Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1993 NO. 207

STATUTORY RULES 1993 No. 207

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 for the purposes of the Corporations Law. In particular, it empowers the GovernorGeneral to make regulations, not inconsistent with the Act or the Corporations Law (the Law), prescribing, inter alia, matters which are required by the Law to be prescribed by regulations or necessary or convenient to be prescribed by regulations for carrying out or giving effect to the Law.

The regulation which depends on this power is Regulation 2 which amends Corporations Regulation 7.1.03 which prescribes two additional indexes for the purposes of the definition of 'option contract' in the Corporations Law.

The Australian Options Market has requested the prescription of two Australian Stock Exchange share price indexes - the All Resources Share Price Index and the All Industrials Share Price Index -for the purposes of subpara (b)(ii) of the definition of ]options contract' in section 9 of the Corporations Law.

The All Resources Share Price Index is a composite index of five different indexes which traces the aggregate market movement of share prices for gold, other metals, solid fuels, oil and gas and diversified resources. The All Industrials Share Price Index traces aggregate movements in industrial share prices.

Prescription of these indexes will permit sponsoring organisations to trade options over these indexes on the Australian Stock Exchange.

Section 73 of the Act empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act (other than for the purposes of the Corporations Law) to be prescribed.

Subsection 79(1) of the Act provides that regulations under section 73 may provide that a specified Co-operative Scheme Act, or specified provisions of a Co-operative Scheme Act, has or have effect with such modifications as the regulations prescribe.

In this context, a Co-operative Scheme Act means the Companies Act 1981 and other Commonwealth Acts which were part of the Co-operative Scheme of companies and securities regulation. These Acts have largely been superceded by the national scheme legislation (which includes the Act) but continue to operate of their own force in relation to certain matters arising before 1 January 1991.

The regulation, which depends on this power, is Regulation 3 which inserts Regulations 10.1.01 and 10.1.02. This Regulation empowers the appropriate Commonwealth Minister, as well as the Ministerial Council for Companies and Securities, to give consent to prosecutions initiated out of time in the Australian Capital Territory (ACT) under the Companies Act 1981 and other Co-operative Scheme Acts.

The regulations address a problem in the ACT which has recently come to light regarding prosecutions under a 'Co-operative Scheme Act' which are initiated more than 5 years after the act or omission alleged to constitute the offence.

Briefly, the problem is that consent for a prosecution under the Companies Act 1981 more than five years after the act or omission alleged to constitute the offence lies with the Ministerial Council for Companies and Securities (section 34 of the Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980.

There is no provision in the 'covering clauses" of the Act (which applies in the ACT) which would put the Commonwealth Attorney-General in the place of the Ministerial Council for Companies and Securities for that purpose. (There are, however, provisions in the comparable State legislation which have, this effect.)

Although the Ministerial Council for Companies and Securities still exists in theory, it has been superceded by the Ministerial Council for Corporations under the national scheme of companies and securities regulation and it is considered undesirable to seek its consent to such prosecutions.

Therefore, the regulation modifies s. 34 of the Companies and Securities (Interpretation and Miscellaneous Provisions) Act so that the Commonwealth Minister for the time being administering the Act (at present the Attorney-General), as well as the Ministerial Council for Companies and Securities, has the power to consent to prosecutions initiated out of time under the Co-operative Scheme Acts which apply in the ACT.

The regulation does not have retrospective effect. It provides that, in future, consent to initiation of a prosecution may be given either by the Ministerial Council for Companies and Securities or the appropriate Minister. It thus prescribes who may perform an action in future (the granting of consent), based upon an existing fact (the existence of an offence against a relevant Act). Courts have decided that the determination of future action on the basis of existing facts is not a retrospective enactment.

Furthermore, the prospective defendant's liability is not altered by this amendment. It is merely a change to an administrative arrangement determining who may consent to the prosecution.

In accordance with the Heads of Agreement between the Commonwealth, State and Territory Ministers having responsibilities in relation to corporate regulation and the draft Corporations Agreement, the Attorney-General has consulted with and obtained the approval of the Ministerial Council for Corporations, to the regulations

The regulations commenced on the date of gazettal.