ASIC Class Order [CO 02/263]

Overview

The ASIC Class Order [CO 02/263], which took effect under section 1020F(1)(a) of the Corporations Act 2001, was enacted to provide an exemption for certain foreign companies offering managed investment schemes traded on approved foreign exchanges to Australian investors. This legislative instrument was introduced to address the need for a streamlined regulatory approach to foreign investment offerings while ensuring that Australian investors are adequately informed and protected. The order was prepared by the Australian Securities and Investments Commission (ASIC) and was amended as indicated in the legislative instrument tables. The primary policy objective is to facilitate the offering of foreign investment schemes in Australia by foreign companies, provided that these offerings meet specific criteria such as a limited number of offers, non-transferability, and compliance with foreign market requirements. This class order aims to balance the need for regulatory oversight with the facilitation of cross-border investment opportunities.

Scope and Application

The ASIC Class Order [CO 02/263] applies to foreign companies that are issuers of interests in managed investment schemes that are traded on approved foreign exchanges. The Act exempts these issuers from certain provisions of Part 7.9 of the Corporations Act 2001, provided that the offers of interests in the managed investment scheme meet the specified criteria. These criteria include that no more than 20 offers are made in Australia in a 12-month period, each offer is personal and not transferable, the interests can be traded on an approved foreign market and trading is not suspended, the required documentation complies with relevant laws and rules, a copy of the document is provided to Australian offerees, and a written statement is included or accompanied by the documents. The exemption is limited to the specified conditions and does not apply to certain sections of the Act. The list of approved foreign markets is specified in the class order and includes various stock exchanges around the world. The instrument applies nationally across Australia and takes effect on the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Key Provisions

The ASIC Class Order [CO 02/263] provides an exemption from certain provisions of Part 7.9 of the Corporations Act 2001, specifically sections 1017E, 1017F, 1020D, and 1021O, for foreign companies offering interests in a managed investment scheme under specific conditions (s1020F(1)(a)). This exemption applies to offers or issues of interests where the number of Australian offerees does not exceed 20 in any 12-month period (Schedule B(1)). Each offer must be personal and non-transferable (Schedule B(2)), and the interests must be tradeable on an approved foreign market that is not suspended (Schedule B(3)). Additionally, the required documentation must comply with the laws of the foreign market and be provided to Australian offerees with appropriate translations and a statement clarifying the nature of the documents and the issuer's compliance status (Schedule B(4)–(6)). The obligations imposed by the ASIC Class Order [CO 02/263] on the issuers include ensuring that the offer is made to no more than 20 Australian offerees within any 12-month period, providing personal and non-transferable offers, ensuring the interests are tradeable on an approved foreign market, and complying with the documentation requirements, including providing certified English translations and a statement to Australian offerees. The issuers must also ensure that the required documentation complies with the legislative requirements applicable in the jurisdiction of the approved foreign market and that these documents are provided to Australian offerees. Breach of the conditions specified in the ASIC Class Order [CO 02/263] can result in various consequences. While the specific penalties for breaching this Class Order are not detailed in the provided text, breaches of the Corporations Act 2001 can lead to civil penalties, including fines, and criminal penalties, including imprisonment. The exact penalties depend on the nature and severity of the breach, and the courts have discretion in imposing fines and sentences. It is essential for issuers to comply with the requirements to avoid these potential consequences.