Commonwealth Numbered Regulations - Explanatory Statements

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CORPORATIONS REGULATIONS (AMENDMENT) 1998 NO. 186

EXPLANATORY STATEMENT

STATUTORY RULES 1997 No. 186

Issued. by the authority of the Treasurer

Managed Investments Act 1998

Corporations Regulations (Amendment)

Section 601QB of the Corporations Law, inserted by the Managed Investments Act 1998, empowers the Governor-General to make regulations that may modify the operation of Chapter 5C of the Corporations Law or any provisions of the Law relating to securities in relation to a managed investment scheme. or all managed investment schemes of a specific class.

Section 4 of the Acts Interpretation Act 1901 provides the power for the Governor-General to make regulations following Royal Assent of the Managed Investments Act 1998 but prior to the commencement of this Act.

The Regulations:

*       amend some of the existing Corporations Regulations relating to prescribed interests so

       that their requirements apply to a managed investment scheme;

*       omit some existing Corporations Regulations relating to prescribed interests as they impose

       requirements which are now included in the Managed Investments Act 1998, or are no longer

       applicable; and

*       make a number of new Regulations required to facilitate the operation of the Chapter 5C of

       the Corporations Law.

Details of the proposed Regulations appear in the Attachment.

The Regulations commence on 1 July 1998 coinciding with the commencement of the Managed Investments Act 1998.

ATTACHMENT

Regulation 1 Commencement

This regulation sets the commencement date for the regulations to be the same as the commencement date for the Managed Investments Act 1998.

Regulation 2 Amendment

This is a formal regulation giving effect to the amendments made by the amending regulations.

Regulation 3 Regulation 1.02 (Interpretation)

This regulation omits a number of definitions in the Corporations Regulations that are no longer applicable once the Managed Investments Act 1998 commences.

Regulation 4 Regulation 1.07 (General requirements for documents)

This regulation amends subparagraphs 1.07 (f) (i) and (ii) by replacing "corporation" with "managed investment scheme", and corrects a typographical error.

Regulation 5 Regulation 1.07A (Information to accompany documents etc years for half-years)

This regulation amends regulation 1.07A (c) by including references to a managed investment scheme, a responsible entity and an Australian Registered Scheme Number (ARSN) as defined in the Corporations Law.

Regulation 6 Regulation 1.07B - (Information to accompany documents etc years for half-years)

This regulation amends regulation 1.07B (c) by including references to a managed investment scheme, a responsible entity and an ARSN.

Regulation 7 Regulation 1.07C (Continuous disclosure notices)

This regulation amends regulation 1.07C (b) by including references to a managed investment scheme, a responsible entity and an ARSN.

Regulation 8 Regulation 1.12 (Certification of a document)

This regulation omits regulation 1.12 and inserts a new regulation, which has the same effect of regulation 1.12.

Regulation 9       Regulation 1.13A (Participation interests: agreements in relation to limited Partnerships.

This regulation repeals regulation 1.13A. The substance of regulation 1.13A has been moved into paragraph (c) of the definition of "managed investment scheme" inserted in the Corporations Law by the Managed Investments Act 1998.

Regulation 10 Regulation 1.15 (Copies of orders to be lodged)

This regulation changes the reference in regulation 1.15 from subsection 1074(5) to the corresponding new provisions of the Corporations Law (section 601ND and subsection 1457(2)).

Regulation 11 New regulation 2C.1.02

This regulation requires the notice to be lodged under subsection 172(2) of the Corporations Law to be in the approved form.

Regulation 12 New Part 2M.4

This regulation requires the responsible entity to lodge a notice with the Australian Securities Commission (ASC) informing them, of the appointment of an auditor of a registered managed investment scheme in a form prescribed by the ASC within 14 days of appointment.

Regulation 13 New Chapter 5C

This regulation adds the following new regulations.

*        A regulation that an application to register a managed investment scheme must be in the

       approved form. This form must state the name of the managed investment scheme, and this

       name must not be the same as any other name of a registered scheme or a scheme that is

       subject of an application for registration.

*        A regulation to facilitate changing a name of a managed investment scheme. The name can

       be changed provided that the new name is not the same as any other name of a registered

       scheme or a scheme that is subject of an application for registration.

*        A regulation to require agents of a responsible entity to take all reasonable steps to assist the

       responsible entity and the ASC when the ASC is carrying out checks on whether the

       responsible entity is complying with the scheme's constitution and compliance plan.

*        A regulation to allow the ASC or a member of a scheme to apply to a court seeking the

       appointment of a temporary responsible entity if the ASC or member reasonably believes that

       the appointment is necessary to protect scheme property.

*        A regulation indicating that a notice lodged under subsection 601FL (2) or 601FM (2) of the

       Corporations Law must be in the approved form.

*        In the event the court appoints a temporary responsible entity on application of a member, a

       regulation to require the member to lodge a notice in the approved form informing the ASC of

       the appointment.

*        A regulation indicating that a notice lodged under subsection 601FP(3) of the Corporations

       Law must be in the approved form.

*        A regulation to allow authority holders to sign on behalf of directors of the responsible entity

       if a verified copy of the authority is attached in the case of lodging a compliance plan, or a

       modification to the compliance plan, with the ASC.

*       A regulation to require an agent of the responsible entity and the officer of the agent to

       allow the auditor of the scheme's compliance plan to have access to the books of the scheme,

       provide information or an explanation to the auditor and assist with the audit.

*       A regulation to require the responsible entity and agents as well as officers of those bodies

       to allow the compliance committee to have access to the books of the scheme, provide

       information or an explanation to the compliance committee and assist the compliance

       committee in the performance of its functions.

*       A regulation prohibiting the responsible entity, entities controlled by the responsible

       entity, agents and persons appointed by the responsible entity and related parties giving

       a financial benefit (except as permitted by law) out of scheme property to a person or a

       related party if the benefit could diminish or endanger scheme property, or adversely

       affect the interests of members. This does not prevent the person or related party from

       being paid fees, or exercising rights to an indemnity, in accordance with the scheme's

       constitution under subsection 601GA(2) of the Corporations Law as amended by the

       Managed Investments Act 1998.

*       A regulation to require the responsible entity to lodge a notice with the ASC informing

       them that the winding up of the scheme has commenced, or has been completed, within

       14 days of commencement or completion.

*       A regulation indicating that Chapter 5C of the Corporations Law does not apply to:

-       the issue by a financial institution of withdrawable shares; or

-       deposit taking by a financial institution; or

-        something else done by a financial institution in the ordinary course of its banking

       business; or

-        the provision by a special services provider of a service mentioned in subparagraph

       36 (2) (b) (i), (ii), (iii), (iv) or (v) of any of the AFIC Codes; or

-        the issue of shares to a building society by a building society special services provider,

       or to a credit union by a credit union special services provider.

*       A regulation indicating that the register of members of a registered managed investment

       scheme does not need to contain information about a member whose only interest in the

       scheme is the holder of an option.

*       A regulation indicating that the related party provisions applying to a managed

       investment scheme commence at the time of the commencement of the regulation.

*       A regulation to prevent the possibility of compensating the managed investment

       scheme twice for an act or omission by an agent appointed by the responsible entity.

*       A regulation indicating that a reference in section 1325 to Part 7.12 of the Corporations

       Law is taken to include a reference to Chapter 5C of the Law.

*       A regulation indicating that the trustee, representative or management company is

       not liable for civil action or civil proceeding for deciding to retire, or giving a

       retirement notice, under section 1455 of the Corporations Law.

Regulation 14 Regulation 7.1.02 (Prescribed interests: exemption of franchise rights or interests).

This regulation repeals regulation 7.1.02, which is now covered by paragraph (f) of the definition of "managed investment scheme" inserted in the Corporations Law by the Managed Investments Act 1998.

Regulation 15 Regulation 7.2.02 (Compliance monitoring - section 770A stock markets)

This regulation replaces "management company" with "responsible entity".

Regulation 16 Regulation 7.3.02A (Conditions to which a licence issued to the management company of a property trust is subject)

Consistent with the repeal by the Managed Investments Act 1998 of the prescribed interest provisions of the Corporations Law, this regulation repeals regulation 7.3.02A dealing with licences issued to a management company of a property trust.

Regulation 17 Regulation 7.3.11 Exemptions from licensing etc.: of prescribed interests)

This regulation amends regulation 7.3.11 to take account of the changes to the Corporations Law reflected by the Managed Investments Act 1998. Regulation 7.3.11 (1) is amended to refer to managed investment schemes rather than trust deeds and prescribed interests, while the provisions relating to the Superannuation Industry (Supervision) Act 1993 are retained.

Regulation 18 Regulation 7.3.12 (Exemption from licensing - dealings in own securities and subunderwriting)

This regulation amends regulation 7.3.12 by replacing "other than prescribed interests" with "except an interest in a managed investment scheme".

Regulation 19 Regulation 7.3.17 (Application of certain provisions of the Law to section 770A stock markets)

This regulation amends regulation 7.3.17 by replacing "management company in relation to unquoted prescribed interests" with "responsible entity in relation to unquoted interests in a managed investment scheme".

Regulation 20 Regulation 7.3.18 (Supervisors have qualified privilege in certain circumstances)

This regulation amends regulation 7.3.18 by replacing "management company" with "responsible entity".

Regulation 21 Regulation 7.4.02 (Exemption of certain securities)

This regulation replaces references to "prescribed interests" in regulation 7.4.02 with references to "interests in a managed investment scheme" and includes a reference to Chapter 5C of the Law.

Regulation 22 Regulation 7.12.01 (Definitions for Part 7.12)

This regulation omits a number of definitions in the Corporations Regulations that are no longer applicable and amends a number of other definitions in light of changes to the Corporations Law effected by the Managed Investments Act 1998.

Regulation 23 Regulation 7.12.04 (Exempt rights or interests: definition of prescribed interest in section 9 of the Corporations Law)

This regulation repeals regulation 7.12.04 as the substance of this regulation has been moved into the definition of "managed investment scheme" inserted in the Corporations Law by the Managed Investments Act 1998.

Regulation 24 Regulation 7.12.05 (Excluded issues (Corporations Law, paragraph 66(2)(n))

This regulation amends regulation 7.12.05 by omitting the reference to an "investment company" as this is no longer applicable.

Regulation 25 Regulation 7.12.06 (Excluded offers and invitations) (Corporations Law, paragraph 66(3)(k))

This regulation amends regulation 7.12.06 (f), (h) and (i) essentially by replacing references to "approved deed" with "constitution of the scheme", and "prescribed interests" with "interests in a managed investment scheme".

Regulation 26 Regulation 7.12.08C (Section 1043B notice - other sales).

This regulation amends regulation 7.12.08C by replacing references to "prescribed interests" with "interests in a managed investment scheme", "trustee, representative or management company" with "responsible entity", and "deed governing the scheme" with "the scheme's constitution". Parts of regulation 7.12.06 are no longer applicable, while other parts have been combined.

Regulation 27 Regulation 7.12.10 (Modifications of Corporations Law to apply to securities that are prescribed interests)

This regulation amends regulation 7.12.10 by replacing the reference to "subsection 1063(2)" with "section 601QB" of the Corporations Law. The reference to regulation 7.12.13 is omitted because it has been repealed.

Regulation 28 Regulation 7.12.11 (Section 1.21 (Specific provisions applicable to all prospectuses))

This regulation amends regulation 7.12.11 by replacing references to "arrangement, common enterprise, financial or business undertaking, investment contract or scheme" with "scheme", "trustee, representative or management company" with "responsible entity", "prescribed interests" with "interests in a managed investment scheme" and "approved deed" with "scheme's constitution". Paragraph (6)(c) is omitted as it is no longer applicable.

Regulation 29 Regulation 7.12.12 (Section 1022 (General provisions applicable to all prospectuses))

This regulation amends regulation 7.12.12 by replacing references to "arrangement, common enterprise, financial or business undertaking, investment contract or scheme" with "scheme", "trustee, representative or management company" with "responsible entity", and "prescribed interests" with "interests in a managed investment scheme". The regulation also requires disclosure in a prospectus how scheme property is to be held.

Regulation 30 Regulation 7.12.12A (Exemption from Division SA of Part 7.12 of the Corporations Law: unlisted property trusts)

This regulation repeals regulation 7.12.12A as it is no longer applicable.

Regulation 31 Regulation 7.12.14A (When financial year reports must be sent)

This regulation repeals regulation 7.12.14A as it is no longer applicable.

Regulation 32 Regulation 7.12.15 (Prescribed covenants: paragraph 1069(1)(n) of the Corporations Law)

This regulation omits regulation 7.12.15 and substitutes a new regulation drawing on the substance of subparagraph 7.12.15 (6) (ba). In the event that a responsible entity receives money without an application form relating to a prospectus, the responsible entity must return the money to the person, or attempt to obtain a completed application form from the person. However, this regulation does not apply in relation to an excluded issue under paragraph 66 (2) (da), or an excluded offer or invitation under paragraph 66 (3) (da), of the Corporations Law. If the moneys accrue interest, the responsible entity is required to ask the person whether they want the interest to be added to the principal or to be paid to the person.

Regulation 33 Regulation 7.12.15A (Prescribed covenants - liquidity of unlisted property trusts)

This regulation repeals regulation 7.12.15A as it is no longer applicable.

Regulation 34 Regulation 7.12.15B (Management companies - period within which returns must be lodged)

This regulation repeals regulation 7.12.15B as it is no longer applicable.

Regulation 35 Regulation 7.12.16 (Return to be lodged under subsection 1071 (1) of the Corporations Law)

This regulation repeals regulation 7.12.16 as it is no longer applicable.

Regulation 36 Regulation 7.12.16A (Conditions for passing a special variation proposal otherwise than at a special variation meeting)

This regulation repeals regulation 7.12.16A as it is no longer applicable.

Regulation 37 Regulation 7.12.16B (Exemption from paragraph 1076T of the Corporations Law)

This regulation repeals regulation 7.12.16 as it is no longer applicable.

Regulation 38 Regulation 7.13.01 (Marketable securities: subsection 1097(1) of the Corporations Law)

This regulation amends regulation 7.13.01 by replacing "a prescribed interest" with "an interest in a managed investment scheme" and referring to the new provision (section 60lEB) inserted in the Corporations Law by the Managed Investments Act 1998.

Regulation 39 Regulation 8.3.02 (Exemption: Part 8.3 - certain futures contracts)

This regulation amends regulation 8.3.02 to omit references to a prescribed trustee corporation as this is no longer applicable and to amend the subparagraphs to refer to a responsible entity and a managed investment scheme.

Regulation 40 Regulation 9.1.01 (Prescribed registers)

This regulation amends regulation 9.1.01 by replacing the reference to "the register of deeds" with "the register of managed investment schemes".

Regulation 41 Regulation 9.1.02 (Prescribed information)

The regulation amends regulation 9.1.02(h) so that it applies to a register of a management investment scheme rather than register of deeds. The ASC is required to record the scheme's ARSN, the name of the scheme (if any), the date of registration, the name and address of the registered office of the scheme's responsible entity, the name and address of the scheme's auditor, the name and address of the auditor of the scheme's compliance plan, date of any amendment to its constitution, date of any amendment to its compliance plan, any winding up or deregistration of the scheme.

Regulation 42 Regulation 9.4A.01 (Definitions for Part)

This regulation amends the definition of register in regulation 9.4A.01 refer to a register of members of a registered managed investment scheme of the corporation.

Regulation 43 New Part 9.11

This regulation inserts a new heading. It also requires notices lodged under section 1455 (2) or 1456 (1), paragraph 1456 (2) (c) or 1457 (1) (b), subsection 1460 (5) or paragraph 1460 (6) (c) of the Corporations Law as amended by the Managed Investments Act 1998 must be in the approved form.

Regulation 44 Schedule 1 (List of forms in Schedule 2)

This regulation omits items that are no longer applicable.

Regulation 45 Schedule 2 (Forms)

This regulation omits forms no linger applicable.

Regulation 46 Schedule 4 (Prescribed amounts)

This regulation inserts a new item in Schedule 4 to prescribe a $10 fee for the purposes of subsection 601GC(4) of the Corporations Law. 9 Regulation 47 Transitional This regulation indicates that the transitional provisions that apply to these regulations.


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