ASIC Class Order [CO 03/748]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Parliament of Australia, addresses the need for regulatory clarity in financial services. The Act aims to provide a comprehensive legal framework governing corporations, financial services, and investment activities. In this context, the legislative instrument F2007B00648, dated 22 August 2003, provides an exemption under paragraph 992B(1)(b) of the Act. Specifically, it exempts natural person financial services licensees from the requirement to include non-financial service related revenues and expenses in their profit and loss statements, thereby reducing administrative burdens and ensuring that financial statements reflect only relevant business activities. The policy objective is to streamline reporting obligations while maintaining transparency and compliance within the financial services sector.

Scope and Application

The legislative instrument F2007B00648, issued under the Corporations Act 2001, provides an exemption for certain financial services licensees who are natural persons from specific reporting requirements. This exemption applies under paragraph 992B(1)(b) of the Act, which allows the Australian Securities and Investments Commission to exempt natural person licensees from the necessity to include in their profit and loss statements, any revenues and expenses that are not related to the financial services business they conduct. This means that the Act applies to financial services licensees who are individuals, and the exemption specifically relates to financial reporting requirements that would otherwise necessitate the inclusion of non-financial services related revenues and expenses. The exemption is granted to alleviate the burden on these natural person licensees who may have diversified income sources outside their financial services business. This legislative instrument operates within the jurisdiction of the Commonwealth, applying to all financial services licensees across Australia who fall under the specified criteria. There are no stated exclusions or thresholds beyond the requirement that the licensee must be a natural person involved in financial services. The exemption is clear and precise, not extending or restricting application through subordinate instruments.

Key Provisions

The key provision of this legislative instrument is found under paragraph 992B(1)(b) of the Corporations Act 2001, which provides an exemption for financial services licensees who are natural persons (referred to as "the licensee") from certain reporting requirements. Specifically, subsection 989B(1) of the Act generally requires the licensee to include in a profit and loss statement any revenues and expenses related to their financial services business. However, under this exemption, such licensees are not required to include any revenues and expenses that do not pertain to their financial services business (992B(1)(b)). The obligations and requirements imposed by this legislative instrument primarily pertain to financial services licensees who are natural persons. These licensees are relieved from the obligation to report certain financial information that is unrelated to their financial services business. This exemption aims to streamline reporting requirements and reduce administrative burdens for these licensees, as long as the revenues and expenses in question do not relate to their financial services business. Under the Corporations Act 2001, breaches of the provisions related to financial reporting and disclosure can lead to both civil and criminal consequences. For instance, knowingly or recklessly providing false or misleading information can result in significant fines and, in some cases, imprisonment. However, the legislative instrument itself does not specify any particular penalties for non-compliance with the exemption provision. Instead, the general penalties applicable under the Corporations Act 2001 would apply, which may include substantial fines and potential criminal charges for serious or repeated breaches. It is important to note that the maximum penalties will depend on the specific nature and severity of the breach, as well as any applicable aggravating factors.