EXPLANATORY STATEMENT
Statutory Rules 1983 No. 303
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
SECURITIES INDUSTRY REGULATIONS (AMENDMENT)
Section 150 of the Securities Industry Act 1980 (“the Act”) provides in sub-section (1) that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Sub-section (5) of that section provides that the power of the Governor-General to make regulations shall be exercised only in accordance with advice that is consistent with resolutions of the Ministerial Council for Companies and Securities (“the Council”).
2. The Council was established under an agreement between the Commonwealth and the States, executed on 22 December 1978, (“the agreement”) that provides the framework for a co-operative Commonwealth-State scheme for a uniform system of law and administration in relation to company law and the regulation of the securities industry in the six States and the Australian Capital Territory.
3. Under sub-clause 45(1) of the agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purpose of the co-operative companies and securities scheme. Should the Council approve any draft amending regulation which gives
effect to such a proposal, the Commonwealth is then required, under sub-clause 45(2) of the agreement, to submit the draft regulation to the Federal Executive Council for making by the Governor-General.
4. The accompanying regulations are identical in form and substance to draft regulations approved by the Council.
5. The purpose of the accompanying regulations is to make amendments to the Securities Industry Regulations (“the Regulations”) consequent upon amendments made to the Act by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (“the 1983 legislation”).
Reg 1 : Commencement
6. The accompanying regulations will come into operation on 1 January 1984. It is hoped that the 1983 legislation will also be able to be proclaimed on that date.
7. The accompanying regulations are expressed to be made in pursuance of section 4 of the Acts Interpretation Act 1901. That section provides that where an Act that does not come into operation immediately upon its enactment amends another Act in such a manner that the other Act, as amended, will confer power to make regulations then, unless the contrary intention appears, that power may be exercised before the amending Act comes into operation. Section 150 of the 1983 legislation extended the regulation-making power in the Act to enable a penalty notice system (discussed below) to be established.
8. Any regulations made in pursuance of section 4 of the Acts Interpretation Act 1901 take effect on the day on which the amending Act comes into operation or on the day on which the
regulations would have taken effect if the amending Act had been in operation when the regulations were made, whichever is the later.
Reg. 2 : Prescribed amount for the purposes of paragraph 51(2) (d)
9. Section 143 of the 1983 legislation omitted from paragraph 51(2) (d) of the Act “$20,000” and substituted “the prescribed amount”. The purpose of this amendment was to give greater flexibility in setting in the Regulations the maximum amount of the bond that may be required of a dealer in securities or of an investment adviser that is licensed under the Act.
10. By virtue of new regulation 17A of the Regulations, the maximum amount of the bond will remain at $20,000 for the time being, pending a review that the National Companies and Securities Commission (NCSC) is conducting in relation to the licensing provisions of the Act.
Reg. 3 : Conditions to which licence is subject
11. The amendment to sub-regulation 18(2) of the Regulations is also consequent upon the amendment made to paragraph 51(2)(d) of the Act by section 143 of the 1983 legislation.
Reg. 4 : Prescribed offences and penalties
Reg. 5 : Schedule 1
Reg. 6 : Schedule 3
12. Section 147 of the 1983 legislation established a penalty notice system. (See new section 141A of the Act.) Under this system persons who are alleged to have committed minor
breaches of the Act have the option of paying a reduced penalty rather than having the matter determined by the courts, in a manner somewhat comparable to “on the spot” parking fines. By virtue of sub-section 150 (1A) of the Act, introduced by the 1983 legislation, the penalty notice system will only apply to offences where the penalty does not exceed $1,000. The system will not apply to offences where the penalty includes a term of imprisonment.
13. The accompanying regulations introduce into the Regulations an explanatory provision (regulation 4), a prescribed penalty notice (regulation 5) and a list of prescribed offences and penalties (regulation 6).
14. The penalty notice has been drafted in accordance with the terms of new sections 141A and 150 of the Act.
15. The prescribed offences that attract a prescribed penalty of $125, as provided for by new Schedule 3, are as follows:
Section 55 -
Failure to lodge within time a notice of change in particulars in relation to a licence.
Sub-section 56(1) -
Failure to lodge within time an annual statement in relation to a dealers licence or an investment advisers licence.
Sub-section 56(2) -
Failure to lodge within time an annual statement in relation to a representatives licence.
Sub-section 78(2) -
Failure of a dealer to prepare and lodge accounts within time.
Sub-section 78(4) -
Failure of a dealer to prepare and lodge accounts within extended period allowed by the NCSC.