ASIC Class Order [CO 98/101]

Overview

The ASIC Class Order [CO 98/101], enacted in 1998 under the Corporations Act 2001, addresses the issue of public companies, registered schemes, and disclosing entities dealing with members who are uncontactable. The Australian Securities and Investments Commission (ASIC), as the enacting body, introduced this order to provide relief to entities that are unable to contact certain members after exercising reasonable diligence. The primary policy objective is to ensure that these entities are not indefinitely burdened with the obligation to send documents to uncontactable members, while still requiring them to inform these members about the suspension of such dispatches and the conditions under which they can be resumed. This approach balances the need for entities to manage their administrative burdens with the rights of members to receive important corporate communications.

Scope and Application

ASIC Class Order [CO 98/101] applies to public companies, registered schemes, and disclosing entities that are subject to the Corporations Act 2001. It specifically targets entities that have members or stakeholders who are uncontactable, meaning their current address cannot be established despite reasonable efforts by the entity. The order provides relief to these entities from the obligation to send specified documents to such uncontactable members, provided that the entities comply with the requirement to send an annual notice to the registered address of each uncontactable member, informing them that the dispatch of reports has been suspended but will resume upon receiving further instructions. This Class Order operates under the legislative authority granted by subsection 341(1) of the Corporations Act 2001 and revokes a previous Class Order [CO 97/1009] from July 1998, with different effective dates depending on whether the entities fall under the new relief provided by Class Order [CO 98/0095] or not. The order's geographic reach is limited to Australia, where the entities are registered and operate under the jurisdiction of the Australian Securities and Investments Commission.

Key Provisions

The ASIC Class Order [CO 98/101], which takes effect under subsection 341(1) of the Corporations Act 2001, outlines specific provisions for public companies, registered schemes, and disclosing entities regarding the handling of uncontactable members. An uncontactable member is defined as an individual whose current address the entity has been unable to ascertain despite exercising reasonable diligence, and who does not reside at the address shown in the entity's register of members. Under this order, entities are relieved from the obligation to send specified documents to such uncontactable members, provided they adhere to certain conditions. Specifically, entities must send a notice to the registered address of each uncontactable member at least once a year for a period of at least six years. This notice must inform the member that the dispatch of concise reports, financial reports, directors' reports, and auditors' reports has been suspended and will resume upon receipt of instructions from the member. Entities governed by this Class Order must comply with several obligations. Primarily, they are required to send annual notices to the registered address of each uncontactable member. These notices must clearly state that the member's correspondence has been suspended and will be resumed upon receiving instructions from the member. This process ensures that uncontactable members are kept informed about their membership status and the suspension of certain communications, while also providing a straightforward mechanism for them to re-establish communication with the entity. Failure to comply with these requirements may result in the entity being subject to regulatory scrutiny or potential penalties under the Corporations Act 2001. The ASIC Class Order also includes provisions for the revocation of a previous Class Order, specifically [CO 97/1009], which was in effect until certain financial years. For entities that apply the relief provided by Class Order [CO 98/0095], the revocation of [CO 97/1009] applies from financial years ending after 7 July 1998. For all other entities, the revocation applies from financial years ending after 30 June 1998. This restructuring aims to streamline compliance requirements and ensure that entities are governed by the most current and relevant regulations. Any breaches of the provisions in this Class Order may lead to civil or criminal consequences, depending on the severity and intent behind the breach. Under the Corporations Act 2001, penalties can include fines and, in more serious cases, imprisonment. The exact penalties may vary based on the specific breach and the jurisdiction in which it occurs.