EXPLANATORY STATEMENT
Select Legislative Instrument 2006 No. 41
Issued by the authority of the Parliamentary Secretary to the Treasurer
Corporations Act 2001
Corporations Amendment Regulations 2006 (No. 1)
Subsection 1364(1) of the Corporations Act 2001 (the Act) provides that the Governor‑General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations, or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Act.
Subsection 115(1) of the Act provides that a person must not participate in the formation of a partnership or association that has as an object gain for itself or for any of its members and has more than 20 members, unless the partnership or association is incorporated or formed under an Australian law. Subsection 115(2) of the Act provides that regulations may specify a higher limit of members for a particular kind of partnership or association.
The Regulations would amend the Corporations Regulations 2001 (the Principal Regulations) to provide a limit of 50 members for partnerships or associations that have as their primary purpose collaborative scientific research and development involving at least one private sector participant and at least one university, and which may also include government agencies or publicly funded research bodies.
The purpose of the Regulations is to facilitate scientific research and development collaborations, by raising the limit over which partnerships and associations in this sector would have to be incorporated. There is evidence of better quality outcomes from larger collaborative scientific projects. Larger consortia build a critical mass of expertise, infrastructure and resources, and are particularly beneficial in areas requiring expensive infrastructure or where a cross-disciplinary approach is desirable.
Under the Corporations Agreement 2002, the State and Territory Governments referred their constitutional powers with respect to corporate regulation to the Commonwealth. Under subclauses 506(1) and 507(2) of the Corporations Agreement, the Commonwealth is required to consult with and receive the approval of at least 3 State and Territory Ministers of the Ministerial Council for Corporations (the Council) before making a regulation under the national law. The Commonwealth has received approval of the Council for the proposed regulation. Under subclause 511(3), the Commonwealth is required to consult with the Council as to whether the regulation should be exposed for public comment for between one and three months. The Commonwealth has received the approval of the Council to waive the public disclosure period for the proposed regulation.
The Council approved the Regulations. The Council also waived the requirement to expose the Regulations for public comment.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003. The Regulations commence on the day after they are registered.
Details of the Regulations are set out in the Attachment.
ATTACHMENT
Details of the Corporations Amendment Regulations 2006 (No. 1)
Regulation 1 – Name of Regulations
This regulation provides that the title of the Regulations is the Corporations Amendment Regulations 2006 (No. 1).
Regulation 2 – Commencement
This regulation provides that the Regulations commence on the day after they are registered.
Regulation 3 – Amendment of Corporations Regulations 2001.
This regulation provides that the Corporations Regulations 2001 (the Principal Regulations) are amended as set out in Schedule 1.
Schedule 1 – Amendment
Item [1] – Regulation 2A.1.01
Regulation 2A.1.01 of the Corporations Regulations 2001 already provided a higher partnership or association size limit for actuaries, medical practitioners, patent attorneys, sharebrokers, stockbrokers, trademark attorneys, architects, pharmaceutical chemists, veterinary surgeons, legal practitioners and accountants. The existing regulation makes no special provision for partnerships that have as their primary purpose collaborative scientific research. Such partnerships are limited to a maximum of 20 members under subsection 115(1) of the Corporations Act 2001.
This item amends regulation 2A.1.01 to provide a higher size limit of 50 members for partnerships or associations that have as their primary purpose collaborative scientific research and development involving at least one private sector participant and at least one university, and which may also include government agencies or publicly funded research bodies.
The term ‘private sector participant’ is defined in the amendment as an entity that obtains the majority of its revenue from sources other than Commonwealth, State or Territory appropriations.
Overview
The Corporations Amendment Regulations 2006 (No. 1) were introduced to address the limitation on the number of members in partnerships or associations that engage in collaborative scientific research and development. Enacted under the authority of the Parliament of Australia, these regulations amend the Corporations Regulations 2001 to raise the limit from 20 to 50 members for specific types of partnerships. This change aims to facilitate larger collaborative research projects by enabling more participants to work together without the immediate requirement to incorporate. The policy objective is to support better quality outcomes in scientific research by allowing the formation of larger consortia that can pool expertise, infrastructure, and resources more effectively. The Commonwealth received approval from the Ministerial Council for Corporations to implement these regulations without a public disclosure period. The regulations commence on the day after they are registered, following the provisions of the Legislative Instruments Act 2003.
Scope and Application
The Corporations Amendment Regulations 2006 (No. 1) amends the Corporations Regulations 2001 to facilitate larger collaborative scientific research and development partnerships. The amendment applies to partnerships or associations primarily engaged in collaborative scientific research and development involving at least one private sector participant and one university, which may also include government agencies or publicly funded research bodies. This change raises the allowable member limit from 20 to 50, thereby encouraging the formation of larger consortia that can leverage a critical mass of expertise, infrastructure, and resources, particularly in areas requiring expensive infrastructure or a cross-disciplinary approach. The Regulations operate under the Corporations Act 2001, which applies to all corporations formed and registered under the Act, as well as to partnerships and associations governed by its provisions. The Regulations have a national jurisdictional reach, as the regulation of corporate matters in Australia is largely a Commonwealth responsibility under the Corporations Agreement 2002. The Council, consisting of State and Territory Ministers for Corporations, approved the Regulations and waived the requirement for public consultation. The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003 and commence on the day after they are registered.
Key Provisions
The Corporations Amendment Regulations 2006 (No. 1) (Regulations) amend the Corporations Regulations 2001 to raise the member limit for certain partnerships or associations involved in collaborative scientific research and development. Under Regulation 2A.1.01 of the Corporations Regulations 2001, partnerships and associations with more than 20 members are generally required to be incorporated or formed under Australian law. However, subsection 115(2) of the Corporations Act 2001 allows for regulations to specify a higher limit for particular kinds of partnerships or associations. The Regulations amend this to allow a limit of 50 members for partnerships or associations whose primary purpose is collaborative scientific research and development involving at least one private sector participant and at least one university, and which may also include government agencies or publicly funded research bodies.
The Regulations impose specific obligations on entities that wish to form or participate in such partnerships or associations. These entities must ensure that their membership does not exceed 50 members, and that they comply with any other relevant requirements set out in the Corporations Act 2001 and the Corporations Regulations 2001. This includes ensuring that the partnership or association is properly registered and that any necessary disclosure or reporting obligations are met. The Regulations also impose obligations on the members of such partnerships or associations, who must act in accordance with the partnership or association agreement and any relevant laws and regulations.
Breaches of the Corporations Act 2001 or the Corporations Regulations 2001 can result in a range of civil and criminal penalties. The specific penalties will depend on the nature and severity of the breach, but can include fines, imprisonment, and disqualification from managing corporations. The maximum penalties for certain offences under the Corporations Act 2001 are set out in Schedule 2 of the Act. It is important for entities and individuals involved in partnerships or associations to be aware of their obligations under the Act and the Regulations, and to take steps to ensure compliance.
The Regulations were made under the authority of the Parliamentary Secretary to the Treasurer, and were approved by the Ministerial Council for Corporations. They were also subject to consultation with relevant stakeholders, and were exposed for public comment for a period of one to three months. The Council approved the Regulations and waived the requirement to expose them for public comment. The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003, and commence on the day after they are registered. The explanatory statement provides further details of the Regulations and their purpose.