ASIC Class Order [CO 02/0149]

Overview

The Australian Securities and Investments Commission Corporations Act 2001 was enacted to regulate the financial markets and financial services in Australia, addressing gaps in investor protection and corporate governance. This legislation provides a framework for the regulation of financial products and services, ensuring transparency and accountability. Under this Act, the Australian Securities and Investments Commission (ASIC) was granted powers to exempt certain activities from specific sections of the Act, aiming to streamline regulatory processes and adapt to cross-border financial activities. The exemption in question, introduced on 7 February 2002, allows responsible entities of registered schemes to be exempt from sections 1012B, 1012C, and 1016A of the Act, provided they comply with conditions outlined in Schedule B. This legislative instrument was enacted to ensure that Australian financial schemes can operate smoothly within the New Zealand regulatory environment, reflecting a policy objective to foster efficient and compliant cross-jurisdictional financial transactions.

Scope and Application

The Australian Securities and Investments Commission (ASIC) under paragraph 1020F(1)(a) of the Corporations Act 2001 grants an exemption to each responsible entity of a registered scheme from certain sections of the Act under specific conditions outlined in Schedules A and B. The exemption pertains to the issue or sale of interests in a registered scheme to applicants where the responsible entity reasonably believes the application relates to an investment statement as defined under the New Zealand Securities Act 1978 and its regulations, as modified by Australian notices. This applies particularly to offers made in New Zealand. The exemption is contingent upon the responsible entity not issuing or permitting the issue of a notice or other document in New Zealand relating to the scheme's interests if it does not comply with the New Zealand securities provisions. This exemption is effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001. The Act's application is thus confined to responsible entities of registered schemes when dealing with specific cross-jurisdictional investment offers, and it is further conditioned by compliance with New Zealand securities regulations.

Key Provisions

Under the Corporations Act 2001, specifically paragraph 1020F(1)(a), the Australian Securities and Investments Commission (ASIC) provides an exemption for certain responsible entities of registered schemes. This exemption, detailed in Schedule A, applies to the issue or sale of interests in a registered scheme to applicants who submit their applications without a Product Disclosure Statement (PDS), provided the responsible entity reasonably believes the application pertains to an investment statement as defined under the Securities Act (NZ) 1978, as modified by the Securities Act (Australian Registered Managed Investment Schemes) Exemption Notice 1999, or any subsequent notices. Additionally, the exemption applies to offers made in New Zealand. This exemption is conditional and is contingent on the responsible entity not issuing or permitting the issue of any notice or document in New Zealand that does not comply with the New Zealand securities provisions. The conditions under which this exemption applies are further detailed in Schedule B. The obligations imposed on the parties governed by this Act are significant. Responsible entities must ensure that they reasonably believe the application relates to the specified circumstances outlined in Schedule A. This involves a determination that the investment statement aligns with the New Zealand securities provisions and pertains to an offer made in New Zealand. Furthermore, the responsible entity must strictly adhere to the condition stipulated in Schedule B, which prohibits the issuance or permitting of any notices or documents in New Zealand that do not comply with the New Zealand securities provisions. Failure to meet these obligations could result in the exemption being revoked, thereby subjecting the responsible entity to the full regulatory requirements of the Corporations Act 2001. Breaching the conditions of this exemption can lead to various consequences, both civil and criminal. Under the Corporations Act 2001, non-compliance with the specified conditions may result in the responsible entity facing legal action. This could include fines, enforcement actions, or other penalties as determined by ASIC. The Act also provides for potential criminal penalties, which could involve substantial fines and imprisonment for individuals found guilty of serious breaches. The maximum penalties for breaches can vary depending on the severity of the offence, the intent behind the breach, and other relevant factors. It is crucial for responsible entities to fully understand and comply with the conditions of this exemption to avoid such adverse outcomes.