Explanatory Memorandum
(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey MP and the Attorney-General, the Honourable Daryl Williams AM QC MP)Chapter 3 - Notes on individual clauses
Part 1 - Preliminary
3.1. The short title of the Act will be the Corporations (Repeals, Consequentials and Transitionals) Act 2001 .
3.2. Most provisions in the Bill commence at the same time as the Corporations Act 2001 .
3.3. Some amendments in the Bill are consequential amendments relating to other bills before the Parliament. Specific commencement clauses that are contingent on the passage and commencement of the other legislation are included to cover these amendments. If the relevant condition is not met, the items specified do not come into operation.
Part 2 - Repeals and amendments
3.4. Some Commonwealth legislation currently refers to or interacts with the existing corporations legislation (including the Corporations Act 1989 , the Corporations Law and the Australian Securities and Investments Commission Act 1989 ). The Schedules to the Bill specify Commonwealth legislation that is amended to take account of the titles of the new corporations legislation, and to remove references to legislation that is to be repealed by this Bill.
3.5. In some cases, references to provisions are be amended to correct existing cross referencing errors or to take account of the limited instances where provision in new corporations legislation has been renumbered.
Part 3 - Special transitional arrangements for ACT
3.6. Part 3 of the Bill covers transitional arrangements for the ACT that relate to the present national scheme and former co-operative scheme legislation, with the object of providing for a seamless transition from the Corporations Law to the new corporations legislation. These transitional arrangements complement the transitional provisions in Part 10 of the Corporations Act 2001 in so far as those latter provisions relate to the transition from the national scheme legislation enacted for the ACT.
3.7. It is expected that each of the States will enact similar provisions dealing with the transition from their national scheme legislation. However, there will necessarily be some difference in the provisions to be enacted by the States as it is expected that the States will be retaining their national scheme legislation with limited operation rather than repealing it.
Division 1 - Transitional arrangements for the former Corporations Law and ASIC Law
3.8. This clause sets out various definitions used in this Division.
Clause 5: Corresponding provision
3.9. This clause defines corresponding provision in a similar way to the transitional provisions in Part 10 of the Corporations Bill 2001.
Clause 6: Extinguishing rights and liabilities, and terminating proceedings, dealt with by new Corporations legislation
3.10. A key element of the transitional provisions of the new corporations legislation is, as far as possible, to create as a matter of federal law rights and liabilities equivalent to those existing under the present legislation immediately before the commencement of the new legislation (Corporations Bill, clauses 1400 and 1401; ASIC Bill, clauses 276 and 277; Corporations (Fees) Bill, clause 9; Corporations (Securities Exchanges Levies) Bill, clause 8; Corporations (Futures Organisations Levies) Bill, clause 6; and Corporations (National Guarantee Fund Levies) Bill, clause 6). Where this is done, clause 6 of the Bill provides for the extinguishment of the existing rights and liabilities under the existing corporations legislation enacted for the ACT. This includes liability to pay fees, charges and levies under a provision of the old ACT corporations legislation (subclause 6(3)).
3.11. Another feature of the transitional provisions of the new corporations legislation is, as far as practicable, to bring existing court proceedings under federal jurisdiction. This is done by creating new court proceedings in the same court, exercising federal jurisdiction, under (or as a prosecution for an offence against) the corresponding provisions of the new corporations legislation (Corporations Bill, clause 1383; ASIC Bill, clause 267). Subclause 6(2) of the Bill terminates existing proceedings that relate to the present corporations legislation enacted for the ACT. Any rights and liabilities arising from interlocutory orders made in those proceedings are terminated by subclause 7(3).
Clause 7: Court proceedings and orders
3.12. In order to comply with the requirements of Chapter III of the Constitution, the transitional provisions of the new corporations legislation do not create, as a matter of federal law, rights and liabilities equivalent to those arising from orders of a court (Corporations Bill, clause 1400(1); ASIC Bill, clause 276(1)). Accordingly, where a court has made a final determination in the exercise of State jurisdiction, any future steps in relation to the matter (such as an appeal) would need to continue within State jurisdiction. Matters arising under Territory law are generally being treated in the same way as matters under State law. Subclause 7(2) of the Bill provides that where new proceedings are not being created, the old proceedings may be continued; and any decisions or orders may be appealed against, reviewed or enforced as if the old corporations legislation had not been repealed. This includes the provisions of the old legislation that confers functions and powers on Commonwealth officers and authorities.
3.13. For the avoidance of doubt, subclause 7(4) ensures that Part 9 of the Corporations Act 1989 (jurisdiction and procedure of courts) continues to have the same operation in relation to proceedings preserved by subclause 7(2) as it did before commencement of the new corporations legislation.
Division 2 - Transitional arrangements for the former co-operative scheme legislation
3.14. Division 2 sets out transitional provisions related to the repeal of the former co-operative scheme legislation of the ACT. That legislation continues to have some application in relation to matters that arose before the commencement of the present national scheme legislation (see Corporations Act 1989 , subsection 76(1)).
3.15. It is expected that the States will retain their co-operative scheme legislation at this stage.
3.16. This clause sets out various definitions used in this Division.
Clause 9: Winding up started before commencement
3.17. Clause 9 ensures that the winding up of any body corporate that was started under a law in force in the ACT before the commencement of the Corporations Law continues under the original law. This is presently achieved by section 601 of the Corporations Law. That section is not included in the Corporations Bill. Its operation is preserved by clause 1408 of the Corporations Bill in relation to jurisdictions that retain their co-operative scheme legislation. However, given the repeal of the former ACT legislation, the treatment of ongoing windings up is being dealt with by a specific provision to avoid any doubt. Specifically, clause 9 enables the bodies corporate in question to continue to be wound up in the same manner as if the Companies Act 1981 had not been repealed and the Corporations Act 1989 had not been enacted, with references in the Companies Act to the National Companies and Securities Commission taken to be references to ASIC (subclause 9(2)).
Clause 10: Companies Liquidation Account
3.18. Clause 10 continues the effect of section 72 of the Corporations Act 1989 in relation to money in, or paid into, the Companies Liquidation Account established under the Companies Act 1981 (section 72 of the Corporations Act 1989 is not included in the Corporations Bill). As a result, section 427 of the Companies Act 1981 continues to apply to that Account.
3.19. Clause 11 provides that Acts repealed by Part 2 of Schedule 1 (the former co-operative scheme Acts, see notes to Schedule 1 below) continue to apply in the ACT to matters to which those Acts applied immediately before the commencement of the Corporations Act 2001 . It also makes clear that those Acts are to be treated as applying to companies dissolved before 1 January 1991.
3.20. As a result, for example, provisions such as section 460 of the Companies Act 1981 continue to apply in relation to companies dissolved before that date, whether they were registered under that Act or a previous company law. Accordingly, ASIC will be able to continue to act as a representative of those companies (for example, to execute documents). ASIC will also be able reinstate dissolved companies to the extent that it could have done so had the Companies Act 1981 not be repealed.
Part 4 - Functions of Commonwealth agencies in relation to transitional national scheme law matters
3.21. Clause 12 sets out various definitions used in Part 4.
Clause 13: Continuing functions of Commonwealth agencies under State and Territory national scheme laws
3.22. As noted, while the transitional provisions of the new corporations legislation federalise existing rights and liabilities and any associated court proceedings, court proceedings that have been subject to pre-commencement decisions in the exercise of State or Territory jurisdiction will remain subject to State and Territory law. It may be necessary for Commonwealth officers and authorities to continue to carry out functions in relation to these matters. Clause 271 of the ASIC Bill enables ASIC to do so.
3.23. Subclause 13(1) of the Bill does the same for other Commonwealth officers or authorities. This provision effectively replaces those in Division 3 of the Corporations Act 1989 , which presently enable them to perform functions and exercise powers under the national scheme laws of the States. By paragraph 13(1)(b), Commonwealth officers or authorities (including ASIC) continue to have their existing functions and powers in relation to court proceedings that have been subject to pre-commencement decisions under the legislation for the ACT that are not being treated as involving federal jurisdiction.
3.24. It is expected that the State Corporations Acts - which, among other things, confer the functions and powers on the Commonwealth officers and authorities - will remain in place with an appropriately limited application (including to enable non-federal proceedings to be completed).
3.25. Subclause 13(2) provides that a Commonwealth officer or authority is not subject to any directions in relation to the performance or exercise of a power or function conferred by or under a State or Territory transitional law in relation to non-federal proceedings, nor under a duty to perform or exercise those powers or functions. This avoids the risk of the imposition of a duty on a Commonwealth officer or authority in circumstances where that duty may be invalid, following the decision in Hughes , on the basis that it has no sufficient connection with a head of federal legislative power.
Part 5 - Regulations
3.26. Clause 14 allows regulations to be made in relation to matters that are required or permitted by the Bill to be prescribed, or are necessary or convenient for giving effect to the Bill (subclause 14(1)). It also provides that the regulations may modify the effect of Part 3, in relation to special transitional arrangements for the ACT (subclause 14(2)).