Members voice AICD Review

An outline of some of the issues addressed by AICD’s policy department, committees and taskforces over the past month.

Members' voice

An outline of some of the issues addressed by AICD's policy department, committees and taskforces over the past month

CLERP 9

The CLERP 9 Act was passed on 25 June 2004 and received Royal Assent on 30 June 2004. The Act came into effect from July 1. @Normal:Following an extensive advocacy and lobbying campaign a number of member concerns were addressed. These include:

• The incorporation of a due diligence defence into the infringement notice regime for breaches of the continuous disclosure regime
• While non-audit services must be disclosed there is no ban on the provision of specific types of non-audit services
• A Senate proposal to prohibit the payment of options to non-executive directors did not proceed
• The cooling-off period before an audit partner can join a company remains at two years and not four years as proposed by the minority parties
• While the proposal requiring listed companies to put the remuneration report to a non-biding vote was included in the Act, the Explanatory Memorandum indicates there are no consequences for a company which decides not to follow the vote.

The Government has also undertaken to look at most of the PJC's recommendations, in part 1 and 2 of its report into the CLERP 9 Bill, over the coming months. The AICD CLERP 9 Task Force will re-convene to consider its next steps.

The Policy and Advocacy Department extends its sincere thanks to all members of committees and task forces who assisted in drafting material, answering queries and appearing before committees, often under pressure and at short notice.

Proposed changes to

Bankruptcy Act ABANDONED

Attorney-General Philip Ruddock, recently announced that he would withdraw and revise his proposed changes to the Bankruptcy Act which is a "win" for AICD.

AICD made a submission to the House of Representatives Standing Committee on Legal and Constitutional Affairs and also presented evidence to the Committee in Canberra. The proposed changes have been the subject of widespread concern and media attention.

AICD supported the stated policy objectives of the Bill set out in the Explanatory Memorandum, namely, to address the issue of high income professionals using bankruptcy as a means of avoiding their taxation and other obligations. AICD also supported solutions aimed at addressing the identified "problem" of a small but significant number of high-income debtors, typically high earning fee-for-service professionals, who use bankruptcy to avoid paying their taxation and other debts. However, the Bill was a disproportionate response to the concern identified and has serious unintended consequences for free enterprise and, therefore, for Australia's economic prosperity.

AICD considers that the current position represents a reasonable and appropriate balance between the rights of individuals to deal with their assets as they see fit and the legitimate interests of creditors. Active support of the Australian Tax Office undertaking more effective enforcement of existing provisions of the Income Tax Assessment Act could go some considerable way to addressing the concern, as could bolstering the Office's resources dedicated to enforcement. It may also assist if additional funding from the ATO was made available to Bankruptcy Trustees to facilitate enforcement of the Bankruptcy Act.

Remuneration Committee's Good Practice Guide

The guide produced by the AICD Remuneration Task Force will be available through the AICD Publications Department in August 2004.

It is aimed at the Top 500 publicly-listed companies but its principles will also assist smaller publicly-listed companies, public companies, not for distribution organisations, government companies and some private companies.

Divided into good practice principles and commentary, the guide covers the role, scope, responsibilities and terms of reference of the remuneration committee and disclosure. It includes two appendices: one outlining the Corporations Act requirements on remuneration, including material on the changes to the Corporations Act following the CLERP 9 Act and one on the Australian Stock Exchange Listing Rule requirements relating to remuneration of executive and non-executive directors.

Members of the Remuneration Task Force are: Charles Bagot (chairman), John H C Colvin, David Crawford, John Egan, Rob Elliott, Malcolm Irving, Charles Macek, Catherine Maxwell, Dr Ken Moss, Russell Philp, Anne Riches and Chris Thomas.

AICD Corporate

Governance Committee

The newly established AICD Corporate Governance Committee held its first meeting in June 2004. The committee chaired by John Ralph consists of David Clarke, Linda Nicholls, Dr Helen Nugent, John Story, Tony Berg, Graham Bradley, Colin Carter, Ralph Evans and Rob Elliott.

The committee has agreed on an initial work program and will commission research projects looking at various issues including director independence and the role of the NED.

New Policy and Advocacy

Team Member

Jennifer Stafford joined the AICD Policy and Advocacy Team in July and will be based in the national office three days per week. Her main role will be as secretariat to the newly established Corporate Governance Committee.

Stafford has an extensive background in policy including positions with the Australian Broadcasting Authority, the Australian Film Commission and the Department of Social Security.

COSBOA

AICD policy and advocacy manager Rob Elliott attended the Council of Small Business Associations of Australia, National Small Business Summit in Sydney.

Prime Minister John Howard addressed the summit dinner on the subject of reducing red tape for small business.

The second day of the summit featured a panel discussion on issues for small business including: industrial relations, taxation, occupational health and safety, trade practices and legal reform for the sector. AICD members' views were highlighted during question time and in meetings with delegates and speakers including Senator Bob McMulllan, Senator Andrew Murray and Minister for Small Business and Tourism Joe Hockey.

CEDA National Policy Summit

Elliott also attended the Committee for Economic Development of Australia's National Policy Summit in Canberra.

The summit focused on major issues affecting business, large and small, in the run up to the federal election. Issues of concern to AICD members were highlighted during question time and in meetings with delegates.

Members' feedback

All AICD policies and submissions can be found at www.companydirectors.com.au under Policy and Information/Policy and Advocacy.

If you wish to provide feedback, obtain further information or permission to reproduce this material please write to relliott@companydirectors.com.au

FAQ of the month

What are the rights of directors for limited access to company premises? For example: A director has claimed a right to be on company premises at any time to access company documentation.

The Corporations Act specifies access to company documentation, but not access to company premises.

The Corporations Act allows directors access to information so that they can fulfil their duties. It is reasonable to suggest that access takes place during business hours. Access is not unlimited.

For further details regarding directors' right of access to company documentation, see AICD's publication "Directors right of access to company documents."

Disclaimer

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.