ASIC CLASS ORDER [CO 12/794]
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 12/794] under paragraph 926A(2)(c) of the Corporations Act 2001 (the Act). Paragraph 926A(2)(c) of the Act provides that ASIC may declare that provisions to which section 926A applies apply in relation to a person or 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 Clean Energy (Consequential Amendments) Act 2011 deems that carbon units are financial products for the purposes of the Act, with effect from 1 July 2012.
The Carbon Credits (Consequential Amendments) Act 2011 deems that Australian carbon credit units (ACCUs) and eligible international emissions units (EIEUs) are financial products. Regulation 7.1.07I states that ACCUs and EIEUs become financial products on 1 July 2012.
Regulation 7.6.02AGA of the Corporations Regulations 2001 (the regulations) inserts subsections 911A(5B)–(5U) into the Act. Regulations 7.6.02AGA was inserted by item 13 of Schedule 1 of the Corporations Amendment Regulations 2012 (No 1).
Subsection 911A(5C) states that a person must not provide a financial service in relation to a carbon unit, an ACCU or an EIEU unless the person holds an Australian financial services (AFS) licence authorising the financial service. Alternatively, a person may provide a financial service in relation to a carbon unit, an ACCU or an EIEU if that person is registered to provide the financial service (a registered person), and then applies for a licence authorising the financial service no later than 31 October 2012. Subsection 911A(5D) states that a person commits an offence if that person contravenes a requirement of subsection 911A(5C); however, subsection 911A(5E) states that, for the purposes of subsections 911A(5C) and (5D), it is a defence if the person provides the financial service and is exempted from the Act or the regulations.
The effect of subsections 911A(5C)–(5E) is to create a transitional exemption for registered persons to provide financial services in relation to a carbon unit, an ACCU or an EIEU, on condition that they apply for an AFS licence authorising the financial services no later than 31 October 2012, and subject to other requirements in subsections 911A (5F)–(5U). Subsection 911A(5B) states that subsections 911A(5C)–(5U) apply during the period that starts on 1 May 2012, and ends on 31 December 2012, or a later day prescribed by the regulations. Subsection 911A(5F) states that a person may apply to be registered by lodging an application with ASIC.
2. Purpose of the class order
The purpose of this class order is to provide an exemption for representatives of registered persons or representatives of AFS licensees authorised to provide financial services in relation to a carbon unit, an ACCU or an EIEU, during the period from 1 July 2012 to 31 December 2012.
The exemption allows a person to provide a financial service in relation to a carbon unit, an ACCU or an EIEU, if the person provides that service as the representative of a second person who holds an ASFS licence authorising the second person to provide the financial service, or, alternatively if the person provides that service as the representative of a registered person, who is registered to provide that financial service.
This exemption ensures that representatives of persons that have registered under subsection 911A(5I) of the Corporations Act can act for those persons without need for an AFS licence. The exemption is consistent with the approach for representatives that are exempt from holding an Australian Financial Service licence under subsection 911A(2), and reflects the intention in subsection 911A(5S) representatives can act for persons that register to provide financial services in relation to a carbon unit, an ACCU or an EIEU.
Under paragraph 911B(1)(e) of the Act, a person (the provider) may provide a financial service on behalf of another person who carries on a financial services business (the principal) if amongst other things, had the principal provided the service rather than the provider, the principal would not need an AFS licence because the provision of the service would be exempt under subsection 911A(2). While an exemption is provided under subsection 911A(5C) for a registered person to provide a financial service in relation to a carbon unit, an ACCU or an EIEU without holding an AFS licence, this is not an exemption provided under subsection 911A(2), and therefore does not allow a representative to provide a financial services as permitted under paragraph 911B(1)(e).
3. Operation of the class order
This class order modifies Part 7.6 of the Act (other than Divisions 4 and 8) in relation to a carbon unit, an ACCU or an EIEU.
The class order inserts a new subsection 911A(5DA), stating that a person is exempt from subsections 911A(5C) and (5D) if that person provides the financial service as representative of a person mentioned in paragraph (5C)(a) or (b).
Additionally, the class order varies section 911B in relation to a carbon unit, an ACCU or an EIEU by substituting a new paragraph 911B(1)(e). This variation means that a person may provide a financial service without an AFS licence in relation to a carbon unit, an ACCU or an EIEU if they provide the service as representative of a registered person.
The class order applies from the later of 1 July 2012 and the date the instrument making the class order is registered under the Legislative Instruments Act 2003, until the end of the period during which subsections 911A(5C)–(5U) apply, being 31 December 2012, or a later day prescribed by the regulations, if such a day is subsequently prescribed.
4. Statement of Compatibility with Human Rights
This statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
This class order is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 because it does not engage any of the applicable rights or freedoms.
5. Consultation
Treasury consulted publicly on an exposure draft version of the Corporations Amendment Regulations 2012 (No 1) before they were made. As this class order creates an exemption that was intended to be made by the Corporations Amendment Regulations 2012 (No 1), reflecting the exemption applicable for other representatives in Chapter 7.6 of the Corporations Act by addressing an inadvertent omission of an exemption for representatives of registrants, further consultation was not necessary.