Australian Securities and Investments Commission
Corporations Act 2001 — Paragraph 1020F(1)(c) — Declaration
Under paragraph 1020F(1)(c) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission declares that Part 7.9 of the Act applies in relation to an issuer of a financial product in the case referred to in the Schedule, as if section 1013A of the Act were modified or varied by:
1. in subsection (1), omitting “must be a document that has been prepared by the issuer of the financial product.” and substituting:
“may relate to one or more financial products of more than one issuer, and must be a document that has been prepared by the issuer of each financial product to which the Statement relates.”; and
2. in subsection (3), after “prepared” inserting “and who is the issuer of the product”.
Schedule
An offer to issue or to arrange the issue, an issue, or a recommendation to acquire by way of the issue, of a financial product where:
1. the Product Disclosure Statement that is given for that financial product also relates to at least one other financial product of another issuer;
2. each financial product to which the Statement relates (“product”) is of the same kind; and
3. each issuer of a product is a related body corporate of each other issuer of a product; and
4. either:
(a) the Statement states or implies that each of the products will be able to be traded on a financial market (whether in Australia or elsewhere); or
(b) the Statement does not state or imply that any product will be able to be so traded; and
5. the Statement includes a statement to the effect that the issuers are related bodies corporate and that they will remain related bodies corporate for so long as the products are being offered and issued under the Statement; and
6. the new product disclosure provisions apply to each of the products.
Note: A Product Disclosure Statement cannot relate to financial products that are securities : see section 1010A of the Act. Accordingly, this instrument does not affect the extent to which a Product Disclosure Statement may be combined with a disclosure document for an offer of securities.
Interpretation:
For the purposes of this instrument:
1. a financial product is of the same kind as another financial product if and only if both products are covered by the same paragraph of subsection 764A(1) of the Act, and that paragraph is not paragraph (a), (j) or (m); and
2. “new product disclosure provisions” has the meaning given by subsection 1438(2) of the Act.
Dated this 15th day of October 2003
Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission
Overview
The Australian Securities and Investments Commission Corporations Act 2001 was enacted to ensure transparency and accountability in the financial markets, addressing issues of investor protection and market integrity. In 2003, a legislative instrument was introduced under the Act to modify the application of Part 7.9, specifically addressing the disclosure requirements for financial products issued by related issuers. This legislative instrument aims to clarify and extend the scope of disclosure obligations when multiple issuers, who are related bodies corporate, offer similar financial products. The policy objective is to enhance investor protection by ensuring comprehensive and accurate disclosure when financial products from related issuers are marketed together, thereby fostering informed investment decisions and maintaining market confidence.
Scope and Application
Pursuant to the Corporations Act 2001, the Australian Securities and Investments Commission has declared that Part 7.9 of the Act applies to an issuer of a financial product in specific circumstances outlined in the Schedule. This declaration modifies certain provisions to accommodate cases where a Product Disclosure Statement relates to multiple financial products issued by related issuers. The modification allows the Statement to cover multiple products from different issuers, provided the products are of the same kind and the issuers are related bodies corporate. The declaration also stipulates that the Statement must indicate whether the products can be traded on a financial market and must explicitly state the relatedness of the issuers. This legislative instrument extends the scope of the product disclosure requirements to ensure comprehensive and clear disclosure in the context of related issuers and similar financial products. The application of this instrument is limited by the exclusion of securities, as defined under section 1010A of the Act. Additionally, the instrument does not affect the combination of a Product Disclosure Statement with a disclosure document for securities offerings.
Key Provisions
The Australian Securities and Investments Commission, through the legislative instrument dated 15th October 2003, amends the Corporations Act 2001 (the “Act”) to alter the application of Part 7.9 of the Act to issuers of financial products under certain conditions (Paragraph 1020F(1)(c)). Specifically, the instrument modifies the requirement that a Product Disclosure Statement (PDS) must be prepared by the issuer of a financial product, allowing it to pertain to multiple products from different issuers if they are of the same kind and issued by related entities. This change is effected by omitting the phrase “must be a document that has been prepared by the issuer of the financial product” in subsection (1) and substituting it with “may relate to one or more financial products of more than one issuer, and must be a document that has been prepared by the issuer of each financial product to which the Statement relates.” Additionally, it inserts the phrase “and who is the issuer of the product” after “prepared” in subsection (3).
The Act imposes obligations on issuers of financial products, particularly when they offer or recommend the acquisition of a product that is part of a group of similar products issued by related entities. These issuers must ensure that the PDS accurately describes each product, stating explicitly whether the products can be traded on a financial market. The PDS must also include a declaration that the issuers are related bodies corporate and will remain so for the duration of the offer and issuance of the products. Each issuer is responsible for preparing the PDS, which must adhere to the “new product disclosure provisions” as defined by subsection 1438(2) of the Act.
Failure to comply with the requirements of the PDS as outlined in the Act may result in significant legal consequences. Breaches of the Act can lead to civil penalties, including fines, and in some cases, criminal penalties. The maximum penalties for contraventions can vary but typically include fines up to several thousand dollars for corporations, depending on the severity and frequency of the breach. Additionally, individuals involved in the preparation or issuance of non-compliant PDS may face personal fines and potential imprisonment.