ASIC Class Order [CO 00/0214]

Overview

The ASIC Class Order [CO 00/214] was enacted in 2000 to address the problem of regulating offers of securities by listed foreign companies in Australia, particularly where the number of offers is relatively low and the securities are listed on approved foreign markets. This legislative instrument is made under section 741(1) of the Corporations Act 2001 and is intended to provide an exemption from certain disclosure requirements for foreign companies making limited offers in Australia. The order was created by the Australian Securities and Investments Commission (ASIC) to streamline the regulatory process for foreign companies, allowing them to comply with Australian disclosure requirements more efficiently, provided that certain conditions are met. The policy objective is to facilitate investment in Australia by foreign companies while ensuring that Australian investors receive adequate information.

Scope and Application

The ASIC Class Order [CO 00/214] applies to foreign companies that make 20 or fewer offers of securities in Australia within a 12-month period. The exemption from certain provisions of the Corporations Act 2001, specifically Parts 6D.2 and 6D.3, is available to these companies, excluding subsections 736 and 738. The exemption is contingent on several conditions being met, including the offer being personal to the offeree, the securities being in the same class as those quoted on an approved foreign market, and compliance with the applicable legislative requirements in the jurisdiction where the foreign market is located. Additionally, documentation provided to Australian offerees must be in English or accompanied by certified English translations, and must include a statement highlighting the documents' compliance with foreign market requirements and the lack of all necessary information as per Australian disclosure laws. This Class Order has a national reach within Australia and is subject to amendments through subordinate instruments, as evidenced by the updates and changes listed in the tables provided in the Order.

Key Provisions

ASIC Class Order [CO 00/214], made under the Corporations Act 2001, provides exemptions for foreign companies making 20 or fewer offers of securities in Australia over a 12-month period. Specifically, the order exempts these foreign companies from certain disclosure requirements under Parts 6D.2 and 6D.3 of the Act, except for subsections 736 and 738. The exemption applies to foreign companies making offers to no more than 20 individuals in Australia or elsewhere within the same 12-month period (Schedule A and B, Clause 1). The offers must be personal to the offeree and not transferable (Clause 2). The securities offered must be in the same class as those quoted on an approved foreign market, with trading not suspended (Clause 3). The documentation for the offers must comply with the legislative requirements or rules of the foreign market and be made available to Australian offerees, with certified English translations provided if necessary (Clauses 4 and 5). Additionally, the documents must include a statement clarifying that they may not contain all the information required under Australian law and that the company is not subject to Australian continuous disclosure requirements (Clause 6). Entities benefiting from this exemption are required to ensure that the offers meet the specific criteria outlined in the Class Order. This includes limiting the number of offers, ensuring the personal nature of the offers, maintaining compliance with foreign market requirements, and providing necessary documentation and translations to Australian offerees. The companies must also include the required statement in all documents provided to Australian offerees, clarifying the scope and limitations of the information contained within. Failure to comply with the provisions of the ASIC Class Order [CO 00/214] can result in legal consequences. While the Class Order itself does not explicitly detail penalties for non-compliance, breaches of the underlying Corporations Act 2001 provisions can result in significant civil or criminal penalties. For instance, under the Corporations Act, individuals or companies found to be in breach of disclosure requirements can face fines up to AU$210,000 for individuals and AU$1.05 million for bodies corporate, as well as potential imprisonment for serious offences. Additionally, non-compliance could also lead to reputational damage and loss of investor confidence, further impacting the company’s operations in Australia.