Overview

The Australian Securities and Investments Commission (ASIC) issued ASIC Class Order [CO 09/702] in 2009 under the Corporations Act 2001 to address an issue where the notional statutory modifications made by previous Class Orders [CO 05/566] and [CO 09/552] could potentially interfere with each other. This legislation aims to ensure that the relief provided by these Class Orders does not create conflicts in the modification of a registered managed investment scheme's constitution. By omitting a notional statutory modification previously addressed by another Class Order, ASIC [CO 09/702] seeks to streamline the process for responsible entities to amend scheme constitutions without requiring a special resolution from the members, thus facilitating compliance with financial reporting standards. This Class Order was enacted by the Australian Securities and Investments Commission, reflecting the policy objective of providing efficient and consistent relief to managed investment schemes while maintaining regulatory oversight.

Scope and Application

The ASIC Class Order [CO 09/702] applies to responsible entities of registered managed investment schemes within the scope of the Corporations Act 2001. Specifically, it pertains to the modifications and variations to the constitutions of these schemes, particularly in facilitating compliance with Australian equivalents to the International Financial Reporting Standards, and in certain circumstances where a special resolution from the members is not required. The class order is designed to ensure that the statutory modifications provided by previous class orders do not conflict with each other, thereby maintaining coherence in the regulatory framework governing these entities. This class order operates under the overarching jurisdiction of the Commonwealth, as it is made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The modifications and exclusions provided by this class order are limited to the specific notional statutory changes outlined in Class Orders [CO 05/566] and [CO 09/552], and do not extend beyond these provisions unless specified by subordinate instruments.

Key Provisions

The ASIC Class Order [CO 09/702], made under the Corporations Act 2001, is designed to harmonise the provisions of two previous class orders, [CO 05/566] and [CO 09/552]. Specifically, section 1 of the order modifies Class Order [CO 05/566] by removing a notional statutory modification that was previously introduced. This amendment ensures that the changes made by Class Order [CO 09/552] are not redundant or conflicting. Section 601GC of the Act allows for the constitution of a registered managed investment scheme to be modified by a special resolution of the scheme's members. However, the previous class orders provided exceptions to this requirement under certain conditions. The obligations imposed by ASIC Class Order [CO 09/702] primarily concern the responsible entities of registered managed investment schemes. These entities must ensure that their schemes comply with the Australian equivalents to the International Financial Reporting Standards. By omitting the notional statutory modification from Class Order [CO 05/566], the order aims to streamline the compliance process and avoid any potential legal conflicts. Responsible entities must now strictly adhere to the provisions of Class Order [CO 09/552] when making changes to the scheme's constitution. Failure to comply with the provisions of the ASIC Class Order [CO 09/702] could result in legal repercussions. Although the order does not explicitly state penalties, breaches of the Corporations Act 2001 can lead to significant civil and criminal consequences. For instance, under section 1317E of the Act, a person who contravenes the Act may be subject to a civil penalty of up to $210,000 for a corporation or $42,000 for an individual. Additionally, if the breach is deemed to be serious, criminal charges may be brought against the responsible entity or its officers, potentially leading to fines and imprisonment. The precise penalties would depend on the nature and severity of the breach, as well as the specific sections of the Act that are contravened.