January « 2009 « Australian Regulatory Compliance Review from Langes+ Lawyers

January 29, 2009

CAMAC report on Sons of Gwalia and insolvent companies

The Corporations and Markets Advisory Committee (CAMAC) has released its report Claims by shareholders against insolvent companies: implications of the Sons of Gwalia decision.

The report responds to a request for advice by the Government on the effect of the High Court decision in Sons of Gwalia Ltd v Margaretic [2007] HCA 1 (Sons of Gwalia).

The High Court held, in effect, that a claim by a shareholder for loss to the value of shares caused by failure of the company to inform the market would rank equally with the claims of other unsecured creditors in an external administration. It was not a claim in the shareholder’s ‘capacity as a member of the company’, which would be postponed behind claims by unsecured creditors.
While recognising that the decision has significant implications, including for providers of corporate debt finance as well as the conduct of external administrations, CAMAC has not recommended action to overturn its effect.

The Committee was not persuaded of the need for change in the legal position. “Any move to curtail the rights of recourse of aggrieved shareholders where a company is financially distressed could be seen as undermining legislative initiatives to provide shareholders with direct rights of action in respect of corporate misconduct. “

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Posted 29th January 2009 by David Jacobson in Corporations Act

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Retailer fined over misleading jewellery catalogue

In Australian Competition and Consumer Commission v Ascot Four Pty Ltd (No 2) [2009] FCA 28 the Federal Court of Australia fined Ascot Four Pty Ltd, the former owner of the jewellery retailer Zamel’s, $380,000 after it was found guilty of making false and misleading representations about the price of 11 jewellery items advertised in its Christmas 2005 catalogue.

Ascot Four was found to have falsely represented that the purchase of each of the 11 items during the sale period would have resulted in a saving of the difference between the sale price and the strike through price in breach of section 75AZC(1)(g) of the Trade Practices Act 1974, which prohibits false or misleading representations being made in relation to the price of goods.

Ascot Four has lodged an appeal, which will be heard in the Federal Court, Adelaide on 27 February 2009.

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Posted 29th January 2009 by David Jacobson in Trade Practices

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January 27, 2009

Australia Day Blawg Review

The end of the Australia Day weekend marks the end of school and summer holidays for most people.

To mark the transition, read Blawg Review #196 hosted this week by Queensland law lecturer Peter Black.

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Posted 27th January 2009 by David Jacobson in Weblogs

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January 26, 2009

Fixing the banks

The Group of Thirty (chaired by Obama Economic Adviser Paul Volcker) has released Financial Reform: A Framework for Financial Stability. The report addresses flaws in the global financial system.

Its 18 specific recommendations include:

the activities of government-insured deposit-taking institutions should be subject to prudential regulation and supervision by a single regulator (that is, consolidated). The largest and most complex banking organizations should be subject to particularly close regulation and supervision, meeting high and common international standards.
Large, systemically important banking institutions should be restricted in undertaking proprietary activities that present particularly high risks and serious conflicts of interest.

Watch the CNBC interview with Volcker

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Posted 26th January 2009 by David Jacobson in Financial Services

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AML forms and reports

Austrac has issued new forms and reporting guidance in the following areas:

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Posted 26th January 2009 by David Jacobson in Anti-money laundering

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January 23, 2009

30 years of change in legal practice

This month marks 30 years since I was admitted as a Solicitor of the Supreme Court of Queensland.

What's changed in the practice of law in 30 years?

I was trained to concentrate on client service and client service remains the key to my practice. And my clients expect it. Yet it still seems to be the main source of complaints against other lawyers.

Mobile phones, personal computers and the Internet collectively have changed the practice of law (and many other businesses), They have made it possible to work anywhere. Even though there is now much more law in specific complex areas, I can now access information instantly that previously required inter-library transfers that took weeks. I can deliver advice by a number of channels to suit my clients' needs.

I can appreciate the technological changes because I remember our first Unix based computers, our first Windows PC, optical character readers (scanners) the size of photocopiers that cost tens of thousands of dollars and telex machines. When it took days for a property lease to be typed. And my first website.

I can't say that my office is totally paperless but I can say that the paper I do keep takes up less space.

I am constantly widening my range of skills in order to remain relevant to clients.

I prefer project-based fees to time charging but I'd like to think that fees (however calculated) will be less cause for complaint if they are disclosed in advance and clients perceive them as value for money.

I've practised commercial law in a large State firm, as a solo and now in a national firm. Lawyers have become a mobile profession.

Are we seeing the end of lawyers? No, but we're changing.

If you're interested in the topic, read The End of Lawyers? Rethinking the Nature of Legal Services by Richard Susskind OBE

And to show that other Australian lawyers are embracing technology and discussing issues look at the list I've compiled in Australian Law Blogs.

If you have any comments on how lawyers have changed (or need to change) add them below (but nothing obscene or defamatory).

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Posted 23rd January 2009 by David Jacobson in Business Planning

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January 22, 2009

ATO draft superannuation rulings

The ATO has issued 5 draft rulings clarifying terms applicable to self-managed super funds (SMSF's).

SMSFR 2008/D1 deals with the classification of an entitlement of a fund to an unpaid trust distribution.

SMSFR 2008/D2 deals with contributions of assets to a self managed superannuation fund by a related party of that fund.

SMSFR 2008/D3 deals with concessional rules relating to business real property

SMSFR 2008/D4 discusses the meaning of 'borrow money' or 'maintain an existing borrowing of money' for the purposes of section 67 of the Superannuation Industry (Supervision) Act 1993.

SMSFR 2008/D5 discusses the rules limiting investment by SMSF's in "in-house assets".

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Posted 22nd January 2009 by David Jacobson in Financial Services, Superannuation

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Covered short selling ban extended

ASIC has announced that the ban on covered short selling of financial securities will remain in place until Friday, 6 March 2009.

Covered short selling of non-financial securities is unaffected and will still be permitted.

ASIC requires strict compliance with the ban on naked short selling as outlined in RG196.

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Posted 22nd January 2009 by David Jacobson in Corporations Act

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January 21, 2009

Temporary investment allowance

The Treasurer has announced a 10 per cent temporary investment allowance – in the form of an additional tax deduction.

The allowance will be applicable to most new tangible depreciating assets – which includes most items of plant and equipment – over $10,000 which are acquired or ordered by the end of the current financial year (ie 30 June 2010).

The investment allowance will apply from 12.01am AEDT 13 December 2008 until the end of 30 June 2009. To be eligible for the investment allowance, a taxpayer must start to hold the asset under a contract entered into between those times, or start to construct the asset between those times. Assets must also be installed ready for use by the end of 30 June 2010.

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Posted 21st January 2009 by David Jacobson in Tax

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January 18, 2009

New margin lending regulations

Senator Nick Sherry, Minister for Superannuation and Corporate Law, has announced that the Government’s Financial Services Working Group will this week begin consultations with industry on a new, national margin lending regulatory regime, which will include new short form, plain English product disclosure documents.

It is proposed that the new regime will commence on 1 July, 2009.

Margin lending providers will have to be licensed by ASIC and will have to ensure their representatives are appropriately trained to provide advice on the product.

Last year, the Council of Australian Governments (COAG) agreed to the transfer of margin lending regulation from the states to the Commonwealth. As a result, margin lending will be included in Chapter 7 of the Corporations Act as a financial product by 1 July.

This will mean that all margin lending providers will have to:

have an Australian Financial Services Licence (AFSL).
comply with general conduct standards, including the requirement to deal with investors efficiently, honestly and fairly;
undertake appropriate disclosure to an investor, including provision of a Product Disclosure Statement (PDS), a Statement of Advice (SOA) and ongoing reporting;
have adequate arrangements for the management of conflicts;
ensure representatives are adequately trained and competent to provide those services; and
be subject to enforcement measures regarding market manipulation, false or misleading statements, inducing investors to deal using misleading information, and engagement in dishonest, misleading or deceptive conduct.

All margin lending providers will also be subject to responsible lending conduct provisions as part of broader consumer credit reforms covering all credit providers.

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Posted 18th January 2009 by David Jacobson in Financial Services

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