EXPLANATORY STATEMENT
Statutory Rules 1989 No. 369
Issued by the Authority of the Attorney-General
Securities Industry Regulations (Amendment)
Subsection 150(1) of the Securities Industry Act 1980 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Subsection 150(5) of the Act 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 and futures industries in the six States, the Australian Capital Territory and the Northern Territory of Australia.
3. Under subclause 45(1) of the Agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purposes 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 subclause 45(2) of the Agreement, to submit the draft regulations to the Federal Executive Council for making by the Governor-General.
4. The accompanying Regulations are in accordance with a resolution made by the Council.
5. The purpose of the Regulations is to make changes of a technical nature to the Securities Industry Regulations. The need for the changes arises from amendments to the Act made by the Co-operative Scheme Legislation Amendment Act 1989 with effect from 1 November 1989 which effect deregulatory reforms concerning the licensing of participants in the securities industry.
6. Details of the accompanying Regulations are as follows:
Regulation 1: Principal Regulations
The Principal Regulations referred to are the Securities Industry Regulations.
Regulation 2: Interpretation
This regulation amends Regulation 2 of the Principal Regulations by omitting from the definition of bank, the reference to the Primary Industry Bank of Australia Limited. The reference is no longer necessary by virtue of the granting of a banking authority to that bank, the effect of which is that the bank is now a bank within the meaning of s.5 of the Banking Act 1959. The definition of bank in Regulation 2 includes a bank as defined in that Act.
The Regulation also inserts the definition of life office into the Principal Regulations. This amendment is consequential upon the exemption granted under Regulation 27A to dealers which are life offices dealing in securities only in relation to the carrying on of the business of life insurance (see Regulation 7 below).
Regulation 3: New Regulation substituted for Regulations 19A and 19B
This Regulation repeals Regulations 19A and 19B of the Principal Regulations. Regulation 19A of the Principal
Regulations requires disclosure by a licensee of certain matters with respect to the acquisition of a prescribed interest in a property trust. This regulation is no longer necessary in light of the general requirements now imposed by s.68C of the Act. Regulation 19B of the Principal Regulations which relates to the supervision of representatives by licensees dealing in or advising on interests in property trusts is substituted by new Regulation 19A (see below). The Regulation also substitutes a new regulation in place of the repealed regulations.
Proposed Regulation 19A: Conditions to which licences are subject
The new regulation is consequential upon the discontinuation of licensing of representatives.
Paragraph 19A(1)(a) requires a licensee to ensure that each representative of the licensee is adequately supervised in the duties that the representative is required by the licensee to perform.
Paragraphs 19A(1)(b) and (c) require a licensee to ensure that each representative of the licensee is sufficiently trained prior to his or her acting as a representative and is kept up to date in relation to those duties by means of continuing training programs.
Subregulation 19A(2) provides that the National Companies and Securities Commission (NCSC) may require a licensee to satisfy it that the above conditions have been met.
Regulation 4: Insertion of new Regulations 24A, 24B and 24C: Form of notice under s.60F of the Act
Section 60F of the Act requires a licensee to notify the NCSC, by way of written notice, of the contents of the register of holders of proper authorities which a licensee is required to keep under s.60E of the Act. Regulation 4 inserts Regulations 24A, 24B and 24C which prescribe the form of the notices required under s.60F of the Act.
Regulation 5: Insertion of New Regulation 25A: Licensees to notify Commission of location and contents of registers
New regulation 25A effectively extends the period within which certain licensees must comply with the requirements of ss. 60E(4), (5) and (6) and 60F(4), (5) and (6) of the Act relating to establishing and maintaining a register of holders of proper authorities. Licensees with over 100 representatives will be required to comply with these provisions within 12 business days, rather than the 2 business days currently specified. The Regulation is designed to take into account the administrative difficulties which licensees falling into the above category may encounter in keeping the register.
Regulation 6: Insertion of new Regulation 27A: Life Offices: exemption from Part VI of the Act
Regulation 27A exempts a dealer that is a life office and deals in securities only in relation to the carrying on of the business of life insurance from the operation of Part VI of the Act. This exemption is granted to avoid regulatory overlap, because the Life Insurance Act 1945 which specifically regulates life offices already contains strict prudential requirements and accounts and audit provisions approximating those in Part VI of the Act.
Regulation 7: Amendment of Regulation 42: Notice under sub-section 90(2) or (3) or 90A of the Act
This Regulation amends Regulation 42 of the Principal Regulations which provides that the current Form 19 is to be used in respect of notices under subsections 90(2) or (3) or 90A(1) of the Act. New Form 19 (see Regulation 10 below) which replaces the current Form 19 provides for notices under other parts of S.90A, not just ss. 90A(1). Regulation 5 amends Regulation 42 of the Principal Regulations to reflect this change.
Regulation 8: Amendment of Schedule 1: New Forms 4 and 5
This Regulation amends Schedule 1 of the Principal Regulations by omitting Forms 4, 5, 6 and 7 which relate to the licensing of representatives. The Regulation also inserts new Forms 4 and 5 into Schedule 1. The new forms reflect various changes made to the Act, but are in substance the same as the former Forms 4 and 5.
Regulation 9: Amendment of Schedule 1: New Forms 9, 10, 11, 12, 12A and 12B
This Regulation amends Schedule 1 of the Principal Regulations by omitting Forms 9, 10, 11 and 12 and inserting new Forms 9, 10, 11, 12, 12A and 12B. New Forms 9, 10 and 11 reflect various changes made to the Act, but are in substance the same as the previous Forms 9, 10 and 11. New Forms 12, 12A and 12B prescribe the form of the written notices required under s. 60F of the Act (see Regulation 4 above).
Regulation 10: Amendment of Schedule 1: New Form 19
This Regulation substitutes a new Form 19 for the existing Form 19. The new form reflects various changes made to the Act but is in substance the same as the previous form.