CORPORATIONS AMENDMENT (TRUSTEE COMPANIES) REGULATION 2016 (F2016L01902) EXPLANATORY STATEMENT

Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS AMENDMENT (TRUSTEE COMPANIES) REGULATION 2016 (F2016L01902)

EXPLANATORY STATEMENT

Issued by authority of the Minister for Revenue and Financial Services

Corporations Act 2001

Corporations Amendment (Trustee Companies) Regulation 2016

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

The purpose of the Corporations Amendment (Trustee Companies) Regulation 2016 (the Regulation) is to allow Australian Unity Trustees Limited (ACN 162 061 556) to operate as a trustee company under the Act. This would give effect to the Minister for Revenue and Financial Service's decision to approve the entity to act as a trustee company following its application to be a trustee company under Chapter 5D of the Corporations Act. Subsection 601RAB(2A) of the Corporations Act states that, before the Governor-General makes a regulation that includes a company in a list set out for the purposes of  paragraph 601RAB(2)(a), (effectively Schedule 8AA), the company must satisfy the Minister of the matters set out in paragraphs 601RAB(2A)(a)-(f) which has been done.

A licensed trustee company is a trustee company that holds an Australian Financial Services Licence covering the provision of traditional trustee company services. 'Trustee company' in this context means a company that is a constitutional corporation and is prescribed by the Corporations Regulations 2001 (the Principal Regulations) as a trustee company for the purposes of the Corporations Act. Taken together, a licenced trustee company must:

*         be listed on Schedule 8AA of the Principal Regulations; and

*         hold an Australian Financial Services Licence granted by the Australian Securities and Investments Commission covering the provision of 'traditional trustee company services.'

This is the first application approved by a Commonwealth Minister from an entity seeking to become a licensed trustee company. In July 2008, the Council of Australian Governments agreed that the Commonwealth would assume responsibility for the regulation of trustee companies. On 6 May 2010 amendments to the Corporations Act dealing with licenced trustee companies and the provision of traditional trustee company services came into effect.

Prior to the commencement of the Principal Regulations, trustee companies had been regulated at an entity level under State and Territory regulatory regimes. The trustee company provisions allow private trustee companies to enter the market for personal trustee and estate administration work (for example, acting as an executor or administrator of a deceased estate), thereby removing the limitation that these duties could only be undertaken by natural persons.

An advantage of operating as a licenced trustee company is that they are permitted to operate common funds to enable the efficient pooling and investment of moneys from different estates.

Another advantage of operating as a licenced trustee company is that a licensed trustee company may charge fees for the provision of traditional trustee company services. This overcomes a prohibition under the general trust law against a trustee charging fees except in limited circumstances.

Details of the Regulation are set out in Attachment A.

The Corporations Act specifies no other conditions that need to be satisfied before the power to make the Regulation may be exercised.

No consultation was undertaken given the decision to approve a trustee company application lies with the Minister for Revenue and Financial Services and the entity's ability to satisfy legislative requirements.

Under the Corporations Agreement 2002, the Commonwealth must consult with the Legislative and Governance Forum for Corporations before making amendments to certain provisions of the Principal Regulations. The Council has been consulted. No adverse views have been expressed.

 

A Regulation Impact Statement was not required to be provided.

 

The Regulation is an instrument for the purposes of the Legislation Act 2003.

A statement of the Regulation's compatibility with human rights is set out in Attachment B. The Regulation commences on the day after it is registered.


 

 

ATTACHMENT A

Details of the Corporations Amendment (Trustee Companies) Regulation 2016

Part 1 - Name

This section provides that the title of the Regulation is the Corporations Amendment (Trustee Companies) Regulation 2016.

Part 2 - Commencement

This section provides that the Regulation commences on the day after it is registered.

Part 3 - Authority

This section prescribes that the Regulation is made under the following Acts:

                Corporations Act 2001

                Superannuation Industry (Supervision) Act 1993; and

                Payment Systems and Netting Act 1998.

Part 4 - Schedules

Schedule 1 - Amendments

Item 1 in Schedule 1 would provide that Australian Unity Trustees Limited is to be inserted as a trustee company under the Corporations Act 2001 at item 6A of Schedule 8AA of the Corporations Regulations 2001.


 

 

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Corporations Amendment (Trustee Companies) Regulation 2016

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Corporations Amendment (Trustee Companies) Regulation 2016 is to allow Australian Unity Trustees Limited (ACN 162 061 556) to operate as a trustee company under the Corporations Act 2001.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.


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