Overview

The ASIC Class Order [CO 08/11] was enacted in 2008 by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. This legislation aims to address the administrative burden associated with the relief provisions for wholly-owned subsidiaries from the requirement to prepare and lodge audited financial reports. By reducing certain requirements under ASIC Class Order [98/1418], the new order seeks to simplify compliance for group companies and make the relief more accessible. The changes include removing the need for a three-year compliance history with financial reporting requirements, altering the notice obligations, reducing the matters to be addressed in the required certificate, eliminating the need for a statutory declaration when entering into a deed of cross guarantee, and simplifying the signing requirements for solvency statements. This class order reflects a policy objective to streamline compliance processes while maintaining regulatory standards.

Scope and Application

ASIC Class Order [CO 08/11], made under section 341 of the Corporations Act 2001, pertains to a specified class of companies, registered schemes, and disclosing entities, aiming to relieve directors, the entities themselves, and their auditors from certain requirements of Parts 2M.2, 2M.3, and 2M.4 of the Act, excluding Division 4. This class order primarily addresses wholly-owned subsidiaries that seek relief from preparing and lodging audited financial reports for each half-year and each financial year, a requirement already partially managed under ASIC Class Order [98/1418]. The objective of [CO 08/11] is to amend the conditions for relief under [98/1418] to allow more companies to benefit from the relief and to decrease the administrative burden on group companies. The changes include the removal of the three-year compliance history requirement, altering the annual notice requirements, reducing the contents of the certificate, eliminating the need for a statutory declaration when entering into a deed of cross guarantee, and simplifying the process for directors to lodge solvency statements. ASIC consulted with Chartered Secretaries Australia, which supported the proposed changes, and did not seek further consultation as the modifications are deemed minor and of a procedural nature.

Key Provisions

The ASIC Class Order [CO 08/11], made under section 341 of the Corporations Act 2001, primarily focuses on providing relief to certain companies, registered schemes, and disclosing entities from specified requirements of Parts 2M.2, 2M.3, and 2M.4 of the Act. This class order is particularly aimed at wholly-owned subsidiaries that were previously subject to financial reporting obligations under ASIC Class Order [98/1418]. The key changes introduced by [CO 08/11] are intended to simplify compliance for these entities and reduce administrative burdens on group companies. The order removes several requirements previously imposed by [CO 98/1418]. Firstly, it eliminates the need for a three-year compliance history with the financial reporting requirements of the Corporations Act 2001 (section 3). Secondly, it replaces the requirement for an annual notice concerning the use of the class order with a notice when the relief is first applied or when the group holding entity changes, and another notice when the company ceases to apply the relief. Thirdly, it reduces the matters that must be addressed in the certificate required under [CO 98/1418]. Fourthly, it removes the requirement for a statutory declaration when first entering into a deed of cross guarantee. Lastly, it removes the requirement to lodge solvency statements by directors and simplifies the signing requirements for those statements. Entities subject to this class order must adhere to the new simplified requirements, ensuring they lodge the necessary notices when relief is first applied, when the group holding entity changes, or when they cease to apply the relief. They must also ensure compliance with the reduced matters in the certificate and adhere to the simplified signing requirements for solvency statements. Failure to meet these obligations can result in significant legal and financial repercussions for the entities and their directors. The ASIC Class Order [CO 08/11] includes provisions for penalties and consequences in the event of non-compliance. Although specific penalties are not detailed in the explanatory statement, non-compliance with the Corporations Act 2001 can generally lead to civil and criminal penalties. For corporations, breaches can result in substantial fines, while for individuals, penalties can include fines, imprisonment, or both, depending on the severity of the breach and the specific provisions of the Act violated. These consequences underscore the importance of adhering to the requirements set forth in the class order.