Commonwealth Numbered Regulations - Explanatory Statements

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WOOL SERVICES PRIVATISATION (ELIGIBLE WOOLGROWERS) REGULATIONS 2000 2000 NO. 347

STATUTORY RULES 2000 No. 347

Issues by the Authority of the Minister for Agriculture, Fisheries and Forestry

Wool Services Privatisation Act 2000

Wool Services Privatisation (Eligible Woolgrowers) Regulations 2000

Section 39 of the Wool Services Privatisation Act 2000 (the 'Act') provides that the Governor-General may make regulations prescribing matters required or permitted by this Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to this Act.

The Act provides for the conversion of the Australian Wool Research and Promotion Organisation ('AWRAP') from a statutory company into a Corporations Law company to be called Australian Wool Services Limited ('AWS'). Subsection 20(1) of the Act provides that before the conversion time, the Minister must cause a list to be prepared of the persons who will become the shareholders of AWS at the conversion time (expected to be 1 January 2001). Subsection 20(2) provides that the list is to be known as the List of Eligible Woolgrowers. Subsection 20(4) provides that after the list has been prepared, the Minister must certify that the Minister is satisfied that the list was prepared in accordance with the procedures prescribed by regulations.

The regulations prescribe the procedures that the Minister must be satisfied were followed in preparing the List of Eligible Woolgrowers, for the purposes of subsection 20(4) of the Act.

The decision to establish AWS and the shareholding arrangements followed Government consideration of the 1999 wool industry Future Directions Taskforce Report. The Taskforce was established in December 1998 to undertake a major inquiry into the future directions of the Australian wool industry.

The regulations deal with the following key matters.

Eligibility

In order to be included on the List of Eligible Woolgrowers (and hence be issued shares) a person must have applied for shares in accordance with subregulation 5(2). This means that the List of Eligible Woolgrowers, and therefore the shareholder register, are established on a voluntary basis.

A person who does apply for shares will be eligible to receive:

*       one A Class share in AWS if the person has paid at least $100 wool tax on sales, transactions or other acts in the period 1 July 1997 to 30 June 2000: regulation 6; and

*       one B Class share in AWS for each whole $100 of wool tax paid by the person on sales, transactions or other acts in the period 1 July 1997 to 30 June 2000: regulation 7.

The two classes of shares are intended to reflect the fact that AWS will have two main operating subsidiaries - Australian Wool Innovation Limited ('AWI') and The Woolmark Company ('TWC'). AWI will manage the proceeds from the wool tax and outsource research and development and intellectual property management. TWC will focus on the commercial development of the Woolmark and its sub-brands and the commercialisation of intellectual property matters.

Applications for Shares

The regulations set out procedures to be followed in relation to applications for shares. The regulations include provisions in relation to the following:

*       a public information program must be conducted about the issue of shares in AWS: regulation 12;

*       the form on which applications for shares must be made, how that form must be signed and how it should be sent to the share registry company: regulation 13;

*       the setting of a closing date before which applications for shares must be received by the share registry company: regulation 14;

*       the evidence of wool levy paid that applicants must provide: regulations 15 and 16; and

*       the amendment of applications for shares: regulations 17, 18 and 19.

Other regulations are being made which provide regulations for other aspects of the AWRAP privatisation process, including the proposed Primary Industries Levies and Charges Collection Amendment Regulations 2000 (No. 5) the proposed Primary Industries (Excise) Levies Amendment Regulations 2000 (No. 6) the proposed Primary Industries (Customs) Charges Amendment Regulations 2000 (No. 2) and the proposed Wool Services Privatisation (Miscellaneous Provisions) Regulations 2000.

Subsection 20(5) of the Act provides that the Minister may be satisfied that the List of Eligible Woolgrowers was prepared in accordance with the procedures prescribed by regulations even if some steps in the preparation of the List occurred before the regulations were made (for example the setting of the closing date for applications as provided for in the Regulation 14). This provision is necessary to enable the establishment of the shareholder register in time for the expected AWS commencement date of 1 January 2001.

Regulation 22 provides that the Wool Services Privatisation (Eligible Woolgrowers) Regulations 2000 would cease to have effect on the commencement of Schedule 1 to the Act. This is because they prescribe the procedures for the establishment of the initial shareholder register which is to be established prior to conversion time (expected to be 1 January 2001). After conversion time, the maintenance and updating of the shareholder register will be provided for in the company constitutions.

Details of the regulations are at Attachment A.

The proposed regulations commence upon gazettal.

ATTACHMENT A

WOOL SERVICES PRIVATISATION (ELIGIBLE WOOLGROWERS) REGULATIONS 2000

Regulation 1 gives the name of the regulations as the Wool Services Privatisation (Eligible Woolgrowers) Regulations 2000.

Regulation 2 provides that the regulations would commence on gazettal.

Regulation 3 provides definitions of terms used in the Regulations, namely closing date, company, eligible taxable wool transaction, eligibility period, List of Eligible Woolgrowers, registered wool tax agent, share, Share Registry Company, taxable wool transaction and the Act. One key definition is of the term 'eligibility period', which is defined to mean the period commencing on 1 July 1997 and ending at the end of 30 June 2000. The eligibility period is the period in which wool tax must be paid in order for a person to be eligible to receive shares. The eligibility period has been set as a three year period in order to smooth out fluctuations in annual wool sales for eligible woolgrowers.

Regulation 4 provides that a person pays wool tax as an intermediary if they are liable to pay wool tax under Section 12 of the Wool Tax Administration Act 1964. This regulation makes a distinction between intermediaries (who pay wool tax on behalf of woolgrowers) and the woolgrowers (wool tax is payable by the producer who is taken to be the person who owns the wool immediately it is removed from the sheep or lamb). It is the woolgrowers who are potentially eligible to become shareholders not the intermediaries.

Regulation 5 provides that the List of Eligible Woolgrowers must comprise persons who are entitled to at least one share (subregulation 5(1)). A person may not be included on the List of Eligible Woolgrowers unless the person has voluntarily applied for shares, has provided evidence of wool tax they have paid and the application has been processed by the share registry company (subregulation 5(2)).

Regulation 6 provides that a person is entitled to one A class share if the person has paid, other than as an intermediary, at least $100 of wool tax in respect of eligible taxable wool transactions (ie, wool transactions occurring in the period 1 July 1997 to 30 June 2000). The minimum cut-off of $100 recognises the administrative costs associated with processing applications, and the company's future management, in relation to very small woolgrower operations.

Regulation 7 provides that a person is entitled to one B class share for each whole $100 of wool tax paid by the person, other than as an intermediary, in respect of eligible taxable wool transactions (ie, wool transactions occurring in the period 1 July 1997 to 30 June 2000).

Regulation 8 sets out how partnerships are to be dealt with. Members of a partnership will be entitled to shares jointly, based on the amount of wool tax paid by the partnership in aggregate.

Regulation 9 allows for the aggregation of wool tax paid by different persons for the purposes of an application by one of those persons for shares. For example, if a farmer sells wool through two companies, an application of shares could be made in the name of the first company on the basis of the amount of wool tax paid by both the first company and the second company, provided the second company has consented to the aggregation.

Regulation 10 provides for how the personal representatives of deceased individuals are to be treated in relation to share applications.

Regulation 11 provides that if a company is deregistered, it is not entitled to shares to which it would have otherwise been entitled.

Regulation 12 provides that the Minister must cause a public information program to be carried out. The public information program must include at least one advertisement about the issue of shares in at least one national newspaper and in other publications of significant interest to woolgrowers and woolgrowing communities. The Minister must also cause all reasonable efforts to be made to give persons who may be eligible to apply for shares an application form.

Regulation 13 provides that an application must be made in a form approved by the Minister. The Regulation also sets out who must sign the application form and to whom the application form must be sent.

Regulation 14 provides that the Minister must set a closing date for applications and the manner in which applications will be treated before and after this date. The Minister has proposed 30 November 2000 as the closing date. This date has been included in the Share Registration Kit which was sent out to woolgrowers.

Regulation 15 provides that an application for shares must be accompanied by sufficient evidence of the wool tax paid by or for either the applicant or a person whose wool tax is to be aggregated with an applicant's wool tax (see regulation 9 in relation to aggregation). Subregulation 15(2) sets out what documents will qualify as 'sufficient evidence' of wool tax paid.

Regulation 16 sets out certain presumptions that may be made about when documents produced as evidence of wool tax paid may be treated as being sufficiently linked to an applicant to amount to sufficient evidence. For example paragraph 16(1)(a) has the effect that if Mary Catherine Smith shown as the applicant in the application, but the wool tax documents show M.C. Smith, Mary C. Smith or Marie Smith, the documents are taken to relate to Mary Catherine Smith (see note 1, subregulation 16(1)).

Regulation 17 provides how an amendment to an application at the applicant's request can be made.

Regulation 18 provides how an amendment to an application at the Share Registry Company's request can be made.

Regulation 19 provides that the Share Registry Company may make amendments to an application, if sufficient evidence of wool tax paid is attached which is greater or lesser than the amount claimed on the application, without the requirement of requesting an amendment as provided in Regulation 18. This regulation enables the processing of applications (based on the wool tax evidence attached to the application) to proceed without additional time or cost involved with requesting an amended application from the applicant.

Regulation 20 sets out certain presumptions to be made in relation to an application for shares.

Regulation 21 provides for the Minister to delegate powers or functions to an SES employee or acting SES employee of the Department or the Share Registry Company and the conditions under which the delegation must occur or be exercised.

Regulation 22 provides that the regulations cease to have effect on the commencement of Schedule 1 to the Act, which will be a date set by Proclamation (expected to be 1 January 2001).