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Legislation and proposed legislation - January and February 2017
Government consults on measures to increase transparency of beneficial ownership of companies
The Government is seeking to improve transparency around who owns, controls and benefits from companies to assist with preventing the misuse of company structures for illicit purposes.
The Government’s Consultation Paper – Increasing Transparency of the Beneficial Ownership of Companies seeks views on how to potentially increase transparency of the beneficial ownership of companies to better assist authorities to combat illicit activities including tax evasion, money laundering, bribery, corruption and terrorism financing.
The Government is seeking feedback on a range of issues including:
- what beneficial ownership information should be collected and how it should be kept up to date (including the possibility of a central register of beneficial ownership);
- whether listed companies should be exempt on the basis of their existing disclosure obligations;
- sanctions for companies or beneficial owners that fail to comply;
- expected compliance costs for affected parties; and
- whether any increased beneficial ownership disclosure requirements should also apply to beneficial owners of shares held by nominee shareholders and whether bearer share warrants should be banned.
Submissions are due by 13 March 2017.
Government consults on exposure draft legislation to implement an ASIC industry funding model
The Government’s exposure draft legislation seeks to implement an industry funding model to recover the regulatory costs of the ASIC through annual levies and fees-for-service payable by entities regulated by ASIC.
Following consultation late last year on its Proposals Paper and supplementary technical paper, the following three exposure draft Bills, which establish the overarching framework for the model, have been released for consultation:
- ASIC Supervisory Cost Recovery Levy Bill 2017;
- ASIC Supervisory Cost Recovery Levy (Collection) Bill 2017; and
- ASIC Supervisory Cost Recovery Levy (Consequential and Transitional) Bill 2017.
Submissions on the exposure draft Bills are due by 10 March 2017.
The Government is continuing to consult on the mechanisms that will be used to calculate the levies payable by each class of regulated entity, with this detail to be included in subsequent draft regulations.
See also ASIC media release dated 22 February 2017.
State Economics Legislation Committee tables its report on the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016
The Senate Economics Legislation Committee (Committee) has recommended that the amendments to widen the scope of section 46 of the Competition and Consumer Act 2010 (Cth) as proposed in the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016, be passed, subject to amendment.
The Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 (Bill) seeks to widen section 46 of the Competition and Consumer Act 2010 (Cth) to prohibit a corporation with a substantial degree of market power from engaging in conduct with the purpose, effect or likely effect of substantially lessening competition in a market in which it directly or indirectly participates.
By majority, the Committee has recommended in its report that the Bill be passed, subject to the removal of the proposed mandatory factors to be taken into account in determining whether the relevant conduct has the purpose, or is likely to have the effect, of substantially lessening competition in a market, as drafted in subsection 46(2) as proposed by the Bill.
The Committee has also recommended that the Government undertake a post-implementation review of the reforms to section 46 at least five years after commencement.
For further background and details of the exposure draft legislation, see Rethinking the Competition and Consumer Act: Exposure draft legislation lays groundwork for the most significant change in a generation dated 12 September 2016 by Elizabeth Avery, Simon Muys and Matt Rubinstein.
Government signals potential review of section 631(2)(b) of the Corporations Act relating to ability to fund a takeover bid once publicly proposed
The Government has indicated that it will review ASIC’s proposed reforms to section 631(2)(b) of the Corporations Act following the 2015 Mariner decision when other substantial reforms to takeovers laws are next considered by the Government.
In response to the Parliamentary Joint Committee on Corporations and Financial Services’ Report on the 2014-15 annual reports of bodies established under the ASIC Act dated 4 May 2016 (Report), the Government has given in principle support for the Committee’s recommendation that the Government consider the suggestions made by ASIC in relation to section 631(2)(b) of the Corporations Act 2001 (Cth) following the Federal Court decision Australian Securities and Investments Commission v Mariner Corp Ltd  FCA 589. Specifically, ASIC has proposed:
- amending section 631(2)(b) to require that a bidder have an objectively reasonable basis that it will be able to comply with its funding obligations under a bid; and
- addressing the uncertainty arising from the reference to a “substantial proportion of offers” by clarifying that funding is required to pay for all securities to which the proposed bid relates.
The Government has indicated that further consideration of the Committee’s recommendation will occur when other substantial reforms to takeover laws are next considered by the Government.
See the Treasury media release dated 15 February 2017.
Government consults on water entitlement registration rules
The Government’s draft rules set out its proposed exclusions form the requirement for foreign persons to register water entitlements.
The Government has released exposure draft rules to support the Register of Foreign Ownership of Water or Agricultural Land Act 2015 (Cth) (Act) and draft forms that set out the proposed data fields for registration of water entitlements.
Broadly, the draft rules propose that the following exemptions will apply to the requirement for foreign persons to register water entitlements with the Australian Taxation Office under the Act:
- registrable water entitlements will not include ‘harvestable rights’ (ie a right which allows water harvested from rainfall to be used for stock and domestic purposes) and rights held by irrigation infrastructure operators for the purposes of meeting their requirements under an irrigation right with a customer, or conveyance water (ie the additional water which may be lost in transit or as a result of seepage or evaporation); and
- registrable water entitlements or contractual water rights which are obtained through the enforcement of a security held for the purposes of a money lending agreement will not need to be registered.
Water entitlements will not need to be registered before 1 July 2017.
Submissions are due by 3 March 2017.
See Treasury media release dated 25 January 2017.