EXPLANATORY STATEMENT

Select Legislative Instrument 2009 No. 51

Issued by the authority of the Minister for Superannuation and Corporate Law

 

Subject - Corporations Act 2001

Corporations Amendment Regulations 2009 (No. 2)

 

Subsection 1364(1) of the Corporations Act 2001 (the Corporations Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Corporations Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Corporations Act.

 

The Corporations Amendment (No.1) Act 2009 (the Amendment Act) inserts a framework into the Corporations Act to disqualify a person from managing corporations in Australia if the person is currently disqualified by a court, or by operation of the law, of a ‘foreign jurisdiction’ from being a director of a foreign company.

 

A ‘foreign jurisdiction’ is defined as a foreign country, or part of a foreign country, prescribed by the regulations as a foreign jurisdiction.

 

The Amendment Act fulfils a requirement under the Australian and New Zealand Governments’ Memorandum of Understanding on Business Law Coordination and closes a regulatory gap whereby people can escape disqualification simply by crossing the Tasman.

 

The purpose of the proposed regulations is to amend the Corporations Regulations 2001 is to prescribe New Zealand as a foreign jurisdiction. Initially, the mutual disqualification regime will only apply to New Zealand. However, the framework will allow for other countries to be added at a letter date.

 

Under the Corporations Agreement 2002, the Commonwealth must consult with the Ministerial Council for Corporations before making amendments to certain provisions of the Regulations. The Council was consulted about these amendments, and notified of the Minister’s decision to dispense with the period of public exposure due to the minor nature of the reform and the fact that it was publicly exposed in a press release by the Minister on 26 February 2008.

 

The amendment to the Corporations Regulations 2001 (Corporations Regulations) names New Zealand as a prescribed foreign jurisdiction.

 

Details of the amendments to the Corporations Regulations are set out in the Attachment.

 

The Corporations Amendment Regulations 2009 (No. 2) is 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 2009 (No. 2)

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Corporations Regulations 2009 (No. 2).

 

Regulation 2 – Commencement

 

This Regulation provides that the amendments commence on the day after they are registered.

 

Regulation 3 – Amendment of Corporations Regulations 2001

 

This Regulation provides a table to be included in the Corporations Regulations listing prescribed foreign jurisdictions for the purposes of subsection 206B(7) of the Corporations Act 2001. New Zealand is named in the table as a prescribed foreign jurisdiction. As such, people that are disqualified from managing companies in New Zealand by court order will be automatically disqualified from managing corporations in Australia.