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.
Overview
The Statutory Rule 1986 No. 394, issued under the authority of the Minister for Communications, amends the Telecommunications (Telecom Australia Stock) Regulations 1977 to align with the borrowing provisions introduced by the Statute Law (Miscellaneous Provisions) Act 1986. The objective of these amendments is to enable Telecom to more effectively respond to fluctuations in financial market conditions by allowing the issue and resale of stock under terms that are either specified in or consistent with the approval given by the Treasurer. This change ensures that the regulations governing the issuance and resale of stock by Telecom are in line with the more flexible borrowing provisions of the Telecommunications Act 1975. The amendments aim to provide greater flexibility in managing the financial operations of Telecom, thereby facilitating its ability to adapt to varying economic conditions.
Scope and Application
The Telecommunications (Telecom Australia Stock) Regulations, as modified by the statutory rule issued under the Telecommunications Act 1975, apply to Telecom Australia, a statutory corporation established under the Act, and govern the issuance, purchase, and resale of stock by Telecom. These regulations are necessary to facilitate Telecom's ability to manage its financial obligations and respond to market conditions effectively. The regulations are applicable on a national level within Australia, as they pertain to the Commonwealth jurisdiction. Notably, the statutory rule introduces flexibility in the terms and conditions under which Telecom can issue and resell stock, aligning them with the amended borrowing provisions of the Act. This change allows Telecom to issue and resell stock either under terms that are explicitly specified in the approval or under terms that are no less favourable than those approved by the Treasurer, thereby providing greater operational agility. The rule also streamlines the process for cancelling and reissuing stock, enabling Telecom to better adapt to changing market conditions. The rule is effective from the date of its notification in the Commonwealth of Australia Gazette, ensuring timely implementation.
Key Provisions
The main provisions of this statutory rule (C2004L06242) concern the issuance and resale of stock by Telecom Australia, as outlined in the Telecommunications (Telecom Australia Stock) Regulations (the Stock Regulations). Section 4(1) of the proposed rule allows Telecom to issue stock under terms and conditions that are either specific or consistent with those approved by the Treasurer, aligning with the amended borrowing provisions in the Telecommunications Act 1975. This amendment permits more flexibility in issuing stock to respond to market conditions. Section 4(2) allows Telecom, with the Treasurer’s approval, to cancel existing stock and issue new stock under terms specified in or consistent with the Treasurer’s approval. This change aims to resolve issues arising from the inability to resell stock on terms different from those initially approved. Section 4(3) ensures that when the public is invited to purchase stock, a prospectus must be issued detailing the terms approved by the Treasurer. Section 4(4) clarifies that approval for stock issuance may come from the Treasurer or a delegate under section 72E of the Act.
The obligations imposed by these provisions require Telecom to seek approval from the Treasurer or a delegated officer for any stock issuance or cancellation. This includes ensuring that any prospectus issued to the public accurately reflects the terms approved by the Treasurer. Furthermore, any changes to the terms of issued stock must also receive explicit approval from the Treasurer or a delegate, ensuring consistency with the authorised terms.
Failure to comply with these provisions may lead to legal consequences. Although the explanatory statement does not explicitly outline specific offences or penalties, it is implied that breaches of the regulations may result in actions under the broader framework of the Telecommunications Act 1975. Non-compliance could potentially lead to civil or criminal penalties, depending on the severity and intent behind the breach. Given the financial and regulatory nature of these activities, penalties could range from fines to more severe sanctions if the breach is found to be deliberate or negligent.