ASIC Class Order [CO 13/523]

ASIC CLASS ORDER [CO 13/523]

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 13/523] under sections 655A and 741 of the Corporations Act 2001 (the Act).

Paragraphs 655A(1)(b) and 741(1)(b) respectively provide that ASIC may declare that Chapters 6 and 6D of the Act apply to a person as if specified provisions were omitted, modified or varied as specified in the declaration.

1. Background

Chapter 6 of the Act relates to takeover bids and Chapter 6D relates to fundraising.

The Act allows a bidder’s and target’s statement in relation to a takeover bid, and a fundraising disclosure document, to include statements attributed to, or based on a statement made by another person (e.g. an expert or advisor), but only if:

• the person has consented to the statement being included in the document, or accompanying it, in the form and context in which it is included;
   
• the document states that the person has given this consent; and
   
• the person has not withdrawn this consent before the document is lodged with ASIC.

ASIC has previously granted relief, exempting bidders and targets or issuers, as the case may be, from the requirement to obtain consent when citing and quoting certain sources.

ASIC Class Order [CO 00/193] enabled an issuer to make a statement in a disclosure document without obtaining consent, which cites or is based on statements made by an official person, contained in a public official document or already published in a book, journal or comparable publication.

ASIC Class Order [CO 03/635] gave similar relief to a bidder in relation to a bidder’s statement, and a target in relation to a target’s statement.

The relief given by Class Orders [CO 00/193] and [CO 03/635] did not extend to circumstances where the original statement was made in connection with the issuer, or bidder/target (as the case may be), an offer, takeover bid, or any business, property or person that was the subject of the disclosure document, or the bidder’s or target’s statement.

ASIC has recently reviewed the policy underlying Class Orders [CO 00/193] and [CO 03/635] as part of a wider review of class orders relating to the takeover provisions in Chapters 6-6C. ASIC considers that the relief provided in these class orders is still both necessary and appropriate. ASIC has decided to reissue the relief underlying both of those class orders in Class Order [CO 13/523].

The relief underlying Class Order [CO 00/193] while unrelated to the takeover provisions, has been merged with the relief underlying Class Order [CO 03/635] because it operates in an analogous manner, with the exception that it operates with respect to disclosure documents regulated by Chapter 6D of the Act. (Equivalent relief in ASIC Class Order [CO 02/141] in relation to Product Disclosure Statements under Part 7.9 of the Act will also be merged into this class order at a later date.)

The Legislative Instruments Act 2003 (the LIA) provides for the periodic expiry of legislative instruments (‘sunsetting’) to ensure that they are kept up to date and only remain in force for so long as they are needed. Class Orders [CO 00/193] and [CO 03/635] were scheduled to eventually expire under the sunsetting provisions of the LIA. They have been revoked by Class Order [CO 13/518]. ASIC’s reissuing of the relief underlying them has given it the opportunity to deal with their eventual expiry.

2.             Purpose of the class order

An issuer, a bidder or a target is required under the Act to obtain the consent of a person who makes a statement before using it in the disclosure document, or the bidder’s or target’s statement. This enables the person to:

(a) control or limit their liability; and

(b) control the overall effect of the statement.

The purpose of the class order is to allow an issuer, bidder or target to include the following statements made by other persons in their disclosure document or bidder’s or target’s statement without having to obtain the person’s consent:

(a) a statement made by an official person;

(b) a statement that is, or is an extract from, a public official document; or

(c) statement, or an extract from, a statement that has already been published in a book, journal, or comparable publication.

Without the class order relief, issuers, bidders or targets would be required to obtain consent to refer to the statements of government officials and government publications—for example, publications of the Australian Bureau of Statistics or the Commonwealth Bureau of Meteorology. To obtain the consent of Government to use such a general statement may be onerous for the issuer, bidder or target. There is a low risk of liability for the Government in these circumstances.

The Crown in right of the Commonwealth may be exposed to civil liability for damages for a misleading statement included in a disclosure document, a bidder’s or target’s statement: subsections 5A(3) and (5) of the Act. However, liability is unlikely if the statement was not made for the purpose of being included in the disclosure document, bidder’s or target’s statement.

Similarly, with regard to books, journals and comparable publications, it is generally impractical for the issuer, bidder or target to obtain the consent of the author of the statement, if the statement is not specific to the offer, issuer, bid, bidder, target or their businesses. There is also a low risk of liability for the author in this case.

3.             Operation of the class order

The class order gives effect to the relief in the case of disclosure documents so that consent does need to be obtained in relation to a statement that:

(a) fairly represents what purports to be a statement made by an official person; or

(b) is a correct and fair copy of, or extract from, what purports to be a public official document; or

(c) is a correct and fair copy of, or extract from, a statement which has already been published in a book, journal or comparable publication.

For the relief to apply, the statement must not have been made in connection with the particular fundraising or in connection with the issuer’s business or property.

In the case of takeovers, in relation to a bidder’s and target’s statement, the class order gives relief on a similar basis to the relief for disclosure documents. For the relief to apply, the statement must not have been made in connection with the takeover bid or the business or property of the bidder or target.

‘Official person’

The term ‘official person’ contemplates a government official or staff member of a government department, authority or agency. A statement made by an official person refers to a statement made by such a person in their capacity as an official person and that reflects the view of the relevant government body.  Summaries of reports lodged by third parties are not covered as they do not state the views of the relevant government body.

‘Public official document’

Guidance on the meaning of the phrase ‘public official document’ can be found in cases that have considered the term ‘public document’ in an evidentiary context. A public document is one made by a public official as the result of a public inquiry and is available to the public: Lord Blackburn in Sturla v Freccia [1874–80] All ER Rep 657.

In the class order, the term ‘public official document’ contemplates a document that is:

(a) made by an ‘official person’ as the result of carrying out their duties or exercising their powers in their capacity as an ‘official person’;

(b) made public; and

(c) reflects the view of the relevant government body.

Documents do not become public official documents merely because they have been lodged with a government department or statutory authority and are maintained for public access on a registry by the department or authority.

‘Book, journal, or comparable publication’

In the class order, the phrase ‘book, journal or comparable publication’ includes references to statements in a form, and of a standard, similar to that normally contained in a book or journal, but which are made available through the internet or other electronic means. This excludes, for example, references to statements made in internet chat rooms, news groups and homepages with unaccountable content (i.e. with anonymous participants or without editorial control).

4. Consultation

On 14 November 2012, ASIC released Consultation Paper 193: Takeovers, compulsory acquisitions and substantial holdings: Update to ASIC guidance (CP 193) seeking feedback on proposals to update and consolidate a number of regulatory guides relating to Chapters 6–6C of the Act. CP 193 also sought feedback on proposals to reissue the class orders (including Class Orders [CO 00/193] and [CO 03/635]) associated with ASIC’s updated guidance and to make new class orders addressing a number of discrete policy issues. The consultation period closed on 22 February 2013.

While CP 193 invited general feedback on the renewal of ASIC’s class orders, the process did not include any specific consultation on Class Orders [CO 00/193] and [CO 03/635] because the relief raised no new policy considerations. ASIC received 7 submissions in response to CP 193. Details of the submissions received are contained in REP 350 Response to submissions on CP 193 Takeovers, compulsory acquisitions and substantial holdings which is available on ASIC’s website at www.asic.gov.au.

Notwithstanding ASIC’s general consultation on the re-issue and update of its takeovers class orders, ASIC considers that Class Order [CO 13/523] is of a minor or machinery nature and does not substantially alter existing arrangements.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

ASIC Class Order [CO 13/523]

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.

Overview of the class order

The class order relates to Chapter 6 of the Corporations Act 2001 (the Act) which deals with takeover bids and Chapter 6D which deals with fundraising. The Act allows bidder’s and target’s statements and fundraising disclosure documents to include statements attributed to, or based on a statement made by another person (e.g. an expert or advisor), but only if:

• the person has consented to the statement being included in the document, or accompanying it, in the form and context in which it is included;
• the document states that the person has given this consent; and
• the person has not withdrawn this consent before the document is lodged with ASIC.

The purpose of the requirement for an issuer, a bidder or a target to obtain the consent of a person who makes a statement before using it in the disclosure document, or the bidder’s or target’s statement, is to enable the person to:

(a) control or limit their liability; and

(b) control the overall effect of the statement.

The class order allows an issuer, bidder or target to include the following statements made by other persons in their disclosure document or bidder’s or target’s statement without having to obtain the person’s consent:

(a) a statement made by an official person;

(b) a statement that is, or is an extract from, a public official document; or

(c) a statement, or an extract from, a statement that has already been published in a book, journal, or comparable publication.

Without the class order relief, issuers, bidders or targets would be required to obtain consent to refer to the statements of government officials and government publications—for example, publications of the Australian Bureau of Statistics or the Commonwealth Bureau of Meteorology. To obtain the consent of Government to use such a general statement may be onerous for the issuer, bidder or target. There is a low risk of liability for the Government in these circumstances. Similarly, with regard to books, journals and comparable publications, it is generally impractical for the issuer, bidder or target to obtain the consent of the author of the statement, if the statement is not specific to the offer, issuer, bid, bidder, target or their businesses. There is also a low risk of liability for the author in this case.

Human rights implications

This class order does not engage any of the applicable rights or freedoms.

Conclusion

This class order is compatible with human rights as it does not raise any human rights issues.