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 5 - Schedule 2 - Amendment of new corporations legislation on commencement of that legislation
5.1. Schedule 2 makes amendments to the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 to:
- (a)
- update the transitional provisions in light of the decision of the High Court in Edensor ;
- (b)
- make minor drafting corrections that do not involve changes in substance; and
- (c)
- make an amendment consequent on the repeal of the Securities Industry Act 1980 .
Australian Securities and Investments Commission Act 2001
5.2. Item 1 recasts section 122 of the Australian Securities and Investments Commission Act 2001 (the new ASIC Act) to remove an erroneous reference to section 249. Section 249 was removed from the Australian Securities and Investments Commission Act 1989 (the old ASIC Act) in 1991 by the Corporations Legislation Amendment Act 1990 .
Item 2: Subsection 254(1), new definition old Corporations Law
5.3. Item 2 inserts a definition of old corporations legislation. That term is referred to in the amendments below.
5.4. Item 3 substitutes a new definition of State validation Act. This substitution takes account of drafting changes to that legislation since the Corporations Bill was settled. It does not involve a change of substance.
Item 4: Subsection 266(1), insertion of new paragraphs into definition of federal ASIC proceeding
5.5. Item 4 inserts new paragraphs to add additional types of proceeding to the list of federal ASIC proceedings. These include:
- •
- proceedings in relation to a matter to which the old ASIC legislation of the Commonwealth, a State or Territory applied and in to which the Commonwealth is seeking an injunction or declaration;
- •
- proceedings in relation to a matter to which the old ASIC legislation of the Commonwealth, a State or Territory applied and to which the Commonwealth or a person suing or being sued on behalf of the Commonwealth, was a party; and
- •
- certain other proceedings in relation to a matter to which the old ASIC legislation of the Commonwealth, a State or Territory applied and which involve the exercise of federal jurisdiction.
5.6. The new paragraphs apply to both civil proceedings under a provision of the old ASIC legislation and proceedings brought as or connected with the prosecution for an offence against the old ASIC legislation.
5.7. The amendments in item 4 are essentially technical in nature and take account of the decision of the High Court in Edensor . That decision clarified the extent to which certain proceedings under the Corporations Law of the States involve the exercise of federal jurisdiction. As a result, it is necessary for the definition of federal ASIC proceeding to be extended to cover proceedings of kind considered in Edensor ; that is, proceedings in which the Commonwealth is seeking an injunction under the ASIC or Corporations Law of a State. The definition will also cover other forms of proceeding that, by reason of jurisdiction conferred by the Judiciary Act 1903 , potentially involve the exercise of federal jurisdiction. An effect of the amendments is that a greater range of existing proceedings will be continued as federal proceedings under section 268 of the ASIC Act 2001 .
Item 5 New sections 268A and 268B, appeals and effect of decisions in relation to former federal ASIC proceedings
5.8. Item 5 inserts new sections 268A and 268B into the new ASIC Act.
5.9. Section 268A will provide that a decision or order made in a concluded federal ASIC proceeding that related to a matter under the old corporations legislation may be appealed against, or otherwise reviewed or enforced, in the same way as if it was a decision or order made in relation to the Corporations Act 2001 . This ensures that rights to take further steps in relation to concluded federal proceedings are preserved even if the further steps have not been initiated before commencement (clause 268 of the ASIC Bill only continues proceedings that have not been concluded before commencement). Section 268A applies in relation to both civil and criminal proceedings in the exercise of federal jurisdiction.
5.10. Section 268B makes it clear that decisions or orders made in a federal ASIC proceeding, in relation to a matter to which the old ASIC Act applied prior to the commencement of the new ASIC Act, continue to have effect despite the provision of the old ASIC Act ceasing to have effect. New rights and liabilities equivalent to those arising under such decisions or orders are not created by clause 276 of the ASIC Bill. Section 268B applies in relation to both civil and criminal proceedings in the exercise of federal jurisdiction.
Item 6: Subsection 271(4), insertion of paragraph (aa) into definition of non-federal proceeding
5.11. Section 271 of the new ASIC Act enables ASIC to carry out functions under State law in relation to ongoing non-federal proceedings under the old ASIC legislation (refer to the definition of non-federal proceeding in section 271), in the limited instances where the proceedings are not being federalised by the operation of section 267 of the new ASIC Act. The amendments to section 271 ensure that ASIC can also carry out functions under State law in relation to ongoing non-federal proceedings under the old corporations legislation.
5.12. Item 6 extends the meaning of non-federal proceeding to include the same type of proceedings under the Corporations Act 2001 .
Item 7: Subsection 271(4), insertion of subparagraph (b)(ia) into definition of non-federal proceeding
5.13. Item 7 extends the definition of non-federal proceeding to include an enforcement, appeal or review proceeding in relation to a court order made before the commencement of the new ASIC Act in relation to a proceeding under the old corporations legislation of a State or Territory.
Item 8: Subsection 271(4), insertion of subparagraph (b)(iii) into definition of non-federal proceeding
5.14. Item 8 extends the definition of non-federal proceeding to include a proceeding brought as, or connected with, a prosecution for an offence against a provision of the old corporations legislation of a State or Territory.
Item 9: Subsection 271(4), amendment of paragraph (c) of definition of non-federal proceeding
5.15. Item 9 takes account of the insertion of paragraph 271(4)(aa) by referring to it in paragraph (c). As a result, paragraph (c) provides that non-federal proceedings include enforcement, appeal or review proceedings in relation to a court order made after the commencement of the new ASIC Act in relation to non-federal proceedings under both the new ASIC Act and the Corporations Act 2001 .
Items 10 & 11: Subsections 272(1) and (2), amendment of provisions about NCSCs functions and powers
5.16. Items 10 and 11 make minor technical changes to section 272 of the ASIC Act to ensure that ASIC is able to perform the functions and exercise the powers of the former National Companies and Securities Commission; notwithstanding the proposed repeal of the co-operative scheme legislation of the ACT which includes the Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980 .
Corporations Act 2001
Item 12: Subsection 9(1), definition of person
5.17. Item 12 amends the definition of person in the Corporations Act 2001 to take account of former section 85A of the Corporations Law not being re-enacted in the Corporations Act 2001 . The substance of former section 85A will be covered by section 22(1)(a) of the Acts Interpretation Act 1901 .
Item 13: New section 766J, powers and functions of the ASX
5.18. Item 13 inserts new section 766J into Part 7.1A of the Corporations Act 2001 . It provides that, in addition to having the legal capacity and powers set out in its constitution, the Australian Stock Exchange Limited (ASX) has the powers and functions conferred upon it by the Corporations Act 2001 (subsection 766J(1)) and that it is to perform those functions and may exercise the powers (subsection 766J(3)). Further, item 13 clarifies that the powers and functions conferred upon the Exchange by the Corporations Act 2001 are not affected by its constitution (subsection 766J(2)).
5.19. This provision continues the effect of existing section 36D of the Securities Industry Act 1980 (which is repealed by Schedule 1). The operation of section 36D is presently preserved by section 81 of the Corporations Act 1989 . Item 2 is being enacted to avoid any doubt about the functions and powers of the ASX.
5.20. Item 14 substitutes a new definition of State validation Act. This change to the Corporations Bill corresponds to that made to the ASIC Bill by Item 3.
Item 15: Subsection 1382(1), insertion of new paragraphs into definition of federal corporations proceeding
5.21. Item 15 inserts new paragraphs that add additional types of proceeding to the list of federal corporations proceedings. The purpose and effect of these changes are similar to the changes to the definition of federal ASIC proceeding outlined in relation to item 4 above. However, they differ in so far as the Corporations Law of the ACT is treated in the same way as the Corporations Law of the Northern Territory, which is a law for the government of that Territory (the old ASIC Act is a law of the Commonwealth rather than a law for the government of the ACT).
Item 16: New sections 1384A and 1384B, appeals and effect of decisions in relation to some former federal corporations proceedings
5.22. Item 16 inserts new sections 1384A and 1384B into the Corporations Act 2001 . These provisions have a similar purpose in relation to the Corporations Act 2001 as new sections 268A and 268B have in relation to the new ASIC Act (as outlined in relation to item 5 above).