Overview

The Australian Securities and Investments Commission (ASIC) Class Order [CO 07/144], made under subsection 257B(7) of the Corporations Act 2001, aims to update the list of approved overseas financial markets for the purposes of on-market share buy-backs by Australian companies. Enacted in 2007, the class order responds to the need for regulatory consistency and clarity in identifying foreign markets where companies can conduct approved buy-backs without breaching Australian corporate law. The Australian Securities and Investments Commission, acting under the authority of the Corporations Act 2001, introduced this class order to ensure the list of approved overseas markets remains current and accurate, reflecting changes such as market name changes due to amalgamations or other structural adjustments. The policy objective is to facilitate compliance with Australian securities laws while allowing companies to engage in legitimate share buy-backs on international markets.

Scope and Application

The ASIC Class Order [CO 07/144] applies to listed corporations engaging in on-market share buy-backs, particularly those wishing to conduct such transactions on foreign markets declared as approved by the Australian Securities and Investments Commission (ASIC). This class order falls under the Corporations Act 2001 and specifically pertains to section 257B(7) which regulates the variation of buy-back declarations. The geographic reach of this class order is national, affecting corporations listed on approved overseas markets. The order does not apply to entities not listed on recognised financial markets, nor to transactions conducted outside of the approved markets. Class Order [CO 07/144] updates the list of approved overseas financial markets, including adding the Johannesburg Stock Exchange (JSE) and correcting previous entries that reflect name changes of other markets. This class order extends its application through subordinate instruments, which are minor or machinery in nature and hence, do not require consultation with external stakeholders.

Key Provisions

The main operative sections of ASIC Class Order [CO 07/144] are those that declare the JSE Securities Exchange as an approved overseas financial market under subsection 257B(7) of the Corporations Act 2001 (referred to as the Act). This is detailed in section 1 of the explanatory statement, which explains that the order serves to include the JSE in the list of markets where a listed corporation can conduct an on-market buy-back without materially prejudicing its ability to pay creditors, provided the corporation follows the required procedures in Division 2 of Part 2J.1 of the Act. Additionally, section 3 clarifies that the class order updates the names of other financial markets previously listed in Class Order [CO 02/249] to reflect any changes due to amalgamations or other reasons. The obligations imposed by this class order on the parties it governs are primarily centred on compliance with the regulations governing share buy-backs. Specifically, listed corporations must ensure that any on-market buy-back conducted on the JSE, or any other market listed as approved in Class Order [CO 02/249], does not harm their capacity to meet financial obligations to creditors. This is in line with the conditions stipulated in Division 2 of Part 2J.1 of the Act. Additionally, the order requires corporations to adhere to the procedural requirements detailed in the Act, ensuring that their buy-back activities are transparent and do not mislead investors or the market. The class order does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches of its provisions. However, any breach of the Corporations Act 2001, including the sections it references, could result in enforcement actions by ASIC. Such actions might include fines, legal proceedings, or other corrective measures to ensure compliance. The penalties for breaches of the Act can be severe, potentially including substantial monetary fines and, in cases of significant non-compliance, criminal charges. The exact penalties depend on the nature and severity of the breach and are determined in accordance with the provisions of the Act.