Overview

The Australian Securities and Investments Commission (ASIC) enacted ASIC Class Order [CO 06/36] in 2006 under the authority conferred by the Corporations Act 2001, addressing issues arising from transitional provisions in the Legislative Instruments Act 2001 that may have affected certain regulatory instruments. This class order was designed to provide relief and clarification regarding the applicability of specific provisions in the Corporations Act to particular financial instruments. The primary objective of this class order is to ensure that financial reporting and related regulatory requirements are effectively implemented and interpreted in the context of managed investment schemes, financial services, and fundraising activities. By extending the scope of a previous class order, ASIC Class Order [CO 06/36] aims to maintain regulatory certainty and compliance within the financial sector.

Scope and Application

The ASIC Class Order [CO 06/36] applies to entities and individuals involved in financial reporting and managed investment schemes as governed by the Corporations Act 2001. This order is made by the Australian Securities and Investments Commission (ASIC) and affects entities such as financial services providers, investment schemes, and possibly companies required to provide financial reports. The jurisdictional reach of this class order is nationwide, operating within the Commonwealth of Australia. The order provides relief from certain provisions of the Act, such as financial reporting, managed investment schemes, and financial services disclosure, and can modify or omit specific provisions under certain circumstances. Exemptions and variations are possible under this order, allowing ASIC to tailor the application of the Act to specific entities or situations as needed. The order extends its application through subordinate instruments, enabling it to adapt to new instruments and instruments potentially affected by legislative changes.

Key Provisions

The ASIC Class Order [CO 06/36], under the Corporations Act 2001, allows the Australian Securities and Investments Commission (ASIC) to provide relief from certain financial reporting provisions in Chapter 2M (subsection 341(1)), and to declare that other chapters and parts have effect as if they were omitted, modified, or varied (paragraphs 601QA(1)(b), 911A(2)(l), 926A(2)(a), 951B(1)(a) and (c), and 1020F(1)(c)). Additionally, ASIC can exempt certain entities from licensing requirements in Parts 7.6 and 7.7 of the Act (paragraphs 926A(2)(a) and 951B(1)(a)), and from the necessity of holding an Australian financial services licence (paragraph 911A(2)(l)). This Class Order specifically extends the coverage of a previous order, [CO 05/1270], by modifying the definition of eligible instrument to include another instrument, [CO 04/1556]. The obligations imposed by ASIC Class Order [CO 06/36] are primarily aimed at entities subject to the Act, requiring them to adhere to the modified provisions. This includes ensuring compliance with financial reporting standards and any changes made to licensing and disclosure requirements. Entities must ensure they are aware of and comply with the varied provisions, particularly those concerning financial services disclosure and managed investment schemes. They must also ensure that any exemptions granted are appropriately documented and justified, should they apply. The consequences for non-compliance with the provisions of ASIC Class Order [CO 06/36] can be significant. While the Explanatory Statement does not detail specific penalties, breaches of the Corporations Act 2001 can result in substantial fines and legal action. For example, entities that fail to comply with financial reporting requirements can face fines of up to $1.2 million for companies and $220,000 for individuals. Additionally, directors and officers can be held personally liable, potentially facing imprisonment, fines, or disqualification from managing corporations. The exact penalties will depend on the nature and severity of the breach, as well as any mitigating factors.