Corporations Regulations (Amendment) 1997 No. 81
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 81
Issued by the Authority of the Treasurer
Corporations Act 1989
Corporations Regulations (Amendment)
Section 22 of the Corporations Act 1989 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act or the Corporations Law, prescribing, inter alia, matters which 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 Heads of Agreement on Future Corporate Regulation in Australia, reached between State, Northern Territory and Commonwealth Ministers who had responsibilities in relation to corporate regulation in June 1990 forms the political compact on which the national companies and securities scheme is based. It is envisaged that this Agreement will be supplemented by a more formal agreement, to be known as the Corporations Agreement.
Both the Heads of Agreement and the draft Corporations Agreement require the Commonwealth to consult the States and the Northern Territory on legislative proposals relating to matters falling within Chapters 7 and 8 of the Corporations Law. The proposed regulations relate to matters within Chapters 7 and 8. The responsible Ministers of the States and the Northern Territory have been consulted about the proposed regulations.
The purpose of the regulations is to exempt the Australian Stock Exchange Ltd and the Options Clearing House Pty Ltd from the unintended application of certain provisions of the Corporations Law (the licensing provisions, dealers account and audit provisions, money and scrip provisions and securities registers provisions of Chapter 7 and requirements regarding contract notes).
Details of the regulations are contained in the Attachment.
The regulations commenced on the date of gazettal.
ATTACHMENT
Regulation 1
Regulation 1 provides that the Corporations Regulations are amended as set out in these regulations.
Regulation 2
Regulation 2 inserts new Regulation 7.3.01B into the Corporations Regulations.
Subregulation (1) defines OCH and relevant agreement for the purposes of the regulation.
Subregulation (2) exempts the Australian Stock Exchange Ltd (ASX) and the Options Clearing House Pty Ltd (OCH) from the application of certain parts of the Corporations Law (the licensing provisions (Divisions 1 and 3 of Part 7.3), dealers account and audit provisions (Part 7.5), money and scrip provisions (Part 7.6) and securities registers provisions (Part 7.7) of Chapter 7 and section 842 (requirement to issue contract notes)) when they deal in securities or relevant agreements in connection with the provision of clearing and settlement services by the ASX's options clearing house and the administration of Exchange rules.
The need for the exemption arises because in the process of trading and clearing option contracts and relevant agreements there are many activities provided for in the ASX business rules which may constitute a 'dealing' (cf. the wide definition of 'deal' in relation to securities in sec 9 of the Law) by the ASX or the OCH. These activities include the registration with OCH of all options and share ratios entered into on the ASX; the novation process whereby OCH becomes a party to every contract registered with it; dealings by OCH in respect of collateral held by it in the event of a default by a clearing member; action taken by the OCH to transfer, close out, exercise or otherwise deal in contracts registered with it in the event of default by a clearing member; action taken to correct the details of contracts registered with OCH; and a direction by ASX or OCH to transfer, close out, exercise or otherwise deal in contracts registered with OCH.
Novation, registration of contracts and the transfer and closing out of contracts in the event of defalcation are primary functions of approved clearing houses. Neither the ASX nor the OCH is a formally approved clearing house under the Corporations Law (cf. the ASX Settlement and Transfer Corporation and the Sydney Futures Exchange Clearing House).
The exemption applies to securities and to relevant agreements prescribed under para 92A(1)(b) (i.e. agreements that are regulated as if they were securities under the Law. Currently 'share ratios' are prescribed under regulation 1.2.02.)
It is necessary that the exemption apply to actions taken prior to registration of securities or relevant agreements with OCH as such actions may constitute a dealing in securities or relevant agreements.
Subregulation (2) exempts employees (and those acting for the ASX or OCH) from sec 806 (prohibition on acting as a representative of a dealer unless the person holds a proper authority from the dealer) and Part 7.7 (requirement to maintain registers of interests in securities) when they deal in securities or relevant agreements of a kind referred to in subregulation (2).