April 2012
Welcome to our April edition of ‘Legal and regulatory developments in Australia’. Since our last update there have been a number of significant developments in Australia including the commencement of the sweeping new personal property security regime and further reforms affecting executive remuneration. We summarise these and other developments below.
Also since our last update Mallesons Stephen Jaques merged with the leading Chinese law firm King & Wood to create a new legal powerhouse, King & Wood Mallesons, with a uniquely Asian view of the world. I hope that future updates will include a summary of key regulatory developments taking place in China and other parts of Asia.
Please contact me in London if we can provide more details about the developments referred to below or if we can assist you with any other Australian or Asian legal or regulatory issues.
Best wishes,
Robert Hanley, Partner
London
Clawback of bonuses - further reform to executive remuneration laws
In a world where the ‘executive bonus’ is increasingly under scrutiny if not attack, the Australian Government is to tighten up its laws on executive remuneration. First the changes will require improved disclosure of termination or “golden handshake” payments and require remuneration reports to make a “clearer categorisation of pay” to allow shareholders to better understand the company’s remuneration arrangements. The second reform will require a listed company to reveal in its remuneration report what steps it has taken to recover bonuses and other remuneration where a company has made a serious financial misstatement. The reforms don’t actually require the company to clawback amounts paid, but to disclose to shareholders what action it has, or hasn’t taken. Read more.
New anti-avoidance tax regime from 1 March
Part IVA is a general anti-avoidance income tax regime originally brought in to counter blatant, artificial or contrived tax avoidance schemes. The Australian Government has announced changes to that regime to take effect for any schemes entered into after 1 March 2012. However, no details of the changes are available because they will only be finalised and enacted in September 2012 after a public consultation. Remarkably, this means that Australian businesses may find their transactions characterised as unlawful under legislation which has not yet been formulated. Read more.
Personal Property Securities Register now open
Since our last update, the far-reaching Personal Property Securities Act has come into force and registration must now be made with the Personal Property Securities Register. Now that the system is live, businesses are grappling with the new register and the impact of the new law. Read more here, and further background can be read here.
Reforms to company officer liability begin
The first part of proposed reforms to laws imposing personal liability for corporate offences has been announced. The amendments relate to derivative liability on directors and secretaries for offences committed by their company. Read more.
‘FoFA’ toolkit available
The Future of Financial Advice (FoFA) reforms represent an “overhaul” of the Australian regulation of financial advisory services for consumers. The key changes include:
A ban on remuneration structures including commissions and volume based payments in connection with the distribution and advice of retail investment products including managed investments, superannuation (pensions) and margin loans;
The introduction of a statutory fiduciary duty so that financial advisers must act in the best interests of their clients, and place the best interests of their clients ahead of their own when providing advice to retail clients;
Increasing transparency and flexibility of payment for financial advice by introducing 'adviser charging' that will help align the interests of the financial adviser and the client, is clear and product neutral terms, and where the investor will be able to opt in to the advice in response to a compulsory annual renewal notice;
Expanding the availability of low-cost 'simple advice' to improve access to and affordability of financial advice; and
Strengthening the powers of the regulator, the Australian Securities and Investments Commission, to act against unscrupulous operators.
King & Wood Mallesons has produced a FoFA toolkit to assist financial services businesses to determine how the FoFA reforms affect their businesses. For more details and to find out how to obtain the toolkit, read more here. After the linked article was published it was announced that although FoFA comes into force in July 2012, it will not be obligatory until July 2013.