ASIC CLASS ORDER [CO 09/462]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 09/462] Variation of [CO 05/26] under paragraph 601QA(1)(b) of the Corporations Act 2001 (the Act).
Paragraph 601QA(1)(b) of the Act provides that ASIC may declare that Chapter 5C of the Act applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.
1. Background
Paragraph 601GA(1)(a) of the Act requires that the constitution of a registered scheme must make adequate provision for the consideration that is to be paid to acquire an interest in the scheme.
ASIC Class Order [CO 05/26] excludes certain placements of interests in registered schemes that are listed on the financial market of ASX Limited and certain foreign markets from this requirement. This exclusion enables responsible entities to determine the issue price of interests for the placement. Before [CO 09/462] the exclusion was limited if the discount for interests issued under the placement was more than 10% of the current market price o placements that have been approved by a resolution of members.
2. Purpose of the class order
There has been increased volatility in prices of interests quoted on relevant financial markets in the adverse economic circumstances since the second half of 2008. Some responsible entities have considered they need to raise funds for registered schemes quickly including to enable the repayment of debts from the scheme property of the registered scheme. Access to debt financial has been restricted. To ensure fundraising could proceed effectively and within commercially necessary timing some responsible entities have considered that they need to price interests in placements effected at a higher level of discount to market price that had previously been usual and exceeding 10% discount.
The class order facilitates fundraising by removing the 10% discount limit on placements without approval of a resolution of members that has been an impediment to placements in these circumstances.
3. Operation of the class order
Paragraph 4(a) and (b) of [CO 09/462] amends [CO 05/26] to remove the requirement for approval by a resolution of members to a placement because the price is more than 10% less than the current market price.
4. Consultation
Before making this instrument, ASIC invited the public to make submissions on its proposal to make the amendment that is contained in [CO 09/462] to remove the requirement for approval by a resolution of members to a placement because the price is more than 10% less than the current market price.
This invitation was included in Consultation Report 105: Facilitating Capital Equity Raising. We received 23 responses to CP 105 from a wide variety of sources including relevant industry bodies, consumer groups, legal bodies and law firms and stock exchanges. The responses were supportive of the relief in [CO 09/462] being granted. CP 105, the non-confidential submissions received by ASIC, and Report 160 Response to submissions on CP 105 Facilitating equity capital raising can be found on the ASIC website.