House of Representatives

Explanatory Memorandum

Circulated by the authority of the Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry

Chapter 1 Introduction

Clause 1: Short title

1.1 The Act may be cited as the Corporations Amendment (Short Selling) Act 2008 .

Clause 2: Commencement

1.2 Sections 1 to 3 are formal provisions and commence on Royal Assent. Schedule 1 is to commence on Royal Assent. Schedule 2 is to commence on the 28th day after Royal Assent. Schedule 3 is to commence on a date to be fixed by proclamation. However if the provisions do not commence within 12 months of the Act receiving Royal Assent, they commence on the first day after the end of that period.

1.3 Schedule 3 contains the amendments to require the disclosure of covered short sale transactions. This provision will commence on proclamation to provide sellers and AFS Licensees with a transitional period before compliance with the law is required. It is understood that the new disclosure regime will require IT and other administrative changes. While the scope of the IT and other administrative changes will not be fully known until regulations are in place, some parts of industry have suggested the changes may take up to 12 months to complete in order to enable electronic reporting of these transactions.

Clause 3: Schedules

1.4 Schedule 1 amends existing section 1020F of the Corporations Act and inserts new section 1484 to clarify ASIC's existing powers in relation to short selling. Schedule 2 amends existing section 1020B to prohibit certain short sales. Schedule 3 inserts new Division 5B in Part 7.9 to require the disclosure of covered short sale transactions.