Chapter 3

Report on the Provisions of the Wool International Privatisation Bill 1999

Chapter 3

Provisions of the Bill

Definitions

3.1 'Conversion time' is defined by clause 7 to mean the date on which Schedule 2 of the Bill commences. Schedule 2 of the Bill commences on a day to be fixed by proclamation. If that does not occur within 6 months of Royal Assent of the Bill, then 6 months and 1 day after Royal Assent.

Registration of Wool International Limited as a public company

3.2 Clause 8 requires Wool International to register as soon as possible after the commencing time as a public company. The application for registration must be accompanied by a copy of Wool International's proposed constitution. That constitution must be approved by the Minister. Wool International will be exempt from certain requirements under the Corporations Law, namely:

Nomination of TrusteeCo to hold shares etc

3.3 Clause 9 provides for the establishment of a trust company, TrusteeCo, prior to the conversion time. TrusteeCo must be wholly owned by Wool International. All units (ie. a unit of equity in Wool International allocated under the Wool International Act 1993) registered in the name of the Chief Executive (eg. those belonging to putative equity holders) will be taken to be registered in the name of TrusteeCo immediately before the conversion time (clause 10). In addition, any property held by the Chief Executive before the conversion time will also transfer to TrusteeCo at the conversion time.

Share capital

3.4 Clause 13 provides that immediately before the conversion time Wool International is taken to have a share capital of $349 403.18 which will be divided into 349 403 180 shares.

Conversion of Wool International into WoolStock Australia Limited

3.5 At the conversion time the ASIC will be taken to have registered Wool International as a public company with the name WoolStock Australia Limited (clause 14).

Shares in Wool International

3.6 Clause 16 deals with the issue of shares in WoolStock Australia Limited to registered equity holders. At the conversion time, each registered equity holder will receive one share in WoolStock Australia Limited for each unit of equity that they hold. A person to whom shares are issued becomes a member of WoolStock Australia Limited, and will have the same rights, privileges, duties, liabilities and obligations in respect of that membership as if they had become a share holder under the constitution of WoolStock Australia Limited.

Charges on shares

3.7 Shares taken to be issued under clause 16 will be subject to the same charges, if any, as they were subject to immediately before the conversion time (clause 17). As noted in the Explanatory Memorandum to the Bill, this is intended [and will] preserve the value of any security which has been obtained by chargees over units of equity. WoolStock Australia Limited must issue separate share certificates for shares subject to a charge and those not so subject. Chargees will be entitled to WoolStock Australia Limited dividends where a WoolStock Australia Limited share is subject to a charge/s and the registered equity holder has authorised WoolStock Australia Limited to make such dividend payments up to the amount of the debt secured by the charge/s.

Dealings by TrusteeCo with unclaimed units or wrong-name units

3.8 Clause 19 deals with the treatment of unclaimed units of equity and wrong-name units of equity held by TrusteeCo. TrusteeCo will hold such shares on trust until they are transferred to the correct person who is entitled to be registered in respect of the units. The clause also provides for dividends from unclaimed and wrong-name units to be transferred to TrusteeCo, at the finalisation time (ie. one month after the final distribution of equity units), where the holders cannot be identified. Where the holders of such units are identified, before the finalisation time, TrusteeCo must transfer the shares to the person and pay any dividends received in respect of the shares.

Capital gains tax

3.9 Clause 20 deals with capital gains tax and the privatisation of Wool International. The clause provides that certain events flowing from the Bill's provision will not attract capital gains tax, including the issue of shares in WoolStock Australia Limited and the establishment of charges over shares and the transfer of units of equity and property to TrusteeCo.

Exemption from income tax

3.10 WoolStock Australia Limited is provided with an exemption from income tax in respect of amounts derived from wool stockpile activities (clause 22).

Commonwealth guarantee

3.11 Clause 26 provides for the continuation of Commonwealth guarantees in respect of WoolStock Australia Limited debts where:

Schedule 2 - Amendments to the Wool International Act 1993

3.12 Item 3 of Schedule 2 substitutes a new section 3 in the Wool International Act 1993 (the Principal Act) which provides that the main object of the Act, from conversion time, is to provide for units of equity for contributions made to WoolStock Australia Limited from payments of wool tax.

3.13 The effect of item 16 of Schedule 2 is to require TrusteeCo to transfer unclaimed units of equity to the person/s who is entitled to be registered in respect of such units where the person/s is identified.

3.14 A new section 22MA is inserted in the Principal Act by item 39 of Schedule 2 which will allow WoolStock Australia Limited to transfer to the ASIC for disposal certain units of equity which it has held for at least 6 years. The conditions precedent for such a disposal are that WoolStock Australia Limited:

3.15 A new section 22P, dealing with the distribution of surplus money by WoolStock Australia Limited, is inserted in the Principal Act by item 42 of Schedule 2. The surplus money of WoolStock Australia Limited is to consist of any money of WoolStock Australia Limited that in its opinion is not needed to be set aside for its operations. WoolStock Australia Limited must distribute surplus money by way of either interim distributions and a final distribution as soon as practicable after the end of the financial year in which the last stockpile wool is disposed of. The amount of each distribution is to be determined by WoolStock Australia Limited.