Overview

The Corporations Act 2001 (the Act) was amended by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 (SRS Act) to repeal Division 3 of Part 6A.2, which previously required holders of 85% or more of a class of securities in a company to notify the company and its members. To address the redundancy caused by this repeal, the Australian Securities and Investments Commission (ASIC) made Class Order [CO 07/568] under the Corporations Act 2001. This class order revokes Class Orders [CO 00/345] and [CO 01/1545], which had previously exempted certain 85% holders from notification requirements and modified the notification requirements for companies receiving notices from 85% holders. The primary objective of Class Order [CO 07/568] is to facilitate regulatory clarity by eliminating inconsistencies between Chapter 6A of the Act and the ASIC class orders, ensuring that outdated provisions no longer operate in light of the SRS Act’s changes.

Scope and Application

The ASIC Class Order [CO 07/568] pertains to the repeal of Class Orders [CO 00/345] and [CO 01/1545] under the Corporations Act 2001, specifically addressing the obligations of a person holding 85% or more of a class of securities in a company, referred to as an 85% holder. This Class Order applies to individuals or entities that, prior to its revocation, were subject to the requirements of giving notices to the company and its members as stipulated in the repealed Division 3 of Part 6A.2 of the Act. With the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 repealing this division, the Class Orders [CO 00/345] and [CO 01/1545] are now obsolete and have been formally revoked to align with the legislative changes. This revocation ensures regulatory clarity by eliminating inconsistencies within Chapter 6A of the Act, rendering the specific class orders unnecessary.

Key Provisions

The ASIC Class Order [CO 07/568] revokes Class Orders [CO 00/345] and [CO 01/1545]. This revocation is due to the repeal of Division 3 of Part 6A.2 of the Corporations Act 2001 by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007. Specifically, Class Order [CO 00/345] previously exempted certain 85% holders from notifying the company and Class Order [CO 01/1545] modified the notification requirements for 85% holders and the company. The main operative sections in this regard are paragraphs 669(1)(a) and 669(1)(b) of the Corporations Act 2001, which allow ASIC to exempt or modify the application of Chapter 6A. The obligations and requirements imposed by the Act on the parties and entities it governs now involve compliance with the streamlined regulatory framework provided by the repealed Division 3 of Part 6A.2. Previously, an 85% holder had to notify the company if they held 85% or more of a class of securities. The company was also required to notify its members. However, with the repeal of this division and the revocation of the class orders, these notification requirements no longer apply. There are no specific offences, penalties, or civil/criminal consequences outlined for breaches of these class orders in the explanatory statement. However, any failure to comply with the Corporations Act 2001, including its repealed provisions, may still be subject to the general enforcement powers of ASIC. These powers include seeking injunctions, fines, and other penalties as provided by the Act. The maximum penalties for breaches of the Corporations Act can vary widely depending on the nature and seriousness of the breach, but they can include substantial fines for both individuals and corporations.