Treasury Releases Draft Legislation To Implement ALRC Report Recommendations
On 24 August 2022, the draft Treasury Laws Amendment (Measures for consultation) Bill 2022: ALRC Financial Services Interim Report (Cth) ('the Draft Bill') and the draft Treasury Laws Amendment (Measures for Consultation) Regulations 2022: ALRC Financial Services Interim Report (Cth) ('the Draft Regulations') for public consultation.
Consultation on these drafts closed on 20 September 2022. The Draft Bill has yet to be introduced in Parliament and the Draft Regulation has yet to be notified.
Purpose of the Draft Bill
According to the Draft Explanatory Materials, the Draft Bill:
"enacts recommendations and other suggested improvements identified by the Australian Law Reform Commission (ALRC) in Interim Report A from its Review of the Legislative Framework for Corporations and Financial Services Regulation to simplify and improve the navigability of Australia's financial services laws."
Removing erroneous references and redundant definitions
The Draft Bill proposes to remove several erroneous references and redundant definitions, for example:
removing references in the Australian Securities and Investments
Commission Act 2001 (Cth) to Part 1.3 of the Corporations Act 2001 (Cth) ('the Corporations Act') (where there is no Part 1.3 of the Corporations Act); and
removing defined terms in the Corporations Act that are used in the Corporations Regulations 2001 (Cth) ('the Regulations') but are not used in the Corporations Act and inserting the terms into the Regulations through amendments proposed in the Draft Regulations.
Using consistent headings for definitions sections
Currently, the Corporations Act has no consistent method of signposting provisions that contain definitions.
The Draft Bill seeks to amend the headings of provisions in the Corporations Act that contain definitions and no substantive content. The Draft Bill seeks to replace these headings with the phrase ‘Meaning of [defined term]’ to more clearly identify those provisions containing definitions.
Definitions about Resolutions
Currently, the definitions of ‘extraordinary resolution’ and ‘special resolution’ in section 9 of the Corporations Act contain substantive requirements.
The Draft Explanatory Memorandum states that the:
“inclusion of substantive obligations within definitions should be avoided where possible as it conceals the substantive obligation”.
The Draft Bill proposes the repeal of the definitions of ‘extraordinary resolution’ and ‘special resolution’ and remake these definitions without their substantive requirements. The substantive requirements are planned to be remade under two new operative provisions.
Definition of Review Fee
Currently, the definition of ‘review fee’ within the Corporations Act mistakenly refers to section 5 of the Corporations (Review Fees) Act 2003 (Cth) ('Corporations (Review Fees) Act') instead of section 4. Additionally, the Corporations Act interchangeably uses the terms ‘review fee’ and the phrase ‘fees imposed under the Corporations (Review Fees) Act’.
The Draft Bill replaces the definition of ‘review fee’ with a signpost to the definition in the Corporations (Review Fees) Act. Further, the Draft Bill would update references in the Corporations Act to review fees to ensure consistency.
Definition of Rules
Finally, the Draft Explanatory Memorandum states that despite the definition of ‘rules’ under the Corporations Act as rules of the Federal Court or rules of a State or Territory Supreme Court, the word ‘rules’ is frequently used throughout the Corporations Act in its ordinary sense, which:
“causes confusion to readers who are required to consider whether the word is used in its defined or ordinary sense”.
To remove this ambiguity, the Draft Bill proposes to replace the term ‘rules’ with the term ‘rules of the court’.
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[Draft] Treasury Laws Amendment (Measures for consultation) Bill 2022: ALRC Financial Services Interim Report (Cth) and additional explanatory materials available from TimeBase's LawOne service
[Draft] Treasury Laws Amendment (Measures for Consultation) Regulations 2022: ALRC Financial Services Interim Report (Cth) and additional explanatory materials available from TimeBase's LawOne service