Overview

The Australian Securities and Investments Commission Corporations Law, introduced in 2000, aims to address the regulatory gap in the management and oversight of common funds, particularly those operating under specific state exemptions. This legislative instrument modifies the application of Division 11 of Part 11.2 of the Corporations Law by altering the conditions under which these funds are regulated. The modification ensures that certain common funds, which would otherwise be exempt from specific regulatory provisions under state laws such as the Trustee Companies Act 1987 (Western Australia), the Companies (Application of Laws) Act 1982 (South Australia), and the Companies (Trustees and Personal Representatives) Act 1947 (Northern Territory), are brought under the purview of federal regulation. The policy objective is to harmonise and strengthen the oversight of these funds, ensuring consistent and comprehensive regulatory standards across jurisdictions.

Scope and Application

The Australian Securities and Investments Commission Corporations Law — Paragraph 601QA(1)(b) — Modification applies to the operation of a managed investment scheme that constitutes a common fund, thereby extending the reach of Division 11 of Part 11.2 of the Law to cover such schemes. This legislative instrument specifically addresses the application of the Law in cases where the operation of a common fund might otherwise be exempt under certain state-specific provisions, such as section 21 of the Trustee Companies Act 1987 (Western Australia), regulations under the Companies (Application of Laws) Act 1982 (South Australia), or subsection 25(15) of the Companies (Trustees and Personal Representatives) Act 1947 (Northern Territory). This modification ensures that the regulatory oversight provided by the Commonwealth law is not circumvented by state-specific exemptions, thus maintaining a consistent regulatory environment across jurisdictions for common funds within managed investment schemes. The modifications introduced are narrowly tailored to target the specified exemptions, ensuring that the integrity of the national regulatory framework is upheld while addressing potential jurisdictional overlaps.

Key Provisions

The legislative instrument in question modifies the Australian Securities and Investments Commission Corporations Law to ensure that certain provisions apply to managed investment schemes that are common funds, specifically by amending the conditions under which these funds are exempt from certain regulations. According to section 1 of the legislation, the insertion of "or" at the end of paragraph 1452(b) and the addition of a new paragraph 1452(c) modify the application of Division 11 of Part 11.2 of the Law. This means that these provisions will now apply to common funds that would have been exempt under specific state laws or regulations (section 1). The obligations imposed by this legislative instrument primarily concern the managed investment schemes that are common funds. These schemes must now comply with the provisions of Division 11 of Part 11.2 of the Corporations Law, which were previously excluded due to certain state-specific exemptions. For instance, common funds that were exempt under section 21 of the Trustee Companies Act 1987 (Western Australia), regulations under the Companies (Application of Laws) Act 1982 (South Australia), or subsection 25(15) of the Companies (Trustees and Personal Representatives) Act 1947 (Northern Territory) now fall under the purview of these federal provisions (section 1). Failure to comply with the amended provisions could result in significant consequences for the parties involved. While the legislation itself does not explicitly state the penalties for non-compliance, breaches of the Corporations Law generally attract severe penalties, including substantial fines and, in some cases, imprisonment. The maximum penalties for breaches of the Corporations Law can vary depending on the specific offence and the jurisdiction, but they can include fines of up to $210,000 for individuals and significantly higher amounts for corporations, along with potential imprisonment terms. These penalties underscore the importance of adhering to the new requirements imposed by this legislative instrument.