Overview

The Australian Securities and Investments Commission Corporations Act 2001 (the Act) was enacted to regulate corporate activities and financial markets within Australia, ensuring transparency and fairness. This legislative instrument, dated 10th September 2002, revokes Class Order [00/453] and declares that Chapters 6 and 6C of the Act apply to a specific class of persons as outlined in the schedules. The revocation and declaration are under sections 655A and 673 of the Act, with the intent to modify the definitions and provisions concerning Put Warrants, specifically addressing issues around associations and relevant interests arising from Put Warrant transactions. This legislative action by the Australian Securities and Investments Commission aims to clarify and refine the legal framework governing financial instruments and their impact on corporate governance and securities holdings.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001, specifically through sections 655A and 673, revokes Class Order [00/453] and declares that Chapters 6 and 6C of the Act apply to the class of persons described in Schedule A, where the Offering Circular or Product Disclosure Statement for the Put Warrant states that this Class Order, Class Order [00/453], or Class Order [99/843] is to apply. This Act pertains to Put Warrant issuers, Put Warrant holders, and any person who would otherwise have a relevant interest in, or voting power in relation to, any securities as a result of a person acquiring or holding a Put Warrant, for the period the person holds the Put Warrant. The application of the Act is national, extending across the Commonwealth of Australia. The Act modifies sections 12 and 609 to clarify that no association arises between a Put Warrant issuer and a Put Warrant holder merely because of the Put Warrant, and that a Put Warrant issuer does not have a relevant interest in a security merely because the Put Warrant holder has an option to require the issuer to acquire the security or can exercise power to control the voting or disposal of the security under certain conditions. These modifications are intended to refine the interpretation and application of relevant interests and voting power in the context of Put Warrants. The Act further extends its application through subordinate instruments, allowing for detailed regulations and clarifications to be established in support of the primary legislation.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has used its powers under sections 655A and 673 of the Corporations Act 2001 to revoke Class Order [00/453] and declare that specific chapters of the Act apply to certain parties involved with Put Warrants. This legislation modifies the definition and implications of an 'associate' and 'relevant interest' in relation to Put Warrants. Section 655A allows ASIC to revoke existing class orders, while section 673 enables the declaration of new rules that apply to specified classes of people or entities. In this case, the changes affect Put Warrant issuers, Put Warrant holders, and any other person who might have a relevant interest or voting power due to the existence of a Put Warrant. Under this legislative instrument, several obligations are placed on Put Warrant issuers and holders. Firstly, for the purposes of determining associate references in sections 610, 9, and 671B, no association is recognised between a Put Warrant issuer and a Put Warrant holder simply because of the existence of a Put Warrant (section 12(6)). Secondly, a Put Warrant issuer does not have a relevant interest in a security merely because the Put Warrant holder has an option to require the issuer to acquire the security, or if the issuer can exercise control over the voting or disposal of the security under certain conditions (subsection 609(6A)). If these conditions cease to apply, the Put Warrant issuer is considered to acquire a relevant interest in the security at that time, by a transaction in relation to the security (subsection 609(6B)). The Act outlines specific consequences for breach of its provisions. While the Act does not explicitly state penalties for breaches, it is reasonable to infer that breaches of the Corporations Act, including those arising from non-compliance with class orders or declared rules, could result in civil or criminal penalties. These penalties can include fines for individuals and corporations, as stipulated under various sections of the Corporations Act. For instance, section 1317E imposes a maximum penalty of up to $210,000 for individuals and $1,050,000 for bodies corporate for breaches of disclosure requirements. Additionally, section 1311(1) allows for criminal prosecution where the breach is intentional, negligent, or reckless, which can lead to imprisonment for individuals and further substantial fines for corporations. The exact penalties would depend on the specific breach and the discretion of the court.