SA Director
Issue No. 8 - December/ 2002/january
President's Message
CLERP 9, the government’s next tranche of corporate reform announced on 18 September 2002, focuses on the audit process and on continuous disclosure. It takes up many of the Ramsay recommendations and these proposals, in the main, are to be welcomed. However directors should be wary on some aspects of the changes proposed to the continuous disclosure regime.
One curious feature of CLERP 9 is that it precedes CLERP 8. That unexplained reversal of order presages another curious reversal, that of the roles of prosecutor and judge. This is the effect of the proposal to give the regulator, ASIC, the power to impose a financial penalty if, in ASIC’s opinion, a contravention of the continuous disclosure provisions has occurred.
The Treasury discussion paper, while short on detail, proposes an “expiation notice” regime. A somewhat similar expiation notice regime operates for speeding fines caught on camera in South Australia. Under the regime proposed by CLERP 9, ASIC would hold a hearing on whether it should form the opinion that breach has occurred with the suspect being informed of the case against and having an opportunity to be heard in response. If ASIC forms the requisite opinion an expiation notice, called an “infringement notice”, would be issued giving the defendant the choice of either paying up the amount fixed in the notice or requiring that the matter be dealt with by the Court.
On the surface, the “expiation notice” approach has some attractions. It can certainly allow the matter to be dealt with quickly and without the hassle and delay of litigation. As with the speeding fine regime, when the expiation amount is paid no further action can be taken in relation to that breach. The approach might also have the advantages, although the Treasury paper is not clear on this, of disposing of ASIC’s claim by a private process and avoiding the imposition of “ASIC demerit points”.
