ASIC Class Order [CO 07/9]

Administered by Department of the Treasury

Legislation au F2007L00510 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 07/9]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

Paragraphs 741(1)(a) and 1020F(1)(a) – Exemptions

 

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 07/9] Prospectus relief for foreign schemes of arrangement and PDS relief for Part 5.1 schemes and foreign schemes of arrangement under paragraphs 741(1)(a) and 1020F(1)(a) of the Corporations Act 2001 (the Act). Paragraph 741(1)(a) provides that ASIC may exempt a person from a provision of Chapter 6D of the Act, and paragraph 1020F(1)(a) provides that ASIC may exempt a person from a provision of Part 7.9 of the Act.

 

1. Background

 

Prospectus relief for foreign schemes

 

Chapter 6D regulates the making of offers for the issue or sale of securities. It provides a disclosure and liability regime so as to ensure adequate investor protection in circumstances where an investor may not know all the information needed to make a decision whether to accept the offer of securities.

 

The provisions set out where an offer for the issue or sale of securities needs disclosure to investors. The following offers need disclosure under Chapter 6D (unless an exemption applies):

 

  • an offer of securities for issue;
  • an offer of a body's securities for sale by the body's controller where the securities are either not quoted or not offered for sale in the ordinary course of trading on a relevant financial market;
  • an offer of a body's securities for sale within 12 months after their issue without disclosure where either the body issued the securities, or the person to whom they were issued acquired them, with the purpose of the securities being on-sold ; and
  • an offer of a body's securities for sale within 12 months after their sale without disclosure by the body's controller where the securities were at the time of sale by the controller either not quoted or not offered for sale in the ordinary course of trading on a relevant financial market and either the controller sold the securities, or the person to whom they were sold acquired them, with the purpose of the securities being on-sold .

 

Offers made under an Australian scheme of arrangement are expressly exempted from the disclosure requirement under subsection 708(17) because adequate disclosure and protection is provided to investors as a substitute for the requirements in Chapter 6D.

 

Chapter 6D would capture offers made under a foreign scheme of arrangement which are received in Australia. This means that such offers would need to be accompanied by a disclosure document in accordance with Chapter 6D.

 

However, schemes of arrangement (foreign schemes) regulated by or under a law in force in certain foreign jurisdictions are likely to be accompanied by adequate disclosure.  This is because these jurisdictions provide scheme regulation that offers a comparable level of disclosure and investor protection to that provided in Australia.

 

PDS relief for Part 5.1 schemes and foreign schemes

 

Part 7.9 regulates the issue, sale and purchase of financial products. It provides a disclosure and liability regime so as to ensure adequate protection in circumstances where a person may not know all the information needed to make a decision whether to acquire a financial product.

 

The provisions set out where the issue or sale of a financial product needs disclosure, generally in the form of a Product Disclosure Statement (PDS). A PDS may need to be given (unless an exemption applies):

 

  • by a person who gives personal advice recommending a particular financial product;
  • by a person who offers to issue, offers to arrange the issue of or issues a financial product to a person; and
  • by a person who sells a financial product in certain situations.

 

Offers of securities made under a compromise or arrangement under Part 5.1 (a Part 5.1 scheme) are expressly exempted from the prospectus requirement under subsection 708(17) of the Act. However, offers or issues of a financial product under a Part 5.1 scheme are not exempt from the PDS requirement. This means that an entity conducting a Part 5.1 scheme where a financial product is given as consideration to members must provide the members with a PDS.

 

However, Part 5.1 schemes are likely to provide adequate disclosure, as shown by their express exemption from the prospectus requirement. Similarly, foreign schemes are likely to provide adequate disclosure.  This is because schemes in the relevant jurisdictions provide regulation of schemes that offers a comparable level of disclosure and investor protection to that provided in Australia.

 

2. Purpose of the class order

 

The purpose of [CO 07/9] is to provide relief from the disclosure requirements to persons who:

 

(a) make offers of securities to Australian residents under a foreign scheme; or

 

(b) offer a financial product as consideration under a Part 5.1 scheme or a foreign scheme.

 

 

3. The class order

 

Prospectus relief for foreign schemes

 

[CO 07/9] provides an exemption from Parts 6D.2 and 6D.3 of the Act in relation to an offer of securities under a compromise or arrangement:

 

(a) between a foreign corporation and its members; and

 

(b) regulated under the laws of  one of the following:

 

(i) Hong Kong;

(ii) Malaysia;

(iii) New Zealand;

(iv) Singapore;

(v) South Africa; or

(vi) the United Kingdom.

 

PDS relief for Part 5.1 schemes and foreign schemes

 

[CO 07/9] provides an exemption from sections 1012A, 1012B and 1012C of the Act in relation to a recommendation to acquire, an issue or sale, or an offer to issue or sell, a financial product under:

 

(a) a Part 5.1 scheme; or

 

(b) a compromise or arrangement:

 

(i) between a foreign corporation and its members; and

 

(ii) regulated under the laws of one of the following:

 

(A) Hong Kong;

(B) Malaysia

(C) New Zealand;

(D) Singapore;

(E) South Africa; or

(F) the United Kingdom. 

 

4. Consultation

 

In July 2005, ASIC released a Policy Proposal Paper Disclosure in reconstructions (PPP) seeking submissions from interested parties on a range of proposals, including the relief in [CO 07/9].  Submissions received in response to the PPP supported the relief in [CO 07/9].

 

 

Overview

The Australian Securities and Investments Commission (ASIC) enacted Class Order [CO 07/9] in 2007 under the Corporations Act 2001. The primary purpose of this legislation is to address the need for streamlined disclosure requirements for entities offering securities or financial products under specific foreign or domestic schemes, thereby facilitating cross-border transactions and enhancing investor protection. The class order exempts entities from certain disclosure obligations under the Act when they make offers of securities under a foreign scheme or offer a financial product under a Part 5.1 scheme or a foreign scheme. This relief is applicable to schemes regulated in jurisdictions such as Hong Kong, Malaysia, New Zealand, Singapore, South Africa, and the United Kingdom, where the regulatory frameworks are deemed to offer adequate investor protection comparable to those in Australia. The objective is to reduce unnecessary regulatory burdens while maintaining the integrity and protection of investors.

Scope and Application

The ASIC Class Order [CO 07/9] pertains to exemptions from certain disclosure requirements under the Corporations Act 2001 for entities and persons conducting schemes of arrangement in certain foreign jurisdictions, as well as Part 5.1 schemes in Australia. Specifically, the Class Order exempts from the prospectus requirements in Chapter 6D and the Product Disclosure Statement (PDS) requirements in Part 7.9 for offers of securities under foreign schemes of arrangement if these schemes are regulated under the laws of Hong Kong, Malaysia, New Zealand, Singapore, South Africa, or the United Kingdom. Similarly, it exempts from the PDS requirements for offers of financial products under Part 5.1 schemes and foreign schemes of arrangement. These exemptions apply on the basis that the foreign jurisdictions provide a comparable level of disclosure and investor protection to that provided under Australian law. The exemptions are available to foreign corporations making offers to Australian residents and to entities conducting schemes where a financial product is given as consideration. The scope of the Class Order is limited to the specified jurisdictions and types of schemes, and it extends to persons and entities affected by the relevant provisions of the Corporations Act 2001. The Class Order is made under the authority granted by paragraphs 741(1)(a) and 1020F(1)(a) of the Corporations Act 2001, and it does not include any exclusions, exemptions, or thresholds beyond those specified in the text of the Order itself.

Key Provisions

The main operative sections of the ASIC Class Order [CO 07/9] provide exemptions from specific disclosure requirements under the Corporations Act 2001 (the Act). Section 741(1)(a) allows ASIC to exempt a person from the disclosure obligations of Chapter 6D, which deals with the issue or sale of securities, and section 1020F(1)(a) allows ASIC to exempt a person from the disclosure obligations of Part 7.9, which deals with financial products. Specifically, [CO 07/9] exempts foreign schemes of arrangement and Part 5.1 schemes from certain disclosure requirements. This means that offers of securities under certain foreign schemes and offers of financial products under certain schemes do not need to comply with the usual disclosure requirements under the Act. The obligations imposed by the Act on the parties or entities it governs include ensuring that adequate disclosure is provided to investors in certain situations, particularly when securities or financial products are being offered or sold. This includes compliance with the disclosure requirements of Chapter 6D and Part 7.9 unless an exemption applies. The Act also requires that any exemptions from these disclosure requirements, such as those provided by [CO 07/9], are granted by ASIC. The Act further requires that schemes of arrangement, including those under Part 5.1, and foreign schemes provide adequate disclosure and investor protection. Failure to comply with the disclosure requirements of the Act, or to obtain the necessary exemptions where applicable, can lead to various consequences. These include civil penalties for contraventions of the Act, which can result in fines for individuals and corporations. Additionally, there can be criminal penalties for serious or repeated breaches, including imprisonment. The maximum penalties for civil contraventions can be substantial, often calculated based on the number of breaches and the extent of harm caused. Criminal penalties, including fines and imprisonment, are reserved for the most serious breaches. It is important for entities to ensure they are compliant with the Act to avoid these penalties and maintain their legal standing.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.