EXPLANATORY STATEMENT
STATUTORY RULES 1982 NO. 121
Issued by the authority of the Attorney-General
AMENDMENT OF THE COMPANIES REGULATIONS
1. On 22 December 1978 the Commonwealth and the States executed a Formal 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.
2. Under clause 32 of the Formal Agreement, the National Companies and Securities Commission (NCSC) is to have responsibility for the entire area of policy and administration with respect to company law and the regulation of the securities industry, subject to directions by the Ministerial Council for Companies and Securities. The Ministerial Council consists of Commonwealth and State Ministers responsible for administering the law relating to companies and the regulation of the securities industry, or their delegates, or the Ministers acting in their office (Formal Agreement, clauses 19 and 20).
3. Under sub-clause 45(1) of the Formal Agreement, the Ministerial Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purposes of the co-operative scheme. Should the Ministerial Council approve any draft amending regulation which gives effect to such a proposal, the Commonwealth is then required, under sub-clause 45(2) of the Agreement, to submit the draft regulation to the Federal Executive Council for making by the Governor-General.
4. The Ministerial Council has passed a resolution which, so far as is relevant, provides:
“1. The Ministerial Council resolved unanimously pursuant to paragraph 8(1)(b) of the Formal Agreement that:-
Commonwealth
(A) Companies Regulations (Amendment)
The draft Companies Regulations (Amendment) being as set out in the print dated 10th May, 1982, and
(B) -----
be approved.”
5. The purpose of the Companies Act 1981 is to provide a law in relation to the formation and regulation of companies and other bodies in the Australian Capital Territory.
6. The main purpose of the Companies Regulations (Amendment) is to ensure that companies incorporated under the existing law (Companies Ordinance 1962) are afforded sufficient time to comply with comparable obligations under the new law (Companies Act 1981) relating to the preparation and lodgment of financial accounts.
7. Regulation 57 of the Companies Regulations, S.R. No. 35/81, made in pursuance of section 4 of the Acts Interpretation Act 1901, is in the following terms:
“57. For the purposes of sub-section 269(8) of the Act, the prescribed requirements are set out in Schedule 7”.
8. The effect of sub-regulation 57(1) is that accounts of a company prepared in respect of a financial year that begins after the commencement of the Companies Act 1981 shall comply with such of the requirements set out in Schedule 7 to the Companies Regulations as are relevant to those accounts.
9. The effect of sub-regulation 57(2) is that accounts of a company prepared in respect of a financial year that begins before the commencement of the Companies Act 1981 (whether or not it also ends before this date) may comply with either -
(a) Schedule 7 to the Companies Regulations; or
(b) the Ninth Schedule to the Companies Ordinance 1962.
10. The Companies Regulations (Amendment) is in accordance with the draft regulations approved by the Ministerial Council.
Overview
The Companies Regulations (Amendment) Statutory Rules of 1982 were enacted to address the transitional needs of companies that were incorporated under the old Companies Ordinance 1962, ensuring they have adequate time to comply with the new requirements of the Companies Act 1981, specifically concerning the preparation and lodging of financial accounts. This amendment was introduced in response to the need for a uniform system of law and administration in relation to company law and the regulation of the securities industry across the Commonwealth and the States, as outlined in the Formal Agreement executed on 22 December 1978. The policy objective was to harmonise the regulatory framework and provide a smooth transition for companies affected by the change in legislation. The amendment was approved by the Ministerial Council for Companies and Securities and subsequently submitted to the Federal Executive Council for making by the Governor-General, in accordance with the provisions of the Formal Agreement.
Scope and Application
This statutory rule amends the Companies Regulations to provide for the transition of companies from the Companies Ordinance 1962 to the new Companies Act 1981. The amendment applies to companies that were incorporated under the old law, allowing them a transition period to comply with the new requirements for the preparation and lodgment of financial accounts. The scope of the amendment is to ensure that companies have adequate time to adjust to the new regulatory framework introduced by the Companies Act 1981, which applies to the formation and regulation of companies in the Australian Capital Territory. The Ministerial Council, consisting of Commonwealth and State Ministers responsible for company law and securities regulation, has approved the draft amending regulation, which is now submitted to the Federal Executive Council for formal enactment. The amendment extends its application nationally, reflecting the cooperative scheme between the Commonwealth and the states under the Formal Agreement, while ensuring companies have the necessary time to transition to the new requirements without undue hardship.
Key Provisions
The main operative sections of the Statutory Rules 1982 No. 121, particularly Regulation 57 of the Companies Regulations, establish the requirements for the preparation and lodgment of financial accounts for companies (section 57(1)). For financial years beginning after the commencement of the Companies Act 1981, companies must adhere to the requirements set out in Schedule 7 of the Companies Regulations. Conversely, for financial years beginning before the Act's commencement, companies have the flexibility to comply with either Schedule 7 or the Ninth Schedule of the Companies Ordinance 1962 (section 57(2)). This amendment aims to provide existing companies sufficient time to transition to the new regulatory requirements under the Companies Act 1981.
The Act imposes several obligations on companies, particularly in terms of financial reporting. Companies incorporated under the previous law, the Companies Ordinance 1962, are required to ensure their financial accounts meet the relevant criteria specified in either Schedule 7 of the Companies Regulations or the Ninth Schedule of the Companies Ordinance 1962, depending on the timing of their financial years. The Act mandates a transition period to allow companies to adjust to the new requirements, facilitating a smoother compliance process. Additionally, the Regulations necessitate that companies keep accurate records and ensure their financial statements are complete and accurate, reflecting the true financial position of the company.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the provided text for non-compliance with the financial reporting requirements. However, in general terms, failure to comply with the financial reporting obligations under the Companies Act 1981 and the Companies Regulations could potentially lead to legal consequences. Companies that do not comply with these requirements may face sanctions under the general provisions of the Act, which could include fines or other penalties as prescribed by law. The exact nature and extent of these penalties would be determined in accordance with the provisions of the Companies Act 1981 and any related legislative instruments.