Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1998 NO. 185

EXPLANATORY STATEMENT

Statutory Rules 1998 No. 185

Issued by the Authority of the Treasurer

Corporations Act 1989

Corporations Regulations (Amendment)

Section 22 of the Corporations Act 1989 (die Act) provides that the Governor-General may make regulations, not inconsistent with the Act or the Corporations Law (the Law), prescribing matters required or permitted 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 purpose of the Corporations Regulations (Amendment) is to:

*       amend cross-references in the Corporations Regulations to provisions in the Law to take

       account of the renumbering and relocation of provisions in the Law by the Company Law

       Review Act 1989 (the Amending Act) ( regulations 3, 6, 7, 9, 10, 12, 13, 14, 15, 16, 18, 19, 20,

       21, 22, 23, 24, 25, 26, 30, 34, 35, 36, 37, 38, 39, 40, 41,46, 47, 51, 56, 57, 59, 60, 65, 70, 72,

       75, 76, 77, 78, 79, and 80); and

*       facilitate the approval of forms by the Australian Securities Commission (ASC) as

       contemplated by section 350 of the Amending Act, principally by repealing forms which it is

       should instead be approved by the ASC (regulations 4, 5, 17, 27, 33, 62 and 63); and

*       repeal a number of the Corporations Regulations that will not be required because of

       amendments made to the Law by the Amending Act ( regulations 8, 11, 28, 31 and 49); and

*       amend the test for determining whether a name is identical to a name that is already registered

       or reserved under the Law or a name that is included in the national business names register

       regulations 42, 43, 44, 53, 55 and 67); and

*       take up into the Corporations Regulations the existing exemptions, currently made available

       by the ASC pursuant to existing section 383C of the Law, from using an Australian Company

       Number or Australian Registered Body Number on certain transport documents ( regulation

       45); and

*       correct a number of typographical errors in the Corporation Regulations ( regulations 50 and

       73); and

*       amend the terminology used by the Corporations Regulations to reflect the language used in

       the Law (regulation 71); and

*       relocate into the Corporations Regulations the existing rules of Divisions 4, 4A and 5 of Part

       2.2 of the Law (about the transfer of a company's jurisdiction of registration) and Part 4.5 of

       the Law (about financial reporting by banks and insurance companies) ( regulation 66).

Details of the regulations are set out in the Attachment.

Part 1 of these regulations commence on gazettal. Part 2 of these regulations commence on the commencement of item 198 of Schedule 3 of the Company Law Review Act 1998. Part 3 of these regulations commence on the commencement of Schedule 5 of the Company Law Review Act 1998.

Part 4 of these regulations commence on the commencement of the Managed Investments Act 1998.

ATTACHMENT

CORPORATIONS REGULATIONS (AMENDMENT)

DETAILS OF THE REGULATIONS

PART 1 - PRELIMINARY

Regulation 1 Commencement

Regulation 1.1 sets out when these regulations will commence. Part 1 of these regulations commence on gazettal.

Part 1 of these regulations comprises Regulation 1 and 2 address formal matters only.

Part 2 of these regulations commence on the commencement of item 198 of Schedule 3 of the Company Law Review Act 1998 (the Amending Act). This will be on the commencement of Schedules 1, 2, 3 and 4 of the Amending Act.

Part 3 of these regulations commence on the commencement of Schedule 5 of the Amending Act. Section 2(5) of the Company Law Review Act 1998 provides that Schedule 5 of that Act commences immediately after the Taxation Laws Amendment (Company Law Review) Act 1998 commences.

Part 4 of these regulations commence on the commencement of the Managed Investments Act 1998.

Regulation 2 Amendment

This is a formal regulation giving effect to the amendments made by these regulations to the Corporations Regulations (the Principal Regulations).

PART 2 - AMENDMENTS RELATED TO SCHEDULES 1, 2, 3 AND 4 OF THE COMPANY LAW REVIEW ACT 1998

Regulation 3 Regulation 1.02 (Interpretation)

Regulation 3 will add and amend definitions in Regulation 1.02 of the Principal Regulations.

Regulations 3.1, 3.3 and 3.4 are consequential upon the renumbering of provisions and subject matter in the Corporations Law (the Law) undertaken by the Amending Act.

Regulations 3.2 and 3.5 are consequential upon Bill section 350 which will allow the Australian Securities Commission (the ASC) to approve forms for the purposes of certain provisions of the Law.

Regulation 4 Regulation 1.03 (Approved and prescribed forms)

Regulation 4 is consequential upon section 350 of the Law to be inserted by the Amending Act. This new section will allow the ASC to approve forms for the purposes of certain provisions of the Law, instead of requiring the forms to be prescribed by the Principal Regulations. Regulation 4 amends Corporations Regulation 1.03 so that it applies to both the forms prescribed by the Principal Regulations and those approved by the ASC.

Regulation, 5 Regulations 1.05 (Documents and information required by forms)

Regulation 5 is consequential upon section 350 of the Law to be inserted by the Amending Act. This new section will allow the ASC to approve forms for the purposes of certain provisions of the Law, instead of requiring the forms to be prescribed by the Principal Regulations. Regulation 4 amends Corporations Regulation 1.05 so that it refers to both the forms prescribed by the Principal Regulations and those approved by the ASC.

Regulation 6 Regulations 1.07A (Information to accompany documents etc lodged for half years)

Regulation 6 is consequential upon the renumbering of provisions and relocation of subject matter in the Corporations Law undertaken by the Amending Act in relation to the preparation of half year financial statements and reports.

Regulation 7 Regulation 1.07B (Information to accompany documents etc lodged for financial years)

Regulation 7 is consequential upon the renumbering of provisions and relocation of subject matter in the Corporations Law undertaken by the Bill in relation to the preparation of annual financial statements and reports.

Regulation 8 Regulation 1.08 (Manner of signing documents to be lodged)

Regulation 8 has the effect of omitting existing Regulations 1.08(1)(a) and (b) consequential upon the taking up of the relevant rules into section 351 of the Law by the Amending Act.

Regulation 9 Regulation 1.15 (Copies of lodged orders)

Regulation 9.1 is consequential upon the relocation of the rules in existing section 190(2) of the Law at section 254CC(2) of the Law by the Amending Act.

Regulation 9.2 is consequential upon the repeal of existing section 202 of the Law by the Amending Act.

Regulation l0 Regulation 1.17 (Modification of Securities Industry Act 1980)

Regulation 10 moves the rules in Schedule 9B of the Principal Regulations into Regulation 1.17 of the Principal Regulations.

Regulation 11 New Part 1.1

Regulation 11 moves the effect of existing Regulation 2.4.02 of the Principal Regulations to new Regulation 1.1.01 of the Principal Regulations.

Regulation 12 Regulation 1.2.23 (Application of certain provisions of Chapter 7 of Corporations Law)

Regulation 12 amends Regulation 1.2.23 of the Principal Regulations to make it clear that the reference to section 979(1) in that regulation is a reference to that section as modified by Regulation 1.2.26 of the Principal Regulations.

Regulation 13 Regulation 1.2A.04 (Financial institutions exempt from disclosing entity provisions)

Regulation 13 amends Regulation 1.2A.04 of the Principal Regulations consequential upon the renumbering of provisions and relocation of subject matter undertaken by the Amending Act in relation to the preparation of financial statements and reports.

Regulation 14 New regulation 1.2A.05

Regulation 14 inserts a new Regulation 1.2A.05 into the Principal Regulations having the same effect as Regulation 3.6.06 of the Principal Regulations. Regulation 32 will omit Regulation 3.6.06 from the Principal Regulations. This amendment is consequential upon the relocation of the rules in sections 331B(1)(c) and 331B(2) of the Law by the Amending Act.

Regulation 15 Chapter 2 (Constitution of companies)

Regulation 15 is consequential upon the repeal of the existing chapter heading for Chapter 2 of the Corporations Law, and the insertion of a heading for new Chapter 2B entitled "Basic Features of a Company".

Regulation 16 Part 2.3 (Legal capacity, powers and status)

Regulation 16.1 omits the existing heading for Part 2.3 and inserts a new Part heading "Part 2B.6 - Names". This amendment is consequential upon the repeal of Part 2.3 of the Law by the Amending Act, and the insertion of a new Part 2B.6 entitled "Names".

Regulation 16.1 also inserts new Regulations 2B.6.01, 2B.6.02 and 2B.6.03 into the Principal Regulations.

Regulation 2B.6.01 (1) provides that for the purposes of sections 147(1)(a) and (b) of the Law as amended by the Amending Act the rules for determining whether a name is identical with another name are at Part 1 of Schedule 6 to the Principal Regulations. Regulation 2B.6.01(2) provides that for the purposes of sections 147(1)(c) of the Law as amended by the Amending Act the rules for determining whether a name is unacceptable for registration are at Part 2 of Schedule 6 to the Principal Regulations.

Regulation 2B.6.02 provides that for the purposes of an application under sections 117, 152 and 157 of the Law as amended by the Amending Act if a name contains a word or phrases specified in column 2 of Part 4 of Schedule 6 of the Principal Regulations the application must be accompanied by the consent in writing of the relevant Minister. This regulation has substantially the same effect as Regulation 4.2.02 of the Principal Regulations.

Regulation 2B.6.03 provides that the rules for determining whether a company is exempted from including its Australian Company Number on a document are set out in Schedule 7 to the Principal Regulations. Schedule 7 to the Principal Regulations has the effect that certain documents used in the course of air transport or sea transport need not set out the Australian Company Number of the company or body corporate that issued the document. The new Schedule takes up existing exemptions from this requirement currently made available by the Australian Securities Commission pursuant to existing section 383C of the Law, which will be repealed by the Amending Act.

Regulation 17 Regulation 2.3.01 (Form of notice of resolution)

Regulation 17.1 is consequential upon the renumbering of provisions and relocation of subject matter undertaken by Schedule 1 of the Bill.

Regulation 17.2 is consequential upon Bill section 350 which allows the ASC to approve forms for the purposes of certain provisions of the Law.

Regulation 18 Regulation 2.3.02 (Translation day- Division 2 companies)

Regulation 18 repeals existing Regulation 2.3.02 of the Principal Regulations consequential upon the repeal of section 174 of the Law by the Amending Act.

Regulation 19 Part 2.4 (Membership and share capital)

Regulation 19 repeals existing Regulations 2.4.01 and 2.4.02 of the Principal Regulations consequential upon the repeal of Part 2.4 of the Law by the Amending Act.

Regulation 20 Part 2.5 (Company registers)

Regulation 20 replaces the heading for Part 2.5 of the Principal Regulations to reflect the renumbering and renaming of existing Part 2.5 of the Law, entitled "Company Registers", as Part 2C, entitled "Registers".

Regulation 21 Regulation 2.5.01 (Securities exchange (Corporations Law, s.170C(3))

Regulation 21 is consequential upon the renumbering of section 170(3) of the Law as section 216C(3) of the Law by the Amending Act.

Regulation 22 Chapter 3 (Internal administration)

Regulation 22 is consequential upon the repeal of the existing heading for Chapter 3 of the Law, and the insertion of a new heading for Chapter 2D, entitled "Officers".

Regulation 23 Part 3.2 (Officers)

Regulations 23 omits the heading for Part 3.2 of the Principal Regulations.

Regulation 24 Part 3.3 (Meetings and proceedings)

Regulation 24 omits the heading for Part 3.3 of the Principal Regulations.

Regulation 25 Part 3.5 (Charges)

Regulation 25 omits the existing heading for Part 3.5 of the Corporations Regulations, and substitutes a new heading, "Chapter 2K - Charges".

Regulation 26 Part 3.6 (Accounts)

Regulation 26 omits the existing heading for Part 3.6, and substitutes a new heading, "Chapter 2M - Financial reports and audit".

Regulation 27 Regulation 3.6.01 (Accounting records)

Regulation 27 omits Regulation 3.6.01 of the Principal Regulations because Form 313 will be approved by the ASC in accordance with section 350 of the Law as amended by the Amending Act.

Regulation 28 Regulation 3.6.02 (Financial statements prescribed requirements under subsection 297(1) of the Corporations Law)

Regulation 28 rewrites existing Regulation 3.6.02 of the Principal Regulations and repeals existing Regulation 3.6.02(2)(b) concerning the preparation of financial statements for financial years ending before 1 January 1991.

Regulation 29 Regulations 3.6.02A (Section 309 - Benefits under contracts with directors (accounting period))

Regulation 29 repeals existing Regulation 3.6.02A of the Principal Regulations consequential upon the repeal of section 309 of the Law by the Amending Act.

Regulation 30 Regulation 3.6.03 (Prescribed stock exchanges for the purposes of subclause 17(3) of Schedule 5)

Regulation 30 repeals existing Regulation 3.6.03 of the Principal Regulations consequential upon the relocation of the relevant rule into existing Schedule 5 of the Principal Regulations by Regulation 66.

Regulation 31 Regulation 3.6.05 (Rounding off amounts: section 311 of the Corporations Law)

Regulation 31 repeals Regulation 3.6.05 of the Principal Regulations consequential upon the repeal of section 311 of the Law by the Amending Act.

Regulation 32 Regulation 3.6.03 (Section 331B - Are the financial statements properly drawn up?)

Regulation 32 repeals Regulation 3.6.06 of the Principal Regulations consequential upon the insertion of a new Regulation 1.2A.05 into the Principal Regulations having the same effect as Regulation 3.6.06. This amendment is consequential upon the relocation of the rules in sections 331B(1)(c) and 331B(2) of the Law by the Amending Act.

Regulation 33 Part 3.8 (Annual return)

Regulation 33 omits Part 3.8 of the Principal Regulations consequential upon the relocation of these rules to section 348 of the Law by the Amending Act.

Regulation 33 also inserts a new Corporations Regulation 2M.6.01 modifying the operation of the Law under section 343 in the way set out in Schedule 9 of the Principal Regulations. This is consequential upon the repeal of existing Part 4.5 of the Law by Schedule 1 of the Bill.

Regulation 34 Chapter 4 (Various corporations)

Regulation 34 omits the chapter heading for Chapter 4 of the Principal Regulation and substitutes a new chapter heading reflecting the changes to the chapter headings the Amending Act makes to the Law.

Regulation 35 Part 4.1 (Registration of certain bodies)

Regulation 35 omits the chapter heading for Part 4.1 of the Principal Regulation and substitutes a new part heading reflecting the changes to the part headings the Amending Act makes to the Law.

Regulation 36 Regulation 4.1.01 (Certified copies of certificates of incorporation etc)

Regulation 36 amends Regulation 4.1.01 to take account of the renumbering of existing sections 341 and 344 as sections 601CB and 601CD respectively by Schedule 2 of the Bill, and the renumbering of Part 4.1 of the Law as Part 5B.2.

Regulation 37 Regulation 4.1.02 (Manner of certifying constituent documents)

Regulation 37 amends Regulation 4.1.01 of the Principal Regulations to take account of the renumbering by the Amending Act of existing sections 341 and 344 of the Law as sections 601CB and 601CE respectively.

Regulation 38 Regulations 4.1.03 (Manner of sending letters (Corporations Law, ss 601CC(2) and 601CC(3))

Regulation 38 amends Regulation 4.1.03 of the Principal Regulations to take account of the renumbering by the Amending Act of existing sections 342 and 350 of the Law as sections 601CC and 601CL respectively.

Regulation 39 Regulation 4.1.04 (Manner of sending notices (Corporations Law ss 601CC(3) and 601CC(4)

Regulation 39 amends existing Regulation 4.1.04 of the Principal Regulations to take account of the renumbering by the Amending Act of existing sections 342 and 350 of the Law as sections 601CC and 601 CL respectively.

Regulation 40 Regulation 4.1.05 (Balance sheets and other documents)

Regulation 40 amends existing Regulation 4.1.05 of the Principal Regulations to take account of the renumbering by the Amending Act of existing section 349 of the Law as section 601CL.

Regulation 41 Regulation 4.1.06 (Notices (Corporations Law s 601CV(1))

Regulation 41 amends existing Regulation 4.1.06 of the Principal Regulations to take account of the renumbering by the Amending Act of existing section 361 of the Law as section 601CV.

Regulation 42 Part 4.2 (Names)

Regulation 42.1 omits the heading for Part 4.2 of the Principal Regulations and substitutes a new heading "Part 5B.3 - Names of Registrable Australian Bodies and Foreign Companies" to reflect the restructuring of the Law made be the Amending Act.

Regulation 42.1 also inserts new Regulation 5B.3.01 into the Principal Regulations. Regulation 5B.3.01 (1) provides that for the purposes of sections 601D(1)(a) and (b) of the Law as amended by the Amending Act the rules for determining whether a name is identical with another name are at Part 1 of Schedule 6 to the Principal Regulations. Regulation 5B.3.01(2) provides that for the purposes of sections 601D(1)(c) of the Law as amended by the Amending Act the rules for determining whether a name is unacceptable for registration are at Part 2 of Schedule 6 to the Principal Regulations.

Regulation 43 Regulation 4.2.01 (Names unacceptable for registration)

Regulations 43.1, 43.4, 42.3, 42.4, 42.5 and 42.9 amend existing Corporations Regulation 4.2.01 to take account of the renumbering and relocation of the rules about whether a name is unacceptable for reservation or registration under the Corporations Law.

Regulations 43.2 and 43.13 move the effect of Schedule 6A of the Principal Regulations into Regulation 4.2.01(1B)(a) of the Principal Regulations. Schedule 6A of the Principal Regulations is repealed by Regulation 68 of these regulations.

Regulation 43.3 amends Regulation 4.2.01(1B)(m) as a consequence of the relocation of the effect of Schedule 6A of the Principal Regulations into Regulation 4.2.01(1B)(a) of the Principal Regulations.

Regulation 43.5 corrects an error in the terminology used in the regulations.

Regulations 43.6 and 43.7 correct an error in the Principal Regulations. The Principal Regulations currently prohibits the use of a name if the name suggests a connection with, for example, the Commonwealth Government, even if the connection exists. These amendments will allow a name to be used if the connection does exist.

Regulations 43.8, 43.9, 43.10, 43.11, 43.12 and 43.12 make amendments to Regulation 4.2.01 of the Principal Regulations consequential upon the relocation of Regulation 4.2.01 to Part 2 of Schedule 6 of the Principal Regulations by Part 4 of these regulations.

Regulation 44 Regulation 4.2.02 (Ministerial consent required for use of certain expressions in names)

Regulation 44 amends Regulation 4.2.02 of the Principal Regulations to take account of the relocation and renumbering by the Amending Act of provisions in the Law about the names of registrable Australian Bodies and foreign companies.

Regulation 44 also amends Regulation 4.2.02 of the Principal Regulations as a consequence of the relocation to Schedule 6 of the rules about whether the Minister's consent is required before a name may be used.

Regulation 45 New regulation 5B.3.03

Regulation 45 inserts a new Regulation 5B.3.03 into the Principal Regulations providing that the rules for determining whether a registered Australian body or foreign company is exempted from including its Australian Registered Body Number on a document are set out in Schedule 7 to the Principal Regulations. Schedule 7 to the Principal Regulations has the effect that certain documents used in the course of air transport or sea transport need not set out the Australian Registered Body Number of the body corporate that issued the document. The new Schedule takes up existing exemptions from this requirement currently made available by the Australian Securities Commission pursuant to existing section 383C of the Law, which will be repealed by the Amending Act.

Regulation 46 Regulation 5.6.04 (Deregistration of defunct company)

Regulation 47 repeals existing Corporations Regulation 5.6.04 consequential upon the repeal of existing section 572 by the Bill.

Regulation 47 Regulation 5.6.05 (Rate of commission)

Regulation 47 repeals existing Corporations Regulation 5.6.05 consequential upon the repeal of existing section 577 by the Bill.

Regulation 48 Regulation 5.6.44 (Debt discount rate (Corporations Law, s 554B))

Regulation 48 is consequential upon the repeal of Corporations Regulation 5.6.44(1) by Regulation 44.1 of Statutory Rule No. 135 of 1993.

Regulation 49 Regulation 5.6.73 (Notice of intention to deregister a defunct company)

Regulation 49 repeals existing Corporations Regulations 5.6.73 consequential upon the repeal of existing section 573 by the Bill.

Regulation 50 Regulation 6.1.01 (Manner of sending documents (Corporations Law s 607(2))

Regulation 50 corrects 2 typographical errors in existing Corporations Regulation 6.1.0 1.

Regulation 51 Regulation 7.3.15 (Sale of forfeited shares exempt (Act, s 30))

Regulations 51 amends existing Corporations Regulation 7.3.15 consequential upon the relocations of the rules in existing section 388 to Bill section 254Q.

Regulation 52 Regulation 7.3.16 (Exemption from Chapter 7 - transactions in options contracts on NZFOE market (Act, s 30))

Regulation 52 omits the definition of "Commission" from existing Regulation 7.3.16 of the Principal Regulations as that term is defined in the Law.

Regulation 53 Regulation 7.12.06 (Excluded offers and invitations (Corporations Law, s 66(3))

Regulations 53 amends Corporations Regulation 7.12.06 consequential upon the repeal of Part 4.4 of the Corporations Law concerning investment companies.

Regulation 54 Regulation 7.12.08C (Section 1043D notices)

Regulation 54 amends existing Corporations Regulation 7.12.08C consequential upon the change in terminology made by the Amending Act from shares being partly paid to being partly unpaid, the abolition of the concept of authorised capital by the Amending Act, and the renumbering and relocation of the rules in section 326 of the Corporations Law.

Regulation 55 Regulation 9.1.01 (Prescribed registers (Corporations Law, s 1274A))

Regulation 55 amends existing Regulation 9.1.01 of the Principal Regulations to take account of the renumbering and relocation by the Amending Act of the rules in the Law concerning the registration of companies and the registration and reservation of names.

Regulation 56 Regulation 9.1.02 (Prescribed information (Corporations Law, s 1274A))

Regulation 56.1 amends existing Corporations Regulation 9.1.02(a) to take account of the renumbering and relocation by the Amending Act of the rules in the Law concerning the registration of names.

Regulation 56.2 amends existing Corporations Regulation 9.1.02(a)(i) to reflect the change in terminology in the Bill from the incorporation of companies under the Corporations Law to the registration of companies under the Corporation Law.

Regulations 56.3, 56.4 and 561.5 omit existing Corporations Regulations 9.1.02(a)(iv), (d)(iii) and (c)(iii) respectively consequential upon the removal of the requirement for companies and other entities to specify their principal activity in the annual return they lodge with the Australian Securities Commission.


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