Senate

Supplementary explanatory memorandum relating to sheet RS134

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

Chapter 1 - Continuous Disclosure - Parliamentary Amendment

Outline of chapter

1.1 The Parliamentary Amendment to the Bill requires the Minister to cause an independent review of Parts 1 and 2 of Schedule 2 (continuous disclosure) to be conducted within six months after the second anniversary of the commencement of Schedule 2 to the Bill. The Government must table the review and make public its response within three months of that tabling.

1.2 All references to the Bill in this document refer to the Treasury Law Amendments (2021 Measure No. 1) Bill 2021.

1.3 All references to the Act in this document refer to the Corporations Act 2001.

Context of amendments

1.4 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). It also ensures that 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.

Summary of new law

1.5 The Minister must cause an independent statutory review of the amendments to the continuous disclosure provision in Parts 1 and 2 of Schedule 2 to the Bill to be conducted within six months of the second anniversary of the commencement of that Schedule. The review must be tabled in each House of Parliament within 15 sittings days of the report being given to the Minister.

1.6 The Government must also make their response to the review public by publishing it on the Department's website as soon as practicable and in any event within three months after the report is first tabled in Parliament.

Detailed explanation of new law

1.7 The Parliamentary Amendment requires the Minister to commission an independent review of the operation of the continuous disclosure amendments in Parts 1 and 2 of Schedule 2 to the Bill. That review must be conducted within six months of the second anniversary of the commencement of Schedule 2. [Parliamentary Amendment (1)]

1.8 The independent expert must prepare a written report of the review and provide the report to the Minister. If the review makes any recommendations, the report must set out the reasons for those recommendations. [Parliamentary Amendment (1)]

1.9 The Minister must table the written report within each House of Parliament within 15 sitting days of receiving the report from the independent expert. The Government must also make its response to the recommendations publicly available on the Department's website as soon as practicable after receiving the report and in any event within three months of the report first being tabled. [Parliamentary Amendment (1)]

1.10 If the Minister fails to cause the review to be conducted, table the report or make its response publicly available on the Department's website within the required timeframes, the continuous disclosure amendments automatically sunset on the day after the end of the period to which the first failure relates. For instance, if the Minister fails to cause the review to be conducted within six months of the second anniversary of the commencement, the provisions sunset on the day after the six-month period ends. Sunsetting does not invalidate anything done before the sunsetting date. [Parliamentary Amendment (1)]

1.11 This ensures that there is a legislated process for considering the effect of the continuous disclosure reforms, along with any further changes that may be required. [Parliamentary Amendment (1)]

1.12 The statutory review does not need to consider the amendments made by Schedule 1 (company meetings) as these are temporary in nature. The Government is finalising permanent company meetings reforms. Consultation on these reforms occurred between 25 June 2021 and 16 July 2021 (see "Using technology to hold meetings and sign and send documents" at https://treasury.gov.au/consultation ) and the Exposure Draft included a requirement for a statutory review of the amendments.