ASIC CLASS ORDER [CO 05/0644]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Subsection  341(1) - Order

Subsections 341(1) of the Corporations Act 2001 (the Act) provides that the Australian Securities and Investments Commission (ASIC) may make an order in respect of a specified class of companies, registered schemes or disclosing entities that relieves the entities in question, their directors and/or auditors from specified requirements of Parts 2M.2, 2M.3 or 2M.4 (other than Division 4) of the Act.

1. Background

In the Act as it applies both for financial years commencing before 1 July 2004 and for financial years commencing on or after 1 July 2004, ss.295(2) and 303(2) only allow financial reports to include those financial statements specified by those provisions.

These provisions prevent an entity from explaining a material acquisition or disposal of entities or businesses that occur after year end in the notes to their financial statements in the form of a pro forma balance sheet.  Such a presentation may be the most meaningful way to explain the effect of the transaction.

2. Class Order [CO 05/0644] “Disclosing post balance date acquisitions and disposals”

Class Order [CO 05/0644] “Disclosing post balance date acquisitions and disposals” allows the presentation of a pro forma balance sheet in the notes to the financial statements to explain the financial effect of material acquisitions and disposals of entities and businesses after balance date.  The relief applies to full year financial reports and half-year financial reports, and is subject to conditions.

3.  Consultation

As [CO 05/0644] is minor and machinery in nature, ASIC did not undertake any consultation with stakeholders before that class order was made.