Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 4 - Notes on Clauses
Clause 2 - Commencement
4.1 Items 1 to 6 change the commencement date for Schedules 1, 2 (except Part 3), 4 (Parts 1, 3 and 5) and 5 of the Bill from 1 July 2004 to the later of 1 July 2004 and the day after the Act receives the Royal Assent.
4.2 The commencement date for Part 3 of Schedule 2, which deals with the establishment and operation of the Financial Reporting Panel (FRP), will be changed from 1 July 2004 to 1 January 2005.
4.3 Item 8 provides that proposed Schedule 11A will commence on 1 January 2005.
4.4 These items also make minor technical amendments to the table in clause 2 by omitting '1 July 2004' from column 3 of each of the table items in which the date appears.
Schedule 1, Part 1 - Audit oversight
4.5 These are technical amendments to the Companies Auditors and Liquidators Disciplinary Board (CALDB) confidentiality requirements which change proposed paragraph 213(2)(c) of the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to proposed paragraph 213(2)(aa) to correct a duplication of paragraph numbers in the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2003 (the Bill) (see also Government amendments 85 to 87).
4.6 Proposed section 225A of the ASIC Act sets out the information gathering powers that can be used by the Financial Reporting Council (FRC) when it is performing its auditor independence functions.
4.7 As drafted, proposed subsections 225A(1) and (5) allow the FRC Chair to give notices requiring the supply of information or documents to a professional accounting body and an Australian auditor. Proposed subsection 225A(8) enables the FRC Chair to extend the period of time for complying with a notice under proposed subsections 225A(1) and (5). As the FRC does not have an executive chairman, any notice given by the FRC Chair would need to be supported by a resolution of the FRC.
4.8 One means of streamlining the operation of the FRC would be for the FRC Chair to be able to give a notice on behalf of the FRC. Proposed subsections 225A(1), (5) and (8) are, therefore, being revised to allow the FRC Chair to give a notice to a professional accounting body or an Australian auditor on behalf of the FRC (Government amendments 12 to 14). Consequential amendments are made to the enforcement requirements in proposed subsections 225A(9), (11) and (13) to change 'a notice given by the FRC' to 'a notice given by the Chair of the FRC' (Government amendments 15 to 18).
4.9 This item will amend section 237 of the ASIC Act to permit the FRC to disclose information to the Australian Prudential Regulation Authority. The purpose of the amendment is to facilitate the performance by the FRC of its expanded functions, particularly in relation to the oversight of auditor independence.
Schedule 1, Part 2 - Qualifications of auditors
4.10 Subsection 1279(2) of the Corporations Act 2001 (the Corporations Act) provides that, where a person makes an application to the Australian Securities and Investments Commission (ASIC) for registration as a company auditor, the application is to be made in writing as prescribed and is to contain such information as is prescribed.
4.11 This item replaces subsection 1279(2) with a new subsection which provides that an application for registration must be lodged with ASIC, must contain such information as is prescribed in the regulations and must be in the prescribed form.
4.12 The purpose of the amendment is to bring the application form within the scope of section 350 of the Corporations Act. Subsection 350(1) permits ASIC to approve a form if a form is not prescribed in the regulations. Giving ASIC the ability to approve and publish the form, as an alternative to the form being prescribed in the regulations, will simplify the process should there be a future need to modify the form.
4.13 Proposed subsection 1280A(1) of the Corporations Act provides that ASIC may approve an auditing competency standard for the purposes of proposed paragraph 1280(2)(b).
4.14 A note immediately following proposed subsection 1280A(1) states that where ASIC approves a competency standard under this subsection, anyone can rely on that competency standard to qualify for registration as a company auditor. The person does not have to be a member of the body that applied for approval of the standard.
4.15 Following consultation with stakeholders, this note will be removed.
4.16 Proposed section 1287A(1) of the Corporations Act deals with the preparation and lodgement of an annual statement by a person who is a registered company auditor at the end of a calendar year. As drafted, the provision provides that the annual statement is to set out such information as is prescribed in the regulations and is to be lodged with ASIC by 31 January in the year after the calendar year to which the statement relates.
4.17 The proposed subsection currently in the Bill will be replaced by two new subsections, proposed subsections 1287A(1) and (1A). The amended subsection 1287A(1) will require a person who is a registered company auditor to lodge an annual statement within one month after the anniversary of person's registration and at the end of each subsequent period of 12 months. The amended subsection 1287A(1A) will require the annual statement to contain such information as is prescribed in the regulations and to be in the prescribed form.
4.18 These effect amendments will be to:
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- use the date of a person's registration as an auditor as the trigger for lodging the statement (as is currently the case with the triennial statement); and
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- bring the annual statement within the scope of section 350. Subsection 350(1) permits ASIC to approve a form if a form is not prescribed in the regulations. Giving ASIC the ability to approve and publish the form, as an alternative to the form being prescribed in the regulations, will simplify the process should there be a future need to modify the form.
Schedule 1, Part 3 - Auditor appointment, independence and rotation requirements
4.19 This is a technical amendment to remove the definition of 'All Ordinaries Index' from section 9 of the Corporations Act. Government amendment 23 is relevant to Government amendment 34, which amends proposed subsection 300(11D) to remove the reference to 'All Ordinaries Index'. Given the removal of this reference, a definition of the term is no longer needed.
4.20 Item 24 is a technical amendment which will correct a typographical error in the definition of 'auditor independence requirements of this Act' in section 9 of the Corporations Act.
4.21 This item inserts proposed subsection 300(2A), which provides that where the disclosures required by proposed paragraphs 300(11B)(a) and (11C)(b) are included in the financial report as permitted by subsection 300(2), a cross-reference to where that information is located in the financial report must be included in the non-audit services section of the directors' report.
4.22 The purpose of the amendment, which will avoid duplication of information in the financial report and the directors' report, is to maintain the integrity of the information that has to be included in the non-audit services component of the directors' report.
4.23 Proposed paragraph 300(11B)(a) and proposed subsection 300(11C) provide for disclosure of the amount paid to the auditor for non-audit services provided by the auditor during the year. As drafted, these provisions may only result in the disclosure of the cash payments that were made for those services.
4.24 These items amend proposed paragraph 300(11B)(a) and proposed subsection 300(11C) require disclosure of 'the amounts paid or payable', thus ensuring that any amounts owing to the auditor at the end of the year are also disclosed.
4.25 Proposed paragraphs 300(11B)(a), (b) and (c) of the Corporations Act expand the disclosure requirements relating to non-audit services so that disclosure is required of services provided by another person or firm on the auditor's behalf in addition to services provided by the auditor themself.
Details of non-audit services provided by a person or firm providing non-audit services for, or on behalf of, the auditor must be included in the details of services provided by the auditor.
4.26 The expansion of disclosure requirements in this way will ensure that the disclosure requirements are not circumvented by the auditor contracting out to another person or firm the delivery of non-audit services to the audit client.
4.27 These items amendment proposed subsections 300(11B) and (11C) of the Corporations Act to provide that, where a company prepares consolidated financial statements, disclosure must be made in respect of non-audit services provided by the auditor to any entity included within the consolidated financial statements of the listed company.
The amendment will prevent companies avoiding the disclosure requirements in circumstances where non-audit services are provided to a subsidiary of a listed company.
4.28 These amendments seek to ensure that an overall picture is given where non-audit services are provided to other entities within a consolidated group.
4.29 Proposed subsection 300(11D) of the Corporations Act as currently drafted has the effect of mandating audit committees for companies included in the All Ordinaries Index. Government amendment 34 amends proposed subsection 300(11D) to remove the reference to companies included in the All Ordinaries Index, which includes the 500 largest companies listed on the Australian Stock Exchange, by market capitalisation.
4.30 The Government amendment takes into account changes made to the ASX Listing Rules. The Government's amendment effectively will require that where a company has an audit committee, the statement made under sections 300(11B)(b) and (c) must be made by that audit committee. Where a company does not have an audit committee, the statement must be made by the board of directors.
4.31 This is a technical amendment to ensure that a member of an audit firm is taken to be appointed as the auditor of a registered scheme from the time they are admitted to a firm that is the registered scheme's auditor. This is consistent with the current treatment in relation to an appointment as auditor of a company where an audit firm is reconstituted during the audit engagement.
Items 36, 39, 44, 48, 54, 60, 61 and 66 to 76
4.32 Currently, under proposed paragraph 327B(2)(d) of the Corporations Act, an auditor's appointment will be automatically terminated where the auditor ceases to be capable of acting because of a breach of the auditor independence requirements. In the case of an inadvertent breach, the auditor and the company may be unaware that an automatic termination has occurred. It is proposed that Part 2M.4 of the Corporations Act be amended to refine the operation of the automatic termination provisions and provide certainty as to when an auditor's appointment ceases due to breach of the auditor independence requirements.
4.33 Item 36 inserts subsections 324CA(1A) - 324CA(1D) into the Bill. Under these subsections an auditor is required to notify ASIC within 7 days of becoming aware that a conflict of interest situation exists (the 'start date'). Item 39 inserts subsections 324CB(1A) - 324CB(1D) into the Bill, which replicates the provisions at item 36 but applies them to audit firms. Item 44 does the same in relation to audit companies.
4.34 Items 48, 54 and 60 apply the requirement to notify ASIC within 7 days to individual auditors, audit firms and audit companies where they become aware of the existence of relevant relationships as set out in the table in subsection 324CH(1). Item 61 extends the requirement to the directors of audit companies.
4.35 Item 66 inserts subsections 327B(2A), 327B(2B) and 327B(2C). These subsections specify that the auditor, audit firm or audit company will automatically cease to be the auditor of a company where they have notified ASIC within 7 days of discovering the conflict of interest situation or the relevant relationship, but have not notified ASIC within 21 days of the 'start date' that the conflict of interest situation or relevant relationship has ceased to exist.
4.36 Item 67 proposes the removal of subsection 327B(4) on the basis that it will no longer be required. In its place, subsection 327B(4) is inserted, which provides that when an audit firm's appointment as auditor of the company ceases under subsection 327B(2), the appointment of each member of the audit firm will also cease.
4.37 Item 68 inserts subsections 331AAA(2A), 331AAA(2B) and 331AAA(2C) regarding registered scheme auditors. Item 69 replicates item 67 in relation to auditors of registered schemes.
4.38 Items 70 to 76 specify the penalties for a breach of the notification requirements.
4.39 The overall intention of these Government amendments is to ensure that there is a process by which an auditor who is in breach of the auditor independence requirements and becomes aware of that breach has an opportunity to rectify the breach within a reasonable time before a termination of the auditor's appointment takes effect. The process will ensure that ASIC and the company for which the auditor acts are on notice of the breach and the need for the auditor to take corrective action.
4.40 This item will insert a sub-heading above proposed subsection 324CA(6) of the Corporations Act.
4.41 These items will insert sub-headings before proposed subsections 324CB(1), (4), (6) and (7) of the Corporations Act respectively.
4.42 These items will insert sub-headings above proposed subsections 324CC(1), (4), (6) and (7) of the Corporations Act.
4.43 This item will insert a sub-heading above proposed subsection 324CE(5) of the Corporations Act.
Items 50 to 52, 56 to 58 and 62 to 64
4.44 The table in proposed subsection 324CE(5) of the Corporations Act sets out the people and entities covered for purposes of determining whether particular relationships exist which would bring an individual auditor into breach of the specific audit independence requirements applying to an individual auditor.
4.45 Items 2, 7 and 8 of the table in proposed subsection 324CE(5) refer to 'a service company or trust or other entity acting for, or on behalf of, the individual auditor'. The purpose of the amendments in items 50, 51 and 52 is to clarify the meaning of 'other entity' to ensure that it applies to another entity which performs a similar function to a service company or a service trust.
4.46 If these arrangements were not covered in the table, they would provide a loophole which an individual auditor could exploit to avoid the specific auditor independence requirements.
4.47 Items 56, 57 and 58 will effect similar amendments for purposes of the specific auditor independence requirements applying to an audit firm.
4.48 Items 62, 63 and 64 will effect similar amendments for purposes of the specific auditor independence requirements applying to an audit company.
4.49 The specific auditor independence requirements address the threat posed when a former individual auditor, a former member of an audit firm, an officer of an audit company or a professional employee becomes an officer or employee of the audit client and retains retirement benefits with the auditor or is in a position to influence the auditor's operations or financial policies.
4.50 Proposed paragraphs 324CE(7)(d) (individual auditor), 324CF(7)(d) (audit firm) and 324CG(11)(d) (audit company) of the Corporations Act permit financial arrangements 'providing for regular payments of a fixed pre-determined dollar amount which is not dependent on the revenues, profits or earnings of the firm'.
4.51 To ensure greater flexibility, and without undermining the purpose of the restriction, it is proposed to also permit financial arrangements in respect of which the method of calculating the dollar amount is fixed and provided the calculated amount is not dependent on the revenues, profits or earnings of the auditor. The proposed amendment would permit, for example, the amount of a partner's retirement benefit to be adjusted each year by reference to the Consumer Price Index.
4.52 Items 53, 59 and 65 give effect to these proposed amendments in relation to an individual auditor, an audit firm and an audit company respectively.
4.53 This item will insert a sub-heading above proposed subsection 324CF(5) of the Corporations Act.
Schedule 1, Part 4 - Registration of authorised audit companies
4.54 These items will ensure that the documents required to be lodged with ASIC under sections 1299A and 1299F of the Corporations Act will be brought within the scope of section 350 of that Act.
4.55 Section 350 applies to a document that is required to be lodged with ASIC in a prescribed form. If such a form is not prescribed in the regulations, section 350 permits ASIC to approve a form for the document.
4.56 Proposed section 1299G of the Corporations Act requires an authorised audit company to lodge an annual statement in respect of a calendar year. The proposed amendment to subsection 1299G(1) under item 81 will require the annual statement to be lodged within one month of the anniversary of the day on which the company became an authorised audit company.
4.57 Item 81 will also ensure under the proposed subsection 1299G(1A) that the annual statement must be in the prescribed form. This will bring the statement within the scope of section 350.
4.58 These items will reduce the pecuniary penalty in relation to the lodgement of prescribed forms with ASIC by authorised audit companies from 50 penalty units to 5 penalty units. A pecuniary penalty of 5 penalty units for these strict liability offences is more appropriate where there is a failure to comply with prescribed technical requirements (as opposed to substantive requirements).
Schedule 1, Part 8 - Companies Auditors and Liquidators Disciplinary Board
4.59 These amendments correct anomalies in the numbering of amendments to section 213 of the ASIC Act (see also items 9 to 11 above).
Schedule 2, Part 3 - Financial Reporting Panel
4.60 This amendment allows the appointment of one or more additional persons to the FRP in relation to a particular matter, where a previously appointed member or members are no longer available.
4.61 Proposed section 239BA of the ASIC Act deals with the constitution of the FRP in relation to particular matters. Under proposed subsection 239BA(2), the Chairperson may give directions as to which members are to sit on a particular panel. Where a chosen member ceases to be available to attend panel proceedings, proposed subsection 239BA(4) allows the Chairperson to revoke the original direction, and to give a further direction as to which additional members should be on the panel. Without this amendment the entire panel would need to be reappointed.
4.62 Proposed section 239CC of the ASIC Act allows a Panel to give a direction that part of a Panel proceeding is to take place in private and who may be present at private hearings.
4.63 The current drafting of the Bill is not clear as to whether the Panel can revoke or replace a direction that it has given in a particular proceeding. This Government amendment clarifies that the Panel can revoke or vary its directions.
4.64 Proposed section 239CD of the ASIC Act allows a Panel to give directions that restrict the publication of submissions, evidence or documents lodged with the Panel.
4.65 The current drafting of the Bill is not clear as to whether the Panel can revoke or replace a direction that it has given in a particular proceeding. This Government amendment clarifies that the Panel can revoke or vary its directions.
4.66 Proposed section 239CG of the ASIC Act allows a Panel to make a determination regarding legal representation of parties before Panel proceedings.
4.67 Currently, it is not clear that there is any ability for the panel to revoke or replace a determination that it has given in a particular proceeding. An amendment is proposed which would explicitly enable the panel to revoke or vary its determinations.
4.68 Proposed subsections 239CL(2) and (3) of the ASIC Act enable a Panel to certify to the Court an individual's failure to comply with a requirement of the panel made under section 239CE. Currently all members of the panel must certify in writing the failure to comply in order for a Court to inquire into the case.
4.69 This amendment will require only one member of the Panel to certify relevant information, rather than the entire Panel.
Schedule 2, Part 4 - Content of financial reports
4.70 This item will insert a new part, 'Part 4 - Content of financial reports', in Schedule 2 of the Bill. The new Part will amend sections 45A, 295 and 303 of the Corporations Act respectively. The purpose of the amendment is to facilitate the introduction of international accounting standards by amending or removing provisions that may conflict with the requirements of those standards.
4.71 Subsection 295(2), which lists the documents that make up the annual financial statements, will be replaced by a revised provision that provides:
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- the financial statements of an entity are statements required by the accounting standards; and
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- the financial statements of the consolidated entity that are required by the accounting standards.
4.72 An equivalent amendment will be made to subsection 303(2), which deals with the half-year financial statements.
4.73 The amendment to subsection 45A(4) updates a cross-reference to subsection 295(2) to take account of amendments that are being made to the latter provision .
Schedule 4, Part 2 - Protection for employees reporting breaches
4.74 These items amend proposed section 1317AA regarding the persons who may make disclosures that will qualify for protection under the whistleblowing provisions. Currently the Bill provides that a discloser may be a company officer, employee, subcontractor of services, or employee of a subcontractor of services. These amendments will also allow a subcontractor of goods and an employee of a subcontractor of goods to make protected disclosures under the whistleblowing provisions.
4.75 To promote the reporting of breaches of the corporations legislation internally within a company, the Bill extends the provisions for the protection of whistleblowers to disclosures made to auditors, directors, secretaries, or senior managers of a company, or to a person whom the company authorises to receive such disclosures.
4.76 Item 97 inserts proposed subsection 1317AB(3) which allows a court to order reinstatement of the employee at a comparable level where the court is satisfied that an employer is attempting to terminate the employment of an employee on the basis of a disclosure.
4.77 Item 98 inserts proposed section 1317AE which provides that protected information disclosed by a whistleblower to specifed persons within a company is confidential. A disclosure of the information that is not authorised will constitute an offence.
4.78 Item 99 specifies that a fine of up to 25 penalty units will apply to a breach of the confidentiality provisions at proposed subsection 1317AE(1).
Schedule 5 - Remuneration of directors and executives
4.79 Currently, section 200B of the Corporations Act provides that shareholder approval, by resolution passed at a general meeting, is needed for the provision of certain termination payments to a director. Section 200F provides an exemption to the requirements under 200B in certain cases. The Bill amends section 200F to specify further the conditions for exemption.
4.80 This item amends Section 200F to provide that shareholder approval is not required for a payment made pursuant to an order of a court.
Schedule 6 - Continuous disclosure
4.81 Sections 674 and 675 of the Corporations Act impose obligations on disclosing entities in relation to continuous disclosure. The Bill currently includes amendments to these sections (proposed subsections 674(2A) and 675(2A) - see Schedule 6, Item 102, in the Bill) which would have the result that a person who is involved in a contravention of these provisions also contravenes subsection 674(2) or 675(2).
4.82 It is now proposed to include a due diligence defence for persons involved in the contravention. This defence is proposed to address concern expressed that persons involved in the management of a disclosing entity may be considered to have contravened the continuous disclosure requirement even though they had done their best to ensure that the entity complied with its continuous disclosure obligations.
4.83 The defence requires that the person took all steps that were reasonable in the circumstances to ensure that the disclosing entity complied with its continuous disclosure obligations, and believed on reasonable grounds that the disclosing entity was complying with those obligations. Paragraph (a) of each proposed defence encompasses the assessment whether particular information is required to be disclosed and the process for disclosing it.
4.84 The notion of reasonable steps is obviously for the court to decide on the facts of a particular case and may include, in appropriate circumstances, instances of delegation and reliance on others.
4.85 The phrase 'in the circumstances' refers to all the conditions surrounding the disclosing entity's compliance with its subsection 674(2) (and 675(2)) obligations and may include, for example, the circumstances of the person taking the steps (including his or her role) and of the disclosing entity, and the nature of the information.
4.86 Further, the defence relates to the steps taken to ensure compliance in relation to the particular information referred to in subsection 674(2)(b) or 675(2), as appropriate.
4.87 The defence does not address situations where, for example, the view of a compliance officer, individual board member or secretary is overruled, with the result that the disclosing entity has contravened its continuous disclosure obligations. This is not addressed because such a person would not be 'involved in' the contravention in the sense required by section 79 of the Corporations Act 2001. The notion of 'involved in' is explored in the original Explanatory Memorandum (paragraphs 5.447 to 5.449).
4.88 This amendment provides a defence to a breach of proposed subsection 675(2A) in relation to a person who is involved in a breach of a disclosing entity's continuous disclosure obligations, where the person took all reasonable steps to ensure the entity complied with its disclosure obligations and had reasonable grounds to believe that the entity was complying with its disclosure obligations.
4.89 The onus is on the defendant to prove that they satisfy the requirements of this defence. Further explanation is provided in relation to Item 101.
4.90 The first proposed amendment would clarify the intention of proposed subsection 1317DAF(3) of the Corporations Act - that a disclosing entity which complies with an infringement notice is not, because it has complied, regarded as having contravened the relevant provision or having been convicted of an offence constituted by the that conduct.
4.91 The second proposed amendment would correct a minor drafting omission.
Schedule 7 - Disclosure rules
4.92 This item is a technical amendment.
4.93 This item amends proposed section 708A of the Corporations Act by replacing the 'and' between subparagraphs 708A(7)(b)(i) and (ii) with an 'or'.
Schedule 11A - Register of information about relevant interests
4.94 Item 107 will insert Schedule 11A after Schedule 11 of the Bill. Schedule 11A contains amendments to the Corporations Act provisions dealing with tracing beneficial ownership of shares. The amendments will require listed companies and responsible entities for listed managed investment schemes to maintain a register of notices about relevant interests.
4.95 The amendments are consistent with the Report of the Parliamentary Joint Committee on Corporations and Financial Services (Recommendation 27) and reinstate, with several modifications, former section 724 of the Corporations Law.
4.96 Until 1996, section 724 of the Corporations Law required listed companies to keep a register of information disclosed under the tracing provisions. That section was repealed by the First Corporate Law Simplification Act 1995. The rationale for the change was that, since all information received under the tracing regime had to be lodged with ASX pursuant to ASX Listing Rules, there was no reason to require companies themselves to maintain a register. Given the subsequent abolition of the ASX Listing Rule requiring lodgement of information received unde the tracing regime, it is appropriate that the requirement to keep a register of notices of relevant interests be reinstated.
4.97 Proposed section 672DA does not require companies or responsible entities to seek further information. It is aimed at making the information already collected available to the wider market.
4.98 Item 1 of Schedule 11A will amend subsection 168(1) of the Corporations Act (Registers to be maintained) by inserting a note referring to proposed section 672DA.
4.99 Item 2 of Schedule 11A will insert a new section 672DA after section 672D. Proposed section 672DA contains provisions requiring listed companies and responsible entities of listed managed investment schemes to maintain a register of notices about relevant interests.
4.100 The listed company or responsible entity must keep a register of the information outlined in proposed paragraphs 672DA(1)(a)-(e) that it receives under Part 6C.2 (Tracing beneficial ownership of shares) on or after 1 January 2005, in accordance with proposed section 672DA (proposed subsection 672DA(1)).
4.101 Proposed subsections 672DA(2) and (3) list the alternative places at which the register must be kept: the listed company's or scheme's registered office, principal Australian place of business, or another Australian place either approved by ASIC or where the work involved in maintaining the register is done.
4.102 Notice must be given by the company or responsible entity to ASIC of the address at which the register is kept within 7 days after the register is either moved to another place, or is established at a non registered office or at an office that is not at the principal Australian place of business (proposed subsection 672DA(4)). However, a company or responsible entity is not required to give ASIC written notice for moving the register between its registered office and its principal Australian place of business.
4.103 Strict liability applies to an offence based on proposed subsections 672DA(2), (3) or (4) (proposed subsection 672DA(5)).
4.104 Proposed subsection 672DA(6) provides a default rule for the form in which information specified in proposed paragraphs 672DA(1)(a)-(e) must be kept. ASIC can, however, also approve another form for the register (proposed subsection 672DA(6)).
4.105 The register must be kept open for inspection without charge by any member of the company or scheme. Non-members must be able to inspect the register either without charge or for a fee, which if required must not exceed a prescribed amount (proposed subsection 672DA(7)).
4.106 Upon request by any person to give them a copy of (any part of) the register, the company or responsible entity must give that person the copy either without charge or for a fee, which if required must similarly not exceed a prescribed amount. The copy must be provided either within 21 days after the day on which the request is made or payment of the fee is received, or within a longer period approved by ASIC in writing (proposed subsection 672DA(8)).
4.107 Information required by proposed subsection 672DA(6) must be entered within 2 business days after the day on which the information is received (proposed subsection 672DA(9)).
4.108 Item 3 of Schedule 11A will insert a new table item 229AA in Schedule 3. By virtue of section 1311, the effect of proposed table item 229AA is that an offence against proposed subsections 672DA(1), (2), (3), (4), (6), (7), (8) and (9) is punishable, on conviction, by a penalty not exceeding 10 penalty units.
4.109 For each day after the periods referred to in proposed subsections 672DA(4), (8) and (9), until ASIC is notified, the copy is given or the details are entered in the register, respectively, the company or responsible entity is guilty of an offence (proposed subsections 672DA(4), (8) and (9)).
Schedule 12 - Transitional provisions
Items 108 to 121, 123, 126 to 132, 134 to 146 and 148 to 151
4.110 These are technical amendments which replace references to 1 July 2004 (other than references to financial years commencing on 1 July 2004) with a reference to the commencement day of the Schedule containing the amendment to which the transitional provision relates. The amendment is a consequence of the changes to the commencement dates in clause 2 (see Government amendments 1 to 8 above).
4.109 Proposed subsection 1455(4) of the Corporations Act provides that provides that professional auditing standards that are given interim legal backing cease to have effect on either 30 June 2006 or a later date specified in the regulations.
4.111 The proposed Government modifies subsection 1455(4) to provide that the professional standards cease to have effect for periods ending either after 30 June 2006 or after a later date specified in the regulations.
4.112 The purpose of the amendment is to ensure that audits of financial reports for periods ending on either 30 June 2006 or the later date specified in the regulations can be undertaken in accordance with the professional standards, even though the audit report might not be signed until after 30 June 2006 or the later date specified in the regulations.
4.113 Proposed section 1457 of the Corporations Act is a transitional provision dealing with the lodgement of annual statements by registered company auditors. Proposed subsection 1457(1) provides that the requirement to lodge an annual statement applies from the calendar year ending on 31 December 2004 while proposed subsection 1457(2) provides that the first annual statement is to cover the period ending on 31 December 2004.
4.114 The proposed Government amendments revise proposed subsection 1457(1) to provide that the obligation to lodge an annual statement applies from the first anniversary of registration occurring on or after 1 January 2005 and proposed subsection 1457(2) to provide that the first annual statement is to cover the period ending on the first anniversary of registration occurring on or after 1 January 2005.
4.115 The proposed Government amendments reflect the decision to change the lodgement requirements for an annual statement from whether a person is registered at the end of a calendar year to the anniversary of a person's registration as an auditor.
4.116 This is a technical amendment to proposed subsection 1462(4) to correct a cross-reference to another provision.
4.117 Proposed subsection 1465(3) of the Corporations Act provides that the Financial Reporting Panel amendments made by Part 3 of Schedule 2 of the Bill apply to all financial reports, including reports for periods that started before 1 July 2004.
4.118 The proposed Government amendment inserts a revised subsection 1465(3) which provides the amendments made by Part 3 of Schedule 2 apply to financial reports lodged with ASIC on or after 1 January 2004.
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