EXPLANATORY STATEMENT
Telecom (Capital) Regulations
Statutory Rule No.204 of 1989
Issued by the Authority of the Minister for Transport and Communications
Section 105 of the Australian Telecommunications Corporation Act 1989 (the Corporation Act) provides that the Governor-General may make regulations, not inconsistent with the Corporation Act, prescribing matters required or permitted by the Corporation Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Corporation Act.
Section 85 of the Telecommunications and Postal Services (Transitional Provisions and Consequential Amendments) Act 1989 (the Transition Act) provides that, subject to any regulations made under the Corporation Act, section 71 of the Telecommunications Act 1975 (the old Act), as in force immediately before the commencement of section 85, continues to have effect as if the old Act had not been repealed. (The old Act was repealed by section 90 of the Transition Act.)
Section 71 of the old Act provides for the determination of the value of the Australian Telecommunications Corporation’s (Telecom) assets, liabilities, and vesting day loans payable by Telecom to the Commonwealth as at 1 July 1975.
Section 47 of the Corporation Act provides that the Minister shall, as soon as practicable after the commencement of the Corporation Act and after consultation with the Board of Telecom, determine the amount of Telecom’s initial capital under the Corporation Act.
It is intended that 25% of the vesting day loans payable by Telecom to the Commonwealth under section 71 of the old Act will be determined by the Minister to be Telecom’s initial capital under subsection 47(1) of the Corporation Act. The regulations enable the making of this determination by converting 25% of these loans to equity.
Details of the regulations are as follows:
Citation
Clause 1 - Provides that the Regulations are to be called the Telecom (Capital) Regulations.
Clause 2 - Provides that section 71 of the old Act continues to have effect as if the amounts of the loans determined under that section were reduced by 25%.
Overview
The Telecom (Capital) Regulations, Statutory Rule No. 204 of 1989, were enacted to facilitate the determination of the Australian Telecommunications Corporation's (Telecom) initial capital under the Australian Telecommunications Corporation Act 1989. This legislation was introduced to address the need to convert a portion of Telecom's vesting day loans into equity, specifically 25%, to establish the initial capital of the corporation as required by the Act. The regulations were made under the authority of the Minister for Transport and Communications and are designed to align with the Corporation Act while providing the necessary framework for the capital determination process.
These regulations serve to ensure that the transition from the old Telecommunications Act 1975 to the new legislative regime under the Corporation Act is smooth and legally compliant. By reducing the amount of loans payable by Telecom by 25%, the regulations effectively transform part of these loans into equity, thus establishing the initial capital of Telecom. The policy objective is to maintain the continuity of the telecom services provided by Telecom while ensuring that the corporation is adequately capitalised to meet its obligations under the new Act.
Scope and Application
The Telecom (Capital) Regulations, statutory rule number 204 of 1989, are a set of regulations under the Australian Telecommunications Corporation Act 1989, which apply to the Australian Telecommunications Corporation (Telecom). These regulations specifically pertain to the determination of the initial capital of Telecom under the Corporation Act, by reducing the vesting day loans payable by Telecom to the Commonwealth by 25% and converting that proportion into equity. The regulations are designed to give effect to section 47 of the Corporation Act, which mandates that the Minister, in consultation with the Board of Telecom, determine the amount of Telecom’s initial capital. The scope of these regulations is inherently tied to the operations and financial structuring of Telecom, impacting the financial liabilities and assets as they are transitioned under the new legislative framework.
Geographically and jurisdictionally, these regulations operate within the Commonwealth of Australia and are subject to the overarching legislation enacted by the Commonwealth Parliament. The application of these regulations is not restricted by state or territory boundaries, thus applying uniformly across the nation. There are no explicit exclusions or exemptions detailed within the text, indicating that the regulations apply comprehensively to the specified purpose of determining Telecom’s initial capital. The regulations are supported by subordinate instruments as permitted under the Corporation Act, ensuring their alignment with the broader legislative intent and framework.
Key Provisions
The Telecom (Capital) Regulations, issued under the authority of the Minister for Transport and Communications, lay out the framework for determining and converting a portion of Telecom's loans into equity as its initial capital. Section 1 of the Regulations specifies that these rules will be known as the Telecom (Capital) Regulations. Section 2 provides that the amounts of the loans determined under section 71 of the old Telecommunications Act 1975 will be reduced by 25%, effectively converting this portion into equity to form Telecom's initial capital under the Australian Telecommunications Corporation Act 1989.
These Regulations impose specific obligations on the Minister and the Board of Telecom. Under section 47(1) of the Corporation Act, the Minister is mandated to determine Telecom's initial capital, which, as per the Regulations, involves reducing the loans payable by Telecom by 25% and converting that amount to equity. The Minister must undertake this task as soon as practicable after the commencement of the Corporation Act and after consulting with the Board of Telecom. The Board, in turn, is required to provide the necessary information and cooperate with the Minister to facilitate this determination.
Breach of the provisions in these Regulations can lead to legal consequences. Although the Regulations themselves do not explicitly detail specific offences or penalties, non-compliance with the Corporation Act or the Transition Act, which the Regulations are made under, could result in civil or criminal penalties. These penalties would be in accordance with the relevant provisions of the Corporation Act and the Transition Act, which might include fines or other enforcement actions deemed appropriate by the relevant authorities.
The Regulations are designed to ensure a smooth transition and effective governance of Telecom under the new legislative framework. By reducing the loans by 25% and converting that amount into equity, the Regulations help establish a stable financial foundation for Telecom as it operates under the new Act. This process is crucial for ensuring that Telecom can meet its operational needs and regulatory obligations under the new legal structure.