EXPLANATORY STATEMENT
Corporations (Aboriginal and Torres Strait Islander)
Determination 2 / 2009
Summary
The Corporations (Aboriginal and Torres Strait Islander) Determination 2/2009 (the determination) is made under subsection 353-10(1) of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (the Act) by the Registrar of Aboriginal and Torres Strait Islander Corporations.
The determination exempts certain small and medium sized Aboriginal and Torres Strait Islander corporations from the requirement to prepare and lodge an annual directors’ report for the financial year ending 30 June 2009 and subsequent financial years.
Background
The revised explanatory memorandum of the Corporations (Aboriginal and Torres Strait Islander) Bill indicated that chapter 7 of the Bill implemented review recommendations that the Registrar be able to exempt classes of corporations from the reporting requirements. Chapter 7 enables flexible and responsive administrative practices. Reporting requirements can be adjusted for individual corporations or classes of corporations. Exemptions from the operation of the chapter can be given for specific corporations or classes of corporations.
The revised explanatory memorandum stated that ‘section 353-10 is based on section 341 of the Corporations Act and provides the Registrar with the power to relieve classes of corporations (or their directors or auditors) from the record keeping and reporting requirements of the chapter, including any regulations made for the purposes of chapter 7 of the Bill.’
Explanation of the provisions
Clause 1 specifies the title of the determination.
Clause 2 sets out commencement information for the determination. The determination takes effect the day after it is registered on the Federal Register of Legislative Instruments.
Clause 3 sets out the exemption. Aboriginal and Torres Strait Islander corporations reporting under subdivision 333-B of the Corporations (Aboriginal and Torres Strait Islander) Regulations 2007 (the Regulations) are exempted by the determination from the requirements to prepare and lodge an annual directors’ report in subregulation 333-16.01(3) and regulation 333-16.03 of the Regulations, and section 348-1 of the Act.
The exemption applies to reporting for the financial year ending 30 June 2009 and subsequent financial years.
The exemption will assist Aboriginal and Torres Strait Islander corporations reporting under subdivision 333-B of the Regulations, which are corporations registered under the Act on 30 June of a financial year as a:
(a) small corporation, and having a consolidated gross operating income in the financial year of more than $100,000 but less than $5 million; or
(b) medium corporation, and having a consolidated gross operating income in the financial year of less than $5 million.
The determination was made to reduce the reporting obligations for these small and medium sized Aboriginal and Torres Strait Islander corporations.
(Small and medium sized corporations having an income of $5 million or more must still prepare and lodge a directors’ report. Small sized corporations having an income of $100,000 or less were not required to prepare or lodge a directors’ report.)
Criteria for determining registered size
Corporation registered size is determined under part 2-4 of the Act by a combination of the corporation’s gross operating income, gross assets and number of employees, for which thresholds are set out part 2-4 of the Regulations.
Consultation
The Registrar did not consult because the Registrar is satisfied that consultation is unnecessary and inappropriate in this case. The determination reduces the reporting obligations on many Aboriginal and Torres Strait Islander corporations. They will not be required to prepare and lodge a directors’ report.
Regulatory Impact Analysis
The determination does not require a Regulatory Impact Statement or a Business Cost Calculator Figure. The determination exempts regulatory requirements for many Aboriginal and Torres Strait Islander corporations, will not impact on business activity and will have no, or minimal, compliance costs or competition impact. Their business compliance costs will be reduced.
The Registrar writes to each Aboriginal and Torres Strait Islander corporation after the end of the financial year, and advises the corporation of its registered size, as at 30 June, and the reports that the corporation should prepare and lodge with the Registrar. The Registrar will advise these small and medium sized corporations that they do not have to lodge a directors’ report.
Legislative instrument
The determination is made in relation to a class of Aboriginal and Torres Strait Islander corporations. Accordingly, under section 353-10(5) of the Act, the determination is a legislative instrument.