ASIC Class Order [CO 98/59]

Overview

The ASIC Class Order [CO 98/59], effective from July 1998, was enacted under the Corporations Act 2001 to address transitional relief for one party prescribed interest schemes. This legislative instrument was prepared by the Australian Securities and Investments Commission (ASIC) and applies to management companies or trustees of undertakings that do not have a separate entity acting as the trustee or representative due to exemptions or declarations under the Law. The primary objective of this Class Order is to provide transitional relief by modifying or varying certain sections of the Corporations Act, ensuring that the management company or trustee continues in office until registration and that any winding up of the undertaking is carried out in accordance with relevant deeds, agreements, or court orders. This instrument aims to facilitate smoother transitions and compliance for entities involved in prescribed interest schemes.

Scope and Application

ASIC Class Order [CO 98/59] provides transitional relief for one party prescribed interest schemes, applying to certain management companies or trustees or representatives of undertakings that fall under section 1452 of the Corporations Act 2001. Specifically, the Class Order applies to entities that do not have a separate trustee or representative or management company due to an exemption or declaration under subsections 1084(2) and 1084(6) of the Act. This transitional relief modifies the provisions of sections 1455, 1456, 1457, 1458, 1459, 1460, and 1461 to facilitate the convening of meetings for holders of prescribed interests to choose a proposed responsible entity or decide on the winding up of the scheme. The Class Order operates under the authority of paragraph 601QA(1)(b) of the Corporations Act and has been amended several times since its initial promulgation on 13 July 1998. The Class Order does not specify any exclusions or thresholds but allows for further adjustments through subordinate instruments.

Key Provisions

The ASIC Class Order [CO 98/59] provides transitional relief for certain one party prescribed interest schemes, applying under paragraph 601QA(1)(b) of the Corporations Act 2001. Specifically, this legislation modifies or varies certain sections of the Act for management companies or trustees or representatives of undertakings that do not have a separate entity acting in those capacities due to exemptions or declarations under subsection 1084(2) or 1084(6) of the Corporations Act 2001 (sections 1455, 1456, 1457, 1458, 1459, and 1461). The changes allow these entities to convene meetings of prescribed interest holders to choose a proposed responsible entity for registration or to decide on winding up the undertaking. Furthermore, it modifies the powers and duties of the management company or trustee or representative in relation to winding up the undertaking. The ASIC Class Order imposes several obligations on the management companies or trustees or representatives of the specified undertakings. Firstly, if they decide not to lodge a registration application themselves, they must convene a meeting of prescribed interest holders to choose a proposed responsible entity or decide on winding up the undertaking (section 1455). They must also lodge a notice with ASIC when a meeting is convened and another notice setting out the outcome of the meeting. If the prescribed interest holders neither choose a responsible entity nor decide to wind up the undertaking at a convened meeting, the management company or trustee or representative may apply to the Court for an order to wind up the scheme (section 1455(4)). Additionally, the management company or trustee or representative must ensure that the undertaking is wound up in accordance with any deed, agreement, or court order if the prescribed interest holders decide to wind up the undertaking or if the Court orders it to do so (section 1459). Failure to comply with the requirements of the ASIC Class Order may lead to civil or criminal consequences. However, the specific offences, penalties, or consequences are not explicitly stated in the text. Under the Corporations Act 2001, penalties for breaches can vary depending on the offence, and they can include fines, imprisonment, or both. It is essential to consult the relevant sections of the Act for specific penalties related to non-compliance with this Class Order.