Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1996 NO. 205

STATUTORY RULES 1996 No. 205

Issued by the Authority of the Treasurer

Corporations Act 1989

Corporations Regulations (Amendment)

Section 22 of the Corporations Act 1989 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act or the Corporations Law, prescribing inter alia, matters which are permitted by the Corporations Law to be prescribed by regulations, or which are necessary or convenient to be prescribed by regulations for carrying out or giving effect to the Corporations Law.

The purposes of the proposed regulations are to:

(i)       extend the period for the provisional registration of company charges from 30 days to 90 days for the purposes of section 265 of the Corporations Law.

A "charge" is a form of security for the payment of a debt or performance of an obligation consisting of the right of a creditor to receive payment out of some specific fund or out of the proceeds of specific property. The term "charge" is defined in section 9 of the Corporations Law to mean a charge created in any way and includes a mortgage and an agreement to execute a charge or mortgage, whether on demand or otherwise.

The Corporations Law requires that certain charges over the property of a company be registered with the Australian Securities Commission on the Australian Register of Company Charges.

Proposed regulation 3.5.02 will provide for the extension of the period of the provisional registration of company charges from 30 days to 90 days for the purpose of section 265(5b) of the Corporations Law, and thereby allow a more reasonable length of time for parties to comply with the registration requirements. Regulation 3.5.02 will apply to all charges lodged within 30 days before the commencement of the regulation.

(ii)       achieve accurate and consistent numbering throughout the Corporations Regulations by renumbering regulations 3.2.03, 3.2.04, 3.2.05 and 3.2.06.

Details of the proposed regulations are contained in the Attachment.

ATTACHMENT

Regulation 1

Amendment

Regulation 1 provides that the Corporations Regulations are amended as set out in these regulations.

The purpose of these regulations is to extend the period for the provisional registration of company charges from 30 days to 90 days for the purposes of section 265 of the Corporations Law (proposed regulation 3.5.02).

When drafting the regulations it became apparent that regulations 3.2.03, 3.2,04, 3.2.05 and 3.2.06 are incorrectly numbered and situated in the Corporations Regulations as relating to Part 3.2 of the Corporations Law. Regulations 3.2.03, and 3.2.04 should relate to Part 3.3 of the Corporations Law and regulations 3.2.05 and 3.2.06 should relate to Part 3.5.

Therefore, the attached draft regulations also amend the Corporations Regulations by renumbering regulations 3.2.03, 3.2.04, 3.2.05 and 3.2.06 to achieve accurate and consistent numbering throughout the Regulations. Renumbering as follows is made:

(a)       under the heading "PART 3.3 - MEETINGS & PROCEEDINGS", regulation 3.2.03 is renumbered as 3.3.01, and 3.2.04 is renumbered as 3.3.02; and

(b)        under the heading "PART 3.5 - CHARGES" regulation 3.2.05 is renumbered as 3.5.01, the draft proposed regulation numbered 3.5.02, and regulation 3.2.06 is renumbered as 3.5.03.

The renumbered regulations 3.2.04 (as 3.3.02) and 3.2.06 (as 3.5.03) are reproduced in these regulations for technical drafting reasons only, without any change to the text of the regulations.

Regulation 2

New Part Heading (Part 3.3)

Regulation 2 inserts the heading "Part 3.3 - Meetings and Proceedings" after regulation 3.2.02.

At present the Corporations Regulations incorrectly group regulations 3.2.03 and 3.2.04 under the heading, "Part 3.2 - Officers". As these regulations relate to Part 3.3 of the Corporations Law, a heading for Part 3.3 is inserted into the Corporations Regulations for the renumbered regulations 3.2.04 (as 3.3.02) and 3.2.06 (as 3.5.03).

Regulation 3

Regulation 3.2.03 (Certification of statutory report and auditor's report)

Regulation 3 renumbers regulation 3.2.03 as regulation 3.3.01 as it relates to Part 3.3 of the Corporations Law and should appear under the heading, "Part 3.3 - Meetings and Proceedings" which has been inserted by Regulation 2 of these regulations.

Regulation 4

Regulation 3.2.04 (Statement to accompany copy of minute)

Regulation 4 omits regulation 3.2.04 and substitutes regulation 3.3.02. Regulation 3.2.04 has, in effect, only been renumbered as the regulation relates to Part 3.3 of the Corporations Law and was incorrectly numbered. The text of the regulation is unchanged.

Regulation 4 also inserts the heading, "Part 3.5 - Charges". The Corporations Regulations Previously incorrectly grouped regulations 3.2.05 and 3.2.06 under the heading, "Part 3.2 -Officers". As these regulations and regulation 3.5.02 relate to Part 3.5 of the Corporations Law, a heading for Part 3.5 is inserted into the Corporations Regulations.

Regulation 5

Regulation 3.2.05 (Lien or charge on crop, wool or stock mortgage that is a registrable security: prescribed law)

Regulation 5 renumbers regulation 3.2.05 as regulation 3.5.01 as it relates to Part 3.5 of the Corporations Law and should appear under the heading, Tart 3.5 - Charges".

Regulation 6

Regulation 3.2.06 (Registration under other legislation relating to charges: prescribed matters under section 273 of the Corporations Law)

Regulation 6 omits regulation 3.2.06 and substitutes new regulation 3.5.02. Regulation 3.2.06 is renumbered as 3.5.03.

New regulation 3.5.02 provides for the extension of the period of the provisional registration of company charges from 30 days to 90 days for the purpose of section 265(5)(b) of the Corporations Law. Regulation 3.5.02 applies to all charges lodged within 30 days before the commencement of the regulation.

Documents relating to company charges are required to be registered with the Australian Securities Commission (ASC). Section 265 provides that registration is 'provisional' until a certificate of compliance with all applicable stamp duty laws is also lodged. Subsection 265(5) provides that such a certificate should be lodged within 30 days, or such longer period as allowed by the ASC or as prescribed by the regulations.

Parties registering charges with the ASC must ensure that all relevant stamp duty laws have been complied with. This can be quite an involved process where an instrument relates to property located in several different jurisdictions, since stamp duty might be applicable in each jurisdiction. In practice, this can lead to parties being put to the expense and uncertainty of having to seek ASC extensions of the 30 day period. Failure to do so results in the notice of the charge being deleted from the register. Regulation 3.5.02 extends this period to 90 days.

Regulation 3.2.06 has, in effect, been renumbered as 3.5.03 as it relates to Part 3.5 of the Corporations Law and should appear under the heading, "Part 3.5 - Charges". The text of the renumbered regulation is unchanged.