Re Australian Newsprint Mills Ltd

[1988] TASSC 51

Serial No 45/1988
List “A”

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Re Australian Newsprint Mills Ltd [1988] TASSC 51; A45/1988

PARTIES:  Australian Newsprint Mills Ltd

FILE NO/S:  M363/1988
DELIVERED ON:  26 September 1988
JUDGMENT OF:  Cox J

Judgment Number:  A45/1988
Number of paragraphs:  7

Serial No 45/1988

List "A"

File No M363/1988

RE AUSTRALIAN NEWSPRINT MILLS LTD

REASONS FOR JUDGMENT  COX J

26 September 1988

1. This is an appeal from the decision of the Commissioner of Corporate Affairs declining to relieve the directors of Australian Newsprint Mills Ltd. ("the company") from compliance with the provisions of clause 24(2)(a) and (b) and clause 24(4) of Schedule 7 of the Companies Regulations. The power of the Commissioner to grant such relief is contained in the Companies (Tasmania) Code, s273(1), and the right of appeal to the court is given by s273(10). It is common ground between the parties before me, namely the company and the Commissioner, that the appeal is one de novo and it is for me to exercise my own discretion upon the materials before me in the same manner as on an appeal from the Master.

1. The power of granting relief given by s273(1) is very broad in scope. The directors may be relieved from any specified requirements of the Code relating to, or to the audit of, accounts or group accounts or to the directors‘ reports required by s270(1) or (2). The relief sought in the present appeal is from compliance with requirements that the directors disclose in the accounts the aggregate of the income received, or due and receivable, in respect of the current financial year and hereafter and "in respect of the band of income below $10,000 income and in respect of each successive $10,000 band the number of directors of the company whose total income received, or due and receivable, in respect of that financial period directly or indirectly from the company or from any related corporation falls within that band". Income in relation to a director of a company is defined for present purposes as including "all his or her remuneration in connection with the management of the company or any related corporation whether as a director or otherwise".

1. The power to make an order granting relief of the kind sought may not however be exercised unless the Commissioner (or the court on appeal) is of the opinion that compliance with the requirement in question would render the accounts misleading or inappropriate to the circumstances of the company, or would impose unreasonable burdens on the company or on an officer of the company. Unless one of these pre–conditions can be fulfilled, the order must be refused (and the appeal dismissed). The company relies on only one such pre–condition which it submits has been established, namely that compliance would impose an unreasonable burden on one director of the company.

1. This unreasonable burden is said to arise by virtue of the fact that compliance with Schedule 7 will disclose what his remuneration package is (to within $10,000). The company has six directors, one of whom is an executive director. He receives no director's fees as such, but is paid a salary. The remaining five directors received in the year ending 30 June 1988 the sum of $28,000 in aggregate. Compliance with s.7 will disclose that five directors received remuneration in the band $1 – $10,000 and that the remaining director received remuneration in a higher band which has not been disclosed to the court but which would have to be specified in the accounts. The executive director will thus be capable of being identified and his salary band revealed. It is submitted that this is a burden because it constitutes an invasion of the director‘s privacy and is unreasonable because the company is owned in equal shares by two major listed public companies, the directors of which appoint the board of the applicant company. Publication of the information is therefore said to be unnecessary because it is already within the knowledge of the shareholders of the applicant company.

1. Disclosure of the remuneration received by directors of companies is now commonplace and should in my view be regarded as very much an incident of commercial life which, if involving something of an invasion of privacy, can scarcely be said to amount to a burden. In the United Kingdom in 1948 disclosure of the aggregate amount received by all the directors was provided for and in 1967 disclosure of the numbers of directors within successive bands of income was introduced. Gower in a note to his text Modern Company Law, 4th ed., at p155 says that by virtue of the Companies Act 1967, s6, "Individual emoluments have to be shown only in the case of the chairman. The modesty of other directors is protected by a somewhat inadequate fig leaf; what must be revealed is the number of directors receiving emoluments within specified points on a scale." For a time before its amendment by Statutory Rule No 206 of 1987 clause 24 of Schedule 7 required disclosure of the name of each director and of the amount of income received by him. That requirement has now been modified to the system Gower refers to as an inadequate fig leaf, but in my view this requirement of disclosure cannot in itself be termed a burden. One can easily imagine situations in which compliance with some of the requirements of the Code could require companies or individual officers to undertake considerable effort to procure information of perhaps little importance and could fairly be said to impose a burden which may or may not be unreasonable in the circumstances. A requirement that has the effect of revealing the approximate remuneration of one or more identifiable directors does not in my opinion constitute the kind of burden predicated in s273.

1. Nor, in my opinion, does the fact that the remuneration is already known to the two shareholders in the company render the requirement to disclose it in the accounts unreasonable. It may be known to the shareholder companies through their respective boards of directors, but it is not necessarily known to their general body of shareholders who in my opinion have a legitimate interest in receiving that information. Be that as it may however, if there is merit in the claim that disclosure in those circumstances is unnecessary that is an argument for changing the regulation. It does not, in my view, make the burden of disclosure (if it is a burden) unreasonable.

1. It was further submitted that as the company is engaged in the politically sensitive area of forestry operations, the information concerning the executive director's remuneration may be used to advance the cause of those opposed to such activities and to discredit the director himself or the company. There is no material before me which would suggest that the information would have the potential to achieve such a result, or that there was any likelihood that it would be so used. I see no reason to regard the director concerned as being in any significant way differently situated to many executive directors throughout the country whose companies are presently required to give information which in the circumstances may reveal the level of their individual salaries. I am unpersuaded that compliance with the requirement in question is an unreasonable burden. The appeal is dismissed.