Corporations Legislation Amendment Act 1991

Overview

The Corporations Legislation Amendment Act 1991 was enacted by the Parliament of Australia to address several gaps and issues in existing corporate and securities laws. The Act primarily seeks to amend the Corporations Act 1989, the Corporations Law, the Australian Securities Commission Act 1989, and the Crown Debts (Priority) Act 1981. One of the key objectives of this legislation is to ensure the smooth transition and operation of the Australian Securities Commission (ASC) following the abolition of the National Companies and Securities Commission (NCSC). The Act details provisions for the transfer of assets, liabilities, and ongoing proceedings from the NCSC to the ASC, as well as addressing various administrative and technical amendments to the Corporations Law. Furthermore, the Act includes provisions to manage insider trading and the disclosure of certain information that could impact the securities market. Through its comprehensive amendments and the establishment of new rules and penalties, the Act aims to enhance the regulation and oversight of corporate entities and securities trading in Australia.

Scope and Application

The Corporations Legislation Amendment Act 1991 amends the Corporations Act 1989 and related legislation, affecting the regulation of corporations, securities, and insider trading within Australia. This Act applies to entities, including companies and partnerships, and their officers, such as directors and employees, as well as to transactions and conduct within the jurisdiction. The geographic reach of the Act is national, affecting all states and territories of Australia, and its provisions are designed to be applicable in a manner consistent with Commonwealth administrative laws. The Act also addresses transitional arrangements, including the abolition of the National Companies and Securities Commission and the transfer of its assets, liabilities, and proceedings to the Australian Securities Commission or the Commonwealth. Certain exclusions and exemptions are outlined, particularly in relation to insider trading and the disclosure of information. The application and commencement of certain changes are governed by subordinate instruments, allowing for flexibility in implementation. This Act ensures that the legal framework governing corporate entities is updated to reflect changes in the regulatory environment and to enhance the administration of corporate law across the nation.

Key Provisions

• The Corporations Legislation Amendment Act 1991 amends several existing Acts, including the Corporations Act 1989, the Corporations Law, and the Australian Securities Commission Act 1989, among others. It introduces significant changes to the structure and operation of the corporate regulatory framework in Australia, most notably by abolishing the National Companies and Securities Commission (NCSC) and transferring its functions to the Australian Securities Commission (ASC).
• The Act mandates that the ASC must prepare reports on the operations of the NCSC, detailing its activities and financial transactions over specific periods, including the six months ending 31 December 1990 and another six-month period starting from 30 June 1991. These reports, along with financial statements, must be submitted to the Minister and the Auditor-General for review. The Auditor-General is required to assess whether the NCSC's financial activities were conducted in accordance with the law and must report back to the Minister. This process ensures transparency and accountability during the transition from the NCSC to the ASC.
• Additionally, the Act places obligations on the ASC and the Minister to manage the transition effectively. This includes preparing and submitting final reports and financial statements if the NCSC Act has not been repealed by 1 July 1991. The Minister must also lay these reports and financial statements before each House of Parliament. The Act also specifies that the NCSC's assets and liabilities are to be transferred to the Commonwealth or the ASC, depending on the nature and timing of the vesting, and that pending legal proceedings involving the NCSC are to be continued by the Commonwealth or the ASC as appropriate.
• Under the new provisions, any person who was previously an employee or appointed official of the NCSC is prohibited from disclosing sensitive information acquired during their tenure, except under specific circumstances such as legal proceedings or public interest disclosures. Breach of this confidentiality requirement is subject to penalties, including fines and imprisonment. Furthermore, the Act provides for the application of Commonwealth administrative laws to the Capital Territory and external Territories, ensuring consistent regulatory oversight across jurisdictions.
• The Act also introduces amendments to the Corporations Law to clarify and enhance the requirements for consolidated financial accounts and insider trading regulations. For instance, it mandates that companies must ensure their financial years align with those of their controlled entities and requires detailed consolidated financial statements. It also imposes strict prohibitions on insider trading, where individuals in possession of non-public information that could materially affect securities trading must refrain from trading or communicating such information.
• In terms of penalties and consequences, the Act imposes significant penalties for breaches of insider trading provisions. For instance, individuals found guilty of insider trading may face penalties of up to $200,000 or imprisonment for five years, or both. The Act also allows for civil actions by affected parties to recover losses incurred due to insider trading, reinforcing the deterrence against such practices.
• Finally, the Act includes transitional provisions to ensure a smooth transfer of responsibilities, assets, and liabilities from the NCSC to the ASC and the Commonwealth. It specifies that certain instruments and proceedings in place before the Act's commencement retain their effect, subject to necessary modifications. It also outlines the process for certifying the transfer of assets, liabilities, and instruments, ensuring legal continuity and clarity during the transition period.

Legal classification tags

Area of Law

Corporate Law & Governance

Instrument

Act

Concepts

Commencement Provisions

Repeal & Amendment

Reporting & Disclosure Obligations

Enforcement Powers

Civil Penalty Provisions

Licensing & Registration