EXPLANATORY
STATEMENT
Select
Legislative Instrument 2010 No. 86
Issued by the Authority
of the Minister for Financial Services, Superannuation and Corporate Law
Corporations
Act 2001
Corporations
Amendment Regulations 2010 (No. 3)
Australian
Securities and Investments Commission Act 2001
Australian
Securities and Investments Commission Amendment Regulations 2010 (No.
1)
The Corporations
Act 2001 (the Corporations Act) and the Corporations Regulations 2001 (the Corporations Regulations)
provide for the regulation of corporations, financial markets, products and
services, including in relation to licensing, conduct, financial product advice
and disclosure.
The Australian
Securities and Investments Commission Act 2001 (the ASIC Act) and
the Australian Securities and Investments
Commission Regulations 2001 (the ASIC Regulations) establish the
Australian Securities and Investments Commission (ASIC), define the scope of
ASIC’s powers of investigation and prescribe certain consumer protections in
relation to financial services.
Subsection 1364(1) of the Corporations Act and
subsection 251(1) of the ASIC Act provide that the Governor-General may make
regulations prescribing matters required or permitted by those Acts to be
prescribed by regulations, or necessary or convenient to be prescribed by such
regulations for carrying out or giving effect to those Acts.
The Regulations make a number of amendments to the
Corporations Regulations and the ASIC Regulations related to the Corporations Legislation Amendment (Financial
Services Modernisation) Act 2009 (the Amendment Act), which received
the Royal Assent on 6 November 2009.
Schedule 2 to the Amendment Act inserts a new Chapter
5D - Licensed trustee companies into the Corporations Act. Chapter 5D
implements the transfer of certain regulatory responsibilities from the states
and territories to the Commonwealth. It creates a national licensing system
for trustee companies, since they will be required to hold an Australian
financial services licence covering the provision of ‘traditional trustee
company services’. Licensed trustee companies will be subject to the consumer
protection and disclosure requirements of the Corporations and ASIC Acts.
The Regulations amend the Corporations Regulations to include:
•
transitional arrangements for unlicensed trustee
companies, charging of fees, dispute resolution and compensation, and
established common funds;
•
definitions of “trustee company”, “traditional
trustee company services”, “estate management functions” and “mortgage-backed
security”;
•
obligations on trustee companies to provide annual
returns, and the information to be included in such returns;
•
regulation of fees charged by licensed trustee
companies;
•
a Schedule which lists licensed trustee companies
within Australia;
•
Schedules which list prescribed state and territory
laws in each jurisdiction; and
•
additional provisions for the regulation of trustee
company common funds.
The Regulations
also amend the ASIC Regulations to specify when a person is taken to be provided
a traditional trustee company service.
Details of the
Regulations are set out in Attachments A and B.
Under the Corporations
Agreement 2002 (the Corporations Agreement), 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, and
obtain the approval of state and territory Ministers of the Ministerial Council
for Corporations (the Council) before making a regulation under the national
law. The Commonwealth has received approval of the Council for the Regulations
as required by the Corporations Agreement.
The Corporations Act and the ASIC Act specify no other
conditions that need to be satisfied before the power to make the Regulations
may be exercised.
The Regulations are legislative instruments for the
purposes of the Legislative Instruments Act
2003.
The Regulations have two different commencement
dates. Regulations 1 to 6 and Schedule 1 to the Regulations amending the
Corporations Regulations and the Regulations amending the ASIC Regulations will
commence on the same day as Schedule 2 to the Amendment Act. Regulation 7 and
Schedule 2 to the Regulations amending the Corporations Regulations will
commence on 1 July 2010. The different commencement date of 1 July 2010 for
the common fund provisions is to give the industry additional time to comply
with the new rules.
ATTACHMENT
A
Details
of the Corporations Amendment Regulations
2010 (No. 3)
Regulation 1 – Name of
Regulations
This regulation provides that the title of the
Regulations is the Corporations Amendment
Regulations 2010 (No. 3).
Regulation 2 –
Commencement
This regulation provides that the Regulations will
commence as follows:
•
Regulations 1 to 6 and Schedule 1 will commence on
the same date as the commencement of Schedule 2 of the Corporations Legislation Amendment (Financial Services
Modernisation) Act 2009 (the Amendment Act);
•
Regulation 7 and Schedule 2 will commence on 1 July
2010.
Regulation 3 – Amendment
of Corporations Regulations 2001
This regulation provides that the Corporations Regulations 2001 (the
Corporations Regulations) are amended as set out in Schedules 1 and 2.
Regulation 4 –
Transitional arrangements for charging of fees
Section 1496 of the Corporations Act allows
regulations to deal with transitional matters prior to new provisions taking
full effect. This regulation states that licensed trustee companies may charge
existing clients the fees which they were entitled to charge under the relevant
state law in operation prior to the commencement of the Amendment Act.
Any new clients must be charged fees in accordance
with the provisions in Part 5D.3 of the Amendment Act.
Regulation 5 –
Transitional arrangements for unlicensed trustee companies
This regulation will also be made under section 1496
of the Corporations Act. With the enactment of the Amendment Act, traditional
trustee companies are required to hold an Australian financial services licence
covering their trustee services. Trustee companies listed in Schedule 8AA to
the Regulations who did not hold an Australian financial services licence at
the time that the Amendment Act was enacted are taken to have a deemed licence
covering traditional trustee services until 30 April 2011.
Under a deemed licence, a deemed licensee will be
required to maintain adequate resources. To prove it holds adequate resources,
a deemed licensee needs to maintain (for the period it holds a deemed licence) the
level of net tangible assets it held at the commencement of the Regulations.
This regulation provides
a methodology for licensees to calculate their net tangible assets, including
defining assets which are excluded from such calculations.
Regulation 6 – Transitional
arrangements about dispute resolution and compensation
This regulation will also be made under section 1496
of the Corporations Act. With the enactment of the Amendment Act, traditional
trustee companies which hold an Australian financial service licence must
comply with dispute resolution and compensation arrangements.
This regulation provides that any trustee company
listed in Schedule 8AA to the Regulations is exempt until 30 April 2011 from
complying with dispute resolution and compensation arrangements which generally
apply to Australian financial service licensees. This allows trustee companies
time to put in place dispute resolution and compensation systems which comply
with the law.
Regulation 7 – Application
to established common funds
Paragraphs 5D.2.05(1)(a) to (g) and subregulation
5D.2.05(2) prescribe obligations attaching to common funds managed by licensed
trustee companies.
This regulation deems non-compliance with paragraphs
5D.2.05(1)(a) to (g) and subregulation 5D.2.05(2) to be an offence if a trustee
company has an established common fund before 1 July 2010.
Schedule 1 – Amendments
Item [1]
– Chapter 5D
Item 1 inserts new Chapter 5D into the Principal Regulations including
new regulations 5D.1.01 to 5D.1.04, 5D.2.01, 5D.2.02 and 5D.3.01.
Regulation 5D.1.01
Subsection 601RAB(1) of the Corporations Act states that a trustee company is a company: (a) that is
a corporation to which paragraph 51(xx) of the Constitution applies; (b) that
is prescribed by the regulations as a trustee company for the purpose of the
Act. Subsection 601RAB(2) states that companies may (for example) be
prescribed by setting out a list of companies in the regulations.
Subregulation 5D.1.01(1) provides that a company is prescribed as a
trustee company if the company is listed in Schedule 8AA.
Subregulation 5D.1.01(2) provides that a Public Trustee of any state or
territory must only be listed in Schedule 8AA if: (a) the state or territory
requests the Minister (that is, the Commonwealth Minister responsible for the
administration of the Corporations Act) to prescribe the company as a trustee
company; and (b) the Minister agrees to the request.
Regulation 5D.1.02
Subsections 601RAC(1) and (2) of the Corporations Act define traditional trustee company services and estate management functions as applicable
to trustee companies under the Corporations Act. Subsection 601RAC(3) excludes
certain arrangements from the definition of traditional trustee company
services and estate management functions, with paragraph 601RAC(3)(f) allowing
regulations to prescribe other capacities which will not amount to traditional
trustee company services or estate management functions.
This regulation excludes certain capacities which may be associated
with trustees from the meaning of traditional trustee company services and
estate management functions. Such capacities include:
•
trustees for holder of debt securities;
•
trustees for trusts which issue debt securities or
manage or service the assets of a trust;
•
trustees for the benefit of creditors of another
person when holding secure debts owing to that creditor;
•
custodians for another trustee;
•
trustees for managed investment schemes over real
property;
•
trustees for employee share or benefit schemes;
•
trustees for trusts which mainly make loans to, or
invest in companies;
•
escrow agents;
•
executors or power of attorneys who do not actively
provide services; and
•
providing a living will or advance directive of any
kind.
This regulation also provides
definitions for custodian, debt security,
employee share or benefit scheme, escrow agent, and loan-backed security.
Regulation
5D.1.03
This regulation provides
a definition of mortgage-backed security.
A definition of mortgage‑backed
security is important, as trustees of trusts established for the
purpose of issuing debt securities are excluded from obligations relating to traditional trustee company services and estate management functions.
Regulation
5D.1.04
Subregulation 5D.1.04(1)
Paragraph 601RAE(4)(a) of
the Corporations Act states that regulations may provide that the trustee
company provisions (as defined in subsection 601RAE(1)) are intended to apply to
the exclusion of prescribed state and territory laws, or prescribed provisions
of state or territory laws.
The purpose of subregulation 5D.1.04(1) is to ensure that the common
fund provisions of the Amendment Act and the Regulations apply to the exclusion
of trustee company common fund provisions in the state and territory trustee
company legislation listed in Schedule 8AB.
Subregulation 5D.1.04(2)
Paragraph 601RAE(4)(b) of the Corporations Act states that regulations
may provide that the Commonwealth trustee company provisions (as defined in
subsection 601RAE(1)) are intended not to apply to the exclusion of prescribed
state and territory laws, or prescribed provisions of state or territory laws.
The purpose of subregulation 5D.1.04(2) is to ensure that matters
relating to the role of trustee companies as guardians and administrators of
estates (on behalf of persons not
fully able to manage their own affairs) remain subject to state and territory
laws (as listed in Schedule 8AC). However, under Commonwealth law the trustee
company is still (for example):
•
obligated to fulfil its general Australian
financial service licence obligations (except in relation to dispute
resolution);
•
prohibited from engaging in unconscionable conduct;
•
regulated in relation to common funds that contain
guardianship moneys; and
•
subject to the general duties of officers and
employees.
Subregulation 5D.1.04(3)
Paragraph 601RAE(4)(b) of the Corporations Act states that regulations
may provide that the trustee company provisions (as defined in subsection
601RAE(1)) are intended not to apply to the exclusion of prescribed state and territory
laws, or prescribed provisions of state or territory laws.
Subregulation 5D.1.04(3) provides that the trustee company provisions are
intended not to exclude the state and territory laws listed in Schedule 8AD.
Schedule 8AD contains a list of laws which deal with the probate and
administration of estates, as well as civil procedure rules, rules governing
the legal profession, and other matters.
Regulation 5D.2.01
Section 601SAB of the Corporations
Act provides that regulations may prescribe (amongst other things)
additional powers, functions, liabilities and obligations of licensed trustee
companies.
This regulation prescribes
that licensed trustee companies are obliged to provide annual information
returns under certain circumstances. Failure to provide an information return
when required to do so constitutes an offence.
The parties entitled to
request an annual information return include:
•
beneficiaries of the estate of a deceased person;
•
a person under state or territory law who is or
claims to be entitled to an interest in the estate of a deceased person;
•
a person who has commenced proceedings to be
included as a beneficiary to the estate of a deceased person;
•
a settlor of a charitable trust or any other trust;
•
a person who has power to appoint or remove a
trustee or power to vary the terms of a charitable trust or any other trust;
•
a person named as a person who may be consulted
before the distribution of money or property under a charitable trust; and
•
a beneficiary of any other trust.
This regulation also
specifies how an entitled party may request an annual information return, and
the obligations on the provider to provide a current return in a timely manner.
Regulation 5D.2.02
This regulation
supplements regulation 5D.2.01 by specifying information which must be included
in an annual information return provided by a licensed trustee company.
Generally, those with an individual interest as a beneficiary under a will, a
person with a claim to an intestate estate, or a beneficiary to a trust, are
entitled to details of income earned on their interest, expenses incurred in
operating the trust in relation to their interest, and the net value of their
trust interest. Other parties entitled to an annual information return are
entitled to details of income earned on the trust’s assets, expenses incurred
in operating the trust’s assets, and the net value of the trust’s assets.
If the terms of the trust
require an audit report and annual financial statements, these also need to be
included in any annual information return.
Regulation
5D.3.01
Paragraph 601YAB(1)(b) of
the Corporations Act provides that regulations may omit, modify or vary the
application of the Act to a specific person or class of persons.
Section 601TAB of the
Corporations Act prescribes that, in the event of a trustee company changing
the fees it will charge for the provision of services, it must, within 21 days
of the change of fees taking effect, inform the client of the changed fees.
This regulation modifies
section 601TAB by prescribing that licensed trustee companies are not required
to comply with the obligation to inform clients of fee changes in relation to
clients who are lost clients or
agents who are lost agents.
Lost
clients and lost agents
are defined in this regulation as those who, at a particular time, are uncontactable. Uncontactable is also defined in this regulation and includes
a client or agent for whom the licensed trustee company has no contact address;
or a client or agent to whom the licensed trustee company has sent at least one
written communication which was returned unclaimed.
Item [2]
Regulation
7.1.17C
Subsection 761G(6A) of the Corporations Act states that, unless
otherwise provided, services provided by traditional trustee companies are taken
to be provided to the person as a retail client. The subsection also provides
that regulations may prescribe circumstances when a person may not be classed
as a retail client.
This regulation states that traditional trustee services are not
provided to a person as a retail client where the service is provided to the
person for use in a business that is not a small business; or where the person
to whom the service is provided is a professional investor. These exemptions mirror
the exceptions to the “retail client” definition under the Corporations Act
(paragraphs 761G(7)(b) and (d)).
Small business is
defined in subsection 761G(12) of the Corporations Act, and professional investor is defined in
section 9 of the Corporations Act.
Item [3]
Regulation
7.1.28A
Subsection 766A(1B) of
the Corporations Act provides that regulations may, in relation to traditional
trustee company services, prescribe a person or persons to whom trustee
services are provided. This regulation deems that the following persons are
taken to be provided a traditional trustee company service:
•
a person who may request an annual information return
under subregulation 5D.2.01(3); and
•
a person who requests the preparation of a will,
trust instrument, power of attorney, or agency instrument.
Item [4]
Subregulation
7.6.02(6)
Paragraph 926B(1)(a) of
the Corporations Act allows regulations to exempt a person or class of persons
from specific provisions of the Corporations Act.
Paragraph 912A(1)(g) of
the Corporations Act states that holders of Australian financial service
licenses, including traditional trustee companies, must have dispute resolution
systems in place for all retail clients.
This regulation provides
that traditional trustee companies do not need to comply with the dispute resolution
requirements in section 912A of the Corporations Act if a complaints mechanism
exists under the relevant state and territory law listed in Schedule 8AC.
Schedule 8AC contains a list of laws which deal with guardianship and
administration of estates (on behalf of persons not fully able to manage their
own affairs). Many of the laws listed in this Schedule contain their own
dispute resolution mechanisms. This regulation ensures that there is no
inconsistency between dispute resolution processes which may apply to
guardianship by trustee companies.
Item [5]
Subregulation
7.7.04(3)
This subregulation modifies
the existing subregulation 7.7.04(3) contained within the Corporations
Regulations. Subregulation 7.7.04(3) currently states that if such information
is able to be ascertained, remuneration, commissions and other benefits must be
stated in a Financial Services Guide, which must be provided to all clients of
Australian financial service licensees.
Upon the making of this
subregulation, Australian financial service licensees who are licensed trustee
companies may provide such information on remuneration, commissions and other
benefits as an absolute figure, or as a percentage of the capital value to the
trust estate. All other Australian financial service licensees remain
obligated to express remuneration, commissions and other benefits as an
absolute figure.
Item [6]
Subregulation
7.7.04(4)
This subregulation is a technical amendment to the current
subregulation 7.7.04(4) of the Corporations Regulations. Subregulation
7.7.04(4) applies where remuneration is not ascertainable at the time a
Financial Services Guide is to be provided to a client, and the providing
entity believes personal advice will be given. However, the words “is required”
are missing. This amendment corrects this error.
Item
[7]
Subregulation
7.7.04(5)
This subregulation is a technical amendment to the current
subregulation 7.7.04(5) of the Corporations Regulations. Subregulation
7.7.04(5) applies where remuneration is not ascertainable at the time a
Financial Services Guide is to be provided to a client, and the providing
entity believes personal advice will not be given. However, the words “is
required” are missing. This amendment corrects this error.
Item [8]
Subregulation
7.7.07(3)
This subregulation modifies
the existing subregulation 7.7.07(3) contained within the Corporations
Regulations. Subregulation 7.7.07(3) currently states that if such information
is able to be ascertained, remuneration, commissions and other benefits must be
stated in a Financial Services Guide, which must be provided to all clients of
Australian financial service licensees.
Upon the making of this
subregulation, authorised representatives of Australian financial service
licensees who are licensed trustee companies may provide such information on
remuneration, commissions and other benefits as an absolute figure, or as a
percentage of the capital value to the trust estate. All other Australian financial
service licensees remain obligated to express remuneration, commissions and
other benefits as an absolute figure.
Item [9]
Subregulation
7.7.07(4)
This subregulation is a technical amendment to the current
subregulation 7.7.04(4) of the Corporations Regulations. Subregulation
7.7.04(4) applies where remuneration is not ascertainable at the time a
Financial Services Guide is to be provided to a client, and an authorised
representative of the providing entity believes personal advice will be given.
However, the words “is required” are missing. This amendment corrects this
error.
Item
[10]
Subregulation
7.7.07(5)
This subregulation is a technical amendment to the current
subregulation 7.7.04(5) of the Corporations Regulations. Subregulation
7.7.04(5) applies where remuneration is not ascertainable at the time a
Financial Services Guide is to be provided to a client, and an authorised
representative of the providing entity believes personal advice will not be
given. However, the words “is required” are missing. This amendment corrects
this error.
Item
[11]
Schedule
8AA
Schedule 8AA provides a
complete list of trustee companies (within the meaning of section 601RAB of the
Corporations Act).
Section 601RAB of the
Corporations Act states that a trustee
company is a company: (a)
that is a corporation to which paragraph 51(xx) of the Constitution applies;
and (b) that is prescribed by the regulations as a trustee company.
Schedule 8AA is inserted
into the Corporations Regulations in order to list entities which can provide
traditional trustee company services.
Schedule
8AB
Paragraph 601RAE(4)(a) of
the Corporations Act states that the regulations may provide that the trustee
company provisions (as defined in subsection 601RAE(1)) are intended to apply
to the exclusion of prescribed State and Territory laws, or prescribed
provisions of state or territory laws.
Schedule 8AB provides a
list of state and territory provisions relating to trustee company common funds
which do not apply to licensed trustee companies because the Commonwealth trustee
company provisions apply exclusively.
Schedule
8AC
Paragraph 601RAE(4)(b) of
the Corporations Act states that the regulations may provide that the trustee
company provisions (as defined in subsection 601RAE(1)) are intended not to
apply to the exclusion of prescribed state and territory laws, or prescribed
provisions of state or territory laws.
Schedule 8AC provides a
list of estate administration state and territory laws relating to
guardianship, and administration of estates on behalf of persons not fully able
to manage their own affairs, which continue to apply to licensed trustee
companies, despite the Commonwealth trustee company provisions.
Schedule
8AD
Paragraph 601RAE(4)(b) of
the Corporations Act states that the regulations may provide that the trustee
company provisions (as defined in subsection 601RAE (1)) are intended not to
apply to the exclusion of prescribed state and territory laws, or prescribed
provisions of state or territory laws.
Schedule 8AD provides a
list of state and territory laws which continue to apply to licensed trustee
companies despite the Commonwealth trustee company provisions.
Schedule
2 – Amendments commencing 1 July 2010
Item [1]
– Division 2.2
Item 1 inserts a new
Division 2.2 into Chapter 5D of the Principal Regulations including new regulations
5D.2.03 to 5D.2.09.
Regulation
5D.2.03
Section 601SCC of the Corporations
Act provides that regulations may include provisions relating to the
establishment of operation of common funds. This regulation states that
Division 2.2 under Chapter 5D of the Corporations Regulations is made for the
purpose of section 601SCC.
Regulation
5D.2.04
This regulation allows
licensed trustee companies the option of establishing common funds for the
estate investments of relevant clients. A common fund may be established on
the basis of units or another suitable basis.
The regulation states
that all money held by a licensed trustee company on behalf of a client in a
common fund is deemed to be held on trust for the person on whose behalf the
money is invested.
Regulation
5D.2.05
This regulation places a
number of obligations on the Board of licensed trustee companies who run a
common fund. At the time of establishing a common fund, the Board needs to
state in writing:
•
any limitations on the amount of money that will
form the common fund;
•
the investment strategy for the fund, including
class of investments, procedure for calculation, and any expert investment
advice which will be sought;
•
the amount of fees to be paid by the fund for the
provision of trustee services;
•
the amount of fees which will be paid by each
account within the fund;
•
the manner in which withdrawals can be made;
•
the procedure for auditing the fund;
•
the duration of the life of the fund; and
•
the minimum amount which may be invested in the
fund on account of each estate.
The regulation states
that the Board of a licensed trustee company must inform the Australian
Securities and Investments Commission of any decision, and publish a copy of
the decision on its website within 14 days of any decision being made.
Clients entitled to
request an annual information return under subregulation 5D.2.01(3) of the Regulations
may also request a copy of any decision in writing. A copy of the decision
must be provided to the client within 30 days of the request being made.
Regulation
5D.2.06
This regulation specifies
rules governing the operation of common funds administered by licensed trustee
companies. It also creates penalties for breach of the rules.
Subregulation
5D.2.06(1)
Subregulation 5D.2.06(1) provides
that licensed trustee companies may credit or debit amounts to or from a common
fund in accordance with the Corporations Act and the Regulations.
Subregulations
5D.2.06(2) and (3)
Subregulations 5D.2.06(2)
and (3) provide that a licensed trustee company may withdraw an amount from a
common fund for a purpose relating to a trust that is part of the fund. A
licensed trustee company may also withdraw an amount at credit from a common
fund, provided it is invested in a separate account on behalf of the client.
Subregulation
5D.2.06(4)
Subregulation 5D.2.06(4)
generally provides that licensed trustee companies may not use common funds to
enter derivatives, except where the derivatives are used to manage the financial
risk associated with the fund. Any derivative arrangement must be in
accordance with the trustee company’s duties as a trustee under the relevant
state or territory provisions set out in Schedule 8AE.
Subregulations
5D.2.06(5) and (6)
Subregulations 5D.2.06(5)
and (6) provide that any income generated by a common fund may only be paid to
the licensed trustee company as payment for fees and in proportion to the value
of work done by the licensed trustee company. Income may also be allocated in
accordance with subregulation (6) in relation to the accounts from which the
fund is derived, in which case the allocation must be made at intervals not
exceeding 6 months, and must be divided between each amount in the common
fund in proportion to the amounts invested from those accounts and the period of
investment.
Subregulation
5D.2.06(7)
Subregulation 5D.2.06(7)
provides that any investment committed to administration and management fees
must be made in accordance with a decision of the Board of the licensed trustee
company, and with the relevant state and territory provisions set out in
Schedule 8AE.
Subregulations
5D.2.06(8) and (9)
Subregulations 5D.2.06(8)
and (9) require that a licensed trustee company must determine the value of
investments in any common fund each month. These subregulations also prescribe
rules for determining the value of investments.
Subregulation
5D.2.06(10) and (11)
Subregulations
5D.2.06(10) and (11) provide that, if a licensed trustee company wishes to
realise or sell any investments belonging to the common fund, it must credit or
debit any profit or loss to the account within 14 days of the sale.
Regulation
5D.2.07
Subregulation 5D.2.07
requires licensed trustee companies to maintain a register of investments in
each common fund it operates. The register must identify each investment, and
detail all amounts held to the credit of the common fund.
Regulation
5D.2.08
Subregulation
5D.2.08(1)
Subregulation 5D.2.08(1) provides
that licensed trustee companies must keep accounts and financial reports for
all common funds which are not registered schemes.
Subregulation
5D.2.08(2)
Subregulation 5D.2.08(2) provides
that, for all common funds held by a licensed trustee company, accounts must be
kept that record and explain all transactions and the fund’s financial
performance. The accounts must be such as to enable financial statements of
the common fund to be prepared and audited.
Subregulation
5D.2.08(3)
Subregulation 5D.2.08(3) provides
that at the end of each financial year, licensed trustee companies must submit
their financial statements to be audited by a registered company auditor.
Subregulation
5D.2.08(4)
Subregulation 5D.2.08(4) provides
that audited financial reports must then be lodged with the Australian
Securities and Investments Commission within 3 months of the end of the
financial year.
Subregulations
5D.2.08(5), (6) and (7)
Subregulations 5D.2.08(5),
(6) and (7) provide that clients who are entitled to request an annual
information return under subregulation 5D.2.01(3) of these regulations may
request a copy of the common fund’s financial statements, audit reports,
investment strategy, classes of investments and division of funds between
classes. A copy of the relevant financial information must be provided to the
client within 30 days of the request being made.
Regulation
5D.2.09
This subregulation
generally prevents a licensed trustee company from giving a financial benefit,
in relation to a common fund, to a related party.
The rule does not apply
if the financial benefit is given on terms that:
(a) would be reasonable
in the circumstances if the company and the related party were dealing at arm’s
length; or
(b) are less
favourable to the related party than the terms in paragraph (a).
Related
party is given the same meaning as it has in section 228 of
the Corporations Act.
Item
[2]
Schedule
8AE
Paragraph 601RAE(4)(b) of
the Corporations Act states that regulations may provide that the trustee
company provisions (as defined in subsection 601RAE(1)) are intended not to
apply to the exclusion of prescribed state and territory laws, or prescribed
provisions of state or territory laws.
Schedule 8AE provides a
list of provisions of state and territory Trustee Acts which relate to
investment in common funds, and which continue to apply to licensed trustee
companies, despite the trustee company provisions in the Corporations Act.
ATTACHMENT
B
Details of the Australian Securities and Investments Commission
Amendment Regulations 2010 (No. 1)
Regulation 1 – Name of Regulations
This regulation provides that the title of the Regulations
is the Australian Securities and Investments
Commission Amendment Regulations 2010 (No. 1).
Regulation 2 – Commencement
This regulation provides for regulations 1 to 3 and
Schedule 1 of the Regulations to commence on the same day as Schedule 2 to the
Amendment Act.
Regulation 3 – Amendment of Australian Securities and Investments Commission Regulations 2001
This regulation provides that the Australian Securities and Investments Commission
Regulations 2001 are amended as set out in Schedule 1.
Item [1] Regulation 2D
Circumstances in which a person is taken to be
provided a traditional trustee company service
This regulation clarifies,
for the purpose of Part 2, Division 2 of the Australian
Securities and Investments Commission Act 2001, the circumstances in
which a person is taken to be provided with a traditional trustee company
service. The regulation mirrors regulation 7.1.28A of the Corporations
Amendment Regulations 2010 (No. ).
For the purpose of this
regulation, a person is taken to be provided with a traditional trustee company
service if:
(a)
they are a person who may request an annual
information return under subregulation 5D.2.01(3); or
(b) they
are a person who requests the preparation of a will, a trust instrument, a power
of attorney or an agency arrangement.
This regulation is needed
so that the Australian Securities and
Investments Commission Act 2001 requirements in relation to
financial products and services apply to providers of traditional trustee
company services.