Explanatory Statement

Issued by the Authority of the Parliamentary Secretary to the Treasurer

EXPLANATORY STATEMENT

Corporations Act 2001

Corporations Amendment Regulations 2003 (No. 6)

Section 1364 of the Corporations Act 2001 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Act.

Paragraph 1364(2)(n) provides that the regulations may make provision prescribing penalties for late payment of a review fee imposed by the Corporations (Review Fees) Act 2003. Paragraph 1364(2)(w) provides that the regulations may make provision prescribing penalties not exceeding 50 penalty units for contraventions of the regulations.

Under amendments to the Act, the former requirement that companies lodge annual returns with the Australian Securities and Investments Commission (ASIC) has been replaced by new information lodgment requirements. For the most part, the new information lodgment requirements commenced on 1 July 2003.

Company information lodged with ASIC is used to assist ASIC to maintain accurate records in relation to the companies and registered managed investment schemes it regulates. Members of the business community may also obtain from ASIC information about companies (including the names of directors and the address of the registered office) with which they are conducting, or propose to conduct, business.

Under the new information lodgment requirements, ASIC will initiate an annual review of company particulars. Each year, ASIC will send an 'extract of particulars' to companies and the responsible entities of registered schemes or to registered agents. An extract of particulars is a statement given by ASIC under new section 346A of the Act, setting out some or all of the current particulars about the company or scheme recorded in a register maintained by ASIC under section 1274 of the Act.

Under new section 346B, the extract of particulars may also contain a requirement to provide ASIC with a particular prescribed by the regulations.

Under new section 348A, ASIC may also require a company or the responsible entity of a registered scheme to respond to a 'return of particulars', which is a statement containing some or all of the particulars in relation to the company or scheme that are recorded on the register or registers maintained by ASIC under subsection 1274(1), and which ASIC may provide to the company or responsible entity where it suspects or believes that the information may be incorrect or incomplete.

Under new section 348B, ASIC may include in the return of particulars for a company or registered scheme, a requirement that the company or the responsible entity of the scheme provide a particular prescribed by the regulations.

The purpose of the Regulations is to give effect to the new annual review of company particulars regime. The Regulations:

(a)

remove from the Corporations Regulations 2001 references to sections 348 and 349 of the Act, which previously governed the annual return, and remove references to the annual return form (Form 316);

(b)

prescribe the questions ASIC may ask in the extract of particulars;

(c)

prescribe the questions ASIC may ask in a return of particulars; and

(d)

prescribe penalties of up to $270 for failure to pay a review fee by the due date.

As required by the Corporations Agreement, the Ministerial Council for Corporations has been consulted about, and has agreed to, the Regulations.

Details of the Regulations are in the Attachment.

The Regulations commence on 1 August 2003.

Authority: Section 1364 of the Corporations Act 2001

Regulation 1 - Name of Regulations

Regulation 1 provides that the Regulations are known as the Corporations Amendment Regulations 2003 (No. 6).

Regulation 2 - Commencement

Regulation 2 provides that the Regulations commence on 1 August 2003.

Regulation 3 - Schedule 1 - Amendments

Regulation 3 provides that Schedule 1 amends the Corporations Regulations 2001.

Schedule 1 - Amendments

Item 1 of Schedule 1 omits references to sections 348 and 349 from paragraph (a) of subregulation 1.0.05(2) of the Corporations Regulations 2001.

Regulation 1.0.05 relates to documents and information required to be lodged or provided by forms.

Item 2 inserts after Chapter 2M of the Corporations Regulations 2001, the headings 'Chapter 2N Updating ASIC information about companies and registered schemes', 'Part 2N.2 Extract of particulars' and 'Part 2N.4 Return of particulars'.

Under the heading, 'Part 2N.2 Extract of particulars', Regulation '2N.2.01 Particulars ASIC may require in an extract of particulars (Act s 346B)', prescribes the questions ASIC may ask in the extract of particulars.

The questions prescribed by the Regulations mirror the information previously required to be provided pursuant to sections 348 and 349 (Contents of annual return) of the Act (repealed by the Corporations Legislation Amendment Act 2003).

Under the heading, 'Part 2N.4 Return of particulars', Regulation '2N.401 Particulars ASIC may require in a return of particulars (Act s 348B)', prescribes the information and other particulars that ASIC may seek in response to a return of particulars, including information, the lodging of which in accordance with new subsection 348D(2), will satisfy a requirement elsewhere in the Act to lodge the information in a prescribed form.

Information or other particulars prescribed by the Regulations includes information ASIC may seek from a company or the responsible entity of a registered scheme in order to verify or update its records, such as, for example, the personal details of office holders mentioned in subsection 205B(3) of the Act (see paragraph (a) of Regulation 2N.4.01) or any of the information from the share structure table for a class of shares (see paragraph (m) of Regulation 2N.4.01).

The share structure table referred to in paragraph (m) of Regulation 2N.4.01 is information relating to a company's share structure held by ASIC and set out in section 5 of an extract of particulars for a company. The share structure table for a class of shares may include information concerning changes to its share structure lodged by the company with ASIC in accordance with new section 178C (inserted by item 22 of Schedule 1 to the Corporations Legislation Amendment Act 2003).

Item 3 will insert after Regulation 9.4.02 of the Corporations Regulations 2001, Regulation 9.4.03 headed 'Late payment of review fee - prescribed offence and penalty (Act s 1313 and 1364)'.

The Corporations (Review Fees) Act 2003 provides for a review fee, in place of annual return fees, with respect to the review date of a company or scheme (usually the anniversary of its registration with ASIC).

Subregulation 9.4.03(1) prescribes failure to pay a review fee imposed under the Corporations (Review Fees) Act 2003 by the due date as specified for the fee in new subsection 1351(3) of the Corporations Act as an offence for the purposes of section 1313 of the Act (the penalty notices provision).

Subregulation 9.4.03(2) prescribes a penalty of $65 for failure to pay a review fee, where payment is received within one month after the due date, and a penalty of $270 for failure to pay the review date, where payment is not received within one month after the due date.

The penalties are commensurate with fees prescribed for late lodgment of a document with ASIC under item 28 of Schedule 1 to the Corporations (Fees) Regulations 2001, as amended by the Corporations (Fees) Amendment Regulations 2003 (No 2)).

Item 4 omits the reference to item 32 in Schedule 1 to the Corporations Regulations 2001. Schedule 1 to the Corporations Regulations 2001 is the List of Forms in Schedule 2 to the Corporations Regulations 2001. Item 32 is a reference to Form 316, the annual return for a company under sections 345, 346, 347 and 348 of the Act (which sections were repealed by the Corporations Legislation Amendment Act 2003).

Item 5 omits Form 316 (the annual return form for a company) from Schedule 2 to the Corporations Regulations 2001.