Australian Securities and Investments Commission
Corporations Act 2001 — Sections 655A and 673 — Revocation and Declaration
Under sections 655A and 673 of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission (“ASIC”) hereby revokes Class Order [00/454].
And under sections 655A and 673 of the Act ASIC hereby declares that Chapters 6 and 6C of the Act apply to the class of persons described in Schedule A, in the case referred to in Schedule B, as if section 609 of the Act were modified or varied by inserting after subsection 609(6) the following subsection:
“(6A) Subsection (2) applies to a person (the “trustee”) who would otherwise have a relevant interest in securities as a trustee under a trust for the purpose of satisfying rights or obligations of the issuer or holder of warrants despite:
(a) the trustee having any of the following discretions under the terms of the trust deed relating to the warrants:
(i) discretions where the issuer or holder of the warrants becomes insolvent or breaches a term of the warrants; or
(ii) discretions in relation to bonus issues, rights issues, returns of capital, security splits, security consolidations or other reconstructions of capital affecting the securities; or
(iii) discretions in relation to a takeover bid for or a scheme of arrangement affecting the issuer of the securities but not in relation to voting or disposal of the securities; or
(iv) discretions to lend the securities; or
(b) the holder of the warrant not having a presently enforceable or unconditional right of the kind referred to in subsection 608(8);
where:
(c) the warrants are issued and admitted to trading status in accordance with the operating rules of Australian Stock Exchange Limited; and
(d) the trustee holds the securities in trust, except where it has lent the securities under a discretion referred to in subparagraph (a)(iv); and
(e) if the trustee exercises any of the discretions referred to in paragraph (a), it does so on ordinary commercial terms or in an ordinary commercial manner as the case requires.”.
SCHEDULE A
A person who holds securities on trust for the purpose of satisfying the obligations of an issuer or holder of warrants; or who would so hold such securities on trust but for having lent them in accordance with the terms of the trust deed and on ordinary commercial terms.
SCHEDULE B
The calculation of the relevant interests, voting power or substantial holdings of a person in the class of persons described in Schedule A, where the warrant Offering Circular issued under the operating rules of Australian Stock Exchange Limited or the Product Disclosure Statement in relation to the warrants stated that this instrument or Class Order [00/454] or Class Order [99/1006] would apply in relation to the warrants.
Dated the 10th day of September 2002
Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission
Overview
The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Australian Parliament, aims to regulate and oversee the securities and financial markets in Australia. This legislation was introduced to address gaps and problems in financial market regulation, ensuring investor protection and maintaining market integrity. This particular legislative instrument, F2007B00263, revokes Class Order [00/454] and declares that Chapters 6 and 6C of the Act apply to a specific class of persons, as outlined in Schedule A, under certain conditions described in Schedule B. The policy objective is to ensure that trustees holding securities in trust for warrant issuers or holders are subject to the same rules as other relevant interest holders, even if they possess discretions in managing those securities under specific circumstances.
Scope and Application
The Australian Securities and Investments Commission Corporations Act 2001, through sections 655A and 673, modifies the application of the Act to a specific class of persons involved in the management of securities on trust for the satisfaction of rights or obligations of warrant issuers or holders. The Act applies to trustees who hold securities under a trust arrangement for warrants, excluding those instances where the trustee has discretion over the securities that could influence the issuer or holder of the warrants, such as in cases of insolvency, bonus or rights issues, or capital reconstructions. This includes trustees who may lend securities under certain conditions, but only if these actions are conducted on ordinary commercial terms. The changes introduced by the Act are effective in the context of warrants issued and admitted to trading status in accordance with the Australian Stock Exchange Limited’s operating rules. The geographic and jurisdictional reach of these provisions is national, applying uniformly across Australia. The Act’s modifications extend to the calculation of relevant interests, voting power, or substantial holdings of persons within the described class, provided that the warrant Offering Circular or Product Disclosure Statement specifies the applicability of this instrument or associated class orders. The revocation of Class Order [00/454] further refines the legislative framework, ensuring that the application of these provisions is consistent with the stated modifications to section 609 of the Act.
Key Provisions
The Australian Securities and Investments Commission (ASIC) has issued a legislative instrument that revokes Class Order [00/454] under sections 655A and 673 of the Corporations Act 2001 (the "Act"). The Act now declares that Chapters 6 and 6C of the Act apply to trustees holding securities in trust for the purpose of satisfying rights or obligations of warrant issuers or holders, or those who would hold such securities in trust but for having lent them under ordinary commercial terms (Sections 655A and 673). This applies in specific cases detailed in Schedule B, where the warrant Offering Circular or Product Disclosure Statement refers to the application of this instrument or Class Order [00/454] and Class Order [99/1006]. The new provisions modify section 609 of the Act by inserting a new subsection (6A) to clarify that trustees with certain discretionary powers over the warrants are still considered to have relevant interests in securities. These discretionary powers include decisions in cases of issuer insolvency or warrant breaches, bonus or rights issues, capital reconstructions, and takeover bids, excluding voting or disposal of securities. The trustee must exercise these discretions on ordinary commercial terms to be exempt from the relevant interest provisions.
Trustees who hold securities in trust for warrant issuers or holders must adhere to the modified provisions of the Act. They must ensure that any discretionary powers they exercise over the warrants are done on ordinary commercial terms, as outlined in the new subsection (6A). Trustees must also ensure that the warrants are issued and admitted to trading status in accordance with the operating rules of the Australian Stock Exchange Limited. Furthermore, trustees must maintain the securities in trust, except when they have lent them under the terms of the trust deed and on ordinary commercial terms. Trustees must also ensure that the holder of the warrant does not have a presently enforceable or unconditional right of the kind referred to in subsection 608(8).
Failure to comply with the provisions of the Act can result in significant consequences for trustees. The Act does not explicitly state the penalties for breaches; however, it is likely that such breaches could result in enforcement actions by ASIC. These actions could include administrative penalties, fines, or legal proceedings against the trustee. The severity of the penalties would depend on the nature and extent of the breach, as well as any relevant precedents set by ASIC. Trustees are therefore advised to ensure strict compliance with the Act to avoid potential enforcement actions and associated penalties.