ASIC Class Order [CO 02/831]

Overview

The Australian Securities and Investments Commission Corporations Act 2001 (the Act) was enacted to provide a comprehensive legal framework governing corporations in Australia, with a focus on enhancing corporate transparency and accountability. This Act was introduced to address the need for a unified legal structure to regulate corporate activities across the nation, thereby ensuring investor protection, maintaining market integrity, and fostering confidence in the Australian financial markets. The Act is administered by the Australian Securities and Investments Commission (ASIC), which is tasked with enforcing the provisions of the Act and ensuring compliance by corporations. The policy objective behind the Act is to maintain a fair, efficient, and transparent market by regulating corporate behaviour and practices, ultimately contributing to economic growth and stability. Under the authority granted by the Act, ASIC has the power to exempt certain classes of issuers from specific parts of the legislation, as seen in the legislative instrument dated 17th September 2002. This instrument exempts issuers meeting certain criteria from Parts 6D.2 and 6D.3 of the Act, while simultaneously revoking Class Order [00/194] effective from 1 January 2003. The exemptions are contingent on various conditions, including compliance with certain statutory provisions, the nature of the offer, and the provision of specific information in the offer document. This legislative measure aims to provide flexibility and efficiency in corporate operations while maintaining essential regulatory oversight.

Scope and Application

The Corporations Act 2001 (the Act) sets out various regulations for corporations, including those related to financial markets and offerings. Under subsection 741(1) of the Act, the Australian Securities and Investments Commission (ASIC) has issued a legislative instrument that exempts certain issuers from specific parts of the Act under particular conditions. This exemption applies to issuers who are admitted to the Official List of the Australian Stock Exchange Limited and to responsible entities of registered schemes similarly admitted. These issuers are exempt from Parts 6D.2 and 6D.3 of the Act, with exceptions for sections 736 and 738, if they meet the criteria specified in Schedule B. These criteria include making a written offer for the issue of shares or interests in the issuer or a registered scheme, where the offer is made under an arrangement that meets several conditions, such as being made on the same terms to all registered holders, having an issue price below the market price for a specified period, and adhering to limits on the total application price over a 12-month period. The offer document must also include detailed information about the issue price calculation, its relationship to the market price, and the risks associated with potential market price changes. Additionally, ASIC has revoked Class Order [00/194] with effect from 1 January 2003. The instrument provides specific definitions for terms such as "registered holder" and explains how these definitions apply in various scenarios, including joint holdings, beneficiary interests, and stapled securities.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has provided an exemption under subsection 741(1) of the Corporations Act 2001 (the Act) for certain issuers from Parts 6D.2 and 6D.3 of the Act, except for sections 736 and 738. Specifically, this exemption applies to issuers specified in Schedule A, who are either a body admitted to the Official List of the Australian Stock Exchange Limited or a responsible entity of a registered scheme admitted to the Official List. This exemption is conditional and applies to written offers for the issue of shares or interests in the issuer or a registered scheme, provided certain criteria are met as outlined in Schedule B. The criteria in Schedule B include ensuring that the shares or interests are in a class quoted on the Australian Stock Exchange Limited and trading is not suspended. Additionally, the issuer must not have contravened certain provisions of the Act in the previous 12 months. The offer must also comply with several conditions, such as being made to each registered holder whose address is in a place where it is lawful and practical for the issuer to offer and issue shares or interests. The offer must be on the same terms and conditions, on a non-renounceable basis, with an issue price less than the market price during a specified period in the 30 days prior to the offer date or issue date. Moreover, no registered holder may be issued with shares or interests with an application price exceeding $5,000 in any consecutive 12-month period. Registered holders must also certify that the aggregate application price for the shares or interests and any other shares or interests applied for under the arrangement or similar arrangements in the 12 months prior does not exceed $5,000. The written offer document must disclose the method for calculating the issue price, the relationship between the issue price and the market price, and the risk of market price changes and their effect on the price or value of the shares or interests. ASIC also revokes Class Order [00/194] with effect from 1 January 2003 under the same subsection 741(1) of the Act. The interpretation section clarifies key terms, such as "registered holder," which includes persons recorded in the register of members of a company or registered scheme as members. Jointly held shares or interests are treated as held by a single registered holder, and if a trustee or nominee holds shares or interests on behalf of a beneficiary, the beneficiary is considered the registered holder. The $5,000 limit applies to stapled securities as if their components constitute a single share or interest. References to issuers offering shares or interests also include invitations for applications for the issue of shares or interests. In summary, the legislative instrument outlines specific exemptions and conditions under which issuers can offer shares or interests without certain regulatory constraints, while also revoking a previous class order. This provides clarity and specific guidelines for compliance with the Corporations Act 2001.