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 3 Offences relating to business names
Outline of chapter
3.1 Part 2 of this explanatory memorandum outlines:
- •
- offences relating to business names
- •
- the core obligations regarding the use of business names
- •
- sanctions for their breach and provides sanctions for their breach
Detailed explanation of new law
3.2 Subsection 18(1) of the Registration Bill provides that an entity commits an offence if they carry on business under a business name that is not registered. Subsection 18(2) provides exceptions to subsection 18(1), preserving the circumstances where it is not an offence to carry on business under a business name. This includes where an entity is carrying on business under their own name and where an entity has notified ASIC that it is the entity expected to inherit the business name following the death of the business name holder. There is a power to make regulations to prescribe other circumstances where a non-holder of a business name will not commit an offence when trading under the name.
3.3 The exceptions also include where the person is a government body. This exception also exists in relation to all of the offences in this Part. This exception exists in addition to section 11, which provides that government bodies are not liable to prosecution.
3.4 The penalty for a breach of the provision is 30 penalty units. This is a strict liability offence.
3.5 The appropriateness of applying strict liability for the offence in section 18 of the Registration Bill was considered in accordance with Report 6/2002 of the Senate Standing Committee for the Scrutiny of Bills: Application of Absolute and Strict Liability Offences in Commonwealth Legislation (Report 6/2002 of the Scrutiny of Bills Committee).
3.6 First, the penalty imposed under section 18 is 30 penalty units. Secondly, the punishment of offences not involving fault is likely to allow ASIC to establish a compliance program that will significantly enhance the enforcement of the regime in deterring offences.
3.7 The defence of reasonable mistake of fact as well as the other general defences in part 2.3 of the Commonwealth Criminal Code will continue to apply in relation to the strict liability offences under the Registration Bill.
3.8 Strict liability will also help ensure the integrity of the regulatory regime, by ensuring that the entity behind a business name can be identified. This is consistent with the justifications for strict liability indicated by Report 6/2002 of the Scrutiny of Bills Committee at 284:
"strict liability may be appropriate where it is necessary to ensure the integrity of a regulatory regime."
3.9 Strict liability will provide consistency with analogous offences under other Commonwealth legislation, in particular the Corporations Act and the Credit Act. Many of the existing corresponding offence provisions in State and Territory business name legislation contain strict liability offences. Therefore, applying strict liability will not impose an unduly onerous burden and entities will be provided with sufficient notice to guard against the possibility of inadvertently contravening the offence provisions.
3.10 Section 75 of the Registration Bill allows ASIC to issue formal warnings if it believes on reasonable grounds that an entity has contravened a provision of the Registration Bill and warn the entity of the action that may be taken by ASIC under the Act in response to the contravention. This provision is intended allow ASIC pursue its objective of compliance more effectively.
3.11 Section 19 provides that an entity commits an offence if it communicates externally in writing with another entity and the communication is a business document (which may be digital) connected with carrying on the business and the document does not include its clearly legible business name. Written communications that relate primarily to the internal administration of the business are not intended to be captured.
3.12 This requirement represents the current position under the Victorian, Tasmanian, Western Australia and Queensland business names legislation, with the extra catch all of 'all business documents connected with carrying on business', which is used under the current NSW business names legislation. This means that most businesses will not have a large compliance burden and will most likely not need to change stationery.
3.13 Subsection 19(2) outlines that the ABN and business name of an entity must be displayed on the following documents: a document that is lodged with ASIC; a statement of account; a receipt; an order for goods and services; a cheque; a promissory note or bill of exchange; an offer to provide goods or services (rather than an invitation to treat).
3.14 The documents required to include an entity's ABN are similar to the documents required to display an ACN under the Corporations Act.
3.15 Subsection 19(4) lists a number of exceptions where it is not an offence to not include a business name on written communications. These exceptions mirror those in the preceding offence. Under subsection 19(6) the Minister may, by written determination, exempt an entity from these requirements in specified circumstances. The Minister's determination is not a legislative instrument within the meaning of the Legislative Instruments Act 2003. The statement in subsection 19(6) has been included for the sake of clarity only, to assist the reader, and does not amount to a declaration under the Legislative Instruments Act 2003.
3.16 The penalty for a breach of the provision is 5 penalty units. This is a strict liability offence.
3.17 The appropriateness of applying strict liability for the offence in section 19 of the Registration Bill was considered in accordance with Report 6/2002 of the Scrutiny of Bills Committee.
3.18 First, the penalty imposed under section 19 is 5 penalty units. Secondly, the punishment of offences not involving fault is likely to allow ASIC to establish a compliance program that will significantly enhance the enforcement of the regime in deterring offences.
3.19 The defence of reasonable mistake of fact as well as the other general defences in part 2.3 of the Commonwealth Criminal Code will continue to apply in relation to the strict liability offences under the Registration Bill.
3.20 Strict liability will also help ensure the integrity of the regulatory regime, by ensuring that the entity behind a business name can be identified. This is consistent with the justifications for strict liability indicated by Report 6/2002 of the Scrutiny of Bills Committee at 284:
"strict liability may be appropriate where it is necessary to ensure the integrity of a regulatory regime."
3.21 Strict liability will provide consistency with analogous offences under other Commonwealth legislation, in particular the Corporations Act and the Credit Act. For example, the offence under section 19 of the Registration Bill is comparable to the strict liability offence relating to the obligation to cite an Australian credit licence number in certain documents under section 52 of the Credit Act and the obligations relating to the use of company names and ACNs under section 153 of the Corporations Act. Many of the existing corresponding offence provisions in State and Territory business name legislation contain strict liability offences. Therefore, applying strict liability will not impose an unduly onerous burden and entities will be provided with sufficient notice to guard against the possibility of inadvertently contravening the offence provisions.
3.22 Section 75 of the Registration Bill allows ASIC to issue formal warnings if it believes on reasonable grounds that an entity has contravened a provision of the Registration Bill and warn the entity of the action that may be taken by ASIC under the Act in response to the contravention. This provision is intended allow ASIC pursue its objective of compliance more effectively.
3.23 Section 20 states that an entity commits an offence if it carries on business under a business name and does not display the name prominently at every place of business open to the public. Subsection 20(2) sets out the circumstances where this requirement does not apply. These exceptions mirror those in the preceding offence. In addition, subsection 20(3) makes it clear that an entity is not required to display a business name at a particular place in circumstances where displaying the name or making a representation through displaying the name at a particular place, or using the name, would be contrary in some way to the law of the Commonwealth or of a referring / adopting State or affected Territory. Under subsection 20 (4) the Minister may, by written determination, exempt an entity from these requirements in specified circumstances. The Minister's determination is not a legislative instrument within the meaning of the Legislative Instruments Act 2003. The statement in subsection 20 (4) has been included for the sake of clarity only, to assist the reader, and does not amount to a declaration under the Legislative Instruments Act 2003.
3.24 The penalty for a breach of the provision is 5 penalty units. This is a strict liability offence.
3.25 The appropriateness of applying strict liability for the offence in section 20 of the Registration Bill was considered in accordance with Report 6/2002 of the Scrutiny of Bills Committee.
3.26 First, the penalty imposed under section 20 is 5 penalty units. Secondly, the punishment of offences not involving fault is likely to allow ASIC to establish a compliance program that will significantly enhance the enforcement of the regime in deterring offences.
3.27 The defence of reasonable mistake of fact as well as the other general defences in part 2.3 of the Commonwealth Criminal Code will continue to apply in relation to the strict liability offences under the Registration Bill.
3.28 Strict liability will also help ensure the integrity of the regulatory regime, by ensuring that the entity behind a business name can be identified. This is consistent with the justifications for strict liability indicated by Report 6/2002 of the Scrutiny of Bills Committee at 284:
"strict liability may be appropriate where it is necessary to ensure the integrity of a regulatory regime."
3.29 Strict liability will provide consistency with analogous offences under other Commonwealth legislation, in particular the Corporations Act and the Credit Act. Many of the existing corresponding offence provisions in State and Territory business name legislation contain strict liability offences. Therefore, applying strict liability will not impose an unduly onerous burden and entities will be provided with sufficient notice to guard against the possibility of inadvertently contravening the offence provisions.
3.30 Section 75 of the Registration Bill allows ASIC to issue formal warnings if it believes on reasonable grounds that an entity has contravened a provision of the Registration Bill and warn the entity of the action that may be taken by ASIC under the Act in response to the contravention. This provision is intended allow ASIC pursue its objective of compliance more effectively.
3.31 Section 21 provides that an offence is committed if an entity trades under a business name whilst disqualified. The circumstances where an entity is disqualified are set out in section 32. Subsection 21(2) sets out the exceptions to this. These exceptions mirror those in the preceding offence.
3.32 The penalty for a breach of the provision is 30 penalty units. This is a strict liability offence.
3.33 The appropriateness of applying strict liability for the offence in section 21 of the Registration Bill was considered in accordance with Report 6/2002 of the Scrutiny of Bills Committee.
3.34 First, the penalty imposed under section 21 is 30 penalty units. Secondly, the punishment of offences not involving fault is likely to allow ASIC to establish a compliance program that will significantly enhance the enforcement of the regime in deterring offences.
3.35 The defence of reasonable mistake of fact as well as the other general defences in part 2.3 of the Commonwealth Criminal Code will continue to apply in relation to the strict liability offences under the Registration Bill.
3.36 Strict liability will also help ensure the integrity of the regulatory regime, by ensuring that the entity behind a business name can be identified. This is consistent with the justifications for strict liability indicated by Report 6/2002 of the Scrutiny of Bills Committee at 284:
"strict liability may be appropriate where it is necessary to ensure the integrity of a regulatory regime."
3.37 Strict liability will provide consistency with analogous offences under other Commonwealth legislation, in particular the Corporations Act and the Credit Act. Many of the existing corresponding offence provisions in State and Territory business name legislation contain strict liability offences. Therefore, applying strict liability will not impose an unduly onerous burden and entities will be provided with sufficient notice to guard against the possibility of inadvertently contravening the offence provisions.
3.38 Section 75 of the Registration Bill allows ASIC to issue formal warnings if it believes on reasonable grounds that an entity has contravened a provision of the Registration Bill and warn the entity of the action that may be taken by ASIC under the Act in response to the contravention. This provision is intended allow ASIC pursue its objective of compliance more effectively.
Application and transitional provisions
3.39 All provisions in Part 2 will 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.
3.40 Transitional provisions are contained in the Business Names Registration (Transitional and Consequential Provisions) Bill 2011.
Consequential amendments
3.41 Consequential provisions are contained in the Business Names Registration (Transitional and Consequential Provisions) Bill 2011.