Transfer Rules Variation Determination No. 1 of 2005
EXPLANATORY STATEMENT
Issued by the authority of the Australian Prudential Regulation Authority (‘APRA’)
Financial Sector (Transfers of Business) Act 1999, subsection 46(1)
Acts Interpretation Act 1901, subsection 33(3)
Under subsection 46(1) of the Financial Sector (Transfers of Business) Act 1999 (‘the Act’), the Australian Prudential Regulation Authority (‘APRA’) has the power to make (in writing) rules prescribing all matters required or permitted by the Act to be prescribed by transfer rules. Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to issue an instrument the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to amend or vary any such instrument.
Transfer Rules Variation Determination No. 1 of 2005 (‘the Determination’) varies the Transfer Rules No. 1 of 2004 (‘the Rules’). The Rules were originally determined on 30 November 2004 with effect from 8 December 2004.
APRA has determined that the variation will come into effect from the date of registration on the Federal Register of Legislative Instruments.
Variation to Transfer Rules No. 1 of 2004
The Act requires the Rules to prescribe the relevant application form for a voluntary transfer and one or more acceptable modes of adoption for the transfer.
In relation to most transfers, the transferring and receiving bodies’ members must be given an information document. The form of the draft information document (which must be approved by APRA) is set out in rule 8.
Subparagraph 8(c)(i) provided that the draft information document must include ‘particulars of… the financial position of the transferring body and the receiving body (including a copy of the latest audited financial statements for each body)’. The Determination amends subparagraph 8(c)(i) to remove ‘(including a copy of the latest audited financial statements for each body)’, so the draft information document will only need to include information about the financial position of the transferring body and the receiving body, not the audited financial statements. This reflects the practice that existed before the determination of the Rules.
The Office of Regulation Review has determined that a Regulation Impact Statement is not required for the amendment to the Rules.
Overview
The Transfer Rules Variation Determination No. 1 of 2005 was enacted to amend the Transfer Rules No. 1 of 2004 under the authority of the Financial Sector (Transfers of Business) Act 1999. The Act was introduced to facilitate and regulate the transfer of business between financial institutions, ensuring that such transfers are conducted in an orderly manner with adequate protection for stakeholders. The Australian Prudential Regulation Authority (APRA), exercising its powers under the Act, determined that the amendment to the transfer rules would streamline the process by removing the requirement for audited financial statements in the draft information document, thereby aligning with prior practices. The variation aims to provide a more efficient and less burdensome process for the transfer of business while maintaining the essential safeguards for all parties involved.
This Determination was made under the authority of subsection 46(1) of the Financial Sector (Transfers of Business) Act 1999, which grants APRA the power to prescribe rules regarding the transfer of business. The specific variation was issued to modify rule 8(c)(i) of the Transfer Rules No. 1 of 2004, thereby aligning the requirements with previous practices and reducing the administrative burden on the transferring and receiving bodies. The determination was registered on the Federal Register of Legislative Instruments, and the amendment took effect from the date of its registration.
Scope and Application
The Transfer Rules Variation Determination No. 1 of 2005, issued by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Transfers of Business) Act 1999, modifies the Transfer Rules No. 1 of 2004, which were initially established on 30 November 2004 and came into effect on 8 December 2004. This variation determination alters the form and content of the information document that must be provided to the members of both the transferring and receiving bodies in a voluntary transfer. Specifically, the amendment removes the requirement for the draft information document to include a copy of the latest audited financial statements of each body involved in the transfer, aligning the rules with practices that existed prior to the initial determination of the rules. This change reflects a simplification of the documentation process, ensuring that only pertinent financial position information needs to be disclosed. The determination is set to take effect from the date of its registration on the Federal Register of Legislative Instruments.
Key Provisions
The Transfer Rules Variation Determination No. 1 of 2005 modifies the Transfer Rules No. 1 of 2004. The original rules, which were determined on 30 November 2004 and came into effect on 8 December 2004, are amended by this Determination, which will take effect from the date of registration on the Federal Register of Legislative Instruments. Under subsection 46(1) of the Financial Sector (Transfers of Business) Act 1999, the Australian Prudential Regulation Authority (APRA) has the authority to prescribe transfer rules that outline the necessary and permissible matters. This power is also subject to the Acts Interpretation Act 1901, which allows for amendments or variations of such instruments.
These rules primarily govern the form of the information document that must be provided to the members of transferring and receiving bodies in most voluntary transfer scenarios. Rule 8 specifies the required form for this information document, which must be approved by APRA. Notably, the original rule required the inclusion of the latest audited financial statements of both the transferring and receiving bodies within this document. The Determination revises this requirement by removing the mandate for including the audited financial statements, aligning the rules with the practice that was in place prior to the initial determination of the rules.
Entities governed by these rules are subject to specific obligations. For instance, they must ensure that the information document provided to the members of the transferring and receiving bodies adheres to the newly amended rule, which no longer necessitates the inclusion of audited financial statements. Additionally, they must ensure that the draft information document, which outlines the financial positions of both bodies, is approved by APRA before distribution.
Failure to comply with the amended rules may have legal consequences. While the explanatory statement does not detail specific offences or penalties, it is understood that breaches of such regulatory requirements could lead to enforcement actions by APRA. Depending on the severity and nature of the breach, this could involve civil or criminal penalties. However, the specific penalties are not outlined in the explanatory statement and would need to be referred to in the relevant sections of the Financial Sector (Transfers of Business) Act 1999.