ASIC Class Order [CO 07/571]

Overview

The Australian Securities and Investments Commission (ASIC) Class Order [CO 07/571], enacted in 2007 under the Corporations Act 2001, was introduced to address the need for a disclosure exemption for rights issues. This legislative instrument allows for modifications to certain disclosure requirements for companies undertaking rights issues, thereby reducing the administrative burden on these companies. It was made under the authority of subsections 741(1) and 1020F(1) of the Corporations Act 2001, which grant ASIC the power to make class orders for the purposes of the Act. The policy objective of this class order is to streamline the disclosure process for companies issuing new shares, while still ensuring that sufficient information is provided to the market to maintain transparency and protect investors.

Scope and Application

The ASIC Class Order [CO 07/571] applies to all persons in relation to certain disclosures required by Chapter 6D and Part 7.9 of the Corporations Act 2001, which pertain to financial products and services. This legislation is applicable nationally, as it is administered by the Australian Securities and Investments Commission (ASIC), a Commonwealth authority. The order modifies or varies the disclosure requirements for rights issues, exempting certain entities and transactions from specific disclosure obligations. Notably, this Class Order does not apply to the entities and instruments listed in the Class Order itself, such as ASIC Class Orders [CO 98/100], [CO 98/101], [CO 98/104], [CO 98/1418], [CO 98/2395], [CO 99/90], [CO 00/2449], [CO 10/654], [CO 13/1050], [CO 14/757], ASIC Corporations (Stapled Group Reports) Instrument 2015/838, ASIC Corporations (Related Scheme Reports) Instrument 2015/839, and ASIC Corporations (Post Balance Date Reporting) Instrument 2015/842. The Class Order extends its application through subordinate instruments, as indicated in the Table of Instruments and Table of Amendments.

Key Provisions

The ASIC Class Order [CO 07/571] applies to rights issues under the Corporations Act 2001, specifically through subsections 741(1) and 1020F(1). This legislative instrument was prepared on 1 October 2015, incorporating amendments up to ASIC Corporations (Amendment and Repeal) Instrument 2015/843. It is essential to note that this instrument comes into effect on the date it is registered under the Legislative Instruments Act 2003, and it can be accessed via the Federal Register of Legislative Instruments. The order modifies the application of Chapter 6D and Part 7.9 of the Act by excluding specific ASIC Class Orders and Instruments from their scope, thereby altering their applicability to all persons. Under this Class Order, certain obligations and requirements are imposed on entities and individuals involved in rights issues. For instance, the disclosure obligations outlined in Chapter 6D and Part 7.9 of the Act apply to all persons unless exempted by the specified Class Orders and Instruments. This means that companies planning a rights issue must ensure they comply with the general disclosure requirements while being mindful of the specific exemptions listed in the Class Order. The modifications introduced by this instrument affect the scope and applicability of these sections, ensuring that certain entities are not subject to the full extent of these provisions. The ASIC Class Order [CO 07/571] also includes provisions regarding the consequences of non-compliance. Although the Class Order itself does not explicitly state the penalties for breaching the Act's disclosure requirements, the Corporations Act 2001 provides for both civil and criminal penalties. For civil penalties, contraventions can result in significant fines for both individuals and corporations. The maximum penalty for individuals can reach up to $210,000, while corporations may face fines of up to $1.05 million. Additionally, criminal penalties may apply, leading to imprisonment terms for individuals depending on the severity and frequency of the breaches. These potential consequences underscore the importance of adhering to the disclosure requirements and exemptions outlined in the Class Order.