ASIC Class Order [CO 02/1176]
Credit union member shares
This instrument has effect under s911A(2)(l), 951B(1)(a) and 1020F(1)(a) of the Corporations Act 2001.
This compilation was prepared on 20 December 2011 taking into account amendments up to [CO 11/1277]. See the table at the end of this class order.
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act 2001 – Paragraphs 911A(2)(l), 951B(1)(a) and 1020F(1)(a) – Exemptions
1. Under paragraph 911A(2)(l) of the Corporations Act 2001 ("Act") the Australian Securities and Investments Commission ("ASIC") hereby exempts each person specified in Schedule A (each a "credit union") from the requirement to hold an Australian financial services licence for the provision of financial services of the kind specified in Schedule B.
2. Under paragraph 951B(1)(a) of the Act ASIC hereby exempts each credit union from Part 7.7 of the Act in the cases specified in Schedule B.
3. Under paragraph 1020F(1)(a) of the Act ASIC hereby exempts each credit union from section 1017F of the Act in the case of a transaction described in paragraph 2 of Schedule B on the condition that each statement of account sent by the credit union to a holder of member shares includes a statement of:
(a) the number of member shares held by that member; or
(b) the amount subscribed by that member for the member shares.
Schedule A
A company that satisfies both of the following:
(a) is covered by clause 3 of Schedule 4 to the Act;
(b) on 1 July 1999 was permitted to use the expression “credit union”, “credit society”, or “credit co-operative” under section 66 of the Banking Act 1959.
Schedule B
1. The provision of financial product advice to a member or prospective member of the credit union in relation to the issue to that member of one or more member shares as defined in Regulation 12.8.03 of the Corporations Regulations 2001, where the aggregate amount subscribed or to be subscribed by the member for:
(a) all member shares then held by the member; and
(b) all member shares proposed for issue to the member,
does not exceed $50.
2. Any dealing in member shares that is constituted by:
(a) an issue of member shares in the circumstances described in paragraph 1 of this Schedule; or
(b) the redemption of such shares.
Notes to ASIC Class Order [CO 02/1176]
Note 1
ASIC Class Order [CO 02/1176] (in force under s911A(2)(l), 951B(1)(a) and 1020F(1)(a) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the tables below.
Table of Instruments
Instrument number | Date of making or FRLI registration | Date of commencement | Application, saving or transitional provisions |
[CO 02/1176] | 5/8/2002 (see F2008B00014) | 5/8/2002 | |
[CO 11/1277] | 16/12/2011 (see F2011L02721) | 20/12/2011 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Sch A paras (a) and (b) | am. [CO 11/1277] |
Overview
The ASIC Class Order [CO 02/1176], effective under sections 911A(2)(l), 951B(1)(a), and 1020F(1)(a) of the Corporations Act 2001, was introduced to provide certain exemptions to credit unions from specific provisions of the Act. Enacted by the Australian Securities and Investments Commission (ASIC), the order aims to streamline regulatory requirements for credit unions, facilitating their operations within the financial services sector. This was achieved by exempting credit unions from holding an Australian financial services licence for certain financial services, from specific sections of the Act, and from certain conditions regarding transactions and account statements. The policy objective is to enable credit unions to operate more efficiently while still maintaining a level of regulatory oversight to protect consumers.
Scope and Application
ASIC Class Order [CO 02/1176] applies to credit unions, which are specifically defined entities in Schedule A of the class order. These credit unions are companies that satisfy certain criteria, including being covered by clause 3 of Schedule 4 to the Corporations Act 2001 and being entities that were permitted to use specific terminology under the Banking Act 1959 as of 1 July 1999. The class order provides exemptions from certain requirements of the Corporations Act for these credit unions, subject to conditions outlined in Schedule B. Specifically, the class order exempts credit unions from the need to hold an Australian financial services licence for the provision of certain financial services, from Part 7.7 of the Act in specified cases, and from section 1017F of the Act in the case of transactions described in Schedule B, provided that member shares statements include specific details as outlined. The geographic reach of this class order is national, applying across Australia, and it extends to subordinate instruments which may further detail or amend its provisions.
Key Provisions
The ASIC Class Order [CO 02/1176] provides specific exemptions to credit unions under the Corporations Act 2001. Primarily, it exempts credit unions from the requirement to hold an Australian financial services licence for the provision of financial services related to member shares (Section 911A(2)(l)). This means that credit unions can offer certain financial services to their members without needing a separate financial services licence. Additionally, credit unions are exempt from Part 7.7 of the Act and section 1017F in certain circumstances (Sections 951B(1)(a) and 1020F(1)(a)).
Under these provisions, credit unions must adhere to specific conditions when providing financial services to their members. For instance, credit unions are required to include a statement of either the number of member shares held by the member or the amount subscribed by that member for the shares in each statement of account sent to the member (Section 1020F(1)(a)). This ensures transparency and clarity in the financial dealings between credit unions and their members.
Failure to comply with these requirements can lead to significant legal consequences. While specific penalties are not detailed in the Class Order, breaches of the Corporations Act can result in civil or criminal penalties, depending on the nature and severity of the breach. These penalties can include fines and imprisonment for individuals, as well as fines for the credit unions themselves. The exact penalties would be determined by the courts based on the specific circumstances of each case.
The Class Order also specifies the entities eligible for these exemptions. A credit union must be a company that was permitted to use the term “credit union” under the Banking Act 1959 as of 1 July 1999 and must be covered by clause 3 of Schedule 4 to the Corporations Act 2001. This ensures that only entities meeting certain criteria can benefit from the exemptions provided by the Class Order.
Overall, the ASIC Class Order [CO 02/1176] provides credit unions with certain exemptions from financial licensing requirements and other regulatory provisions, provided they adhere to the specific conditions outlined in the Class Order. Non-compliance with these conditions can result in legal penalties, highlighting the importance of adherence to the regulatory framework governing credit unions.