ASIC Class Order [CO 03/237]

Overview

The ASIC Class Order [CO 03/237], introduced under section 1020F(1)(a) of the Corporations Act 2001, was enacted to address the need for updated information in Product Disclosure Statements (PDS) provided by responsible persons for financial products. This legislative instrument, prepared by the Australian Securities and Investments Commission (ASIC), exempts responsible persons and regulated persons from certain obligations under section 1012J of the Act, provided that the PDS was up to date when prepared and does not include materially adverse information. The policy objective is to ensure that PDS remain current without the burden of constant updates, while still ensuring that any significant changes are communicated to consumers. The Class Order sets out specific requirements for how updated information must be made available, including ensuring that the PDS clearly explains how and where updated information can be accessed and that a paper copy can be provided without charge.

Scope and Application

ASIC Class Order [CO 03/237], which has effect under section 1020F(1)(a) of the Corporations Act 2001, applies to responsible persons for financial products and regulated persons who provide Product Disclosure Statements (PDS) or Short-Form PDS in accordance with certain sections of the Act. This legislation is part of the Commonwealth's regulatory framework, ensuring that financial products are accompanied by adequate disclosure. The exemption provided by this class order relieves these entities from the requirement to include updated information in their PDS or Short-Form PDS if the original statement was up-to-date at the time of its preparation and the updated information does not include any materially adverse information. Furthermore, the responsible person must make reasonable efforts to ensure the availability of any updated information, making it simple and free for consumers to access. This class order also specifies the obligations of responsible persons in relation to the maintenance and distribution of updated information, and the record-keeping requirements for such information. The scope of this legislation is governed by the definitions provided within the instrument and is subject to amendments as detailed in the accompanying tables.

Key Provisions

The ASIC Class Order [CO 03/237], effective under section 1020F(1)(a) of the Corporations Act 2001, provides an exemption from certain obligations for responsible persons and regulated persons regarding Product Disclosure Statements (PDS) for financial products. Under this class order, responsible persons who prepare PDS and regulated persons who provide these statements are exempt from the requirement to include updated information in the PDS, provided the original PDS was up-to-date at the time of preparation and the updated information does not contain materially adverse information. This exemption applies as long as the responsible person takes reasonable steps to ensure that the PDS clearly explains that the information may change and how updated information can be accessed. The responsible person must also maintain simple and free means for accessing updated information, provide a paper copy of the updated information on request, and keep a copy of the updated information for seven years (section 1020F(1)(a)). The Act imposes specific obligations on responsible persons and regulated persons to manage and disseminate updated information effectively. Responsible persons must ensure the PDS prominently explains the potential for updates and how to access them, including providing paper copies without charge on request (Schedule, para 1(a)-(c)). They must also establish and maintain means for accessing updated information that are simple, free, and cause little inconvenience (Schedule, para 1(b)). Additionally, responsible persons must make updated information available to regulated persons promptly and retain copies of the updated information for seven years (Schedule, para 1(c) and (d)). Failure to comply with the requirements set out in the ASIC Class Order [CO 03/237] can lead to various consequences under the Corporations Act 2001. While the specific penalties for breaches of this class order are not detailed within the text of the instrument, general penalties under the Corporations Act can include substantial fines for both individuals and corporations. Civil penalty provisions may apply, where the maximum penalty for a corporation can be up to $2.1 million, and for individuals, the maximum penalty can be up to $420,000 or imprisonment for up to five years, or both, depending on the nature and seriousness of the breach (section 1317E). Additionally, breaches of the Act may also lead to criminal charges, depending on the circumstances and the discretion of the court.