ASIC CLASS ORDER [CO 06/0226]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Subsections 601QA(1)(a), 741(1)(a) and 1020F(1)(a)—

Variations

The Australian Securities and Investments Commission (ASIC) makes ASIC Class

Order [CO 06/0226] under paragraphs 601QA(1)(a), 741(1)(a) and 1020F(1)(a) of the Corporations Act 2001 (the Act).

1. Background

Section 601FC(1)(i) of the Act provides that in exercising its powers and carrying out its duties, the responsible entity of a registered scheme must ensure that scheme property is:

(i)     clearly identified as scheme property; and

(ii)  held separately from property of the responsible entity and property of any other scheme.

Class Order [CO 98/51] Relief from duty to separate assets of a managed investment scheme, exempts responsible entities of registered managed investment schemes from subsection 601FC(1)(i) of the Act in a number of specified circumstances.

Class Order [CO 04/194] Managed discretionary accounts, exempts operators of Managed Discretionary Account (MDA) services from the managed investments provisions in Chapter 5C of the Act and the product disclosure provisions in Part 7.9 of the Act, subject to conditions. MDA services are arrangements that involve a person (the MDA operator) managing a portfolio of assets for a retail client on an individual basis. To have the benefit of this relief, MDA operators must comply with the licensing and conduct provisions in Parts 7.6 and 7.7 of the Act and some additional conduct requirements designed to promote consumer protection.

2. The Class Order

Class Order [CO 06/0226] effects two amendments to [CO 98/51], which are to remove the sunset clause set out in paragraph (e) of the Schedule, which was previously due to expire on 31 March 2006 and to remove paragraphs (2), (4), (5) and (6) of the Interpretation.

Class Order [CO 06/0226] effects two amendment to [CO 04/194], which are to remove the sunset clause set out in subparagraph 1.23(b)(v) and paragraph 2.10(e), which were previously due to expire on 31 March 2006.

3. Consultation

Consultation was not required as the class order is minor or machinery in nature. ASIC did not conduct consultation in respect of this class order.