Governance Review Implementation (Treasury Portfolio Agencies) Act 2007

The central concept running through the Act is that ASIC, CAMAC and APRA are not separate legal entities for the purposes of property ownership and financial liability. Instead, each agency functions as an administrative unit of the Commonwealth, holding property and money for and on behalf of the Commonwealth. This concept is expressed in nearly identical terms for each agency. For ASIC, subsection 8(2) provides that ASIC may enter into contracts in its own right, but subsection 8(3) immediately qualifies this by stating that any real or personal property held by ASIC is held for and on behalf of the Commonwealth, and subsection 8(4) states the same for money received by ASIC. Subsection 8(7) clarifies that a right to sue is not personal property for these purposes, preserving ASIC's ability to litigate in its own name. Section 8A deems any financial liabilities of ASIC to be liabilities of the Commonwealth, with a financial liability defined as a liability to pay a person an amount where the amount or the method for working out the amount has been determined. The same structure applies to CAMAC under sections 146 and 146A, and to APRA under sections 11 and 11A. A second key concept is that ASIC cannot hold property on trust. Subsection 8(5) states this expressly, and the note adds that any property or money ASIC would otherwise hold on trust is held by the Commonwealth on trust. Subsection 8(6) then provides that, despite any rule of equity, ASIC may for and on behalf of the Commonwealth perform all the duties and exercise all the powers of the Commonwealth as trustee in relation to any such property. This avoids disruption to existing trust arrangements while ensuring the legal title rests with the Commonwealth. Third, the Act introduces the concept of the Chairperson (or Convenor or Chair) not being subject to direction by the agency on certain Financial Management and Accountability Act 1997 and Public Service Act 1999 matters. Section 10A for ASIC, section 147A for CAMAC, and section 12A for APRA each provide that the head of the agency is independent of the agency itself when performing functions under those Acts. Fourth, the Act establishes new special accounts. For ASIC, section 133 creates the Companies and Unclaimed Moneys Special Account, which replaces the previous unclaimed money account. For APRA, section 52 creates the Australian Prudential Regulation Authority Special Account. Both are special accounts for the purposes of the Financial Management and Accountability Act 1997 and have specified credits and debits. For ASIC, credits include appropriated money, amounts under Corporations Act section 1339, interest from investment of account amounts, and money received in relation to property paid for from the account (section 134). Debits include payments under Corporations Act section 1341, expenses of administering the account, and amounts determined by the Minister to reduce business costs and improve regulation in areas including corporate governance, securities, financial products, and winding up (section 135(2)(d)). For APRA, credits include appropriated money, amounts from agreements or contracts under section 9A or 11 of the APRA Act, levy money amounts under section 50, and fees, charges or penalties (section 53). Debits include costs and expenses of performing APRA's functions, remuneration and allowances, and other payments authorised or required under the APRA Act or other Commonwealth law (section 54).

The Act directly affects four groups. First, the three agencies themselves are affected by the re-characterisation of their legal status. ASIC, CAMAC and APRA no longer hold property, money or liabilities in their own right as separate Commonwealth authorities. They must now conduct their operations on the basis that all property and money is held for and on behalf of the Commonwealth and that all financial liabilities are Commonwealth liabilities. This affects their contracting, accounting, trust administration, and reporting functions. Second, the Act affects the heads of those agencies: the Chairperson of ASIC, the Convenor of CAMAC, and the Chair of APRA. These individuals gain new independence provisions freeing them from direction by the agency on Financial Management and Accountability Act and Public Service Act matters (sections 10A, 147A, 12A). For APRA, the Chair gains additional powers to appoint staff and consultants on behalf of APRA (items 53-56), and to determine APRA Values and the APRA Code of Conduct (sections 48AB, 48AC). The Chair may also delegate functions or powers conferred by Part 4 or 4A of the APRA Act to an APRA member (other than the Chair) or to an APRA staff member (section 48AA). Third, the Act affects persons who have claims to unclaimed property held by ASIC. The former framework under which ASIC held unclaimed property on trust is replaced. Under the new section 1339 of the Corporations Act, unclaimed property held by ASIC is held for and on behalf of the Commonwealth, and ASIC must credit money to the Companies and Unclaimed Moneys Special Account or sell or dispose of other property and credit the proceeds to that account. If a person claims an amount credited to that account under subsection 1339(2) and ASIC is satisfied of the entitlement, ASIC must pay the amount to the person and debit it from the account, or if it has already been debited under the six-year rule, pay it out of appropriated money (section 1341(2)). Fourth, the Act affects the Commonwealth itself. The Commonwealth becomes the legal holder of trust property that would otherwise vest in ASIC. Subsection 601AD(1A) of the Corporations Act provides that on deregistration of a company, all property that the company held on trust immediately before deregistration vests in the Commonwealth, while other company property vests in ASIC under subsection 601AD(2). The Commonwealth gains powers as trustee under subsections 601AD(3A) and 601AE(1), and may apply to a court for appointment of a new trustee. The Commonwealth also becomes liable for notional payments in respect of liabilities imposed on property that vests in it (subsection 601AE(2A)). Fifth, state and territory governments are affected by the stamp duty and other tax exemptions in Schedule 2, item 18, which provides that no stamp duty or other tax is payable under a law of a State or Territory in respect of the transfer of an asset or liability under the Schedule or the operation of the Schedule in any other respect.

The Act imposes several key duties and confers specific rights. For ASIC, the principal duty is to hold property and money for and on behalf of the Commonwealth and to not hold property or money on trust (subsections 8(3), 8(4), 8(5)). If property or money would otherwise be held on trust by ASIC, it is held by the Commonwealth on trust, but ASIC may perform all the duties and exercise all the powers of the Commonwealth as trustee (subsections 8(5), 8(6)). ASIC must deal with unclaimed property by crediting money to the Companies and Unclaimed Moneys Special Account or selling or disposing of other property and crediting the proceeds to that account (section 1339 of the Corporations Act). If a person claims an amount and ASIC is satisfied of the entitlement, ASIC must pay the amount to that person (section 1341(2) of the Corporations Act). ASIC must also ensure that amounts not debited from the Companies and Unclaimed Moneys Special Account within six years of being credited are debited from the account (section 1341(1) of the Corporations Act). ASIC is not subject to taxation under Commonwealth, state or territory laws unless regulations provide otherwise (section 137). For CAMAC, similar duties apply: CAMAC holds property and money for and on behalf of the Commonwealth (subsection 146(2), (3)), it is not subject to taxation (section 159), and it must comply with annual reporting requirements under section 162. The Convenor must prepare and give to the Minister a report on CAMAC's operations each financial year, including financial statements and an audit report, and the Minister must table it within 15 sitting days. For APRA, the Chair gains the duty to determine APRA Values and the APRA Code of Conduct (sections 48AB, 48AC), and must uphold and promote those values. APRA members and staff must uphold the APRA Values. The Chair must appoint staff on behalf of APRA (section 45), engage consultants (section 47), and ensure that staff and consultants have a code of conduct (section 48D). The Chair must also prepare annual reports on APRA's operations, including information on ADI statutory managers and investigations under the Banking Act 1959, exercise of powers under the Retirement Savings Accounts Act and Superannuation Industry (Supervision) Act, financial statements and audit reports (section 59). APRA's levy money arrangements are restructured: the Minister determines the amount of levy money payable to the Commonwealth to cover costs of market integrity and consumer protection functions, and the excess over that determination is credited to the Australian Prudential Regulation Authority Special Account (section 50). APRA is not subject to taxation under Commonwealth, state or territory laws (subsection 55(1)), but a note to subsection 55(2) clarifies that APRA may still be subject to GST under the A New Tax System (Goods and Services Tax) Act 1999. For all three agencies, Schedule 2 provides transitional duties: agency heads must provide any outstanding reports under the previous law for periods ending before the commencement time (item 14). The Commonwealth gains the right under Schedule 2 to lodge certificates with land registration officials and assets officials to effect vesting of land and other assets (items 6, 7), and those certificates are taken to be authentic unless the contrary is established (item 9). The Commonwealth is also liable to pay reasonable compensation if the operation of the Schedule results in an acquisition of property otherwise than on just terms (item 17).

The Act itself does not create new criminal offences or civil penalty provisions directed at regulated entities. It is machinery legislation that restructures governance arrangements for three statutory agencies. However, the Act establishes frameworks through which enforcement accountability operates indirectly. For company deregistration scenarios, amendments to the Corporations Act alter the vesting of trust property and other property. Under subsection 601AD(1A), trust property vests in the Commonwealth on deregistration, and under subsection 601AD(2), other company property vests in ASIC. The Commonwealth and ASIC gain powers under section 601AF to fulfil outstanding obligations of the deregistered company, including obligations the company would have been bound to fulfil if still in existence. These provisions create potential liability for the Commonwealth and ASIC in respect of property they take. The liability provisions are qualified: subsection 601AE(2A) provides that if any liability is imposed on property under a law of the Commonwealth immediately before the property vests in the Commonwealth under subsection 601AD(1A), then immediately after that time the liability applies to the Commonwealth as if it were a body corporate, and the Commonwealth is liable to make notional payments to discharge that liability. Subsection 601AE(3) provides that any property vesting in the Commonwealth or ASIC under subsection 601AD(1A) or (2) is vested subject to any liability imposed on that property under a law of the Commonwealth and s 132 of the Bankruptcy Act 1966 (relating to property acquired after bankruptcy). Subsection 601AE(4) limits the Commonwealth's or ASIC's obligation under subsections (2A) and (3) to the value of the property at the time of vesting. The Act provides a constitutional safety net: if the operation of Schedule 2 results in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay reasonable compensation, and if no agreement is reached the person may institute proceedings in a court of competent jurisdiction (Schedule 2, item 17). This provision protects persons whose property interests may be adversely affected by the transitional vesting provisions. For taxation, section 137 for ASIC, section 159 for CAMAC, and subsection 55(1) for APRA provide that these agencies are not subject to taxation under Commonwealth, state or territory laws, though regulations may disapply this exemption for specified laws. The notes to each provision cross-reference section 177-5 of the A New Tax System (Goods and Services Tax) Act 1999, indicating that GST may still apply. No specific penalty amounts or infringement notice regimes are created by the Act. The enforcement mechanisms that exist are those that apply generally to breaches of the Financial Management and Accountability Act 1997 and the Public Service Act 1999, which are cross-referenced but not reproduced in this Act.

The Act is explicitly designed to align the three agencies with the Financial Management and Accountability Act 1997 (FMA Act). The independence provisions in sections 10A, 147A and 12A refer directly to the Chairperson's or Convenor's performance of functions under the FMA Act and the Public Service Act 1999, and provide that they are not subject to direction by the agency in relation to those functions. The special accounts established for ASIC (section 133) and APRA (section 52) are stated to be special accounts for the purposes of the FMA Act. The reporting requirements in sections 136, 162 and 59 reference the need for financial statements under section 49 of the FMA Act and audit reports under section 57 of the FMA Act. The Act also interacts extensively with the Corporations Act 2001. The definition of 'unclaimed property' in section 9 of the Corporations Act is amended to refer to property paid or transferred to ASIC under provisions that provide for property to be dealt with under Part 9.7, and to amounts credited to the Companies and Unclaimed Moneys Special Account. The vesting of property on company deregistration is fundamentally altered: new subsection 601AD(1A) provides that trust property vests in the Commonwealth, while subsection 601AD(2) provides that other property vests in ASIC. Section 601AE is amended to give the Commonwealth powers to continue as trustee or apply for appointment of a new trustee, and to credit money to a special account or sell property and credit the proceeds. Section 601AF gives the Commonwealth and ASIC powers to fulfil outstanding obligations of deregistered companies. Section 1339 of the Corporations Act is replaced to require ASIC to deal with unclaimed property by crediting money to the Companies and Unclaimed Moneys Special Account or selling or disposing of other property and crediting the proceeds. Section 1341 is replaced to provide for the six-year debit rule and for payment of claims. The Act interacts with the Commonwealth Authorities and Companies Act 1997 through transitional provisions: for CAMAC, item 10 of Schedule 2 provides that the reference in subsection 27L(4) of that Act to a Commonwealth authority is to be read as a reference to the Convenor. For APRA, item 13 of Schedule 2 provides the same substitution for the Chair of APRA. Item 16 of Schedule 2 provides that if an agency has kept accounting records under subsection 20(1) of the Commonwealth Authorities and Companies Act 1997, that section continues to apply in respect of those records as if the agency continued to be subject to that Act. The Act also interacts with the Acts Interpretation Act 1901. Sections 136, 162 and 59 note that section 34C of that Act contains provisions relating to annual reports. The APRA Values and Code of Conduct provisions (sections 48AB, 48AC) note that subsection 33(3) of the Acts Interpretation Act 1901 provides for the repeal, variation etc. of instruments, and each provision states that the instrument is not a legislative instrument, removing the requirement for parliamentary scrutiny under the Legislative Instruments Act 2003. The Act interacts with the Banking Act 1959 through the annual reporting provisions for APRA, which require information on the activities of ADI statutory managers and persons conducting investigations under Division 2 of Part II of the Banking Act and section 61 of that Act (section 59(2)(a)). However, subsection 59(3) provides that this does not authorise inclusion of information with respect to the affairs of a particular ADI, authorised NOHC, subsidiary or customer. The Act exempts transitional transfers from state and territory stamp duty and other taxes under Schedule 2, item 18.

The Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 is itself an amending act and has not been subsequently amended by any later enactment that is relevant to its core provisions. The Act received Royal Assent on 5 June 2007. Its commencement is split: sections 1 to 3, anything not elsewhere covered, and Schedule 3 commenced on Royal Assent (5 June 2007). Schedules 1 and 2 commenced on 1 July 2007. The amending Schedules inserted new provisions into the Australian Securities and Investments Commission Act 2001, the Corporations Act 2001, the Australian Prudential Regulation Authority Act 1998, and the Financial Institutions Supervisory Levies Collection Act 1998. Those new provisions have since been subject to the normal amendment history of their host Acts. For example, the Companies and Unclaimed Moneys Special Account established by section 133 of the ASIC Act may have been renamed or repealed since 2007. The APRA Values and Code of Conduct provisions (sections 48AB and 48AC of the APRA Act) may have been amended. The annual reporting provisions in sections 136, 162 and 59 may have been updated. However, the core structural changes made by this Act the re-characterisation of property holding, the prohibition on ASIC holding trust property, the establishment of special accounts, and the vesting rules for deregistered companies remain in force in their essential form. The transitional provisions in Schedule 2 were largely spent once the vesting of pre-existing property and liabilities was completed on and after 1 July 2007, though the constitutional safety net for acquisition of property (item 17) and the delegation and regulation-making powers (items 19, 20) remain available for any ongoing application. The stamp duty exemption in item 18 applies to anything connected with the operation of the Schedule, which may have ongoing effect if further dealings are required to perfect vesting arrangements.

The Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 is a machinery statute that has not generated significant reported litigation in its own name. The Act itself is not the subject of judicial consideration in the way that a substantive regulatory Act might be. Its provisions are largely procedural and structural, and they have operated without generating constitutional challenges or interpretive disputes that have reached the courts. The most likely source of future litigation would be the constitutional safety net in Schedule 2, item 17, which provides that if the operation of the Schedule results in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay reasonable compensation, and if no agreement is reached the person may institute proceedings in a court of competent jurisdiction. This mirrors the just terms guarantee in paragraph 51(xxxi) of the Constitution. Any person who claims that the vesting of their property in the Commonwealth under the transitional provisions constitutes an acquisition on other than just terms could bring proceedings. No such proceedings have been reported. A second potential area for litigation arises from the amendments to the Corporations Act concerning vesting of property on company deregistration. New subsection 601AD(1A) provides that trust property vests in the Commonwealth, while subsection 601AD(2) provides that other property vests in ASIC. Disputes could arise over whether particular property was held on trust or beneficially, and the extent of the Commonwealth's obligations under subsection 601AE(2A) to make notional payments in respect of liabilities imposed on vested property. The limitation in subsection 601AE(4) that the Commonwealth's or ASIC's obligation is capped at the value of the property at the time of vesting could also be litigated. A third area is the interpretation of the independence provisions in sections 10A, 147A and 12A, which provide that the agency head is not subject to direction by the agency in relation to performance of functions under the FMA Act and the Public Service Act. These provisions could be relevant in proceedings concerning the proper exercise of financial management powers or employment decisions. No reported cases have addressed these provisions. The Act's provision that APRA Values and the APRA Code of Conduct instruments are not legislative instruments (subsections 48AB(4), 48AC(3)) could be challenged if a person affected by those instruments sought to argue they should have been subject to parliamentary scrutiny. However, no such challenge has been reported.

Several provisions in the Act create traps for those who do not read carefully. First, the prohibition on ASIC holding property on trust in subsection 8(5) is absolute, but the note provides that any property or money that ASIC would otherwise hold on trust is held by the Commonwealth on trust. This means that a person dealing with ASIC in its capacity as a trustee may need to confirm that the Commonwealth is the actual trustee, with ASIC acting only as agent. Subsection 8(6) allows ASIC to perform all duties and exercise all powers of the Commonwealth as trustee despite any rule of equity, which is a broad saving provision but does not alter the legal reality that the Commonwealth is the trustee. Second, the definition of financial liability in sections 8A, 146A and 11A is limited to a liability to pay a person an amount where the amount or the method for working out the amount has been determined. This means that contingent liabilities where the amount is not yet determined and no method exists for working it out are not automatically Commonwealth liabilities. A plaintiff with an unquantified claim against an agency cannot rely on the agency's liability being automatically a Commonwealth liability until the amount is determined. Third, the six-year rule in section 1341(1) of the Corporations Act requires that if an amount is not debited from the Companies and Unclaimed Moneys Special Account within six years of being credited under subsection 1339(2), it must be debited from the account. The note clarifies that despite being debited, the amount remains part of the Consolidated Revenue Fund. This creates a practical concern for claimants: if six years have passed, the amount is no longer in the special account and must be paid out of appropriated money. ASIC's obligation to pay under subsection 1341(2) remains, but the mechanism changes. Fourth, the APRA Values and Code of Conduct provisions explicitly state that the instruments are not legislative instruments (subsections 48AB(4), 48AC(3)). This means they are not subject to disallowance or tabling in Parliament, and they are not registered on the Federal Register of Legislation as legislative instruments. A person subject to APRA regulation may not be aware of the content of these instruments unless APRA publishes them voluntarily. Fifth, the transitional provisions in Schedule 2 create automatic vesting without any conveyance, transfer or assignment (items 4(2), 5(2)). This means that a person dealing with ASIC or APRA may not have clear notice that property has vested in the Commonwealth. The Minister may lodge certificates with land registration officials and assets officials to effect registration, but lodging the certificate is optional not mandatory (items 6, 7). A person searching a title register may not see any record of the vesting until the certificate is lodged. Sixth, the exemption from stamp duty and other state or territory taxes in Schedule 2, item 18, applies only in respect of the transfer of an asset or liability under the Schedule or the operation of the Schedule. Any subsequent dealings with property that has vested under the Schedule may be subject to state or territory taxes. Seventh, the constitutional safety net in item 17 of Schedule 2 requires the Commonwealth to pay reasonable compensation only if the acquisition was otherwise than on just terms. This is not an automatic compensation right; the person must establish that the operation of the Schedule resulted in an acquisition of property and that the terms were not just. Eighth, the annual reporting provisions for ASIC, CAMAC and APRA all require that reports be given to the Minister as soon as practicable after 30 June each year, but there is no specified deadline other than the 15 sitting day tabling requirement. This creates a risk of delay in public accountability. Ninth, the independence provisions in sections 10A, 147A and 12A apply only to functions under the FMA Act and the Public Service Act 1999 (and for APRA, Part 4 or 4A of the APRA Act). They do not give the agency head general independence from the agency on all matters.

Compliance with the Governance Review Implementation (Treasury Portfolio Agencies) Act 2007 is primarily a matter for the three agencies and their staff, not for the general public or regulated entities. For ASIC, compliance requires ensuring that all property and money is held and recorded as being held for and on behalf of the Commonwealth, not as ASIC's own property. ASIC must not hold any real or personal property or money on trust; where ASIC would otherwise act as trustee, the trust property must be held by the Commonwealth with ASIC acting under subsection 8(6) to perform all duties and exercise all powers of the Commonwealth as trustee. ASIC's financial records and accounting systems must reflect that financial liabilities are Commonwealth liabilities and must be treated accordingly for budgeting and reporting purposes. ASIC must maintain the Companies and Unclaimed Moneys Special Account under section 133 and ensure credits from appropriated money, Corporations Act amounts, interest, and property proceeds are correctly credited. ASIC must ensure that unclaimed property received under Part 9.7 of the Corporations Act is dealt with by crediting money to the special account or selling or disposing of other property and crediting the proceeds. ASIC must process claims under section 1341(2) of the Corporations Act by paying the amount to the person and debiting it from the account, or if the six-year rule in subsection 1341(1) has caused the amount to be debited, paying it out of appropriated money. ASIC must also ensure that the six-year debit rule is applied to the special account. ASIC's annual report under section 136 must include a description of specific goals and priorities, progress towards them, adverse factors affecting effectiveness, performance indicators and performance, exercise of powers under the Retirement Savings Accounts Act and Superannuation Industry (Supervision) Act, monitoring of market integrity and consumer protection, activities under subsection 11(14) agreements, financial statements and audit reports. For CAMAC, compliance requires similar treatment of property, money and liabilities as held for and on behalf of the Commonwealth. CAMAC must not hold property or money in its own right. CAMAC's Convenor must ensure that annual reports under section 162 include financial statements and audit reports. For APRA, compliance is more detailed. The Chair must ensure that property and money are held for and on behalf of the Commonwealth (subsections 11(4), (5)). The Chair must determine APRA Values in writing and uphold and promote them (section 48AB). APRA members and staff must uphold those values. The Chair must determine an APRA Code of Conduct in writing that applies to APRA members and staff (section 48AC). The Chair must appoint staff on behalf of APRA (section 45) and engage consultants (section 47), and ensure that staff and consultants have a code of conduct (section 48D). The Chair may delegate functions or powers under Part 4 or 4A to other APRA members or staff (section 48AA). APRA must maintain the Australian Prudential Regulation Authority Special Account under section 52 and ensure correct credits from appropriated money, agreement or contract amounts, levy money amounts under section 50, and fees, charges or penalties. Debits must be for costs and expenses of performing APRA's functions, remuneration and allowances, and other authorised payments. APRA must ensure that the levy money arrangement under section 50 is followed: the Minister determines the amount of levy money payable to the Commonwealth to cover market integrity and consumer protection costs, and the excess is credited to the special account. For all three agencies, the transitional provisions in Schedule 2 require that any outstanding reports for periods ending before the commencement time must be provided by the agency head. The new annual reporting requirements in sections 136, 162 and 59 apply from the 2007-2008 financial year (Schedule 2, item 15). Records kept under the Commonwealth Authorities and Companies Act 1997 must continue to be maintained under that Act as if the agency continued to be subject to it (item 16). The Minister may delegate powers under Schedule 2 to the agency head (item 19).