Australian Securities and Investments Commission
Corporations Law - Subsection 741(1) - Exemption
Under subsection 741(1) of the Corporations Law (the “Law”) the Australian Securities and Investments Commission gives the following exemptions to the extent and in the case specified in relation to each of them.
1. Issue and sale of warrants
An institution described in ASX Business Rule 8.6.1 (“Warrant-Issuer”), any person acting for or on behalf of the Warrant-Issuer and any person who is issued with Warrants with the purpose of selling or transferring the Warrant is exempt from:
(a) Part 6D.2 of the Law; and
(b) sections 726 to 735 (inclusive) and section 737 of the Law
in relation to offers for the issue or sale of Warrants giving the holder a right to buy or sell quoted securities, where:
(c) the ASX has granted admission of the Warrants to trading status on a stock market of the ASX;
(d) the Warrant-Issuer complies with:
(i) ASX Business Rule 8.7.5,except that information required by the rule may be excluded where:
(A) the Warrant-Issuer has previously disclosed the information in a document which was either lodged under the Law or provided to the ASX for the purpose of the ASX making that information available to a stock market conducted by the ASX; and
(B) the Offering Circular refers to the document, summarises the information excluded from the Offering Circular and states that a copy of the document may be obtained from the Warrant-Issuer free of charge during the period the Offering Circular is current; and
(ii) all of the other Business Rules which relate to Warrants (subject to any waiver or variation of those Business Rules made by ASX) and any conditions imposed by the ASX on the waiver of Business Rules;
(e) any advertisement relating to the Warrants complies with the requirements of Business Rule 8.10.1;
(f) in the case of Warrants offered for issue ‑ the Warrants are not issued except:
(i) in response to an application made on a form; and
(ii) the Warrant-Issuer has reasonable grounds to believe that the form was included in or accompanied by a copy of the Offering Circular required by the Business Rules when the form was distributed by the Warrant-Issuer; and
(g) in the case of Warrants offered for sale ‑ the Warrants were originally issued under an Offering Circular and a copy of that document has been lodged with ASX and is available for inspection in accordance with Business Rule 8.7.14.
2. On market purchasers of warrants - relief in relation to on-sale
Any person who purchases Warrants in the ordinary course of trading on a stock market of the ASX is exempt from:
(a) Part 6D.2 of the Law; and
(b) sections 726 to 735 (inclusive) and section 737 of the Law
in relation to the any subsequent sale of the Warrants giving a right to buy quoted securities.
Note: A Warrant that has been purchased in the ordinary course of trading on a stock market may have been issued for the purposes of resale without a disclosure document. In those circumstances, without this relief, a disclosure document may be required for the initial and any subsequent resale.
3. Interpretation
For the purposes of this exemption:
"Business Rules" means the Business Rules of ASX as amended from time to time;
"Offering Circular" and “Warrant” have the same meaning as is given to those terms in Business Rule 8.1.
Dated the 23rd day of May 2000
Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission
Overview
The Australian Securities and Investments Commission Corporations Law - Subsection 741(1) - Exemption, enacted in 2000, provides specific exemptions from certain financial regulations to Warrant-Issuers and purchasers of warrants on the Australian Securities Exchange (ASX). This legislative instrument aims to streamline and facilitate the trading and issuing of financial derivatives, particularly warrants, while ensuring compliance with broader regulatory frameworks. The exemptions address potential inefficiencies and complexities in the financial markets by reducing the burden of multiple disclosure requirements on entities dealing with warrants. The exemptions are granted by the Australian Securities and Investments Commission, acting under the authority of the Corporations Law, to ensure that financial markets operate smoothly while maintaining necessary oversight and compliance standards. The policy objective is to balance regulatory requirements with the need for market flexibility and efficiency in the trading of financial instruments.
Scope and Application
The Australian Securities and Investments Commission Corporations Law, through the legislative instrument F2007B00055, provides specific exemptions under subsection 741(1) concerning the issue and sale of warrants by certain institutions and individuals. These exemptions apply to institutions described in ASX Business Rule 8.6.1, any person acting for or on behalf of these institutions, and those issued with warrants with the intent to sell or transfer them. The exemptions cover Part 6D.2 of the Law and sections 726 to 735 and section 737 of the Law in relation to offers for the issue or sale of warrants. These exemptions are contingent upon compliance with ASX Business Rules, including 8.7.5 and 8.10.1, and certain conditions regarding the offering circular and advertising. Additionally, persons who purchase warrants in the ordinary course of trading on a stock market of the ASX are exempt from the aforementioned parts and sections of the Law in relation to any subsequent sale of the warrants, provided the warrants were originally issued under an offering circular and a copy of this document has been lodged with ASX. This exemption ensures that a disclosure document is not required for the initial and subsequent resale of warrants in certain circumstances.
Key Provisions
The Australian Securities and Investments Commission (ASIC) has provided certain exemptions under subsection 741(1) of the Corporations Law, as specified. These exemptions primarily relate to the issue and sale of warrants by institutions and individuals acting on their behalf, as well as the on-market purchasers of warrants. Section 1 of the legislative instrument exempts warrant issuers, their representatives, and warrant holders from specific sections of the Corporations Law when particular conditions are met. These conditions include compliance with Australian Securities Exchange (ASX) business rules, adherence to disclosure requirements, and the provision of certain documents to the ASX. Section 2, meanwhile, provides relief to on-market purchasers of warrants, exempting them from certain legal obligations regarding subsequent sales of the warrants. The exemptions are designed to streamline the process for issuing and trading warrants while ensuring that certain regulatory requirements are still met.
The obligations imposed by the Act on the parties it governs include compliance with specific ASX business rules and adherence to disclosure requirements. Warrant issuers must ensure that their warrants meet the conditions set out in ASX Business Rule 8.7.5 and any other relevant business rules, with certain exceptions allowed under specific circumstances. Warrant issuers must also ensure that any advertisements for the warrants comply with ASX Business Rule 8.10.1. For warrants offered for issue, the issuer must provide a copy of the Offering Circular with the application form and have reasonable grounds to believe that the form was accompanied by the Offering Circular. For warrants offered for sale, the issuer must have originally issued the warrants under an Offering Circular and lodged a copy of that document with the ASX. On-market purchasers of warrants, on the other hand, must ensure that they purchase the warrants in the ordinary course of trading on a stock market of the ASX.
The legislative instrument does not explicitly state any specific offences, penalties, or civil/criminal consequences for breach. However, it is implied that failure to comply with the specified conditions and obligations may result in regulatory action by ASIC or the ASX. The severity of the consequences would depend on the nature and extent of the breach, and could potentially include fines, legal action, or other penalties as prescribed by the Corporations Law or other relevant legislation. It is important for warrant issuers and on-market purchasers to adhere to the conditions and obligations set out in the legislative instrument to avoid any potential legal repercussions.