ASIC Class Order [CO 13/632]

Administered by Department of the Treasury

Legislation au F2013L00853 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 13/632]

 

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 13/632] under paragraph 1020F(1)(c) of the Corporations Act 2001 (the Act).

Paragraph 1020F(1)(c) 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 Amendment Regulations 2010 (No 5) established a new shorter Product Disclosure Statement (PDS) regime under Subdivision 4.2B (for superannuation products) and Subdivision 4.2C (for simple managed investment schemes) of Division 4 of Part 7.9 of the Corporations Regulations 2001. The shorter PDS regime fully commenced on 22 June 2012.

ASIC Class Order [CO 12/749] Relief from the Shorter PDS regime provides interim relief, until 22 June 2014, excluding hedge funds from the shorter PDS regime. However, hedge funds who have prepared and given a shorter PDS prior to 22 June 2012 may continue to use their shorter PDS until 22 June 2013, after which they must prepare a full PDS.

2. Purpose of the class order

In September 2012, ASIC released Regulatory Guide 240 Hedge funds: Improving disclosure (RG 240). RG 240 contains new disclosure benchmarks and principles for issuers of hedge funds. The benchmarks and disclosure principles in this guide set out the specific features and risks of hedge funds that ASIC expects to be addressed in a PDS for these products.

ASIC is currently reviewing the definition of "hedge fund" which we consider should disclose against the benchmarks and principles in RG 240. We expect to complete this review so that RG 240 will commence from 1 February 2014.

Currently, Class Order [CO 12/749] provides responsible entities of hedge funds which had prepared and given a shorter PDS prior to the commencement of the class order with a transitional period to allow them to continue using a shorter PDS until 22 June 2013. 

Class Order [CO 13/632] extends this transitional period until 1 February 2014 to align with the proposed commencement of RG 240. After that date, hedge funds will need to prepare and give a full PDS that complies with RG 240.

3. Operation of the class order

The class order extends the transitional period provided to responsible entities of hedge funds that had prepared and given a shorter PDS prior to 22 June 2012 from 22 June 2013 to 1 February 2014.

4. Consultation

ASIC has consulted with the Financial Services Council.

 

 


Statement of Compatibility with Human Rights

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

ASIC Class Order [CO 13/632]

This legislative instrument 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 legislative instrument

The purpose of this legislative instrument is to amend ASIC Class Order [CO 12/749] (the principal class order). The principal class order provides responsible entities of hedge funds which had prepared and given a shorter PDS prior to the commencement of the class order with a transitional period to allow them to continue using a shorter PDS until 22 June 2013.

ASIC is currently reviewing the definition of "hedge fund" which we consider should disclose against the benchmarks and principles in RG 240. We expect to complete this review so that RG 240 will commence from 1 February 2014.

This legislative instrument extends the transitional period until 1 February 2014 to align with the proposed commencement of RG 240.

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms.

Conclusion

This legislative instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Australian Securities and Investments Commission (ASIC) introduced ASIC Class Order [CO 13/632] under the Corporations Act 2001 to address a transitional issue for hedge funds within the newly established shorter Product Disclosure Statement (PDS) regime. This class order, enacted to provide a smooth transition for responsible entities of hedge funds that had prepared a shorter PDS before the commencement of the new regime, extends the transitional period from 22 June 2013 to 1 February 2014. This extension aligns with the anticipated commencement of Regulatory Guide 240, which outlines new disclosure benchmarks and principles for hedge funds. The class order aims to ensure that hedge funds have sufficient time to comply with the updated disclosure requirements before the new regime fully takes effect.

Scope and Application

ASIC Class Order [CO 13/632] applies to responsible entities of hedge funds that had prepared and given a shorter Product Disclosure Statement (PDS) prior to 22 June 2012. This class order operates under the Corporations Act 2001, specifically under ASIC's authority to modify or omit specified provisions as outlined in the Act. The order extends the transitional period for these entities, allowing them to continue using a shorter PDS until 1 February 2014, in alignment with the proposed commencement of Regulatory Guide 240, which provides new disclosure benchmarks and principles for hedge funds. This extension is intended to provide these entities with adequate time to comply with the new disclosure requirements that will come into effect with the commencement of RG 240 on 1 February 2014. After this date, hedge funds must prepare and provide a full PDS that meets the standards set out in RG 240. The class order does not extend to hedge funds that have not previously prepared and given a shorter PDS before 22 June 2012.

Key Provisions

ASIC Class Order [CO 13/632], issued under the Corporations Act 2001, extends the transitional period for responsible entities of hedge funds that prepared a shorter Product Disclosure Statement (PDS) before 22 June 2012. Previously, these entities could continue using a shorter PDS until 22 June 2013, but this class order extends that period to 1 February 2014. The extended period aligns with the anticipated commencement of the new disclosure benchmarks and principles for hedge funds outlined in Regulatory Guide 240 (RG 240). This class order imposes specific obligations on responsible entities of hedge funds that had already prepared a shorter PDS before 22 June 2012. These entities must adhere to the extended transitional period, continuing to use their existing shorter PDS until 1 February 2014. After this date, they are required to prepare and provide a full PDS that complies with the new benchmarks and principles set out in RG 240. The class order ensures that these entities have sufficient time to update their disclosure documents in line with the new regulatory requirements. The Act provides for various consequences in the event of non-compliance with the provisions of the class order. Responsible entities failing to comply with the extended transitional period and not transitioning to a full PDS by 1 February 2014 could face significant regulatory scrutiny and potential enforcement actions. Although the specific penalties are not detailed within this class order, general penalties under the Corporations Act for non-compliance with ASIC's regulations can include substantial fines, both for individuals and corporate entities, as well as potential criminal sanctions. The maximum penalties for corporate entities can reach up to $1.65 million, and for individuals, the fines can extend to $330,000, or imprisonment for up to five years, or both, depending on the severity and intent of the breach.

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Area of Law
Corporate Law & Governance
Instrument
Order
Concepts
Transitional Provisions
Regulatory Standards
Reporting & Disclosure Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.