ASIC Class Order [CO 02/803]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Australian Parliament, was introduced to comprehensively regulate the financial services industry in Australia and to protect investors. This Act provides a legal framework for the operation of financial markets and services in the country, ensuring that market participants act with integrity and transparency. The legislation aims to maintain the stability of the financial system and to promote confidence in the financial markets. The specific legislative instrument referenced, F2008B00012, pertains to an exemption from the requirement to hold an Australian financial services licence for certain financial services provided under specific conditions. This exemption is granted to ensure a smooth transition during the implementation of new regulatory standards, allowing financial service providers to continue their operations without unnecessary disruption while the new regulatory framework is established. The instrument was signed by Brendan Byrne as a delegate of the Australian Securities and Investments Commission on 17 July 2002, to provide clarity and guidance on the transitional arrangements for financial service providers during the period leading up to the commencement of the Financial Services Reform (FSR) on 11 March 2004.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001 provides an exemption from the requirement to hold an Australian financial services licence under specific circumstances, as detailed in this legislative instrument. This exemption applies to the provision of financial services where the individual arranging the service (person 1) is not in Australia, and they are acting on behalf of another individual (person 2) who is also outside Australia. The financial service must be arranged with a person (person 3) who holds a dealer's licence or a futures broker's licence under the old Corporations Act, and the dealing must fall within the scope of the regulated activities of that licence holder. Furthermore, this exemption is applicable only if the dealing occurs within the transition period specified in the Act, and the person arranging the service reasonably believes that the other individual is not in Australia. This exemption does not extend beyond the specified date of 11 March 2004 and is subject to the definitions provided in the Act concerning terms such as "FSR commencement", "regulated activities", and "transition period".

Key Provisions

The legislative instrument under consideration specifies an exemption from the requirement to hold an Australian financial services licence under certain conditions, as outlined in paragraph 911A(2)(l) of the Corporations Act 2001. This exemption applies until 11 March 2004 for financial services provided when a person, referred to as person 1, who is not in Australia, arranges for a holder of a dealers licence or a futures brokers licence (person 3) to deal in a financial product within the scope of their regulated activities. This exemption is conditional on person 1 reasonably believing that the person on whose behalf the arrangement is made (person 2) is also not in Australia. The exemption is designed to facilitate transactions that involve Australian licensed dealers or brokers acting on behalf of non-residents. The Act imposes specific obligations on the parties involved in these transactions. Person 1 must be outside Australia and must reasonably believe that person 2 is also outside Australia. Person 3, the holder of the dealers or futures brokers licence, must be dealing within the scope of their regulated activities and during the transition period as defined in the Act. Additionally, the dealing must fall within the definition of "regulated activities" as stipulated in section 1430 of the Act, and must occur within the "transition period" as defined in subsection 1431(1) of the Act. Failure to comply with the conditions of this exemption may result in civil or criminal consequences, although the specific penalties are not detailed within this legislative instrument. Generally, breaches of the Corporations Act 2001 can result in significant penalties, including fines and imprisonment, depending on the nature and severity of the breach. For corporate entities, penalties can also include substantial fines. The precise penalties for any breaches of this exemption would be determined in accordance with the relevant sections of the Act and any applicable regulations or guidelines issued by the Australian Securities and Investments Commission.