ASIC Class Order [CO 02/0259]

Overview

ASIC Class Order [CO 02/259], enacted in 2002, was introduced under the Corporations Act 2001 to streamline and regulate the process of downstream acquisitions involving foreign stock markets, thus addressing potential gaps in existing regulations regarding cross-border financial market activities. This legislative instrument, prepared by the Australian Securities and Investments Commission (ASIC), revokes previous Class Orders [00/2375], [01/53] and [01/921] and approves specific foreign financial markets, contingent on their conduct relating to their main boards. The policy objective behind this Class Order is to ensure that Australian securities and investment activities involving foreign markets are conducted under a recognised regulatory framework, thereby protecting investors and maintaining market integrity. The Order came into effect on 11 March 2002, aligning with the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Scope and Application

ASIC Class Order [CO 02/259] applies to entities conducting foreign financial markets, specifically those listed in the Schedule of the legislative instrument. This includes the American Stock Exchange LLC, Deutsche Borse AG, Euronext Amsterdam NV, and other named entities. The Order is enacted under item 14 of section 611 of the Corporations Act 2001, thereby revoking previous Class Orders [00/2375], [01/53], and [01/921] and approving the listed foreign bodies for the purpose of conducting financial markets, limited to their main boards if they conduct multiple markets. The geographic scope of the Order is international, targeting foreign entities whose markets are relevant to Australian investors and corporations. This Order does not apply to domestic Australian financial markets. It came into effect on 11 March 2002, with subsequent amendments taking effect on 4 April 2005. The Order's applicability may be extended or restricted via subordinate instruments, ensuring it remains relevant to changes in the financial landscape.

Key Provisions

ASIC Class Order [CO 02/259], under the Corporations Act 2001, addresses the regulation of downstream acquisitions involving foreign stock markets. Specifically, sections 1 and 2 of the Order revoke previous class orders [00/2375], [01/53], and [01/921] and approve certain foreign financial market bodies, listed in the Schedule, provided their approval is limited to their main board conduct (section 1). The Order is effective as of the commencement of Schedule 1 to the Financial Services Reform Act 2001. The obligations imposed by this Order on the approved foreign financial market bodies primarily involve ensuring that their operations comply with Australian standards, particularly in relation to downstream acquisitions. The Order mandates that these entities must adhere to the regulations set forth in the Corporations Act 2001 and any subsequent amendments or approvals issued by ASIC. Furthermore, the Order’s stipulation that the approval extends only to the main board conduct of these entities means they must ensure that any other financial markets they operate are not subject to the Order unless separately approved by ASIC. Failure to comply with the provisions of the ASIC Class Order [CO 02/259] may result in significant consequences. The Act provides for both civil and criminal penalties for non-compliance. The specific penalties can vary but may include fines, imprisonment, or both, depending on the severity of the breach. For instance, individuals found guilty of contravening the Order may face fines up to a substantial amount, and in more serious cases, imprisonment for several years. Corporate entities may also face substantial financial penalties, and in extreme cases, the revocation of their operating license in Australia. In summary, ASIC Class Order [CO 02/259] sets clear parameters for foreign financial market bodies wishing to operate in Australia, particularly in relation to downstream acquisitions. It imposes stringent compliance obligations and outlines severe penalties for any breaches, thereby ensuring that the integrity of the Australian financial market is maintained.