The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today introduced a Bill into Parliament to reduce red-tape on business and improve Australia's corporate reporting framework.
"The Government is very mindful of the regulatory burden facing Australian companies. That is why the Government has taken action to improve Australia's corporate reporting framework and reduce unnecessary red-tape on business," Mr Bowen said.
The package of reforms will deliver much-needed relief from red-tape for Australian companies and implement a number of other important refinements to our corporate regulatory framework.
The key measures to reduce red-tape include:
- significantly reducing the regulatory burden on companies limited by guarantee, which typically have a not-for-profit purpose, by introducing a three-tiered differential reporting framework;
- streamlining parent-entity reporting;
- providing greater flexibility for companies to pay dividends, by replacing the profits test with a solvency-type test; and
- allowing companies to more easily change their year-end date to minimise the burden on companies and their auditors during peak reporting periods.
The reforms will also implement refinements to the regulatory framework, including:
- improving disclosure of non-financial information in the directors' report;
- refining the statement of compliance with International Financial Reporting Standards contained in the directors' declaration; and
- clarifying the circumstances in which a company can cancel its share capital.
The reforms are being implemented through the Corporations Amendment (Corporate Reporting Reform) Bill 2010 and accompanying Regulations.
The draft legislation was released for a two-month public consultation period, which concluded in February this year. A number of interested stakeholders also participated in roundtables to discuss the proposed reforms.
"I would like to thank all of the stakeholders that participated in the consultation process. Their feedback has ensured this Bill delivers the best outcome for business," Mr Bowen said.
A measure contained in the draft Bill, protecting solicitors' representation letters from disclosure to enable auditors to properly verify a company's contingent liabilities, was removed from the final version of the Bill prior to its introduction.
While most stakeholders supported the measure, several requested further consultation be undertaken on the details of the amendment. The Government will consult further on the proposal and include reforms in a later Bill once appropriate wording has been settled.
26 May 2010