24 September 2001

Red Tape Cut for Small Business

Note

Joint media release with
The Hon Ian Macfarlane MP
Minister for Small Business

Small Business red tape will be cut through the streamlining of Australian Securities and Investment Commission (ASIC) reporting requirements, the Minister for Financial Services and Regulation, Joe Hockey, and the Minister for Small Business, Ian Macfarlane announced today.

The changes complement other measures being announced today by the Government to help small business.

From mid-2002, nearly 1 million proprietary companies will no longer need to provide ASIC with an annual return, significantly reducing paperwork.

"The cost savings to small business from these measures will be significant. These measures stem from consultations and the series of formal roundtables I have held with small business across the country over the last eight months" Minister Macfarlane said.

Under the changes small businesses:

  • will no longer need to provide ASIC with an annual return. These companies will only need to alert ASIC if they make changes such as address or directors;
  • will have their ASIC fee capped at $200 for three years;
  • will be able to lodge documents over the Internet;
  • can conduct online searches of ASIC's database;
  • make payments to ASIC electronically.

"ASIC will also set up a Business Advisory Board, which will include representatives of small business, to advise on its relationship with business clients in managing company information."

"This will allow small business to contribute to the development of ASIC policies and systems affecting the business community," Minister Hockey said.

The changes announced today flow from the Government's Corporate Law Economic Reform Program - or CLERP 7.

They take account of consultation with the business community and other stakeholders following the release last year of the CLERP 7 discussion paper `Simplified Lodgments and Compliance. Streamlining paperwork under the Corporations Law'. The CLERP 7 proposals have received broad support from the business community.

They also include a simplification of the schedule of fees paid by companies, the three year cap on annual fees paid by small business, and moves toward greater cost recovery when larger companies lodge fundraising and takeover documents with ASIC.

"The measures will not only reduce the paper compliance burden for business, but also help ASIC by reducing the volume of returns requiring processing, while maintaining the quality and integrity of its company database."

"The Government will amend the Corporations Act to give effect to some of the measures and will implement others administratively," Minister Hockey said.

Further information on the measures is provided in an attachment. Additional information will be provided on the ASIC website closer to the implementation date, proposed for mid-2002. ASIC will progressively advise individual companies of the changes from about that time.

Contact: Matthew Abbott, Minister Hockey's Office Tel: 0413 076 213

Contact: Scott Reading, Mr Macfarlane 's Office Tel: 0419 418 793

24 September 2001


ATTACHMENT

STREAMLINING PAPERWORK UNDER THE CORPORATIONS ACT

Further information about the measures announced by the Minister for Financial Services & Regulation is provided below. Most of the measures are discussed in detail in the consultation paper Simplified Lodgments and Compliance. Streamlining paperwork under the Corporations Law, Corporate Law Economic Reform Program Proposals for Reform: Paper No. 7, available on the Treasury website (www.treasury.gov.au).

The implementation of some measures is subject to the passage of enabling legislation or regulations.

Abolition of company annual returns

  • From June 2002, companies will no longer lodge an annual return with ASIC. An Annual Fee will replace the present annual return fee.
    • The Annual Fee will be payable on the anniversary of a company's registration or an alternative date nominated by the company and agreed by ASIC.
  • Companies would still need to notify ASIC of any changes in company details as they occur. However, if there are no changes, no paperwork will need to be lodged.
    • In practice, this will reduce compliance burdens for a large number of small businesses which typically do not notify changes during the course of the year.
  • ASIC will also benefit from a reduced volume of returns requiring processing. The quality and integrity of ASIC's Register of Companies will be protected by the use of an Extract of Particulars.
    • The Extract of Particulars, setting out a company's details as recorded on the Register, will be issued to all companies together with an Annual Fee invoice. (This will be done electronically except where a company lodges in paper form.) Unless ASIC is advised otherwise, payment of the Annual Fee will be taken as confirmation of details about the company shown in the Extract.
    • ASIC will be able to contact companies to seek confirmation of company details if it has reason to believe that these details are not up to date.

Streamlining document lodgment requirements

  • Currently, the Corporations Act requires a separate notification form to be lodged with ASIC for each change in company details. These processes will be simplified by introducing a single, multi-purpose form.

Electronic lodgment and payment

  • ASIC actively encourages the electronic lodgment of information. It has already achieved high rates of electronic lodgment of annual returns, electronic processing of company data, and electronic searches of its database.
  • While continuing to provide facilities for paper based lodgment, ASIC will encourage greater use of electronic lodgment and online searches of its database.
  • To supplement existing cash and cheque payment methods, ASIC will introduce the option of electronic payment facilities and third party agency facilities such as those provided by many banks and Australia Post.

Creation of Business Advisory Board

  • To ensure direct input from business on changes affecting them, a Business Advisory Board will be established to provide ASIC with strategic advice and feedback on the initiatives and operations of its Public Information Program.
  • The Advisory Board will be appointed and chaired by ASIC. It will have 8-10 members drawn mainly from the business community - including small business - and professional organisations.

Overhaul of fees under the Corporations Act

  • The schedule of fees payable by companies will be simplified, with the number of items reduced from 51 to about 30. It is proposed that fee changes would generally take effect from 1 July 2002.
  • With the abolition of company annual returns, an Annual Fee for companies will replace the present annual return fee.
    • The annual fee paid by proprietary companies will be capped at $200 for three years.
  • Financial service providers will pay an Annual Fee rather than a fee for each document lodged with ASIC. Fees for licence holders will be calculated on a sliding scale according to the number of representatives the licence holder has.
  • Fees for prospectuses will be changed to a differential scale according to the type of disclosure document. The existing flat-rate fee structure for lodging takeover documents will be retained, but the amount of the fee will be increased.
  • Fees for financial service providers, fundraising and takeover activities will continue to be monitored with a view to ensuring that they are progressively increased to a level that fully covers regulatory costs.