2010‑2011‑2012

The Parliament of the
Commonwealth of Australia

HOUSE OF REPRESENTATIVES/THE SENATE

EXPOSURE DRAFT NO. 1 (January 2012)
This draft covers legislation administered by the Treasury (other than tax legislation). A second exposure draft covering other legislation will be released later in the first quarter of 2012.	

Personal Liability for Corporate Fault Reform Bill 2012

No.      , 2012

(Treasury)

A Bill for an Act to amend the law relating to personal liability for offences committed by corporations, and for related purposes

Contents
1	Short title	1
2	Commencement	1
3	Schedule(s)	2
Schedule 1—Corporations Act 2001	3
Schedule 2—Foreign Acquisitions and Takeovers Act 1975	9
Part 1—Main amendments	9
Part 2—Signalling personal fault: main amendments	10
Part 3—Signalling personal fault: further amendments	11
Schedule 3—Insurance Contracts Act 1984	12
Schedule 4—Pooled Development Funds Act 1992	14

A Bill for an Act to amend the law relating to personal liability for offences committed by corporations, and for related purposes
The Parliament of Australia enacts:
1  Short title
		This Act may be cited as the Personal Liability for Corporate Fault Reform Act 2012.
2  Commencement
		This Act commences on the day after this Act receives the Royal Assent.
3  Schedule(s)
		Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Corporations Act 2001
  
1  Section 188
Repeal the section, substitute:
188  Responsibility of secretaries etc. for certain corporate contraventions
Responsibility of company secretaries
	(1)	A secretary of a company contravenes this subsection if the company contravenes any of the following provisions (a corporate responsibility provision):
	(a)	section 142 (registered office);
	(b)	section 145 (public company’s registered office to be open to public);
	(c)	section 146 (change of principal place of business);
	(d)	section 178A (change to proprietary company’s member register);
	(e)	section 178C (change to proprietary company’s share structure);
	(f)	section 205B (lodgement of notices with ASIC);
	(g)	section 254X (issue of shares);
	(h)	section 319 (lodgement of financial reports);
	(i)	section 346C (response to extract of particulars);
	(j)	section 348D (response to return of particulars);
	(k)	section 349A (change to proprietary company’s ultimate holding company);
	(l)	section 1302 (location of registers).
Note 1:	See section 204A for the circumstances in which a company must have a secretary.
Note 2:	This subsection is a civil penalty provision (see section 1317E).
Responsibility of directors of proprietary companies
	(2)	Each director of a proprietary company contravenes this subsection if:
	(a)	the proprietary company contravenes a corporate responsibility provision; and
	(b)	the proprietary company does not have a secretary when it contravenes that provision.
Note 1:	See section 204A for the circumstances in which a company must have a secretary.
Note 2:	This subsection is a civil penalty provision (see section 1317E).
Defence of reasonable steps
	(3)	A person does not contravene subsection (1) or (2) in relation to a company’s contravention of a corporate responsibility provision if the person shows that he or she took reasonable steps to ensure that the company complied with the provision.
Location of registers—responsibility of all officers and employees
	(4)	Without limiting subsections (1) and (2), if a company contravenes section 1302 (location of registers), an officer or employee of the company contravenes this subsection if the officer or employee was involved in the company’s contravention.
Note 1:	Section 79 defines involved.
Note 2:	This subsection is a civil penalty provision (see section 1317E).
2  Subsection 208(1) (note)
Omit “Note”, substitute “Note 1”.
3  At the end of subsection 208(1)
Add:
Note 2:	For the criminal liability of a person dishonestly involved in a contravention of this subsection, see subsection 209(3). Section 79 defines involved.
4  Subsection 254J(1) (note)
Omit “Note”, substitute “Note 1”.
5  At the end of subsection 254J(1)
Add:
Note 2:	For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection 254L(3). Section 79 defines involved.
6  Section 254K (note)
Omit “Note”, substitute “Note 1”.
7  At the end of section 254K
Add:
Note 2:	For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection 254L(3). Section 79 defines involved.
8  Subsection 254Q(13)
Omit “and any officer of the company who is involved in the contravention are each”, substitute “is”.
9  At the end of subsection 256B(1)
Add:
Note 4:	For the criminal liability of a person dishonestly involved in a contravention of subsection 256D(1) based on this subsection, see subsection 254D(4). Section 79 defines involved.
10  Subsection 256D(4)
Omit “section 256B”, substitute “subsection (1)”.
11  At the end of section 259A
Add:
Note:	For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection 259F(3). Section 79 defines involved.
12  At the end of subsection 259B(1)
Add:
Note:	For the criminal liability of a person dishonestly involved in a contravention of this subsection, see subsection 259F(3). Section 79 defines involved.
13  At the end of subsection 260A(1)
Add:
Note:	For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection 260D(3). Section 79 defines involved.
14  Subsection 319(5A)
Repeal the subsection (including the note).
15  At the end of subsection 328A(4)
Add:
Note:	An officer of a company, or of a responsible entity, is in default if the officer is involved in the contravention of subsection (1) by the company, the company’s directors or the entity (see section 83). Section 79 defines involved.
16  At the end of subsection 328B(2)
Add:
Note:	An officer of a company is in default if the officer is involved in the company’s contravention of subsection (1) (see section 83). Section 79 defines involved.
17  Subsection 601FC(6)
Repeal the subsection.
18  Subsection 1302(3)
Repeal the subsection, substitute:
	(3)	If default is made in complying with subsection (1) in its application to any register of a company by any of the following persons, the person is guilty of an offence:
	(a)	the company;
	(b)	a person who has arranged with the company to make up the register on its behalf.
Note:	A person mentioned in paragraph (b) is in default if the person is involved in the company’s contravention of subsection (1) (see section 83). Section 79 defines involved.
19  Subsection 1302(5)
Omit “and any officer of the company who is in default are each”, substitute “is”.
20  After paragraph 1317E(1)(a)
Insert:
	(aa)	subsection 188(1), (2) or (4) (responsibilities of secretaries etc. for certain corporate contraventions);
21  After subsection 1317G(1B)
Insert:
Responsibilities of secretaries etc. for certain corporate contraventions
	(1BA)	Without limiting subsection (1), if a declaration of contravention by a person of subsection 188(1), (2) or (4) has been made under section 1317E, a Court may order the person to pay the Commonwealth a pecuniary penalty of up to $3,000.
22  Schedule 3 (cells at table items 9, 12, 13, 29A and 29B, column headed “Penalty”)
Repeal the cells, substitute:
60 penalty units.	
23  Schedule 3 (table item 31)
Repeal the item.
24  Schedule 3 (cell at table item 44, column headed “Penalty”)
Repeal the cell, substitute:
60 penalty units or imprisonment for 1 year, or both.	
25  Schedule 3 (cell at table item 84, column headed “Penalty”)
Repeal the cell, substitute:
60 penalty units.	
26  Schedule 3 (cell at table item 112, column headed “Penalty”)
Repeal the cell, substitute:
60 penalty units or imprisonment for 1 year, or both.	
27  Schedule 3 (cells at table items 118, 119B and 119C, column headed “Penalty”)
Repeal the cells, substitute:
60 penalty units.	
28  Schedule 3 (table item 163A)
Repeal the item.
29  Schedule 3 (after table item 333)
Insert:

333A	Subsection 1302(3)	60 penalty units.	
333B	Subsection 1302(5)	60 penalty units.	

Schedule 2—Foreign Acquisitions and Takeovers Act 1975
Part 1—Main amendments
1  Section 30 (heading)
Repeal the heading, substitute:
30  Offences—orders under Part II
2  Subsection 31(1)
Omit “(1)”.
3  Subsection 31(1)
Omit “an officer of the corporation who is in default”, substitute “an officer of the corporation who authorised or permitted the commission of the offence”.
4  Subsection 31(2)
Repeal the subsection.

Part 2—Signalling personal fault: main amendments
5  Multiple amendments
The provisions of the Foreign Acquisitions and Takeovers Act 1975 listed in this Part are amended by adding at the end:
Note:	For the criminal liability of an officer of a corporation if the corporation contravenes or fails to comply with an order under this subsection, see sections 30 and 31.
6  Subsections 18(2), (3) and (4)
7  Subsections 19(2), (3) and (4)
8  Subsections 20(2) and (3)
9  Subsections 21(2) and (3)
10  Subsections 21A(2), (3) and (4)
11  Subsection 22(1)

Part 3—Signalling personal fault: further amendments
12  Multiple amendments
The provisions of the Foreign Acquisitions and Takeovers Act 1975 listed in this Part are amended by adding at the end:
Note:	For the liability of an officer of a corporation, see section 31.
13  Subsection 25(1C)
14  Subsection 26(2)
15  Subsection 26A(2)
16  Subsection 30(1)
17  Subsection 36(2)

Schedule 3—Insurance Contracts Act 1984
  
1  At the end of subsections 11C(2) and 11D(2) and (3)
Add:
Note:	For the liability of a director, employee or agent of an insurer, see section 11DA.
2  After section 11D
Insert:
11DA  Supervisory powers—liability of directors, employees and agents of insurers
	(1)	A person (the responsible person) commits an offence if:
	(a)	the responsible person is:
	(i)	a director of a company that is an insurer; or
	(ii)	an employee or agent of an insurer; and
	(b)	the responsible person permits or authorises the insurer to engage in conduct; and
	(c)	the conduct constitutes an offence (the insurer offence) against subsection 11C(2) or 11D(2) or (3); and
	(d)	the insurer commits the insurer offence.
Penalty:	150 penalty units.
	(2)	There is no fault element for the physical element described in paragraph (1)(d) other than the fault elements (if any) for the physical elements of the insurer offence.
	(3)	To avoid doubt:
	(a)	an insurer does not commit the insurer offence, for the purposes of subsection (1), if the insurer has a defence to the insurer offence; and
	(b)	a person may be convicted of an offence against subsection (1) even if the insurer concerned has not been prosecuted for, or convicted of, the insurer offence.
	(4)	In this section:
conduct means:
	(a)	an act; or
	(b)	an omission to perform an act.
engage in conduct means:
	(a)	do an act; or
	(b)	omit to perform an act.
3  Section 76A
Repeal the section.

Schedule 4—Pooled Development Funds Act 1992
  
1  Section 50
Repeal the section.
2  Section 51 (heading)
Repeal the heading, substitute:
51  Offences—failure to comply with directions or requirements
3  Subsection 51(2)
Omit “, not being a PDF,”.