ASIC Class Order [CO 98/2159]

Overview

The ASIC Class Order [CO 98/2159], enacted in 1998, was introduced to address the need for regulatory flexibility in the modification of approved deeds by certain entities under the Corporations Act 2001. This legislative instrument was prepared by the Australian Securities and Investments Commission (ASIC) and has the effect under paragraph 601QA(1)(b) of the Act. The policy objective of this order is to allow modifications to approved deeds that remove certain provisions, provided such modifications are in the best interests of the holders of prescribed interests, are fair, and do not adversely affect their rights. This order revokes Class Order 98/1789 and applies to bodies specified in subsection 1460(1) of the Corporations Act, excluding those to which other ASIC class orders apply.

Scope and Application

ASIC Class Order [CO 98/2159] applies to certain entities that fall under the Corporations Act 2001, specifically targeting bodies that are not subject to ASIC Class Orders [00/4] or [00/1067]. This legislative instrument operates by revoking Class Order 98/1789 and declaring that Division 11 of Part 11.2 of the Law applies to these entities, modifying the provisions of subsection 1460(3)(b) to include specific conditions under which modifications to approved deeds can be made. The modifications are permitted if they remove provisions that were originally included to satisfy certain requirements, are incidental to permitted modifications, or if the body reasonably considers the modification to be in the best interests of the holders of prescribed interests, fair to them, and not adversely affecting their rights. The scope of this Class Order is national, covering entities across Australia in compliance with the Corporations Act 2001. The exclusions from this Class Order include entities that fall under ASIC Class Orders [00/4] or [00/1067]. The application and impact of this Class Order may be further extended or restricted through subordinate instruments, as noted in the compilation.

Key Provisions

The ASIC Class Order [CO 98/2159] provides specific provisions regarding the removal of approved deed provisions, and it operates under paragraph 601QA(1)(b) of the Corporations Act 2001. The order revokes Class Order 98/1789 and declares that Division 11 of Part 11.2 of the Law applies to a body referred to in subsection 1460(1) of the Law, with modifications to the provisions that were included to satisfy certain requirements. Specifically, it allows for the removal of provisions that were added to meet the requirements of Division 5 of Part 7.12 of the old Law or previous laws, the requirements of the National Consumer Credit Scheme (NCSC) or other authorised persons, or conditions of instruments under subsection 1069(3) or 1084(2) of the old Law or corresponding previous laws. Additionally, it permits modifications that are incidental to those allowed by the preceding paragraphs, or if the body reasonably considers the modification to be in the best interests of the holders of prescribed interests, fair to them, and not adversely affecting their rights. The ASIC Class Order [CO 98/2159] imposes several obligations on the entities it governs. Firstly, it requires that any modifications to the deed must align with the specified criteria, such as meeting the requirements of prior laws or the NCSC, or being incidental to permitted modifications. Secondly, it mandates that the body making the modification must reasonably consider whether the modification is in the best interests of the holders of the prescribed interests, fair to them, and will not adversely affect their rights. Furthermore, the order requires that any modifications must be made in accordance with the provisions set out in Division 11 of Part 11.2 of the Law, ensuring that all changes are transparent and justifiable. The ASIC Class Order [CO 98/2159] outlines specific consequences for non-compliance with its provisions. Breaches of the order may result in civil or criminal penalties, depending on the nature and severity of the breach. Civil penalties may include fines, while criminal penalties could involve imprisonment, reflecting the seriousness with which the Australian Securities and Investments Commission (ASIC) treats non-compliance with these regulations. The specific maximum penalties are not detailed within the Class Order itself but would be subject to the broader provisions of the Corporations Act 2001 and any relevant case law. It is essential for entities governed by this order to adhere strictly to its provisions to avoid these potential consequences.