ASIC Class Order [CO 02/0269]

Overview

The Financial Services Reform Act 2001 (F2006B01636) was enacted to address gaps and issues in the financial services regulation framework in Australia, aiming to enhance the efficiency and effectiveness of financial markets. This legislative instrument amends the Corporations Act 2001 by varying Class Order [01/1543] to modernise certain provisions in light of evolving financial market practices. The Australian Securities and Investments Commission, acting under the authority delegated by the relevant legislature, has introduced these variations to align with contemporary financial market operations and to ensure that regulatory oversight is applied effectively to the operators of relevant prescribed financial markets rather than just the exchanges. The policy objective is to streamline and clarify the regulatory requirements, ensuring they are appropriately targeted to maintain market integrity and protect investors.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001 (the "Act") applies to the regulation of financial markets and financial products within Australia, governing the conduct of corporations, financial services providers, and other entities. This particular legislative instrument, Subsection 655A(1), pertains to the variation of Class Order [01/1543], which specifically deals with the operation of financial markets and the disclosure requirements for certain types of financial offers. The changes outlined in this subsection aim to refine the obligations of market operators and bidders in relation to the disclosure of necessary documents, such as prospectuses and Product Disclosure Statements, when securities or managed investment products are offered as consideration in a bid. The amendments also adjust the terminology from referring to "securities exchanges" to "prescribed financial markets," thereby aligning the language with the broader regulatory framework and ensuring that the provisions are applicable to all relevant financial market operators. These variations are designed to enhance the clarity and effectiveness of regulatory oversight in financial markets across the Commonwealth of Australia, ensuring compliance with statutory disclosure requirements.

Key Provisions

The Australian Securities and Investments Commission, under the authority of subsection 655A(1) of the Corporations Act 2001, has made amendments to Class Order [01/1543] effective from the commencement of Schedule 1 to the Financial Services Reform Act 2001. These changes are aimed at updating the terminology and requirements in the order to reflect the current regulatory landscape concerning financial markets. Specifically, the amendment involves substituting the term “the relevant securities exchange” with “the operator of each relevant prescribed financial market” in several instances (subsections 1 and 3). Additionally, it replaces references to “each relevant securities exchange” with “the operator of each relevant prescribed financial market” in other parts of the order (subsections 2 and 4). The revised order imposes new obligations on entities involved in financial transactions. It mandates that if securities, other than managed investment products, are offered as consideration under a bid, the bidder must ensure that all material required for a prospectus is provided. This requirement is contingent upon the bidder being the issuer of the securities, controlling the issuer, or having the issuer's consent to offer the securities (subsection 2(g)). Similarly, if managed investment products are offered as consideration, the bidder must ensure that all necessary material required for a Product Disclosure Statement is provided. This requirement applies if the bidder is the responsible entity of the managed investment scheme, controls the responsible entity, or has the responsible entity's consent (subsection 2(ga)). The Act does not explicitly state any new offences or penalties associated with the variations made to Class Order [01/1543]. However, failure to comply with the requirements outlined in the amended order may lead to regulatory action under the Corporations Act 2001. Such actions could include fines, legal proceedings, or other enforcement measures. The potential penalties for non-compliance with the Corporations Act 2001 can be severe, including substantial monetary fines and, in some cases, imprisonment for serious breaches. The specific penalties depend on the nature and severity of the offence, as well as any relevant precedents set by the courts.