House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Glossary

This Explanatory Memorandum uses the following abbreviations and acronyms.

General outline and financial impact

Schedules 1 to 3 - Australian Law Reform Commission recommendations

Outline

Schedules 1 to 3 to the Bill implement recommendations identified by the ALRC in Interim Reports A and B from the ALRC Review to simplify and improve the navigability of the law. This includes 'unfreezing' the application of the AIA to the Corporations Act and ASIC Act, creating a single glossary for all defined terms in the Corporations Act, repealing redundant definitions, addressing unclear or incorrect provisions and simplifying unnecessarily complex provisions in the law.

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These changes facilitate a more adaptive, efficient, and navigable legislative framework which ensures that the legislative intent is met.

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The amendments in these Schedules are minor and technical in nature, and do not engage policy considerations.

Date of effect

Schedules 1 to 3 to the Bill commence on the later of the start of the 30th day after the Act receives Royal Assent and immediately after the commencement of Schedule 2 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023. This ensures the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 commences first and then this Bill, and the accompanying Regulations, commence at the same time.

Financial impact

Nil.

Human rights implications

Schedules 1 to 3 to the Bill do not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 5.

Compliance cost impact

Schedules 1 to 3 to the Bill do not impose any ongoing additional regulatory burden. The simplifications to the law have a small but unquantifiable cost saving for those that frequently refer to the law.

Schedule 4 - Insurance

Outline

Schedule 4 to the Bill primarily amends the IAT Act, Life Insurance Act and Insurance Act to implement relevant findings of the thematic review of Insurance Instruments that are due to sunset on 1 October 2023.

Date of effect

Items 1 to 121 and 123 to 136 of Schedule 4 to the Bill commence on a day fixed by proclamation. However, if any of the provisions do not commence within the period of 6 months beginning on the day of Royal Assent, they commence on the day after the end of that period.

Item 122 of Schedule 4 to the Bill commences on the later of the commencement of items 1 to 121 of Schedule 4 to the Bill, and immediately after the commencement of item 114 of Schedule 1 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023.

Part 7 of Schedule 4 to the Bill commences on the later of the commencement of Schedules 1 and 2 to the Bill and immediately after the commencement of items 123 to 136 of Schedule 4 to the Bill.

Financial impact

Nil.

Human rights implications

Schedule 4 to the Bill raises human rights issues. See Statement of Compatibility with Human Rights - Chapter 5.

Compliance cost impact

Schedule 4 to the Bill is unlikely to have a more than a minor impact on compliance costs.

Schedule 5 - Rationalisation of ending ASIC instruments

Outline

Schedule 5 to the Bill amends the Corporations Act and the National Consumer Credit Protection Act 2009 to transfer longstanding and accepted matters currently contained in ASIC legislative instruments into the primary law. The amendments will improve navigability of the law and provide industry and consumers with greater certainty and clarity when interacting with Treasury laws.

Date of effect

Schedule 5 to the Bill commences on the day after Royal Assent.

Financial impact

Nil.

Human rights implications

Schedule 5 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 5.

Compliance cost impact

Schedule 5 to the Bill is unlikely to have more than a minor impact on compliance costs.

Schedule 6 - Minor and Technical Amendments

Outline

Schedule 6 to the Bill makes a number of minor and technical amendments to Treasury portfolio legislation. The amendments demonstrate the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

The amendments correct drafting errors, repeal inoperative provisions, address unintended outcomes, and make other technical changes.

Date of effect

Divisions 1 and 2 in Part 1 of Schedule 6 to the Bill commence on the day after the Bill receives Royal Assent.

Division 3 in Part 1 of Schedule 6 to the Bill commences immediately after the commencement of the provisions in Divisions 1 and 2 in Part 1.

Part 2 of Schedule 6 to the Bill commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day the Bill receives Royal Assent.

Financial Impact

The amendments in Schedule 6 to the Bill have nil or minimal financial impact.

Human rights implications

Schedule 6 to the Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 5.

Compliance cost impact

Schedule 6 to the Bill is unlikely to have more than a minor impact on compliance costs.

Chapter 1: Australian Law Reform Commission recommendations

Outline of chapter

1.1 This chapter outlines how Schedules 1 to 3 to the Bill simplify and improve the navigability of Australia's corporations and financial services laws.

Context of amendments

1.2 In September 2020, the then Attorney-General asked the ALRC to inquire into the potential simplification of laws regulating Australian corporations and financial services as part of the Government's response to the 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

1.3 The ALRC found that the law is challenging to navigate and complex for individuals and businesses and that it needs to be simplified to ensure its intent is met.

1.4 The ALRC's Interim Report A focused on the use of definitions. It found that complexity could be reduced by only using defined terms where this reduces repetition and enhances readability, improving the design of definitions and using defined terms consistently throughout the corporations law. The ALRC made 13 recommendations, along with 24 proposals and questions for further consideration.

1.5 In Interim Report B, the ALRC focussed on design choices relevant to determining where material is located in the legislative hierarchy. It found that the particular design choices made in relation to the Corporations Act are a significant source of complexity. The ALRC made a further six recommendations, largely centred around opportunities for technical simplification, and raised 18 proposals for further consideration.

1.6 In November 2022, the Government introduced the MBC Bill, which contained a first tranche of amendments to implement recommendations from Interim Report A and other easily implementable opportunities to improve the law.

1.7 This Bill implements a further two recommendations from Interim Report A and partially implements three recommendations from Interim Report B.

1.8 The Interim Reports' recommendations, as opposed to their proposals and questions, were designed for immediate implementation. They address technical aspects of the legislation, do not raise significant policy issues and have broad support from stakeholders.

1.9 In particular, this Bill only implements those elements from the three Interim Report B recommendations that can be implemented without any substantial policy changes.

1.10 The recommendations primarily address unnecessary complexity in the corporations and financial services law. They unfreeze the AIA, create a single glossary of terms, remove redundant definitions and make other simplifications to improve the navigability and clarity of the law.

1.11 The Government is progressing these amendments as part of its ongoing commitment to practical and effective stewardship of Treasury laws to ensure they remain current and fit-for-purpose. Other recommendations made by the ALRC will be considered in the future as part of this ongoing program of work.

Comparison of key features of new law and current law

Comparison of new law and current law

Detailed explanation of new law

1.12 Schedules 1 to 3 to the Bill improve the navigability and readability of the corporations and financial services law by:

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implementing two further recommendations from the ALRC's Interim Report A to:

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unfreeze the AIA so that the current version of the AIA applies to the Corporations Act and ASIC Act (recommendation 5); and

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create a single glossary of defined terms in section 9 of the Corporations Act (recommendation 7).

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partially implementing three recommendations from the ALRC's Interim Report B to:

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repeal definitions that are no longer used, cross-references to repealed provisions and other redundant provisions (recommendation 14);

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amend the law to address unclear or incorrect provisions (recommendation 16); and

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simplify unnecessarily complex provisions in the law, with a particular focus on terms defined as having more than one meaning, definitions containing substantive obligations and definitions that contain the phrase 'in relation to' (recommendation 17).

Unfreezing the AIA

1.13 Section 5A of the ASIC Act and section 5C of the Corporations Act apply the version of the AIA in force on 1 January 2005 to those Acts, that is, they freeze the AIA. This means that amendments to the AIA made after 1 January 2005 date do not apply.

1.14 Freezing the AIA has created practical complications for Corporations Act and ASIC Act readers, who must locate the historic version of the AIA.

1.15 Additionally, whenever the AIA is amended, those amendments must be replicated in the Corporations Act and ASIC Act if the amendments are intended to apply to those Acts. For example, the Corporations Act now includes a definition of 'document' to replicate the technology neutral definition inserted into the AIA after 2005.

1.16 Freezing the AIA has also created uncertainty about which version of the AIA applies to delegated legislation made under the Corporations Act. This is because the AIA is frozen only for the purposes of 'this Act' and the definition of 'this Act' does not include ASIC instruments. However, the definition applies subject to any contrary intention. 'This Act' is frequently used in a manner that differs to the definition, making it unclear whether there is a contrary intention.

1.17 Schedule 1 to the Bill implements the ALRC's recommendation 5 to unfreeze the AIA so that the version of the AIA that is in force at the relevant point in time applies to both Acts. This:

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restores the original intent of the AIA as an Act of general application across all Commonwealth laws;

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reduces complexity and improves navigability of the corporations and financial services law; and

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removes the duplication of provisions across the Commonwealth statute book. [Schedule 1, item 1, section 5A of the ASIC Act; item 13, section 5C of the Corporations Act]

1.18 Unfreezing the AIA does not change existing policy settings.

1.19 The most significant change to the AIA since 1 January 2005 relates to the calculation of time.

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The frozen AIA calculates a period of time exclusive of the first day of that period whereas the unfrozen version includes the first day.

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Further, the frozen AIA states that if the last day for doing a thing falls on a Saturday, Sunday, 'public holiday or bank holiday', it may be done on the next day. The unfrozen AIA refers generally to 'holidays' which includes a day on which the place where the thing is to be done is closed.

1.20 The corporations law also contains bespoke rules for calculating time. When calculating how many days a particular day is before or after another day, the first day is to be counted but not the other day. Further, the definition of 'business day' includes 'bank holidays'. These bespoke rules are in the Corporations Act but they also apply to the ASIC Act due to section 5 of the ASIC Act.

1.21 The Bill amends the bespoke rules for calculating time in the Corporations Act to ensure that the rules in the frozen AIA (as modified by the Corporations Act) continue to apply. The Bill also clarifies that this approach applies to instruments made under the Corporations Act. [Schedule 1, item 15, section 105 of the Corporations Act]

1.22 The bespoke rules in the Corporations Act relating to calculating time also apply to the ASIC Act due to subsection 5(3) of the ASIC Act.

1.23 Other differences between the frozen and unfrozen AIA are minor and technical. These are outlined in Table 1.2.

Comparison of frozen and unfrozen AIA

1.24 The amendments also repeal the definition of 'modifications' in the Corporations Act and ASIC Act and the definitions of 'affidavit', 'document' and 'territorial sea' in the Corporations Act. As the AIA already contains these definitions, their inclusion in the Corporations Act and the ASIC Act is unnecessary. The amendments also substitute the terms 'Judge' and 'Judges' in the Corporations Act with 'judge' and 'judges' so the AIA definitions apply to the terms. [Schedule 1, item 2, subsection 12GNA(4) (definition of 'modifications') of the ASIC Act; items 14, 16, 17, 20 and 21, section 9 (definitions of 'affidavit', 'document', 'Judge' and 'territorial sea') and subsections 110(1) (note 1), 581(1), 1044B(4) (definition of 'modifications'), 1057A(2) and (3) of the Corporations Act]

1.25 Similarly, the Bill repeals sections in the Corporations Act and ASIC Act that relate to acting positions. These sections replicate the content in the unfrozen AIA. The Bill inserts a note directing readers to the relevant provision in the AIA. [Schedule 1, items 5, 6, 7, 8, 10 and 11, sections 116, 117, 118, 182 and 245, subsections 208(4), 208A(1), 208A(2), 236D(4) and 236H(4) of the ASIC Act]

1.26 The Corporations Act and ASIC Act are internally inconsistent in their treatment of oaths and affirmations. Newer provisions refer to both 'oaths and affirmations' whereas older provisions do not. This reflects a change in drafting conventions, rather than a deliberate policy distinction. To bring relevant provisions of the Corporations Act and ASIC Act in line with modern drafting practices and ensure consistency with the unfrozen AIA, the Bill inserts references to 'affirmation' into relevant provisions. [Schedule 1, items 3, 4, and 9, subsections 58(5) and 218(5), paragraph 19(2)(b) of the ASIC Act; item 18, paragraph 596D(1)(b) of the Corporations Act]

1.27 The amendments update outdated references to the AIA in the Corporations Act. [Schedule 1, items 12 and 19, section 1020AE (note 2) and subsection 3(2) of the Corporations Act]

Single Glossary

1.28 The Bill implements recommendation 7 from the ALRC's Interim Report A to create a single glossary of defined terms in the Corporations Act.

1.29 The Corporations Act does not have a single comprehensive dictionary and the main dictionary in section 9 includes some, but not all, defined terms. Other dictionaries are scattered throughout the different Chapters, Parts, Divisions and Subdivisions. Further, section 9 sometimes refers readers to a Chapter or Part where a substantial definition is located, but not the specific provision. This makes it harder for readers to find the meaning of defined terms.

1.30 Implementing the ALRC's recommendation to create a single glossary improves the Corporations Act's navigability by listing all defined terms in section 9, either in the form of a real definition or as a 'signpost' (i.e. a cross-reference) to the precise provision that contains the real definition.

1.31 Schedule 2 to the Bill, which contains the amendments to create the single glossary, is divided into 14 separate Divisions organised thematically by subject matter. For example, Division 5 deals with definitions related to managed investment schemes and Division 7 deals with definitions related to takeovers and acquisitions.

1.32 This is intended to make the Bill more accessible for readers who only deal with one subject area under the Corporations Act. It removes the need for readers to search through one omnibus Division and identify for themselves which definitions are relevant to them.

1.33 The primary effect of each of the separate Divisions is to relocate definitions within the Act rather than make any substantive policy change.

1.34 The Bill applies six key principles to ensure a consistent approach to implementing the recommendation to create a single glossary.

1.35 A discussion of the key principles is below. Attachment 1 lists the principles that apply to each defined term and the provisions affected, along with the corresponding references in the Bill.

Principle 1 - Terms that can be understood according to their ordinary meaning should not be defined

1.36 The Bill deletes definitions that replicate the ordinary meaning of the defined term. There is a common law rule of interpretation that terms that are not defined carry their ordinary meaning. Therefore, definitions that replicate the ordinary meaning are redundant and unnecessarily add to the length and complexity of the law.

1.37 Deleting redundant definitions also improves navigability as it removes the need for readers to regularly refer back to the single glossary in section 9 to determine the meaning of a term.

1.38 This principle also partially implements the ALRC's recommendation 14 in Interim Report B to repeal redundant provisions.

Principle 2 - Terms used infrequently should not be defined

1.39 The Bill deletes definitions for terms that are only used once or a small number of times throughout the Corporations Act and incorporates the substance of the definition into the relevant section(s). This is consistent with the ALRC's Interim Report A finding that terms should only be defined if it enhances readability or significantly reduces the need to repeat text.

1.40 However, the Bill does not delete the definitions for a small number of infrequently used terms where the definition is particularly long and complex. This is because incorporating long and complex definitions into the only provisions in which they are used would significantly add to the length and complexity of the law.

Principle 3 - Defined terms should be listed in section 9

1.41 The Bill creates a single glossary in section 9 that contains a complete list of all defined terms used in the main body of the Corporations Act.

1.42 Consistent with the ALRC's recommendation, terms only used in transitional provisions (i.e. Chapter 10) are not included in section 9. Transitional provisions only apply to a small part of the regulated community for a restricted period of time. Including terms used in the transitional provisions in section 9 would increase the length of section 9 and detract from its utility for other users of the law. It would also necessitate further amendments to section 9 when the transitional provisions become redundant and are repealed.

1.43 Similarly, terms used only in a Schedule to the Corporations Act are not included in section 9. The ALRC found that including these terms in section 9 would have negligible benefit in terms of enhancing navigability and it would be a significant undertaking.

1.44 Terms defined for the purposes of a single section in the Corporations Act (just in-time definitions) are also excluded from section 9. It is more reader-friendly for these definitions to be located in or near the section that uses the term. This eliminates the need for the reader to refer back to section 9, improving navigability.

Full definition versus sign-posting

1.45 Defined terms are listed in section 9 either in full or as a cross-reference (a 'sign-post') to the provisions where the full definition can be found.

1.46 A defined term is signposted in section 9 with a cross-reference to the relevant section containing the definition (rather than listed, along with its actual definition in section 9) if:

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the definition is particularly long or elaborate in its structure, as including these in section 9 would increase the length and complexity of the single glossary;

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defining the word in another part of the Act better supports the narrative flow and makes it easier to understand the operative provisions; or

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the definition is only used for the purposes of a particular chapter, part, division or subdivision, as it is more reader-friendly to locate the definition close to the use of the term.

1.47 Where a signpost is included in section 9, the signpost refers to the precise provision that contains the defined term (rather than cross-referencing an entire Chapter or a provision which itself contains another cross-reference). This enhances navigability by allowing the reader to quickly locate the definition.

Defined terms listed in dictionaries other than section 9

1.48 The Corporations Act currently includes dictionaries scattered throughout different Chapters, Parts, Divisions and Sub-divisions. For simplicity, these other dictionaries are referred to as Chapter-specific dictionaries in this explanatory memorandum.

1.49 Chapter-specific dictionaries hinder navigability as it is not intuitive which dictionary contains each definition and readers may need to refer to multiple dictionaries to find the definition. Chapter-specific dictionaries also increase the risk of one word carrying multiple definitions in different parts of the Act.

1.50 Where possible within existing policy settings, the Bill gives terms in Chapter-specific dictionaries Act-wide application and lists them in section 9. This has been done where the term:

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is used outside the Chapter with the same meaning as in the Chapter; or

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is not currently used outside the Chapter.

1.51 Clarifying the scope of such defined terms to make clear they apply for the purposes of the whole Act reduces the risk that in the future the defined term may take on different meanings. This future-proofs the Corporations Act and eliminates a potential future source of complexity.

1.52 If a term is used outside the Chapter with a different meaning, the term is listed in section 9, but section 9 makes it clear that the definition only applies for the purposes of a particular Chapter. This ensures that readers can quickly locate the definition by referring to the single glossary, while also preserving the existing policy settings.

1.53 Terms are listed in full in section 9 unless they are:

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used only for the purposes of a particular Chapter;

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used outside the Chapter with a different meaning; or

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the definition is particularly long or elaborate in structure (refer to the discussion under the heading 'Full definition versus sign-posting' above).

1.54 In the above three scenarios, section 9 includes a cross-reference to the section that contains the definition.

1.55 The Bill also deletes any terms or signposts from the Chapter-specific dictionary that are redundant, either because:

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the term has been moved into section 9 with its full definition; or

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the Chapter-specific dictionary only included a signpost to another section and the signpost now appears in section 9.

1.56 The Bill makes consequential amendments to the Corporations Act and ASIC Act to accurately reflect the new location of relevant definitions that have been moved to sit within the section 9 single glossary, or which have been given Act-wide application.

1.57 Table 1.3 summarises how the principles apply to terms in Chapter-specific dictionaries.

Table 1.1 : Approach for terms in Chapter-specific dictionaries

Terms remaining in Chapter-specific dictionaries

1.58 The Bill also repeals the dictionaries in section 601WAA (dictionary for Division 1 of Part 5D.6), section 960 (dictionary for Part 7.7A), section 1011B (dictionary for Division 2 of Part 7.9), section 1074B (dictionary for Division 4 of Part 7.11), section 1023B (dictionary for part 7.9A), section 1276 (dictionary for Division 1 of Part 9.2), subsection 1317DAA(1) (dictionary for Part 9.4AA) and section 1363 (dictionary for Part 9.12). Only a few defined terms remained in these dictionaries after applying the above principles. There is little benefit retaining Chapter-specific dictionaries with only one or two definitions as it leads to unnecessary complexity. [Schedule 2, items 153, 475, 503, 534, 541, 601, 607, 612, Division 1 of Part 9.2, sections 601WAA, 960, 1011B, 1020AA, 1023B, 1074B and 1363 and subsection 1317DAA(1) of the Corporations Act]

1.59 The defined terms remaining in the repealed dictionary are moved to section 9 or a stand-alone section according to the principles outlined above. [Schedule 2, items 142, 255, 260, 503, 534, 541, 605, 606, 607, sections 9, 1011B, 1020AA, 1023B, 1276, 1317DAAA, 1317DAA (heading) and subsection 1317DAA(1) of the Corporations Act]

Principle 4 - Headings for provisions containing defined terms should be consistent and intuitive

1.60 The Bill implements recommendation 9 from Interim Report A to use consistent headings for provisions containing definitions.

1.61 Provisions which contain defined terms are not signposted with clear and consistent headings. For example, section 9 is headed 'Dictionary', sections 9A to 9C are headed 'Meaning of [defined term]' and section 46 is headed 'What is a [defined term]'. Some provisions with defined terms do not even have a heading that indicates that there is a definition. This makes it difficult for readers to easily locate defined terms. It also means digital search tools, which can assist readers to locate definitions, are of limited use.

1.62 To assist readers to locate definitions more readily, the Bill amends relevant headings so that they use the phrase 'Meaning of [defined term]'.

1.63 The Bill also amends headings to ensure they are intuitive. Intuitive headings provide readers with a clearer indication of a provision's contents, improving clarity.

Principle 5 - Labels for defined terms should be intuitive

1.64 The Bill omits references to multiple defined terms used in the Corporations Act and ASIC Act and replaces them with more intuitive labels. It also combines definitions for terms that are different grammatical forms of another term. For example, the Bill repeals the definitions of 'offers' and 'offeror' and incorporates their meanings under the existing label of 'offer'.

1.65 These definitions are unnecessary because the AIA contains rules of interpretation which provide that a defined term has the same meaning in both its singular or plural form and in other grammatical forms unless a contrary intention appears. It is also counter-intuitive to define a term in different grammatical forms where the different forms carry the same meaning.

1.66 Intuitive labels help readers understand and recall the content of the definition, which improves the law's readability. This is consistent with the ALRC's finding that labels should be intuitive.

Principle 6 - Bold italics should only be used when creating defined terms

1.67 The Corporations Act uses bold italics inconsistently. The amendments rationalise the use of bold italics so it is only used when a new term is defined, including in just-in-time definitions and section specific definitions (internal tags).

1.68 The amendments remove bold italics from terms that are not used in a defined sense, including in provisions that merely contain application rules.

1.69 By applying bold italics consistently throughout the Corporations Act, the Bill makes it easier for readers to identify provisions that create definitions.

Consequential amendments relating to regulation-making powers

1.70 The Bill relocates the following regulation-making powers to create the single glossary:

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the power to prescribe persons and offers for the purpose of determining who 'offers' a security;

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the power to prescribe a certain event as a 'triggering event';

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the powers to prescribe circumstances and conditions that a deposit product is required to satisfy in order to meet the definition of 'basic deposit product';

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the power to prescribe classes of 'ADIs' (authorised deposit taking institutions);

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the power to prescribe classes of transactions for the purposes of the definition of 'derivative transaction';

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the power to prescribe a licensed CS facility for the purposes of the definition of 'prescribed CS facility';

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the power to prescribe circumstances where a sale is a 'regulated sale';

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the power to prescribe requirements that must be satisfied for a clearing and settlement facility to be an 'authorised clearing and settlement facility';

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the power to prescribe bodies corporate as 'widely held market bodies';

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the power to prescribe reporting requirements with which 'Part 7.5 authorities' must comply in relation to 'Division 3 arrangements' in certain situations;

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the power to prescribe 'regulated persons';

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the power to prescribe a website as a 'CGS depository interest information website';

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the power to prescribe things that are not 'financial products';

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the power to prescribe superannuation products that are not 'Division 3 financial products';

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the power to prescribe provisions of a recognised jurisdiction's law as comprising a 'foreign recognition scheme'; and

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the power to prescribe a foreign country as a 'recognised jurisdiction'. [Schedule 2, items 30, 125, 208, 221, 251, 260, 289, 373, 420, 491, 535, 541, 546, 573, sections 9 (definitions of 'offer', 'basic deposit product', 'derivative transaction', 'prescribed CS facility', 'regulated sale', ), 500AAA, 761A (definition of 'authorised clearing and settlement facility'), 850A, 892I, 994A, 1020AH, 1023B, 1042A (definition of 'Division 3 financial products'), subsection 1200A(1) (definitions of 'foreign recognition scheme' and 'recognised jurisdiction') of the Corporations Act]

1.71 These regulation-making powers provide sufficient flexibility so the law can be efficiently updated to accommodate new technologies, new financial products and new companies. They therefore need to be retained.

1.72 None of the new regulation-making provisions contain exemption or modification powers. Regulations made under these powers are also subject to parliamentary oversight through the disallowance process and must be consistent with the scope of the powers in the primary law.

1.73 The Bill does not amend the power or scope of the existing regulation-making power provisions.

Other amendments

Interim Report B recommendations

1.74 The Bill partially implements three recommendations from Interim Report B to:

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repeal unused definitions and other redundant or unnecessary provisions;

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address unclear or incorrect provisions; and

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simplify unnecessarily complex provisions, including terms defined as having more than one meaning and definitions that contain substantive obligations.

1.75 The Bill repeals the definitions of 'financial benefit' and 'transitional period'. Both terms are redundant. The term 'financial benefit' is not used or defined in the Act and the provision that uses the term 'transition period' is spent. [Schedule 2, item 484, Division 7 of Part 7.7A of the Corporations Act]

1.76 The Bill removes unnecessary provisions from the Corporations Act and ASIC Act where they replicate rules contained in Acts of general application or reflect ordinary rules of statutory interpretation. For instance, the Bill repeals the section in the Corporations Act that provides that references to ASIC include ASIC delegates. [Schedule 2, item 1, subsections 5(2) and (3) of the ASIC Act; items 63, 70, sections 83 and 106 of the Corporations Act]

1.77 The amendments also fix an erroneous reference in the ASIC Act. [Schedule 2, item 163, paragraph 43(1)(e) of the ASIC Act]

1.78 In some cases, the Corporations Act uses identical labels for terms that have different meanings. The Bill combines the different definitions so they all sit under a single label. The label then outlines the different meanings that label carries in different contexts. This reduces complexity for readers who may not know how to apply a definition when one label has more than one meaning. [Schedule 2, items 20, 22, 24, 30, 48, 80, 109, 110, 164, 165, 166, and 573, section 9 (definition of 'eligibility criteria' (first and second occurring), 'eligibility criteria' (second occurring), 'enter into', 'interest', 'involved', 'law' and 'offer'), 9AB, 9AD, 64 and subsections 700(2) and (3), and subsection 1200A(1) of the Corporations Act]

1.79 The Bill removes a substantive obligation from the definition of 'crossing [of section 1020B products]' and locates it in a new standalone provision. This is consistent with the ALRC's finding that defined terms should not contain substantive obligations or powers because doing so increases complexity. The Bill also relocates the power of ASIC to delegate matters to staff members to a standalone provision. [Schedule 2, items 155, 156, 157, 158 and 534, sections 601WCI and 1020AA, subsection 601WCA(1) and paragraphs 601WCB(b)(i) and 601WCC(1)(b)(i) of the Corporations Act]

Miscellaneous amendments to improve clarity, consistency and navigability

Clarity

1.80 The Bill amends expressions that are unclear. In particular, it replaces references to compensation arrangements with 'arrangements for compensation' to avoid using shorthand. It also avoids using a defined term where the term is not intended to be understood in its defined sense. [Schedule 2, items 441, 463 and 464, section 912B (heading) and subsections 923C(10) (heading) and 923C(10) (note) of the Corporations Act]

1.81 The Bill inserts 'or providing compensation' after the phrase 'paying compensation' to capture the provision of non-monetary compensation, which is not something capable of being 'paid'. This language is more intuitive and clarifies meaning for readers. [Schedule 2, items 388, 394 and 395, section 883C, paragraph 885B(1)(e) and subsection 885E(1) of the Corporations Act]

1.82 The Bill makes minor amendments to remove unnecessary words, where doing so improves clarity. However, it also adds additional words in some limited circumstances to explain certain concepts more clearly. In particular, the phrase 'under any law of the Commonwealth or a State or Territory' is inserted in relation to the availability of infringement notices to make clear that both Commonwealth and State or Territory legislation can impose infringements notices. [Schedule 2, item 589, subsection 12BAB(14) (note) of the ASIC Act; items 42, 87, 340, 341, 519, 565, 602 and 608, section 9 (definition of 'annual transparency report', note to the definition of 'retention of title clause'), subsection 1017BB(6) (definition of 'small APRA fund'), 1200F(1) (table item 4), 1317DAG(3)(heading), paragraphs 766A(1)(a) to (c), 766A(1)(e) to (ec) and 1311E(3)(a) and (b) of the Corporations Act]

1.83 The Bill removes notes and words which pinpoint sections for defined terms in the Act rather than pinpointing the single glossary in section 9. For example, the Bill repeals note 1 under subsection 208(1) as it provides various pinpoint references in the Act for 'related party', 'entity', 'control' and 'giving a financial benefit' when they are all defined in the single glossary. Similarly, the Bill repeals words directing readers to consult another provision for the definition of a term, where that term is defined in the single glossary. For example, the Bill repeals a suggestion that readers 'see section 766C' in relation to the term 'dealing', as this term is defined in the single glossary. As such, the preferred approach is to simplify the Act by removing these notes and pinpoint references to encourage readers to use the single glossary as their first and primary dictionary source for defined terms. [Schedule 2, items 96, 106, 284, 285, 322, 335, 336, 353, 435, 465, 466, 467, 468, 470, 477 and 507, sections 601LC (note to subsection 208(1)) and 738C (notes 1 and 2), subsections 208(1) (notes 1, 2 and 3) and 941C(6), paragraphs 763A(1)(a) to (c), 765A(1)(k), 768A(2)(h), 922M(1)(a), 941C(2)(b), 941C(6)(b), 946B(5)(b) and 961F(b), and subparagraphs 765A(1)(h)(ii), 765A(1)(i)(ii), 911B(1)(c)(iv) and 1012G(1)(b)(ii) of the Corporations Act]

1.84 Section 7 of the Corporations Act is redundant following the creation of the single glossary in section 9 and is repealed. The Bill substitutes a new section 7, which provides guidance to aid interpretation of the single glossary and explain the principles that underpin it. [Schedule 2, item 3, section 7 of the Corporations Act]

1.85 The Bill amends some defined terms to clarify the context in which the terms apply. For example, the definition of 'reasonable investigation' is updated to acknowledge that it occurs in respect of 'financial products'. 'Renewal period' is updated to clarify that it applies for an 'anniversary day' for an 'ongoing fee arrangement' and the definition of 'clearing requirements' is updated to clarify that it applies in relation to 'derivative transactions'. [Schedule 2, items 213 and 260, section 9 (definition of 'clearing requirements', 'reasonable investigation' and 'renewal period') of the Corporations Act]

1.86 The Bill inserts a definition for 'penalty applicable' in the ASIC Act. The Corporations Act defines 'penalty applicable', but the penalties regime applied by the ASIC Act differs significantly from that of the Corporations Act. Including a definition of 'penalty applicable' in the ASIC Act ensures that readers are aware that the ASIC Act contains a different penalties regime to the Corporations Act. [Schedule 2, items 599, subsection 5(1) of the ASIC Act]

1.87 Some labels for defined terms include acronyms. For example, 'RSE licensee' and 'RSA'. The Bill inserts notes below these definitions to explain the acronyms. The note below 'RSE licensee' clarifies RSE is short for registrable superannuation entity and the note below 'RSA' clarifies it is short for retirement savings account. [Schedule 2, items 267 and 268, section 9 (definitions of 'RSA', 'RSA provider' and 'RSE licensee') of the Corporations Act]

Consistency

1.88 The ALRC suggested that terms used in the ASIC Act should take the same meaning as in the Corporations Act where possible. The ASIC Act provides that terms used, but not defined, in the ASIC Act take the same meaning as in the Corporations Act. Despite this, the ASIC Act sometimes defines terms in an identical form to the Corporations Act. This creates confusion for readers, as it is not clear where to find the meaning of defined terms. It also creates duplication, unnecessarily increasing the length of the statute book.

1.89 To reduce duplication, the amendments repeal definitions from the ASIC Act where they also appear in the Corporations Act.

1.90 The Bill also amends the interpretation provision in section 5 of the ASIC Act to clarify that the Corporations Act's interpretation provisions in Part 1.2, which include the section 9 single glossary, apply to the ASIC Act. As a result of these amendments, the definition of 'APRA' in the ASIC Act is redundant. These amendments repeal this definition. [Schedule 2, items 1 and 7, subsections 5(1) (definition of 'APRA'), (2) and (3) of the ASIC Act]

1.91 For consistency with the approach taken in the ASIC Act, the Bill amends the interpretation provisions in the Corporations (Fees) Act 2001 and the Corporations (Review Fees) Act 2003 to clarify that the Corporations Act's interpretation provisions in Part 1.2 also apply to these Acts. It also amends the interpretation provisions of the Corporations (Compensation Arrangements Levies) Act 2001 and the Corporations (National Guarantee Fund Levies) Act 2001 to clarify that defined terms in Division 3 of Part 7.5 and Division 4 of Part 7.5 of the Corporations Act apply to these Acts respectively. [Schedule 2, item 636, section 3 of the Corporations (Compensation Arrangements Levies) Act 2001; item 637, subsection 4(2) of the Corporations (Fees) Act 2001; item 638, section 3 of the Corporations (National Guarantee Fund Levies) Act 2001; item 639, subsection 4(2) of the Corporations (Review Fees) Act 2003]

1.92 The Bill removes the reference to the term 'derivative' and 'managed investment scheme' being 'within the meaning of the Corporations Act'. These words are unnecessary as the interpretation provisions in the Corporations Act apply to the ASIC Act. References to 'that Act' are also updated to 'the Corporations Act' as required. [Schedule 2, items 190 and 191, paragraphs 12BAA(8)(h),(i) and (j) and subparagraph 12BAA(8)(k)(i) of the ASIC Act]

1.93 The Bill amends the introductory text at the start of section 9 to accord with modern drafting conventions and ensure consistency with other dictionaries in the Corporations Act. It also clarifies that terms listed in the single glossary generally apply Act wide. [Schedule 2, item 4, section 9 of the Corporations Act]

1.94 The Bill updates definitions that rely on terms defined in other Acts, so they use consistent labels. It repeals the definition of 'BAS agent' in the Corporations Act and replaces it with a composite definition of 'registered tax agent or BAS agent' to reflect the definition provided for in the Tax Agent Services Act 2009. [Schedule 2, item 260, section 9 of the Corporations Act]

1.95 The Bill updates the definition of 'public sector superannuation scheme' to align with the definition in the SIS Act. [Schedule 2, items 243, 256, 257, 260 and 308, section 9 (paragraph (h) of the definition of 'managed investment scheme', paragraphs (b) and (d) of the definition of 'professional investor' and the definition of 'public sector superannuation scheme'), subparagraph 761G(6)(c)(i) of the Corporations Act]

1.96 The Bill also removes a redundant signpost which directs the reader to the location of the defined term 'unacceptable control situation'. [Schedule 2, item 149, paragraph 601RAB(2A)(e) of the Corporations Act]

Navigability

1.97 The Bill improves the use of simplified outlines in the Corporations Act. Simplified outlines assist readers to navigate the law and understand the substantive provisions (but are not intended to be comprehensive). The Bill inserts a new outline for Part 1.2 and updates the formatting of the outline for Part 2D so that it is in a box as per modern drafting conventions. [Schedule 2, items 2 and 95, sections 5J and 179 of the Corporations Act]

1.98 The Bill amends some definitions provisions to include references to other definitions or rules relevant to the definition's interpretation. For example, the Bill inserts a note below the definition of 'market' directing readers to the related definition of 'makes a market'. Similarly, the Bill inserts a note below the definition of 'infringement notices' directing the reader to the various provisions affected by that definition. This improves navigability and aids interpretation. The Bill makes these amendments in relation to the following definitions in section 9:

•

'act' - see 'doing' an act or thing;

•

'client' - see 'retail client' and 'wholesale client';

•

'general insurance product' - see 'insurance product';

•

'insurance product' - see 'general insurance product', 'risk insurance product', 'life risk insurance product' and 'reinvestment life insurance product';

•

'investment life insurance product' - see 'insurance product';

•

'market' - see 'makes a market';

•

'register' - see 'Business Names Register' and 'Register of Relevant Providers';

•

'risk insurance product' - see 'general insurance product', 'insurance product' and 'life risk insurance product'; and

•

'shares' - see 'number of shares'.

[Schedule 2, items 8, 17, 40, 46, 239, 245, 267, 600, section 9 (definitions of 'act', 'client', 'general insurance product', 'infringement notice', 'insurance product', 'investment life insurance product', 'market', 'register', 'risk insurance product' and 'shares') of the Corporations Act]

1.99 The Bill inserts legislative notes for definitions in the single glossary that have a modified meaning in a particular provision, or group of provisions. For example, the Act-wide definition of 'selective reduction' contained in the single glossary does not apply to an MCI mutual entity. Instead, a modified definition of 'selective reduction' applies. The Bill inserts a legislative note identifying the location of the modified definition to ensure readers are aware of it. [Schedule 2, item 184, subsection 5(1) of the ASIC Act; items 30, 94, 213, 229, 260 and 269, section 9 (definitions of 'selective reduction', 'custodial arrangement', 'financial product', 'offer', 'purchase' and 'sale') of the Corporations Act]

1.100 The Bill inserts signposts to assist readers to find defined terms where the label begins with a verb. For example, the Bill adds a signpost to 'non-cash payments' referring readers to the defined term of 'makes non-cash payment'. The inclusion of a verb in definitions is unusual and readers may not initially look for a verb for the meaning of a term. The Bill adds signposts to the following definitions:

•

'financial benefit' - see 'giving a financial benefit';

•

'financial investment' - see 'makes a financial investment';

•

'financial risk' - see 'manages financial risk'; and

•

'non-cash payments' - see 'makes non-cash payments'.

[Schedule 2, items 89, 227, 230 and 247, section 9 (definitions of 'financial benefit', 'financial investment', 'financial risk' and 'non-cash payments') of the Corporations Act]

1.101 The Bill makes it easier for readers to find out when a form needs to be lodged in a prescribed form. 'Lodge' is defined for the purposes of Chapter 7 to mean 'lodge with ASIC in a prescribed form'. However, readers are often unaware that the term is defined. To avoid this confusion, the Bill repeals the definition of 'lodge' from the Chapter 7 dictionary and instead uses the phrases 'in a prescribed form' wherever required. [Schedule 2, items 29, 289, 359, 360, 362, 363, 368, 369, 371, 372, 376, 386, 389, 390, 391, 400, 401, 425, 426, 446 to 452, 454, 455, 458, 489, 490 and 512, sections 9 (definition of lodge), 761A and 913A, subsections 793D(1) and (3), 795A(1), 797A(1), 822D(1) and (3), 824A(1), 826A(1), 851D(4), 884B(2), 884B(4), 890G(1), 890G(3), 908BD(1) and (2), 913B(3) and (4B), 914B(3) and (6), 915A(1), 915C(5), 916F(1), 989B(2), 990K(1) and 1015B(1), paragraphs 796A(2(b)), 825A(2)(b), 882B(2)(b), 884C(2)(b), 914A(2)(b), 915B(1)(e), 915B(2)(d), 915B(3)(d), 915B(4)(d) and 920D(2)(b) of the Corporations Act]

1.102 The Bill inserts notes in provisions directing readers to the section 9 single glossary, where the glossary is particularly relevant to the provision. For example, a note is added to the dictionary in section 5-5 of the Insolvency Practice Schedule to alert readers that the meaning of some terms used in the Schedule are actually defined in the section 9 single glossary. [Schedule 2, item 6, section 5-5 of Schedule 2 (heading) of the Corporations Act]

1.103 Further, the Bill amends vague language, such as 'in such cases as are prescribed' and replaces it with 'in such cases as are specified in the regulations'. The Bill also inserts references to the regulations in relation to publishing. These changes make clear to readers that they need to look to the regulations, which improves clarity and navigability. [Schedule 2, items 613, section 1367; Schedule 3, items 23 to 25, subsections 601WDA(1) and (3), paragraph 601WBH(b) of the Corporations Act]

1.104 The Bill repeals the four separate definitions of 'officer' located in section 9 and combines them into a new standalone provision titled 'meaning of officer'. This new provision incorporates the four definitions of 'officer' into different subsections. Combining all the definitions of 'officer' into one provision improves navigability as readers are required to only refer to one location for all definitions that relate to 'officer'. The Bill also creates a standalone provision titled 'meaning of director' to incorporate the different definitions of 'director' in the Corporations Act. [Schedule 2, items 18, 31 and 48, sections 9 (definitions of 'director' and 'officer'), 9AB, 9AC and 9AD of the Corporations Act]

Substantive amendments to other Acts

1.105 The Bill repeals the definition of 'corporations law' in the SIS Act as the term is not used in that Act. [Schedule 2, item 630, subsection 10(1) (definition of 'Corporations Law') of the SIS Act]

1.106 The amendments repeal the definition of 'financial services business' from the Security of Critical Infrastructure Act 2018. This Act relies on the definition of 'financial services business' in the Corporations Act. However, the Bill repeals this definition from the Corporations Act, as the term is defined as 'a business providing financial services', which does not add anything to the ordinary meaning of the term (see principle 1 above). The Bill also amends the only reference to this definition in the Security of Critical Infrastructure Act 2018 to ensure that Act continues to operate as intended. [Schedule 2, item 706, section 5 (definition of 'financial services business') of the Security of Critical Infrastructure Act 2018]

1.107 The Bill repeals the reference to section 769 of the Corporations Act in the ITAA 1997, as it is redundant. Section 769 of the Corporations Act has been repealed and the definition of 'approved stock exchange' in the Corporations Act now directs the reader to the meaning of the phrase in the ITAA 1997. The phrase 'approved stock exchange' is defined as 'a stock exchange named in regulations made for the purposes of this definition' in the ITAA 1997. The Bill substitutes the reference to section 769 of the Corporations Act with the defined term 'approved stock exchange'. [Schedule 2, item 649, paragraph 115-290(1)(b) of the ITAA 1997]

Consequential amendments

Consequential amendments to other Acts and Regulations

1.108 The Bill makes consequential amendments to Acts which rely on definitions in the Corporations Act that are affected by this Bill.

1.109 In most cases, where the Bill relocates a definition and that definition is relied on by a provision of another Act, the Bill amends the provision in the other Act to remove any reference to a specific chapter, part, division or provision of the Corporations Act. This ensures the reference does not need to be updated if the location of the definition within the Corporations Act changes. It also brings the drafting into line with modern conventions.

1.110 Attachment 2 lists the provisions of these Acts amended as a consequence of the creation of the single glossary and the relevant Corporations Act definitions that apply to each provision.

1.111 One exception to this principle is where the Corporations Act contains multiple definitions for the term. In these circumstances, the pinpoint reference to a specific definition is retained.

1.112 The Bill also relocates the definition of 'securities' in the Corporations Act from section 761A to subsection 92(5). Where an Act relies on the definition of 'securities' provided by current section 761A of the Corporations Act, this Bill amends that Act to refer to new subsection 92(5) of the Corporations Act. 'Securities' has multiple definitions in the Corporations Act and therefore the pinpoint reference is needed. [Schedule 2, item 622, section 5 (definition of 'security') of the Anti-Money Laundering and Counter Terrorism Financing Act 2006; item 676, subclause 6(8) of Schedule 2 (definition of 'security') of the Medibank Private Sale Act 2006; item 687, section 5 (paragraph (a) of the definition of 'financial property') of the Payment Systems and Netting Act 1998]

1.113 The SIS Act contains a provision which defines the term 'regulated superannuation fund' with reference to the definition of 'regulated superannuation fund' in Chapter 7 of the Corporations Act. The Bill amends this provision to remove this reference to the Corporations Act while incorporating the substance of the definition from the Corporations Act into the relevant provision of the SIS Act. [Schedule 2, items 719 and 720, subsections 101(1) and 101(3) of the SIS Act]

Commencement, application, and transitional provisions

1.114 The Bill ensures ASIC instruments continue to operate as intended notwithstanding the amendments to definitions in the Corporations Act and the ASIC Act made by the Bill. In particular, references in ASIC instruments to:

•

definitions that are moved or amended by the Bill are treated as referring to the new definition; and

•

repealed definitions (that are not moved or replaced) are treated as continuing to have effect for the purposes of the instrument as though they had not been repealed.

1.115 [Schedule 2, item 541, sections 344B and 344C of the ASIC Act; item 617, sections 1698B and 1698C of the Corporations Act]

1.116 Similarly, the Bill ensures that authorisations, appointments, delegations, declarations and instruments made by ASIC remain valid, where they were made under a provision that is modified by the amendments. The Bill also provides for documents which are prescribed forms under the Corporations Act to continue to have effect, as if the form had been prescribed or approved under the Act as amended by the Bill. [Schedule 2, item 617, sections 1698E, 1698F, 1698H, 1698J, 1698K of the Corporations Act]

1.117 The Bill includes a savings provision to ensure that the amendments relating to the AIA do not alter the calculation of time for periods which starts before the commencement of the Bill. This is significant for time periods in ASIC instruments. It has no practical effect for time periods in the ASIC Act, Corporations Act or regulations made under those Acts as the amendments in this Bill preserve the status quo. [Schedule 2, item 542, sections 344B and 344D of the ASIC Act; item 542, section 1698D of the Corporations Act]

1.118 The Bill also includes a savings provision that preserves the effect of regulations made under several provisions of the Corporations Act, where those provisions are modified by the amendments. [Schedule 2, item 617, sections 1698G and 1698L of the Corporations Act]

Contingent amendments

1.119 Schedule 3 to the Bill contains additional consequential amendments that will be required if Bills currently before Parliament are passed. Schedule 3 to the Bill also contains necessary consequential amendments where an Act modified by the Bill has not yet commenced and has more than one possible commencement date.

Treasury Laws Amendment (More Competition, Better Prices) Act 2022

1.120 On 27 October 2022, the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 passed the Parliament.

1.121 The Bill amends the ASIC Act and the Competition and Consumer Act to update references to the Corporations Act inserted by the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 following the creation of the single glossary by this Bill, consistent with principle 3. [Schedule 3, items 1 and 2, subsection 12BLC(3) and subparagraph 12BLC(1)(a)(i) of the ASIC Act; item 3, subsection 28A(3) of the Competition and Consumer Act]

1.122 These amendments commence at the later of the time the single glossary amendments commence or immediately after the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 commences. While Parliament passed the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 in October 2022, the relevant amendments are not scheduled to commence until 9 November 2023. [Section 2 of the Bill, table item 3]

Financial Accountability Regime Bill 2023

1.123 The Financial Accountability Regime Bill 2023 is currently before the Parliament.

1.124 The Bill amends the definitions of 'annual turnover', 'officer' and 'financial services law' in the Financial Accountability Regime Act 2023 to reflect the relocation and removal of these definitions in the Corporations Act, consistent with principle 3.3, principle 2 and principle 3.1 respectively. [Schedule 3, items 4, 5 and 6, section 8 and subparagraph 21(1)(d)(v) of the Financial Accountability Regime Act 2023]

1.125 These amendments commence only if the Financial Accountability Regime Bill passes. This is achieved by commencing the amendments at the later of the time the single glossary amendments commence or immediately after the Financial Accountability Regime Act 2023 commences. [Section 2 of the Bill, table item 4]

Compensation Scheme of Last Resort Bills

1.126 The Compensation Scheme of Last Resort Bills are currently before the Parliament.

1.127 The Bill amends the definitions of:

•

'AFCA' in the ASIC Act, the Financial Services Compensation Scheme of Last Resort Levy Act 2023 (if passed) and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 (if passed) to reflect the relocation of the definition of 'AFCA' in the Corporations Act, consistent with principle 3.1 [Schedule 3, items 7, 8, 10, subparagraph 127(4)(aa)(i) of the ASIC Act; subsection 7(1) (definition of 'AFCA') of the Financial Services Compensation Scheme of Last Resort Levy Act 2023; subsection 7(1) (definition of 'AFCA') of the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023]

•

'AFCA scheme' in the Financial Services Compensation Scheme of Last Resort Levy Act 2023 (if passed) and the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023 (if passed) to reflect the relocation of the definition of 'AFCA scheme' in the Corporations Act, consistent with principle 3.1. [Schedule 3, items 9, 11, subsection 7(1) (definition of 'AFCA scheme') of the Financial Services Compensation Scheme of Last Resort Levy Act 2023; subsection 7(1) (definition of 'AFCA scheme') of the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023]

1.128 However, these amendments only commence if the relevant Compensation Scheme Bill passes. Commencement of these amendments occurs at the later of the commencement of the single glossary amendments (to guard against retrospective commencement) and the relevant Compensation Scheme Bill (to tie the commencement of the amendment and the Compensation Scheme Bill together). [Section 2 of the Bill, table items 5, 6 and 7]

Schedule 6 to the Treasury Laws Amendment (2022 Measures No. 4) Bill

1.129 The Treasury Laws Amendment (2022 Measures No. 4) Bill 2023 is currently before the Parliament.

1.130 The Bill repeals the definition of 'RSE licensee' in the ASIC Act inserted by Schedule 6 to the Treasury Laws Amendment (2022 Measures No.4) Act 2023 (if passed). The ALRC found that terms used in the ASIC Act should take the same meaning as in the Corporations Act where possible. As 'RSE licensee' is already defined in section 9 of the Corporations Act, it is not necessary to define it again in the ASIC Act. [Schedule 3, item 12, subsection 127(9) (definition of 'RSE licensee') of the ASIC Act]

1.131 The Bill amends provisions of the Corporations Act that are amended by Schedule 6 to the Treasury Laws Amendment (2022 Measures No.4) Act 2023 (if passed) to reflect the creation of the section 9 single glossary consistent with principle 2 and principle 3 (definition of 'officer'), principle 3.1 (definitions of 'exempt public sector superannuation scheme' and 'officer') and principle 3.2 (definitions of 'director' and 'financial year'). [Schedule 3, items 13 to 21, section 9 (note 2 to the definition of 'director', paragraphs (aa) of the definition of 'financial year' and (i) of the definition of 'registrable superannuation entity', definition of 'officer of a registrable superannuation entity', subparagraph (b)(i) of the definition of 'registrable superannuation entity'), sections 9AB, 345AAC, and 345AAD and subsections 9AC(3), 9AD(3) and 9AD(4) of the Corporations Act]

1.132 These amendments only commence if Schedule 6 to the Treasury Laws Amendment (2022 Measures No. 4) Bill 2023 is passed. The amendments commence at the later of the commencement of the Bill and the Treasury Laws Amendment (2022 Measures No. 4) Act 2023. [Section 2 of the Bill, table item 8]

Schedule 1 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023

1.133 The MBC Bill is currently before the Parliament. That Bill amends the requirements relating to the communication of notices of cancellation of a financial services licences to ensure technology neutrality.

1.134 This Bill removes the definition of 'cancel' in the Corporations Act and instead incorporates the meaning into the provisions that use the term. This is consistent with principle 2. [Schedule 2, items 104, 105 and 110, section 601WAA, subsection 601WDA(1) and paragraph 601WBA(1)(a) of the Corporations Act]

1.135 Consequential amendments are required to the provisions relating to the communication of notices of cancellation of financial services licences. The form of these amendments depends on whether the relevant provisions in the MBC Bill have commenced.

1.136 If the relevant provisions of the MBC Bill have commenced, the existing law needs to be updated to reflect the repeal of the definition of 'cancel' and framed in a manner that is technology neutral. This form of the amendment will only commence if the relevant provisions of the MBC Bill commence before this Bill. [Schedule 3, Division 1, item 22, subsections 601WDA(1) of the Corporations Act; section 2 of the Bill, table item 9]

1.137 If the relevant provisions of the MBC Bill have not commenced, the existing law should be updated to reflect the repeal of the definition of 'cancel' but continue to only permit publication on a website. This form of the amendment commences only if the relevant provisions in the MBC Bill have not commenced when this Bill commences. [Schedule 3, Division 2, items 23-25, paragraph 601WBH(b) and subsections 601WDA(1) and 601WDA(3) of the Corporations Act; section 2 of the Bill, table item 10]

1.138 If the MBC Bill subsequently commences after this Bill, the MBC Bill will update the existing law to allow for technology neutral publications.

Schedule 3 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023

1.139 Schedule 3 to the MBC Bill inserts a new definition ('proposed licensee trustee company') and amends an existing definition ('unacceptable control situation') in the Corporations Act. It also inserts a new provision with a cross-reference to 'unsolicited contact'.

1.140 Consequential amendments are required to ensure these definitions and the cross-reference adhere to the principles set out above. The form of these amendments depends on whether relevant provisions in the MBC Bill have commenced at the time that this Bill commences.

1.141 If the relevant provisions of the MBC Bill have commenced, the definitions it inserted or amended need to move location consistent with the principles underpinning the single glossary. The Bill inserts the full definition of 'proposed license trustee company' and a signpost to the definition of 'unacceptable control situation' (which is located in section 601VAA) in the single glossary. It also updates a cross-reference to the location of the definition of 'unsolicited contact'. This form of the amendments only commences if the relevant provisions of the MBC Bill have commenced when the single glossary amendments commence. [Schedule 3, items 26-30, section 9, section 601RAA (definition of proposed licensed trustee), section 601VAA, section 601VAA (heading) and paragraph 1012GA(1)(a) of the Corporations Act, section 2 of the Bill, table item 11]

1.142 If the relevant provisions of the MBC Bill have not commenced, the Bill includes a signpost of 'unacceptable control situation' (which is currently located in section 601VAA) into section 9. This commences regardless of whether the MBC Bill subsequently passes and commences. [Schedule 3, Division 2, items 31 and 32, section 9 and 601VAA of the Corporations Act; section 2 of the Bill, table item 12]

1.143 If the relevant provisions in the MBC Bill subsequently commence, further consequential amendments are needed immediately after the commencement of the MBC Bill to:

•

move the definition of 'proposed licensed trustee company', which was inserted by the MBC Bill, from section 601RAA to section 9 [Schedule 3, Division 3, items 33 and 35, section 9 of the Corporations Act; section 2 of the Bill, table item 13];

•

update the definition of 'unacceptable control situation' in section 9 to reflect the amendments in the MBC Bill and make consequential amendments to the new provisions inserted by the MBC Bill to reflect its new location in section 9 [Schedule 3, Division 3, items 34, 36 and 37, section 9 and section 601VAA of the Corporations Act; section 2 of the Bill, table item 13]; and

•

update the cross-reference to 'unsolicited contact' to reflect the new location of that definition. [Schedule 3, Division 3, item 38, paragraph 1012GA(1)(a); section 2 of the Bill, table item 13]

Part 1 of Schedule 4 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2023

1.144 The Bill amends the Corporations Act to:

•

relocate the definitions of 'credit licensee', 'mortgage broker' and 'mortgage intermediary', which the MBC Bill inserts into section 910A of the Corporations Act, to the single glossary in section 9, consistent with principle 3;

•

update a reference to the definition of 'recognised tax adviser' in the ITAA 1997 to reflect the definition's relocation in the Corporations Act, consistent with principle 3.1; and

•

update a reference to the definition of 'financial services licensee' in the National Consumer Credit Protection Act 2009 to reflect the expanded application of the definition in the Corporations Act, consistent with principle 3.3. [Schedule 3, items 39 to 42, sections 9 and 910A of the Corporations Act, section 995-1 of the ITAA 1997 and subsection 5(1) of the National Consumer Credit Protection Act 2009]

1.145 These amendments only commence if Part 1 of Schedule 4 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 commences. [Section 2 of the Bill, table item 14]

Chapter 2: Insurance

Outline of chapter

2.1 Schedule 4 to the Bill primarily amends the IAT Act, Life Insurance Act and Insurance Act to implement relevant findings of the thematic review of Insurance Instruments that are due to sunset on 1 October 2023.

Context of amendments

2.2 The Legislation Act 2003 provides that all legislative instruments, other than exempt instruments, are automatically repealed according to the progressive timetable in section 50 of that Act. The Attorney-General may defer sunsetting in certain circumstances, pursuant to section 51 of the Legislation Act 2003. Legislative instruments generally cease to have effect after a specific date unless further legislative action is taken to extend their operation, such as remaking the instrument.

2.3 The Legislation (Insurance Instruments) Sunset-altering Declaration 2018 aligned the sunsetting date for the Insurance Instruments to 1 October 2023 to enable Treasury to conduct a comprehensive thematic review of regulation imposed on the insurance industry.

2.4 Treasury carried out the review of the Insurance Instruments and relevant provisions of the enabling Acts (the IAT Act, Life Insurance Act and Insurance Act) in 2022, in consultation with APRA and ASIC. As part of Treasury's review, a number of provisions in the enabling Acts and Insurance Instruments were identified as inoperative, spent, or necessary to clarify in order to ensure the law operates as intended. A number of provisions contained in the Insurance Instruments were also identified as being appropriate to incorporate into the primary law, in accordance with the hierarchy of laws.

2.5 Schedule 4 to the Bill primarily amends the IAT Act, Life Insurance Act and Insurance Act to implement the findings of the thematic review. This is necessary to transition to the new framework of instruments proposed to replace the Insurance Instruments that are due to sunset on 1 October 2023.

Summary of new law

2.6 Schedule 4 to the Bill primarily amends the IAT Act, Life Insurance Act and Insurance Act to implement relevant findings of the thematic review of Insurance Instruments that are due to sunset on 1 October 2023. This includes:

•

repealing the enabling provision for the Decision-Making Principles in the IAT Act, and replacing it with the ability for the Minister to determine, by legislative instrument, matters relevant to the public interest test; that is, the test for when a particular matter is contrary to the public interest;

•

clarifying the decisions in Parts 3 and 4 of the IAT Act that require the Minister to consider the public interest test;

•

giving the Minister, APRA or ASIC as relevant, the power to prescribe the manner and form of applications and notices in the IAT Act and Life Insurance Act, rather than have forms prescribed in regulations;

•

clarifying that the prohibition on the investment of assets of a statutory fund of a life company in a subsidiary of that life company applies at all times at which an asset is invested, and clarifying the kinds of subsidiaries and related entities that an asset of the subsidiary must not be invested in under the Life Insurance Act;

•

including a new offence, with a maximum penalty of 100 penalty units in the Life Insurance Act, for a life company failing to comply with the existing requirement to notify APRA of changes in the address at which the company stores its financial records;

•

moving certain provisions in the Insurance Instruments into the primary law to reflect the hierarchy of laws more appropriately, including modifications relating to friendly societies in the Life Insurance Act;

•

updating certain provisions in the IAT Act, Life insurance Act and Insurance Act in accordance with modern drafting practice; and

•

repealing certain obsolete or spent provisions.

Detailed explanation of new law

Part 1 - Public Interest

Decision-Making Principles reframed as public interest test

2.7 The IAT Act establishes a framework for the control and compulsory notification of certain acquisitions and agreements relating to Australian-registered insurance companies. The Minister has various decision-making powers for these purposes.

2.8 Subsection 65(1) of the IAT Act allows the Minister to formulate principles to be complied with by him or her in making decisions under Part 3 or 4 of the Act. The Decision-Making Principles were made for the purpose of this provision.

2.9 The IAT Act also requires the Minister to consider whether a matter is contrary to the public interest when making certain decisions. For example, section 57 of the IAT Act allows the Minister to make a permanent restraining order if the Minister is satisfied that the result of a trigger proposal would be contrary to the public interest. Section 5 of the IAT Act prescribes when a matter is contrary to the public interest (referred to as the 'public interest test' in this document). Subsection 5(1) of the IAT Act provides that for the purposes of the application of the Act to an Australian-registered insurance company, a particular matter is taken to be contrary to the public interest if it is:

•

likely to adversely affect the prudential conduct of the affairs of the company; or

•

likely to result in an unsuitable person being in a position of influence over the company; or

•

likely to unduly concentrate economic power in the Australian general insurance industry, in the Australian life insurance industry or in the Australian financial system; or

•

contrary to the national interest.

2.10 The above criteria are referred to as 'primary public interest criteria' in this document. The Decision-Making Principles, in effect, prescribe matters in relating to the primary public interest criteria for the purposes of the public interest test.

2.11 The thematic review of Insurance Instruments found that while the Decision-Making Principles are still required in some form, their application is unclear, and the IAT Act should be amended to clarify their intended operation and purpose; that is, to inform the public interest test pursuant to section 5 of the IAT Act.

2.12 To give effect to the findings of the review, Part 7 of the IAT Act containing the enabling provision for the Decision-Making Principles is repealed. This also results in the repeal of the Decision-Making Principles. This is replaced with the ability for the Minister to determine, by legislative instrument, matters which inform the public interest test. Specifically, the Minister may determine matters to which regard must or may be had in determining whether a particular matter (such as the result of a trigger proposal under section 57 of the IAT Act) is:

•

contrary to the national interest (which is one of the primary public interest criteria), or likely to have the effect or result mentioned in any of the other primary public interest criteria prescribed in subsection 5(1) of the IAT Act;

•

contrary to the public interest (this applies in addition to the primary public interest criteria prescribed in subsection 5(1) of the IAT Act).

2.13 A number of consequential amendments are also made to give effect to the change described above.

[Schedule 4, items 4, 17 and 18, subsections 5(2), 5(3), 5(4), 5(5) and 5(6), section 69 and Part 7 of the IAT Act]

2.14 The matters which inform the public interest test are appropriate to be prescribed in a legislative instrument to ensure that they can be updated quickly when required. This is because they will inform decisions concerning Australia's insurance industry, the stability of the financial system and Australia's national interest, so must be kept up to date with the most relevant and accurate matters for determining what is contrary to the public interest. The determination would be subject to disallowance and therefore would be subject to appropriate parliamentary scrutiny.

2.15 Subsection 5(1) of the IAT Act is amended to clarify that the primary public interest criteria specified in subsection 5(1) of the Act do not limit when a matter may be taken to be contrary to the public interest. This provides flexibility for the Minister when making decisions to which the public interest test relates. [Schedule 4, item 2, subsection 5(1) of the IAT Act]

Update to primary public interest criteria - fit and proper person

2.16 Paragraph 5(1)(b) of the IAT Act provides that for the purposes of the application of the Act to an Australia-registered insurance company, a particular matter is taken to be contrary to the public interest if it is likely to result in an 'unsuitable person' being in a position of influence over the company. This is one of the primary public interest criteria, as described above. Subsections 5(2) and (3) of the IAT Act provide further detail on when a matter is likely to result in an 'unsuitable person' being in a position of influence over the company. Subsection 5(2) of the IAT Act provides that a person is taken to be an 'unsuitable person' to be in a position of influence over a company if the person is not a fit and proper person to be in such a position of influence. Subsection 5(3) of the IAT Act provides when a person is taken to be in a position of influence over a company.

2.17 The thematic review of Insurance Instruments found that the two-step test described above, whereby a person is an unsuitable person if the person is not a fit and proper person, is not necessary as the reference to an unsuitable person is redundant. To implement these findings, subsection 5(2) of the IAT Act is repealed, and paragraph 5(1)(b) of the IAT Act is amended to provide that a particular matter is taken to be contrary to the public interest if it is likely to result in a person who is not a fit and proper person to be in a position of influence over an Australian-registered insurance company being in such a position of influence. [Schedule 4, items 3 and 4, paragraph 5(1)(b) and subsection 5(2) of the IAT Act]

2.18 The reference to unsuitable persons in the objects of the IAT Act is also replaced with a reference to 'persons who are not fit and proper'. This reflects the change explained above. [Schedule 4, item 1, section 3 of the IAT Act]

2.19 Subsection 5(3) of the IAT Act, prescribing when a person is taken to be in a position of influence over a company, is repealed for consistency with other matters that inform the primary public interest criteria. This is replaced with a power in new subsection 5(2) for the Minister to determine, by legislative instrument, circumstances in which a person is taken to be in a position of influence over an Australian registered insurance company, for the purposes of determining whether a matter is likely to result in a person who is not a fit and proper person to be in a position of influence over an Australian registered insurance company being in such a position of influence. This does not limit the circumstances in which a person is taken to be in such a position of influence.

2.20 The circumstances in which a person is taken to be in a position of influence over an Australian-registered insurance company are appropriate to be prescribed in a legislative instrument to ensure that they can be updated quickly when required. This is because they will inform the public interest test, and affect decisions concerning Australia's insurance industry, the stability of the financial system and Australia's national interest, so must be kept up to date with the most relevant and accurate matters for determining the public interest. The determination would be subject to disallowance and therefore will be subject to appropriate parliamentary scrutiny. [Schedule 4, item 4, subsections 5(2) and 5(3) of the IAT Act]

2.21 A note is inserted at the end of section 5 which specifies that for certain decisions made under Parts 3 and 4 of the IAT Act, the Minister must be satisfied that a particular matter is, would or will be contrary to the public interest. This is intended to clarify that certain decisions in the IAT Act are subject to the public interest test. A determination made pursuant to new subsection 5(2) or 5(6) of the IAT Act will be relevant for this consideration. [Schedule 4, item 4, note to section 5 of the IAT Act]

Clarification of decisions to which public interest test relates

2.22 The thematic review of Insurance Instruments found that the IAT Act should be amended to clarify the intended operation of the Decision-Making Principles. This includes clarification of the decisions in the IAT Act to which the public interest test relates.

2.23 To implement the findings of the thematic review, subsection 41(1) of the IAT Act is repealed and replaced. New subsection 41(1) of the IAT Act provides that the Minister may decide that the Minister has no objection to a trigger proposal if the Minister is satisfied that it is not likely to be contrary to the public interest if the trigger proposal is carried out. A decision made under this provision is a 'go-ahead decision' for the purposes of Part 3 of the IAT Act.

2.24 New subsection 41(1A) of the IAT Act provides that the Minister may decide that the Minister has no objection to a trigger proposal as long as the person concerned complies with specified conditions, if the Minister is satisfied that the trigger proposal, if carried out, is not likely to be contrary to the public interest if the person concerned complies with those conditions. A decision made under this provision is a 'conditional go-ahead decision' for the purposes of Part 3 of the IAT Act.

2.25 The amendment to subsection 41(1) of the IAT Act clarifies that the Minister must consider the public interest test when making an unconditional 'go-ahead decision', as well as a 'conditional go-ahead decision'. The Minister must be satisfied in either case that the trigger proposal, if carried out, is not likely to be contrary to the public interest. As such, the Minister will be required for all decisions made under new subsections 41(1) and (1A) of the IAT Act to have regard to the public interest test under section 5 of the Act. A note directs the reader to the public interest test in section 5 for the purposes of these decisions. [Schedule 4, item 7, subsections 41(1) and 41(1A) of the IAT Act]

2.26 To clarify when a decision is a 'conditional go-ahead decision', paragraphs 41(3)(c) and (d) of the IAT Act are amended to make clear that:

•

the reference to a 'decision subject to conditions' in paragraph 41(3)(c) of the Act is a decision which is a 'conditional go-ahead decision';

•

the reference to 'the conditions' in paragraph 41(3)(d) of the Act is a reference to the conditions to which the 'conditional go-ahead decision' is subject.

[Schedule 4, item 8, paragraphs 41(3)(c) and (d) of the IAT Act]

2.27 The definition of 'conditional go-ahead decision' in section 35 of the IAT Act is also amended to specify that it means a 'go-ahead decision' that is made under subsection 41(1A) for the purposes of Part 3 of the Act. [Schedule 4, item 5, section 35 of the IAT Act]

2.28 The definition of 'go-ahead decision' in section 35 of the IAT Act is amended to provide that this type of decision can be made under new subsection 41(1A) of the Act, in addition to new subsection 41(1) of the Act. [Schedule 4, item 6, section 35 of the IAT Act]

2.29 The amendments to section 41 of the IAT Act described above apply in relation to a decision made by the Minister on or after the commencement of item 20 of Schedule 4 to the Bill. [Schedule 4, item 20]

2.30 Subsection 55(1) of the IAT Act is also repealed and replaced to implement the findings of the thematic review. New subsection 55(1) of the IAT Act provides that the Minister may decide that the Minister has no objection to a trigger proposal if the Minister is satisfied that it is not likely to be contrary to the public interest if the trigger proposal is carried out. A decision made under this provision is a 'go-ahead decision' for the purposes of Part 4 of the IAT Act.

2.31 New subsection 55(1A) of the IAT Act provides that the Minister may decide that the Minister has no objection to a trigger proposal as long as the person concerned complies with specified conditions, if the Minister is satisfied that the trigger proposal, if carried out, is not likely to be contrary to the public interest if the person or company complies with those conditions. A decision made under this provision is a 'conditional go-ahead decision' for the purposes of Part 4 of the IAT Act.

2.32 The amendment to subsection 55(1) of the IAT Act clarifies that the Minister must consider the public interest when making an unconditional 'go-ahead decision', as well as a conditional 'go-ahead decision'. As such, the Minister will be required for all decisions made under new subsections 55(1) and (1A) of the IAT Act to have regard to the public interest test under section 5 of the Act. A note directs the reader to the public interest test in section 5 for the purposes of these decisions. [Schedule 4, item 13, subsections 55(1) and 55(1A) of the IAT Act]

2.33 To clarify when a decision is a 'conditional go-ahead decision', paragraphs 55(3)(c) and (d) of the IAT Act are amended to make clear that:

•

the reference to a 'decision subject to conditions' in paragraph 55(3)(c) of the Act is a decision which is a 'conditional go-ahead decision';

•

the reference to 'the conditions' in paragraph 55(3)(d) of the Act is a reference to the conditions to which the 'conditional go-ahead decision' is subject. [Schedule 4, item 14, paragraphs 55(3)(c) and (d) of the IAT Act]

2.34 The definition of 'conditional go-ahead decision' in section 49 of the IAT Act is amended to specify that it means a 'go-ahead decision' that is made under subsection 55(1A) for the purposes of Part 4 of the Act. [Schedule 4, item 11, section 49 of the IAT Act]

2.35 The definition of 'go-ahead decision' in section 49 of the IAT Act is also amended to specify that this type of decision can be made under new subsection 55(1A) of the Act in addition to new subsection 55(1) of the Act. [Schedule 4, item 12, section 49 of the IAT Act]

2.36 The amendments to section 55 of the IAT Act apply in relation to a decision made by the Minister on or after the commencement of item 20 in Schedule 4 to the Bill. [Schedule 4, item 20]

Additional matters

2.37 Subsection 80(2) of the IAT Act is amended so that in addition to a decision made by the Commonwealth, a decision made by a Minister under the Act or the Foreign Acquisitions and Takeovers Act 1975 has effect only for the purposes of the Act concerned. [Schedule 4, item 19, subsection 80(2) of the IAT Act]

2.38 A note directs the reader to the public interest test in section 5 for all decisions in relation to which the Minister must consider whether a matter is contrary to the public interest in the IAT Act (beyond 'go-ahead decisions', including 'conditional go-ahead decisions', which also include this note, as described above). This is intended to provide a clear link between the decisions that require the Minister to consider the public interest test, and the test itself. [Schedule 4, items 9, 10, 15 and 16, section 43 and 57, subsections 44(1), 44(3), 48(2), 58(1) and 62(2) of the IAT Act]

Part 2 - Forms of notices etc.

2.39 A number of provisions in the IAT Act and Life Insurance Act provide for the form of a notice or application to be prescribed by regulations. The thematic review of Insurance Instruments found that the manner and form of a notice or application should instead be approved administratively, to reduce complexity in the legislation and align with modern drafting practices. This also ensures the manner and form of notices and applications can be updated quickly to require all relevant information, should circumstances change.

2.40 Schedule 4 to the Bill amends the IAT Act and Life Insurance Act to allow either the Minister or a regulator to approve the manner and form of a notice or application, in accordance with the findings of the thematic review.

Insurance Acquisitions and Takeovers Act 1991

2.41 The requirements for giving certain notices under the IAT Act are prescribed in a specific form in the Insurance Acquisitions and Takeovers (Notices) Regulations 1992, which are proposed to be repealed when Schedule 4 to the Bill commences as an outcome of the thematic review. New section 17A of the IAT Act sets out the general requirements for giving notices to replace the Insurance Acquisitions and Takeovers (Notices) Regulations 1992.

2.42 The amendments allow the Minister to approve the manner or form for giving a notice, rather than relying on a prescriptive form in regulations. This allows existing policy to continue whilst reducing legislative complexity and implementing the outcomes of the thematic review. As per section 6 of the Legislation (Exemptions and Other Matters) Regulation 2015, instruments prescribing or approving a form are not legislative instruments. [Schedule 4, item 21, subsection 17A(3) of the IAT Act]

2.43 The general requirements for giving notices in new section 17A of the IAT Act apply to any provision in the Act which refers to giving notice in accordance with section 17A of the Act. [Schedule 4, item 21, subsection 17A(1) of the IAT Act]

2.44 A notice is given in accordance with new section 17A of the IAT Act if the notice:

•

is given in the manner approved in writing by the Minister (or if no manner has been so approved, is given in writing);

•

if the Minister has approved, in writing, a form for giving the notice-is given in the approved form, and includes the information required by the form and is accompanied by any documents required by the form;

•

includes the information (if any) prescribed by the regulations; and

•

is accompanied by any documents prescribed by the regulations.

[Schedule 4, item 21, subsections 17A(2) of the IAT Act]

2.45 The approved manner for giving a notice could, for example, include giving notice electronically. New section 17A specifies that an approved form may be in the form of a statutory declaration, or a form that requires a matter to be verified by a statutory declaration. This does not limit the manner or form for giving a notice that may be approved. [Schedule 4, item 21, subsections 17A(4) of the IAT Act]

2.46 Consequential to the amendments described above, the reference to 'the prescribed form' in paragraph 38(b) of the IAT Act is omitted and replaced with 'accordance with section 17A'. [Schedule 4, item 22, paragraph 38(b) of the IAT Act]

2.47 The amendment to section 38 of the IAT Act described above applies to notices given on or after the commencement of item 23 of Schedule 4 to the Bill. To allow for flexibility in relation to compliance, a written notice given during the 2 months starting on the commencement of item 23 of Schedule 4 to the Bill and in the form that, immediately before that commencement, was prescribed for the purposes of paragraph 38(b) of the IAT Act, is taken to meet the requirements of new section 17A of the Act. This means that the form prescribed in the Insurance Acquisitions and Takeovers (Notices) Regulations 1992 for the purpose of paragraph 38(b) can be used for 2 months following commencement. [Schedule 4, item 23]

2.48 The references to 'the prescribed form' in paragraphs 52(b) and (c) of the IAT Act are also omitted and replaced with 'accordance with section 17A'. [Schedule 4, item 24, paragraphs 52(b) and (c) of the IAT Act]

2.49 The amendments to section 52 of the IAT Act described above apply to notices given on or after the commencement of item 25 of Schedule 4 to the Bill. To allow for flexibility in relation to compliance, a written notice given during the 2 months starting on the commencement of this amendment and in the form that, immediately before that commencement, was prescribed for the purposes of paragraph 52(b) or (c) of the IAT Act is taken to meet the requirements of section 17A of that Act. This means that the form prescribed in the Insurance Acquisitions and Takeovers (Notices) Regulations 1992 for the purpose of paragraph 52(b) or (c) can be used for 2 months following commencement [Schedule 4, item 25]

Life Insurance Act 1995

2.50 The requirements for giving certain notices and making applications under the Life Insurance Act are detailed in the 1995 Regulations. In accordance with the thematic review, these provisions are not proposed to be remade. New section 8A of the Life Insurance Act sets out the general requirements for the manner and form of making applications or giving notices to replace the requirements in the 1995 Regulations. [Schedule 4, item 26, subsection 8A(1) of the Life Insurance Act ]

2.51 The amendments allow APRA to approve the manner and form of an application or notice, rather than relying on a prescriptive form. This allows existing policy to continue whilst reducing legislative complexity and increasing administrative flexibility. As per section 6 of the Legislation (Exemptions and Other Matters) Regulation 2015, instruments prescribing or approving a form are not legislative instruments. [Schedule 4, item 26, subsection 8A(3) of the Life Insurance Act]

2.52 The general requirements for making applications and giving notices in new section 8A of the Life Insurance Act apply to any provision in the Act which refers to giving notice or making an application in accordance with section 8A of the Act. [Schedule 4, item 26, subsection 8A(1) of the Life Insurance Act]

2.53 An application is made, or a notice is given, in accordance with section 8A of the Life Insurance Act if the application or notice:

•

is given in the manner approved in writing by APRA (or if no manner is so approved, is given in writing);

•

if APRA has approved, in writing, a form for making the application or giving the notice-is given in the approved form, and includes the information required by the form and is accompanied by any documents required by the form;

•

includes the information (if any) prescribed by the regulations; and

•

is accompanied by any documents prescribed by the regulations.

[Schedule 4, item 26, subsections 8A(2) of the Life Insurance Act]

2.54 The approved manner for giving a notice or application could, for example, include the ability to give notice or make an application electronically. New section 8A specifies that an approved form may be in the form of a statutory declaration, or a form that requires a matter to be verified by a statutory declaration. This does not limit the manner or form of a notice or application that may be approved. [Schedule 4, item 26, subsections 8A(4) of the Life Insurance Act]

2.55 The requirements for an application for registration to be in the form approved by APRA and include information requested by APRA in paragraphs 20(2)(a) and (b) of the Life Insurance Act are omitted and replaced with new paragraph 20(2)(a), which provides that applications for registration must be made in accordance with the new general requirements for making applications outlined in new section 8A of the Act. [Schedule 4, item 27, paragraph 20(2)(a) and (b) of the Life Insurance Act]

2.56 The amendments to section 20 of the Life Insurance Act described above apply to applications made on or after the commencement of item 28 of Schedule 4 to the Bill. To allow for flexibility in relation to compliance, an application made during the 2 months starting on the commencement of this item and in the form that, immediately before commencement, was approved by APRA and accompanied by any information requested by APRA for the purposes of paragraph 20(2)(a) of the Life Insurance Act prior to the amendments, is taken to meet the requirements of new section 8A of the Act. [Schedule 4, item 28]

2.57 The reference to 'written' in subsection 33(1) of the Life Insurance Act is omitted. Further, the reference to 'the regulations' in subsection 33(2) of the Life Insurance Act is omitted and replaced with 'section 8A'. These amendments update the legislation to provide that the general requirements for giving notice to APRA when a fund is established is in accordance with new section 8A of the Life Insurance Act. [Schedule 4, items 29 and 30, section 33 of the Life Insurance Act]

2.58 The amendments to section 33 of the Life Insurance Act described above apply to notices given on or after the commencement of item 31 of Schedule 4 to the Bill. To allow for flexibility in relation to compliance, a written notice given during the 2 months starting on the commencement of this amendment and made in accordance with the regulations in force immediately before that commencement, and that is made for the purposes of subsection 33(2) of the Life Insurance Act prior to the amendments, is taken to meet the requirements of new section 8A of the Act. This means that the requirements for a notice prescribed in regulation 4.00 of the 1995 Regulations can be used for 2 months following commencement [Schedule 4, item 31]

2.59 Section 76A of the Life Insurance Act requires a life company to keep company records that it is required to keep under sections 75 and 76 of the Life Insurance Act or section 286 of the Corporations Act in Australia, or in another country on APRAs approval. This is subject to an offence, with a maximum penalty of 200 penalty units. Subsections 76A(3) to (5) of the Life Insurance Act require a life company to notify APRA of the address where these records are kept, including any new address, within 28 days.

2.60 Subsections 76A(3) to (5) of the Life Insurance Act are repealed and replaced to clarify the way a life company must notify APRA of the address where its company records are kept.

2.61 If a life company is registered under the Life Insurance Act, it must notify APRA of where company records are kept in accordance with the requirements under section 8A of the Act. The life company must notify APRA within 28 days after the day on which it becomes registered. [Schedule 4, item 32, subsections 76A(3) and (3A) of the Life Insurance Act]

2.62 Where a life company has given APRA notice of the address where its records are kept and the company moves its financial records to a new address, the company must notify APRA of this in accordance with the requirements for giving notice under new section 8A of the Life Insurance Act and within 28 days after the date on which the records were moved to the new address. This requirement applies to a life company that is registered under the Life Insurance Act. [Schedule 4, item 32, subsections 76A(4) and (5) of the Life Insurance Act]

2.63 New subsection 76A(7) of the Life Insurance Act provides that a life company commits an offence if it fails to notify APRA of the address of where the company's records are kept as outlined above. The maximum penalty imposed for such a contravention is 100 penalty units. [Schedule 4, item 33, subsection 76A(7) of the Life Insurance Act]

2.64 The amendments to subsection 76A(7) of the Life Insurance Act described above apply to a company that is registered under the Act on or after the commencement of item 34 of Schedule 4 to the Bill. The amendments also apply to a company that is registered within 28 days before the commencement of the amendments, where the company did not notify APRA, before that commencement, of the address where the records are kept. [Schedule 4, item 34]

2.65 To allow for flexibility in relation to compliance:

•

a written notification given during the 2 months after the commencement of these amendments in the approved form for the purposes of subsection 76A(3) or (4) of the Life Insurance Act prior to the amendments, is taken to meet the notice requirements under new section 8A of the Act; and

•

the amendments to subsections 76A(4) and (5) of the Life Insurance Act apply to a company moving its records to a new address on or after the commencement of these amendments. The amendments also apply to a company moving its financial records to a new address within 28 days before the commencement of these amendments, if the company did not notify APRA, before that date, of the new address where the records are kept. [Schedule 4, item 34]

2.66 The reference to 'written notice' in subsection 179C(1) of the Life Insurance Act is substituted with 'notice', in accordance with new section 8A of the Act. This amendment updates this provision to ensure it aligns with new approved manner and form for giving notices under new section 8A of the Life Insurance Act, and reflects the greater administrative flexibility created by the amendments. [Schedule 4, item 35, subsection 179C(1) of the Life Insurance Act]

2.67 The above amendment to subsection 179C(1) of the Life Insurance Act applies to a notice given on or after the commencement of item 38 of Schedule 4 to the Bill. [Schedule 4, item 38]

2.68 To allow for flexibility in relation to compliance, a written notification given during the 2 months after the commencement of these amendments, that is in the approved form for the purposes of subsection 179C(1) of the Life Insurance Act prior to the amendments, is taken to meet the notice requirements under new section 8A of Act. [Schedule 4, item 38]

2.69 Subsection 179C(2) of the Life Insurance Act provides that where there is an approved form for a notice for the purposes of section 179C, the notice must be given in the approved form. This provision is repealed as it is redundant due to new section 8A of the Life Insurance Act which provides the new approved manner and form for giving notices for the purposes of section 179C of the Act. [Schedule 4, item 36, subsection 179C(2) of the Life Insurance Act]

2.70 Subsection 179C(6) of the Life Insurance Act provides that a person (other than APRA) commits an offence where a person makes an application or appointment without APRA's consent and does not provide APRA with notice. Paragraph 179C(6)(c) of the Life Insurance Act is repealed and replaced to update the notice requirements. A person commits an offence for the purposes of subsection 179C(6) of the Life Insurance Act if the person does not give APRA notice at least one week before making the application or appointment, and in accordance with new section 8A of the Act. [Schedule 4, item 37, paragraph 179C(6)(c) of the Life Insurance Act]

2.71 The amendment to paragraph 179C(6)(c) of the Life Insurance Act applies to a notice given on or after the commencement of item 38 of Schedule 4 to the Bill. [Schedule 4, item 38]

2.72 To allow for flexibility in relation to compliance, a written notification given during the 2 months after the commencement of these amendments, that is in the approved form for the purposes of subsection 179C(6) of the Life Insurance Act prior to the amendments, is taken to meet the notice requirements under new section 8A of Act. [Schedule 4, item 38]

2.73 Section 197 of the Life Insurance Act requires documents to be lodged with APRA in accordance with the regulations in the case of the transfer or amalgamation of a life insurance business.

2.74 Section 197 of the Life Insurance Act is amended to allow APRA to approve a manner for giving the documents (rather than this being prescribed in regulations). Documents are given in accordance with new subsection 197(3) of the Life Insurance Act:

•

if the documents are given in the approved manner (in circumstances where APRA has approved a manner for giving the documents under new subsection 197(4) of the Act); or

•

if the documents are given in any other manner (in circumstances where APRA has not approved a manner for giving the documents).

[Schedule 4, items 40 and 42, subsections 197(1), (3) and (4) of the Life Insurance Act]

2.75 A number of consequential amendments are made to implement the amendments to section 197 of the Life Insurance Act described above.

[Schedule 4, items 39 and 41, heading to section 197 and subsection 197(2) of the Life Insurance Act]

2.76 The amendments to section 197 of the Life Insurance Act apply in relation to a transfer or amalgamation of a life insurance business that occurs on or after the commencement of item 43 of Schedule 4 to the Bill. [Schedule 4, item 43]

2.77 Paragraph 200(2)(a) of the Life Insurance Act is amended to provide that an assignment of policy must be by memorandum of transfer in accordance with the form requirements outlined in new subsection 200(2A) of the Act, rather than in the form prescribed by regulations. [Schedule 4, item 44, paragraph 200(2)(a) Life Insurance Act]

2.78 The form of a memorandum of transfer is prescribed by regulation 10.01 of the 1995 Regulations; this provision is proposed to be repealed when Schedule 4 to the Bill commences and is not proposed to be remade. Instead, new subsection 200(2A) of the Life Insurance Act requires ASIC to approve the manner and the form of the memorandum of transfer, which increases flexibility and simplifies the legislation. New subsection 200(2A) of the Life Insurance Act provides that a memorandum of transfer referred to in paragraph 200(2)(a) of the Act is in accordance with subsection 200(2A) of the Act if it is in the form approved by ASIC under subsection 200(2B) of the Act, and any other requirements set out in regulations which have been made for the purposes of paragraph 200(2A)(b) of the Act in relation to a memorandum of transfer are satisfied. [Schedule 4, item 45, subsection 200(2A) and (2B) of the Life Insurance Act]

2.79 The amendments to section 200 of the Life Insurance Act in relation to a memorandum registered under paragraph 200(2)(d) of the Act apply on or after the commencement of item 46 of Schedule 4 to the Bill. However, if a written memorandum of transfer is registered under paragraph 200(2)(d) of the Life Insurance Act within two months of the commencement of the amendments and is in the form that was prescribed by paragraph 200(2)(a) of the Act before the amendments commenced, then the memorandum is taken to be in accordance with new subsection 200(2A) of the Act. [Schedule 4, item 46]

2.80 Subsection 203(1) of the Life Insurance Act requires a person who previously had a policy vested in them as trustee but who is no longer trustee to provide the life company with notice of that fact.

2.81 Subsection 203(1) of the Life Insurance Act is amended to provide that a person giving a life company notice for the purposes of section 203 of the Act must give that notice in accordance with new subsection 203(2) of the Act. [Schedule 4, item 47, subsection 203(1) of the Life Insurance Act]

2.82 Subsections 203(2) and (3) of the Life Insurance Act are repealed and replaced to provide that ASIC may approve the manner and form of the notice given for the purposes of subsection 203(1) of the Act. This replaces the form of this notice prescribed in the 1995 Regulations, which are proposed to be repealed when Schedule 4 to the Bill commences.

2.83 A notice is given in accordance with subsection 203(1) of the Life Insurance Act if the notice:

•

is given in the manner approved in writing by ASIC (or if no manner is so approved, is given in writing);

•

if ASIC has approved, in writing, a form giving the notice-is given in the approved form, and includes the information required by the form and is accompanied by any documents required by the form;

•

includes the information (if any) prescribed by the regulations; and

•

is accompanied by any documents prescribed by the regulations.

[Schedule 4, item 48, subsections 203(2) and (3) of the Life Insurance Act]

2.84 The approved manner for giving a notice could, for example, include the ability to give notice electronically. New subsection 48(3A) of the Life Insurance Act provides that an approved form may be in the form of a statutory declaration, or a form that requires a matter to be verified by a statutory declaration. This does not limit the manner and form that may be approved. [Schedule 4, item 48, subsections 203(3A) of the Life Insurance Act]

2.85 The amendments to section 203 of the Life Insurance Act made by Part 2 to Schedule 4 to the Bill apply in relation to a notice given on or after the commencement of item 49 of Schedule 4 to the Bill. However, if a written notice is given for the purposes of subsection 203(1) of the Life Insurance Act within two months of the commencement of the amendments, and it is in accordance with the regulations made for the purposes of subsection 203(2) of the Act which were in force immediately before the commencement of the amendments, then that written notice is taken to be in accordance with subsection 203(2) of the Act as amended. [Schedule 4, item 49]

2.86 Subsection 216(1) of the Life Insurance Act requires a life company to give ASIC, within 3 months after the end of a calendar year, a statement in the form prescribed by regulations of all unclaimed money, other than unclaimed money held in RSAs as at the end of that year. Subsection 216(4) provides that if, between the end of the calendar year and the date on which the statement is given to ASIC, the company has paid any money to persons to whom the amounts were due by the company, the company must give ASIC a statement in the form prescribed by the regulations relating to the amounts so paid.

2.87 A number of amendments are made to section 216 to impose new manner and form requirements for these statements.

2.88 Subsections 216(1) and (4) of the Life Insurance Act are amended to provide that the required form of a statement for the purposes of these subsections is prescribed in new subsection 6A, where previously the form was prescribed by the regulations. This amendment increases flexibility and simplifies the legislation. [Schedule 4, item 50, subsections 216(1) and (4) of the Life Insurance Act]

2.89 New subsection 216(6A) of the Life Insurance Act provides that a statement given by a life company to ASIC under subsection 216(1) or (4) of the Act is in accordance with the subsections if it is given in writing, is in a form approved by ASIC, includes the information required by the form and is accompanied by any required documents. It must also be accompanied by any information or documents required by regulations made for the purposes of subsection 216(6A) of the Act. [Schedule 4, item 51, subsections 216(6A) and (6B) of the Life Insurance Act]

2.90 ASIC may, in writing, approve a manner or form for giving the statement. It may take the form of a statutory declaration, or a form that requires a matter to be verified by a statutory declaration. This does not limit the manner and form that may be approved. [Schedule 4, item 51, subsections 216(6C) of the Life Insurance Act]

2.91 The amendments to section 216 of the Life Insurance Act made by Part 2 to Schedule 4 apply in relation to a statement given on or after the commencement of item 52 to Schedule 4 to the Bill. However, if a written statement is given under subsection 216(1) or (4) of the Life Insurance Act within two months of the commencement of the amendments, and is in in a form which that was, immediately before the commencement of the amendments, prescribed for the purposes of those subsections, then that written statement is taken to be in accordance with subsection 216(6A) of the Act as amended. [Schedule 4, item 52]

2.92 The definition of 'approved form' in the Schedule to the Life Insurance Act is repealed as it is redundant. The definition provided that an approved form was a form which was approved in writing by APRA. [Schedule 4, item 53, Schedule to the Life Insurance Act]

Part 3 - Friendly Societies

Life Insurance Act 1995

2.93 Friendly societies are frequently prudentially regulated as life companies; however, they operate with certain structural differences compared to other life companies. As such, certain provisions of the Life Insurance Act were not properly adapted for the regulation of friendly societies, and the application of the Act in relation to these entities is modified in Schedule 5 of the 1995 Regulations. However, as this has modified the Life Insurance Act and has remained relatively stable, the thematic review of Insurance Instruments found that it would be appropriate for the modifications to be contained in primary legislation. Schedule 4 to the Bill implements the findings of the review by incorporating the modifications that are in the 1995 Regulations directly into the Life Insurance Act. [Schedule 4, item 54, section 16A(4)(c) to (d) of the Life Insurance Act]

2.94 Section 35 of the Life Insurance Act outlines the requirements for policy documents. Friendly societies do not issue a policy document to members as the benefit fund product (or policy). That is, a common set of benefit fund rules forms the basis of the contract between all members of that fund and the friendly society. Therefore, the Life Insurance Act concept of a policy document is not relevant to friendly societies. As such the requirements in subsections 35(1), (3), (4) and (5) of the Life Insurance Act as well as those in subsections 36(b), 229(2) and Division 7 of Part 10 of that Act do not apply to friendly societies. [Schedule 4, items 56 and 61, sections 16HA, 16 HB, 16ZAAC and 16ZAAF of the Life Insurance Act]

2.95 As references to policy documents are not relevant to friendly societies the following provisions are modified when applying to friendly societies:

•

subsection 35(2) of the Life Insurance Act ? so that approved benefit fund rules do not make provisions that are inconsistent with section 31 of the Act;

•

subsection 198(1) and paragraph 201(1)(b) of the Life Insurance Act ? so that references which relate to policy documents are omitted;

•

subsections 213(2) and 213(3) of the Life Insurance Act ? so that the requirement that the policy be endorsed is changed to a requirement that the approved benefit fund rules be followed when registering the applicant. [Schedule 4, items 56, 60 and 61, sections 16HA, 16ZAB, 16ZAAA and 16ZAAB of the Life Insurance Act]

2.96 Section 15 of the Life Insurance Act establishes that all policies issued by life companies are either participating or non-participating benefits. A non-participating benefit is a benefit that does not include any entitlement to share in any distribution of profit and a participating benefit is any other benefit. These concepts apply to the requirements in Divisions 5 and 6 of Part 4 of the Life Insurance Act.

2.97 However, in the context of benefit funds provided by friendly societies, products are classified as either defined contribution or defined benefit funds. In defined contribution funds, the benefit is a function of the contributions made by the member and the investment performance of the funds (e.g. declared bonuses). These funds could not be classed as participating in terms of section 15 of the Life Insurance Act because the society may exercise discretion as to what portion of the generated surplus is to be distributed to members and what portion is to remain unallocated. In defined benefit funds, the amount of the benefit is specified in the benefit fund rules. As such, friendly societies require more flexibility to decide how much of the surplus is distributed in any period. In particular, it is not necessary for the friendly society to distribute all surplus within the period. Therefore, the provisions in Divisions 5 and 6 of Part 4 of the Life Insurance Act are modified so as not to apply to friendly societies. [Schedule 4, items 57 and 62, section 16KA and Part 1 of Schedule 2 to the Life Insurance Act]

2.98 These provisions are replaced by requirements that are more adapted to the circumstances of friendly societies. The requirements in section 30 of the Life Insurance Act are modified so as to enable a society to pay, apply or allocate all or part of the surplus to the members of the approved benefit fund, or transfer all or part of the surplus to another approved benefit fund or to the management fund if the rules of the society so provide. The appointed actuary must advise the friendly society that there is a surplus before the distribution can take place. The distribution must comply with any applicable prudential standard. [Schedule 4, items 55 and 62, section 16GA and Part 1 of Schedule 2 to the Life Insurance Act]

2.99 Sections 226 and 227 of the Life Insurance Act require a life company to maintain a register of policies for each jurisdiction in which it carries on life insurance business and set out the requirements for the register. In comparison, friendly societies maintain registers of benefit members of each benefit fund. Therefore, the requirements in section 226 of the Life Insurance Act are modified for friendly societies to require that such registers are kept in parts for each State or Territory and include individuals' membership details. The requirements in section 227 of the Life Insurance Act are modified so as not to apply to friendly societies. [Schedule 4, item 61, sections 16ZAAD and 16ZAAE of the Life Insurance Act]

2.100 Section 242 of the Life Insurance Act provides for postal voting by members of a mutual life company, which includes friendly societies. However, other requirements in the Life Insurance Act and the Corporations Act serve to involve members in the governance of friendly societies. As there are other processes that achieve a similar outcome to section 242 of the Life Insurance Act, section 242 of the Act is modified so as not to apply to friendly societies. [Schedule 4, item 61, section 16ZAAG of the Life Insurance Act]

2.101 The Life Insurance Act establishes the requirements for a life company's financial records to be divided into various classes. As friendly societies generally adopt a single product benefit fund structure it is not possible to further divide the financial records of each benefit fund in the same way. For this reason, the requirements in sections 75 and 76 of the Life Insurance Act are modified when applying to friendly societies so as to simply require records that properly record the affairs and transactions of the society in respect of each fund. [Schedule 4, items 62 and 58, Part 2 of Schedule 2 to the Life Insurance Act]

2.102 The addition of new Divisions and a new Schedule to the Life Insurance Act results in a degree of renumbering and the renaming of the existing Schedule to Schedule 1. [Schedule 4, items 59, 63, 64, 65, 66 and 67, note to subsection 7(2), 16F(3), and 179AQ(1), subsection 8(1) and Division 6 of Part 2A and heading to Schedule 1 to the Life Insurance Act]

Part 4 - Statutory funds of life companies

Life Insurance Act 1995

2.103 Part 4 of the 1995 Regulations provides for the circumstances in which a life company may give a charge over an asset of a statutory fund including a charge over the assets for the purposes of engaging in derivatives transactions. Part 4 of the 1995 Regulations also provides for the circumstances in which a life company is prohibited from investing assets of a statutory fund in a subsidiary. As part of the thematic review, these provisions of the 1995 Regulations (regulation 4.00 (Notice of establishment of statutory fund), regulation 4.00A (Charges over the assets of statutory funds: derivative contracts), regulation 4.00B (Charges over the assets of approved benefit funds) and regulation 4.01A (Prohibited investments)) were considered to be more appropriate for inclusion in the Life Insurance Act.

2.104 The terms of these provisions of the 1995 Regulations are incorporated directly into the Life Insurance Act while retaining the same regulatory effect in relation to a charge over an asset of a statutory fund. Any update to language and structure to reflect current drafting practice is not intended to change the substantive effect of the provisions. Similarly, it is intended that these provisions continue to operate in the same manner as equivalent provisions of the Superannuation Industry (Supervision) Regulations 1994.

2.105 Subsection 33(1) of the Life Insurance Act provides that whenever a life company establishes a statutory fund otherwise than under an approval given under section 52 of the Act, the company must give APRA written notice of certain matters in relation to the fund. Amendments described in paragraph 1.55 remove the reference to 'written' and ensure that the notice must be given in accordance with new section 8A. Subregulation 4.00(2) of the 1995 Regulations specify that notice of the establishment of a statutory fund must be given in writing within 14 days of the establishment of the fund.

2.106 New subsection 33(3) of the Life Insurance Act is proposed to replace subregulation 4.22(2) of the 1995 Regulations, by it providing that this written notice must be given on or before the time prescribed by the regulations or where there is no time period prescribed, at the end of 14 days after the establishment of the fund. [Schedule 4, item 28, 30, 116, subsection 33(1), 33(2) and 33(3) of the Life Insurance Act]

2.107 This replaces the requirement set out in subsection 4.00(2) of the 1995 Regulations, which is not proposed to be remade.

2.108 The notice requirements outlined in new subsection 33(3) of the Life Insurance Act applies to statutory funds established on or after the commencement of this item. [Schedule 4, item 117]

2.109 Section 38 of the Life Insurance Act provides that a life company must not apply, or deal with, assets of a statutory fund, whether directly or indirectly, except for limited purposes prescribed by the Life Insurance Act. New paragraph 38(3)(aa) of the Life Insurance Act provides a new exception to the prohibition on a life company mortgaging or charging any of the assets of a statutory fund. A life company may do so if it is in accordance with new section 38A or 38B of the Life Insurance Act. [Schedule 4, item 68, paragraph 38(3)(aa) of the Life Insurance Act]

2.110 New section 38A of the Life Insurance Act deals with circumstances in which life companies may give a charge over the assets of a statutory fund for the purposes of engaging in derivatives transactions. A life company may give a charge over the assets of a statutory fund of the purposes of engaging in such transactions subject to the following conditions:

•

the charge relates to an investment; and

•

the life company has in place a risk management statement setting out:

-

policies for the use of derivatives (including analysis of risks);

-

controls on the use of derivatives and compliance processes to ensure that they are effective; and

-

that the investment to which the charge relates is made in accordance with that risk management statement.

[Schedule 4, item 69, subsection 38A(1) of the Life Insurance Act]

2.111 The charge must also comply with subsection 38A(2), (3) or (4) of the Life Insurance Act in relation to:

•

a derivative to which the life company is a party;

•

a derivative to which a person (other than the life company) is a party on behalf of, on the instructions of, on account of, or for the benefit of, the life company; or

•

in the case of subsection (3)-a derivative that relates to a derivative to which either of the above apply.

[Schedule 4, item 69, paragraph 38A(1)(a) of the Life Insurance Act]

Charges given to comply with rules and laws

2.112 New subsection 38A(2) of the Life Insurance Act sets out the circumstance in which the charge is given for the purposes of complying with a requirement to secure the performance of an obligation in relation to the derivatives contract under either:

•

rules governing the operation of the approved body; or

•

a law of the Commonwealth, a State, a Territory or a foreign country (including a part of a foreign country) that applies to dealings in the derivatives contract.

2.113 The reference to 'law' should be interpreted broadly to include legislation, regulations, legislative instruments, delegated legislation, prudential standards, capital requirements and any other requirements imposed by domestic or foreign financial market regulators and central banks (such as APRA, ASIC and the Reserve Bank of Australia and similar foreign regulators). This subsection is proposed to replace regulation 4.00A(1A) of the 1995 Regulations. [Schedule 4, item 69, subsection 38A(2) of the Life Insurance Act]

2.114 The approved bodies are proposed to be prescribed in regulations replacing the 1995 Regulations, for the purposes of the definition of 'approved body' in Schedule 1 to the Life Insurance Act. This is so that the list can be easily updated and maintained in the event that the name of a body changes, or it is considered necessary to add or remove an approved body. [Schedule 4, item 77, Schedule 1 to the Life Insurance Act]

Charges given to agents etc

2.115 New subsection 38A(3) of the Life Insurance Act is proposed to replace subregulation 4.00A(1B) of the 1995 Regulations. A charge will satisfy subsection 38A(3) of the Life Insurance Act in relation to a derivative if the charge is given in favour of a person who is a party to the derivative on behalf of, on the instructions of, on account of, or for the benefit of, the life company or enters into the derivative on behalf of, on the instructions of, on account of, or for the benefit of, the life company. This wording is intended to reflect the various ways in which an agent may act for a person. The charge must be given for the purposes of securing the performance of an obligation in relation to the derivative. Further, the agent must:

•

be obliged to keep the property separate from the property of the agent under rules governing the operation of the approved body or a law of the Commonwealth, a State, a Territory or a foreign country (including a part of a foreign country) that applies to dealings in the derivatives contract; and

•

be obliged (or but for a netting-off, be obliged) to transfer property to another entity in relation to the derivative if particular circumstances arise. [Schedule 4, item 69, subsection 38A(3) of the Life Insurance Act]

Charges over financial property

2.116 A charge will satisfy new subsection 38A(4) of the Life Insurance Act if:

•

the asset over which the charge is given is financial property;

•

the obligations secured by the financial property are any of the following:

-

an obligation of the life company that relates to a derivatives contract;

-

an obligation of the life company to pay interest on an obligation of the life company that relates to a derivatives contract; or

-

an obligation of the life company to pay costs and expenses incurred in connection with enforcing a charge given in respect of either an obligation of the life company that relates to a derivatives contract or obligation to pay interest on such an obligation;

•

and, either:

-

the financial property is transferred or otherwise dealt with so as to be in the possession or under the control of the secured party or another person (who is not the life company), who acknowledges in writing that they have that possession or control of the financial property on behalf of the secured party; or

-

the financial property is intermediated financial property in relation to an account and there is an agreement in force between the intermediary (who is not the life company) and one or more other persons, one of whom is the secured person or the life company where the agreement has the effect that:

o

the person in whose name the account is maintained is not able to deal with the property;

o

the intermediary must not comply with instructions of the life company in relation to the property without the consent of the secured person or someone who has agreed to act on the instructions of the secured person; or

o

the intermediary must comply (or must comply in a specified circumstance or circumstances) with the instructions of the secured person in relation to the intermediated financial property without the consent of the life company or anyone who has agreed to act on the instructions of the life company.

2.117 The secured person is the person whose rights are "secured" as mentioned in paragraph 38A(4)(b).

2.118 New subsection 38A(4) of the Life Insurance Act remakes subregulations 4.00A(1C) and (IF) of the 1995 Regulations. [Schedule 4, item 69, subsections 38A (4) of the Life Insurance Act]

2.119 New subsections 38A(5), (6), (7) and (8) of the Life Insurance Act set out a range of circumstances in respect of which the possession and control test would, or would not, be satisfied. These subsections are proposed to replace subregulations 4.00A(1D), (1E) and (1G) of the 1995 Regulations. Subsections 38A(6) and (7) of the Life Insurance Act do not limit paragraph 38A(4)(c) of the Act. The fact that a life company retains certain rights does not stop paragraph 38A(4)(c) from applying. This includes, for example, a right to reciev and withdraw income in relation to the financial property and a right to receive notices in relation to the financial property. [Schedule 4, item 69, subsections 38A (5), (6),(7), (8) and (9) of the Life Insurance Act]

2.120 This provision uses similar concepts and safeguards to those used in the Payment Systems and Netting Act 1998 in respect of facilitating the enforcement of security in respect of financial property given in respect of certain financial market transactions. It is intended that the concepts of possession and control are applied in a similar way to the way in which those concepts are applied in respect of the Payment Systems and Netting Act 1998. More information about how these subsections work is provided in the Explanatory Memorandum to the Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016.

2.121 Subsections 38A(2), (3) and (4) of the Life Insurance Act are not mutually exclusive, and in some circumstances more than one may be satisfied by a particular arrangement. For example, this may occur where a charge is given by a life company over financial property in order to comply with the requirements of an approved body.

2.122 New section 38B of the Life Insurance Act provides that for the purposes of new paragraph 38(3)(aa) of the Act, a friendly society may mortgage or charge an asset of an approved benefit fund for the purposes of advantaging the approved benefit fund if this is in accordance with the benefit fund rules of the friendly society. This is subject to subsection 38(8) of the Life Insurance Act which provides that section 38 of the Act does not authorise a friendly society to mortgage or charge assets of an approved benefit fund otherwise than as provided by the approved benefit fund rules. New section 38B of the Life Insurance Act is proposed to replace regulation 4.00B of the 1995 Regulations. [Schedule 4, item 69, section 38B of the Life Insurance Act]

2.123 Subsection 40(1) of the Life Insurance Act is amended to provide that, subject to various conditions, a life company may mortgage or charge an asset of a statutory fund for purposes other than those mentioned in paragraphs 38(3)(a), (aa) or (c) of the Act, where previously the provision mentioned only paragraphs 38(3)(a) and (c) of the Act. [Schedule 4, item 70, subsection 40(1) of the Life Insurance Act]

2.124 Subsection 43(3) of the Life Insurance Act is amended by adding new paragraph 43(3)(c), which provides that a life company must not contravene new subsection 43A(1) or (4) of the Act. The operation of these subsections is explained below. [Schedule 4, item 71, paragraph 43(3(c)) of the Life Insurance Act]

2.125 Subsections 43(4) and (5) of the Life Insurance Act are both amended to include references to new paragraph 43(3)(ca), alongside the existing references to paragraphs 43(3)(c) and (d) of the Act in each subsection. [Schedule 4, item 72, subsections 43(4) and (5) of the Life Insurance Act]

2.126 New section 43A of the Life Insurance Act prescribes the circumstances in which an investment, or the retention of an investment, of assets of a statutory fund in a subsidiary of the life company is prohibited.

2.127 It prohibits any investment in a subsidiary of the life company where the statutory funds of the company (considered in aggregate) do not hold the majority interest in the subsidiary.

2.128 The purpose of the provision is to ensure the 'control' of the asset being included as an asset of the statutory fund is, in fact, held by the statutory fund. Where the 'control' of the subsidiary is effectively held by the shareholders funds (that is, the assets of the company other than assets of a statutory fund) - then the instrument is prohibited as an investment of the statutory fund.

2.129 Further, to facilitate that same purpose, the provision prevents reinvestment of the assets of the subsidiary, either directly or indirectly, in another related (non-subsidiary) company.

2.130 The test of majority interest for the purpose of this section is measured relative to the total interest of the life company in the subsidiary. In other words, the interest of the life company in the subsidiary to the extent it is held in the shareholders' funds must exceed the interest of the life company in the subsidiary to the extent it is held in the statutory funds.

2.131 Subsection 43A(2) of the Life Insurance Act gives APRA discretion to determine whether an investment by a life insurer that has a branch in Australia is consistent with the intent of the legislation.

2.132 In line with current drafting practice, an alternative text has been included for images in the formula in subsection 43A(1) of the Life Insurance Act so the content of the images is accessible to anyone who relies on screen reading software to read the legislation. This alternative text is for assistance in readability only and does not form part of the Act because of the operation of subsection 13(3) of the AIA.

2.133 This prohibition is proposed to replace regulation 4.01A of the 1995 Regulations. [Schedule 4, item 73, section 43A of the Life Insurance Act]

2.134 A transitional provision is included to ensure that an approval that was given under sub-subparagraph 4.01A(a)(ii)(B) of the 1995 Regulations and was in force immediately before the commencement of item 74 of Schedule 4 to the Bill has the same effect from that commencement as if it had been given under new subsection 43A(2) of the Life Insurance Act as amended. [Schedule 4, item 74]

2.135 The definition of 'reviewable decision' in the Life Insurance Act is amended to include a refusal to give an approval under new subsection 43A(2), and also a decision that is made under the regulations, and is prescribed by the regulations for the purposes of the subparagraph. [Schedule 4, items 75 and 76, subsection 236(1) (after paragraph (hc) and at the end of the definition of 'reviewable decision' of the Life Insurance Act)]

Part 5 - References to Treasurer

Insurance Act 1973

2.136 References to the 'Treasurer' in the Insurance Act are omitted and replaced with references to the 'Minister'. These changes accord with current drafting practices to allow for greater flexibility in administering provisions of the Act. References to Ministers in Acts in dealt with by section 19 of the AIA. [Schedule 4, items 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88 and 89, section 62ZOZA (heading), subsection 3(1)(paragraph (c) of the definition of 'securities exchange'), 3(2), 8(3), 62ZOZA(1) (heading), 62ZOZA(1), 62ZOZA(2), 106(3) (heading), 106(3), 106(4) (heading), 106(4), 106(5) and 106(5) of the Insurance Act]

Insurance Contracts Act 1984

2.137 A reference to the 'Treasurer' in the Insurance Contracts Act 1984 is omitted and replaced with a reference to the 'Minister'. This change accords with current drafting practices to allow for greater flexibility in administering provisions of the Act. References to Ministers in Acts in dealt with by section 19 of the AIA. [Schedule 4, item 90, section 11A of the Insurance Contracts Act 1984]

Life Insurance Act 1995

2.138 References to the 'Treasurer' or 'Treasurer's' in the Life Insurance Act are omitted and replaced with references to the 'Minister' or 'Minister's', as required. These changes accord with current drafting practices to allow for greater flexibility in administering provisions of the Act. References to Ministers in Acts in dealt with by section 19 of the AIA. [Schedule 4, items 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103 and 104, section 179AZA (heading), subsection 197AZA(1) (heading), 179AZA(1), 179AZA(2), 216(7), 216(7A), 216(14B), 230D(3) (heading), 230D(3), 230(4), 230(5), 230D(4) (heading), 230D(4), 230D(5) (heading) and 230D(5), and paragraph 216(14B)(a), of the Life Insurance Act]

Part 6 - Other amendments

Insurance Acquisitions and Takeovers Act 1991

2.139 Certain references to 'time' within the IAT Act are omitted and replaced with references to 'period'. These amendments clarify in each instance that the Act is not referring to a moment in time, but rather a period of time. [Schedule 4, items 105, 106, 108 and 111, subsection 44(2) and 58(1) paragraphs 44(1)(c), 44(1)(d), 73(1)(a), (b) and (c) of the IAT Act]

2.140 Subsection 44(2) of the IAT Act grants the Minister a power to vary a divestment order which the Minister has made under subsection 44(1) of the Act for the purposes of Part 3 of the Act. The order may be varied by notifiable instrument extending the period of time allowed to the person to whom the divestment order applies, before the time period has expired.

2.141 Subsection 33(3) of the AIA provides that the power to make, grant or issue an instrument of a legislative or administrative character includes the power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary such an instrument.

2.142 New subsection 44(2A) of IAT Act is added to clarify that the Minister's power to vary a divestment order under subsection 44(2) of the Act does not limit the application of subsection 33(3) of the AIA in relation to the divestment order. This addition clarifies the law and ensures that it continues to reflect legislative intent which provides for greater administrative flexibility. [Schedule 4, item 107, section 44 of the IAT Act]

2.143 New subsection 58(2) of the IAT Act grants the Minister a power to vary a divestment order which the Minister has made under subsection 58(1) of the Act for the purposes of Part 4 of the Act. The order may be varied by notifiable instrument extending the period of time allowed to the person to whom the divestment order applies, before the time period has expired.

2.144 New subsection 58(2A) of the IAT Act is added to clarify that the Minister's power to vary a divestment order under subsection 44(2) of the Act does not limit the application of subsection 33(3) of the AIA in relation to the instrument. The operation of subsection 33(3) of the AIA is explained above. This addition clarifies the law and ensures that it continues to reflect legislative intent which provides for greater administrative flexibility. [Schedule 4, item 109, subsection 58(2) and (2A) of the IAT Act]

2.145 New subsection 58(2) of the IAT Act applies in relation to a divestment order made before the commencement of this item if the order was not revoked before the item commenced, and the period of time specified in the divestment order did not end before that commencement, or if the divestment order was made on or after the commencement of this item. [Schedule 4, item 110]

Insurance Act 1973

2.146 Subsection 3A(1) of the Insurance Act provides that for the purposes of the Act, insurance business does not include undertaking liability under a contract of insurance, or a kind of contract of insurance, which is either specified in the regulations or is in circumstances specified in the regulations for the purposes of the subsection.

2.147 New subsection 3A(3) of the Insurance Act provides that the regulations may specify a contract of insurance, a kind of contract of insurance, or circumstances, by reference to a decision of APRA or a person, or a certificate or other documents issued by APRA or a person. If the regulations do so, they may also impose obligations on APRA or the person in relation to the decision. [Schedule 4, item 112, subsection 3A(3) of the Insurance Act]

2.148 New section 28A of the Insurance Act introduces two offences into the Act to replace offences in the 2002 Regulations. The section provides that a person commits an offence if the person is a general insurer that becomes aware that the person has started to carry on insurance business in Australia, or that the person has ceased to carry on insurance business in Australia, and does not inform APRA in writing within 7 days after the date on which the person becomes aware that the insurance business has started or ceased. The penalty for either offence is 50 penalty units.

2.149 These offences are moved from the 2002 Regulations into the Insurance Act to simplify the legislation and provide certainty and visibility to persons who may be affected. The penalty units applicable for each offence has been increased to 50, from 5 penalty units, to bring the penalty in line with other equivalent offences in the Act. For example, section 114 of the Insurance Act provides that a person commits an offence if the person carries on a business using the word "insurance" or "insurer", for a product that is not insurance and could be mistakenly believed to be insurance. The penalty for this offence in the case of an individual is 50 penalty units. [Schedule 4, item 113, section 28A of the Insurance Act]

2.150 Section 28A of the Insurance Act applies in relation to a person starting or ceasing to carry on an insurance business in Australia on a particular date if the date occurs on or after the commencement of this item, or within 7 days before the commencement if the person did not tell APRA of that date under subregulation 7(1) or (2) respectively of the 2002 Regulations. [Schedule 4, item 114]

2.151 Section 123 of the Insurance Act is repealed. Section 123 of the Insurance Act provided that a person may, on application in accordance with the regulations and on payment of the prescribed fee, inspect the Register of General Insurers and Authorised NOHCs or an auditor's certificate lodged with APRA under section 49L of the Insurance Act (Lodgement of auditor's certificate and actuary's reports).

2.152 Section 123 of the Insurance Act is repealed as it is no longer necessary because:

•

APRA publishes the Register of General Insurers and Authorised NOHCs on their website; and

•

a person can request an auditor's certificate administratively or in accordance with the Freedom of Information Act 1982.

[Schedule 4, item 115]

Life Insurance Act 1995

2.153 Subsection 35(6) of the Life Insurance Act provides for transitional arrangements which were applicable only during the period of 15 months after the commencement of the Act. As that period has passed, the subsection is redundant are repealed. [Schedule 4, item 118, subsection 35(6) of the Life Insurance Act]

2.154 Paragraph 191(2)(a) of the Life Insurance Act is amended to clarify that for the purposes of the paragraph, a copy of each actuarial report on which a scheme is based must be provided to APRA. Prior to amendment, the paragraph specified that any report could be provided. Normally an actuarial report will be prepared by each of the transferring entity and the receiving entity. The requirements under new paragraph 191(2)(a) of the Life Insurance Act replace regulation 9.01 of the 1995 Regulations. As this regulation clarifies a provision in the Act to ensure that both reports were provided, it was incorporated directly into the Life Insurance Act. [Schedule 4, item 119, paragraph 191(2)(a) of the Life Insurance Act]

2.155 The 1995 Regulations provide for the requirements for a notice of intention to make an application for a scheme for the transfer and amalgamation of a life insurance business. These provisions have been incorporated directly into the Life Insurance Act. The requirements specify that a copy of the scheme has been published for 15 days in a manner which results in it being accessible to the public and reasonably prominent, necessary documents are provided to APRA and any other requirements set out in regulations as necessary. [Schedule 4, items 120, 121, 122 and 123, subsection 191(2), 191(2E), 191(2F) and paragraph 191(2)(c) and 191(2A)(b) of the Life Insurance Act]

2.156 The amendments to section 191 of the Life Insurance Act apply in relation to an application made on or after the commencement of this item, except for paragraph 191(2A)(ba) of the Act, as inserted by Part 6 of Schedule 4 to the Act, which applies in relation to an application made on or after the commencement of that paragraph. [Schedule 4, item 124]

2.157 Section 210 of the Life Insurance Act provides for when non-payment of premiums will not result in the forfeiture of a policy. Schedule 2 to the 1995 Regulations provides for a modification of section 210 of the Life Insurance Act in its application to ordinary policies where the sum insured and premiums thereof have been increased at the request of the policy owner. These provisions have been incorporated directly into the Life Insurance Act for transparency in the way section 210 of the Act operates in relation to these kinds of policies. The provisions provide that increases in the sum insured and premiums at the request of the policy owner are treated for the purposes of the section 210 of the Life Insurance Act non-forfeiture provisions as a separate life policy issued at the date of the increase. [Schedule 4, item 127, subsections 210(6), (7), (8) and (9) of the Life Insurance Act]

2.158 As a consequence of incorporating this modification into section 210 of the Life Insurance Act, minor changes have been made to subsections 210(1) and (5) of the Act to align the language of the subsections and to clarify the operation of new subsection 210(8) of the Act. These minor changes are not intended to change the substantive effect of the provisions. [Schedule 4, items 125 and 126, subsections 210(1) and (5) of the Life Insurance Act]

2.159 The 1995 Regulations provide ASIC with authority to publish information relating to the unclaimed money register. Subsection 10.05B of the 1995 Regulations has been incorporated into the Life Insurance Act. New section 216AA of the Life Insurance Act provides that ASIC may authorise information on the unclaimed moneys register to be made available to the public or to a particular person in a way that ASIC determines. This authority excludes making tax file numbers available. [Schedule 4, items 128 and 129, section 216AA and subsection 216A(3) of the Life Insurance Act]

2.160 Additionally, new paragraph 216AA(2)(b) of the Life Insurance Act provides that further restrictions on the ability to publish information to the unclaimed money register may be prescribed by regulation. This provision ensures that additional restrictions may be placed upon ASIC, should any further privacy considerations arise in future. [Schedule 4, item 128, paragraph 216AA(2)(b) of the Life Insurance Act]

2.161 Subsection 216A(3) of the Life Insurance Act is amended to provide that the prohibitions against disclosure of certain details located in subsection 216A(2) of the Act do not apply if the disclosure is authorised under section 216AA of the Act, in addition to disclosures authorised under section 216 of the Act. [Schedule 4, item 129, subsection 216A(3) of the Life Insurance Act]

2.162 Subsections 246(2) and 246(3) of the Life Insurance Act provide transitional arrangements regarding principal executive officers which were applicable only during the period of 3 months after the commencement of the Life Insurance Act. As such, these provisions are no longer applicable and are repealed. Subsection 246(1) of the Life Insurance Act is amended to reflect these repeals. [Schedule 4, items 130, 131, 132 and 133, subsections 246(1), 246(2) and 246(3) of the Life Insurance Act]

2.163 These amendments to section 246 of the Life Insurance Act do not apply in relation to nomination made under subsection 246(2) of the Act that is made before the commencement of item 133 of Schedule 4 to the Bill. [Schedule 4, item 133]

2.164 Industrial policies are a specific form of life policy where the premiums are made payable at intervals of less than two months and are contracted to be received, or are usually received, by means of collectors. These policies were regulated by provisions of the Life Insurance Act 1945 which have been repealed. In order to ensure that the remaining industrial policies which were created under the Life Insurance Act 1945 before the commencement of the Life Insurance Act are regulated in the same way, specific provisions which applied to these policies remain applicable.

2.165 New section 265 of the Life Insurance Act therefore provides that section 210 of the Act does not apply to an ordinary policy that existed before the Act commenced and was an industrial policy within the meaning as defined in the Life Insurance Act 1945. Further, that despite the repeal of section 101 of the Life Insurance Act 1945 by the Life Insurance Act, that section continues to apply to those specifics policies as it applied immediately before its repeal. [Schedule 4, item 134, section 265 of the Life Insurance Act]

2.166 Regulation 13.02 of the 1995 Regulations provides for certain kinds of life policies to be declared to be superannuation policies for the purposes of the definition of 'superannuation policy' in the Life Insurance Act. The kinds of policies listed in regulation 13.02 of the 1995 Regulations have been stable and the list has not been amended since 1998. For this reason, the definition of 'superannuation policy' in Schedule 1 to the Life Insurance Act as amended is clarified to include life policies that are owned by the trustee of an approved deposit fund or pooled superannuation trust, and RSAs when those life policies are maintained for the purposes of superannuation or retirement. The power to prescribe additional kinds of policies has been retained. [Schedule 4, item 135, Schedule 1 to the Life Insurance Act]

Terrorism and Cyclone Insurance Act 2023

2.167 The Terrorism and Cyclone Insurance Act 2023, defines an 'unauthorised foreign insurer' to have the same meaning as the 2002 Regulations, which are due to sunset. To ensure a smooth transition to the new framework, and to remain consistent with current drafting guidelines, the definition of 'unauthorised foreign insurer' is repealed and substituted with a new definition. This new definition provides that the term 'unauthorised foreign insurer' has the same meaning as prescribed by the regulations. [Schedule 4, item 136, section 3 of the Terrorism and Cyclone Insurance Act 2003]

Part 7 - Amendments consequential on Schedule 2 to the Bill

2.168 Schedule 2 to the Bill provides for the renaming of provisions of the Corporations Act. A reference to 'Chapter' will be substituted with a reference to the 'Act' in the new definition of 'derivative' in Schedule 1 to the Life Insurance Act (see item 77 of Schedule 4 to the Bill), on the later of the commencement of Schedules 1 and 2 to the Bill and the commencement of items 123 to 136 of Schedule 4 to the Bill. [Schedule 4, item 137, Schedule 1 to the Life Insurance Act]

Commencement and application

2.169 Items 1 to 121 of Schedule 4 to the Bill commences on a date to be fixed by proclamation. However, if any of those provisions do not commence within the period of 6 months beginning on the day the Bill receives the Royal Assent, they commence on the day after the end of that period. Items 123 to 136 of Schedule 4 to the Bill commence at the same time as items 1 to 121.

2.170 Item 122 commences on the later of the time when items 1 to 121 commence and immediately after the commencement of Part 4 of Schedule 1 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023. This is because this item is contingent on amendments contained in Part 4 of Schedule 1 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023. Item 122 will not commence at all if those amendments do not commence.

2.171 Part 7 of Schedule 4 to the Bill commences on the later of the time when items 123 to 136 of Schedule 4 to the Bill commence and immediately after the commencement of Schedules 1 and 2 to the Bill. This is because the item replaces a reference in Part 7 of the Life Insurance Act to accord with those amendments and is therefore contingent on them. Part 7 of Schedule 4 to the Bill will not commence at all if those amendments do not commence as the references will not need to be replaced.

2.172 The amendments in Schedule 4 to the Bill only apply in relation to offences committed, or contraventions, acts or omissions that occur, on or after the commencement of Schedule 4 to the Bill. [Subsection 2(1), items 15 to 18]

Chapter 3: Rationalisation of ending ASIC instruments

Outline of chapter

3.1 Schedule 5 to the Bill makes amendments to laws in the Treasury portfolio to move matters currently in ASIC legislative instruments into the primary law.

3.2 Amendments to the Corporations Act incorporate the following instruments:

•

ASIC Class Order [CO 13/520] (Part 1 of Schedule 5); and

•

section 6 of ASIC Corporations (Superannuation and Schemes; Underlying Investments) Instrument 2016/378 (Part 2 of Schedule 5).

3.3 Amendments in Part 3 to the National Consumer Credit Protection Act 2009 insert regulation-making powers to support the incorporation of ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 into the National Consumer Credit Protection Regulations 2010.

Context of amendments

3.4 These amendments incorporate longstanding and accepted matters currently contained in ASIC-made legislation into the primary law. This is part of the regular care and maintenance of Treasury portfolio legislation and provides industry and consumers with greater certainty and clarity when interacting with Treasury laws.

3.5 Class orders and legislative instruments that notionally amend the primary law or regulations may cause complexity in the law and undermine accessibility. This may make it difficult for entities to identify and understand the law as it applies to them. Moving notional amendments and other matters out of ASIC-made legislation through this package goes towards addressing these concerns.

Relevant interests, voting power and exceptions to the general prohibition (ASIC Class Order [CO 13/520])

Context of amendments

3.6 Chapter 6 of the Corporations Act relates to takeovers. It regulates the acquisition of substantial interests in listed companies and bodies, listed registered managed investment schemes and unlisted companies with more than 50 members, by:

•

imposing a general prohibition relating to the acquisition of relevant interests by, or on behalf of a person resulting in an increase of a persons' voting power in a regulated entity to, or from, a point above 20 per cent (the general prohibition) (section 606 of the Corporations Act); and

•

providing for a number of exceptions to the general prohibition under which otherwise prohibited acquisitions may be made (including, for example, acquisitions under a takeover bid) (section 611 of the Corporations Act).

3.7 Section 608 of the Corporations Act sets out the basic rule of when a person will have a relevant interest in securities. Broadly, a person's interest in securities will be a 'relevant interest' and regulated by the takeovers provisions if the person holds the securities, or has the power to control voting or the disposal of the security. Section 609 of the Corporations Act sets out a number of situations that will not give rise to a relevant interest in securities.

3.8 ASIC Class Order [CO 13/520] makes a number of modifications to Chapter 6 of the Corporations Act in relation to:

•

situations that will not give rise to a relevant interest under section 609 of the Corporations Act;

•

securities that are the subject of an acceptance facility; and

•

exceptions to the general prohibition.

3.9 The modifications in ASIC Class Order [CO 13/520] relate to similar themes and modify similar parts of the Corporations Act, however the provisions generally operate independently of each other.

Comparison of key features of new law and current law

Table 3.1 Comparison of new law and current law

Detailed explanation of new law

Definitions

3.10 The Bill amends a number of definitions in the Corporations Act.

3.11 The definition of convertible securities is repealed and replaced with a new definition that provides that securities are convertible into another class of securities if the holder may, by the exercise of rights attached to those securities, have the other class of securities issued to them or have the securities transform into securities of that other class. The definition also states that an option may be a convertible security even if it is non-renounceable. [Schedule 5, item 1, section 9 of the Corporations Act]

3.12 The definition of substantial holding in section 9 of the Corporations Act is amended to include a reference to subsection 609(6) (market traded options), subsection 609(7) (conditional agreements), subsection 609(9B) (securities escrowed under listing rules) or sections 609B (securities subject to escrow agreement). The Bill makes identical amendments to subsection 671B(7) in relation to when a person will have a relevant interest in securities for the purpose of exchange traded options, conditional agreements, companies that issue restricted securities and securities that are subject to escrow agreement. [Schedule 5, items 3 and 18, sections 9 and 671B of the Corporations Act]

3.13 When calculating a person's voting power and when determining if a person has a substantial holding in a listed entity, it is necessary to consider the relevant interests both a person and any associates have in securities of the body. Section 12 of the Corporations Act provides the definition of associate for the purpose of Chapter 6 of the Corporations Act and subsection 12(2) specifies when a second person is an associate to a primary person, in relation to a designated body. The Bill amends the definition of associate to provide that a second person is not an associate of a primary person merely because they have entered into a relevant agreement and one of the persons has or will have a right under that agreement to dispose of securities in the designated body. [Schedule 5, items 4 and 5, section 12 of the Corporations Act]

Situations not giving rise to relevant interests

3.14 Section 608 of the Corporations Act sets out when a person will have a relevant interest in securities. Section 609 of the Corporations Act sets out situations that do not give rise to a relevant interest in securities. Subsection 609(1) relates to situations involving money lending and financial accommodation. Under the exception security interests taken or acquired in the ordinary course of a non-associated person's business of providing financial accommodation on ordinary commercial terms do not give rise to a relevant interest.

3.15 The Bill repeals and replaces subsection 609(1) to extend the exemption where:

•

the security interest is acquired in the ordinary course of the person's business of the provision of financial accommodation by any means and on ordinary commercial terms; or

•

the interest was acquired for the benefit of one or more persons in relation to financial accommodation provided by them in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms; and

•

the person whose property is subject to the security interest is not an associate of any other person mentioned in this subsection.

[Schedule 5, item 7, subsection 609(1) of the Corporations Act]

3.16 The Bill also clarifies that a reference to a security interest includes a reference to a negative pledge. [Schedule 5, item 7, subsection 609(1) of the Corporations Act]

3.17 Subsection 609(3) of the Corporations Act relates to situations where a financial services licensee does not have a relevant interest in securities merely because they hold securities on behalf of someone else in the ordinary course of their financial services business. The Bill inserts subsection 609(3A) to provide that a financial services licensee does not have a relevant interest in the securities of their clients merely because they are instructed to dispose of the securities on the person's behalf or enter into a sold position in relation to the securities. [Schedule 5, item 8, subsection 609(3A) of the Corporations Act]

3.18 The Bill inserts another situation that will not give rise to a relevant interest in securities in relation to securities escrowed under listing rules. This provides that a listed company does not have a relevant interest in securities merely because the company must apply restrictions on the disposal of the securities as part of a listing rule escrow under the listing rules of a prescribed financial market. [Schedule 5, item 9, subsection 609(9B) of the Corporations Act]

3.19 Additionally, the Bill provides that that an operator of a prescribed financial market does not have a relevant interest merely because it has the power to control the disposal of securities that are the subject of a listing rule escrow. [Schedule 5, item 9, subsection 609(9C) of the Corporations Act]

Securities the subject of an acceptance facility

3.20 An acceptance facility allows holders of target securities to provide a third-party facility agent with completed acceptance documents. The facility agent is then able to release the acceptances once a particular level of support has been achieved or once the bidder declares the bid free of all conditions or states they will do so no later than the time all facility acceptances are processed. The Bill provides that a bidder for a takeover bid will not have a relevant interest in bid class securities merely because those securities are the subject of an acceptance, in relation to a facility, that is given to the operator of the facility in certain circumstances. This includes that:

•

the offer under the takeover bid for those securities has not been accepted;

•

in the case where bid class securities are quoted on a prescribed financial market-for every movement of at least one per cent in the aggregate level of the bidder's voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility, the bidder provides to the relevant market operator, by 9.30 am on the next trading day after the movement, a notice that meets the relevant notice requirements; and

•

in the case where bid class securities are not on a prescribed financial market-the bidder lodges with ASIC a notice within two business days after the aggregate level of the bidder's voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility rise or fall above or below a percentage listed in subsection 654C(1).

[Schedule 5, item 10, subsection 609A(1) of the Corporations Act]

3.21 The relief will only be available to acceptance facilities that meet specific requirements set out in subsection 609A(2), including that:

•

it is the only facility in relation to the bid class;

•

the operator of the facility is a third party and is not the bidder or an associate of the bidder;

•

a participant in the facility may give the operator acceptances in relation to the facility;

•

the terms permit the operator to maintain custody of an acceptance until it is withdrawn by the participant or the triggering conditions are satisfied;

•

the terms provide that the facility must be made available to all holders of bid class securities for unconditional bids or otherwise available to all or specified holders of bid class securities;

•

the terms of the facility provide that the operator of the facility must provide information about acceptances in relation to the facility to the bidder sufficiently regularly to allow the bidder to comply with relevant reporting requirements; and

•

the terms of the facility provide that all participants in the facility participate in the facility on the same terms.

[Schedule 5, item 10, subsection 609A(2) of the Corporations Act]

3.22 The Bill sets out the definition of triggering conditions, acceptance and participant. The Bill also sets out the notice requirements for the notice provided by the bidder to the relevant market operator in relation to circumstances where bid class securities are quoted on a prescribed financial market. [Schedule 5, item 10, subsections 609A(3) to (5) of the Corporations Act]

Escrow agreements

3.23 The Bill inserts another situation that will not give rise to relevant interests in relation to securities subject to an escrow agreement in connection with an IPO.

3.24 When undertaking an IPO, a lead manager and an underwriter are often engaged to coordinate the process and manage the offer to ensure the success of the IPO. This can include the underwriter acquiring any securities which are not taken up. Under section 608 of the Corporations Act, a person who enters into an escrow arrangement with a security holder will have a relevant interest in those securities as they have the power to control the disposal of the securities. The Bill therefore provides that a body corporate, or an underwriter, lead manager or joint lead manager will not have a relevant interest in securities merely because they enter into an agreement in connection with an IPO. This relief only applies where the escrow securities are in the same class of securities as those that are covered by the IPO and the agreement satisfies certain conditions, which are set out in subsection 609B(5). [Schedule 5, item 10, subsection 609B(1) and paragraph 609B(2)(a) of the Corporations Act]

3.25 The Bill also inserts another situation that will not give rise to relevant interests in relation to securities subject to a voluntary escrow agreement. Under an escrow arrangement, the holder generally agrees not to dispose of the securities, or rights or interests connected with the securities, for the duration of the escrow. An escrow arrangement may contain exceptions which allow the holder to dispose of the securities, or rights or interests connected with the securities, in limited circumstances. ASIC currently grants individual relief to companies to facilitate certain voluntary escrow arrangements.

3.26 The Bill therefore provides that a body corporate will not have a relevant interest in securities merely because they enter into a voluntary escrow agreement. The relief only applies if the escrow securities are issued as consideration for the acquisition of a business under a separate agreement between the body corporate and the vendor of the business and the agreement satisfies certain conditions, which are set out in subsection 609B(5). [Schedule 5, item 10, subsection 609B(1) and paragraph 609B(2)(b) of the Corporations Act]

3.27 The conditions include:

•

that the agreement does not restrict the exercise of voting rights attaching to the escrow securities;

•

that in relation to a takeover bid, the agreement allows holders of the escrow to accept into a successful takeover bid and allow the securities to be transferred or cancelled as part of a merger by way of a compromise or scheme of arrangement;

•

that the agreement terminates in relation to a body corporate two years after it is entered into or otherwise one year after it is entered into;

•

that if the agreement permits the holder to create a security interest in some or all of the escrow securities in favour of a person who does not have a relevant interest in the escrow securities because of subsection 609(1) - the agreement requires that the holder must not create a security interest in favour of the person unless the person has agreed in writing to take or acquire the security interest in the escrow securities subject to the terms of the agreement; and

•

if the agreement permits the holder to transfer their interests in the escrow securities to another person, it requires that they must not do so if that would result in a change in the beneficial ownership of the securities, an extension in the period of the agreement or if the transferee does not agree to be subject to the same restrictions on disposal of the escrow securities.

[Schedule 5, item 10, subsection 609B(5) of the Corporations Act]

3.28 Consequential amendments to the definition of relevant interest and a note to subsection 606(1) ensure that new sections 609A and 609B are appropriately incorporated into other provisions of the Corporations Act that refer to a relevant interest. [Schedule 5, items 2 and 6, section 9 (definition of 'relevant interest') and subsection 606(1) (note 2) of the Corporations Act]

3.29 Subsection 610(3) of the Corporations Act provides that a person's voting power may be taken to have increased when acquiring securities in which they did not already have a relevant interest, from an associate. The Bill inserts subsection 610(3A) to provide that a subsidiary that acquires securities from its holding company is not taken to have increased its voting power as a result of the acquisition. However, this will not apply if the acquisition results in an increase of another person's voting power in a designated body and that person is not a subsidiary of the ultimate holding company of the body corporate that issued those shares. [Schedule 5, item 11, subsection 610(3A) of the Corporations Act]

Amendments to exceptions to the General Prohibition

3.30 Section 606 of the Corporations Act imposes a general prohibition relating to the acquisition of interests by, or on behalf of a person resulting in an increase of a persons' voting power in a regulated entity to, or from, a point above 20 per cent (the general prohibition).

3.31 Section 611 of the Corporations Act sets out in table form the acquisitions of relevant exemptions from the general prohibition as set out in section 606 of the Corporations Act. The Bill makes a number of amendments to items in the table. Items 2 and 3 of the table relate to on-market purchases during the currency of a bid. The Bill amends items 2 and 3 to clarify that the acquisition of bid class securities will only occur under item 2 or 3 if the bid is subject only to the condition that an event which, if it occurs, permits a bidder under a market bid to withdraw their offers under subsection 652C(1) or (2); or is subject only to the statutory condition set out in paragraph 625(3)(c). [Schedule 5, item 12, table items 2 and 3 of section 611 of the Corporations Act]

3.32 Item 6 of the table contains an exception to the general prohibition which permits an acquisition that results from an exercise of power, or appointment as receiver, or receiver and manager, under an instrument or agreement creating or giving rise to a security interest. The Bill replaces item 6 of the table to provide that an acquisition will be exempt from the general prohibition if it results from the exercise of a power, or appointment of a receiver, under an instrument or agreement creating or giving rise to a security interest in certain circumstances. The Bill also clarifies, for consistency with the amendments to subsection 609(1) outlined above, that the exception applies to security trustees and that a security interest includes a negative pledge. [Schedule 5, item 13, table item 6 of section 611 of the Corporations Act]

3.33 Item 14 of the table provides that an acquisition will be exempt from the general prohibition where it results from another acquisition of relevant interests in voting shares in a body corporate that is included in the official list of a prescribed financial market, or a foreign body conducting a financial market approved by ASIC. The Bill modifies item 14 of the table to provide that the exemption only applies to primary listings on official lists. [Schedule 5, item 14, table item 14 of section 611 of the Corporations Act]

3.34 Section 615 of the Corporations Act sets out a procedure that allows foreign holders to participate in the benefits flowing from a rights issue that has control implications and seeks to minimise those control effects, while permitting non-foreign holders to rely on the relevant exceptions to the general prohibition notwithstanding foreign holders do not receive offers. The Bill inserts subsection 615(2) to provide that the exception in item 10 of the table in section 611 (which relates to rights issues) applies to foreign holders of a company's securities that are specified in offers even when the conditions set out in item 10 are not satisfied in certain circumstances. This includes that under the terms of the offer the company appoints a nominee for the specified foreign holders that is approved by ASIC and the company issues to the nominee the securities that would otherwise be issued to the specified foreign holders. The nominee must, under the terms of the offer, sell the securities and distribute to the specified foreign holders the relevant proportion of the proceeds of the sale net of expenses. [Schedule 5, items 15 to 17, section 615 of the Corporations Act]

Commencement, application, and transitional provisions

3.35 The amendments commence on the day after Royal Assent.

ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378

Context of amendments

3.36 The Corporations Act sets out a legislative framework for providing Financial Services Guides to retail clients.

3.37 Section 941A and section 941B of the Corporations Act require Australian financial services licensees to provide a Financial Services Guide that contains information about the entity providing a financial service.

3.38 Subsections 941C(2) and 941C(3) of the Corporations Act provide exemptions for operating a registered scheme and dealing by a responsible entity in scheme interests, however these two exemptions do not extend to the underlying dealings of superannuation trustees or responsible entities of registered schemes.

3.39 Section 6 of ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 provides exemptions to the trustee of a superannuation fund or the responsible entity of a registered scheme from the requirement to provide a Financial Services Guide for dealing in a financial product in the ordinary course of the operation of the scheme.

Comparison of key features of new law and current law

Table 3.2 Comparison of new law and current law

Detailed explanation of new law

3.40 Subsection 941C(3B) of the Corporations Act exempts trustees of a registerable superannuation fund from providing a Financial Services Guide where the financial service consists only of providing superannuation trustee services. Subsection 941C(3) provides a similar exemption for the responsible entities for a registered scheme the financial service consists only of the operation of that scheme.

3.41 However, neither of these exemptions address the dealing in the underlying investments or assets of the scheme or fund, which is a financial service according to paragraph 766A(1)(b) of the Act. As underlying dealing is a necessary part of the ordinary operation of a scheme or fund, the existing exemptions have little practical effect if a trustee or responsible entity is still required to provide a Financial Services Guide for the underlying dealing that forms part of the exempted services.

3.42 New subsection 941C(2A) inserts an exemption for trustees of superannuation entities from their obligation to provide members of the superannuation entity with a Financial Services Guide related to dealing in the ordinary course of operation of the fund. This exemption is necessary, as requiring a Financial Services Guide for the underlying dealing of the fund would undermine the intent of the existing exemption. [Schedule 5, item 19, subsection 941C(2A) of the Corporations Act]

3.43 New subsection 941C(2B) inserts an exemption for responsible entities of a registered scheme from their obligation to provide members of the scheme with a Financial Services Guide related to dealing in the ordinary course of operation of the scheme, to likewise address the underlying dealing not covered by the existing exemption. [Schedule 5, item 19, subsection 941C(2B) of the Corporations Act]

3.44 Due to the similarities between CCIVs, introduced by the Corporate Collective Investment Vehicle Framework and Other Measures Act 2022, and registered schemes, it is appropriate for the exemptions to also apply to certain dealings undertaken in the operation of a CCIV. New subsection 941C(2C) inserts an exemption for corporate directors of a CCIV from their obligation to provide members of the CCIV with a Financial Services Guide related to dealing in the ordinary course of operation of the CCIV. [Schedule 5, item 19, subsection 941C(2B) of the Corporations Act]

Consequential amendments

3.45 The Bill repeals ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 as it is no longer required. [Schedule 5, item 31]

3.46 Division 2 of Part 3 of the Bill repeals a number of notes related to evidential burdens for existing exemptions in section 941C. The notes were intended to aid readers of the law however were inconsistent throughout the Act and may have caused confusion about a financial licensee's obligations. [Schedule 5, items 21 to 30, subsections 952C(1) (note), 952C(3) (note), 952D(1) (note), 952D(2) (note), 952E(1) (note), 952E(2) (note), 952I(1) (note), 952I(3) (note) and 952J(1) (note) and section 952K (note) of the Corporations Act]

Commencement, application, and transitional provisions

3.47 The amendments commence on the day after Royal Assent.

3.48 As new subsection 941C(3C) introduces a new requirement, transitional provisions have been included to ensure that the exemptions apply in relation to a financial service provided on or after the commencement of the Bill. [Schedule 5, item 20, Part 10.70 of the Corporations Act]

ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835

Context of amendments

3.49 The National Credit Code sets out a legislative framework for credit contracts.

3.50 Section 16 of the National Credit Code requires a credit provider to give debtors a precontractual statement and an information statement prior to entering into a contract.

3.51 Regulation 28L of the National Consumer Credit Protection Regulations 2010 sets out how certain documents that are required to be provided to consumers by Australian credit licensees (under the National Consumer Credit Protection Act 2009) are to be provided. This includes allowing electronic document retrieval as a manner of giving, and setting, conditions that must be met when documents are given other than personally (including via electronic communication).

3.52 Regulation 28L does not apply to precontractual statements and information statements required by section 16 of the National Credit Code.

3.53 ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 applies the prescribed manners of giving documents set out in Regulation 28L to all credit providers (not all of whom are licensees) for the purposes of section 16 precontractual and information statements.

Comparison of key features of new law and current law

Comparison of new law and current law

Detailed explanation of new law

3.54 New subsections in section 16 to the National Credit Code insert a power to make regulations that prescribe ways in which credit providers may give precontractual disclosure documents to debtors. This regulation-making power is necessary as the National Consumer Credit Protection Act 2009 does not contain an appropriate regulation-making power to support the incorporation of the effect of ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835.

3.55 Regulations may specify additional ways in which a credit provider may give a document to a debtor. [Schedule 5, item 32, subsection 16(8) of the National Credit Code]

3.56 The regulations may also set out conditions that must be satisfied in order for a document to be given in a certain way. [Schedule 5, item 32, subsection 16(9) of the National Credit Code]

3.57 If a credit provider is required to give a precontractual disclosure by section 16 of the National Credit Code, and gives it in a way that is contrary to regulations made for the purposes of new subsection 16(9), the requirement to give the document will not be satisfied. [Schedule 5, item 32, subsection 16(10) of the National Credit Code]

3.58 To avoid doubt, the new subsections also clarify that any regulations made for the purposes of subsections 16(9) and 16(10) apply to the exclusion of any conflicting provisions of the Electronic Transactions Act 1999. [Schedule 5, item 32, subsection 16(11) of the National Credit Code]

Commencement, application, and transitional provisions

3.59 The amendments commence on the day after Royal Assent.

Chapter 4: Minor and technical amendments

Outline of chapter

4.1 Schedule 6 to the Bill makes a number of minor and technical amendments to Treasury portfolio legislation. The amendments demonstrate the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

4.2 The amendments correct drafting errors, repeal inoperative provisions, address unintended outcomes, and make other technical changes.

Context of amendments

4.3 Minor and technical amendments are periodically made to Treasury portfolio legislation to correct drafting errors, repeal inoperative provisions, address unintended outcomes and make other technical changes. The amendments are part of the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

4.4 The minor and technical amendments process was first supported by a recommendation of the 2008 Tax Design Review Panel, which was appointed to examine how to reduce delays in the enactment of tax legislation and improve the quality of tax legislation. The minor and technical amendments process has since been expanded to all Treasury portfolio legislation.

Summary of new law

4.5 The minor and technical amendments maintain and improve the quality of Treasury legislation by:

•

correcting typographical and numbering errors;

•

fixing incorrect legislative references;

•

reducing unnecessary red tape;

•

addressing unintended outcomes;

•

adopting modern drafting practices;

•

enhancing readability and administrative efficiency;

•

repealing redundant and inoperative provisions; and

•

making other technical changes.

Detailed explanation of new law

Part 1 - Amendments commencing the day after Royal Assent

Division 1 - Definition of year of income in the SIS Act

4.6 The definition of 'year of income' in subsection 10(1) of the SIS Act is amended to provide that it has the same meaning as it does in the ITAA 1936.

4.7 Without the amendment, the definition of 'year of income' in subsection 10(1) of the SIS Act provides that 'year of income' in relation to a fund, scheme, or trust means a period that is, for the purposes of the ITAA 1936, a year of income of the fund, scheme, or trust (noting that subsection 6(2A) of the same Act applies accordingly).

4.8 The Tax Laws Amendment (2008 Measures No.4) Act 2008 repealed subsection 6(2A) of the ITAA 1936. However, the definition in the SIS Act was not updated alongside the ITAA 1936 definition. This means that the reference to subsection 6(2A) in subsection 10(1) of the SIS Act is outdated.

4.9 This amendment updates the outdated definition so that it is consistent with the ITAA 1936. The new definition of 'year of income' will still encompass 'fund, scheme or trust'. It is technical in nature and does not change the operation of the SIS Act. [Schedule 6, item 1, section 10 of the SIS Act]

Division 2 - Measures relating to the CADB

4.10 Part 11 of the ASIC Act establishes the CADB, which consists of a Chairperson, Deputy Chairperson, six accounting members, and six business members. The powers of the CADB are performed and exercised by a Panel of the CADB, constituted by either three or five members of the CADB. The members of a Panel are determined by the Chairperson. The ASIC Act requires that the Chairperson or Deputy Chairperson be on a Panel and be the Panel Chairperson. A Panel can hold a hearing in relation to a matter.

4.11 The definition of 'Deputy Chairperson' is repealed and replaced with the following:

•

the Deputy Chairperson of the Disciplinary Board; and

•

in any other case - a Deputy Chairperson of ASIC.

[Schedule 6, item 2, subsection 5(1) of the ASIC Act]

4.12 The amendments also insert a definition for 'Panel Chairperson', which is defined as having the meaning given by subsection 210A(3A). [Schedule 6, item 3, subsection 5(1) of the ASIC Act]

4.13 Section 210A of the ASIC Act is amended to allow the Chairperson to constitute a Panel so that either the Chairperson, Deputy Chairperson, or another CADB member who meets certain legal qualification requirements is made the Panel Chairperson.

4.14 This amendment ensures that a Panel can be formed to deal with matters for which neither the Chairperson nor the Deputy Chairperson are able to be on a Panel. Importantly, a CADB member must meet certain legal qualification requirements to be a Panel Chairperson to ensure that the member has sufficient knowledge and experience to conduct a hearing. [Schedule 6, item 4, subsections 210A(3) to (5) of the ASIC Act]

4.15 Subsection 216(7) of the ASIC Act is also amended to reflect updated drafting practices and to provide that a CADB member who is not on a Panel may be present at a private hearing if approved by the Panel to be present. This amendment applies to a hearing of a Panel that is constituted on or after the commencement of the amendments. [Schedule 6, items 5 and 6, subsection 216(7) and section 345 of the ASIC Act]

Division 3 - Claims handling and settling services

4.16 The ASIC Act is amended to align the meaning of financial service with the corresponding definition in the Corporations Act. Recommendation 4.8 of the report by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry suggested that handling and settlement of insurance claims, or potential insurance claims, should no longer be excluded from the definition of financial service. Accordingly, the amendments confirm that claims handling and settling services are covered by the ASIC Act's consumer protections in relation to financial services.

4.17 These amendments provide certainty and consistency in the law for providers and consumers of claims handling and settling services and reduce the ambiguity in relation to ASIC enforcement action.

4.18 Subsection 12DB(1) of the ASIC Act provides that a person must not make a range of false or misleading representations by any means in connection with the promotion, supply, or use of financial services. As the definition of financial service will now include claims handling and settling services, subsection 12DB(1) is extended to apply to claims handling and settling services.

4.19 A new heading is inserted alongside new section 346, which describes the application of the amendment to claims handling and settling services. This amendment applies to representations made on or after the commencement of this amendment. [Schedule 6, items 7 and 8, paragraph 12BAB(1)(eb) and section 346 of the ASIC Act]

Division 4 - GST-free cars

4.20 Section 38-510 of the GST Act provides for the supply of a GST-free car and car parts to an eligible individual who has a current disability certificate, issued by the nominated company, certifying that the individual has lost the use of their limb(s) to such an extent that they are unable to use public transport.

4.21 Section 38-510 was modified by the TLAA No. 5 2021 to allow a registered medical practitioner to issue a certificate of medical eligibility in the approved form, certifying an individual has lost the use of their limb(s) to such an extent that they are unable to use public transport.

4.22 The amendment clarifies that the TLAA No. 5 2021 amendments do not apply to disability certificates or certificates of medical eligibility that were issued prior to the commencement of the TLAA No. 5 2021 and met the requirements of paragraph 38-510(1)(a) of the GST Act.

4.23 The amendment confirms that certificates issued by the nominated company prior to the amendment are still valid and have effect as if the certificate was issued by a medical practitioner. [Schedule 6, item 9, paragraph 38-510(1)(b) of the GST Act]

Division 5 - Regulation of financial benchmarks

4.24 The amendments update section 760B of the Corporations Act to include a reference to 'Part 7.5B regulation of financial benchmarks' in table item 5B of the summary table. The summary table in section 760B lists each Part in Chapter 7 and their headings. Part 7.5B was passed into law in 2018 following the commencement of the Treasury Laws Amendment (2017 Measures No.5) Act 2018. However, the summary table in section 760B was not updated. This amendment ensures the table is up to date. [Schedule 6, item 10, table item 5B of section 760B of the Corporations Act]

Division 6 - Authorisations

4.25 The Competition and Consumer Act contains many instances of inconsistent spelling of 'authorisation' (and variants thereon) with a 'z' rather than with an 's'.

4.26 This amendment corrects these typographical errors so all references to 'authorisation' (and its variants) are spelt with an 's'. [Schedule 6, items 11 to 14, of the Competition and Consumer Act]

Division 7 - Other amendments

4.27 Paragraph 58(4)(a) of the APRA Act contains references to repealed sections 52A and 52B of the Banking Act 1959. The amendment removes the references to these repealed sections in paragraph 58(4)(a). [Schedule 6, item 15, paragraph 58(4)(a) of the APRA Act]

4.28 Paragraphs 58(4)(b) and (c) of the APRA Act contain lists of references to sections of the Insurance Act and the Life Insurance Act, respectively, in non-sequential order. Items 16 and 17 rearrange the references in both paragraphs in a sequential order. [Schedule 6, items 16 and 17, paragraphs 58(4)(b) and (c) of the APRA Act]

4.29 Subsection 244(2) of the ASIC Act contains two paragraphs numbered (d). Item 18 renumbers the last paragraph as paragraph (g). [Schedule 6, item 18, paragraph 244(2)(d) of the ASIC Act]

4.30 Subsection 285(4) of the ASIC Act contains a reference to the Legislative Instruments Act 2003. The Legislative Instruments Act 2003 has been renamed as the Legislation Act 2003. Item 19 updates the name of the Act to the Legislation Act 2003. [Schedule 6, item 19, subsection 285(4) of the ASIC Act]

4.31 The definition of 'electricity retailer' in section 60A of the Competition and Consumer Act refers to the Electricity Reform Act 2000 of the Northern Territory. The Electricity Reform Act 2000 has been renamed as the Electricity Reform Act 2000. Item 20 updates the name of the Act to the Electricity Reform Act 2000. [Schedule 6, item 20, section 60A of the Competition and Consumer Act]

4.32 Paragraph 151BU(4B)(a) of the Competition and Consumer Act incorrectly refers to 'publically' instead of 'publicly'. Item 21 corrects this typographical error. [Schedule 6, item 21, paragraph 151BU(4B)(a) of the Competition and Consumer Act]

4.33 Subsections 151DB(2A), (2B) and (2C) of the Competition and Consumer Act are no longer required in the law, as the purpose for which they were enacted has been achieved. Item 22 removes these provisions and assists in ensuring the legislation is up-to-date and easy to follow. [Schedule 6, item 22, subsections 151DB(2A), (2B) and (2C) of the Competition and Consumer Act]

4.34 Part 5.4B of the Corporations Act contained 2 Divisions numbered 1A. Item 23 renumbers the Divisions sequentially. [Schedule 6, item 23, Part 5.4B of the Corporations Act]

4.35 Subparagraph 911A(2)(en)(v) of the Corporations Act contains a typographical error, with the word 'be' missing after 'that could reasonably' and before 'regarded'. Item 24 inserts the word 'be' to subparagraph 911A(2)(en)(v) to fix this typographical error. [Schedule 6, item 24, subparagraph 911A(2)(en)(v) of the Corporations Act]

4.36 Paragraph 1292(1)(a) of the Corporations Act contains two subparagraphs numbered (ia). Item 25 renumbers the second occurring (ia) to (iaa). [Schedule 6, item 25, paragraph 1292(1)(a) of the Corporations Act]

4.37 In paragraphs 1301(1)(a) and (b) of the Corporations Act, the word 'the' was erroneously in bold and italics. Item 26 removes the bold and italics formatting from the three instances of 'the'. [Schedule 6, item 26, paragraphs 1301(1)(a) and (b) of the Corporations Act]

4.38 Subsection 1409(4) of the Corporations Act contains a reference to the Legislative Instruments Act 2003. The Legislative Instruments Act 2003 has been renamed as the Legislation Act 2003. Item 27 updates the reference to the Legislation Act 2003. [Schedule 6, item 27, subsection 1409(4) of the Corporations Act]

4.39 Part 10.33 of the Corporations Act erroneously contains sections numbered 1 and 2 in between sections 1644A and 1647. Items 28 and 29 renumber the sections to 1645 and 1646. [Schedule 6, items 28 and 29, Part 10.33 of the Corporations Act]

4.40 Paragraphs 1678B(6)(a) and (b) of the Corporations Act have no conjunctions at their conclusion. Item 30 fixes this typographical error by inserting 'and' at the end of each paragraph. [Schedule 6, item 30, paragraphs 1678B(6)(a) and (b) of the Corporations Act]

4.41 The definition of unclaimed money law in subsection 37(4) of Schedule 4 to the Corporations Act referred to the Companies (Unclaimed Assets and Moneys) Act of the Northern Territory. This Act has been renamed as the Companies (Unclaimed Assets and Moneys) Act 1963. Item 31 updates the reference to this Act. [Schedule 6, item 31, subsection 37(4) of Schedule 4 to the Corporations Act]

4.42 The formula in section 976-1 of the ITAA 1997 contains an incorrect reference to the 'franking credit on the dividend'. Item 32 corrects this reference to the 'franking credit on the distribution'. [Schedule 6, item 32, section 976-1 of the ITAA]

4.43 Section 127D of the Insurance Act contains paragraphs referring to other sections of that Act in a non-sequential order. Item 33 renumbers the paragraphs, so that they are ordered sequentially. [Schedule 6, item 33, section 127D of the Insurance Act]

4.44 Paragraphs 127D(b), (c) and (f) of the Insurance Act refer to sections 38A and 38B of that Act, which have been repealed. Item 34 repeals these paragraphs as they are redundant following the repeal of sections 38A and 38B. [Schedule 6, item 34, paragraphs 127D(b), (c) and (f) of the Insurance Act]

4.45 Paragraphs 246C(a), (e) and (f) of the Life Insurance Act refer to sections 156A and 156B of that Act, which have been repealed. Item 35 repeals these paragraphs as they are redundant following the repeal of sections 156A and 156B. [Schedule 6, item 35, paragraphs 246C(a), (e) and (f) of the Life Insurance Act]

4.46 Section 246C of the Life Insurance Act contains paragraphs referencing other sections of that Act in a non-sequential order. Item 36 of Division 7 rearranges the paragraphs in a sequential order. [Schedule 6, item 36, section 246C of the Life Insurance Act]

4.47 Paragraph 131FD(a) of the SIS Act refers to section 336B of that Act, which has been repealed. Item 37 repeals paragraph 131FD(a) of the SIS Act as it is now redundant. Item 38 provides that, despite the repeal of paragraph 131FD(a), the paragraph continues to apply, at and after the commencement of item 37, in relation to disclosures of information made before the commencement of item 32 of Schedule 1 to the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019. [Schedule 6, items 37 and 38, paragraph 131FD(a) of the SIS Act]

4.48 Note 1 in subsection 12-390(4) in Schedule 1 to the TAA contains an incorrect reference to 'managed investment trust'. Items 39 and 40 correct the reference to 'withholding MIT'. [Schedule 6, items 39 and 40, Note 1 of subsection 12-390(4) of Schedule 1 to the TAA]

Part 2 - Amendments commencing first day of next quarter

Division 8 - GST at Settlement Credit Entitlement Update

4.49 Under Schedule 1 to the TAA, purchasers of new residential premises and potential residential land are required to withhold a portion of the purchase price and remit that amount to the ATO as part of the settlement process. This amount is in respect of the GST payable on the taxable supply of land.

4.50 The policy intention is that the entity that is liable to pay GST on the taxable supply should be entitled to the credit for the GST paid by the purchaser. This is in line with how the GST system operates more broadly. However, under the current operation of paragraph 18-60(1)(a) in Schedule 1 to the TAA, the credit entitlement will arise for the entity that makes the taxable supply instead of the entity that has the GST liability in such cases. These entities are often the same, but this is not always the case.

4.51 Minor amendments are made to provisions in the GST Act and Schedule 1 to the TAA to make it clear that the entity that is liable to pay GST on the taxable supply is entitled to the credit for the GST paid by the purchaser. [Schedule 6, items 41, 42 to 43, section 33-1 (note 4) and subsection 40-65(2) (note) of the GST Act, and paragraph 18-60(1)(a) of Schedule 1 to the TAA]

4.52 Item 44 provides that the amendments apply to supplies to which subsection 14-250(2) in Schedule 1 of the TAA applies, whether those supplies were made before, on or after the commencement. This means the amendments effectively apply retrospectively in relation to supplies of land for which any of the consideration (other than consideration provided as a deposit) was first provided on or after 1 July 2018. The retrospective application is entirely neutral to taxpayers and ensures the law operates as intended. [Schedule 6, item 44, section 33-1 (note 4) and subsection 40-65(2) (note) of the GST Act, and paragraph 18-60(1)(a) of Schedule 1 to the TAA]

Chapter 5: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023

Schedule 1 to 3 - Australian Law Reform Commission recommendations

Overview

5.1 Schedules 1 to 3 to the Bill are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

5.2 Schedules 1 to 3 to the Bill implement recommendations identified by the ALRC in Interim Reports A and B from its ALRC Review to simplify and improve the navigability of the law. This includes 'unfreezing' the application of the AIA to the Corporations Act and ASIC Act, creating a single glossary for all defined terms in the Corporations Act, repealing redundant definitions, addressing unclear or incorrect provisions and simplifying unnecessarily complex provisions in the law.

5.3 These changes facilitate a more adaptive, efficient, and navigable legislative framework which ensures that the legislative intent is met.

5.4 The amendments in Schedules 1 to 3 to the Bill are minor and technical in nature.

Human rights implications

5.5 Schedules 1 to 3 to the Bill do not engage any of the applicable rights or freedoms.

Conclusion

5.6 Schedules 1 to 3 to the Bill are compatible with human rights as they do not raise any human rights issues.

Schedule 4 - Insurance

5.7 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

5.8 In 2022, in consultation with APRA and ASIC, Treasury carried out a review of the following sunsetting instruments (the Insurance Instruments):

•

the Insurance Acquisitions and Takeovers (Notices) Regulations 1992;

•

the Decision-Making Principles

•

the 2002 Regulations; and

•

the 1995 Regulations.

5.9 The review also considered the enabling Acts; that is, the IAT Act and the Life Insurance Act.

5.10 As part of Treasury's review, a number of provisions in the enabling Acts and Insurance Instruments were identified as inoperative, spent, or necessary to clarify in order to ensure the law operates as intended. A number of provisions contained in the Insurance Instruments were also identified as being more appropriately incorporated into the primary law.

5.11 Schedule 4 to the Bill primarily amends the enabling Acts to implement relevant findings of the thematic review of Insurance Instruments that are due to sunset on 1 October 2023.

Human rights implications

5.12 Treasury has assessed the instruments against the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 and determined that they may engage the following human rights:

•

the right to protection from arbitrary or unlawful interference with privacy in Article 17 of the ICCPR;

•

the right to work under Article 6 of the International Covenant on Economic, Social and Cultural Rights.

The right to privacy

5.13 Schedule 4 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR. These rights are engaged where:

•

ASIC is provided the authority to publish information relating to individuals on the unclaimed money register;

•

the Minister may require a person to give or produce such information about matters that are relevant to the exercise by the Minister of his or her powers under the IAT Act;

•

friendly societies are required to keep a register of members of each approved benefit funds of the society under the Life Insurance Act.

5.14 The right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

5.15 New section 216AA of the Life Insurance Act engages the right to privacy by providing ASIC with the authority to publish information relating to individuals on the unclaimed money register. The authority was previously contained within the Life Insurance Act and the sunsetting 1995 Regulations. ASIC may determine the extent of the information that it deems appropriate to publish on the register. However, it may not publish or make available any tax file numbers on the register, and a new enabling provision allows further restrictions to be imposed in the regulations to prevent ASIC from disclosing other types of personal information, should concerns arise. This new provision in the Life Insurance Act ensures that the use of personal information for the register continues to be authorised by law, is in keeping with the purpose of the register and is able to be modified or further constrained by the regulations in future, as required.

5.16 The unclaimed money register allows individuals to identify and access 'unclaimed money', which is money in bank accounts that have been inactive for 7 years or more and life insurance policies that have not been claimed for 7 years or more. The publishing of personal information is required so that an individual who may otherwise be unaware that they have unclaimed moneys payable to them can discover, and take steps to claim, the unclaimed moneys. The disclosure of personal information is therefore necessary and appropriate to facilitate an individual's access to any money to which they are entitled from inactive bank accounts or unclaimed life insurance policies.

5.17 Collection and use of personal information by ASIC is subject to the Privacy Act 1988, which gives effect to the right to privacy under the ICCPR. The Privacy Act 1988 imposes obligations to protect personal information, ensuring its collection and use are in accordance with law and any limitations of privacy are reasonable in the circumstances. As such, ASIC will collect and securely handle personal information in relation to the Register in accordance with obligations under the Privacy Act 1988.

5.18 The right to privacy is also engaged by new section 16ZAAD of the Life Insurance Act, which requires friendly societies to keep a register of members of each approved benefit funds of the society. The register must include certain information relating to individuals and their membership with the friendly society. This register is not published or made public and is an administrative requirement for record-keeping purposes. The collection of personal information is therefore necessary, reasonable, and proportionate to the aim of promoting financial system stability in Australia through prescribing certain regulatory requirements.

5.19 Accordingly, to the extent that the Life Insurance Act engages the right to privacy, that engagement is reasonable in the circumstances. In particular, collection of some personal or identifying information about an individual is necessary to achieve the purpose of the Life Insurance Act to protect the interests of the owners of life insurance policies and the benefits that they are entitled to. The collection of personal information is proportionate to the end sought as the Life Insurance Act balances the need for transparency with protection of personal and commercial information. Any limitation of the right to privacy from these arrangements is consistent with the ICCPR as the collection and use of any personal information is authorised by and consistent with the law, proportional to the end sought, and necessary in the circumstances.

5.20 The right to privacy is also engaged in the amendments to the IAT Act. The IAT Act establishes a framework for the control and compulsory notification of certain acquisitions and agreements relating to Australian-registered insurance companies, including their directorate. The Minister has various decision-making powers for these purposes.

5.21 Section 73 of the IAT Act provides that, if the Minister has reason to believe that a person is capable of giving information or producing documents about matters that are relevant to the exercise by the Minister of his or her powers under the Act, the Minister may, by notice in writing served on that person, require that person to give or produce such information within the time and in the manner specified in the notice.

5.22 The Minister may exercise his or her power under Section 73 of the IAT Act by requiring a person to give or produce information about matters that are relevant to the Minister in relation to various amendments made by Schedule 4 to the Bill, including in determining whether a particular matter is contrary to the public interest under section 5 of the IAT Act. This information ultimately supports the objects of the IAT Act to protect the public interest, by ensuring that the affairs of Australian-registered insurance companies are carried out in a prudential manner and preventing unsuitable persons from being in a position of influence.

5.23 Further, section 75 of the IAT Act provides that section 56 of the APRA Act, which prohibits certain disclosures of information received, applies to information received under the Act. This is intended to protect the privacy of individuals, consistent with the right to privacy under Article 17, while still ensuring appropriate levels of transparency and accountability in assisting the Minister to exercise his or her powers under the IAT Act. Accordingly, the extent to which the IAT Act engages the right to privacy is reasonable in the circumstances.

The right to work - fit and proper person test

5.24 The right to work provides that everyone must be able to freely accept or choose their work and includes a right not to be unfairly deprived of work. The right to work also requires that States parties provide a system of protection guaranteeing access to employment. This right must be made available in a non-discriminatory manner pursuant to Article 2(1) of the International Covenant on Economic, Social and Cultural Rights.

5.25 A number of amendments are made to the IAT Act to remove redundant references to an 'unsuitable person' in relation to the public interest test in section 5 of the Act. This is because an unsuitable person to be in a position of influence over a company was defined to mean a person that is not a fit and proper person to be in such a position of influence, making the reference to an 'unsuitable person' redundant. Specifically, subsection 5(2) of the IAT Act is repealed, and paragraph 5(1)(b) of the IAT Act is amended to provide that a particular matter is taken to be contrary to the public interest if it is likely to result in a person who is not a fit and proper person to be in a position of influence over an Australian-registered insurance company being in such a position of influence. New subsections 5(2) and (6) of the IAT Act respectively allow the Minister to determine circumstances in which a person is taken to be in a position of influence, and determine matters to which regard must or may be had in determining whether a matter is likely to result in a person who is not a fit and proper to be in a position of influence over an Australian-registered insurance company being in such a position of influence.

5.26 The inclusion of the power for the Minister to determine, by legislative instrument, the maters to which the Minister must or may have regard in determining whether a person is not a fit and proper person to be in a position of influence over an Australian-registered insurance company being in such a position of influence is appropriate as it pursues the legislative objective of ensuring that persons who are in a position of influence over an Australian-registered insurance company are persons who are trustworthy and have the required integrity for the role. Ensuring that only individuals who meet appropriate ethical standards can be in such a position of influence is necessary to protect the public interest.

Conclusion

5.27 Schedule 4 to the Bill is compatible with human rights as any limitations of the right to privacy and right to work are proportionate, reasonable and necessary and achieve a legitimate objective.

Schedule 5 - Rationalisation of ending ASIC instruments

Overview

5.28 Schedule 5 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

5.29 Schedule 5 to the Bill amends the Corporations Act and the National Consumer Credit Protection Act 2009 to provide for longstanding and accepted matters that are currently contained in ASIC legislative instruments.

5.30 When ASIC-made legislative instruments notionally amend the primary law it causes complexity in navigating and understanding the operation of the law, and therefore undermines accessibility. By moving these matters into primary law the amendments provide industry and consumers with greater certainty and clarity when interacting with Treasury laws.

5.31 The amendments incorporating ASIC Class Order [CO 13/520] amend Chapter 6 of the Corporations Act to makes a number of modifications to in relation to:

•

situations that will not give rise to a relevant interest under section 609 of the Corporations Act;

•

securities that are the subject of an acceptance facility; and

•

exceptions to the general prohibition.

5.32 The amendments incorporating section 6 of ASIC Corporations (Superannuation and Schemes: Underlying Investments) Instrument 2016/378 provide exemptions to the trustee of a superannuation fund, or the responsible entity of a registered scheme or the corporate director of a CCIV from the requirement to provide a Financial Services Guide for dealing in a financial product in the ordinary course of the operation of the fund, scheme or CCIV.

5.33 Part 3 of Schedule 5 to the Bill inserts a regulation-making power to support the insertion of regulations in the National Consumer Credit Protection Regulations 2010 that incorporate the effect of ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835.

Human rights implications

5.34 Schedule 5 to the Bill does not engage any of the applicable rights or freedoms.

Conclusion

5.35 Schedule 5 to the Bill is compatible with human rights as it does not raise any human rights issues.

Schedule 6 - Minor and Technical Amendments

Overview

5.36 Schedule 6 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

5.37 Schedule 6 to the Bill makes minor and technical amendments to primary legislation within the Treasury portfolio. Minor and technical amendments are periodically made to Treasury portfolio legislation to correct drafting errors, repeal inoperative provisions, address unintended outcomes and make other technical changes. The amendments are part of the Government's ongoing commitment to the care and maintenance of Treasury portfolio legislation.

5.38 The minor and technical amendments process was first supported by a recommendation of the 2008 Tax Design Review Panel, which was appointed to examine how to reduce delays in the enactment of tax legislation and improve the quality of tax legislation. The minor and technical amendments process has since been expanded to all Treasury portfolio legislation.

Human rights implications

5.39 Schedule 6 to the Bill does not raise any human rights issues.

Conclusion

5.40 Schedule 6 to the Bill is compatible with human rights as it does not raise any human rights issues.

Attachment 1: References in Part 1 of Schedule 2 to the Bill

Attachment 2: References in Part 3 of Schedule 2 to the Bill