Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1991 NO. 479

STATUTORY RULES 1991 No. 479

Issued by the Authority of the Attorney-General

Corporations Act 1989

Corporations Regulations (Amendment)

Section 22 of the Corporations Act 1989 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act or the Corporations Law, prescribing matters required or permitted by the Corporations Law, or necessary or convenient to be prescribed for the carrying out or giving effect to the Corporations Law.

In accordance with the Heads of Agreement between Commonwealth, State and Northern Territory Ministers having responsibilities in relation to corporate regulation, the Attorney-General has consulted with the relevant State and Northern Territory Ministers on the proposed amendments. Under the terms of the agreement, the Attorney-General is required only to consult Ministers on matters falling within Chapter 7 of the Corporations Law. The proposed Regulations are in this category.

The purpose of the Regulations is to update regulation 7.11.01 of the Corporations Regulations in consequence of amendments made to the insider trading provisions of the Corporations Law by the Corporations Legislation Amendment Act 1991.

Details of the Regulations are given in the Attachment.

ATTACHMENT

Regulation 1

Commencement

This regulation provides that regulation 3, which amends regulation 7.11.01 of the Corporations Regulations, is taken to have commenced on 1 August 1991.

The amendments of regulation 7.11.01, which provides for exemptions from the prohibition against insider trading, are necessary in consequence of amendments made to the insider trading provisions of the Corporations Law by the Corporations Legislation Amendment Act 1991 which were proclaimed to take effect from 1 August. With these amendments to the insider trading provisions the cross references in the regulation to sections of the Corporations Law are no longer appropriate and in consequence the regulation has been inoperative since 1 August. It is desirable, therefore for regulation 3 to be given retrospective effect to 1 August to maintain the continuity of the exemptions. To do otherwise would create a hiatus in the operation of the exemptions.

As regulation 7.11.01 is an exempting provision, no person is likely to be prejudicially affected by giving the amending regulation retrospective effect, thus subsections 6(3) and (5) of the Corporations Act 1989 would not operate to give regulation 3 effect from the date of notification rather than retrospectively from 1 August.

Regulation 2

Amendment

This regulation provides that the Corporations Regulations are to be amended as set out in these Regulations.

Regulation 3

Regulation 7.11.01 (Prohibition of dealings in securities by insiders)

Regulation 7.11.01 exempts certain classes of person from the prohibition in the Corporations Law against dealing in securities by insiders, for example, directors obtaining a share qualification. The insider trading provisions of the Corporations Law were completely redrafted by the Corporations Legislation Amendment Act 1991. The prohibitions against insider trading which were previously contained in subsections 1002(1), (2), (3) and (6) of the Corporations Law are now provided for by subsection 1002G(2). Further, subsection 1002G(2) prohibits 'subscribing for, purchasing or selling' securities whilst in possession of inside information, compared with the wider 'dealing' in securities under the former provisions.

Regulation 3 therefore omits subregulations 7.11.01(1) and (2) and substitutes a new regulation 7.11.01 to take account of these changes. References to subsections 1002(1), (2), (3) and (6) are replaced by a reference to subsection 1002G(2).

Former subregulation 7.11.01(2)(b) is recast in new subregulation 7.11.01(1)(e) by replacing the words 'a transaction by way of or arising out of' by 'a sale of securities under', as subsection 1002G(2) only prohibits subscriptions for, purchasing or selling securities. For the same reason, former subregulations 7.11.01(2)(c) and (d), which dealt with the acquisition of securities under a will or on intestacy and the transfer of the legal estate in securities from one trustee to another, respectively, are omitted.