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EXPLANATORY STATEMENT
Issued by the Australian Prudential Regulation Authority
Life Insurance Act 1995
Prudential Rules Number 44
Subsection 252(1) of the Life Insurance Act 1995 (the “Act”) provides that the Australian Prudential Regulation Authority (“APRA”) may, in writing, make rules prescribing all matters required or permitted by the Act to be prescribed by Prudential Rules. Subsection 252(2) of the Act provides that such Prudential Rules are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.
Section 16V of the Act applies where APRA considers that the constitution of a company is deficient because, as a result of the adoption or amendment of approved benefit fund rules, the constitution is inconsistent with those rules. Subsection 16V(2) of the Act allows APRA to give a company a written notice requiring the company to submit for approval consequential amendments (in accordance with the requirements set out in this Prudential Rule) to rectify deficiencies in its constitution. APRA may approve the consequential amendments if satisfied that the amendments rectify the deficiency. APRA must give the company written notice of its decision in accordance with subsection 16V(4).
If APRA refuses to approve the proposed amendments or the company fails to submit consequential amendments, APRA may, in writing, determine consequential amendments of the constitution to rectify the deficiency. APRA must immediately give the company written notice of the amendments in accordance with subsection 16V(6) of the Act.
The company will be guilty of an offence if APRA has either approved or made consequential amendments to the company’s constitution and the company fails to notify its members of the consequential amendments in accordance with this Prudential Rule. Failure to notify members attracts a maximum penalty of 50 penalty units.
If APRA approves consequential amendments of a company’s constitution under section 16V of the Act, the company will need to lodge a copy of the consequential amendment with the Australian Securities and Investments Commission (ASIC), in accordance with section 16W of the Act. Section 16X of the Act provides that consequential amendments approved by APRA under section 16V come into force on the day lodged with ASIC or a later day if specified in the amendments. Section 16X of the Act ensures that a consequential amendment of a company’s constitution which has been approved or determined by APRA subsections 16V(4) or (5) will take effect as an amendment of the constitution of the company.