ASIC Class Order [CO 04/523]
Investor directed portfolio services takeovers relief
This instrument has effect under s655A(1) and 673(1) of the Corporations Act 2001.
This compilation was prepared on 4 October 2013 taking into account amendments up to [CO 13/854]. See the table at the end of this class order.
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act 2001 — Subsections 655A(1) and 673(1) — Declaration
Under subsections 655A(1) and 673(1) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission 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(16) (as notionally inserted by ASIC Class Order [CO 12/1209]) the following subsections:
“IDPS operators
(17A) A person does not have a relevant interest in securities merely because the person:
(a) is the operator of an IDPS; or
(b) is involved in the operation of an IDPS and is a financial services licensee or a representative of a financial services licensee;
and under the terms of the IDPS:
(c) holds the securities; or
(d) has a discretion in relation to the disposal of the securities.
(17B) If ASIC Class Order [CO 02/294] (old IDPS Class Order) applies to the operator of an IDPS due to the operation of ASIC Class Order [CO 13/763], subsection (17A) does not apply to:
(a) the operator where it is unable to rely on an exemption granted under the old IDPS Class Order because it has failed to comply with, failed to take reasonable steps to comply with, or has reasonable grounds to believe that it has not complied with, a condition of that Class Order as the circumstances require; or
(b) a person referred to in paragraph (17A)(b) if the person has knowingly caused or procured the operator or any person who holds property to which the IDPS relates to breach a condition of the old IDPS Class Order.
(17C) Subsection (17A) does not apply to a person if ASIC has given a notice in writing to the person stating that subsection (17A) does not apply to the person and has not withdrawn that notice.
(17D) In subsections (17A) to (17C), IDPS and operator have the same meaning as in subsection 912AD(42).
Note: Notional subsection 912AD(42) is inserted by ASIC Class Order [CO 13/763].”
SCHEDULE A
An operator, or a person involved in the operation, of an IDPS.
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.
Interpretation
In this instrument, IDPS and operator have the meanings given by notional subsection subsection 609(17D). set out above.
Notes to ASIC Class Order [CO 04/523]
Note 1
ASIC Class Order [CO 04/523] (in force under s655A(1) and 673(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the tables below.
Table of Instruments
Instrument number | Date of making or FRLI registration | Date of commencement | Application, saving or transitional provisions |
[CO 04/523] | 17/5/2004 (see F2006B01156) | 17/5/2004 | |
[CO 04/613] | 9/6/2004 (see F2006B01157) | 9/6/2004 | - |
[CO 13/763] | 29/6/2013 (see F2013L01273) | 1/7/2013 | - |
[CO 13/854] | 4/10/2013 (see F2013L01766) | 4/10/2013 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Class Order....... | am. [CO 13/854] |
Subsection 609 (11)(b) as notionally inserted | am. [CO 04/613] |
Subsection 609 (11)(c) and (d) as notionally inserted |
ad. [CO 04/613]
|
Subsection 609 (17A) (formerly (11)) as notionally inserted |
am. [CO 13/854]
|
Subsection 609 (17B) (formerly (12)) as notionally inserted |
am. [CO 13/854]
|
Subsection 609 (13) as notionally inserted |
am. [CO 13/763]
rs. [CO 13/854] |
Subsection 609 (17C) (formerly (13)) as notionally inserted |
rs. [CO 13/854]
|
Subsection 609 (17D) (formerly (13)) as notionally inserted |
rs. [CO 13/854]
|
| |
Interpretation | am. [CO 13/854] |
Overview
The ASIC Class Order [CO 04/523], enacted in 2004, was introduced to address the problem of ensuring that investor directed portfolio services (IDPS) operators and related entities do not unduly influence the securities market by holding relevant interests in securities. The order operates under sections 655A(1) and 673(1) of the Corporations Act 2001 and is administered by the Australian Securities and Investments Commission (ASIC). The policy objective behind the order is to provide relief to IDPS operators by modifying the application of certain sections of the Corporations Act to ensure that these operators and their associates are not unfairly penalised for holding securities under the terms of an IDPS. This was achieved by specifying conditions under which a relevant interest in securities does not arise, thereby protecting operators and their associates from the adverse implications that such an interest might otherwise entail.
Scope and Application
The ASIC Class Order [CO 04/523] applies to the operators of Investor Directed Portfolio Services (IDPS) and individuals involved in their operation, ensuring that certain sections of the Corporations Act 2001 (the “Act”) are modified to exempt these operators and individuals from having a relevant interest in securities under specific conditions. This class order modifies section 609 of the Act by inserting new subsections that clarify the circumstances under which an IDPS operator or an individual involved in the operation of an IDPS does not have a relevant interest in securities. This exemption applies unless certain conditions, such as failure to comply with prior class orders or receiving a notice from ASIC, are met. The modifications are aimed at facilitating the operation of IDPS without imposing unnecessary regulatory burdens on operators and their associates. The geographic reach of this class order is national, applying uniformly across Australia as it is an instrument of the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001.
Key Provisions
The ASIC Class Order [CO 04/523], effective under sections 655A(1) and 673(1) of the Corporations Act 2001, applies to operators and persons involved in the operation of Investor Directed Portfolio Services (IDPS). According to the Order, Chapters 6 and 6C of the Corporations Act apply to these individuals as if section 609 of the Act were modified to include specific provisions regarding IDPS operators. Section 609(17A) specifies that an IDPS operator does not have a relevant interest in securities if they hold the securities or have a discretion in relation to their disposal under the terms of the IDPS. However, section 609(17B) excludes certain operators from this protection if they have failed to comply with a condition of the old IDPS Class Order or have knowingly caused a breach of that condition. Additionally, section 609(17C) states that the protections do not apply if ASIC has issued a written notice to the person indicating that subsection 609(17A) does not apply to them.
The obligations imposed by the Order on IDPS operators and involved persons include compliance with the conditions set out in the old IDPS Class Order and adherence to any written notices from ASIC indicating that the protections under subsection 609(17A) do not apply to them. Operators must ensure that they do not hold securities or have discretion over their disposal in a manner that would attribute a relevant interest to them, unless explicitly allowed by the Order. Furthermore, any person involved in the operation of an IDPS must avoid knowingly causing a breach of the conditions specified in the old IDPS Class Order.
Failure to comply with the provisions of the ASIC Class Order [CO 04/523] can result in various consequences. Firstly, if an operator or involved person breaches the conditions of the old IDPS Class Order, they may lose the protections afforded by subsection 609(17A). Additionally, ASIC may take enforcement actions against those who fail to comply with the Order, which can include issuing written notices, imposing penalties, or initiating legal proceedings. The specific penalties for breaches of the Corporations Act can include substantial fines and, in some cases, imprisonment, depending on the severity and nature of the breach.