16 March 2010

The Manager
Governance and Insolvency Unit
Corporations and Financial Services Division
The Treasury
Langton Crescent
PARKES ACT 2600
insolventtrading@treasury.gov.au
 

Dear Sir/Madam

Corporate Law Insolvency Reform Package

The Group of 100 (G100) is an organisation of chief financial officers from Australia’s largest business enterprises with the purpose of advancing Australia’s financial competitiveness. The G100 is pleased to provide comments on aspects of the package.

1. Reversal of Sons of Gwalia decision: The G100 supports the proposal to amend Section 563 A of the Corporations Act to reverse the effect of the Sons of Gwalia decision.
 
2. Modified Business Judgment Rule: The G100 supports the implementation of the proposed modified business judgment rule which would provide appropriate protections for directors in the event that the four conditions are met. While the G100 considers that these conditions are reasonable we believe that further clarification is necessary in respect of the following:
  • The presentation of a true and fair picture of the company’s financial circumstances requires a context given that the true and fair view requirement and accounting standards relate to an entity which is a going concern. In assessing solvency a broader range of factors than those dealt with by accounting standards may warrant consideration; and
     
  • the need for the source of restructuring advice to be independent of the company.
3. Other elements of the package: The G100 supports the proposed amendments relating to issues in External Administration and Miscellaneous Insolvency Reforms to clarify the operation of the law.
 

Yours sincerely
Group of 100 Inc

 

Peter Lewis
National President