ASIC Class Order [CO 06/709]

Administered by Department of the Treasury

Legislation au F2006L02985 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 06/709]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

Subsections  341(1), 741(1), 992B(1) and 1020F(1) – Variations and Revocations

 

 

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.

 

Subsection 992B(1) of the Act provides that ASIC may make an order exempting a person or class of persons (or a financial product or class of financial products) from a provision of Part 7.8 of the Act (other provisions relating to the conduct etc connected with financial products and financial services, other than financial product disclosure) or declare that Part 7.8 applies as if specified provisions were omitted, modified or varied as specified in the declaration.

 

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 ASIC Class Order [CO 98/100] “Rounding in financial reports and directors’ reports”

 

ASIC Class Order [CO 98/100] “Rounding in financial reports and directors’ reports” under s.341(1) permits the rounding of amounts in financial reports and directors' reports prepared under Chapter 2M of the Act. The order also contains restrictions on the extent to which certain information can be rounded, such as remuneration of directors, executive officers and auditors.

 

Following amendments made on 24 January 2006 by Class Order [06/51], there was a minor cross referencing error in Class Order [CO 98/100].

 

2. 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 24 January 2006, ASIC made Class Order [CO 06/51] which included a minor and technical amendment to Class Order [CO 98/1418] “Wholly-owned entities” under s.341(1).  The amendment introduced a “Second Order” that provides relief to the holding entity in a closed group to make the disclosures specified under condition (i) of Class Order [CO 98/1418].  This facilitates increased information for users of the holding entity financial report, and [CO 01/1455] now needs a minor amendment in order to permit the holding entity to use transaction-specific disclosure.

 

3. 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 amended Class Order [CO 98/1418] pursuant to s.341(1) on 24 January 2006.  This facilitates increased information in a holding entity’s financial report.  As a result, [CO 04/672] now needs a minor amendment in order to permit a holding entity to rely on the on-sale exemptions despite having relied on the technical relief provided by Class Order [CO 98/1418].


4. Class Order [CO 06/709] “Variation and revocation of financial reporting class orders”

 

Class Order [CO 06/709] “Variation and revocation of financial reporting class orders”:

 

(a) varies [CO 98/0100] to correct the cross referencing error mentioned above;

 

(b) varies [CO 01/1455] to permit an entity that has taken advantage of the relief under the Second Order of Class Order [CO 98/1418] to rely on transaction specific disclosure;

 

(c) varies [CO 04/672] to permit an entity that has taken advantage of the relief under the Second Order of Class Order [CO 98/1418] to take advantage of disclosure exemptions for secondary sales of securities and financial products;  and

 

(d) revokes spent Class Orders [CO 98/1867], [CO 98/1868], [CO 98/1869], [CO 98/1870], [CO 98/1871], [CO 98/1999], [CO 98/2000], [CO 98/2001] and [CO 98/2002] which provided relief in connection with auditor independence requirements of the Act that were replaced in 2004 and removes the reference to those orders from Class Orders [CO 01/1455] and [04/672].

 

5.  Consultation

 

As [CO 06/709] 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 06/709], enacted in 2006, addresses minor discrepancies and updates to existing class orders that facilitate financial reporting requirements under the Corporations Act 2001. This class order was created by the Australian Securities and Investments Commission (ASIC) to streamline and correct the application of financial reporting provisions, ensuring compliance with the law while reducing unnecessary administrative burdens. The policy objective behind this class order is to maintain a balance between regulatory compliance and practical flexibility, allowing entities to operate efficiently without compromising the integrity of financial disclosure. By varying and revoking certain outdated or redundant class orders, [CO 06/709] ensures that the regulatory framework remains current and effective, thereby supporting the broader goal of market transparency and investor protection. The class order specifically rectifies a cross-referencing error in an earlier class order concerning rounding in financial reports and updates provisions related to transaction-specific disclosure for continuously quoted securities and on-sale exemptions for financial products. These adjustments are designed to permit entities that have taken advantage of minor and technical relief measures to still qualify for certain exemptions and disclosures, provided that such relief does not materially affect the information available to the market. The overarching aim is to enhance the quality and clarity of financial information provided to stakeholders while ensuring that the regulatory process is as efficient as possible.

Scope and Application

The ASIC Class Order [CO 06/709] applies to certain entities, directors, and auditors involved in the preparation and disclosure of financial reports, prospectuses, and Product Disclosure Statements (PDS) under the Corporations Act 2001. Specifically, it affects companies, registered schemes, and disclosing entities that have previously taken advantage of financial reporting reliefs provided by ASIC, including those under Class Orders [CO 98/100], [CO 01/1455], and [CO 04/672]. This class order facilitates adjustments to the application of these reliefs to ensure consistency and clarity in financial reporting practices across Australia. The order also revokes certain outdated class orders that dealt with auditor independence requirements, which have been superseded by subsequent legislative changes. While the scope of the order is limited to these specific class orders, it aims to streamline and modernise the regulatory framework governing financial reporting and disclosure obligations. The geographic reach of the ASIC Class Order [CO 06/709] is national, as it applies to entities operating under the Corporations Act 2001 throughout Australia. There are no explicit geographic exclusions, meaning that the order applies uniformly across all states and territories. The order does not introduce new exclusions or thresholds beyond those already specified in the relevant class orders it amends or revokes. Additionally, while the class order itself does not extend its application through subordinate instruments, the Corporations Act 2001 provides mechanisms through which ASIC may further refine or expand these provisions via additional class orders or regulations as needed.

Key Provisions

The ASIC Class Order [CO 06/709] amends and revokes several existing class orders under the Corporations Act 2001. Section 341(1) allows ASIC to make orders that relieve companies, registered schemes, and disclosing entities from specified requirements of the Act. This particular order corrects a cross-referencing error in Class Order [CO 98/100], which permits the rounding of amounts in financial reports and directors' reports, with specific restrictions on rounding certain information. Additionally, it amends Class Order [CO 01/1455] to allow entities that have taken advantage of certain ASIC relief to use transaction-specific disclosure for continuously quoted securities. Class Order [CO 04/672] is also amended to permit entities that have relied on the technical relief provided by Class Order [CO 98/1418] to rely on disclosure exemptions for secondary sales of securities and financial products. Finally, the order revokes several Class Orders that provided relief in connection with auditor independence requirements that were replaced in 2004. Entities governed by this Act must comply with the requirements set out in these amended and revoked class orders. Companies, registered schemes, and disclosing entities must adhere to the rounding provisions of Class Order [CO 98/100] and ensure that they do not round certain restricted information. Entities that have taken advantage of certain ASIC relief must ensure that they are eligible to use transaction-specific disclosure and disclosure exemptions for secondary sales, as amended by Class Orders [CO 01/1455] and [CO 04/672]. The revocation of certain Class Orders means that entities no longer need to comply with the auditor independence requirements that were replaced in 2004. Failure to comply with the requirements of the Act or the amended and revoked class orders may result in civil or criminal consequences. The maximum penalties for breaches of the Act vary depending on the offence and the entity involved. For example, individuals who contravene the Act may be subject to fines of up to $222,000 and/or imprisonment for up to five years. Companies that contravene the Act may be subject to fines of up to $1,110,000 for each breach. ASIC also has the power to seek injunctions, orders for restitution, and other remedies in civil proceedings. In addition, certain offences under the Act are also criminal offences, which may result in prosecution by the Commonwealth Director of Public Prosecutions.

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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.