ASIC Class Order [CO 04/653]

Administered by Department of the Treasury

Legislation au F2007B00671 Not in force Legislative Instrument

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ASIC Class Order [CO 04/653]

On-sale disclosure relief for scrip bids and schemes of arrangement

This instrument has effect under s741(1) and 1020F(1) of the Corporations Act 2001.

This compilation was prepared on 17 May 2012 taking into account amendments up to [CO 06/267]. 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 741(1) and 1020F(1) — Exemption

1. The Australian Securities and Investments Commission (ASIC) grants this exemption under paragraphs 741(1)(a) and 1020F(1)(a) of the Corporations Act 2001 (the Act).

2. A person who makes an offer for sale of takeover consideration securities does not, for that offer, have to comply with:

(a) subsection 707(3) of the Act; or

(b) subsection 1012C(3) of the Act insofar as it applies to an offer that takes place in circumstances covered by subsection 1012C(6) of the Act.

3. A person who makes a recommendation to acquire takeover consideration securities does not, for that recommendation, have to comply with subsection 1012A(3) of the Act insofar as it applies to an acquisition by way of a transfer of the securities in circumstances covered by subsection 1012C(6) of the Act.

Interpretation

4. In this instrument:

excluded person means a person who is not offered securities under a Part 5.1 scheme involving an issue of securities in exchange for other securities because:

(a)  the person is a foreign holder of the last mentioned securities; or

(b) the person would otherwise receive an unmarketable parcel of the first mentioned securities under the terms of the scheme.

explanatory statement has the meaning given by section 412 of the Act.

   market value of securities means the highest closing price for the securities published during the bid period by any prescribed financial market on which the securities are quoted.

non-participant means:

(a)  in relation to a takeover bid—a holder of the target’s securities who has accepted an offer made under a takeover bid and has elected not to acquire securities as consideration for their acceptance; and

(b)  in relation to a Part 5.1 scheme:

(i) a person who has been offered securities under the Part 5.1 scheme and has elected not to acquire the securities; or

(ii)  an excluded person.

offer for sale includes an invitation to purchase.

Part 5.1 scheme means a compromise or arrangement conducted under Part 5.1 of the Act approved at a meeting held as a result of an order under subsection 411(1) or (1A) of the Act.

security sale facility means:

(a)  a facility established in connection with a takeover bid to which both of the following apply:

(i) under the terms of the bid:

(A) the consideration includes an offer of securities; and

(B)  the bidder appoints a nominee and transfers the securities that are not acquired by non‑participants, or the right to acquire those securities, to the nominee; and

(C) the nominee sells the securities, or the right to acquire the securities, and distributes to the non‑participants their proportion of the proceeds of the sale net of expenses;

(ii) the terms and conditions of the facility are disclosed in the bidder’s statement; and

(b) a facility established in connection with a Part 5.1 scheme to which both of the following apply:

 (i) under the terms of the scheme:

(A) securities are to be issued in exchange for other securities; and

(B) the securities, or the right to acquire the securities, that are not acquired by non-participants are sold and their proportion of the proceeds of the sale net of expenses is distributed to them;

(ii) the terms and conditions of the facility are disclosed in the explanatory statement for the scheme.

takeover consideration securities means securities (as defined in subsection 92(3) of the Act) that are:

(a) transferred to a nominee under the terms of an off-market bid which are of the kind described in subsection 619(3) of the Act; or

(b) offered for sale through a security sale facility; or

(c)  offered for sale through an unmarketable parcel sale facility; or

(d) issued under a right to acquire securities that has been transferred or offered in accordance with paragraph (a), (b) or (c).

unmarketable parcel means a parcel of securities which is not a marketable parcel within the meaning of the operating rules of any prescribed financial market on which those securities are quoted, calculated using the market value of those securities.

unmarketable parcel sale facility means a facility through which securities, or the right to acquire securities, that are sold in accordance with the requirements of subsection 619(4) (as notionally inserted into the Act by ASIC Class Order [CO 00/343]) as in force on the date of the commencement of this definition and as amended from time to time by a disallowable legislative instrument within the meaning of the Legislative Instruments Act 2003.

 

Notes to ASIC Class Order [CO 04/653]

Note 1

ASIC Class Order [CO 04/653] (in force under s741(1) and 1020F(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 04/653]

29/6/2004 (see F2007B00671)

29/6/2004

 

[CO 06/267]

25/5/2006 (see F2006L01613)

25/5/2006

-

Table of Amendments

ad. = added or inserted     am. = amended     rep. = repealed     rs. = repealed and substituted

Provision affected

How affected

Para 2...........

Para 3...........

am. [CO 06/267]

am. [CO 06/267]

Para 4...........

rs. [CO 06/267]

 

 

Overview

The ASIC Class Order [CO 04/653], in force under the Corporations Act 2001, provides relief for certain on-sale disclosures for scrip bids and schemes of arrangement. Enacted by the Australian Securities and Investments Commission (ASIC) under the authority of the Corporations Act, this legislative instrument aims to streamline the disclosure requirements for offers involving takeover consideration securities, thereby facilitating smoother transactions in the corporate takeover market. This class order was introduced to address the need for efficient and practical regulation of securities transactions, particularly in complex corporate restructuring scenarios, while maintaining adequate disclosure to protect investors. The policy objective is to balance the need for regulatory efficiency with the imperative to protect investor interests by ensuring that key information is still made available where necessary.

Scope and Application

The ASIC Class Order [CO 04/653] provides an exemption under the Corporations Act 2001 for certain persons involved in the offer for sale or recommendation of takeover consideration securities. This applies to offers made through a security sale facility or an unmarketable parcel sale facility, or through a scheme of arrangement under Part 5.1 of the Act. Specifically, the exemption relieves these persons from complying with certain disclosure requirements under subsections 707(3), 1012A(3), and 1012C(3) of the Act. The exemption applies nationally, as the Corporations Act 2001 is a Commonwealth Act. The exemption does not apply to certain excluded persons, such as foreign holders of securities or those who would receive an unmarketable parcel of securities under a scheme. The Class Order can be amended by subordinate instruments, as evidenced by the amendments made by [CO 06/267].

Key Provisions

The ASIC Class Order [CO 04/653], effective under the Corporations Act 2001, provides relief from certain disclosure obligations for scrip bids and schemes of arrangement. According to Section 2, individuals making an offer for the sale of takeover consideration securities are exempt from complying with subsection 707(3) and subsection 1012C(3) of the Act. Similarly, those making a recommendation to acquire takeover consideration securities are exempt from subsection 1012A(3) under specific circumstances (Section 3). These exemptions are designed to facilitate smoother transactions in certain takeover scenarios without the burden of detailed disclosure requirements. The obligations imposed by the Act under this Class Order primarily focus on ensuring that the exempted activities are clearly defined and transparently communicated. For example, a security sale facility must be established under a takeover bid or a Part 5.1 scheme, with the terms and conditions clearly disclosed in the relevant bidder’s statement or explanatory statement for the scheme (Section 4). Additionally, the Class Order mandates the disclosure of certain definitions, such as 'market value of securities' and 'non-participant,' to ensure that all parties understand the scope and implications of the exemptions provided. Failure to comply with the provisions of the Corporations Act 2001, despite the exemptions granted by this Class Order, may result in significant legal consequences. While the specific penalties are not detailed in this Class Order, breaches of the Corporations Act can lead to civil penalties, criminal charges, or both, depending on the nature and severity of the breach. The maximum penalties for breaches can be severe, including fines and imprisonment, reflecting the importance of adhering to corporate governance and disclosure requirements. In summary, ASIC Class Order [CO 04/653] provides targeted exemptions from certain disclosure requirements for scrip bids and schemes of arrangement, aiming to streamline these processes while maintaining a framework of accountability. The obligations under the Act require clear and transparent communication of the terms and conditions related to these exemptions, ensuring that all parties are well-informed. Any non-compliance with these provisions may result in significant legal repercussions, highlighting the importance of adherence to the stipulated guidelines.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.