Commonwealth of Australia Explanatory Memoranda

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CORPORATIONS AMENDMENT (CORPORATE REPORTING REFORM) BILL 2010

2008-2009-2010




               THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA











                          HOUSE OF REPRESENTATIVES











        Corporations Amendment (corporate reporting reform) bill 2010














                    SUPPLEMENTARY EXPLANATORY MEMORANDUM





                Amendments moved on behalf of the Government








                     (Circulated by the authority of the
  Minister for Financial Services, Superannuation, Corporate Law and Human
                       Services, the Hon Chris Bowen)






Table of contents


Chapter 1    Explanation of amendment   1




Chapter 1
Explanation of amendment

Context of amendments


      1. On 26 May 2010, the Government introduced the Corporations
         Amendment (Corporate Reporting Reform) Bill 2010 (the Bill) into
         Parliament.


      2. The Bill contains measures to significantly reduce the regulatory
         burden on companies limited by guarantee.  The Bill also prohibits
         companies limited by guarantee from paying dividends to their
         members, as the corporate structure of such companies means that
         they are not suited for conducting for-profit activities which
         could legitimately warrant the payment of dividends to members.


      3. Since the Bill's introduction, an issue has arisen about the
         ability of certain companies limited by guarantee to pay a
         dividend.  This issue has been addressed by the minor amendment to
         the Bill.


Detailed explanation of new law


      4. The amendment provides that the prohibition on companies limited by
         guarantee from paying a dividend applies only to companies limited
         by guarantee incorporated on or after commencement of the Bill.
         This amendment will allow existing companies limited by guarantee
         to pay dividends if they need to do so.


      5. The amendment to the Bill commences at the same time as the Bill.