Is the Corporations Law Still Too Complex?

Is the Corporations Law Still Too Complex? Because of constitutional constraints on the powers of the Commonwealth, companies legislation was regard as a state matter. Each state had its own Companies Act in the early times. With the market development, Australia tried to uniform the companies legislation through different methods including the Co-operative Scheme in 1980s and the Corporation Act 1989. But the latter was held unconstitutional by the High Court.(1) However, a special solution was finally introduced, after a special agreement was made between the Attorneys-General of Commonwealth and six states, the Corporations Law became operative on 1 January 1991. In order to make it more logic, many of the older laws were restructured into it, so it "is unique in the world in that it contains in a single statute the laws relating to companies, accounts, securities markets, takeovers and insolvency".(2) It became incredibly complex with 22 chapters, two schedules and 1,362 sections. In 1991, there were 892,749 companies, of which 10,402 were public companies and the number of the listed companies was only 1,096,(3) but the Corporations Law applied to all these 892,749 companies despite of Titanics or tiny sampans. It was absurd, as the former Chief Justice of the High Court of Australia, Sir Anthony Mason, said in 1992 that: "Oscar Wilde?would have regarded our modern Corporations Law not only as uneatable, but also indigestible and incomprehensible".(4) It was really in need of reform. As the reaction, the Labor Attorney-General established in 1993 a Corporations Law Simplification Task Force to introduce the Corporate Law Simplification Program which was replaced in May 1997 by Liberal Federal Treasurer's Corporate Law Economic Reform Program (CLERP). Both the two programs have made substantive changes to the Corporations Law. Is the Corporations Law still complex? The objective of the Corporate Law Simplification Program was to render the Corporations Law "capable of being understood so that users can act on their rights and carry out their responsibilities".(5) Accordingly, the Simplification Task Force targeted seven priority areas including small business, share buy-backs, capital rules, annual reporting, registers, company names and meetings, and three components for simplification, that was simplification of content, clarification of drafting and comprehensive consultation. As to simplification of content, the plan was to streamline the Corporations Law, procure consistency and coherence, strip away unnecessary complexities, maintain effective protection for investors and bring cost benefits both to and to relevant authorities. As to clarification of drafting, the program adopted principles of plain English to meet the needs of a variety of types of users. The program also called for extensive consultation particularly with those most closely associated with its operation and administration. As the first stage achievement of the Simplification Task Force, the First Corporate Law Simplification Act 1995 (Cth) (The Simplification Act) came into force on 9 December 1995. It effected substantial changes in three areas: proprietary companies, share buy-backs and company registers. The highlight of the Simplification Act is the introduction of a "Small Business Guide" as Part 1.5 CL and it is also available as a separate publication. In 11 sections it clearly outlines central rules including the rights, obligations and duties for most small business. The Simplification Act also made annual general meetings optional, reduced accounting and financial reporting requirements, and single director companies and single member companies are allowed. Share buy-backs provisions is simplified both in content and in drafting through the replacement Part 2.4 Division 4B. The Simplification Act allows a company to buy back its own shares (other than redeemable preference shares) if it follows the procedures la