Review of ASIC Powers Welcome but Legislation still Flawed

The Business Council of Australia said today the detailing of new corporate governance legislation in federal Parliament today reinforced business views that key parts of the CLERP 9 bill were bad law and would continue to be opposed.

Chief Executive, Ms Katie Lahey, said the BCA accepted the bulk of the CLERP 9 bill, which related to improved auditing and financial reporting by companies.

Ms Lahey said business also acknowledged the government’s announcement today that it would now provide a process to review the workability of new ASIC powers after a period of two years.

However, this did not lessen the fact that giving ASIC unprecedented powers over companies on continuous disclosure breaches was fundamentally flawed.

“Any review of the legislation as it stands will not address the fundamental issue of ASIC being the judge and jury in these matters.

“These powers are unprecedented for a regulator and the government should go back to the drawing board.

Ms Lahey said the BCA was also disappointed that the government was proceeding with a proposal to make executive pay decisions by Boards subject to a shareholder vote.

“The BCA believes this law will create more problems than it solves in the short term,” she said.

“Corporate Australia has got the message that executive pay needs to be reasonable and justified in the eyes of shareholders.

“More laws to regulate or intervene in what is a highly competitive, global market for executive talent is not a sustainable approach.

“Neither is eroding the powers of board directors to take decisions, as they are elected to do by shareholders.”

Ms Lahey said BCA would continue to press the government to rethink both proposals prior to the legislation being debated in Parliament next year.