ASIC Class Order [CO 00/0227]

Overview

The Australian Securities and Investments Commission Corporations Law — Subsection 741(1) was enacted in 2000 to address the need for regulatory exemptions in specific circumstances related to the issue, sale, or offer for issue or sale of rights or interests in time-sharing schemes. This legislative instrument aims to exempt certain persons from Parts 6D.2 and 6D.3 of the Corporations Law, provided they meet the criteria outlined in the accompanying schedules. The exemptions are granted to individuals involved in transactions involving time-sharing schemes that meet specific conditions, including those with no more than 15 parties, where all parties benefit equally, and where the scheme is not promoted by entities whose primary business is the promotion of such schemes. This exemption was signed by Brendan Byrne as a delegate of the Australian Securities and Investments Commission to streamline the regulatory process and provide relief where appropriate.

Scope and Application

The Australian Securities and Investments Commission Corporations Law — Subsection 741(1) — Exemption Pursuant to subsection 741(1) of the Corporations Law, the Australian Securities and Investments Commission (ASIC) exempts certain persons from Parts 6D.2 and 6D.3 of the Corporations Law, specifically relating to the issue or sale of rights or interests in a time-sharing scheme or proposed time-sharing scheme. This exemption applies to individuals involved in the issues, sales, or offers of rights or interests in such schemes as described in Schedule B. The geographic and jurisdictional reach of this exemption is within the Commonwealth of Australia, as ASIC is a federal regulatory body. The exemption is applicable to schemes constituted by an agreement involving no more than 15 parties, where no party, including the promoter, benefits on a preferential basis, and where the scheme is not promoted by a person or an associate whose ordinary business includes the promotion of similar schemes. Additionally, the scope of the exemption is further defined and detailed in Schedules A and B, which outline the specific conditions and circumstances under which the exemption applies. This legislative instrument thus provides a clear framework for the application of the exemption within the designated parameters, ensuring that the regulatory requirements of the Corporations Law are appropriately tailored to the particular nature of the time-sharing schemes in question.

Key Provisions

The key operative sections of this legislative instrument are sections 1 and 2, which together provide the exemption from certain parts of the Corporations Law for specific persons involved in the issue, sale, or offer of rights or interests in a time-sharing scheme or proposed time-sharing scheme under certain conditions (subsection 741(1)). This exemption applies to persons involved in schemes that are constituted by an agreement involving no more than 15 parties (Schedule B(a)), where no party, including the promoter, benefits more than the others (Schedule B(b)), and where the scheme is not promoted by someone whose ordinary business includes promoting similar schemes (Schedule B(c)). The Act imposes several obligations and requirements on the parties involved in the schemes. Firstly, they must ensure that the agreement constituting the scheme involves no more than 15 parties (Schedule B(a)). Secondly, the scheme must be structured in such a way that no party, including the promoter, benefits more than the others on a basis that is equitable to all parties (Schedule B(b)). Lastly, the promotion of the scheme must not be carried out by a person, or an associate of a person, whose ordinary business includes promoting similar schemes, whether or not that person is a party to the agreement (Schedule B(c)). Failure to comply with the conditions set out in the legislative instrument may result in civil or criminal consequences. Although the specific penalties are not detailed in the text, breaches of the Corporations Law can lead to various penalties, including fines and imprisonment. For instance, under section 1317E of the Corporations Act 2001, individuals can face penalties of up to five years imprisonment and/or fines of up to $300,000 for breaches involving dishonesty, while corporations can be fined up to $1.65 million for similar offences. The exact penalties would depend on the specific nature and severity of the breach.