The highly anticipated ‘deregulation’ bill, released on 10 April, is aimed at reducing red tape and compliance costs for businesses.

 

The draft Bill is a package of repeal and streamlining amendments to the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. The proposed amendments in the draft Bill are stated to include the improvement of remuneration report disclosure.

When it comes to simplifying remuneration disclosures, however, it falls well short of the mark. The government actually imposes yet another reporting requirement, while at long last removing a requirement identified as useless from the day it was introduced in 2005 (but replacing it with a new requirement).

 

The additional requirement is to require companies to include a description of their remuneration governance framework, to the extent that it is not included elsewhere in the annual report.

 

The useless bit being removed is the requirement to disclose the value of options granted to key management personnel that have lapsed, as well as the percentage of remuneration consisting of options. But to fill the void the government is replacing it with a requirement to disclose the number of lapsed options and the year in which they were granted. This addition will provide useful information to some investors.

 

The new requirement to disclose the remuneration governance framework will not impact too may companies, as the vast majority of companies already include a description of the remuneration governance framework in the remuneration report or, if not, the corporate governance statement. 

 

However, it could have been worse. Some readers may recall the previous incarnation of the simplification amendments (contained in the Corporations Legislation Amendment (Remuneration Disclosures and Other Measures) Bill 2012) proposed substantive changes – including disclosures relating to past, present and future pay. If enacted these would have been lovely for remuneration consultants but of no help at all to investors wanting to know if pay was related to performance (see HERE).

 

Other key proposed amendments to the Corporations Act in the current draft Bill include:

• removing the obligation to hold a general meeting on the request of 100 shareholders. Members holding at least 5% of voting shares will still be able to request a meeting; and

• increasing the flexibility of companies to pay dividends by amending the ‘dividend test’ from a net assets test to a profit test.

   

This Bill presented an opportunity to fix the various issues associated with the operation of the two strikes regime (see HERE) – an opportunity that the government has so far not acted on.

 

Submissions on the draft Bill close on 16 May 2014.

 

See the Bill and background HERE.

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