ASIC Class Order [CO 06/106]

Administered by Department of the Treasury

Legislation au F2006L00591 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 06/106]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

Subsections  341(1), 741(1) and  1020F(1) — Variations

 

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.

 

Subsections 741(1) and 1020F(1) of the Act provide that ASIC may make an order exempting a person from a provision of Chapter 6D (fundraising) or Part 7.9 (financial product disclosure and other provisions relating to issue, sale and purchase of financial products) of the Act or declare that the Chapter 6D or Part 7.9 applies as if specified provisions were omitted, modified or varied as specified in the declaration.

 

1. Background - amendments to Class Order [CO 01/1455] “Continuously quoted securities”

 

The Act permits a disclosing entity to issue a prospectus or Product Disclosure Statement (PDS) with a specified limited content (“transaction-specific disclosure”) for continuously quoted securities: ss.713 and 1013FA.  Transaction-specific disclosure is predicated on the fact that such entities are subject to the continuous disclosure requirements of the Act and that the market generally should have all information necessary to reach an informed view about those securities.

 

Section 9 of the Act defines “continuously quoted securities” and excludes the securities of an entity where that entity, its directors or auditor have taken advantage of relief under ss.340 or 341 from the financial reporting and audit requirements of Chapter 2M in the 12 months before the date of the prospectus or PDS.  Hence, an entity is not permitted to use transaction-specific disclosures where the entity, its directors or auditor have taken advantage of relief under ss.340 or 341.

 

Class Order [CO 01/1455] “Continuously quoted securities” allows an entity to use transaction-specific disclosures even where the entity, its directors and/or auditor has taken advantage of certain ASIC relief under ss.340 or 341 that:

 

(a) is minor and technical; or

 

(b) otherwise does not detract from the level of information available to the market.

 

On 17 February 2006, ASIC made Class Order [CO 06/105] “Calculation of director and executive remuneration” under s.341(1) allows listed companies to measure information on remuneration of individual directors and executives required to be disclosed in the financial report under accounting standard AASB 124 “Related Party Disclosures” and in the directors’ report under s.300A of the Act on a common basis for financial years ending 31 December 2005 to 31 March 2006 inclusive.  As there is no measurement basis in AASB 124, relief on measurement in relation to that standard is for the avoidance of doubt only.

 

The relief provided by [CO 06/105] is considered minor and technical as it only removes doubt that companies are able to use a common measurement basis for both sets of disclosures.  It allows a company to use one of the measurement bases specified in the class order.  [CO 06/105] does not remove the requirement to disclose the remuneration information within an annual report.

 

2. Background - amendments to Class Order [CO 04/672] “Extension of on-sales exemptions”

 

The Act requires an entity to issue a prospectus or PDS where the entity is on-selling a financial product within 12 months of that product being issued and:

 

(a) there was no disclosure at the time of issue; and

 

(b) certain other criteria are satisfied as outlined in ss.707(3) and 1012C(6).

 

There are a number of exemptions to the requirements in ss.707(3) and 1012C(6).  In particular, ss.708A(5) and 1012DA(5), the “on-sale exemptions”, recognise that a prospectus or PDS need not accompany the on-sale of a financial product that is quoted on an Australian financial market provided, amongst other things, the on-selling entity, its directors and auditor are not relying on any relief granted in the 12 months prior to the issue of the product under ss.340 or 341.

 

Class Order [CO 04/672] “Extension of on-sales exemptions” allows an entity to rely on the on-sale exemptions even where the entity, its directors and/or auditor has taken advantage of certain ASIC relief under ss.340 or 341 that:

 

(a) is minor and technical; or

 

(b) otherwise does not detract from the level of information available to the market.

 

As stated above, ASIC Class Order [CO 06/105] does not reduce the amount increase the information available in financial reports and ensures that certain financial reporting requirements of the legislation operate in an effective manner.

 

As a result, [CO 04/672] now needs a minor amendment in order to permit an entity to rely on the on-sale exemptions despite its auditor having relied on the technical relief provided by [CO 06/105].

 

3. Class Order [05/637] “Additional month for first financial reports under AIFRS”

 

Class Order [CO 05/637] “Additional month for first financial reports under AIFRS” applies to the first financial reports prepared under the Australian equivalents of International Financial Reporting Standards (AIFRS) by most unlisted entities and individuals.  [CO 05/637] allows an additional month for those entities and individuals to distribute those financial reports to members and to lodge those financial reports with ASIC.

 

The relief applies to financial reports under both Chapter 2M and Chapter 7 of the Corporations Act and for half-years and financial years commencing from 1 January 2005 to 31 December 2005 inclusive.

 

The order contained a minor error in referring to the relevant provisions of s.315 of the Act.

 

4. Class Order [CO 06/106] “Variation and revocation of financial reporting class orders”

 

Class Order [CO 06/106] “Variation and revocation of financial reporting class orders”:

 

(a) varies [CO 01/1455] to permit an entity that has taken advantage of the relief under Class Order [CO 06/105] to rely on transaction specific disclosure;

 

(b) varies [CO 04/672] to permit an entity that has taken advantage of the relief under Class Order [CO 06/105] to take advantage of disclosure exemptions for secondary sales of securities and financial products;  and

 

(c) varies [CO 05/637] to correct a minor referencing error.

 

5.  Consultation

 

As [CO 06/106] is of a minor or machinery nature and does not substantially alter existing arrangements, ASIC did not undertake any consultation with stakeholders before that class order was made.

 

Overview

The ASIC Class Order [CO 06/106], enacted in 2006, was introduced to address specific minor and technical issues within previously established class orders under the Corporations Act 2001. The objective of this class order was to ensure that certain financial reporting requirements operate effectively while providing necessary flexibility to entities in compliance with disclosure obligations. The Australian Securities and Investments Commission (ASIC), exercising its authority under the Act, aimed to correct minor errors and to provide clarity on the application of relief measures, without fundamentally altering the existing legal framework. This class order varied previous class orders to permit entities to take advantage of certain relief measures without compromising the integrity of market information. The enactment of [CO 06/106] was designed to streamline compliance processes and maintain the balance between regulatory requirements and practical application, thereby facilitating smoother operations for entities subject to financial reporting obligations.

Scope and Application

ASIC Class Order [CO 06/106] pertains to the Corporations Act 2001, enabling the Australian Securities and Investments Commission (ASIC) to make orders affecting specified classes of companies, registered schemes, and disclosing entities. These orders may relieve the entities in question, their directors, and auditors from certain requirements of the Act, particularly focusing on financial reporting and disclosure obligations. The order applies to companies and other entities subject to continuous disclosure obligations, and it extends its reach to directors and auditors of these entities. The amendments outlined in Class Order [CO 06/106] primarily focus on providing relief concerning the use of transaction-specific disclosure for securities and financial products, and adjusting certain class orders to allow entities to benefit from exemptions despite prior reliance on specified ASIC relief. The geographic scope of the Act is national, affecting entities across Australia. There are no explicit exclusions or thresholds mentioned in the explanatory statement, but the relief is generally applicable to minor and technical adjustments. The order rectifies referencing errors and extends relief provisions to ensure compliance with the continuous disclosure requirements of the Act without reducing the information available to the market.

Key Provisions

The ASIC Class Order [CO 06/106] amends and revokes certain provisions of earlier class orders under the Corporations Act 2001. Specifically, it varies Class Order [CO 01/1455] to allow entities that have taken advantage of certain relief under Class Order [CO 06/105] to still use transaction-specific disclosure (subsection 341(1)). It also varies Class Order [CO 04/672] to permit entities that have taken advantage of relief under Class Order [CO 06/105] to take advantage of disclosure exemptions for secondary sales of securities and financial products (subsections 741(1) and 1020F(1)). Lastly, it varies Class Order [CO 05/637] to correct a minor referencing error (subsection 315). The obligations and requirements imposed by this Class Order primarily focus on ensuring that certain entities are still able to benefit from certain reliefs even after taking advantage of specific provisions. For example, entities that have used the relief provided by Class Order [CO 06/105] regarding the calculation of director and executive remuneration are still allowed to use transaction-specific disclosures under Class Order [CO 01/1455] and disclosure exemptions for secondary sales of securities and financial products under Class Order [CO 04/672]. These variations ensure that the relief provided is minor and technical, and does not detract from the overall level of information available to the market. There are no direct offences, penalties, or civil/criminal consequences specified for breaches of this Class Order. However, entities that do not comply with the varied provisions of the earlier class orders may still face penalties under the Corporations Act 2001 for non-compliance with financial reporting requirements. These penalties can include fines and, in some cases, imprisonment for directors or officers of the entity. The exact penalties depend on the specific provisions of the Act that have been breached. In summary, Class Order [CO 06/106] makes minor adjustments to existing class orders to ensure that certain entities can continue to benefit from specific reliefs while maintaining the integrity of financial reporting and disclosure requirements under the Corporations Act 2001.

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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.