Overview

The Australian Securities and Investments CommissionCorporations Act 2001 — Paragraph 601QA(1)(a), 741(1)(a), 992B(1)(a) and 1020F(1)(a) — Revocation and Exemption legislative instrument was introduced to address specific regulatory gaps concerning the operation of managed investment schemes involving real property interests, particularly those where units or interests are offered or sold at significant value thresholds. Enacted by the Australian Securities and Investments Commission (ASIC) as a delegate under the Corporations Act 2001, the instrument revokes Class Order [00/191] and provides exemptions for certain schemes and regulated persons from various sections of the Act. The policy objective is to streamline and clarify the regulatory environment for such investment schemes, ensuring that they comply with necessary standards while accommodating the unique nature of these real property investments. This instrument aims to provide certainty and flexibility in the regulatory framework for managed investment schemes involving high-value real property interests.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001—Revocation and Exemption legislative instrument primarily concerns the revocation and exemption of certain provisions within the Corporations Act 2001 for specific types of managed investment schemes. The Act applies to individuals or entities operating schemes involving owners of strata title units, community title interests, or similar real property interests at one location, which are used as part of a serviced apartment, hotel, motel, or resort complex. The instrument revokes Class Order [00/191] under the authority granted by the Act, thereby removing specific regulatory burdens for these schemes. Furthermore, it exempts both operators of the schemes and regulated persons from certain disclosure and licensing requirements when offering or selling interests in the scheme, provided that the offers are made only to persons owning or agreeing to purchase a unit or interest for an amount of at least $500,000. This exemption extends to recommendations for acquiring interests in the scheme. The jurisdictional reach of this Act is national, applying across all states and territories of Australia, and it comes into effect on the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has taken significant actions under the Corporations Act 2001, specifically under paragraphs 601QA(1)(a), 741(1)(a), 992B(1)(a), and 1020F(1)(a). Firstly, ASIC has revoked Class Order [00/191], which was previously in place to regulate certain aspects of investment schemes. This revocation suggests a shift in regulatory approach, potentially simplifying or altering the compliance requirements for those operating in this space. Secondly, ASIC has granted exemptions to certain parties operating specific types of managed investment schemes. These exemptions apply to the operation of the scheme, offers to issue or sell interests in the scheme, and the regulated activities related to offering, selling, or arranging interests in the scheme. The exemptions provided by ASIC are specifically targeted at managed investment schemes involving owners of strata title units, community title interests, or similar real property interests located at the same property. These schemes allow the owners to make their units or interests available to a manager for use as part of a serviced apartment, hotel, motel, or resort complex. Importantly, the exemptions only apply if all offers of interests in the scheme are made exclusively to persons who own or have agreed to purchase a unit or interest in the real property for an amount of not less than $500,000, including any associated chattels, costs, and expenses. Parties subject to these provisions must ensure that they comply with the specific conditions outlined in the Act and the exemptions granted by ASIC. This includes adhering to the criteria set forth in the Schedule, such as the minimum offer price of $500,000 and the type of real property interests involved. Failure to comply with these conditions may have legal repercussions. The Act imposes strict obligations on the parties involved, including the need to operate within the confines of the exemptions provided and to ensure that all offers and recommendations related to the investment scheme meet the specified criteria. Non-compliance with these obligations can result in severe consequences. While the Act does not explicitly state the penalties for breach, breaches of the Corporations Act 2001 can generally lead to civil or criminal penalties, including fines and imprisonment, depending on the nature and severity of the breach. The specific penalties would be determined in the context of the court proceedings following any enforcement actions by ASIC.