Overview

The Australian Securities and Investments Commission Corporations Act 2001 (the Act) was enacted to establish a framework for financial markets and entities, ensuring the protection of investors and maintaining market integrity. One specific legislative instrument under this Act is the "Australian Securities and Investments Commission Corporations Act 2001 — Paragraph 911A(2)(l) — Exemption" which was introduced to address a temporary exemption from holding an Australian financial services licence for certain financial services provided by pooled development funds (PDFs). This exemption applies to PDFs that meet specific criteria, including being registered under the Pooled Development Funds Act 1992 and having an enforceable contract with a licensee for administering their investments and obtaining financial product advice. The objective of this exemption is to facilitate the operation of PDFs during a defined period while ensuring they receive necessary financial advice, thereby mitigating risks for wholesale clients. The instrument was enacted by the Australian Securities and Investments Commission as a delegate of the relevant legislature.

Scope and Application

The Australian Securities and Investments Commission Corporations Act 2001 provides a framework for regulating financial services within Australia. Under paragraph 911A(2)(l) of this Act, the Australian Securities and Investments Commission has granted an exemption from the requirement to hold an Australian financial services licence for certain financial services provided by specific entities. This exemption applies to companies, referred to as "PDFs," that meet two conditions outlined in Schedule A. First, these companies must have a registration declaration made in relation to them under section 14 of the Pooled Development Funds Act 1992 and must have such a declaration in force. Second, they must have entered into an enforceable contract with a licensee, defined as either a person holding an Australian financial services licence or a regulated principal as per section 1430 of the Act, to administer their investments and obtain financial product advice before making any decisions regarding financial products or interests in such products. The exemption pertains to financial services provided by these PDFs, specifically concerning the offer to issue securities during the period from 17th August 2002 to 17 August 2003, to wholesale clients as defined in subsection 761G(4) of the Act, and under an offer document that does not contain personal advice as defined in subsection 766B(3). Additionally, it applies to any issue of securities by the PDF resulting from the acceptance of such an offer. The exemption does not extend to any services beyond those specified in Schedule B, and it is contingent upon the conditions in Schedule A being strictly adhered to.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has issued an exemption under paragraph 911A(2)(l) of the Corporations Act 2001 (the Act). This exemption applies to companies referred to as "PDFs" in Schedule A, which are subject to specific conditions. According to section 14 of the Pooled Development Funds Act 1992, a PDF must have a registration declaration that is both made and in force. Additionally, these companies must have an enforceable contract with a licensee to administer their investments. This contract must allow the PDF to receive financial product advice from the licensee before making any investment decisions. The services exempted from requiring an Australian financial services licence pertain to the offer of securities by the PDF and the issuance of securities resulting from the acceptance of such offers, as detailed in Schedule B. The offer must be made between 17 August 2002 and 17 August 2003, to a wholesale client as defined in subsection 761G(4) of the Act, and must not include personal advice as defined in subsection 766B(3). The obligations imposed by this legislative instrument on the parties involved are quite specific. Each PDF must ensure that their registration declaration under the Pooled Development Funds Act 1992 is valid and active. Additionally, they must enter into and maintain an enforceable contract with a licensee who can provide the necessary financial product advice before any investment decisions are made. The licensee, in turn, must be either a person holding an Australian financial services licence or a regulated principal as described in section 1430 of the Act. These conditions ensure that while PDFs are exempt from needing an Australian financial services licence for the specified financial services, they still receive professional financial advice from qualified entities. There are no explicit offences, penalties, or consequences for breaches mentioned in this legislative instrument. However, failure to comply with the requirements of having a valid registration declaration and an enforceable contract with a licensee could potentially lead to other legal ramifications under the Corporations Act 2001 or the Pooled Development Funds Act 1992. Given the nature of financial services and the regulatory environment, non-compliance could result in significant legal and financial repercussions for the PDFs involved.