EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 183
Issued by authority of the Minister for Financial Services, Superannuation and Corporate Law
Australian Securities and Investments Commission Act 2001
Australian Securities and Investments Commission Amendment Regulations 2010 (No. 3)
Subsection 251(1) of the Australian Securities and Investments Commission Act 2001 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Recently, the Act was amended by the Corporations Amendment (Corporate Reporting Reform) Act 2010 (the Amending Act) for the purpose of, among other things, modifying the membership requirements of the Company Auditors and Liquidators Disciplinary Board (CALDB). The CALDB is a disciplinary body which receives and reviews applications made to it by the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA) in respect of the conduct of either registered company auditors or liquidators.
Under paragraphs 203(1)(c) and (d), and subsection 203(1A) of the Act, the Minister for Financial Services, Superannuation and Corporate Law can select six persons who are eligible for appointment as accounting members of the CALDB. Subsection 203(1B) specifies that the member must be a resident of Australia and a member of a professional accounting body.
Additionally, the Act contains a power in subparagraph 203(1B)(b)(ii) to create regulations which prescribe additional bodies to which a person can be a member of and considered eligible for appointment as an accounting member. This is to ensure that all relevant professional bodies are able to nominate members for appointment to the CALDB.
The Regulations prescribe the Insolvency Practitioners Association (IPAA) of Australia as one of these bodies. The IPAA is the professional organisation within Australia for specialists practising in corporate and personal insolvency.
Under the Corporations Agreement 2002, the Commonwealth must consult with and obtain the approval of the Ministerial Council for Corporations before making amendments to certain provisions of the ASIC Regulations. The Council was consulted and has approved the Regulations and waived the period of public consultation, given the extensive consultation already undertaken.
The Regulations were exposed for a four week public consultation, along with the Corporate Reporting Reform Bill, ending on 3 February 2010. Over 50 stakeholders made written submissions and roundtable discussions were also held in Sydney and Melbourne. Key stakeholders consulted included the CALDB, ASIC, the Auditing and Assurance Standards Board, the Australian Institute of Company Directors, the Australian Accounting Standards Board, Chartered Secretaries Australia, the Joint Accounting Bodies and several major audit and accounting firms. Views were generally supportive of the intent of the Regulations.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Act does not specify any other conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations commenced on the commencement of the Corporations Amendment (Corporate Reporting Reform) Act 2010.
Overview
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 3) were enacted to address gaps in the regulatory framework concerning the membership of the Company Auditors and Liquidators Disciplinary Board (CALDB) as amended by the Corporations Amendment (Corporate Reporting Reform) Act 2010. The Australian Securities and Investments Commission Act 2001 provides the authority for the Minister for Financial Services, Superannuation and Corporate Law to make these regulations, which are necessary to implement the Act effectively. The policy objective of these amendments is to ensure that the CALDB has the appropriate expertise and representation to effectively review and discipline the conduct of company auditors and liquidators. The regulations specifically prescribe the Insolvency Practitioners Association (IPAA) of Australia as an eligible body for nominating members to the CALDB, thereby broadening the pool of potential members and ensuring that all relevant professional bodies are considered in the disciplinary process.
Scope and Application
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 3) amends the Australian Securities and Investments Commission Act 2001 to modify the membership requirements of the Company Auditors and Liquidators Disciplinary Board (CALDB), which is a disciplinary body reviewing applications concerning the conduct of registered company auditors or liquidators. These regulations specify that the Insolvency Practitioners Association (IPAA) of Australia is eligible for nomination of accounting members to the CALDB, ensuring that all relevant professional bodies can nominate members. The Regulations, issued under the authority of the Minister for Financial Services, Superannuation and Corporate Law, were subject to consultation with the Ministerial Council for Corporations, which approved them, waiving the period of public consultation due to extensive prior consultation efforts. The regulations commenced on the commencement of the Corporations Amendment (Corporate Reporting Reform) Act 2001, and they serve to extend the application of the Act by including the IPAA as a nominating body for accounting members of the CALDB.
Key Provisions
The Australian Securities and Investments Commission Amendment Regulations 2010 (No. 3) primarily concern the modification of membership requirements for the Company Auditors and Liquidators Disciplinary Board (CALDB) as mandated by the Corporations Amendment (Corporate Reporting Reform) Act 2010. Section 203(1) of the Australian Securities and Investments Commission Act 2001 (the Act) allows the Minister for Financial Services, Superannuation and Corporate Law to appoint accounting members to the CALDB, which is a disciplinary body that reviews the conduct of registered company auditors and liquidators. These accounting members must be Australian residents and members of a professional accounting body, as stipulated in section 203(1B). The Regulations further specify that the Insolvency Practitioners Association (IPAA) of Australia is eligible for nomination of members to the CALDB, aligning with the intent to ensure all relevant professional bodies can participate in the disciplinary process.
The Regulations impose several obligations and requirements on parties involved in the disciplinary process. The Minister for Financial Services, Superannuation and Corporate Law must ensure that the six appointed accounting members meet the eligibility criteria specified in the Act, including being members of a professional accounting body. The IPAA, as a nominated body, must also ensure that its members meet the criteria for eligibility and that the association remains relevant and compliant with the disciplinary process. Additionally, the CALDB itself must follow the guidelines set out in the Act and the Regulations to ensure fair and efficient disciplinary proceedings.
Failure to comply with the provisions of the Act and the Regulations can lead to various consequences, including civil and criminal penalties. Under the Act, individuals found guilty of misconduct in their professional capacity can face disciplinary action, including fines and disqualification from practising as auditors or liquidators. The Act also provides for criminal penalties for more severe breaches, such as fraud or dishonesty, which can result in substantial fines and imprisonment. The Regulations do not explicitly outline additional penalties, but they reinforce the obligations set out in the Act, thereby making non-compliance a punishable offence.