The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has today released draft laws giving effect to the Government's commitment to clamp down on unsolicited share offers by restricting access to company registers.
These reforms are required because previous investor protection measures, such as mandatory disclosure of a company's current share price, have failed to stop the continuing operation of share offer scams.
"Unscrupulous operators have continued to prey on vulnerable investors, duping them into handing over their shares for well-below market prices. The Government is now acting to put these charlatans out of business," Mr Bowen said.
The draft Bill released today will enable companies to refuse to hand over copies of their member registers where that information is not being sought for a proper purpose.
Under the current law, a company must provide a copy of its member register to anyone who requests it and pays a small fee.
Associated draft regulations, also released today, specify a non-exhaustive list of improper purposes, including accessing a register for the purpose of making an off-market offer to purchase securities in a listed company. Genuine takeover bids will be exempted from this regime.
"This legislation is designed to balance the needs of those seeking legitimate access to registers with the rights of those whose personal information is contained in the register," Mr Bowen said.
The legislation will require persons seeking a copy of a company's register of members to state the purpose for which they will use the register.
The Bill makes it an offence to:
- make a false or misleading application for access to a register;
- use information obtained from a register for an improper purpose; or
- disclose information obtained from the register, knowing it is likely to be used for an improper purpose.
The reforms will also reduce compliance costs for companies by:
- allowing for a register maintained on a computer to be inspected on a computer;
- prescribing the formats in which a copy of the register can be provided; and
- establishing a tiered fee structure for those seeking access to the register.
"The Government has acted on widespread concern in the business community that the fees a company is able to charge for preparing a copy of its member register are substantially less than the true cost of producing the copy," Mr Bowen said.
"We have been careful to ensure that access to member registers for legitimate purposes is not prohibitively priced, while setting out a more balanced fee structure to better reflect the cost to companies."
The amendments are contained in the Corporations Amendment (No 1) Bill 2010, which also contains provisions giving effect to the Government's commitment to increase criminal penalties for market offences, such as insider trading, and to provide ASIC with stronger powers to detect such offences.
The Government intends to introduce the Bill in the current parliamentary session.
Further information on these reforms is available at www.treasury.gov.au.
Consultation process
Interested parties are invited to make written submissions on the draft Bill and regulations.
Submissions may be lodged electronically, by post or facsimile to:
Corporations Amendment (No.1) Bill 2010
Corporations and Financial Services Division
The Treasury
Langton Crescent
PARKES ACT 2600
Fax: 02 6263 2770
Email: accesstoregisters@treasury.gov.au
Telephone inquiries may be made by calling (02) 6263 3971.
The closing date for submissions is 10 June 2010.
CANBERRA
20 May 2010