Australian Securities and Investments Commission Class Order [CO 98/110] (Cth)

ASIC Class Order [CO 98/110]

ADIs — related party balances and transactions

This instrument has effect under subsection 341(1) of the Corporations Act 2001.

This compilation was prepared on 1 September 2005 taking into account amendments up to [CO 05/640].

Prepared by the Australian Securities and Investments Commission.

Australian Securities and Investments Commission

Corporations Act 2001 — Section 341(1) — Class Order and Revocation

Pursuant to subsection 341(1) of the Corporations Act 2001 (“the Act”) the Australian Securities and Investments Commission (“ASIC”) hereby makes an order in respect of each company and disclosing entity which is an ADI, the parent entity of an ADI or an entity controlled by an ADI (“the Entity”) relieving the Entity from compliance with the requirements of the Act specified in the Schedule on condition that:

(a) a statutory declaration meeting the following requirements is lodged with ASIC with the Entity’s financial report as required to be lodged pursuant to subsection 319(1) of the Act for each of the financial years to which this order applies:

(i)    if the Entity is an ADI or a parent entity of an ADI, the declaration is made by two directors of the Entity;

(ii)   in any other case, the declaration is made by two directors of the ADI of which the Entity is a controlled entity;

(iii)   the declaration states that the Entity has systems of internal controls and procedures which:

(A)       in the case of any material financial instrument transaction, ensure that; and

(B)       in any other case, are designed to provide a reasonable degree of assurance that,

any financial instrument transaction of a Bank which may be required to be disclosed in the Entity's financial report in accordance with AASB 1017 and which is not entered into regularly, is drawn to the attention of the directors of the Entity so that it may be disclosed; and

(b)   a statement containing a summary of this class order is included in the notes to the Entity’s financial report.

SCHEDULE

Except in respect of any loan made, guaranteed or secured by, or financial instrument transaction of, a Bank of which any director of the Entity should reasonably be aware that if not disclosed, would have the potential to adversely affect the decisions made by users of the financial report about the allocation of scarce resources, subsection 296(1) of the Act, in so far as that subsection requires the Entity's financial report for a financial year commencing before 1 January 2005 to be made out in accordance with:

(i)    Paragraphs 4.10, 4.12 and 4.14 of AASB 1017 in respect of a loan regularly made, guaranteed or secured by a Bank other than a loan made, guaranteed or secured by a Bank to an AASB 1017 Director of the Entity or to an entity controlled or significantly influenced by such an AASB 1017 Director;

(ii)   Paragraphs 4.17, 4.18, 4.19, 6.2, 6.3, 6.4 and 6.5 of AASB 1017 in respect of a financial instrument transaction regularly made by a Bank (whether the Bank is a party to the financial instrument or not) where neither:

(A)  an AASB 1017 Director of the Entity; nor

(B)  an entity controlled or significantly influenced by such an AASB 1017 Director, is a party to the transaction;

(iii)  Paragraphs 9.1 and 9.2 of AASB 1046 in respect of a loan regularly made, guaranteed or secured, directly or indirectly, by a Bank other than a loan made, guaranteed or secured, directly or indirectly, by a Bank to an AASB 1046 Director of the Entity or an executive of the Entity, or to an entity controlled or significantly influenced by such an AASB 1046 Director or executive; and

(iv)  Paragraphs 10.1 and 10.2 of AASB 1046 in respect of a financial instrument transaction regularly made by a Bank (whether the Bank is a party to the financial instrument or not) where none of:

(A)  an AASB 1046 Director of the Entity; or

(B)  an executive of the Entity; or

(C)  an entity controlled or significantly influenced by such an AASB 1046 Director of the Entity or executive of the Entity, is a party to the transaction.

Definitions

In this instrument:

“AASB 1017” means accounting standard AASB 1017 “Related Party Disclosures”;

“AASB 1017 Director” has the same meaning as “director” in paragraph 9.1 of AASB 1017;

“AASB 1046” means accounting standard AASB 1046 “Director and Executive Disclosures by Disclosing Entities”;

“AASB 1046 Director” has the same meaning as “director” in paragraph 12.1 of AASB 1046;

“arm's length basis” in relation to a transaction between a Bank and another party, means on terms and conditions no more favourable to the other party than those which it is reasonable to expect the Bank would have adopted if dealing with the other party at arm's length in similar circumstances;

“ADI” means an authorised deposit-taking institution for the purposes of the Banking Act 1959 ;

“Bank” means a corporation which lawfully carries on the general business of banking, whether in Australia or another country, and includes an ADI;

“entity” means any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives;

“executive” has the same meaning as in paragraph 12.1 of AASB 1046;

“regularly” means lawfully and in the course of its ordinary banking business and either on an arm's length basis or with the approval of a general meeting of the Entity and its ultimate parent entity if any; and

“financial instrument transaction” means a transaction which has as its subject matter a “financial instrument” (other than a share or share option) as defined in paragraph 7.1 of AASB 1033 “Presentation and Disclosure of Financial Instruments” (whether or not that accounting standard applies to the Entity or for the financial year) and includes, but is not limited to, transactions involving loans, financial investments (other than in shares and share options), deposits, borrowings, bills of exchange, foreign exchange contracts, forward rate agreements, interest and currency swaps, futures contracts and options, caps, collars and floor agreements and any of the following where credit related, provision of security, endorsements, guarantees and commitments and any income or expenditure relating to such a transaction, and, except for futures contracts, does not include a transaction which has as its subject matter goods (other than financial assets) or services.

Pursuant to subsection 341(1) of the Corporations Law the Australian Securities and Investments Commission hereby revokes Class Order Number 97/1016 dated 9 July 1997 with effect from:

(i)    in respect of entities which apply the relief provided by Class Order 98/0095 dated 10 July 1998, financial years ending after 7 July 1998; and

(ii)   in all other cases, financial years ending after 30 June 1998.

Notes to ASIC Class Order [CO 98/110]

Note 1

ASIC Class Order [CO 98/110] (in force under 341(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the Tables below.

Table of Instruments

Instrument number	Date of making or FRLI registration	Date of commencement	Application, saving or transitional provisions
[CO 98/110]	10/7/1998	10/7/1998	-
[CO 99/1224]	30/8/1999	30/8/1999	-
[CO 00/321]	8/2/2000	8/2/2000	-
[CO 04/665]	15/7/2004	15/7/2004	-
[CO 05/640]	28/7/2005	28/7/2005	-

Table of Amendments

ad. = added or inserted     am. = amended     rep. = repealed     rs. = repealed and substituted

Provision affected	How affected
Para (a)(i)	am. [CO 04/665]
Schedule, introductory para	am. [CO 05/640]
Schedule, paras (i) and (ii)	rs. [CO 04/665]
Schedule, paras (iii) and (iv)	ad. [CO 04/665]
Definitions	am. [CO 99/1224]; [CO 00/321]; [CO 04/665]; ad. [CO 99/1224]; [CO 04/665]
Class order	am. [CO 99/1224]; [CO 04/665]