PROGRAMME 8 — BUSINESS AFFAIRS

PROGRAMME 8 — BUSINESS AFFAIRS
Objective
To achieve a corporate environment that promotes business activity and investor confidence, maximises the efficiency of securities markets and provides protection for investors and the wider community.
Table 4.1:  Summary of Appropriations to the Programme and Summary of Underlying Outlays

Table 4.1:  Summary of Appropriations to the Programme and Summary of Underlying Outlays (continued)

(i)	As presented in 1997‑98 Budget documentation (May 1997 — adjusted, where necessary, to reflect underlying outlays).
(ii)	1997‑98 Revised Approp amended to include Additional Estimates, Advance to the Minister for Finance, running cost borrowings, savings and other revisions.
(iii)	Variation percentage = ((1998-99 Budget less 1997-98 Estimated Outcome)/1997-98 Estimated Outcome).

Sub-Programme 8.1 — Australian Securities Commission
Objective
To protect the interests of companies and investors by providing information about companies, helping businesses to interpret  the law, and taking action against offenders.
Table 4.2:  How the Sub-Programme is Resourced;  Reconciliation of Appropriations to the Sub-Programme and Summary of Underlying Outlays

Table 4.2:  How the Sub-Programme is Resourced;  Reconciliation of Appropriations to the Sub-Programme and Summary of Underlying Outlays (continued)
(i)	As presented in 1997‑98 Budget documentation (May 1997 — adjusted, where necessary, to reflect underlying outlays).
(ii)	1997‑98 Revised Approp amended to include Additional Estimates, Advance to the Minister for Finance, running cost borrowings, savings and other revisions.
(iii)	Variation percentage = ((1998-99 Budget less 1997-98 Estimated Outcome)/1997-98 Estimated Outcome).

Sub-Programme Variation
The following table shows changes in the underlying outlays of the Sub-Programme in 1998-99.
Table 4.3:  Variations to Sub‑Programme Underlying Outlays 1997-98 to 1998-99

(i)	The 1997-98 figure appears in column 3 in Table 4.2 above.
(ii)	The 1998-99 Budget figure appears in column 4 in Table 4.2 above.
1998‑99 Budget Measures affecting Portfolio Underlying Outlays
The following Budget Measures affect this Sub-Programme.
Financial Systems Inquiry Implementation
Funding of $19.252 million has been provided to meet the transitional costs of the Australian Securities Commission (ASC) implementing the Government’s decisions on the Financial System Inquiry. Included in this amount is $3.700 million and $0.150 million which have been transferred from the ISC and the ACCC respectively. This will permit the ASC (to be re-named the Australian Securities and Investments Commission — ASIC) to provide consumer protection functions in the financial system, some of which have been previously vested across a number of other agencies. For further information see page 190 in Section 5.
Managed Investments Bill
Funding of $3.945 million has also been provided to the ASC to meet the costs of supervising the governance structure for collective investment schemes proposed in the Managed Investments Bill. For further information see page 191 in Section 5.
More detail on these new policy initiatives is included in the Performance Forecasts for 1998-99.
Performance of the Sub-Programme in 1996‑97 and 1997‑98
Information on the ASC’s performance in 1996-97 was included in its Annual Report for that year. Performance information for 1997-98 will be included in the 1997-98 Annual Report to be tabled in Parliament by 31 October 1998.
ASC Performance Forecasts for 1998‑99
Implementing the outcome of the Financial System Inquiry will be a major influence on performance strategies for 1998-99. From 1 July 1998 the ASC will be renamed the Australian Securities and Investments Commission and its charter will be expanded to include consumer protection of financial products and services. 
The new body will take on the existing consumer protection elements from the ACCC, the ISC and the RBA and provide consumer protection and market integrity regulation across the financial system. This will include development and administration of a single licensing system for dealers and advisers, monitoring industry codes of practice, administration of disclosure requirements for financial products, monitoring and enforcement of consumer protection provisions and market integrity rules. A primary focus of these changes is the vesting of similar regulatory functions for the financial industry sectors into a single agency. This is designed to assist the harmonisation of regulation in this sector and facilitate competitive forces.
The reform of the governance structure of collective investment schemes proposed under the Managed Investments Bill, when enacted, will require the ASC (subsequently the ASIC) to administer the reformed regulatory framework. The new regime imposes new responsibilities upon the ASC in relation to administration, compliance and enforcement in the managed investments industry. Existing schemes will have a 2 year transition period to enable them to meet the new requirements, although it is expected that many schemes will seek to bring themselves within the new regime at an early stage. Resources will be applied to licensing, registration, surveillance and enforcement functions to manage the transition from the old regime and administration of the new system. The  ASC will, in consultation with industry, be working to ensure an orderly transition. The ASC will use the range of administrative powers and discretions in the Bill when enacted to assist it to do so. Scheme registration deadlines will be 28 days for the first 2 years of transition and thence 14 days after that as set out in the Bill.
The current budget provides for  additional funding for the new functions that will be taken on by the ASIC under the Government’s reforms to financial system regulation and the Managed Investments Bill when enacted. Notwithstanding these increases the ASC plans to continue the reform of its support infrastructure to ensure its alignment with core business and to assist it in managing the other reductions to its funding base.
Australian Accounting Standards Board (AASB) and Australian Accounting Research Foundation (AARF) Performance Forecast  for 1998-99
Objectives for 1998-99
Accounting standard-setting arrangements in Australia are currently being reviewed by the Commonwealth Government, as part of the Corporate Law Economic Reform Programme. Proposals for revised standard-setting arrangements are being finalised and it is expected that draft legislation will be introduced into Parliament mid-year. The exact nature and timing of the reforms, and their impact on the operations of the AASB, are unclear at this stage. Notwithstanding the review, the AASB has established objectives for 1998 and beyond based on current resource levels and arrangements, as reflected in the Work Programme below.
As indicated in the work programme, international considerations will continue to have a significant impact on the work of the AASB. As occurred during 1997-98, consistent with its International Harmonisation Policy and its agreement with the Australian Stock Exchange, the AASB expects to continue to pursue its Programme of harmonising Australia's accounting standards with those of the IASC. The Programme’s objective is to change Australian standards and influence the development of, and changes to, IASC standards so that an Australian reporting entity complying with Australian standards would also be complying with IASC standards.
The AASB will also continue to pursue its objective of increasing the extent to which Australian accounting standards are harmonised with those of other major national standard setters.
In addition, the AASB will continue its work on Corporations Law related projects, including ‘Financial Reporting of Life Insurance Business’ and ‘Concise Financial Reporting’ during 1998 and beyond. Further, the AASB anticipates issuing a standard jointly with the Public Sector Accounting Standards Board of the Australian Accounting Research Foundation on accounting for self-generating and regenerating assets during 1998.
The following table illustrates the work programme for AASB for 1998 and 1999 onwards. The footnotes give an explanation of the codes used in the table.
Table:  AASB Work Programme 1998 and 1999 Onwards
Project	Current Status	1998	1999+	
1.	Related to International Work
Consolidated Accounts	AASB 1024		ED,STD(r)	-
Earnings per Share	AASB 1027,ED 85	STD(r)		-
Acquisition of Assets	AASB 1015,ED 84	STD(r)		-
Goodwill			AASB 1013		ED,STD(r)	-
Revenue			AASB 1004,ED 81	STD(r)		-
Segment Reporting	AASB 1005,ED 90	STD(r)		-
Joint Arrangements	AASB 1006,ED 79	STD(r)		-
Revaluation of Non-Current	AASB 1010,IC		ED,STD(r)	-
Assets
Impairment			AASB 1010		ED	            STD 
Research and Development	AASB 1011		ED	            STD(r)
Foreign Currency Translation	AASB 1012,ED 86	STD(r)   	-
Set-Off and Extinguishment	AASB 1014		ED	            STD(r)
of Debt
Related Party Disclosures	AASB 1017		ED	            STD(r)
Income Tax			AASB 1020,ED 87	STD(r)  		-
Interim Reporting	AASB 1029		ED,STD(r)  	-
Provisions			ED 88			STD	         	-
Intangibles			-			ED,STD	 	-
Accounting Policies	AASB 1001,ED 89	STD(r)	 	-
Leases				AASB 1008,ED 82	STD(r)	      	-
Profit and Loss Statements	AASB 1018		ED,STD(r) 	-
Employee Benefits (except Super)	AASB 1028		ED	            STD(r)
Employee Benefits (only Super)	-			ED	            STD
Disclosure/Presentation	AASB 1034		ED,STD(r) 	-

Table:  AASB Work Programme 1998 and 1999 Onwards (continued)
Project	Current Status	1998	1999+	
Discontinuing Operations	-			ED		STD
Financial Instruments -	-			ED		STD
Recognition and Measurement

Investment Properties	DP 24			ED		STD

2.	Related to Corporations Law

Life Insurance		ED 73			STD		-

Concise Financial Reporting	-			ED		STD

3.	Other Projects

Performance Reporting	AASB 1018		ATM		ED,SAC
										STD(r)

Measurement		-			ATM		ED,SAC

Scope of Financial Reporting	-			-		ATM,
										SAC

Self-Generating and Regenerating	ED 83			STD		-
Assets

 (r) = revised	
SAC = Statement of Accounting Concepts
ED = Exposure Draft
DP = Discussion Paper
STD = AASB/AAS Standard
IC = Invitation to Comment
ATM = Accounting Theory Monograph

Sub-Programme 8.2 — Companies & Securities Advisory Committee
Objective
To advise on law reform affecting corporations, securities or futures, including proposals to improve the administration of national scheme laws and the efficiency of securities and futures markets.
Table 4.2:  How the Sub-Programme is Resourced;  Reconciliation of Appropriations to the Sub-Programme and Summary of Underlying Outlays

(i)	As presented in 1997‑98 Budget documentation (May 1997 — adjusted, where necessary, to reflect underlying outlays).
(ii)	1997‑98 Revised Approp amended to include Additional Estimates, Advance to the Minister for Finance, running cost borrowings, savings and other revisions.
(iii)	Variation percentage = ((1998-99 Budget less 1997-98 Estimated Outcome)/1997-98 Estimated Outcome).

Performance of the Sub-Programme in 1996‑97 and 1997‑98
Information on the performance of the Sub-Programme in 1996‑97 is included in the Annual Report of the Companies and Securities Advisory Committee for that year. Performance information for 1997‑98 will be published in the 1997‑98 Annual Report to be tabled in Parliament by 31 October 1998.
Performance Forecasts for 1998‑99
The following matters are currently under, or identified for, review by the Advisory Committee. Reports or Discussion Papers are expected to be published in this period on most of these matters. It is anticipated that further matters for review will be identified, and work will commence, in the period.
Insolvency
The Legal Committee of the Advisory Committee will publish a Report on voluntary insolvency administration in 1998‑99. This Report will make recommendations for amending the current law relating to corporate voluntary administration in a number of key areas, including:
•	administrators’ disclosure to creditors of any professional, personal and business relationships they have with the company or its officers, members or creditors;
•	the appropriate procedure for ensuring that a deed of company arrangement accurately reflects the resolution of creditors at the major meeting;
•	the treatment of pledgees, lienees and reservation of title creditors;
•	the ‘relation‑back’ period for recovery of voidable preferences where an application to wind up a company has been made before the company is placed under administration;
•	the relationship between the voluntary administration provisions and the prospectus and takeover provisions;
•	whether it is necessary to give creditors who deal with a company under a deed of company arrangement any priority if the company subsequently goes into winding up; and
•	giving creditors the right to appoint their own nominee as liquidator when a company under administration goes into winding up.
Corporate Groups
The Advisory Committee will publish a Discussion Paper in 1998-99 on how corporate law in Australia might better recognise and respond to the way corporate groups operate in practice, thereby assisting directors of corporate group companies to carry out their functions, while protecting the legitimate interests of minority shareholders and outsiders who deal with these groups.
The Discussion Paper will:
•	describe the different ways in which corporate groups are regulated in various jurisdictions, including Australia, the United States, New Zealand and Germany;
•	examine the legal difficulties that directors of a corporate group company may face in balancing their fiduciary responsibilities to that company with the overall economic interests of the group;
•	review the adequacy of existing remedies for minority shareholders within corporate groups;
•	consider whether the Corporations Law provisions dealing with schemes of arrangement, voluntary administration and liquidations may need amendment to better accommodate corporate groups; and
•	discuss the legal implications for tort plaintiffs in enforcing their rights within the context of corporate groups.
Ultra vires
The Advisory Committee’s Final Report on Regulation of On‑exchange and OTC Derivatives Markets (June 1997) referred at paras 8.95‑8.113 to the ultra vires problem as it applies to trusts and other entities in financial markets. The Report pointed out that some entities may be prohibited from, or restricted in, dealing in derivatives or some other financial transactions. The validity or enforceability of any such transactions into which they enter could be jeopardised by their lack of power to act as contracting parties.
The Advisory Committee will prepare a Discussion Paper dealing in detail with the matters raised in its Derivatives Report and seeking submissions on the various policy options raised in the Report, and any other matters arising from the doctrine of Ultra Vires.
Corporate Law Economic Reform Programme
The Advisory Committee, in consultation with the Legal Committee, will provide advice on the draft legislation arising from the Corporate Law Economic Reform Programme. This work will continue into 1998‑99.
Performance indicators and evaluation
The Advisory Committee will seek to ensure that, in the 1998‑99 period, it completes its Report on Voluntary Insolvency Administration. It will also release Discussion Papers on Corporate Groups and Ultra Vires and provide advice to the Government on the draft legislation released under the Corporate Law Economic Reform Programme.
To achieve the performance forecasts for 1998‑99, the Advisory Committee will seek the expert advice of its Legal Committee, encourage public comment on its Discussion Papers and thoroughly review all submissions received on them. This well‑established process of public review is designed to ensure that all interested persons in the commercial community are given an adequate opportunity to make written submissions on particular matters, and otherwise express their views, to the Advisory Committee. Through this consultation process and the provision of timely advice to the Treasurer, the Advisory Committee will seek to ensure that Australian financial markets and corporations operate in a commercial environment of the highest standards supported by appropriate legislation.