Corporations Regulations (Amendment) 1996 No. 218
EXPLANATORY STATEMENT
STATUTORY RULES 1996 No. 218
Issued by the Authority of the Parliamentary Secretary to 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, which prescribe matters which are required or permitted 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 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 Chapter 6 of the Corporations Law which relates particularly to takeovers. The regulations relate to matters within Chapter 6. The responsible Ministers of the States and the Northern Territory have been consulted about the proposed regulation and their comments have been taken into account.
The purposes of the regulations are:
* to update references in Corporations Regulation 6.2.01 to the State/Territory legislation regulating building societies and credit unions which exempts takeovers of certain entities (for example, incorporated associations and co-operatives) from regulation under Chapter 6 of the Corporations Law; and
* to omit a reference to Bendigo Sandhurst Mutual Permanent Land and Building Society (the Society) in Corporations Regulation 7.13.03, which is no longer necessary as the Society is now a bank.
Details of the regulations are contained in the Attachment.
The regulations will commence on gazettal.
ATTACHMENT
Regulation 1
Regulation 1.1 states that the Corporations Regulations are amended as set out in these Regulations.
Regulation 2
Regulation 6.2.01 (prescribed companies under paragraph 633(b) of the Corporations Law)
Chapter 6 of the Corporations Law includes provisions which regulate the takeover of a "company" which for this purpose includes any listed body corporate.
The central provision in relation to takeovers is section 615 which prohibits the acquisition of shares in a company if that acquisition would bring a person's entitlement to over 20% of the voting shares of the company, except as provided in Chapter 6.
Paragraph 633(b) provides that section 615 does not apply in relation to, among other things, an acquisition of shares in a prescribed company.
Corporations Regulation 6.2.01 provides a list of bodies that are prescribed for the purposes of paragraph 633(b) of the Corporations Law.
The amendments which this regulation made to Regulation 6.2.01 update legislative references in this list to reflect the enactment of the Financial Institutions Code. The scope is unchanged except to the extent necessary to ensure uniformity of treatment to all 'financial institutions' (ie building societies and credit unions regulated under the Financial Institutions Code and special services providers regulated under the AFIC Code).
The amendment is consistent with the decision of the Ministerial Council for Corporations at its Sixth Deferred Meeting in Adelaide on 4 February 1993 when it agreed that the takeover and substantial shareholding provisions were to continue to apply to non-bank financial institutions (ie building societies, credit unions and special services providers) in the same circumstances as they did prior to the interface amendments. Corporations Regulation 6.2.01 was then in force in the same terms as prior to this amendment.
Regulation 3
Corporations Regulation 7.13.03 (Eligible body: subsection 1097(1) of the Corporations Law)
To gain access to the efficient means of transfer for which Part 7.13 of the Corporations Law provides, an entity must be an "eligible body".
At the time Corporations Regulation 7.13.03 was made, paragraph 1097(1)(b) of the Corporations Law defined "eligible body" as including a body corporate (other than a company) that is incorporated in the jurisdiction and prescribed for the purposes of the paragraph.
Two bodies were so prescribed - the Bendigo Sandhurst Mutual Permanent Land and Building Society ('Bendigo') and Westpac Banking Corporation (Corporations Regulation 7.13.03).
Bendigo is now a bank, incorporated under the Corporations Law. There is therefore no need for that part of Corporations Regulation 7.13.03 which prescribes Bendigo. In addition, amendments to the Corporations Law have included listed non-bank financial institutions in the definition of "eligible body" in subsection 1097(1).
The reference to Bendigo in this Regulation has therefore been omitted.