ASIC CLASS ORDER [CO 11/943]
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 11/943] 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.
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 30 September 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 7 December 2011, 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 7 December 2011.
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 7 December 2011.
4. Consultation
ASIC consulted with the Department of the Treasury before making this class order. The Department of the Treasury consented to the making of this class order.
Overview
The ASIC Class Order [CO 11/943], enacted in 2011, was introduced to address the transitional regulatory arrangements for trustee companies that provide traditional trustee services. The Class Order was made under the Corporations Act 2001 by the Australian Securities and Investments Commission (ASIC). It extends the transitional period for certain trustee companies that do not hold an Australian financial services licence, allowing them to continue providing traditional trustee services without breaching the Act. This extension was necessitated by the delay in the Department of the Treasury's ability to implement amending regulations that would otherwise extend the transitional period until 31 December 2012. The Class Order aims to ensure that these trustee companies can operate without legal issues during the interim period between 1 May 2011 and 7 December 2011.
Scope and Application
ASIC Class Order [CO 11/943] applies to trustee companies that provide traditional trustee services and are listed in Schedule 8AA to the Corporations Regulations 2001. The order extends the transitional period during which certain companies can continue to operate without holding an Australian financial services licence, providing them with a temporary exemption from specific regulatory requirements. This extension is necessary until the Corporations Regulations can be amended by subordinate legislation to further extend the transitional period until 31 December 2012. The geographic reach of the Act is national, applying across all states and territories of Australia. The class order ensures that these companies can continue their operations without breaching the Act in the interim period between 30 September 2011 and 7 December 2011.
Key Provisions
The ASIC Class Order [CO 11/943] operates under section 601YAA(1) of the Corporations Act 2001, enabling ASIC to declare that Chapter 5D of the Act applies to certain persons or classes of persons with specified omissions, modifications, or variations. The order primarily concerns trustee companies that provide traditional services, such as estate management, will preparation, and operating common funds, which require an Australian financial services licence. The Class Order extends the transitional arrangements for certain trustee companies until the end of 7 December 2011, ensuring that these companies can continue to operate without breaching the Act until the proposed amending regulations are enacted.
Entities governed by this Class Order, specifically the trustee companies listed in Schedule 8AA of the Corporations Regulations 2001, have obligations to comply with the extended transitional period. These companies are granted a deemed licence to provide traditional trustee company services, exemptions from certain disclosure requirements, and are allowed to continue their operations without immediate compliance with Chapter 5D of the Act. The extension is intended to maintain regulatory certainty for these companies during the interim period while the Department of the Treasury works on the amending regulations.
The Class Order imposes no direct obligations on entities beyond those outlined in the transitional arrangements, such as maintaining compliance with the deemed licence and exemptions granted. However, it is essential for these entities to ensure that they do not exceed the scope of the transitional arrangements, as doing so may result in non-compliance with the Act. The primary focus is on ensuring continuity of operations without breaching regulatory requirements until the amending regulations are implemented.
Breaches of the transitional arrangements or the Act could result in various consequences. While the explanatory statement does not detail specific offences or penalties, it is implied that non-compliance could lead to enforcement actions under the Corporations Act. This may include fines, legal proceedings, or other civil or administrative penalties as prescribed by the Act. The exact penalties would depend on the nature and severity of the breach, but it is clear that maintaining compliance with the Class Order is crucial to avoid potential legal repercussions.