New Corporations Law removes uncertainties.

    On 15 July the new federal Corporations Act, 2001 came into effect, removing the period of uncertainty which had prevailed since 1999 when decisions of the High Court of Australia in Wakim and Hughes cases raised problems with the enforceability of the national Corporations Law which had prevailed since 1991. The AICD quickly recognised that as a result of these court decisions Australia's reputation as a country with sound and effective corporate law and regulation was in jeopardy. The High Court decisions cast doubt on fundamental areas of business law such as the formation and operation of companies and the enforcement powers of the Australian Securities and Investments Commission. Together with the Business Council of Australia, the Institute of Chartered Accountants in Australia, the Investment and Financial Services Association, the Law Council of Australia and the Securities Institute of Australia, the AICD formed the Coalition for Corporate Certainty. This coalition of key business, financial and legal organisations was established as a matter of urgency because of a recognition by those bodies that it was vital for all Australian governments to take immediate action to address the uncertainty and confusion which threatened the Corporations Law following the High Court decisions. The coalition was particularly concerned that lawyers both in Australia and overseas while advising clients of significant international transactions were cautioning that they could not provide unqualified opinions about the legal status of Australian entities. This had serious implications for Australia's standing as an investment destination and our aspirations to be a regional centre for financial markets and products. At an early stage of the coalition's activities to find a solution to the problems created by the High Court decisions, it was recognised that all States would need to provide a referral of powers from the States to the Commonwealth Parliament to correct the uncertainty and confusion with the Corporations Law. This was not going to be an easy task as many of the States were concerned that there was a potential for the Commonwealth to misuse the referral powers, for example, for the purposes of regulating industrial relations or the environment. The coalition of business and legal groups made extensive representations to all governments involved in the negotiation process to ensure that the issues raised by the States were appropriately addressed but at the same time the overall urgency of resolving the issue of uncertainty had to be the prime consideration. Whilst the negotiations between the Commonwealth and State Governments were difficult and at times overly protracted, given the seriousness and urgency of the problem the resulting outcome will be heralded as a commendable example of the co-operative federalism that can be achieved between the Commonwealth and the States on matters of interest and national importance. The dynamic drive forward by the key business and professional groups which comprised the coalition was very impressive and provided impetus to progress resolution of the constitutional problem facing the Corporations Law as a matter of urgency. The AICD is delighted that the issue is now resolved and thanks its other partners in the coalition, the Commonwealth and State governments for their role in restoring the credibility of Australia's corporate law in the national interest. The AICD Corporations Law Committee, chaired by Professor Bob Baxt, and the Research and Policy Department staff, co-ordinated and managed the detailed AICD involvement in the coalition's activities.


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