House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

1 Outline

1.1 This Bill will implement the seventh phase of the Commonwealth Governments Corporations Law Economic Reform Program, known as Streamlined Lodgments and Compliance or CLERP 7. The CLERP 7 reforms are intended to simplify document lodgement and compliance procedures for companies under the Corporations Act, provide a user pays system of servicing by the Australian Securities and Investments Commission (ASIC) and facilitate a more efficient and competitive business environment. In particular, the Bill seeks to improve the efficiency of corporate regulation and reduce regulatory burdens on business.

The CLERP 7 amendments

1.2 The main CLERP 7 amendments are:

(a)

Abolition of company annual returns (Schedule 1 of the Bill)

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In place of the annual return, companies will be required to confirm or correct company particulars using information provided by ASIC in the form of an Extract of Particulars and, where necessary, a Return of Particulars, and pay an annual review fee. There will be new requirements for lodging information about company members and any ultimate holding company.

(b)

Streamlining document lodgment requirements (Schedule 3 of the Bill)

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A number of existing company forms will be replaced by a multi-purpose form. In addition, electronic lodgment of and payment for documents will be facilitated and encouraged.

(c)

Harmonisation with the new tax system (use of ABN and extension of lodgment periods) (Schedules 2 and 4 of the Bill)

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A number of minor and technical amendments that are intended to harmonise some requirements of the Corporations Act 2001 (the Corporations Act) with similar requirements in the A New Tax System (Australian Business Register) Act 1999.

(d)

Modification of the Corporations Act fees regime (Part 9.10 in Schedule 1 and the Fees Bills)

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The fees schedule will be simplified and fees relief provided for small business. Annual fees will be introduced for occupational licence holders, while there will be progressive implementation of user pays principles for fees for occupational licensing, fundraising and takeovers.

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As some aspects of the Corporations Fees proposals are classified as taxation for the purposes of the Constitution, the changes relating to the annual review fee, and other fees have been placed in two separate bills, the Corporations (Fees) Bill 2002 and the Corporations (Review Fees) Bill 2002 (See Part 9.10 in Schedule 1).

Other amendments

1.3 This Bill will also effect a number of miscellaneous amendments to the Australian Securities and Investments Commission Act 2001 (the ASIC Act) and to the Corporations Act. The Bill will:

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amend paragraph 137(1)(a) of the ASIC Act to increase the financial cap from $250,000 to $1 million; amend Part 9 of the ASIC Act to clarify that the Chairperson of the Australian Securities and Investments Commission (ASIC) (an ex officio member of the Corporations and Markets Advisory CommitteeCAMAC) may appoint an alternate person (being a member of the Commission or a senior officer of ASIC) to attend any meeting of CAMAC that the Chairperson is unable to attend personally; repeal section 201C of the Corporations Act to remove the prohibition on the election or re-election of directors of a public company (or subsidiary of a public company) who have reached 72 years of age; and amend the Corporations Act to exclude charges over uncertificated securities from the charges provisions of the Corporations Act (Chapter 2K).