ASIC CLASS ORDER [CO 11/1262]
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 11/1262] under subsection 601YAA(1) of the Corporations Act 2001 (the Act).
Section 601YAA provides that ASIC may declare that Chapter 5D of the Act (including the transitional provisions set out in Division 2 of Part 10.12 of the Act) applies to a person or class of persons as if specified provisions were omitted, modified or varied as specified in the declaration.
1. Background
Chapter 5D of the Act implements the transfer of certain regulatory responsibilities from the States and Territories to the Commonwealth in relation to trustee companies that provide “traditional trustee company services”, including performing estate management functions, preparing wills, applying for probate of a will and establishing and operating common funds.
The Chapter created a national licensing system for trustee companies, since they are required to hold an Australian financial services licence covering the provision of these traditional trustee company services. The trustee companies to which Chapter 5D applies are those companies listed in Schedule 8AA to the Corporations Regulations 2001 (the Corporations Regulations).
Some of these trustee companies do not hold an Australian financial services licence. These trustee companies have the benefit of certain transitional arrangements set out in regulation 5 of the Corporations Amendment Regulations 2010 (No. 3).
Under the transitional arrangements, these trustee companies are deemed to have a licence authorising them to provide traditional trustee company services until the end of 30 April 2011. Further, until the end of that day, these trustee companies are granted exemptions from the requirement in section 601TAB of the Act to disclose changes to fees in relation to the provision of traditional trustee company services, and from the requirements in Part 7.7 of the Act, which deal with financial services disclosures.
These transitional arrangements were extended to the end of 30 June 2011 by ASIC Class Order [CO 11/407]. This Class Order was varied by ASIC Class Order [CO 11/557] to extend the transitional period to the end of 30 September 2011 and by [CO 11/943 to extend the period to the end of 7 December 2011.
2. Purpose of the class order
The purpose of this class order is to amend [CO 11/407] to further extend the transitional arrangements pending the making of regulations to amend the Corporations Regulations. The proposed amending regulations will extend the transitional period until 31 December 2012.
The Department of the Treasury have informed ASIC that they may be unable to implement the amending regulations before the expiration of the current transitional period as extended by [CO 11/407] (the end of 7 December 2011) and have requested ASIC to implement measures to ensure the transitional arrangements continue to apply until such time as amending regulations can be made.
This class order extends the transitional period to the end of 29 April 2012, at which point the amending regulations will take effect and this class order will cease to have effect. It is required to ensure that trustee companies that are operating under the current transitional arrangements may continue to do so without breaching the Act in this interim period between 1 May 2011 and 29 April 2012.
3. Operation of the class order
This class order amends notional section 1495A of the Act by extending the operation of the transitional arrangements to the end of 29 April 2011.
4. Consultation
ASIC consulted with the Department of the Treasury before making this class order.
Overview
ASIC Class Order [CO 11/1262], enacted in 2011, extends the transitional period for certain trustee companies that provide traditional trustee company services. These companies, which do not hold an Australian financial services licence, were initially granted a transitional period until 30 April 2011, subsequently extended to 7 December 2011 through several earlier class orders. The purpose of this class order is to further extend the transitional period until 29 April 2012 to allow for the Department of the Treasury to implement necessary amending regulations by that date. This measure ensures that these trustee companies can continue to operate without breaching the Corporations Act during the interim period between 1 May 2011 and 29 April 2012. ASIC consulted with the Department of the Treasury before making this class order.
Scope and Application
ASIC Class Order [CO 11/1262] applies to trustee companies listed in Schedule 8AA of the Corporations Regulations, particularly those providing traditional trustee company services and not yet holding an Australian financial services licence. This class order extends the transitional period during which certain companies can operate without a licence and without needing to comply with specific disclosure requirements. The geographic reach of this class order is national, as it pertains to the application of Chapter 5D of the Corporations Act 2001, which is a Commonwealth statute. The order ensures that affected trustee companies can continue their operations without breaching the Act until the proposed amending regulations, which are expected to extend the transitional arrangements until 31 December 2012, are enacted. This extension to 29 April 2012 is designed to provide a buffer period in anticipation of the regulatory amendments, ensuring that there is no disruption to the services provided by these companies during the interim period.
Key Provisions
The ASIC Class Order [CO 11/1262] extends the transitional arrangements for trustee companies under Chapter 5D of the Corporations Act 2001 (the Act). These transitional arrangements, initially set out in regulation 5 of the Corporations Amendment Regulations 2010 (No. 3), allowed certain trustee companies that did not hold an Australian financial services licence to continue providing traditional trustee company services until the end of 30 April 2011. These services include estate management, preparing wills, applying for probate, and operating common funds. The Class Order first extended this period to 7 December 2011 through [CO 11/943], and now further extends it to 29 April 2012.
The primary requirement of this Class Order is to ensure that the transitional arrangements remain in effect until the proposed amending regulations can be implemented by the Department of the Treasury. This extension allows trustee companies operating under the transitional arrangements to continue their services without breaching the Act during the interim period between 1 May 2011 and 29 April 2012. By amending notional section 1495A of the Act, the Class Order modifies the effective date of the transitional arrangements to 29 April 2012.
Trustee companies affected by this Class Order must adhere to the extended transitional arrangements to avoid non-compliance with the Act. This includes continuing to provide their traditional services without holding an Australian financial services licence and complying with any other related obligations during the extended period. They must also ensure that any changes to fees and financial services disclosures are managed in accordance with the exemptions provided by the transitional arrangements.
Breach of the Act during this transitional period could lead to various civil and criminal consequences. While the Class Order itself does not detail specific penalties, penalties under the Corporations Act for non-compliance could include fines and, in severe cases, imprisonment. The maximum penalties would depend on the specific breach and the relevant sections of the Act. Trustee companies must therefore ensure strict adherence to the transitional arrangements to avoid any potential penalties.
The Class Order was developed after consultation with the Department of the Treasury, reflecting a coordinated effort to manage the transitional arrangements effectively. By extending the transitional period to 29 April 2012, the Class Order provides a temporary solution until the Department can implement the necessary regulations. This ensures continuity for trustee companies and compliance with the Act until the permanent regulatory framework is established.