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STATUTES AMENDMENT (CORPORATIONS—FINANCIAL SERVICES REFORM) BILL\TOC\2\STATUTES AMENDMENT (CORPORATIONS—FINANCIAL SERVICES REFORM) BILL

\IND\Speech:nn:The Hon. M.J. ATKINSON The Hon. M.J. ATKINSON (Attorney-General) obtained leave and introduced a bill for an act to amend the Authorised Betting Operations Act 2000, the Broken Hill Proprietary Company's Indenture Act 1937, the Broken Hill Proprietary Company's Steel Works Indenture Act 1958, the Casino Act 1997, the Cooperatives Act 1997, the Corpora­tions (Ancillary Provisions) Act 2001, the Liquor Licensing Act 1997, the Motor Vehicles Act 1959, the Racing (Prop­rietary Business Licensing) Act 2000 and the Stamp Duties Act 1923. Read a first time.

The Hon. M.J. ATKINSON: I move:

That this bill be now read a second time.

On 21 June 2001 the South Australian parliament effected a limited reference of corporations power to the commonwealth parliament. The principal legislation effecting the reference was the Corporations (Commonwealth Powers) Act 2001. This legislation was complemented by three other acts, including the Corporations (Ancillary Provisions) Act 2001. Based on this reference and similar references from all other states, the commonwealth parliament enacted the Corpora­tions Act 2001 and the ASIC Act 2001.

This legislation forms the basis of the corporations scheme under which Australian companies and securities are regulated. The corporations scheme commenced on 15 July last year. Since the commencement of the corporations scheme, a number of important amendments have been made to the Corporations Act and the ASIC Act. The most significant of these were contained in the FSR (Financial Services Reform) Act 2001.

The FSR Act repealed chapters 7 and 8 of the Corpora­tions Act. Chapter 7 regulated the acquisition of securities and the operation of the securities industry in Australia. Chapter 8 regulated the futures market in Australia, including the approval and regulation of futures exchanges. Participants in the securities and futures industries were licensed and their conduct regulated under these provisions.

The FSR Act has replaced the former chapters 7 and 8 of the Corporations Act with a new chapter 7 that provides for a single harmonised licensing disclosure and conduct frame­work for all financial service providers and establishes a con­sistent and comparable financial product disclosure regime apply­ing to financial investment, financial risk and non-cash pay­ment products. These amendments form part of the com­monwealth's corporate law economic reform program and constitute the third tranche of the commonwealth govern­ment's legislative response to the financial system inquiry.

The FSR Act amendments have necessitated a number of consequential amendments to the provisions of state legisla­tion which refer to or operate by reference to the repeal provisions of the old chapters 7 and 8 of the Corporations Act or to concepts or terminology relevant to the repeal provi­sions. In particular, the FSR Act has introduced the concepts of financial products, financial markets and clearing and settlement facilities.

Specific references in South Australian acts, in particular the Stamp Duties Act 1923, to marketable securities, stock exchanges and securities clearing houses, tied to the former corporations act regulatory regime, must be replaced with the equivalent terminology of the new FSR provisions. Mr Deputy Speaker, I seek leave to insert the remainder of the second reading explanation and the explanation of clauses in Hansard without my reading it.

Leave granted.

Remainder of Explanation

These amendments are contained in the Statutes Amend­ments (Corporations—Financial Services Reform) Bill 2002.

Corporate law reform in Australia is an ongoing process. As a consequence, the commonwealth parliament regular­ly amends the Corporations and ASIC Acts.

As with the FSR Act, these amendments often necessi­tate con­sequential amendments to state legislation. Owing to state parliamen­tary constraints, it is not always possible to enact the necessary consequential amendments before commencement of the relevant commonwealth amend­ments. This can result in inconsisten­cies between related state and commonwealth provi­sions, and may even render inoperative state provisions, that refer to or rely upon concepts or terminology made redundant by the commonwealth amendments.

To address this problem, the Statutes Amendment (Corpora­tions—Financial Services Reform) Bill amends the Corpora­tions (Ancillary Provisions) Act 2001 to em­power the Governor to make regulations to amend provi­sions in state legislation that refer to or rely upon provi­sions of the Corporations or ASIC Acts, or terms, expres­sions or con­cepts defined in those Acts, which are amend­ed by commonwealth legislation.

To ensure this regulation making power is not used to circum­vent the proper Parliamentary processes for amend­ing legislation, it is subject to the following limitations:

×an amendment to state legislation to be effected by a regula­tion must be necessary as a consequence of amendments to the Corporations or ASIC Acts;

×an amending regulation may not deal with any other matter (except matters of a transitional nature conse­quent upon the amendment to the Corporations or ASIC Acts); and

×an amending regulation will automatically expire after 12 months (unless revoked or specified to expire at an earlier time).

These limitations will ensure that necessary amend­ments to state legislation can be made, on an interim basis, with­out the need for Parliament to enact amending legisla­tion, provided the required amendment to state legislation is consequential in nature, for example, a change in cross-referencing or a change in termi­nology. A Bill will still be necessary in due course to ensure consequential amend­ments are given permanent effect. Regula­tions made under the propose provision will be subject to section 10 of the Subordinate Legislation Act 1978. Similar amend­ments are being made in other jurisdictions.

Finally, this Bill makes a number of minor amendments to State Acts, consequential upon the reference of power, which, owing to parliamentary constraints, could not be made at the time reference legislation was enacted.

I commend this bill to the house.

Explanation of Clauses

PART 1

PRELIMINARY

Clause 1: Short title

This clause is formal.

Clause 2: Commencement

This clause provides for the commencement of the meas­ure.

Clause 3: Interpretation

A reference in a provision to the principal Act is to be taken to be a reference to the Act referred to in the heading of the Part in which the reference occurs.

PART 2

AMENDMENT OF AUTHORISED BETTING

OPER­ATIONS ACT 2000

Clause 4: Amendment of s. 3—Interpretation

These amendments up-date provisions so that they refer to the Corporations Act 2001 of the commonwealth.

Clause 5: Amendment of s. 5—Close associates

These amendments ensure that concepts under section 5 of the principal Act are consistent with the terminology and concepts under the new commonwealth provisions.

Clause 6: Amendment of s. 29—Duty of auditor

Clause 7: Amendment of s. 74—Power to appoint man­ager

These amendments up-date provisions so that they refer to the Corporations Act 2001 of the commonwealth.

PART 3

AMENDMENT OF BROKEN HILL PROPRIETARY

COMPANY'S

INDENTURE ACT 1937

Clause 8: Insertion of s. 11

This amendment ensures that concepts under the Principal Act are consistent with the terminology and concepts under the new commonwealth provisions.

PART 4

AMENDMENT OF BROKEN HILL PROPRIETARY

COMPANY'S STEEL

WORKS INDENTURE ACT 1958

Clause 9: Insertion of s. 13

This amendment ensures that concepts under the principal Act are consistent with the terminology and concepts under the new commonwealth provisions.

PART 5

AMENDMENT OF CASINO ACT 1997

Clause 10: Amendment of s. 3—Interpretation

Clause 11: Amendment of s. 4—Close associates

These amendments ensure that concepts under the princi­pal Act are consistent with the terminology and concepts under the new commonwealth provisions.

Clause 12: Amendment of s. 49—Licensee to supply auth­ority with copy of audited accounts

Clause 13: Amendment of s. 50—Duty of auditor

Clause 14: Amendment of s. 50—Duty of auditor

These amendments up-date provisions so that they refer to the Corporations Act 2001 of the commonwealth.

PART 6

AMENDMENT OF CO-OPERATIVES ACT 1997

Clause 15: Amendment of s. 9—Exclusion of operation of Corporations Act

These amendments ensure consistency with the terminol­ogy and concepts under the new commonwealth provi­sions, and up-date a cross-reference.

Clause 16: Amendment of s. 258—Application of Cor­po­rations Act to issues of debentures

This amendment up-date a cross-reference.

PART 7

AMENDMENT OF CORPORATIONS (ANCILLARY

PROVISIONS) ACT 2001

Clause 17: Amendment of s. 22—Power to amend certain statutory instruments

This amendment extends section 22 of the principal Act so that regulations can be made under that section where the Corporations Act or the ASIC Act is being amended.

Clause 18: Insertion of s. 22A

This clause inserts a new section 22A into the principal Act which provides a power to make interim regulations construing refer­ences in Acts consistently with the provi­sions of a Commonwealth Act, or a Bill for a Commonwealth Act, that affects those refer­ences. The purpose of the new section is to enable affected refer­ences to be adjusted in circumstances where it has not been pos­sible to amend the references by Act in the time avail­able. Any regulations made under the new section will expire after 12 months (unless sooner revoked).

Clause 19: Insertion of s. 25A

This clause inserts new section 25A into the principal Act. The new section validates things done on or after the commencement of the Financial Services Reform Act 2001 of the Commonwealth and before the commencement of the proposed Act. The validation extends only to things that would have been valid and lawful if this Bill had been in operation at the relevant time.

Clause 20: Amendment of s. 26—Regulations

This is a consequential amendment.

PART 8

AMENDMENT OF LIQUOR LICENSING ACT 1997

Clause 21: Amendment of s. 7—Close associates

These amendments ensure consistency with the terminol­ogy and concepts under the new commonwealth provi­sions.

PART 9

AMENDMENT OF MOTOR VEHICLES ACT 1959

Clause 22: Amendment of s. 71C—Interpretation

Clause 23: Amendment of s. 99—Interpretation

These amendments ensure consistency with the terminol­ogy and concepts under the new commonwealth provi­sions, and up-date some cross-references.

PART 10

AMENDMENT OF RACING (PROPRIETARY

BUSI­NESS LICENSING) ACT 2000

Clause 24: Amendment of s. 3—Interpretation

Clause 25: Amendment of s. 5—Close associates

These amendments ensure consistency with the terminol­ogy and concepts under the new commonwealth provi­sions, and up-date some cross-references.

PART 11

AMENDMENT OF STAMP DUTIES ACT 1923

Clause 26: Amendment of s. 2—Interpretation

It is necessary to amend various definitions used in the principal Act to provide greater consistency with the ter­minology and concepts under the new commonwealth provisions. In particular, the new legislation refers to "financial products", and so it is appropriate to now refer to "financial products" rather than "mar­ketable securities" under the principal Act. In view of the potential ambit of the concept of "financial product", the definition in the principal Act will be able to be adjusted by regulation to exclude any stock, security or interest that should not be subject to the operation of the Act. In addition, the con­cept of a "stock market" is to be replaced with the concept of a "financial market" (being the terminology now used under the commonwealth provisions).

Clause 27: Amendment of s. 31—Certain contracts to be chargeable as conveyance on sale

Clause 28: Amendment of s. 67—Computation of duty where instruments are interrelated

Clause 29: Amendment of s. 71—Instruments charge­able as conveyances operating as voluntary dispositions inter vivos

Clause 30: Amendment of heading

These are consequential amendments.

Clause 31: Amendment of s. 90A—Interpretation

These amendments relate to the definitions that are re­quired for the purposes of Part 3A of the principal Act. The changes are consequen­tial on changes to the concepts, terminology and provi­sions that relate to financial markets and clearing and settlement facilities.

Clause 32: Amendment of s. 90B—Application of Division

Clause 33: Amendment of s. 90C—Records of sales and pur­chases of financial products

Clause 34: Amendment of s. 90E—Endorsement of instru­ment of transfer as to payment of duty

Clause 35: Amendment of s. 90F—Power of dealer to recover paid duty

Clause 36: Amendment of s. 90G—Transactions in S.A. finan­cial products on U.K. stock exchange

These are consequential amendments.

Clause 37: Substitution of Divisions 3 and 4 of Part 3A

Division 3 of Part 3A of the principal Act relates to trans­fers of marketable securities conducted through clearing house facilities. The Division currently applies to any "SCH-regulated transfer", which has been any transfer conducted through a particular clear­ing house recognised under the old Corporations Law. The new legislation recognises the fact that other clearing and settlement facili­ties may be established (and no longer specifically refers to "SCH"). It is therefore appropriate to amend the Stamp Duties Act 1923 to provide greater consistency with ar­rangements that may now be established under the new commonwealth provisions. Given the extent of changes required to be effected because of changes in terminology, it has been decided to replace the Division with a new set of provisions. The new provisions will have a similar effect to the existing provisions, but will now better reflect modern practices with respect to potential business licen­sees practices (especially in connection with electronic clearing and settlement facilities), and with respect to the potential opera­tors of these facilities. Division 4 is also to be replaced, consistent with the fact that it may be appro­priate in the future to extend the scheme that has applied to SCH to other CS facility licensees (on application by the licensee). In undertaking these amendments, it is also appropriate to extend the registration scheme to encompass new market licensees (in addition to the ASX) under the commonwealth provisions.

Clause 38: Amendment of s. 90T—Application of Division

Clause 39: Amendment of s. 90U—Financial pro­ducts liable to duty

Clause 40: Amendment of s. 90V—Proclaimed count­ries

Clause 41: Amendment of s. 91—Interpretation

Clause 42: Amendment of s. 97—Calculation of duty

Clause 43: Amendment of s. 101—Exempt transactions

Clause 44: Amendment of s. 106A—Transfer of finan­cial products not to be registered unless duly stamped

Clause 45: Amendment of Sched. 2

These clauses all make consequential, or related, amend­ments.

Clause 46: Transitional provisions

This clause will ensure the on-going recognition of ASX and SCH under the scheme that applies under Part 3A of the principal Act.

One White

The Hon. I.F. EVANS secured the adjournment of the debate.