EXPLANATORY STATEMENT
Select Legislative Instrument 2006 No. 362
Issued by the authority of the Parliamentary Secretary to the Treasurer
Corporations Act 2001
Corporations Amendment Regulations 2006 (No. 5)
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.
The Corporations Regulations 2001 (the Principal Regulations) regulate the registration of body corporate names. In particular, subregulations 2B.6.01(2) and 5B.3.01(2) of the Principal Regulations provide that, for paragraphs 147(1)(c) and 601DC(1)(c) respectively of the Act, a name is unacceptable for registration if it is unacceptable under the rules set out in Part 2 of Schedule 6 to the Principal Regulations. In addition to the general rules, paragraph 6203(b) of Part 2 provides that a name is unacceptable for registration if the name contains a restricted word or phrase specified in Part 3 of Schedule 6, an abbreviation of that word or phrase, or a word or phrase or an abbreviation having the same or a similar meaning.
The Regulations add the words ‘police’ and ‘policing’ to Part 3 of Schedule 6 of the Principal Regulations. The intended effect of this amendment is to prevent the use of these words in body corporate names without the Minister’s prior consent. This ensures that the registration of body corporate names including these words is allowed only for entities that can demonstrate that the use of these words is not unacceptable. The amendment is to have prospective effect, and as such will not affect body corporate names that have previously been registered.
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 Regulations. In addition, under subclause 511(3), the Commonwealth is required to consult with the Council as to whether the Regulations 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 Regulations.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on the day after they were registered.
Overview
The Corporations Amendment Regulations 2006 (No. 5), issued under the authority of the Parliamentary Secretary to the Treasurer, were enacted to address the issue of potentially misleading or deceptive use of certain terms in corporate names, particularly those that could be associated with law enforcement activities. This legislative instrument amends the Corporations Regulations 2001 to include the words "police" and "policing" in the list of restricted terms within Schedule 6, thereby requiring entities to obtain prior consent from the Minister before using these terms in their corporate names. This amendment aims to ensure that only entities that can justify the use of such terms are permitted to do so, thus maintaining clarity and integrity in corporate names. The regulations were approved by the Ministerial Council for Corporations and commenced immediately after registration, without a period of public disclosure.
Scope and Application
The Corporations Amendment Regulations 2006 (No. 5) pertain to the regulation of body corporate names under the Corporations Act 2001, with a specific focus on preventing the use of the words 'police' and 'policing' in corporate names without the prior consent of the Minister. This regulation applies to any entity seeking to register a body corporate name that includes these terms, ensuring that such names are only approved if the entity can justify the use of these words as acceptable. The amendment does not impact names that were already registered prior to the enactment of these regulations. The jurisdictional reach of these regulations is national, given the Commonwealth’s authority over corporate regulation as per the Corporations Agreement 2002. The regulations were approved by the Ministerial Council for Corporations, and the Commonwealth has waived the public disclosure period for these regulations as per the Council’s approval. These regulations are a legislative instrument under the Legislative Instruments Act 2003 and commenced on the day following their registration.
Key Provisions
The main operative sections of the Corporations Amendment Regulations 2006 (No. 5) (the Regulations) pertain to the prohibition of certain words in body corporate names. Specifically, section 1 of the Regulations amends Part 3 of Schedule 6 of the Corporations Regulations 2001 to include the words 'police' and 'policing' in the list of restricted words and phrases. This means that these terms, or any abbreviations, synonyms, or similar words, cannot be used in a body corporate name without prior consent from the Minister, as outlined in section 2 of the Regulations. This amendment is prospective and does not affect names that were registered prior to the commencement of the Regulations.
The Regulations impose specific obligations on entities seeking to register a body corporate name. As stated in section 2 of the Regulations, any entity wishing to use the words 'police' or 'policing' in its name must apply for prior consent from the Minister. This application must demonstrate that the use of these terms is not unacceptable under the rules set out in Part 2 of Schedule 6 to the Corporations Regulations 2001. Failure to obtain such consent will result in the name being deemed unacceptable for registration.
Any breach of the provisions outlined in the Regulations can result in significant legal consequences. Under section 1317E of the Corporations Act 2001, a person who contravenes a provision of the Corporations Regulations 2001 may be subject to civil penalty provisions. For a body corporate, the maximum penalty for each contravention is $210,000. Additionally, section 1317G of the Act specifies that a court may order the body corporate to pay costs relating to the proceedings. The Regulations ensure that only entities that meet the specified criteria can use the restricted words in their names, thereby maintaining the integrity and clarity of corporate registrations.