Overview

The Australian Securities and Investments Commission (ASIC) introduced the Class Order (CO 07/570) under section 601QA(1)(a) of the Corporations Act 2001. This legislative instrument revokes Class Order (CO 98/55) which had previously exempted certain entities from the requirement that investments in another managed investment scheme must be registered. The revocation was necessitated by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007, which repealed section 601FC(4) of the Corporations Act, thereby removing the need for the exemptions provided by CO 98/55. The purpose of CO 07/570 is to streamline and modernise the regulatory framework by eliminating outdated provisions that are no longer relevant. ASIC did not conduct specific consultations for this Class Order, considering its minor and administrative nature.

Scope and Application

The ASIC Class Order (CO 07/570) pertains to the revocation of Class Order (CO 98/55) under section 601QA(1)(a) of the Corporations Act 2001. This Act applies to the Australian Securities and Investments Commission (ASIC) which exercises its powers to exempt certain individuals or entities from specific provisions of Chapter 5C of the Act or to declare that such Chapter applies with specified modifications. The scope of this legislation involves the revocation of CO 98/55, which was previously an exemption for certain persons from the requirement to invest in registered managed investment schemes. This change is in response to the repeal of section 601FC(4) of the Act by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007, effective from 28 June 2007. Given the minor and machinery nature of the class order, ASIC did not engage in specific consultation with stakeholders prior to its enactment. The jurisdictional reach of this class order is federal, applying across Australia in accordance with the national legislative framework.

Key Provisions

The main operative sections of the ASIC Class Order (CO 07/570) are found under the Corporations Act 2001 (the Act). Section 601QA(1) allows the Australian Securities and Investments Commission (ASIC) to make exemptions or declarations regarding Chapter 5C of the Act. In this case, CO 07/570 revokes the earlier Class Order (CO 98/55), which had exempted certain persons from the requirement that a responsible entity could only invest scheme property in another registered managed investment scheme. The revocation of CO 98/55 is effective because the relevant section (s601FC(4)) was repealed by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 (SRS Act) with effect from 28 June 2007. The primary purpose of this class order is to streamline regulations by eliminating the need for CO 98/55, which is no longer applicable following the legislative changes. The obligations and requirements imposed by CO 07/570 on the parties or entities it governs primarily relate to the investment practices of responsible entities managing investment schemes. With the repeal of s601FC(4) of the Act and the subsequent revocation of CO 98/57, responsible entities are no longer subject to the restrictions outlined in CO 98/55 regarding investments in unregistered schemes. This change implies that responsible entities now have greater flexibility in their investment strategies, as long as they remain compliant with other relevant provisions of the Corporations Act. The revocation of CO 98/55 means that there are no exemptions from the general requirement that investments in other managed investment schemes must be registered, unless otherwise provided for by other provisions of the Act. The Act and CO 07/570 do not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches of the provisions in this class order. However, it is important to note that any failure to comply with the general requirements of the Corporations Act, including those related to managing investment schemes, could result in enforcement actions by ASIC. Such actions might include civil penalties, court-ordered compensation, or other sanctions. The penalties for breaches of the Corporations Act can vary widely depending on the nature and severity of the breach, but they can include substantial fines and, in some cases, criminal charges. It is essential for responsible entities to remain vigilant and ensure compliance with all applicable laws and regulations to avoid potential enforcement actions.