EXPLANATORY STATEMENT
STATUTORY RULES 1988 NO. 265
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR JUSTICE FOR AND ON BEHALF OF THE ATTORNEY-GENERAL
COMPANIES REGULATIONS (AMENDMENT)
Section 577 of the Companies Act 1981 (the Act) provides in subsection (1) that the Governor-General may make regulations, not inconsistent with the Act, prescribing all 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. Subsection 577(2) of the Act provides that the power of the Governor-General to make regulations shall be exercised only in accordance with advice that is consistent with resolutions of the Ministerial Council for Companies and Securities (the Council).
2. The Council was established under an agreement between the Commonwealth and the States, executed on 22 December 1978, (the agreement) that provides the framework for a co-operative Commonwealth-State scheme for a uniform system of law and administration in relation to company law and the regulation of the securities industry in the six States and the Australian Capital Territory. The Northern Territory became a party to the agreement in 1986.
3. Under subclause 45(1) of the agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purposes of the co-operative companies and securities scheme. Should the Council approve any draft amending regulation which gives effect to such a proposal, the Commonwealth is then required,
under subclause 45(2) of the agreement, to submit the draft regulation to the Federal Executive Council for making by the Governor-General.
4. The Council has resolved that the accompanying regulations should be made under the Act.
5. The purpose of the accompanying regulations is to amend the Companies Regulations (CRs) by:
(a) inserting definitions of ‘franchise’ and ‘mark’;
(b) omitting a reference to the Public Trustee of Victoria and substituting a reference to the State Trust Corporation of Victoria which has replaced the Public Trustee in that State; and
(c) omitting references to the Controller of Prisons in Tasmania and the Director of the Western Australian Prisons Department and substituting references to the heads of the Corrective Services Departments which now administer the Prisons Acts in those States.
Regulation 1: Interpretation
6. Regulation 1 of the accompanying regulations inserts new definitions of ‘franchise’ and ‘mark’ in the CRs. These definitions are relevant to regulation 14A of the CRs which provides that for the purposes of the definition of ‘prescribed interest’ in subsection 5(1) of the Act, any right to participate, or any interest, as franchisee in a franchise is declared to be an exempt right or interest for the purposes of Division 6 of Part IV of the Act. The effect of regulation 14A is that any offer to the public of any franchise right or interest is not subject to the provisions of the Act which require offers to the public of various investment schemes to be accompanied by a prospectus-like document.
7. The new definitions inserted by regulation 1 of the accompanying regulations will give guidance to the business community as to what arrangements are exempted as franchises.
Regulation 2: Definition of ‘authorized trustee corporation’
8. The expression ‘authorized trustee corporation’ is defined in subsection 5(1) of the Act to mean a body corporate that is declared by the regulations to be an authorized trustee corporation for the purposes of the provision in which the expression appears. Regulation 14 of the CRs specifies the bodies corporate that are authorized trustee corporations for the purposes of any provision in which the expression appears.
9. The expression is used in Division 8 of Part IV of the Act, which deals with the transfer of marketable securities. In particular, section 192 of the Act deals with transfers of marketable securities by authorized trustee corporations.
10. Paragraph (w) of regulation 14 of the CRs declares the Public Trustee of the State of Victoria to be an authorized trustee corporation. Regulation 2 of the accompanying regulations omits the reference to the Public Trustee of Victoria and substitutes a reference to the State Trust Corporation of Victoria which has replaced the Public Trustee in that State.
Regulation 3: Prescribed authorities for purposes of subsection 227(3)
11. Subsection 227(2) of the Act prohibits a person who has been convicted of various offences from taking part in the management of a corporation without the leave of the Court within five years after his or her conviction or, if imprisoned, his or her release from prison. Subsection 227(3) provides that in any proceedings for an offence against subsection (2), a certificate by a prescribed authority stating that a person was released from prison on a specified
date is prima facie evidence that the person was released from prison on that date.
12. Paragraphs (a) and (c) of regulation 54A of the CRs provide that the Controller of Prisons in Tasmania and the Director of the Western Australian Prisons Department are prescribed authorities for the purposes of subsection 227(3) of the Act.
13. Regulation 3 of the accompanying regulations omits references to the prescribed authorities and substitutes references to the Director of Corrective Services in Tasmania and the permanent head of the Department of Corrective Services of Western Australia who now administer the Prisons Acts in those States.