Corporations (National Guarantee Fund Levies) Act 2001

The Corporations (National Guarantee Fund Levies) Act 2001 is a narrow Commonwealth Act that imposes levies connected with the National Guarantee Fund. It is not a broad company law statute and it does not create day to day rules for most Australian businesses.

Its function is to support the compensation framework in the Corporations Act 2001. The Act says that levies payable under sections 889J and 889K of the Corporations Act are imposed by this Act. Those levies relate to the situation where the amount in the National Guarantee Fund is less than the minimum amount referred to in section 889I of the Corporations Act.

The practical point is that this Act is only one part of the legal picture. It imposes the levy, but you usually cannot work out liability, scope or amount from this Act alone.

The Act itself does not contain a complete list of persons or entities that must pay. That is an important drafting feature. Section 4 imposes any levy that is payable under section 889J of the Corporations Act 2001 and any levy that is payable under section 889K of that Act. So the levy Act depends on the linked Corporations Act provisions to identify the underlying payable levy.

In practice, the businesses most likely to care are those involved in financial market infrastructure, market operation, compensation arrangements, or legal and compliance work around those areas. Directors and buyers of businesses in this sector should also pay attention because levy exposure may matter in due diligence and contingent liability reviews.

Most ordinary businesses will usually be outside the practical reach of this Act. If you run a retail business, hospitality venue, software company, trade business or professional practice with no regulated market infrastructure role, this law is unlikely to create direct action points for you.

The trigger described in the Act is the shortfall position in the National Guarantee Fund. Section 4 states that the levies relate to the situation in which the amount in the National Guarantee Fund is less than the minimum amount referred to in section 889I of the Corporations Act 2001.

That means the Act is not designed as a standing annual charge written directly into the legislation. It is tied to a shortfall scenario under the Corporations Act framework. Once that framework produces a levy payable under section 889J or 889K, this Act is the statute that imposes it.

For businesses, the practical reading is straightforward. Do not ask only whether this Act exists. Ask whether the National Guarantee Fund shortfall mechanism in the Corporations Act has been engaged, whether a levy is payable under section 889J or 889K, and whether a determination has set the amount or method.

Section 5 explains the amount mechanism. For a determination referred to in subsection 889J(1) of the Corporations Act 2001, the determination must specify the amount of levy payable or specify a method for determining that amount. The levy imposed by paragraph 4(a) is then the amount stated in the determination or the amount worked out under that method.

The same structure applies to a determination referred to in subsection 889K(1). Again, the determination must specify the amount or a method for determining it, and the levy imposed by paragraph 4(b) is the amount stated or worked out under the method.

This matters because the Act does not set one universal dollar figure. If your business is potentially affected, you need the actual determination. Without it, you may know that the Act can impose a levy, but you still may not know the amount.

Section 5 also allows flexibility across classes. It says different amounts or methods may be specified in the same determination in relation to different classes of matters or things.

For business readers, that means two entities operating in the same broad sector may not necessarily face the same levy outcome. The result depends on how the determination is drafted and which class applies. This is especially relevant in acquisitions, restructures and compliance reviews, where assumptions about a flat rate can be wrong.

If your business may be in scope, your internal review should identify the exact class used in the determination and keep a record of why that class applies. That is particularly useful for board papers, due diligence reports and responses to levy notices.

Section 5(4) places a limit on determinations referred to in subsection 889J(1) of the Corporations Act 2001. It says such a determination must not specify an amount of levy, or a method for determining the amount, that results in the total amount in levies becoming payable to the SEGC in a financial year exceeding 150% of the minimum amount in relation to the NGF on 1 July in that financial year.

This is a useful compliance checkpoint. It does not remove the need to read the determination, but it does provide a statutory boundary for that category of levy. If your business is reviewing a levy under the 889J pathway, the cap should be part of the legal analysis.

The Act does not provide a similar cap in section 5(4) for determinations referred to in subsection 889K(1). So businesses should be careful not to overgeneralise the cap beyond what the text actually says.

Sections 6 and 7 are transitional provisions. They are mainly historical, but they can still matter when a business is reviewing old records, legacy liabilities or long-tail disputes.

Section 6 deals with liabilities that existed immediately before the commencement of the Act under sections 938, 940 and 941 of the old Corporations Law of a State or Territory in the jurisdiction. Where an amount was payable immediately before commencement, the Act imposed a liability to pay a levy of the same amount, in respect of the same matter, to the Commonwealth on commencement. Depending on the provision involved, the levy was payable either to the operator of the financial market that was the securities exchange as agent for the Commonwealth, or to SEGC as agent for the Commonwealth.

In direct terms, section 6 carried certain pre-existing liabilities across into the new Commonwealth framework without changing the amount or the underlying matter. If you are looking at old files and see a levy that shifted from a securities exchange or SEGC to the Commonwealth, section 6 may explain that change.

Section 7 deals with the implementation of the Financial Services Reform Act 2001. It says that a determination already having effect immediately before the commencement of item 1 of Schedule 1 to that Act continues to have effect after commencement as if it were a determination for the relevant updated subsection of section 5. In practical terms, some earlier determinations were preserved rather than needing to be remade from scratch.

The Act received assent on 28 June 2001 and commenced at the same time as the Corporations Act 2001, which the legislation history records as 15 July 2001. The current compilation referred to here is Compilation No. 3, dated 20 October 2023 and registered on 15 November 2023.

The legislation history also records amendments in 2001, 2007 and 2023. As with many levy statutes, the practical effect of the Act at any given time still depends on the linked Corporations Act provisions and any relevant determination in force.

If you are relying on this page for a live compliance question, check the current compilation and any current determination before acting.

For most businesses, this Act will never move beyond background reading. For businesses in the relevant market infrastructure space, it should be read as part of a package. The safest approach is to confirm the trigger, the linked Corporations Act liability, the determination, the class treatment and any transitional issue.

Directors and compliance teams should avoid oversimplified internal summaries such as saying only that a levy may apply. The real questions are whether a levy is payable under section 889J or 889K, what determination applies, how the amount is set, whether a class distinction matters, and whether any older liability has been carried across by the transitional rules.