House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)

Chapter 8 Providing flexibility in the Corporations Act

Outline of chapter

8.1 Schedule 8 to this Bill amends the Corporations Act to establish a temporary mechanism to provide short-term regulatory relief to classes of persons that, due to the Coronavirus, are unable to meet their obligations under the Corporations Act or the Corporations Regulations.

Context of amendments

8.2 The Coronavirus has continued to spread globally. The Australian Government has taken numerous actions, based on best evidence strategies, to contain transmission of the Coronavirus. Such strategies can, by their nature, disrupt businesses' everyday operations. In recognition of the importance of continued business activity during the Coronavirus pandemic, the Government has provided flexibility to temporarily adjust legal obligations.

Summary of new law

8.3 The new mechanism enables the Treasurer to determine that, due to the Coronavirus, specified classes of persons are exempt from specified obligations in the Corporations Act or the Corporations Regulations.

8.4 The Treasurer may also determine that the specified obligations are modified to enable specified classes of persons to comply with them.

8.5 This mechanism is temporary and will be operative for six months only. Any relief from specific obligation only has effect for a maximum period of six months.

Comparison of key features of new law and current law

Detailed explanation of new law

8.6 Schedule 8 to this Bill amends the Corporations Act to establish a temporary mechanism to provide short-term regulatory relief to classes of persons that, due to the Coronavirus, are unable to meet their obligations under the Corporations Act or the Corporations Regulations. It also provides for short-term regulatory changes to facilitate continuation of business or mitigate the economic impact of the Coronavirus. [Schedule 8, item 1, subsection 1362A(2) of the Corporations Act]

8.7 The Treasurer may, by disallowable legislative instrument, temporarily exempt specified classes of persons from the operation of specified provisions, or temporarily modify the operation of specified provisions of the Corporations Act or the Corporations Regulations due to the Coronavirus. [Schedule 8, item 1, subsections 1362A(1), (4) and (5) of the Corporations Act]

8.8 Any such legislative instrument made by the Treasurer may make exemptions or modifications that are general, or subject to specified conditions. [Schedule 8, item 1, subsection 1362A(3) of the Corporations Act]

8.9 The legislative instrument is disallowable under section 42 of the Legislation Act 2003.

8.10 This is a temporary provision to facilitate the continuation of business during the Coronavirus. Accordingly, an instrument made by the Treasurer under section 1362A(1) ceases to be in force at the end of the six month period beginning on the day after the instrument is made, or an earlier time, if specified. [Schedule 8, item 1, subsection 1362A(4) of the Corporations Act]

8.11 The Treasurer cannot make an instrument under subsection 1362A(1) after the end of the period of six months beginning on the day this section commences. [Schedule 8, item 1, subsection 1362A(5) of Corporations Act]

8.12 The Treasurer may amend an instrument at any time before the instrument ceases to be in force in accordance with subsection 1362A(4). [Schedule 8, item 1, subsection 1362A(5) of the Corporations Act]

Application and transitional provisions

8.13 The amendments in Schedule 8 to this Bill will commence on the day after this Bill receives Royal Assent.

8.14 An instrument cannot be made under section 1362A(1) after the end of the period of six months beginning on the day the amendments commence. [Schedule 8, item 1, subsections 1362A(4) and (5) of the Corporations Act]