ASIC Class Order [CO 05/1254]

Administered by Department of the Treasury

Legislation au F2005L04233 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 05/1254]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

Paragraph 1020F(1)(c) – Declaration

 

The Australian Securities and Investments Commission (ASIC) makes Class Order [C0 05/1254] Transitional relief for certain superannuation periodic statements under paragraph 1020F(1)(c) of the Corporations Act 2001 (the Act). Paragraph 1020F(1)(c) provides that ASIC may declare that the Part 7.9 of the Act applies in relation to a person or financial product, or class of persons ofr financial products, as if specified provisions were omitted , modified or varied as specified in the declaration.

 

1. Background

 

Division 3 of Part 7.9 imposes sets out disclosure requirements in relation to financial products that include, in section 1017D, the requirement to provide periodic statements to holders of financial products with an investment component., This obligation applies to including (amongst other things) superannuation products.

 

Amendments to the Corporations Regulations 2001 by the Corporations Regulations Amendment 2005 (No. 1) have imposeddetail requirements in relation to the disclosure of fees and costs in periodic statements for superannuation products and managed investment products.  These include requirements in Corporations Regulation 7.9.60B for details of transactions to be included in a periodic statement and in Corporations Regulation 7.9.75(1) for disclosure in relation to costs of common fund expenses attributable to an individual investor.

 

For superannuation products, these two reporting obligations commence in relation to periodic statements apply for reporting periods that commence on or after 1 July 2005 (see Corporations Regulation 7.9.60B(1)(b)(ii)) and, in relation to periodic statements that are exit statements, commence for statements that are issued on or after 1 July 2006. (see This is set out in Corporations Regulations 7.9.60B(1)(b)(ii) and Corporations Regulation at item 1 of the table in 7.9.75(1A), table item 1) (commencement provisions).

 

However, the operation of these commencement provisions can produce anomalous results for periodic reporting obligations as between different members of the same superannuation fund, or sub-plan within a superannuation fund, that hold the same type of financial product over the same period.

 

In particular, this concerns a superannuation fund or a sub-plan can occur where for the fund or sub-plan as a whole the trustee has adopted a general reporting period that is not aligned with a 'standard' financial year.  In this case the fund will have ongoing members whose reporting period commenced before 1 July 2005 but also have new members whose first reporting period under paragraph 1017D(2)(b) of the Act commenced on or after 1 July 2005.  In this circumstance, the commencement provisions require the trustee of the fund to provide a periodic statement that includes disclosure of transaction details and common fund expenses to those members of the fund or sub-plan who joined on or after 1 July 2005, but does not require these to be included in periodic statements to other members of the same fund or sub-plan over the same period.

 

2. Purpose of the class order

 

The purpose of [CO 05/1254] is to provide relief for those superannuation fund trustees with non-standard reporting periods that 'straddle' 1 July 2005 from the requirement to provide a periodic statement that contains transaction details and common fund disclosure. It will only apply in relation to a first reporting period in respect of a new member joining the fund or sub-plan on or after 1 July 2005 and during that non-standard reporting period.

 

The relief instrument will relieve these fund trustees from the obligation develop the administrative requirementcapacity to provide periodic statements which containing the new content requirements for only a subset of members of a fund or sub-plan (new joining members) when this is not required for other members of the same fund in relation to the same period.  The relief will also permit those trustees to prepare their fund's administration and compliance systems to provide complying periodic statements on a more efficient 'whole of fund' basis.

 

3. The class order

 

[CO 05/1254] declares that Part 7.9 of the Act (including the Corporations Regulations made under that Part) applies in relation to issuers of superannuation products as if:

 

(a) Corporations Regulation 7.9.60B(1) had effect that a periodic statement (that is not an exit statement) is not required to comply with the requirement to include transaction details where the statement is in relation to a first reporting period under paragraph 1017D(2)(b) of the Act that is less than 1 year long and ends on or before 30 June 2006; and

 

(b) Corporations Regulation 7.9.75(1A) had effect that a periodic statement (that is not an exit statement) need not comply with the requirement to include common fund disclosure where the statement is in relation to a first reporting period under paragraph 1017D(2)(b) of the Act that is less than 1 year long and ends on or before 30 June 2006.

 

4. Consultation

 

In preparing [CO 05/1254], ASIC receivedconsidered specific requests for relief. an application for relief.  Consultation at a general level also took place with the Association of Superannuation Funds of Australia.  No further consultations took place because [CO 05/1254] is of a minor and machinery nature.

Overview

The ASIC Class Order [CO 05/1254] was enacted in 2005 under the Corporations Act 2001 to address the issue of anomalous results in periodic reporting obligations for superannuation funds with non-standard reporting periods. This was particularly relevant to superannuation funds or sub-plans that had adopted general reporting periods not aligned with the standard financial year, resulting in trustees needing to provide periodic statements with transaction details and common fund expenses to new members joining on or after 1 July 2005, but not to other members of the same fund or sub-plan over the same period. The policy objective of this class order was to provide transitional relief for superannuation fund trustees with non-standard reporting periods that straddled 1 July 2005. It aimed to relieve these trustees from the obligation to develop administrative requirements to provide periodic statements with new content requirements for only a subset of members of a fund or sub-plan, and to permit them to prepare their fund's administration and compliance systems to provide complying periodic statements on a more efficient 'whole of fund' basis.

Scope and Application

ASIC Class Order [CO 05/1254] applies to trustees of superannuation funds who are responsible for issuing periodic statements to members of their funds. The class order is intended to provide transitional relief to superannuation fund trustees whose reporting periods do not align with the standard financial year, particularly those with non-standard reporting periods that straddle the commencement date of certain regulatory requirements in July 2005. The class order applies on a Commonwealth level, as it is made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The class order provides relief from certain disclosure requirements in periodic statements for superannuation products for the first reporting period of new members who join the fund or sub-plan on or after 1 July 2005 and during that non-standard reporting period. Specifically, the class order declares that Part 7.9 of the Corporations Act applies as if certain provisions were omitted or modified, such that periodic statements for new members with a first reporting period that is less than one year long and ends on or before 30 June 2006 do not need to include transaction details or common fund expenses. The class order does not apply to any other types of entities or financial products, and there are no stated exclusions, exemptions, or thresholds. The class order does not extend or restrict application through subordinate instruments.

Key Provisions

The ASIC Class Order [CO 05/1254], made under the Corporations Act 2001, provides transitional relief for certain superannuation periodic statements. This is to address anomalies arising from the different commencement dates for disclosure requirements in periodic statements for superannuation products. Specifically, it applies in relation to issuers of superannuation products and modifies the effect of Corporations Regulations 7.9.60B and 7.9.75(1) for certain periodic statements issued before 30 June 2006. Essentially, the Class Order exempts certain periodic statements from the requirement to include transaction details and common fund expenses disclosure where the reporting period is less than one year and ends on or before 30 June 2006. The Class Order imposes obligations on trustees of superannuation funds to ensure that they provide periodic statements in accordance with the modified requirements set out in the Class Order. Trustees must ensure that periodic statements issued to new members joining the fund or sub-plan on or after 1 July 2005, and for reporting periods ending on or before 30 June 2006, comply with the requirements of the Class Order. This means that trustees can provide periodic statements without the need to include transaction details and common fund expenses disclosure for these specific circumstances. The Corporations Act 2001 does not explicitly state offences, penalties, or consequences for non-compliance with the Class Order. However, non-compliance with the Act or the regulations, including this Class Order, could potentially result in civil or criminal penalties under the Act. For example, contravening a provision of the Act or a regulation could result in fines for individuals and corporations, and in more serious cases, imprisonment for individuals. The specific penalties would depend on the nature and seriousness of the contravention, and would be determined by a court.

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Area of Law
Corporate Law & Governance
Instrument
Regulation
Concepts
Reporting & Disclosure Obligations
Transitional Provisions
Consultation Requirements

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