Overview

The ASIC Class Order [CO 11/557], enacted under the Corporations Act 2001, was established by the Australian Securities and Investments Commission (ASIC) to address the transitional arrangements for certain trustee companies that provide traditional trustee company services, such as estate management and will preparation, which were transferred from state and territory regulation to the Commonwealth. This class order responds to the gap left by the delay in the Department of the Treasury's ability to implement the necessary regulatory changes by extending the transitional arrangements until 30 September 2011. The policy objective of the class order is to ensure that these trustee companies can continue to operate without breaching the Act until the new regulations are in place. This measure was taken after consultation with the Department of the Treasury, which agreed to the extension of the transitional period.

Scope and Application

ASIC Class Order [CO 11/557] pertains to entities providing traditional trustee company services, specifically those listed in Schedule 8AA of the Corporations Regulations 2001, which include performing estate management functions, preparing wills, applying for probate of a will and establishing and operating common funds. The Act applies to these companies to ensure they hold an Australian financial services licence and comply with the requirements under Chapter 5D of the Corporations Act 2001. The geographic and jurisdictional reach of this Act is national, as it pertains to trustee companies operating across Australia. The Act extends transitional arrangements for certain trustee companies that do not hold an Australian financial services licence, allowing them to continue operating without immediate compliance until specific regulations are implemented. These transitional arrangements were initially set to expire on 30 April 2011, but were extended to 30 June 2011 by a previous class order [CO 11/407], and further extended to 30 September 2011 by this class order, pending the making of amending regulations. The exemptions from certain disclosure requirements also apply until the new regulations take effect.

Key Provisions

The main operative sections of ASIC Class Order [CO 11/557], as referenced in the explanatory statement, are intended to extend the transitional arrangements for trustee companies that provide traditional trustee company services. Section 2 of the explanatory statement notes that the purpose of this class order is to amend a previous class order ([CO 11/407]) to further extend the transitional arrangements pending the making of regulations to amend the Corporations Regulations. The class order operates by amending notional section 1495A of the Act, as outlined in section 3 of the explanatory statement, to extend the transitional period to the end of 30 September 2011. The obligations and requirements imposed by the Act on the parties or entities it governs are primarily concerned with the regulatory responsibilities of trustee companies providing traditional trustee company services. These obligations include holding an Australian financial services licence and adhering to certain disclosure requirements as outlined in section 601TAB of the Act and Part 7.7 of the Act. Under the transitional arrangements, these companies were initially granted exemptions from these requirements until the end of 30 April 2011, with the extensions noted in the class order and previous orders. The Act requires these companies to continue to operate under the transitional arrangements until the proposed amending regulations, which will extend the transitional period until 31 December 2012, are made. There are no specific offences, penalties, or civil/criminal consequences mentioned in the explanatory statement for breaches of the transitional arrangements provided by the class order. However, the Act does provide for penalties for non-compliance with its provisions. For example, under section 1317E of the Act, a person who contravenes a civil penalty provision in the Act may be subject to penalties, including fines of up to $210,000 for individuals and $1,050,000 for bodies corporate. Additionally, under section 1317G of the Act, a court may order a person to compensate any person who has suffered loss or damage due to the contravention. The maximum penalties for these offences are not explicitly stated in the explanatory statement, but they are stipulated elsewhere in the Act.