Supplementary Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Amendment to be moved on behalf of the Government
Explanation of amendment
1.1 The amendment clarifies the Commonwealth's obligations under the Corporations Act 2001 (Corporations Act) in relation to managing property that a company held on trust immediately prior to its deregistration.
1.2 Under the current law, all property that a company held on trust immediately before deregistration vests in the Australian Securities and Investments Commission (ASIC). ASIC may either continue to act as trustee or apply to the court for the appointment of a new trustee.
1.3 The Governance Review Implementation (Treasury Portfolio Agencies) Bill 2007 (the Bill) will transfer ASIC to the Financial Management and Accountability Act 1997. As a result, ASIC will no longer be able to hold property on trust in its own name, rather, this obligation will be transferred to the Commonwealth. This change is not intended to affect the nature of the obligations owed by the trustee.
1.4 However, on one interpretation of the Bill, the Commonwealth would be subject to a new operational obligation - to sell or dispose of trust property as it thinks fit and subject to the Commonwealth's obligations as trustee.
1.5 The amendment to subsection 601AE(1) of the Corporations Act ensures that the Commonwealth is not subject to additional operational obligations and that the current level of flexibility in managing trust property is preserved.