Overview

The ASIC Class Order [CO 05/0643] was enacted in 2005 under the Corporations Act 2001, addressing a practice whereby some responsible entities included the financial statements of different registered schemes in a single financial report, despite this not being expressly permitted by the Act. This class order allows responsible entities to continue this practice if the registered schemes are related and have a common responsible entity, and if there is a facility for investors to switch funds between the schemes. The relief applies to full year, concise, and half-year financial reports. The Australian Securities and Investments Commission (ASIC) did not undertake consultation with stakeholders prior to making this class order, deeming it minor and procedural. The objective of this order is to provide clarity and legal allowance for a practice that was already being conducted by some entities, ensuring compliance with the legislative framework while accommodating industry practices.

Scope and Application

ASIC CLASS ORDER [CO 05/0643] pertains to responsible entities that manage multiple registered schemes and permits them to include the financial statements of related schemes in a single financial report. This relief applies to full year, concise, and half-year financial reports where there is a facility for investors to switch monies between the related schemes. The Class Order was created under subsections 341(1) of the Corporations Act 2001, allowing ASIC to exempt certain classes of companies, registered schemes, or disclosing entities from specific requirements of the Act. This order applies nationally, impacting entities, their directors, and auditors who would otherwise be subject to the restrictions outlined in Parts 2M.2, 2M.3, or 2M.4 (excluding Division 4) of the Act. Notably, the Class Order does not extend to other entities or industries outside of those specified, and it does not require further consultation with stakeholders beyond its initial implementation.

Key Provisions

The ASIC Class Order [CO 05/0643] modifies the requirements for certain entities under the Corporations Act 2001, specifically focusing on the financial reporting practices of responsible entities. According to section 341(1) of the Act, the Australian Securities and Investments Commission (ASIC) has the authority to issue orders that provide relief from specified obligations for a class of companies, registered schemes, or disclosing entities. This particular class order permits responsible entities to include the financial statements of different registered schemes in a single financial report, provided these schemes are related and have a common responsible entity, and there is a mechanism in place for investors to switch funds between these schemes. The relief applies to full year, concise, and half-year financial reports as per the class order. The obligations imposed by the ASIC Class Order [CO 05/0643] are relatively straightforward. Responsible entities that meet the criteria outlined in the class order are allowed to include the financial statements of related registered schemes in a single report, provided that these schemes have a common responsible entity and allow for fund switching between them. This arrangement aims to streamline financial reporting practices for entities managing multiple related schemes, facilitating easier comparison and assessment of financial performance and position by stakeholders. In terms of compliance, the ASIC Class Order [CO 05/0643] does not explicitly detail specific penalties or consequences for non-compliance. However, under the Corporations Act 2001, non-compliance with ASIC class orders can lead to enforcement actions by ASIC. Such actions may include civil penalties, orders for financial compensation, or even criminal charges in cases of significant breaches or misconduct. The severity of these consequences depends on the nature and extent of the non-compliance, as well as any associated harm caused to stakeholders or the market. The maximum penalties for breaches of the Act can be substantial, reflecting the importance of adhering to regulatory requirements to maintain market integrity and protect investor interests.