Corporations Regulations (Amendment) 1998 No. 22
EXPLANATORY STATEMENT
STATUTORY RULES 1998 No. 22
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. The Corporations Agreement, a more formal agreement to supplement the Heads of Agreement, is currently being signed by the parties.
The responsible Ministers of the States and the Northern Territory have been consulted about and have approved the draft regulations, as required by the Agreement.
The regulations:
* removed and updated obsolete references in the Regulations (Regulations 2, 6, 7 and 8);
* corrected an anomaly (Regulation 3, 4 and 5); and
* and updated the list of authorised trustee corporations to reflect two name changes (Regulation 9).
Details of the proposed regulations are as follows:
Regulation 1
Regulation 1 provides that the regulations are amended as set out in these regulations.
Regulations 2, 6 and 7
Regulations 2, 6 and 7 replace all references in the Corporations Regulations to the Life Insurance Act 1945 to reflect the repeal and replacement of this Act by the Life Insurance Act 1995.
Regulations 3, 4 and 5
Prior to these amendments, Corporations Regulations 6.7.01, 6.7.02 and 6.7.03 exempted substantial shareholders and former substantial shareholders from lodging a contract note with the required substantial shareholder notice where the relevant interest was acquired in a transaction that took place 'on a stock exchange approved under section 769 of the Corporations Law'.
It was considered that where the transaction took place on an approved stock exchange it was unnecessary to require the contract note to be attached to the notice.
Regulations 3, 4 and 5 amend these Regulations so that t he exemptions also apply where the transaction took place on the Australian Stock Exchange. The amendment was needed - because, due to the special status of the Corporations Law, the Australian Stock Exchange is not an approved exchange for the purpose of section 769.
Regulation 8
Subregulations 8.1 and 8.3 remove the remaining references to the expression "principal executive officer", which was removed from the Corporations Law by the First Corporate Law Simplification Act.
Subregulation 8.2 corrects an error in Form 602A in Schedule 2, by replacing the incorrect reference to "dissenting offereers" with the correct reference to "dissenting offerees".
Regulation 9
Section 9 of the Corporations Law defines an "authorised trustee corporation" as a body corporate declared in the regulations to be an authorised trustee corporation. Regulation 7.1.01 of the Corporations Regulations provides that a body corporate listed in Schedule 9 of the Corporations Regulations is an authorised trustee corporation.
Subregulation 9.1 inserts "Austrust Limited" into Schedule 9. This is the new name of "Elders Trustee & Executor Company Limited" in item 12.
Subregulation 9.2 removes the reference to "Elders Trustee & Executor Company Limited", and replaces "Executor Trustee and Agency Company of South Australia" with the new name of "Executor Trustee Australia Limited".
Overview
The Corporations Regulations (Amendment) 1998 No. 22 was enacted to update and rectify certain provisions within the Corporations Regulations, ensuring they align with the current legislative framework and address anomalies. This statutory rule was issued by the authority of the Treasurer under section 22 of the Corporations Act 1989, which empowers the Governor-General to make regulations necessary or convenient for carrying out or giving effect to the Corporations Law. The amendments were developed in consultation with the responsible Ministers of the States and the Northern Territory, reflecting the collaborative approach to corporate regulation outlined in the Heads of Agreement on Future Corporate Regulation in Australia and the subsequent Corporations Agreement. The policy objective is to streamline and modernise the regulatory framework, ensuring it remains relevant and effective in addressing contemporary corporate practices and legislative changes.
The regulations specifically aim to remove and update obsolete references, correct anomalies in existing provisions, and update the list of authorised trustee corporations to reflect recent name changes. For instance, they replace references to the Life Insurance Act 1945 with the Life Insurance Act 1995, amend exemptions for substantial shareholders in transactions on the Australian Stock Exchange, and correct errors in forms and schedules. By doing so, the amendments enhance the clarity and applicability of the Corporations Regulations, supporting the broader goal of maintaining a robust and efficient corporate regulatory environment in Australia.
Scope and Application
The Corporations Regulations (Amendment) 1998 No. 22 apply to entities and individuals governed by the Corporations Act 1989, primarily targeting companies, trustees, and substantial shareholders operating within Australia. The amendments aim to ensure compliance with the evolving legislative landscape, particularly in relation to life insurance and stock exchange transactions, while also correcting specific errors within the regulatory framework. The regulations are designed to maintain the integrity of corporate governance and reporting standards across Australia. Geographically, the regulations apply nationally, reflecting the unified approach to corporate regulation across state and federal jurisdictions as per the Heads of Agreement on Future Corporate Regulation in Australia. There are no explicit exclusions or thresholds mentioned in the text, but the regulations do not apply to matters inconsistent with the Act or the Corporations Law. The amendments extend and refine the application of existing regulations through subordinate instruments to ensure that the regulatory framework remains current and effective in addressing corporate practices and transactions.
Key Provisions
The key provisions of the Corporations Regulations (Amendment) 1998 No. 22 involve several amendments to the Corporations Regulations, reflecting changes in legislation and correcting errors. Regulation 1 sets out the amendments contained within these regulations. Specifically, Regulations 2, 6 and 7 update references to the Life Insurance Act 1945 to the Life Insurance Act 1995, reflecting the former's repeal and replacement by the latter. Regulations 3, 4 and 5 amend the exemptions for substantial shareholders and former substantial shareholders from lodging a contract note with the required substantial shareholder notice, ensuring the exemptions apply to transactions on the Australian Stock Exchange. Regulation 8 updates and corrects references in subregulations 8.1, 8.2, and 8.3, removing references to "principal executive officer" and correcting a typographical error in Form 602A. Regulation 9 updates Schedule 9 of the Corporations Regulations to reflect name changes of authorised trustee corporations, inserting "Austrust Limited" and replacing "Executor Trustee and Agency Company of South Australia" with "Executor Trustee Australia Limited".
The obligations imposed by these amendments are primarily on the parties and entities governed by the Corporations Regulations. These obligations include updating references to reflect changes in the law, ensuring that exemptions for substantial shareholders and former substantial shareholders are correctly applied, and maintaining accurate and updated records. For instance, substantial shareholders and former substantial shareholders must now ensure that the exemptions apply correctly to transactions on the Australian Stock Exchange. Similarly, authorised trustee corporations must ensure that their names are correctly reflected in Schedule 9 of the Corporations Regulations.
The legislation also addresses potential breaches and the associated penalties. While the explanatory statement does not detail specific penalties, breaches of the Corporations Regulations can generally lead to civil or criminal consequences, depending on the nature and severity of the breach. Civil penalties may include fines, while criminal penalties may involve imprisonment or additional fines, depending on the offence and jurisdiction. The specific penalties would be determined in accordance with the Corporations Act 1989 and any other relevant legislation. The importance of adhering to these regulations cannot be overstated, as non-compliance can have serious legal repercussions.