ASIC Class Order [CO 00/0231]

Overview

The Australian Securities and Investments Commission Corporations Law — Subsections 260MA(1) and 741(1) — Exemption instrument, enacted in 2000, addresses a specific gap in the regulatory requirements for certain financial entities by exempting them from specific provisions of the Corporations Law. This legislative instrument was enacted by the Australian Securities and Investments Commission, as a delegate, and seeks to streamline regulatory compliance for corporations that engage in short-term money market activities and have certain credit ratings. The primary objective of this exemption is to provide relief to these entities, thereby potentially encouraging investment and financial activities within the specified parameters without the burden of the exempted regulatory requirements. The exemption applies to corporations that deal in the short-term money market and hold unsecured short-term debt rated A.2, A.1, or A.1+ by Standard & Poor's (Australia) Pty. Ltd. The focus of the exemption is on offers to accept deposits of at least $100,000 made to entities whose primary business involves investment in the short-term money market, securities, or the purchase and sale of securities. This targeted approach aims to balance the need for regulatory oversight with the practical considerations of financial entities operating in highly specialised and often high-value sectors of the financial market.

Scope and Application

The Australian Securities and Investments Commission Corporations Law — Subsections 260MA(1) and 741(1) — Exemption legislative instrument provides an exemption for certain corporations from specific parts of the Corporations Law, as detailed in Schedules A and B. This exemption applies to corporations that typically engage in the short-term money market and have unsecured short-term debt rated A.2, A.1, or A.1+ by Standard & Poor's (Australia) Pty. Ltd. The exemption extends to offers to accept deposits of money in amounts of at least $100,000 made to individuals or entities whose usual business involves investing in funds on the short-term money market or investing in securities or the purchase and/or sale of securities. This legislative instrument is applicable on a national level, as it is issued under the authority of the Commonwealth of Australia and pertains to entities within Australia. No specific exclusions, exemptions, or thresholds beyond those outlined in Schedules A and B are mentioned in the text. The application and scope of the exemption may be further detailed or refined through subordinate instruments, which could provide additional clarifications or conditions for the exemption.

Key Provisions

The legislative instrument issued under the Corporations Law provides an exemption from certain sections of the Law for a specific class of corporations. According to subsections 260MA(1) and 741(1), the Australian Securities and Investments Commission (ASIC) exempts corporations that deal in the short-term money market and have unsecured short-term debt rated A.2, A.1, or A.1+ by Standard & Poor's (Australia) Pty. Ltd. from specific parts of the Law. These exempted parts include Parts 2L.1, 2L.2, 2L.3, 2L.4, and 2L.5, as well as sections 718, 727(1), and 736. The obligation imposed by this legislative instrument is primarily on the exempted corporations to ensure they meet the criteria specified in Schedule A. These corporations must be involved in the short-term money market and have their unsecured short-term debt rated by Standard & Poor's (Australia) Pty. Ltd. This requirement ensures that only those corporations that meet the specified criteria are exempt from the designated sections of the Corporations Law. Additionally, these corporations must continue to operate in the manner described in Schedule B, which involves offers to accept deposits of money in amounts of not less than $100,000 made to persons whose ordinary business includes investment in securities or the purchase and/or sale of securities. Regarding potential consequences, the legislative instrument does not explicitly detail specific offences, penalties, or civil/criminal consequences for breaches. However, it is important to note that the Corporations Law itself provides a comprehensive framework for enforcement and penalties for non-compliance. Breaches of the Corporations Law can lead to significant civil and criminal penalties, including fines, imprisonment, and disqualification from managing corporations, depending on the nature and severity of the breach. The exact penalties would be determined according to the specific provisions of the Law that the exempted corporations are otherwise subject to, outside the scope of this exemption.