I~IIi~Dfl~ · SUPERMt~TIC2~INDUSTRY (SUPERVISflT) BILL 1993 GENERAL OCJThINE AND~IN PURPOSES OF ThE BILL This Bill, together with the coapanion Occupational Superannuation Standards

ARTHUR Ro:~NsCN4Pc HEDDERWICKSL~.I~ILf.hY

1993

THE PA flh1~?XOF THE ~fl1WEALTH OF AUSTRALIA

SflTE

SUPERANNUAflCN INDUSTRY (SUPERVISIC*T) BILL 1993

flTORY M~VR~1~M

(Circulated by authority of the Treasurer,the Hon John Dawkina, MP)

ntrs M~CRAtflJMTAKES ACC~W~TOF AN~fl(E21TS}~DEBY THE ROUSEOP REPRESflTThTIVESTO THE BILL AS Efl’ROflY~

~I~IIi~Dfl~51115 Cat. No. 934244X 9 783L44 21~4997

Printed by Authority by the Comnonweatth Government Printer

SUPERMt~TIC2~INDUSTRY (SUPERVISflT) BILL 1993

GENERALOCJThINE AND~IN PURPOSES OF ThE BILL

This Bill, together with the coapanion OccupationalSuperannuation Standards ~n&nent Bill 1993, Superannuation(Resolution of Catplaints) Bill 1993, Superannuation (Financial

Assistance Funding) Levy Bill 1993, Superannuation (Polled-OverBenefits) Levy Bill 1993, Superannuation Supervisory Levy~rnencb~nt Bill 1993 and Superannuation Industry (Supervision)Consequential knendrrents Bill 1993, give effect to treasures tosubstantially increase the level of prudential protectionprovided to the superannuation industry, and represent asubstantial strengthening of the security of superannuationsavings and in protecting the rights of superannuation fundmatters.

These seven Bills give effect to the new prudential arrangementsfor superannuation that the Theasurer announced on 21 October1992.

This Bill contains the uost irrpcrtant elements of the package ofBills and provides:

- for effective supervisory arrangements involving directenforcement powers for the Insurance and SuperannuationCoimiission enabling effective enforcement of the prudentialrequirements and obligations placed on funds and trustees;

- for trustees and investment managers to be made subject toadequate legislative sanctions for the proper perfoit~anceof their fiduciary responsibilities and increasing theiraccountability to their members;

- clear delineation of the basic duties and responsibilitiesof trustees, and indicating that trustees have primaryresponsibility for the operation of funds;

- that trustees and investment managers must be suitable toact as fund trustees and to manage fund nrcneysrespectively;

- for financial assistance to be provided to funds that havesuffered a loss due to fraudulent conduct or theft; and

- mechanisms for dealing with benefits in errçloyer-sponsoredfunds in respect of members that have left erployment orwho are lost, and unclaimed benefits

- for equal member and enployer representation;

- certain disclosure obligations in respect of auditors andactuaries of funds; and

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- rules relating to invitations and offers to subscribe forinterests in, and disclosure by, public offersuperannuation funds, approved deposit funds and pooledsuperannuation trusts.

FINANCIAL I!’~AC STATt�wr

The measures for added protection for superannuation savings andpnnition of a nore efficient s~erannuation industry, togetherwath the treasures contained in the ccxrpanion OccupationalSuperannuation Standards Amen±ent Bill 1993, Superannuation(Resolution of Ccmplaints) Bill 1993, Superannuation (Financial

Assistance Funding) Levy Bill 1993, Superannuation (Rolled-OverBenefits) Levy Bill 1993, Superannuation Supervisory LevyAmendment Bill 1993 and Superannuation Industry (Supervision)Consequential ktendments Bill 1993, will result in additionalsupervisory costs being incurred by the Insurance andSuperannuation CcnTniss ion.

The Insurance and Superannuation Ccnmission estimates that theadditional resources needed to give effect to this package ofmeasures will be $4.831m in 1993-94, $4.591m in 1994-95 and$4.631m in 1995-96.

These additional costs will be recovered through thesuperannuation supervisory levy and the itr~osition of a new levyon certain superannuation funds and approved deposit funds asprovided in the Superannuation (Rolled-Over Benefits) Levy Bill1993.

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SXPLMThTORY}RDTES ~N THE s~~n~canaifl4DUSTRY (SUPERVISIC2O

BILL 1993

PAfl 1 - PR~DCtThRY

DIVISION 1 - PRELIMINARY

CLAUSE 1 SHORT TITLE

1. This clause provides the ntde of citation of the Bill.

clAUSE 2 O4E!cEME~Tr

2. This clause provides for Part 1 (in so far as it relates tosection 112) and section 112 to cane into operation with effectfrom 21 October 1992. Parts 1, 2, 21, 27, 28, 29 and 30 of theBill are to come into operation on the thy the Bill receivesRoyal Assent. Parts 18, 19, 20, 22, 23 and 24 and section 336are to cane into operation with effect fran 1 July 1994. Thebalance of the provisions are to cane into operation on 1December 1993 but only a~ly in respect of a fund’s, scheme’s ortrust’s 1994-95 year of income and subsequent years of incare.3. Subclause (1) provides that Part 31 conrnences on the day on

which the Bill receives Royal Assent.

CLAUSE 3 OBJECT OF THE ACT

4. Thi~ clause sets out the object of the Act which is to makeprovision for the prudent management of certain superannuationfunds, approved deposit funds and pooled superannuation trusts,and for their supervision by the Insurance and SuperannuationCaitnissioner.

CAUSE4 SUMv~P~RYOF PROVISIONS

5. This clause sets out a brief suninary of the provisionscontained in each Part of the Act.

CAUSE5 Ot.TILINE OF KEY CtNCEVFS

6. This clause outlines in diagramnatic fonn the key conceptsunderlying the framework of the Act, including the requirementsfor obtaining complying superannuation fund, complying approveddeposit fund and pooled superannuation trust status, such statusconferring eligibility for concessional taxation treatment

CLAUSE 6 GENERALALtIINISTRATION OF fliE ACT

7. This clause provides for the Insurance and SuperannuationCarrnissioner to have responsibility for the generaladministration of the Act, subject to any directions from theMinister as to the performance or exercise by the Cannissionerof his functions or powers.

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CAUSE 7 APPLICATION OF ACT tcr ‘10 BE EXCLUDEDOR tCDIFIED

8. This clause provides for the Act to apply to allsuperannuation entities notwithstanding any provisions in thegoverning rules of the entity to the contrary.

ClAUSE 8 ACT EXTENDS ‘it EXTERNALTERRITORIES

9. Self explanatory.

CAUSE 9 CROWNTO BE BOUND

10. This clause provides for binding the Crown in right of thecczrrronwealth, each of the States, the Australian CapitalTerritory, the Northern Territory, and Norfolk Island. Itfurther provides that the Crown is not liable to be prosecutedfor an offence against or arising out of this Act.

D1VISION 2 - IIqrERPREmTION

CAUSE10 DEFINITIONS

11. This clause sets out a number of definitions and expressionsfor the purposes of the Act.

CAUSE 11 APPROVAlS, DETERMINATIONS ETC. BY Ct~lMISSICt’?ER

12. This clause provides that, notwithstanding the absence ofany express provision in the Act for the Canitissioner to give anapproval, make a determination, or do an act or thing, theCcmnissioner is authorised by this clause to so do.

CAUSE 12 ASSOCIATES

13. This clause provides that the question of whether a personis an associate of another is to be determined as provided by theCorporations Law, subject to the nodifying assumptions set outin subclause (2).

CAUSE 13 SINGLE TRUSTEESANDGROUPSOF TRUSTEES

14. This clause sets out, for the purposes of the Act, thecircumstances when a fund, scheme or trust is taken to have asingle corporate trustee, a single individual trustee and a groupof 2 or mare individual trustees.

CLAUSE 14 INDEFINITELY ODWTINUING PUNT) - APPLICATION OF RULESAGAINST PERPgITJITIES

15. This clause provides that, notwithstanding any provision inthe governing rules of a fund designed to avoid a breach of arule of law relating to perpetuities, the fund is not preventedfrom being treated as an indefinitely continuing fund for thepurposes of the definitions of superannuation fund and approveddeposit fund in section 10.

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CAUSE 15 PAYMENTS FOR PURCHASEOF ANNUITIES

16. This clause provides that, for the purposes of thedefinition of approved purposes in section 10, where abeneficiary requests payment of an amaunt deposited with anapproved deposit fund fran the fund to a life insurance carpanyor registered organisation for the purchase of an annuity in thename of the beneficiary of the fund, that payment is taken to berepayntnt of the anount to the beneficiary.

CLAUSE 16 DEFINITIONS ASSOCIATEDWITH ~1PI.OYER-SEONSORSHIP

17. This clause defines the terms employer-sponsor, standardemployer-sponsor, employer-sponsored fund, standard employer-sponsored fund and staniard employer- sponsored niethber for thepurposes of this Act.

CLAUSE 17 PERSONSINVOLVED IN CONTRAVENTION

18. This clause provides that, for the purposes of the Act, aperson is involved in a contravention if and only if the personhas done the things specified in paragraphs (a) to (d).

CAUSE18 PUBLIC OFFERSUPERAMflATION FUND

19. This clause sets out the circumstances under which asuperannuation fund is a public offer superannuation fund for thepurposes of the Act. The clause provides that the trustee of aemployer-sponsored superannuation fund may elect that the fundbe treated as a public offer superannuation fund, and for theconinissioner to declare a superannuation fund to be, or not tobe, a public offer superannuation fund for the purposes of theAct.

20. Subclause (3A)provides the trustee with the power to make anelection to be a public offer fund, despite any limitationsimposed by the governing rules.

CAUSE 19 REGULATEDSUPERANNUATIONFUN!)

21. This clause sets out the conditions which must be canpliedwith by a superannuation fund in order that it be a regulatedsuperannuation fund for the purposes of this Act. It providesthat the fund must have a trustee, that the trustee must be aconstitutional corporation or, where that is not the case, thatthe fund has as its sole or primary purpose the provision of old-

P age pensions, and that the trustee of the fund must have givento the Connissioner a notice making an irrevocable election tohave the provisions of the Act apply to the fund.

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22. This clause also provides that where the conditions set outin paragraphs (6) (a) to (c) are net during the period can~ncingon the date of Royal Assent and ending on the last day of thefund’s 1993-94 year of incane, the trustee of the fund must useits best endeavours to ensure that the fund becomes a regulatedsuperannuation fund no later than the first day of its 1994-95year of income. A contravention of this provision is not anof fence, but it may be grounds for an injunction pursuant tosection 310.

23. Subclause (5-A) provides that the trustee of a fund of thekind described in sub-clause 19(3) has the power to make anelection, in spite of any limitations imposed by its governingrules, or the lack of any authority conferred by the governingrules.

CAUSE20 RELATED BODIES COREORATE

24. This clause provides that the question of whether a personis an associate of another is to be determined as provided by theCorporations Law.

PARE 2 - APPPJYThL OF flUSTEES

CLAUSE 21 OBJECT OF PART


CLAUSE 22 INTE2PRETATION


CLAUSE 23 APPLICATION FOR APPROVAL

27. This clause provides for the making of applications forapproval as a trustee for the purposes of the Act. Subclause (2)sets out requirements relating to an application.

CLAUSE 24 FtJRTE{ER INFORIVIAT ION MAY BE REQUESTED


CLAUSE 25 PERIOD WITHIN WElCH APPLICATION FORAPPROVAL‘10 BEDECIDED

29. This clause specifies a 60 day time period for theCormtissioner to make a decision in respect of an application forapproval as a trustee. Subclause (2) proviaes for theComissioner to extend this period up to a further 60 days if theextension is required to decide an application.

30. Subclause (5) provides that if the Coninissioner has notdecided an application within the time period (or extendedperiod), then the application is to be taken as having beenrefused.

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CLAUSE 26 DECIDING AN APPLICATION FORAPPROVAL

31. This clause sets out requirements for the consideration ofapplications for approval by the Conmissioner. Subclause (1)provides that approval must be granted if the Commissioner issatisfied that the applicant can be relied upon to perform in aproper manner the duties of trustee, and has access to sufficientfinancial resources (or suitable custody arrangements have beenput in place) to provide appropriate security to beneficiariesof a relevant entity. Subclause (2) provides that if theseconditions are not satisfied, the Ccmn.issioner must refuse anapplication.

32. Subclause (3) provides that the grant of approval may besubject to conditions.

CAUSE27 WHENAN APPROVALIS IN FORCE

33. This clause provides that an approval may cane into forceeither when it is granted, or at a later time if such a time isspecified in the instrument of approval. The approval remainsin force until it is revoked.

ClAUSE 28 REVOCATIONOF APPROVAL

34. This clause provides that the Conmissioner may revoke anapproval of an approved trustee. Subclause (2) sets out some ofthe grounds on which an approval may be revoked.

CLAUSE 29 NOTIFICATION OF CHANGE IN CIRCUMSTANCESOR BREACHOFCONDITIONS

35. This clause places a requirement on approved trustees tonotify the Ccxrrnissioner as soon as possible after becoming awareof the events specified in subclause (2).

PART 3 - OPERATINGSTANDPSDSFORS PER7~fl~t~TIOttENTITIES



CAUSE 31 OPERATINGSTANDARDSFORREGULATEDSUPERANNUATIONFUNDS

37. This clause provides that standards applicable to theoperation of regulated superannuation funds may be prescribed.Subclause (2) specifies particular matters in respect of whichoperating standards may be prescribed.

CLAUSE 32 OPERATING STANDARDSFORAPPROVEDDEIOSIT FUNDS

38. This clause provides that standards applicable to theoperation of approved deposit funds may be prescribed. Subclause(2) specifies particular matters in respect of which operatingstandards may be prescribed.

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CLAUSE 33 OPERATING STANDARDS FOR ICXDLED SUPERANNUATION TRUSTS

39. This clause provides that standards applicable to theoperation of pooled superannuation trusts nay be prescribed.Subclause (2) specifies particular matters in respect of whichoperating standardsnay be prescribed.

CLAUSE 34 PRESCRIBEDOPERATING STANDARDSMUSTBE CCNPLIED WITh

40. This clauseprovides that the trustee of a st.~erannuationentity must ensurethat the entity carplies at all timeswith theapplicable operatingstandards. Subclauses(2) and (3) providethat where a trustee intentionally or recklessly fails to ensurethat the applicable operatingstandardsare ccznpliedwith at alltimes, the trustee is guilty of an offence, but that such acontravention does not affect the validity of a transaction.

PART4 - TRUSTEEOP SUPERMINIflTICV flITIfl 1~)LODGE MW1U~LRETURNSWITH ‘IBE C~2CSSI~



CAUSE36 TRUSTEE ‘10 LOEX3E ANNUAL RETURNS

42. This clause provides that the trustee of a superannuationentity, in respect of each year of income, and within theprescribed period, must provide to the Ccurnissioner, in theapprovedform, a return, a certificate, and a certificate by theapprovedauditor.

43. Subclauses (3) and (4) provide that the return may beprovided in electronic form, and that, where the return isprovided other than in electronic form, the respectivecertificates may be endorsedon the return.

44. Subclause (2) provides that an intentional or reckless

contravention of subclause (1) is an offence.

PART 5 - tvri~ ABC~TC~QLYflJ3 flO STM’US

DIVISION 1 - OBJECT AND INTERPRETATION

CLAUSE 37 OBJECTS OF PART


CLAUSE 38 MEANINGOF “Etfl’ITY”


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F ClAUSE 3 BA MEANING OF CONTRAVENTION

47. For the purposes of determining compliance of superannuationfunds, approved deposit funds and pooled superannuation tn’sts,the trustee is taken not to have contravened the Act, other thanPart 9, or the regulations if any contravention is not regardedas either an offence under the Act or the contravention of acivil penalty provision under the Act. It would be sufficientfor this purpose if contravention can be established on thebalance of probabilities. As this is a matter subject toAdministrative Appeals Tribunal review, it is appropriate thatthe balance of probabilities be the test, not the criminalstandardof proof.

DIVISION 2 - Ct(StIISSIONER MAY GIVE NOTICES ABOUT OCMPLYING PUNt)

STATUS

CAUSE39 NOTICES BY CUVt4ISSIONER ‘10 TRUSTEE

48. Subclause (1) provides that the Comnissioner may givewritten notice to the trustee of a superannuation entity statingwhether the entity is, in respect of a particular year of income,a caxiplyin~ or non-complying superannuation fund, a conplying ornon—caiplying approved deposit fund, or a pooled superannuationtrust.

49. Subclause (2) provides that, where the Catmissioner givesa notice of non-carpliance in relation to a particular year ofincome, the notice must also set out the reasons for that notice.

50. Subclause (3) provides for the Coninissioner of Taxation tobe given particulars of all notices given under this clause.

51. Subclause (4) provides that, where the Conrrtissioner givesa caipliance notice under this section in relation to aparticular year of income, and subsequently gives a notice ofnon-compliance in relation to that year of income, the non—compliance notice is taken to have revoked the originalcompliance notice.

CLAUSE 40 WHENCEf4IISSIONER OBLIGED 20 GIVE NOTICE OF CCMPLIANCE

52. This clause sets out when the Carinissioner is required togive a notice of compliance to the trustee of an entity. If theentity is a complying superannuation fund, a complying approveddeposit fund, or a pooled superannuation trust, as the caserequires, in relation to the current year of income and, either,the entity has not received a compliance notice in respect of aprevious year of income or, the rtst recent notice the entity hasreceived in relation to a previous year of income is a notice ofnon-compliance, the Coninissioner must give a notice of carplianceunder section 39 in respect of the current year of income.

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53. The Connissioner is not required to give a notice undersection 39 except as provided by subclause (2) of this clause.It follows that, if a notice of compliance has not been givenunder section 39 to the trustee of an entity in relation to aparticular year of income, the entity is not a complyingsuperannuation fund, a complying approved deposit fund, or apooled superannuation trust, as the case requires, in respect ofthat year of incctne.

54. Subclause (3) provides that a reference to a previous yearof income may be a reference to a year of incare before 1994-95.However, notwithstanding section 47, if the fund was not aregulated superannuat ion fund at all times during the currentyear of incare when the fund was in existence, paragraph (2) (b)does not apply unless the previous year of income is the 1994-95year of income or a later year of income.

55. Subclause (4) provides that, for the purposes of thissection, a notice given under section 39 that is revoked is takento have never been given.

CLAUSE 41 CCMPLY1NG SUPERA UATION FUN])

56. This clause provides out when an entity Is a complyingsuperannuation fund in a relation to a particular year of incomefor the purposes of this Division. It follows that, if an entitydoesnot satisfy the requirements set out in paragraph (1) (a) andsubparagraphs (1) (b) (i) to (iii), and the Corrrnissioner does notthink, after considering all relevent circumstances, that anotice of carpliance should be given in relation to that year ofinccxve, the entity is not a caiplying superannuation fund inrespect of that year of income.

57. Subclause (2) provides that, for the purposes of subclause(1), where a fund does not comply with the equal representation

rules in Part 9 at any time during a year of income, the trusteeis taken to have contravened this Act in relation to the fund inrespect of that year of inccxre.

CLAUSE 42 CCMPLYING APPROVED DEPOSIT FUND

58. This clause sets out when an entity is a complying approveddeposit fund in relation to a particular year of income for thepurposes of this Division. It follows that, if an entity doesnot satisfy the requirements set out in paragraph (a) andsubparagraphs (b) (i) to (iii), and the Conrnissioner does notthink, after considering all relevant circumstances, that anotice of compliance should be given in relation to that year ofincare, the entity is not a complying approved deposit fund inrespect of that year of income.

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CLAUSE 43 PCOLEDSUPERANNUATICtJ TRUST

59. This clause sets out when an entity is a pooledsuperannuationtrust in relation to a particular year of inccmefor the purposesof this Division. It follows that, if an entitydoes not satisfy the requirements set out in paragraph (a) andsubparagraphs (b) (i) to (iii), and the Conim.ssioner does notthink, after considering all relevant circumstances, that anotice should be given in relation to that year of income thatthe entity is a pooled superannuation trust, the entity is nota pooled superannuation trust in respect of that year of incare.

DIVISION 3 - CCt4PLYIN.3 FUNDSTATUS FOR TAX PURPOSES

CLAUSE 44 (IMPLYING SUPERANNUATION FUND

60. This clause provides that a fund is a caiplyingsuperannuationfund for the purposesof Part IX of the IncoaeTaxAssessment Act 1936 in relation to a particular year of incare(and therefore eligible for concessional taxation treatment under

that Act) if and only if the Cennissioner has given a notice ofcompliance in relation to that year of income under section 39of this Act or the nost recent notice the fund has received inrelation to a previous year of income is a notice of capliance.If the Conrnissioner has not given a notice of ccxipliance inrelation to that year of incomie and the nost recent notice thefund has received in relation to a previous year of incone is anotice of non-carpliance, the fund is a non-complyingsuperannuation fund in relation to that year of income.

61. Subclause (2) provides that a reference to a previous yearof incomemay be a reference to a year of incare before 1994-95.However, notwithstanding section 47, if the fund was not aregulated superannuation fund at all times during the currentyear of income when the fund was in existence, paragraph (1) (b)does not apply unless the previous year of income is the 1994-95year of income or a later year of inccxre.


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CLAUSE 45 CCtbIPLYLN3 APPROVED DEPOSIT ?tND

63. This clause provides that an approved deposit fund is acoirplying approved deposit fund for the purposes of Part IX ofthe Income Tax Assessment Act 1936 in relation to a particularyear of income (and therefore eligible for concessional taxationtreatment under that Act) if and only if the Ccnnissioner hasgiven a notice of compliance in relation to that year of incomepursuant to section 39 of this Act or the nost recent notice thefund has received in relation to a previous year of incare is anotice of caipliance. If the Cantssioner has not given a noticeof caupliance in relation to that year of income and the mostrecent notice the fund has received in relation to a previousyear of income is a notice of non-ccxrpliance, the fund is a non-carplying approved deposit fund in relation to that year ofincome.

64. Subclause (2) provides that a reference to a previous yearof income may be a reference to a year of inccme before 1994-95.


CLAUSE 46 ~CX)LEDSUPERANNtaTIONTRUST

66. This clause provides that a unit trust is a pooledsuperannuation trust for the purposes of Part IX of the IncomeTax Assessment Act 1936 in relation to a particular year ofincare (and therefore eligible for concessional taxationtreatment under that Act) if and only if the Comnissioner hasgiven a notice to that effect in relation to that year of incomepursuant to section 39 of this Act or the most recent notice thetrust has received in relation to a previous year of incate isa notice that the trust is a pooled superannuation trust. If theCamnissioner has not 5iven a notice that the trust is a pooledsuperannuation trust in relation to that year of incoire and themost recent notice the fund has received in relation to aprevious year of income is a notice that the trust is not apooled superannuation trust1 the trust is a not a pooledsuperannuation trust in relation to that year of income.

67. Subclause (2) provides that a reference to a previous yearof income may be a reference to a year of income before 1994-95.


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CLAUSE 47 TRANSITIONAL - NG~I~SUNDER THE REPEALED PROVISIONSOF ThE CCCYJPATIONALSUPERANNUATIONSTANDARDSACT 1987

69. This clauseprovides for certain notices under the repealedprovisions of the OccupationalSuperannuationStandardsAct 1987to have effect for the purposes of paragraph 40(2) (b) and thisDivision.

70. Subclause (1) provides that a positive (complying) noticeunder repealed sections 12 or 13 of the OccupationalSuperannuationStandardsAct 1987 in relation to a superannuationfund in respect of its 1993-94 year of inccxne or anearlier yearof income, has effect as if it were a notice under section 39 ofthis Act stating that the fund is a caiplying superannuationfundin relation to that year of income.

71. Subclause (2) provides that a positive (complying) noticeunder repealed sections 14 or 15 of the OccupationalSuperannuationStandards Act 1987 in relation to an approveddeposit fund in respect of its 1993-94 year of income or anearlier year of income, has effect as if it were a notice undersection 39 of this Act stating that the fund is a complyingapproved deposit fund in relation to that year of incomie.

72. Subclause (3) provides that a positive (complying) noticeunder repealed sections 153 or 15C of the OccupationalSuperannuation Standards Act 1987 in relation to a pooledsuperannuationtrust in respect of its 1993-94 year of inccme oran earlier year of income, has effect as if it were a noticeunder section 39 of this Act stating that the trust is a pooledsuperannuationtrust in relation to that year of incomre.

73. Subclause (4) provides that a negative (non-complying)notice under repealed sections 12 or 13 of the OccupationalSuperannuationStandardsAct 1987 in relation to a superannuationfund in respect of its 1993-94 year of income or an earlier yearof income, has effect as if it were a notice under section 39 ofthis Act stating that the fund is not a complying superannuationfund in relation to that year of income.

74. Subclause (5) provides that a negative (non-carplying)notice under repealed sections 14 or 15 of the OccupationalSuperannuation StandardsAct 1987 in relation to an approveddeposit fund in respect of its 1993-94 year of income or anearlier year of income, has effect as if it were a notice undersection 39 of this Act stating that the fund is not a complyingapproveddeposit fund in relation to that year of incaie.

75. Subclause (6) provides that a negative (non-complying)notice under repealed sections 153 or ISC of the OccupationalSuperannuation Standards Act 1987 in relation to a pooledsuperannuationtrust in respect of its 1993-94 year of income oran earlier year of income, has effect as if it were a noticeunder section 39 of this Act statir~ that the trust is not apooled superannuationtrust in relation to that year of income.

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PAfl 6 - pj~o’casicaqgRflATflR~TO GOtTERNrfl RUL~OF SUPERANNUAflC2I~?flTIES



CLAUSE 49 COVENANTS ‘SO BE INCLUDED IN GOVERNINGRULES

77. Subclause (1) provides that where the governing rules of asuperannuation entity do not contain covenants binding thetrustee as specified in paragraphs (2) (a) to (h). the governingrules are taken to contain covenants to that effect.

78. Subclause (3) provides that paragraph (2) (e) does notprevent the trustee from engaging or authorising agents to doacts or things on the trustee’s behalf.

79. Subclause (4) provides that the investment strate9y covenantin paragraph (2) (f) may allow for the giving of directions to thetrustee by individual beneficiaries or a class of beneficiariesin relation to investments to be undertaken in respect of thatbeneficiary or class of beneficiaries.

50. Subclause (5) deems the effect of any covenant prescribedby regulation to be contained in the governing rules of allsuperannuation entities.

81. Subolause (6) provides that, without limiting the generalityof subclause (5), the regulations may prescribe a covenant thatelaborates, supplements or otherwise deals with any aspect of amatter referred to in subclause (2) or a matter to which this Actrelates. Subclause (7) provides that a prescribed covenant, whencontained in the governing rules, must be capable of operatingconcurrently with this Act and all the covenants alreadycontained in the rules by virtue of this clause.

82. Subclause (8) provides that each of the directors of acorporate trustee should exercise the degree of care anddiligence that a reasonable person in the position of such adirector would exercise, to ensure that the trustee companycomplied with its covenants.

83. Subclause (9) provides a guideline as to what constitutesa reasonable degree of care and diligence.

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ClAUSE 50 COVENANTS ‘SD REPAY I~flJTJNT5 ‘SO BENEFICIARIES INAPPROVED DEPOSIT FUNDS

84. This clause requires that the governing rules of largeapproved deposit funds must contain a covenant binding thetrustee to repay an interest in the fund, where written noticehas been given by a beneficiary, within such period not exceeding12 nonths as is determined by the trustee, and that where thecovenant is not expressly contained in the rules, it is deemedto be included.

85. Subclause (3) provides for each of the directors of acorporate trustee to be hound by the covenant in paragraph (2) (b)as if they were a party to the governing rules.

86. Subclause (5) provides that a redemption period determinedby the trustee can only be varied where the Conniissioner hasconsented in writing to the variation, or the requirements insection 28 have been complied with.

CLAUSE 51 PREREQUISITES ‘SO VARIATION OF REPAYMENT PERIOD

87. This clause sets out the requirements referred to inparagraph 50(5) (b) for varying the period set by the trustee forredeeming an interest in a large approved deposit fund.

CLAUSE 52 CONSEQUENCESOF CONTRAVENTION OF COVENANT

88. This clause provides that a person must not contravene acovenant contained in or deemed to be contained in the governingrules of a superannuation entity. However, any suchcontravention is not an offence, and any contravention does notresult in invalidity of a transaction.

89. Subclauses (3) and (4) provide that a person who suffersloss or damage as a result of conduct of another person that wasengaged in, in contravention of subclause (1), nay recover theanDunt of the loss or damage by action, within 6 years of thedate of cause of the action, against that person or any otherperson engaged in the contravention.

90. Subclause (5) provides grounds for a defence to an actionfor loss or damage by a person as a result of the making of aninvestment by or on behalf of the trustee of a superannuationentity.

91. Subclause (6) provides grounds for a defence to an actionfor loss or damage by a person as a result of the management ofany reserves by the trustee of the entity. Subclause (7)provides that the defences specified under subclauses (5) and (6)apply to an action for loss or damage, whether brought undersubclause (3) or otherwise.

16

CLAUSE 53 INDEM~IFICATION OF TRUSTEE FRON ASSETS OF a~~rITY

92. Subclause (1) renders void any provision in the governingrules of a superannuationentity that precludes the trustee fromubeing inderrmified out of the assets of the entity in respect ofany liability incurred while acting as trustee.

93. Subclause (2) renders void any provision in the governingrules of a superannuationentity that exempts the trustee fran,or inderrinifies the trustee against, liability for breachof trustin the circumstances set out in paragraph (a) or liability fora monetarypenalty under a civil penalty order.

94. Subclause (3) provides that nothing in the governing rulesof a superannuation entity may prohibit the trustee fran seekingadvice in respect of the performance of the duties or theexercise of the powers of the trustee, and renders void anyprovision that precludes the trustee fromn inderrnification out ofthe assets of the entity for the cost of obtaining such advice.

CLAUSE 53A INDE7~NIFICAflON OF DIRECIORS OF TRUSTEE FROMASSETS OF ENTITY

95. Subclause (1) rendersvoid any provision in the governingrules of a superannuationentity that precludes a director of thetrustee frcr~being indermified out of the assets of the entityin respect of any liability incurred while acting as trustee.

96. Subclause (2) renders void any provision in the governingrules of a superannuationentity that exempts a director of thetrustee fromn, or indernnifies a director of the trustee against,liability for breath of trust in the circumstances set out inparagraph (a) or liability for a monetary penalty under a civilpenalty order.

97. Subclause (3) provides that a director of the trustee maybe indeimified out of the assets of the entity in accordance withprovision of the entity’ s governing rules, where those rulescomply with this section.

98. Subclause (4) provides that the section has effect despitesection 241 of the Corporations Law of a State or internalTerritory.

CLAUSE 54 TRUSTEENOT‘PD BE SUBJECT TO DIRECTION

99. This clause provides that, except as provided in subclause(2), the governing rules of a large superannuation entity must

not permit the trustee, in the exercise of any of the trustee’spowers, to be subject to the direction of any other person, andrenders void any provision in the governing rules that does so.This clause does not preclude the concurrent exercise of powerby the trustee, the employer-sponsor and its associates in thecase of an employer—sponsored fund.

17

CLAUSE 55 EXERCISE OF DISCRETION BY PERSONOTHERThAN TRUSTEE

100. This clause provides that the governing rules of a largesuperannuation entity must not permit the exercise of adiscretion under those rules that is exercisable other than bythe trustee to be exercisedwithout the consentof the trustee,except as provided in paragraph (1) (b), and renders void anyprovision in the governing rules that does so.

CLAUSE 56 AMENfl’~tENT OF GOVERNThX3RULES

101. Subclause (1) provides that the governing rules of a largesuperannuation entity must not permit the rules to be arrendedexcept as provided in paragraphs (a), (b) or (0). Subclause (2)provides that the governing rules of a regulated superannuationfund must not permit the rules to be amended except as providedin paragraphs (a) or (b).

102. Subclause (3) provides that, where the governing rules areinconsistent with subsections (1) or (2), the subsectionconcerned prevails, and the governing rules are, to the extentof the inconsistency, invalid.

PART 7 - PP~)VISXCt4SAPPLYIIfl CtLY TO R~LkTfl) SUPERANtflTIC*Tn~s



CLAUSE 58 SOLE PURPDSETEST

104. This clause sets out the purposes for which the trustee ofa regulated superannuation fund must ensure that the fund ismaintained. The purposesare essentially the types of benefitsto be provided to, or in respect of, each rrerter of the fund.Paragraph (1) (a) sets out the core purposes for which a fund mustbe maintained, while paragraph (1) (b) sets out the ancillarypurposes for which a fund may be maintained (in addition to thecore purposes).

105. Subclause (2) provides that subclause (1) is a civil penaltyprovision, pursuant to Part 21 of the Act, attracting civil andcriminal consequences for contravention, or being involved in acontravention.

106. Subclause (3) provides that an approval by the Commissionerof the provision of other benefits pursuant to subparagraph(1) (b) (v) may be specified to relate to a fund or a class offunds.

18

CLAUSE 59 CtWISSlONER MAYDIRECT TRUSTEESOF CERTAIN REGtRATEI)SUPERANNUATIONKINDS NOT TO ACCEVT F2~~PWYER(XNTRIBUTION5

107. Subclause (1) provides that the Ccxrrnissioner may direct thetrustee of a regulated superannuation fund not to accept anycontributions made by an employer-sponsor of the fund.

108. Subclause (2) provides that the Ccnnissioner may only givedirections to the trustee under this section prior to theccmrencerrent of the fund’s 1994-95 year of incomne where thedirection does not take effect until the start of that year ofinccme and the fund did not comply with any or all of thestandards applicable to it under the Occupational superannuationStandards Act 1987 during the period fran Royal Assent to the daybefore the start of the fundls 1994-95 year of inccme.

109. Subclause (3) provides that the Commissioner cannot give adirection to the trustee under this section in respect of thefund’s 1994-95 and subsequent years of incane unless theconditions in paragraphs (a3 and ~b) are satisfied.

110. Subclause (4) provides that a statement of reasons for thedirection must accomipany the direction. Subclause (5) providesthat the Commissioner may revoke a direction where he issatisfied as to the matters specified. Subclause (6) providesthat, for the purposes of subclauses (3) and (5), the trustee ofthe fund is takento have contravenedthis Act in relation to anynon—comrpliance on the part of the fund with the equalrepresentation rules.

111. Subclauses (7) and (8) provide that a contravention of adirection under this section by the trustee, without reasonableexcuse, is an offence, but that such a contravention does notaffect the validity of a transaction. A contribution acceptedby the trustee in contravention of this section must be refundedwithin 28 days or such further period as the Ccmmissioner allows.

112. Subclause (9) provides that the trustee must take allreasonable steps to notify receipt of a direction under thissection to all employer-sponsors of the fund. Subclause (10)provides that a contravention of subsections (8) or (9), withoutreasonable excuse, is an offence

113. Subclause (11) provides that refunded contributions are tobe ignored for the purposes of incane tax and the superannuationguarantee charge. Subclause (12) provides that any shortfallcomçonent in relation to the superannuation guarantee charge isto be treated as an employer contribution.

19

ClAUSE 60 SUPERANNUATIONCONTRIBUTIONS - DEDUCTIONS FRCt’l SALARYOR ~.GES TO BE R~4ITTEDPRCMPILY

114 - Subclauses (1) and (2) provide that an employer mustpromptly remit to the trustee of the superannuation fundautborised deductions (being superannuation contributions) bythat employer from the salary or wages of employees. Subclause(3) provides that an intentional or reckless contravention ofsubclause (2) is an offence.

115. Subclauses (4) and (5) define the ten “salary or wages forthe purposes of this section.

CLAUSE 61 LD~INGTO MEMBERSOF REGULATEDSUPERANNUATIONFUNDPROHIBITED

116. This clause prohibits any lending or provision of otherfinancial assistance by the trustee or investment manager of aregulated superannuation fund to any member or relative of amember of the fund.

117. Subclauses (2) and (3) set out exceptions to thisprohibition in relation to, respectively, private sector fundsestablished before 16 December 19851 and public sector fundsbefore 25 May 1988.

118. Subclause (4) provides that, in cases where subclauses (2)and (3) apply, from the beginning of the funds 1994-95 year ofincome, thy variation in a provision contained in the fund sgoverning rules that authorises lending to menters is void unlessthe variation satisfies the requirerrents contained in paragraphs(c) and (d).


CLAUSE 62 ACVTJISITION OF ASSETS FRCMMEMBERSOF REGULATEDSUPERANNUATIONFUND PROHIBITED

120. Subclause (1) provides that a trustee or an investmentmana~erof a regulated superannuation fund mustnot intentionallyacquire an asset from any member, or relative of a neither, of thefund.

121. Subclause (2) prohibits schemes the intention of which isto avoid application of subclause (1).

122. Subclause (3) provides that a person who contravenessubclauses (1) or (2) is guilty of an offence.

123. Subclause (4) provides that to “acquire an asset” does notinclude accepting contributions in the f on of cash or othermeney.

20

CLAUSE 63 BORROWING

124. This clause provides that the trustee of a regulatedsuperannuationfund must not borrow money or maintain an existingborrowing of money.

125. Subclauses (2), (2A), (3) and (4) set out exceptions to thisprohibition in relation to, respectively, temporaryborrowingsin order to pay beneficiaries, temporary borrowings to coversettlement of securities transactions, maintenanceof moneysborrowed by private sector funds before 12 June 1986, andmaintenance of moneys borrowed by public sector funds before 2July 1990.

126. Subclause (25) provides that a determination made by theConnissionerunder subclause 63(2A) is a disallowable instrumentfor the purposesof section 46A of the Acts Interpretation Act1901.

127. Subclause (5) provides that subclause (1) is a civilpenalty, pursuant to Part 21 of the Act, attracting civil andcriminal consequences for contravention, or being involved in acontravention.

CLAUSE 64 VICTIMISATION OF TRUSTEESETC.

128. This clause provides that a person must not intentionallyor recklessly connit an act of victimisation against the trustee,or a responsible officer of a corporate trustee, of an employer-sponsored fund.

129. Subclauses (2) and (3) set out, for the purposes of thissection, the circumstances when a person is taken to havecomminitted an act of victimisation against, respectively, thetrustee or a responsible officer of a corporate trustee.

130. Subclause (4) sets out the circumstances when, for thepurposes of this section, an employer is taken to have subjectedan employee to detriment. It also provides that an employer isnot taken to subject an employee to detriment where the employerpermanently ceases to make contributions to the superannuationfund of which the employee is a member or suspends or reducescontributions to a cilass of members in which the employee isincluded.

131. Subclause (5) sets out matters relating to the reason foran alleged action in relation to civil proceedings arising outof this section, and sets out grounds for a defence.

132. Subclauses (6) and (7) clarify the meaning of an obligationimposed on, and the powers of, a trustee or a responsible officerfor the purposes of this section.

133. Subclause (8) provides that a trustee or responsible officerwho suffers loss or damage as a result of an act of victimnisationmay recover the amount of loss or damage by civil action.

21

134. Subclause (9) clarifies the meaning of “employee” and“employer” for the purposes of this section.

PAWT 8 - rn-HOUSE ASSET RULES APPLYING TO RECflATEDSUP~2ANNUAflC~PU2~DS

DIVISION 1 - OBJECT AND IWTERPRETEATION



CLAUSE 66 ASSOCIATE OF EMPLOYER-SfCNSOR

136. Paragraph (a) provides that, for the purposes of this Part,an associateof a standardemployer-sponsor of a private sectorsuperannuationfund is defined in terms of subsection 26AMB(14)of the Incomme Tax Assessment Act 1936.

137. Paragraph(b) provides that, for the purposesof this Part,an associate of a standard employer-sponsor of a public sectorsuperannuationfund is definedin termsof subparagraphs(i) and(ii)

CLAUSE 67 MEANINGOF “IN-HOUSE ASSET”

138. This clause defines, for the purposes of this Part, anin-house asset. Para9raphs (1) (a) to (1) (d) set out certainexclusions to the basic meaning of the term, while paragraph(1) (e) also excludes such other assets as are determined by theCormiissionernot to be in-houseassets. Paragraph(1) (f) allowsthe Cormrmjissioner to determine an asset not to be an in-houseasset of a fund or class of funds.

139. Subclause (2) provides that certain assets arising out ofthe entering into or carrying out of certain agreementsare in-houseassetsfor the purposes of this Part. Paragraphs(2) (d)and (2) (e) explain the term “asset” for the purposesof the Partand the areas to which it does not apply. Paragraphs (2) (d) and(2) (e) operation to prevent the in-house asset exclusionscontained in paragraphs 67(1) (a) to (f) from applying to certainloans and investments.

140. Subclause (3) provides that the Commrnissioner may determinethat certain assets that would otherwise not be in-house assetsare in-house assets for the purposes of this Part. Paragraph(3) (b) allows the Connissioner, by written notice, to determinean asset to be a loan to, or investment in, a specified standardemployer sponsor of the fund1 fran the day of the notice.Paragraphs (3) (c) and (3) (d) explain the term “asset” for thepurposes of the Part and the areas to which it does not apply.

22

141. Subclause (4) ensures that where the Comissioner determinesthat an asset is not an in-house asset, the determinationmay bemade retrospectively. This will ensure that trustees arid memberscan receive the benefit of the Catmissioner’s determination inearlier years than that in which the determination is made.

142. Subclause (5) is inserted so that a determination underparagraph 67(1) (f) is a disallowable instrument for the purposesof section 46A of the Acts Interpretation Act 1901.

CLAUSE CiA HOWTHIS PART APPLIES IF THERE ARE 2 OR MOREUNRELATEDfl4PLOYER- SPONSORS

143. Subclause (1) provides the meaning of ‘unrelated employersponsor’ for the purposes of this section.

144. Subclause (2) indicates into which class of in-house assetsa particular unrelated employer-sponsor falls.

145. Subclause (3) allows the in-house asset provisions to applyseparately to each unrelated employer sponsor of a fund, wherethere is more than one employer sponsor. The in-house assets inrelation to an individual employer apply as if that employer wasthe only employer sponsor of the fund.

CLAUSE 68 COSTOF IN-HOUSE ASSET

146. This clause provides that, in the circumstances specifiedin paragraphs (1) (a) and (b), the cost of an in-house asset isthe arm’s length value of the asset when it was acquired.

CLAUSE 69 HISTORICAL COSTRATIO OF FUND’S IN-HOUSE ASSETS

147. This clauses specifies the formula for working out thehistorical cost of a fund’s in-house assets.

CLAUSE 70 MARKEr VALUE RATIO OF FUND’S IN-HOUSE ASSETS

148. This clauses specifies the formula for working out themarket value of a fund’s in-house assets.

DIVISION 2 - HISTORICAL COSTRATIO OF FUND’S IN-HOUSE ASS~IS

CLAUSE 71 PRIVATE SECTORFUNDS ESTABLISHEDON OR AFTER 12 MARCH1985 - HISTORICAL COSTRATIO FOR TEE 1994-95 YEAR OFINCcME

149. This clause provides that, at all times during the 1994-95year of income of a private sector regulated superannuation fundestablished on or after 12 March 1985, the historical cost of itsin-house assets must not exceed 10 per cent of all its assets.

23

CLAUSE 72 PRIVATE SECTORFUNDS ESTABLISHED BEFORE12 MARCH1985- HISTORICAL COSTRATIO FOR ThE 1994-95 YEAR OF

INCOME

150. This clause provides that, at all times during the 1994-95year of incane of a private sector regulated superannuation fundestablishedbefore 12 March 1985, the historical cost of its in-house assets must not exceed the greater of the percentages ofall its assets specified in paragraphs (2) (a) and (2) (b).

151. Subclause (3) provides that clause 67Abe ignored in workingout the percentage specified in the clause.

CLAUSE 73 PUBLIC SECTOR FUNDS ESTABLISHED ON OR AFTER 1 JULY1990 - HISTORICAL COSTRATIO FOR ThE 1994-95 YEAR OFINCcX4E

152. This clause provides that, at all times during the 1994-95year of income of a public sector regulated superannuation fundestablished on or after 1 July 1990, the historical cost of itsin-house assets must not exceed 10 per cent of all its assets.

CLAUSE 74 PUBLIC SECTORFUNDS ESTABLISHEDBEFORE 1 JULY 1990 -

HISTORICAL COSTRATIO FOR THE 1994-95 YEAR OF INCOME

153. This clause provides that, at all times during the 1994-95year of income of a public sector regulated superannuation fundestablishedbefore 1 July 1990, the historical cost of its in-houseassetsmust not exceedthe greater of the percentagesofall its assetsspecified in paragraphs(2) (a) and (2) (b).

154. Subclause (3) provides that clause 67A be ignored in workingout the percentagespecified in the clause.

ClAUSE 75 ALL FUNDS - HISTORICAL COST RATIO FOR THE 1995-96 YEAROF INCaVIE, ThE 1996-97 YEAR OF INCOMEAND THE 1997-98YEAR OF INCOME

155. This clause provides that, at all times during the 1995-96,1996-97 and 1997-98 years of income of a regulated superannuationfund, the historical cost of its in-house assets must not exceed10 per cent of all its assets.

DIVISION 3 - MARKETVALUE RATIO OF FUND’S IN-HOUSE ASSETS

CLAUSE 76 ML FUNDS - MARKETVALUE RATIO FOR THE 1998-99 YEAROF INCOME AND THE 1999-2000 YEAR OF INCOME

156. This clause provides that, at the end of each of the 1998-99and 1999-2000 years of incane of a regulated superannuation fund,the market value of its in-house assets must not exceed 10 percent of all its assets.

24

CLAUSE 77 ALL FUNDS - MARKETVALUE RATIO FOR THE 2000-2001 YEAROF INCOMEAND LATER YEARS OF INCOME

157. This clause provides that, if at the end of the 2000-2001year of income or a subsequent year of income of a regulatedsuperannuation fund, the market value of its in-house assetsexceeds 5 per cent of all of its assets, the fund must disposeof at least the aii~unt of the excess over 5 per cent before theend of the next following year of income.

CLAUSE 78 CERTAIN NEV~IN-HOUSE ASSET INVESThIFNTS PROHIBITED

158. This clause provides that, if at any time the market valueof a regulated superannuationfund’s in-house assets exceeds5 per cent of all of its assets, the fund is prohibited from anyacquisitions of in-house assets. Further, where the market valuedoes not exceed S per cent, any acquisition that would take themarket value over 5 per cent is prohibited.

DIVISION 4 - ENFORCENEm’

CLAUSE 79 IN-HOUSE ASSET RULES MUST BE COMPLIED WITH

159. Subclause (1) provides that the trustee of a regulatedsuperannuationfund musttake all reasonablestepsto cc~plywiththe in-houseasset rules.

160. Subclause (2) provides that subclause (1) is a civil penaltyprovision, pursuant to Part 21 of the Act, attracting civil andcriminal consequences for contravention, or being involved in acontravention, and subclause (3) provides that a contraventionof subclause (1) does not affect the validity of a transaction.

DIVISION 5 - ANTI-AVOIDANCE

CLAUSE 80 PROHIBITION OF AVOIDANCE SCHENES

161. Subclause (1) prohibits schemes the intention of which isto avoid ajçlication~ of any provision of this Part to asuperannuationfund. Subclause(2) provides that subclause (1)is a civil penalty provision, pursuant to Part 21 of the Act,attracting civil and criminal consequences for contravention, orbeing involved in a contravention, and subclause (3) providesthat a contravention of subclause (1) does not affect thevalidity of a transaction.

PART 9 - E~iAL REPRESfl?flflCfl OP fl4PWYERS P2W M~’SERS -

E2.IPWYER-SPONSOREDSP~Afl~tThflCN PONDS


162. Self eçdanatory.

25

CLAUSE 82 CONSEQUENCESOF NON-COMPLIANCEWITH THIS PART

163. This clause provides that a contravention of this Part isnot an offence and does not result in the invalidity of atransaction, but such a contravention may result in an employer-sponsored fund not being a ccnplying fund for the purposes ofPart IX of the Income Tax Assessment Act 1936.

CJ.AUSE 83 THIS PART DOES NOT APPLY 1F ACTING TRUSTEEAPPOINTEDUNDERPART 17

164. Self eçilanatory.

CLAUSE 84 BASIC EQUAL REPRESENTATIONRULES

165. Subclause (1) sets out the basic equal representation ruleswith which a fund must couply for the purposes of this Part.

166. Subclause (2) provides that it is not a breach of the basicequal representation rules where a group of trustees or the boardof a corporate trustee includes art additional independent trusteeor an additional independent director, as the case may be, andthe requirements set out in peragraphs (b) to (d) are met.

167. Subclause (3) provides that, if the rules specified for thefilling of vacancies are met, the fund is taken to have conpliedwith the basic equal representation rules during the period ofthe vacancy.

CLAUSE 85 PRE-l JULY 1995 RULES - FUNDS WITH FEWERTHAN 200MEMBERS

168. This clause sets out rules for the equal representation ofea~loyers and members in the trustee arrangements of certainprivate sector and public sector standard employer-sponsoredsuperannuationfunds with less than 200 members, for the periodup to and including 30 June 1995.

169, Subclause (3) provides that the fund must comply with thebasic equal representation rules or the alternative agreedrepresentation rule set out in subclause (4).

CLAUSE 86 PRE-i. JULY 1995 RULES - FUNDSWITH 200 OR MOREMEMBERS

170. This clause sets out rules for the equal representation ofen~loyersand members in the trustee arrangen~ntsof certainprivate sector and public sector standard employer-sponsoredsuperannuation funds with 200 or more members, for the period upto and including 30 June 1995.

171. Subclause (3) provides that public offer funds must corplywith the requirements specified in paragraphs (a) to (c), whilesubclause (4) provides that non-public offer funds must complywith the basic equal representation rules.

26

172. Subclause (5) sets out rules relating to the transition ina fund’s membershipsize from less than 200 members to 200 ormore members.

CLAUSE 87 FOST-30 JUNE 1995 RULES - FUNDS WITH MORETHAN 4, BUTFEWERTHAN 50, MEMBERS

173. This clause sets out rules for the equal representation ofemployers and members in the trustee arrangements of standardemployer-sponsored superannuation funds with more than 4, butfewer than 50 members, from 1 July 1995.

174. Subclause(3) provides that public offer funds must caplywith the requirements specified in paragraphs (a) to (c), whilesubclause(4) provides that non-public offer funds must caplywith the basic equal representation rules or the alternativeagreed representation nile set out in subclause (5).

175. Subclauses (6) to (12) set out provisions relating to theapproval of the trustee for the purposes of the agreedalternative equal representation rule.

CLAUSE 88 LOST-3D JUNE 1995 RULES - FUNDS WITH MORETHAN 49MEMBERS

176. This clausesets out rules for the equal representation ofenployersand membersin the trustee arrangementsof standardenployer-sponsored superannuation funds with more than 49members, from 1 July 1995.

177. Subclause (3) provides that public offer funds must con~lywith the requirements specified in paragraphs (a) to (c), whilesubclause(4) provides that non-public offer funds must complywith the basic equal representation rules.

178. Subclause (5) sets out rules relating to the transition ina fund’s membership size from less than 50 members to 50 or moremembers.

PART 10 - PROVISICt~S APPLY]Th C~tYTO APPPDVEI) D~OSITPONDS



CLAUSE 90 BORROWING

180. This clause provides that the trustee of an approved depositfund must not borrow money except where there are specialcircumstances justifying a borrowing and the Commissionerapproves the borrowing. Subclause (3) provides thatsubclause (1) is a civil penalty provision, pursuant to Part 21of the Act, attracting civil and criminal consequences forcontravention, or being involved in a contravention.

27

181. Subclause (2A) provides specified exceptions to theborrowing prohibitions in the case of temporary borrowings tocover settlement of securities transactions. The need for theborrowing must not have been reasonably foreseen at the time theinvestmentdecisionwas made,unlessprovided for underawrittendeterminationby the Ccurnissioner.

182. Subclause (2B) provides that a determinationmade by theCcximissioner under subclause90(2A) is a disallowable instrumentfor the purposesof section 46A of the Acts Interpretation Act1901.

PART 11 - PROVISIONS APPLtIN3 ObLY TO POOLED SP~ANNIThTIOt(TRUSTS



CLAUSE 92 BORROWING

184. This clause provides that the trustee of a pooledsuperannuation trust must not borrow money except for short - tencash flow purposes to meet payeents to beneficiaries required bylaw or by the governing rules. Such borrowings are restrictedto a maximum period of ninety days and in total must not exceedten per cent of the trust’s assets.

185. Subclause (3) provides specified exceptions to the borrowingprohibitions in the case of temporary borrowings to coversettlement of securities transactions. The need for theborrowing must not have been reasonably foreseen at the tine theinvestmentdecision was made, unlessprovided for undera writtendetermination by the Comissioner.

186. Subclause (4) provides that a determination made by theCcnnissioner under subclause 92(3) is a disallowable instrumentfor the purposes of section 46A of the Acts Interpretation Act1901.

CLAUSE 93 LEM)INO ¶10 UNIT-HOLDERS PROHIBITED

187. This prohibits any lending or provision of other financialassistance by the trustee of a pooled superannuationtrust to anybeneficiary in the trust.

CLAUSE 94 CIVIL PENALlY PROVISIONS

188. This clause provides that subsection92 (1) and section 93are civil penalty provisions, pursuant to Part 21 of the Act,attracting civil and criminal consequences for contravention, orbeing involved in a contravention.

28

PART 12 - IXJTIES OF flUS2~ A!O mv~’Derr MMW~RSOFSUPZtANtflTICti ~CITIES

CLAUSE 95 OBJECTOF PART


CLAUSE 96 DUlY TO ESTABLISH ARRANGEMEI~IS FOR DEALING WITHINQUIRIES OR COMPLAINTS

190. This clause provides that the trustees of large regulatedsuperannuationfunds and approved deposit funds must have inforce at afl times arrangements for beneficiaries to makeinquiries into and cctrplaints about the operation or managementof the fund, and for those inquiries and ccnplaints to beproperly considered and dealt within a period of 90 days afterthey were made.

191. Subclause (2) provides that an intentional or recklesscontravention of subclause (1) is an offence.

CLAUSE 97 DUTY ‘10 SEEK INFORMATION FRCR9I INVESTEIE!ff MANAGER

192. This clause provides that where the trustee of asuperannuation entity enters into an agreement with an investmentmanager for the investment of the entity’ s money, the trusteemust ensure that the agreement contains adequate provision toenable the trustee to require the investment manager to provideinformation as set out in paragraphs (1) (a) and (b). Further,the trustee must seek such information whenever it is necessaryor desirable to so do.

193. Subclauses (2) and (3) provide that where an existingagreement does not contain such a provision, the trustee must assoon as practicable seek to amend the agreement to include sucha provision, and if the investment manager will not agree to suchan amendment, to terminate the agreement, notwithstanding anyprovision in the agreement to the contrary. The trustee is notunder any liability to the investment manager because of such atermination of agreement.

194. Subclause (4) provides that an intentional or recklesscontravention of subclauses (1) or (2) is an offence.

CLAUSE 98 DUTY ‘ID KEEP MINUTES AND RECORDS

195. This clause provides for the trustee (s) of a superannuationentity to keep and retain for at least ten years minutes of allmeetings of the trustee(s) of the entity.


29

Cr.AUSE 99 DUTY TO KEEP RECORDSOF CHANGESOF TRUSTEES

197. This clause provides for the trustee of a superannuationentity to keep and retain for at least ten years up-to-daterecords of all changes of trustees and changes of directors ofany corporate trustee of the entity, and of consents toappointments pursuant to section 113.198. Subclause (2) provides that an intentional or reckless


CLAUSE 100 DUTY TO KEEP RE?)RTS

199. This clause provides for the trustee of a regulatedsuperannuation fund or approved deposit fund to keep and reta~for so long as is relevant, and in any event for at least tyears, copies of general reports given to all beneficiariepursuant to this Act or the governing rules, and for those copiesto be made available for inspection on request by a member of thestaff of the Ccmnissioner.


CLAUSE 101 DUTY TO NOTIFY CCIt2ISSIONER OF SIGNIFICANT ADVERSE

201. This clause provides that where the trustee of asuperannuation entity beccmes aware of an event that has had ormay have a significant adverse effect on the financial positionof the entity, the trustee must advise the Cotrinissioner withinthree business days of particulars of the event.

202. Subclause (2) sets out the circumstances under which anevent is taken to have had or to have a significant adverseeffect on the financial position of an entity. Subclause (3)provides that subclause (1) is a civil penalty provision,pursuant to Part 21 of the Act, attracting civil and criminalconsequences for contravention, or being involved in acontravention.

CLAUSE 102 DUTY OF TRUSTEE OF E~WIOYER-SFONSORE~)F~DTOESTABLISH PROCEDUREFORAPRJINTING Mfl4BERREPRESENTATIVES

203. This clause provides that, where a large standard employer-sponsored fund is required by law to have member representatives,the trustee of such a fund must establish rules settin? out theprocedures for appointing member representatives, ensuring that,except as specified, member representatives so appointed can onlybe removedby the same procedure by which appointed. The trusteemust also publish those rules such that members will be aware ofthose procedures.

30

204. Subclause (3) provides that an intentional or recklesscontravention of subclause(2) is an offence.

CLAUSE 103 DUTY OF TRUSTEE OF ET4PWYER-SECtJSORED FUND TOESTABLISH PROCEDUREFOR APPDINTING INDEPENDENTTRUSTEE OR INDEPENDENTMEMBER OF BOI½RDOF DIRECI’ORSOF CORIORATE TRUSTEE

205. This clause provides that, where a large standard employer-sponsored fund relies on the provisions of subsection 84(2) forcompliancewith the basicequal representation rules, the trusteeof such a fund must establish rules ensuring that, except asspecified, the additional independent trustee or additionalindependentdirector can only be removed by the same procedureby which appointed. The trustee must also publish those rulessuch that memberswill be aware of those procedures.


CLAUSE 104 INVESTMENTSOF SUPERANNUATIONENTITY TO BE MADEONAN~fl4t5 LE~fl1 BASIS

207. This clause provides that all investments by the trustee orinvestment manager of a superannuation entity must be made on anarnVs length basis. Subclause (2) provides that subclause (1)is a civil penalty provision, pursuant to Part 21 of the Act,attracting civil and criminal consequences for contravention, orbeing involved in a contravention. Subclause (3) provides thata contravention of subolause (1) does not affect the validity ofa transaction.

PART 13 - ACCOUNt’S OF SUP~A~t]ATIQ~ENTITIES



CLAUSE 106 ACCOUNTINGRECORDS

209. Subclause (1) sets out requirements relating to the keepingof accounting records by the trustee of a superannuation entityand the purposes for which they must be kept.

210. Subclause (2) sets out certain requirements imposed on thetrustee in relation to the retention, place and manner of keepingof the accounting records.


31

CLAUSE 107 ACCOUNTS

212. Subclause (1) provides that the trustee of a superannuationentity must prepare, in respect of each year of income, theaccounts and statements in respect of the entity specified.

213. Subclause (2) provides that the regulations may specify themanner and form in which the accounts and statements are to beprepared.

214. Subclause (3) specifies requirements relating to the signingof the accounts and statements, while subclause (4) requirestheir retention for a period of at least 5 years after the endof the year of inccme to which they relate.

215. Subclause (5) provides that an intentional or recklesscontravention of this clause is an offence.

CLAUSE 108 AUDIT OF ACCOUNTS

216. Subclause (1) provides for audit of the annual accounts andstatements of the entity by an approved auditor, while subclause(2) provides that the trustee must make such arrangements as are

necessary to enable that audit to be undertaken.


219. Sthclause (4) provides for the auditor to give to thetrustee a certificate in the approved form in respect of theaudit.


PART 14 - Ot’HEP~ PROVISICVS APPLYD?3 TO SP~NNUATIONEt~Tt’ITIES



CLAUSE 110 TRUSTEEOF SUPERANNUATIONENTITY MAYMAINTAIN RESERVES

221. This clause provides that, except where prohibited by thegoverning rules, the trustee of a superannuationentity maymaintain reserves.

CLAUSE ill ACREE~1ENTBFfl’?EEN TRUSTEEAND INVESTMENT MANAGER

222. This clause renders void any provision of an agreement madebetween the trustee of a superannuation entity and an investmentmanager that exempts or lima.ts the investment manager’s liabilityfor negligence, notwithstanding anything in the governing rulesof the entity.

32

CLAUSE 112 CIRCUMSTANCESIN WHICHAMOUNTSMAYBE PAID OUT OF ANE~w1PLOYER-SPONSOREDFUND TO AN ETIPLOYER-SEONSOR

223. Subclause (3) provides that, except as otherwise providedby this clause, the trustee of a large standard employer-sponsored fund is prohibited fran paying ameunts out of the fundto an employer-sponsor (as defined in subclause (10)).

224. Subclause (1) provides that this section does not apply toa fund during the period 21 October 1992 to the day before RoyalAssent unless the fund is a complying superannuation fund (asdefined in subclause (10)) in respect of each year of income ofthe fund which falls in this period.

225. Subclause (2) provides that this section does not apply toexcluded superannuation funds for the period fran 21 October 1992until the date on which the Bill receives Royal Assent and doesnot apply to such a fund after that time, if the fund remains anexcluded fund.

226. Subclause (5) sets out the rules that are required to befulfilled before any amount of the surplus of a large standardemployer-sponsored fund may be paid to a standard employer-sponsor. These rules mainly relate to equal representationrequirements and to the making and passing of certain resolutionsby the trustee relating to the intended payment of the surplus.

227. Subclause (6) provides that the Ccnmissioner has the abilityto waive all requirements about equal representation in sub—clause (5).

228. Subclause (4) provides that a reasonable amount may be paidout of a standard employer-sponsored fund for services renderedin connection with the management or operation of the fund.5uJ~clause (9) clarifies that reference in this clause to payingan amount out of the fund to a standard employer-sponsor does notinclude amounts paid by way of the making of a loan to, or aninvestment in, the standard employer-sponsor.

229. Subclause (7) provides the Coninissioner with a discretionto waive, upon application by the trustee, any or all of therequirements in subclause (5) in relation to the period beforeRoyal Assent


231. Subclause (9A) provides the conditions that must befulfilled before a group of trustees, or the board of a corporatetrustee, is taken to consist of equal numbers of employerrepresentatives and member representatives.

33

CLAUSE 113 CONSENTSTO APPOINTMENTS

232. This clause provides that a person must consent in writingto be eligible for appointmentas a trustee of a superannuationentity or as a director of a corporate trustee of such an entity.

PAfl 15 - STANDARDSFOR TRUSTEES, CtISTODIANS AND INVFSflefl’MANAGERSOF SUPERAflWATXC2i ~rxTIEs



CLAUSE 115 DISQt.~LIFIED PERSONS

234. Subclause (1) sets out when, for the purposes of this Part,an inclivithial is a disqualified person.

235. Subclause (2) sets out when, for the purposes of this Part,a body corporate is a disqualified person.

236. Subclause (3) sets out the meaning of a reference to aperson who has been convicted of an offence for the purposes ofthis clause.

237. Subclause (4) waives application of Division 3 of Part VIICof the Crimes Act 1914 in relation to the disclosure of aconviction covered by paragraph (1) (a) where the disclosure isfor the purposes of this Part. As this provision of the CrimesAct permits non-disclosure of spent convictions, the effect ofthis subclause is to waive that right of non-disclosure of spentconvictions consistent with the application of paragraph (1) (a)to offences whenever having occurred.

CLAUSE 116 DISQUALIFIED PERSONSICTT TO BE TRUSTEESOFSUPERANNUATIONENTITIES

238. This clause provides that a disqualified personmust notintentionally be or act as a trustee of a superannuation entity,and that a body corporatethat is the trustee of such an entitymust not permit a disqualified person to be or act as aresponsible officer of the body corporate.

239. Subelause (2) provides that the corporate trustee must not,without reasonable excuse, permit a disqualified personto be aresponsible officer of the body corporate if it knows, or hasreasonablegroundsto suspect, that the person is a disqualifiedperson.

240. Subclause (3) provides that the Conrnissionermust be toldin writing by the trustee of a superannuation entity when thetrustee is or becomes a disqualified person.

34

CLAUSE 117 PERSONS WHO MAY BE APPOINTED TO BE CUSTODIANSOFSUPERANNUATIONENTITIES

241. Subclause (1) sets out eligibility requirements forappointment as a custodian of a large superannuation entity.

242. Subclause (2) provides that a person is not prohibited fromcontinuing as the entity’s custodian for the period specified,notwithstanding that the person ceases to be eligible, if therules set out in paragraphs (a) to (d) are ccn~lied with. Theserules are intended to allow an orderly transition of custodiansto be made.

243. Subclause (3) sets out requiren~nts to be met by thecustodian and the trustee of the entity when the custodian ceasesto be eligible to continue as custodian.

244. Subclauses (4) and (5) provide for offences forcontravention of subclause (3).

CLAUSE 118 INVESTMENTMANAGERSMUST BE APPOINTED IN WRITING

245. Subclause (1) provides that a trustee must not make a non-written appointmentof an investmentmanager.

246. Subclause (2) provides that a person who intentionally orrecklessly makes a non-written appointment of an investmentmanager is guilty of an of fenoe punishable on conviction by afine not exceeding 50 penalty units.

CLAUSE 119 INJJIV]flTAIJ3 NOTTO BE INVESTMENTMANAGERSOFSUPERANNUATIONENTITIES

247. This clause provides that only a body corporate may be oract as an investment manager of a large superannuation entity.

CLAUSE 120 DISQUALIFIED PERSONSNOT TO BE INVESTMENTMANAGERSOFSUPERANNUATIONENTITIES

248. Subclause (1) provides that a disqualified person must notintentionally be or act as an investment manager of a largesuperannuation entity. Subclause (3) provides that adisqualified person must not be or act as a responsible officerof an investment manager that is a body corporate.

249. Subclause (2) provides that a person is not prohibited francontinuing as the entityls investment manager for the periodspecified, notwithstanding that the person ceases to be eligible,if the rules set out in paragraphs (a) to (d) are complied with.These rules are intended to allow an orderly transition ofinvestment managers to be trade.

35

250. Subclause (4) sets out requirements to be met by theinvestment manager and the trustee of the entity when theinvestment manager ceases to be eligible to continue asinvestment manager.

251. Subclauses (5) and (6) provide for of fences forcontravention of subclause (4).

a.AUSE 121 NON-(fl4PLIANCE NOTTO INVALIDATE APPOINTMENTORTRANSACTION

252. This clause provides, that the validity of an appointment ortransaction is not affected by a failure to cc~ply with aprovision of this Part.

PARE 16 - ACr~RIES AND AUDITORS OF S P~AtThtaflC1i ~TITIFS



SECTION 123 OBLIGATIONS OF ACTUARIES AND AUDITORS - CCt4PLIANCE

254. This clause provides for the trustee of a superannuationentity and, in certain circumstances, the Conn~issioner to be toldby the actuary or auditor of a superannuation entity that, inthat person’s opinion, as the case may be, a contravention ofthis Act or the regulations may have occurred, may be occurring,or may occur. The actuary or auditor must be engaged in theperformance of actuarial or audit functions, as the case nay be,under this Act or the regulations at the time the opinion wasformed.

255. Subclause (2) req9ires that the trustee of a superannuationentity be told in writing that a contraventionof this Act or theregulations nay have occurred, may be occurring or may occur,unless the person had an honest belief that the trustee hadalready been told about the matter.

256. Subclause (2A) provides that the Corrinissioner may be toldthat a contravention of this Act or the regulations may haveoccurred, tray be occurring or may occur. Civil liability doesnot attach to the person on whart this subsection confers theexercise of power.

257. Sthclause (3) sets out certain requirements relating to thetrustee of the entity when the trustee is told about a matter bythe actuary or auditor under this section, while subclause (4)sets out requirements relating to the making of a report to theCcnnissionerby the actuary or auditor.

258. Subclause (5) provides that an intentional or recklesscontravention of this section is an offence.

36

SECTION 124 OBLIGATIONS OF ACTUARIES ANDAUDITORS - SOLVENCY

259. This clause provides for the trustee of a superannuationentity and, in certain circumstances, the Carnissioner to be toldby the actuary or auditor of a superannuation entity that, inthat person’s opinion, as the case may be, the financial positionof the entity may be, or may be about to become, unsatisfactory.The actuary or auditor must be engaged in the performance ofactuarial or audit functions, as the case tray be, at the time theopinion was formed.

260. Subciause (2) provides that the trustee of a superannuationentity must be told that the financial position of the entity traybe, or may be about to become, unsatisfactory. This subclausewill not apply in circumstances where the person has an honestbelief that the tnistee already knows of the matter.

261. Subclause (2A) provides that the CcnTiissioner may be toldthat the financial position of the entity may be, or maybe aboutto become, unsatisfactory. Civil liability does not attach tothe person on whomthis subsection confers the exercise of power.

262. Subclause (3) sets out certain requirements relating to thetrustee of the entity when the trustee is told about a matter bythe actuary or auditor under this section, while subclause (43sets out requirements relating to the making of a report to theCcnnissioner by the actuary or auditor.


264. Subclause (6) provides that the regulations may specify whenthe financial position of a superannuation entity is taken to beunsatisfactory.

SECTION 125 AUDITORS - DISQUALIFICATION ORDERS

265. Subclause (1) provides for the Comitissioner to disqualifya person from being an approved auditor for the purposesof theAct in the circumstances specified in paragraphs ~a) and (b).Such a disqualification order takeseffect on the date specifiedor within 28 days of the making of the order, whichever is theearlier.

266. Subclauses (2) and (3) provide for the affected person tobe given a copy of the order and for particulars of the order tobe published in the Gazette.

267. Subclauses (5) and (6) provide for revoking of adisqualification order by the Corrinissioner, and for anapplication to be made for revocation of the order by theaffected person.

37

268. Subclause (7) sets out the grounds on which adisqualification order may be revoked by the Commissioner. Arevocation of a disqualification order has effect from the dayon which made, and must be published in the Gazette.

269. Subclause (9) provides that where the Ccmmissionerrefusesan application for revocation of a disqualification order, anotice of the decision, and setting out reasons, must be given.

PART 17 - SUSPfl~SIOK OR RflSDVP~L OP TRUSTEE OP SP~ANtWATIQt~1attn

ClAUSE 126 OBJECT OF PART

270. Self e~lanatory.

CLAUSE 127 SUSPENSIONOR REMOVALOF TRUSTEE OF SUPERANNUATION

ENTITY

271. Subclause (1) provides that the Commissioner may suspend orremove the trustee, or all of the trustees, of a superannuationentity in the circumstances specified in paragraphs (a) and (b).Under paragraph (c), the Commissioner may appoint an actingtrustee of the fund in certain circumstances. Subclauses (2) and(3) provide that a suspension of a trustee may be for such periodas the Courtissioner determines and may be extended. Subclause(4) provides that a notice of a decision of suspension orremoval, with reasons, must be given to the trustee.

CLAUSE 128 (fl4MISSI~1ER TO APPDINr ACTING TRUSTEE IN CASES OFSUSPENSIWOR REMOVAL

272. Subclauses (1) and (2) provide that, where the Comissionersuspends or removes a trustee of a superannuation entity, theCcnnissioner must appoint an acting trustee during the period ofsuspension, or until the vacancy is filled, as the case may be.The acting trustee must be a constitutional corporation or anindividual.

273. Subclause (3) provides that the Carmissioner may onlyappoint an individual as an acting trustee where the governingrules of the entity provide that the sole or primary purpose ofthe entity is the provision of old-age pensions.

274. Subclause (4) provides that, where the entity has a groupor 2 or more individual trustees, and the Commissioner suspendsor removes all of those trustees, the Commissioner may appointone of those persons as an acting trustee in the circumstancesset out in paragraph (c).

38

CLAUSE 129 TERMSANDCONDITIONS OF AP OICt~~TOF ACTING TRUSTEE

275. This clause ?rovides that the Ccninissioner may determine theterms and conditions of the appointment of an acting trustee,including in relation to the actin9 trusteets fees, which may bepaid out of the corpus of the entity concerned.

CLAUSE 130 TERMThLkTION OF AflOfl’flMENT OF ACTING TRUSTEE


CLAUSE 131 RESI~TION OF ACTING TRU.$IEE

277. This clause sets out provisions relating to the resignationof an acting trustee.

CLAUSE 132 PROPERTYVESTING ORDERS

278. Subclause (1) provides that, where an appointment of anacting trustee is trade, the Carmnissioner must make a writtenorder vesting the property of the entity in the acting trusteeconcerned.

279. Subclause (2) provides that, where the appointment of anacting trustee cares to an end, the Ccnnissioner must make awritten order vesting the property of the entity in the persons,and in the circumstances, set out in paragraphs (a) to (c).

280. Subclause (3) sets out, where the Ccxnissioner makes aproperty vesting order under this clause, when, subject tosubclauses (4) and (5), the property is taken to have vested inthe person named in the order.

CLAUSE 133 EOWERSOF ACTING TRUSTEE

281. This clause sets out the extent of the powers of an actingtrustee appointed under this Part.

CLAUSE 134 ACTING TRUSTEETO NOTIFY APEOINfl~ENP TO BENEFICIARIES

282. This clause provides for the beneficiaries in the entityconcerned to be notified (in the approved form) of theappointirent of an acting trustee under this Part.

283. Subclauses (3) and (4) provide that a contravention of thissection, without reasonable excuse, is an offence, but does notaffect the validity of an appointment.

CLAUSE 135 Ctt’tvIISSIONER MAYGIVE DIRECTIONS TO ACTING TRUSTEE

284. This clause provides for the Commissioner to give directionsto an acting trustee appointed under this Part.

39

285. Subclauses (2) and (3) provide that an intentional orreckless contravention of a direction under subclause (1) is anoffence, and that a contravention does not affect the validityof a transaction.

CLAUSE 136 CU~4ISSIONERMAY FORMULATEA SChEMEFOR THE WINDING-UP OR DISSOLUTION, OR BCIflI, OF A SUPERAMIUI½TIONENTITY

286. This clause provides that, where a person has been appointedan acting trustee of a superannuation entity under this Part, theCcnttissioner tray formulate in writing a scheme for the windingpp and/or dissolution of the entity. The schememayprohibit thefilling of a vacancy in the position of trustee of the entity.The acting trustee is to be given a cow of the instrumentsetting out the scheme, and the Catssioner may direct theacting trustee to tell the beneficiaries in the entity about thescheme.

287. Subclauses(6) and (7) make provision for the supply ofcopies of the instrument to personswhoseinterests are affectedby it, and for advertising the making of an instrument.

288. Subclause (3) provides that an intentional or recklesscontravention of the provisions of a scheme formulated under thisclause is an offence. Subclause (8) provides that an instrumentunder subclause (1) is a disallowable instrument for the purposesof the Acts Interpretation Act 1901.

mitT is - PROffl3flED nnrr m ~nana~ at ST3PERANNtTh1flCZir~Esrs



CLAUSE 138 RE~3ULATEDACTS

290. This clause sets out the acts, being acts performed inconnection with all superannuation funds, approved deposit fundsand pooled superannuation trusts, to which sections 139 and 140are to apply.

CLAUSE 139 FRAUDULENTLYINDUCING ETC. A PERSONTO ENGAGEINRD3UIATED ACT - CRIMfl~.L LIABILITY

291. This clause provides that a person must not engage inspecified false or misleading condUct with the intention ofinducing another person to engage in a regulated act.

292. Subclause (2) provides a defence where a contraventionrelates to the recording or storing of false or materiallymisleading information.

40

CLAUSE 140 MISLEADING CENDUCT IN CONNECTIONWITH A REGULATE)ACT - CIVIL LIABILITY

293. This clause provides that civil liability attaches toconduct by a person, in connection with the performance of aregulated act, which is misleading, or likely to mislead.

CLAUSE 141 MISLEADING CCfl)UCT BY TRUSTEESOF ~ftITIES - CIVILLIABILITY

294. This clause provides that civil liability attaches tomisleading conduct, or conduct which is likely to mislead, by thetrustee of a superannuation entity in respect of certaindealings. Dealings covered by the clause are those with abeneficiary or enployer-sponsor (including an associate of anenployer-sponsor) of the entity, in his or her capacity as abeneficiary or eriployer-sponsor, as the case nay be.

CLAUSE 142 CIVIL LIABILITY WHERE SECTION 140 OR 141 CONTRAVENED

295. This clause provides that where a person has suffered lossor damage as a result of conduct that nay give rise to civilliability under this Part, he or she can bring an action torecover the arrount of that loss or damage against the personresponsible for the conduct, or any other person involved in thecontravention.

296. An action cannot be brought under this clause where theperson suffering the loss could also bring an action to recoverthe amount of loss or damage under section 156.

CLAUSE 143 CONTRAVENTIONOF PART TIDES NOTAFFECT VALIDITY OFISSUE OF SUPERANNUATIONINTEREST ETC.

297. This clause provides that the validity of the issue of asuperannuation interest or any other act is not affected by acontravention of this Part.PART 19 - PUBLIC OFFER ENrITIES - P1~)VISICVS Rfl1ATfl~ TO

STWERA2~1NTThTflT]RTERESTS NO DISa.OSURE OF EWORMATflI




CLAUSE 145 CONTRAVENTIONOF PART tIDES NOTAFFECT VALIDITY OFISSUE OF SUPERANNUATIONINTEREST ETC.

299. This clause provides that the validity of the issue of asuperannuation interest or any other act is not affected by acontravention of this Part.

41

DIVISION 2 - ISSUING, OFFERING E~IC. SUPERANNUATIONINTERESTS INPUBLIC OFFER ENTITIES

CLAUSE 146 LIMITATION ON ISSUING, OFFERING ETC.SUPERANNUATIONINTERESTS IN PUBLIC OFFERENTITIES

300. This clauseimposesrequirementson trustees of public offerentities whensuperannuationinterests are offered or personsareinvited to become standard employer-sponsors. It provides thatonly the trustee of a public offer entity can mike offers orinvitations for the issue of superannuation interests in a publicoffer entity, and then, only if the entity is constitutea by adeedas a trust, has a single corporate trustee, and that trusteeis approvedunder this Act.

301. The restriction on persons other than the trustee makingoffers or invitations does not restrict the activities of agentsacting on behalf of the trustee.

CLAUSE 147 TRUSTEEMUSTNOT ISSUE INTERESTS, OR PERMITPERSONS¶10 BECG1E STANDARDEZ4PLCYER-SPONSORS,EXCEPT PURSUANT ¶10 APPLICATIONS

302. This clause provides that a trustee must not issue asuperannuation interest to a person, or permit a person to becomea standard employer-sponsor of the entity, except pursuant to anapplication. An application can anticipete a series of re9ularissues (each of which is to be made pursuant to the application).

CLAUSE 148 Cfl~?~I55ION AND BROKERAGE

303. This clause provides that a trustee must comply withprescribed requirements relating to the payment of ccxmnssion orbrokerage.

CLAUSE 149 FAIR DEALING ON ISSUE OR REDEThPPIONOF ASUPERANNUATIONINTEREST

304. This clause provides that a trustee must disregard thegoverning rules of an entity where the trustee reasonablybelieves that an issue or redemption price determinedunder thoserules would not be fair and reasonable, or where such a pricecannot be determined under those rules.

305. In these circumstances, the trustee can only issue or redeeminterests at a price which is fair and reasonable as between theperson and the beneficiaries of the entity. In ccaplying withthis clause, the trustee is taken to have acted in accordancewith the governing rules.

42

CLAUSE 150 CIVIL LIABILITY WHERESUBSECTION149(2) CONTRAVENE2)

306. This clause provides that civil liability attaches incircumstances where a trustee, although having reasonable groundsfor believing that an issue or redemption price was not fair andreasonable, fails to issue or redeem at a price that is fair andreasonable.

DIVISION 3 - PROVISIONS RELATING ‘10 INFORMATION GIVEN 10PROSPECTIVE BENEFICIARIES ETC. OF PUBLIC OFFERENTITIES

SUBDIVISION A - CERTAIN INFORMATION ¶10 BE GIVEN ¶10 PROSPECTIVEBENEFICIARIES ETC.

CLAUSE 151 INFORMATION ‘10 BE GIVEN BEFORE SUPERANNUATIONINTERESTS ISSUED OTHERWISETHAN ¶10 STANDARDEMPLOYER-SPONSOREDME24BER

307. This clause provides that a trustee must, before issuing asuperannuation interest to a person, other than a standardemployer-sponsored merter, be satisfied that the person hasreceived documents issued by the trustee containing all theinformation specified in re9ulations or determinations. Thesedocuments must also coriply with any relevant requirements of theregulations or determinations.

308. The trustee is only required to be satisfied that the personreceived information that was current at the time the applicationwas received by the trustee.

CLAUSE 152 INFORMATION ‘JO BE GIVEN BEFOREPERSONSBECCMESTANDARDFI4PWYER- SFQ~YSORS

309. This clause provides that a trustee must, before permittinga personto becomea standardemployer-sponsor,be satisfied thatthe person has received documents issued by the trusteecontaining all the information specified in regulations ordeteniu.nations. These documents must also ca~ly with anyrelevant requirements of the regulations or determinations.

310. The trustee is only required to be satisfied that the personreceived information that was current at the time the applicationwas received by the trustee.

CLAUSE 153 RESULATIONS AND DETERMINATIONSREQUIRING THEGIVING OF INFORMATION

311. This clause defines the scope of regulations that may bemade in respect of information to be given before superannuationinterests are issued or persons become standard employer-sponsors.

43

312. The clause also provides that the Comissioner may issuedeterminations, which must not be inconsistent with regulationsmade under this clause, in respect of information to bedisclosed.

CLAUSE 154 DOCUMENTSTAKEN TO CONTAIN INFORMATION REFERRED¶10

313. This clause provides that where a document authorised by atrustee includes an appropriate reference to informationcontained in another document, the first document is taken toinclude the referred information for the purposes of sections 151and 152. The trustee must also provide free of charge, a copyof the other document upon request.

SUBDIVISION B - LIMIThTIONS ON ISSUING REGULATEDDOCUMENTS

CLAUSE 155 REGULATEDDOCUMENTSNOT TO BE FALSE OR MISLEADINC

- CRIMINAL LIABILITY

314. This clause provides that a trustee must not issue, orauthorise the issue of, a re~u1ateddocument which the trusteeknows to be false or misleading.

CLAUSE 156 REGULATEDtCCUt~1ENTS NOT TO BE FALSE OR MISLEADING- CIVIL LIABILITY

315. This clause provides that civil liability attaches incircumstances where a person suffers loss or damage as aconsequence of a trustee issuing, or authorising the issue of,a regulated document which was false or misleading.

CLAUSE 157 ~~TEMENTSBY E(PERTS

316. This clause provides that a trustee must not issue aregulated document which includes a statement made by, or basedon a statement of, an expert, unless the written consent of theexpert to the inclusion of that statement in the document hasbeen obtained. The consent must not have been withdrawn priorto the issue of the document, and must be kept by the trustee fora prescribed period.

DIVISION 4 — STOP ORDERS

CLAUSE 158 ORDER TO STOP CONTRACTSETC. FOR ISSUE OFSUPERANNUATIONINTERESTS IN PUBLIC OFFER ENTITIES

317. This clause provides that in circumstances where an entityissues a re~ulated document containing information which appearsto the Coninassioner to be false or misleading, or where there isa material cznission from the document, the CarTnissioner maydirect that no further contracts or agreements be entered intoby that entity for the issue of superannuation interests.

44

CLAUSE 159 WHENA STOP ORDERIS IN FORCE

318. This clause specifies the period for which a stop order is

to be effective.

CLAUSE 160 REVCX~TIONOF STOP ORDERS

319. This clause provides that the Ccmnissioner may revoke a stop

order.

CLAUSE 161 EFFECT OF STOP ORDER

320. This clause provides that a trustee must not enter intocontracts or agreementsfor the issue of superannuationinterestsin contravention of a stop order.

DIVISION 5 - APPLICATION MDNEY‘ID BE HELD ON TRUST

CLAUSE 162 SITt~TION ¶10 WHICH DIVISION APPLIES - APPLICATIONMZ!’~1EY RECEIVED BUT S PERANNUATIONINTEREST NOTISSUED Tht4EDIATELY

321. This clause provides that the Division is to apply where atrustee receives money in respect of an application and is notin a position to inmediately issue the interest to which theapplication relates.

CLAUSE 163 TRUSTEE TO CC&IPLY WITH REQUIRE~’1ENTSOF THEREGUlATIONS IN RELATION ¶10 ‘TIlE MDNEY

322. This clause provides that moneys to which this Divisionapplies are to be held by the trustee on trust for the applicant,and must be dealt with in accordance with the regulations.

DIVISION 6 - CtYOLING- OFF - REDEMV~IONOF INTERESTS

CLAUSE 164 SITUATION ‘ID WHICHDIVISION APPLIES - SUPERANNUATIONINTEREST ISSUED IN CERTAIN CIRCUMSThNCES

323. This clause sets out the circumstances to which theprovisions of this Division apply. This Division essentiallyapplies to the first issue of a superannuation interest under a~o1icy of personal superannuation, other than the issue of aninterest under a contract of life insurance.

CLAUSE 165 GOVERNINGRULESTAKENTO CONFERRIGHT TO HAVE INTERESTREDE~ED

324. This clausesets out provisions to permit a person to redeeman interest to which this Division applies within 14 days of theissue of that interest, and for determining the amount to bereceivedby that personon redenption of the interest underthisclause.

45

325. The person is to receive the normal redemption amount,tcgether with an amount representingany positive spreadbetweenthe allocation price and redemption price on the day ofredemption. The trustee is not permitted to be reimbursed by theentity for payment of this latter amount. The normal redetr~tionamount does not include tax which the trustee has paid, or is ormay beccme liable to pay, because of the issue of the interestto the applicant.

CLAUSE 166 CONSEQUENCESOF 1’RAVENING PROVISIONS TAKEN TO BEINCLUDED IN GOVERNINGRULES

326. This clause provides that civil liability attaches incircumstances where a person suffers loss or damage as aconsequence of another person contravening a provision includedin the governing rules under section 165.

PARr 20 - PUBLIC OFFER flfl’flIES - DISIDER TR~DflR3

DIVISION 1 - PRELIMIIThRY

CLAUSE 167 OBJECT OF THE PART


ClAUSE 168 SUPERANNTaTIONflfl~R~TMEANS INTEREST IN RJBLIC OFFERENTITY

328. This clause limits the application of this Part tosuperannuation interests in public offer entities only.

DIVISION 2 - IN’IERPRETATION

CLAUSE 169 DEFINITIONS

329. This clause sets out definitions of “information” and“off icer” for the purposesof this Part.

CLAUSE 170 WHENINFORMATION IS GENERALLYAVAILABLE

330. This clause establishes the circumstances under which it isto be taken that information is generally available. Broadly,these circumstances are where the information:

(a) is readily observable;

(b) was made available in a manner that would, or would belikely to, bring it. to the attention of persons whocamonly invest in superannuation interests of a kind whoseprice or value might be affected by the information, and areasonableperiod had elapsed; or

46

Cc) consists of deductions, conclusions or inferences made ordrawn fran information that consists of readily observablematter, or that was made available in a manner that would,or would be likely to, bring it to the attention of personswho conironly invest in superannuation interests of a kindwhose price or value might be affected by the information.

CLAUSE 171 WHENINFORMATION HAS A MATERIAL EFFECT ON PRICE ORVALUE OF SUPERANNUATIONINTERESTS

331. This clause defines material effect for the purposes of thePart. A reasonable person is to be taken to expect informationto have a material effect on the price or value of superannuationinterests if the information would, or would be likely to,influence a person who coimonly invests in superannuationinterests deciding whether or not to apply for the issue of suchinterests.

CLAUSE 172 INFORMATION IN POSSESSIONOF OFFICER OF BODYCORPORATE

332. This clause attributes to a body corporate information inpossession of an officer of that body corporate which came intohis or her possession in the course of the performanceof dutiesas such an officer. It also presumes that a body corporate knowsor ought reasonably to know any matter or thing that an officerof the body corporate knows or ought reasonably to know becausehe or she is an officer of the body corporate.

DIVISION 3 - INSIDER TRADING RULES

CLAUSE 173 WHENA PERSONCONTRAVENESTHE INSIDER TRADING RULESIN RELATION TO SUPERANNUATIONINTERESTS

333. This clause establishes the circumstances under which aperson is taken to have breached the insider trading rules inrelation to superannuation interests. Specific exceptions areprovided for in other provisions of this Division.

CLAUSE 174 EXCEPTION TO INSIDER TRADING RULES - CHINESE WALLARRANGEMEnTSBY BODIES CORPORATE

334. This clause provides an exception from the insider tradingrules in respect of bodies corporate which have in placeappropriate administrative arrangements to prevent informationthat is made available to one part of the organisation beingpassed on to other parts of the organisation.

335. Contravention of the insider trading rules will occur if,within that body corporate, a person in possession of informationconinunicates that information, or provides advice to, anotherperson responsible for a decision to enter into a transaction oragreement relating to superannuation interests.

47

CLAUSE 175 EXCEPTION TO INSIDER TRADING RULES - XtCt~LEEGEOFPERSON’S CMNINT~TICt~SOR ACTIVITIES

336. This clause provides that a natural person does notcontravene the prohibition on insider trading by entering intotransactions or agreementsrelating to superannuationinterestsin a particular superannuationentity, merely becausethe personis awarethat he or she has previously entered into or proposesto enter into transactions or agreements for superannuationinterests with that entity.

CLAUSE 176 EXCEPTIONS TO INSIDER TRADING RULES - SPECIAL RULESR~ATINGTO BODIES CORPORATE

337. This clause permits a body corporate to enter intotransactions or agreementsrelating to superannuationinterestsin a particular superannuation entity, where it possessesinformation, or one of its officers possesses information,obtained in the course of duties relating only to the bodycorporate entering into transactions or agreements forsuperannuationinterests in that entity.

CLAUSE 177 EXCEPTION TO INSIDER TRADING RULES - OFFICERS ORAGENTS OF BODIES CORPORATE

338. This clause provides an exeuption fran the prohibition oninsider trading for officers and agents acting on behalf of abody corporate that is afforded an exemptionunder section 176.

DIVISION 4 - OFFINCE OF N1’RAVENIM3 TEE INSIDER TRADIM3 RULES

CLAUSE 178 OFFENCEOF Q]~fl’RAVENThGTBE INSIDER TRADING RULES

339. This clauseprovides that it is an offence to contravenetheinsider trading rules. The prosecution does not have to provethe non-existenceof facts or circumstancesthe existence ofwhich would lead to the application of anexceptionprovision andtherefore prevent the act or omission fran constituting anoffence. Provision is alsomadefor a nutter of defencesagainstprosecution.

DIVISION 5 - CIVIL LIABILITY FOR CttTTRAVENTION OF THE INSIDERTRADING RULES - REOCNBRYOF LOSS OR DAMAGE

CLAUSE 179 CIVIL LIABILITY WHERE PLAINTIFF SUFFERS LOSS ORDAMAGE BECAUSE OF A CON’TRA.VENTICtC OF TEE INSIDERTRADING RULES

340. This clause provides that civil liability attaches incircumstanceswhere a person suffers loss or damageas a resultof conduct 1q anotherperson that was in contravention of theinsider tradangrules.

48

DIVISION 6 - CIVIL LIABILITY FOR CONfl~AVENTIONOF THE INSIDERTRADING RULES - RECOVERYOF PRICE DIFFERENTIAL

CLAUSE 180 CIVIL LIABILITY - TRUSTEE MAYRECOVERPRICEDIFFERENTIAL

341. This clause provides that if a person contravenes theinsider trading provisions, the trustee of the public offerentity concerned has the right to recover the anrunt by which theprice of the superannuation interests, in respect of which thecontravention relates, applied for was less than the price atwhich the interests would have been applied for had theinformation beengenerally available.

CLAUSE 181 COMMISSIONERMAYBRING AN ACPION IN THE NAMEOF ATRUSTEE

342. This clause provides that, if it is in the public interest,the Ccxrrnissioner may bring an action under this Division in thename of a trustee.

CLAUSE 182 SPECIAL DEFENCEWHEREINFORMATION MADEKNOWNIN ACERTAIN M~ER

343. This clause provides a defenceunder this Division where theinformation was made available in a manner that would, or wouldbe likely to, bring it to the attention of personswho ccrmDnlyinvest in superannuation interests of a kind whose price or valuemight be affected by the information.

CLAUSE 183 AMOUNTSRECOVEREE)TO BE HEWON TRUST FOR CERTAININTEREST-HOLDERS

344. This clause provides that amounts recovered under thisDivision are to be held by trustees on behalf of personswho, atthe time the contravention occurred, had superannuation interestsin the entity.

CLAUSE 184 OFFSET OF AMOUNTSRECOVEREDIN OTHERPROCEEDINGS

345. This clause provides that amounts recoverable under thisDivision are to be reduced by any amounts recovered fran, orordered to be paid, in proceedings instituted under anotherprovision of this Act or under the Corporations Law.

DIVISION 7 - SPECIAL POWERSOF COURTTO MAKEORDERSIN CASESOFCONTRAVENTIONOF THE INSIDER TRADING RULES

CLAUSE 185 SPECIAL POWERSOF COURT

346. This clause provides that if, in any proceeding under thisAct, the Court uncovers a contravention of the insider tradingrules, the Court has the power to make any such order or ordersas it thinks just.

49

PART 22. - CIVIL AND CRflCThL CtVSEQUE~CFSOF CDWTRAVBI1fl4G CIVILP~ThLfl PROVISIC~

DIVISION I - PRELIMINARY



CLAUSE 187 CIVIL PENALTY PROVISIONS

348. This clause sets out the provisions of the Act that arecivil penalty provisions.

CLAUSE 188 PERSONINVOLVED IN Ctt~TIRAVENING A PROVISION TAKEN TOHAVE CONTRAVENED THE PROVISION


CLAUSE 189 WHENA COURTIS TAKEN TO FIND A PERSONGUILTY OF ANOFFENCE

350. This clause sets out, for the purposes of this Part, whenan Australian court is taken to find a person guilty of anoffence.

DIVISION 2 - CIVIL PENALTY ORDERS

CLAUSE 190 COURT MAY MAKE CIVIL PENALTY ORDERS

351. This clause, where the Court is satisfied that a personhascontraveneda civil penalty provision, sets out the circumstancesunder which the Court may make civil penalty orders, and alsoorder payment of a monetary penalty.

CLAUSE 191 WHOMAY APPLY FOR CIVIL PENALTY ORDER


CLAUSE 192 TIME LIMIT FOR APPLICATION


CLAUSE 193 APPLICATION FOR CIVIL PENALTY ORDERIS A CIVIL

PROCEEDING


CLAUSE 194 ENFORC~4ENTOF ORDERTO PAY MONETTARYPENALTY


50

CLAUSE 195 Ctt41ISSIC~ER MAYREQUIREA PERSONTO GIVE ASSISTANCEIN C1~NECTIONWITh! APPLICATION FORCIVIL PENALTYORDER

356. This clause, where it appears to the Conutissioner that aperson may have contravened a civil penalty provision, sets outthe circumstances under which the Cccrrnissioner may require aperson to give all reasonable assistance in connection with anapplication for a civil penalty order. It further sets out insuhclause (3) the persons to whnn subclause (2) does not apply,and in subclause (4) the re~edies available to the Ccnnissionerwhere a person fails to give assistance as required.

DIVISION 3 - CRIMflThL PROCEEDIN3S

Ct~JSE 196 WHENCflflRAVE~TION OF CIVIL PENALTY PROVISIONS IS ANOFFENCE

357. This clause sets out the circumstances under which a personcontravening a civil penalty provision is guilty of an offence.

358. Subclause (3) provides that the Federal Court of Ai&straliadoes not have junsdict ion over criminal proceedings wherecontravention of a civil penalty provision constitutes anoffence.

CLAUSE 197 APPLICATION FOR CIVIL PENALTY ORDERPRECLUDESLATER

CRIMfl~L PRO(EEDfl~3S


DIVISION 4 - EFFECT OF CRIMINAL PROCEEDINGSON APPLICATION FORCIVIL PENALTY ORDER

CLAUSE 198 WHENDflTISION APPLIES


CLAUSE 199 EFFECT DURING CRIMINAL PROCESD]NJS

361. This clause provides that an application may be made for acivil penalty order against a person in relation to the sanecontravention in respect of wfiich criminal proceedings havebegun. However, such an application is stayed until thecircumstances set out in subclause (2) have been finallydetermined or otherwise disposed of.

51

CLAUSE 200 FINAL OUIXXt4E PRECLUDINGAPPLICATIONS FOR CIVILPENALTY ORDER

362. This clause provides that when criminal proceedings, appealsand applications for review are finally determined or otherwisedisposed of, and the result of those proceedings, etc. is as setout in paragraphs Cc) to (h), an application for a civil penaltyorder in relation to the same contravention cannot be made, andsuch an application that was stayedpursuant to subsection 199(2)is dismissed.

CLAUSE 201 FINAL OUTCOMENOT PRECLUDINGAPPLICATION FOR CIVILPENALTY ORDER

363. This clause provides that where the result of criminalproceedings, etc. being finally determinedor otherwise disposedof under the circumstances ~ecified in paragraphs (a), (b), (c)or otherwise, an application for a civil penalty order inrelation to a contravention may be made and may proceed as if thecriminal proceedings had never begun.

CLAUSE 202 AFTER UNSUCCESSFULCOMMITTAL PROCEEDING, COURTMAYPRECLUDEAPPLICATION FOR CIVIL PENALTY ORDER

364. This clause provides, subject to appeal or review, thecircumstances in which a court may preclude an application fora civil penalty order.

CLAUSE 203 APPLICATION FOR CIVIL PENALTY ORDERBASEDONALTERNATIVE VERDICT AT JURY TRIAL

365. This clause sets out provisions in relation to a finding bya jury that a person has ccnnitted a contravention but is notsatisfied beyond reasonable doubt that the person ccnnitted anoffence as provided in subsection 196(1).

CLAUSE 204 APPLICATION FOR CIVIL PENALTY ORDERBASEDONALTERNATIVE FIb~ING BY COURTOF SIJIvIIARY JURISDICTION

366. This clause sets out provisions in relation to a finding bya court of sunnary jurisdiction that a person has coarnitted acontravention but is not satisfied beyond reasonable doubt thatthe personcomitted an offence asprovided in subsection 196(1).

CLAUSE 205 APPLICATION FOR CflhIL PENALTY ORDEREASEDONALTERNATIVE FINDING BY APPEAL COURT

367. This clause sets out provisions in relation to a finding bya court that the person is guilty of an offence, and, on a~ealor review, a court nakes an order determining the criminalproceedings for the offence in such a way that does not involveconvicting the person, but the court is satisfied beyondreasonable doubt that the person coninitted the contravention.

52

CLAUSE 206 AFTER SETTIM3 ASIDE DECLARATION, COURTMAY PRECLUDEAPPLICATION FOR CIVIL PENALTY ORDER


CLAUSE207 ONUNSUCCESSFULAPPEALAGAINST DECLARATION, COURTMAYMAKE CIVIL PENALTY ORDERS

369. This clause sets out the circumstances under which the Courtmay, on application of a prosecutor or the Ccxmiissioner, make anorder for a nonetary penalty under subsection 190(3).

CLAUSE 208 APPEALS UNDERThIS DIVISION


DElISION 5 - CCt4PENSATICU FOR LOSS SUFFEREDBY SUPERANNUATIONENTITY

CLAUSE 209 ON APPLICATION FOR CIVIL PENALTY ORDER, COURTMAYORDEROZMPENSATION

371. This clause sets out, on application for a civil penaltyorder against a person in relation to a contravention, thecircumstancesunder which the Court may order the personto payccnpensation in respect of loss or damaged suffered by thesuperannuation entity in relation to which the contravention wasccmnitted. This clause also sets out the circumstances underwhich a trustee may intervene in a proceeding for a civil penaltyorder, and the conditions under which that trustee is entitledto be heard.

CLAUSE 210 CRIMINAL COURTMAYORDERCOMPENSATION

372. This clause sets out the circumstances under which a courtnay order a person to pay conpensation in relation to the personhaving been found guilty of an offence constituted bycontravention of a civil penalty order.

CLAUSE 211 ENFORCET�W2OF ORDERUNDERSECTION 209 OR 210


CLAUSE 212 RECOVERYOF PROFITS, AND COMPENSATIONFOR LOSS,RESULTING FROMCCNTRAVEtCION

374. This clause sets out the circumstances under which a trusteeof a superannuation entity, in respect of a contravention by aperson of a civil penalty provision in relation to the entity,may institute proceedings in a court to recover fran the personany profits, and ccxrpensation for loss, resulting fran thecontravention.

53

CAUSE 213 EFFECT OF SECTIONS 209, 210 AND212


CLAUSE 214 CERTIFICATES EVIDENCING CONTRAVENTION


DIVISION 6 - MISCELLANEOUS

CLAUSE 215 RELIEF FROMLIABILITY FORCONTRAVENTIONOF CIVILPENALTY PROVISION

377. This clause sets out the circumstances under which the Courtmay relieve a person either wholly or partly fran liability towhich the person would otherwise have been subject forcontravention of a civil penalty provision. It further sets outthe circumstances under which a person may apply to the Court forrelief.

CLAUSE 216 PART DOESNC!]? LIMIT POWER‘10 AWARDPUNITIVE DNvIAGES


PART 22 - WICLAD~lfl~EY



CLAUSE 218 DEFINITION OF “FUND”

380. This clause defines the term “fund” for the purposes of this

Part.

CI~USE219 TRUSTEE10 PAY UNCLAIMEDMONEY‘10 THE COMMISSIONER

381. Subclause (1) sets out in paragraphs (a) to (d) thecircumstances under which an amount payable (other than apension) to the beneficiary in a regulated superannuation fundor an approved deposit fund is taken to be unclaimed money.

382. Subclauses (2), (3), and (5) set out the requirementsrelating to the payment of unclaimed money to the Conrnissioner.

383. Subclause (4) authorises a beneficiary to quote his or hertax file nuither to the trustee of a fund.

384. Subclause (6) sets out the circumstances under which paymentnay be made to a person of unclaimed money previously paid to theCaimissioner. Subclause (7) provides for the repayment to thetrustee of a fund of overpaid unclaimed money. Subclause (9)provides for the appropriation of the Consolidated Revenue Fundfor the purposes of this clause.

54

385. Subclause (8) discharges the trustee of a fund fran furtherliability in respect of unclaimed money once payment has beenmade to the Comru.ssioner.

386. Subclause (8A) provides that the unclaimed money provisionsdo not operate to the exclusion of unclaimed money legislationin the States of Territories.

387. Subclause (10) provides a penalty for a contravention ofthis clause by the trustee of a fund.

CLAUSE 220 REGISTER OF UNCLAIMEDMONEY

388. This clauseprovides for the Cairnissioner to keepa registerof particulars of unclaimed money and persons to whan such moneyswould otherwise have been payable, which nay include the tax filenumbers of those persons.

PART 23 - FINANCIAL ASSISTflfl ‘It ~ThflT FUNDS




CLAUSE 222 INTERPRETATION

390. This clause sets out definitions of a number of words forthe purposes of this Part.

CLAUSE 223 APPLICATION FOR ASSISTANCE

391. This clause sets out the circumstances under which a largeregulated superannuation fund or approved deposit fund that hassuffered a loss as a result of fraudulent conduct or theft mayapply to the Minister for a grant of financial assistance for thefund.

CLAUSE 224 MINISTER MAY REQUESTADDITIONAL INFORMATION


DIVISION 2 - DFflI’ERMINATION OF APPLICATIONS FOR FINANCIALASSI STANCE

CLAUSE 225 MINISTER MAY GRANTFINANCIAL ASSISTANCE

393. This clause provides for the Minister to determine, onpublic interest grounds, whether a grant of financial assistanceshould be made to the trustee for the purposes of the fund and,.if so, the amount of such assistance, and the manner and timesin which it is to be paid.

55

CLAUSE 226 ?@~XIMUMAMOUNTOF FINANCIAL ASSISTANCE


CLAUSE 227 FINANCIAL ASSISTANCE TO BE SUBJECT TO CONDITIONS

395. This clause provides that the payment of a grant offinancial assistance to the trustee of a fund is to be subjectto the conditions set out in paragraphs (a) to (d).

DIVISION 3 - HOWFINANCIAL ASSISTANCE IS TO BE PMD

CLAUSE 228 SUPERANNUATIONPROTECTIONACCOUNT

396. This clause establishes a Superannuation Protection Accountwhich is a trust account for the purposes of section 62A of theAudit Act 1901, and makes provision for the investment of moneyin the account.

CLAUSE 229 MINISTER TO DECIDE THE SOURCEFROM WHICE-I FINANCIALASSISTANCE IS IC) BE PAID

397. This Clause provides for the Minister, in determining thata grant of assistance is to be made, to also determine whetherthe assistance is to be paid out of the Consolidated Revenue Fundor out of the Superannuation Protection Account, and if theformer, appropriates the ConsolidatedRevenue Fund accordingly.

CLAUSE 230 PURPOSESOF ACCOUNT


CLAUSE 231 SEPARATENCfI’IONAL ACCOUNTS10 BE KEPT WITHIN TEE

ACCOUNT

399. Subclause C]!) provides for a separate notional account tobe kept within the Superannuation Protection Account in respectof each levy irrç’osed.

400. Subclause (2) provides that where the total of amounts paidinto the Superannuation Protection Account in respect of a levyirr~osed by the Minister in relation to a grant of financialassistance is greater than the amount of the financial assistancepaid to the fund, the excess is to be applied as the Ministerdeternu.nes.

56

CLAUSE 232 FINANCIAL ASSISTANCE TO BE REPAiD IN CERTAINCIRCUMSTANCES

401. This clause sets out the circumstances under which thetrustee of a fund that has received a grant of financialassistance is liable to repay the whole of the amount of thegrant, or such part thereof as the Minister determines. Theclause also provides that the Minister may determine the mannerin which repayments of financial assistance are to be trade, andthat any such amount payable is a debt due to the Carnonwealth.

CLAUSE 233 MINISTER MAYRflCT LABILITY


CLAUSE 234 REPAYABLEGRANTTO HAVE PRIORITY OVEROTHERDEBTS

403. This clause provides that, despite any laws to the contrary,an amount payable to the Canmonwealth under section 232 haspriority over all other debts except anr~unts payable to theCcnnissioner of Taxation under the Inccx~ Tax Assessment Act1936.

PA~24 - ROLLOVEROP C~ThflT B~XTSBflWE~ FUtWB



CLAUSE 236 INtERPRETATION

405. This clause sets out definitions of a number of words and

expressions for the purposes of this Part.

CLAUSE 237 DECLARATIONOF ELIGIBLE FUNDS


CLAUSE 238 ROLLOVEROF BBNEFITS FROMSUPERA~UATIONFUND

407. Subclause (1) sets out the circumstances under which thetrustee of a standard enployer- sponsored superannuation fund maypay a benefit (other than a pension) that is payable in respectof a member to an eligible rollover fund.

408. Subclause (LA) provides that the benefit referred to insubclause (1) may, be paid by the trustee despite anything in thegoverning rules of the fund.

409. Subclause (2) sets out the circumstances under which thetrustee of a standard enployer-sponsored superannuation fund mustpay a benefit (other than a pension) that is payable in respectof a rretter to an eligible rollover fund.

57


CLAUSE 239 ROLLOVEROF BENEFITS FTCM APPROVEDDEPOSIT FUND

411. Ctnitted.

ClAUSE 240 TRUSTEETO GIVE INFORMATION110 ELIGIBLE ROLLOVERFUND

412. This clause requires the trustee of a fund which pays abenefit to an eligible rollover fund to also give prescribedinformation, including a beneficiary’s or member’s tax filenumber if it has been quoted to the trustee in connection withthe operation of this Part, to the trustee of the eligiblerollover fund.

• 413. Subclause (4) provides that an intentional or reckless ~contravention of subclause (1) is an offence.

CLAUSE 241 REPORTSTO INCLUDE REPORTSSENT BEFORE CCX~4MEtTCF7’4EE’TFOF PART


ClAUSE 242 NOTICE 110 MU4BERS AND BENEFICIARIES OF CIRCUMSTANCESIN WHICHBENEFITS MAY BE ROLLED-OVER

415. Subclause (1) sets out requirements relating to theprovision by trustees of standard employer-sponsored funds ofnotices to members setting out the circurri.stances under which themember’ s benefits may be paid to an eligible rollover fund orotherwise dealt with under this Part.

416. Subclause j3) provides that the trustee may by writtennotice to the member or beneficiary, as the case may be, vary theeligible rollover fund to which it proposes to pay benefits underthis Part.


contravention of subclause (l)is an offence.

ClAUSE 243 WHATHAPPENS IF BENEFITS ARE BELOWMINIMUM AMOUNT

418. This clause provides that where the amount of the benefitthat would otherwise be paid to an eligible rollover fund underthis Part is less than the prescribed minimum preservation amount(currently $500), the trustee may instead deal with the amount

under Part 22 as if it were unclaimed money.

58

CLAUSE 244 TRUSTEEOF ELIGIBLE ROLLOVERRiND TO NOTIFYCG44ISSTONEROF RECEIPT OF PAYMENTS

419. This clause sets out re9uirements relating to notificationto the Cormiissioner by eligible rollover funds of amountsreceived from another fund pursuant to this Part. Theserequirementsmay also relate to the tax file numberof the memberor beneficiary, wherethat number has been quoted to the trusteeconcerned.420. Subclause (6) provides that an intentional or reckless


CLAUSE 245 REX3ISTER OF ROLLED-OVERBENEFITS

421. This clause provides that the Comissioner must keep aregister of particulars of rolled-over benefits, and may requirea person to quote his or her tax file number for the purpose ofanswering requests as to whether the register contains anyparticulars relating to that person.

CLAUSE 246 RIGHTS OF BENEFICIARY TO ROLLED-OVERBENEFITS

422. This clause provides that on a fund paying benefits to aneligible rollover fund pursuant to this Part, a member of, orbeneficiary in, the first fund ceases to have rights against thatfirst fund, but has corresponding rights against the eligiblerollover fund.

CLAUSE 247 ClAIMS TO ROLLED-OVERBENEFITS


PARr 25 - }OIITORING AIU ~VESTIGhT~3 SUPERA~UATXCt4~TflTIES

DIVISION 1 - OBJECTS OF PART

CLAUSE 248 OBJECTS OF PART


DIVISION 2 - MCVfl\JRING SUPERT~NNUATIONEK~TITIES

CLAUSE 249 INEORNATION TO BE GIVEN TO O~’t4ISSIONER

425. Subclause (1) provides for a new superannuationentity toprovide such information to the Commissioner as is prescribed,while subclause (3) provides that the Commissioner or anauthorisedpersonmust give written acknowledgment of the receiptof such information.

59

426. Subclause (2) provides that the Comnissioner or anauthorised person may by notice in writing to the trustee of asuperannuation entity require the trustee to give to theCcxrrnissioner or the authorised person such information, or areport on such matters, as are set out in the notice.


CLAUSE 250 Ct(~MISSlONER MAYREQUIRE PRODUCTIONOF BCOKS

428. Subclause (1) provides that the Conmissioner or anauthorised person may by notice in writing to a relevant personin relation to a superannuation entity, require the relevantperson to produce to the Coninissioner or an authorised person anbooks relating to the affairs of the entity, while subclause (3provides that the Commissioner or an authorised person mayinspect, take extracts from and make copies of any book producedpursuant to this section.

429. Subclause (2) provides that where any book produced pursuantto subclause (1) is not in English, the Commissioner or anauthorised person may require the relevant person to produce aversion of the book that is in English.

CLAUSE 251 ACCESSTO PREMISES

430. This clause provides that the Commissioner or an authorisedperson may access any premises relating to a superannuationentity, with the permission of the occupier, to inspect any bookskept on the premises or to make copies of, or take extracts from,any such books.

DIVISION 3 - (fl~1MISS lONER MAY REQUIRE TRUSTEE OF SUPENANNUATIOMENTITY TO AflOINT All INDIVIDUAL, OP. A CtMMIflEE, TO INVESTIGATEThE FINANCIAL POSITION OF THE ENTITY

CAUSE252 INVESTIGATION OF FINANCIAL POSITION OF SUPERAMWATIONEI~TI’ITY

431. This clause provides that the Commissioner may require thetrustee of a superannuation entity to appoint an individual ora ccnid.ttee of individuals to undertake an investigation of thewhole or a part of the financial position of the entity, and makea report on the investigation.

CLAUSE 253 QUALIFICATIONS OF INVESTIGATOR OR INVESTIGATORS

432. This clause provides that the Coninissioner may specify thequalifications of the investigator (s) appointed in accoraancewith this section.

60

CLAUSE 254 CtFIMISS lONER MAY VE7IO APPOINThIEN’T OF INVESTIGATOR ORINVESTIGATORS

433. This clause provides that the trustee must, within 7 days,notify the Commissioner of the name of investigator(s) appointed.The Commissioner may determine that the person is, or any of thepersons are, not acceptable. Where the trustee receives fran theCcxmiissioner a notice that a person is, or the persons are,unacceptable, the trustee trust notify the Commissioner within 7days of the name of the fresh investigator(s) appointed.

CAUSE255 DEADLINE FOR RECEIPT OF REPORT


CLAUSE 256 CONTENTSOF REPORTFTC.

435. This clause provides that the report on the investigationmust contain a statement of the person’s or the ccmnittee’s, asthe case may be, opinion about any particular matter on which aview was sought by the Ccnnissioner.

436. Subclause (3) sets out provisions relating to the expressionof the coninittee’s opinion where the members of the ccxrrnittee aredivided. Subclause (4) sets out provisions relating to thesigning of the report.

CLAUSE 257 TRUSTEE MUST CCMPLYWITh THIS DIVISION

437. This clause provides that a trustee who intentionally orrecklessly contravenes this Division is guilty of an otfence.

DIVISION 4 - INVESTIGATIONS BY CtMMISSIONER

CLAUSE 258 INVESTIGATION OF SUPERANNUATIONENTITY

438. This clause provides that the Ccxrmissioner may give a noticeto the trustee of a superannuation entity that he proposes toconduct an investigation into the whole or a part of the affairsof the entity where it appears to the Ccmmissioner that acontravention of this Act may have occurred or be occurring, thefinancial position of the entity may be unsatisfactory, or thetrustee has refused or failed to give effect to a determinationof the Superannuation Complaints Tribunal.

439. Subclause (2) provides that where such a notice is given thesucceedingprovisions relating to investigations apply.

61

CLAUSE259 POWEROF COMMISSIONERTO OBTAIN INFORMATIONOR FREEZEASSETS

440. This clause provides that, where it appears to theCommissioner that the trustee or an investment manager of asuperannuation entity has been or is engaged in conduct that islikely to affect adversely the values of the interests ofbeneficiaries, the Commissioner may:

(a) by written notice direct the trustee or investment managerto provide within the stated period such infontation aboutthe affairs of the entity as is stated in the notice;

(b) by written notice direct the trustee or investment managernot to dispose of or remove from Australia any assets, anyassets included in a specified class of assets, or aspecified asset or assets of the entity, in Australiaduring the period specified in the notice; or

(c) by written notice direct a person (other than the trusteeor investment manager) having possession, custody orcontrol of an asset or assets of an entity not to disposeof or remove from Australia the asset or assets fromAustralia during the period specified in the notice.

CLAUSE 260 INS PEC1DRS

441. This clause provides for the Commissioner to appoint amember of his staff as an inspector to conduct an investigationof the whole or a part of the affairs of a superannuation entity.The inspector is to be issued with an identity card and mustreturn it on the cessation of the appointment.

CAUSE26]. DELEGATIONBY INSPEC1DR

442. This clause provides that an inspector may delegate to amember of the Coninissioner’s staff any of his powers as aninspector, and that any such delegate must, pursuant to arequest, produce the instrument of delegation or a copy forinspection.

CLAUSE 262 Ctt’~1ISSIONF2 MAY EXERCISE POWERSOF INSPECTOR


CLAUSE 263 INSPECtOR MAYENTERPREMISES FOR PURPOSESOF ANINVESTIGATION

444. This clause empowers an inspector, while conducting aninvestigation, to enter any premises relating to thesuperannuation entity and inspect any books kept on the premisesrelating to the affairs of the entity, and make copies, or takeextracts f ran, any such books.

62

CLAUSE 264 INSPECTOR MAY REQUIRE PRODUC]:’ICIJ OF SCOKS

445. This clause provides that an inspector, by written notice,may require a relevant person, or any other person who theinspector believes has custody or control of books, to produceall or any of the books relating to the affairs of the entitythat is under investigation.

CLAUSE 265 POWERSOF INSPECTORTO REQUIRE ASSISTANCE FROM, ANDEXAMINE, RELEVANTPERSONS

446. This clause provides that an inspector, by written noticeto a relevant person, may require that person to give allreasonable assistance in connection with an investigation, andto require the person to appear for examination in connectionwith the investigation.

CAUSE266 APPLIGATION FOR WARRANTTO SEIZE BCOKSNOT PRODUCE!)

447. This clause provides that an inspector may apply to amagistrate for the issue of a warrant to search premises forbooks that have not been produced pursuant to a requirement underthis Part.

CLAUSE 267 GRANTOF WARRANT

448. This clause sets out provisions relating to the grant of awarrant pursuant to an application made under section 266,including the thin9s or acts the warrant may authorise and thejustification for issue of the warrant.

CAUSE 268 POWERSIF BOOKSPRODUCEDOR SEIZED

449. This clause sets out things or acts a person may do inrelation to books ~,roduced to the person pursuant to arequirement under this Part or seized pursuant to a warrantissued under section 267. This clause permits retention of thebooks for the purposes of the investigation, inspection of thebooks by another person who would othendse be entitled toinspect them, and prevents a lien being claimed on any of thebooks.

CLAUSE 269 POWERSIF BOOKSNOT PRODUCED

450. This clause provides that where a person fails to produceparticular books in compliance with a requirement made under thisPart, that personmay be required to say where the books may befound or who laSt had possession or control of the books andwhere that person may be found.

63

CLAUSE 270 POWERTO REQUIRE PERSONTO IDENTIFY PROPERTYOFSUPERANNUATIONENTITY

451. This clause provides that a person who has power under thisPart to require another person to produce books relating to anentity tray also require that other person to identify propertyof the entity and to explain how the trustee or an investmentmanager of the entity has kept account of that property.

DIVISION 5 - EXAMINATIONS

CLAUSE 271 APPLICATION OF DIVISION


CLAUSE 272 REQUIRE2’1EI~TrSMADEOF AN EXAMINEE

453. This clause provides that the inspector may examine anexaminee on oath or affirmation, may require the examinee eitherto take an oath or make an affirmation, nay administer an oathor affirmation, and may require the examinee to answer questionsput to the examinee at the examination.

CLAUSE 273 EXAMINATION TO BE IN PRIVATE

454. This clause provides that an examination is to be inprivate, ani sets out the persons who may be present during anexamination.

455. Subclause (3) provides that a person who knowinglycontravenes this section is guilty of an offence.

ClAUSE 274 EXAMTHEE’ S LAWYERMAYATTEND

456. This clause provides that the examinee’s lawyer may bepresent at the examination and may address the inspector andexamine the examinee about matters which are the subject of theexamination, it further provides that the inspector may requirethe examinee’ s lawyer to stop addressin~ the inspector orexamining the examinee if he is of the opinion that such actionis intended to obstruct the examination.

CLAUSE 275 RECORDOF EXAMINATION

457. This clause provides that the inspector shall cause awritten record of an examination to be made, and may require theexaminee to read it and to sign it. It further provides that theinspector shall provide to the examinee a written copy of therecord of examination.

64

CLAUSE 276 GIVING COPIES OF RECORDTO CIrflER PERSONS

458. This clause provides that the Ccxrrnissioner may give a copyof a record of examination to a person’s lawyer where theCorrinissioner is satisfied that the person is carrying on, or iscontemplating, a proceeding in respect of a matter to which theexamination related. It also limits the use to which a copy ofa record of examination so provided can be put.

CLAUSE 277 COPIES GIVEN SUBJECTTO CONDITIONS


CLAUSE 278 RECORDTO ACCOMPANYREPORT

460. This clause sets out the circumstances under which a recordof an examination is to accc*ipany a report about an investigationprepared pursuant to section 138.

DIVISION 6 - REPORTS

CLAUSE 279 REPORTOF INS PECIOR

461. This clause provides that an inspector must prepere a reportin respect of an investigation undertaken, and sets out theparticulars that must be included in the report.

462. Subclause (3) sets out the things the coumissioner must doin respect of an inspector’s report, and specifies theorganisations to which a copy of the report may be given if itrelates to a contravention of the law.

DIVISION 7 - OFFENCES

CLAUSE 280 PERSONS¶10 CCt4PLY WITH REQUIRE24ENTPSMADEUNDERACT

463. This clause provides that it is an offence for a person,without reasonable excuse, to intentionally or recklessly refuseor fail to comply with a requirement of the Conmissioner, anauthorised person or an inspector under this Act.

CLAUSE 281 CONCEALINGBOOKSRELEVANTTO INVESTIGATION

464. This clause provides that it is an offence for a person toconceal, etc. a book relating to a matter the Ccmmissioner isinvestigating or is about to investigate, or to take or send abook relating to such a matter out of the State or Territory inwhich it is located, or out of Australia.

465. Subclause (2) provides grounds for a defence to aprosecution for contravention of sitclause (1).

65

CLAUSE 282 SELF-INCRIMINATION

466. Subclause (1) provides that it is not a reasonable excusefor a person to refuse or fail to do the things or acts specifiedin paragraphs (a) to (c) on the basis that the thing or act mightincriminate the person or make the person liable to a penalty.

467. Subclauses (2) and (3) provide that where before making anoral statement, signing a record or producing a book pursuant toa requirement under this Part, a person claims the statement,etc. might tend to incriminate them or make them liable to apenalty, and the statement, etc. might in fact tend toincrinunate them or make them liable to a penalty, the statement,etc. is not admissible in evidence against the person in thecircumstances set out in paragraphs (a) (a), (b) and (c) exceptas provided in subclause (4).

CLAUSE 283 LEGAL PROFESSIONALPRIVILBGE

468. This clause provides that, in the circumstances set out insubclause (1), a lawyer is entitled to refuse to comply with arequirement unless the persons specified in paragraphs (2) (a) and(b) consent to the lawyer complying with the requirement.

469. Subclause (3) provides that where a lawyer refuses to con~lywith a requirement, he or she must as soon as practicable giveto the person making the requirement a notice setting out theparticulars required by paragraphs (a) to (c).


contravention of this section is an offence.

CLAUSE 284 POWERSOF COURTWHENNON-CCVJPLIANCE WITH THIS ACT

471. This clause provides that where the Coninissioner issatisfied that a person has, without reasonableexcuse, failedto comply with a requirement, the Cormiissioner may certify thefailure to the Court, and the Court may inquire into the case andorder the person to comply with the requirement.

DIVISION 8 - EVIDENTIARY USE OF CERTAIN MATERIAL

CLAUSE285 STATEMENTSMADEAT AN EXAMINATION: PROCEEDINGSAGAINSTEXAMINEE

472. This clause provides that a statement that a person makesat an examination is a&nissible in evidence against the personin a proceeding unless the requirements set out in subclauses(2) to (6) are met.

66

CLAUSE 286 STATEMENTSMADEAT AN EXAMINATION: CftRER PROCEEDINGS

473. This clause provides that if direct evidence by an absentwitness of a matter would be admissible in a proceeding, astatement that the absent witness made at an examination and thattends to establish that matter is admissible in the proceedingas evidence of that matter in the circumstances set out insubclause (2)

CLAUSE 287 WEIGHT OF EVIDENCEADMITTED UNDERSECTION 286

474. This clause sets out how much weight (if any) is to be givento a statement made by a person at an examination as evidence ofa matter. Subclause (3rn) makes provision in relation to theadmissibility of evidence where the person is not called as awitness in the proceeding, while subclause (4) sets outcircumstanceswhen evidence of a matter is not admissible.

CLAUSE 288 OBJECTION TO ADMISSION OF SThTFZC[~TrS MADEATEXAMINATION

475. This clausesetsout requirementsrelating to a party givingnotice to another concerning the making of an application to haveadmitted in evidence in a proceeding specified statements madeat an examination, and that other party giving notice ofobjection to admission of those statements.

CLAUSE 289 COPIES OF, OR EX’IRACT$ FRCt~1, CERTAIN BOOKS

476. This clause sets out requirements relating to theadmissibility in evidence in a proceeding of a copy of, or anextract from, a book relating to the affairs of a superannuationentity.

CLAUSE 290 REPORTUNDERDIVISION 6


CLAUSE 291 EXCEPTIONS ‘lit) ADMISSIBILITY OF REPORT

478. This clause sets out requirements relating to a party to aproceeding tendering a copy of a report as evidence againstanother party, and when that copy may or may not be admitted asevidence pursuant to section 290.

CLAUSE 292 MATERIAL C1]MERWISE ADMISSIBLE


67

DIVISION 9 - MISCELLANEOUS

CLAUSE 293 COMMISSIONERMAYCAUSE CIVIL PROCEEDINGPD BE BEX3UN

480. This clause provides that, where, as a result of aninvestigation or fran a record of an examination, it appears tothe Oonrnissioner to be in the public interest for a person tobegin or carry on a proceedin~ as set out in paragraphs (a) and(b), the Camassionermay begin or carry on a proceeding in the

name of that person.

CLAUSE 294 PERSONCOMPLYINGWITh REQUIREMENTNOT‘lit) INCURLIABILITY ‘lit) ANOTHERPERSON


PART 26 - OFF~CESRfl,A2fl~3 TO STkTfllE2~TS, REC.tRDS ETC.




483. This clause sets out definitions of a number of words and

expressionsfor the purposeof this Part.CLAUSE 297 FALSE OR MISLEADING STATEMENTS

484. This clause provides that it is an offence to make astatement to an SIS officer that is false or misleading in amaterial particular or to omit from a statement any matter orthin9 without which the statement is misleading in a materialparticular. Subclause (a) provides, however, that failing toquote a tax file number does not constitute an offence.

485. Subclause (2) provides that, in a prosecution for anoffence, it is a defence if the person proves that they did notknow or could not reasonably be e~iected to have known that thestatement concerned was false or misleading.

CLAUSE 298 INCORREC1t,Y KEEPING REC.tRDS E~.

486. This clause provides that it is an offence to incorrectlykeep accounts, accounting records or other records or incorrectlyto record any matter, transaction, act or operation, where theyare required to be kept under this Act or the regulations.

487. Subclause (2) provides grounds for a defence against aprosecution under this clause.

68

CLAUSE 299 RECKLESSLYMAKING FALSE OR MISLEADING STATEMENTS

488. This clause provides that it is an offence to recklesslymake a statement to an SIS officer that is false or misleadingin a material particular or to omit from a statement any matteror thing without which the statement is misleading in a materialparticular.

CLAUSE 300 INTETIONALLY MAKING FALSE OR MISLEADING STATEMENIS

489. This clause provides that it is an offence to intentionallymake a statement to an 515 officer that is false or misleadingin a material particular or to omit from a statement any matteror thing without which the statement is misleading in a materialparticular.

CLAUSE 301 INTENTIONALLY OR RECKLESSLY INCORRECTLYKEEPINGRECORDSEat.

490. This clause provides that it is an offence to recklessly orintentionally keep accounts, accounting records or other recordsor to record any other matter, transaction, act or operationwhere they are required to be kept under this Act or theregulations.

CLAUSE 302 INCORRECtLY KEEPING RECORDSWITH INTENTION OFDECEIVING OR MISLEADING Eat.

491. This clause sets out the circumstances under which it isan offence to incorrectly keep accounts, accounting records orother records, or make an incorrect record of any matter,transaction, act or operation, with the intention of deceivingor misleading the Camiissioner or a particular SIS officer.

CLAUSE 303 FALSIFYING OR CONCEALINGIDENTITY WITH INTENTION OFDECEIVING OR MISLEADING Eat.

492. This clause sets out the circumstances under which it is anoffence to falsify or conceal the identity of, or the address orlocation of a place of residence or business of, a person withthe intention of deceiving or misleading the Coninissioner or aparticular 513 officer.

PART 27 - flIERS OP COURT



CLAUSE 305 tOWER TO GRANT RELIEF

494. This clause provides that a person may apply to a court forrelief against liability in certain circumstances arid sets outthe Court’s power to relieve the person from that liability.

69

CLAUSE 306 POWEROF COURTTO GIVE DIRECTIONS WITH RESPECTTOMEETINGS ORDEREDBY THE COURT

495. This clause provides that where the Court orders a meetingto be convened it may, subject to this Act, give directions withrespect to the convening, holding and conduct of the meeting.

CLAUSE 307 IRREGULARITIES

496. This clause provides that the Court may make orders incertain circumstances to prevent proceedings or meetings underthis Act from being invalidated on account of proceduralirregularities. Subclause (8) provides that the Court mist notmake an order pursuant to this section unless it is satisfied asto the matters specified in paragraphs (a) to (c).

CLAUSE 308 POWEROF COURT TO PROHIBIT PAYMENTOR TRANSFEROFMONEYOR PROPERTY

497. This clause provides that a Court may make orders in thecircumstances as set out in paragraphs (1) (a) to (c) to prohibitthe parent or transfer of troney or property by a person that isor may become liable to pay roney or account for property toanother person under this Act.

CLAUSE 309 COURTMAYORDERTHE DISCLOSUREOF INFORMATION OR THEPUBLICATION OF ADVERTISEMENTS- CONTRAVEMTICNOFPROVISIONS RELAT]fl3 TO ISSUE OF SUPERANNUPJIONINTERESTS Eat.

498. This clause sets out the types of orders the Court may make,on the Corinissioner’s application, where a person has engaged,is engaging, or is proposing to engage, in conduct contraveningParts 18, 19 or 20.

CLAUSE 310 INJUNCTIONS

499. This clause provides that the Court may in certaincircumstances grant an injunction for the purposes of this Acton the application of the Cccrrnissioner or of a person who wouldbe affected by the conduct against which the injunction isordered.

CLAUSE 311 EFFECT OF SECTIONS 308, 309 AND 310


CLAUSE 312 POWEROF COURTTO PUNISH FOR CONTEMPTOF COURT

501. This clause provides that the Court is not precluded by anyprovision under this Act from punishing a person for conterrpt ofthe Court.

70

CLAUSE 313 COURTMAYRESOLVETRANSITIO?ThL DIFFICULTIES

502. This clause provides that, subiect to the Constitution, theCourt may make orders to resolve difficulties arising from theinteraction of a provision of another law with the provisions ofthis Act.

PART 28 - PRoCEEDINr~s



CAUSE 315 ECWEROF Cfl4MISS TONER TO INTERVENE IN PROCEEDINGS

504. This clause provides that the Ccrrrnissioner may intervene inany court proceedings relating to a matter arising under thisAct. The Corrinissioner may be represented by a meter of hisstaff, by a delegate or by a solicitor or counsel.

CLAUSE 316 CIVIL PROCEEDINGSNOT ¶lt) BE STAYED


CLAUSE 317 STAND1½RDOF PRCOF

506. This clause provides that in proceedings in relation tomatters arising under this Act, other than those relating to anof fence, the standard of proof for the Court is establishment ofthe matter or satisfaction on the balance of probabilities.

CLAUSE 3l7A RELIEF FROMCIVIL LIABILITY

507. This clause applies to eligible proceedings within themeaning of section 215 and proceedings under subsections 52(3),142(1), 156(2), 166(3) or 179(1). It provides a defence againstproceedings where the defendant is able to establish that thecontravention was due to reasonable mistake, due to reliance oninformation supplied by another person who was not a servant ora?ent of the person in the case of a natural person, or adirector, servant or agent in the case of a body corporate or dueto the act or default of another person, an accident or saneother cause beyond the defendant’s control.

508. Subclause (4) ~>rovides that where a defence is based onreliance on information supplied by another person or the act ordefault of another person, unless the court grants leave or thedefendant provides to the person instituting the proceedingswritten notice identifying the person, and the notice is servednot less than 7 days before the cournencerrent of the hearing, thedefendant cannot rely on that defence.

71

CLAUSE 318 EWIDENCEOF CTh?TRAVENTION

509. This clause provides that in the absence of proof to thecontrary, a certificate that purports to be signed by theRegistrar or other proper officer oE anAustralian court will beproof that a person was convicted of the offence on that thy, orthat the person contravened the relevant provision, asappropriate.

CLAUSE 319 VESTING OF PROPERTY

510. This clause sets out the inplications of an order by a courtunder this Act that property is to vest in a person, includingwhen, subject to subsections (2) arid (3), the property is takento have vested in the person named in the order.

PART 29 - E~’~naTsAID IVDIFICATICVS

CLAUSE 320 OBJECT

511. This clause provides that the object of this Part is to givethe Corrinissioner power to niodify or exerr~t the application ofspecified provisions to a particular superannuation entity orclass of superannuation entities. The Connissioner wouldexercise this power only where he is satisfied that, if themodification or exenption is given, the particular superannuationentity or class of superannuation entities would still complywith the spirit of the provisions concerned.

CLAUSE 321 DEFINITIONS

512. This clause defines the provisions of this Act which aremodifiable provisions and tenporarily modifiable provisions forthe purposes of this Part.

CLAUSE 322 (IXtIISSIONER’S POWERSOF EXE24PTTCt4 - MODIFIABLE

PROVISIONS

513. This clauseprovides that the Commissionermay, in writing,exenpt a particular person or class of persons f ran compliancewith any or all of the modifiable provisions.

CLAUSE 323 CUtIISSIONER’S ICWERS OF EX~~IVTION- TEMPORARILYMODIFIABLE PROVISIONS

514. This clause provides that the Conmissioner may, in writing,exempt a particular person or class of persons f ran compliancewith any or all of the temporarily modifiable provisions. Anysuch exemption has no effect after 30 June 1994.

72

CLAUSE 324 Ctt’T’IISS lONER’S ?~ERSOF ~7CION - GENERAL ISSUES

515. This clause provides that an exemption under this Part naybe general or otherwise, conditional or unconditional, and mayrelate to a particular superannuation entity or a class ofsuperannuation entities.

CLAUSE 325 ENFORCEMENTOF CONDITIONS TO WHICH ~~WTION ISSUBJECT

516. This clause provides that it is an offence to contras~ne,without reasonable excuse, a condition of an exemption under thisPart. The Court may, on a~çlication of the Commissioner, orderthe person to comply with the condition.

CLAUSE 326 CCPT4ISSIC*ThR’ S ICWERS OF MODIFICATION - MODIFIABLEPROVISIONS

517. This clause provides that the Carnissioner may, in writin~,declare that a modifiable provision is to have effect, inrelation to a particular person or class of persons.. as if itwere modified as specified in the declaration.

CLAUSE 327 CCt’I4ISSIONER’ S PCMERSOF MODIFICATION - TEMPORARILYMODIFIABLE PROVISIONS

518. This clause provides that the Ccnnissioner may, in writing,declare that a temporarily modifiable provision is to haveeffect, in relation to a particular person or class of persons,as if it were modified as specified in the declaration. Any suchdeclaration has no effect after 30 June 1994.

CLAUSE 328 CtttIISSIONER’S POWERSOF MODIFICATION - GENERAL

ISSUES

519. A declaration under this Part may have effect eithergenerally or otherwise, and may relate to a particularsuperannuation entity or a class of superannuation entities.

CLAUSE 329 REVOCATIONOF B 4PPIONS ANDMODIFICATIONS


CLAUSE 330 PUBLICATION OF EXEMPTIONSAND MODIFICATIONS SIC.


PART 30 - JCSCELLPNS(XJS



713

CLAUSE 332 CONDUCTBY DIREC1DRSt SERVANTSAND AGENTS

523. This clause sets out theinto account in proceedings f o~state of mind of directors, serany conduct engaged in by or on

CLAUSE 333 CONVICTION tOES NOT]LIABILITY


:onsiderat ions a court may takean offence in determining the

vents and agents in relation tobehalf of a body corporate.

tELIEVE DEFENDANTFRCMCIVIL

CLAUSE 334 LIABILITY FOR DANAGE$

525. This clause exempts the perto Ce) fran liability for bona fof the performance of powers oror the regulations.

CLAUSE 335 CIVIL ]Jt1UNITY W}~E1

THIS ACT

526. This clause provides for cidone by a person oomplyin9 with tregulations, including in respfulfilling obligations pursuant

sonsspecified in para~raphs(a)ide acts or omissions in respect

functions conferred by the Act

DEFENDANTWAS CCt4PLYING WITH

.ril immunity in relation to actshe provisions of this Act or theect of actuaries and auditorsto sections 123 and 124.

CLAUSE 336 PRE-l JULY 88 FUNDINC$ CREDITS ANt) DEBITS

527. This clause provides for t.1988 funding credits and debits

529. Subclause (2) provides thatunder subclause (1) the Insurancemist give a written notice to the1988 funding credit where cerlsatisfied.

530. Subclause (3) sets out requlfor pre-1 July 1988 funding creand (6) set out the obligeSuperannuation Commissioner inthe circumstances in which the Ccof a fund a pre-i July 1988 deb:

rernents relating to applicationsdits, while sübclauses (4), (5)tions of the Insurance and~s~ect of prescribed events and~mu.ssioner may grant the trusteeLt.

-ie administration of pre-1 July

528. Subclause (1) provides th4 a trustee of a fund may applyto the Commissioner for a pre-1~Ju1y 1988 funding credit.

upon receipt of an applicationand Superannuation Ccrrmiss ionerapplicant granting a pre-1 July

:ain prescribed conditions are

74

531. Subclauses (7) and (8) provide for the transfer of pre-1July 1988 funding credits between funds in certain circumstances.Subclause (9) empowers the Ccxtrcissioner to revoke a notice incertain circumstances, while subclause (10) provides that theCcwrrnissioner must give written notice of a decision to refuse togrant a pre-1 July 1988 funding credit. Subclause (11) providesthat the Ccirmissioner must set out reasons for refusing to granta notice, or revoking a notice given, in respect of the transferof pre-1 July 1988 credits between funds.

532. Subclause (12) provides that the Commissioner of Taxationmist be given details of all notices in relation to the transferof pre—1 July 1988 funding credits.

CLAUSE 337 RULES A~.mSTPERPETU1TIES NOTTO APPLY TOSUPERANNUATIONEflTITY

533. This clause provides that the rules of law relating toperpetuities do not apply, and are taken never to have awlied,to the trusts of any en~loyer-sponsored fund, irrespective ofwhen the fund was established.

CLAUSE 338 REVIEWOF CERThIN DECISIONS

534. This clause provides that the trustees of a superannuationentity that is affected by a decision that is a “reviewabledecision” may, by written notice given to the Carinissioner withina period of 21 days after the date on which the fund firstreceives notice of the decision, or such longer period as theCcitnissioner allows, request the Commissioner to reconsider thedecision.

535. Where the Cocinissioner does not confirm, revoke or vary adecision within 60 days after receipt of a request to reconsiderthe decision, the decision is deentd to have been confirmed bythe Ccniiissioner. Where the Catnissioner confirms, revokes orvaries a decision before the expiration of 60 days after receiptof the request, the Ccxrnissioner rust inform the trustees of thefund of the reasons for confirming, revoking or varying thedecision, as the case nay be.

536. Application may be made to the Administrative AppealsTribunal for a review of a decision that has been confirmed orvaried by the Commissioner.

CLAUSE 339 STATEMENTSTO ACCCMPANYmTIFICATION OF DECISIONS

537. This clause provides for notification of appeal rights tothe trustees of a superannuation entity affected by a reviewabledecision of the Ccnxiissioner.

75

CLAUSE 340 SECRECY

538. This clause provides for protection, subject to theprovisions of the Freedom of Information Act 1982, of anyinformation or documents concerning the affairs of anysuperannuation entity acquired under or for the purposes of thisAct.

539. Subclauses (3), (4) and (5) set out certain types ofinformation and certain circumstances in which the Comnissioneris not prohibited from disclosing information.

540. Subclause (6) sets out particular persons to whom theCommissioner nay disclose information.

CLAUSE 341 HOWINFORMATION MAYBE GIVEtI TO THE CtWISSIONER OFTAXATION

541. This clause provides that information required or authorisedto be given by the Commissioner to the Commissioner of Taxationunder this Act can be conveyed by means of a data processingdevice.

CLAUSE 342 Ctfl~ffSS lONER MAY PUBLISH STATISTICAL INFORMATION

542. This clause provides that the Commissioner may publishstatistical information relating to superannuation entities orthe payment of benefits to persons. However, such informationmay not be published in such a way as to identify particularsfurnished in respect of a person or an individual fund.

CLAUSE 343 THIS ACT AND THE RFi3ULATIONS HAVE EFFECT SUBJECT TOTHE CRIMES (SUPERANNUATIONBENEFITS) ACT 1989


CLAUSE 344 CONCURRENTOPERATIONOF STATE/ThRRITORY LAWS


CLAUSE 345 DEL~ATION

545. This clause provides that the Commissioner may delegate allhis or her powers under the Act or the regulations to a memberof his or her staff, other than the obligation imposed upon theCamussioner under section 346 to prepare and give to theMinister an annual report.

76

CLAUSE 346 ANNUALREFORTS

546. This clause requires the Carrnissioner to prepare and giveto the Minister within 3 months after each year ending on 30 Junea report on the working, during the year, of the Act. TheMinister has to cause a copy of the report to be laid before eachHouse of the Parliament within 15 sitting days after the day ofreceipt of the report.

ClAUSE 347 REGULATIONS

547. This clause permits the Governor-General to make regulationsnot inconsistent with the Act, in respect of matters required orpermitted by the Act to be prescribed or for the carryin? out ofor for giving effect to the Act. In particular, regulations maybe made in respect of the payment of fees, and the payment to theComEonwealth of prescribed penalties not exceeding 10 penaltyunits in respect of of fences against the regulations.

PART 31 - TRANSITICt? TO SCE~EPROVtDfl) FOR D~THIS ACT

DIVISION 1 - OBJECT OF PART



DIVISION 2 - ENTITIES THAT HAVE A MANAGE~1ENTCOMPANYAND A

TRUSTEE

SUBDIVISION A - GENERAL

CLAUSE 349 ENTITY TO WHICH DIVISION APPLIES

549. Subclause (1) provides that Division 2 of Part 31 appliesto a trust or fund if the conditions specified in subclause (2)are satisfied on the carmencement of the Part, or becomesatisfied after that commencement and before 1 July 1994.

550. The conditions set out in subclause (2) are that the fundor trust is a complying superannuation fund within the meaningof Part IX of the Income Tax Assessment Act 1936, or an approveddeposit fund or pooled superannuation trust within the meaningof the Occupational Superannuation Standards Act 1987, interestsin the fund or trust are prescribed interests within the meaningof the Corporations Law referred to in paragraph (b), there isa trustee of the fund or trust, there is a management companywithin the meaning of the Corporations Law referred to inparagraph(b) in relation to those prescribedinterests, andthetrustee and management company are constitutional corporations.

551. Subclause (3) provides that the fund or trust to which thisDivision applies is called a ‘Part 31 entity’.

7.7


552. This clause sets out a number of definitions and expressionsfor the purposes of this Division.

SUBDIVISION B - EXISTING N GE74ENT CCMPANY MAY RETIRE

CLAUSE 351 EXISTING M~ThGE74Etft CC&IPANY MAY GIVE NOTICE OFRErIRfl~1E�~T

553. Subclause (1) provides that, sut~ject to clause 352, theexisting management ccnipany may retire fran the office ofmanagement company of the Part 31 entity by giving a writtennotice to the existing trustee of the entity.

554. Subclause (2) provides that the notice referred to subclause(1) ‘mist specify a date of effect that is at least three months

after it was given to the existing trustee and after 30 June1994.

555. Subelause (3) provides that the existing management companycannot give a notice of retirement under this clause if theexisting trustee has already given the existing managementcompany a notice under clause 357.

556. Subclause (4) provides that if the existing managementcompany gives a notice of retirement under this clause to theexisting trustee, the management company tmist also give a copyof the notice to the Commissioner.

557. Subclause (5) provides that intentional or recklesscontravention of subclause (4) by the existing management companyis an offence.

558. Subclause (6) provides a notice of retirement referred toin subclause (1) cannot be revoked

CLAUSE 352 EFFECT OF NOTICE UNDERSECTION 351.

559. Subclause (1) provides that where the existinq managementcompany gives a notice under the clause 351, the retirement willtake effect on the date specified in the notice if the Part 31entity is a superannuation entity on the date of effect specifiedin the notice.

78

560. Subclause (2) provides that if the retirement of themanagement company takes effect under subclause (1), then so longas the Part 31 entity remains a superannuation entity, no newmanagement company of the entity can be appointed, the governingrules of the entity have effect as if the references to themanagement company were instead references to the trustee of theentity and, subject to subclauses (4) and (5), the trustee of theentity has power to amend any trust instrument that constitutes,or is part of, the governing rules for the purpose of reniovingreferences to the management cccrpany and making other changesconsequential on the renDval of those references.

561. Subclause (3) provides that an appointment that wouldcontravene paragraph 2(a) is ineffective.

562. Subclause (4) provides that amendments under para~raph(2) (c) must be ones which the Part 31 entity reasonably believeswill not adversely affect the rights of members of the entity.

563. Subclause (5) provides that regulations may be made inrespect of matters specified in paragraphs (a) and (b).

564. Subclause (6) provides that a notice under clause 351 hasno effect except as provided for in Division 2.

CLAUSE 353 ACTION TO BE TAKEN BY EXISTING TRUSTEEONRECEIPTOF NOTICE UNDERSECTION 351

565. Subclause (1) provides that if the existing trustee receivesa notice under section 351, the existing trustee must take actionunder subclause (2) or (3) within two mnnths of receiving thenotice.

566. Subclause (2) provides that, subject to clause 355, theexisting trustee may retire from the office of trustee of thePart 31 entity by giving written notice to the Commissioner.

567. Subclause (3) provides that the existing trustee may givewritten notice to the Commissioner that it is not going toretire.

568. Subclause (4) provides that if the existing trustee givesthe Commissioner a notice under subclause (3), the existingtrustee must give a copy of the notice to each member of the Part31 entity.

569. Subclause (5) provides that intentional or recklesscontravention of subclauses (1) or (4) by the existing trusteeis an offence.

79

CLAUSE 354 CflVICSSIONER IC) APPOINT NE~TRUSTEE IF RECEIVESNOTICE UNDERSUBSECTION353(2)

570. This clause provides that if the Commissioner receives anotice under subclause 353(2) from the existing trustee, thecommissioner must appoint a constitutional corporation as the newtrustee of the Part 31 entity1 and the appointment of the newtrustee does not take effect except as provide for in subclause355(2).

CLAUSE 355 EFFECT OF NOTICE UNDERSUBCLAUSE353(2)

571. Subclause (1) provides that where an existing trustee givesthe Commissioner a notice under subclause 353 (2), and the Part31 entity is a superannuation entity on the date of effectspecified in the notice given by the management company underclause 351, the retirement of the existing trustee takes effecton that date.

572. Subclause (2) sets out provisions that apply if theretirement of the existing trustee takes effect under subclause(1). Under paragraph (a) the appointment of the new trustee

under clause 354 takes effect when the retirement of the existingtrustee takes effect. Under paragraph (b) the property of theentity vests in the new trustee in accordance with subclauses(3), (4) and (5).

573. Subclauses (3) and (4) provide that property of the Part 31entity that was vested in law or in equity in the existingtrustee immediately before the retirement of the exist ingtrustee, vests in the new trustee at that time. Subclause (35is subject to subclause (5).

574. Subclause (5) provides that property does not vest in lawin the new trustee until the requirements of any transfer law,as provided for in paragraphs (a) and (b), have been compliedwith.

575. Subclause (6) provides that the former trustee must do allthings within its power that are necessary to enable theregistration of the new trustee as the owner of the propertyunder the transfer law referred to in subclause (5).

576. Subclause (7) provides that intentional or recklesscontravention of subclause (6) is an offence.

577. Subclause (8) provides that a notice under subclause 353(2)has no effect except as provided for in this clause.

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CLAUSE 356 WHATIThPPENS IF EXISTING TRUSTEE FAILS TO GIVE ANOTICE UNDER SUBQAUSE353(2) OP. (3)

578. Subclause (1) provides that if the existing trustee failsto give a notice as required by subclause 353 (1), the trustee istaken to havegiven a notice to the Commissioneras provided forin subclause 353(3).

579. Subclause (2) provides that subclause (1) does not haveeffect for the purpose of a prosecution relating to contraventionof subclause 353(1).

580. Subclause (3) provides that if the existing trustee is takento have given a notice because of the cperation of subclause (1),then the existing trustee is not required to give a copy of thenotice to each member of the entity as provided for by subclause353(4).

SUBDIVISION C - EXISTING TRUSTEEMAYRETIRE

CLAUSE 357 EXISTING TRUSTEE MAYGIVE NOTICE OF RETTIREMENT

581. Subclause (1) provides that, subject to clause 360, theexisting trustee may retire fran the office of trustee of thePart 31 entity by giving a notice to the existing managementcompany of the entity in accordance with this clause.

582. Subclause (2) provides that the notice must specify a dateof effect that is at least three months after it was given to theexisting managertent company and after 30 June 1994.

583. Subclause (3) provides that the existing trustee cannot givea notice of retirement under this clause if the existingmanagement company has already given the existing trustee anotice under clause 351.

584. Subclause (4) provides that if the existing trustee givesa notice of retirement under this clause to the existingmanagement company at the same time that the existing managementcom~any~ives the existing trustee a notice under clause 351, thenotice given by the existing trustee has no effect.

585. Subclause (5) provides that if the existing trustee givesa notice of retirement under this clause to the existingmana~ement company, a copy of the notice must be given to theCommissioner by the trustee.

586. Subclause (6) provides that intentional or recklesscontravention of subci].ause (5) by the existing trustee is anoffence.

587. Subclause (7) provides a notice of retirement referred toin this clause cannot be revoked.

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CLAUSE 358 ACTION 7K) BE TAKEN BY EXISTING MANAGEMENT(tNPANY

ON RECEIPT OF NOTICE UNDERSECTION 357

588. Subclause (1) provides that if the existing managementcompany receives a notice under section 357, the existingmana9ement company must take action under subclause (2) and (3)within two months of receiving the notice.

589. Subclause (2) provides that, subject to clause 361, theexisting management company may retire from the office ofmanagement company of the entity and refuse to be appointedtrustee of the entity by giving written notice to theCommissioner.

590. Subclause (3) provides that, subject to clause 361, theexisting management company may retire from the office ofmanagement company of the Part 31 entity and agree to beappointed trustee of the entity by giving written notice to theCommissioner.

591. Subclause (4) provides that intentional or recklesscontravention of subclause (1) by the existing management companyis an offence.

CLAUSE 359 CCI’MTSSIONER ‘10 APPOINT NEWTRUSTEE

592. Subclause (1) provides that, subject to subclauses (2) and(3), if the Commissioner receives a notice under clause 357 that

the existing trustee will retire, then the Ccxrmnissioner mustappoint a constitutional corporation as the new trustee of theentity.

593. Subclause (2) provides that if the Commissioner alsoreceives a notice under subclause 358(2) that the existingmanagement company refuses to be appointed as trustee, then theCommissioner must not appoint the existing management company asthe new trustee.

594. Subclause (3) provides that if the Ccxrmn.issioner receives anotice under subclause 358(3) to the effect that the existingmanagement company agrees to be appointed as trustee, then theCommissioner must appoint the existing management company as thenew trustee.

595. Subclause (4) provides that the appointment of the newtrustee does not take effect except as provided for in Clause360.

CLAUSE 360 EFFECT OF NOTICE UNDERSECTION 357 ON TRUSTEE.

596. Subclause (1) provides that the clause applies in the

circumstances set out in paragraphs (a) and (b).597. Subclause (2) provides that the retirement of the existingtrustee takes effect on the date specified in the notice referredto in subclause (1).

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598. Subclause (3) sets out provisions that apply if theretirement of the existing trustee takes effect under subclause(1). Under paragraph (a) the appointment of the new trustee of

the entity under clause 359 takes effect when the retirement ofthe existing trustee takes effect. Under paragraph (b) theproperty of the entity vests in the new trustee in accordancewith subclauses (4), (5) and (6)

599. Subclauses (4) and (5) provide that property of the Part 31entity that was vested in law or in equity in the existingtrustee immediately before the retirement of the existing trusteevests in the new trustee at that time. Subclause (4) is subjectto subclause (6).

600. Subclause (6) provides that property does not vest in lawin the new trustee until the requa.rements of any transfer law,as provided for in paragraphs (a) and (b), have been compliedwith.

601. Subclause (7) provides that the former trustee must do allthings within its power that are necessary to enable theregistration of the new trustee as the owner of the propertyunder the transfer law referred to in subclause (6)

602. Subclause (8) provides that intentional or recklesscontravention of subclause (7) is an offence.

CLAUSE 361 EFFECT OF NOTICE UNDERSECTION 357 ONMANAGEMENTCt(vIPANY

603. Subclause (1) provides that the retirement of the existingmanagement company from the office of management company of theentity takes effect at the same time as the retirement of theexisting trustee, where clause 360 applies and the existingmanagement company has given the Commissioner a notice undersubclause 358(2) or (3).

604. Subclause (2) provides that if the retirement of theexisting management company’s takes effect under subclause (1),then so long as the Part 31 entity remains a superannuationentity, no new management company of the entity can be appointed,the governing rules of the entity have effect as if referencesin them to the management company were instead references to thetrustee, subject to clause (4~) and (5), the trustee is empoweredto amend any trust instrument that constitutes, or is part of,the governing rules for the purposes of removing references tothe management company and making other changes consequential onthe removal of those references.

605. Subclause (3) provides that an appointment of a newmanagement company in contravention of paragraph 2(a) isineffective. Subclause (4) provides that amendments referred toin paragraph 2(c) must be amendments that the trustee reasonablybelieves will not adversely affect the rights of the members ofthe entity.

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606. Subclause (5) provides that regulations may be made in

P respect of natters specified in paragraphs (a) and (b).

CLAUSE 362 NOTICES UNDERSECTIONS 357 AND 358 HAVENC) EFFECT

EXCEPTAS PROVIDED IN THIS DIVISION

607. self explanatory.

CLAUSE 363 WHATHAPPENSIF EXISTING MANAGEMENT(flvIPANY FAILS

TO GIVE A NOTICE UNDERSUBSECTIONS 358 (2) OR (3)

608. This clause provides that if the existing management companyfails to act as required under subclause 358(1), the existingmanagement is taken to have notified the Commission, pursuant tosubclause 358(3), that it has retired from the office ofmanagement company of the entity and agreed to being appointedas its trustee.

SUBDIVISION D - WHAT HAPPENS IF EXISTING MANAGEMENTCOMPANYOREXISTING TRUSTEE STOPS HOLDING OFFICE OThERWISE‘IMAN UNDERTHISDIVIS ION

CLAUSE 364 EXISTING MAI1AGE2wIfl%TT COMPANYCEASESTO HOWOFFICEFIRST

609. This clause sets out how Division 2 and the noticere9uirementsreferred to in subclause(4) would apply where theexisting management company on or after 1 July 1994 ceases tohold office as the management cctrpany of the entity otherwisethan because of Division 2 and at the time of cessation, theexisting trustee still holds office as the trustee of the entityand the entity is a superannuation entity.

CLAUSE 365 EXISTING TRUSTEE CEASES TO HOWOFFICE FIRST

610. This clause sets out how Division 2 and the noticere9uirements referred to in subclause (3) would apply where theexisting trustee on or after 1 July 1994 ceases to hold officeotherwise than because of Division 2 and at the time ofcessation, the existing management company still holds office asthe management company of the entity and the entity is asuperannuation entity.

CLAUSE 366 EXISTING TRUSTEE CANNOTCEASE 10 HOLD OFFICE ATSAMETIME AS EXISTING MANAGEMENTCfl’4PANY

611. This clause sets out how Division 2 and the noticereguirements referred to in subclause (5) would apply where theexisting trustee and the existing management company on or after1 July 1994 would, but for this clause, cease to hold theirrespective offices in relation to the entity at the same time andotherwise than because of Division 2 and, at the time ofcessation of those offices, the entity is a superannuationentity.

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612. Subclause (2) provides that by force of this clause theexisting trustee in these circumstancesdoes not cease to holdoff ice as the trustee of the entity.

SUBDIVISION E - SPECIAL PROVISIONS IN RELATION 10 ThETThNSITIC~L PERIOD

CLAUSE 367 INIERPRFPATION


CLAUSE 368 EXISTING TRUSTEE TAKEN TO BE AN APPROVEDTRUSTEE

614. This clause provides that after 30 June 1994, where the Part31 entity is a superannuation entity, and the existing trusteeand existing management company continue to hold their respectiveoffices in relation to the entity, the existing trustee is takento have been approved as a trustee under clause 26 on 1 July1994.

CLAUSE 369 APPLICATION OFSECTION147 DURINGTEE TRANSITIONALPERIOD

615. This clause sets out how clause 147 applies to a Part 31entity after 30 June 1994, where the Part 31 entity is asuperannuation entity, and the existing trustee and existingmanagement ccupany continue to hold their respective offices inrelation to the entity. The clause ensures that the entity isprecluded, in effect, from issuing superannuation interests inthe entity to a person who was not a menter of the entity on 1July 1994 or to a standard employer-sponsor, who was not astandard employer-sponsor of the entity on 1 July 1994.

CLAUSE 370 R33ULATIONS MAY MODIFY APPLICATION OF ACT ANDAPPLY PROVISIONS OF THE CORPORATIONSLAW ETC

616. Subclause (1) provides that the regulations may ntdify theway in which the Bill (other than this Part) and the regulationsmade under the Bill (other than this Part) applies to the Part31 entity during the transitional period. However, subclause (2)provides that a modification under subclause (1) must not changethe penalty for an offence or be inconsistent with clause 369.

617. Subclause (3) provides that regulations may apply to theentity some or all of the provisions of Division 5 of Part 7.12of the Corporations Law and Part 7.12 of the CorporationsRegulations as in force at the ccnnencement of this Part, withsuch nndifications as are prescribed.

61$. Subclause (4) provides that the provisions applied by theregulations have effect as if they were provisions of the Bill,and as if interests in the Part 31 entity were prescribedinterests.

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619. Subclause (5) provides that1 subject to subclause (6), theregulations may provide penalties for of fences against theapplied provisions not exceeding 10 penalty units.

620. Subclause (6) covers the circumstance where an appliedprovision of Corporations Law has a pecuniary penalty greaterthan 10 penalty units in the Corporations Law. This subclauseallows tE~e regulations to provide for a penalty of more than 10units provided that it does not exceed the maximum pecuniarypenalty for the offence against the relevant correspondingprovision of the Corporations Law or Regulations. However, theregulations cannot provide for penalties of imprisonment.

SUBDIVISION F - MISCELLANEOUS

CLAUSE 371 NEWTRUSTEE TO NOTIFY APPO~IMENTTO MEMBERS

621. Subclause (1) provides for members of the entity to benotified (in the approved form) of the appointment of a bodycorporate who becomes the trustee of the entity under thisDivision.

622. Subclauses (3) and (4) provide that a contravention of thissection, without reasonable excuse, is an offence, but does notaffect the validity of an appointment.

CLAUSE 372 CIVIL I!vNUNITY FOR ACTIONS UNDERDIVISION


CLAUSE373 DIVISION HAS EFFECT DESPITE ANYTHING IN ANYGr}~RPART OF THIS ACT ETC


DIVISION 3 - REX~ULATIONS MAYMAKE OThER TRANSITIONAL PROVISIONS

ClAUSE 374 RB3ULATIONSMAYMAKEOTHERTRANSITIONAL PROVISIONS


Documents

I~IIi~Dfl~ · SUPERMt~TIC2~INDUSTRY (SUPERVISflT) BILL 1993 GENERAL OCJThINE AND~IN PURPOSES OF ThE BILL This Bill, together with the coapanion Occupational Superannuation Standards