Explanatory Memorandum(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Chris Pearce MP)
Chapter 7 Compliance
Outline of chapter
7.1 This chapter describes amendments to the Corporations Act to streamline compliance procedures and ensure companies can access newer technologies, by simplifying returns of company particulars and permitting electronic registration of charges.
Context of amendments
7.2 The amendments seek to address concerns that the current compliance framework can stymie companies from using newer technologies and cause them to devote too many resources to unproductive outputs.
7.3 The amendments are based on proposals appearing in the Corporate and Financial Services Review Proposals Paper of November 2006.
Summary of new law
7.4 The Bill will make amendments to the Corporations Act to:
- limit when ASIC can issue a return of particulars to instances where it suspects or believes the particulars on the corporate register are not correct, and give companies two months to respond; and
- allow ASIC to register company charges electronically.
Comparison of key features of new law and current law
|New law||Current law|
|Simplifying returns of company particulars|
|ASIC will be able to give to a company or responsible entity of a registered scheme a return of particulars for the company or scheme if ASIC suspects or believes that particulars recorded in relation to the company or scheme in a register maintained by ASIC are not correct. The response to a return of particulars will have to be lodged within two months of date of issue.||ASIC may give a company or responsible entity of a registered company a return of particulars if the review fee is not paid by the due date, it suspects or believes particulars recorded are not correct, or if no documents have been lodged with ASIC for at least one year. This must be lodged within 28 days of date of issue.|
|Electronic registration of company charges|
|ASIC will provide a facility that allows for the electronic registration of company charges.||Company charges can only be registered on paper forms.|
Detailed explanation of new law
Simplifying returns of company particulars
7.1 Under the current law, ASIC may give to a company or responsible entity of a registered scheme a return of particulars for the company in three situations: if the review fee for the company or scheme has not been paid by the due date; if ASIC suspects or believes that particulars recorded in a register maintained by ASIC are not correct; or if no documents have been lodged with ASIC for at least one year.
7.2 In addition, the response to the return of particulars must be lodged with ASIC within 28 days of the date of issue of the return.
7.3 The requirement to respond to a return of particulars for a company or scheme can involve considerable compliance burden as the issuing of the return of particulars cannot be anticipated by the company or scheme. Companies and schemes also risk being penalised by late lodgment fees if the response is not lodged within 28 days.
7.4 The compliance burden on companies could be reduced by better targeting the circumstances in which a return of particulars may be issued and allow for a longer period to respond. The most appropriate circumstances for ASIC to issue a return of particulars would be it if has reasonable grounds to suspect or believe that particulars recorded in a register are not correct.
7.5 The Bill will repeal existing subsection 348A(1) of the Corporations Act, substituting it with a new subsection 348A(1) that allows ASIC to give a company or responsible entity of a registered scheme a return of particulars for the company or scheme if ASIC suspects or believes that particulars recorded in a registered are not correct. [Schedule 1, Part 3, item 208]
7.6 In addition, the Bill amends paragraph 348D(2)(a) of the Corporations Act, increasing the time in which a return of particulars must be lodged with ASIC from 28 days to two months. [Schedule 1, Part 3, item 209]
Electronic registration of company charges
7.7 From 1 July 2007, ASIC will provide a facility that allows for the electronic registration of charges. Currently, charges can only be lodged with, and certified by, ASIC on paper.
7.8 The Bill will amend subsection 352(1) of the Corporations Act to allow ASIC to approve the lodgement documents in a particular class by electronic means. This will allow ASIC to establish a system for the electronic registration of charges under which all documents in the class of documents related to charges can be lodged with ASIC electronically. [Schedule 1, Part 2, item 196]
7.9 As the timing of the registration of charges is important for issues of priority, the Bill will amend also section 274 of the Corporations Act to provide ASIC with the ability to apply to the Court to have the register rectified in circumstances where the electronic system to register the charges fails. This power would allow ASIC to have the register reflect the order in which charges were registered notwithstanding that the electronic system register was unavailable for a period of time. [Schedule 1, Part 2, items 194 and 195]
7.10 In relation to charge certificates, the Bill will remove the requirement in subsections 272(1) and 272(3) of the Corporations Act for ASIC to issue a certificate providing details of a charge under ASIC's common seal, that is, on paper. Removing this requirement will facilitate ASIC issuing electronic certificates that provide details of a registered charge. This amendment is not intended to remove the requirement for a charge certificate, merely how it comes into existence. [Schedule 1, Part 2, items 191 and 193]
7.11 In addition, to ensure consistency within the charge certificate provisions in the Corporations Act, the Bill will amend subsection 272(3) to replace 'register' with 'Register', so that the provision expressly refers to the Australian Register of Company Charges, to avoid any doubt. [Schedule 1, Part 2, item 192]
Application and transitional provisions
7.12 The amendments providing a facility to allow for the electronic registration of company charges will commence on 1 July 2007.
7.13 The amendment in relation to circumstances when ASIC can issue a return of particulars will commence on a date to be fixed by proclamation or otherwise six months after Royal Assent, and will apply to returns of particulars issued on or after commencement [Schedule 1, Part 6, item 241]
Electronic registration of company charges
7.14 Subparagraph 264(1)(a)(ii) of the Corporations Act contains an incorrect cross reference to paragraph 263(1)(a) of the Corporations Act. The Bill will correct the reference so that it refers to paragraph 263(1)(b) in relation to a company issuing a series of debentures constituting a charge by resolution or resolutions passed by the company. This amendment will commence on a date to be fixed by proclamation or otherwise six months after Royal Assent. [Schedule 1, Part 3, item 207]
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