ASIC Class Order [CO 00/0238]

Overview

The ASIC Class Order [CO 00/238], enacted under subsection 741(1) of the Corporations Act 2001, was introduced to provide a regulatory framework for dividend reinvestment plans (DRPs) and bonus share plans offered by Australian bodies. This legislative instrument was prepared by the Australian Securities and Investments Commission (ASIC) and came into effect on 13 March 2000. The primary objective of this Class Order is to exempt certain Australian bodies from specific sections of the Corporations Act when they offer fully paid shares under a DRP or a bonus share plan to their existing shareholders. This exemption aims to streamline the process for companies to implement these plans, thereby encouraging investment and reinvestment in the company by its shareholders.

Scope and Application

ASIC Class Order [CO 00/238], which is enacted under subsection 741(1) of the Corporations Act 2001, applies to registrable Australian bodies when they offer fully paid shares to one or more existing shareholders via a dividend reinvestment plan or a bonus share plan. This exemption from Part 6D.2 of the Act facilitates the process by which shareholders can reinvest their dividends into additional shares, thus enhancing shareholder participation and potentially encouraging long-term investment. The Class Order was initially made on 12 March 2000 and came into effect on 13 March 2000. It has since been amended by [CO 03/68] on 7 February 2003, which also took effect on the same date. The scope of the exemption is limited to the offer of fully paid shares under the specified plans, and it does not extend to other types of share offers or transactions. The Class Order applies nationally, as it is a Commonwealth instrument. The legislative instrument does not specify any exclusions or thresholds, but its application is contingent on compliance with the conditions set out in the Class Order and the overarching provisions of the Corporations Act 2001.

Key Provisions

The ASIC Class Order [CO 00/238] (effective under subsection 741(1) of the Corporations Act 2001) exempts certain Australian bodies from the registration requirements under Part 6D.2 of the Act for offers of fully paid shares to existing shareholders through a dividend reinvestment plan or bonus share plan. This means that certain types of companies do not need to register their offers to shareholders under these plans with ASIC, simplifying the process for these entities (subsection 741(1)). The operative sections of this legislation focus on providing exemptions to Australian bodies that offer fully paid shares under specific plans to existing shareholders. This is aimed at streamlining the compliance requirements for these entities, thereby reducing administrative burdens. By exempting these offers from the registration process, the legislation intends to facilitate easier access to share ownership for existing shareholders (subsection 741(1)). The obligations imposed on the parties governed by this Class Order include ensuring that the offers made under dividend reinvestment plans or bonus share plans are only extended to existing shareholders of the Australian body. This ensures that the exemption applies correctly and the simplified processes are adhered to, maintaining the integrity of the legislative intent. The entities must also ensure that their plans comply with other relevant provisions of the Corporations Act, even though they are exempt from the registration requirements. Any breach of the provisions or obligations outlined in the ASIC Class Order [CO 00/238] may result in civil or criminal penalties under the Corporations Act 2001. While specific penalties are not detailed in the Class Order, breaches of the Corporations Act can result in substantial fines for both individuals and corporations, as well as potential criminal charges for serious or repeated violations. These penalties underscore the importance of compliance with the legislative requirements.