Treasury has released a draft Corporations Legislation Amendment (Remuneration Disclosures and Other Measures) Bill 2012 for discussion.

The key executive remuneration measures include:

• Requiring listed disclosing companies whose financial statements have been materially misstated to either disclose whether any overpaid remuneration to Key Management Personnel (KMP) has been ‘clawed-back’, or if no reduction, repayment or alteration of overpaid remuneration has been made, an explanation of why not;
• removing the requirement for unlisted disclosing entities that are companies to prepare a remuneration report. The Bill will require only listed disclosing companies to prepare remuneration reports;
• requiring listed disclosing companies to include in the remuneration report a general description of their remuneration governance framework;
• requiring the disclosure of details in the remuneration report of all payments made to KMP upon their retirement from a listed disclosing company; and
• requiring listed disclosing companies in the remuneration report to disclose for each KMP:
  (a) the amount that was granted before the financial year and paid to the person during the financial year;
  (b) the amount that was granted and paid during the financial year; and
  (c) the amount that was granted but not yet paid during the financial year.

Dividends test
The Bill also replaces the test for the payment of dividends to allow companies to:
• either declare or determine a dividend, consistent with Corporations Act dividend provisions and company practice; and
• calculate assets and liabilities based on existing reporting requirements.

The new dividends test also requires directors to reasonably believe that the company will be solvent, immediately after the dividend is declared or paid.