Overview

The ASIC Class Order [CO 07/43] was enacted in 2007 under the Corporations Act 2001 to address the problem of requiring an Australian financial services licence for persons distributing general advice in explanatory statements about schemes of arrangement in certain foreign jurisdictions. This class order was introduced by the Australian Securities and Investments Commission (ASIC) to exempt such individuals from needing an Australian financial services licence, provided the foreign jurisdiction's regulation of schemes is comparable to that in Australia. The policy objective is to streamline the financial services industry by providing relief in circumstances where the regulatory frameworks are sufficiently aligned to ensure adequate investor protection. This minor and machinery-related class order varies the existing Class Order [CO 03/606] by including explanatory statements prepared due to legal requirements in specific foreign jurisdictions.

Scope and Application

The Australian Securities and Investments Commission (ASIC) has issued Class Order [CO 07/43] under the Corporations Act 2001, modifying Class Order [CO 03/606] to exempt certain persons from the requirement to hold an Australian financial services licence. This exemption applies to the provision of general financial product advice contained in an explanatory statement about a compromise or arrangement, provided that the arrangement is between a foreign company and its members and is regulated under the laws of Hong Kong, Malaysia, New Zealand, Singapore, South Africa, or the United Kingdom. The exemption is limited to situations where the explanatory statement is required by law in the relevant jurisdiction and the regulatory regime for the scheme is comparable to Australia’s. The purpose of this class order is to offer relief from the licensing requirement in circumstances where the foreign jurisdiction provides adequate investor protection. Notably, this class order does not extend to general advice contained in explanatory statements for foreign schemes of arrangement not regulated by the specified jurisdictions. The order applies across Australia, affecting entities and individuals who may otherwise need an Australian financial services licence for similar activities.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has implemented Class Order [CO 07/43], which modifies the previous Class Order [CO 03/606] under the Corporations Act 2001 (the Act). This variation, detailed in paragraph 911A(2)(l) of the Act, allows for an exemption from the requirement to hold an Australian financial services licence for the provision of financial services in certain circumstances. This order specifically targets general advice contained in an explanatory statement about a compromise or arrangement, referred to as a scheme of arrangement, in specified foreign jurisdictions. This Class Order [CO 07/43] exempts financial product advice that is general advice and contained in an explanatory statement about a compromise or arrangement between a foreign company and its members, if the arrangement is regulated under the laws of Hong Kong, Malaysia, New Zealand, Singapore, South Africa, or the United Kingdom. The exemption applies where the explanatory statement has been prepared because it is required by law. This relief is intended to streamline the process for distributing such documents in Australia, recognising that the regulatory frameworks in these jurisdictions provide adequate investor protection. Entities governed by this Class Order must ensure that any general advice provided in an explanatory statement about a scheme of arrangement from the specified jurisdictions meets the criteria set out in [CO 07/43]. This includes verifying that the scheme is regulated under the laws of one of the specified countries and that the explanatory statement has been prepared because it is a legal requirement. Failure to comply with the conditions of the Class Order may result in the need for an Australian financial services licence. There are no specific offences, penalties, or civil/criminal consequences outlined in the Explanatory Statement for breaching the provisions of this Class Order. However, non-compliance with the Corporations Act 2001 or any related regulations could result in penalties as prescribed under the Act. These penalties can include fines and, in severe cases, criminal charges depending on the nature and extent of the breach.