ASIC Class Order [CO 02/0144]

Overview

The Australian Securities and Investments Commission Corporations Act 2001 — Paragraph 1020F(1)(a) — Exemption, enacted in 2001, addresses a gap in the Corporations Act by exempting certain persons from specific prohibitions under section 1018A. The exemption was introduced by the Australian Securities and Investments Commission (ASIC) to facilitate compliance with international standards and regulations while ensuring that the interests of Australian residents are protected. This exemption applies to publishers of advertisements or statements concerning financial products, provided the publication meets certain criteria such as being produced outside Australia and not targeting Australian residents. The objective is to allow these publishers to operate without contravening Australian laws while ensuring that their activities comply with local requirements in the jurisdictions where the publications are produced. This exemption is effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Scope and Application

The Corporations Act 2001, as amended by this legislative instrument, provides an exemption under paragraph 1020F(1)(a) for certain publishers from the prohibitions contained in section 1018A of the Act. Specifically, the exemption applies to a class of persons who advertise financial products or publish statements that may induce acquisition of such products, provided that the responsible person for the product is a foreign corporation or a proposed foreign corporation. The exemption applies to advertisements or statements published in newspapers or periodicals produced outside Australia, where the circulation is primarily outside Australia, and the publications are either explicitly non-actionable by Australian residents or are not advertised within Australia. Additionally, the publications must comply with any applicable legislative requirements or codes of conduct in the jurisdiction where they are produced. This exemption is applicable to the whole of Australia, including the external Territories for superannuation and related financial services. The exemption is effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Key Provisions

Under paragraph 1020F(1)(a) of the Corporations Act 2001, the Australian Securities and Investments Commission (ASIC) has provided an exemption from section 1018A of the Act for certain individuals and entities, referred to as "publishers," in specific cases outlined in Schedule B. The Act aims to exempt publishers from the prohibition on advertising or publishing statements that could induce the acquisition of a financial product when certain conditions are met. Specifically, these exemptions apply to publishers who advertise a financial product or publish a statement that might induce acquisition, provided the responsible person for the financial product is a foreign corporation or a proposed foreign corporation. The obligations imposed by this legislation require that the advertisement or statement must be published in a newspaper or periodical produced outside Australia, with the majority of its circulation also outside Australia. Additionally, it must be clear that the advertisement or statement is not intended for residents of Australia or be published in a newspaper or periodical that is not advertised within Australia. Furthermore, the publisher must ensure that the advertisement or statement complies with any relevant legislative requirements, rules, or codes of conduct applicable in the jurisdiction where the newspaper or periodical is produced. In the event of a breach of this exemption, the consequences can be significant. While the specific civil or criminal penalties are not detailed in the legislative instrument itself, breaches of the Corporations Act 2001 generally attract substantial penalties. For individuals, the penalties can include fines of up to $210,000 for a serious contravention and imprisonment for up to five years. Corporations can face even higher fines, sometimes amounting to millions of dollars, depending on the severity and impact of the contravention. These penalties underscore the importance of compliance with the Act and the exemptions provided.