On 14 August 2006 Parliamentary Secretary to the Treasurer Chris Pearce announced that changes to the Corporations Act 2001 (Cth) aimed at simplifying the day-to-day administration of companies are expected to proceed in the coming months.
28 out of over 50 reform proposals first touted in April this year will be further detailed in a proposal paper expected to be released to the public for feedback next month.
The following is a summary of the reform proposals that are expected to surface:
reducing the contents required in a concise report to shareholders to a summary of information from the detailed directors' report
increasing the revenue and asset thresholds for financial reporting of "large proprietary companies", which has not changed in 10 years;
removing the requirement for shareholder approval for a public company to provide financial benefits to related parties (such as a director, a director’s spouse or a parent company) where the benefit to be provided is of a minor nature;
relaxing ASIC reporting and notification requirements across the Act;
removing of the requirement to issue a prospectus for rights issues of quoted securities;
facilitating small scale share offerings, for example, by relaxing the rules on small scale offerings (the "20/12" rule) and the "sophisticated investor" rules;
easing disclosure requirements for unlisted companies issuing shares to employees under an employee share option plan;
increasing flexibility for companies to advertise and promote prospectus issues.
Later on in the pipeline, amendments may also be introduced to extend the definition of the "business judgment rule" to protect directors from potential breaches of directors’ duties, if they act in a bona fide manner for the corporation’s benefit, having considered the scope of the corporation’s business.
Another potential amendment will be to enable shareholders in single-director companies to resolve to disapply some of the directors’ duties provisions.
Gadens Lawyers will keep you updated on developments regarding these proposed amendments and how it will impact the way your company is administered. by Albert Yung
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This publication is provided to clients and correspondents for their information on a complimentary basis. It represents a brief summary of the law applicable as at the date of publication and should not be relied on as a definitive or complete statement of the relevant laws.
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