Explanatory Statement
Issued by the authority of the Parliamentary Secretary to the TreasurerCorporations Act 2001
Subsection 1364(1) of the Corporations Act 2001 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations, or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Act.
Under section 346B of the Act and regulation 2N.2.01 of the Corporations Regulations 2001, public companies (both listed and unlisted) must notify the Australian Securities and Investments Commission (ASIC) of their top 20 members in each class once a year in response to the annual review process. However, registers of company members must also be kept under sections 168 and 169 of the Act and these are generally publicly available for all companies. In addition, ASX listing rules require listed public companies to report similar details to the market regulator, resulting in a duplication of regulatory requirements.
The availability of member registers makes the annual nature of the share and member reporting obligations for public companies of limited value in terms of public information and regulatory and enforcement outcomes. In particular, the rate of change of members, especially in listed companies, may quickly render information in the annual reports obsolete.
The Regulations remove the requirement for public companies and registered schemes to notify ASIC of the top 20 shareholders or interest holders of a company or scheme. The amendments reduce compliance costs for approximately 20,000 public companies and reduce ASIC's administrative workload. Information will continue to be publicly available through the register of members or of interest holders, and through ASX disclosures.
Details of the Regulations are set out in the Attachment.
Under the Corporations Agreement 2002, the State and Territory Governments referred their constitutional powers with respect to corporate regulation to the Commonwealth. Under subclauses 506(1) and 507(2) of the Corporations Agreement, the Commonwealth is required to consult with and receive the approval of at least three State and Territory Ministers of the Ministerial Council for Corporations (the Council) before making a regulation under the national law. The Commonwealth has received approval of the Council for the Regulations. In addition, under subclause 511(3), the Commonwealth is required to consult with the Council as to whether proposed regulations should be exposed for public comment for between one and three months. The Commonwealth has received the approval of the Council to waive the public disclosure period for the Regulations.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 July 2007.
ATTACHMENT
Details of the Corporations Amendment Regulations 2007 (No. 5)
Regulation 1 - Name of Regulations
This regulation provides that the title of the Regulations is the Corporations Amendment Regulations 2007 (No. 5).
Regulation 2 - Commencement
This regulation provides for the Regulations to commence on 1 July 2007.
Regulation 3 - Amendment of Corporations Regulations 2001
This regulation provides that the Corporations Regulations 2001 are amended as set out in Schedule 1.
Schedule 1 - Amendments
Item [1] - Paragraph 2N.2.01(h)
This item limits to proprietary companies the requirement to provide to ASIC the names and addresses of members in an extract of particulars.
Item [2] - Paragraph 2N.2.01(i)
This item limits to proprietary companies the requirement to provide to ASIC details of the number of shares held by the members mentioned in paragraph 2N.2.01(h), whether those shares are fully paid and whether the shares are beneficially owned in an extract of particulars.
Items [3] - Subparagraph 2N.2.01(1)(i)(iii)
This item is a consequential amendment to remove the reference to listed corporations. Given that subparagraph 2N.2.01(1)(i)(iii) will apply only to proprietary companies it will not apply to listed corporations as all listed corporations are public companies.