EXPLANATORY STATEMENT
STATUTORY RULE 1986 NO. 394 ISSUED BY THE AUTHORITY OF THE MINISTER FOR COMMUNICATIONS
Section 112 of the Telecommunications Act 1975 (‘the Act’) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which are required or permitted to be prescribed by the regulations, or which are necessary or convenient to be prescribed by the regulations, for carrying out or giving effect to the Act.
The borrowings provisions of the Act were recently amended by the Statute Law (Miscellaneous Provisions) Act 1986 (No. l). Section 72A of the Telecommunications Act, as amended, allows for the borrowing or raising of money on terms and conditions that are specified in or consistent with the Treasurer’s approval. The amended borrowing provisions therefore allow approval to be given on the basis of specific terms and conditions or on the basis of terms and conditions being no less favourable (i.e. ‘consistent with’) than those in the approval. These amendments were designed to allow Telecom to respond more easily to changes in financial market conditions. Section 72E of the Act, as amended, allows the Treasurer to delegate his power to approve a borrowing or raising of money to an officer of the Department of the Treasury.
The proposed statutory rule repeals regulations 4 and 25 of the Telecommunications (Telecom Australia Stock) Regulations (‘the Stock Regulations’) and inserts a new regulation 4.
The existing Stock Regulations provide in sub-regulation 4(1) that the Australian Telecommunications Commission (‘Telecom’) may issue stock in amounts, and at such prices and terms and conditions, including rates and terms and conditions as to interest, as approved by the Treasurer. Sub-regulation 4(2) of the Stock Regulations provides that whenever members of the public are invited to purchase stock Telecom shall issue a prospectus inviting applications to purchase stock and setting out the price and other terms and conditions approved by the Treasurer in relation to the issue of the stock.
Unlike the amended borrowing provisions, the existing Stock Regulations allow approvals to be given only in terms of specific terms and conditions. To bring the Stock Regulations into line with the amended borrowing provisions the proposed new sub-regulation 4(1) allows the issue of stock on terms and conditions which are consistent with those in the approval as well as the issue of stock on specific terms and conditions.
Regulation 25 of the Stock Regulations empowers Telecom to purchase stock that has been issued and to resell that stock. Under regulation 25, however, such stock can only be resold on the same terms and conditions under which it was issued. This has presented problems where Telecom has attempted to resell stock which has terms at variance with current market conditions. The proposed statutory rule repeals regulation 25 and inserts a new sub-regulation 4(2) which will enable Telecom, with the approval of the Treasurer, to cancel stock and, in lieu of that stock, issue and sell stock on such terms as are specified in, or are consistent with, the Treasurer’s approval.
The proposed sub-regulation 4(3) retains the requirement in the existing Stock Regulations that when members of the public are invited to purchase stock, a prospectus shall be issued in terms consistent with the Treasurer’s approval which sets down the terms and conditions in relation to the issue and sale of the stock.
The proposed sub-regulation 4(4) makes clear that approval for the issue of stock may be given either by the Treasurer or a person to whom the Treasurer has delegated his power to approve borrowings under section 72E of the Act.
The proposed statutory rules will commence on the date of their notification in the Commonwealth of Australia Gazette.