ASIC CLASS ORDER [CO 07/572]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/572] Variation of Class Orders [CO 01/1455] and [CO 04/672] under subsections 741(1) and 1020F(1) of the Corporations Act 2001 (the Act).

Subsection 741(1) provides that ASIC may declare that Chapter 6D applies to a person as if specified provisions (including definitions as they apply to references in that Chapter) were omitted, modified or varied as specified in the declaration.

Subsection 1020F(1) provides that ASIC may declare that Part 7.9 applies in relation to a person as if specified provisions (including definitions as they apply to references in that Part) were omitted, modified or varied as specified in the declaration.

1. Background

Class Order [CO 01/1455]

Sections 713 and 1013FA of the Act permit a disclosing entity to prepare a prospectus or Product Disclosure Statement (PDS) with a specified limited content (“transaction-specific disclosure”) for continuously quoted securities. Transaction-specific disclosure is predicated on the fact that such entities are subject to the continuous disclosure requirements of the Act and that the market generally should have all information necessary to reach an informed view about those securities.

Section 9 of the Act defines “continuously quoted securities”. Securities of an entity will only satisfy the definition of “continuously quoted securities” where, among other things, no order under s340 or 341 covered the entity, its directors or auditor, during the shorter of the period during which the class of securities were quoted and the period of 12 months before the date of the prospectus or Product Disclosure StatementPDS.

Class Order [CO 01/1455] allows an entity to use transaction-specific disclosures even where the entity, its directors or auditor are covered by certain ASIC orders made under section 341 which give technical accounting and financial reporting relief and do not detract from the level of information available to the market.

Class Order [CO 04/672]

The Act requires a person to prepare a prospectus or PDS for an offer to sell securities or financial products where:
 

(a) the offer is made within 12 months of issue; 

(b) there was no disclosure at the time of issue; and

(c) certain other criteria set out in subsections 707 and 1012C are satisfied.

A prospectus or PDS is not required for securities or financial products that are quoted and for which a “cleansing notice” under section 708A and s1012DA has been lodged with the relevant operator of the financial market. This “cleansing notice” exemption is only available where, among other thing, no order under section 341 covered entity, its directors and or auditor, at any time during the shorter of the period during which the class of securities or financial products were quoted and the period of 12 months before the day on which the relevant securities or products were issued.

Class Order [CO 04/672] allows an entity to rely on the “cleansing notice” exemption even where the entity, its directors or auditor are covered by certain ASIC orders made under section 341 which give technical accounting and financial reporting relief and do not detract from the level of information available to the market.

2. Purpose of the class order

The purpose of Class Order [CO 07/572] the class order is to remove references in
[CO CO 01/1455] and [CO CO 04/672] to certain orders made under section 341 which:

(a) have been superseded because they have expired or been revoked; and

(b) could not have covered an entity, its directors or auditor so as to disqualify a person from relying on section 708A, 713, 1012DA or 1013FA.               

3. Operation of the class order

Class Order [CO 07/572] amends [CO 01/1455] and [CO 04/672] by removing references in those class orders to the following superseded orders:

•      - Class Order [CO 98/105] Authorised trustee corporations – trust liabilities; 
•      - Class Order [CO 98/107] NSW workers compensation statutory funds; 
•      - Class Order [CO 98/110] ADIs – related party balances and transactions;    
•      - Class Order [CO 98/1416] Comparative information in financial reports;  
•      - Class Order [CO 05/640] ADIs – related party transactions and balances;    
•      - Class Order [CO 05/643] Combining registered scheme financial reports;   
• - Class Order [CO 06/50] Transfer of remuneration information into directors' report; and                 
• - Class Order [CO 06/105] Calculation of director and executive remuneration.               

4. Consultation

Class Order [CO 07/572] is of a minor or machinery nature and does not substantially alter existing arrangements. Consequently, ASIC did not undertake any consultation with stakeholders before making the class order.