EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 175
COMMONWEALTH INSCRIBED STOCK ACT 1911
COMMONWEALTH INSCRIBED STOCK REGULATIONS (AMENDMENTS)
ISSUED BY AUTHORITY OF THE TREASURER
The existing Regulation 66AA of the Commonwealth Inscribed Stock Regulations provides that where a bearer security is lost, stolen or destroyed the owner may apply to the Treasurer for the issue of a replacement security on the same terms and conditions as those on which the initial security was issued. The Treasurer may then, upon the applicant giving an indemnity to the satisfaction of the Treasurer to indemnify the Commonwealth against payment of the lost, stolen or destroyed bearer security or interest thereon, authorize the issue to the applicant, upon such conditions, if any, as the Treasurer determines, of a replacement security, to be in the form of inscribed stock and to be held in the charge of the Registrar.
Regulation 66AB provides that where an interest coupon detached from a bearer security has been lost, stolen or destroyed before it is paid, the Treasurer may, upon the owner giving an indemnity to the satisfaction of the Treasurer to indemnify the Commonwealth against payment of the coupon, authorise payment of the amount of the coupon to the owner.
The existing Regulations do not permit acceptance of an indemnity from a parent or guardian acting on behalf of an owner who is a minor as satisfying the indemnity requirements. At the same time, because it is considered that a minor lacks sufficient understanding by reason of youth to execute a binding indemnity, the minor’s indemnity cannot be accepted until sufficient maturity is reached for the indemnity to be judged as binding. This effectively prevents the issue of replacement securities to minors.
The proposed amendments to the Regulations will allow the Government to accept appropriate indemnities from a parent or guardian of an owner who is a minor thus enabling replacement securities or interest coupons to be issued.
The Treasury
Canberra ACT
Overview
The Commonwealth Inscribed Stock Regulations (Amendments) 1996, introduced under the Commonwealth Inscribed Stock Act 1911, aim to address the issue of issuing replacement securities or interest coupons to minors who have lost, stolen, or destroyed their bearer securities or coupons. Previously, the regulations did not permit the acceptance of indemnities from parents or guardians acting on behalf of minor owners, nor did they allow for the acceptance of indemnities from minors due to their perceived lack of understanding to execute binding indemnities. These provisions effectively hindered the ability to issue replacement securities to minors. The amendments were enacted to resolve this gap by allowing the acceptance of appropriate indemnities from parents or guardians of minors, thereby facilitating the issuance of replacement securities or interest coupons to them. The policy objective is to provide a practical solution that ensures minors can also benefit from the replacement securities mechanism without compromising the Commonwealth’s financial security.
Scope and Application
The Commonwealth Inscribed Stock Regulations, as amended by the Commonwealth Inscribed Stock Regulations (Amendments), primarily govern the issuance and replacement of bearer securities and interest coupons under the Commonwealth Inscribed Stock Act 1911. This legislation applies to individuals and entities who own bearer securities issued by the Commonwealth and specifically addresses the circumstances where such securities are lost, stolen, or destroyed. The Regulations cover both the issuance of replacement securities and the payment of lost interest coupons, provided that an indemnity is given to protect the Commonwealth against the loss. The amendments introduced allow parents or guardians to provide the necessary indemnity on behalf of minors, thereby enabling the replacement of lost or destroyed securities for minors. This amendment extends the reach of the Regulations to include minors, previously excluded due to the inability of minors to provide a legally binding indemnity. The Regulations apply across the Commonwealth, reflecting the national jurisdiction of the legislation, and are enforced through the Treasurer, who has the authority to issue replacement securities and authorise coupon payments subject to the conditions stipulated within the Regulations. The scope of the Act is further extended through subordinate instruments, which may include further detailed rules and conditions governing the indemnity process and the administration of bearer securities.
Key Provisions
The main operative sections of the Commonwealth Inscribed Stock Regulations (Amendments) concern the replacement of lost, stolen, or destroyed bearer securities and interest coupons. Regulation 66AA (1) allows for the application by a security owner to the Treasurer for a replacement security when the original is lost, stolen, or destroyed, provided the applicant gives an indemnity to the Treasurer. This replacement security is to be issued under the same terms and conditions as the original, in the form of inscribed stock and held by the Registrar. Similarly, Regulation 66AB (1) permits the Treasurer to authorise payment of a lost, stolen, or destroyed interest coupon if the owner provides an indemnity to the Treasurer.
The Regulations impose several obligations on the parties involved. The primary obligation lies with the security owner who must apply to the Treasurer for a replacement security or payment of a lost coupon. This application must be accompanied by an indemnity that satisfies the Treasurer, ensuring the Commonwealth is protected against any potential payment to an unauthorised party. For minors, the amendments introduce the requirement that an appropriate indemnity can be provided by a parent or guardian acting on behalf of the minor. This change aims to ensure that minors, who previously could not receive replacement securities due to their inability to execute a binding indemnity, can now be accommodated.
In terms of consequences for non-compliance, the Regulations do not explicitly outline specific offences or penalties for breach. However, the requirement to provide an indemnity and the potential refusal to issue a replacement security or payment of a lost coupon if the indemnity is unsatisfactory could have significant implications for the applicant. The absence of explicit penalties in the Regulations suggests that the primary enforcement mechanism is the conditional nature of the indemnity requirement itself, with the potential for the Commonwealth to refuse to proceed with the replacement or payment if the indemnity does not meet the Treasurer's satisfaction.