ASIC CLASS ORDER 07/91
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001- Paragraphs 601QA(1)(a) – variation
Paragraph 601QA(1)(a) of the Corporations Act 2001 (the Act) provides that the Australian Securities and Investments Commission (ASIC) may exempt a person from a provision of Chapter 5C of the Act.
1. Background
Paragraph 601FG(1)(a) of the Act provides that the responsible entity of a registered managed investment scheme may acquire and hold an interest in the scheme, but it must only do so:
(a) for not less than the consideration that would be payable if the interest were acquired by another person; and
(b) subject to terms and conditions that would not disadvantage other members.
ASIC Class Order 03/104 Relief facilitating the acquisition and sale of forfeited interests in registered time-sharing schemes (CO 03/104) grants conditional relief from paragraph 601FG(1)(a) of the Act to responsible entities of registered time-sharing schemes to allow them to acquire, hold and dispose of forfeited time-sharing interests.
ASIC has granted relief in [CO 03/104] to assist responsible entities to manage time-sharing schemes more effectively for the benefit of all members. ASIC has imposed conditions on the relief in [CO 03/104] that are designed to:
(a) protect members from unfair methods of acquisition of time-sharing interests through forfeiture;
(b) ensure that forfeited time-sharing interests are sold for a fair and reasonable price;
(c) ensure that the proceeds of sale of forfeited time-sharing interests are distributed equitably; and
(d) assist members understand when their time-sharing interests can be forfeited and their rights with respect to any forfeiture.
2. The Class Order
ASIC Class Order CO 07/91 (CO 07/91) effects amendments to [CO 03/104] that are intended to replace references to the disclosure regime in Chapter 6D of the Act and the transitional disclosure regime in Part 10.2 of the Act, which no longer apply to time-sharing interests, and replace them with references to the disclosure regime in Part 7.9 of the Act, which now applies to time-sharing interests following recent legislative changes.
3. Consultation
ASIC did not consult on the amendments to [CO 03/104] in [CO 07/91], as they are only minor or machinery in nature.
Overview
The ASIC Class Order CO 07/91 was enacted in 2007 as an amendment to the existing relief provided in CO 03/104. This legislation was introduced to address the need for updated references in the regulatory framework concerning the disclosure regime for time-sharing interests. The original CO 03/104 provided conditional relief to responsible entities of registered time-sharing schemes, allowing them to acquire, hold, and dispose of forfeited time-sharing interests under certain conditions designed to protect members and ensure fair practices. However, recent changes in the Corporations Act 2001 necessitated an update to the relevant disclosure regime references within the class order. The Corporations Act 2001, enacted by the Australian Parliament, was the primary legislation that introduced these provisions, with the objective of enhancing the regulatory oversight and management of time-sharing schemes for the benefit of all members.
Scope and Application
The ASIC Class Order CO 07/91 applies specifically to the responsible entities of registered managed investment schemes, particularly those related to time-sharing schemes, under the Corporations Act 2001. The Class Order seeks to modify the existing relief provided by ASIC Class Order CO 03/104, which allows these entities to acquire, hold, and dispose of forfeited time-sharing interests. The scope of this legislation extends to ensuring that any acquisition of these interests adheres to certain conditions designed to protect the interests of all members involved. The amendments in CO 07/91 update the references in the original class order to align with current legislative changes, specifically substituting outdated references with those from Part 7.9 of the Act, which now governs the disclosure regime applicable to time-sharing interests. This Class Order has a national jurisdictional reach as it is an instrument made under the Commonwealth's authority. There are no stated exclusions or exemptions in this Class Order, and it does not specify any particular thresholds. The application of the Class Order may be extended or restricted through subordinate instruments, although no such instruments are mentioned in the explanatory statement.
Key Provisions
Paragraph 601QA(1)(a) of the Corporations Act 2001 allows ASIC to exempt a person from a provision of Chapter 5C of the Act. This provision is pertinent as it gives ASIC the discretion to modify certain regulatory requirements for specific cases. More specifically, under paragraph 601FG(1)(a) of the Act, the responsible entity of a registered managed investment scheme can acquire and hold an interest in the scheme, provided it adheres to the stipulated terms and conditions to ensure fairness to other members. This ensures that the responsible entity's acquisition does not disadvantage other members and is made at a fair market price.
ASIC Class Order 03/104 provides conditional relief to responsible entities of registered time-sharing schemes, allowing them to acquire, hold, and dispose of forfeited time-sharing interests. This relief is intended to help responsible entities manage time-sharing schemes more effectively for the benefit of all members. The conditions imposed by ASIC aim to protect members from unfair acquisition methods, ensure forfeited interests are sold at fair prices, ensure equitable distribution of proceeds, and assist members in understanding the conditions under which their interests can be forfeited and their rights regarding such forfeiture.
The obligations imposed by this Act and the Class Order on responsible entities of registered time-sharing schemes include adherence to the acquisition terms set forth in paragraph 601FG(1)(a), ensuring that any acquisition does not disadvantage other members and is made at fair market prices. Furthermore, responsible entities must comply with the conditions outlined in CO 03/104, which include protecting members from unfair acquisition methods, ensuring forfeited interests are sold at fair and reasonable prices, ensuring equitable distribution of proceeds, and assisting members in understanding forfeiture conditions and their rights.
Failure to comply with the requirements of the Act and the Class Order can result in civil or criminal consequences. While the specific penalties are not detailed in the explanatory statement, breaches of the Corporations Act can generally lead to substantial fines and, in some cases, imprisonment. The penalties depend on the severity of the breach and the discretion of the court. It is important for responsible entities to ensure full compliance with these provisions to avoid such repercussions.