ASIC CLASS ORDER [CO 07/166]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/166] Variation of Class Order [CO 02/315] under paragraph 601QA(1)(b) of the Corporations Act 2001 (the Act).
Paragraph 601QA(1)(b) of the the Act provides that ASIC may declare that Chapter 5C of the Act applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.
1. Background
Paragraph 601GA(1)(a) of the Act requires that the constitution of a registered managed investment scheme makes adequate provision for the consideration that is to be paid to acquire an interest in the scheme.
ASIC Class Order [CO 02/315] Time-sharing schemes – use of loose-leaf price list modifies paragraph 601GA(1)(a) of the Act to allow promoters and operators of registered time-sharing schemes to specify the acquisition price of time-sharing interests in a Product Disclosure Statement instead of requiring that the acquisition price be specified in the constitution of the registered time-sharing.
ASIC granted relief from paragraph 601GA(1)(a) of the Act in Class Order [CO 02/315] because the acquisition price of a time-sharing interest is often negotiable and variable. Allowing promoters and operators of registered time-sharing schemes to use a loose-leaf price list to specify the acquisition price facilitates prices being quickly and easily updated.
ASIC has imposed requirements on responsible entities who rely on the relief in Class Order [CO 02/315] that are designed to:
(a) protect consumers from the effects of pressure selling tactics; and
(b) assist consumers make an information decision about the costs associated with the purchase of time-sharing interests.
One such requirement that has existed since 2002 is a record-keeping obligation regarding statements about cooling off periods. Recent amendments that ASIC has made to our class order confirm this record keeping obligation. These amendments take effect from 1 October 2007.
2. Purpose of the class order
This Class Order [CO 07/166] makes amendments to Class Order [CO 02/315]. The amendments are designed to clarify that a record-keeping obligation which forms part of Class Order [CO 02/315] only applies for a period of 7 years.
3. Operation of the class order
This Class Order [CO 07/166] clarifies that the record-keeping obligation which forms part of Class Order [CO 02/315] applies for a period of 7 years. As the amended record keeping obligation only applies from 1 October 2007, these changes only commence at that time.
4. Consultation
No consultation was necessary because this change is minor and machinery in nature.
Overview
The ASIC Class Order [CO 07/166], enacted in 2007, modifies the existing Class Order [CO 02/315] under the Corporations Act 2001. The primary objective of this legislative action is to address a gap in the regulatory framework for time-sharing schemes by specifying the period for which the record-keeping obligation applies. The Australian Securities and Investments Commission (ASIC), the enacting body, aims to ensure that responsible entities comply with record-keeping requirements designed to protect consumers from pressure selling tactics and to assist them in making informed decisions regarding the purchase of time-sharing interests. The modifications introduced by Class Order [CO 07/166] clarify that the record-keeping obligation, which was recently amended, applies for a period of 7 years, effective from 1 October 2007.
Scope and Application
The ASIC Class Order [CO 07/166] is a regulatory instrument under the Corporations Act 2001, made by the Australian Securities and Investments Commission (ASIC) to amend the existing Class Order [CO 02/315] concerning time-sharing schemes. This class order applies specifically to promoters and operators of registered time-sharing schemes, ensuring they comply with certain obligations designed to protect consumers and facilitate informed decision-making. The amendments introduced by Class Order [CO 07/166] aim to clarify the record-keeping obligations that form part of Class Order [CO 02/315], specifically limiting the duration of these obligations to a period of 7 years. These changes are effective from 1 October 2007 and do not require consultation as they are considered minor and administrative in nature.
Key Provisions
The Australian Securities and Investments Commission (ASIC) has made Class Order [CO 07/166] to modify the existing Class Order [CO 02/315], which allows promoters and operators of registered time-sharing schemes to specify the acquisition price in a Product Disclosure Statement rather than in the scheme’s constitution (section 1). This amendment takes effect from 1 October 2007 and clarifies that the record-keeping obligation, which requires responsible entities to maintain records of statements about cooling-off periods, applies for a period of 7 years (section 3). This clarification applies from the date the amendment takes effect, 1 October 2007.
The Class Order imposes specific obligations on responsible entities, including the requirement to maintain records of statements about cooling-off periods for 7 years (section 3). This obligation is intended to protect consumers from pressure selling tactics and assist them in making informed decisions about purchasing time-sharing interests (section 1). Responsible entities must ensure that they adhere to these requirements to comply with the Class Order.
Failure to comply with the obligations outlined in the Class Order may result in regulatory action against the responsible entity. While specific penalties are not mentioned in the explanatory statement, breaches of similar requirements under the Corporations Act 2001 may lead to enforcement actions, including fines and other civil or criminal penalties (section 3). It is essential for responsible entities to ensure they meet all obligations under the Class Order to avoid potential consequences.