Hockey fires several salvos; Don’t forget to resign; Independent auditors; UK simplifies Corporations Law; Who needs salespeople?; Directors and share disclosure; Corporate governance ratings; Slow-paying government; New governance institute
The Financial Services Reform Bill that was due to become law on October 1 will be delayed for a few weeks to ensure that the process goes smoothly. While there has been extensive consultation (including submissions from the AICD) the government is very sensitive about any BAS type fall-out. Financial Services Minister Joe Hockey also addressed an ASA meeting last month and took the opportunity to elaborate on his views about director issues. He doesn't favour a separate corporate governance board (Company Director, July) and he also took issue with the lack of female board members in Australia. He also touched on auditor independence and the need for independent directors to be paid more money. Transcript available on the policy page at www.companydirectors.com.au.
AICD Volunteers Wanted
The Australian Accounting Standards Board has decided to develop a project on purchased intangible assets (see story page 17) to coincide with the International Accounting Standards Board project on business combinations. AASB has asked for AICD members' help in "field testing" the impairment approach to accounting for purchased intangible assets. AICD encourages members to participate in the testing to ensure that the momentum of this important project is maintained. G100 members are also participating in the field testing.
Don't forget to resign
You are on the board of a small company that sells plumbing supplies and the company is sold. The company goes into voluntary liquidation and is deregistered because there is no reason for it to exist now that someone else owns the actual business. All the procedures were adhered to including the settlement of outstanding WorkCover claims. You go one with your life. However, an old employee who has asbestos (the company apparently sold covers for hot water pipes) has lawyers re-register the company and they contact the directors seeking damages. Luckily for the directors the action was taken out against the insurance company at the time but what if it had been HIH. The lesson is to make sure that you officially resign and inform ASIC.
Professor Ian Ramsay (a member of the AICD's Law Committee) is expected to submit his report on auditor independence to the Financial Services Minister, Joe Hockey this month. The issue has created considerable debate, with the Australian Shareholders' Association calling for strict new rules while some of the accounting bodies want self-regulation. The AICD has recently prepared a set of best practice guidelines (see story page 23).
UK simplifies Corporations Law
Just as Australia has done, Britain is attempting to simplify its Corporations Law. The process began in March 1998 and a steering group has submitted its final report to the government. The Blair government is expected to provide a response this month.
Who needs salespeople?
Why have people when you can use machines particularly in selling across the Internet? Aren't salespeople just an expensive waste of time when you can use that new technology to send your message into cyberspace? Well, don't count on it. Sales Asses, a sales consulting company recently conducted a global study on the value created by salespeople and sales managers in IT, banking and finance, manufacturing, professional services, transport and media. The results highlight the need to train both managers and salespeople.
Directors and share disclosure
Last July the Companies and Securities Advisory Commission (CASAC) released a discussion paper on insider trading that raised the issue of company directors disclosing the shares and securities they may buy or sell in a timely manner. AICD provided a submission calling for a disclosure regime that would essentially mirror the existing Corporations Law requirements, but would now require directors to disclose the date of their transactions, its nature and its dollar value within five days. The proposal has been accepted.
Corporate governance ratings
Corporate Governance International has developed a process for rating the corporate governance of major listed companies reported by the CGI Proxy Advisory Service. Companies are rated on a scale of 0-5 with 5 exhibiting all, or nearly all the elements of best governance practice and 0 failing to exhibit any element of best governance practice. Australian companies receiving the five-star rating included CSL, David Jones and Lend Lease.
The government is always anxious to get your money as quickly as possible when it comes to taxes, but it is a bit reticent in paying its bills to the myriad small businesses supplying government. Small businesses, which depend upon cash flow to survive and to pay their quarterly BAS, are finding the government are stretching their payments longer and longer. Small Business Minister Ian Macfarlane (see cover story) is aware of the problem and having discussions with the offending departments. He did say he was absolutely sure that his department pays its bills on time.
New governance institute
Last month, the European Corporate Governance Institute officially came into being with its founding members agreeing to the Articles of Association. The aim is for ECGI to be a centre for independent research to improve corporate governance. Research funding will come from its membership.
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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