ASIC CLASS ORDER [CO 10/545]

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 10/545] under section 341 of the Corporations Act 2001 (the Act).

Section 341 provides that ASIC may make an order in writing in respect of a specified class of companies, registered schemes or disclosing entities, relieving any of the following persons from all or specified requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Act:

(a) directors;

(b) the companies, registered schemes or disclosing entities themselves;

(c) auditors of the companies, registered schemes or disclosing entities.

1. Background

Class Order [CO 10/545] amends Class Order [CO 98/1417] (the principal class order).

The principal class order provides relief to certain proprietary companies and their auditors from the requirement to have such companies' financial reports audited.

The principal class order currently requires companies to lodge Form 382 with ASIC for each financial year in which they apply the relief available under the class order.

2. Purpose of the class order

The new terms of the principal class order are intended to reduce the administrative burden on companies relying on the relief associated with the requirement to lodge forms with ASIC every year.

3.            Operation of the class order

Under the new terms of the principal class order:

(a) companies will only need to lodge Form 382 for each first financial year in which they start to apply the relief under the principal class order, rather than for each consecutive financial year in which relief is applied under the class order; and

(b) companies that have applied the relief under the principal class order must lodge Form 396 if and when they cease to apply the relief under the class order.  The requirement only applies to companies which ceased to apply the relief after 1 July 2010, so that companies which ceased applying the relief before the requirement to lodge Form 396 came into effect do not have to lodge the Form.

Companies will only be required to lodge Form 382 with ASIC in a financial year that does not follow a financial year in which they applied the relief. The only companies that would need to lodge Form 382 would be:

(a) recently incorporated companies applying relief for their first financial year;

(b) companies which had not applied the relief in previous financial years but were applying relief for the first time; and

(c) companies that had applied relief in a previous financial year or financial years, but had ceased to apply the relief for a particular period and wished to apply the relief again for the first financial year following that period of non-application.

4. Consultation

ASIC engaged in consultation with external parties representing major users of audited financial information on the public record, who did not oppose the changes effected by [CO 10/545]. The changes are of a minor or machinery nature.