ASIC Class Order [CO 02/1161]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted in 2001, addresses the need to streamline financial services regulation within public offer entities, particularly superannuation funds. The Act was introduced to address a gap in the regulatory framework that could potentially create barriers for trustees operating within these entities. The policy objective is to facilitate smoother operations for trustees while maintaining oversight and consumer protection standards. By exempting trustees of public offer entities from the requirement to hold an Australian financial services licence when dealing in financial products on behalf of members, the Act aims to reduce administrative burdens and costs without compromising on regulatory integrity. This legislative instrument, dated 31 October 2002, was issued under the authority delegated to Brendan Byrne by the Australian Securities and Investments Commission. It specifies that the exemption applies to financial services provided by trustees in the course of their operations, excluding interests in the public offer entity itself. This exemption is in line with the interpretation of "public offer entity" as defined in the Superannuation Industry (Supervision) Act 1993, ensuring consistency and clarity in the application of these regulatory measures.

Scope and Application

Under the Australian Securities and Investments Commission Corporations Act 2001, specifically paragraph 911A(2)(l), the Australian Securities and Investments Commission provides an exemption for each trustee of a public offer entity from the necessity of holding an Australian financial services licence when offering financial services that involve dealing in financial products (excluding an interest in the public offer entity) on behalf of the entity's members during its operations. This exemption is designed to streamline the operations of trustees within public offer entities, ensuring they can manage and execute transactions efficiently without the added burden of obtaining a financial services licence. The exemption applies to the trustees of public offer entities as defined under subsection 10(1) of the Superannuation Industry (Supervision) Act 1993, thus ensuring clarity and consistency in its application. The exemption is confined to activities strictly related to the trustees' dealings in financial products on behalf of the entity's members, highlighting its targeted scope. The legislative instrument, dated 31st October 2002, is signed by Brendan Byrne as a delegate of the Australian Securities and Investments Commission, reflecting the authority vested in the Commission to issue such exemptions.

Key Provisions

Under the Corporations Act 2001, specifically paragraph 911A(2)(l), the Australian Securities and Investments Commission (ASIC) has provided an exemption for trustees of public offer entities from the necessity of holding an Australian financial services licence. This exemption applies to the trustees' dealings in financial products, excluding any interests in the public offer entity itself, when acting on behalf of the entity's members during the course of the entity's operations. This provision aims to ease certain regulatory burdens on trustees, allowing them to focus on their primary duties without the additional requirement of obtaining a financial services licence for these specific activities. The obligations under this Act for trustees of public offer entities are primarily centred around the operation and management of the entity in compliance with the broader regulatory framework. Trustees must ensure that their activities in dealing with financial products, as permitted by the exemption, are conducted in good faith and in the best interests of the members. This includes maintaining appropriate records and disclosures as required under other sections of the Corporations Act and relevant superannuation laws. Trustees should also be aware of their fiduciary duties and other statutory obligations that may apply to their role within the entity. Breaching the conditions or spirit of this exemption could have significant consequences. Although the specific legislative instrument does not detail penalties, general provisions within the Corporations Act and other relevant legislation may apply. Offences related to improper conduct, misleading or deceptive behaviour, or failure to comply with the best interests requirement could lead to civil penalties, including fines and compensation orders. Criminal penalties may also apply, particularly if there is evidence of intentional or reckless disregard for legal obligations, with potential maximum penalties including fines and imprisonment depending on the severity and impact of the breach. Trustees must therefore exercise due diligence and adhere to the highest standards of governance and ethical conduct to avoid such repercussions.