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CORPORATIONS REGULATIONS (AMENDMENT) 1998 NO. 239
EXPLANATORY STATEMENTSTATUTORY RULES 1998 No. 239
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 required by the Corporations Law to be prescribed by regulations, or necessary or convenient to be prescribed by regulations for carrying out or giving effect to the Corporations Law.
The Heads of Agreement on Future Corporate Regulation in Australia, reached between State, Northern Territory and Commonwealth Ministers who have responsibilities in relation to corporate regulation in June 1990 forms the political compact on which the national companies and securities scheme is based. The Corporations Agreement, a more formal agreement to supplement the Heads of Agreement, was finalised on 23 September 1997.
The responsible Ministers of the States and the Northern Territory on the Ministerial Council for Corporations were consulted about the regulations and the Council has approved them, as required by the Agreement.
The regulations:
* updated the reference to a prescribed authority in regulation 2D.1.01(c) which lists the
State and Territory authorities who can certify the date when former company directors
were released from prison;
* omitted a defunct regulation, regulation 9.5.0 (b), which enabled the Minister to
delegate powers (in relation to moneys unclaimed after a takeover) which were
transferred to the Australian Securities Commission by legislative amendment;
* inserted the terms 'RSL' and 'R.S.L.' in Part 3 of Schedule 6 of the Regulations which
lists words and phrases which must not be used in company names unless the Minister
consents;
* omitted the terms 'Savings' and 'Savings Bank' respectively from Parts 3 and 4 in
Schedule 6 of the Corporations Regulations (these words no longer need any special
protection because the concept of a savings bank has been removed from Australian
banking law).
Details of the regulations are set out in the Attachment.
ATTACHMENT
Regulation 1 (Commencement)
Subregulation 1.1 provides that the Regulations commence on Gazettal.
Regulation 2 (Amendment)
Subregulation 2.1 provides for the amendment of the Corporations Regulations.
Regulation 3 - Regulation 2D.1.01(c) (Prescribed authorities (Law, s.229(4))
Subsection 229(4) of the Corporations Law ('the Law') provides that in a proceeding for a contravention of subsection 229(3) a certificate by a prescribed authority stating that a person was released from prison on a specified date is prima facie evidence that the person was released from prison on that date. (Subsection 229(3) prohibits a person who has been convicted of certain offences under the Law from managing a corporation, without leave of the Court, within 5 years after release from prison if the person was sentenced to imprisonment.)
Regulation 2D.1.01 of the Corporations Regulations lists the prescribed authorities for the purposes of subsection 229(4) of the Law. In the case of Queensland, a prescribed authority under regulation 2D.1.01(c) is the Superintendent of the prison in Queensland that had legal custody of the person on the specified date.
There have not been any Superintendents of prisons in Queensland since the Prisons Act 1958 was replaced by the Corrective Services Act 1988. Under the latter Act, the nearest equivalent to the concept of "Superintendent" is the "general manager" of each prison. Advice has been received from the Queensland Department of Justice that it is satisfactory to use the term "general manager" which is defined in the Corrective Services Act.
Subregulation 3.1 amends regulation 2D.1.01(c) to substitute the term "general manager" as defined in the Corrective Services Act 1988 (Qld) for the term "Superintendent" in that regulation.
Regulation 4 - Regulation 9.5.01 (Prescribed functions (Law, s.1345A(1))
Section 1345A of the Law allow S the Commonwealth Minister to delegate, to an officer of the Commonwealth Treasury, prescribed functions and powers of the Minister under the Law. Regulation 9.5.01(b) of the Corporations Regulations prescribed the Minister's powers and functions under subsection 702(5) of the Law to publish in the Gazette a register of unclaimed money and property of dissenting shareholders to a takeover scheme.
As the Minister's powers and functions under subsection 702(5) have been transferred by legislative amendment to the Australian Securities and Investments Commission, regulation 9.5.01(b) is no longer relevant and has been omitted by Subregulation 4.1.
Regulation 5 - Schedule 6, Part 3 (Restricted words and phrases) Regulation 6 - Schedule 6, Part 4 (Consent required to use restricted words and phrases)
Under subsections 147(1) and 601DC(1) of the Corporations Law, a name will not be available to a body corporate if the name is a name which is declared by the Regulations to be unacceptable for registration (unless Ministerial consent is granted under subsections 147(2) or 601DC(2) as the case requires). Regulation 2B.6.01(2) and 5B.3.01(2) of the Corporations Regulations respectively provide that a name is unacceptable for registration if it is unacceptable under the rules set out in Part 2 of Schedule 6. Rule 6203(b) in Part 2 of Schedule 6 provides that a name is unacceptable for registration if it is a name that contains a word or phrase specified in an item in Schedule 6 or an abbreviation of that word or phrase or a word or phrase or an abbreviation having the same or a similar meaning. Prior to the amendments, item 6317 in Part 3 of Schedule 6 specified the word 'Savings'.
Regulation 2B.6.02 of the Corporations Regulations provides that where an application is made to reserve, register or change a name that contains a word or phrase specified in Part 4 of Schedule 6, the application must be accompanied by the written consent of the relevant Minister specified in that Schedule. Prior to the amendments, item 6404 in Schedule 6 contained the words 'Savings Bank' and the relevant Minister whose consent was required was the Commonwealth Treasurer.
The inclusion of the terms 'Savings' and 'Savings Bank' in Schedule 6 of the Corporations Regulations was apparently motivated by the view that the use of those terms may suggest that an applicant body corporate had authority under the Banking Act 1959 to carry on business as a Savings Bank in Australia, or that the body corporate had some other form of Government authority to operate as a financial institution, when that might not be the case.
Prior to the repeal of the then section 67 of the Banking Act by the Banking Legislation Amendment Act 1989 ('the Amendment Act), the use of the term 'Savings Bank' was, in the absence of written consent by the Treasurer, prohibited. The Explanatory Memorandum to the Amendment Act states that one of the principal aims of the Amendment Act was to remove all references in the Banking Act to 'trading banks' and 'savings banks' and replace them with a general reference to 'banks'. This was to facilitate the removal of the distinction between trading and savings banks as announced by the then Treasurer in the 1988-89 Federal Budget.
As the term 'Savings Bank' is no longer prohibited by the Banking Act, the term has been omitted from Part 4 of Schedule 6 as a restricted term in body corporate names by subregulation 6.1. Similarly, it is considered that the term 'Savings' in body corporate names should no longer be restricted and has been omitted from Part 3 of Schedule 6 by subregulation 5.1.
Regulation 5 - Schedule 6 (Restricted words or phrases)
Subregulation 5.1 also inserts the terms "R.S.L." and "RSL" in Part 3 of Schedule 6:
The amendment has the effect of preventing the registration of names including these letters, unless the Commonwealth Minister consents. This will address concerns that certain companies might use these letters in a misleading and deceptive manner, to the detriment of veterans.