Federal Minister for Financial Services, Superannuation and Corporate Law Chris Bowen released a draft legislation today to help put an end to below-value unsolicited share offer scams.
Bowen claimed the reforms were required because previous investor protection measures, such as mandatory disclosure of a company’s current share price, had failed to stop the continuing operation of share offer scams.
“Unscrupulous operators have continued to prey on vulnerable investors, duping them into handing over their shares for well-below market prices. The Government is now acting to put these charlatans out of business,” Mr Bowen said.
Under the current law, a company must provide a copy of its member register to anyone who requests it and pays a fee.
But the draft Bill will enable companies to refuse to hand over copies of their member registers where that information is not being sought for a proper purpose.
The proposed legislation will also require persons seeking a copy of a company’s register of members to state the purpose for which they will use it, making it an offence to provide false or misleading information, or use the details obtained from the register for improper use.
Bowen said the reforms would reduce compliance costs for companies by allowing for a register maintained on a computer to be inspected, and prescribing the formats in which a copy of the register could be provided.
“The Government has acted on widespread concern in the business community that the fees a company is able to charge for preparing a copy of its member register are substantially less than the true cost of producing the copy,” he added.
The amendments are contained in the Corporations Amendment Bill 2010, which also contains provisions to increase criminal penalties for market offenders, such as insider trading, and to provide ASIC with stronger powers to detect such offences.
The Government plans to introduce the Bill in the current parliamentary session.
