ASIC CLASS ORDER [CO 11/554]
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 11/554] Variation of Class Order [CO 10/630] under paragraph 1020F(1)(c) of the Corporations Act 2001 (Act).
Paragraph 1020F(1)(c) of the Act provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.
1. Background
The Corporations Regulations 2001 (Regulations) require regulated superannuation funds (other than self-managed funds) to disclose long term performance returns to assist members to engage with the long term performance of their superannuation.
On 19 February 2010, following discussions with the superannuation industry, the Minister for Financial Services, Superannuation and Corporate Law announced proposed refinements to the long term superannuation disclosure reporting requirements to:
(a) exclude exit statements;
(b) allow the industry to use inserts to provide five-year performance information for one more year up until 30 June 2011;
(c) exempt "traditional" funds (of an insurance nature); and
(d) allow approved deposit funds and pooled superannuation trusts to provide annual reports online.
Class Order [CO 10/630] provides relief from the operation of the current long term superannuation performance reporting requirements that are proposed to be refined, by implementing the proposed refinements pending the commencement of the proposed amending regulations. This assists industry by providing greater certainty regarding their compliance obligations.
Class Order [C0 10/630] also extended transitional disclosure requirements under reg 7.9.20AA(2) to the period 1 July 2010 – 30 June 2011.
Class Order [CO 10/630] has effect until the earlier of the commencement of any amendments to the Regulations which have the same or similar effect to the modifications or variations contained in the class order and 12 months after the commencement of the class order.
2. Purpose of the Class Order
The purpose of Class Order [CO 11/554] is to extend the maximum period of operation of Class Order [CO 10/630] for a further 12 months so that the proposed refinements continue to apply, to allow additional time for the proposed amending regulations to be made. Class Order [CO 11/554] does not extend the transitional disclosure requirements under reg 7.9.20AA(2) for a period beyond 30 June 2011.
3. Operation of the Class Order
Class Order [CO11/554] varies Class Order [CO 10/630] by replacing the reference in subparagraph 5(b) to 12 months with a reference to 24 months.
4. Consultation
ASIC consulted with the Department of the Treasury, but did not engage in broader industry consultation with respect to Class Order [CO 11/554], as the Class Order is a transitional measure of a machinery nature.
Overview
The Australian Securities and Investments Commission (ASIC) enacted ASIC Class Order [CO 11/554] under the Corporations Act 2001 to address the need for a transitional measure while the legislative framework governing long term superannuation performance reporting was being refined. This legislative instrument was introduced to provide certainty to the superannuation industry during the transition period when the existing disclosure requirements were being adjusted. Class Order [CO 10/630], which implemented these refinements, was extended by Class Order [CO 11/554] to allow an additional 12 months for the proposed amending regulations to be finalised. This extension ensured that the superannuation industry could comply with the updated requirements without immediate pressure, facilitating a smoother transition and compliance process. The objective of these Class Orders is to maintain regulatory clarity and industry stability during the period of legislative change.
Scope and Application
ASIC Class Order [CO 11/554], made under the Corporations Act 2001, pertains to regulated superannuation funds (excluding self-managed funds) and their disclosure of long term performance returns to superannuation members. The class order applies to these funds and modifies the current reporting requirements in anticipation of forthcoming regulations. The purpose of this class order is to extend the period of operation of an earlier class order, [CO 10/630], by an additional 12 months to provide further certainty for the industry during the transition to the proposed amending regulations. Notably, the extension does not apply to the transitional disclosure requirements, which are limited to the period of 1 July 2010 to 30 June 2011. The class order operates by varying the earlier class order to extend its effective period from 12 to 24 months, thereby allowing regulated superannuation funds additional time to comply with the evolving regulatory landscape. This measure is intended to facilitate smoother compliance and implementation of the proposed refinements to long term superannuation disclosure reporting.
Key Provisions
The ASIC Class Order [CO 11/554] is a variation of the previously issued Class Order [CO 10/630] under section 1020F(1)(c) of the Corporations Act 2001 (section 1020F(1)(c)). This class order modifies the application of Part 7.9 of the Act by omitting, modifying, or varying specified provisions related to the reporting requirements for regulated superannuation funds. The primary aim of Class Order [CO 11/554] is to extend the operational period of Class Order [CO 10/630] by an additional 12 months, thereby continuing the application of the proposed refinements in superannuation disclosure reporting until such time as the amending regulations are enacted.
The key operative sections of Class Order [CO 11/554] include the modification of subparagraph 5(b) of Class Order [CO 10/630], which changes the operational period from 12 months to 24 months (section 3). This extension is intended to provide greater certainty to the superannuation industry regarding their compliance obligations during the transitional period. Additionally, Class Order [CO 11/554] does not extend the transitional disclosure requirements beyond 30 June 2011 (section 2).
Class Order [CO 11/554] imposes specific obligations on regulated superannuation funds, particularly those that are not self-managed. These funds are required to continue to provide long-term performance returns to assist members in understanding the long-term performance of their superannuation. The class order also allows for the exclusion of exit statements and the use of inserts to provide five-year performance information until 30 June 2011 (section 1). Furthermore, it exempts traditional funds of an insurance nature from these reporting requirements (section 1(a)-(d)).
There are no specific offences, penalties, or consequences outlined within Class Order [CO 11/554] itself. However, any failure to comply with the Corporations Act 2001 or the associated regulations could result in civil or criminal penalties as stipulated under the primary legislation. The penalties for breaches of the Act can include substantial fines and, in some cases, imprisonment, depending on the severity and intent behind the breach.