House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Revenue and Assistant Treasurer, Senator the Hon Helen Coonan)

6 - Schedule 2 - Clarification of the application of the law to groups of trustees

Superannuation Industry (Supervision) Act 1993

Items 1 - 114, 116 - 129, 131 - 146, 148 - 176, 178 - 189, 191 - 194, 196 - 205 and 207 - 372

6.1 Schedule 2 contains amendments to clarify the operation of SIS Act provisions as they apply to trustees of superannuation entities.

6.2 The existing SIS Act provisions impose obligations on 'the trustee'; however, the trustee of a regulated superannuation fund may be either a constitutional corporation or a group of individual trustees. The purpose of these amendments is to clarify the operation of provisions of the SIS Act as they apply to trustees of superannuation entities, particularly for a trustee that is one of a group of individual trustees. The purpose is not to alter the definition of a trustee.

6.3 These amendments have introduced four new formulations to impose obligations on a trustee of a superannuation entity.

6.4 A reference to 'a trustee' means that one or more of the individual trustees must do something, or ensure that something is done. The references to 'a trustee' are used to recognise that one of a group of individual trustees is required to act. For example, where APRA seeks to give a written notice to a group of individual trustees, it is not necessary for APRA to give a written notice to each individual trustee within the group. Notice should be given to one of the trustees and it is the responsibility of the group of individual trustees to ensure that adequate systems are in place to communicate those notices to other members of the group. A reference to 'a trustee' is also used in relation to transactions entered into by the trustee. These amendments recognise that one or more trustees may enter an agreement or arrangement on behalf of the group of individual trustees, because the group of individual trustees does not possess capacity as a separate legal entity.

6.5 The purpose of these amendments is not to override the governing rules of the fund as to whether a particular individual trustee was empowered to carry out a particular act. Any action taken by a trustee must be taken in accordance with the terms of the governing rules and/or trust deed.

6.6 A reference to 'each trustee' means that each individual trustee must do something, or ensure that something is done. For example, subsection 36(1) has been amended (see Item 12), so that each trustee must ensure that annual returns are lodged with the Regulator and each individual trustee will be held responsible in the event that the annual returns are not lodged, unless the defences contained in section 338A (Schedule 1, Part 1, Item60) or the Criminal Code apply.

6.7 A reference to 'the trustee or the trustees' means that all of the individual trustees are under an obligation to do something on behalf of the fund and the manner in which this obligation is fulfilled should be determined in accordance with the trust deed or governing rules.

6.8 A reference to 'the trustee or if the entity/fund has a group of individual trustees, the trustees' has the same meaning as 'the trustee or the trustees', but the wording of the provision necessitates the inclusion of a link between the trustee and the superannuation entity.

6.9 These amendments do not alter the operation of offences in relation to a trustee that is a constitutional corporation or body corporate. Each of these formulations accommodates the circumstance where a fund or entity has only one trustee by imposing the obligation on that trustee, including where that trustee is a corporation.

Items 115, 130, 147, 177, 190, 195 and 206

6.10 These items remove references to '2 or more' in provisions that refer to groups of 2 or more individual trustees. The purpose of these amendments is to allow for the circumstance where a group of 2 or more trustees experiences a temporary vacancy, leaving only one trustee in the group. The operation of the provisions of the SIS Act is not altered in the case of such a temporary vacancy.

Item 373

6.11 This item allows regulations to be made which are necessary or convenient to clarify how these provisions apply in relation to groups of individual trustees.