ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063

Administered by Department of the Treasury

Legislation au F2017L01549 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for

ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (8 Daphne Street Botany Limited – Real Estate Company) Instrument 2017/1063 under subsections 741(1) and 926A(2) of the Corporations Act 2001 (the Act). Subsection 741(1) of the Act provides that ASIC may exempt a person, or class of persons, from all or specified provisions of Chapter 6D of the Act, which deals with fundraising. Subsection 926A(2) of the Act provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.6 of the Act (other than Divisions 4 and 8), which deals with the licensing of financial services providers. An exemption may apply unconditionally or subject to specified conditions.

  1.  Background

8 Daphne Street Botany Ltd ACN 622 833 863 (the Company) is a company which wishes to offer company title in real estate through offers of its shares to members of the public. The Company applied to ASIC for disclosure and financial services licensing relief equivalent to the relief in ASIC Corporations (Real Estate Companies) Instrument 2015/1049 as if the definition of 'real estate company' was modified to apply to it.

The Company could not fit within the definition of 'real estate company' in ASIC Corporations (Real Estate Companies) Instrument 2015/1049 as the shareholders would not have exclusive occupation of the real estate in which they have company title. This is because the Company operates as a general boarding house in accordance with the Boarding Houses Act 2012 (NSW) and for the purpose of the NSW Government's Low Income Housing Initiative. As a result the real estate can only be leased to eligible occupants and cannot be occupied by the shareholders of the Company.

2. Purpose of the instrument

The purpose of ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063  is to incorporate the exemptions and conditions in ASIC Corporations (Real Estate Companies) Instrument 2015/1049 to ensure that:

(a)    vendors involved in secondary sales of shares in the Company;

(b)   real estate agents who market and sell shares in the Company; and

(c)    valuers who provide valuations of shares in the Company,

are not subject to an onerous regulatory burden that would be imposed on these persons under the financial services regulatory regime, while maintaining appropriate consumer protections that would otherwise be provided for the sale of real estate interests.

The policy underlying the instrument is that the Company should have the benefit of the same relief as other real estate companies notwithstanding that it technically does not meet the definition of 'real estate company' in ASIC Corporations (Real Estate Companies) Instrument 2015/1049 due to the requirements of its operation as a general boarding house.

A legislative instrument is considered necessary because the financial services licensing relief relates to two classes of persons that may not be associated with the Company, being real estate agents and valuers.

3. Operation of the instrument

ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063  operates to make the exemptions, and impose the conditions, made and imposed by ASIC Corporations (Real Estate Companies) Instrument 2015/1049. This exempts persons who sell shares in the Company from the requirement to provide a disclosure document under Chapter 6D of the Act where a number of conditions are met, including that:

(a)    the offer to sell the shares is made by or on behalf of the vendor;

(b)   the draft contract for sale is publicly available at the time of the offer;

(c)    the terms of the sale contract include certain provisions regarding the Company and the property it owns.

The instrument also gives relief from the financial services licensing provisions of the Act for:

(a)    persons who provide general advice and dealing in relation to shares in the Company; and

(b)    persons who provide general advice which relates to a valuation of shares in the Company.

In addition to the conditions imposed by ASIC Corporations (Real Estate Companies) Instrument 2015/1049, ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063 requires that the Company fall within existing exemptions under the Act from the requirement to register a managed investment scheme. 

4. Documents incorporated by reference

ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063 imposes exemptions and conditions made by ASIC Corporations (Real Estate Companies) Instrument 2015/1049 which may be obtained from the Federal Register of Legislation.

5. Consultation

ASIC has not consulted publicly on this instrument because ASIC believes this instrument is minor and machinery, as it applies ASIC Corporations (Real Estate Companies) Instrument 2015/1049 to the Company with minor and technical variations specific to the Company. ASIC consulted publicly on ASIC Corporations (Real Estate Companies) Instrument 2015/1049 in August 2015 in Consultation Paper 237 Remaking ASIC class orders on real estate companies and received 1 written response supporting the re-making of that relief.

Given the nature of the relief, ASIC believes no Regulation Impact Statement is required.

 

Overview

The ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063, issued under the Corporations Act 2001, aims to address the regulatory gap experienced by 8 Daphne Street Botany Ltd, a company that operates as a general boarding house under the NSW Government's Low Income Housing Initiative. This legislation was enacted by the Australian Securities and Investments Commission (ASIC) to provide exemptions and conditions for the company in relation to fundraising and financial services licensing. The intent behind this instrument is to ensure that vendors, real estate agents, and valuers involved with the company’s shares are not unduly burdened by financial services regulations, while still maintaining consumer protections. This legislation is necessary to tailor the existing reliefs to the specific operational context of the company, which does not fit neatly within the existing definition of a 'real estate company' due to its boarding house operations.

Scope and Application

The ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063 applies to 8 Daphne Street Botany Ltd, a company operating under the NSW Government's Low Income Housing Initiative, and is made under the Corporations Act 2001. This instrument grants exemptions to the company from specific provisions of the Act, particularly those related to fundraising and financial services licensing, to facilitate its operations without imposing an undue regulatory burden. This relief extends to vendors, real estate agents, and valuers involved in the sale of shares in the company, provided certain conditions are met, such as the availability of a publicly accessible draft contract for sale and the inclusion of specific provisions in the sale contract regarding the company and its property. The exemptions and conditions imposed are largely consistent with those found in the ASIC Corporations (Real Estate Companies) Instrument 2015/1049, with minor variations tailored to the unique circumstances of 8 Daphne Street Botany Ltd. The instrument ensures that while the company operates within a specific regulatory framework, appropriate consumer protections are maintained. This legislative instrument operates within the Commonwealth jurisdiction, reflecting ASIC's regulatory authority over financial services and markets across Australia.

Key Provisions

The ASIC Corporations (8 Daphne Street Botany Ltd – Real Estate Company) Instrument 2017/1063 (the Instrument) under the Corporations Act 2001 (the Act) provides exemptions for certain activities related to the sale of shares in 8 Daphne Street Botany Ltd, a company that offers company title in real estate. This instrument was made under sections 741(1) and 926A(2) of the Act, allowing ASIC to exempt individuals or classes of persons from specified provisions of the Act, including those related to fundraising and financial services licensing. This exemption is intended to ensure that vendors, real estate agents, and valuers involved in the secondary sale of shares in the company are not unduly burdened by regulatory requirements while maintaining appropriate consumer protections. Under the Instrument, vendors, real estate agents, and valuers involved in the sale of shares in 8 Daphne Street Botany Ltd are exempt from the requirement to provide a disclosure document under Chapter 6D of the Act, provided certain conditions are met. These conditions include the offer being made by or on behalf of the vendor, the draft contract for sale being publicly available at the time of the offer, and the sale contract including specific provisions regarding the company and the property it owns. Additionally, the Instrument exempts individuals and entities that provide general advice and dealing in relation to shares in the company, as well as those that provide general advice related to the valuation of shares, from the financial services licensing provisions of the Act. The obligations imposed by the Instrument require that 8 Daphne Street Botany Ltd adheres to the conditions set forth, including ensuring that the draft contract for sale is publicly available and includes certain provisions. Furthermore, the company must fall within existing exemptions under the Act from the requirement to register a managed investment scheme. These obligations are designed to maintain appropriate consumer protections while reducing the regulatory burden on those involved in the sale of shares in the company. Breaching the conditions set out in the Instrument may result in civil or criminal consequences. Although the specific penalties are not detailed in the Explanatory Statement, the Act generally provides for penalties for non-compliance, including fines and imprisonment. The precise penalties would depend on the nature and severity of the breach, as well as any relevant provisions in the Act. It is essential for the company and those involved in the sale of its shares to comply with the conditions to avoid any potential legal repercussions.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.