Explanatory Memorandum
Circulated By the Authority of the Minister for Financial Services, Superannuation, Corporate Law and Human Services, the Hon Chris BowenChapter 9 -CALDB processes
Context of amendments
9.1 The CALDB is a disciplinary body which receives and reviews applications made to it by the ASIC or the Australian Prudential Regulation Authority (APRA) in respect of the conduct of either registered company auditors or liquidators.
9.2 Membership of the CALDB consists of:
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- a Chairperson and a Deputy Chairperson, each of whom must be enrolled as a barrister and/or a solicitor or a legal practitioner in Australia;
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- three members selected from a panel of seven nominated by the Board of the ICAA;
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- three members selected from a panel of seven nominated by the Board of CPA Australia (CPAA); and
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- six business members. Business members need not be nominated by any particular body. The Minister must be satisfied that a business representative has knowledge or qualifications in a business or law-related discipline.
9.3 There are three professional accounting bodies in Australia, the ICAA, CPAA and the NIA. Additionally, there is also a recognised professional body representing insolvency practitioners, the Insolvency Practitioners Association of Australia (IPAA). Under the current framework, the NIA and other professional and interested parties are unable to nominate members for CALDB.
9.4 Under section 221 of the ASIC Act, immunity consistent with that of a Justice of the High Court is conferred on Panel Members of the CALDB when exercising powers in relation to a hearing. Witness and legal and other representatives receive immunity equivalent to that which they would receive in appearing before the High Court.
9.5 However, section 1294A of the Corporations Act also allows the Chairperson and Deputy Chairperson to conduct pre-hearing conferences. This was introduced to streamline the hearing process.
9.6 Under the current framework, the immunity under section 221 of the ASIC Act is not available for pre-hearing conferences conducted by the Chairperson of the CALDB. It is only available if the full Panel conducts the pre-hearing conference.
9.7 The Bill introduces amendments to the ASIC Act to improve both the membership process and pre-hearing conferences immunities for the CALDB. These modifications will provide efficiency in the functioning of the CALDB.
Summary of new law
9.8 The Bill modifies the membership requirements of the CALDB by repealing the requirement for three members to be selected from a panel of seven nominated by the Board of the ICAA and for three members to be selected from a panel of seven nominated by the Board of the CPAA. Under the new arrangements, the Minister appoints six members as accounting members of the CALDB.
9.9 The new arrangements will not apply retrospectively to existing members of the CALDB. The new arrangements will apply to members appointed once the provisions commences.
9.10 In addition, the Bill extends the protection and immunities provisions in section 221 of the ASIC Act to include a pre-hearing conference convened by the Chairperson of the CALDB.
9.11 This arrangement will apply both retrospectively and on or after the commencement of the provisions.
Comparison of key features of new law and current law
| New law | Current law |
| Six members selected by the Minister who are eligible for appointment as accounting members of the CALDB. | Three members to be selected from a panel of seven nominated by the Board of the ICAA and three members to be selected from a panel of seven nominated by the Board of CPAA. |
| Immunity under section 221 of the ASIC Act is extended to include pre-hearing conferences convened by the Chairperson of the CALDB. | Immunity under section 221 of the ASIC Act is not available for pre-hearing conferences conducted by the Chairperson. |
Detailed explanation of new law
Definitions
9.12 The Bill repeals some terms used in Schedule 2 . [Schedule 2, Part 1, items 1 and 2]
Modifying the membership requirements
9.13 Section 203 of the ASIC Act prescribed the membership conditions of the CALDB. The Bill repeals the existing requirements for the appointment of ICAA and CPAA members and introduces a new provision for the Minister to select 6 members who are eligible for appointment as accounting members of the CALDB [Schedule 2, Part 1, items 3 and 4, paragraphs 203(1)(c) and (d), subsection 203(1A)]. The new arrangement will mean that accounting members are appointed to the CALDB in the same manner in which business members are appointed.
9.14 The Bill sets out the conditions that must be met for a person to be eligible for appointment as an accounting member in subsection 203(1B) [Schedule 2, Part 1, item 5, subsection 203(1B)]. This includes a person who is a resident of Australia and a member of a professional accounting body. The ICAA, CPAA and NIA are taken to be professional accounting bodies in Australia.
9.15 Additionally, the Bill contains a regulation making power to create regulations which prescribe bodies to which a person can be a member of and considered eligible for appointment as an accounting member [Schedule 2, Part 1, item 5, subparagraph 203(1B)(b)(ii)]. This is to ensure that all relevant professional bodies, for example, the IPAA, are able nominate members for appointment to the CALDB.
9.16 Consequential changes to existing references to ICAA member and CPAA member are made in this Bill . [Schedule 2, Part 1, item 6, subsection 210A(5)]
Protection and immunity for pre-hearing conferences
9.17 Section 221 of the ASIC Act confers immunity consistent with that of a Justice of the High Court onto Panel Members of the CALDB when exercising powers in relation to a hearing. Also, witness and legal and other representatives receive immunity equivalent to that which they would receive in appearing before the High Court.
9.18 The Bill extends the scope of the provisions to apply to pre-hearing conferences convened by the Chairperson of the CALDB under section 1294A of the Corporations Act [Schedule 2, Part 1, item 7, subsection 221(1A)]. This arrangement will make the legislation more complete as the current immunity relies on a full Panel conducting a pre-hearing conference rather than just the Chairperson.
9.19 The Bill also extends the protection and immunity to include a barrister, solicitor or other person appearing on behalf of a person at a pre-hearing conference . [Schedule 2, Part 1, item 8, subsection 221(2A)].
Application and transitional provisions
9.20 Schedule 2, Part 2 of the Bill prescribes the application, saving and transitional provisions relevant to the new arrangements . [Schedule 2, Part 2, item 13]
9.21 The Bill defines several terms used in Schedule 2, Part 2 . [Schedule 2, Part 2, item 13, section 289]
Application of membership amendments
9.22 The new membership arrangements will not apply retrospectively to existing members of the CALDB. Rather, the Bill provides for a transition period whereby a member appointed after the commencement of the new provisions must be eligible as an accounting member. At the same time, however, a person already appointed as an ICAA or CPAA member prior to the commencement of the new provisions continues to hold the position for the remainder of their term . [Schedule 2, Part 1, item 13, section 290]
Application of pre-conference amendments
9.23 The provisions extending immunity to pre-hearing conferences convened by the Chairperson of the CALDB will apply to hearings conducted before, on or after the commencement . [Schedule 2, Part 2, item 13, section 291]
9.24 This arrangement will apply retrospectively to ensure that the protections and immunities available for the Chairperson, witness and legal and other representatives cover any hearings that have been convened prior to the commencement of the provisions.