Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2019-2020-2021-2022
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TREASURY LAWS AMENDMENT (MODERNISING BUSINESS
COMMUNICATIONS) BILL 2022
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Treasurer, the Hon Josh Frydenberg MP)
Table of Contents
Glossary................................................................................................. iii
General outline and financial impact ...................................................... 1
Signatures, sending documents and lost member relief
..................................................................................... 3
Credit and payments.................................................. 17
Publication requirements and other amendments ..... 31
Statement of Compatibility with Human Rights .......... 43
Attachment 1: Preface to the Regulation Impact Statement ............. 55
Attachment 2: Regulation Impact Statement .................................... 61
Glossary
This Explanatory Memorandum uses the following abbreviations and acronyms.
Abbreviation Definition
ACCC Australian Competition and Consumer
Commission
APRA Australian Prudential Regulation
Authority
ASIC Australian Securities and Investments
Commission
ASX Australian Securities Exchange
Corporations Act Corporations Act 2001
ETA Electronic Transactions Act 2009
ICCPR International Covenant on Civil and
Political Rights
ITAA 1936 Income Tax Assessment Act 1936
ITAA 1997 Income Tax Assessment Act 1997
Meetings and Documents Bill Corporations Amendment (Meetings and
Documents) Bill 2021
NCC National Credit Code
NCCPA National Consumer Credit Protection
Act 2009
RIS Regulation Impact Statement
SIS Act Superannuation Industry (Supervision)
Act 1993
SSAA Small Superannuation Accounts
Act 1995
Glossary
Abbreviation Definition
the Bill Treasury Laws Amendment
(Modernising Business
Communications) Bill 2022
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
General outline and financial impact
Modernising business communications
Outline
Schedule 1 to the Bill establishes a global communications regime for documents sent
under the Corporations Act. This includes providing for relief where communication
with a person is not possible due to a lack of current contact details for that person.
Schedule 2 to the Bill amends the NCCPA to improve the ability for credit licensees to
communicate documents to consumers electronically. It also facilitates the use of
electronic payments.
Schedule 3 to the Bill modernises publication requirements in various Treasury
portfolio laws.
Date of effect
Most of Schedule 1 to the Bill (the global communications regime) commences on the
later of:
• the day after the Bill receives Royal Assent; or
• immediately after the commencement of Schedule 2 to the
Corporations (Meetings and Documents) Act 2022.
The consequential amendments to the Corporate Collective Investment Vehicle
Framework and Other Measures Act 2022 are contingent on the passage of that Act.
Part 1 of Schedule 2 to the Bill (relating to the credit amendments) commences the day
after the end of the period of 18 months beginning on the day the Bill receives Royal
Assent.
Part 2 of Schedule 2 to the Bill (which facilitates electronic payments) commences the
day after the Bill receives Royal Assent.
Part 1 of Schedule 3 to the Bill (which modernise publication requirements)
commences on a single day to be fixed by Proclamation. If this Part does not
commence within the period of 6 months beginning on the day the Bill receives Royal
Assent, it commences on the day after the end of that period.
The contingent amendments in Part 2 of Schedule 3 to the Bill commence on a single
day to be fixed by proclamation. If this Part does not commence before 1 July 2024, it
commences on the day after the end of that period. This effectively ties their
commencement to the commencement of the Treasury Laws Amendment (Registries
Modernisation and Other Measures) Act 2020.
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Signatures, sending documents and lost member relief
Proposal announced
The Bill partially implements the Commonwealth's Deregulation Agenda measure
from the 2021-22 Budget.
Financial impact
The Bill has no financial implications.
Regulation impact statement
Impact: The measures in the Bill will benefit companies, registered funds, foreign
passport funds, and other registered entities, their members, officers and service
providers, and bidders and holders of securities in takeover targets. Credit licensees
and their clients will benefit from the changes to the NCC.
A Preface to the RIS is included at Attachment 1, which provides updates to the RIS
methodology and outcomes due to the expanded scope of the amendments compared to
the original published version of the RIS. The original RIS for the amendments in the
Bill has been included at Attachment 2. This was originally published on 9 June 2021.
Human rights implications
The Bill raises human rights issues. See Statement of Compatibility with Human
Rights -- Chapter 4.
Compliance cost impact
Average regulatory cost reductions of $60.1 million per year.
2
Signatures, sending
documents and lost member relief
Table of Contents:
Outline of chapter .................................................................................. 3
Context of amendments ......................................................................... 3
Summary of new law.............................................................................. 4
Comparison of key features of new law and current law ........................ 4
Detailed explanation of new law ............................................................ 6
Technology neutral signing and execution of documents ................ 6
Technology neutral requirements for sending documents ............... 6
Lost members ............................................................................... 10
Consequential amendments ................................................................ 12
Application and transitional provisions ................................................. 13
Contingent amendments ...................................................................... 13
Outline of chapter
1.1 This chapter provides an overview of the changes that Schedule 1 makes to the
Corporations Act in relation to:
• signing and executing documents electronically;
• sending certain documents electronically; and
• the introduction of relief for companies from sending documents to
members whose contact details are known to be incorrect.
1.2 All references in this chapter refer to the Corporations Act.
Context of amendments
1.3 The Meetings and Documents Bill, which was introduced on 20 October 2021,
proposes to amend the Corporations Act to allow:
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Signatures, sending documents and lost member relief
• companies to sign and execute documents electronically or using
wet-ink; and
• companies, responsible entities of registered schemes and disclosing
entities to send meetings-related documents electronically or in hard
copy.
1.4 Schedule 1 to the Bill expands the scope of these changes so that all documents
under the Corporations Act can be signed electronically and certain additional
categories of documents can be sent electronically and in hard copy.
1.5 The ASIC Corporations (Uncontactable Members) Instrument 2016/187
provides relief to entities who would otherwise need to comply with
subsections 314(1) or 314A(1) of the Corporations Act, in certain
circumstances. Subsections 314(1) and 314A(1) require a relevant entity to
send a hard copy of the entity's annual report to members who have elected to
receive the report in this form.
1.6 Schedule 1 to the Bill amends the Corporations Act so that it incorporates and
expands the scope of this relief to encompass a larger number of documents.
Summary of new law
1.7 Schedule 1 to the Bill amends the Corporations Act to provide that:
• all documents which are required or permitted to be signed under the
Corporations Act can be signed electronically or in wet-ink;
• documents sent under Chapters 2A to 2M, 5 to 5D, 6-6C, 8A and 9 or
Schedule 2 to the Corporations Act can be sent in either hard copy or
electronic form; and
• companies are not required to send documents to a member where the
contact details for that member are known to be incorrect.
Comparison of key features of new law and
current law
Table 1.1 Comparison of new law and current law
New law Current law
All documents under the Corporations Act Only certain documents can be signed or
can be signed or executed electronically. executed electronically under the new global
provisions in the Meetings and Documents
Bill.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
New law Current law
All documents in Chapters 2A to 2M, 5 to Only meetings related documents sent by
5D, 6 to 6C, 8A, 9 and Schedule 2 to the companies, registered schemes and
Corporations Act, other than those which disclosing entities can be sent either
are lodged with ASIC, the Registrar, or the electronically or in hard copy under the new
Takeovers Panel, can be sent either global provisions in the Meetings and
electronically or in hard copy. Documents Bill. Most other documents must
be sent in hard copy.
A member of a company, registered A member of a company, registered scheme
scheme, disclosing entity or a notified or disclosing entity may elect to receive
foreign passport fund, and a holder of meetings related documents in either hard
securities in the target for a bid can elect to copy or electronic form.
receive documents in either hard copy or
electronic form.
The target of a takeover bid is required to The target is required to provide the bidder
provide the bidder with the electronic and with the postal addresses of relevant security
postal addresses of relevant security holders.
holders, where known to the target.
A bidder can only use information about No equivalent.
security holders which is provided by the
target to the bidder for purposes related to
the takeover or compulsory acquisition.
A person may object to a compulsory A person objecting to a compulsory
acquisition by signing the objection form acquisition is required to sign and return the
and either returning it to the 90% holder or objection form to the 90% holder in hard
sending it to them in an electronic copy.
communication or in hard copy.
Entities do not have to send any documents Entities do not have to send annual reports in
in specified chapters to members if the hard copy to members if the entity knows
entity knows that the members' postal and that the members postal address is incorrect.
electronic addresses are incorrect.
An entity must attempt to contact a member An entity must send a notice to the address
to whom it is no longer sending documents they possess in relation to the shareholder at
due to an incorrect address in the period least once a year for 6 years after they have
from 6 to 18 months following the point at fulfilled the conditions for the relief to apply.
which they stop sending that member After that 6-year period the entity has no
documents. obligation to send further notices in relation
After the end of that 6-to-18 month period to annual reports to that member.
the entity has no obligation to attempt to
contact the member, provided the
conditions for the relief continue to apply.
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Signatures, sending documents and lost member relief
Detailed explanation of new law
Technology neutral signing and execution of
documents
1.8 Schedule 1 to the Bill amends Part 1.2AA of the Corporations Act to provide
that any document, including deeds, which are required or permitted to be
signed by a person under the Corporations Act can be signed in wet-ink or
electronically, or by witnessing the fixing of a common seal in person or using
electronic means. This includes documents signed by an agent on behalf of a
company in accordance with section 126 of the Corporations Act and
documents executed by a company in accordance with section 127 of the
Corporations Act.
[Schedule 1, item 4, section 110]
1.9 The rules for signing and executing documents which applied to documents
covered by the Meetings and Documents Bill now apply to all documents
which are required or permitted to be signed by a person under the
Corporations Act. This means that:
• a document will be validly signed if it identifies the person signing the
document, indicates their intention to be bound by the document and
the method of signing is appropriate in all the circumstances;
• a person may sign or execute the document in one or more capacities
by signing the document only once if that person's signature block
states each capacity in which they are signing; and
• a document does not need to be signed on paper, parchment or vellum
or meet common law delivery requirements to be validly executed.
1.10 ASIC or the Registrar cannot refuse to receive or register a document on the
sole basis that it was signed or executed electronically. However, the Bill does
not restrict the ability of ASIC or the Registrar to refuse to receive or register
documents for other reasons, including where the document does not meet the
prescribed lodgement requirements (such as the requirements under
Chapter 2P).
[Schedule 1, items 5 to 7, section 110B]
Technology neutral requirements for sending
documents
1.11 Specifically, the amendments provide that any document that is permitted or
required to be sent under Chapters 2A to 2M, 5 to 5D, 6 to 6C, 8A and 9 or
Schedule 2 to the Corporations Act may be sent in any of the following ways:
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
• hard copy;
• electronically to an electronic address;
• by sending, in hard copy, details sufficient to enable the recipient to
access the document electronically; or
• by sending, in electronic form, details sufficient to enable the recipient
to access the document electronically.
[Schedule 1, item 9, subsections 110C(1)-(3)]
1.12 The new rules for technology neutral service of documents will not apply to
documents which are required or permitted to be served by a provision of
another Act. The rules which set out how documents can be served on relevant
entities in sections 109X, 601CX or 1200R of the Corporations Act will,
however, continue to apply to these documents.
[Schedule 1, item 9, subsection 110C(7)]
1.13 For a document, or details to enable the recipient to access a document, to be
validly sent electronically, the sender must have sent it to the recipient's
nominated electronic address or an address which the sender knows because of
the recipient's membership or interest in the company or scheme. This means
that a sender cannot send a document to an address for the recipient which it
knows because of another relationship, such as an address that the recipient
provided as a customer of the sender.
[Schedule 1, item 10, subsection 110D(5)-(7)]
1.14 The rules also apply where the words 'give', 'serve' or 'dispatch' are used
instead of 'send'.
[Schedule 1, item 9, subsection 110C(6)]
1.15 In addition to documents under the specified chapters, the rules for sending
documents apply to classes of documents which are prescribed in the
Regulations.
[Schedule 1, item 9, subsection 110C(4)]
1.16 Companies, registered schemes, disclosing entities and notified foreign
passport funds will continue to meet their obligations to send annual reports to
members if they make them readily accessible on a website.
[Schedule 1, items 11 and 15, paragraph 110D(3)(a) and 110E(5)(a)]
1.17 The rules do not apply to documents which are sent by, or to, ASIC, the
Registrar or the Takeovers Panel.
[Schedule 1, item 9, subsection 110C(5)]
Elections to receive documents in a particular form
1.18 The Bill also provides that, in addition to members of companies, registered
schemes and disclosing entities, Australian members of a notified foreign
passport fund and any other person prescribed in the regulations may elect to
be sent documents in either hard copy or electronic form. This election can
7
Signatures, sending documents and lost member relief
apply to all documents or a class of documents.
[Schedule 1, items 13 and 18, subsections 110E(1) and 110J(3)]
1.19 As is the case in the Meetings and Documents Bill for elections made by
members in relation to meetings related documents, to make an election a
recipient must notify the sender that they wish to be sent one or more
documents in either physical or electronic form. Unless the recipient making
the election specifies otherwise, an election will take effect on the first
business day after it is received by the sender and will continue to be in effect
until it is withdrawn by the recipient.
1.20 If a member of a company elects to be sent all documents in a particular form
then that election will also apply to any takeover related documents which are
sent to the member by a bidder.
[Schedule 1, items 14 and 42, note to subsection 110E(3) and section 648CB]
1.21 The amendments also provide that a sender will not be considered to fail to
comply with an election to receive a document in electronic form if they give
the recipient the document by way of personal service.
[Schedule 1, item 16, paragraph 110F(1)(b)]
Notification of right to make an election
1.22 Public companies, responsible entities of registered schemes, disclosing
entities and operators of foreign passport funds are obligated to notify
members of their rights to make an election each year. A failure to comply
with this obligation is a strict liability offence subject to 30 penalty units.
[Schedule 1, items 20, 21, 22 and 58, paragraph 110K(3)(a),
subsections 110K(3A), (3B) and (4) and Schedule 3 to the Act]
1.23 A strict liability offence is appropriate in this circumstance as it is necessary to
strongly deter entities from failing to advise members of their right to elect to
receive documents in a physical form. The imposition of a strict liability
offence reduces non-compliance by ensuring that ASIC can efficiently and
expeditiously deal with low-level offending, thereby bolstering the integrity of
the regime.
1.24 This strict liability offence meets all the conditions listed in the
Attorney-General's Department's A Guide to Framing Commonwealth
Offences, Infringement Notices and Enforcement Powers. It does not exceed
300 penalty units for a body corporate and preserves the defence of honest and
reasonable mistake of fact to be proved by the accused on the balance of
probabilities.
Documents which relate to takeovers
1.25 The amendments apply to documents which are permitted or required to be
sent under Chapters 6 or 6A of the Corporations Act. The Bill includes
8
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
amendments to these chapters to facilitate the provision of documents to
security holders by electronic means.
[Schedule 1, item 9, subsection 110C(3)]
1.26 Section 641 of the existing law requires a company which is the target of a
takeover bid under Chapter 6 to provide the bidder with the names and
addresses of any person with a security interest in the bid class. The Bill
amends the existing law to provide that a target must also provide the bidder
with any electronic addresses of security holders which are known to the target
because the person holds securities in the target. The target must also provide
the bidder the details of any elections made by security holders to receive a
document in a particular form which are in force. The target does not need to
provide electronic addresses if they do not reasonably believe that they are
current.
[Schedule 1, items 38 and 39, paragraphs 641(1)(aa)-(ab) and
subsection 641(1C)]
1.27 To provide safeguards against the misuse of the personal information by the
bidder, the Bill introduces a civil penalty provision which applies to any
misuse of information received under section 641. A contravention of the new
civil penalty provision is punishable by 2,000 penalty units for an individual,
or 10,000 penalty units for a body corporate.
[Schedule 1, items 40 and 60, subsection 641A(1) and
subsection 1317E(3) (table)]
1.28 The use of a civil penalty provision in these circumstances is consistent with
penalties for the disclosure of personal information in other Commonwealth
laws. The penalty is in accordance with the Attorney-General's Department's
A Guide to Framing Commonwealth Offences, Infringement Notices and
Enforcement Powers. The introduction of a civil penalty provision provides a
strong disincentive to the misuse of personal information, which may cause
significant harm to the individuals to whom the information relates. It also
provides a strong disincentive for bidders to use a target security holders
contact details to advertise other services or products to target security holders.
1.29 The existing law specifies that documents required or permitted to be sent
under Chapter 6 must be sent to a holder of securities at the address shown for
that person in the information provided to the bidder under section 641. The
amendments clarify that this does not preclude the use of an electronic address
to provide documents to a holder of securities under Chapter 6.
[Schedule 1, item 41, section 648B]
1.30 The amendments also establish two new general provisions with the
requirements for sending documents under Chapters 6 and 6A (including the
rules relating to when a document is taken to have been sent). These provisions
consolidate the existing requirements relating to when a physical document has
been sent under Chapters 6 or 6A. The provisions also include a rule which
states that an electronic communication is taken to have been sent when the
sender sends it, rather than when it is delivered to the recipient. This preserves
9
Signatures, sending documents and lost member relief
the existing way that the concept of 'sent' is understood to operate for
takeovers. It ensures that the time of sending is not affected by the definition of
'sent' in section 105A of the Act.
[Schedule 1, items 1 to 3, 42, 56, section 9, subsection 105A(2) and
sections 648C and 669A]
1.31 The amendments do not allow for the provision of the electronic addresses of
holders of securities in the target company to any individual who may wish to
object to a compulsory acquisition being conducted under Chapter 6A. The
current settings, which allow the subject of a compulsory acquisition notice to
obtain the names and postal addresses of all other security holders who have
received the same notice, are sufficient for the purposes of allowing such
security holders to contact security holders in a similar position.
[Schedule 1, item 45, subsection 641D(1)]
1.32 It is necessary to clarify when a document is taken to have been sent under
Chapter 6 due to the nature of the takeover process, which imposes strict
deadlines on participants.
1.33 The amendments also repeal the existing rules for when a document is taken to
have been sent under Chapter 6A. These provisions are no longer needed as the
rules are set out in the new general provision.
[Schedule 1, items 43, 44, 46 to 51, 54 to 56, subsections 661B(3), 661B(4),
662B(3), 662B(4), 664C(4), 664C(5), 664E(1), 664E(2), 665B(3)
and 665B(4)]
1.34 The amendments remove reference to the phrase 'returning' and 'returned'
from Chapter 6A, substituting this phrase with 'giving' or 'given'. This
improves the consistency of the terminology used in the compulsory
acquisitions regime.
[Schedule 1, items 52 and 53, subsections 664E(1) and (2)]
1.35 The Bill repeals section 600G, on the basis the effect of the section is
preserved and applied more broadly to the global communications regime.
[Schedule 1, item 37, section 600G]
Lost members
1.36 The Bill provides relief from an obligation to send particular types of
documents under the Act provided certain conditions are met.
[Schedule 1, item 19, subsections 110JA(1) and (2)]
1.37 The relief is only available where the person required to send the document
(the sender) is a company, responsible entity or disclosing entity, and the
recipient is a member of the sender.
1.38 The conditions which must be met before the relief is available are that:
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
• the sender has received notification, in relation to each of the addresses
for the recipient that are known to the sender because of the recipient's
membership of, or interest in, a company, registered scheme or
disclosing entity, that indicates the address is not current; and
• the sender reasonably believes that none of those addresses are current;
and
• the sender is unable, after exercising reasonable diligence, to ascertain
a current address for the recipient.
[Schedule 1, item 19, subsections 110JA(3) and (4)]
1.39 In order to demonstrate that due diligence has been conducted in attempting to
ascertain a current address for the member, the sender must have attempted to
communicate with the recipient using all contact details for the recipient that
are known to the sender because of the recipient's membership of the entity.
As a general rule, senders will not be expected to use other contact details
which it knows because of another relationship between the entity and the
recipient, such as details provided by the member in their capacity as a
customer of the entity's business.
[Schedule 1, item 19, subsection 110JA(4)]
1.40 The sender must attempt to contact the recipient at any time in the period
from 6 to 18 months after the conditions for relief are first met. If the sender
does not attempt to contact the recipient in this timeframe, the relief the sender
was previously able to rely on will no longer be effective.
[Schedule 1, item 19, subsections 110JA(5) and (6)]
1.41 When attempting to contact the recipient in the timeframe referred to above,
the sender must take reasonable steps to advise the recipient that the sending of
documents to which the relief applies has been suspended, but sending of the
documents will be resumed if the recipient provides a current address (which
may be electronic) to which the documents may be sent.
[Schedule 1, item 19, subsection 110JA(6)]
1.42 To facilitate attempts by the sender to ascertain the current address of the
member, a sender is exempted from the obligation to adhere to a member's
election if they reasonably believe that the address nominated by the member
for the purposes of that election is not current.
[Schedule 1, item 17, subsection 110F(4A)]
1.43 Although a sender may attempt to contact a member in a manner inconsistent
with their election to receive documents in a certain form under section 110E,
the sender will bear the evidential burden of establishing that they reasonably
believed that the address for the member was not current.
1.44 Reversing the evidential onus in these circumstances is proportional,
necessary, reasonable and in pursuit of a legitimate objective. The sender will
have peculiar knowledge of whether they reasonably believed the address to no
longer be current. For example, proof that an attempt was made to contact the
11
Signatures, sending documents and lost member relief
member at their nominated address would be readily available to the sender.
By reversing the onus of proof in these circumstances, the Bill clarifies that the
relief provided for is only available in exceptional circumstances, and that a
member's election must be complied with unless there is a reasonable belief
that the address is not current.
Consequential amendments
1.45 Consequential amendments have also been made to:
• update the heading to Division 2 of Part 1.2AA to reflect the Part's
expanded scope;
[Schedule 1, item 8, heading to Division 2 of Part 1.2AA]
• update the heading to section 110E to recognise that persons other than
members may make elections;
[Schedule 1, item 12, heading to section 110E]
• allow members of companies, registered schemes and disclosing
entities to elect not to receive an annual report;
[Schedule 1, item 11, paragraph 110D(3)(a)]
• preserve rules for foreign passport funds in relation to the provision of
annual reports in English or the official language of the home economy
of the fund and the right to make an election not to receive an annual
report;
[Schedule 1, items 13 and 28, sections 110E and
subsections 314A(3) and (4)]
• ensure that the rules for sending annual reports operate consistently
with the new technology neutral rules for sending documents;
[Schedule 1 items 24-27, 29-31, subsection 254P(2),
paragraphs 283EA(3)(b) and (c), subsection 283EA(4),
sections 314A, 315 and 316AA]
• enable members of companies limited by guarantee and notified
foreign passport funds to make elections to receive an annual report in
a particular form;
[Schedule 1, items 32-33, sections 316A(1), (3) and (4), and 316AA]
• ensure that directors meetings can be held using any technology so
long as it is reasonable; and
[Schedule 1, item 23, section 248D]
• apply the technology neutral sending rules to all insolvency
documents.
[Schedule 1, items 34-37, sections 414(2), (9)(a) and (10), and 600G]
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Application and transitional provisions
1.46 The extension of the global communications and signatures regimes and the
lost member rules commence on the later of the day after the Bill receives
Royal Assent and the commencement of the Meetings and Documents Bill
(which inserts the new global regimes).
1.47 The rules for signing documents apply to documents signed on or after the
commencement day. Similarly, the rules for sending documents apply to
documents which are sent on or after the commencement day and the rules
relating to directors meetings apply to meetings which are called on or after the
commencement day.
[Schedule 1, item 57, sections 1693-1693B and 1693D]
1.48 The lost member rules apply only to documents that:
• are required to be sent after commencement (even if they are sent
before commencement); and
• where the sender receives a notice that the person's address is not a
current address after commencement.
[Schedule 1, item 57, section 1693C]
1.49 This ensures that the new rules do not operate retrospectively. Elections in
relation to documents sent by Australian foreign passport funds and companies
limited by guarantee which are in force immediately before the commencement
day continue to be in force after commencement until withdrawn by the
member.
[Schedule 1, item 57, sections 1693E and 1693F]
Contingent amendments
1.50 The Bill also includes amendments to ensure that the new technology neutral
rules for signing and sending documents apply to corporate collective
investment vehicles.
Amendments if the Corporate Collective Investment Vehicle Framework
and Other Measures Act 2022 commences before the Bill
1.51 Division 1 of Part 2 of Schedule 1 to the Bill extends the operation of the
global communications regime to Chapter 8B of the Corporations Act in the
event that the Corporate Collective Investment Vehicle Framework and Other
Measures Act 2022 commences before the Bill. Chapter 8B of the Corporations
Act relates to the operation of corporate collective investment vehicles.
[Schedule 1, item 61, paragraph 110C(3)(e)]
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Signatures, sending documents and lost member relief
1.52 A number of amendments are also made to ensure that the rules for sending
technology neutral documents apply to Corporate Collective Investment
Vehicles. Specifically, division 1 makes amendments which:
• permit a corporate director of a Corporate Collective Investment
Vehicle to send documents to a member of that Corporate Collective
Investment Vehicle to an address that the corporate director knows
because the sender because they are a member of the Corporate
Collective Investment Vehicle;
[Schedule 1, item 62, paragraph 110D(7)(ba)]
• ensure that the corporate director of a Corporate Collective Investment
Vehicle does not fail to comply with a members election if they send a
document in a manner other than that which is elected because the
corporate director reasonably believes that none of the addresses
known to the corporate director because of the recipient's membership
of the Corporate Collective Investment Vehicle are current; and
[Schedule 1, item 63, paragraph 110F(4B)(ba)]
• extends the relief for persons sending documents where a current
address for the recipient is unknown to corporate directors of
Corporate Collective Investment Vehicles who are sending documents
to members of that Corporate Collective Investment Vehicle.
[Schedule 1, items 64 and 65, paragraphs 110JA(1)(c)(iia) and
110JA(3)(a)(i)]
Amendments if the Corporate Collective Investment Vehicle Framework
and Other Measures Act 2022 do not commence before the Bill
1.53 Divisions 2 and 3 of Part 2 of Schedule 1 to the Bill will apply if the Corporate
Collective Investment Vehicle Framework and Other Measures Act 2022
commences after the Bill.
1.54 Division 2 repeals Schedule 4 of the Corporate Collective Investment Vehicle
Framework and Other Measures Act 2022 and Division 3 makes amendments
to the Corporations Act to ensure the changes made in the Bill apply to
corporate collective investment vehicles. Specifically, Divisions 2 and 3:
• repeal Schedule 4 to the Corporate Collective Investment Vehicle
Framework and Other Measures Act 2022;
[Schedule 1, items 66 and 67, repeal subsection 2(1) and Schedule 4
to the Corporate Collective Investment Vehicle Framework and
Other Measures Act 2022]
• extend the operation of the global communications regime to
Chapter 8B of the Corporations Act;
[Schedule 1, item 68, paragraph 110C(3)(e)]
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
• permit a corporate director of a Corporate Collective Investment
Vehicle to send documents to a member of that Corporate Collective
Investment Vehicle to an address that the corporate director knows
because the sender because they are a member of the Corporate
Collective Investment Vehicle;
[Schedule 1, item 69, paragraph 110D(7)(ba)]
• ensure that the corporate director of a Corporate Collective Investment
Vehicle does not fail to comply with a members election if they send a
document in a manner other than that which is elected because the
corporate director reasonably believes that none of the addresses
known to the corporate director because of the recipient's membership
of the Corporate Collective Investment Vehicle are current;
[Schedule 1, item 71, paragraph 110F(4B)(ba)]
• extends the relief for persons sending documents where a current
address for the recipient is unknown to cover corporate directors of
Corporate Collective Investment Vehicles who are sending documents
to members of that Corporate Collective Investment Vehicle;
[Schedule 1, items 73 and 74, subparagraph 110JA(1)(c)(iia) and
110JA(3)(a)(i)]
• allow members of corporate collective investment vehicles to elect to
be sent documents in a particular form on either an ongoing or ad hoc
basis or elect not to be sent certain documents;
[Schedule 1, items 70 and 72, paragraphs 110E(1)(b) and
110J(3)(b)]]
• require corporate collective investment vehicles to send its members a
notice, at least once a year, setting out members' rights to elect to
receive documents in a particular form, or to elect not to be sent certain
documents;
[Schedule 1, items 75 and 76, paragraphs 110K(2), (4) and (5)]
• amend the annual reporting requirements for corporate collective
investment vehicles to ensure consistency with the requirements placed
on other types of companies following the amendments in the Bill; and
[Schedule 1, item 77, subsection 1232H(1)]
• update Schedule 3 to the Corporations Act to reflect the change to
annual reporting requirements outlined above.
[Schedule 1, item 78]
15
Credit and payments
Table of Contents:
Outline of chapter ................................................................................ 17
Context of amendments ....................................................................... 17
Summary of new law............................................................................ 18
Comparison of key features of new law and current law ...................... 18
Detailed explanation of new law .......................................................... 20
Technology neutral giving of documents ....................................... 20
Technology neutral payments ....................................................... 28
Application and transitional provisions ................................................. 29
Outline of chapter
2.1 This Chapter outlines the amendments that have been made to:
• allow credit licensees to communicate with their customers and other
persons under the NCCPA electronically in a greater range of
situations; and
• facilitate the greater use of electronic payments.
Context of amendments
2.2 The NCC contains a number of rules that require notifications by consumers to
occur 'in writing'. Documents can only be provided electronically with the
recipient's consent.
2.3 There are also provisions scattered across Treasury laws which require
payments to be made at a particular place or otherwise restrict the method of
payment.
2.4 These rules limit flexibility for both consumers and credit licensees when
updating contact details such as advising of nominated addresses for
communication. They may also limit the use of electronic payments.
17
Credit and payments
Summary of new law
2.5 The scheme established by the Schedule allows for technology neutral
provision of documents under the NCC. Documents can be given in physical
form, in electronic form, or by the provision of an electronic postcard.
Licensees do not need to obtain an individual's consent in order to give
documents to them electronically.
2.6 However, individuals have the option of electing the form in which they want
documents to be provided, and can nominate the address to which they must be
sent. They can communicate these preferences to the licensee in any manner.
2.7 For existing customers with neither an election or nomination in force,
licensees are obliged to continue providing documents by the existing method
and address, but they can change the method and address by notifying the
customer. This means that licensees are able to switch from providing
documents physically to providing them electronically, provided the customer
does not opt against this.
2.8 A regulation making power is introduced to specify documents that, if
provided electronically, must be accompanied by a warning regarding the
nature of the document and consequences of not reading or responding to it.
This power may be used for critical documents that could have serious legal or
financial consequences if missed or ignored by an individual.
2.9 Finally, amendments are made to ensure digital payments are supported by
Treasury portfolio legislation.
Comparison of key features of new law and
current law
Table 2.1 Comparison of new law and current law
New law Current law
National Credit Code
Documents can be given in physical or Under the ETA, documents can only be
electronic form (unless the recipient 'opts given electronically with the consumer's
out'). Documents can be given in electronic explicit consent. Some credit documents are
form by giving the recipient an electronic carved out of the ETA and cannot be given
postcard. electronically in any circumstances.
Documents given electronically cannot be
given by electronic postcard.
18
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
New law Current law
Recipients can elect the form in which Recipients may nominate an address but
documents must be given (physical or cannot make an election as to the form in
electronic) and can nominate an address to which the document should be given.
which the documents must be provided.
Givers can establish classes of documents Recipients only have one nominated address
and recipients can apply different election which applies to all documents.
and address nomination preferences to these
classes.
If there is no nominated address and the If there is no nominated address, the giver
giver has not previously given a document must provide documents to the last known
of the kind being sent, the giver must residential or business address of the
provide documents to the last known recipient.
residential or business address of the
recipient, or the last known electronic
address of the recipient.
If there is no nominated address and the
giver has been providing documents to a
particular address, they can change this
address by giving notice to the recipient.
Nominations and elections come into force Nominations and cancellations of nomination
and are withdrawn one day following the come into force immediately when they are
giver's receipt of the nomination or made.
election. Nominations and elections made
within 7 days of a deadline to give a
document do not need to be followed for the
purpose of meeting the deadline.
Nominations and elections and withdrawal Nominations, changes to nominations and
of them may be made in any manner. cancellations must be made in writing.
Payments legislation
For a call on shares in a no liability For a call on shares in a no liability company
company to be payable, the company is to be payable, the company is required to
required to give notice to the shareholders give notice to shareholders of the amount of
of the amount of the call, when it is payable the call, when it is payable and the place for
and the details for payment. payment. The notice must be sent by post.
The penalty imposed by an infringement The penalty imposed by an infringement
notice under the Excise Act 1901 may be notice under the Excise Act 1901 may be paid
paid in any way stated in the notice. by delivery or postage to the place of
payment stated in the notice, or in any other
way stated in the notice.
There is no requirement for a deposit form. The deposit form accompanying the deposit
paid to the Commissioner of Taxation under
Part 4 of the SSAA must include certain
specifications as to the method of payment.
19
Credit and payments
Detailed explanation of new law
Technology neutral giving of documents
2.10 The Schedule amends the NCC to allow a credit licensee or other person to
give documents to a recipient in either physical form, electronic form or by
giving them an electronic postcard which contains information about how the
recipient can access the document electronically.
[Schedule 2, item 6, subsection 195A(1) of the NCC]
2.11 A recipient does not need to consent to receive documents in electronic form,
but they do have the right to 'opt out' of electronic communication or elect or
nominate a preferred form or address. For this reason, paragraphs 9(1)(d)
and 9(2)(d) of the ETA (which require consent) are disapplied.
[Schedule 2, item 1, section 187 of the NCC]
2.12 A document may only be given electronically or using an electronic postcard if
it is reasonable to expect that the document would be readily accessible so as to
be useable for subsequent reference. This mirrors the conditions in the ETA
and the Meetings and Documents Bill that apply to the giving of documents
electronically.
[Schedule 2, item 6, subsection 195A(2) of the NCC]
2.13 Whether a document is readily accessible so as to be useable for subsequent
reference is a question of fact and depends on the context. Factors that might
be relevant include the nature of the document, the duration that a recipient
would ordinarily need to refer to the document, ease of access to the document
and the ability of the recipient to download a permanent copy of the document.
In general, if the recipient is able to download and save the document, then it is
useable for subsequent reference.
2.14 Apart from the requirement as to accessibility, the Bill takes a technology
neutral approach and does not specify any particular means to provide the
document electronically. For example, a document may be given by:
• sending the recipient an email with the document as an attachment; or
• notifying the recipient that the document is available on the recipient's
online account with the credit licensee via text message or email; or
• providing a link so that the recipient can access the document via an
online portal (information known or expected to be known to the
recipient, such as account login details and password, does not need to
be provided).
20
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Carve outs from the regime
2.15 The new rules for technology neutral giving of documents do not apply if the
recipient is a credit licensee acting in their capacity as a licensee. This ensures
that debtors, who are often individuals, do not need to establish systems for
recording the nominated address for a credit licensee. Individuals are still
permitted by the ETA to give documents by electronic communication.
[Schedule 2, item 6, subsection 195(2) of the NCC]
2.16 There is also a power for regulations to be made to prohibit certain documents
from being given by using an electronic postcard. This ensures that if the
provision of certain documents by electronic postcard has unintended negative
consequences, those documents can be excluded from the electronic postcard
method.
[Schedule 2, item 6, subsection 195A(3) of the NCC]
Elections to receive documents in a particular form
2.17 A recipient may elect to be given documents in a physical or electronic form
by notifying the giver of the election. The notification can be made in any
manner; for example, by email, by telephone or in person.
[Schedule 2, item 6, subsection 195B(1) of the NCC]
2.18 The election may be made in relation to all documents or a specified class (or
classes) of documents. Classes of documents are determined by the giver in a
notice, and the giver may also change the classes of documents.
[Schedule 2, item 6, subsections 195B(2) and (3) of the NCC]
2.19 The new law does not prevent the giver from charging the recipient for the
additional cost associated with giving documents in physical form.
2.20 To comply with an election to be given a document in physical form, a giver
must give the document in physical form. To comply with an election to be
given a document in electronic form, a giver must give the document in
electronic form or by electronically giving the recipient sufficient information
to allow the recipient to access the document.
[Schedule 2, item 6, subsection 195C(3) of the NCC]
When an election is in force
2.21 In general, an election made by the recipient begins on the first business day
after the day on which the credit licensee receives the notice of the election,
unless the recipient specifies a later day. If the recipient specifies a later day,
the election commences on the first business day after that later day. The
election is ended in the same manner by the recipient giving a notice to the
credit licensee withdrawing the election.
[Schedule 2, item 6, subsection 195B(4) of the NCC]
21
Credit and payments
2.22 However, an election to be given documents in a physical form is not in force
if the giver needs to provide the document to the person within the next 7 days.
This ensures that the giver has adequate time to print and post documents. It
also ensures that the giver is not placed in a position where they cannot comply
with their obligation to provide a document within a stipulated time period.
[Schedule 2, item 6, subsection 195B(5) of the NCC]
2.23 During the seven-day grace period, the giver may provide the document in
either electronic or physical form, or using an electronic postcard. This is
because the new election as to physical form is not in force and any existing
election is withdrawn one business day after notice of the new election is
received. At that point, there is no election in force and the giver can give the
document in any of the permitted manners.
[Schedule 2, item 6, subsection 195B(5) of the NCC]
2.24 The seven-day grace period only applies to documents which the NCC requires
or permits to be given by a particular day. Documents for which the day they
are given is at the discretion of the giver (such as default notices) would need
to be given in accordance with the election, even if the election is made within
7 days of the giver's intended date of giving the document.
2.25 The new election is in force for documents required or permitted to be sent
after the seven-day grace period.
[Schedule 2, item 6, subsections 195B(4) and (5) of the NCC]
Consequences of failing to comply with an election
2.26 If a giver gives a document only in a manner that does not comply with that
election, the document is to be treated as not having been given, unless it is
established that it was in fact received. If the document has been received, the
document is still considered to have been given. However, the date on which
the document is determined to have been given may be different from the date
on which it would ordinarily be determined to have been given (refer to
the table on the next page).
[Schedule 2, item 6, section 195C of the NCC]
22
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Table 2.2 Date document is taken to be given
Manner of Date document is Date document is taken to
giving ordinarily taken to be be given when an election
document given is disregarded
Physical form The later of the date the document The later of the date the document
bears or the date when it would bears or the date the recipient
have been delivered in the ordinary receives the document
course of post (as per existing
section 196 of the NCC)
Electronic form The time that section 14A of the The later of the date it bears or the
ETA provides is the time of time that section 14A of the ETA
receipt, that is, the time when the provides is the time of receipt
communication becomes capable
of being retrieved and the recipient
becomes aware of it (for
communications not sent to a
nominated address)
[Schedule 2, item 6, subsections 195C(4) and (5) of the NCC]
2.27 If a document is given in a manner which complies with the recipient's
election and in a non-compliant manner, there is no consequence. Further, the
giver may always give a document to the recipient personally, even if they
have elected to receive the document electronically.
[Schedule 2, item 6, subsection 195C(1) of the NCC]
Nominations of address
2.28 A recipient may nominate a physical or electronic address to be given
documents by notifying the giver of the nomination. If there is a nominated
address, it is the appropriate address for the credit licensee to give relevant
documents to the recipient.
[Schedule 2, item 6, subsection 195D(1) and paragraph 195E(1)(a) of the
NCC]
2.29 The nomination may be made in relation to all documents or a specified class
(or classes) of documents set out in a notice from the credit licensee.
[Schedule 2, item 6, subsections 195D(2) and (3) of the NCC]
When a nomination is in force
2.30 The mechanics for when nominations of address are in force operate in the
same way as for elections as to form, that is:
• a nomination generally begins on the first business day after the day on
which it is received (subject to the below rules);
23
Credit and payments
• if the recipient specifies a later day, the nomination commences on the
first business day after that later day; and
• if an election to be given documents in physical form is received
within 7 days of the time when a document is required or permitted to
be given under the law, the giver may provide the document either
electronically or physically.
[Schedule 2, item 6, subsections 195D(4)-(7) of the NCC]
2.31 The seven-day grace period only applies to documents which the NCC requires
or permits to be given by a particular day. Documents for which the day they
are given is at the discretion of the giver (such as default notices) would need
to be given in accordance with the nomination, even if the nomination is made
within 7 days of the giver's intended date of giving the document.
Changing or withdrawing a nomination
2.32 A nomination is ended or changed by the recipient giving notice to the credit
licensee withdrawing the election.
[Schedule 2, item 6, subsections 195D(4)-(7) of the NCC]
2.33 If a recipient cancels their nomination, it ceases to have effect on the first
business day after the day on which the giver receives notice or a later
specified date. The appropriate address would therefore be determined by the
scheme in relation to circumstances where there is no nomination.
[Schedule 2, item 6, subsections 195D(4)-(7) of the NCC]
Determining the appropriate address
2.34 If a recipient has nominated an address, it is the appropriate address.
[Schedule 2, item 6, paragraph 195E(1)(a) of the NCC]
2.35 If a recipient has not nominated an address, but has made an election to receive
documents in physical form, the appropriate address is the physical address last
known to the giver. If the recipient is a business, the giver can send the
document to either the last known residential or last known business address of
the recipient.
[Schedule 2, item 6, paragraph 195E(1)(b) of the NCC]
2.36 If a recipient has not nominated an address, but has made an election to receive
documents in electronic form, the appropriate address is the electronic address
(if any) of the recipient last known to the giver.
[Schedule 2, item 6, paragraph 195E(1)(c) of the NCC]
2.37 If a recipient has not nominated an address and has not made an election,
generally the giver can choose to give the document to either the last known
physical or last known electronic address of the recipient. However, if the most
recent document of the same kind was sent to the last known residential,
business or electronic address, the giver must use that same address again,
24
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
unless and until it has given notice to the recipient that it is going to use a
different address.
[Schedule 2, item 6, paragraph 195E(1)(d) and subsections 195E(2) and (3)
of the NCC]
2.38 If there is no nomination and no election, and the giver would like to change
the address to which it is sending documents from the address it is otherwise
required to use because the giver has previously used that address before for
documents of that kind, the giver must give the recipient notice that at the
elapsing of 14 days, unless the recipient nominates an alternative address,
documents of that kind will be sent to a specified address, that address being
one of the last known residential, business (if applicable) or electronic
addresses. After the 14 days has elapsed, the giver is required to send
documents to the address specified on this notice. In practice, the notice
mechanism allows the giver to switch from providing documents in physical
form to electronic form (and vice versa), or if providing documents to a
business operator, switch from providing documents to their residential
address, to providing them to their business address (and vice versa). Requiring
the giver to give notice of this change (and affording the recipient a chance to
opt out) ensures that the recipient will remain aware of the address to which
documents will be sent.
[Schedule 2, item 6, paragraph 195D(1)(d) and subsections 195E(4) and (5)
of the NCC]
2.39 The process for determining the appropriate address is summarised in the
flowchart on the next page.
25
Credit and payments
Diagram 2.1 Appropriate address
26
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Inconsistency between elections and nominations
2.40 If a recipient has made both an election and nomination, and there is an
inconsistency between them, the nomination is not valid to the extent of its
inconsistency with the election.
[Schedule 2, item 6, section 195F of the NCC]
2.41 Givers should take a common-sense approach to interpreting this principle. For
example, if a recipient with an election to receive document physically later
notified the giver that they would like all their correspondence to be sent to a
nominated email address, this should be interpreted as an election to receive
documents in electronic form at the nominated email address. If a recipient
with a nominated electronic address notifies the giver that they would like to
receive documents in physical form (but does not specify any alternative
address), this should be interpreted as an election to receive documents in
physical form and a withdrawal of the nomination.
Content requirement for the electronic giving of certain
documents
2.42 When giving some documents electronically, the giver must take reasonable
steps to give the recipient certain information.
[Schedule 2, item 6, section 195G of the NCC]
2.43 The documents to which this applies will be set out in regulations. The policy
intent is that these are documents which if not opened or considered by a
recipient could have serious legal or financial consequences for them, such as
default notices and repossession notices.
[Schedule 2, item 6, paragraph 195G(1)(b) of the NCC]
2.44 In these circumstances, the giver must take reasonable steps to ensure that, at
the time the giver gives the document to the recipient, the document is
accompanied by a description of the nature of the document, a description of
the consequences of not reacting to the document and any other information
specified by regulations. The giver must take reasonable steps to ensure that
the information is presented in a reasonably prominent form.
[Schedule 2, item 6, subsection 195G(2) of the NCC]
2.45 The requirement to 'accompany' the document with this information is
intended to reflect that the information should be in the covering
communication, such as the electronic postcard or the email attaching a
document. It should not be in the document itself or in a separate document
which needs to be opened.
2.46 The intended effect of these rules is that a recipient would see the required
information immediately upon opening the electronic communication, without
having to open any other document or take any further steps, so that they are
made immediately aware of the potential consequences of the document This is
27
Credit and payments
aimed at reducing the likelihood that consumers miss or ignore critical
documents which are given to them electronically.
2.47 A civil penalty of a maximum of 5000 penalty units applies to contraventions
of this requirement. The use of a civil penalty and the amount of the penalty is
consistent with the Attorney-General's Department's A Guide to Framing
Commonwealth Offences, Infringement Notices and Enforcement Powers. This
high penalty is appropriate to deter contravention. Failure to take reasonable
steps to provide the required information in a prominent form could cause a
recipient to miss or ignore a document with serious legal or financial
consequences.
Other minor amendments
2.48 The Schedule corrects a typographical error in paragraph 196(1)(c) of the
NCC. A document is taken to be given by electronic communication at the
time that section 14A of the ETA provides is the time or receipt of the
electronic communication.
[Schedule 2, item 9, paragraph 196(1)(c) of the NCC]
2.49 The Schedule replaces all uses of the words 'notice or other document' and
'notices or other documents' with 'document' and 'documents'. This simplifies
the provisions, as a notice is a document. To avoid doubt, references to
documents include references to notices. Consequential amendments have also
been made to update internal references to the different sections.
[Schedule 2, items 2-5, 7, 8 and 10, paragraph 194(1)(a) and sections 194,
196 and 196A of the NCC]
Technology neutral payments
2.50 The Bill also removes technologically prescriptive requirements relating to
payments.
2.51 It removes the requirement for a no liability company to notify shareholders of
the place of payment. This removes any uncertainty that companies can
provide for any method of payment, including digital methods. The previous
requirement to send the notice by post is also omitted.
[Schedule 2, items 12 and 13, subsection 254P(2) and paragraph 254P(2)(c)
of the Corporations Act]
2.52 Amendments are also made to allow penalties imposed by an infringement
notice issued under the Excise Act 1901 to be paid in any way specified in the
notice. Formerly, payment needed to specify a place.
[Schedule 2, item 14, paragraph 129C(2)(a) of the Excise Act 1901]
2.53 Finally, the Bill repeals section 32 of the SSAA. This section required the
deposit form accompanying the deposit paid to the Commissioner of Taxation
28
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
under Part 4 of the SSAA to include certain specifications as to the method of
payment.
[Schedule 2, item 15, section 32 of the SSAA]
Application and transitional provisions
2.54 The amendments relating to credit apply to documents given from 18 months
after the Act receives Royal Assent. This ensures that providers and other
regulated entities have time to make administrative adjustments to their
communication systems and protocols so that they can implement the added
options provided by the amendments.
[Schedule 2, item 11, Schedule 21 of the National Consumer Credit
Protection (Transitional and Consequential Provisions) Act 2009]
2.55 However, the amendments do not apply in relation to documents given on or
after the commencement day if the document is given for the purposes of a
contract that is in force immediately before the commencement day. This
ensures that there is no conflict between the amendments and the terms of
contracts which are already in force.
[Schedule 2, item 11, Schedule 21 of the National Consumer Credit
Protection (Transitional and Consequential Provisions) Act 2009]
2.56 The giver is also prohibited from using an electronic address in circumstances
where there is no nomination and no election (without first notifying the
recipient in the manner set out in paragraph 2.38 above) if the recipient
cancelled their nomination of an address before the commencement and did not
nominate another address. This transitional requirement ensures that existing
customers are not disadvantaged or taken by surprise. Under the rules in place
before these reforms, recipients who had not made a nomination would have
only received documents physically.
[Schedule 2, item 11, Schedule 21 of the National Consumer Credit
Protection (Transitional and Consequential Provisions) Act 2009]
2.57 Nominations of an address made under paragraphs 195(1)(a) or (2)(a) of the
NCC prior to commencement continue in force after commencement.
[Schedule 2, item 11, Schedule 21 of the National Consumer Credit
Protection (Transitional and Consequential Provisions) Act 2009]
29
Publication requirements
and other amendments
Table of Contents:
Outline of chapter ................................................................................ 31
Context of amendments ....................................................................... 31
Summary of new law............................................................................ 31
Comparison of key features of new law and current law ...................... 32
Detailed explanation of new law .......................................................... 33
Application and transitional provisions ................................................. 40
Outline of chapter
3.1 This chapter explains the amendments that have been made to modernise
existing requirements to publish notices in newspapers.
Context of amendments
3.2 Various Treasury portfolio laws require or permit notices to be published in
newspapers.
3.3 To reflect advances in technology, the new law intends to expand and provide
additional flexibility to the ways in which these publication requirements can
be met. The new requirements are designed to be adaptive to developments in
methods of information-sharing to allow for effective communication of
notices to the intended audience.
Summary of new law
3.4 The Bill replaces provisions that require or permit notices to be published in
newspapers with technology neutral rules. The amendments ensure the relevant
31
Publication requirements and other amendments
notices are published in manner which result in them being publicly available
and reasonably prominent.
3.5 Generally, where a Commonwealth entity was previously required or permitted
to publish a notice in a newspaper, the new law now permits the
Commonwealth entity to publish the relevant notice in a manner that results in
the notice being accessible to the public and reasonably prominent.
3.6 Generally, where a non-Commonwealth entity was required or permitted to
publish a notice in a newspaper, the non-Commonwealth entity may now
publish the relevant notice:
• in a manner that results in the notice being accessible to the public and
reasonably prominent; and
• where required, in a manner determined by the relevant regulator.
3.7 The Bill also repeals a number of newspaper publication provisions, and
associated provisions, which no longer serve any purpose.
Comparison of key features of new law and
current law
Table 3.1 Comparison of new law and current law
New law Current law
Notices which were previously required or Certain notices are required or permitted to
permitted to be published in newspapers can be published in newspapers.
now be published in technology neutral
manners.
Generally, the notices must be published in
a manner which results in them being
accessible to the public and reasonably
prominent.
In certain instances, notices may need to be
published in accordance with a manner
determined by the relevant regulator. The
regulator can only determine manners of
publication which the regulator considers
will result in the notices being accessible to
the public and reasonably prominent.
32
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Detailed explanation of new law
3.8 Schedule 3 to the Bill replaces newspaper publication requirements and
permissions across Treasury Portfolio laws with technology neutral publication
requirements and permissions.
3.9 Generally, the amendments ensure the relevant notices are published in a
manner that allows the notices to be:
• accessible to the public and reasonably prominent; and
• if a regulator determination concerning the publication of the notice is
in force, published according to the determination.
3.10 The intention is that the regulator would only make a determination if there
were differences of opinion or uncertainty as to what was required for the
notice to be reasonably prominent.
Example 3.1 Notice that is accessible to the public and reasonably
prominent
A share in a no liability company is forfeited and will be offered for
sale by public auction in 2 weeks. Section 254Q of the
Corporations Act requires the company to advertise the sale of the
share in a manner which is accessible to the public and reasonably
prominent.
The company advertises its sale of the share by putting a notice on
its company website. The notice is placed on the website in a
manner that makes it easily noticeable and can be accessed from
the company website. The notice contains a description of the sale
which can be easily understood. The notice also includes a link to
another webpage that provides further details relating to the sale of
the share and the public auction.
Example 3.2 Where notice is not considered accessible to the public and
reasonably prominent
A general insurance company changes its name. Section 29 of the
Insurance Act 1973 requires the company to publish notice of its
change of name in a manner which is accessible to the public and
reasonably prominent.
The company arranges for a note to be put on the ASX platform
containing information about the old and new names of the
company and the date of that change.
In these circumstances, the company has not published notice of its
change of name in a manner that is accessible to the public and
reasonably prominent. The notice is not reasonably prominent to
33
Publication requirements and other amendments
members of the public likely to be interested in the information, as
persons generally do not access the ASX platform for information
on the company.
The general insurance company could have published notice of its
change of name on its company website or in a newspaper in a
manner that is reasonably noticeable and can be accessed by
members of the public who would be interested in this information
or the company.
Competition and Consumer Act 2010
3.11 Various provisions in the Competition and Consumer Act 2010 required the
ACCC to publish certain notices in national newspapers. The provisions now
require the regulator to publish the notices in a manner that results in the
notices being accessible to the public and reasonably prominent.
[Schedule 3, items 1 to 5, paragraph 28(2)(a), subsections 44GA(10),
44LD(10), 44NC(10) and 44ZZOA(10) of the Competition and Consumer
Act 2010]
Corporations Act 2001
Notices
3.12 Section 254Q of the Corporations Act concerns the forfeiture and sale of shares
for a failure to meet a call on the shares. Notice of the sale of forfeited shares
was previously required to be advertised in a national newspaper. Notice of the
sale of forfeited shares, or the postponement of the sale of forfeited shares,
must now meet the technology neutral publication requirements outlined in
paragraph 3.6.
[Schedule 3, items 9 and 10, subsections 254Q(3),(4), (5A) and (5C) of the
Corporations Act]
3.13 Section 601WBH(1)(b) of the Corporations Act contains the rules for ASIC to
publish notice of the issue of a certificate of transfer in a manner prescribed by
the Corporations Regulations. ASIC was previously required to publish such a
notice in the Gazette and on their website. ASIC is now required to make a
notifiable instrument setting out notice of the issue of the certificate and
publish notice on their website.
[Schedule 3, items 15 to 17, paragraphs 601WBH(1)(b) and (c) and
subsection 601WBH(2) of the Corporations Act]
3.14 Subsections 601WDA(1) and (3) of the Corporations Act contains rules about
the cancellation of the Australian Financial Services Licence of a trustee
company and voluntary transfer determinations under section 601WBA of the
Corporations Act. The companies covered by these sections were previously
required to publish certain notices in a national newspaper and on their
34
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
website. The covered companies are now required to publish the notices on
their website (if any) and according to the technology neutral publication
requirements outlined in paragraph 3.9.
[Schedule 3, items 18 to 20, paragraph 601WDA(1)(b) and
subsections 601WDA(3) and (6) of the Corporations Act]
3.15 Sections 601CC and 601CL of the Corporations Act contain rules about the
cessation of business of a registered Australian body and a registered foreign
body, respectively. Liquidators of these bodies were previously required to
publish notices in newspapers before making any distribution of the bodies'
property.
3.16 Liquidators must now publish the notices in accordance with the technology
neutral publication requirements outlined in paragraph 3.9. However, ASIC
may determine that the notices must be published in the 'prescribed manner'.
[Schedule 3, items 11 to 14, paragraph 601CC(14)(a), section 601CCA,
paragraph 601CL(15)(a) and section 601CLA of the Corporations Act]
Miscellaneous Provisions
3.17 Section 103 of the Corporations Act concerns the effect of certain
contraventions of the Corporations Act. As notices may now be published in a
number of ways, references to specific manners of publication in the section
are repealed.
[Schedule 3, item 8, paragraph 103(2)(b) of the Corporations Act]
3.18 The definitions of 'daily newspaper' and 'national newspaper' are repealed as
newspaper references throughout the Corporations Act are repealed.
[Schedule 3, items 6 and 7, section 9 of the Corporations Act]
3.19 Section 1070D of the Corporations Act contains rules about the loss or
destruction of title documents for certain securities. The owner of lost or
destroyed title documents may apply to the relevant company for a duplicate
title document.
3.20 Previously, the directors of the company could, before accepting the
application, require the applicant to place an advertisement in a daily
newspaper stating the title documents had been lost destroyed and the owner
intended to apply for duplicate certificates. The directors can now specify the
manner in which the notice is published.
[Schedule 3, item 21, paragraph 1070D(6)(a) of the Corporations Act]
3.21 Section 1071D of the Corporations Act contains rules about the registration of
the transfer of a security of a company at the request of transferor. Under the
section, lists of certain documents could be advertised in such newspapers as
the company thinks fit. The list of documents can now be published in a
manner specified by the directors of the company, in addition to being
published in the Gazette.
[Schedule 3, item 22, paragraph 1071D(6)(b) of the Corporations Act]
35
Publication requirements and other amendments
3.22 Clause 38 of Schedule 4 to the Corporations Act allows the regulations to
modify the operation of that Act in relation to certain companies. A new
subclause is inserted into clause 38 of Schedule 4 to ensure that ASIC has the
power to specify how notices of company meetings are published.
[Schedule 3, item 23, clause 38(2A) of Schedule 4 to the Corporations Act]
3.23 This regulation-making power is limited. It can only stipulate that ASIC has
the power to determine how notices of meetings of a company's member are to
be published. Further, it only applies to a small class of companies (mainly
building societies, credit unions and friendly societies). It ensures that any
additional requirements for publishing in paragraphs of the Act, where a
manner for publication has not been prescribed, can be prescribed by ASIC.
Where ASIC exercises this power, it must take the form of a legislative
instrument and be published on the Federal Register of Legislation. Legislative
instruments that ASIC publishes under this clause are subject to the usual
safeguards, including sunsetting and disallowance by Parliament.
Income Tax Assessment Act 1936
Serving notices
3.24 Section 45D of the ITAA 1936 concerns determinations made under
sections 45A, 45B and 45C of that Act. Previously, the Commissioner of
Taxation could serve a notice of a determination under section 45A by
publishing the notice in certain daily newspapers. The Commissioner can now
serve the notice by publishing the notice in a manner that accords with the
technology neutral publication requirements outlined in paragraph 3.9.
[Schedule 3, items 24 and 25, subsection 45D(2) of the ITAA 1936]
3.25 Section 177EA of the ITAA 1936 concerns the creation of franking debits and
the cancellation of franking credits. Previously, if the Commissioner made a
determination under paragraph 177EA(5)(b) of that Act, the Commissioner
could serve notice of the determination on each relevant taxpayer if the
determination was published in certain daily newspapers. The Commissioner is
now taken to have served the notice if it is published according to the
technology neutral publication requirements outlined in paragraph 3.9.
[Schedule 3, items 26 and 27, subsection 177EA(7) of the ITAA 1936]
Income Tax Assessment Act 1997
3.26 Under subsection 204-50(3) of the ITAA 1997, if the Commissioner makes a
determination denying an imputation benefit, the Commissioner was
previously taken to have served notice of the determination if they published
the notice in certain newspapers. The Commissioner is now taken to have
served the notice if it is published according to the technology neutral
36
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
publication requirements outlined in paragraph 3.9.
[Schedule 3, item 28, subsection 204-50(3) of the ITAA 1997]
Insurance Act 1973
3.27 Section 29 of the Insurance Act 1973 contains rules about the change of name
of general insurers. Previously, a general insurer who changed its name had to
place a notice of that fact in certain newspapers. Now, the general insurer must
publish the notice in accordance with the technology neutral publication
requirements outlined in paragraph 3.9.
[Schedule 3, items 29 to 31, subsection 29(1), (2) and (3) of the Insurance
Act 1973]
Life Insurance Act 1995
3.28 Section 191 of the Life Insurance Act 1995 previously required notice of an
intention to make an application for confirmation of a scheme to be published
in certain newspapers and elsewhere. This newspaper publication requirement
is replaced with the technology-neutral publication requirements in
paragraph 3.9. However, consistent with the previous publication rules in
regulation 9.02 of the Life Insurance Regulations 1995, APRA can approve the
form of the notice.
[Schedule 3, items 32 to 34, paragraph 191(2)(b), subsections 191(2A)-(2D)
and 191(3) of the Life Insurance Act 1995]
3.29 The operation of any forms approved by APRA under the previous
regulation 9.02 of the Life Insurance Regulations 1995 is preserved.
Additionally, despite the amendments to paragraph 91(2)(b) of the Life
Insurance Act 1995, the operation of regulations made for the purposes of that
paragraph are preserved.
[Schedule 3, items 42 and 43, subsection 191(2) of the Life Insurance
Act 1995]
3.30 The amendments to section 191 commence on or after the commencement of
Schedule 3. This is to ensure that notices published in accordance with the
regulations prior to commencement of the Schedule are valid and changes to
notice requirements only apply after amendments to the Bill come into force.
[Schedule 3, items 41, section 191 of the Life Insurance Act 1995]
3.31 Section 223 of the Life Insurance Act 1995 previously required notice to be
given of a company's intention to issue certain replacement policy documents.
Repealing the notification requirements simplify the process for re-issuing
replacement policy documents to consumers.
[Schedule 3, items 35 and 36, subsections 223(3) and (4) of the Life
Insurance Act 1995]
3.32 Section 224 of the Life Insurance Act 1995 previously required notice to be
given in relation to certain policy documents which were lost or destroyed.
37
Publication requirements and other amendments
Repealing the notification requirements simplify the process for re-issuing
replacement policy documents to consumers. The amendment is intended to
allow insurers to be able to issue a copy of the life insurance policy either
electronically or through post and reduce costs to both the insurer and
consumer.
[Schedule 3, items 37 to 40, subparagraphs 224(1)(b)(i) and 224(1)(b)(ii),
subsections 224(2) and (3) of the Life Insurance Act 1995]
National Consumer Credit Protection Act 2009
3.33 Section 64 of Schedule 1 to the NCCPA concerns notification of interest rate
changes by credit licensees. Previously, credit licensees were required to give
notice of interest rate changes that increased the obligations of consumers by
publishing a notice in certain newspapers (if they elect not to notify the debtor
directly). Credit licensees are now required to publish such notice of interest
rate changes in accordance with technology neutral publication requirements in
a manner that allows the notices to be accessible to debtors and reasonably
prominent. Additionally, if a regulator determination is made concerning the
publication of the notice, it must be published according to the determination.
[Schedule 3, items 44 to 46, subsections 64(2), (3) and (8)-(10) of the NCC]
3.34 Section 66 of Schedule 1 to the NCCPA concerns notification of credit fees
and charges changes. Previously, credit licensees were required to give notice
of changes that increased the obligations of consumers by publishing a notice
in certain newspapers. Credit licensees are now required to publish such notice
of the changes in accordance with the technology neutral publication
requirements in a manner that allows the notices to be accessible to debtors and
reasonably prominent. Additionally, if a regulator determination is made
concerning the publication of the notice, it must be published according to the
determination.
[Schedule 3, items 47 and 48, subsections 66(2), (6)-(8) of the NCC]
3.35 Section 119 of the NCC contains provisions relating to application by credit
licensees or ASIC for court orders. Previously, the court could require notice of
such applications to be published, in a form approved by the court, in certain
newspapers. The court can now require notice of the applications to be
published, in a form approved by the court, in a manner determined by the
court.
[Schedule 3, item 49, subsection 119(2) of the NCC]
Private Health Insurance (Prudential Supervision) Act 2015
3.36 Section 20 of the Private Health Insurance (Prudential Supervision) Act 2015
contains rules relating to private health insurers' applications to APRA for
approval to convert to being registered as for-profit insurers. Previously under
this section, APRA could publish notices of the applications in certain
38
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
newspapers. APRA can now publish notices of the applications in a manner
which results in the notice being accessible to the public and reasonably
prominent.
[Schedule 3, item 50, paragraph 20(4)(a) of the Private Health Insurance
(Prudential Supervision) Act 2015]
3.37 Section 40 of the Private Health Insurance (Prudential Supervision) Act 2015
contains rules relating to the conduct of funds during the "termination
process". Previously under this section, a private health insurer had to publish a
notice in certain newspapers. Private health insurers are now required to
publish the notice in accordance with the technology neutral publication
requirements in outlined in paragraph 3.9.
[Schedule 3, items 51 and 52, paragraph 40(2)(b) and subsections 40(2A)
and (2B) of the Private Health Insurance (Prudential Supervision) Act 2015]
3.38 Section 75 of the Private Health Insurance (Prudential Supervision) Act 2015
contains rules relating to the dealing of property of health benefits funds under
management. Previously under this section, a manager of the fund could
provide notice of an appointment in certain newspapers. The manager of the
fund is now simply required to provide notice of the appointment to the
relevant entity.
[Schedule 3, item 53, paragraph 75(2)(b) of the Private Health Insurance
(Prudential Supervision) Act 2015]
Productivity Commission Act 1998
3.39 Section 13 and 14 of the Productivity Commission Act 1998 required the
Productivity Commissioner to provide notice of certain hearings and inquiries
in newspapers. The Productivity Commissioner is now required to provide the
notices in a manner that results in the notices being accessible to public and
reasonably prominent.
[Schedule 3, item 54, sections 13 and 14 of the Productivity Commission
Act 1998]
Superannuation Industry (Supervision) Act 1993
3.40 Various amendments are made to the SIS Act to remove references to the
licensing transition period. Provisions concerning the licensing transition
period have been spent for several years and so are no longer needed.
[Schedule 3, item 55-60, subsection 10(1), section 29CB,
subsections 29CC(1) and (2) and paragraph 29D(1)(h) of the SIS Act]
3.41 Section 142 of the SIS Act contains rules relating to the winding-up or
dissolution of superannuation entities. Previously under this section, APRA
was required to advertise the making of instruments made under subsection (1)
of the section in certain newspapers. APRA is now required to publish notice
of the making of the instruments in a manner that results in the notice being
39
Publication requirements and other amendments
accessible to the public and reasonably prominent.
[Schedule 3, item 61, subsections 142(7) and (9) of the SIS Act]
Taxation Administration Act 1953
3.42 Section 260-145 of Schedule 1 to the Taxation Administration Act 1953
requires the Commissioner of Taxation to publish notice of certain
determinations in newspapers. The Commissioner of Taxation is now required
to publish the notice in a manner that results in the notice being accessible to
the public and reasonably prominent.
[Schedule 3, item 62, subsection 260-145(3) of Schedule 1 to the Tax
Administration Act 1953]
Other minor amendments
3.43 Contingent amendments are also made to replace references to ASIC with the
Registrar after the commencement of the Treasury Laws Amendment
(Registries Modernisation and Other Measures) Act 2020. That Act transfers
the registry functions from ASIC to the Registrar.
[Schedule 3, items 63 to 65, subsections 254Q(5B) and (5C), 601CCA(2) and
(3) and 601CLA(2) and (3) of Corporations Act]
Application and transitional provisions
3.44 Most of the new rules relating to the publication requirements commence and
apply on a date to be fixed by Proclamation. Where this date is not within
6 months on the day after the Bill receives Royal Assent, the new rules will
commence and apply on the day after the end of the 6 months. This will allow
interconnected amendments to the Regulations to be commenced on the same
day.
3.45 The contingent amendments commence at the later of a day fixed by
proclamation, or 1 July 2024.
3.46 The possible extended commencement date arises from the nexus between the
contingent amendments in the Bill and amendments to the Treasury Laws
Amendment (Registries Modernisation and Other Measures) Act 2020 made by
Schedule 7 to the Treasury Laws Amendment (Enhancing Tax Integrity and
Supporting Business Investment) Bill 2022, which if passed, will commence at
the latest on 1 July 2024. It would not be appropriate for these contingent
amendments to automatically commence after six months as the Treasury Laws
Amendment (Registries Modernisation and Other Measures) Act 2020 will not
have commenced.
40
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
3.47 Saving provisions are also included to ensure the determinations continue to be
in force when administration of the sections transfers from ASIC to the
Registrar. However, if the Registrar has not amended or repealed the
determination before the end of the period of 6 months after the transfer, the
determinations are repealed at the end of that period.
[Schedule 3, item 66, sections 1694 and 1694A]
41
Statement of
Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Treasury Laws Amendment (Modernising Business Communications)
Bill 2022
Table of Contents:
Schedule 1- Documents and meetings under the Corporations Act 2001
............................................................................................................. 44
Overview ....................................................................................... 44
Human rights implications ............................................................. 45
Conclusion .................................................................................... 49
Schedule 2 - Documents under the National Credit Code and payments
............................................................................................................. 50
Overview ....................................................................................... 50
Human rights implications ............................................................. 50
Conclusion .................................................................................... 53
Schedule 3 - Publication requirements and other amendments .......... 53
Overview ....................................................................................... 53
Human rights implications ............................................................. 53
Conclusion .................................................................................... 53
43
Statement of Compatibility with Human Rights
Schedule 1- Documents and meetings under
the Corporations Act 2001
Overview
4.1 This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
4.2 Schedule 1 to the Bill amends the Corporations Act to modernise the law and
make the Corporations Act more technology neutral. Key aspects of these
amendments include:
• allowing all documents under the Corporations Act to be signed or
executed electronically;
• allowing all documents required or permitted to be sent under
Chapters 2A to 2M, 5 to 5D, 6 to 6C, 8A, 9 and Schedule 2 to the
Corporations Act, other than those which are lodged with certain
regulators, to be sent electronically;
• allowing most types of recipients of a document under the
Corporations Act to elect to receive documents in either a physical or
electronic form;
• requiring the target of a takeover bid to provide the bidder with the
electronic and postal addresses of relevant security holders;
• allowing the subject of a compulsory acquisition notice to lodge their
objection to that notice with the sender of the notice in either a
physical or electronic form; and
• amending the criteria with which an entity must comply before they
are relieved from their obligations under the Corporations Act to
provide a document to a member.
4.3 The majority of the amendments made in Schedule 1 to the Bill relate to the
activities of a company, responsible entity of a registered scheme or a
disclosing entity under the Corporations Act. These amendments do not affect
individuals' human rights.
4.4 New sections 641A and 648C introduce civil penalty provisions applicable
where a person engaging in a takeover bid misuses personal information
obtained from the target of the bid or provides a security holder with
information prohibited by the amendments. The penalties are civil in nature
and do not affect individuals' human rights.
44
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
4.5 New subsection 110F(4A) reverses the evidential burden of proof placed in
relation to the matters contained in that subsection. However, this subsection
does not apply to individuals and therefore does not engage the presumption of
innocence.
4.6 Reversing the evidential onus in these circumstances is proportional,
necessary, reasonable and in pursuit of a legitimate objective. The sender will
have peculiar knowledge of whether they reasonably believed the address to no
longer be current. For example, proof that an attempt was made to contact the
member at their nominated address would be readily available to the sender.
By reversing the onus of proof in these circumstances, the Bill clarifies that the
relief provided for is only available in exceptional circumstances, and that a
member's election must be complied with unless there is a reasonable belief
that the address is not current.
Human rights implications
4.7 The amendments made by Schedule 1 to the Bill are primarily intended to
apply to behaviour by a company, responsible entity of a registered scheme or
a disclosing entity under the Corporations Act. However, they may be used in
circumstances where an individual has engaged in conduct in relation to a
takeover bid which contravenes new subsection 641A(1) or 648C(4). To the
extent these new penalty provisions apply to individuals, they engage the
following human rights:
• the right to privacy; and
• the right to a fair trial.
Engagement of the right against arbitrary or unlawful
interference with privacy
4.8 Article 17 of the ICCPR requires parties to the ICCPR to uphold the
individual's right not to have one's private, family and home life or
correspondence unlawfully or arbitrarily interfered with. It also includes the
right to protection by law of one's reputation. According to the Parliamentary
Joint Committee on Human Rights' Guide to Human Rights, the right to
privacy includes:
• the right to respect for confidential and private information,
particularly the storing, use and sharing of such information; and
• the right to control dissemination of information about one's private
life.
4.9 The Parliamentary Joint Committee on Human Rights' Guide to Human Rights
also states that in order to uphold the right to privacy, a State must adopt
45
Statement of Compatibility with Human Rights
measures to protect people from arbitrary interference with their privacy from
others, including by corporations.
4.10 The Privacy Act 1988 provides for the protection of personal information,
including setting out Information Privacy Principles applying to the
Commonwealth public sector and National Privacy Principles applying to
many private sector organisations.
4.11 The right to privacy and reputation is not an absolute right and is subject to
permissible limits. The implied limitation arises inter alia as a result of the
interpreting term 'arbitrary' in Article 17 of the ICCPR, which prohibits
unlawful or arbitrary interferences with a person's privacy, family, home and
correspondence.
Overview of provisions that interact with the right to privacy
4.12 The Bill engages the right to privacy because it involves the collection,
security, use or disclosure of information that may include personal
information.
Personal information of a person who is the subject of a takeover bid under
Chapter 6 or compulsory acquisition under Chapter 6A
4.13 New paragraphs 641(1)(aa) and (ab) require a company which is the target of a
takeover bid being conducted under Chapter 6 of the Corporations Act to
provide the bidder with the electronic address and communication preferences
of security holders who are the subject of the takeover bid.
4.14 There is already a range of information that must currently be provided by the
target of a takeover bid to the bidder (see existing section 641).
4.15 These requirements pertain to personal information, and so create an
interaction with the right to privacy.
Justification for limitations on right to privacy
4.16 To the extent the provisions outlined above limit the right to privacy, those
limitations are justified. These limitations are in pursuit of the legitimate
objectives of ensuring:
• that where a document is required or permitted to be provided to a
person under the Corporations Act, it can be done so;
• that where a person has a preference to receive a document in a
particular format, the document can be provided in that format;
• a person is not disadvantaged in a takeover situation and receives all
documents that they would have expected to receive, regardless of
their preferred form of communication;
46
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
• unnecessary costs are not imposed on a person who is required or
permitted to provide a document under the Corporations Act.
4.17 Further, there is a rational connection between the amendments and the
legitimate objective of ensuring that shareholders receive all required
communication in the form that they requested. The amendments require the
target to provide the bidder with the limited personal details that the bidder
requires to contact the shareholders via their electronic address. It would not be
possible for the bidder to provide the shareholders with the required
information electronically if they did not have those details, and bidders would
subsequently be disadvantaged.
4.18 These amendments are reasonable and necessary in pursuit of these legitimate
objectives. A bidder should have the information necessary to contact the
shareholders of the target electronically and it should not be prevented from
using modern communications methods to send or receive documents which
are required or permitted to be sent under the Corporations Act.
4.19 To the extent these provisions limit the right to privacy, they are proportionate
to the legitimate objective they seek to give effect to. Significant penalties are
in place where a person uses personal information in a way which is
inconsistent with the purpose for which the information has been provided. In
particular, new section 641A of the Bill introduces penalties for the misuse of
personal information obtained under new paragraph 641(1)(aa).
4.20 In addition, these amendments do not require a shareholder to provide personal
information that they were not previously required to provide. It does not
oblige shareholders to provide their electronic addresses to the target. Rather it
merely ensures that if the shareholder chose to provide such information to the
target, then the target must pass on the information to the bidder. If the
shareholder was not comfortable with this, they could simply refuse to provide
their electronic address to the target and request all correspondence in hard
copy.
Engagement of the right to a fair and public hearing
4.21 Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and
public hearing by a competent, independent and impartial tribunal established
by law. Article 15 of the ICCPR ensures that offences are not retrospective in
nature.
Overview of applicable offence
4.22 New subsections 641A(1) and 648C(4) of the Bill introduce civil penalty
provisions. Subsection 641A(1) applies where a person engaging in a takeover
bid misuses personal information obtained from the target of the bid.
Subsection 648C(4) applies where a person providing a document to a holder
of securities as part of a Chapter 6 takeover includes other inappropriate
47
Statement of Compatibility with Human Rights
information in the document, such as unwanted marketing material. These
penalty provisions are not strict liability offences, nor do they have
retrospective effect.
Civil penalties are not 'criminal' for the purposes of human rights law
4.23 Guidance Note 2: Offence provisions, civil penalties and human rights,
provides that offence provisions need to be considered and assessed against the
criminal process rights enshrined in Articles 14 and 15 of the ICCPR. These
articles broadly protect the right to a fair trial and fair hearing, prevent the
application of retrospective criminal laws, and provide minimum guarantees in
criminal proceedings such as laws relating to double jeopardy and self-
incrimination.1
4.24 When a provision imposes a civil penalty, an assessment is required as to
whether the penalty is 'criminal' for the purposes of Articles 14 and 15 of the
ICCPR. Such an assessment requires consideration of the classification of the
penalty under domestic law, the nature of the penalty, and the severity of the
penalty.
4.25 Where a civil penalty is assessed as a 'criminal' penalty for the purposes of
international human rights law, it must be shown to be consistent with the
criminal process guarantees set out in articles 14 and 15 of the ICCPR. If it is
assessed as not being 'criminal', these processes need not apply.
4.26 New subsections 641A(3) and 648C(6) relate to subsections 641(4) and
648C(4), respectively. They provide that a person who contravenes the relevant
subsection does not commit an offence.
4.27 The penalties provided for in new subsections 641A(1) and 648C(4) are
classified as a civil penalty under domestic law. Neither is punishable by a
term of imprisonment.
4.28 Whilst the new civil penalty provisions have the purpose of deterring specific
misconduct and incentivising compliance with the law, the penalties apply only
in a specific regulatory context. The penalties do not apply outside of a
takeover process being conducted under Chapter 6 of the Corporations Act.
4.29 Furthermore, the penalty provisions are needed to ensure the proper
functioning and integrity of the takeovers regime. New subsection 641A(1)
addresses the risk that the takeovers process could lead to the disclosure of
large amounts of sensitive personal information. New subsection 648C(4)
addresses the risk that a bidder could seek commercial advantage through the
provision of misleading material to target security holders.
1
Parliamentary Joint Committee on Human Rights, Guidance Note 2: Offence provisions, civil
penalties and human rights, December 2014.
48
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
4.30 Guidance Note 2: Offence provisions, civil penalties and human rights notes
that the nature of the industry or sector being regulated is relevant to the
relative size of the pecuniary penalties and fines that may be imposed.
4.31 The severity of the penalties is proportionate to the nature of the industry being
regulated, as takeovers often involve the handling of large amounts of sensitive
personal information. The risk of harm associated with the misuse of personal
information obtained through a takeover can be great where the target of a
takeover bid is a large public company with many security holders. The
information transferred from the target to the bidder in this process includes the
names, nominated electronic addresses and physical addresses of all members
of the target company.
4.32 Whilst the new civil penalty provisions have substantial maximum penalties,
these are proportionate to the relevant conduct, being a takeover procedure
under Chapter 6 of the Corporations Act, and support the fact that the new civil
penalty provisions should not be considered 'criminal'.
4.33 These new civil penalty provisions should not be considered 'criminal' for the
purposes of international human rights law.
Criminal process rights
4.34 Irrespective of the classification of the penalty provisions as civil or criminal
under international law, the penalty provisions are consistent with the criminal
process rights contained in articles 14 and 15 of the ICCPR.
4.35 The penalty provisions are not strict liability offences and do not reverse the
onus of proof. They do not limit the right to be presumed innocent until proven
guilty.
4.36 The penalty provisions are subject to the existing civil penalties framework in
Part 9.4B of the Corporations Act. The existing law sets out the circumstances
that must be satisfied to establish a contravention of a civil penalty provision,
such as proof of certain elements and circumstances, and procedural
requirements to ensure a fair and proper process.
Conclusion
4.37 The amendments made by Schedule 1 to the Bill are compatible with human
rights. The amendments engage the right to privacy and reputation and the
right to a fair trial and public hearing. However, the Schedule ensures that the
new penalty provisions which engage the right to a fair trial and public hearing
are civil in nature and subject to the existing due process protections in the
Corporations Act. To the extent that the amendments made by Schedule 1 to
the Bill place limitations on the right to privacy and reputation, these
limitations can be considered legitimate, rational, and necessary in light of the
49
Statement of Compatibility with Human Rights
objectives they aim to achieve, and reasonable and proportionate in their
extent.
Schedule 2 - Documents under the National
Credit Code and payments
Overview
4.38 This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
4.39 This Schedule makes a number of amendments across Treasury portfolio laws
to make these laws technology neutral. The amendments relate to either
provisions of the NCC, which require various notifications to customers to
occur 'in writing', or various provisions across Treasury laws which require
payments to be made at a particular place or otherwise restrict the method of
payment.
4.40 The amendments include new subsection 195F(1), which requires a person
giving a document to another person under the NCC to also provide the
information set out in new subsection 195F(2). New subsection 195F(2) also
provides for a penalty of 5,000 penalty units for contravention of this
subsection. The penalties are civil in nature and do not affect individuals'
human rights, as outlined below
Human rights implications
4.41 The amendments made by Schedule 2 to the Bill are intended to modernise the
NCC and allow for electronic communication of documents required or
permitted to be provided under the NCC. As part of this process, the Schedule
includes a new offence provision to ensure that a consumer who receives
documents under the NCC in an electronic form is not subject to less consumer
protections than someone who receives the documents in a physical form. To
the extent the new penalty provision applies to individuals, it engages the
following human rights:
• the right to a fair trial; and
• the right to the presumption of innocence.
50
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Engagement of the right to a fair and public hearing
4.42 Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and
public hearing by a competent, independent and impartial tribunal established
by law. Article 15 of the ICCPR ensures that offences are not retrospective in
nature.
Overview of applicable offence
4.43 New subsection 195F(2) introduces a civil penalty provision, making a
contravention of that subsection punishable by 5,000 penalty units. New
subsection 195F(3) and (4) provide that a person who contravenes new
subsection 195F(2) commits an offence punishable by 50 penalty units.
Infringement notices
4.44 Under the existing NCCPA framework, certain offences and civil penalties are
covered by an infringement notice regime. Relevantly, all strict liability
offences are subject to infringement notices. Accordingly, the strict liability
offence contained in new subsection 195F(4) is subject to an infringement
notice.
4.45 The infringement notice regime allows ASIC to issue an infringement notice as
an alternative to court proceedings, for the payment of a pecuniary penalty in
relation to an alleged contravention of specified Corporations Act provisions.
If given an infringement notice, a person has the option to either pay the
appropriate fine or contest the notice in a court.
4.46 If an infringement notice is complied with, no further action will be taken
against the person, and the payment is not considered an admission of guilt
(see section 288R of the Corporations Act). However, if the infringement
notice is not complied with, ASIC may take action in relation to the alleged
contravention of the provision under which the infringement notice was issued.
4.47 To the extent that the infringement notice regime does engage the right to a fair
and public hearing by a competent, independent and impartial tribunal, it does
not limit the right as the person may still elect to have a matter heard by a court
rather than pay the amount specified in the infringement notice.
Criminal process rights
4.48 Guidance Note 2: Offence provisions, civil penalties and human rights,
provides that offence provisions need to be considered and assessed against the
criminal process rights enshrined in Articles 14 and 15 of the ICCPR.
4.49 The existing criminal offences framework in the NCCPA will also apply to
new subsection 195F(2). New subsection 195F(2) does not affect the existing
criminal process rights contained in the NCCPA and therefore does not limit
51
Statement of Compatibility with Human Rights
the right to a fair and public hearing by a competent, independent and impartial
tribunal.
Engagement of the presumption of innocence
4.50 Paragraph 2 of Article 14 of the ICCPR protects the right of a person charged
with a criminal offence to be presumed innocent until proven guilty according
to law. The presumption of innocence is also a fundamental principle of the
common law. As the Parliamentary Joint Committee on Human Rights has
observed, the presumption of innocence 'imposes on the prosecution the
burden of proving the charge, guarantees that no guilt can be presumed until
the charge has been proved beyond reasonable doubt, ensures that the accused
has the benefit of doubt, and requires that persons accused of a criminal act
must be treated in accordance with this principle'. The presumption of
innocence generally requires the prosecution to prove each element of a
criminal offence beyond reasonable doubt.
Overview of applicable strict liability offence
4.51 New subsection 195F(4) provides that a person who contravenes new
subsection 195F(2) commits a strict liability offence punishable by 50 penalty
units.
Justification for limitations on right to the presumption of innocence
4.52 Presumption of innocence is not an absolute right and is subject to permissible
limits, for example in a situation in which threats to the rights of the innocent
are minimal in comparison to the threats to the wider public interest. However,
because proof of fault is one of the fundamental protections of criminal law,
strict liability should only apply where there is adequate justification and
subject to specific considerations.
4.53 The strict liability offences created by new law pursue the legitimate objectives
of aiding the oversight and enforcement of the NCC and protecting consumers.
4.54 There is a rational connection between the limitations on the presumption of
innocence imposed by this new strict liability offence and the legitimate
objectives described above. The offence only applies to licensees under the
NCCPA, who should be cognisant of their regulatory obligations in conducting
credit activity (and the potential imposition of strict liability offences for
certain conduct). Further, the defence of honest and reasonable mistake of fact
remains available. The imposition of a strict liability offences for failing to
comply with this consumer protection is likely to be effective in achieving
greater compliance than otherwise would be the case.
52
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Conclusion
4.55 Schedule 2 to the Bill is compatible with human rights. It engages with the
right to the presumption of innocence and the right to a fair and public hearing.
However, to the extent the amendments contained in Schedule 2 to the Bill
limit these rights, these limitations can be considered legitimate, rational, and
necessary in light of the objectives they aim to achieve, and reasonable and
proportionate in their extent.
Schedule 3 - Publication requirements and
other amendments
Overview
4.56 This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
4.57 This Schedule amends the competition and consumer law to allow for notices
to be published using means other than a physical newspaper, provided the
manner of publishing results in the notice being accessible to the public and
reasonably prominent.
Human rights implications
4.58 This Schedule does not engage any of the applicable rights or freedoms
Conclusion
4.59 This Schedule is compatible with human rights as it does not raise any human
rights issues.
53
Attachment 1: Preface to the Regulation
Impact Statement
Table of Contents:
Modernising Business Communications - Improving the Technology
Neutrality of Treasury Portfolio Laws ................................................... 55
Introduction ................................................................................... 55
Updates to regulatory saving estimates ........................................ 56
Summary of updated estimated regulatory savings from Legislation
Package 1 ..................................................................................... 59
Modernising Business Communications -
Improving the Technology Neutrality of Treasury
Portfolio Laws
Introduction
The Modernising Business Communications (MBC) project for Treasury portfolio
legislation was first announced on 21 April 2021 by the Treasurer, the Hon Josh
Frydenberg MP, and the Minister Assisting the Prime Minister and Cabinet, the Hon
Ben Morton MP. The MBC Regulation Impact Statement was publicly released on 9
June 2021. Since that time, the policy settings for the package have evolved reflecting
developments in policy design and responses to feedback received during consultation.
In response to these changes, Treasury has updated its estimates of the regulatory
savings. This has resulted in the overall estimate of deregulatory savings rising from
$48.1 million per year to $61.0 million per year.
The next section details the changes that affect the various elements and how the
methodology has been revised. This is followed by a table providing the updated
regulatory savings estimates for tranche one of MBC.
55
Preface to the Regulation Impact Statement
Updates to regulatory saving estimates
1. Publishing notices in newspapers
Since the RIS was first published and following consultation, further opportunities to
reduce regulatory burdens on business were identified in respect of requirements to
publish notices in newspapers. In particular, two publishing requirements relating to
life insurance companies where a policy is lost or destroyed are no longer appropriate.
The requirements can be removed due to advances in technology since these provisions
were put in place. Life insurers were required to publish a notice prior to replacing or
considering a claim on a lost or destroyed policy and the cost of the publication was
passed onto the client. The estimated regulatory savings for this change have been
amended to reflect this.
Methodology revisions
The cost of publishing notices for replacement life insurance policies in newspapers
has been recalculated assuming there are on average 7,000 notices published per year
at an average cost of $125 per notice. In addition, an adjustment was made to the
number of insolvencies in the original costing.
The revised estimate of regulatory savings is $3.5 million per year.
2. Communication of documents
The original RIS considered extending the meeting materials amendments to
non-meeting materials required to be sent to members of companies, registered
schemes or disclosing entities under the Corporations Act 2001 (Corporations Act).
This original proposal was to mirror the Government's proposed changes to meeting
materials.
The Government subsequently developed a global communications regime for the
Corporations Act as introduced to Parliament in the Corporations Amendment
(Meetings and Documents) Bill 2021 (Corporations Amendment Bill). As a result, the
MBC proposal has been modified to ensure consistency across meeting and non-
meeting materials.
Electronic communication of documents will include all communications required to
be sent under Chapters 2A to 2M, 5 to 5D, 6 to 6C, 8A, 9 and Schedule 2 to the
Corporations Act, excluding those lodged with ASIC, the Registrar or the Takeovers
Panel. This will cover entity-to-entity and person-to-entity communications, such as
companies' communications with their auditors and (prospective) director
communications with the company, not only member communications.
56
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Methodology revisions
The assumption of the average number of non-meeting related notices that an entity
may communicate has been increased from 4 to 10 per year to account for the
expanded scope of the proposed legislative change. This is based on the number of
provisions proposed for reform that are not required to be communicated with
regulators. All other assumptions and calculations remain the same.
The revised estimate of regulatory savings is $46.0 million per year.
3. Takeover notices
No policy changes have been made that impact the costing for this element. However,
changes to the assumptions have been made to reflect updated information.
Methodology revisions
The average number of takeovers each year has been updated to reflect 2020-21 data,
reducing the level of activity slightly from 26 takeovers per year to 25 takeovers per
year. The number of shareholders per company has also changed slightly, increasing
the saving from increased use of electronic communications.
The revised estimate of regulatory savings is $6.5 million per year.
4. Sending documents to lost members
Companies and registered schemes will be relieved from having to send any documents
that are required under the Corporations Act to lost members. Companies and
registered schemes must attempt to notify the member six to 18 months after forming a
reasonable belief that none of the addresses they hold for the member are current. The
original proposal was limited to Annual Reports and meeting materials as covered by
the existing ASIC relief and only allowed cessation after two years and two attempts to
contact the member.
Methodology revisions
The methodology has been revised to include an additional 10 documents per year to
reflect other documents required to be sent to lost members, not just the annual reports.
The cost of sending these non-meeting documents is estimated to be $5 per document.
The average cost of sending meeting materials by entities has been increased following
stakeholder feedback to include the cost of preparing the annual report and other
material - it is now assumed to be $24 for each copy of the materials sent to a
shareholder.
For the purposes of the regulatory impact assessment, it is assumed that the initial
contact used to establish that a member is lost under the proposed arrangements will be
made when the meeting materials are sent as this produces a more conservative
57
Preface to the Regulation Impact Statement
estimate of the cost savings. It is assumed that half of the follow-up communications
prior to stopping communication occur in the same year as the initial contact with the
other half in the following year. It is also assumed that the half of the follow-up
communication will be made in hard copy and the remainder electronically. There is
now only one follow-up communication attempt. Finally, to maintain a conservative
bias in the estimates it is also assumed that 0.1 per cent of all shareholdings become
lost each year.
The revised estimate of regulatory savings is $3.3 million per year.
5. National Consumer Credit Protection Act 2009,
Regulations 2010 and National Credit Code
A greater range of communications between credit providers and their clients will be
streamlined or made technology neutral than was included in the original policy
specification. Communications with clients will be aligned with the communications
provisions used in the Corporations Act, including allowing credit providers to provide
a 'postcard' containing information on how to access information. Credit providers will
also now be able to communicate electronically with their clients when the client has
not nominated a preferred address and the provider has the client's physical and
electronic addresses.
It is now proposed to allow credit providers to electronically communicate National
Credit Code (NCC) notices that are currently exempt from the Electronic Transactions
Act 1999 (ETA), including default notices. Where these documents are provided
electronically, they must be accompanied by a warning regarding the nature of the
document and consequences of not reading or responding to it.
Methodology revisions
No change to methodology of this element has been made due to a lack of information
on the scope to increase electronic communications from current levels and the volume
and cost of notices sent by credit providers which are currently exempt under the ETA.
However, these elements are expected to further increase the regulatory savings from
what has already been identified.
6. Sole director companies with no company secretary can
execute documents electronically
This element has been included in the Corporations Amendment Bill and has not been
included in the updated estimates.
7. Signatures and witnessing
This element remains unquantifiable.
58
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
8. Payment methods - cheques, money orders and cash
No changes have been made to this element that affect the RIS estimate.
Summary of updated estimated regulatory savings
from Legislation Package 1
Original Revised
estimate of estimate of
regulatory regulatory
savings savings
Element ($m/year) ($m/year)
1. Publishing notices in newspapers 1.1 3.5
2. Communication of documents 27.7 46.0
3. Takeover notices 6.2 6.5
4. Sending documents to lost members 2.8 3.3
5. National Consumer Credit Protection Act 2009,
1.7 1.7
Regulations 2010 and National Credit Code
Removed
since
6. Sole director companies with no company secretary progressed
8.6
can execute documents electronically via other
legislative
package
7. Signatures and witnessing * *
8. Payment methods - cheques, money orders and cash 0.0 0.0
Total estimated savings 48.1 61.0
* Unquantifiable
59
Attachment 2: Regulation Impact
Statement
Modernising Business Communications -
Improving the Technology Neutrality of Treasury
Portfolio Laws
Background
In 2019, the Government established its Deregulation Taskforce to ensure that
regulation is designed and applied in the most efficient and timely way, with the lowest
cost to business.2
The importance of appropriate regulation was heightened by the COVID-19 pandemic,
which highlighted the need for business to be able to adapt and respond quickly to a
changing business environment. The importance of technology to the continued
functioning of the Australian economy was also brought to the fore.
The Government has made progress on this front by putting in place temporary
measures, including those under the Corporations Act 2001 (Corporations Act), to
provide for virtual meetings and electronic execution of documents, to ensure
businesses could continue to operate and meet their regulatory obligations through the
COVID-19 pandemic.
The Government also committed to examining options to modernise business
communications across the Commonwealth and working with the states to reduce the
ongoing costs of doing business and provide business with more time and resources to
focus on investment and creating jobs.3
Reforms to modernise business communication support a business-led private sector
recovery from the COVID-19 pandemic and contributes to the Government's goal of
positioning Australia as a leading digital economy by 2030 by enabling businesses to
increase their uptake and use of digital technologies.
2
Delivering Deregulat...~https://ministers.pmc.gov.au/morton/2019/delivering-deregulation-
australian-business
3
Cutting red tape by ...~https://ministers.pmc.gov.au/morton/2020/cutting-red-tape-
modernising-business-communications-and-improving-occupational-mobility
61
Regulation Impact Statement
1.0 What is the policy problem you are trying to solve?
Rapid digital and technological advances continue to be a feature of the business and
consumer environment. While digital technologies continue to evolve, changing the
way the world works and communicates, it is apparent that regulations have not always
kept pace.
Reviews by the Government, business and other stakeholders have long called for
improved technology neutrality in selected pieces of Treasury portfolio legislation.
Technology neutrality in this context means legislation that refrains from prescribing
specific methods for its implementation. For example, to ensure it does not mandate
that information must be provided in hardcopy, or paper-based form, only that the
information must be provided.
The growth of digital technologies, including usage of the internet and ICT software,
provides alternate communication channels that are often cheaper, faster and more
convenient for both the sender and receiver. An increasing number of Australians are
engaging with digital technologies; in the six months to June 2020, 99% of Australian
adults accessed the internet, likely driven in part by the COVID-19 epidemic.4
Previous and current inquiries into the problem
The Financial System Inquiry (FSI) in 2014 noted that some legislation prescribes the
use of certain forms of technology. In its Final Report, the FSI recommended that the
Government:5
• identify, in consultation with the financial sector, and amend priority
areas of regulation to be technology neutral;
• embed consideration of the principle of technology neutrality into
development processes for future regulation; and
• ensure regulation allows individuals to select alternative methods to
access services to maintain fair treatment for all consumer segments
(Recommendation 39).
The FSI stated that 'technology-neutral regulation enables any mode of technology to
be used and tends to be competitively neutral.' It goes on to note that '[t]he principle of
technology neutrality should be incorporated into government policy-making guides,
and processes for developing future regulation. The guidance should allow for
technology-specific regulation on an exceptions basis.'6
4
'Trends in online behaviour and technology usage, ACMA consumer survey 2020,' Australian
Communications and Media Authority, September 2020:
5
Financial System Inquiry Final Report at www.treasury.gov.au, p. 269
6
Financial System Inquiry Final Report (treasury.gov.au), p270
62
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
The FSI panel found that a technology neutral approach provides for greater adoption
of innovative developments, improves risk management by regulators, can also reduce
compliance costs and improve the stability and longevity of regulation. The panel drew
attention to stakeholder feedback that identified a range of priority areas that could be
made more technology neutral such as customer consent and authorisation, payments
and cheques, external administration processes, conveyancing and identity verification.
In its 2015 response to the FSI, the Government committed to amend priority areas of
legislation and regulation to be technology neutral, by embedding the principle of
technology neutrality into future legislation and regulation making.7 The Government
also agreed:
• to consult with the financial sector on priority areas of existing
legislation and regulation that present regulatory impediments to
innovation, before commencing work on any amendments;8 and
• that regulatory impediments to innovative product disclosure should be
removed.9
In 2019, the Senate Select Committee on Financial Technology and Regulatory
Technology (the Committee) re-emphasised the importance of technology neutrality in
laws. In its Interim Report, the Committee noted that a number of parties advised
additional measures could be taken to help modernise the Corporations Act and make it
more technology-friendly, above and beyond making temporary changes to virtual
meetings and electronic document execution permanent. The Interim Report contained
the following relevant recommendations: 10
The Corporations Act be amended to enable companies to communicate with
shareholders electronically by default, with shareholders retaining the right to request
paper-based communications on an opt-in basis.
The Corporations Act and other relevant legislation and regulations be amended in
order to allow for the electronic signature and execution of legal documents.
Relevant regulations be amended in order to enable the witnessing of official
documents via videoconferencing or other secure technological means.
Current state
The growing divergence between the Government's legislative framework and changes
in the business operating environment as a result of technological advances has been
evident for some time. Prescriptive legislation that locks businesses into outdated
technology is unnecessarily burdensome, creating red tape that makes communication
time-consuming and costly.
7
Government response to the Financial System Inquiry at www.treasury.gov.au, p18.
8
Ibid
9
Government response to the Financial System Inquiry at www.treasury.gov.au, p19.
10
Select Committee on Financial Technology and Regulatory Technology, p.vii
63
Regulation Impact Statement
This is of particular importance to the Treasury portfolio because it contains the main
legislation governing business operations in a number of critical sectors including
banking, credit, insurance and superannuation. Legislation such as the Corporations
Act contains provisions that prescribe outdated methods of business communication
such as wet signatures, posting of hardcopy documents and traditional meetings where
all parties attend in person.
This Regulation Impact Statement (RIS) focusses on a select number of priority
regulations in the Treasury portfolio and excludes tax laws recognising the unique
challenges and complexities involved in examining this area of law.
Legislation such as the Electronic Transactions Act 1999 (ETA) has been introduced to
allow regulatory frameworks to recognise the importance of technology to the future
economic prosperity of Australia, facilitate the use of technology, promote business
and community confidence in the use of technology and enable business and the
community to use technology when communicating, including with the Government.11
There are however, 19 exemptions to the operation of the ETA in Treasury portfolio
legislation including the Corporations Act 2001, Superannuation Industry
(Supervision) Act 1993 (SIS Act), Australian Securities and Investments Commission
Act 2001 (ASIC Act), Banking Act 1959, Cheques Act 1985, Competition and
Consumer Act 2010, Insurance Act 1973, Life Insurance Act 1995 and National
Consumer Credit Protection Act 2009 (NCCP Act).12
Under the Corporations Act for example, exemptions apply to the validity of electronic
transactions,13 requirements relating to writing, signatures, production of documents
and retention of documents,14 the time and place of dispatch,15 receipt of electronic
communication, 16 and the attribution of electronic communications.17 ETA
exemptions, in part, prevent the Corporations Act from being technology neutral.
Five categories of business communication where the lack of technology neutrality is
particularly burdensome are:
• written communication between stakeholders;
• communicating with regulators;
• signatures and witnessing;
• record keeping; and
• payment methods.
The policy problems related to each are set out below.
11
See s3 of the Electronic Transactions Act 1999
12
See Schedule 1 to the Electronic Transactions Regulations 2000
13
See s8 of the Electronic Transactions Act 1999
14
See Part 2, Division 2 of the Electronic Transactions Act 1999
15
See s14 of the Electronic Transactions Act 1999
16
See s14A of the Electronic Transactions Act 1999
17
See s15 of the Electronic Transactions Act 1999
64
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
1.1 Written communication with stakeholders
Legislation often requires parties to communicate 'in writing', using physically printed
documents. The requirement is omnipresent, occurring for example, in more than 550
provisions in the Corporations Act and in more than 60 provisions in the NCCP Act.
Methods of transmitting documents are sometimes prescribed requiring sending, for
example, by post.18 Australia Post has decreased its city letter deliveries to every
second day and increased delivery times for other items to five days for cities and
seven days for rural areas.19 Together with the declining use of facsimile machines,
this has led to these prescribed methods of business communication no longer being
the most reliable, efficient or cost effective method.
As an example, the Corporations Act requires, in the event of a takeover bid, that a
bidder must ensure they complete the dispatch of their offer in a three-day window
between commencing dispatch and its completion. Companies involved in this process
can have significant share registries with thousands of shareholders. Takeover
documentation can also be quite voluminous, meaning that this requirement is not only
hard to achieve using post, but in comparison, electronic transmission of documents by
email or links to document repositories can be almost instantaneous and would produce
significant cost savings.
Treasury portfolio legislation also requires businesses, regulators and individuals to
publish notices in newspapers for various reasons. For example, under the
Corporations Act no-liability companies must advertise in daily newspapers circulating
in each state and territory before selling shares for failure to meet a call.20 Similarly,
registered Australian bodies must advertise before distributing property when ceasing
to carry on business,21 and before registering the transfer of a security, the owner may
have to advertise in a newspaper if directed by the business.22
Using newspapers as a method for public notification is less useful than it was at the
time when these regulations were originally introduced. Provisions that require public
notices in newspapers may no longer be reaching the intended audience and achieving
the intended purpose.
Businesses and regulators often need to supplement their notices in newspapers with
more contemporary methods of communication to reach their intended audience -
illustrating the unnecessary burden and cost on business that these requirements can
produce.
18
See for example s648C of the Corporations Act 2001 on the manner of sending documents to
holders of securities
19
Australia Post, https://auspost.com.au/service-updates/current-updates/temporary-changes-to-
letter-delivery
20
See s254Q (3) and (4) of the Corporations Act
21
See s601CC (14)(a) and s601CL (15)(a) for foreign companies
22
See s1070D(6)
65
Regulation Impact Statement
1.2 Communicating with regulators
Treasury portfolio legislation may require businesses to provide written information to
regulators. Regulators in scope for the purposes of this RIS include the Australian
Securities and Investments Commission (ASIC), the APRA) and the Australian
Competition and Consumer Commission (ACCC).
Legislation can also require regulators to provide information to business and others in
relation to licensing and registration, breach reporting, investigations and application
for regulatory relief. Information can be required to provide an administrative and
evidentiary basis for decision-making by regulators and to assist the regulator in
conducting regulatory activities.
As regulators receive large volumes of information, it is often necessary to prescribe
the format in which it is received. There are some instances where legislation
prescribes the form in which information is provided, for example, in hard copy and
even at times, prescribe specific layout of the form. This means that regulators can
experience situations where they cannot use technology to receive information and
they cannot amend the contents of a form or assist with pre-filling forms without a
change to the legislation or legislative instrument.
This approach has been addressed successfully in some cases by allowing regulators
such as the Australian Taxation Office to specify the means by which it receives
information and allowing business to comply at the lowest cost.
1.3 Signatures and witnessing
The purpose of signature and witnessing requirements is to identify the person signing
and to confirm their intention to agree to terms in the document. These requirements
are often met by the person signing a paper document in the presence of a qualified
witness. For example, superannuation funds require binding death benefit nomination
forms to be signed in the presence of two witnesses, by a member seeking to nominate
a legal representative or dependant to receive benefits from their superannuation fund
in the event of their death.23
Recent events such as the bushfires in 2019-20 and the COVID-19 pandemic have
restricted the ability for business and regulators to continue operating using traditional
methods such as physical signatures and witnessing and have highlighted opportunities
for more efficient methods of identifying individuals and confirming agreement.
Secure digital methods of verifying identity and a person's intention to sign are readily
available and used extensively in business and in Government, providing the same or
higher levels of assurance as current signature and witnessing requirements.
In 2020, the Government provided temporary relief to businesses as part of the
COVID-19 economic response to allow the electronic execution of documents without
23
See regulation 6.17A(6)(b) of the Superannuation Industry (Supervision) Regulations 1994
66
Treasury Laws Amendment (Modernising Business Communications) Bill 2022
a physical signature in the presence of a witness.24 However, there are other instances
in Treasury portfolio legislation which do not allow electronic signature and witnessing
to occur which were not addressed through the current temporary reforms.
The relief provided under the Corporations Act temporary measures and the
application of the ETA to specific Acts and provisions within selected Treasury
portfolio legislation creates a regulatory environment where treatment or acceptance of
electronic signatures is applied inconsistently. There is a need to review and modify
legislation to ensure there is sufficient flexibility to allow electronic signatures to be
used where appropriate.
1.4 Record-keeping requirements
Selected Treasury portfolio legislation may require a business to record or retain
information "in writing" for a specified period of time.25 The purpose of requiring
information to be retained in a specified format for a period of time is to ensure that
information can be accessed in the future for regulatory and evidentiary purposes and
for records to be available for scrutiny when required.
For example, s12 of the ETA provides that record-keeping requirements are met where
information is kept in electronic form however, the Corporations Act, and the SIS Act
are exempt from the operation of the ETA.
A technology neutral approach to achieving these goals would ensure that this purpose
is achieved while providing flexibility regarding the manner in which information is
retained. This would allow for innovative developments in record keeping to be
employed where appropriate.
Outdated record-keeping requirements are particularly problematic as businesses
conduct more of their operations on digital systems. Digital records can provide many
benefits over paper records such as cheaper storage with greater accessibility and
provides greater ease of retrieval and analysis of information (for both the company
and regulators). Requiring businesses that operate digitally to print documents and
store them at a physical location creates an unnecessary burden.
For example, under the SIS Act, self-managed super fund (SMSF) trustees must keep
physical copies of trustee minutes, date records of all trustee changes and trustee
consents, copies of all member or beneficiary reports and written records of decisions
about the storage of collectable and personal use assets under SIS Act and associated
24
See s127 of the Corporations Act 2001 and the Corporations (Coronavirus Economic
Response) Determination (No. 1) 2020; and the Corporations (Coronavirus Economic
Response) Determination (No. 3) 2020
25
See for example s286 of the Corporations Act 2001 which requires companies to keep written
financial records for a period of seven years
67
Regulation Impact Statement
Regulations for at least 10 years.26 Given there are over 580,000 SMSFs in Australia,27
this is a sizeable burden.
1.5 Payment methods
Stakeholders have expressed concerns that Treasury portfolio legislation requires them
to use and accept outdated, expensive payment methods. For example, the
Corporations Act provides that a company must give holders of shares notice of the
place for payment of calls on shares and the notice must be sent by post.28
Payment methods have changed significantly in recent decades. Technological
improvements coupled with the globalisation of trade and commerce have driven a
dramatic shift toward faster, more cost effective digital forms of payment. In an
increasingly globalised economy, Australian businesses need to be able to harness
these new technologies, which also assist in business cash flow, in order to remain
competitive.
In Australia, this shift has been evidenced by an increase in monthly debit card
transactions from 150 million per month in 2011, to approximately 600 million per
month in 2019. At the same time, use of cash is declining, with the proportion of
payments made using cash falling from nearly 75% in 2007 to approximately 30% in
2019.29
In Australia, the use of cheques has been in steep decline over the past 20 years, in
terms of number of cheques written and the value. Today, only around 0.2% of
payments are made with cheques.30 The value of cheque payments was more than 40
per cent lower in April 2020 than in the preceding twelve months, with cheque usage
falling to historically low levels.
Estimates in 2014 suggest that cheques were around six times more costly per
transaction than card payments. This figure is expected to continue to increase due to
the rise of more accessible and efficient payment methods. As the number of cheques
being processed declines, the cost per transaction for cheque increases.
As such, there is a need to ensure there is sufficient flexibility for electronic payment
methods to be offered and used where appropriate.
26
See SIS Act sections 103, 104, 104A, 105 35AB, 35C and Superannuation Industry
(Supervision) Regulations 1994 section 13, 18AA.
27
ATO SMSF Quarterly Statistical Report - Sept 2020: Self-Managed
Superan...~https://data.gov.au/data/dataset/self-managed-superannuation-funds
28
See s254P of the Corporations Act 2001
29
Delaney L, N McClure and R Finlay (2020), 'Cash Use in Australia: Results from the 2019
Consumer Payments Survey', RBA Bulletin, June. Available at
.
30
Caddy J, L Delaney and C Fisher (2020), 'Consumer Payment Behaviour in Australia:
Evidence from the 2019 Consumer Payments Survey', RBA Research Discussion Paper 2020-
06. Available at < https://www.rba.gov.au/publications/rdp/2020/2020-06/full.html>.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
2.0 Why is government action needed?
The Government is committed to reducing red tape and to ensuring that legislation is
fit-for-purpose and has the lightest touch possible. Improving the technology neutrality
of Treasury portfolio legislation would positively impact a significant portion of the
regulated population including businesses of all sizes and would have broad-ranging
positive impacts across industry sectors such as banking, insurance, superannuation
and credit.
To be competitive in operation and cost structure, business must be free to adopt
emerging technology neutral methods of communication with other businesses,
regulators and individuals. Government action is required to remove legislative and
regulatory blockers to business adopting emerging technologies.
Overly burdensome regulation imposes unnecessary and often substantial costs on
Australian business, removing their focus from investment and jobs growth. Provisions
within Treasury portfolio legislation constrain businesses by forcing them to continue
using outdated methods of communication, creating time delays and higher business
costs. In addition, some of these provisions are no longer meeting the original policy
intent and are limiting the flexibility of businesses, regulators and individuals to adopt
technology neutral communication methods that are better suited to them.
Without reforms to Treasury portfolio legislation, the regulatory burden on Australian
businesses would increase, reducing Australia's global competitiveness. Given the
Treasury portfolio contains approximately 25% of all Commonwealth legislation,
improving the technology neutrality in Treasury portfolio legislation would have a
significant positive impact on how business operates in Australia.
Stakeholders also advised that a priority for implementation is consistency across
legislation where possible, which is why a principles-based approach is being
proposed, as it would provide the greatest level of consistency possible across Treasury
portfolio legislation.
3.0 What policy options are you considering?
Without legislative reform, businesses would be unable to harness more productive and
efficient ways of communicating when restricted to more traditional methods of
communication by legislation.
The Government has considered three options for improving the technology neutrality
of Treasury portfolio legislation:
• Option 1: Maintain the status quo.
• Option 2: Take an incremental approach by building on the reforms to
virtual meetings and electronic execution of documents provided
through the temporary relief under the Corporations Act.
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Regulation Impact Statement
• Option 3: Adopt a principles-based approach to the reform of one or
more categories of business communication.
There are likely to be cases where there is a strong policy basis for restricting the
choice of communication methods. For instance, regulators may need the ability to
obtain information in a particular format to perform their functions and powers.
Similarly, there may be legislative and regulatory requirements that are geared towards
protecting the more vulnerable members of society. While a priority of this program of
work is on improving the technology neutrality of Treasury portfolio legislation, this
would need be carefully balanced with other policy priorities such as continuing high
levels of protection for individuals and society as a whole.
Option 1: Maintain the status quo
Option 1 involves business, regulators and individuals continuing to comply with
Treasury portfolio legislation that prescribes methods of business communication that
are outdated, inefficient and unnecessarily costly. Option 1 would not meet the
Government's objectives of reducing red tape and modernising business
communication as a COVID-19 recovery priority.
In pursuing Option 1, the Government would fail to meet its commitments to:
• Reduce business costs and better reflecting the way Australians want to
engage and communicate digitally by modernising business
communications in Treasury portfolio legislation.
• Provide business with greater flexibility to determine the manner in
which they engage with other businesses, regulators and individuals.
• Work with business across all levels of government to co-design and
implement better, fit-for-purpose regulation.
The burden currently placed on business and other regulated parties would continue to
grow, making it increasingly more difficult for businesses to remain competitive in the
global marketplace. Reliance on paper-based communications with stakeholders and
regulators would continue and additional stakeholders would be unable to benefit from
savings reforms would provide, such as those in relation to the temporary reforms
under the Corporations Act for virtual meetings and electronic document execution.
Regulators would also need to continue to use their powers to enact instruments to
modify the primary legislation to provide relief to businesses. This in turn, makes it
increasingly more difficult for businesses to understand their regulatory obligations,
costing time and money as they have to consult multiple sources of information.
Businesses would not be required to accept or implement any new or additional
obligations if Option 1 is chosen as the preferred option. Similarly, consumers would
not be required to use electronic communications in place of paper, as they would
retain the ability to fulfil any preferences for paper-based communications.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Option 2:
Take an incremental approach by building on the reforms to virtual meetings and
electronic execution of documents provided through the temporary relief under the
Corporations Act.
Option 2 involves taking an incremental approach to technology neutral reforms by
building on the temporary relief under the Corporations Act. Option 2 would include
reforms to allow:
• proprietary companies with a sole director and no company secretary
to execute documents electronically, and
• non-meeting materials to be sent to shareholders electronically, under
the same regulatory requirements as the temporary relief.
These reforms build on the temporary relief measures, providing greater consistency in
the legislative requirements across the regulated population. The documents provided
at a meeting, and therefore covered by the temporary relief, can vary.
The current rules provide that a document, if provided as part of meeting papers, can
be sent electronically. However, if documents are required to be sent outside of a
meeting, they must be sent in paper form. For example, papers relating to members'
resolutions must be sent to members for voting and signature, with a business reply
paid envelope supplied for return to the company or registry. The turn-around time for
voting on members' resolution by mail can take several weeks and is extended
significantly where shareholders live overseas, as is common for companies with a
large retail shareholder base. Delays can disadvantage both the company and its
shareholders.
Providing legislative certainty for proprietary companies with a sole director but no
company secretary to execute electronic documents in the same manner as companies
with one or more directors and a company secretary would improve consistency in the
regulation of electronic execution of documents by companies.
This approach is aligned with the Government's temporary reforms and would allow
bedding down of permanent reforms provided under the temporary relief measures and
provide the ability to monitor and evaluate the engagement with the regulatory changes
prior to proceeding with additional reforms to technology neutrality.
Although pursuing Option 2 would improve consistency across regulations affecting
companies and produce savings, the limited nature of these reforms would mean that
the Government would miss the broader opportunity to meet its commitments to:
• reduce business costs and better reflect the way Australians want to
engage and communicate digitally;
• provide business with greater flexibility to determine the manner in
which they engage with other businesses, regulators and individuals;
and
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Regulation Impact Statement
• work with business across all levels of government to co-design and
implement better, fit-for-purpose regulation.
Option 2 would not impose any new and additional obligations on businesses if they
were to offer shareholders the ability to receive non-meeting materials electronically
under the same regulatory requirements as the temporary relief. Option 2 does not
mandate the acceptance and implementation of such electronic communications to the
exclusion of paper communications; it simply provides an additional option for the
distribution of non-meeting materials to shareholders.
Option 3: Adopt a principles-based approach to the reform of
one or more categories of business communication in
Treasury portfolio legislation
Option 3 involves adopting a principles-based approach to reforms in three of the five
categories of business communication within Treasury portfolio legislation. Reforms
would be progressed through a series of sequenced legislation packages.
Legislation Package 1, the subject of this RIS, would progress valued early actions of
low complexity and low levels of interaction with other Treasury portfolio laws.
Further legislation packages would be accompanied by separate regulatory impact
analysis.
Option 3 would include the reforms considered in Option 2 but would undertake
further reforms to modernising business communications in the Treasury portfolio.
A principles-based approach
Option 3 involves applying a principles-based approach to the Legislation Package.
The proposed principles have benefited from public consultation undertaken in 2020-
2021.
A principles-based approach to legislative reform would provide greater consistency
across Treasury portfolio legislation and would also allow for pain-points to be
prioritised in accordance with stakeholder views drawn from the consultation process.
The consistency achieved under Option 3 would make legislative requirements easier
for businesses to understand, while also simplifying compliance requirements for
business, regulators and individuals. Option 3 involves removing barriers to businesses
and consumers both having their preferences fulfilled for the types of communication
that best suit their circumstances.
For example, the Australian Shareholders Association submission on the Corporations
Amendment (Virtual Meetings and Electronic Communications) Bill 2020 noted that
currently all the major share registries offer a form of opt-in for company
communication, whether that be an opt-in for hard copy/paper communications, or opt-
in for electronic communications. The ASA suggested an opt-in system to receive
printed communications, and that such a system would not add extra procedures or
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
costs. It would in fact reduce the number of posted communications and the cost of
their delivery, including to shareholders may prefer email communications but have
not yet made such election.31
Legislation Package 1 would make early progress towards addressing the
Government's objective to reduce regulatory burden and facilitate the use of
technology.
These early measures are ready to be progressed now due to:
• a lower degree of complexity and interaction with various other laws;
• stakeholders identifying the actions as higher priority pain points; and
• groundwork already being undertaken through existing work by
Treasury.
Guiding policy principles
The proposed policy principles to guide legislative change were outlined in Treasury's
consultation paper (released 18 December 2020) and have benefitted from feedback
received during the consultation process. The proposed principles out contained in the
table below:
Written Communication with Stakeholders
Where a default method is not specified in the law, Treasury laws should allow written
communication to be undertaken in any form, provided that the:
• Sender is reasonably satisfied that the recipient can access the information; and
• Information can be stored by the sender and the receiver in a way that allows it to be
readily accessed and reusable for subsequent reference.
In some circumstances, it will be appropriate for the law to:
• Allow a party to specify a preferred form of communication; or
• Require that parties consent to a specific form of communication.
Where a company communicates with its shareholders, consent is not required for electronic
communication. Members can specify a preferred form of alternative communication.
Communicating with Regulators
Regulators should be able to request information from clients that provides the regulator with
the maximum ability to use the information to assist them in their regulatory responsibilities
as well as providing clients with a streamlined process to meet their responsibilities.
Regulators should be able to conduct hearings without the requirement for parties to be
physically present, provided:
31
20201106Submission to Treasury re making online AGMs permanent ED.pdf
(australianshareholders.com.au)
73
Regulation Impact Statement
• Hearings are conducted with procedural fairness;
• The ability of the parties to obtain information, present evidence and be represented, is
not impaired;
• The confidentiality of private proceedings is assured;
• Public hearings are conducted in a manner that allows public access; and,
• There is a place and time for the hearing for the purposes of determining jurisdictional
questions.
Signatures and witnessing
Technology may be used to identify a person and indicate their agreement, in place of a
physical signature and witnessing, provided the method used is:
• As reliable as appropriate for the purpose for which the electronic communication was
generated;
• Is proven to have fulfilled the functions of identifying the person and indicating their
intention in respect of the information communicated; and,
• The business or individual to whom the signature is required to be given consents to the
use of that method.
Record keeping
Written records can be stored by any means as long as:
• The information is readily accessible, in a format that can be easily reused; and,
• The integrity of the information can be maintained.
Payment Methods
Payment methods should only be prescribed by law where necessary to achieve a policy
outcome.
These principles incorporate feedback received during the consultation process, noting
that overall the feedback received was supportive of the principles and a principles-
based approach. The 'written communication with stakeholders' principle was
amended to account for specific requirements regarding communicating with
shareholders, in order to match the temporary reforms put in place under the
Corporations Act.
In other circumstances, it is proposed that consumers would need to express their
preference for electronic communications. Some stakeholders would prefer not to be
required to seek consent. This would be a matter for consideration as part of any
review of the ETA, as this proposal seeks to achieve consistency with the ETA -
recognising the benefits that stakeholders such as the Insurance Council of Australia
and the Australian Banking Association raised during consultation regarding achieving
consistency in laws.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
The Australian Banking Association supported the principles and encouraged Treasury
to go further and introduce processes by which Treasury portfolio agencies share a
consistent and coordinated approach to data collection. This issue is outside of the
scope of this proposal.
Legislation Package 1
Legislation Package 1 reforms would address a number of priority pain points raised
by businesses and comprise amendments that are considered to be 'implementation-
ready'.
The following reforms comprise Legislation Package 1:
No. Proposed reform
1. Remove requirements for the publication of selected notices to be in
newspapers.
This reform would provide businesses and regulators greater flexibility to
publish notices using the most appropriate medium. Regulatory guidance
would be provided on what is the most appropriate medium and how
regulated parties can satisfy publishing requirements. It is anticipated that
mediums such as websites and social media would be used for publishing
notices while the option to publish in newspapers would still be available,
should regulated parties choose to do so.
Businesses and regulators may also choose to notify their customer or
client directly. For example a bank may choose to publish an interest rate
change on their website and also directly notify their customers through
their primary method of communication as per the current requirements.
There are some notices where it may remain more appropriate to have a
dedicated centralised repository and publishing mechanism; such notices
would not be considered in this Package.
Option 3 contemplates how those circumstances would be addressed.
2 Amend the Corporations Act 2001 and related legislation to allow non-
meeting materials to be sent to shareholders electronically (building on
changes that allow meeting materials to be sent electronically).
This reform would adopt the same principles used in the temporary
Corporations Act 2001 reforms relating to the sending of meeting
materials electronically.
3. Amend the Corporations Act 2001 and related legislation to allow
takeover notices to be sent to shareholders electronically (building on
changes that allow meeting materials to be sent electronically).
This reform would adopt the same principles used in the temporary
Corporations Act 2001 reforms relating to the sending of meeting
materials electronically.
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Regulation Impact Statement
No. Proposed reform
4. Amend the requirement for companies to contact lost shareholders in
writing as per the Corporations Act 2001 and ASIC Instrument 2016/187.
It is proposed that where a company has been unable to contact a
shareholder multiple times using the shareholder's preferred method of
communication, the company can then use an alternate method of
communication. If the alternate method of communication also fails, they
can stop sending the shareholder notices. For example, if a shareholder's
preferred method of communication is paper-based and the company
sends multiple notices via post which are returned, they can attempt to
contact the shareholder via an alternate method (for example, email, text
message, phone). If the use of alternative methods of communication also
fails, the company would no longer be required to send notices to the
shareholder.
If a shareholder who has been deemed 'lost' notifies the company of their
new residential address or email address the company would be required
to send notices to the shareholder again using the shareholders' preferred
contact method.
This proposal benefits companies as they would no longer be required to
send member notices to addresses they know the person is no longer
residing at for six years. Shareholders benefit by this reform as they are
more likely to receive notices relating their shareholdings as companies
would be able to nominate and use multiple methods of communication,
if available.
5. Amend the National Consumer Credit Protection Act 2009, National
Credit Code and related legislation to streamline communications with
consumers, including, but not limited to:
• consider where changes are required to ensure customers can
provide verbal consent to receive electronic communications;
- This proposed measure aims to provide credit consumers with
greater flexibility in advising businesses on whether they
consent receive electronic communications.
- Credit consumers would still be able to use written methods to
update their address while also providing an additional option
of being able to consent verbally if preferred.
• allow changes of address over the phone - for example, in situations
where a consumer has called their bank to make other transactions or
inquiries, and where it would be convenient to also update address
information;
- This proposed measure would allow credit consumers to update
their address verbally. This would make it easier for consumers
to update their address, such as when they call a bank to
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
No. Proposed reform
undertake other business and would improve the likelihood of
them receiving notices.
- Credit consumers would still be able to use written methods to
update their address.
• remove prescriptive detail in the format of consumer warnings to
accommodate digital product disclosure statements; and
- At present, prescriptive detail providing consumer warnings
needs to be provided inside a black box on the form to ensure
that it is brought to the consumer's attention. Stakeholders have
advised that this prescriptive format restricts them from fully
utilising technology for these documents.
- Under this reform, the warning would still need to be brought
to the specific attention of consumer to ensure they are aware
of risks but would be outcome-based, changing the language to
ensure ease for both written and electronic documents. This
reform does not propose to not change the wording associated
with the warning.
- This reform would make it easier for credit licensees to digitise
warnings, lowering their costs while ensuring adequate
protection for consumers is retained.
• the nominated address for customers can be changed verbally.
- The nominated address is the consumers preferred contact
address for communication such as email or residential
address.
- This proposal would allow consumers to update it verbally,
making it easier for consumers to receive their notices. Credit
consumers would still be able to use written methods to update
their preferred address, be it physical or electronic, for
receiving communication.
Any reforms would be subject to appropriate security and privacy
protections for consumers.
6. Amend the Corporations Act 2001 and related legislation to allow
proprietary companies with a sole director and no company secretary to
execute documents.
This proposal would ensure proprietary companies with a sole director
and no company secretary can execute documents electronically, using
the same principles provided for companies under the temporary reforms.
This small class of companies would have benefitted from the temporary
relief when it was granted, had they been captured under a relevant
provision of the Corporations Act.
77
Regulation Impact Statement
No. Proposed reform
7. Amend Treasury portfolio legislation to improve technology neutrality for
signature and witnessing requirements, provided the method used is
consistent with the proposed principles, particularly:
• fulfilling the functions of identifying the person; and
• indicating their intention in respect of the information
communicated.
This reform would adopt the same principles used in the Electronic
Transaction Act 1999 and temporary Corporations Act 2001 measures
relating to the electronic execution of documents, providing consistency
across legislation where possible.
Originally, signatures were used to verify a person's identity and their
intention to be bound to the terms in the document. Electronic signatures
are appropriate in circumstances where they can satisfy both of these
requirements to the same or a greater extent.
8. Amend Treasury portfolio legislation to improve technology neutrality for
payments where there are only non-electronic payment options in a
particular form or place.
This reform would provide consumers with an electronic payment option
where the law currently prescribes non-electronic methods only. This
reform would give consumers greater choice in how they do business or
satisfy regulatory obligations.
4.0 What is the likely net benefit for each option?
With more than 2.8 million registered companies in Australia in 2020, the benefits of
enabling more modern forms of business communication would be felt broadly across
the economy.32
Option 1: Maintain the status quo
As this option would maintain the status quo, and therefore require no regulatory or
legislative changes: there are no new regulatory costs associated with this option. This
option would result in a continuation of current requirements, meaning that businesses
would continue to operate as usual and would not have to change any ways of working.
While this option maintains the current corporate governance standards in the law, it
does not achieve the Government's objectives of promoting the effective use of
technology to deliver upon those standards.
32
ASIC, https://asic.gov.au/regulatory-resources/find-a-document/statistics/company-
registration-statistics/2020-company-registration-statistics/#total
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Accordingly, companies would continue to incur existing costs associated with these
mechanisms, even when there is cheaper technology available, and would have limited
additional incentives to improve that technology and its usage.
This option also results in businesses missing out on more timely communication with
consumers and regulators due to the higher costs of transacting in paper-based formats.
It also has the potential to make permanent a situation where some businesses benefit
from being able executing documents electronically, while others cannot.
Given the Government's commitment to finalising permanent changes to allow
electronic signing and sending of documents prior to the expiry of the temporary
arrangements under the Corporations Act on 15 September 2021, maintaining the
status quo would not allow more companies to be able to execute documents
electronically. This would hamper the full benefits of the reform given greater
efficiencies can be achieved when both parties to an agreement can execute
electronically, should they wish to do so.
Feedback arising from the public consultation process demonstrated that this option is
not preferred by stakeholders, nor would it provide for greater consistency and
flexibility across Treasury portfolio legislation.
Option 2: Take an incremental approach by building on the
reforms to virtual meetings and electronic execution of
documents provided through the temporary relief under the
Corporations Act.
In response to the pandemic, the Government put in place temporary reforms to the
Corporations Act to allow for virtual meetings and electronic document execution.
The temporary relief changes allows companies to convene annual general meetings
under the Corporations Act entirely online rather than face-to-face. The changes also
give businesses certainty that when company officers sign a document electronically,
the document has been validly executed.
The feedback that the Government has received from industry is that the temporary
relief changes helped them continue to operate through the coronavirus crisis.
Feedback has suggested that building on the reforms provided through the temporary
relief under the Corporations Act would provide a regulatory benefit to businesses and
other stakeholders. The benefits extend to both businesses and regulators, through
reduced costs, as well as consumers and investors who benefit from more timely
interaction with businesses and greater flexibility in the method of communication
through which the interaction occurs.
There are two proposed reforms under this option: allowing non-meeting materials
under the Corporations Act to be provided electronically and providing electronic
execution of documents by proprietary companies with a sole director and no company
secretary.
79
Regulation Impact Statement
Non-meeting materials
Allowing non-meeting materials under the Corporations Act to be provided
electronically would provide consistency in the regulation of meeting and non-meeting
documentation. Building on these reforms and allowing non-meeting materials to be
sent electronically, would lead to significant benefits being realised.
The benefits of this option are reliant on the uptake of electronic communication by
shareholders as the ability to opt-in to hardcopy documentation would remain. It is
important to retain this ability to ensure that shareholders are able to receive
communications in their preferred format. The benefits of this option are also reliant on
shareholders providing their email addresses to public companies.
An estimated 53% of 6.6 million shareholders have not elected to receive notices from
public companies electronically. If we assume (conservatively) that companies send on
average four non-meeting notices to shareholders each year, the estimated regulatory
savings from this reform is $27.7 million per year.
Methodology used to estimate regulatory savings for non-meeting
materials - Option 2
Regulatory savings come from public companies shifting from printing and posting non-
meeting notices to sending documents electronically.
Based on the range of industry estimates provided through consultation, the following
assumptions were made to determine the regulatory savings of allowing legal requirements
in respect of non-meeting notices to be met using technology:
• Public companies would be able to email approximately four non-meeting
materials to around 53% of the approximately 6.6 million shareholders per
year who have not elected to receive notices electronically.
• The number of mailings is a conservative estimate. It should be noted that
the volume of correspondence can differ depending on the operation of the
business and the documents that are combined with meeting materials or
combined for postage.
• 2% of shareholders are assumed to wish to continue receiving hardcopy
notices.
• Printing and postal costs per letter are estimated at $2.
• Average electronic communication costs per thousand were estimated at
$450.
Electronic execution of documents by proprietary companies with a sole
director and no company secretary
There are an estimated 70,000 active proprietary companies with a sole director and no
company secretary33 that would benefit from being able to electronically execute
documents under the Corporations Act. This measure would reduce regulatory burden
33
ASIC and ABS data to define approximate number of actively trading companies.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
and increase the benefits of the temporary reforms for those businesses already able to
do so and are engaging with this type of proprietary company. Companies would still
be able to use physical signatures, should they choose to do so. While this small class
of companies would have benefitted from the temporary relief when it was granted,
they were not captured under a relevant provision of the Corporations Act. There was
no deliberate policy decision made to include or exclude this category of company at
that time.
Businesses would be able to reduce costs related to the need to travel to sign and
witness documents physically along with the costs of transporting documents to
recipients. Should social distancing and other health measures remain as a result of the
COVID-19 pandemic, or if another disruptive event occurs, the benefits of this reform
are likely to be higher as the increased need to communicate electronically would
remain. The increased uptake of IT since COVID-19 also increases the likelihood that
businesses would maximise their investment.
A possible risk of this option is that a person may execute a document without
appropriate the authority. However, this risk applies whether the document is executed
electronically or physically and as such the document would not be valid. Furthermore,
electronically executed documents are more likely to be easily traceable providing an
easier method to determine whether the document was validly executed.
The estimated average regulatory saving as a result of allowing electronic document
execution for companies with a sole director and no company secretary is estimated at
$8.6 million per year.
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Regulation Impact Statement
Methodology used to estimate regulatory savings for sole directors
with no company secretary - Option 2
To determine the costs associated with executing a document in person, the following
assumptions have been incorporated into the methodology:
• There are an estimated 70,000 active companies with a sole director and no
company secretary in Australia. Assumes 50 per cent of directors have
already provided for electronic execution in their constitution and do so
already.
• On average, 50 per cent of businesses travel to execute one document every
fortnight.
• If the director is working from home or in disparate locations, the director
is required to commute one hour to execute a document.
• OBPR work-related labour cost of $73.05 per hour.
• Time cost of printing and other mailroom activities involved in sending a
letter is approximately $6.62.
• Printing and postal costs per actual letter are respectively $1.50 and $2.20.
As for electronic document execution, the following assumptions have been incorporated
into the methodology:
• Sophisticated web-based signing services are an optional extra which are not
required by companies that wish to electronically execute documents
• 50 per cent of directors would be working from home and therefore are
required to travel to execute documents.
• It takes three minutes to send an electronic document.
• 50% prefer to execute in hard copy.
• 1 deed is executed each year.
Overall, Option 2 results in an average saving of $36.4 million per year.
Regulatory burden estimate table
Average annual regulatory costs (relative to status quo)
Change in costs Business Community Individual Total change
($ million) organisations in cost
Total, by sector -$36.4 0 0 -$36.4
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Option 3: Adopt a principles-based approach to the reform of
one or more categories of business communication in
Treasury portfolio legislation
Option 3 is a more substantial reform program, which incorporates the reforms in
Option 2, but seeks to commence a multi-year program of work applying consistent
principles to improve the technology neutrality across Treasury portfolio legislation.
In addition to the benefits discussed in Option 2, requirements for businesses and
regulators to publish in newspapers would be made technology neutral. Benefits would
arise in a reduced cost to businesses and regulators for publishing in newspapers,
which for interest rate changes under the NCCP Act alone are estimated at $1 million a
year.34 Regulators and businesses are already engaging in providing notifications
through other means to ensure they are reaching their target audience.
Public companies would benefit from a reduced obligation to send notices to lost
members for six years. This not only provides benefits for the company in terms of
printing and postage costs, but also to the residents of addresses from receiving
repeated mail for people who do not reside at the address. Takeover notices would also
be able to be sent electronically, providing benefits for both the companies involved in
the takeover bid and their shareholders.
Consumers and credit licensees under the NCCP Act and associated legislation would
benefit from increased ease in being able to amend residential addresses and
communicate electronically. This is important for both the customer and credit
provider, as the customer is obligated to provide the credit provider with any change of
address and a credit provider is required to issue notices to the customer's last known
residential address.
Expanding the range of documents to be executed electronically would have significant
benefits for the regulated population. It is difficult to quantify the benefits of these
changes due to the significant number of provisions across multiple pieces of
legislation. Legislation requiring a signature generally require the signee to physically
sign documents as a statement of both their identity and agreement to the terms
outlined in the document.
There are provisions in Treasury laws that still require a physical signature and do not
allow for the use of electronic means of identification and verification of agreement.
The proposal is to modernise signature requirements to allow technology to be used to
verify a person's identity and receive their agreement, provided that the electronic
method used provides at least the same level of validity as a physical signature and
where providing for electronic execution supports the policy intent.
An initial search of these provisions across Treasury legislation returned over 200
individual provisions that relate to signatures and witnessing requirements. Signature
provisions govern interactions between a wide spectrum of stakeholders, including
businesses, consumers and government agencies. Reliable parameters to quantify the
34
Cost modelling by Accenture.
83
Regulation Impact Statement
regulatory benefits for each affected stakeholder under each provision are difficult to
ascertain, as this would involve an inquiry on the specific costs on each individual
party for each relevant provision with a range of different variables and circumstances.
The savings estimated from the temporary reforms to the Corporations Act currently in
place, were around $435 million per year, and provide an indication of the significant
savings that can be achieved through this type of reform.35 A large driver of savings in
this area is the reduced cost relating to travel to sign documents in wet signatures, as
well as the need to have multiple parties present at the same time, where relevant.
As discussed above, a risk to expanding electronic execution for this option is that a
person may execute a document without appropriate authority. However, this risk has
potential to be realised when using either wet or physical signatures. Again,
electronically executed documents are more likely to be easily traceable providing an
easier process to determine whether the document was validly executed.
Analysis to date has identified very few provisions mandating payments with no
electronic options in primary legislation. These provisions do not have an identified
regulatory burden due to being redundant. The Reserve Bank of Australia estimated in
2014 that cheques are the most resource intensive of the payment methods at a cost of
over $5, significantly higher than cash at 0.70 cents and debit and credit cards at 0.94
cents and $1.34 respectively.36
Stakeholders were supportive of the proposed measures for Legislation Package 1 as
outlined in the table below.
35
Corporations Amendment (Virtual Meetings and Electronic Communications) Bill 2020 -
Exposure Draft Explanatory Materials (treasury.gov.au)
36
The Evolution of Payment Costs in Australia (rba.gov.au), p17.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Stakeholder feedback on Legislation Package 1
No. Current Future state Stakeholder Comment
state view
1.
Treasury Treasury Stakeholders Regulatory
portfolio portfolio are supportive obligations to
legislation legislation of this reform. publish notices
requires notices would be The National would remain
to be published amended to Australia Bank where relevant.
in newspapers. allow notices, if advised that Regulated
still required, to publishing parties would
For example,
be published by notifications in not be restricted
the
the most newspapers is from publishing
Corporations
appropriate no longer the in newspapers,
Act 2001, the
method. For most effective should they
National
example, on way of wish to do so.
Consumer
websites, in providing
Credit If needed, more
social media, in transparency to
Protection detailed
electronic the general
Act 2009 and regulatory
distribution lists, public on
the Competition guidance would
and/or in pricing changes
and Consumer be provided to
newspapers. to banking
Act 2010. ensure that
products and
regulated parties
that online
are aware of
notifications
their
were now a
obligations.
more effective,
timely method.
The Financial
Services
Council argued
that newspaper
advertising
requirements in
relation to death
claims are
expenses
incurred by the
deceased's
dependants at a
time that is both
inappropriate
and
burdensome
while providing
limited to no
benefits.
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Regulation Impact Statement
No. Current Future state Stakeholder Comment
state view
2. Companies are Amend the Stakeholders Reduction in
required to post Corporations are supportive cost for
notices and Act to allow of this reform. business.
materials to electronic National Increase in the
shareholders in distribution of Australia Bank timeliness and
hard-copy notices and advised that accuracy of
(other than materials to electronic receipt of
those related to members. The communication notices and
meetings). option for provides a materials for
shareholders to number of shareholders.
receive notices benefits for
and materials in shareholders,
paper would be including
maintained. providing for
engagement
with
shareholders on
a timelier and
more frequent
basis.
2.
Takeover Allow all Stakeholders Reduction in
notices under takeover are supportive cost to business
Chapters 6 and documentation of this reform. in takeover
6A of the to be sent Link Group process.
Corporations electronically, advised that Increase in the
Act must be where email offers timeliness of
distributed in shareholders much more takeover
hardcopy. have previously reliable delivery processes for
elected to to the investor, business and
receive notices including shareholders.
by email under tracking of the
other sections of rate of emails
the Corporations that do not
Act. bounce, that are
opened and
whose content
is accessed.
3.
Businesses are Amend Stakeholders Reduction in
required to send legislation to are supportive cost for
notices to the reduce the of this reform. business. Cease
last known number of times The aggravating
address of a notices must be Governance residents by
'lost' member sent. Add the Institute of repeatedly
for six years requirement to Australia sending
under the attempt contact advised that unwanted mail.
Corporations by another despite mail
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
No. Current Future state Stakeholder Comment
state view
Act and ASIC method of being returned
Instrument communication, year after year
2016/187. if available, with a range of
before ceasing messages with a
notifications. range of
messages
indicating the
person is no
longer at the
address, they
are still required
to send notices
to the address.
4.
Credit licensees Ensure Stakeholders Reduction in
are required to customers can are supportive cost to business
communicate in provide verbal of this reform. and removal of
writing with consent to A banking peak a pain point for
customers under receive body advised customers.
the NCCP, the electronic that if a
The requisite
National Credit communications; customer has
warnings would
Code and the change address not notified
not change and
National by phone; their change of
would still be
Consumer remove the address in
required in the
Credit requirement for writing, credit
future state.
Protection certain licensees can be
Regulations disclosures to be required to send
2010. in contained in documents to a
boxes (reg 74 of known wrong
National address.
Consumer
Credit
Protection
Regulations
2010); allow the
nominated
address of
customers to be
changed
verbally.
6. Proprietary Allowing Stakeholders This regulatory
companies with proprietary are supportive change would
a sole director companies with of this reform. facilitate
and no a sole director This electronic
nominated and no company amendment document
company secretary access rectifies an execution for a
secretary are to the document anomaly in the small class of
excluded from execution rules legislation that companies.
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Regulation Impact Statement
No. Current Future state Stakeholder Comment
state view
electronic in s.127 of the currently only
execution of Corporations allows a
document rules Act. director of a
in s127 of the proprietary
Corporations company to
Act. This class execute a
of company is document if
denied the they also have a
benefit of company
changes to secretary. A
facilitate the large legal firm
electronic noted that the
execution of inability for
documents. sole directors
without a
company
secretary to sign
electronically
under s127
stops it and the
counterparties
from the
benefits of
electronic
execution. This
change would
ensure the
document
execution rules
from the
COVID-19 are
also provided
for this small
class of
companies.
5.
A substantial Treasury would Stakeholders These change
number of amend portfolio are supportive would allow
provisions legislation to of this reform. signature
across Treasury improve The Australian requirements to
portfolio technology Institute of be uniform,
legislation neutrality for Company fulfilled with
require signature and Directors noted greater ease,
signatures to be witnessing that they thus reducing
hand written requirements, support making costs to
and witnessed. creating uniform electronic business.
Requirements application to signatures
are not uniform. permanent for a
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
No. Current Future state Stakeholder Comment
state view
Many the proposed broader range
provisions principles. of legal and
require wet company
signatures, documents
some do not. In across all
addition, many Treasury
Treasury portfolio laws,
portfolio Acts including
are exempt from permitting all
the operation of documents and
the Electronic deeds to be
Transactions created and
Act 1999. signed in
electronic form
by
organisations
and individuals.
6.
Treasury Treasury would Stakeholders Would increase
portfolio develop are supportive payment
legislation can legislation that of this reform. flexibility for
restrict payment provides more The Australian business and
methods forcing flexibility in the Banking customers.
people to use or choice of Association
accept cheques, payment advised that it
money orders or methods across considers that a
cash. Treasury program of
portfolio payment
legislation. neutrality
reforms
encompassing
the identified
pieces of
legislation
should be
prioritised by
Treasury.
Methodology used to estimate regulatory burden of early reforms -
Legislative Package 1 of Option 3
No. Reform
1. 1. Publishing notices in newspapers
Regulatory savings come from removing the cost of newspaper advertising and placing
notices on websites and in social media as part of business-as-usual.
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Regulation Impact Statement
• Based on the range of industry estimates provided through consultation, the
following assumptions were made to determine the regulatory savings of
removing the requirement for notices to be published in newspapers:
• The estimated cost of publishing an advertisement in a national newspaper is
$4,500 per day.
• The cost of a public notice in a newspaper is estimated at $200.
• In the future state, businesses can place notices on their website or on a public
register and/or advertise across social media depending on what is appropriate and
required under the legislation.
• In each case, newspaper publishing requirements would be triggered by different
events. For example, the National Consumer Credit Protection Act 2009 requires
credit providers to publish changes to interest rates, fees and charges in national
newspapers.
- Two newspaper notifications per bank.
- 112 credit agencies publicly listed under the National Credit Code (ASIC),
75% (84) are assumed to notify consumers through newspaper notifications.
- 235 instances per year.
The overall estimated regulatory saving for this option is approximately $1 million per
year (over 10 years).
2. 2. Non-meeting materials
Regulatory savings come from public companies shifting from printing and posting
non-meeting notices to sending documents electronically.
Based on the range of industry estimates provided through consultation, the following
assumptions were made to determine the regulatory savings of allowing legal
requirements in respect of non-meeting notices to be met using technology:
• Public companies mail in hardcopy at least four non-meeting materials annually
to around 53% of the approximately 6.6 million shareholders who have not
elected to receive notices electronically. The volume of correspondence can differ
depending on the operation of the business and the documents that are combined
with meeting materials or combined for postage.
• Post implementation of Legislation Package 1, 2% of shareholders are assumed to
continue their preference of receiving non-meeting materials in hard copy.
• Printing and postal costs per correspondence are estimated at $2.
• Average electronic communication costs per thousand were estimated at $450.
The estimated regulatory savings from this reform are estimated at approximately
$27.7 million per year.
3. 3. Takeover notices
• The process of sending bidder and target statements and shareholder voting is
conducted in paper where shareholders have not elected to receive
communication electronically. Regulatory savings arise from distributing
takeover statements to all shareholders electronically.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
• There was an average of 26 takeovers a year over the last three years.
• Assumed average of 5,693 shareholders in each company.
• The manual process requires design, printing and mailing costs for bidder and
target documents and postal return of shareholder votes.
• Bidders and targets send bid statements to shareholders.
• Offers are can be extended and bid prices increased three or more times during a
takeover cycle.
• The design of bidder and target statements costs $280.
• The cost of printing and posting target and bidders statements of up to 180 pages
is $10 per shareholder.
• The cost of printing and posting letter sized documents for extended offers and
bid price increases is $3 per shareholder.
• Savings arise from delivering documents by email saves on printing, mailing and
manual tabulation of shareholder returns
• The cost of processing direct electronic acceptances from shareholders is $2.50
per shareholder.
• Average electronic communication costs per thousand were estimated at $450.
The overall estimated regulatory saving for this option is approximately $6.2 million
per year (over 10 years).
4. ASIC Instrument 2016/187 - send annual reports for 6 years to lost members
Regulatory savings arise from ceasing to send annual reports to lost shareholders after
2 years and two further attempts to contact the shareholder.
• There are approximately 6.6 million shareholders in Australia.
• Of those shareholders, approximately four percent of shareholders are considered
lost.
• The average cost of printing and posting a package of large documents is $6.62.
• The average cost of sending documents electronically is $1.22.
• The average cost of attempting to contact shareholders twice to confirm address is
S4.88.
The overall estimated regulatory saving for this option is approximately $2.8 million
per year (over 10 years).
5. National Consumer Credit Protection Act 2009, Regulations 2010 and National Credit
Code
5.1 Ensure credit customers can provide verbal consent to receive electronic
communications.
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Regulation Impact Statement
Regulatory savings arise from not having to print and post written communications to
credit customers.
• There are approximately 13,600,000 credit card and charge accounts in Australia.
• Assumes approximately 50% of credit customers already receive electronic
communication and 10% per year are changed.
• Assumes 75% of customers bank online and process changes through internet or
mobile banking, with the remaining 25% visiting branch or using the phone.
• Assumes the average cost of manually processing a written request to change
method of communication is $6.09.
• Assumes average cost of processing a phone request to change method of
communication is $2.44.
• The overall estimated regulatory saving for this option is approximately $0.7
million per year (over 10 years).
5.2 Allow for change of address and change of nominated address over the phone.
Regulatory savings arise from businesses being able to send communications to the
correct address in the first instance and avoiding the expense of handling returned mail
and 'lost' customers.
For the purposes of this estimate of benefits, it is assumed that in instances where
customers are changing address by phone, this would replace online methods. We
assume that a similar amount of time is taken by the customer in both circumstances
and therefore no time savings are attributed in this costing.
• There are 13,600,000 credit card and charge card accounts in Australia.
• Of those, it is assumed that approximately 1 million customers may wish to
change their address each year.
• The time taken for consumers to complete change of address forms on the internet
and over the phone are very similar; the benefit to consumers relates instead to
ensuring they don't miss out on relevant information. The benefit to consumers of
having access to correct information is not quantified due to unavailable data.
• The cost of processing written change of address requests is approximately $6.09.
• The cost of processing a change of address request over the phone is $2.44.
The overall estimated regulatory saving for this option is approximately $1 million per
year (over 10 years).
5.3 5.3 Remove black boxes around warnings from written credit documents and place
warnings elsewhere in documents to allow greater clarity in digital presentation
Regulatory savings are not able to be costed for this reform and any likely savings
would be offset by the need to revise the credit document.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
6. Sole director companies with no company secretary can execute documents
electronically.
To determine the costs associated with executing a document in person, the following
assumptions have been incorporated into the methodology:
• There are an estimated 70,000 active companies with a sole director and no
company secretary in Australia. 50% of directors have already provided for
electronic execution in their constitution and do so already.
• On average, 50% of businesses travel to execute one document every fortnight.
• If the director is working from home or in disparate locations, the director is
required to commute one hour to execute a document.
• OBPR work-related labour cost of $73.05 per hour.
• Time cost of printing and other mailroom activities involved in sending a letter is
approximately $6.62.
• Printing and postal costs per actual letter are respectively $1.50 and $2.20.
• As for electronic document execution, the following assumptions have been
incorporated into the methodology:
• Sophisticated web-based signing services are an optional extra which are not
required by companies that wish to electronically execute documents
• 50 per cent of directors would be working from home and therefore are required
to travel to execute documents.
• It takes three minutes to send an electronic document.
• 50% prefer to execute in hard copy.
• 1 deed is executed each year.
The estimated average regulatory saving as a result of allowing electronic document
execution for companies with a sole director and no company secretary is estimated at
approximately $8.6 million per year (over 10 years).
7. Signatures and witnessing.
Preliminary searches of Treasury portfolio legislation reveal that there are a substantial
number of provisions that relate to signatures and witnessing. Signature requirements
across legislation are not uniform. There are 19 pieces of Treasury portfolio legislation
that are exempt from the operation of the Electronic Transactions Act 1999, meaning
that electronic signatures are cannot be accepted under relevant provisions. Many
stakeholders raised signatures as a pain point in consultation.
It is not possible to determine the regulatory benefit of removing requirements for wet
signatures because we have been unable to obtain sufficiently reliable parameters
across so many provisions. While final estimates are yet to be calculated, initial
Treasury estimates of approximately $445 million for allowing companies to
electronically execute documents were previously consulted on.
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Regulation Impact Statement
8. Payment methods - cheques, money orders and cash.
There a few identified provisions which solely require payment by cheque, cash or
money order. Of those that have been identified, the provision was transitional or
procedures have been put in place to provide for payment via other mechanisms.
There are no identified regulatory saving for this option at this time.
The estimated regulatory savings of implementing the first six reforms of Legislation
Package 1 in Option 3 is approximately $48.1 million per year.
Regulatory burden estimate table
Average annual regulatory costs (relative to status quo)
Change in costs ($ Business Community Individuals Total change in
million) organisations cost
Total, by sector -$48.1 0 0 -$48.1
5.0 Who did you consult and how did you incorporate
feedback?
Consultation process
The Treasury undertook a public consultation process with stakeholders including
businesses, law and accounting bodies, community and consumer protection
organisations, Government agencies and Treasury portfolio bodies. Stakeholder
feedback has been incorporated into the relevant options.
The purpose of public consultation was to identify areas of business communication,
develop principles to guide legislative change, identify legislative provisions for
amendment, and prioritise reforms.
Options were also informed by the Modernising Business Communication Expert
Panel, established to provide guidance on the most promising areas of reform and
ensure meaningful benefits are realised for business and the Australian community.
Members of the Expert Panel are drawn from the Australian Shareholder's Association,
the Institute of Public Accountants, Emerson Economics, the Australian Institute of
Company Directors, Johnson Winter & Slattery, the Australasian Investor Relations
Association, the Governance Institute of Australia, the Australian Banking Association,
FinTech Australia and the Australian Payments Network.
Treasury also held targeted meetings to seek stakeholder views on areas of business
communication requiring reforms and to raise awareness of the Government's
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
technology neutral reform agenda and public consultation process. On
18 December 2020, the Government released a public consultation paper, which was
open for 10 weeks, closing on 28 February 2021.
Stakeholder feedback and submissions were collated, reviewed and analysed to
identify areas of business communication, inform principles to guide legislative
change, identify legislative provisions for amendment and to prioritise reforms.
Main themes in consultation
Submissions made through the public consultation process demonstrated strong
support for broad reform to selected Treasury portfolio legislation, noting the need for
a step-change from incremental changes in legislation to adapt to emerging
technologies towards a more agile, updated and fit-for-purpose regulatory
environment. Overall, stakeholders were strongly opposed to maintaining status quo.
For example, the Governance Institute of Australia noted that:
"As the last twelve months have demonstrated, technological progress and the uptake
of new technology by businesses and consumers is advancing rapidly. There are likely
to be technological solutions and ways of doing things not yet in existence, but which
will exist within a relatively short time which may again change the way businesses
and consumers operate and behave as radically as the changes experienced
during 2020. It is critical that legislation is technology and mode neutral to enable
businesses and consumers to respond to rapid technological change."
A number of submissions, including from banks and industry bodies such as the
National Australia Bank and the Australian Business Software Industry Association,
were supportive of principles-based guidance, rather than further prescription. These
views support technology neutrality in order to create consistency with how regulators,
businesses and consumers use technology to interact with each other.
Stakeholders across a variety of groups including the Governance Institute of Australia,
National Australia Bank agreed that the outcomes in response to the temporary
measures is encouraging and they view the advancement of digital technologies and the
opportunity to improve the technology neutrality of Treasury portfolio laws a priority
and correctly reflects the future path for business engagement and communication in
general.
Stakeholders acknowledged that consumers would benefit from improved technology
neutrality across selected Treasury portfolio legislation by providing consumers with
greater choice in determining how they receive communications. Creating technology
neutral regulation would address a number of priority pain points raised by businesses
by focussing on the intent and purpose of the business communication. This in turn is
likely to increase customer satisfaction by information being communicated in the
format the customer prefers, creating a more seamless experience.
Technology neutral reforms would not preclude consumers from using particular
methods of communication. Instead consumers would be offered greater flexibility. For
example, consumers that prefer traditional methods of communications such as paper
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Regulation Impact Statement
would still be able to receive communication in this format. Whereas consumers that
want to use electronic methods, but currently cannot because of prescriptive laws,
would be able to communicate using their preferred method.
For example, the Australian Shareholders' Association did not support forcing
shareholders fully online, but are supportive of an opt-in system for shareholders for
communication that they want to receive in hard copy.37
This approach ensures that legislative changes would support the needs of vulnerable
people, small businesses and other segments of society that may be less likely to
embrace digital technologies. This would occur by ensuring that more traditional
options such as paper-based communication are retained. For example, where a
shareholder or consumer cannot receive electronic communications, does not have the
ability to access online information or chooses to engage using paper-based
communication, businesses would need to provide the shareholder or consumer with
hard copy communication to meet their regulatory obligations.
In addition, small businesses would be able to make a commercial decision on whether
to take advantage of more electronic communications options and the advantages that
arise, or remain with current forms of communication without the cost associated with
information technology.
Stakeholders have raised the need to progress reforms in this area through other related
consultation processes. For example:
• The Australian Institute of Company Directors stated in a submission
to the Treasurer that ... '[t]o accelerate economic recovery, Australia
needs a regulatory environment that can adjust from crisis settings to
re-set for growth. Modernising Australia's corporate law is one clear
priority, with benefits to stakeholders and organisations across the
community.'38
• The Australian Banking Association has a 'new digital economy'
campaign stating that 'The COVID-19 lockdown has highlighted
century-old regulations slowing down commerce. The ABA is
currently working to enable people to get a mortgage and do business
digitally, including using electronic signatures.'39
• The Governance Institute 'strongly encourages Government to
embrace the opportunity to amend the Corporations Act to enable
companies to use technology to notify members that notices of meeting
and materials are available.'40
37
20201106Submission to Treasury re making online AGMs permanent ED.pdf
(australianshareholders.com.au)
38
aicd-letter-to-josh-frydenbergvirtual-agms-04112020.ashx (companydirectors.com.au)
39
A new digital econom...~https://www.ausbanking.org.au/campaigns/electronic-transaction-
reform/
40
Corporations Amendment (Virtual Meetings and Electronic Communications) Bill 2020
(Bill) (governanceinstitute.com.au)
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
Further consultation
Stakeholders would have a further opportunity to provide feedback on proposed
regulatory changes through consultation that would be conducted on exposure draft
bills. A number of the high priority areas for stakeholders would be progressed in
Legislation Package 2, which would be subject to a separate RIS due to the need to
undertake policy development, alongside further consultation with stakeholders on the
proposed approach.
For example, communicating with regulators was a priority for stakeholders, with a
desire for Government and regulators to be leading in this area and providing
consistency where possible. However, given the complexity and size of potential
reforms in this category, obtaining optimal outcomes would require consultation across
Treasury regulators and the identification of streamlining options where possible.
Broader implications of Commonwealth legislation also need to be considered and
addressed as needed.
6.0 What is the best option from those you have
considered?
Option 3 is the preferred option because it provides the greatest opportunity to address
the longstanding issue of a lack of technology neutrality in Treasury portfolio
legislation. Option 3 would reduce the regulatory burden on businesses, consumers and
regulators in the most consistent and clear way in a timely fashion.
Under Option 3 businesses, consumers and regulators would have increased flexibility
and greater ability to harness digital technologies to increase efficiency and
productivity.
For example, one stakeholder advised that the cost of a recent takeover bid was over
$700,000 and estimated savings of approximately 60% could be achieved if the
Corporations Act provisions were technology neutral. It would also potentially provide
investors with critical information in a quicker manner with greater surety of receipt, as
email bounce backs are often instantaneous. With an average of 26 takeovers in the last
three years, takeovers over the last three years, the regulatory savings from takeovers
alone could be substantial.
Option 1 would not achieve the Government's goals or meet stakeholder expectations.
As the case for change is clear and compelling, leaving legislation in the current state
would cause an increasing burden on business and limit their ability to compete in the
global economy.
While Option 2 would reduce red tape and modernise business communication through
building on the temporary relief provided under the Corporations Act, it would not
address stakeholder concerns or provide benefits across the regulated population.
Option 2 would also not achieve the objectives of the Government or meet the
expectations of stakeholders.
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Regulation Impact Statement
The preferred option has been informed by the regulation impact assessment process.
An early assessment RIS was prepared to inform Government consideration prior to
the announcement of its commitment to modernise business communications on
18 August 2020.
The early assessment RIS informed the development of the draft principles and the
options and analysis put forward in the public consultation paper.
The proposed Implementation Plan was informed by the development of this decision
RIS, along with the public consultation process and used to inform Treasury's advice
to Government on how to proceed with reforms to modernising business
communications.
7.0 How will you implement your chosen option?
Subject to policy approval, the chosen option would be implemented via permanent
legislative changes to Treasury Portfolio legislation and other related subordinate
instruments using a principle-based approach.
Improving the technology neutrality of Treasury portfolio legislation would require
careful analysis and implementation planning. The breadth and complexity of Treasury
portfolio legislation and the nature of the business environment today means that
changing one area of communication or piece of legislation may significant flow-on
effects in other areas. For example, the Corporations Act has significant interaction
with the ASIC Act.
There are a number of considerations in improving technology neutrality that need to
be observed when implementing any changes. A priority is to ensure that business and
other regulated entities can understand their responsibilities in order to continue to
meet their regulatory obligations in the midst of transition, recognising that uncertainty
costs time and money. This may require providing a transitional period to provide
adequate time for businesses to change their internal processes, should they wish to do
so.
The degree to which transitional arrangements are required would depend on the extent
to which businesses and consumers would be required to make adjustments to their
processes and behaviours. The proposal does not require changes and instead would
remove obstacles to options that could facilitate improved ways of communicating.
The need for transitional arrangements would be best addresses by relevant businesses,
provided sufficient notice of pending legislative changes is provided.
A key challenge in implementing this proposal would be to maintain consistency in the
application of the proposed principles-based approach. To address this, Treasury would
foster a whole-of-portfolio approach and, where appropriate, a whole-of-government
approach to legislative development.
Reforms to legislation, if and when passed, would be subject to ongoing monitoring to
ensure they operate effectively. We would continue to engage with stakeholders to
determine the effectiveness of the new processes.
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Treasury Laws Amendment (Modernising Business Communications) Bill 2022
A formal review of the efficacy and impact of the changes would commence within
two-years of completion of the project.
99