Call for wholesale review of the Corporations Act
Governance Institute of Australia is urging the next Federal Government to commit to a wholesale review of corporations law, claiming that corporate legislation developed in a pre-technological time needs reform to make it more relevant to the 21st century and more supportive of a robust economy.
“The Corporations Act today is a 19th century model that struggles to facilitate corporations being agile or new corporate structures to emerge. Not only does it fail to take into account technological advances that have changed the way we do business over the last 10 years, it is at loggerheads with a broader reform agenda focused on innovation and a smarter way of doing things, ”says Governance Institute chief executive Steven Burrell.
Broad-ranging in its scope, Governance Institute’s position paper is urging the next Federal Government to:
- make the Corporations Act technology-neutral
- reduce compliance costs and facilitate shareholder engagement by undertaking a wholesale review of corporate reporting, including remuneration reporting
- facilitate shareholder engagement and reduce red tape through AGM reform
- enhance productivity for both the private and not-for-profit sectors by providing leadership on a permanent referral of powers from the states on corporations law and to provide for all incorporated associations to be regulated nationally to remove duplication of compliance obligations
- facilitate these reforms by establishing a Corporations Law and Governance Taskforce
- ensure that all new legislation is effective and achieves the desired policy objectives.
“There are compelling reasons as to why we need this wholesale review,” says Mr Burrell. “For example, the AGM in its current form is expensive. With a price tag of $250,000 to $1,000,000 per meeting, it’s a heavy compliance burden, yet it does not facilitate shareholders being able to engage with the companies in which they invest. The law still assumes physical attendance and hard copy voting forms, instead of encouraging virtual attendance and online voting.
“It is not in the best interests of our economy for the corporations law to stand still. It underpins the operation of our markets — this is why a wholesale overhaul is a policy imperative.
“We strongly recommend that the incoming Australian Government establish a Corporations Law and Governance Taskforce to develop and submit proposals for reform of the Corporations Act to make it fit for purpose in the 21st century. We recommend a proactive approach to utilising the expertise of the Taskforce, and not have it seen as an advisory body whose recommendations are not acted upon,” Mr Burrell added.
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Media contact: Hannah Edwards, firstname.lastname@example.org
About Governance Institute of Australia
A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors. Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.