Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)General outline and financial impact
Outline
Schedule 1 to the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2014 (Bill) amends the Corporations Act 2001 to facilitate improved trading of retail corporate bonds in Australia.
Date of effect: Sections 1 to 3 of the Bill have effect the day after the Act receives the Royal Assent. Schedule 1 to the Bill has effect on a day fixed by Proclamation or the day after six months after the Royal Assent.
Proposal announced: The measures that give effect to the simple corporate bonds regime were announced by the former Deputy Prime Minister and Treasurer in a Media Release titled 'A competitive and sustainable banking system', of 12 December 2010.
Financial impact: Nil.
Human rights implications: This Bill does not raise any human rights issues. See Chapter 1, paragraphs 1.96 to 1.108 - Statement of Compatibility with Human Rights.
Compliance cost impact: This Bill significantly reduces the compliance costs faced by issuers of certain retail corporate bonds.
Summary of regulation impact statement
Regulation impact on business
Impact: The Office of Best Practice Regulation has assessed the regulation impact statements as meeting the regulation impact statement requirements. The regulation impact statement is at Chapter 2.
Main points:
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- The regulation impact statement (RIS) identified that issuers of simple corporate bonds will incur lower bond disclosure costs due to the reforms set out in this Bill. This is likely to result in increased bond issuance.
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- The RIS also identified the removal of deemed liability for company directors when issuing simple corporate bonds will remove a disincentive to issue retail corporate bonds, but will also retain investors' rights to seek compensation for loss or damage due to an omission or misstatement in disclosure material.
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- Industry feedback indicated that if the reforms were to be put into effect there was likely to be an increase in retail corporate bonds being issued.