Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)Chapter 5
Schedule 5 - Corporations
Outline of chapter
5.1 Schedule 5 to the Bill amends the Corporations Act 2001 (the Corporations Act) and the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to close the Companies and Unclaimed Moneys Special Account (CUMSA), and establish new processes for the receipt and payment of unclaimed property.
Context of amendments
5.2 The Australian Securities and Investments Commission (ASIC) is responsible for holding and handling unclaimed property (including unclaimed moneys) arising under the Corporations Act, on behalf of the Commonwealth.
5.3 Currently, upon receipt of unclaimed property, ASIC must either credit the amount of the money to CUMSA (in the case of money), or sell or dispose of the property as it sees fit and credit the amount of the proceeds to CUMSA (in the case of property). The funds are held in CUMSA for six years, after which any remaining funds are debited from CUMSA (Part 9.7, Corporations Act).
5.4 Owners of unclaimed property are able to lodge claims for the return of the value of their property at any time while it is held in CUMSA, or afterwards through funds appropriated by Parliament for that purpose.
5.5 The new arrangements will streamline current processes and provide for unclaimed property to be recognised directly in the Commonwealth Consolidated Revenue Fund upon receipt by ASIC. Owners of unclaimed property continue to be able to claim and receive the return of an amount equal to the value of their property, funded by an amount appropriated by Parliament for that purpose. The new arrangements also provide for an interest component to be paid to owners.
Summary of new law
5.6 The new law will remove Division 1, Part 8 of the ASIC Act, which establishes CUMSA and its purposes, and amend sections 1339 and 1341 of the Corporations Act to provide for the new arrangements for the administration and distribution of unclaimed property. The Bill provides that owners of unclaimed property will be entitled to a payment of interest, calculated according to the regulations.
Comparison of key features of new law and current law
| New law | Current law |
| ASIC will continue to have responsibility for the holding and handling of unclaimed property. In the case of property that is not money, ASIC must sell or dispose of the property as it sees fit. Unclaimed property, including moneys and proceeds from the sale or disposal of property, will be remitted directly to Commonwealth consolidated revenue. | ASIC has responsibility for the holding and handling of unclaimed property. In the case of property that is not money, ASIC must sell or dispose of the property as it sees fit. Unclaimed property, including moneys and proceeds from the sale or disposal of property, are held in CUMSA for six years, after which time any remaining moneys are recognised in Commonwealth consolidated revenue. |
| Claimants of unclaimed property would continue to be able to seek the return of an amount equal to the value of their property at any time, with the moneys returned through an appropriation by Parliament. This would include an interest component. | Claimants of unclaimed property are able to seek the return of an amount equal to the value of their property at any time, with the moneys returned through CUMSA, or an appropriation by Parliament if the money has been transferred to Commonwealth consolidated revenue.
An interest component is not included in the repayment . Interest accrued on the balance in CUMSA may be used to fund proposals determined by the Minister to reduce business costs and improve regulation. |
Detailed explanation of new law
5.7 The Bill repeals Division 1 of Part 8 of the ASIC Act, thereby closing CUMSA. [Schedule 5, item 1, ASIC Act, Division 1 of Part 8; items 2 to 4, Corporations Act, section 9]
5.8 ASIC will continue to have responsibility for the holding and handling of unclaimed property arising under the Corporations Act, under Part 9.7.
5.9 The Bill repeals existing subsection 1339(2) which requires ASIC to credit unclaimed property to CUMSA, and replaces the provisions with new arrangements for dealing with unclaimed property. [Schedule 5, item 5, subsection 1339(2)]
5.10 Upon the receipt of unclaimed property that is money, ASIC will continue to hold and receive moneys on behalf of the Commonwealth, which will be recognised in the Commonwealth Consolidated Revenue Fund. Upon the receipt of unclaimed property, ASIC must sell or dispose of the property as it sees fit, and hold and receive any proceeds on behalf of the Commonwealth, with any proceeds to be recognised in the Commonwealth Consolidated Revenue Fund. [Schedule 5, item 5, subsection 1339(2)]
5.11 The Bill repeals existing subsections 1341(1) and 1341(2), and replaces the provisions with new arrangements for the return of unclaimed property to claimants. [Schedule 5, item 6, subsections 1341(1) and (2)]
5.12 The Bill provides that claimants of unclaimed property can continue to claim and receive the return of their property currently or previously held by ASIC on behalf of the Commonwealth. If ASIC is satisfied that the claimant is entitled to the amount claimed, ASIC must pay the owner an amount equal to the value of the unclaimed money (in the case of money), or the proceeds received for the property (in the case of property that is not money), using funds appropriated by the Parliament for that purpose. [Schedule 5, item 6, subsections 1341(1) and (2)]
5.13 The Bill also provides that owners will be entitled to a payment of interest on the principal value, which will be calculated according to the regulations. This interest does not accrue prior to 1 July 2013. The regulations may prescribe different rates for different periods over which interest accrues. It is intended that interest will be calculated in accordance with the Consumer Price Index (CPI) and that a nil rate will be able to be prescribed where the CPI does not change between given periods. [Schedule 5, item 8, after subsection 1341(3)]
Application and transitional provisions
5.14 The amendments in this Chapter will commence the day after the Act receives the Royal Assent.