Submission on Corporations Legislation Amendment Act 2009

  • Date:28 Mar 2013
  • Type:Policy Submission

On 28 March 2013 the Australian Institute of Company Directors provided comments to Treasury on the Corporations Legislation Amendment (Improving Accountability on Termination Payments) Act 2009 (the Act) to be used as input into the Post-Implementation Review of the Act.

In summary, our key comments were:

(a) We do not believe that the Act has been successful in achieving its stated objective, namely to curb “excessive termination benefits paid to company executives”.

(b) The main impact of the Act has been to cause further unnecessary “red tape” and increase compliance costs for those companies that are affected by it. These compliance costs were not “one-off” costs (for example, transitionary costs for the company to “get up to speed” on the new requirements). Those companies affected by the Act continue to incur compliance costs due to the complex requirements of the Act, uncertainty as to how the new provisions will be interpreted and the evolving nature of executive remuneration arrangements, which now must be considered in light of the overly-restrictive requirements of the Act.

(c) In our view, the compliance costs that have resulted from the introduction of the Act for those companies affected far outweigh any public benefit that has been obtained from its introduction or that will be obtained in the future. The cost to those companies affected was not adequately taken into account prior to the Act being introduced.

(d) The Act has had a number of unintended consequences, as evidenced by some of the shareholder approvals that have needed to be obtained since its introduction. These unintended consequences need to be addressed through further legislative amendment, preferably through the repeal of all amendments made to the Corporations Act by the Act. Also, those provisions of the Income Tax Assessment Act 1997 (ITAA) that relate to termination benefits should be amended.

Download our submission on the Corporations Legislation Amendment Act 2009 (PDF 3.5 MB).