EXPLANATORY STATEMENT

 

Select Legislative Instrument 2007 No. 194

 

Issued by the authority of the Parliamentary Secretary to the Treasurer

 

Corporations Act 2001

 

Corporations Amendment Regulations 2007 (No. 3)

 

Subsection 1364(1) 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.

 

The Regulations repeal regulation 2M.6.03 of and Schedule 5A to the Corporations Regulations 2001. These provisions permit bank and life insurance companies to rely on the financial reporting requirements in the Banking Act 1959 and the Life Insurance Act 1995, rather than following the requirements of the accounting standards under Chapter 2M of the Corporations Act 2001.

 

Targeted consultation has identified that these provisions are not currently being used. In any event, these provisions would allow banks and life insurance companies to prepare financial statements that do not comply with International Financial Reporting Standards (IFRS). This is contrary to Government policy and would erode the benefits to Australian companies of adopting IFRS. In addition, the regulations are outdated, as there are no financial reporting provisions contained in the Banking Act 1959.

 

Details of the Regulations are set out in the Attachment.

 

Under the Corporations Agreement 2002, the State and Territory Governments referred their constitutional powers with respect to corporate regulation to the Commonwealth. Under subclauses 506(1) and 507(2) of the Corporations Agreement, the Commonwealth is required to consult with and receive the approval of at least three State and Territory Ministers of the Ministerial Council for Corporations (the Council) before making a regulation under the national law. The Commonwealth has received approval of the Council for the Regulations. In addition, under subclause 511(3), the Commonwealth is required to consult with the Council as to whether proposed regulations should be exposed for public comment for between one and three months. The Commonwealth has received the approval of the Council to waive the public disclosure period for the Regulations.

 

The Act specifies no other conditions that need to be met before the power to make the Regulations may be exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commence on the day after they are registered.

 

 

Attachment

 

Details of the Corporations Amendment Regulations 2007 (No. 3)

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Corporations Amendment Regulations 2007 (No. 3).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Regulation 3 – Amendment of Corporations Regulations 2001

 

This regulation provides that the Corporations Regulations 2001 (the Principal Regulations) are amended as set out in Schedule 1.

 

Schedule 1 – Amendment

 

Item [1] – Regulation 2M.6.03 and Item [2] – Schedule 5A

 

Items 1 and 2 of Schedule 1 repeal regulation 2M.6.03 and the associated Schedule 5A. The requirements in regulation 2M.6.03 and Schedule 5A do not comply with IFRS and are contrary to Government policy. In addition, the regulations are outdated, as there are no financial reporting provisions contained in the Banking Act 1959.