Corporations Regulations (Amendment) 1992 No. 230
EXPLANATORY STATEMENT
STATUTORY RULES 1992 No. 230
Issued by the Authority of the Attorney-General
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 (the Law), prescribing, inter alia, matters which are required by the Law to be prescribed by regulations or necessary or convenient to be prescribed by regulations for carrying out or giving effect to the Law.
In accordance with the Heads of Agreement and the draft Corporations Agreement (the Agreement) between the Commonwealth, State and Territory Ministers having responsibilities in relation to corporate regulation, the Attorney-General has consulted the relevant State and Territory Ministers on the amendments. Under the terms of the Agreement, the Attorney-General is required only to consult Ministers on legislative proposals relating to matters failing within Chapter 7 of the Law. The Regulations are in this category.
The purposes of the Regulations are:
1. to make technical amendments to certain fundraising provisions;
2. to amend Schedules 1 and 2 in respect of a new form (Form 719A) which is the notice to be inserted in newspapers calling for claims against the National Guarantee Fund for compensation for losses resulting from the unauthorised execution of a document of transfer of rights or securities by a dealer; and to revise a form in Schedule 2 (Form 721) which is used by the Securities Exchanges Guarantee Corporation to notify a person who has made a claim against the National Guarantee Fund that his or her claim has been disallowed; and
3. to include a body corporate in the list of authorised trustee corporations in Schedule 9.
Details of the Regulations are at Attachment A.
ATTACHMENT A
Regulation 1
Amendment
Regulation 1 provides that the regulations amend the Corporations Regulations (the Regulations).
Regulation 2
Regulation 7.12.02 (Exemptions from Chapter 7 of the Corporations Law)
Regulation 7.12.02 was formerly expressed to provide that the prospectus provisions in Division 2 of Part 7.12 of the Corporations Law (the Law) did not apply in relation to:
• offers of securities in connection with a takeover scheme; or
• offers of securities in relation to a compromise or arrangement approved by the Court under subsection 411(6).
Regulation 2 makes technical amendments to regulation 7.12.02 of the Regulations which do not affect the policy underlying the exemption from the prospectus provisions.
Prior to its amendment, paragraph (a) of regulation 7.12.02 was expressed to exempt an offer or invitation in relation to marketable securities that was made or issued in connection with a takeover scheme and which was "in" a Part A statement "required" under section 644 of the Law. This paragraph has been amended so that it more accurately reflects the relationship between an offer of securities and the associated Part A statement insofar as the offer or invitation is accompanied by the Part A statement and not contained within it. Further, the amendment also reflects the fact that the Part A statement is required to be "registered" under, and not "required" under, section 644 of the Law.
Prior to its amendment, paragraph (b) of 7.12.02 was expressed to exempt an offer or invitation in relation to a compromise or arrangement "approved by a Court under subsection 411(6)" of the Law. This paragraph has been amended so that it refers more accurately to the point when offers might first be made under a compromise or arrangement - where a Court, pursuant to an application proposing a compromise or arrangement, orders a meeting of creditors or members to consider the compromise or arrangement.
Regulation 3
Regulation 7.12.13 (Section 1080 (Particulars to be included in statement))
The regulation repeals regulation 7.12.13 of the Regulations. The omission is consequent on the repeal of section 1080 of the Law by the Corporations Legislation Amendment Act (No. 2) 1991.
Regulation 4
Regulation 7.12.15 (Prescribed covenants: paragraph 1069(1)(n) of the Corporations Law)
Paragraph 7.12.15(6)(h) of the Regulations lists the persons to whom a management company of a prescribed interest scheme is permitted to pay brokerage or commission. The list of persons includes the holder of a dealers licence and its representatives. Currently, certain persons are exempt from the requirement to hold such a licence in connection with dealings in prescribed interests by virtue of regulation 7.3.11. The combined effect of these provisions appears to be that persons who have the benefit of the latter provision are unable to be paid a commission. Paragraph 7.12.15(6)(h) has been amended to include amongst those persons to whom the management company may pay a commission, persons who are exempt from the requirement to hold a dealers licence by subregulation 7.3.11 (1) of the Regulations.
Persons to whom subregulation 7.3.11 is applicable are exempted from the application of certain provisions of the Law, including the requirement to hold a dealers licence, in relation to a dealing by the person in or with a prescribed interest to which an approved deed within the meaning of section 1066 of the Law was not required to be in force.
The amendment allows, in connection with dealings in prescribed interests not requiring an approved deed, persons having the benefit under regulation 7.3.11 of exemptions from the operation of certain of the provisions of the Law to be paid brokerage or commission by the management company of the prescribed interest scheme.
Regulation 5
Regulation 7.12.17 (Prescribed invitation or offer: subsection 1078(4) of the Corporations Law)
Regulation 5 omits former paragraph 7.12.17(c) of the Regulations and substitutes new paragraphs (c), (d) and (e) in regulation 7.12.17. The omission of former paragraph 7.12.17(c) is consequent on the repeal of section 1079 of the Law by the Corporations Legislation Amendment Act (No.2) 1991.
Section 1078 of the Law prohibits a person going from place to place issuing invitations to subscribe for securities or offering for subscription or purchase the securities of a corporation. By paragraph 1077(a), this prohibition is extended to communicating with persons in different places using an eligible communications service, defined in section 9 of the Law to include a postal, telegraphic, telephonic, or other like service. Regulation 7.12.17 prescribes invitations and offers to which the prohibition imposed generally by section 1078 on the hawking of securities is not to apply.
Paragraph 7.12.17(a) provides that the prohibition in section 1078 does not apply in relation to those offers and invitations which are excluded offers and excluded invitations under subsection 66(3) of the Law other than those referred to in paragraphs 66(3)(f), (g), (h) and (j). New paragraph (c) of regulation 7.12.17, which has been inserted by regulation 5 allows excluded offers or invitations referred to in paragraphs 66(3)(f), (g), (h) and (j) of the Regulations which are sent by post.
Regulation 5 also inserts paragraphs (d) and (e) in regulation 7.12.17, allowing the following invitations and offers:
• an offer or invitation in relation to marketable securities that is made or issued in connection with a takeover scheme and accompanied by a Part A statement registered under section 644 of the Law, and sent by post.
• an offer or invitation in relation to a compromise or arrangement to which an order made by the Court under subsection 411 (1) or (1A) of the Law relates and which is sent by post.
Regulation 6
Schedule 1 (List of forms in Schedule 2)
Schedule 1 provides particulars of the list of forms contained in Schedule 2. Regulation 6 amends Schedule 1 by inserting a new item, item 127A, in respect of Form 719A (regulation 7) into the Schedule.
Regulation 7
Form 719A - Compensation for losses resulting from the unauthorised execution of a document of transfer of rights, shares, debentures or other securities by dealer
The Corporations Legislation Amendment Act (No. 2) 1991 substituted a new section 959 in the Law. The substituted section 959 allows the Securities Exchanges Guarantee Corporation, which administers the National Guarantee Fund, to publish a notice in the prescribed form in each State and Territory in a daily newspaper calling for claims under Division 7 (Unauthorised transfer) of Part 7.10. The amendment enables the Corporation to bring the claim process to a definitive close.
Form 719A which has been inserted into Schedule 2 of the Regulations by regulation 7.1 is the form of the notice to be published. It refers to the unauthorised execution of a document of transfer of securities by a particular dealer during a particular period and advises persons who wish to make a claim how to do so. It also summarises the relevant provisions.
Form 721 - Notice of disallowance of claim against the Securities Exchanges Guarantee Corporation
Section 975 of the Law requires the Securities Exchanges Guarantee Corporation, after wholly or partly disallowing a claim against the National Guarantee Fund, to serve on the claimant (or the claimant's solicitor) a notice of the disallowance in the prescribed form.
The former Form 721 did not cover all the possible heads of claim under Part 7.10 of the Law. It has been redrafted so that it is applicable to the disallowance of any claim under Part 7.10. Subregulation 7.2 substitutes revised Form 721 for the former Form 721.
Regulation 8
Schedule 9 - Authorised trustee corporations
The phrase "authorised trustee corporation" is defined in section 9 of the Law to mean a body corporate that is declared by the Regulations to be an authorised trustee corporation for the purposes of the provision in which the expression appears.
Regulation 7.1.01 provides that each of the bodies corporate listed in Schedule 9 is declared to be an authorised trustee corporation for the purposes of the provision in which the expression appears.
Regulation 8 adds an additional trustee corporation to the list in Schedule 9 Guardian Trust Australia Limited.
A key provision which uses the phrase "authorised trustee corporation" is section 1102 which provides such corporations with a convenient method of transferring marketable securities and marketable rights to a beneficial owner.