EXPLANATORY STATEMENT
Statutory Rules 1990 No. 295
Issued by the Authority of the Attorney-General
Companies Regulations (Amendment)
Subsection 577(1) of the Companies Act 1981 (the Act) provides that the Governor-General may make regulations for the purposes of 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 and futures industries in the six States, the Australian Capital Territory and the Northern Territory of Australia.
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 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 subclause 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 in accordance with a resolution of the Council.
5. The Regulations add information to the annual return form for companies to facilitate the updating of the national companies database and verify the integrity of the details already on State and Territory computer databases.
6. The accompanying Regulations amend the annual return form for companies (Form 66 in Schedule 2 of the Regulations) by adding the following:
place of incorporation - at present, this is not stated separately;
details of the company’s principal business office in Australia - in many cases this could be different from any of the registered office addresses on State CACs’ databases;
details about options issued - at present, options are required to be included in the directors* report (subsection 270(4) of the Companies Act refers). Inclusion of the information on the annual return form will facilitate its addition to the database, through computer terminals. The alternative, of isolating information from the narrative directors’ report, would be very costly and time-consuming;
supplementary information about members - an indication as to whether members are officers of the company, whether shares are fully paid and whether they are held beneficially or not. Some of this information could be
deduced from an analysis of the return form, however, such a task would not be consistent with the speedy computerisation of company information;
registered number of a company’s ultimate holding company - at present, only the name and place of incorporation are required,
information about trusts - companies acting as trustees will be asked to disclose liabilities incurred in that capacity as well as the corresponding right of indemnification out of trust assets. At present, companies are required to disclose this information, however, there is no provision for its inclusion on the current annual return form;
the declaration at the foot of the return is augmented to include a reference to it being complete as well as merely correct (the existing requirement); and
the statement of changes form, which accompanies the annual return, includes several minor additions, ie inclusion of the company’s number, where the company has ceased to carry on business, a different form of consent to the listing of the company’s registered office address and an indication as to whether changes have been previously notified.
Overview
The Companies Regulations (Amendment) Statutory Rules 1990 No. 295, issued under the authority of the Attorney-General, were enacted in response to a need for improved accuracy and efficiency in the maintenance of the national companies database. This regulation was developed in accordance with advice from the Ministerial Council for Companies and Securities, established under an agreement between the Commonwealth and the States. The primary policy objective of these amendments was to enhance the reliability and completeness of company information by requiring additional details in the annual return form submitted by companies. This included the incorporation place, principal business office details, information about issued options, supplementary member information, ultimate holding company details, trust-related disclosures, and an augmented declaration of completeness. These additions aimed to streamline the data entry process and ensure that the national companies database remains up-to-date and accurate.
Scope and Application
The Companies Regulations (Amendment) Statutory Rules 1990 No. 295, issued under the authority of the Attorney-General, pertains to the Companies Act 1981 and is designed to enhance the regulatory framework for companies within Australia. These Regulations apply to all companies registered under the Act, encompassing their officers, directors, and shareholders. The scope of these Regulations extends across the Commonwealth, as well as the states and territories of Australia, thus ensuring a uniform system of company law and administration. These Regulations aim to update and verify the national companies database by amending the annual return form for companies. This includes adding details such as the place of incorporation, the principal business office in Australia, and supplementary information about members, amongst others. The amendments are intended to streamline the process of data entry into the national database, making it more efficient and accurate compared to the current practice of extracting information from directors' reports. Furthermore, the Regulations require companies to provide information about their ultimate holding companies, trusts, and changes in business activities, thereby enhancing transparency and compliance. The changes mandated by these Regulations are subject to approval by the Ministerial Council for Companies and Securities and subsequent submission to the Federal Executive Council for enactment by the Governor-General, reflecting the co-operative Commonwealth-State scheme established under the Agreement executed on 22 December 1978.
Key Provisions
The primary operative sections of the Companies Regulations (Amendment) require companies to provide additional information in their annual returns to ensure the accuracy and comprehensiveness of the national companies database. Section 45 of the Agreement mandates the Council to approve proposals for amending regulations, which are then submitted to the Federal Executive Council for the Governor-General's approval. The Regulations amend Form 66 in Schedule 2 to include several new pieces of information: the place of incorporation, details of the principal business office in Australia, information about options issued, supplementary information about members, the registered number of the ultimate holding company, information about trusts, and a declaration that the return is both complete and correct (subsections 45(1) and 45(2)). Additionally, minor changes are made to the statement of changes form, which accompanies the annual return, including the inclusion of the company’s number, details if the company has ceased to carry on business, a different form of consent to the listing of the registered office address, and an indication of whether changes have been previously notified.
The Regulations impose specific obligations on companies to provide accurate and detailed information in their annual returns. Companies must now include the place of incorporation, which is not currently stated separately, and details of their principal business office in Australia, which may differ from any registered office addresses on State and Territory databases. They must also disclose information about options issued, supplementary information about members, the registered number of the ultimate holding company, and details about trusts, including liabilities incurred and corresponding rights of indemnification. These obligations are designed to enhance the accuracy and integrity of the national companies database, ensuring that it is a reliable source of information for regulators and the public. Furthermore, the declaration at the foot of the return must now attest to the completeness and correctness of the information provided, reinforcing the importance of accurate reporting.
The Companies Regulations (Amendment) do not explicitly state any offences, penalties, or civil/criminal consequences for non-compliance with the new requirements. However, the failure to provide accurate and complete information in annual returns could potentially lead to regulatory action under the Companies Act 1981. Non-compliance with the requirements to provide accurate and complete information in annual returns may result in enforcement actions by the Australian Securities and Investments Commission (ASIC) or other relevant regulatory bodies. Such actions could include fines, administrative penalties, or even legal proceedings in cases of significant non-compliance or fraudulent behaviour. While the specific penalties are not detailed in the Regulations, the importance of accurate and complete reporting is underscored by the potential for regulatory action under the broader framework of the Companies Act.