ASIC CLASS ORDER [CO 05/682]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
Section 1020F(1)(a) – Variation
The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 05/682] Dollar disclosure: Costs of warrants – amendment under s1020F(1)(a) of the Corporations Act 2001 (the Act). Section 1020F(1)(a) provides that ASIC may exempt a person or a class of persons from all or specified provisions of Pt 7.9 of the Act.
- Relief from obligation to disclose costs of warrants in dollars
Section 1012B requires an issuer of a financial product to give a Product Disclosure Statement (PDS) if they are issuing a financial product to a person as a retail client.
The PDS must include the information required by s1013D, 1013DA and 1013E of the Act. Section s1013D(1)(d) and s1013D(1)(m) require the costs associated with acquiring a product to be stated in dollars. Class Order [CO 04/1431] Dollar disclosure: Costs of derivatives, foreign exchange contracts, general insurance products and life risk insurance products grants (among other things) conditional relief from the obligation to disclose acquisition costs in dollars, for derivatives and foreign exchange contracts. Prior to the making of [CO 05/682], [CO 04/1431] did not apply to warrants that are not derivatives.
[CO 05/682] amends [CO 04/1431] by relieving a responsible person for a PDS for a warrant from the obligation to disclose the costs associated with acquiring a warrant in dollars, provided that the PDS specifies any significant factors that will affect the cost of acquiring the warrant and includes an explanation of the impact of each of those factors on the cost of acquiring the warrant.
Like warrants that are derivatives, the costs associated with acquiring warrants that are not derivatives is generally dependant on a number of variables which change over time, rendering their disclosure in dollars in a PDS very difficult. The proposed relief will result in a consistent approach to the requirement to disclose the acquisition costs for all warrants in dollars.
2. Consultation
ASIC received a submission from a law firm acting for a number of warrant issuers seeking relief from compliance with the dollar disclosure provisions- acquisition costs. [CO 05/682] takes into account this submission. ASIC did not undertake further consultation because [CO 05/682] is of a minor and machinery nature.