EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 301
Subject - Corporations Act 2001
Corporations Amendment Regulations 2010 (No. 9)
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, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Corporations Amendment (Financial Market Supervision) Act 2010 (the Amending Act) transferred the responsibility for supervision of Australia’s domestic licensed financial markets from market operators (such as the ASX) to the Australian Securities and Investments Commission (ASIC). This Act received Royal Assent on 25 March 2010.
The Corporations (Fees) Act 2001 allows ASIC to levy fees on market operators to recover costs incurred in the performance of these supervisory duties. The Corporations (Fees) Regulations 2001 were amended in July 2010 to set out the precise amounts of the fees that ASIC would be charging to perform this function. In the process of arriving at these amounts it was contemplated that some of ASIC’s costs in performing these supervisory duties would be subsidised through use of excess money in the National Guarantee Fund (NGF).
Regulation 7.5.88 of the Corporations Regulations 2001 (the Principal Regulations) provides that the Minister may approve the use of excess funds from compensation funds (such as the National Guarantee Fund) by a market licensee in certain circumstances – such as for the creation or participation in a program for the development of the financial industry. Examples of programs envisaged by regulation 7.5.88 include public education facilities, or research into future product or service needs. However, as it stands, regulation 7.5.88 would not permit the Minister to approve use of funds to implement a regulatory scheme that owes its existence to statute.
The Regulations amend regulation 7.5.88 to allow the Minister (in this case the Parliamentary Secretary to the Treasurer) to approve the use of excess funds from the NGF to fund the costs incurred by either a market licensee or ASIC in association with the market supervision responsibilities undertaken by ASIC. This is consistent with the original policy intention under regulation 7.5.88 and puts beyond doubt that the Minister may approve an application from a market licensee for funding to be provided from excess funds from the NGF for that purpose.
Additionally, a number of minor amendments update references to the New Zealand Regulations 1983, which, due to amendments in New Zealand, have since been superseded by the New Zealand Regulations 2009. A number of minor grammatical changes are also made in order to ensure consistency within the Principal Regulations.
Details of the Regulations are included in the Attachment.
Under the Corporations Agreement 2002 (the Corporations Agreement), the state and territory governments (the states) referred their constitutional powers with respect to corporations regulation to the Commonwealth. The Agreement requires the Commonwealth to be consulted with before making amendments to the Corporations Regulations, including the Fees Regulations. The states have been consulted through the Ministerial Council for Corporations about the Regulations
The Regulations are legislative instruments for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
ATTACHMENT
DETAILS OF THE corporations amendment regulations 2010 (No. 9)
Regulation 1 – Name of Regulations
Regulation 1 names these Regulations as the Corporations Amendment Regulations 2010 (No. 9)
Regulation 2 – Commencement
Regulation 2 provides that the Regulations commence on the day after they are registered.
Regulation 3 – Amendment of Corporations Regulations 2001
Regulation 3 provides that the Corporations Regulations 2001 are amended as set out in Schedule 1 to the Regulations.
Schedule 1 – Amendments
Item [1] – Paragraph 7.5.88 (2) (b)
This item amends paragraph 7.5.88 (2) (b) of the Corporations Regulations 2001 to substitute a new paragraph 7.5.88 (2) (b) and insert new paragraphs 7.5.88 (2) (c) and (d) into the Principal Regulations.
The previous paragraph 7.5.88 (2) (b) allows excess funds from the National Guarantee Fund to be used to pay premiums for fidelity insurance or other compensation arrangements for the financial market as part of an approved compensation arrangement under Division 3 of Part 7.5 of the Act. The paragraph 7.5.88 (2) (b) mirrors the original paragraph but modifies the wording to reflect that paragraph 7.5.88 (2) (c) is inserted after it.
Paragraph 7.5.88 (2) (c) allows excess funds from the National Guarantee Fund to be used for the reimbursement of costs incurred by a market licensee associated with ASIC’s market supervision responsibilities created by the Corporations Amendment (Financial Market Supervision) Act 2010.
Paragraph 7.5.88 (2) (d) allows excess funds to be used for matters related to the making of payments to ASIC by market licensees associated with ASIC’s market supervision responsibilities created by the Corporations Amendment (Financial Market Supervision) Act 2010.
Items [2-6] – Regulations 8.2.01, 8.2.02, item 18.1 of Schedule 10A, and item 2.3 of Schedule 10AA
These items amend regulations 8.2.01, 8.2.02 item 18.1 of Schedule 10A and item 2.3 of Schedule 10AA in order to update references to changes to the regulations that have since been made to the New Zealand Securities Regulations 1983. The intent of those regulations referred to is broadly the same, but the 1983 regulation has since been updated, and the Principal Regulations are updated to reflect this.
Additionally, items 2 to 4 make minor grammatical changes to references to other New Zealand legislation to make the Principal Regulations more internally consistent.