ASIC Class Order [CO 00/0181]

Overview

The ASIC Class Order [CO 00/181], enacted under section 741(1) of the Corporations Act 2001, was introduced to address the need for flexibility in the application of prospectus requirements for foreign securities offered in Australia. This legislative instrument, prepared by the Australian Securities and Investments Commission (ASIC), aims to streamline the regulatory process for foreign companies issuing securities in Australia while ensuring compliance with both Australian and foreign legislative requirements. The policy objective is to facilitate cross-border securities offerings by foreign companies, provided that certain conditions are met, including the lodgement of a prospectus compliant with the foreign jurisdiction's requirements and the submission to Australian courts' jurisdiction. This class order specifically exempts foreign companies and their associates from certain sections of the Corporations Act, allowing them to offer securities under more flexible conditions when specific criteria are fulfilled.

Scope and Application

ASIC Class Order [CO 00/181] under the Corporations Act 2001 provides specific exemptions for certain foreign companies and their associates from particular requirements of the Act when they offer securities in Australia. The class order applies to foreign companies whose securities are quoted on, or reasonably expected to be quoted on, an approved foreign market and to their associates. This exemption is applicable to offers of securities that are quoted, or expected to be quoted, on specified foreign markets, provided the offer is made to persons both within Australia and in the jurisdiction of the foreign market. The order also requires that the prospectus lodged with the Australian Securities and Investments Commission (ASIC) is either identical to or includes the prospectus used in the foreign market and must comply with the foreign market's legislative requirements and operating rules. Additionally, the prospectus must state that the offeror submits to the jurisdiction of Australian courts and nominates an agent resident in Australia for service of documents. The exemptions are contingent upon certain conditions being met, such as the inclusion of required disclosures and compliance with other specified legislative provisions. The geographic scope of this class order is national, applying across Australia, and its application may be extended or restricted through subsequent amendments or subordinate instruments.

Key Provisions

The ASIC Class Order [CO 00/181], operating under the Corporations Act 2001 (the "Act"), exempts certain classes of persons from specific requirements when they issue securities. Section 741(1) of the Act allows the Australian Securities and Investments Commission (ASIC) to issue such class orders. This particular order exempts foreign companies and their associates from certain sections of the Act concerning prospectuses. Specifically, it exempts these entities from the requirement that a prospectus must be a single document (Section 727) if the prospectus comprises no more than four documents plus an application form, provided it includes all necessary disclosures, complies with subsection 716(1) of the Act, and lists and describes all accompanying documents (Section 727). It also exempts these entities from the requirement that securities cannot be issued to persons within the jurisdiction after the prospectus's expiry date (Subsection 711(6)). The obligations imposed by this class order are primarily on foreign companies and their associates who are offering securities quoted or expected to be quoted on an approved foreign market. These entities must ensure their prospectus complies with the legislative requirements of the foreign jurisdiction and the operating rules of the foreign market. Additionally, the prospectus must be identical to or include the one lodged with the responsible regulatory authority in the jurisdiction of the foreign market. It must also state that the offeror submits to the jurisdiction of Australian courts and nominates an agent resident in Australia for the service of documents. Furthermore, a true copy of any other documents provided to a responsible regulatory authority in connection with the offer must be lodged with ASIC. Breaches of the obligations under this class order can result in legal consequences. While the class order itself does not specify penalties, breaches of the Corporations Act 2001, which underpins this class order, can lead to both civil and criminal penalties. Civil penalties can include substantial fines, depending on the severity and nature of the breach. Criminal penalties may also apply, including fines and imprisonment, particularly if the breach is deliberate or involves significant dishonesty. The exact penalties would be determined based on the specific provisions of the Corporations Act that are contravened.