ASIC Class Order [CO 02/0141]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Parliament of Australia, aims to address gaps in the regulation of financial products and services, ensuring transparency and protecting consumers. One such gap pertains to the use of certain statements in Product Disclosure Statements (PDS) that might require consent from the original maker of the statement. To address this, the Australian Securities and Investments Commission (ASIC) has been granted authority to exempt certain classes of persons from the strict consent requirements outlined in subsection 1013K(1) of the Act. This legislative instrument, dated 5th February 2002, specifies that ASIC may exempt persons who include statements in a PDS that either fairly represent statements made by an official person, are correct and fair copies of public official documents, or are correct and fair copies of previously published statements, provided that the PDS clearly indicates that the original person has given consent. The exemption facilitates smoother operation of financial markets by reducing unnecessary bureaucratic hurdles, while still ensuring that consumers are adequately informed.

Scope and Application

The legislative instrument F2007B00295, which pertains to the Corporations Act 2001, offers an exemption to certain persons from the prohibitions outlined in subsection 1013K(1) regarding the inclusion of specific statements in a Product Disclosure Statement (PDS). This exemption applies to statements that fairly represent an official person's statement, are a correct and fair copy of a public official document, or are a correct and fair copy of a previously published statement not associated with the responsible person or their business. To benefit from this exemption, the responsible person must ensure that the person who made the statement or the basis for the statement has consented to its inclusion in the PDS, and the PDS must explicitly state that this consent has been obtained. The exemption applies nationally and aligns with the provisions of the Financial Services Reform Act 2001, taking effect from the commencement of Schedule 1 of that act. This exemption provides a specific legal framework for financial entities to include certain pre-existing statements in their PDS under defined conditions, thereby facilitating compliance while ensuring the integrity and accuracy of the disclosures made to consumers.

Key Provisions

The legislative instrument F2007B00295, issued under paragraph 1020F(1)(a) of the Corporations Act 2001, outlines an exemption from certain provisions of the Act. Specifically, it exempts certain persons from subsection 1013K(1) of the Act in relation to statements included in a Product Disclosure Statement (PDS). According to this exemption, subsection 1013K(1) does not prohibit the inclusion of these statements in a PDS if two conditions are met: (1) the person who made the statement or another statement on which it is based consents to its inclusion in the PDS, and (2) the PDS explicitly states that the person has given their consent (Corporations Act 2001, s. 1020F(1)(a)). The Schedule to the instrument details the types of statements that can be included under this exemption. The Act imposes specific obligations on parties involved in the preparation and distribution of PDSs. The responsible person, who is responsible for ensuring the accuracy and completeness of the PDS, must ensure that any statements included in the PDS meet the criteria set out in the Schedule. This includes verifying that the statements fairly represent what is claimed or are correct and fair copies or extracts from other published documents (Corporations Act 2001, Schedule). Additionally, the responsible person must obtain explicit consent from the person who made the statement or another statement on which it is based before including it in the PDS (Corporations Act 2001, s. 1020F(1)(a)). The PDS itself must also clearly state that the person has given their consent. Failure to comply with the requirements of the Act can result in both civil and criminal consequences. For example, any person who knowingly, recklessly, or negligently includes a statement in a PDS that is not permitted by the Act may face legal action. The maximum penalties for such breaches can include substantial fines and, in some cases, imprisonment (Corporations Act 2001, s. 1300). The Australian Securities and Investments Commission (ASIC) is responsible for enforcing the provisions of the Act and can take legal action against any person or entity that violates its terms. These penalties underscore the importance of adhering to the requirements outlined in the Act and the Schedule to avoid potential legal repercussions.