House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business, Minister Assisting on Deregulation and Public Sector Superannuation, Minister Assisting the Minister for Tourism, Senator the Hon Nick Sherry)

Chapter 2 Preliminary

Outline of chapter

2.1 Chapter 1 of this explanatory memorandum outlines:

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the definitions used in the Registration Bill

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the constitutional basis of the Bill

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that a State, Territory or Commonwealth body is not liable to be prosecuted under the provisions of the Bill.

Detailed explanation of new law

2.2 Section 1 of the Business Names Registration Bill 2011 (the Registration Bill) provides that the Act may be cited as the Business Names Registration Act 2011.

2.3 Section 2 provides that sections 1 and 2 commence on the day the Act receives Royal Assent whilst the other provisions of the Registration Bill are to commence on various days to be fixed by proclamation.

2.4 Section 3 outlines the definitions of terms used in the Registration Bill.

2.5 'Business' is defined in section 4 to include an activity or activities that involve undertaking a profession; a trade; employment; a vocation or a calling; an adventure or concern in the nature of trade; or the leasing, licensing or granting of property on a regular or continuous basis. Business that is done in circumstances where an entity would not be entitled to an Australian Business Number (ABN) is excluded.

2.6 The legal persons that are considered to be an 'entity' are set out in section 5. This term is used in the Bill in relation to the holder of a business name. The term extends beyond what would be considered an entity in the general law, and includes trusts and superannuation funds.

2.7 Under the definition, a person may be considered to be a different entity when they act in different capacities. Under the definition, groups of persons may be considered for the purposes of the Bill to be one entity.

2.8 Section 6 provides details of what constitutes a 'notified state or territory register'. This includes a register which is maintained under the law of a referring / adopting State or affected Territory. A notified State/Territory register is one where notice of the names of entities entered on that register is received by ASIC electronically and updated from time to time, and which is specified in Schedule 1 to the Bill. This term is used in the Bill in various sections, most notably in section 25 which deals with the availability of names for registration. Further detail is provided in the commentary in relation to that section.

2.9 Schedule 1 to the Registration Bill contains a list of the registers, or kinds of registers, that may be notified State/Territory registers. Section 6 contains a trigger for such registers to be modified. A Minister of a State/Territory may notify the Commonwealth Minister in writing of a proposal to change Schedule 1 to the Bill and the Commonwealth Minister must then consult with all other referring/adopting States and affected Territories about the proposed modifications. Modifications include additions, omissions and substitutions to a register.

2.10 Section 7 sets out the constitutional basis for the Registration Bill and the Transitional Bill.

Application in a referring/adopting State

2.11 The Registration Bill provides the constitutional basis for its effective operation. The States will be referring constitutional power of the States to the Parliament of the Commonwealth either by a text referral, comprising the text of the initial version of the Registration Bill and the Transitional Bill (the initial Bills), or by adopting the initial Bills. The States will also be referring specified matters relating to the amendment of the initial Bills (the amendment reference). The application of the initial Bills in the referring/adopting States is based on:

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the legislative powers of the Commonwealth Parliament under section 51 of the Constitution, apart from paragraph 51(xxxvii); and

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the legislative powers of the Commonwealth Parliament which it has as a result of matters referred to it by the Parliament of the referring States under paragraph 51(xxxvii) of the Constitution.

2.12 The State referrals cover matters to the extent to which they are not otherwise included in the legislative powers of the Commonwealth Parliament.

Application in a Territory

2.13 In the Australian Capital Territory, the Northern Territory, the Jervis Bay Territory, the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, the application of the initial Bills is based on the legislative powers of the Commonwealth Parliament under section 122 of the Constitution to make laws for the government of those Territories, and under section 51 of the Constitution. The initial Bills apply in those affected Territories as a law of the Commonwealth, therefore overriding subsection 22(3) of the Acts Interpretation Act 1901.

Application outside Australia

2.14 Outside Australia, the application of the initial Bills is based on:

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the legislative power the Commonwealth Parliament has under paragraph 51(xxix) of the Constitution; and

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the other legislative powers that the Commonwealth Parliament has under section 51 of the Constitution; and

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the legislative powers that the Commonwealth Parliament has under section 122 of the Constitution to make laws for the government of a Territory.

Reference of matters by State Parliament to Commonwealth Parliament and adoption of initial Bills

2.15 Section 8 sets out the meaning of a 'referring / adopting State'.

2.16 A State which has referred powers or which has adopted the initial Bills and has made the amendment reference described above is a 'referring / adopting State':

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if and to the extent that the matters are not otherwise included in the legislative powers of the Parliament of the Commonwealth (otherwise than by a reference under paragraph 51(xxxvii) of the Constitution); and

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if and to the extent to which the matters are included in the legislative powers of the Parliament of the State.

2.17 A State is a referring / adopting State even if a law of the State provides that the reference to the Commonwealth Parliament is to terminate in particular circumstances or that the adoption of the initial Bills is to terminate in particular circumstances.

2.18 As described above, the reference of powers is in two parts, the first enabling the enactment of the initial Bills, and the second enabling subsequent amendment of the initial Bills by the Commonwealth Parliament. These references of power are explained in more detail as follows.

Reference covering initial Bills

2.19 The first part of the reference of powers relates to the extent of the making of laws with respect to those matters by including the referred provisions in the initial Bills.

Reference covering subsequent amendments

2.20 The second part of the reference of powers covers the referred business names matters to the extent of the making of laws with respect to those matters by making express amendments to the Act or the Transitional Act (as in force). The meaning of 'referred business names matter' is set out in section 9.

Effect of terminating reference or adoption of initial Bills

2.21 A State will cease to be a referring/adopting State if its initial reference of the text in the initial Bills terminates or its adoption of the initial Bills terminates.

Effect of terminating amendment reference

2.22 A State ceases to be a referring/adopting State if the State's amendment reference terminates and the exception to the amendment reference termination set out in subsection 8(7) does not apply to the termination.

2.23 The exception in subsection 8(7) operates as follows. A State whose amendment reference has terminated will not cease to be a referring State if the termination is to take effect on a day to be fixed by proclamation; that day is no earlier than six months after the proclamation date; and the State's amendment reference, and the amendment reference of every other State, terminates on that day. The effect of this provision is that a State can remain part of the national scheme for the regulation of business names if it terminates its amendment reference, but only if it gives at least six months notice of the termination and if every other referring State terminates its amendment reference on the same day.

2.24 There are various definitions relevant to explaining the terms used in the operation of Division 3. For example; there is a definition of the term 'amendment reference' of a State which means the reference by the Parliament of the State to the Parliament of the Commonwealth of the matters covered by section 8(4).

2.25 Section 9 sets out the meaning of 'referred business names matter'. Subsection 9(1) provides that each of the following matters is a referred business names matter:

(a)

the registration of business names;

(b)

the regulation of the use of business names to assist entities who engage with an entity carrying on a business under a business name to identify the entity;

(c)

the regulation of the use of business names to assist entities who engage with an entity carrying on a business under a business name to contact the entity;

(d)

the regulation of the use of business names to reduce the risks that arise from an entity carrying on a business under a name that is not the entity's own;

(e)

the prohibition or restriction of the use of business names that are undesirable, offensive or confusing;

(f)

the prohibition or restriction of the use of business names by an entity because:

i.

the entity has engaged in unlawful conduct; or

ii.

a person involved in the management of the entity has engaged in unlawful conduct.

2.26 Subsection 9(2) has the effect that a referred business names matter does not include the following:

(a)

the imposition of a restriction on a government body affecting the ability of the body to carry on business under a name;

(b)

the imposition of a restriction on an entity affecting the ability of the entity to carry on business under a name that is registered to the entity on a notified State/Territory register;

(c)

the imposition of a restriction on an entity affecting the ability of the entity to carry on business under a name that is specified as the name of the entity in an Act of a State, or an instrument made under such an Act;

(d)

the imposition of an obligation on a government body to include a name in a communication or to display a name;

(e)

the imposition of an obligation on an entity to include in a communication, or to display, a name that is registered to the entity on a notified State/Territory register;

(f)

the imposition of an obligation on an entity to include in a communication, or to display, a name that is specified as the name of the entity in an Act of a State, or an instrument made under such an Act;

(g)

the omission of an exemption provision without the insertion of an equivalent provision, or the imposition of a limitation on the operation of an exemption provision;

(h)

any matter relating to the imposition or payment of taxes under an Act of a State, or an instrument made under such an Act.

General application of the initial Bills

2.27 Section 10 provides that the initial Bills apply in 'this jurisdiction', which means the geographical area of each referring / adopting State and affected Territory, including their coastal seas.

2.28 Section 11 provides that a government body as defined is not liable to be prosecuted or subject to a remedy (including an injunctive remedy) for conduct that would constitute an offence under the provisions of the Bill, but that a government body is able to register a business name under the Bill and obtain the same benefits of doing so as other persons.

2.29 Section 12 provides that the initial Bills are not intended to exclude the concurrent operation of any referring / adopting State or affected Territory laws. This provision is in terms similar to those of several other Commonwealth legislative provisions, including section 23 of the National Consumer Credit Protection Act 2009 (Credit Act) and section 5E of the Corporations Act.

2.30 The concurrent operation provision provides that in all circumstances where a Commonwealth law and a State law can operate concurrently, they are intended to do so. This means, for example, that if would-be real estate operators obtain business names, they are not entitled to operate in a jurisdiction unless they also comply with the relevant real estate licensing requirements in that jurisdiction

2.31 This section does not apply where there is a direct inconsistency between the law of a referring / adopting State or affected Territory and the business names legislation. A direct inconsistency would exist where, for example, there is a direct collision between a State law and a Commonwealth law, meaning that it is impossible to obey both the state law and the Commonwealth law.

2.32 Subsections 13(1) and 13(2) provide that a provision of a State or Territory law may declare a matter to be an excluded matter, in relation to the whole of the business names legislation, a specified provision of the legislation, the business names legislation other than a specified provision or the business names legislation otherwise than to a specified extent. As a result, the initial Bills (either in whole or as specified) will not apply in that State or Territory in relation to the declared matter. Subsection 13(3) makes it clear that subsection 13(2) does not apply to a declaration to the extent regulations are made providing that the subsection does not apply to the declaration. This provision is in terms similar to section 5F of the Corporations Act.

2.33 Section 14 is a provision which limits or qualifies the operation of the initial Bills if a valid displacement provision is in effect. The key rule is that this provision of the Registration Bill does not prohibit the doing of an act, or impose a civil or criminal liability for doing an act, if a provision of a State or Territory law (displacement provision) specifically permits, authorises or requires the doing of that act. Regulations may provide that subsections 14(4) and 14(5) do not apply to the displacement provision to the extent specified in the regulations. This provision is in terms similar to section 5G of the Corporations Act.

2.34 Section 15 provides a regulation making power to deal with the interaction between the Commonwealth laws and the laws of a referring / adopting State or affected Territory.

2.35 Section 16 sets out the objects of the Bill, being to ensure that the entity carrying on business can be identified by those dealing or proposing to deal with the business; to enable persons to contact the entity and to remove the inconvenience caused by multiple registrations. Further, the objects of the Bill are to avoid confusion by preventing identical or nearly identical names being registered; to prevent the registration of undesirable (for example, offensive) names; to prevent business names that should be restricted for some other reason. Further detail of the purpose of the new law is set out earlier in this document in the overview of the new regime.

2.36 Section 17 provides that the registration of a business name does not affect any rights of an entity in relation to the business name, or any part of it, that the entity has under the law. For example, registering a name that infringes upon a person's trade mark does not reduce the rights of the trade mark holder to take action for the infringement. In respect of trade marks, see also section 51 of the Bill.

2.37 Registration does not lead to an entity acquiring any property in the business name or any part of it.

Application and transitional provisions

2.38 Sections 1 and 2 of the Registration Bill commence on the day this Bill receives Royal Assent. Sections 3 to 17 commence on a day to be fixed by proclamation. The date of proclamation will depend on when the final State or Territory passes its referral legislation or adopts the Commonwealth legislation.

2.39 Transitional provisions are contained in the Business Names Registration (Transitional and Consequential Provisions) Bill 2011.

Consequential amendments

2.40 Consequential provisions are contained in the Business Names Registration (Transitional and Consequential Provisions) Bill 2011.