ASIC Class Order [CO 98/105]
Authorised trustee corporations — trust liabilities
This compilation has effect under subsection 341(1) of the Corporations Act 2001.
This compilation was prepared on 1 September 2005 taking into account amendments up to [CO 04/668].
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act — Subsection 341(1) — Class Order and Revocation
Pursuant to subsection 341(1) of the Corporations Act 2001 (“the Act”) the Australian Securities and Investments Commission hereby makes an order in respect of each company which is, or is a wholly owned subsidiary of, an authorised trustee corporation as defined in section 9 of the Act (“the Company”) relieving the Company from compliance with the requirements of the Act specified in the Schedule where:
(a) the particulars of the relief given by this order are provided in the notes to the financial statements and in any concise financial report; and
(b) if a concise financial report is prepared, accounting standard AASB 1039 “Concise Financial Reports” is applied as if paragraph 5.2 were replaced by the following paragraph:
“5.2 Each financial statement must be presented as in the financial report, in accordance with current Accounting Standards (as modified by the application of any relief provided by the Australian Securities and Investments Commission pursuant to s 340 or s 341 of the Corporations Act), except for the omission of cross-references to notes to the financial statements in the financial report.”
SCHEDULE
Paragraph 7.2 of accounting standard AASB 1001 “Accounting Policies”; subparagraph 7.5(h) of accounting standard AASB 1029 “Interim Financial Reporting”; paragraphs 4.1 to 6.6 of accounting standard AASB 1033 “Presentation and Disclosure of Financial Instruments”; paragraphs 4.1 to 5.3 and 7.1 to 8.4 of accounting standard AASB 1040 “Statement of Financial Position” and paragraphs 5.1 to 6.4 and 14.1 to 14.6 of accounting standard AASB 1044 “Provisions, Contingent Liabilities and Contingent Assets” insofar as those provisions require the Company's financial report for a financial year or half-year to disclose, whether in the balance sheet, consolidated balance sheet or any note to the financial statements:
(a) liabilities incurred by the Company whilst acting:
(i) as trustee (except in relation to a controlled entity); or
(ii) in a representative capacity where the Company has taken in its own name a grant of probate of the will of a deceased person or of letters of administration of the estate of a deceased person,
in respect of which the Company has a valid and subsisting right of indemnity out of any assets which are sufficient to satisfy the right of indemnity; and
(b) the amount and description of the assets from which the Company has a right of indemnity in respect of any liability to which paragraph (a) applies.
Pursuant to subsection 341(1) of the Corporations Law the Australian Securities and Investments Commission hereby revokes Class Order Number 97/1012 dated 9 July 1997 with effect from:
(i) in respect of entities which apply the relief provided by Class Order 98/0095 dated 10 July 1998, financial years ending after 7 July 1998; and
(ii) in all other cases, financial years ending after 30 June 1998.
Notes to ASIC Class Order [CO 98/105]
Note 1
ASIC Class Order [CO 98/105] (in force under subsection 341(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the Tables below.
Table of Instruments
Instrument number | Date of making or FRLI registration | Date of commencement | Application, saving or transitional provisions |
[CO 98/105] | 10/7/1998 | 10/7/1998 | - |
[CO 99/90] | 11/2/1999 | 11/2/1999 | - |
[CO 00/321] | 8/2/2000 | 8/2/2000 | - |
[CO 04/668] | 1/7/2004 | 1/7/2004 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
First para (a) and (b) | ad. [CO 99/90] |
Schedule, first para | am. [CO 00/321]; rs. [CO 04/668] |
Class order | am. [CO 04/668] |
Overview
ASIC Class Order [CO 98/105], enacted in 1998 under the Corporations Act 2001, was introduced to address the issue of financial disclosure by authorised trustee corporations in their financial reports. This legislation, issued by the Australian Securities and Investments Commission, aims to provide relief to authorised trustee corporations from certain financial reporting requirements, while ensuring transparency and adequate disclosure through specific notes in their financial statements. The policy objective is to balance the need for streamlined reporting for these corporations with the requirement to maintain necessary disclosure standards for stakeholders. The order specifically addresses the disclosure of liabilities incurred by the corporation in their capacity as trustees or in representative capacities, while also ensuring that accounting standards are adhered to in the preparation of concise financial reports.
Scope and Application
ASIC Class Order [CO 98/105] applies to companies that are, or are wholly owned subsidiaries of, authorised trustee corporations as defined under section 9 of the Corporations Act 2001. The order provides relief from certain compliance requirements of the Act for these companies, provided that specific details of the relief are disclosed in the notes to the financial statements and in any concise financial report. The relief pertains to the omission of certain financial disclosures regarding liabilities incurred by the company while acting as a trustee or in a representative capacity, where the company has a right of indemnity. This Class Order has a national jurisdictional reach, as it is made under the authority of the Commonwealth through the Corporations Act 2001. The application of the Class Order can be extended or modified through subordinate instruments, although the primary text does not provide explicit details on such extensions or modifications.
Key Provisions
The ASIC Class Order [CO 98/105], made under the Corporations Act 2001, provides relief to authorised trustee corporations and their wholly owned subsidiaries from certain financial reporting requirements. Specifically, section 9(1) of the Act allows the Australian Securities and Investments Commission (ASIC) to make such an order if the company discloses the particulars of the relief in its financial statements or concise financial report, and if a concise financial report is prepared, it must apply AASB 1039 "Concise Financial Reports" with a modification to paragraph 5.2. The relief applies to certain liabilities incurred by the company while acting as a trustee or in a representative capacity, and requires disclosure of these liabilities and related indemnity rights in the financial statements (Schedule).
This Class Order imposes specific obligations on the companies it governs. Firstly, the companies must provide particulars of the relief in their financial statements and concise financial reports, ensuring transparency. If a concise financial report is prepared, it must follow AASB 1039 but with a modified paragraph 5.2. Furthermore, the companies must disclose certain liabilities and related indemnity rights in their financial reports, as specified in the Schedule. This ensures that stakeholders have access to critical information about the company's financial obligations and potential recoveries.
Breach of the obligations set out in the ASIC Class Order [CO 98/105] may result in civil or criminal consequences. Although the specific penalties are not detailed in the Class Order itself, violations of the Corporations Act 2001 can result in substantial penalties. For instance, individuals found guilty of dishonest conduct under the Act may face fines of up to $210,000 and imprisonment for up to five years. Companies may also be subject to penalties, including fines of up to $1.05 million for serious breaches. Additionally, the court may order the disqualification of directors found to be in breach of their duties under the Act. These potential consequences underscore the importance of compliance with the requirements set out in the Class Order.