Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1998 NO. 9

Statutory Rules 1998 No. 9

Issued by the Authority of the Treasurer

Corporations Act 1989

Corporations Regulations (Amendment)

Section 73 of the Corporations Act 1989 provides that the Governor-General may make regulations prescribing matters which are required or permitted by the Act to be prescribed.

Section 30 of the Corporations Act 1989 provides that regulations may be made exempting persons from Chapters 7 and 8 of the Corporations Law.

Sections 1142 and 1143 in Chapter 8 of the Corporations Law require a person who deals in or advises on futures contracts on behalf of others to hold a futures brokers or futures advisers licence. The remainder of Parts 8.3, 8.4 and 8.5 of the Corporations Law regulate the conduct of futures. brokers and futures advisers in relation to their dealings with clients.

The primary objective of regulating brokers and advisers is to provide protection for retail investors. Minimum licence thresholds facilitate investor confidence that brokers and advisers have appropriate skills, experience and qualifications. The statutory obligations in Parts 8.3, 8.4 and 8.5 of the Corporations Law are designed to limit fraud and provide appropriate accounting for client instructions and funds.

The purpose of the proposed regulations is to exempt certain persons and bodies from complying with the licensing and other provisions of Parts 8.3, 8.4 and 8.5 of the Corporations Law. They exempt from those provisions bodies that are dealing in futures contracts on an exempt futures market solely on behalf of their owners or controllers. From a policy perspective, bodies dealing solely on behalf of their owners or controllers should not require a licence as they will not be dealing with members of the public.

The proposed regulations also exempt Snowy Hydro Trading Pty Limited from Parts 8.3, 8.4 and 8.5 of the Corporations Law, when dealing on behalf of the Commonwealth, Pacific Power and State Electricity Commission of Victoria. From a policy perspective, it is not considered necessary that bodies dealing on behalf of the Crown, an agency of the Crown or other public authorities. should require a licence.

One body, CSR Limited, has previously been exempted from complying with Parts 8.3, 8.4 and 8.5 of the Corporations Law in relation to services provided by it to the Crown in the right of Queensland, the Queensland Sugar Board or another public authority of Queensland. The regulations continue that existing exemption.

Details of the proposed regulations are set out in the Attachment.

The regulations commence on the date of gazettal.

ATTACHMENT

Regulation 1

Amendment

Regulation 1 provides that the regulations amend the Corporations Regulations.

Regulation 2

Regulation 2 (Exemption from Parts 8.3. 8.4 and 8.5 of the Corporations Law)

Regulation 2 omits existing regulation 8.1.01 and substitutes proposed new regulation 8.1.01.

Under existing regulation 8.1.01, which commenced on 5 July 1991 (Statutory Rules 1991 No 218), CSR Limited was exempt from Parts 8.3, 8.4 and 8.5 of the Corporations Law in connection with services as a futures broker or adviser that it provides to the Crown in the right of Queensland, to the Queensland Sugar Board or to another public authority of Queensland.

Under new regulation 8.10.01 (a), bodies that are dealing in futures contracts on an exempt futures market solely on behalf of their owners or controllers are exempt from Parts 8.3, 8.4 and 8.5 of the Corporations Law.

New regulation 8.10.01(b) continues the CSR exemption.

New regulation 8.10.01(c) exempts Snowy Hydro Trading Pty Limited from complying with Parts 8.3, 8.4 and 8.5 of the Corporations Law when dealing on behalf of the Commonwealth, Pacific Power and State Electricity Commission of Victoria.