Overview

The ASIC Class Order [CO 09/626], enacted in 2009 under the Corporations Act 2001, addresses the administrative burden and timing issues associated with the lodging of opt-in and opt-out notices by certain companies seeking relief from specific financial reporting requirements. The Australian Securities and Investments Commission (ASIC), as the enacting body, aimed to streamline and clarify the procedures for companies to notify ASIC of their intention to rely on certain class orders, thereby reducing unnecessary administrative complexities while maintaining the integrity of financial disclosures. This class order modifies existing class orders [CO 98/98] and [CO 98/1418] to provide a more extended and predictable timeframe for lodging notices and to eliminate ASIC's discretion to extend these deadlines, thus ensuring a uniform application of the rules.

Scope and Application

ASIC Class Order [CO 09/626] applies to a specified class of companies, registered schemes, and disclosing entities, which are typically small proprietary companies that are foreign-controlled or wholly-owned entities. The Act provides relief to these entities from certain reporting requirements under Parts 2M.2, 2M.3 and 2M.4 of the Corporations Act 2001, specifically from the requirement to prepare and lodge audited financial reports and directors’ reports with ASIC. This class order primarily affects directors of these entities, the entities themselves, and their auditors by relieving them from the aforementioned reporting obligations. The jurisdictional reach of this class order is national, as it is made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001, which applies throughout Australia. The Explanatory Statement indicates that the changes made by [CO 09/626] are considered minor or machinery in nature, and therefore, no consultation with external parties was undertaken. The class order extends the period for lodging opt-in and opt-out notices for companies relying on relief under the class order, and removes ASIC's discretion to grant further extensions, as the deadlines for lodging these notices now coincide with the deadline for lodging financial reports.

Key Provisions

The Australian Securities and Investments Commission (ASIC) has issued Class Order [CO 09/626] under section 341 of the Corporations Act 2001. This class order varies the existing Class Orders [CO 98/98] and [CO 98/1418], which provided relief to certain companies from the obligation to prepare and lodge audited financial reports and directors’ reports with ASIC. The main operative sections of [CO 09/626] extend the timeframe for companies to lodge opt-in and opt-out notices with ASIC. Companies now have a 19-month window to lodge an opt-in notice, starting 3 months before the start of the first financial year they intend to take advantage of relief, and ending 4 months after the end of the financial year. Similarly, opt-out notices can be lodged within the same timeframe when a company ceases to rely on the relief. The class order also removes the discretion for ASIC to extend the time for lodging opt-in notices under [CO 98/98] and [CO 98/1418]. The obligations imposed by [CO 09/626] require companies that wish to take advantage of the relief to lodge the appropriate notices with ASIC within the specified timeframes. Companies must ensure they lodge an opt-in notice if they intend to rely on the relief for the first financial year and an opt-out notice if they cease to rely on the relief at any point. Failure to lodge these notices within the stipulated period could result in companies losing their eligibility for the relief provided by [CO 98/98] and [CO 98/1418]. There are no explicit offences, penalties, or civil/criminal consequences mentioned in the explanatory statement for breach of [CO 09/626]. However, the primary consequence of not complying with the class order would be the loss of the relief from preparing and lodging audited financial reports and directors’ reports with ASIC. This means that companies would revert to the standard requirements under the Act, which could involve additional administrative burdens and costs. The explanatory statement does not provide information on potential penalties or consequences beyond the loss of relief.