the transition period;
this Act applies to the member, during the transition period, as if the amendments made by Schedule 2 to the amending Act had not been made.
	(2)	For the purposes of this section, transition period means the period:
	(a)	beginning on commencement; and
	(b)	ending when the Remuneration Tribunal makes a determination under subsection 236FA(1) as inserted by the amending Act.
Schedule 3—Consequential amendments
  
Financial Sector (Business Transfer and Group Restructure) Act 1999
1  Subsection 36G(2) (note 2)
Repeal the note, substitute:
Note 2:	Section 254T of that Act sets out the circumstances in which a dividend may be declared or paid.