The passage through the Senate of the Personal Liability for Corporate Fault Reform Bill 2012 (the Bill) today has moved Australia closer towards a seamless national economy.
The Bill represents the Australian Government's commitment to implementing the Directors' Liability reform initiative as part of the Council of Australian Governments' (COAG) National Partnership Agreement to Deliver a Seamless National Economy.
The reform commits all jurisdictions to establishing a nationally consistent and principles-based approach to the imposition of personal criminal liability on directors for corporate fault.
Parliamentary Secretary to the Treasurer, Bernie Ripoll, said that this was an important deregulation initiative aimed at encouraging wealth and job creation in Australia by, where appropriate, removing unnecessary compliance burdens from company directors and corporate officers.
"By passing this Bill, the Gillard Government is acting to cut red tape, and is leading by example in working to boost productivity and promote the seamless national economy envisaged by the COAG National Partnership Agreement," Mr Ripoll said.
"When all States and Territories have passed similar legislation, there will be significant improvements in the consistency of the imposition of personal criminal liability for corporate fault across the country."
"This regulatory reform will benefit all Australian businesses, particularly those that operate across multiple jurisdictions within Australia."
By introducing and passing the legislation this year and thereby exceeding the milestones for the reform established by COAG, the Federal Labor Government has demonstrated its strong commitment to the Seamless National Economy reforms.
In recommending the passage of the Bill, the Parliamentary Joint Committee on Corporations and Financial Services (PJC) noted that it was "confident that the Bill and the wider reform agenda will provide greater certainty for company directors and reduce red tape... [and] provide for a significant reduction in the legislative and regulatory burden."
The Bill amends a significant number of provisions across a range of Commonwealth legislation that imposes personal criminal liability for corporate fault. It will ensure that a person is only made criminally liable for the fault of a corporation where it is fair and reasonable in all circumstances to do so.
As part of the COAG reform, Commonwealth legislation was assessed against principles and guidelines endorsed by COAG for the imposition of personal liability. The Bill amends Commonwealth legislation to align it with these principles and guidelines.
Once implemented by all jurisdictions, this reform will enhance national consistency in the imposition of personal criminal liability for corporate fault, and reduce unnecessary compliance burdens on business.
The passage of the Bill follows a substantial public consultation process over the course of 2012, as well as an inquiry by the PJC.
22 November 2012