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Chapter 3 - Structure of the Legislation
The Corporations Bill 2001
3.1
As noted in the previous chapter, the Bill is
one of a package of measures intended to respond to the decisions of the High
Court in Wakim and Hughes. It will replace the present Corporations
Act 1989 and the Corporations Law of the ACT, and the corresponding
legislation of the Northern Territory and those States which have referred
appropriate powers to the Commonwealth, as the statutory basis for the
formation of companies, corporate regulation and the regulation of the
securities and futures industries. The Bill will, in effect, re-enact the
existing Corporations Law as a Commonwealth Act in operation throughout
Australia. It will, therefore, restore the regulatory framework which existed before
Wakim and Hughes. The Bill does not involve substantial policy
changes so this description of the structure of the Bill will, like the
Explanatory Memorandum, concentrate on the differences between the Bill and the
Corporations Law and on transitional provisions.
From eight Corporations Laws to one Corporations Act 2001
3.2
The Bill includes the text of the present
Corporations Law amended so that it may operate throughout Australia as a
Commonwealth Act. Individual provisions of the Bill generally have the same
numbers as the corresponding provisions of the Corporations Law. After
enactment of the Act it will therefore be necessary to refer to the Corporations
Act 2001 instead of the Corporations Law. A company registered under the
Bill will be incorporated in the jurisdiction of the Bill (all mainland
Territories and all referring States) and taken to be registered in a
particular referring State or Territory. Existing companies will be taken to be
registered in the current State or Territory of registration.
From the Corporations Act 1989 to the Corporations Act 2001
3.3
The provisions of the Bill dealing with the
jurisdiction and procedure of Courts are intended to produce the same outcomes
as the corresponding provisions of the Corporations Act 1989 and the
State Corporations Acts before the Wakim decision.
Effect on non-referring States
3.4
The Bill has been drafted to operate effectively
even if one or more States do not participate in the new arrangements or
subsequently withdraw from them. However, there will be some significant
consequences for non-referring States. For instance, the Bill provides that any
company formed under a law of a non-referring State must register with ASIC
before carrying on business in a referring State or Territory. Also, significant
provisions relating to securities and futures (such as access to the National
Guarantee Fund and other fidelity funds) will not apply to non-referring
States.
Transition from the present scheme to the new scheme
3.5
The object of the transitional provisions in the
Bill is to provide a seamless transition from the existing Corporations Law
scheme to the new scheme based on the Bill. Individuals, bodies corporate and
other bodies are, as far as possible, to be put in the same position as if
their rights and liabilities under the present Corporations Law had arisen
under the Bill.
The Australian Securities and Investments Commission Bill 2001
3.6
Like the Corporations Bill 2001, this Bill is a
core element in the Commonwealth package of bills responding to the High Court
decisions in Wakim and Hughes. It will, in effect, re-enact the Australian
Securities and Investments Commission Act 1989 as a Commonwealth Act
capable of operating throughout Australia, following suitable referral of State
powers. The Bill will, for all practical purposes, restore the regulatory
framework which existed before the High Court decisions. The Bill does not make
any substantive policy changes.
3.7
The Bill expressly continues in existence the
following bodies established under the 1989 Act:
- Australian Securities and Investments Commission
- Companies and Securities Advisory Committee
- Companies Auditors and Liquidators Disciplinary
Board
- Financial Reporting Council
-
Australian Accounting Standards Board
- Parliamentary Joint Committee on Corporations
and Securities
3.8
The Bill provides a service obligation for ASIC,
obliging it to establish an office, with its own Regional Commissioner, in
every referring State and Territory, and to serve adequately the needs of
business communities in those States and Territories.
3.9
The transitional provisions of the Bill, like
those of the Corporations Bill 2001, are intended to ensure that individuals,
bodies corporate and other bodies are, as far as possible, put in the same
position that they would have been if their rights and liabilities under the
present ASIC legislation had arisen under the new ASIC legislation.
The Corporations (Commonwealth Powers) Act 2001 (NSW)
3.10
The Corporations (Commonwealth Powers) Act
2001 (NSW), which commenced on 4 April 2001, is the first State Act to
refer powers relating to corporations and financial products and services to
the Commonwealth, to enable the Commonwealth to make laws which apply in the
State of their own force, instead of through the Corporations Law and other
applied laws. The Act includes an objects clause excluding reliance on the
reference by the Commonwealth to regulate industrial relations. The reference
is in two parts, the first enabling the Commonwealth to enact the text of the
Corporations Bill and the ASIC Bill and the second to ensure that those new
Acts may be amended by the Commonwealth, as long as the amendments relate to
the formation of corporations, corporate regulation, or the regulation of
financial products and services. The reference is for five years, although this
period may be extended by proclamation.
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