A monthly review of the Australian Institute of Company Directors’ policy and advocacy team’s key projects and issues.
Last Month, the federal government introduced legislation into parliament, which among other things, removes the “100 member rule”.
The removal of the 100 member rule, which allows 100 members to requisition an extraordinary general meeting (EGM) of members, is a good example of the type of deregulation that would allow business to operate more efficiently, without compromising the fundamental rights of shareholders.
The existing requirement, which allows an EGM to be called by 5 per cent of voting shareholders, will remain.
We have advocated on this issue for over a decade and it is pleasing to finally see progress. We are hopeful the opposition and minor parties pass this important amendment.
Proposed abolition of CAMAC
We have continued our campaign for the government to reconsider the abolition of the Corporations and Markets Advisory Committee (CAMAC), as the government remains intent on its removal.
This decision was made in the context of the broader Smaller and More Rational Government reforms to reduce the number of Australian government bodies and streamline the shape of government.
The government has invited comment on the draft legislation to abolish CAMAC and we provided further feedback to Treasury last month.
We understand that in the short term, the abolition of CAMAC and streamlining its functions into Treasury may appear to be an effective cost-saving measure and we commend the government for seeking savings in general. However, we are of the view that the government’s decision to dismantle CAMAC is likely to increase red tape in the long term. This is because there will no longer be a cost-effective, highly experienced and independent body considering improvements to the corporate law in Australia.
CAMAC has played an important role in the development of corporate law since it was created in 1989 and should be able to continue to do so long into the future.
We have long held the view that the hallmark of any solid deregulatory agenda is not just removing regulation but ensuring that the regulation which remains is working as effectively as possible. One of our concerns with previous state and federal governments was the practice of moving straight to regulation, without first identifying and adequately defining the problem to be solved.
We have consistently articulated that problem definition and making policy decisions based on an accurate understanding of the factual, legal or governance background to a particular issue, are critical factors in achieving effective regulatory outcomes. Only after first determining whether a problem exists and defining that problem, can analysis be undertaken as to whether regulation, de-regulation or another option (such as education or guidance) will provide an appropriate and targeted solution.
CAMAC plays a critical role in identifying, explaining and analysing corporate law and market-related problems. It has also played an important educational role by preparing high quality and well researched reports which effectively set out technical issues in a clear and highly readable manner.
The level of consultation conducted by CAMAC with stakeholders is also noteworthy. CAMAC’s expertise in the corporations and markets area has ensured a deep understanding within CAMAC of the issues and laws being canvassed by stakeholders when consultation occurs.
This has ensured excellent communication and sophisticated debate on matters being considered by CAMAC. Unfortunately, we do not believe this expertise can currently be matched by other government bodies or departments..
Given the valuable role CAMAC has played in the corporations and markets arena over the past 25 years, we have strongly recommended that the government reconsider its decision to abolish CAMAC.
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