ASIC CLASS ORDER [CO 07/144]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Paragraph 257B(7) – Variation of declaration

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/144] Approved overseas financial markets: s257B(7) - Variation under  subsection 257B(7) of the Corporations Act 2001 (Act).

1. Background

Division 2 of Pt 2J.1 of the Act regulates share buy-backs. A company may buy back its own shares if:

(a) the buy-back does not materially prejudice the company's ability to pay its creditors; and

(b) the company follows the procedures in Div 2 of Pt 2J.1.

On-market buy-backs are one of the types of buy-back under the Act.  An on-market buy-back is defined in the Act as a buy-back by a listed corporation on a prescribed financial market (for example, the ASX) in the ordinary course of trading on that market.  A buy-back is also an on-market buy-back if it results from an offer made in a financial market outside Australia, which ASIC has declared in writing to be an approved overseas financial market for the purposes of   subsection 257B(7). ASIC's declaration of approved overseas financial markets is in Class Order [CO 02/249].

2. Purpose of the class order

Class Order [CO 02/249] sets out a list of approved overseas financial markets for the purposes of s257B(7). 

In 2005, ASIC added JSE Securities Exchange (the JSE) as an ‘approved foreign market’ to a number of class orders which provide relief from various provisions of Ch 6D of the Act (dealing with fundraising), as well as in other contexts (see Class Order [05/770] which included JSE in the lists of approved markets in Class Orders [00/180], [00/181], [00/183], [00/185], [00/214], [00/2338], [CO 03/184] and [CO 04/10]).

For consistency, Class Order [CO 07/144] adds  JSE to its list of approved overseas financial markets for the purposes of subsection 257B(7). Many of the financial markets referred to in Class Order [CO 02/249] have changed their names since the publication of that class order, for various reasons such as amalgamations etc. Class Order [CO 07/144] updates  obsolete names of financial markets listed in Class Order [CO 02/240].

3. Operation of the Class Order

Class Order [07/144] has the effect of approving the JSE as an approved overseas financial market for the purposes of subsection 257B(7).  It adds the JSE to an existing class order under which a number of other foreign bodies are approved by ASIC for the purposes of subsection 257B(7).

Class Order [07/144] also makes technical amendments to Class Order [02/249] to update the references to the other approved overseas financial markets to reflect name changes.

4. Consultation

ASIC did not undertake any consultation with external stakeholders before this instrument was made.  Consultation was not undertaken because the instrument is minor or machinery in nature.