7 February 2013
Mr Bernie Ripoll MHR
Parliamentary Secretary to the Treasurer
CANBERRA ACT 2600
Dear Mr Ripoll
Corporations Legislation Amendment (Remuneration Disclosures and other Measures) Bill 2012
The Group of 100 (G100) is an organization of chief financial officers from Australia’s largest business enterprises with the purpose of advancing Australia’s financial competitiveness. The G100 is pleased to provide comments on the proposed amendments to the Corporations Act.
The G100 has supported the introduction of a solvency test for the payment of dividends for several years and welcomed the Government’s amendments to achieve this reform. Notwithstanding our support for the amendment we were concerned about the regulations regarding the operation of the solvency test and the failure to address issues relating to the franking of dividends.
The G100 believes that the existing Corporations Law requirements relating to the directors’ statement and trading while insolvent are an adequate safeguard to protect the interests of shareholders and creditors and, accordingly, supports the proposed amendments to rely on those requirements.
The G100 strongly believes that where a company has unused franking credits those franking credits should be available for the payment of franked dividends irrespective of whether the dividend is paid out of profits or not.
We are extremely disappointed that the proposed amendments do not address issues relating to the franking status of dividends and fails to acknowledge the importance of the payment of franked dividends to the financial attractiveness of investments in listed and widely held companies. The continued failure to deal with these aspects of the changes in dividend rules diminishes the benefits of the amendments and is in stark contrast to the concept of tax consolidation wherein the activities of the tax group is paramount rather than the separate internal activities of entities within the group.
Group of 100 Inc
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