EXPLANATORY STATEMENT

 

Select Legislative Instrument 2006 No. 57

 

Issued by the authority of the Parliamentary Secretary to the Treasurer

 

Corporations Act 2001

 

                        Corporations Amendment Regulations 2006 (No. 2)

 

Subsection 1364(1) of the Corporations Act 2001 (the Act) provides that the Governor‑General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations, or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Act.

 

The Regulations update references to New South Wales legislation for the purposes of Chapter 2K of the Act, which deals with the registration of charges over the property of a company.  The update reflects the repeal of the Bill of Sales Act 1898 (NSW) and the Liens on Crops and Wool and Stock Mortgages Act 1898 (NSW), and the enactment of the Security Interests in Goods Act 2005 (NSW).  The Regulations maintain the status quo whereby registration of a charge under the Act satisfies the requirements of relevant New South Wales legislation.

 

Details of the Regulations are set out in the Attachment.

 

Under the Corporations Agreement 2002, the State and Territory Governments referred their constitutional powers with respect to corporate regulation to the Commonwealth.  Under subclauses 506(1) and 507(2) of the Corporations Agreement, the Commonwealth is required to consult with and receive the approval of at least 3 State and Territory Ministers of the Ministerial Council for Corporations (the Council) before making a regulation under the national law.  The Commonwealth has received approval of the Council for the Regulations.  In addition, under subclause 511(3), the Commonwealth is required to consult with the Council as to whether the Regulations should be exposed for public comment for between one and three months.  The Commonwealth has received the approval of the Council to waive the public disclosure period for the Regulations.

 

The Act specifies no other conditions that need to be met before the power to make the Regulations may be exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commenced on the day after they were registered.

 

 

 

 

 

 

 

 

Attachment

 

Details of the Corporations Amendment Regulations 2006 (No. 2)

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Corporations Amendment Regulations 2006 (No. 2).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the day after they are registered.

 

Regulation 3 – Amendment of Corporations Regulations 2001

 

This regulation provides that the Corporations Regulations 2001 (the Principal Regulations) are amended as set out in Schedule 1.

 

Schedule 1 – Amendment

 

Item [1] – Regulation 2K.2.01

 

The existing heading for regulation 2K.2.01 is ‘Lien or charge on crop, wool, or stock mortgage that is a registrable security: prescribed law’.  The amendment substitutes ‘Lien or charge on crop or wool, or stock mortgage, that is a registrable security: prescribed law — subsection 262 (5) of Act’ for this heading.  This minor change is to ensure consistency with the heading of new regulation 2K.2.03 (see item [3] below).

 

Item [2] – Regulation 2K.2.01

 

Paragraph 262(1)(h) of the Act states that Chapter 2K may apply to a lien or charge on a crop, a lien or charge on wool or a stock mortgage.  Subsection 262(5) provides that a charge referred to in paragraph 262(1)(h) includes a charge that is registrable under a prescribed law of a State or Territory.

 

Regulation 2K.2.01 specifies Parts II and III of the Liens on Crops and Wool and Stock Mortgages Act 1898 (NSW) (the Liens Act) as a prescribed law for the purposes of subsection 262(5) of the Act.  The amendment to the regulation inserts Parts 2 and 3 of the Security Interests in Goods Act 2005 (NSW) (the SIG Act) as a prescribed law for the purposes of subsection 262(5).  The amendment maintains the status quo, by ensuring that charges created under the prescribed law are required to be registered under section 262 of the Act.

 

Item [3] – Regulation 2K.2.03

 

This item inserts new regulation 2K.2.03 to specifying the SIG Act as a specified law for the purposes of paragraphs 273A(4)(b), 273B(3)(b) and 273C(3)(b) of the Act.

 

Subsection 273A(2) of the Act provides that failure to register a charge under a specified law does not affect the validity, or limit the effect, of the charge.  Subsection 273A(3) of the Act provides that the priority of a charge is to be determined under Chapter 2K, and not under a specified law.  Paragraph 273A(4)(a) provides a table of specified laws for the purposes of section 273A.  Paragraph 273A(4)(b) provides for laws to be specified by the regulations for the purposes of section 273A. 

 

The Bill of Sales Act 1898 (NSW) (the BoS Act) and the Liens Act are listed in the table in subsection 273A(4) as specified laws for the purposes of section 273A.  The amendment specifies the SIG Act for the purposes of section 273A of the Act.

 

Subsection 273B(2) of the Act provides that transfer, assignment or giving of security is, subject to subsection 273A(3), as valid and effectual as if it had been duly registered under the specified law.  Paragraph 273B(3)(a) provides a table of specified laws for the purposes of section 273B.  Paragraph 273B(3)(b) provides for laws to be specified by the regulations for the purposes of section 273B.

 

The BoS Act is listed in subsection 273B(3) as a specified law for the purposes of section 273B.  The amendment specifies the SIG Act for the purposes of section 273B.

 

Subsection 273C(2) of the Act provides that a lien or mortgage is, subject to subsection 273A(3), as valid and effectual as if it had been duly registered under the applicable registration law.  Paragraph 273C(3)(a) provides a table of specified laws for the purposes of section 273C.  Paragraph 273B(3)(b) provides for laws to be specified by regulations for the purposes of section 273C.

 

Parts II and III of the Liens Act are listed in subsection 273C(3) as specified laws for the purposes of section 273C.  The amendment specifies Parts 2 and 3 of the SIG Act for the purposes of section 273C.