ASIC CLASS ORDER [CO 07/43]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Paragraph 911A(2)(l) – Variation

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/0043] Financial products advice – exempt documents - Variation  [CO 03/606] under paragraph 911A(2)(l) of the Corporations Act 2001 (the Act). Paragraph 911A(2)(l) provides that ASIC may exempt a person from the requirement to hold an Australian financial services licence for the provision of a financial service in specified circumstances.

1. Background

Part 7.6 of the Act deals with licensing of providers of financial services. Under section 911A, a person who carries on a financial services business in Australia must hold an Australian financial services licence unless exempt.

Class Order [CO 03/606] Financial product advice – exempt documents exempts persons from the requirement to hold an Australian financial services licence in relation to financial product advice that is:

(a) general advice; and

(b) contained in a document of a kind specified, including an explanatory statement about a compromise or arrangement of the kind referred to in section 412 of the Act or a draft of such a statement of the kind referred to in subsection 411(3) of the Act (a scheme of arrangement).

General advice contained in an explanatory statement for a foreign scheme of arrangement is not covered by [CO 03/606], so a person who distributes a foreign explanatory statement containing general advice in Australia would need an Australian financial services licence.

However, like an explanatory statement for an Australian scheme of arrangement, an explanatory statement for a foreign scheme of arrangement in certain jurisdictions is prepared because of a legislative requirement and the scheme process will provide adequate investor protection as a substitute for the Australian financial services licensing regime.

2. Purpose of the class order

The purpose of [CO 07/43] is to provide relief from the requirement to hold an Australian financial services licence in relation to financial product advice that is general advice and contained in an explanatory statement about a scheme of arrangement in certain foreign jurisdictions where the regulation of schemes is comparable to that in Australia.

3. The class order

[CO 07/43] varies [CO 03/606] by adding as a class of exempt documents an explanatory statement about a compromise or arrangement:

(a) between a foreign company and its members; and

(b) regulated under the laws of one of the following:

(i) Hong Kong;

(ii) Malaysia;

(iii) New Zealand;

(iv) Singapore;

(v) South Africa; or

(vi) the United Kingdom

where the statement has been prepared because it is required by law.

4. Consultation

ASIC did not conduct consultation in relation to this class order.  Consultation was not required as this class order is minor or machinery in nature.