EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO. 122
COMMONWEALTH INSCRIBED STOCK ACT 1911
COMMONWEALTH INSCRIBED STOCK REGULATIONS (AMENDMENTS)
Section 58 of the Commonwealth Inscribed Stock Act 1911 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing fees payable under the Act and all matters and forms required or necessary or convenient to be prescribed for carrying out or for giving effect to the Act or for the conduct of any business at or in connection with any Registry.
The regulations make provision for:
(i) the legislative basis for the continued use of the terms ‘Australian Savings Bonds’, ‘Treasury Indexed Bonds’, ‘Treasury Bills’, Treasury Bonds’ and ‘Treasury Notes’ when Commonwealth securities are issued in a Stock form only;
(ii) the conditions and terms for the inscription of Stock in the names of trustees and unincorporated bodies;
(iii) the legislative basis for the continuation of the handling facility offered by most banks to investors following the cessation of the issue of Commonwealth securities in bearer form; and
(iv) repeal those regulations and prescribed forms in the Schedule to the Regulations which are rendered redundant as a consequence of amendments to the Act.
The amendments have been introduced to give effect to amendments to the Commonwealth Inscribed Stock Act 1911 to eliminate the issue of Commonwealth securities in bearer form as a consequence of the use of these securities to evade income tax and the limit on subscriptions to Australian Savings Bonds and the high administrative costs of bearer securities, as well as to expand the range of investors who are eligible to hold their Commonwealth securities in the form of Inscribed Stock.
Overview
The Commonwealth Inscribed Stock Regulations (Amendments) 1996 (Statutory Rules 1984 No. 122) amend the Commonwealth Inscribed Stock Regulations to address the issues arising from the cessation of the issuance of Commonwealth securities in bearer form. This amendment to the Commonwealth Inscribed Stock Act 1911 was enacted by the Australian Parliament to tackle the problem of securities being used to evade income tax and to manage the high administrative costs associated with bearer securities. Additionally, it aims to broaden the eligibility of investors who can hold their Commonwealth securities in the form of Inscribed Stock. The regulations provide for the continued use of specific terms such as 'Australian Savings Bonds' and 'Treasury Indexed Bonds', set conditions for the inscription of Stock in the names of trustees and unincorporated bodies, and repeal outdated regulations and forms. This amendment ensures the continued operation of the securities market in a more efficient and transparent manner.
Scope and Application
The Commonwealth Inscribed Stock Regulations (Amendments) 1996 apply to individuals, trustees, and unincorporated bodies that engage in the issuance, transfer, and management of Commonwealth securities such as Australian Savings Bonds, Treasury Indexed Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes in inscribed stock form. These regulations are designed to support the Commonwealth Inscribed Stock Act 1911, which applies across the Commonwealth of Australia. The regulations address the transition from bearer securities to inscribed stock by setting conditions and terms for the inscription of stock in the names of trustees and unincorporated bodies, and by continuing the handling facility offered by most banks to investors. These amendments aim to eliminate the use of bearer securities due to their association with tax evasion, the administrative costs involved, and to broaden the eligibility of investors to hold their securities in inscribed form. The regulations also repeal outdated provisions rendered unnecessary by these amendments, ensuring the legislative framework remains current and efficient.
Key Provisions
The main operative sections of the Commonwealth Inscribed Stock Regulations (Amendments) primarily concern the continued use of specific terminology for Commonwealth securities and the conditions for inscribing stock in the names of trustees and unincorporated bodies. Section 58 of the Commonwealth Inscribed Stock Act 1911 allows for regulations that are not inconsistent with the Act, and these amendments aim to update the terminology and conditions to reflect changes in the way Commonwealth securities are issued and held. The terms ‘Australian Savings Bonds’, ‘Treasury Indexed Bonds’, ‘Treasury Bills’, ‘Treasury Bonds’, and ‘Treasury Notes’ are specified for continued use when securities are issued in a Stock form only (Section 1). Additionally, the regulations set out the conditions and terms for the inscription of Stock in the names of trustees and unincorporated bodies (Section 2), and continue the handling facility offered by banks to investors, following the cessation of bearer form securities (Section 3).
The obligations and requirements imposed by these regulations are primarily directed at ensuring compliance with the new forms of securities issuance and the conditions under which they can be inscribed. Trustees and unincorporated bodies must adhere to the specified conditions for inscribing stock in their names (Section 2). The regulations also mandate that banks continue to provide handling facilities to investors who hold Commonwealth securities in inscribed form (Section 3). Moreover, the changes to the terminology and the cessation of bearer form securities necessitate that all parties involved in the issuance and handling of these securities must align their practices with these new requirements.
The amendments also address potential breaches and the consequences thereof. Although the regulations themselves do not explicitly outline offences, penalties, or civil/criminal consequences for non-compliance, any failure to adhere to the conditions set forth in these regulations could potentially lead to legal ramifications under the overarching Commonwealth Inscribed Stock Act 1911. Such breaches might attract penalties as prescribed under the main Act, which could include fines or other administrative sanctions. The precise penalties would depend on the specific nature and severity of the breach, as well as any relevant case law or subsequent legislative amendments.