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Abstract:
This paper seeks to establish what form of management structure, ownership structure and financial characteristics are exhibited by firms that propose and subsequently adopt anti-takeover charter amendments (ATCAs) in Australia. An ATCA is a restriction of partial takeover activity implemented though shareholder approval to changes in a firm's constitution. Approval for such changes is obtained through majority agreement from a plebiscite of shareholders.

The study adopts a control sample design to analyse if characteristics differ statistically from adopting ATCA firms and those which do not adopt ATCAs during the investigation period. Following this, a logit analysis establishes the importance of variables considered to have a role in distinguishing between ATCA adoptees and firms without ATCAs.

The variables tested include proportion of independent directors; directors' shareholdings; proportion of shares held by institutional shareholders; and proportion of shares held by the largest 20 shareholders.

Various measures of performance are also tested with some evidence being found that poorly performing firms are most likely to introduce ATCAs.

Abstract:
Studies of share repurchases, or share buy-backs as they are referred to in Australia, have been an important part of financial research. In addition, there is increasing interest in the relationship between legal regulation and finance. In this Research Report, we combine these areas of research and examine the effects of the changing legal regulation of share buy-backs in Australia. Prior to 1989 Australian companies were prohibited from repurchasing their shares, and until 1995 they were heavily regulated with few companies repurchasing their shares. In December 1995 the legal regulation of share buy-backs was simplified making it considerably easier for companies to repurchase their shares. The changing Australian regulation of share buy-backs provides a unique opportunity to test the effects of legal regulation on companies' financing decisions. In particular, we examine whether the highly regulated environment for share buy-backs that existed during 1989-95 meant that companies were unable to undertake buy-backs for the purpose of information signalling. In the less regulated environment, which existed after 1995, we examine whether companies have been able to undertake buy-backs for the purpose of information signalling. Our results indicate that the stringent regulation of share buy-backs during 1989-95 made them less effective as a credible signalling mechanism. Further, we find that the market generally reacts the most positively to on-market buy-backs, while the reaction to other types of share buy-backs is positive but not statistically significant. Finally, we also find that the abnormal returns earned by resource sector companies announcing share buy-backs are generally higher than the abnormal returns earned by share buy-backs announced by companies in the industrial and financial services sectors.

Abstract:
The Task Force on Rebuilding Public Confidence in Financial Reporting was commissioned by the International Federation of Accountants (IFAC) to look at ways of restoring the credibility of financial reporting and corporate disclosure from an international perspective. It is this international perspective that distinguishes the report from the many national reviews on similar topics.

The Task Force was asked to: (a) identify and analyze the causes of the loss of credibility; (b) consider alternative courses of action which might restore credibility; and (c) consider recommendations as to best practice in the areas of financial and business reporting, corporate governance and auditor performance. The report details the Task Force's findings and recommendations in each of these areas.

The members of the Task Force brought to its deliberations extensive experience from a wide range of professional backgrounds. They come from six countries: Australia, Canada, France, Japan, the United Kingdom, and the United States. Three members have experience as accounting professionals, although only one is currently an auditor; the other members have experience in central and commercial banking, international economics, academia, and law. Five of the Task Force members currently serve on the boards and audit committees of listed companies.

Financial reporting, auditing, corporate governance

Abstract:
Edited by Ian Ramsay, this book is a collection of essays that explores a number of key corporate governance debates and, in particular, examines the role of directors' duties in corporate governance.

The chapters of the book are:

Part I - Introduction

1. The Corporate Governance Debate and the Role of Directors' Duties - Ian M Ramsay

Part II - Corporate Governance

2. The Defining Tension in Corporate Governance in America - Chief Justice E Norman Veasey
3. The Role of Corporate Governance Practices in the Development of Legal Principles Relating to Directors - Justice Alex Chernov
4. Corporate Governance, Corporate Law and Global Forces - Justice Michael Kirby

Part III - Directors' Duties

5. Directors' Duties: The Governing Principles - Chief Justice David Malcolm
6. The Duty of Care of Company Directors in Australia and New Zealand - John H Farrar
7. The Duty of Care of Directors: Does it Depend on the Swing of the Pendulum? - Robert Baxt
8. Directors' Statutory Duties of Honesty and Propriety - Michael J. Whincop
9. The Role of Nominee Directors and the Liability of Their Appointers - Justice E. W. Thomas
10. Shadow Director and Other Third Party Liability for Corporate Activity - Robyn Carroll
11. Safe Harbours or Sleepy Hollows: Does Australia Need a Statutory Business Judgment Rule? - Paul Redmond
12. The Perspective of the Australian Securities Commission on the Enforcement of Directors' Duties and the Role of the Courts - Alan Cameron

Abstract:
There are approximately 7,000 registered company auditors in Australia according to the Australian Securities and Investments Commission. This report, which was commissioned by the Minister for Financial Services and Regulation, examines Australia's existing legislative and professional requirements on independence of company auditors and compares them with equivalent overseas requirements. Where appropriate, the report proposes measures for strengthening the Australian requirements. The report also reviews a large number of empirical studies relating to the independence of auditors.

The review has been prompted by two developments. First, recent overseas work in the area of audit independence has moved independence requirements in those regions ahead of equivalent requirements in Australia. Major developments, including the growth of the largest accounting firms and an increase in non-audit services provided by these firms, highlight the need for Australian requirements to be updated.

Second, following the failure of a number of listed Australian companies during the first half of 2001, the resultant publicity has included audit independence issues and has raised concerns about the adequacy of the Australian rules that ensure the independence of Australian accounting firms from the companies they audit.

Auditors' independence

Abstract:
This article presents the results of an empirical study of the group structures in Australia's Top 500 listed companies. It also examines some of the key legal issues relating to corporate groups. These include issues associated with the definition of corporate group in the Corporations Act and regulatory approaches to corporate groups in Australia.

corporate groups

Abstract:
This paper is part of a larger project that examines, by way of detailed case studies of companies, the interaction between several key factors in the creation and sustainability of Partnerships at Work. These factors include particular employment systems, forms of corporate governance and ownership structures. The project investigates how these various factors have interacted so as to give rise to - or fail to give rise to - high performance partnership-style relations at work.

The focus of this paper is on three core issues. We first examine the extent to which shareholder value has come to dominate debates around corporate governance and theories of the company. Secondly, we explore the extent to which the Australian corporate law framework offers clear support for shareholder value as a corporate governance norm or imperative. Thirdly, we examine the degree to which labour law provides a constraint on, or compels a modification of, the idea of shareholder primacy.

In relation to the first two of these issues, whereas we can clearly identify the consolidation of the shareholder value norm in contemporary corporate governance debates, our analysis leads us to the conclusion that some longstanding parts of corporate law provide only modest support for shareholder primacy. However, recent corporate governance reform strategies, such as those linking senior executive remuneration to share prices, and increasing reliance upon independent directors, are more closely linked to the pursuit of shareholder value than some of the more longstanding corporate law doctrines. Yet the impact of each of these reforms on corporate performance, and hence on the delivery of shareholder value, remains uncertain based on the results of empirical studies designed to test the outcomes of these reform strategies.

We also examine changes in corporate ownership, where, in the Australian context, the increasing ownership by institutional investors (which provides an incentive for active monitoring of the governance of the companies in which they invest) is in many cases counter-balanced by even larger non-institutional substantial shareholders (such as shareholdings of founding families or overseas companies), thereby reducing the prospects of successful institutional intervention. Patterns of institutional activism vary, depending on the size of the shareholding, the size of other non-institutional holdings in the company, the size of the company itself, the resources devoted to monitoring, the nature of the institution's portfolio and whether the institution is managing index funds. We note that institutional investors have, in recent years, increasingly argued for the types of corporate governance reforms which involve the pursuit of shareholder value.

In relation to the third issue, we argue that labour law, although not often a key focus of the research of corporate governance scholars, has always been able to be viewed as part of corporate governance to the extent to which it structures and limits what management can do in its relations with employees. However, current developments in Australian labour law are moving to a position whereby management's power to restructure the enterprise for shareholder value is being subjected to fewer constraints, with a corresponding shift of risk to employees.

Corporate law, corporate governance, labour law

Abstract:
This chapter has three objectives. First, it addresses some theoretical issues associated with the regulation of directors' conflicts of interest. Second, it reviews the Australian legal framework for regulating directors' conflicts. Third, it presents the results of an empirical study of directors' conflicts in Australia. The study covered disclosure of financial benefits between large Australian companies and their directors. The purpose of the study is to provide some insight into the types of matters which potentially involve directors' conflicts. Sixty-four per cent of the companies in the sample disclosed at least one director-related transaction. By dollar amount, the largest category of director-related transactions is goods or property provided to a company by a director or a director-related entity. Another common category of director-related transactions is services provided to a company by a director-related entity. The chapter identifies the types of services provided by directors by dollar amount and classifies the services according to their type (e.g. management services, legal services and consulting services).

Abstract:
A statutory derivative action has been proposed for the United Kingdom and is contained in Part 11 of the Company Law Reform Bill. Australia has had a statutory derivative action for approximately 6 years. This paper outlines the results of the first empirical study of the Australian statutory derivative action. The study provides insights into the way Australian courts have interpreted and applied this legal remedy. Issues discussed in the paper include the role of shareholder litigation in corporate governance and the purposes of the statutory derivative action.

derivative action, shareholder litigation, corporate governance

Abstract:
There has been a significant amount of literature by commentators discussing the doctrine of piercing the corporate veil. However, there has not been a comprehensive empirical study of the Australian cases relating to this doctrine.

In this article, the authors present the results of the first such study. Some of the findings are: (1) there has been a substantial increase in the number of piercing cases heard by courts over time; (2) court are more prepared to pierce the veil of a private company than a public company; (3) piercing rates decline as the number of shareholders in companies increases; (4)courts pierce the corporate veil less frequently when piercing is sought against a parent company than when piercing is sought against one or more individual shareholders; and (5) courts pierce more frequently in a contract context than in a tort context.

corporate veil

Abstract:
Because financial innovation has both social and economic benefits it is necessary to understand the factors which facilitate or impede financial innovation. In this article the author explores the role which legal regulation plays in financial innovation by using the example of securitisation. By reviewing the history of securitisation in Australia, it is demonstrated that legal regulation has both hindered and promoted financial innovation.

Abstract:
Executive remuneration is a topical subject. It is important because of the introduction into the corporations legislation of the concept of corporate officers being paid reasonable remuneration. The authors examine a series of court judgments both in Australia and in overseas jurisdictions which have dealt with the question of what constitutes reasonable remuneration. The authors also present the results of an empirical investigation into the relationship between remuneration and performance in the largest Australian companies.

Abstract:
It is mandatory for companies listed on the Australian Stock Exchange whose reporting periods end on or after 30 June 1996 to disclose their main corporate governance practices in place during the reporting period: ASX Listing Rule 4.10.3. This study seeks to determine the extent to which Australian listed companies are disclosing their corporate governance practices by examining the annual reports of 268 listed companies.

Abstract:
This paper reports the findings of the first detailed empirical survey of court-based enforcement activities by the regulator of Australian corporate and financial services law, the Australian Securities and Investments Commission (ASIC), during the years 1997 to 1999. The paper seeks to determine whether those activities are consistent with the findings of past sociological studies of legal regulation and enforcement. Enforcement includes all the activities by which ASIC investigates possible breaches of the laws it administers, takes action to remedy those breaches and/or to punish wrongdoing and secure compliance. Sociological theories contend that the effectiveness of laws as forms of regulation depend on the process by which those laws are received, interpreted and responded to by the participants in the regulatory process. This paper contributes to existing literature by providing an empirical study of one example of economic regulation in Australia. It interrogates three aspects of ASIC court enforcement: the characteristics of the participants in the regulatory process apart from ASIC; the types of enforcement activity undertaken by ASIC and the legislation applied in those activities; and the outcomes of ASIC enforcement activities. The paper concludes that trends in ASIC court enforcement are broadly consistent with cited past sociological studies. In particular, the predominant use of penal enforcement activities and sanctions by ASIC during the study period reflects a traditional conception of the role of court enforcement in legal regulation as a last resort strategy. The study also reveals that the majority of enforcement activities in the dataset concern breaches of mandatory, socially oriented or ethically-based laws by regulatees in circumstances where their behaviour is widely regarded as undesirable.

Australia, Australian Securities and Investments Commission, enforcement, regulator, enforcement strategies, court, litigation

Abstract:
The Asian financial crisis has led to attempts to better understand the dynamics of the global financial system. International economic institutions have identified principles of corporate governance as an essential element in improving the global financial architecture. This chapter explores the links between the new international financial architecture and corporate governance and then considers the impact of the growth of institutional investors on corporate governance practices.

The chapter is in two main sections. In the first section, the authors examine the role of corporate governance in improving the international financial architecture. They consider definitions of corporate governance and their implications; the international interest in corporate governance and the development of corporate governance principles by organisations such as the Organisation for Economic Co-operation and Development (OECD) and the Organisation for Asia-Pacific Economic Co-operation (APEC). They also consider why corporate governance is important and examine various corporate governance mechanisms.

In the second section, the authors turn to consider the role of institutional investors in corporate governance. They commence this section by documenting significant differences between countries and also between regions in the shareholdings of institutional investors. Institutional investment in a number of Asian countries has been much lower than that of countries as the United Kingdom, the United States and Australia. They then turn to consider the implications of institutional investment for corporate governance. Although there has been a substantial increase in institutional shareholdings in many countries, the evidence is mixed in relation to whether institutional investors have been more actively involved in corporate governance matters. As part of considering reasons for this, the authors examine the views of institutional investors on corporate governance issues at both an international level and also in Australia.

Abstract:
This research report highlights the role played by institutional investors in corporate governance. It details the findings of interviews conducted with representatives of institutional investors. The report analyses their views on a range of key corporate governance issues such as board structure and composition. It also details their attitudes to the exercise of voting rights; involvement in behind-the-scenes activism; and barriers to institutional involvement in corporate governance.

Abstract:
This research report documents the findings of an empirical study of judicial findings (of superior courts in Australia) relating to the duty to prevent insolvent trading. The duty to prevent insolvent trading is the most controversial of the duties imposed upon company directors. Those who support the duty argue that it provides appropriate protection for the unsecured creditors of companies. Those who oppose the duty argue that it has the effect of making directors unduly risk adverse which can result in directors too quickly putting companies into voluntary administration or liquidation for fear of personal liability (which may have a negative financial impact on unsecured creditors). Information is provided about (a) the number of court judgments over time, (b) the verdict of courts, including the amount of compensation ordered to be paid by the defendant, (c) the type of company involved in insolvent trading (including the industry it operates in, and (d) the type of director (executive, non-executive, etc) involved in insolvent trading.

insolvent trading, directors' duties

Abstract:
The objective of this paper is to provide a critical appraisal of the rationales for mandatory corporate disclosure rules. Following preliminary observations concerning voluntary disclosure, the authors commence the main discussion with an examination of various rationales for mandatory disclosure requirements based upon market failure. These rationales include protection of ill-informed investors, reduction of social waste, and monitoring of management. This is followed by an analysis of mandatory disclosure rules based upon public choice theory. Finally, the authors examine the efficient markets debate and consider the implications of this debate for securities regulation.

Abstract:
Trade unions in a number of countries have recently begun to use corporate law to pursue employee interests. They are putting forward resolutions to be voted on at company annual general meetings (AGMs); lobbing for proxy votes through the distribution of statements in support of union sponsored AGM resolutions; posing questions to the board of directors at shareholder meetings in order to highlight employee interests; and, less commonly, requisitioning special meetings of shareholders. Unions appear to be utilising corporate law in order to forge a role in influencing company workplace practices, where this role has been greatly diminished because of changes to labour law. This article examines the recent practice of union shareholder activism in Australia through eight case studies in which unions have used corporate law to advance employee interests. The rationale, methods, effectiveness and perceived legitimacy of unions engaging in shareholder activism are evaluated.

union shareholder activism, corporate governance, corporate law, trade unions

Abstract:
This article analyses when a holding company should be liable for the debts of its insolvent subsidiary using a law and economics perspective. The article (1) considers whether creditors warrant protection by the legislature or the courts or whether they should be expected to contract to protect themselves; (2) surveys the different approaches adopted in several countries to the issue of holding company liability for the debts of an insolvent subsidiary; and (3) analyses a provision of the Australian Corporations Act that imposes liability on holding companies and identifies some limitations of this provision.

Abstract:
The research project examines how the Australian Securities and Investments Commission (ASIC) uses civil penalties as an enforcement tool against company directors. It identifies and critically evaluates the factors which impact upon ASIC enforcement decisions regarding civil penalties. The methodology employed for the research involved collection of data about the use of civil penalties and a series of semi-structured interviews with senior ASIC enforcement personnel from regional offices around Australia. Those interviewed included: National Director, Enforcement; Regional Commissioner; Regional Director, Enforcement; Regional Assistant Director, Enforcement; and Regional General Counsel.

Civil penalties were introduced by the Federal Parliament in 1993 with the expectation that they would be a significant enforcement tool. On 1 July 1998, the Federal Parliament extended the application of civil penalties under the Corporations Law to a number of additional statutory provisions including provisions involving share capital transactions and the management of managed investment schemes.

However, our research has found that ASIC has commenced only 14 civil penalty applications relating to 10 case situations since civil penalties were introduced in 1993.

The research identifies a number of reasons for this:

1. Civil penalties are seen by many of those interviewed as being inflexible and having limited utility as an enforcement option.

2. There are a number of alternative remedies which, from ASIC's point of view, appear to be more viable than civil penalties. In particular, there are injunctions which provide a "real time" remedy as well as section 600 of the Corporations Law which allows ASIC, in certain circumstances, to ban a person from managing a corporation. Section 600 is an effective remedy according to many of those who we interviewed as it does not require ASIC to bring court proceedings although the person banned may challenge the ASIC banning order in court. In order to ban a person from managing a corporation for breach of a civil penalty provision, ASIC must bring court proceedings.

3. A number of those interviewed expressed reservations about delays associated with use of the courts in the area of enforcement and, in addition, some of the difficulties of interpretation that have resulted from certain judgments of courts. These uncertainties in the interpretation of basic statutory provisions regulating directors' duties (which are civil penalty provisions) reinforce the trend to use alternative enforcement mechanisms.

4. There was some indication that many of those in the enforcement section of ASIC come from a criminal law background and therefore have a tendency to prefer criminal actions rather than civil penalties. The suggestion was that this would change over time as the personnel of ASIC changed.

5. Those interviewed indicated that the requirement to liaise with the Director of Public Prosecutions (DPP) over significant enforcement matters adds another level of complexity to the decision-making process. The consequences resulting from the requirement to liaise with the DPP was a recurring theme in the interviews. These consequences include (i) the requirement means that the DPP effectively has a veto over the use of civil penalties; (ii) the need for the DPP to satisfy itself that there is no criminal element in a matter may result in delay that can undercut the opportunity for a civil penalty action; and (iii) ASIC and the DPP have different enforcement objectives. The role of the DPP is to prosecute criminal breaches of the law while ASIC has broader objectives which include using civil remedies. These different objectives can impact upon the likelihood of civil penalties being pursued.

6. Unclear drafting of the civil penalty provisions, particularly regarding the elements that must be proved to satisfy the court that a breach of a civil penalty provision has occurred, limits the use of civil penalties. Where the same conduct may breach both a civil penalty provision and a provision in a State Criminal Code, there is an incentive to frame the legal action as a breach of the Criminal Code because of the uncertainty surrounding the civil penalty provisions.

Abstract:
Short selling constitutes a significant portion of total sales of exchange traded securities in the United States. Articles in the Securities Regulation Law Journal have outlined the recommendations of the House Committee on Government Operations in its report titled "Short-Selling Activity in the Stock Market: Market Effects and the Need for Regulation (Part 1)".

In this brief article, I argue that two issues have been inadequately addressed by the House Committee. First, the House Committee assumes that short selling is undertaken by investors seeking to profit from a decline in stock prices. Based on this assumption, the House Committee recommends increased disclosure obligations with respect to short selling. However, what is missing from the House Committee Report is an analysis of the economic literature on short selling. Much of this literature demonstrates that short selling is undertaken for a number of reasons and that short selling undertaken for the purposes of speculation constitutes only a portion of total short selling. Second, the House Committee endorses the uptick rule applicable to short selling and recommends the uptick rule be extended to apply to NASDAQ trading. Again, the House Committee does not acknowledge the existence of economic literature which challenges the assumptions underlying the uptick rule.

Abstract:
Corporate political donations are controversial. These donations are of interest for several reasons including:

- a concern that commercial interests can be advanced by donating funds to political parties; and

- in the case of public companies, that the funds being donated are not those of the directors of the company who make the decision to donate the funds but are the funds of the company's shareholders.

This article begins by examining some of the more recent and topical responses to the phenomenon of corporate political donations. It then examines the motivations which apparently underpin corporate giving. The article then analyses the legal framework within which corporations may pursue philanthropy, which comprises corporate and electoral regulation, both under statute and at common law. This is followed by a presentation and analysis of the results of an empirical study of corporate donations to Australian political parties. The article concludes by outlining some options for law reform.

corporate political donations

Abstract:
Shareholder statutory derivative actions have been introduced into the laws of an increasing number of countries. Derivative actions are where shareholders bring litigation on behalf of the company; for example, to enforce breaches of directors duties. This article considers three key issues relevant to derivative actions. First, the role of shareholder litigation in corporate governance is evaluated. Second, the article considers possible solutions to the collective action problem evident in shareholder litigation including a mandatory requirement for the company to pay the costs of the derivative action once the court allows the action to proceed and also shifting the risk of litigation to the plaintiff shareholder's attorney by the use of contingency fees. Third, an evaluation is undertaken of the competence of various bodies (the plaintiff shareholder, the other shareholders of the company, independent directors and the courts) to determine whether a derivative action is in the interests of the company.

Abstract:
This book chapter is a revised version of a paper presented at a conference to mark the centenary of the decision of the House of Lords in Salomon v Salomon & Co Ltd. Few law judgments would be worthy of a major conference 100 years after they are handed down. Yet the decision of the House of Lords in Salomon v Salomon & Co Ltd continues to generate much discussion. A later judgment referred to the decision in Salomon as constituting “the foundation of our modern company” while one commentator refers to the decision as “calamitous”.

The decision in Salomon remains important today because a number of the matters considered by their Lordships are still being debated. For example, when is it appropriate to grant limited liability to an organisation? This was fundamental to the decision in Salomon yet remains important today when we consider recent debates concerning whether or not certain professions such as solicitors and accountants should be able to incorporate and thereby gain the benefits of limited liability. Is it appropriate to grant limited liability to a company which, although having more than one shareholder, may in fact reasonably be described as a “one person” company because of the dominance of one particular shareholder? Again, this was fundamental to the decision in Salomon and we finally saw this debate resolved in Australia in late 1995 with the enactment of the First Corporate Law Simplification Act which allows a proprietary company to be formed with only one shareholder.

What is the appropriate balance between protecting shareholders of a company by granting them limited liability and protecting unsecured creditors who will bear additional risk where shareholders have limited liability? In Salomon it was the unsecured creditors represented by the liquidator of Salomon & Co Ltd who lost. This issue remains central to a number of significant corporate law debates when we consider statutory provisions of the Australian Corporations Law which impose liability on the directors of a company which engages in insolvent trading. These statutory provisions have, as their objective, the protection of unsecured creditors.

There is a further issue arising from the decision in Salomon. To what extent should corporate regulation be essentially mandatory or enabling (in the sense that regulation has, as its objective, the promotion of private agreements between participants in companies on the basis that they are typically in a better position to understand and contract for their own needs rather than the government)? How did this issue arise in Salomon? The English Companies Act of 1862 allowed companies to be incorporated with seven shareholders. The Act specifically granted shareholders limited liability. Aron Salomon had a company duly incorporated in accordance with the Act on 28 July 1892. He held 20,001 shares in the company and his wife, daughter and four sons each held one share.

Once there is formal compliance with these provisions allowing for incorporation, is this sufficient to obtain limited liability? A negative reply was given by the Court of Appeal where the judges stated that more than formal compliance with the statutory provisions was required. Lindley LJ stated that “the incorporation of the company cannot be disputed”. However, he, along with the other judges of the Court of Appeal, did not believe that the legislature intended to give “one person” companies limited liability. The decision of the Court of Appeal was overturned by the House of Lords.

In the chapter, I examine in greater detail issues relevant to the debate on whether corporate regulation should be mandatory or enabling. In Part II, I look more closely at mandatory and enabling systems of regulation. In Part III, I provide some examples, drawn from Australian corporate regulation, of mandatory rules which have had high costs associated with them. In Part IV, I discuss mandatory corporate disclosure rules as a case study of the mandatory/enabling debate. In Part V, I return to a key theme evident in Salomon - limited liability. Should we promote and facilitate limited liability or strictly regulate the circumstances where limited liability should be permitted? Finally, in Part VI, I turn to examine the implications of two significant recent developments (the growth of institutional investors and electronic commerce) for the mandatory/enabling debate.

Abstract:
This report is part of a larger project which examines the managed funds industry in Australia and the means by which it is regulated. The report examines in particular (a) the different size and types of managed funds in Australia; (b) the extent to which the Australian regulatory regime conforms with international principles for the regulation of collective investment schemes; (c) the legislative intention and practical operation of compliance committees in managed funds; (d) the internalisation and centralisation of the compliance function; (e) the degree to which fund operators outsource their activities and responsibilities; and (f) whether the governance and regulatory approach of recent legislative changes represents an improvement to the previous regulatory regime.

The analysis has utilised data that is publicly available as well as interviews and surveys conducted with compliance managers, representatives of the Australian Securities and Investments Commission, compliance committee members and directors.

managed funds

Abstract:
Edited by Ian Ramsay, this book is a collection of essays that examines the liability of directors for insolvent trading. In addition to legal analysis of insolvent trading provisons in several countries, theoretical perspectives on insolvent trading are also provided.

The chapters of the book are:

Part I - Introduction

1. An Overview of the Insolvent Trading Debate - Ian M Ramsay

Part II - Theoretical Perspectives on Insolvent Trading

2. Corporate Directors' Personal Liability for "Insolvent Trading" in Australia, "Reckless Trading" in New Zealand and "Wrongful Trading" in England: A Recipe for Timid Directors, Hamstrung Controlling Shareholders and Skittish Lenders - Dale A Oesterle
3. The Economic and Strategic Structure of Insolvent Trading - Michael J Whincop

Part III - Insolvent Trading in Australia

4. Insolvent Trading in Australia: The Legal Principles - Niall F Coburn
5. The Recovery of Employee Entitlements in Insolvency - David B Noakes
6. Why are There so Few Insolvent Trading Cases? - Abe Herzberg

Part IV - International Perspectives on Insolvent Trading

7. Directors' Liability for Trading While Insolvent: A Critical Review of the New Zealand Regime - David Goddard
8. Civil Liability of Directors for Company Debts Under English Law - Jenny Payne and Dan Prentice

Abstract:
Edited by Ian Ramsay, this book is a collection of essays that examines the judgment of the High Court of Australia in Gambotto v WCP Ltd. This judgment is one of the court's most important corporate law decisions and relates to:
• the rights of minority shareholders
• squeeze-outs of minority shareholders
• capital reconstructions
• disclosure obligations to shareholders
• amendment of the company constitution, and
• takeovers

The chapters of the book are:

Part I - Introduction

1. Key Aspects of the Decision of the High Court in Gambotto v WCP Ltd - Ian M Ramsay

Part II - Practical Implications of Gambotto

2. Compulsory Share Acquisitions: Practical and Policy Considerations - Damien Grave
3. Disclosure Obligations in Corporate Squeezeouts - Paul Redmond
4. The Implications of Gambotto for Non-Takeover Aspects of Compulsory Acquisitions: A Comment - Quentin Digby
5. The Implications of Gambotto for Takeovers: A Comment - Ian Renard
6. The Implications of Gambotto for Minority Shareholders - Elizabeth Boros

Part III - Theoretical Implications of Gambotto

7. Proprietary Norms in Corporate Law: An Essay on Reading Gambotto in the United States - Deborah DeMott
8. An Economic Analysis of Gambotto - Michael J Whincop
9. When Should Compulsory Acquisition of Shares be Permitted and, if so, What Ought the Rules be? - Saul Fridman

Abstract:
This paper examines accounting and non-accounting based restrictive covenants in Australian private debt agreements. With respect to the former, our findings differ from previous research on public debt. We find more varied definitions of constraints and their specific tightness in private debt contracts than in public debt contracts. Further, limits on interest cover are found to be continuing constraints and not 'once-off' limits. The paper reports frequent use of more specific or 'tailored' accounting based constraints and the frequent inclusion of off-balance sheet numbers in the measurement rules specified.

The paper also provides the first Australian evidence on the use of non-accounting based constraints. These are pervasive and cover a wide range of corporate activity. While largely consistent with previous research the paper also reports evidence of restrictions previously argued to be sub-optimal and hence, unlikely to be observed. Specifically, there are frequent restrictions on firms' production and investment policies.

Abstract:
An important debate concerns the meaning of the duty imposed on company directors to act in the best interests of the company. Are shareholders' interests paramount when directors act in accordance with this duty? To what extent can the interests of stakeholders other than shareholders be considered by directors? Does this duty need to be changed to facilitate socially responsible behaviour by directors? There have been significant international developments addressing these questions. For example, in the United Kingdom the duty to act in the interests of the company was reformulated in 2006. In Australia, two recent government inquiries have investigated these questions. However, the two government inquiries lacked empirical evidence regarding how directors understand their legal duties. This paper assesses the findings of the two government inquiries against the results of a survey of directors which inquired into how company directors balance the competing and sometimes conflicting interests of stakeholder groups, including employees, creditors and shareholders. The paper also investigates the extent to which the current law of directors' duties permits directors to consider the interests of stakeholders other than shareholders.

Abstract:
Significant attention is currently focussed on the level of remuneration received by directors and officers of public companies in England, Australia and elsewhere. Some have argued that the remuneration received is excessive and that additional regulation is required. Others assert that directors' remuneration is inadequate. This attention is understandable for several reasons. First, it is important to ascertain whether the remuneration received is related to performance. Secondly, analysis of remuneration is critical to developing a viable theory of how companies operate given that remuneration, by reason of the incentives it provides, can determine how directors and officers behave. The author's concern is the role of the law in this area. The issue is whether the law should take a more interventionist role than it does currently. The author first outlines recent evidence on directors' and officers' remuneration. This is followed by a review of the existing role of the law. As will be seen, this is essentially one of limited disclosure obligations and limited judicial review. In the third section, agency theory is applied to the issue of remuneration with the objective of developing an appropriate framework for legal regulation. In the fourth and fifth sections, the author analyses empirical studies on the use and effects of different types of remuneration plans and considers reasons why many existing remuneration plans fail to align adequately the interests of managers with those of shareholders. Finally, the author identifies and evaluates a number of alternative means of determining remuneration. These range from requiring regulatory approval of remuneration to allowing the market for directors and officers to set appropriate remuneration levels. It is argued in this final section that the role of the law should be to strengthen the mechanisms which play a role in setting directors' and officers' remuneration; namely, remuneration committees and market forces. This is achieved primarily by a more rigorous regime of mandated disclosure.

Abstract:
Discussion of share buybacks or repurchases is topical. Yet share buybacks are a relatively recent phenomenon in Australia. Until 1989, they were prohibited. In this article we undertake the first empirical investigation of Australian share buybacks. The article commences by reviewing the Australian debate on buybacks and examines why so few buybacks have been undertaken in Australia. We then discuss reasons why companies undertake buybacks and, as part of this discussion, survey the results of prior studies undertaken in the United States which investigate reasons for buybacks in that country. This is followed by an explanation of the data and methodology that we employ in our own study and the results of the study. We conclude by discussing the implications of our results for the legal regulation of buybacks.

Abstract:
This paper draws together recent developments in legal and economic theory on corporate ownership structure and empirically tests several key theoretical propositions by examining data on 100 Australian companies. The objective is to examine the implications of ownership structure for corporate governance and legal regulation. The two main aspects of ownership structure examined are ownership concentration and institutional investment. The authors evaluate factors which influence ownership concentration and identify the major institutional shareholders in 100 companies. A number of implications for legal regulation are discussed in the paper including whether different legal rules should apply to companies according to their degree of ownership concentration.

Abstract:
This research report provides detailed analysis of data collected from a major survey into how company directors balance the competing and sometimes conflicting interests of stakeholder groups, including employees, creditors and shareholders. The findings have significant policy implications. The obligations of directors toward company stakeholders and whether the law of directors' duties needs to be changed have been the subject of much public debate. There have been government inquiries on this topic in a number of countries. However, there has been little empirical evidence of directors' attitudes and business practice.

The survey tested directors' understanding of their obligations under the law and their priorities in relation to stakeholders using simple ranking exercises and a more sophisticated 'salience' test in order to gain a more nuanced understanding of the extent to which directors prioritise particular interests. The survey revealed results which suggest that directors do not adhere to a simple 'shareholder primacy' corporate strategy.

Abstract:
This article presents the results of a study of court judgments resulting from use of the oppression remedy by shareholders. Issues addressed include: trends in the use of the oppression remedy; the types of companies involved in oppression actions (private or public company; number of shareholders in the company); the allegations pleaded by plaintiffs; the remedy sought by plaintiffs; the remedy granted by courts; and the tests used by courts.

Abstract:
There is significant concern in the United States that the costly corporate law reforms introduced by the Sarbanes-Oxley Act of 2002 (SOX) are causing companies to delist from stock exchanges and deregister their securities with the Securities and Exchange Commission (ie, "go dark").

The principal cause of increased compliance costs has been section 404 of SOX. This section requires annual reports to contain an internal control report setting out management's responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reporting. The effectiveness of the internal control structure must be assessed by management and attested to by external auditors.

Australia has introduced corporate law reforms in recent years. However, these reforms have not been as extensive as SOX and Australia has not introduced an equivalent to section 404 of SOX. Australian corporate law reforms would therefore seem not as expensive to comply with as SOX and Australian listed companies may not have the same incentive to delist as some US companies.

In this study the authors seek to determine whether companies listed on the Australian Stock Exchange (ASX) are responding to corporate law reforms or changes made to their reporting requirements by delisting. The authors analyse 30 years of data of delisting, spanning 1975-2004, to see what the reasons are for companies delisting in this period. From the 5,952 observations collated the authors do not find any significant evidence of companies delisting in response to corporate law reforms or because of their reporting costs.

In addition to examining the reason for delisting, the authors also use the same data to examine (1) the extent of delistings relative to all companies listed on the ASX; (2) the length of time delisted companies are listed; and (3) the industry of delisted companies.

Abstract:
This article is a revised version of a paper presented at a conference at the University of Cambridge. The theme of the conference was Developing Directors' Duties. The article commences by placing directors' duties in the broader context of corporate governance. It then addresses two issues that form part of the English Law Commission's consultation paper on directors' duties. The first is the possible introduction in England of a statutory formulation of the duty of care. This part of the article reviews the Australian experience with such a statutory formulation. The second issue is the possible decriminalisation of some aspects of directors' duties. This occurred in Australia in 1993 with the introduction of civil penalties. This part of the article outlines the preliminary results of a study of the use of civil penalties by the Australian Securities and Investments Commission since their introduction in 1993. There has been little use of civil penalties by the Securities Commission and possible reasons for this are identified.

Abstract:
Employee share ownership (ESO) has been the subject of significant public policy debate. In these debates, ESO plans are usually said to be implemented for a variety of reasons including alignment of employer and employee interests, increased employee productivity, improved workplace harmony, and increased employee remuneration. This study explores, through case studies of ESO plans at two Australian companies, three key issues relevant to the implementation of ESO plans and the policy and regulation applicable to ESO plans. These issues are: (1) whether ESO plans better align the interests of employees with those of their employer, leading to better enterprise performance; (2) whether the objectives of companies in implementing ESO plans are primarily "ownership objectives," "remuneration objectives" or "workplace change objectives;" and (3) whether the concessional taxation treatment of ESO plans provides an incentive for the implementation of plans in a way that leads to improved enterprise performance.

employee share ownership, corporate governance

Abstract:
Employee share ownership ("ESO") schemes have recently been the subject of public policy interest in Australia. Employees owning shares in the company for which they work potentially has a number of ramifications, not least of which is the prospect that these schemes might circumvent the problematic of employees as "outsiders" in corporate governance.

This paper surveys key issues and themes surrounding ESO schemes in Australia. It explores the varied policy rationales for these schemes, noting both broad bipartisan support and a generally limited conception of their fundamental purpose. The paper also outlines the current state of empirical research on their incidence and effects. It is suggested that available information on ESO schemes is patchy and there is no clear picture of Australian practices. In light of an overview of the present regulation of ESO schemes, the paper concludes by highlighting further research questions.

employee, share, ownership, ESO

Abstract:
Do changes in the legal and regulatory environment of a country affect companies' financing/investment decisions? In this paper, we address this question by examining the market's reaction to announcements of share buybacks in Australia. Before 1989, Australian companies were prohibited from repurchasing their shares and, until 1995, they were heavily regulated with few companies repurchasing their shares. In December 1995, the regulations governing share buybacks were simplified making it considerably easier for companies to repurchase their shares. The changing Australian legal regulation of share repurchases provides a unique opportunity to test the effects of legal regulation on companies' financing/investment decisions. We find that, unlike in the United States, the market reacts most positively to on-market buybacks (equivalent to open-market repurchases), while the reaction to other types of share buybacks is positive but not statistically significant. We also find that the abnormal returns earned by resource sector companies announcing share buybacks are higher than the abnormal returns earned by share buybacks announced by companies in the industrial and financial services sectors. An examination of matched companies announcing share buybacks before and after the regulatory changes in December 1995 shows that the market attaches a substantially higher value to the removal of stringent regulations governing share buybacks. This evidence is consistent with the expectation that the stringent regulation of share buybacks during 1989-1995 made them less effective as a credible signaling mechanism.

Abstract:
This paper presents the results of an empirical study of the Australian Takeovers Panel. The Takeovers Panel is the primary forum for resolving disputes about a takeover bid while the takeover is underway. The Takeovers Panel was established in 2000 and replaced the earlier Panel which was widely regarded as ineffective, hearing very few matters and the extent of its powers being subject to extensive litigation in the courts. The new Takeovers Panel was given enhanced powers with the objective of enabling the Panel to replace the courts as the primary forum for the resolution of takeovers disputes. It was expected that the new Panel would be able to facilitate resolutions to takeovers disputes more rapidly, informally and cost effectively than the courts.

All decisions of the Takeovers Panel during the first 5 years of its existence (2000-2005) were examined. The study provides insight into how the Panel has operated since 2000 and how effective it has been in terms of matters such as the time taken to reach decisions. Issues examined include: how active is the Takeovers Panel?; who makes applications to the Panel?; speed of decision making; the Panel as a facilitator of takeover bids; the basis for applications and the basis for decisions; size of companies involved in Panel applications; industry classification of companies involved in Panel applications; and appeals against decisions of the Panel.

Abstract:
An important and controversial corporate governance issue is the extent to which share ownership by directors increases corporate performance. Some commentators suggest that increasing directors' shareholdings in their companies provides directors with the incentive to improve corporate performance. Other commentators suggest that high levels of director share ownership may simply entrench directors. We examine whether there is a positive relationship between the level of director shareholdings and corporate performance for 180 listed Australian companies. We find that, in some circumstances, such a relationship does exist but the results differ according to a number of factors such as the performance measure used, whether director share ownership is measured by dollar value or percentage of the shares of the company outstanding, the size of the company and the industry in which the company operates.

Abstract:
There has been a lack of analysis of the justification for trustees in collective investment schemes. Yet a study of the topic is pertinent because of the prominent position occupied by trustees in certain schemes. One possible justification for trustees, considered in this paper, is the existence of a collective action problem. Four types of schemes are examined: debentures, public unit trusts, life-insurance firms and superannuation funds. While each of these schemes can exhibit a considerable collective action problem, only the first three typically involve a trustee. We conclude that even where a collective action problem exists, there is not necessarily the need for a trustee. There may be more efficient solutions to the problem.

Abstract:
This study reports the results of a survey of Australian investors and their professional advisers on how they use prospectuses and the utility of prospectuses. Information is obtained in relation to prospectuses for managed funds and direct share investments and includes (a) the most popular source of information for investment decisions, (b) views on the utility of prospectuses, and (c) how often trading is undertaken.

prospectuses, disclosure

Abstract:
The Australian Federal Parliament introduced civil penalties into company law in 1993 with the expectation that there would be more effective enforcement of directors' duties. However, in the six years since civil penalties were introduced, the Australian Securities and Investments Commission (ASIC) has commenced only 14 civil penalty actions. The research undertaken by the authors reveals that civil penalties are perceived by ASIC as serving only a limited deterrent function. The factors responsible for this include ASIC's: (1) resource constraints, including financial constraints; (2) relationships with other regulatory agencies, such as the Director of Public Prosecutions (DPP) and the judiciary; (3) ability to choose from a range of sanctions; and (4) concerns about the limited utility of civil penalties given the unclear nature of the civil penalty regime and its regulatory praxis.

Abstract:
In this article I examine the market for lawyers. The objective is to place the debate regarding whether there is an oversupply of lawyers on a firmer footing than it hitherto has been. Following the outline of statistics on the growth in the number of lawyers, the discussion commences with an analysis of the tasks that lawyers undertake. It is necessary to identify these tasks because without some understanding of them we cannot proceed to an informed debate of those factors that go to make up the demand for the services that lawyers provide. A crucial debate that is addressed is whether lawyers provide services that produce wealth or whether the services that lawyers provide are only associated with the redistribution of wealth. The factors that have led to a significant increase in the supply of lawyers are identified. In brief, these are an increase in the number of law student enrolments and an increase in the participation of women in the legal workforce.

While it is relatively easy to identify those factors that have resulted in an increase in the supply of lawyers, it is much more difficult to identify factors which are associated with an increase in the demand for lawyers' services. Common explanations given for such an increase in demand are that we live in a society that is increasingly more litigious and more regulated. I demonstrate that these explanations are too simplistic. The discussion proceeds to an evaluation of further reasons that may be associated with an increase in the demand for lawyers' services. These include changes in wealth levels and demographics, greater population diversity, changes in the production of goods and services and increasing internationalisation. A further reason is that lawyers themselves are able to generate increased demand for their services. This will occur where lawyers create additional legal work beyond that required by the client. It will also occur where lawyers are able to introduce monopolies on the provision of legal services. Some of these factors are associated with an increase in the demand for the services of professions other than lawyers. Possible reasons why lawyers are able to specialise in certain tasks are also considered. The analysis of factors that influence the supply of lawyers and the demand for lawyers' services has implications for legal education and also for practising lawyers. These implications are discussed in the final section of the article.

Abstract:
This article reports the results of a study of the underpricing of initial public offerings under the Corporations Law. The authors commence by outlining a number of theories that have been advanced to explain the persistent underpricing of the issuing company's shares. The authors then examine whether the introduction of due diligence requirements in the Corporations Law, motivated as they were by a desire to provide more credible information to investors in prospectuses, may reduce investor uncertainty and hence, underpricing. The authors report average adjusted underpricing of 11 to 14 per cent in two samples of IPOs. However, they do not find evidence that increased due diligence is associated with lower underpricing of IPOs.

Abstract:
The emergence of institutional investors as shareholders has rendered obsolete many of the traditional assumptions about shareholders and their behaviour in relation to the affairs of the corporation. Corporate theory is, however, still coming to grips with the implications of these changes for a revised picture of corporate governance. It is unclear to what extent older models of the corporation, in which shareholders were viewed as corporate owners are being reasserted, or whether the distinctive characteristics of institutional investors require a totally new version. In addition, the potential of institutional investors to monitor corporate management is significant within the broad debate on managerial accountability and corporate regulation.

The aim of this chapter is to examine the changes wrought by the rise of institutional investors at both theoretical and empirical levels. The chapter discusses the reconception of the role and behaviour of shareholders which has occurred in corporate law. It then examines the extent to which empirical evidence in Australia supports a new role for institutional investors. Finally, the chapter examines the likelihood of greater institutional investor activism in the future in Australia, and the degree to which legal barriers may hamper the development of a more interventionist role for institutional investors.

Abstract:
This article addresses the issue of who best enforces corporate rights and duties: shareholders or the Australian Securities Commission (ASC). The author commences by examining the evidence relating to litigation commenced by shareholders and the ASC. The evidence suggests that most enforcement is undertaken by the ASC. This is followed by an analysis of the costs and benefits of shareholder litigation and ASC litigation to enforce corporate rights and duties.

Abstract:
The financial services industry in Australia has undergone major changes in the past decade. In this article the author documents and analyses these changes. The article commences by reviewing developments in Australia's capital markets and provides information on the growth of the financial services industry. Next, the article examines links between electronic commerce and financial services. The article then turns to examine the growing need to reform the regulation of Australia's financial services industry and, as part of this, discusses the Final Report of the Financial System Inquiry which recommended a move from institutional to functional regulation. The final part of the article examines the key changes resulting from the Financial Services Reform Act 2001, including licensing of financial markets and clearing and settlement houses; licensing of providers of financial products and services; disclosure requirements for financial services licensees and their representatives; financial product disclosure; and liability provisions in the Financial Services Reform Act.

Abstract:
Approaches to the regulation of partial takeovers differ significantly among countries. The author reviews the regulatory approaches adopted in a number of countries noting that statutory amendments in Australia have virtually eliminated partial takeovers in that country. The justifications for partial takeovers are evaluated, most notably the argument that partial takeovers are an essential part of an active market for corporate control which, in turn, is necessary to ensure competent management of companies. Opposing arguments include the possible exploitation of remaining minority shareholders by the new controlling shareholder and the alleged coercive nature of partial takeovers. Empirical evidence is utilised to challenge the assumption that partial takeovers are inevitably coercive. The author concludes that while most discussion on partial takeovers has centred upon the need to protect the shareholders of target companies, a broader inquiry, which considers the effects of partial takeovers on other interested groups, including creditors, employees and also shareholders in acquiring companies, is required.

Abstract:
An important debate in corporate governance concerns the validity of the shareholder primacy theory, a theory which depicts the role of company directors as primarily being to act in the interests of shareholders and maximize the wealth of shareholders. This paper reports the results of a survey of company directors that had, among its objectives, testing the validity of the shareholder primacy theory.

The authors present the survey findings on four questions: 1. whether directors prioritize the interests of shareholders above the interests of employees and other stakeholders; 2. whether, if that is the case, the source of that prioritisation lies in legal obligation or duty; 3. whether directors in types of companies corresponding to the market/outsider model are more inclined to prioritize shareholder interests (the authors test two models derived from the work of others - the market/outsider model and the insider/relational model where the market/outsider model is based upon indicators such as the company being listed and higher levels of shareholdings by institutional investors); and 4. whether the prioritisation of shareholder interests tends to come at the expense of employees.

The key conclusions of the authors include: 1. The shareholder primacy view of directors' priorities has considerable cogency but the results of the survey indicate that this cannot be reduced to a simple proposition that directors will necessarily pursue shareholders' interests at the expense of other stakeholders. There is very little evidence, for example, that directors see short term returns to shareholders through share price or other short term gains as a priority. Clearly, though, shareholders are seen as important and, probably, the most important, of stakeholders. 2. How this prioritisation plays out in directors' minds, however, is far from clear cut. It evidently does not follow that other stakeholders are not prioritised or that their interests are not attended to or seen as legitimate. Other evidence derived from the survey results indicates that employees, for example, are also ranked highly in these respects and sometimes ranked more highly than shareholders. 3. Whatever the normative strength of the shareholder primacy view, shareholder primacy is not derived from a legal obligation on the part of directors, nor is it derived from a view by directors that they are under an obligation to pursue such a policy. Directors indicate that they are legally free to pursue any strategy which they feel will benefit all stakeholders.

Abstract:
It is now 50 years since the first steps were taken towards the establishment of a federal scheme of companies and securities regulation in Australia and the development of a single, national securities commission to police the relevant legislation. Sweeping and fundamental changes in conceptual, legislative and institutional approaches to companies and securities regulation have ensued over the last half-century with the development of a national corporations scheme. The paper is a preliminary survey and investigation of the many complexities - personal, political, legal, social and institutional - that have influenced, motivated and constrained the development of the present system of Australian companies and securities regulation, particularly in reference to the bodies which have been mandated the task of policing the relevant law.

The paper commences by reviewing the developments which led to the formation of the first national regulatory scheme, the Unified Companies Acts (1961-62) of the six states and the creation of the Interstate Corporate Affairs Commission (1974-79), the first institutional regulatory arrangement with a substantially national purview. The influence of economic and political events, from the finance and securities scandals of the 1960s to the large-scale breakdown of federal-state relations are surveyed, and the leading role of lawyers and politicians in the reform of the old states-based regimes are assessed as the need for a national system of regulation and enforcement was increasingly recognised as a matter of national economic interest and hence a pressing concern for political and legislative reform.

The turbulent years of the 1980s and the National Companies and Securities Commission (1981-90) are then assessed. The seminal role of the first properly federal commission in developing accounting standards, securities trading and managed funds reform are considered in light of the critical legislative changes which saw widespread deregulation and internationalisation of the financial system and the concomitant rise of a clamorous tide of securities speculation, take-over activity and corporate misconduct. By the late 1980s the reform process had become a matter of intense public interest as the billion-dollar losses of both local and international banks were now matched by a new round of scandals in the managed funds area, just as the first federal scheme was being wound up to be replaced by a more developed legislative framework and companies and securities enforcement regime.

The final part of the paper surveys the first ten years of the comprehensive new national scheme established at the end of the 1980s: from the establishment of the Australian Securities Commission (now ASIC) in 1989 and the development of the Corporate Law Economic Reform Program to the reworking of the previous regulatory arrangements which saw investment protection brought squarely under the supervision of the national securities commission.

Abstract:
Retail managed investments schemes (or mutual funds) operating in Australia are regulated under the Corporations Act through financial services licensing in conjunction with the imposition of statutory duties on scheme operators and their officers. Compliance committees and compliance plans are important parts of the regulatory platform. The compliance committee, similar to the operation of the audit committee in relation to a company, is intended to serve as the primary monitoring and reporting intermediary between the area performing the compliance function and the board of the scheme operator. This article draws upon data from the Australian Bureau of Statistics, the Australian Securities and Investments Commission and other bodies as well as interviews with industry participants to examine the operation of compliance committees in practice.

Abstract:
What explains the development of different types of structures for conducting business? What type of regulation is appropriate for these business structures? These are two of the most important questions for those involved in commercial law research. In this brief article I endeavour to answer the second question as it relates to one particular type of business structure - limited partnerships.

Increasing attention is being given to limited partnerships. This attention has focused upon five issues. First, the fact that a majority of states in Australia have now enacted legislation permitting limited partnerships. Second, the advantages that a limited partnership has when compared to a company and a general partnership. Third, the removal of the tax advantage applicable to limited partnerships in the 1992-1993 federal budget. Fourth, whether the new tax policy will eliminate the use of limited partnerships in major infrastructure investments which typically need significant capital expenditure before generating revenue and often accumulate large tax deductions, particularly during the construction phase of the project. Fifth, the decision of the Australian Securities Commission (ASC) that the general exemptions from the fundraising provisions of the Corporations Law should not be given to limited partnerships unless an exemption is consistent with ASC policy and that limited partnerships must meet the same standards of investor protection as other prescribed interest schemes.

In all of this discussion concerning limited partnerships, two important issues have not been addressed. These two issues are central to the question posed in the opening paragraph; namely, what type of regulation is appropriate for particular business structures? The first issue is whether an expansion of limited liability into partnership law is warranted. It is surprising that there has been little discussion of this issue given that the principle of limited liability is the underpinning feature of the legislation permitting limited partnerships. Moreover, discussion of limited liability is topical given that some commentators have begun to question whether limited liability is justifiable in all of the circumstances where it now applies. The second issue concerns the way in which the activities and operations of limited partnerships are increasingly subject to federal regulation (through taxation policy and the application of the fundraising provisions of the Corporations Law) albeit that these partnerships are established under state legislation. There is an important question concerning whether this is a desirable trend. These two issues are the subject of this brief article.

Abstract:
It is important to ascertain the financial effects of legal change, whether that change be in the form of a statute enacted by Parliament, or in the form of a judgment handed down by a court. There are a number of ways of measuring the financial effects of legal change. For example, it is possible to focus upon the compliance costs associated with a new statute. Indeed, explanatory memoranda for government legislation typically identify some of the costs, including compliance costs, associated with proposed legislation.

In this article, we analyse the reaction of the share price of certain companies, which may be affected by specific legal changes, as a means of ascertaining the financial effects of these changes. In particular, we examine the effects of the Mabo judgment and a series of related events (such as particular land claims made by Aboriginal groups following the Mabo judgment) on the share prices of Australian mining companies. We employ what financial economists term event study methodology for this purpose. This article represents what we believe to be the first use in Australia of event study methodology to measure the effects of legal change.

Abstract:
There has been considerable speculation regarding the effects of the growing prevalence of institutional investors in the equity markets on investee company behaviour. It has been posited that the growth of institutional investors may lead to the pursuit of what is generally referred to in the human resource literature as 'high commitment' employment practices in investee companies. This may be because institutional investors are using 'voice' mechanisms to pressure investee companies to adopt 'high commitment' human resource practices. These labour management practices typically involve managerial attempts to motivate and manage workers through a series of workplace practices that incorporate the interests of employees rather than through strict command and control structures. These might include investment in staff training and development, employment security, flexible workplace practices and self-directed work teams, investment in occupational health and safety, incentive pay, and 'partnerships' and consultation with employees and/or their representatives.

The purpose of this study is to discover whether it is the intention of institutional investors to encourage investee companies to adopt 'high commitment' employment practices through case studies of twelve prominent institutional investors with funds invested in the Australian equities market and the Australian Council of Superannuation Investors (an industry body representing 39 superannuation funds). In the event that the institutional investor did seek to influence investee companies, we asked (i) why they seek to influence the companies, and (ii) what mechanisms they use to exert this influence. In the event that they did not seek to influence investee companies in this way, we asked (iii) why they did not and what barriers exist to taking into account companies' employment practices. We also sought to discover (iv) whether institutional investors take into account the employment practices of companies when making investment decisions, and if so, (v) what kinds of practices they take into account. In addition, we enquired into (vi) whether there are any differences between institutional investors, based on type, in relation to whether or not they have an intention to influence investee company employment practices, or the ability to do so.

We are particularly interested in the difference between industry superannuation funds and other types of institutional investors. This difference is significant, first, because under the relevant legislation, industry superannuation funds are required to have equal representation of employers and members on their boards. In the case of industry superannuation funds, which are operated by parties to industrial awards, these representatives are usually employer associations and unions. Second, industry superannuation funds often manage their funds via external fund managers, whereas other institutional investors generally manage their funds internally. It is possible that these two characteristics of industry superannuation funds might result in different attitudes and responses concerning the human resource practices of investee companies compared with other types of institutional investors.

Abstract:
This article links corporate regulation with developments in economic and corporate theory. The issue employed for this purpose is one that dates back more than one hundred years in Australia: whether companies should be regulated by the federal government or by state governments. Much attention has focused on the constitutional power of the federal government to regulate both the incorporation of companies and the trading activities of companies. A fundamental question however is whether it is better to regulate companies at the national level or the state level. A review of the economic literature relating to federalism indicates that some government functions are best carried out at the state level rather than the national level. The question is whether the regulation of companies is one of these functions. The article provides an economic analysis of the appropriate level of legal regulation using the regulation of companies as the focus. This becomes part of a broader debate over issues of federalism. Linked to this economic analysis are recent developments in corporate theory. It becomes evident that different theories of the company entail different views concerning not just the extent to which companies should be subject to regulation but also the level of government at which corporate regulation should be undertaken.

Abstract:
Discussion of business ethics is topical. Indeed, a code of conduct has been adopted by many Australian companies with the objective of improving "the performance and reputation of Australian business by encouraging and assisting the general adoption of the highest standands of corporate conduct." What is missing however from these debates is discussion of the ethical issues confronted by professional advisers to business people and how resolution of those ethical issues shapes the role of the professional adviser.

The question I address in this article can be stated simply: what is the proper role for the business lawyer? Should the business lawyer be an advocate for all of a client's goals with the only limitation being that the pursuit of these goals is legal? Or should the business lawyer take a broader view of his or her role and interpret the instructions of the client as not only an advocate of the client but also as an officer of the court with a duty to preserve the integrity of the legal system?

In this brief article I evaluate two different roles for the business lawyer and consider the consequences of adopting one role over the other. I suggest that one role elevates the interests of the client above those of the legal system which results in not only bringing the profession into disrepute but also harms the integrity of the legal system.

Abstract:
An important issue for company directors is to what extent (1) they may insure themselves (or to what extent their company may insure them) against liability for breach of the various duties they owe to the company; and (2) they may be indemnified by the company for breaches of duty. This article compares and contrasts US and Australian approaches to this issue, examining both the law and policy.

Abstract:
A continuing dilemma in the area of education and the law concerns the standard of care required of teachers. Why do courts continue to articulate the standard of care as that of the reasonable or careful parent when teachers are required to undertake extensive training and education in order to be certified as capable to teach, and the school environment is different in so many respects from that of the home? Given that the careful parent standard is obviously inappropriate to the school environment why has it continued to be the standard applied by courts?

In this article I attempt to formulate some answers to these questions. The article is in three parts. After noting the relevant case law, I discuss a number of arguments that have been advanced in support of a higher standard of care for teachers than that of the reasonable or careful parent. I then identify a number of reasons why such a higher standard has not been adopted. I suggest that a range of different views or attitudes to teachers and the process of teaching underlies these reasons.

Abstract:
Since at least the 1970s, employee share ownership has enjoyed bipartisan political support in Australia. Despite broad and sustained public policy interest in employee share ownership, however, Australian literature on the subject remains scarce. There has also been very little in the way of comprehensive analysis of the regulatory framework. This paper provides an overview of employee share ownership from an Australian perspective. It begins by reviewing the literature on broad-based employee share ownership before turning to examine available data on Australian practice. It then considers how employee share ownership plans are currently provided for in public policy and law. Companies in Australia proposing to offer shares to employees must comply with many regulatory requirements. The paper examines these requirements. The authors also examine features of the current regulatory framework which have been identified as problematic.

Abstract:
Courts are divided on the important question of the effect of the statutory assumption in the Corporations Law dealing with affixing the company seal on documents. While some courts have made a distinction between formal authority (that is, demonstrating that the company's assent to the transaction is in proper form) and substantive authority (that is, demonstrating that the company has authorised the transaction in question), other courts have not. Some courts infer that all that is required for a company to be bound by a sealed document is for the statutory assumption of due sealing to apply. The issue is important for determining whether a company is bound by a sealed document. The authors argue that the statutory due sealing assumption relates only to formal authority and not substantive authority. They examine the case law in the area, the statutory provisions regarding the company seal (and their history) as well as policy considerations, and conclude that those seeking to enforce a sealed document can rely on the statutory assumption of due sealing for formal authority but not substantive authority.

Abstract:
Many countries have a tradition of complex and detailed corporate laws. Why does this occur when there are costs to detailed laws? This article examines the pressures and mechanisms that transform general statutory principles into more detailed rules. Much corporate law allocates power with respect to the interpretation and implementation of that law. A relevant factor in the design of legislation is therefore an assessment of the merits of bodies to undertake specific tasks that may be delegated to them by legislation. The article evaluates principles relevant to the drafting of corporate laws and evalutes the merits of courts and regulators as two main bodies interpreting and implementing such laws.

Abstract:
This article examines the possibility of establishing a claim for educational negligence in Australia. Education negligence occurs when a student suffers harm as a result of incompetent or negligent teaching. The prospects and difficulties associated with such a claim are examined. Issues discussed in the article include whether it is possible to establish a claim for educational negligence according to established legal principles. Also discussed is whether allowing an educational negligence claim to succeed satisfies sensitive policy considerations that are evident in such a claim. These include whether courts have the necessary expertise to assess educational negligence claims, whether disruption of the school environment would be a necessary result and whether allowing education negligence claims would enhance educational standards. One of the arguments considered is that while legal intervention in the school environment is based upon the goals of remedying wrongs and deterring future harmful behaviour, such intervention can stifle, through the fear of legal liability, the creativity and innovation that is so vital to the educational process.

Abstract:
Citation analysis is a developing field of legal research. It has been used to evaluate the influence of other disciplines (such as economics) on legal scholarship, the sources which influence judges when they draft judgments and the influence of particular articles, scholars and legal journals. We undertake a citation analysis of Australian law journals as a means of providing a partial indication of where legal academics obtain ideas for their research. We evaluate the influence of Australian law journals and compare this to the influence of both overseas and non-law journals on Australian legal writing. We find that authors publishing in Australian law journals are looking to a broad range of journals (including interdisciplinary and non-law journals) for ideas. Specialist law journals are increasingly influential. At the same time, significant influence is wielded by a small number of Australian law journals. Possible explanations for our findings are considered.

Abstract:
In an article published in 1999, Gilligan, Bird and Ramsay presented the results of a detailed research project in which they noted that during the six years of operation of civil penalties in Australian corporate law, the Australian Securities and Investments Commission (ASIC) had brought only 14 civil penalty actions relating to ten case situations. An important issue raised by the authors was whether ASIC was making effective use of civil penalties as an enforcement tool.

This brief article discusses two ways in which there has occurred an expansion of civil penalties. First, ASIC now appears to be more active in relation to the use of civil penalties. Second, the Financial Services Reform Act 2001, which was passed by Federal Parliament in August 2001, extends the application of the civil penalty provisions of the Corporations Act to cover market misconduct provisions such as insider trading and continuous disclosure.

Abstract:
This is a revised version of a paper presented at the University of Connecticut. The theme of the conference was corporate groups and the conference was held in honor of Professor Philip Blumberg who is the author of the 7 volume treatise on the Law of Corporate Groups. The article is in four main parts. First, the author provides statistics on corporate groups in Australia. Second, there is discussion of reasons for the development of corporate groups. Third, the different approaches to the regulation of corporate groups in Australia are discussed. The article concludes with discussion of whether, and in what circumstances, holding (or parent) companies should be liable for the debts of insolvent subsidiaries.

Abstract:
This report was prepared at the request of the Australian Securities and Investments Commission (ASIC) as part of its ongoing commitment to ensure that the objectives of the Financial Services Reform Act 2001 ("FSRA") are achieved. The report focuses upon one aspect of disclosure - disclosure of fees and charges in Product Disclosure Statements ("PDSs") and member or investor periodic statements. As requested by ASIC, the report reviews current Australian disclosure requirements as well as international disclosure requirements, and proposes a number of options for improved disclosure.

Part 2 of the report provides an overview of the FSRA disclosure principles. These principles, as identified by ASIC in Policy Statement 168, are that disclosure should be timely, relevant and complete; promote product understanding; promote comparison of products; highlight important information; and have regard to consumers' needs. Part 2 also provides a description of typical fees and charges that relate to financial products. It also provides statistics on managed funds - both for Australia and internationally.

Part 3 of the report identifies problems with disclosure of fees and charges. It is divided into two sections. The first section presents the results of surveys of the adequacy of disclosure of fees and charges in prospectuses. As part of this project, 30 prospectuses relating to various types of superannuation and managed funds were reviewed in order to obtain insight into the adequacy of disclosure of fees and charges.

The second section of Part 3 is a summary of the results of surveys which have been undertaken in the last few years with the objective of testing investors' understanding of fees and charges in prospectuses and other selling documents. These surveys have found that substantial numbers of investors fail to understand the fees that are disclosed in prospectuses.

Part 4 of the report provides an analysis of the law governing disclosure of fees and charges in Australia. It highlights the important changes that have been made under the FSRA and focuses upon the enhanced disclosure requirements for superannuation.

Part 5 of the report provides a detailed review of the regulatory framework for disclosure of fees and charges in managed investments in the United Kingdom, New Zealand, Canada and the USA.

Part 6 of the report identifies options for improved disclosure of fees and charges. It is divided into three sections:

1. options for improved disclosure in PDSs;
2. options for improved disclosure in periodic member statements; and
3. options for implementation and the role of ASIC and industry.

Abstract:
Non-executive employees are increasingly being offered the opportunity to participate in employee share ownership plans. In many cases, companies provide their employees with shares or options as a 'gift', either on a one-off or regular basis. Many plans, however, are structured so as to require employees to contribute to the value of the securities. In the cases of contributory plans, the reasons why employees choose to participate are not always clear. This paper reviews existing studies and presents a conceptual framework to explain why employees participate in employee share plans. It examines the relationship between the decision to participate in a plan and a number of demographic and workplace-specific variables. It also identifies key factors that may moderate this relationship, such as the extent of company communication on the plan and company performance. This conceptual framework has been developed on the basis of a synthesis of previous studies and twelve semi-structured interviews conducted with human resource managers and trade union representatives within publicly listed companies.

Abstract:
This report was prepared at the request of the Australian Broadcasting Authority (ABA) to identify ways in which the enforcement powers of the ABA can be strengthened to enable it to deal more effectively with breaches of the Broadcasting Services Act (BSA). The report reviews the existing enforcement powers of the ABA, reviews the enforcement powers of several overseas broadcasting regulators, identifies limits in the existing enforcement powers of the ABA, and proposes several recommendations for enhanced enforcement powers.

Section 3 of the report provides an overview of the ABA's current enforcement powers. The penalties for breaches of the BSA comprise a mix of criminal and administrative penalties. The most significant administrative penalties are the power to suspend or cancel a licence and the power to impose a licence condition. Section 3 also provides information in relation to ABA investigations into programming matters.

Section 4 of the report discusses in detail problems with the ABA's current enforcement powers. Section 4 also contains an evaluation of the ABA's enforcement powers based upon strategic regulation theory. This theory advocates regulatory compliance as best secured by persuasion, rather than legal enforcement, based upon co-operation between the regulator and regulated entities. According to strategic regulation theory, the threat of punishment should take the form of a set of integrated sanctions which should escalate in severity in response to more serious contraventions of the law. When the existing ABA's enforcement powers are evaluated according to strategic regulation theory, it becomes evident the ABA does not have at its disposal the flexible range of sanctions upon which the theory is based.

Section 5 of the report contains a review of the responsibilities and enforcement powers of broadcasting regulators in the USA, the UK, Canada and New Zealand. Section 6 proposes a series of reforms which have as their objective enhancing the enforcement powers of the ABA.

Abstract:
One of the more significant debates in company law concerns the extent to which the interests of creditors should form a part of company law. In recent years, companies, courts and regulators have had to address this issue. Yet there is generally insufficient appreciation of the fact that different types of creditors have different interests. The authors identify and evaluate the meaning of different types of creditors. In particular, they consider the differences between contingent, prospective and future creditors and the use of these terms in both the Corporations Law and judgments.

Abstract:
In a wide ranging review of the Australian legal profession, the Trade Practices Commission has examined the rules that currently regulate the way in which law firms conduct their businesses. Although the Commission has made many recommendations in its report, the focus of this article is upon one recommendation. This recommendation would allow law firms to incorporate and thereby allow the partners (who would become equity holders) of the law firm to obtain the benefits of limited liability.

The recommendation of the Commission is part of a broader debate concerning whether professionals should be able to limit the extent of their liability for malpractice. Much of this debate has focused upon the liability of auditors given the significant increase in both the number and size of legal claims against auditors in recent years. Attention is now focused upon lawyers limiting their liability for malpractice as a result of the Commission's report.

The objective of this article is to evaluate critically the Commission's recommendation. A number of possible rationales for allowing the introduction of limited liability in the context of law firms are considered. Some of these are demonstrated to be unpersuasive. Two issues are given particular consideration. The first is the possible effects of limited liability on the standard of care employed by lawyers. Will limited liability reduce the standard of care? The second issue is the possible effects of limited liability on the degree to which lawyers in a firm will continue to monitor each other. Monitoring fulfils an important function as it ensures that the law firm is providing services of sufficient quality to clients. These two issues are related. Under a regime of unlimited liability, each lawyer, being fully liable for any malpractice which he or she performs, has a powerful incentive to ensure that appropriate care is taken in connection with the provision of legal services to clients. At the same time, because unlimited liability also means that all partners are jointly liable for the malpractice of other partners in the law firm, each partner also has an incentive to be monitoring the quality of the legal services provided by these other lawyers.

Given the existence of these incentives to take appropriate care which are generated by unlimited liability, there must be strong reasons to allow law firms to incorporate and thereby obtain limited liability. The conclusion of the author is that these reasons do exist. In particular, it is demonstrated that unlimited liability does not always create the appropriate incentives to take care and, in addition, it can work against the interests of clients by imposing unjustified costs upon law firms which are passed on to clients.

Abstract:
This article addresses risk of loss problems under executory contracts for the sale of land. The Unites States Uniform Vendor and Purchaser Act and recent Australian reforms are compared. It is concluded that the legislative approaches of both Acts offer more complete protection to the purchaser than do approaches that allow the purchaser to have access to the vendor's insurance.

Abstract:
This brief commentary was presented as part of a round table panel discussion on corporate law research methods and theory. The author outlines a theoretical shift in law and economics as it applies to corporate law. The theoretical shift is from the Berle and Means analysis of the corporation to the agency theory of the corporation. Second, the author applies some of the perspectives arising from agency theory to two current issues. These issues are share buy-backs and the judgment of Justice Hodgson in Standard Chartered Bank of Australia v Antico handed down in August 1995.

Abstract:
A current securities regulation issue concerns the incorporation, by reference, of documents into prospectuses. The Australian federal government and the Australian Securities Commission have each advanced proposals dealing with this issue. The two proposals are outlined and then a series of rationales for allowing incorporation by reference are evaluated. These rationales include reduction of costs associated with prospectuses, verification of disclosure, and reliance upon informationally efficient markets.

Abstract:
This research report contains the findings of 10 case studies of Australian companies undertaken as part of a project to better understand the relationships between corporate structure, corporate governance and labour relations.

We first sought to assess each of our case study companies according to whether it could be categorised as an 'insider' controlled company or as an 'outsider' controlled company. Second, we sought to examine in each of our case studies the extent to which enterprise employment systems could be said to 'complement' the style of corporate governance within the organisation in accordance with the suppositions of the comparative capitalisms literature. Third, because we were particularly interested in the quality of employment systems (beyond their mere conformity with insider/outsider styles) we identified more specifically what we thought could be said to properly characterise 'partnership' style relations at the business enterprise level.

We investigated whether the case study companies reflect a recent pattern of development which links changes in ownership structure with a more market-oriented, shareholder-oriented, form of corporate governance accompanied by adverse or negative outcomes for employees.

In most of our studies, in the time period under review, ownership change or capital reorganisation occurred which could be said to have exposed the companies to greater 'market' or 'outsider' pressure. In our studies we attempted to examine empirically how employment systems were readjusted in each case to deal with the greater market exposure to which most of our companies were subjected. We also investigated the role of regulation in influencing these outcomes.

corporate governance, labour relations

Abstract:
In this study we identify and discuss trends in personal insolvency in Australia. By personal insolvency, we mean bankruptcy, debt agreements and personal insolvency agreements under the Bankruptcy Act. We examine data on the number of personal insolvencies for the period 1990 to 2008 and on the characteristics of personal insolvents for the period 1997 to 2008. Key findings include: (1) a significant increase (261%) in the number of personal insolvents over the time period studied - far exceeding the increase in population; (2) changes over time in the reasons for this increase (for example, increases in excessive use of credit, ill health, and gambling or other speculation leading to personal insolvency); (3) significant changes in the characteristics of personal insolvents (for example, bankrupts are now older and have more dependants).

We find evidence that personal insolvency in Australia is becoming more of a middle class phenomenon. Personal insolvents are increasingly coming from higher status occupations; have increasing levels of personal income and household income; and have increasing asset and property ownership levels.

bankruptcy, personal insolvency

Abstract:
In Australia, plaintiffs in civil corporate law matters are generally free to choose between the Federal Court and a state or territory Supreme Court when commencing litigation.

This research note outlines the results of research undertaken by the authors indicating which courts deliver most corporate law judgments. The research indicates the states where the Federal Court has had the most impact in recent years in terms of hearing corporate law matters that could have gone to a state Supreme Court. Data is also presented on the numbers of hearing days relating to the judgments.

Possible explanations for the differences in the numbers of judgments delivered are explored. One possible explanation is that there are more companies registered in those states which have the courts delivering the most judgments. The data does not support this explanation. However, there is a significant difference between the registrations of all companies and where the top 150 Australian Securities Exchange (ASX) listed companies (measured by market capitalisation) are registered. This data might provide a possible explanation for some of the differences between the courts in terms of the numbers of judgments delivered because it might be expected that the top 150 companies, because of their size and the extent of their operations, are more involved in litigation than smaller companies.

The advantages of allowing plaintiffs to choose between courts when commencing corporate law litigation are discussed. The note concludes with discussion of whether courts compete for corporate law litigation and what might be the incentives to compete.

Abstract:
Most Australians' understanding of court proceedings and the legal system is derived from television - but, more often than not, this information is from American dramas or documentaries and is not necessarily applicable to Australia. Few Australian judges have allowed cameras into their courts, but there are a number of reasons why this development should be encouraged, at least on an experimental basis.

The author reviews the present situation in Australia and overseas; sets out the main arguments for and against televising the proceedings of courts; and suggests an experimental program to evaluate the arguments in practice.

Abstract:
This research report presents findings from a survey of employee share ownership practice in Australian listed companies. The research focused on broad-based employee share ownership plans (ESOPs): that is, plans that are open to a majority of employees within the company. The purpose of this study was fourfold: (1) to inform public policy debate on the issue of employee share ownership through providing, for the first time, a detailed account of employee share plan practice in Australian listed companies; (2) to examine how, if at all, the regulatory framework in taxation and corporate law is impacting upon the decision by companies to implement ESOPs and the design of their plans; (3) to obtain company views on the adequacy of the current regulatory framework; and (4) to test a range of hypotheses as to the determinants of ESOPs in the Australian context.

Key findings as to company practice include: (1) approximately 57 percent of companies responding to the survey had at least one broad-based employee share ownership plan; (2) significantly more companies reported having a broad-based plan than a narrow-based plan: that is, a plan that is only open to executives; (3) the three most popular reasons for implementing a plan were 'showing employees the company values them'; 'sharing financial success with employees'; and 'aligning employee interests with shareholder interests'; (4) over three quarters of companies that have a broad-based plan have adopted their plan since 2000; (5) the most common type of broad-based ESOP was a plan structured to take advantage of the tax exemption in Division 13A of the Income Tax Assessment Act.

Three structural characteristics were found to have a significant and positive association with the presence of an employee share ownership plan. These were the presence of a centralised human resource function; company growth over the preceding 12 months (measured by the number of employees); and the composition of the workforce (the proportion of full-time to part-time and casual employees). We also found that companies with broad-based ESOPs were significantly more likely to have structures for communicating directly with employees.

Abstract:
This article, published in 1992, puts the case for Australian corporate law to require prompt disclosure by directors and officers of their trading in the shares of their companies. The article: (1) reviews the arguments supporting such a requirement (the protection of investors and market efficiency): (2) discusses the law in this area in several countries: and (3) reviews empirical studies conducted in the United States, Canada and the Britain which have examined the extent to which share trading by directors and officers conveys information to the market.

In 1995, the Australian Corporations Law was amended to require directors (but not officers) of listed companies to disclose trading in the shares of their companies to the Australian Securities Exchange.

Abstract:
Australian corporate law is a mix of federal and state jurisdiction. In the period 1999 to 2000 a series of decisions of the High Court of Australia challenged the existing structure of corporate law. This paper provides an overview of the federal structure of corporate law, refers to the judgments which have challenged that structure, and examines the possibilities for reform.

Abstract:
This paper presents the results of a study that measures the costs associated with litigation for plaintiff and defendant companies for a sample of companies listed on the Australian Securities Exchange. The study uses event study methodology to examine the effects of litigation initiation announcements, settlement announcements and judgment announcements. The study also examines whether the impact of an announcement is related to the type of plaintiff (such as corporate plaintiff or a government plaintiff) and whether the impact differs according to the type of legal claim (such a breach of contract, a trade practices matter, an intellectual property infringement or securities fraud).

Abstract:
Under the Australian Bankruptcy Act, there are three regulated forms of personal insolvency: bankruptcy, debt agreements, and personal insolvency agreements. Between 1990 and 2008 there was a 261% increase in the number of personal insolvencies in Australia. We suggest one important aspect of this increase is that Australian personal insolvency has become an increasingly middle class phenomenon. Although the concept of middle class is not readily quantifiable, we suggest that several factors reveal that personal insolvency is affecting those who might generally be considered middle class. Our findings have implications for Australia’s personal insolvency laws. The findings also raise for consideration the connections between personal insolvency laws and broader social issues such as rising debt levels, spending habits and social welfare benefits.

Abstract:
In the face of declining prominence and influence under industrial relations laws regulating Australian workplaces, Australian trade unions appear increasingly to be directing their attention to Corporations Law as a mechanism for pursuing union and employee "voice" within corporate business organisation. This paper undertakes an examination of four recent "union shareholder" campaigns, the circumstances in which they were undertaken, the objectives of the "union shareholder" strategies and the outcomes of the campaigns. The paper also opens up for consideration whether union shareholder activism is merely a new strategy for pursuing conventional industrial aims, or whether it potentially represents a move by unions to identify themselves as "insiders" with a dual interest in the profitability and governance of the corporation as both shareholders and stakeholders.

Abstract:
This research report, published jointly by the Centre for Corporate Law and Securities Regulation at the University of Melbourne and Corporate Governance International, contains the results of a study of proxy voting at a sample of major listed Australian companies during 1999.

When institutional shareholders do vote, they typically do so by way of appointment of proxies. This study examined lodgment of proxy instructions for annual general meetings of large Australian listed companies as a means of determining the extent to which institutional investors vote.

The report: (a) presents and analyses voting figures on the election and re-election of directors – including total figures and also a breakdown of votes for, against, abstaining and discretionary; (b) presents and analyses voting figures on controversial resolutions; (c) provides separate figures for widely held companies and companies having a large shareholder; (d) provides comparisons with figures for the US, the UK and Germany; (e) discusses the regulatory and practical framework within which voting takes place; and (f) discusses the role of shareholder voting as a corporate governance mechanism.

Abstract:
This report was prepared at the request of the Australian Institute of Superannuation Trustees to assist its members deal with corporate governance issues relevant to the shareholding investment of trustees of Australian superannuation funds. The report: (a) outlines the meaning and importance of corporate governance; (b) discusses the role of superannuation trustees in corporate governance (this section includes a range of options as to how trustees can participate in corporate governance); and (c) provides an overview of some key corporate governance issues which superannuation trustees should address when formulating new corporate governance policy or revising an existing policy.

Abstract:
Australian corporate law has been the subject of significant reform. This includes: (a) increased duties imposed upon company directors; (b) regulation of transactions between public companies and their related parties; (c) increased disclosure requirements for public companies; (d) new liability upon parent companies where a subsidiary trades while it is insolvent; and (e) a wider definition of insider trading. In this paper, the author evaluates some of these reforms in the light of theories of the corporation - particularly the managerialist (or institutionalist theory) and the contractual theory. The author also discusses the costs associated with some of the reforms.

Abstract:
In this paper the author examines the law in Australia regulating loans made by companies to their directors. The author: (a) documents several instances where companies have collapsed with large loans outstanding to their directors; (b) provides the history of the Australian provision regulating loans to directors (s 230 of the Companies Code); (c) examines the small amount of case law on s 230; (d) discusses problems in the operation of s 230; (e) examines how several other countries regulate loans to directors; and (f) evaluates reform proposals.

Abstract:
In the well known Marquis of Bute case from 1892, the Marquis became president of the Cardiff Savings Bank when only six months old, inheriting the position from his father. During the next 38 years, he attended only one meeting of the board of directors. When the bank collapsed because of lending irregularities, the liquidator alleged that the Marquis was negligent in the performance of his duties. The Marquis was held not liable for any losses sustained by the bank’s customers. In this brief article, the author argues that the decision of the Supreme Court of South Australia in Group Four Industries Pty Ltd v Brosnan (1991) 5 ACSR 649, creates the same perverse incentives as did the decision in the Marquis of Bute case. In the Group Four Industries case, the court held that a director who took no part in the business of the company and who claimed to know almost nothing about the financial aspects of the business, was not liable for debts the company incurred when it traded while insolvent.

Abstract:
This paper reports the results of a study of disclosure of loans made by listed Australian companies to their directors. Thirty six percent of the surveyed companies disclosed outstanding loans to directors. The author explores the implications of the results of the study, noting that the minimal disclosure requirements mean that in many instances, the purpose of the loan is not disclosed and where disclosure of the purpose of the loan is made, there is a lack of consistency.

Abstract:
Commercial Applications of Company Law is a book designed for the study of Australian company law by business students. Published by CCH Australia, the book is now in its 10th edition. It includes case studies and problems. The chapters are:

PART A - COMPANIES AND COMPANY LAW . About companies . Company law . Companies and business planning . Constituting companies

PART B - COMPANY MANAGEMENT AND GOVERNANCE . Managing companies . Member decision-making . Members' meetings . Restrictions on member decision-making . Company directors . Directors' duties . Consequences of breach of duty . Members' remedies . Reporting and disclosure

PART C - CORPORATE FINANCE . Financing companies . Shares and shareholding . Securities and takeovers . Financial services and markets

PART D - COMPANIES AND OUTSIDERS . Transacting by companies . Corporate liability and the corporate veil . External administration . Winding up

Abstract:
The Varieties of Capitalism approach begins from the premise that economic and business systems are organized in different ways in different countries. These systems include liberal market economies and co-ordinated market economies. The literature comparing types or 'varieties' of capitalist economies has much to say about corporate governance and employment systems. While the varieties of capitalism debate generally ranges across a broad spectrum of different questions and topics, the issues of corporate governance and labour management, and the relationship between them, appear crucial in how different systems are characterised and typified.

Can it be said that Australia's industrial relations and corporate governance systems - two institutions which influence the variety of capitalism of a national economy - now belong more clearly in a group with the US and the UK rather than with other OECD countries such as Germany, Sweden or Japan? While this is often assumed to be the case, very little work has been conducted which systematically investigates Australian evidence. This book brings together contributions by leading Australian academics in the area, which together provide the most systematic response to the question to date.

The authors examine the question from a number of different perspectives, drawing on a range of academic disciplines. The book brings together corporate law and labour law scholars, comparative employment relations and human resource management academics and political economists. Some of the chapters are concerned with changes to corporate ownership or financing; tracking any associated shifts in corporate priorities. They consider the impact of corporate ownership and corporate governance on workplace practices and attitudes. They also examine the implications for employment practices of the increasing prominence of institutional investors, such as mutual funds and superannuation funds, as owners of Australian companies.

Other contributions examine the issue of where Australia fits on the international spectrum of varieties of capitalism from an employment relations perspective. Labour law scholars map the effects which the Australian government's labour law changes over the last decade have brought about concerning partnership relations between employers and employees, and compare these labour law changes with recent pro-partnership reforms in the UK. Industrial relations specialists examine whether the Australian variety of capitalism acts as an impediment to the co-operative implementation of innovative work systems in Australian workplaces.

Abstract:
The economic importance of directors, the increasing intensity of debate about their functions and accountability, and the continuing public interest in the subject of company directors make this book a timely publication. Company Directors: Principles of Law and Corporate Governance is a detailed, scholarly and comprehensive analysis of law and governance as they relate to Australian company directors. In particular, the duties of company directors, remedies for breach of these duties, and the structure and operations of the board of directors are examined. Commentary on corporate governance, as it relates to company directors, is also provided.

The chapters of the book are:

Part A — Structure and Powers of the Board of Directors
1 Issues in Corporate Governance
2 The Structure and Operations of the Board of Directors
3 Directors and Authority to Act for a Company
4 The Rights of Directors

Part B — The Duties of Directors
5 The Function and Nature of Directors' Duties
6 The Duty to Act with Care and Diligence and the Duty Not to Fetter Discretions
7 The Duties to Act in Good Faith in the Best Interests of the Company and for a Proper Purpose
8 The Duty to Avoid Conflicts of Interest and Conflicts of Duty
9 Improper Profits and the Appropriation of Corporate Property and Opportunities
10 Insolvent Trading and the Protection of Creditors
11 The Duty to Act Lawfully, with Power and within Authority
12 Duties in Relation to Meetings of Members and Financial
Statements
13 The Duties and Liabilities of Directors in the Context of Capital Raising
14 Common Directorships and Nominee Directors
15 Related Parties, Termination Benefits, Insider Trading, and Other Statutory Liabilities
16 Concurrent Liability of Directors
17 Ratification of Duties; Insurance and Indemnification; Statutory Validation

Part C — Remedies for Breach of Duty and Enforcement
18 Remedies and Penalties
19 Members' Derivative Litigation to Enforce Directors' Duties

Abstract:
The 13th edition of this book provides a comprehensive treatment of Australian company law. The chapters of the book are:

- Companies and Company Law - The Nature and Functions of Companies - The Origins of Company Law - Regulating Companies - A Company as a Corporate Entity - Incorporation and its Consequences - Formation, Promotion and Establishment - The Law of Corporate Governance - Corporate Governance Rules - The Board of Directors and the General Meeting - Acting Properly and with Care - Conflicts of Interest and Special Cases - Accounts, Audit and Disclosure - Members' Remedies - Corporate Liability - Corporate Capacity - Authority to Act for a Company - A Company's Assent to Transactions - Validation and Ratification of Defective Transactions - A Company's Liability for Civil and Criminal Wrongs - Corporate Finance - Equity Finance - Dividends - Debt Finance - Protection of Creditors - Dealings with Security Holdings - Fundraising by Issue and Sale of Securities - Corporate Control and Restructuring - Takeovers and Disclosure of Shareholdings - Corporate Reorganisation and Elimination of Minority Holdings - External - External Administration in Insolvency Generally - Receiverships - Voluntary Administration - Winding Up

Abstract:
Edited by Professor Ian Ramsay, this collection of essays, in celebration of the scholarship of Professor Harold Ford (who has for many years been at the forefront of researching and teaching in corporate law and trusts law), makes an important contribution to our understanding of corporate law, trusts law and equity.

The chapters of the book are:

1. Introduction to Essays in Honour of Professor Harold Ford, Professor Ian Ramsay

Part A - International Perspectives on Corporate Law and Corporate Governance
2. Comparative Corporate Governance and the Australian Experience, Professor Brian Cheffins
3. Globalisation, the New Financial Architecture and Effective Corporate Governance, Professor John Farrar
4. Institutional Investors, Corporate Governance and the New International Financial Architecture, Professor Ian Ramsay and Associate Professor Geof Stapledon
5. Shareholders as Principals, Professor Deborah DeMott

Part B - Key Issues in Corporate Law
6. The Role of Corporate Governance Practices in the Development of Legal Principles Relating to Directors, Justice Alex Chernov
7. Directors' Duty of Care and the New Business Judgment Rule in the Twenty - first Century Environment, Professor Robert Baxt
8. Voluntary Administrators as Fiduciaries, Justice Robert Austin and Robert Brown

Part C - Key Issues in Trusts Law and Equity
9. Reflections on Some Commercial Applications of the Trust, Professor Michael Bryan
10. The Responsible Entity as Trustee, Pamela Hanrahan
11. Equitable Compensation as a Remedy for Diversion of Opportunity, Professor Elizabeth Boros

Abstract:
Experts' reports have become a key factor in providing shareholders and others with independent, objective information about many corporate transactions. Sometimes required by law, sometimes voluntary, their rising importance in major transactions has brought increased scrutiny. This book discusses the critical issues, analysing them with reference to the Corporations Act, ASIC policy, case law and industry codes.

The chapters of the book are:

1. The Purposes and Uses of an Expert's Report
2. Who is an Expert?
3. 'Fair and Reasonable', 'Fair Value' and Other Tests Applied by Experts
4. The Contents of an Expert's Report
5. Liability of Experts
6. Defences and Limitation of Liability
7. Reliance by Directors on Experts' Reports
8. Independence

Abstract:
This book examines the law of education as it applies to all educational institutions - primary, secondary and tertiary. It describes the legal framework in which primary, secondary and tertiary teachers and administrators operate and addresses current issues.

The chapters of the book are:

• Primary and Secondary Education - The Legal Framework
• The Legal Framework of the Teaching Profession
• Vocational and Higher Education - The Legal Framework
• The Legal Context of the Financing of Education in Australia
• Physical Injury in the Educational Environment
• The Application of Anti-discrimination Laws to Education
• Teachers and Family Law
• Employment Law and Schools
• Educational Negligence

Abstract:
Commercial Applications of Company Law in Singapore is now in its third editon. It has been revised to incorporate commentary on changes to the Companies Act effected by the Companies (Amendment) Act 2005, which came into force on 30 January 2006. The book provides a comprehensive working knowledge of the sources, applications and impact of company law in Singapore.

The chapters of the book are: The Functions and Structure of Companies; Company Law; The Legal Nature of Companies; Business Planning and Company Formation; The Memorandum and Articles of Association; Managing Companies; Members' Decision-Making; Company Meetings; Limitation to Voting Power; Company Directors; Directors' Duties; Conflicts of Interest; Consequences of Breach of Duty; Members' Remedies; Reporting and Disclosure; Shares and Shareholding; Increasing and Reducing Share Capital; Debt Finance; Contracting by Companies; Corporate Liability; External Administration; Winding Up; Securities; Takeovers.

Abstract:
Commercial Applications of Company Law in New Zealand is now in its third edition. The book provides a comprehensive working knowledge of the sources, applications and impact of company law in New Zealand.

The chapters include the functions and structure of companies; the legal nature of companies; partnerships; business planning and company formation; internal governance rules; managing companies; shareholder decision-making; comany directors; directors' duties; consequences of breach of duty; shareholders' remedies; reporting and disclosure; shares and shareholdings; debt finance; contracting by companies; corporate liability; receivership; liquidation; voluntary administration; and securities and takeovers.

Abstract:
Edited by Gordon Walker, Brent Fisse and Ian Ramsay, Securities Regulation in Australia and New Zealand is in its second edition. The chapters of the book are:

Part I - Contemporary Perspectives

1. Globalisation: Meanings and Implications
2. Securities Regulation for the Information Age
3. Mandatory Corporate Disclosure Rules and Securities Regulation
4. Reinterpreting NZ Securities Regulation


Part II - Regulators and Markets

5. The Economic Role of ASX
6. The Legal Role of the ASC and the ASX
7. The NZSE and Securities Markets in NZ
8. Australian Sharemarket Ownership
9. New Zealand Sharemarket Ownership

Part III - Aspects of Primary Market Regulation

10. Capital Raising in Australia
11. Due Diligence Reviews for Fund-raisings under the Australian Corporations Law
12. Public Offerings of Securities in New Zealand
13. Case Study of an IPO in New Zealand

Part IV - Aspects of Secondary Market Regulation

14. Regulation of Securities Intermediaries in Australia
15. The Regulation of Stock Market Manipulation and Short Selling in Australia
16. Insider Trading in Australia
17. Insider Trading in New Zealand
18. Derivatives Regulation in Australia
19. Derivatives Regulation in New Zealand

Abstract:
Commercial Applications of Company Law in Malaysia provides a comprehensive working knowledge of the sources, applications and impact of company law in Malaysia.

The chapters of the book are: The Functions and Structure of Companies; Company Law; The Legal Nature of Companies; Business Planning and Company Formation; The Memorandum and Articles of Association; Managing Companies; Members Decision Making; Company Meetings; Limitations to Voting Power; Company Directors; Directors' Duties; Conflicts of Interest; Consequences of Breach of Duty; Members' Remedies; Reporting and Disclosure; Shares and Shareholding; Increasing and Reducing Share Capital; Debt Finance; Contracting by Companies; Corporate Liability; External Administration; Winding Up; Securities; Takeovers.