EXPLANATORY STATEMENT
STATUTORY RULES 1986 NO. 376
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
COMPANIES REGULATIONS (AMENDMENT)
1. Section 577 of the Companies Act 1981 (‘the Act’) provides in sub-section (1) that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Sub-section 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.
3. Under sub-clause 45(1) of the agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purpose 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 sub-clause 45(2) of the agreement, to submit the draft
regulations to the Federal Executive Council for making by the Governor-General.
4. The accompanying regulations are identical in form and substance to draft regulations approved by the Council.
5. The purpose of the accompanying regulations is to make amendments to the Companies Regulations consequent upon amendments made to the Act by the Companies and Securities Legislation Amendment Act 1986 (‘the 1986 Act’).
6. The accompanying regulations are expressed to be made in pursuance of section 4 of the Acts Interpretation Act 1901 which provides that where an Act that does not come into operation immediately upon its enactment amends another Act in such a manner that the other Act, as amended, will confer power to make regulations then, unless the contrary intention appears, that power may be exercised before the amending Act comes into operation.
7. Any regulations made in pursuance of section 4 of the Acts Interpretation Act 1901 take effect on the day on which the amending Act comes into operation.
8. Part III of the 1986 Act has been proclaimed to come into operation on 1 January 1987.
9. Details of the accompanying regulations are set out as follows.
Regulation 1: Notice of change in relevant interest or relevant interests of substantial shareholder
10. Regulation 47 of the Companies Regulations prescribes documents for the purposes of section 138 of the Act which requires substantial shareholders to give written notice to the company of a change in the entitlement to shares of a
substantial shareholder or associate, together with the prescribed documents.
11. The 1986 Act amended section 138 of the Act so that a substantial shareholder only has to give notice to the company when there is an increase or reduction by 1% or more relevant interest of the substantial shareholder or associate.
12. Regulation 47 has been amended by adopting new terminology introduced by the 1986 Act (‘notifiable change’) and by making other minor consequential amendments.
Regulation 2; Notice to be given to the company by former substantial shareholder
13. Regulation 48 of the Companies Regulations prescribes documents for the purposes of section 139 of the Act which requires a person who has ceased to be a substantial shareholder to give written notice to the company together with the prescribed documents.
14. The 1986 Act amended section 139 of the Act to take account of the fact that prior to ceasing to be a substantial shareholder the size of a person’s holding may have fluctuated within the parameters allowed by new section 138 of the Act. Those variations will not, therefore, have been disclosed. The effect of section 139 which was inserted by the 1986 Act is to require the disclosure of any changes in the relevant interest or relevant interests occurring since the time when the person was last required to give notice (whether under section 137 or 138 of the Act) and the date when the person ceases to be a substantial shareholder.
15. Because of the extent of the consequential amendments regulation 48 has been repealed and accompanying regulation 48, which takes account of the above complexities, has been inserted.
Regulation 3: Schedule 2
Companies Form 42: Notice of Interests of Substantial Shareholder
16. Form 42 of the Companies Regulations is the prescribed form, for the purposes of section 137 of the Act, in which a substantial shareholder gives notice to the company of the details of the substantial shareholder’s, or associate’s relevant interest in the voting shares of the company.
17. Accompanying regulation 3 substituted a new Form 42 to make it clear to make it clear that, where the shares in which a notifiable change has occurred form part of a class, the notice concerned shall indicate the class. The form has also been amended to require the relevant information to be given of the change in relevant interest in the shares in each class where there is a change in entitlements of the required percentage occurring in respect of shares belonging to more than one class.
Companies Form 43: Change in Interests of Substantial Shareholder
18. Form 43 of the Companies Regulations is the prescribed form, for the purposes of section 138 of the Act, in which a substantial shareholder gives notice to the company of a change in the details of the substantial shareholder’s, or associate’s relevant interest in the voting shares of the company.
19. Form 43 has been amended by accompanying regulation 3 in the same manner as Form 42.
20. Form 43 has also been amended by accompanying regulation 3 to require the history and relevant details of the transactions occurring in the period since the most recent notifiable change. Part B of Form 43 has been amended to
ensure that the relevant information that is required under items (a)-(e) of Part B of Form 43 will be given in respect of each change in the relevant interest of the person that occurred during the time from when the person was last required to give a substantial shareholding notice (whether under sections 137 or 138 of the Act) to when the size of the change in the entitlement exceeded 1% of the shares of that class and the person thereby became obliged to file a further notice under section 138 as amended by the Act.
21. Form 43 has also been amended to take account of changes in terminology introduced by the 1986 Act.
Companies Form 44: Notice of Person Ceasing to be a Substantial Shareholder
22. Form 44 of the Companies Regulations is the prescribed form, for the purposes of section 138 of the Act, in which person gives notice to the company that the person has ceased to be a substantial shareholder.
23. Form 44 has also been amended by accompanying regulation 3 in the same manner as Form 42.
24. Form 44 has also been amended by accompanying regulation 3 by inserting provisions which correspond to the amended version of Part B of Form 43 so that Form 44 can deal with the changes in relevant interest which have not been of a sufficient percentage of entitlement to come within the requirement to give notice under section 138 of the Act, as amended, between the time when the last substantial shareholding notice was required and when the person ceases to be a substantial shareholder.
25. Form 44 has also been amended to take account of changes in terminology introduced by the 1986 Act.