Corporations Amendment Regulations 2000 (No. 6) 2000 No. 175
EXPLANATORY STATEMENT
STATUTORY RULES 2000 No. 175
Issued by the Authority of the Minister for Financial Services and Regulation
Corporations Act 1989
Corporations Amendment Regulations 2000 (No. 6)
Section 22 of the Corporations Act 1989 empowers the Governor-General to make regulations, not inconsistent with the Act or the Corporations Law, prescribing, among other things, matters that are required by the Corporations Law to be prescribed by regulations, or necessary or convenient to be prescribed by regulations for carrying out or giving effect to the Corporations Law. The Regulations are also based upon the following provisions in the Corporations Law:
* subparagraph 206F(1)(b)(i) requires the Australian Securities and Investments Commission
(ASIC) to give a person a notice in the prescribed form requiring them to demonstrate why
they should not be disqualified, before ASIC can disqualify them from managing corporation's
under section 206F;
* subsection 206F(3) requires the notice of disqualification from managing corporations served
on the person to be in the prescribed form;
* section 601QB provides that the regulations may modify the operation of Chapter 5C, relating
to managed investment schemes, or any other provisions of the Corporations Law relating to
securities in relation to a managed investment scheme or all managed investment schemes of
a specified class;
* subsection 671B(4) provides that information about substantial holdings required under
section 671B must be given in the prescribed form; and
* subsection 1313(8) allows the regulations to prescribe offences and penalties for the purposes
of the penalty notice regime.
The purpose of the Regulations is as follows:
* to correct anomalies that have been identified in the Corporations Regulations, particularly
affecting the penalty notice regime in section 1313 of the Corporations Law;
* to overcome a difficulty with the registration of managed investment schemes in
subsection 601ED(2) of the Corporations Law; and
* to prescribe forms for the purposes of notification of substantial holdings and the
disqualification of directors.
The Regulations ensure that all offences listed in Schedule 3 to the Corporations Law that carry a penalty of 5 penalty units are a 'prescribed offence' in subsection 1313(8) of the Corporations Law for the purposes of the penalty notice regime. The Regulations also make consequential amendments to the prescribed penalties involved.
The Regulations overcome a difficulty with the registration of managed investment schemes. Section 601ED of the Corporations Law requires managed investment schemes to register with ASIC subject to specified criteria. Part 6D.2 of the Corporations Law regulates disclosures to investors made by issuers of securities, including registered managed investment schemes. Currently, it is possible that subsection 601ED(2) could be interpreted as permitting a scheme to avoid registration. This is because subsection 601ED(2) only requires registration for those schemes that require disclosure to investors under Part 6D.2, which in turn requires disclosures to be made only by registered schemes. The modification to the interpretation of subsection 601ED(2) overcomes this difficulty. It clarifies the position by treating the interests in all schemes, including´ unregistered schemes, as interests in a registered scheme for the purpose of determining whether their issue was exempt from disclosure under Part 6D.2.
The State and the Northern Territory Ministers on the Ministerial Council for Corporations have been consulted on the Regulations and have given their agreement, as required by the Corporations Agreement reached between State, Northern Territory and Commonwealth Ministers who had responsibilities in relation to corporate regulation in June 1990.
Details of the Regulations are in the Attachment.
The Regulations commence on gazettal.
ATTACHMENT
Corporations Amendment Regulations 2000 (No. 6)
Regulation 1 - Name of regulations
Regulation 1 provides for the name of the regulations.
Regulation 2 - Commencement
Regulation 2 provides that the regulations will commence on gazettal.
Regulation 3 - Amendment of Corporations Regulations 1990
Regulation 3 provides that Schedule 1 amends the Corporations Regulations 1990.
Schedule 1
Item 1 in Schedule 1 inserts regulation 5C.11.05A into the Corporations Regulations 1990. Regulation 5C.11.05A modifies the effect of subsection 601ED(2) of the Corporations Law by treating the interests in an unregistered managed investment scheme as interests in a registered scheme for the purpose of determining whether their issue was exempt under Part 6D.2. As interests in a registered scheme are within the definition of 'securities' for Chapter 6D, the amendment ensures that schemes are only exempt from registration where all the issues of interests were within the specific exemptions from disclosure contained in Part 6D.2.
Item 2 in Schedule 1:
* omits current regulation 9.4.01 and substitutes regulation 9.4.01, which prescribes all offences
in Schedule 3 to the Corporations Law carrying a penalty of 5 penalty units as a 'prescribed
offence' in subsection 1313(8) for the purposes of the penalty notice provisions of the
Corporations Law;
* omits current regulation 9.4.02 and substitutes regulation 9.4.02, which prescribes the following
penalties for the purposes of regulation 9.4.01:
- for an individual - 1.25 penalty units;
- for a body corporate - 6.25 penalty units.
Item 3 in Schedule 1:
* inserts item 3 in Schedule 1 to the Corporations Regulations 1990, which refers to Form 5249 as the prescribed form for subparagraph 206F(1)(b)(i); and
* inserts item 4 in Schedule 1 to the Corporations Regulations, which refers to Form 587 as the prescribed form for subsection 206F(3).
These forms deal with disqualification of directors. Form 5249 is a notice to demonstrate why disqualification should not occur and Form 587 is the notice of disqualification from managing corporations.
Item 4 in Schedule 1 inserts items 96, 97 and 98 in Schedule 1 to the Corporations Regulations 1990. These items refer to Forms 603, 604 and 605 as the prescribed forms for subsection 671B(4). The forms deal with notification of substantial holdings. Form 603 is a notice of initial substantial holder, Form 604 is a notice of change of interests of substantial holder and Form 605 is a notice of ceasing to be a substantial holder.
Item 5 in Schedule 1 inserts Forms 587, 603, 604 and 605 in Schedule 2 to the Corporations Regulations.
Item 6 in Schedule 1 inserts Form 5249 in Schedule 2 to the Corporations Regulations.