The Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 has been introduced into Parliament and largely reflects the form of the Exposure Draft (including removing the obligation to hold a general meeting at the request of 100 members). Disappointingly however, the reforms to clarify the dividend payment test in section 245T of the Corporations Act 2001 (Cth) have been omitted from the Bill, and are subject to further consideration following stakeholder feedback. We will monitor the progress of the Bill and any developments in relation to the dividend payment test.
On 22 October 2014, the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 (Bill) was introduced into Parliament. For our commentary on the Exposure Draft of the Bill, see the May 2014 G+T Client Update.
To a large extent, the Bill follows the form of the Exposure Draft and proposes to amend the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) by:
- removing the obligation to hold a general meeting at the request of 100 members under section 249D (so that only a member or members with 5% of the votes that may be cast at the general meeting will have such a right);
- replacing the requirement to disclose in a remuneration report the value of options granted to key management personnel with a requirement to disclose the number of lapsed options and the year in which they were granted – the requirement in the Exposure Draft for a remuneration report to include a general description of the company’s remuneration governance framework is not included in the Bill;
- clarifying the circumstances in which a financial year may be less than 12 months;
- relieving certain disclosing entities from the obligation to prepare a remuneration report and exempting certain companies limited by guarantee from the obligation to appoint an auditor;
- empowering the President of the Takeovers Panel to give directions about the composition of the Panel while overseas and allowing members of the Panel to participate in proceedings while overseas; and
- transferring the remuneration-setting responsibilities of the Financial Reporting Council, Australian Accounting Standards Board and the Auditing and Assurance Standards Board to the Remuneration Tribunal.
Disappointingly, the reforms to clarify the dividend payment test in section 245T of the Corporations Act 2001 (Cth) (by essentially replacing the 3 limb balance sheet test with a pure solvency test – see the May 2014 G+T Client Update for more details) which were included in the Exposure Draft have been omitted from the Bill. Treasury has advised that the omission is due to stakeholder feedback that the changes in the form set out in the Exposure Draft would not reduce the compliance burden for business and required further consideration.