Australian Securities and Investments Commission
Corporations Act 2001 — Subsection 1438(6) — Determination
For the purposes of subsection 1438(6) of the Corporations Act 2001 (“the Act”) the Australian Securities and Investments Commission (“ASIC”) hereby determines as follows:
REQUIREMENTS FOR ISSUERS OF FINANCIAL PRODUCTS
WHO LODGE OPT-IN NOTICES
A person (“the issuer”) who lodges a notice with ASIC in accordance with paragraph 1438(3)(b) of the Act (an “opt-in notice”) in relation to a financial product or class of financial products must:
(a) take all reasonable steps to ensure that within 7 days after it lodges the opt-in notice, each notifiable person who the issuer should reasonably expect is likely, within 90 days after the new product disclosure provisions (as defined in subsection 1438(2) of the Act) first apply to the financial product or class of financial products, to be required under section 1012A, 1012B, 1012C or 1012IA of the Act to give a Product Disclosure Statement in relation to the financial product or a financial product of that class is informed in writing:
(i) of the name of the issuer, of the financial product or class of financial product in respect of which the opt-in notice has been lodged, that the opt-in notice has been lodged, and when those new financial product disclosure provisions will apply in respect of that product or class of products; and
(ii) that the notifiable person may have obligations under those new product disclosure provisions such as the obligation to give a Product Disclosure Statement to persons to whom the product or a product in the class of products is offered or recommended;
(b) on the request of any person, make available to that person a document that sets out the matters described at paragraph (a)(i) and (ii) free of charge and as soon as practicable, and in any event within 5 days of receiving the request; and
(c) if the issuer makes available on the Internet information relating to the issue by the issuer of any financial product - display with reasonable prominence at the same Internet address the matters described at paragraph (a)(i) and (ii).
The requirements in paragraphs (b) and (c) apply from 7 days after the opt-in notice is lodged with ASIC until 30 days after the new product disclosure provisions first apply to the financial product or class of financial products.
Interpretation
For the purposes of this instrument, “notifiable person” means the following:
(a) a seller of the financial product if the sale takes place in circumstances described in subsection 1012C(5), (6) or (8) of the Act;
(b) any financial services licensee;
(c) any regulated principal (as defined in section 1430 of the Act);
(d) any authorised representative of a financial services licensee;
(e) any representative of a regulated principal (within the meaning of section 1436 of the Act);
(f) any person who is not required to hold an Australian financial services licence because the person is covered by:
(i) paragraph 911A(2)(j) of the Act;
(ii) an exemption in regulations made for the purposes of paragraph 911A(2)(k) of the Act; or
(iii) an exemption specified by ASIC for the purposes of paragraph 911A(2)(l) of the Act;
(g) the provider of a custodial arrangement within the meaning of section 1012IA of the Act.
Note: “Writing” includes any mode of representing or reproducing words in a visible form; and “documents” include any article from which writing is capable of being reproduced, with or without the aid of any other article or device: see section 25 of the Acts Interpretation Act 1901.
Dated this 15th day of February 2002
Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission
Overview
The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Parliament of Australia, was introduced to provide a comprehensive regulatory framework for financial markets and entities, addressing gaps in investor protection and corporate governance. This Act serves to ensure transparency and accountability in the corporate sector, aiming to protect investors and consumers by mandating disclosure and reporting requirements. One of the key aspects of this legislation is the establishment of ASIC, which plays a pivotal role in enforcing the provisions of the Act and overseeing compliance. The legislative instrument dated 15th February 2002, signed by Brendan Byrne as a delegate of ASIC, further delineates specific requirements for issuers of financial products who choose to opt-in under certain conditions, ensuring that relevant parties are adequately informed about new disclosure obligations. The policy objective is to enhance market integrity and investor confidence by promoting transparency in financial product offerings.
Scope and Application
This legislative instrument under the Corporations Act 2001, as amended by the Australian Securities and Investments Commission (ASIC), applies specifically to issuers of financial products who lodge an opt-in notice with ASIC. These issuers must ensure that certain notifiable persons, including sellers, financial services licensees, regulated principals, and others, are informed in writing of the issuer's opt-in notice and the impending application of new financial product disclosure provisions. The issuer must also provide a written document detailing this information upon request and display it prominently if the issuer publishes information about the financial product on the internet. The obligations outlined in this instrument are in effect from 7 days after the opt-in notice is lodged until 30 days after the new product disclosure provisions apply. The geographic reach of this instrument is national, given it operates under the Commonwealth framework of the Corporations Act 2001. There are no stated exclusions or exemptions within the text, but it is understood that the provisions extend or may be restricted through subordinate instruments as necessary.
Key Provisions
The determination under subsection 1438(6) of the Corporations Act 2001 outlines specific requirements for issuers who choose to opt-in to new financial product disclosure provisions by lodging an opt-in notice with the Australian Securities and Investments Commission (ASIC) (subsection 1438(3)(b)). These issuers must ensure that certain stakeholders, known as "notifiable persons," are informed in writing within seven days of lodging the notice (subsection 1438(6)(a)). Notifiable persons include sellers of the financial product under specific conditions, financial services licensees, regulated principals, authorised representatives of financial services licensees, representatives of regulated principals, persons exempt from holding a financial services licence, and providers of custodial arrangements. The written notice must detail the issuer's name, the financial product or class of products, the lodging of the opt-in notice, and the impending application of new financial product disclosure provisions. It must also inform notifiable persons of their potential obligations under these provisions, such as the requirement to provide a Product Disclosure Statement to those to whom the product is offered or recommended.
Additionally, issuers are obligated to provide a document containing the same information to any person who requests it, free of charge and within five days of the request (subsection 1438(6)(b)). If the issuer makes information about the financial product available on the internet, they must also prominently display the notice on the same internet address (subsection 1438(6)(c)). These requirements remain in effect from seven days after the opt-in notice is lodged with ASIC until 30 days after the new financial product disclosure provisions apply to the financial product or class of products.
Issuers who fail to comply with these obligations may face consequences under the Corporations Act 2001. Although the determination itself does not explicitly state the penalties, the broader Act includes provisions for both civil and criminal penalties for breaches. Civil penalties can include substantial fines, and in some cases, criminal penalties may apply, including imprisonment for serious or repeated breaches. The exact penalties depend on the specific breach and the courts' discretion in imposing sanctions. Compliance with these notification requirements is crucial for issuers to avoid potential legal repercussions and to ensure transparency and accountability in financial product disclosures.