ASIC Class Order [CO 00/176]
Pre-prospectus market research
This instrument has effect under subsection 741(1) of the Corporations Act 2001.
This compilation was prepared on 4 October 2005 taking into account amendments up to [CO 02/142].
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act 2001 — Subsection 741(1) — Exemption
Pursuant to subsection 741(1) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission (“ASIC”) hereby exempts the class of persons specified in Schedule A in the case specified in Schedule B from subsection 734(2) of the Act for so long as and on condition that:
1. the offeror does not in aggregate publish more than 5,000 advertisements and statements of the type referred to in Schedule B;
2. the offeror does not permit an organisation which it engages for the purpose of market research of the type permitted by this exemption (“the market research organisation”) to reveal to the offeror the names or addresses of any of the persons contacted for the purpose of such market research; and
3. the offeror provides, and permits the market research organisation to provide, information (“prescribed matter”) to which subsection 734(2) would apply in relation to securities to persons only to the extent necessary to enable:
(a) the market research organisation to conduct market research as mentioned in Schedule B; and
(b) those persons to answer questions asked of them by the market research organisation for the purposes of that research.
SCHEDULE A
A corporation (an “offeror”) and an organisation in the business of conducting market research being an organisation engaged by (but not otherwise associated with) the offeror for the purpose of conducting market research (a “bona fide market research organisation”).
SCHEDULE B
An advertisement or statement:
(a) which is published by the offeror or the bona fide market research organisation;
(b) which contains prescribed matter in relation to an offer of securities for issue or sale to be made pursuant to a disclosure document to be lodged with ASIC which will state that the securities the subject of the disclosure document are, or will be, able to be traded on a financial market operated by Australian Stock Exchange Limited; and
(c) which is published solely for the purpose of market research by a bona fide market research organisation to ascertain:
(i) the number of copies of the disclosure document which should be printed in order to meet demand;
(ii) to whom the intended offer should be marketed; and
(iii) the type and extent of marketing which should be undertaken.
Notes to ASIC Class Order [CO 00/176]
Note 1
ASIC Class Order [CO 00/176] (in force under subsection 741(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 00/176] | 13/2/2000 | 13/2/2000 | - |
[CO 02/142] | 6/2/2002 | 11/3/2002 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Schedule B | am. [CO 02/142] |
Class order | am. [CO 02/142] |
Overview
The ASIC Class Order [CO 00/176], which came into effect under subsection 741(1) of the Corporations Act 2001, was introduced to address the need for a regulatory framework governing pre-prospectus market research conducted by offerors in the securities market. The Australian Securities and Investments Commission (ASIC) enacted this Class Order to ensure that market research conducted before the formal offering of securities does not contravene the disclosure obligations under the Corporations Act. The policy objective of this Class Order is to facilitate limited market research that helps offerors gauge demand and refine their marketing strategies without breaching securities laws. The exemption applies to corporations and bona fide market research organisations conducting market research for specific purposes, such as determining the appropriate number of disclosure documents to print and identifying the target market for the securities offer.
Scope and Application
The ASIC Class Order [CO 00/176] applies to corporations, referred to as offerors, and bona fide market research organisations engaged by these corporations for the purpose of conducting market research in relation to a prospectus. This order provides an exemption from certain requirements of the Corporations Act 2001, specifically subsection 734(2), provided certain conditions are met. These conditions include limitations on the number of advertisements published, restrictions on the disclosure of personal information obtained during the market research, and the provision of certain information only to the extent necessary to conduct the research. The exemptions apply to advertisements or statements published for the purpose of market research to ascertain the demand for securities, the target audience, and the appropriate marketing strategy. The geographic reach of this order is effectively national, as it applies to corporations and market research organisations operating within Australia, and the exemptions are contingent on compliance with the conditions specified within the order. The order can be modified or extended through subordinate instruments, as permitted under subsection 741(1) of the Corporations Act 2001.
Key Provisions
The ASIC Class Order [CO 00/176], issued under the Corporations Act 2001, provides specific exemptions for offerors and bona fide market research organisations conducting pre-prospectus market research. These exemptions allow the offeror to publish up to 5,000 advertisements and statements (section 1), provided they do not reveal the names or addresses of those contacted to the market research organisation (section 2), and ensure that only necessary prescribed information is shared with respondents to facilitate the research (section 3). These advertisements or statements must be published by the offeror or the market research organisation and must relate to an offer of securities to be traded on a financial market operated by the Australian Stock Exchange Limited (Schedule B).
Under this Class Order, both offerors and market research organisations are required to adhere to strict guidelines to ensure compliance. The offeror must ensure that the market research organisation does not disclose personal details of those contacted and must limit the sharing of prescribed information to what is strictly necessary for the research purposes (Schedule A). The market research organisation must use the information solely for conducting research to ascertain the number of disclosure documents to print, the target audience for the offer, and the type and extent of marketing required (Schedule B).
Failure to comply with the conditions of the ASIC Class Order [CO 00/176] can result in legal consequences. Breaches of this Class Order may be considered violations of the Corporations Act 2001, potentially leading to enforcement actions by ASIC. While the specific penalties for non-compliance are not detailed within the Class Order itself, penalties for breaches of the Corporations Act can include substantial fines and, in some cases, criminal charges. The exact penalties would depend on the nature and severity of the breach, and could be influenced by prior history of non-compliance or the impact of the breach on the market or investors.