Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1994 NO. 221

STATUTORY RULES 1994 No. 221

Issued by the Authority of the Attorney-General

Corporations Act 1989

Corporations Regulations (Amendment)

Section 22 of the Corporations Act 1982 (the Act) empowers the Governor-General to make regulations not inconsistent with the Act or the Corporations Law (the Law), prescribing matters which are required or permitted by the Law to be prescribed by regulations, or are necessary or convenient to be prescribed by regulation for carrying out or giving effect to the Law.

Section 30 of the Act provides that the regulations may provide that Chapter 1 or 8, or specified provisions of Chapter 7 or 8, of the Law do not have effect in relation to a specified person or class of persons or in relation to a specified transaction or class of transactions.

The purpose of the amendments to the Corporations Regulations is to exempt superannuation funds, approved deposit funds (ADFs) and pooled superannuation trusts (PSTs) from the definition of prescribed interests under the Corporations Law.

Superannuation funds, ADFs and PSTs are to be regulated under the Superannuation Industry (Supervision) Act 1993 by the Insurance and Superannuation Commission from 1 July 1994.

Details of the amendments to the Corporations Regulations are at Attachment A.

As required under the Reads of Agreement and the draft Corporations Agreement between the Commonwealth, States and Northern Territory, the Attorney-General has consulted with the State and Territory Attorneys-General on the amendments to the Corporations Regulations.

The Regulations relating to superannuation funds, ADFs and PSTs commenced on 1 July 1994.

ATTACHMENT A

DETAILS OF CORPORATIONS REGULATIONS AMENDMENTS

Regulation 1

Commencement

Subregulation 1.1 provides that these Regulations commence on 1 July 1994.

Regulations 3, 4, and 5, which will exclude regulated superannuation funds, approved deposit funds and pooled superannuation trusts from regulation under the Corporations Law, commence on 1 July 1994, the date on which regulation of these superannuation arrangements is transferred to the Superannuation Industry (Supervision) Act 1993.

Regulation 2

Amendment

Subregulation 2.1 provides that the Corporations Regulations are amended as set out in these Regulations.

Regulation 3

Regulation 3.1 - Amendments to Regulation 7.12.04 (Exempt rights or interests)

Subregulation 3.1 inserts new paragraphs 7.12.04(c) and (d) in regulation 7.12.04.

Regulation 7.12.04 provides that certain rights or interests are exempt fights or interests for the purposes of the definition of 'prescribed interest'. Section 9 of the Corporations Law defines the term 'prescribed interest'. Unless otherwise exempted, a prescribed interest is required to comply with Division 5 of Part 7.12 of the Corporations Law and the relevant fundraising provisions of the Law in Part 7.12.

Regulation 7.12.04 is amended by omitting paragraph 7.12.04(c) and substituting a new paragraph 7.12.04(c) reflecting the transfer of regulatory responsibility in relation to regulated superannuation funds, approved deposit funds and pooled superannuation trusts to the Insurance and Superannuation Commission under the Superannuation Industry (Supervision) Act 1993.

New paragraph 7.12.04(c) provides that rights or interests in a trust or a proposed trust that is not a regulated superannuation fund or a proposed regulated superannuation fund are exempt rights or interests otherwise than as provided by subparagraphs 7.12.04(c)(i) and (ii).

New subparagraph 7.12.04(c)(i) excludes from the operation of paragraph (c) a right or interest in a trust or proposed trust the governing rules of which relate to a scheme promoted by a person, or an associate of a person, whose ordinary business is the promotion of similar schemes.

New subparagraph 7.12.04(c)(ii) excludes from the operation of paragraph (c) a trust or a proposed trust the governing rules of which will provide for more than 15 beneficiaries. This subparagraph does not apply to a trust that was in existence on 5 July 1991. This date is the date of commencement of the original regulation 7.12.04(c)(iii) which provided that trusts existing on that commencement date were not excluded from the operation of paragraph (c).

A regulated superannuation fund or a proposed regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 is specifically excluded from the operation of paragraph 7.1204(c). The specific exemption for rights or interests in superannuation trust funds is provided by the new paragraph 7.12.04(d).

Regulation 7.12.04 is amended by inserting a new paragraph (d) which declares as exempt rights or interests for the purposes of the definition of 'prescribed interests' in section 9 of the Law, rights or interests in a regulated superannuation fund, an approved deposit fund or a pooled superannuation trust. Rights or interests in a regulated superannuation fund, an approved deposit fund or a pooled superannuation trust are, however, not exempt rights or interests for the purposes of Parts 7.3 to 7.6 of the Law. Parts 7.3 to 7.6 (inclusive) of the Corporations Law provide for the licensing and regulation of persons selling securities including prescribed interests which are rights or interests in a regulated superannuation fund, an approved deposit fund or a pooled superannuation trust.

Regulation 4

Amendments to Regulation 7.12.05 (Excluded issues)

Subregulations 4.1 and 4.2 amend regulation 7.12.05 of the Corporations Law which declares certain issues or allotments of securities to he excluded issues. Regulation 7.12.05 is amended by omitting paragraphs (b) and (d) to remove the issue or allotment of rights or interests in a superannuation fund.

These amendments are consequential on the amendments made by Regulation 3 of these Regulations. As superannuation funds are excluded from the definition of prescribed interests it is not necessary to declare an issue or allotment of rights or interests in a superannuation fund to be an excluded issue.

Regulation 5

Amendments to Regulation 7.12.06 (Excluded offers or invitations)

Subregulations 5.1 and 5.2 amend regulation 7.12.06 of the Corporations Law which declares certain offers or invitations in relation to securities to be excluded offers or invitations. Regulation 7.12.06 is amended by omitting paragraphs (c) and (e) to remove an offer or invitation of rights or interests in a superannuation fund.

These amendments are consequential upon the amendments made by Regulation 3 of these Regulations. As superannuation funds are excluded from the definition of prescribed interests it is not necessary to declare an offer or invitation in relation to rights or interests in a superannuation fund to be an excluded offer or invitation.