ASIC Class Order [CO 08/25]

Administered by Department of the Treasury

Legislation au F2008L00664 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 08/25]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes Class Order
[CO 08/25] under subsections 741(1) and 1020F(1) of the Corporations Act 2001 (the Act).

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

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

1. Background

Regulation of sale offers under Chapter 6D

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 an offer of securities.

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

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.

Section 708A allows some sale offers to be made without disclosure. Its scope was extended by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007 (SRS Act) to cover certain sale offers made within 12 months after a controller sale.

The exemption applying to sale offers made within 12 months after a controller sale has various conditions that relate to the issue of the relevant securities. The nature of these conditions means that it is more appropriate to apply them with reference to the controller sale rather than the issue of the securities.

For example, the conditions require a “cleansing notice” to be given to the relevant market operator within 5 business days after the issue of the securities. However, the securities may have been issued a number of years before the controller sale and before the relevant company was listed or a controller sale contemplated. The condition operates more effectively if the notice must be given within 5 business days after the controller sale since the 12 month period during which the exemption may be relied on commences at the time of the controller sale rather than the time the securities were issued.

Another example is that both the body whose securities are being sold and the controller are responsible for giving the cleansing notice to the relevant market operator, but only the body is liable for a defective notice. The condition operates more effectively if both the body and the controller may be liable for the defective notice.

Regulation of sale offers under Part 7.9

Part 7.9 regulates the making of offers for the issue or sale of financial products (other than securities). It requires disclosure for sale offers of financial products in similar circumstances to those applying to sale offers of securities under Chapter 6D.

Section 1012DA allows some sale offers to be made without disclosure. Its scope was also extended by the SRS Act to cover certain sale offers made within 12 months after a controller sale. The disclosure exemption applying to these sale offers has various conditions that relate to the issue of the relevant financial products. As with the corresponding exemption under section 708A, the nature of these conditions means that it is more appropriate to apply them with reference to the controller sale rather than the issue of the financial products.

2. Purpose of the class order

Class Order [CO 08/25] is intended to ensure the effective operation of the exemptions under section 708A and 1012DA for sale offers made within 12 months of a controller sale.

3. Operation of the class order

The effect of the class order is that various conditions of the exemption under section 708A for sale offers of securities made within 12 months of a controller sale relate to the controller sale rather than the issue of the securities. Similar amendments are made to the corresponding exemption for sale offers of financial products under section 1012DA.

The class order also makes technical amendments to subsection 707(5) and paragraph 1012C(9)(b) to clarify, and give effect to, the intended operation of those provisions.

4. Consultation

ASIC consulted Treasury before making this class order. ASIC did not undertake any further specific consultation with other stakeholders because the class order is essentially of a technical nature to ensure that the legislation has its intended effect.

Overview

The Australian Securities and Investments Commission (ASIC) introduced the ASIC Class Order [CO 08/25] under the Corporations Act 2001 to address issues with the application of disclosure exemptions for securities and financial products sold within 12 months of a controller sale. The exemptions, initially established to streamline regulatory processes, required conditions relating to the issue of securities or financial products, which was deemed ineffective and impractical. This Class Order shifts the conditions to relate to the controller sale instead, ensuring the exemptions operate as intended by making the conditions more effective and practical. The Class Order also includes technical amendments to clarify and enforce the provisions of the Corporations Act, ensuring that the exemptions function correctly. The objective of the Class Order is to improve the regulatory regime by aligning the exemptions with the timing of the controller sale, thereby enhancing investor protection and regulatory efficiency.

Scope and Application

The ASIC Class Order [CO 08/25] applies to entities making sale offers of securities and financial products within 12 months of a controller sale, ensuring they comply with the disclosure and liability requirements under the Corporations Act 2001. This Act regulates both the issue and sale of securities and financial products, aiming to protect investors by mandating disclosure in certain circumstances. The class order modifies the application of exemptions under sections 708A and 1012DA, ensuring that conditions related to these exemptions are tied to the controller sale rather than the initial issue of the securities or financial products. This change is designed to make the application of these exemptions more effective and easier to enforce. The class order is applicable nationally, extending to all entities within the Commonwealth of Australia, and operates under the authority granted to ASIC by subsections 741(1) and 1020F(1) of the Act. While the order is largely technical, it clarifies the application of specific provisions and ensures that the intended legislative protections are maintained.

Key Provisions

The main operative sections of ASIC Class Order [CO 08/25] are those that modify the conditions under which certain sale offers can be made without disclosure. Specifically, sections 708A and 1012DA of the Corporations Act 2001, which pertain to the sale of securities and financial products respectively, have their exemptions clarified so that the conditions relate to the controller sale rather than the initial issue of the securities or products. This is intended to ensure that the exemptions are applied effectively and in a manner that aligns with the actual circumstances of the sale. The Class Order also makes technical amendments to subsection 707(5) and paragraph 1012C(9)(b) to ensure that these provisions operate as intended. The obligations imposed by the Class Order primarily focus on the timing and conditions of disclosure requirements for sale offers made within 12 months of a controller sale. Controllers are required to ensure that any sale of securities or financial products within this timeframe adheres to the conditions set out in the Class Order. For securities, this involves providing a 'cleansing notice' to the relevant market operator within five business days after the controller sale, and for financial products, it involves similar disclosure obligations. Both the issuing body and the controller are responsible for ensuring these notices are given, although only the issuing body is liable for a defective notice. Breaches of the provisions under the Corporations Act 2001, as amended by the Class Order, can result in significant penalties. For corporations, the maximum penalty for contravening the disclosure requirements can be up to $210,000, while individuals can face penalties of up to $42,000. These penalties are in addition to any civil or criminal consequences that may apply under other provisions of the Act. The severity of the penalties underscores the importance of compliance with the disclosure requirements to ensure adequate investor protection.

Area of Law: Corporate Law & Governance
Instrument: Regulation
Concepts: Definitions & Interpretation; Exemptions & Exclusions; Regulatory Standards

Interactions

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.

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