ASIC Class Order [CO 99/463]

Overview

The Australian Securities and Investments Commission (Corporations Law) Instrument 1999 (F2008B00017) was enacted in 1999 to address the need for specific exemptions and declarations regarding the valuation of property in registered schemes, particularly those involving serviced apartments, hotels, motels, or resort complexes. This legislative instrument empowers the Australian Securities and Investments Commission (ASIC) to exempt certain responsible entities from compliance with specific valuation requirements under the Corporations Law, provided certain conditions are met. The policy objective is to ensure that the valuation of scheme property is conducted appropriately, thereby protecting the interests of scheme members. The instrument specifies that exemptions are granted to responsible entities operating registered schemes where members have no right to be paid an amount related to the value of scheme property upon withdrawal, and it mandates that these entities ensure proper valuation of scheme property when necessary.

Scope and Application

The legislative instrument F2008B00017 pertains to the Australian Securities and Investments Commission Corporations Law, specifically under subsection 601QA(1), and provides exemptions and declarations for certain responsible entities of registered schemes. The Act applies to responsible entities of registered schemes that operate a business involving the provision of real property for use as part of serviced apartments, hotels, motels, or resort complexes, where members of the scheme do not have the right to receive any payment related to the value of the scheme property upon their withdrawal. This exemption and declaration are designed to ease the regulatory burden on these entities while ensuring that they comply with the necessary valuation requirements for the scheme property. The Act's jurisdictional reach is federal, as it involves the Australian Securities and Investments Commission, a Commonwealth body. The exemptions and declarations are conditional, requiring responsible entities to ensure that each item of scheme property is valued as soon as practicable if a valuation is deemed necessary for the benefit or fairness of all members. This legislative instrument thus modifies the application of Chapter 5C of the Corporations Law for the specified responsible entities, with the conditions outlined in the accompanying schedules.

Key Provisions

The primary operative sections of this legislative instrument are subsections 601QA(1)(a) and 601QA(1)(b) of the Corporations Law. Under subsection 601QA(1)(a), the Australian Securities and Investments Commission (ASIC) is authorised to exempt certain persons from complying with paragraph 601FC(1)(j) of the Corporations Law. These exemptions are contingent upon the conditions outlined in Schedule C being met. Specifically, this exemption applies to responsible entities of registered schemes that operate in the context of serviced apartments, hotels, motels, or resorts, where scheme members do not have a right to receive payments related to the value of scheme property upon their withdrawal from the scheme. This exemption is detailed in Schedule A, which lists the responsible entities of registered schemes, and Schedule B, which specifies the type of scheme involved. Under subsection 601QA(1)(b), ASIC declares that Chapter 5C of the Corporations Law applies to these responsible entities as if specific wording were inserted into paragraph 601HA(1)(c) of the Law, ensuring that scheme property is valued in accordance with the exemption conditions or, if no exemption applies, in a fair and transparent manner. The Act imposes several obligations on the parties it governs. Firstly, responsible entities of registered schemes must ensure that each item of scheme property is valued as soon as practicable after the responsible entity has reasonable grounds to believe that a valuation is in the best interests of members or is necessary to be fair to all members. This obligation is outlined in Schedule C and is a condition of the exemption granted under subsection 601QA(1)(a). Additionally, responsible entities must adhere to Chapter 5C of the Corporations Law, which includes requirements for the valuation of scheme property, as modified by the declaration in subsection 601QA(1)(b). This means that the valuation process must be conducted in accordance with any applicable exemption conditions or, if no exemption applies, in a manner that is fair and equitable to all scheme members. Failure to comply with the provisions of the legislative instrument can result in civil or criminal consequences. The Act does not specify maximum penalties for breaches; however, breaches of the Corporations Law generally can result in substantial fines, legal action, and potential criminal charges for individuals found to be in violation. For corporate entities, penalties may include fines and other sanctions that can significantly impact the entity's operations and reputation. Given the nature of the Act, non-compliance could also lead to regulatory action by ASIC, which may impose additional penalties or require corrective actions to ensure compliance with the Corporations Law.