The AICD's advocacy team represents the interests of members in public debate and to governments.
The Australian Institute of Company Directors has for some time been advocating against director liability laws that reverse the onus of proof for directors. Like other people, directors should be deemed innocent until proven guilty.
We reinforced our views in a recent submission to the Australian Law Reform Commission’s Freedoms inquiry.
The reversal of the onus of proof and the use of strict liability offences is an issue that not only impacts Commonwealth laws, but also the laws of the states and territories.
Despite some considerable progress made across Australia in recent years, particularly in Queensland, Victoria and NSW, there are still a number of laws including the Taxation Administration Act 1953 (Cth), which reverse the onus of proof for directors.
It is a long battle but we will continue to advocate on this issue until directors are provided with the same protections afforded to other professions and citizens.
End closer for CAMAC
The senate economics legislation committee on 16 March recommended that the Federal Government should proceed with its proposed abolition of the Corporations Markets Advisory Committee (CAMAC).
The senate committee’s report said: “The committee has considered the evidence and formed the view that the abolition of CAMAC would generate savings as intended.”
Labor senators on the committee issued a dissenting report.
The fate of CAMAC will now be determined by cross-benchers in the senate.
The Australian Institute of Company Directors’ opposition to the abolition of CAMAC is on the record and we are disappointed in the senate committee’s recommendation. Whatever the outcome, CAMAC has made a significant contribution to the development of corporate law in Australia.
Improving insolvency laws
Our advocacy team has been encouraging the Federal Government to provide regulatory settings that support the innovators and entrepreneurs that are Australia’s drivers of growth. One area of focus is Australia’s insolvency regime.
We believe the primary objective of this regime should be corporate recovery. It should encourage entrepreneurialism and operate to save businesses that can be saved. We understand corporate stakeholders including employees, suppliers, customers,and shareholders must be protected. However, aspects of the current regime sometimes prevent the best stakeholder outcomes.
One critical area to be addressed is the liability of directors for insolvent trading. This not only encourages, but effectively mandates directors to move to external administration as soon as a company encounters financial difficulties in order to avoid personal liability and consequent reputational damage.
We provided these comments to the Productivity Commission as part of the consultation for its discussion paper Business set-up, transfer and closure. We will continue to suggest improvements to the insolvency regime with the government and policymakers.
Getting financial regulation right
On 31 March, the Australian Institute of Company Directors lodged a submission with treasury in response to the Financial system inquiry’s final report. Our recommendations included:
- The Australian Prudential Regulation Authority’s (APRA) governance regulation should be revised so there is greater alignment with the ASX Corporate Governance Council’s Corporate governance principles and recommendations.
- The director independence requirements that apply to other APRA-regulated entities should also apply to super funds (although our preference would be that they applied on an “if not, why not” basis to all entities) and a broad description of “independent” should be adopted.
- No cause has been shown to require new penalties for directors of super funds or life insurers.
- We agree with the recommendations to provide better funding to the Australian Securities and Investment Commission (ASIC) and APRA.
- Consideration should be given to how ASIC can better use existing powers before additional or increased powers are granted.
Our advocacy team’s key projects
• Visit our website to read any of our policy submissions in full.
• Go to page 70 to read recent highlights from our new governance centre.
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