Respondent
...
T +61 2 23 5744 F +61 2 9232 7174
E info@governanceinstitute.com.au
Level 11, 10 Carrington Street,
17 December 2024
Sydney NSW 2000
BeneficialOwnership@treasury.gov.au GPO Box 1594, Sydney NSW 2001
Director W governanceinstitute.com.au
Beneficial Ownership and Transparency Unit
Market Conduct Division
The Treasury
Langton Crescent
PARKES ACT 2600
Dear Sirs,
RE: Exposure Draft - Treasury Laws Amendment Bill 2024: Enhanced disclosure of ownership of listed entities (Consultation Paper)
Who we are
A national membership association, Governance Institute of Australia (Governance Institute) advocates for governance and risk management professionals, providing community and support to over 8,000 members.
As an Institute of Higher Education, the Governance Academy provides practical training and expert insights, equipping professionals with the tools to excel in their roles and drive better decision-making in their organisations.
Our members have primary responsibility for developing and implementing governance frameworks in public listed, unlisted, and private companies, as well as the public sector and not-for-profit organisations. They have a thorough working knowledge of the operations of the markets and the needs of investors. We regularly contribute to the formation of public policy through our interactions with Treasury, ASIC, APRA,
ACCC, ASX, ACNC and the ATO. We are a founding member of the ASX Corporate Governance Council. We are also a member of the ASIC Business Advisory Committee, the ASX Business Committee and the ACNC
Sector Users Group.
This Submission does not comment on all aspects of the proposals outlined in the Explanatory Material
(Explanatory Materials) but focuses on the issues of interest and concern to our members.
Governance Institute’s members broadly support the proposals to bring equity derivatives into fuller view of
Chapter 6C of the Corporations Act on the basis that this will enable listed companies to have greater visibility of their share registers.
Access to Registers of Relevant Interests (RORI)
In 2010, the Corporations Act was amended to include provisions in relation to accessing companies’ registers of members. The additions were to clarify the cost of obtaining copies of these registers and to introduce what is known as the ‘proper purpose’ test. The amendments followed a series of incidents where smaller investors were targeted by predators with unsolicited offers to purchase their shares at a significant discount to the market price. Equivalent provisions were not introduced into Section 672DA of the Corporations Act.
Our members consider that the proposals should include the introduction of a ‘proper purpose test’ into the
RORI provisions. This is particularly the case for smaller investors. These investors are generally completely unaware that personal information, such as residential addresses, can be obtained through a request to access a company’s RORI. At a time when identity fraud is at unprecedented levels and citizens are concerned about the security of their personal information, granting access to this type of information without safeguards can
Page 2 no longer be justified. Companies do not want requests for access to RORI to be used by predators to target their smaller shareholders.
We understand that the providers of RORI services to listed companies do not on sell this information because it has been produced for their listed company clients. It would be unfortunate if a service provider were to enter the market and obtain access to listed companies’ RORI and then on sell their analysis. The only protection currently in place is a non-legally binding code of practice.
Our members have reviewed and support the Submission on this consultation from the Australasian Investor
Relations Association and agree that:
• There needs to be clarification of the cost to receive a copy of the RORI which should be in line with the
cost for a copy of a register of members and there should be no difference between the cost of inspection
of a RORI whether it is kept on a computer or by other means.
• There should be a prohibition on:
o Using RORI to target unsophisticated investors or engage in predatory behaviour similar to the
prohibitions in Corporations Regulations 2C.1.03 for registered members.
o Selling any analysis of the RORI other than analysis in relation to substantial shareholders which
is already publicly available.
o Any person using information taken from the RORI or any analysis of the RORI for the purposes
set out in Corporations Regulations 2C.1.03.
o Any journalist or academic disclosing information taken from the RORI, if the disclosure would
identify a particular beneficial holder or their relevant interest in the company, unless the holding
is a substantial shareholding.
• If the Government decides to establish a public register of beneficial interests, the onus to make
disclosure should be on the underlying beneficial holder and not on the company.
• There should be no requirement that RORI be machine readable.
Other matters
• Access to journalists and academics - Our members support the proposal that journalist and academics
have fee free access to tracing notice registers as well as the use of an employment test rather than an
activities test for the purposes of the definitions of academic and journalist.
• Freezing notices - The Bill amends Chapter 6 of the Corporations Act to empower ASIC to make Freezing
Notices in relation to specified disclosable securities. Our members consider these decisions should be
reviewable by the Takeovers Panel.
• Impact on ‘foreign investors’ - We note the linkage between substantial holdings and the meaning of
'foreign person' under Regulation 47 of the Foreign Acquisitions and Takeovers Regulations 2015 (FATR).
Broadening the scope of interests comprising ‘relevant interests’ with the associated increase in
reportable substantial holdings could, without a consequential amendment to the FATR, lead to the
unintended consequence of more Australian listed entities becoming subject to the review process under
the Foreign Acquisitions and Takeovers Act 1975 in a manner inconsistent with the Foreign Investment
Review Board’s priorities and lead to potential breaches of that Act.
• Transition period - Paragraph 1.175 provides for a six-month transition period for the new provisions.
Our members understand from their service providers that six months will not allow sufficient time for
the systems changes required. There should be a longer transition period.
If you have any questions in connection with this Submission, please contact me or Catherine Maxwell,
General Manger, Policy and Advocacy.
Yours faithfully,
Megan Motto, CEO
