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CONTENTS
Passage History
Purpose
Background
Main Provisions
Contact Officer & Copyright Details
Corporations (Compensation Arrangements
Levies) Bill 2001
Date Introduced: 7 June 2001
House: House of Representatives
Portfolio: Treasury
Commencement: On the commencement of item 1 of
Schedule 1 of the proposed Financial Services Reform Act 2001.
Subject to certain exceptions, the Financial Services Reform Bill
will commence on a day to be fixed by Proclamation on or after the
commencement of the Corporations Act 2001. The Government
has stated its intention that the Financial Services Reform Bill
2001 will commence on 1 October 2001.
To impose levies
for the purposes of compensation arrangements relating to financial
markets not covered by the National Guarantee Fund (NGF).
Division 3 of Part 7.5 of the Corporations
Act 2001, as amended by the Financial Services Reform Bill
2001, provides for the making of compensation arrangements for
financial markets not covered by the National Guarantee Fund.
Compensation arrangements are necessary, for example, where the
clients of market participants suffer loss as a result of fraud in
relation to property entrusted to participants for the purpose of a
market transaction.
Section 883D of the Corporations Act
2001, as amended by the Financial Services Reform Bill 2001,
provides for the payment of levies by participants in a particular
financial market to ensure that adequate funds are available for
the purposes of compensation arrangements. The levy is payable to
the operator of the market, as agent for the Commonwealth.
The National Guarantee Fund is a compensation
fund that is available to meet claims arising from dealings with
stockbrokers including where: a stockbroker transfers securities
without authority; or where the stockbroker becomes insolvent and
fails to meet its obligations to a person who had previously
entrusted property to it. The Fund is administered by the
Securities Exchange Guarantee Corporation (SEGC). The NGF may be
funded by levies on securities transactions, the ASX and ASX
members.
Readers may note that the provisions proposed by
this Bill while relating to provisions in the Financial Services
Reform Bill are contained in a separate Bill. The need for this is
the requirements of section 55 of the Constitution.
Section 55 of the Constitution provides in part
that:
Laws imposing taxation shall deal only with the
imposition of taxation, and any provision therein dealing with any
other matter shall be of no effect.
As the Corporations Act 2001 will apply
throughout Australia and will largely be based on powers in section
51 of the Constitution, it is necessary to introduce separate bills
dealing with provisions that may be construed as imposing
taxation.
For a detailed analysis of the Financial
Services Reform Bill 2001 the reader is referred to the Digest for
that Bill.
Clause 4 formally imposes any
levy payable under proposed section 883 of the Corporations Act
2001, as amended by the Financial Services Reform Bill
2001.
Clause 5 provides that that the
amount of levy payable will be the amount, or a method for
determining the amount, specified in, or worked out in accordance
with the method specified in subsection 883D(1) compensation
rules.
Levies payable before the commencement of this
Bill to a securities exchange or to a futures organisation under
the Corporations (Securities Exchanges Levies) Act 2001
and Corporations (Futures Organisations Levies) Act 2001,
which are being repealed as a consequence of the Financial Services
Reform Bill 2001, will become payable to the operator of the
financial market that was that securities exchange or futures
organisation on the commencement of this Bill (clause
6).
Ian Ireland
21 August 2001
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 2000
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