Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)Chapter 3 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Schedule 1 - Virtual meetings and electronic communication of documents
3.1 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.2 Schedule 1 to the Bill allows companies to execute documents, hold meetings, provide notices relating to meetings and keep minutes using electronic means or other alternative technologies.
Human rights implications
3.3 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
3.4 This Schedule is compatible with human rights as it does not raise any human rights issues.
Schedule 2 - Continuous disclosure obligations
3.5 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.6 Schedule 2 to the Bill amends the corporations law to ensure that, in determining whether a listed disclosing entity contravenes its existing continuous disclosure obligations, its state of mind is taken into account (for both civil contraventions and criminal contraventions). However, ASIC continues to be able to issue an infringement notice regardless of state of mind of the entity.
3.7 Similarly, entities and officers are not liable for misleading and deceptive conduct in circumstances where the continuous disclosure obligations have been contravened unless the requisite mental element has been proven.
Human rights implications
3.8 Schedule 2 engages, or may engage, the right to a fair trial under Article 14 of the International Covenant on Civil and Political Rights (ICCPR).
3.9 In assessing the impact on human rights, consideration has been given to the Parliamentary Joint Committee on Human Rights' Guidance Note 2: Offence provisions, civil penalties and human rights (Guidance Note 2), and to the Guide to Framing Commonwealth Offences.
3.10 The civil penalties contained in Schedule 2 are not criminal offences under Australian law. They do not impose a criminal penalty, nor do they carry a penalty of imprisonment.
3.11 Despite this, Guidance Note 2 observes that civil penalty provisions may engage criminal process rights under Article 14 of the ICCPR, regardless of the distinction between criminal and civil penalties in domestic law. Accordingly, the new accessorial liability civil penalties in Schedule 2, which are capable of regulating the conduct of natural persons, have been assessed to determine whether they amount to 'criminal' penalties for the purposes of international human rights law. This assessment took into account the nature, purpose and severity of the penalties.
3.12 The new civil penalties that only regulate the conduct of disclosing entities were not assessed, as it is not possible for these penalties to infringe the criminal process rights of natural persons.
3.13 The accessorial liability provisions carry a significant maximum pecuniary penalty whose purpose is simultaneously to punish and deter contravening conduct. Cumulatively, the nature and purpose of the penalties would appear to be 'criminal' for the purposes of international human rights law.
3.14 The accessorial liability provisions contain a contravention-specific defence, which may constitute a reversed evidential burden in relation to that defence. This engages the right to be presumed innocent until proven guilty according to law under Article 14 of the ICCPR. However, to the extent that it may engage the protection afforded by Article 14, it is reasonable, necessary and appropriate as the reversal of the evidential burden is limited to matters peculiarly within the knowledge of the defendant.
3.15 In accordance with the Attorney-General's Department's guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers (the Guide), it is appropriate for the defendant to bear the evidential burden in relation to whether they took all reasonable steps in the circumstances to ensure the entity complied with its obligations and believed on reasonable grounds that the entity had complied. These matters are peculiarly within the knowledge of the defendant. It would be significantly more costly and difficult for the regulator to disprove than for the defendant to establish the matter, as the defendant would be better positioned to readily adduce evidence as to the steps they took and their beliefs after so doing.
3.16 To the extent that Schedule 2 does engage the protections under Article 14 of the ICCPR, it is compatible with human rights because the reversal of the evidential burden is limited to matters that are peculiarly within the knowledge of the defendant, of which they are better positioned to readily adduce evidence.
Conclusion
3.17 Schedule 2 is compatible with human rights as it does not raise any human rights issues.