Overview

The ASIC Class Order [CO 07/44], enacted under the Corporations Act 2001, addresses the need for regulating unsolicited offers for financial products made under foreign schemes of arrangement. The Class Order was introduced to provide relief from certain disclosure requirements in Division 5A of Part 7.9 of the Act, which is aimed at protecting investors from 'low ball offers'. The primary objective of the Class Order is to exempt persons making unsolicited offers under foreign schemes of arrangement from the disclosure requirements, provided the foreign jurisdiction has comparable regulatory requirements to Australia. This exemption ensures that Australian investors receive adequate protection and disclosure, aligning with the exemption already provided for Australian schemes of arrangement. The Class Order was developed following consultation with industry stakeholders, who supported the relief to streamline the regulatory process for unsolicited offers made under foreign schemes.

Scope and Application

The ASIC Class Order [CO 07/44] applies to individuals and entities that make unsolicited offers to acquire financial products from Australian residents under a scheme of arrangement regulated in foreign jurisdictions with comparable regulatory requirements to Australia. This includes offers made under schemes regulated by the laws of Canada, France, Germany, Hong Kong, Italy, Japan, Malaysia, the Netherlands, New Zealand, Singapore, South Africa, Switzerland, the United Kingdom, and the United States of America. The primary aim is to provide relief from the disclosure requirements stipulated in Division 5A of Part 7.9 of the Corporations Act 2001, provided that the foreign scheme of arrangement is carried out in accordance with the foreign regulation. This exemption is consistent with the existing exemption for Australian schemes of arrangement, recognising that these foreign schemes offer a comparable level of disclosure and investor protection. The class order is a variation to the earlier Class Order [CO 05/850], providing specific relief to those making unsolicited offers under the described foreign schemes. The relief does not extend to offers made under Australian schemes of arrangement or those authorised by section 257A of the Act, which are already adequately protected under the Act. The application of the class order is subject to consultation feedback and industry support as evidenced in the submissions received in response to ASIC's Policy Proposal Paper Disclosure in reconstructions (PPP) released in July 2005.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has implemented Class Order [CO 07/44], which pertains to unsolicited offers under a regulated foreign takeover bid (paragraph 1020F(1)(a) of the Corporations Act 2001). This order varies the requirements of Division 5A of Part 7.9 of the Act, which mandates detailed disclosure for unsolicited offers to purchase financial products. Specifically, the order exempts certain unsolicited offers made under foreign schemes of arrangement from the stringent disclosure requirements stipulated in Division 5A. These foreign schemes must be regulated under the laws of specified jurisdictions such as Canada, France, Germany, and others listed in the order (section 3 of the order). The exemption is intended to align with the existing exemption for Australian schemes of arrangement, recognising that these foreign schemes provide adequate disclosure and investor protection. The primary obligation imposed by [CO 07/44] is that entities taking advantage of the exemption must ensure that the foreign scheme is executed in accordance with the regulations of the relevant foreign jurisdiction (section 3). This includes verifying that the foreign scheme provides sufficient disclosure and protection for Australian investors. The order also places a responsibility on these entities to adhere to the regulatory framework of the foreign jurisdiction, ensuring that the scheme is transparent and complies with local laws. Breach of the requirements under [CO 07/44] may lead to significant consequences. While the explanatory statement does not specify exact penalties, non-compliance with the Corporations Act 2001 can result in both civil and criminal penalties. Civil penalties can include fines and compensation orders, while criminal penalties might involve imprisonment or substantial fines, depending on the severity and intent of the breach. The maximum penalties would be determined by the specific provisions of the Act that are contravened, which could encompass a wide range of sanctions as per the Corporations Act 2001.