EXPLANATORY STATEMENT

Select Legislative Instrument 2008 No. 93

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

Corporations Act 2001

                        Corporations Amendment Regulations 2008 (No. 1)

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.

Under section 346B of the Act and regulation 2N.2.01 of the Corporations Regulations 2001 (the Principal Regulations), managed investment schemes (registered schemes), both listed and unlisted, must notify the Australian Securities and Investments Commission (ASIC) of their top 20 interest holders in each class once a year in response to the annual review process.  However, registers of registered scheme members must also be kept under sections 168 and 169 of the Act and these are generally publicly available for all registered schemes.  In addition, the Australian Securities Exchange (ASX) listing rules require listed registered schemes to report similar details to the market operator, resulting in a duplication of regulatory requirements.

The availability of scheme member registers makes the annual nature of the interest and member reporting obligations for registered schemes of limited value in terms of public information and regulatory and enforcement outcomes.  In particular, the rate of change of scheme members, especially in listed entities, may quickly render information in the annual reports obsolete.

The Regulations amend the Principal Regulations to remove the requirement introduced in 2003 for registered schemes to notify ASIC of the top 20 interest holders of a registered scheme.  The amendments reduce compliance costs for approximately 4,500 registered schemes and reduce ASIC’s administrative workload.  Information will continue to be publicly available through the register of scheme members and through ASX disclosures.

The Regulations align the treatment of registered schemes with the treatment of public companies in relation to the member reporting requirement amendments introduced in Corporations Amendment Regulations 2007 (No. 5).

The Treasury released draft amendment regulations in this form on the Treasury website for a one‑month public consultation period and brought the consultation to the attention of interested firms and industry bodies.  A key industry body responded in support of the making of regulations in this form, noting that regulations in this form will provide compliance certainty by aligning the treatment of registered schemes and public companies.

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(1) of the Corporations Agreement, the Commonwealth is required to consult with the Ministerial Council for Corporations (the Council) before making a regulation under the national law concerning registered schemes.  The Commonwealth has consulted with the Council on the Regulations.

Under subclause 511(2), the Commonwealth is required to advise the Council on the public exposure of regulations concerning registered schemes.  The Commonwealth has advised the Council of the public consultation on the draft amendment regulations.

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 on the Federal Register of Legislative Instruments.

ATTACHMENT

Details of the Corporations Amendment Regulations 2008 (No. 1)

Regulation 1 – Name of Regulations

This regulation provides that the title of the Regulations is the Corporations Amendment Regulations 2008 (No. 1).

Regulation 2 – Commencement

This regulation provides for the Regulations to commence on the day after they are registered.

Regulation 3 – Amendment of Corporations Regulations 2001

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

Schedule 1 – Amendments

Item [1] – Subparagraph 2N.2.01 (2) (e) (v)

This item corrects the punctuation of the subparagraph in light of the amendments in Item [2].

Item [2] – Paragraphs 2N.2.01 (2) (f) and (g), except the note

This item removes the requirement for registered schemes to provide to ASIC details of the names and addresses and number of interests held by the registered scheme members.