ASIC Class Order [CO 00/1092]

Overview

ASIC Class Order [CO 00/1092], enacted in 2000, addresses the need to streamline the process for issuing bonus options to existing shareholders of companies whose securities are quoted on the Australian Stock Exchange Limited. This legislative instrument operates under subsection 741(1) of the Corporations Act 2001, providing a framework for exemptions that facilitate efficient corporate actions without the cumbersome requirement of an application form for such bonus issues. The Australian Securities and Investments Commission (ASIC) established this Class Order to enhance the flexibility and effectiveness of capital raising activities for listed companies, ensuring compliance with the Act while reducing administrative burdens on issuers and shareholders. The primary policy objective is to support the efficient operation of the financial market by allowing companies to distribute bonus options more readily, subject to timely disclosure of material information to shareholders.

Scope and Application

The ASIC Class Order [CO 00/1092] applies to a body whose securities are quoted on the financial market operated by Australian Stock Exchange Limited, referred to as the Issuer. This legislative instrument provides relief for the Issuer from certain provisions of the Corporations Act 2001 in relation to a bonus issue of options over shares in the Issuer to existing holders of shares, referred to as Shareholders. The relief exempts the Issuer from the requirement to include or accompany a disclosure document with an application form and from the restriction that an issue of securities can only be made to a person who has used an application form distributed with the disclosure document, provided the options are offered and issued on terms that no consideration is payable. The relief applies to an offer and issue of options over shares in the Issuer to Shareholders in proportion to their existing shareholdings, provided the Issuer announces the bonus issue via the Australian Stock Exchange Limited's company announcements platform and provides each Shareholder with a disclosure document that complies with the Act as soon as practicable after the announcement. The Class Order extends to any amendments made to it through subordinate instruments.

Key Provisions

ASIC Class Order [CO 00/1092] provides relief for certain bonus issues of options, exempting specific parties from certain provisions of the Corporations Act 2001. Specifically, Section 741(1) of the Act allows the Australian Securities and Investments Commission (ASIC) to exempt a class of persons from certain Act provisions. In this case, the exemption applies to a body whose securities are quoted on the Australian Stock Exchange Limited’s financial market, referred to as the “Issuer,” from certain disclosure requirements and application form conditions outlined in Schedule B of the Class Order. The key operative sections exempted from the Act are those requiring a disclosure document to include or be accompanied by an application form (section 717(3) of the Act) and those provisions that only permit an issue of securities to be made to a person who has used an application form distributed with the disclosure document (section 717(6) and subsection 723(1) of the Act). This exemption applies to a particular situation specified in Schedule C, namely, an offer and issue of options over shares in the Issuer to existing shareholders in proportion to their existing shareholdings, where no consideration is payable for the issue of the options (referred to as a “Bonus Issue”). The exemption is subject to the condition in Schedule D that the Issuer must provide each shareholder with a disclosure document compliant with the Act as soon as practicable after announcing the Bonus Issue via the Australian Stock Exchange Limited's company announcements platform. The obligations imposed by this Class Order on the Issuer include ensuring that a disclosure document, compliant with the Act, is provided to each shareholder without delay after announcing the Bonus Issue. This is to ensure that shareholders are adequately informed about the bonus issue of options despite the exemption from certain application form requirements. In terms of consequences for breach, the Class Order does not explicitly detail penalties or consequences for non-compliance. However, non-compliance with the Corporations Act 2001, from which the exemption is derived, can result in various civil and criminal penalties. For example, individuals involved in breaches may face fines and imprisonment, while the corporation itself may be subject to substantial fines. The exact penalties depend on the nature and severity of the breach, as outlined in the relevant sections of the Act.