Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth)

Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004

No. 103, 2004

An Act to amend the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, and for related purposes

Contents

Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004

No. 103, 2004

An Act to amend the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, and for related purposes

[Assented to 30 June 2004]

The Parliament of Australia enacts:

1Short title

This Act may be cited as the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004.

2Commencement

1. (1)

   Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table.

Commencement information
Column 1	Column 2	Column 3
Provision(s)	Commencement	Date/Details
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table	The day on which this Act receives the Royal Assent.	30 June 2004
2. Schedule 1	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
2A. Schedule 2, Parts 1 and 2	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
2B. Schedule 2, Part 3	1 January 2005.	1 January 2005
2C. Schedule 2, Part 4	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
2D. Schedule 2A	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
3. Schedule 3	A single day to be fixed by Proclamation. However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period.	26 July 2004 (Gazette 2004, No. GN28)
4. Schedule 4, Part 1	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
5. Schedule 4, Part 2	The day after this Act receives the Royal Assent.	1 July 2004
6. Schedule 4, Part 3	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
7. Schedule 4, Part 4	The day after this Act receives the Royal Assent.	1 July 2004
8. Schedule 4, Part 5	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
9. Schedule 5	The later of: (a) 1 July 2004; and (b) the day after this Act receives the Royal Assent.	1 July 2004
10. Schedules 6 and 7	The day after this Act receives the Royal Assent.	1 July 2004
11. Schedules 8 and 9	Immediately after the commencement of the provisions covered by table item 9.	1 July 2004
12. Schedule 10	1 January 2005.	1 January 2005
13. Schedule 11	Immediately after the commencement of the provisions covered by table item 2.	1 July 2004
13A. Schedule 11A	1 January 2005.	1 January 2005
14. Schedule 12	The day on which this Act receives the Royal Assent.	30 June 2004

Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.

1. (2)

   Column 3 of the table is for additional information that is not part of this Act. This information may be included in any published version of this Act.

3Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1Audit ReformPart 1Audit oversight

Australian Securities and Investments Commission Act 2001

1

Paragraph 1(1)(d)

After “Standards Board”, insert “, an Auditing and Assurance Standards Board”.

2

Subsection 5(1)

Insert:

AUASB means the Auditing and Assurance Standards Board.

3

Subsection 5(1)

Insert:

auditor independence requirements means the auditor independence requirements provided for in:

1. (a)

   the Corporations Act; and

2. (b)

   the codes of professional conduct.

4

Subsection 5(1)

Insert:

Australian auditor means:

1. (a)

   an individual auditor; or

2. (b)

   an audit firm; or

3. (c)

   an audit company;

that is conducting, or that has conducted, audits undertaken for the purposes of the Corporations Act and includes a registered company auditor who is participating in, or has participated in, audits of that kind.

5

Subsection 5(1)

Insert:

international auditing standards means auditing standards made by:

1. (a)

   the International Auditing and Assurance Standards Board; or

2. (b)

   another body specified by the regulations.

6

Subsection 5(1) (after paragraph (ea) of the definition of member)

Insert:

1. (eb)

   in relation to the AUASB—a member of the AUASB; and

7

Subsection 5(1)

Insert:

professional accounting body means a body prescribed by the regulations for the purposes of this definition.

8

Paragraph 127(4)(a)

After “the Disciplinary Board,”, insert “the FRC,”.

9

After paragraph 213(2)(a)

Insert:

1. (aa)

   to the FRC for the purposes of its performance of its functions under the corporations legislation; or

10

Part 12 (heading)

Repeal the heading, substitute:

Part 12—The Australian financial reporting system

11

After paragraph 224(a)

Insert:

1. (aa)

   to facilitate the development of auditing and assurance standards and related guidance materials that:

   1. (i)

      provide Australian auditors with relevant and comprehensive guidance in forming an opinion about, and reporting on, whether financial reports comply with the requirements of the Corporations Act; and

   2. (ii)

      require the preparation of auditors’ reports that are reliable and readily understandable by the users of the financial reports to which they relate; and

12

Subparagraph 224(b)(iii)

Omit “accounting standards”, substitute “accounting and auditing standards”.

13

Division 1 of Part 12 (heading)

Repeal the heading, substitute:

Division 1—The financial reporting system

14

Subsection 225(2)

Repeal the subsection, substitute:

Functions generally

1. (1)

   The FRC functions are:

   1. (a)

      to provide broad oversight of the processes for setting accounting standards in Australia; and

   2. (b)

      to provide broad oversight of the processes for setting auditing standards in Australia; and

   3. (c)

      to monitor the effectiveness of auditor independence requirements in Australia; and

   4. (d)

      to give the Minister reports and advice about the matters referred to in paragraphs (a), (b) and (c); and

   5. (e)

      the functions specified in subsections (2) (specific accounting standards functions), (2A) (specific auditing standards functions) and (2B) (specific auditor independence functions); and

   6. (f)

      to establish appropriate consultative mechanisms; and

   7. (g)

      to advance and promote the main objects of this Part; and

   8. (h)

      any other functions that the Minister confers on the FRC by written notice to the FRC Chair.

   Note: The FRC was established by subsection 225(1) of the Australian Securities and Investments Commission Act 1989 and is continued in existence by section 261 of this Act.

Specific accounting standards functions

1. (2)

   The FRC functions include:

   1. (a)

      appointing the members of the AASB (other than the Chair); and

   2. (b)

      approving and monitoring the AASB’s:

      1. (i)

         priorities; and

      2. (ii)

         business plans; and

      3. (iii)

         budgets; and

      4. (iv)

         staffing arrangements (including level, structure and composition of staffing); and

   3. (c)

      determining the AASB’s broad strategic direction; and

   4. (d)

      giving the AASB directions, advice or feedback on matters of general policy and on the AASB’s procedures; and

   5. (e)

      monitoring the development of international accounting standards and the accounting standards that apply in major international financial centres; and

   6. (f)

      furthering the development of a single set of accounting standards for world‑wide use with appropriate regard to international developments; and

   7. (g)

      promoting the continued adoption of international best practice accounting standards in the Australian accounting standard setting processes if doing so would be in the best interests of both the private and public sectors in the Australian economy; and

   8. (h)

      monitoring:

      1. (i)

         the operation of accounting standards to assess their continued relevance and their effectiveness in achieving their objectives in respect of both the private and public sectors of the Australian economy; and

      2. (ii)

         the effectiveness of the consultative arrangements used by the AASB; and

   9. (i)

      seeking contributions towards the costs of the Australian accounting standard setting processes; and

   10. (j)

       monitoring and periodically reviewing the level of funding, and the funding arrangements, for the AASB.

Specific auditing standards functions

1. (2A)

   The FRC functions include:

   1. (a)

      appointing the members of the AUASB (other than the Chair); and

   2. (b)

      approving and monitoring the AUASB’s:

      1. (i)

         priorities; and

      2. (ii)

         business plans; and

      3. (iii)

         budgets; and

      4. (iv)

         staffing arrangements (including level, structure and composition of staffing); and

   3. (c)

      determining the AUASB’s broad strategic direction; and

   4. (d)

      giving the AUASB directions, advice or feedback on matters of general policy and on the AUASB’s procedures; and

   5. (e)

      monitoring the development of international auditing standards and the auditing standards that apply in major international financial centres; and

   6. (f)

      furthering the development of a single set of auditing standards for world‑wide use with appropriate regard to international developments; and

   7. (g)

      promoting the continued adoption of international best practice auditing standards in the Australian auditing standard setting processes if doing so would be in the best interests of both the private and public sectors in the Australian economy; and

   8. (h)

      monitoring:

      1. (i)

         the operation of auditing standards to assess their continued relevance and their effectiveness in achieving their objectives in respect of both the private and public sectors of the Australian economy; and

      2. (ii)

         the effectiveness of the consultative arrangements used by the AUASB; and

   9. (i)

      seeking contributions towards the costs of the Australian auditing standard setting processes; and

   10. (j)

       monitoring and periodically reviewing the level of funding, and the funding arrangements, for the AUASB.

Specific auditor independence functions

1. (2B)

   The FRC functions include:

   1. (a)

      monitoring and assessing the nature and overall adequacy of:

      1. (i)

         the systems and processes used by Australian auditors to ensure compliance with auditor independence requirements; and

      2. (ii)

         the systems and processes used by professional accounting bodies for planning and performing quality assurance reviews of audit work undertaken by Australian auditors to the extent to which those reviews relate to auditor independence requirements; and

      3. (iii)

         the action that Australian auditors who have been subject to such quality assurance reviews have taken in response to the reports prepared as a result of those reviews; and

      4. (iv)

         the action taken by professional accounting bodies to ensure that Australian auditors who have been subject to such quality assurance reviews respond appropriately to the reports prepared as a result of those reviews; and

      5. (v)

         the investigation and disciplinary procedures of professional accounting bodies as those procedures apply to Australian auditors; and

   2. (b)

      monitoring the overall compliance by companies, registered schemes and disclosing entities with the audit‑related disclosure requirements of the Corporations Act and the accounting standards; and

   3. (c)

      giving the Minister reports and advice about the matters referred to in paragraphs (a) and (b); and

   4. (d)

      giving professional accounting bodies reports and advice about the matters referred to in subparagraphs (a)(ii), (iii), (iv) and (v); and

   5. (e)

      monitoring international developments in auditor independence, assessing the adequacy of the Australian auditor independence requirements provided for in:

      1. (i)

         the Corporations Act; and

      2. (ii)

         codes of professional conduct;

   in the light of those developments and giving the Minister, and professional accounting bodies, reports and advice on any additional measures needed to enhance the independence of Australian auditors; and

   1. (f)

      promoting, and monitoring the adequacy of, the teaching of professional and business ethics by, or on behalf of, professional accounting bodies to the extent to which the teaching of those subjects relates to auditor independence.

15

Subsection 225(6)

Omit “formulated and recommended”, substitute “made, formulated or recommended”.

16

At the end of section 225

Add:

1. (7)

   The FRC does not have power to direct the AUASB in relation to the development, or making, of a particular auditing standard.

2. (8)

   The FRC does not have power to veto a standard made, formulated or recommended by the AUASB.

17

After section 225

Insert:

225AFinancial Reporting Council’s information gathering powers

1. (1)

   The Chair of the FRC, acting on behalf of the FRC, may give a professional accounting body a written notice requiring the body to give the FRC:

   1. (a)

      a copy of:

      1. (i)

         a code of professional conduct of the body; or

      2. (ii)

         a proposed code of professional conduct of the body; or

      3. (iii)

         a proposed amendment of a code of professional conduct of the body; or

   2. (b)

      information about the body’s planning or performance of quality assurance reviews; or

   3. (c)

      details of the body’s investigation or disciplinary procedures.

2. (2)

   The notice may require the body to give the FRC information under paragraph (1)(b) or (c) only to the extent to which the information relates to audit work done by Australian auditors.

3. (3)

   A professional accounting body has qualified privilege in respect of a disclosure made by the body in response to a notice given to the body under subsection (1).

4. (4)

   A person has qualified privilege in respect of a disclosure made by the person, on behalf of a professional accounting body, in response to a notice given to the professional body under subsection (1).

5. (5)

   The Chair of the FRC, acting on behalf of the FRC, may give an Australian auditor a written notice requiring the auditor to give the FRC information about, or documents or copies of documents that relate to, one or more of the following:

   1. (a)

      one or more audits conducted by the auditor or in which the auditor participated;

   2. (b)

      the measures the auditor adopted, or the procedures the auditor put in place, to ensure that the auditor was, and continues to be, independent of entities it audits;

   3. (c)

      any other matter prescribed by the regulations for the purposes of this paragraph.

Without limiting this, the documents may be audit working papers.

Note: A person responding to a notice under this subsection has qualified privilege in respect of the response (see section 1289 of the Corporations Act).

1. (6)

   Without limiting subsection (5), the notice:

   1. (a)

      may require the Australian auditor to give the FRC information or a document even if doing so would involve a breach of an obligation of confidentiality that the auditor owes an audited body; and

   2. (b)

      may require that a copy of a document to be given to the FRC must be certified by a particular person or a person holding a particular office or position.

2. (7)

   The notice under subsection (1) or (5) must specify:

   1. (a)

      the information or documents the professional accounting body or Australian auditor must give; and

   2. (b)

      the period within which the body or auditor must give the information or documents.

The period specified under paragraph (b) must be not less than 28 days after the day on which the notice is given.

1. (8)

   The Chair of the FRC, acting on behalf of the FRC, may, by written notice to the professional accounting body or Australian auditor, extend the period within which the body or auditor must give the information or documents.

2. (9)

   A person commits an offence if:

   1. (a)

      the Chair of the FRC gives the person notice under subsection (1) or (5); and

   2. (b)

      the person does not comply with the notice.

   Penalty: 10 penalty units.

3. (10)

   An offence against subsection (9) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

4. (11)

   A person commits an offence if:

   1. (a)

      the Chair of the FRC gives a firm a notice under subsection (5); and

   2. (b)

      the person is a member of the firm when the notice is given; and

   3. (c)

      the notice is not complied with.

   Penalty: 10 penalty units.

5. (12)

   An offence against subsection (11) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

6. (13)

   A member of a firm does not commit an offence at a particular time because of a contravention of subsection (11) if the member either:

   1. (a)

      does not know at that time that the Chair of the FRC has given the firm the notice under subsection (5); or

   2. (b)

      knows that the Chair of the FRC has given the firm the notice under subsection (5) at that time but takes all reasonable steps to ensure that the notice is complied with as soon as possible after the member becomes aware of those circumstances.

   Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.

18

Subsection 227(7)

Repeal the subsection, substitute:

227AThe Auditing and Assurance Standards Board

1. (1)

   The Auditing and Assurance Standards Board is established.

2. (2)

   The Auditing and Assurance Standards Board:

   1. (a)

      is a body corporate with perpetual succession; and

   2. (b)

      must have a common seal; and

   3. (c)

      may acquire, hold and dispose of real and personal property; and

   4. (d)

      may sue and be sued in its corporate name.

   Note: The Commonwealth Authorities and Companies Act 1997 applies to the Auditing and Assurance Standards Board. This Act makes provision for reporting obligations (annual report, interim reports and estimates), accounting records, audit, banking, investment of funds and duties of officers.

3. (3)

   All courts, judges and persons acting judicially must:

   1. (a)

      take judicial notice of the imprint of the common seal of the Auditing and Assurance Standards Board appearing on a document; and

   2. (b)

      presume that the document was duly sealed.

227BAUASB’s functions and powers

Functions

1. (1)

   The functions of the AUASB are:

   1. (a)

      to make auditing standards under section 336 of the Corporations Act for the purposes of the corporations legislation; and

   2. (b)

      to formulate auditing and assurance standards for other purposes; and

   3. (c)

      to formulate guidance on auditing and assurance matters; and

   4. (d)

      to participate in and contribute to the development of a single set of auditing standards for world‑wide use; and

   5. (e)

      to advance and promote the main objects of this Part.

   Note 1: The standards made under paragraph (a) are given legal effect by the Corporations Act. The standards formulated under paragraph (b) do not have legal effect under the Corporations Act itself but may be applied or adopted by some other authority.

   Note 2: See section 224 and sections 234A to 234D for the framework within which the AUASB is to formulate and make auditing standards.

Powers

1. (2)

   The AUASB has power to:

   1. (a)

      engage staff and consultants; and

   2. (b)

      establish committees, advisory panels and consultative groups; and

   3. (c)

      receive money contributed towards its operating costs; and

   4. (d)

      do anything else that is necessary for, or reasonably incidental to, the performance of its functions.

Manner of making and formulating standards

1. (3)

   Without limiting paragraph (1)(a) or (b), the AUASB may make or formulate an auditing standard by issuing the text of an international auditing standard.

2. (4)

   The text of the international auditing standard may be modified to the extent necessary to take account of the Australian legal or institutional environment.

Manner of participating in the development of international standards

1. (5)

   Without limiting paragraph (1)(d), the AUASB may distribute the text of a draft international auditing standard (whether or not modified to take account of the Australian legal or institutional environment) for the purposes of consultation.

19

Paragraph 232(a)

Omit “paragraph 225(2)(d)”, substitute “paragraph 225(2)(c)”.

20

Paragraph 232(b)

Omit “paragraph 225(2)(e)”, substitute “paragraph 225(2)(d)”.

21

Paragraph 232(c)

Omit “paragraph 225(2)(e)”, substitute “paragraph 225(2)(d)”.

22

After Division 2 of Part 12

Insert:

Division 2A—Auditing standards

234APurposive interpretation of standards

Objects of this Part

1. (1)

   In interpreting an auditing standard made or formulated by the AUASB, a construction that would promote the objects of this Part is to be preferred to a construction that would not promote those objects.

1. Note: Section 224 states the main objects of this Part.

Purposes or objects of particular standard

1. (2)

   In interpreting an auditing standard made or formulated by the AUASB, a construction that would promote a purpose or object of the standard (to the extent to which it is not inconsistent with the objects of this Part) is to be preferred to a construction that would not promote that purpose or object. This is so even if the purpose or object is not expressly stated in the standard.

234BGeneric and specific standards

Auditing standards made or formulated by the AUASB may:

1. (a)

   be of general or limited application (including a limitation to different types of audit and specified industries, bodies or undertakings); and

2. (b)

   differ according to differences in time, place or circumstance.

234CFRC views

In performing its functions, the AUASB must:

1. (a)

   follow the broad strategic direction determined by the FRC under paragraph 225(2A)(c); and

2. (b)

   follow the general policy directions given by the FRC under paragraph 225(2A)(d); and

3. (c)

   take into account the advice and feedback on matters of general policy given by the FRC under paragraph 225(2A)(d).

234DInternational auditing standards

1. (1)

   The Minister may give the AUASB a direction about the role of international auditing standards in the Australian auditing standard setting system.

2. (2)

   Before giving a direction under this section, the Minister must receive and consider a report from the FRC about the desirability of giving the direction.

3. (3)

   The AUASB must comply with the direction.

234EValidity of auditing standards

A failure to comply with this Division in relation to the making of an auditing standard does not affect the validity of the standard.

23

At the end of paragraph 235B(1)(a)

Add:

1. (iii)

   the AUASB and its committees, advisory panels and consultative groups; and

24

After subsection 235B(2)

Insert:

1. (2A)

   The report must include details of any change to the AUASB’s priorities or business plan that was made as a result of action taken by the FRC.

25

Subsections 235B(5) and (6)

Repeal the subsections, substitute:

235BAReport on auditor independence functions

1. (1)

   As soon as practicable after 30 June in each year, and in any event before 31 October, the FRC must give the Minister a report on:

   1. (a)

      the performance by the FRC, during the year that ended on 30 June in that year, of its functions under subsection 225(2B) (the auditor independence functions); and

   2. (b)

      the findings and conclusions that the FRC reached in performing those functions; and

   3. (c)

      the actions (if any) that were taken by the FRC in respect of those findings and conclusions.

The report may be given to the Minister separately or included in the report given to the Minister under section 235B.

1. (2)

   The Minister may grant an extension of time in special circumstances.

2. (3)

   The Minister must table the report in each House of the Parliament as soon as practicable.

26

Paragraph 236A(3)(a)

Omit “paragraph 225(2)(e)”, substitute “paragraph 225(2)(d)”.

27

Paragraph 236A(3)(b)

Omit “paragraph 225(2)(e)”, substitute “paragraph 225(2)(d)”.

28

After Subdivision B of Division 3 of Part 12

Insert:

Subdivision BA—The Auditing and Assurance Standards Board

236EProcedures

1. (1)

   Meetings of the AUASB are to be chaired by:

   1. (a)

      the Chair; or

   2. (b)

      the Deputy Chair if the Chair is absent; or

   3. (c)

      a member chosen by the members present if both the Chair and the Deputy Chair are absent.

2. (2)

   If a meeting of the AUASB, or a part of one of its meetings, concerns the contents of auditing standards or international auditing standards, the meeting or that part of it must be held in public.

3. (3)

   The AUASB must:

   1. (a)

      comply with any directions about its procedures that the FRC gives under paragraph 225(2A)(d); and

   2. (b)

      take into account the advice and feedback about its procedures that the FRC gives under paragraph 225(2A)(d).

4. (4)

   Otherwise, the AUASB may determine its own procedural rules (including rules as to notice of meetings, quorum and voting).

236FAppointment of members of the AUASB

Appointment of Chair

1. (1)

   The Minister appoints the Chair of the AUASB.

Appointment of other members

1. (2)

   The FRC appoints the other members of the AUASB.

2. (3)

   The AUASB may appoint one of its members to be Deputy Chair of the Board.

Qualification for appointment

1. (4)

   A person must not be appointed as a member of the AUASB unless their knowledge of, or experience in, business, accounting, auditing, law or government qualifies them for the appointment.

Appointment document

1. (5)

   An appointment under subsection (1) or (2) is to be made in writing.

Period of appointment

1. (6)

   The appointment document must specify the period of the appointment (not exceeding 5 years).

2. (7)

   A member holds office for the period specified in the appointment document and is eligible for re‑appointment.

Terms and conditions of appointment

1. (8)

   The Chair holds office on the terms and conditions that are determined by the Minister.

2. (9)

   The other members hold office on the terms and conditions determined by the FRC.

236GResignation and termination of appointment

Resignation

1. (1)

   A member of the AUASB may resign their appointment by giving a written resignation to:

   1. (a)

      if the member is the Chair of the AUASB—the Minister; or

   2. (b)

      in any other case—the Chair of the FRC.

Termination of Chair’s appointment

1. (2)

   The Chair is not to be removed from office except as provided by subsection (3) or (4).

2. (3)

   The Minister may terminate the appointment of the Chair of the AUASB for:

   1. (a)

      misbehaviour or physical or mental incapacity; or

   2. (b)

      breach of the terms and conditions of their appointment.

3. (4)

   The Minister must terminate the appointment of the Chair of the AUASB if the Chair:

   1. (a)

      becomes bankrupt; or

   2. (b)

      applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or

   3. (c)

      compounds with their creditors; or

   4. (d)

      makes an assignment of their remuneration or property for the benefit of their creditors; or

   5. (e)

      contravenes section 237.

Termination of ordinary member’s appointment

1. (5)

   A member of the AUASB (other than the Chair) is not to be removed from office except as provided by subsection (6) or (7).

2. (6)

   The FRC may terminate the appointment of a member of the AUASB (other than the Chair) for:

   1. (a)

      misbehaviour or physical or mental incapacity; or

   2. (b)

      breach of the terms and conditions of the member’s appointment.

3. (7)

   The FRC must terminate the appointment of a member of the AUASB (other than the Chair) if the member:

   1. (a)

      becomes bankrupt; or

   2. (b)

      applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or

   3. (c)

      compounds with their creditors; or

   4. (d)

      makes an assignment of their remuneration or property for the benefit of their creditors; or

   5. (e)

      contravenes section 237.

236HActing appointments

1. (1)

   The Minister may appoint a person to act as Chair of the AUASB:

   1. (a)

      during a vacancy in the office of Chair (whether or not an appointment has previously been made to the office); or

   2. (b)

      during any period, or during all periods, when the Chair is absent from duty or from Australia, or is for any reason unable to perform the duties of the office.

2. (2)

   The AUASB may appoint one of its members to act as Deputy Chair of the AUASB:

   1. (a)

      during a vacancy in the office of Deputy Chair (whether or not an appointment has previously been made to the office); or

   2. (b)

      during any period, or during all periods, when the Deputy Chair is absent from duty or from Australia, or is for any reason unable to perform the duties of the office.

3. (3)

   The FRC may appoint a person to act as a member of the AUASB (other than the Chair):

   1. (a)

      during a vacancy in the office of the member (whether or not an appointment has previously been made to the office); or

   2. (b)

      during any period, or during all periods, when the member is absent from duty or from Australia, or is for any reason unable to perform the duties of the office.

4. (4)

   Anything done by, or in relation to, a person purporting to act under an appointment is not invalid merely because:

   1. (a)

      the occasion for the appointment had not arisen; or

   2. (b)

      there was a defect in connection with the appointment; or

   3. (c)

      the appointment had ceased to have effect; or

   4. (d)

      the occasion to act had not arisen or had ceased.

29

Subsection 237(1)

Omit “and the AASB”, substitute “, the AASB and the AUASB”.

30

Paragraph 237(2)(b)

Omit “or the AASB’s”, substitute “, the AASB’s or the AUASB’s”.

31

Paragraph 237(2)(c)

Omit “a body that sets international accounting standards”, substitute “bodies that set international accounting standards or international auditing standards”.

32

At the end of subsection 237(2)

Add:

1. ; or (e)

   is made to the Disciplinary Board for the purposes of its performance of its functions under the corporations legislation; or

2. (ea)

   is made to APRA for the purposes of its performance of its functions; or

3. (f)

   is made to a professional accounting body for the purposes of its performance of its functions.

33

Paragraphs 238(b) and (c)

Repeal the paragraphs, substitute:

1. (b)

   in paying or discharging, or reimbursing someone for, the costs, expenses and other obligations incurred in connection with the performance by the FRC of its functions and the exercise by the FRC of its powers; and

2. (c)

   in meeting the administrative expenses of the committees and advisory groups the FRC establishes; and

3. (d)

   in payment of any remuneration and allowances payable to any person appointed to the FRC or the AASB under this Part; and

4. (e)

   in making payments to the AUASB.

34

At the end of section 238

Add:

1. (2)

   The money of the AUASB must be applied only:

   1. (a)

      in payment or discharge of the costs, expenses and other obligations incurred by the AUASB in the performance of its functions or the exercise of its powers under this Act; and

   2. (b)

      in paying or discharging, or reimbursing someone for, the costs, expenses and other obligations incurred in connection with the performance by the FRC of its functions and the exercise by the FRC of its powers; and

   3. (c)

      in meeting the administrative expenses of the committees and advisory groups the FRC establishes; and

   4. (d)

      in payment of any remuneration and allowances payable to any person appointed to the FRC or the AUASB under this Part; and

   5. (e)

      in making payments to the AASB.

35

After paragraph 246(h)

Insert:

1. (i)

   a person engaged as a member of staff, or a consultant, of the AASB under paragraph 227(3)(a);

2. (j)

   a person engaged as a member of staff, or a consultant, of the AUASB under paragraph 227B(2)(a);

3. (k)

   an officer or employee of an Agency (within the meaning of the Public Service Act 1999), or of an authority of the Commonwealth, whose services are made available to the FRC or the Disciplinary Board in connection with the performance or exercise of any of its functions or powers;

4. (l)

   a person engaged by an Agency (within the meaning of the Public Service Act 1999), or of an authority of the Commonwealth, to provide services to the FRC in connection with the performance or exercise of any of its functions or powers;

36

At the end of section 246

Add:

1. (2)

   Without limiting paragraph (1)(f), the following are taken to be persons appointed for the purposes of this Act:

   1. (a)

      a member of the Disciplinary Board;

   2. (b)

      a member of the FRC or of a committee or advisory group established by the FRC;

   3. (c)

      a member of the AASB or of a committee, advisory panel or consultative group established by the AASB;

   4. (d)

      a member of the AUASB or of a committee, advisory panel or consultative group established by the AUASB.

Corporations Act 2001

37

Section 9

Insert:

AUASB means the Auditing and Assurance Standards Board.

38

Section 9

Insert:

auditing standard means:

1. (a)

   a standard in force under section 336; or

2. (b)

   a provision of such a standard as it so has effect.

39

Section 9

Insert:

professional accounting body has the same meaning as in the ASIC Act.

40

After section 307

Insert:

307AAudit to be conducted in accordance with auditing standards

1. (1)

   If an individual auditor, or an audit company, conducts:

   1. (a)

      an audit of the financial report for a financial year; or

   2. (b)

      an audit or review of the financial report for a half‑year;

the individual auditor or audit company must conduct the audit or review in accordance with the auditing standards.

1. (2)

   If an audit firm, or an audit company, conducts:

   1. (a)

      an audit of the financial report for a financial year; or

   2. (b)

      an audit or review of the financial report for a half‑year;

the lead auditor for the audit or review must ensure that the audit or review is conducted in accordance with the auditing standards.

1. (3)

   An offence based on subsection (1) or (2) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

307BAudit working papers to be retained for 7 years

Contravention by individual auditor or audit company

1. (1)

   An auditor contravenes this subsection if:

   1. (a)

      the auditor is an individual auditor or an audit company; and

   2. (b)

      the auditor conducts:

      1. (i)

         an audit of the financial report for a financial year; or

      2. (ii)

         an audit or review of the financial report for a half‑year; and

   3. (c)

      the auditor does not retain all audit working papers prepared by or for, or considered or used by, the auditor in accordance with the requirements of the auditing standards until:

      1. (i)

         the end of 7 years after the date of the audit report prepared in relation to the audit or review to which the audit working papers relate; or

      2. (ii)

         an earlier date determined for the audit working papers by ASIC under subsection (6).

2. (2)

   An offence based on subsection (1) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

Contravention by member of audit firm

1. (3)

   A person (the defendant) contravenes this subsection if:

   1. (a)

      an audit firm conducts:

      1. (i)

         an audit of the financial report for a financial year; or

      2. (ii)

         an audit or review of the financial report for a half‑year; and

   2. (b)

      the audit firm fails, at a particular time, to retain all audit working papers prepared by or for, or considered or used by, the audit firm in accordance with the requirements of the auditing standards until:

      1. (i)

         the end of 7 years after the date of the audit report prepared in relation to the audit or review to which the documents relate; or

      2. (ii)

         the earlier date determined by ASIC for the audit working papers under subsection (6); and

   3. (c)

      the defendant is a member of the firm at that time.

2. (4)

   An offence based on subsection (3) is an offence of strict liability.

   Note 1: For strict liability see section 6.1 of the Criminal Code.

   Note 2: Subsection (5) provides a defence.

3. (5)

   A member of an audit firm does not commit an offence at a particular time because of a contravention of subsection (3) if the member either:

   1. (a)

      does not know at that time of the circumstances that constitute the contravention of subsection (3); or

   2. (b)

      knows of those circumstances at that time but takes all reasonable steps to correct the contravention as soon as possible after the member becomes aware of those circumstances.

   Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.

Earlier retention date for audit working papers

1. (6)

   ASIC may, on application by a person, determine, in writing, an earlier date for the audit working papers for the purposes of paragraphs (1)(c) and (3)(b) if:

   1. (a)

      the auditor is an individual auditor and the auditor:

      1. (i)

         dies; or

      2. (ii)

         ceases to be a registered company auditor; or

   2. (b)

      the auditor is an audit firm and the firm is dissolved (otherwise than simply as part of a reconstitution of the firm because of the death, retirement or withdrawal of a member or members or because of the admission of a new member or members); or

   3. (c)

      the auditor is an audit company and the company:

      1. (i)

         is wound up; or

      2. (ii)

         ceases to be an authorised audit company.

2. (7)

   In deciding whether to make a determination under subsection (6), ASIC must have regard to:

   1. (a)

      whether ASIC is inquiring into or investigating any matters in respect of:

      1. (i)

         the auditor; or

      2. (ii)

         the audited body for the audit to which the documents relate; and

   2. (b)

      whether the professional accounting bodies have any investigations or disciplinary action pending in relation to the auditor; and

   3. (c)

      whether civil or criminal proceedings in relation to:

      1. (i)

         the conduct of the audit; or

      2. (ii)

         the contents of the financial report to which the audit working papers relate;

   have been, or are about to be, commenced; and

   1. (d)

      any other relevant matter.

Audit working papers kept in electronic form

1. (8)

   For the purposes of this section, if audit working papers are in electronic form they are taken to be retained only if they are convertible into hard copy.

41

After subsection 308(3)

Insert:

1. (3A)

   The auditor’s report must include any statements or disclosures required by the auditing standards.

42

After subsection 309(5)

Insert:

1. (5A)

   The auditor’s report must include any statements or disclosures required by the auditing standards.

43

Part 2M.5 (heading)

Repeal the heading, substitute:

Part 2M.5—Accounting and auditing standards

44

Sections 337 and 339

Repeal the sections, substitute:

336Auditing standards

AUASB’s power to make auditing standards

1. (1)

   The AUASB may make auditing standards for the purposes of this Act. The standards must be in writing and must not be inconsistent with this Act or the regulations.

2. (2)

   A standard made under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

   Note: Section 5C provides that the Acts Interpretation Act 1901 (as in force on 1 November 2000) applies to this Act.

3. (3)

   An auditing standard applies to financial reports in relation to:

   1. (a)

      periods ending after the commencement of the standard; or

   2. (b)

      periods ending, or starting, on or after a later date specified in the standard.

4. (4)

   If:

   1. (a)

      the AUASB makes an auditing standard; and

   2. (b)

      the standard applies to financial reports in relation to particular periods under subsection (3); and

   3. (c)

      an auditor is conducting an audit of a financial report in relation to a period that occurs before the start of the earliest of those periods;

the auditor may elect to apply the auditing standard to that audit unless the standard says otherwise. The election must be recorded in the audit report.

337Interpretation of accounting and auditing standards

In interpreting an accounting or auditing standard, unless the contrary intention appears:

1. (a)

   expressions used in the standard have the same meanings as they have in this Chapter; and

2. (b)

   the provisions of Part 1.2 apply as if the standard’s provisions were provisions of this Chapter.

338Evidence of text of accounting standard or auditing standard

1. (1)

   This section applies to a document that purports to be published by, or on behalf of, the AASB or the AUASB and to set out the text of:

   1. (a)

      a specified standard as in force at a specified time under section 334 or 336; or

   2. (b)

      a specified provision of a standard of that kind.

It also applies to a copy of a document of that kind.

1. (2)

   In the absence of evidence to the contrary, a document to which this section applies is proof in proceedings under this Act that:

   1. (a)

      the specified standard was in force at that time under that section; and

   2. (b)

      the text set out in the document is the text of the standard referred to in paragraph (1)(a) or the provision referred to in paragraph (1)(b).

45

After section 989C

Insert:

989CAAudit to be conducted in accordance with auditing standards

1. (1)

   If an individual auditor, or an audit company, conducts an audit of a profit and loss statement and balance sheet for the purposes of this Subdivision, the individual auditor or audit company must:

   1. (a)

      conduct the audit in accordance with the auditing standards; and

   2. (b)

      include in the audit report on the profit and loss statement, and balance sheet, any statements or disclosures required by the auditing standards.

2. (2)

   If an audit firm, or an audit company, conducts an audit of a profit and loss statement and balance sheet for the purposes of this Subdivision, the lead auditor for the audit or review must ensure that:

   1. (a)

      the audit is conducted in accordance with the auditing standards; and

   2. (b)

      the audit report on the profit and loss statement, and balance sheet, includes any statements or disclosures required by the auditing standards.

3. (3)

   An offence based on subsection (1) or (2) is an offence of strict liability.

1. Note: For strict liability see section 6.1 of the Criminal Code.

46

Schedule 3 (before table item 104)

Insert:

103B	Subsections 307A(1) and (2)	50 penalty units.
103C	Subsection 307B(1)	50 penalty units.
103D	Subsection 307B(3)	50 penalty units.

47

Schedule 3 (table item 104)

Repeal the item, substitute:

104 Subsections 308(1), (2), (3), (3A) and (4) 50 penalty units.

48

Schedule 3 (after table item 104)

Insert:

104A Subsections 309(1), (2), (3), (4), (5), (5A) and (6) 50 penalty units.

49

Schedule 3 (after table item 283C)

Insert:

283CA Subsections 989CA(1) and (2) 50 penalty units.

Part 2Qualifications of auditors

Corporations Act 2001

50

Subparagraph 1274(2)(a)(ii)

After “section 1287”, insert “, 1287A”.

50A

Subsection 1279(2)

Repeal the subsection, substitute:

1. (2)

   An application under this section:

   1. (a)

      must be lodged with ASIC; and

   2. (b)

      must contain such information as is prescribed in the regulations; and

   3. (c)

      must be in the prescribed form.

51

Paragraph 1280(2)(a)

Repeal the paragraph, substitute:

1. (a)

   the applicant satisfies subsection (2A) or (2B); and

52

Paragraph 1280(2)(b)

Repeal the paragraph, substitute:

1. (b)

   ASIC is satisfied that the applicant has either:

   1. (i)

      satisfied all the components of an auditing competency standard approved by ASIC under section 1280A; or

   2. (ii)

      had such practical experience in auditing as is prescribed; and

53

After subsection 1280(2)

Insert:

1. (2A)

   The applicant satisfies this subsection if the applicant:

   1. (a)

      holds a degree, diploma or certificate from a prescribed university or another prescribed institution in Australia; and

   2. (b)

      has, in the course of obtaining that degree, diploma or certificate, passed examinations in such subjects, under whatever name, as the appropriate authority of the university or other institution certifies to ASIC to represent a course of study:

      1. (i)

         in accountancy (including auditing) of not less than 3 years duration; and

      2. (ii)

         in commercial law (including company law) of not less than 2 years duration; and

   3. (c)

      has satisfactorily completed a course in auditing prescribed by the regulations for the purposes of this paragraph.

2. (2B)

   The applicant satisfies this subsection if the applicant has other qualifications and experience that, in ASIC’s opinion, are equivalent to the requirements mentioned in subsection (2A).

54

After section 1280

Insert:

1280AApproval of auditing competency standard

1. (1)

   ASIC may, on application by any person, approve an auditing competency standard for the purposes of paragraph 1280(2)(b). The approval must be in writing.

2. (2)

   If, on application by a person, ASIC approves an auditing competency standard under subsection (1), ASIC may, on application by that person, approve a variation of the standard. The approval must be in writing.

3. (3)

   ASIC must not approve an auditing competency standard, or a variation of an auditing competency standard, unless it is satisfied that:

   1. (a)

      the standard, or the standard as proposed to be varied, provides that a person’s performance against each component of the standard is to be appropriately verified by a person who:

      1. (i)

         is a registered company auditor; and

      2. (ii)

         has sufficient personal knowledge of the person’s work to be able to give that verification; and

   2. (b)

      the standard, or the standard as proposed to be varied, is not inconsistent with this Act or any other law of the Commonwealth under which ASIC has regulatory responsibilities; and

   3. (c)

      the standard adequately addresses the level of practical experience needed for registration as a company auditor; and

   4. (d)

      the standard is harmonised to the greatest extent possible with other approved auditing competency standards.

4. (4)

   ASIC may revoke an approval of an auditing competency standard:

   1. (a)

      on application by the person who applied for the approval; or

   2. (b)

      if ASIC is no longer satisfied as mentioned in subsection (3).

The revocation must be in writing.

55

At the end of section 1281

Add:

1. (2)

   A person to whom the Auditor‑General of the Commonwealth, or of a State or Territory, delegates:

   1. (a)

      the function of conducting an audit; or

   2. (b)

      the power to conduct an audit;

is taken to be registered as an auditor under this Part for the purposes of applying Chapter 2M to the audit.

56

After section 1287

Insert:

1287AAnnual statements by registered company auditors

1. (1)

   A person who is a registered company auditor must, within one month after the end of:

   1. (a)

      the period of 12 months beginning on the day on which the person’s registration begins; and

   2. (b)

      each subsequent period of 12 months;

lodge with ASIC a statement in respect of that period.

1. (1A)

   A statement under subsection (1):

   1. (a)

      must contain such information as is prescribed in the regulations; and

   2. (b)

      must be in the prescribed form.

2. (2)

   ASIC may, on the application of the person made before the end of the period for lodging a statement under subsection (1), extend, or further extend, that period.

57

Subsection 1288(3)

Omit “registered company auditor or”.

Note: The heading to section 1288 is altered by omitting “auditors and”.

58

Subsection 1288(4)

Omit “a registered company auditor or”.

59

After Division 2 of Part 9.2

Insert:

Division 2A—Conditions on registration of auditors

1289AASIC may impose conditions on registration

1. (1)

   Under this section, ASIC may impose only conditions of a kind specified in the regulations.

2. (2)

   Subject to this section, ASIC may, at any time, by giving written notice to a person registered as an auditor:

   1. (a)

      impose conditions, or additional conditions, on their registration; and

   2. (b)

      vary or revoke conditions imposed on their registration.

3. (3)

   ASIC may do so:

   1. (a)

      on its own initiative; or

   2. (b)

      if the registered company auditor lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.

   Note: For fees in respect of lodging applications, see Part 9.10.

4. (4)

   Except where conditions are varied on the application of the registered company auditor, ASIC may only impose conditions or additional conditions, or vary the conditions, on registration after giving the auditor an opportunity:

   1. (a)

      to appear, or be represented, at a hearing before ASIC that takes place in private; and

   2. (b)

      to make submissions to ASIC in relation to the matter.

This subsection does not apply to ASIC imposing conditions at the time when the applicant is registered.

60

Subparagraph 1292(1)(a)(i)

Omit “section 1288”, substitute “section 1287A”.

61

After subparagraph 1292(1)(a)(i)

Insert:

1. (ia)

   failed to comply with a condition of the person’s registration as an auditor; or

62

After paragraph 1292(1)(a)

Insert:

1. (b)

   the person either:

   1. (i)

      has not performed any audit work during a continuous period of not less than 5 years; or

   2. (ii)

      has not performed any significant audit work during a continuous period of not less than 5 years;

and, as a result, has ceased to have the practical experience necessary for carrying out audits for the purposes of this Act; or

63

After subsection 1292(1)

Insert:

1. (1A)

   In determining for the purposes of subparagraph (1)(b)(ii) whether audit work performed by a person is significant, have regard to:

   1. (a)

      the nature of the audit; and

   2. (b)

      the extent to which the person was involved in the audit; and

   3. (c)

      the level of responsibility the person assumed in relation to the audit.

64

Section 1298

Omit “section 1288”, substitute “sections 1287A and 1288”.

Part 3Auditor appointment, independence and rotation requirements

Corporations Act 2001

66

Section 9

Insert:

associated entity has the meaning given by section 50AAA.

67

Section 9

Insert:

audit means an audit conducted for the purposes of this Act and includes a review of a financial report for a half‑year conducted for the purposes of this Act.

68

Section 9

Insert:

audit activity: see the definition of engage in audit activity.

69

Section 9

Insert:

audit company means a company that consents to be appointed, or is appointed, as auditor of a company or registered scheme.

70

Section 9

Insert:

audit‑critical employee, in relation to a company, or the responsible entity for a registered scheme, that is the audited body for an audit, means a person who:

1. (a)

   is an employee of the company or of the responsible entity for the registered scheme; and

2. (b)

   is able, because of the position in which the person is employed, to exercise significant influence over:

   1. (i)

      a material aspect of the contents of the financial report being audited; or

   2. (ii)

      the conduct or efficacy of the audit.

71

Section 9

Insert:

audited body, in relation to an audit of a company or registered scheme, means the company or registered scheme in relation to which the audit is, or is to be, conducted.

72

Section 9

Insert:

audit firm means a firm that consents to be appointed, or is appointed, as auditor of a company or registered scheme.

73

Section 9

Insert:

auditor independence requirements of this Act means the requirements of Divisions 3, 4 and 5 of Part 2M.4.

74

Section 9

Insert:

authorised audit company means a company registered under Part 9.2A.

75

Section 9

Insert:

engage in audit activity: an individual auditor, audit firm or audit company engages in audit activity in relation to an audited body for an audit if the individual auditor, audit firm or audit company:

1. (a)

   consents to be appointed as auditor of the audited body for a financial year; or

2. (b)

   acts as the auditor of the audited body for a financial year; or

3. (c)

   prepares a report in relation to the audited body that is required by this Act to be prepared by:

   1. (i)

      a registered company auditor; or

   2. (ii)

      an auditor of the audited body in relation to a financial year or half‑year.

76

Section 9

Insert:

immediate family member for a person means:

1. (a)

   the person’s spouse or de facto spouse; or

2. (b)

   a person who is wholly or partly dependent on the person for financial support.

77

Section 9

Insert:

individual auditor means an individual who consents to be appointed, or is appointed, as auditor of a company or registered scheme.

78

Section 9

Insert:

investment in a company, disclosing entity or other body means:

1. (a)

   a share in the company, disclosing entity or body; or

2. (b)

   a debenture of the company, disclosing entity or body; or

3. (c)

   a legal or equitable interest in:

   1. (i)

      a share in the company, disclosing entity or body; or

   2. (ii)

      a debenture of the company, disclosing entity or body; or

4. (d)

   an option to acquire (whether by way of issue or transfer) an investment in the company, disclosing entity or body covered by paragraph (a), (b) or (c); or

5. (e)

   an option to dispose of an investment in the company, disclosing entity or body covered by paragraph (a), (b) or (c); or

6. (f)

   an interest a person holds under an arrangement that is a derivative if:

   1. (i)

      the consideration to be provided under the arrangement; or

   2. (ii)

      the value of the arrangement;

is ultimately determined, derived from or varies by reference to an investment in the company, disclosing entity or body covered by paragraph (a), (b), (c), (d) or (e).

To avoid doubt, the consideration to be provided under, or the value of, an arrangement in relation to an index is not ultimately determined, derived from or varies by reference to an investment in the company merely because the investment is taken into account in determining the value of the index.

79

Section 9

Insert:

investment in a registered scheme means:

1. (a)

   an interest in the scheme; or

2. (b)

   a legal or equitable interest in an interest in the scheme; or

3. (c)

   an option to acquire (whether by way of issue or transfer) an investment in the scheme covered by paragraph (a) or (b); or

4. (d)

   an option to dispose of an investment in the scheme covered by paragraph (a) or (b); or

5. (e)

   an interest a person holds under an arrangement that is a derivative if:

   1. (i)

      the consideration to be provided under the arrangement; or

   2. (ii)

      the value of the arrangement;

is ultimately determined, derived from or varies by reference to an investment in the scheme covered by paragraph (a), (b), (c) or (d); or

1. (f)

   an investment in the responsible entity of the scheme.

To avoid doubt, the consideration to be provided under, or the value of, an arrangement in relation to an index is taken not to be ultimately determined, derived from or vary by reference to an investment in the scheme merely because the investment is taken into account in determining the value of the index.

80

Section 9

Insert:

lead auditor has the meaning given by section 324AF.

81

Section 9

Insert:

non‑audit services provider for an auditor conducting an audit means a person who:

1. (a)

   is not a professional member of the audit team conducting the audit of the audited body; and

2. (b)

   is either:

   1. (i)

      if the auditor is an individual auditor—an employee of the individual auditor (or of an entity acting for, or on behalf of, the individual auditor); or

   2. (ii)

      if the auditor is an audit firm—a member of the audit firm or senior manager of the audit firm (or of an entity acting for, or on behalf of, the audit firm); or

   3. (iii)

      if the auditor is an audit company—a director of the audit company or a senior manager of the audit company (or of an entity acting for, or on behalf of, the audit company); and

3. (c)

   provides, or has provided, services (other than services related to the conduct of an audit) to the audited body.

82

Section 9

Insert:

play a significant role: a person plays a significant role in the audit of a company or a registered scheme for a financial year if:

1. (a)

   the person is appointed as an individual auditor of the company or scheme for that financial year and:

   1. (i)

      acts as an auditor for the company or scheme for that financial year; or

   2. (ii)

      prepares an audit report for the company or the scheme in relation to a financial report of the company or scheme for that financial year or for a half‑year falling within that financial year; or

2. (b)

   a firm or company is appointed as an auditor of the company or scheme for that financial year and the person:

   1. (i)

      is a registered company auditor; and

   2. (ii)

      acts, on behalf of the firm or company, as a lead auditor, or review auditor, in relation to an audit of the company or scheme for that financial year or for a half‑year falling within that financial year.

83

Section 9

Insert:

professional employee of an individual auditor, audit firm or audit company means an employee of the auditor, firm or company who participates in the conduct of the audits on behalf of the auditor, firm or company and, in the course of doing so, exercises professional judgment in relation to the application of or compliance with:

1. (a)

   accounting standards; or

2. (b)

   auditing standards; or

3. (c)

   the provisions of this Act dealing with financial reporting and the conduct of audits.

84

Section 9

Insert:

professional member of an audit team has the meaning given by section 324AE.

85

Section 9

Insert:

review auditor has the meaning given by section 324AF.

86

Section 9

Insert:

senior manager:

1. (a)

   in relation to a corporation—means a person (other than a director or secretary of the corporation) who:

   1. (i)

      makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or

   2. (ii)

      has the capacity to affect significantly the corporation’s financial standing; and

2. (b)

   in relation to a partnership—means a person (other than a partner) who:

   1. (i)

      makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the partnership; or

   2. (ii)

      has the capacity to affect significantly the partnership’s financial standing; and

3. (c)

   in relation to a trust—means a person (other than a trustee) who:

   1. (i)

      makes, or participates in making, decisions that affect the whole, or a substantial part, of the business or affairs of the trust; or

   2. (ii)

      has the capacity to affect significantly the financial standing of the trust; and

4. (d)

   in relation to a joint venture—means a person (other than a director or secretary of a corporation participating in the joint venture) who:

   1. (i)

      makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the joint venture; or

   2. (ii)

      has the capacity to affect significantly the financial standing of the joint venture.

87

After section 50

Insert:

50AAAAssociated entities

1. (1)

   One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.

2. (2)

   This subsection is satisfied if the associate and the principal are related bodies corporate.

3. (3)

   This subsection is satisfied if the principal controls the associate.

4. (4)

   This subsection is satisfied if:

   1. (a)

      the associate controls the principal; and

   2. (b)

      the operations, resources or affairs of the principal are material to the associate.

5. (5)

   This subsection is satisfied if:

   1. (a)

      the associate has a qualifying investment (see subsection (8)) in the principal; and

   2. (b)

      the associate has significant influence over the principal; and

   3. (c)

      the interest is material to the associate.

6. (6)

   This subsection is satisfied if:

   1. (a)

      the principal has a qualifying investment (see subsection (8)) in the associate; and

   2. (b)

      the principal has significant influence over the associate; and

   3. (c)

      the interest is material to the principal.

7. (7)

   This subsection is satisfied if:

   1. (a)

      an entity (the third entity) controls both the principal and the associate; and

   2. (b)

      the operations, resources or affairs of the principal and the associate are both material to the third entity.

8. (8)

   For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:

   1. (a)

      has an asset that is an investment in the second entity; or

   2. (b)

      has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.

88

At the end of subsection 298(1)

Add:

1. ; and (c)

   a copy of the auditor’s declaration under section 307C in relation to the audit for the financial year.

89

After paragraph 300(1)(c)

Insert:

1. (ca)

   the name of each person who:

   1. (i)

      is an officer of the company, registered scheme or disclosing entity at any time during the year; and

   2. (ii)

      was a partner in an audit firm, or a director of an audit company, that is an auditor of the company, disclosing entity or registered scheme for the year; and

   3. (iii)

      was such a partner or director at a time when the audit firm or the audit company undertook an audit of the company, disclosing entity or registered scheme; and

90

Subsection 300(1)

After “subsections (10), (11),”, insert “(11A), (11B),”.

90A

After subsection 300(2)

Insert:

1. (2A)

   If subsection (2) is relied on to not include in the directors’ report for a financial year details that would otherwise be required to be included in that report under paragraph (11B)(a) or (11C)(b), that report must specify, in the section headed “Non‑audit services”, where those details may be found in the company’s financial report for that financial year.

91

After subsection 300(11)

Insert:

1. (11A)

   If a registered company auditor plays a significant role in the audit of a listed company for the financial year in reliance on a declaration made under section 342A, the report for the company must also include details of the declaration.

Listed companies—non‑audit services and auditor independence

1. (11B)

   The report for a listed company must also include the following in relation to each auditor:

   1. (a)

      details of the amounts paid or payable to the auditor for non‑audit services provided, during the year, by the auditor (or by another person or firm on the auditor’s behalf);

   2. (b)

      a statement whether the directors are satisfied that the provision of non‑audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by this Act;

   3. (c)

      a statement of the directors’ reasons for being satisfied that the provision of those non‑audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) did not compromise the auditor independence requirements of this Act.

These details and statements must be included in the directors’ report under the heading “Non‑audit services”. If consolidated financial statements are required, the details and statements must relate to amounts paid or payable to the auditor by, and non‑audit services provided to, any entity (including the company, registered scheme or disclosing entity) that is part of the consolidated entity.

1. (11C)

   For the purposes of paragraph (11B)(a), the details of amounts paid or payable to an auditor for non‑audit services provided, during the year, by the auditor (or by another person or firm on the auditor’s behalf) are:

   1. (a)

      the name of the auditor; and

   (b) the dollar amount that:

   1. (i)

      the listed company; or

   2. (ii)

      if consolidated financial statements are required—any entity that is part of the consolidated entity;

   paid, or is liable to pay, for each of those non‑audit services.

2. (11D)

   The statements under paragraphs (11B)(b) and (c) must be made in accordance with:

   (a) advice provided by the listed company’s audit committee if the company has an audit committee; or

   1. (b)

      a resolution of the directors of the listed company if paragraph (a) does not apply.

3. (11E)

   For the purposes of subsection (11D), a statement is taken to be made in accordance with advice provided by the company’s audit committee only if:

   1. (a)

      the statement is consistent with that advice and does not contain any material omission of material included in that advice; and

   2. (b)

      the advice is endorsed by a resolution passed by the members of the audit committee; and

   3. (c)

      the advice is written advice signed by a member of the audit committee on behalf of the audit committee and given to the directors.

92

At the end of section 306

Add:

1. (2)

   The directors’ report must include a copy of the auditor’s declaration under section 307C in relation to the audit or review for the half‑year.

93

Before section 308

Insert:

307CAuditor’s independence declaration

Contravention by individual auditor

1. (1)

   If an individual auditor conducts:

   1. (a)

      an audit of the financial report for a financial year; or

   2. (b)

      an audit or review of the financial report for a half‑year;

the individual auditor must give the directors of the company, registered scheme or disclosing entity:

1. (c)

   a written declaration that, to the best of the individual auditor’s knowledge and belief, there have been:

   1. (i)

      no contraventions of the auditor independence requirements of this Act in relation to the audit or review; and

   2. (ii)

      no contraventions of any applicable code of professional conduct in relation to the audit or review; or

2. (d)

   a written declaration that, to the best of the individual auditor’s knowledge and belief, the only contraventions of:

   1. (i)

      the auditor independence requirements of this Act in relation to the audit or review; or

   2. (ii)

      any applicable code of professional conduct in relation to the audit or review;

are those contraventions details of which are set out in the declaration.

1. (2)

   An offence based on subsection (1) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

Contravention by lead auditor

1. (3)

   If an audit firm or audit company conducts:

   1. (a)

      an audit of the financial report for a financial year; or

   2. (b)

      an audit or review of the financial report for a half‑year;

the lead auditor for the audit must give the directors of the company, registered scheme or disclosing entity:

1. (c)

   a written declaration that, to the best of the lead auditor’s knowledge and belief, there have been:

   1. (i)

      no contraventions of the auditor independence requirements of this Act in relation to the audit or review; and

   2. (ii)

      no contraventions of any applicable code of professional conduct in relation to the audit or review; or

2. (d)

   a written declaration that, to the best of the lead auditor’s knowledge and belief, the only contraventions of:

   1. (i)

      the auditor independence requirements of this Act in relation to the audit or review; or

   2. (ii)

      any applicable code of professional conduct in relation to the audit or review;

are those contraventions details of which are set out in the declaration.

1. (4)

   An offence based on subsection (3) is an offence of strict liability.

   Note: For strict liability see section 6.1 of the Criminal Code.

2. (5)

   The declaration under subsection (1) or (3):

   1. (a)

      must be given when the audit report is given to the directors of the company, registered scheme or disclosing entity; and

   2. (b)

      must be signed by the person making the declaration.

Self‑incrimination

1. (6)

   An individual is not excused from giving a declaration under subsection (1) or (3) on the ground that giving the declaration might tend to incriminate the individual or expose the individual to a penalty.

Use/derivative use indemnity

1. (7)

   However, neither:

   1. (a)

      the information included in the declaration; nor

   2. (b)

      any information, document or thing obtained as a direct or indirect consequence of including the information in the declaration;

is admissible in evidence against the individual in any criminal proceedings, or in any proceedings that would expose the person to a penalty, other than:

1. (c)

   proceedings for an offence against section 1308 or 1309 in relation to the declaration; or

2. (d)

   proceedings for an offence against section 137.1 or 137.2 of the Criminal Code (false or misleading information or documents) in relation to the declaration.

94

Division 1 of Part 2M.4 (heading)

Repeal the heading, substitute:

Division 1—Entities that may be appointed as an auditor for a company or registered scheme

95

Section 324

Repeal the section, substitute:

324AAIndividual auditors, audit firms and authorised audit companies

Subject to this Part, the following may be appointed as auditor for a company or a registered scheme for the purposes of this Act:

1. (a)

   an individual;

2. (b)

   a firm;

3. (c)

   a company.

The company or registered scheme may have more than one auditor.

324ABEffect of appointing firm as auditor—general

1. (1)

   The appointment of a firm as auditor of a company or registered scheme is taken to be an appointment of all persons who, at the date of the appointment, are:

   1. (a)

      members of the firm; and

   2. (b)

      registered company auditors.

This is so whether or not those persons are resident in Australia.

1. (2)

   The appointment of the members of a firm as auditors of a company or registered scheme that is taken by subsection (1) to have been made because of the appointment of the firm as auditor of the company or scheme is not affected by the dissolution of the firm. This subsection has effect subject to section 324AC.

2. (3)

   A report or notice that purports to be made or given by a firm appointed as auditor of a company or registered scheme is not taken to be duly made or given unless it is signed by a member of the firm who is a registered company auditor both:

   1. (a)

      in the firm name; and

   2. (b)

      in his or her own name.

3. (4)

   A notice required or permitted to be given to an audit firm under the Corporations legislation may be given to the firm by giving the notice to a member of the firm.

4. (5)

   For the purposes of criminal proceedings under this Act against a member of an audit firm, an act or omission by:

   1. (a)

      a member of the firm; or

   2. (b)

      an employee or agent of the audit firm;

acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority, is also to be attributed to the audit firm.

324ACEffect of appointing firm as auditor—reconstitution of firm

Reconstitution of firm

1. (1)

   This section deals with the situation in which:

   1. (a)

      a firm is appointed as auditor of a company or registered scheme; and

   2. (b)

      the firm is reconstituted because of either or both of the following:

      1. (i)

         the death, retirement or withdrawal of a member or members; or

      2. (ii)

         the admission of a new member or new members.

Retiring or withdrawing member

1. (2)

   A person who:

   1. (a)

      is taken under subsection 324AB(1) to be an auditor of the company; and

   2. (b)

      retires or withdraws from the firm as previously constituted as mentioned in subparagraph (1)(b)(i) of this section;

is taken to resign as auditor of the company as from the day of his or her retirement or withdrawal.

1. (3)

   Section 329 does not apply to the resignation that is taken to occur under subsection (2) unless:

   1. (a)

      the person who is taken to have resigned was the only member of the firm who was a registered company auditor; and

   2. (b)

      there is no member of the firm who is a registered company auditor after that person retires or withdraws from the firm.

New member

1. (4)

   A person who:

   1. (a)

      is a registered company auditor; and

   2. (b)

      is admitted to the firm as mentioned in subparagraph (1)(b)(ii);

is taken to have been appointed as an auditor of the company or registered scheme as from the day of his or her admission to the firm.

Appointments of continuing members not affected

1. (5)

   The reconstitution of the firm does not affect the appointment of the continuing members of the firm who are registered company auditors as auditors of the company or registered scheme.

2. (6)

   Nothing in this section affects the operation of section 324BB.

324ADEffect of appointing company as auditor

1. (1)

   A report or notice that purports to be made or given by an audit company appointed as auditor of a company or registered scheme is not taken to be duly made or given unless it is signed by a director of the audit company (or the lead auditor or review auditor for the audit) both:

   1. (a)

      in the audit company’s name; and

   2. (b)

      in his or her own name.

2. (2)

   For the purposes of criminal proceedings under this Act against a director of an audit company, an act or omission by:

   1. (a)

      an officer of the audit company; or

   2. (b)

      an employee or agent of the audit company;

acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority, is also to be attributed to the audit company.

324AEProfessional members of the audit team

If an individual auditor, audit firm or audit company conducts an audit of a company or registered scheme, the professional members of the audit team are:

1. (a)

   any registered company auditor who participates in the conduct of the audit; and

2. (b)

   any other person who participates in the conduct of the audit and, in the course of doing so, exercises professional judgment in relation to the application of or compliance with:

   1. (i)

      accounting standards; or

   2. (ii)

      auditing standards; or

   3. (iii)

      the provisions of this Act dealing with financial reporting and the conduct of audits; and

3. (c)

   any other person who is in a position to directly influence the outcome of the audit because of the role they play in the design, planning, management, supervision or oversight of the audit.

324AFLead and review auditors

Lead auditor

1. (1)

   If an audit firm or audit company conducts an audit of a company or registered scheme, the lead auditor for the audit is the registered company auditor who is primarily responsible to the audit firm or the audit company for the conduct of the audit.

Review auditor

1. (2)

   If an individual auditor, audit firm or audit company conducts an audit of a company or registered scheme, the review auditor for the audit is the registered company auditor (if any) who is primarily responsible to the individual auditor, the audit firm or the audit company for reviewing the conduct of the audit.

Division 2—Registration requirements

324BARegistration requirements for appointment of individual as auditor

Subject to section 324BD, an individual contravenes this section if:

1. (a)

   the individual:

   1. (i)

      consents to be appointed as auditor of a company or registered scheme; or

   2. (ii)

      acts as auditor of a company or registered scheme; or

   3. (iii)

      prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

2. (b)

   the person is not a registered company auditor.

324BBRegistration requirements for appointment of firm as auditor

Contraventions by members of firm

1. (1)

   A person (the defendant) contravenes this subsection if:

   1. (a)

      at a particular time, a firm:

      1. (i)

         consents to be appointed as auditor of a company or registered scheme; or

      2. (ii)

         acts as auditor of a company or registered scheme; or

      3. (iii)

         prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

   2. (b)

      at that time, the firm:

      1. (i)

         does not satisfy subsection (5); or

      2. (ii)

         does not satisfy subsection (6); and

   3. (c)

      the defendant is a member of the firm at that time; and

   4. (d)

      the defendant is aware of the circumstances referred to in paragraphs (a) and (b) at that time.

2. (2)

   A person (the defendant) contravenes this subsection if:

   1. (a)

      at a particular time, a firm:

      1. (i)

         consents to be appointed as auditor of a company or registered scheme; or

      2. (ii)

         acts as auditor of a company or registered scheme; or

      3. (iii)

         prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

   2. (b)

      at that time, the firm:

      1. (i)

         does not satisfy subsection (5); or

      2. (ii)

         does not satisfy subsection (6); and

   3. (c)

      the defendant is a member of the firm at that time.

3. (3)

   For the purposes of an offence based on subsection (2), strict liability applies to the physical elements of the offence specified in paragraphs (2)(a) and (b).

   Note 1: For strict liability, see section 6.1 of the Criminal Code.

   Note 2: Subsection (4) provides a defence.

4. (4)

   A member of an audit firm does not commit an offence at a particular time because of a contravention of subsection (2) if the member either:

   1. (a)

      does not know at that time of the circumstances that constitute the contravention of subsection (2); or

   2. (b)

      does know of those circumstances at that time but takes all reasonable steps to correct the contravention as soon as possible after the member becomes aware of those circumstances.

   Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.

Registered company auditor requirement

1. (5)

   The firm satisfies this subsection if at least 1 member of the firm is a registered company auditor who is ordinarily resident in Australia.

Business name or members names requirement

1. (6)

   The firm satisfies this subsection if:

   1. (a)

      the business name under which the firm is carrying on business is registered under a law of a State or Territory relating to the registration of business names; or

   2. (b)

      a return in the prescribed form has been lodged showing, in relation to each member of the firm, the member’s full name and address as at the time when the firm so consents, acts or prepares a report.

324BCRegistration requirements for appointment of company as auditor

Contravention by company

1. (1)

   A company contravenes this subsection if:

   1. (a)

      the company:

      1. (i)

         consents to be appointed as auditor of a company or registered scheme; or

      2. (ii)

         acts as auditor of a company or registered scheme; or

      3. (iii)

         prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

   2. (b)

      the company is not an authorised audit company.

Contraventions by directors of company

1. (2)

   A person (the defendant) contravenes this subsection if:

   1. (a)

      at a particular time, a company:

      1. (i)

         consents to be appointed as auditor of a company or registered scheme; or

      2. (ii)

         acts as auditor of a company or registered scheme; or

      3. (iii)

         prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

   2. (b)

      at that time, the company is not an authorised audit company; and

   3. (c)

      the defendant is a director of the company at that time; and

   4. (d)

      the defendant is aware of the circumstances referred to in paragraphs (a) and (b) at that time.

2. (3)

   A person (the defendant) contravenes this subsection if:

   1. (a)

      at a particular time, a company:

      1. (i)

         consents to be appointed as auditor of a company or registered scheme; or

      2. (ii)

         acts as auditor of a company or registered scheme; or

      3. (iii)

         prepares a report required by this Act to be prepared by a registered company auditor or by an auditor of a company or registered scheme; and

   2. (b)

      at that time, the company is not an authorised audit company; and

   3. (c)

      the defendant is a director of the company at that time.

3. (4)

   For the purposes of an offence based on subsection (3), strict liability applies to the physical elements of the offence specified in paragraphs (3)(a) and (b).

   Note 1: For strict liability, see section 6.1 of the Criminal Code.

   Note 2: Subsection (5) provides a defence.

4. (5)

   A director of a company does not commit an offence at a particular time because of a contravention of subsection (3) if the director either:

   1. (a)

      does not know at that time of the circumstances that constitute the contravention of subsection (3); or

   2. (b)

      knows of those circumstances at that time but takes all reasonable steps to correct the contravention of subsection (3) as soon as possible after the director becomes aware of those circumstances.

   Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.

324BDException from registration requirement for proprietary company

1. (1)

   An individual who is not a registered company auditor may be appointed as auditor of a proprietary company if:

   1. (a)

      ASIC is satisfied that it is impracticable for a proprietary company to obtain the services of:

      1. (i)

         an individual who could be appointed as auditor consistently with section 324BA; or

      2. (ii)

         a firm that could be appointed as auditor consistently with section 324BB; or

      3. (iii)

         a company that could be appointed consistently with section 324BC;

   because of the place where the company carries on business; and

   1. (b)

      ASIC is satisfied that the individual is suitably qualified or experienced; and

   2. (c)

      ASIC approves the individual for the purposes of this Act in relation to the audit of the company’s financial reports.

The appointment is subject to such terms and conditions as are specified in the approval under paragraph (c).

1. (2)

   If an individual is appointed in accordance with subsection (1):

   1. (a)

      the individual is taken to be a registered company auditor in relation to the auditing of any of the company’s financial reports; and

   2. (b)

      the provisions of this Act apply, with the necessary modifications, in relation to the individual accordingly.

Paragraph (a) has effect subject to the terms and conditions of the approval under subsection (1).

1. (3)

   If an individual approved by ASIC under subsection (1) is acting as auditor of a company, ASIC may at any time, by notice in writing given to the company:

   1. (a)

      amend, revoke or vary the terms and conditions of its approval; or

   2. (b)

      terminate the appointment of that individual as auditor of the company.

2. (4)

   A notice under subsection (3) terminating the appointment of an individual as auditor of a company takes effect as if, on the date on which the notice is received by the company, the company had received from the individual notice of the individual’s resignation as auditor taking effect from that date.

Division 3—Auditor independence

Subdivision A—General requirement

324CAGeneral requirement for auditor independence—auditors

Contravention by individual auditor or audit company

1. (1)

   An individual auditor or audit company contravenes this subsection if:

   1. (a)

      the individual auditor or audit company engages in audit activity in relation to an audited body at a particular time; and

   2. (b)

      a conflict of interest situation exists in relation to the audited body at that time; and

   3. (c)

      at that time:

      1. (i)

         in the case of an individual auditor—the individual auditor is aware that the conflict of interest situation exists; or

      2. (ii)

         in the case of an audit company—the audit company is aware that the conflict of interest situation exists; and

   4. (d)

      the individual auditor or audit company does not, as soon as possible after the individual auditor or the audit company becomes aware that the conflict of interest situation exists, take all reasonable steps to ensure that the conflict of interest situation ceases to exist.

   Note: For conflict of interest situation, see section 324CD.

Individual auditor or audit company to notify ASIC

1. (1A)

   An individual auditor or audit company contravenes this subsection if:

   1. (a)

      the individual auditor or audit company is the auditor of an audited body; and

   2. (b)

      a conflict of interest situation exists in relation to the audited body while the individual auditor or audit company is the auditor of the audited body; and

   3. (c)

      on a particular day (the start day):

      1. (i)

         in the case of an individual auditor—the individual auditor becomes aware that the conflict of interest situation exists; or

      2. (ii)

         in the case of an audit company—the audit company becomes aware that the conflict of interest situation exists; and

   4. (d)

      at the end of the period of 7 days from the start day:

17

Paragraph 418(1)(c)

Omit “an officer”, substitute “a director, secretary, senior manager or employee”.

18

Paragraph 418(1)(e)

Omit “an officer”, substitute “a director, secretary, senior manager or employee”.

19

Paragraph 418(1)(f)

Omit “an officer”, substitute “a director, secretary, senior manager, employee”.

20

Subsection 418(2)

Repeal the subsection.

21

Paragraph 422(1)(a)

After “officer”, insert “or employee”.

22

Paragraph 422(3)(a)

After “officer”, insert “or employee”.

23

Subsection 437C(1)

After “officer”, insert “or provisional liquidator”.

24

Subsection 437C(2)

After “officer”, insert “or provisional liquidator”.

25

Subsections 437C(4) and (5)

Repeal the subsections.

26

Subsection 437D(5)

After “officer”, insert “or employee”.

27

Paragraph 438D(1)(a)

After “officer”, insert “or employee”.

28

Paragraph 438D(3)(a)

After “officer”, insert “or employee”.

29

Paragraph 448C(1)(c)

Repeal the paragraph, substitute:

1. (c)

   the person is a director, secretary, senior manager or employee of the company; or

30

Paragraph 448C(1)(d)

Omit “an officer”, substitute “a director, secretary, senior manager or employee”.

31

Subsection 448C(3)

Repeal the subsection, substitute:

1. (3)

   For the purposes of this section, a person is taken to be a director, secretary, senior manager, employee or auditor of a company if:

   1. (a)

      the person is or has, within the last 2 years, been a director, secretary, senior manager, employee, auditor or promoter of the company or a related body corporate; and

   2. (b)

      ASIC has not directed that the person not be taken to be a director, secretary, senior manager, employee or auditor for the purposes of this section.

ASIC may give a direction under paragraph (b) only if it thinks fit in the circumstances of the case.

32

Subsection 466(3)

After “officer”, insert “or employee”.

33

Subsection 471A(4)

Repeal the subsection, substitute:

1. (4)

   For the purposes of this section, a person is not an officer of a company merely because he or she is a receiver and manager, appointed under a power contained in an instrument, of property of the company.

34

Subsection 483(1)

Omit “or officer”, substitute “, officer or employee”.

35

Paragraph 486A(1)(a)

After “officer”(wherever occurring), insert “, employee”.

36

Subparagraph 486A(1)(b)(i)

After “officer”, insert “or employee”.

37

Paragraph 486A(1)(c)

After “officer”, insert “or employee”.

38

Paragraph 486A(1)(d)

After “officer”, insert “or employee”.

39

Paragraph 486A(2)(b)

After “officer”, insert “, employee”.

40

Paragraph 486A(2)(c)

After “officer”, insert “, employee”.

41

Paragraph 486A(2)(d)

After “officer”, insert “, employee”.

42

Subsection 500(3)

Omit “or officer”, substitute “, officer or employee”.

43

Subsection 530A(7)

Repeal the subsection, substitute:

1. (7)

   For the purposes of this section, officer includes a former officer.

44

Subsection 530A(8)

Repeal the subsection.

45

Subparagraph 532(2)(c)(i)

After “officer”, insert “or employee”.

46

Subparagraph 532(2)(c)(ii)

After “officer”, insert “or employee”.

47

Subsection 532(6)

After “officer” (first and second occurring), insert “, employee”.

48

Paragraph 532(6)(b)

After “officer,”, insert “employee,”.

49

Paragraph 533(1)(a)

After “officer”, insert “or employee”.

50

Paragraph 533(3)(a)

After “officer”, insert “or employee”.

51

Paragraph 585(a)

Omit “executive officer”, substitute “senior manager”.

52

Paragraph 585(b)

Omit “executive officer”, substitute “senior manager”.

53

Subsection 590(1)

After “present officer”, insert “or employee”.

54

Subsection 590(4)

After “present officer”, insert “or employee”.

55

Subsection 590(4A)

After “present officer”, insert “or employee”.

56

Subsection 596(1)

After “officer”, insert “or employee”.

57

Paragraph 596A(b)

Omit “examinable officer”, substitute “officer or provisional liquidator”.

58

Paragraph 596A(b)

Omit “an officer”, substitute “an officer or provisional liquidator”.

59

Paragraph 601JA(2)(b)

Omit “an executive officer”, substitute “a senior manager”.

60

Paragraph 601JB(2)(a)

Omit “an executive officer”, substitute “a senior manager”.

61

Section 628

After “officer”, insert “or employee”.

62

Paragraph 708(12)(a)

Omit “an executive officer”, substitute “a senior manager”.

63

Paragraph 792B(5)(a)

Omit “executive officer”, substitute “senior manager”.

64

Paragraph 821B(4)(a)

Omit “executive officer”, substitute “senior manager”.

65

Paragraph 853B(a)

Omit “executive officer”, substitute “senior manager”.

66

Paragraph 990I(2)(b)

Omit “executive officer”, substitute “senior manager”.

67

Subsection 990I(3)

Omit “an executive officer”, substitute “a senior manager”.

68

Subsection 1012D(9B)

Omit “an executive officer” (wherever occurring), substitute “a senior manager”.

69

Section 1043F

After “officer” (wherever occurring), insert “or employee”.

70

Subsection 1043I(2)

After “officer”, insert “or employee”.

71

Subsection 1043I(3)

After “officer” (wherever occurring), insert “or employee”.

72

Subsection 1043J(2)

After “officer”, insert “or employee”.

73

Subsection 1071G(3)

After “officers”, insert “and employees”.

74

Subsection 1071H(6)

After “officer”, insert “or employee”.

75

Paragraph 1071H(7)(b)

After “officer”, insert “or employee”.

76

Subsection 1302(3)

After “officer”, insert “or employee”.

77

Subsection 1307(1)

After “former officer,”, insert “employee, former employee,”.

78

Subsection 1307(4)

Repeal the subsection.

79

Subsection 1309(1)

After “An officer”, insert “or employee”.

80

Subsection 1309(1)

After “the officer”, insert “or employee”.

81

Subsection 1309(2)

After “An officer”, insert “or employee”.

82

Subparagraph 1314(4)(a)(i)

After “officer”, insert “or employee”.

83

Subparagraph 1314(4)(b)(iii)

After “officer”, insert “or employee”.

84

Subparagraph 1317R(3)(b)(ii)

After “officer”, insert “or employee”.

85

Subparagraph 1317S(2)(b)(ii)

After “officer”, insert “, or employment as an employee,”.

86

Paragraph 1318(4)(a)

After “officer”, insert “or employee”.

87

Paragraph 1318(4)(b)

After “officer”, insert “or employee”.

88

Subsection 1318(5)

Repeal the subsection.

Schedule 10Management of conflicts of interest by financial services licensees

Corporations Act 2001

1

After paragraph 912A(1)(a)

Insert:

1. (aa)

   have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative; and

Schedule 11Miscellaneous amendments

Australian Securities and Investments Commission Act 2001

1. 1

   Subsection 5(1) (paragraph (a) of the definition of international accounting standards)

   Repeal the paragraph, substitute:

   1. (a)

      the International Accounting Standards Board; or

2

Subsection 236A(3)

Omit “procedure” (wherever occurring), substitute “procedures”.

Note: The heading to section 236A is replaced by the heading “Procedures”.

Corporations Act 2001

3

Section 111AO

After “disclosing entity”, insert “incorporated or formed in Australia”.

4

Subsection 143(3)

Omit “14 days”, substitute “28 days”.

5

Paragraph 188(2)(a)

Omit “section 142, 145, 205B or 345”, substitute “a provision referred to in subsection (1)”.

6

Section 201L

Omit “14 days”, substitute “28 days”.

7

Section 204D (note 1)

Omit “14 days”, substitute “28 days”.

8

Paragraph 285(2)(a)

Omit “(whether or not incorporated or formed in this jurisdiction)”.

9

Paragraphs 295(4)(a) and (b)

Repeal the paragraphs.

10

Paragraphs 303(4)(a) and (b)

Repeal the paragraphs.

11

At the end of subsection 303(4)

Add:

1. ; and (d)

   whether, in the directors’ opinion, the financial statement and notes are in accordance with this Act, including:

   1. (i)

      section 304 (compliance with accounting standards); and

   2. (ii)

      section 305 (true and fair view).

12

At the end of section 306

Add:

1. (3)

   The report must:

   1. (a)

      be made in accordance with a resolution of the directors; and

   2. (b)

      specify the date on which the report is made; and

   3. (c)

      be signed by a director.

Note: The heading to section 331AD is altered by omitting “an” and substituting “on”.

13

Subsection 348D(4)

Omit “extract”, substitute “return”.

14

Section 1448

Omit “2002”, substitute “2003”.

Note: The heading to section 1448 is altered by omitting “2002” and substituting “2003”.

Schedule 11ARegister of information about relevant interests

Corporations Act 2001

1

Subsection 168(1) (after note 1)

Insert:

Note 1A: See also section 672DA (register of relevant interests in listed company or registered scheme).

2

After section 672D

Insert:

672DARegister of information about relevant interests in listed company or listed managed investment scheme

1. (1)

   A listed company, or the responsible entity for a listed managed investment scheme, must keep a register of the following information that it receives under this Part on or after 1 January 2005 (whether the information is received pursuant to a direction the company, or responsible entity, itself gives under section 672A or is received from ASIC under section 672C):

   1. (a)

      details of the nature and extent of a person’s relevant interest in shares in the company or interests in the scheme;

   2. (b)

      details of the circumstances that give rise to a person’s relevant interest in shares in the company or interests in the scheme;

   3. (c)

      the name and address of a person who has a relevant interest in shares in the company or interests in the scheme;

   4. (d)

      details of instructions that a person has given about:

      1. (i)

         the acquisition or disposal of shares in the company or interests in the scheme; or

      2. (ii)

         the exercise of any voting or other rights attached to shares in the company or interests in the scheme; or

      3. (iii)

         any other matter relating to shares in the company or interests in the scheme;

   5. (e)

      the name and address of a person who has given instructions of the kind referred to in paragraph (d).

The register must be kept in accordance with this section.

1. (2)

   A register kept under this section by a listed company must be kept at:

   1. (a)

      the company’s registered office; or

   2. (b)

      the company’s principal place of business in this jurisdiction; or

   3. (c)

      a place in this jurisdiction (whether or not an office of the company) where the work involved in maintaining the register is done; or

   4. (d)

      another place in this jurisdiction approved by ASIC.

2. (3)

   A register kept under this section by the responsible entity of a listed managed investment scheme must be kept at:

   1. (a)

      the responsible entity’s registered office; or

   2. (b)

      the responsible entity’s principal place of business in this jurisdiction; or

   3. (c)

      a place in this jurisdiction (whether or not an office of the responsible entity) where the work involved in maintaining the register is done; or

   4. (d)

      another place in this jurisdiction approved by ASIC.

3. (4)

   The company, or the responsible entity, must lodge with ASIC a notice of the address at which the register is kept within 7 days after the register is:

   1. (a)

      established at a place that:

      1. (i)

         is not the registered office of the company or responsible entity; and

      2. (ii)

         is not at the principal place of business of the company or responsible entity in this jurisdiction; or

   2. (b)

      moved from one place to another.

Notice is not required for moving the register between the registered office and the principal place of business in this jurisdiction.

Note: The obligation to notify ASIC under this subsection is a continuing obligation and the company or responsible entity is guilty of an offence for each day, after the 7 day period, until ASIC is notified (see section 4K of the Crimes Act 1914).

1. (5)

   An offence based on subsection (2), (3) or (4) is an offence of strict liability.

   Note: For strict liability, see section 6.1 of the Criminal Code.

2. (6)

   The register must either contain:

   1. (a)

      the name of each holder of shares in the company, or interests in the scheme, to whom the information relates; and

   2. (b)

      against the name of each such holder:

      1. (i)

         the name and address of each other person (if any) who, according to information the company, or the responsible entity, has received under this Part on or after 1 January 2005, has a relevant interest in any of the shares or interests (together with details of the relevant interest and of the circumstances because of which the other person has the relevant interest); and

      2. (ii)

         the name and address of each person who, according to information received by the company, or the responsible entity, under this Part on or after 1 January 2005, has given relevant instructions in relation to any of the shares or interests (together with details of those relevant instructions); and

   3. (c)

      in relation to each item of information entered in the register, the date on which the item was entered in the register;

or be in such other form as ASIC approves in writing.

1. (7)

   The register must be open for inspection:

   1. (a)

      by any member of the company or scheme—without charge; and

   2. (b)

      by any other person:

      1. (i)

         if the company, or the responsible entity, requires the payment of a fee for the inspection—on payment of the fee; or

      2. (ii)

         if the company, or the responsible entity, does not require the payment of a fee for the inspection—without charge.

The amount of the fee required by the company, or the responsible entity, under subparagraph (b)(i) must not exceed the amount prescribed by the regulations for the purposes of this subsection.

1. (8)

   A person may request the company, or the responsible entity, to give to the person a copy of the register (or any part of the register) and, if such a request is made, the company, or the responsible entity, must give the person the copy:

   1. (a)

      if the company, or the responsible entity, requires payment of a fee for the copy:

      1. (i)

         before the end of 21 days after the day on which the payment of the fee is received by the company or the responsible entity; or

      2. (ii)

         within such longer period as ASIC approves in writing; or

   2. (b)

      if the company, or the responsible entity, does not require payment of a fee for the copy:

      1. (i)

         before the end of 21 days after the day on which the request is made; or

      2. (ii)

         within such longer period as ASIC approves in writing.

The amount of the fee required by the company, or the responsible entity, under paragraph (a) must not exceed the amount prescribed by the regulations for the purposes of this subsection.

Note: The obligation to give the copy under this subsection is a continuing obligation and the company or responsible entity is guilty of an offence for each day, after the period referred to in paragraph (a) or (b), until the copy is given (see section 4K of the Crimes Act 1914).

1. (9)

   The information that subsection (6) requires to be entered in the register must be entered in the register by the company, or the responsible entity, before the end of 2 business days after the day on which the company, or the responsible entity, receives the information.

   Note: The obligation to enter the details in the register under this subsection is a continuing obligation and the company or responsible entity is guilty of an offence for each day, after the 2 business day period, until the details are entered in the register (see section 4K of the Crimes Act 1914).

3

Schedule 3 (after table item 229)

Insert:

229AA Subsections 672DA(1), (2), (3), (4), (6), (7), (8) and (9) 10 penalty units.

Schedule 12Transitional provisions

Australian Securities and Investments Commission Act 2001

1

At the end of the Act

Add:

Part 17—Transitional provisions relating to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004

285ADefinitions

In this Part:

amending Act means the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004.

old Act means this Act as in force immediately before the commencement of the amending Act.

Schedule 1 commencement means the day on which Schedule 1 to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 commences.

286Application of new subsection 225A(5)

Subsection 225A(5) applies to audits conducted in relation to financial reports for financial years that end on or after 1 July 2004.

287Application of Part 8 of Schedule 1 to the amending Act

1. (1)

   The person holding office as the Chairperson of the Companies Auditors and Liquidators Disciplinary Board under paragraph 203(1)(a) of the old Act immediately before the Schedule 1 commencement continues to hold office on and after the Schedule 1 commencement for the remainder of the term of the person’s appointment as if the person had been appointed under paragraph 203(1)(a) of this Act as amended by Part 8 of Schedule 1 to the amending Act.

2. (2)

   The person holding office as a member of the Companies Auditors and Liquidators Disciplinary Board under paragraph 203(1)(b) of the old Act immediately before the Schedule 1 commencement continues to hold office on and after the Schedule 1 commencement for the remainder of the term of the person’s appointment as if the person had been appointed under paragraph 203(1)(c) of this Act as amended by Part 8 of Schedule 1 to the amending Act.

3. (3)

   The person holding office as a member of the Companies Auditors and Liquidators Disciplinary Board under paragraph 203(1)(c) of the old Act immediately before the Schedule 1 commencement continues to hold office on and after the Schedule 1 commencement for the remainder of the term of the person’s appointment as if the person had been appointed under paragraph 203(1)(d) of this Act as amended by Part 8 of Schedule 1 to the amending Act.

4. (4)

   Despite the repeal of section 209 of the old Act by item 146 of Schedule 1 to the amending Act:

   1. (a)

      a person holding office as a deputy of a member under that section immediately before the Schedule 1 commencement continues to hold office on and after the Schedule 1 commencement for the purposes of a hearing in relation to an application made to the Companies Auditors and Liquidators Disciplinary Board before the Schedule 1 commencement; and

   2. (b)

      continues on and after the Schedule 1 commencement to be entitled to attend meetings of the Board at which the member is not present and, while so attending, to be taken to be a member of the Board.

5. (5)

   The amendments made by items 148 and 156 to 175 of Schedule 1 to the amending Act apply to applications made to the Companies Auditors and Liquidators Disciplinary Board on or after the Schedule 1 commencement (regardless of when the circumstances to which the application relates occurred).

288Application of Schedule 3 to the amending Act

The amendments made to this Act by Schedule 3 to the amending Act apply to causes of action that arise on or after the day on which that Schedule commences.

Corporations Act 2001

2

At the end of Chapter 10

Add:

Part 10.5—Transitional provisions relating to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004

1453Definitions

In this Part:

amending Act means the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004.

old Act means this Act as in force immediately before the commencement day.

Schedule 1 commencement means the day on which Schedule 1 to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 commences.

Schedule 4 commencement means the day on which Schedule 4 to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 commences.

Schedule 5 commencement means the day on which Schedule 5 to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 commences.

Schedule 8 commencement means the day on which Schedule 8 to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 commences.

1454Audit reforms in Schedule 1 to the amending Act (auditing standards and audit working papers retention rules)

Sections 307A, 307B and 989CA apply to:

1. (a)

   an audit of the financial report for a financial year; or

2. (b)

   an audit or review of the financial report for a half‑year in a financial year;

if the financial year begins on or after 1 July 2004.

1455Audit reforms in Schedule 1 to the amending Act (adoption of auditing standards made by accounting profession before commencement)

1. (1)

   The regulations may provide that a standard specified in the regulations (as in force from time to time) is to have effect, for the purposes of this Act, as if it had been made by the AUASB under section 336 on the day specified in the regulations.

1. (2)

   The standard must be one made or issued by the Australian Accounting Research Foundation before the Schedule 1 commencement on behalf of CPA Australia and The Institute of Chartered Accountants in Australia.

2. (3)

   The regulations may provide that the standard is to have effect as if it specified that it applies to periods ending, or starting, on or after a date specified in the standard.

3. (4)

   Standards prescribed under subsection (1) do not have effect as auditing standards:

   1. (a)

      in relation to financial reports for periods ending after 30 June 2006; or

   2. (b)

      in relation to financial reports for periods ending after a later date specified by regulations made for the purposes of subsection (1) before 30 June 2006.

4. (5)

   A person does not commit an offence based on a contravention of section 307A, subsection 308(3A) or 309(5A) or section 989CA because an audit or review is not conducted in accordance with, or does not include a statement or disclosure required by, an auditing standard prescribed under subsection (1) if the contravention occurs before 1 July 2006.

   Note: This subsection does not prevent, however, other action being taken on the basis of the failure to comply with the auditing standard (for example, the person’s failure to comply with the standard being referred to the Companies Auditors and Liquidators Disciplinary Board).

1456Audit reforms in Schedule 1 to the amending Act (new competency standard provisions)

If an application by a person for registration as a registered company auditor:

1. (a)

   is lodged with ASIC before the Schedule 1 commencement; and

2. (b)

   has not been determined before that day;

section 1280 of the old Act continues to apply to the application despite the amendments made by the amending Act.

1457Audit reforms in Schedule 1 to the amending Act (new annual statement requirements for auditors)

1. (1)

   The requirement under section 1287A for a registered company auditor to lodge an annual statement applies from the first anniversary of the auditor’s registration that occurs on or after 1 January 2005.

2. (2)

   The first annual statement lodged under section 1287A should cover the period commencing either:

   1. (a)

      immediately after the period covered by the last triennial statement; or

   2. (b)

      the day on which the auditor was registered;

whichever is later, and ending on the first anniversary of registration occurring on or after 1 January 2005.

1458Audit reforms in Schedule 1 to the amending Act (imposition of conditions on existing registration as company auditor)

ASIC may impose conditions on a person’s registration as a company auditor under section 1289A even if the registration took effect before the Schedule 1 commencement.

1459Audit reforms in Schedule 1 to the amending Act (application of items 62 and 63)

The amendments made by items 62 and 63 of Schedule 1 to the amending Act apply to periods that start on or after 1 January 2005.

1460Audit reforms in Schedule 1 to the amending Act (non‑audit services disclosure)

Subsections 300(11B) to (11E) apply to an audit of the financial report for a financial year if the financial year begins on or after 1 July 2004.

1461Audit reforms in Schedule 1 to the amending Act (auditor appointment)

1. (1)

   Section 324AC applies to all appointments of firms as auditor (including an appointment that was made before the Schedule 1 commencement).

2. (2)

   The appointment of a person as auditor of a company or registered scheme made before the Schedule 1 commencement under section 327 or 331AB of the old Act remains valid and effective despite the repeal of that section.

3. (3)

   An approval by ASIC that is in force under subsection 324(12) of the old Act immediately before the Schedule 1 commencement has effect on and after the Schedule 1 commencement as if it had been given under section 324B.

1462Audit reforms in Schedule 1 to the amending Act (auditor independence)

1. (1)

   Section 307C applies to a financial report for financial years that start on or after 1 July 2004.

2. (2)

   Division 3 of Part 2M.4 applies to:

   1. (a)

      an audit of the financial report for a financial year; or

   2. (b)

      an audit or review of the financial report for a half‑year in a financial year;

if the financial year begins on or after 1 July 2004.

1. (3)

   Division 3 of Part 2M.4 applies to all relationships that exist on or after the Schedule 1 commencement between an auditor and an audited body (including a relationship that exists because of circumstances that came into existence before the Schedule 1 commencement).

2. (4)

   Without limiting subsection (3), the items in the table in subsection 324CH(1) apply to circumstances that exist on or after the Schedule 1 commencement (including circumstances that exist because of events that occurred before the Schedule 1 commencement).

3. (5)

   Item 9 of the table in subsection 324CE(5) applies to a person who ceases to be a professional employee of the individual auditor concerned on or after the Schedule 1 commencement.

4. (6)

   Item 10 of the table in subsection 324CE(5) applies to a person who ceases to own the business of the individual auditor concerned on or after the Schedule 1 commencement.

5. (7)

   Item 11 of the table in subsection 324CF(5) applies to a person who ceases to be a member of the audit firm concerned on or after the Schedule 1 commencement.

6. (8)

   Item 12 of the table in subsection 324CF(5) applies to a person who ceases to be a professional employee of the auditor firm concerned on or after the Schedule 1 commencement.

7. (9)

   Item 11 of the table in subsection 324CG(9) applies to a person who ceases to be an officer of the audit company concerned on or after the Schedule 1 commencement.

8. (10)

   Item 12 of the table in subsection 324CG(9) applies to a person who ceases to be a professional employee of the audit company concerned on or after the Schedule 1 commencement.

9. (11)

   Section 324CI applies only if the relevant departure time for the purposes of that section occurs on or after the Schedule 1 commencement.

10. (12)

    Section 324CJ applies only if the relevant departure time for the purposes of that section occurs on or after the Schedule 1 commencement.

11. (13)

    Section 324CK applies to a person only if:

    1. (a)

       the person is on the Schedule 1 commencement, or becomes after the Schedule 1 commencement, a member of the audit firm concerned or a director of the audit company concerned; and

    2. (b)

       becomes an officer of the audited body concerned on or after the Schedule 1 commencement.

1463Audit reforms in Schedule 1 to the amending Act (auditor rotation)

Division 5 of Part 2M.4 applies to:

1. (a)

   an audit of the financial report for a financial year; or

2. (b)

   an audit or review of the financial report for a half‑year in a financial year;

if the financial year begins on or after 1 July 2006.

1464Audit reforms in Schedule 1 to the amending Act (listed company AGMs)

The amendments made by Part 5 of Schedule 1 to the amending Act apply to AGMs at which financial reports for financial years that commence on or after 1 July 2004 are considered.

1465Schedule 2 to the amending Act (financial reporting)

1. (1)

   The amendments made by Part 1 of Schedule 2 to the amending Act apply to directors’ declarations in relation to financial reports for financial years that start on or after 1 July 2004.

2. (2)

   The amendments made by Part 2 of Schedule 2 to the amending Act apply to directors’ reports for financial years that start on or after 1 July 2004.

3. (3)

   The amendments made by Part 3 of Schedule 2 apply to financial reports lodged with ASIC on or after 1 January 2004.

1466ASchedule 2A to the amending Act (true and fair view)

The amendments made by Schedule 2A to the amending Act apply to directors’ reports for periods that start on or after 1 July 2004.

1466Schedule 3 to the amending Act (proportionate liability)

The amendments made to this Act and the Trade Practices Act 1974 by Schedule 3 to the amending Act apply to causes of action that arise on or after the day on which that Schedule commences.

1467Schedule 4 to the amending Act (enforcement)

1. (1)

   The amendments made by Part 2 of Schedule 4 apply to all disclosures made on or after the day on which this Act receives the Royal Assent (including a disclosure of information about circumstances that arose before that day).

2. (2)

   Section 206BA applies to disqualifications from managing corporations that occur because of convictions on or after the Schedule 4 commencement.

3. (3)

   The amendments made by Part 4 of Schedule 4 to the amending Act apply in relation to a contravention of a financial services civil penalty provision that occurs on or after the day on which this Act receives the Royal Assent.

1468Schedule 5 to the amending Act (remuneration of directors and executives)

1. (1)

   Subject to subsections (2) and (3), the amendments made by Schedule 5 to the amending Act apply to financial years commencing on or after 1 July 2004.

2. (2)

   The amendments made by items 4, 4A and 5 of Schedule 5 to the amending Act apply to an agreement only if the agreement is entered into on or after the Schedule 5 commencement.

3. (3)

   The amendments made by items 6, 7 and 8 of Schedule 5 to the amending Act apply to remuneration reports for financial years that start on or after 1 July 2004.

1469Schedule 6 to the amending Act (continuous disclosure)

1. (1)

   The amendments made by Part 1 of Schedule 6 to the amending Act apply in relation to a contravention of subsection 674(2) or 675(2) that occurs on or after the day on which this Act receives the Royal Assent.

2. (2)

   The amendments made by Part 2 of Schedule 6 to the amending Act apply in relation to a failure by a disclosing entity to comply with subsection 674(2) or 675(2) that occurs on or after the day on which this Act receives the Royal Assent.

1470Schedule 7 to the amending Act (disclosure rules)

1. (1)

   The amendments made by Part 1 of Schedule 7 to the amending Act apply to a disclosure document for an offer of securities if the disclosure document is lodged with ASIC on or after the day on which this Act receives the Royal Assent.

2. (2)

   The amendments made by Part 2 of Schedule 7 to the amending Act apply to a Product Disclosure Statement that is required to be given on or after the day on which this Act receives the Royal Assent.

3. (3)

   The amendment made by items 10 and 11 of Schedule 7 to the amending Act applies to an offer of debentures that is made on or after the day on which this Act receives the Royal Assent.

4. (4)

   Section 708A applies to an offer of securities for sale that is made on or after the day on which this Act receives the Royal Assent.

5. (5)

   Section 1012DA applies to:

   1. (a)

      a recommendation situation if the relevant conduct (within the meaning of subsection 1012A(2)); and

   2. (b)

      a sale situation if the relevant conduct (within the meaning of subsection 1012C(2));

occurs on or after the day on which this Act receives the Royal Assent.

1471Schedule 8 to the amending Act (shareholder participation and information)

1. (1)

   The amendments made by items 1 to 6, 13 and 17 of Schedule 8 to the amending Act apply to a notice of a meeting of a company’s members that is given after 30 September 2004.

2. (2)

   The amendments made by items 7 to 12 and 14 of Schedule 8 to the amending Act apply to an appointment of a proxy that is made on or after the Schedule 8 commencement.

3. (2A)

   The amendment made by item 14A of Schedule 8 to the amending Act applies to reports for financial years that start on or after 1 July 2004.

4. (3)

   The amendment made by item 15 of Schedule 8 to the amending Act applies to a directors’ report for a financial year that starts on or after 1 July 2004.

5. (4)

   The amendment made by item 16 of Schedule 8 to the amending Act applies to a report referred to in subsection 314(1) for a financial year that starts on or after 1 July 2004.

[Minister’s second reading speech made in—

House of Representatives on 4 December 2003

Senate on 1 March 2004]

(207/03)