ASIC Corporations (Amendment) Instrument 2016/1211

Administered by Department of the Treasury

Legislation au F2016L01976 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for
ASIC Corporations (Amendment) Instrument 2016/1211

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Amendment) Instrument 2016/1211 (Instrument).

The Instrument is made under subsection 341(1) of the Corporations Act 2001 (Act).

Subsection 341(1) of the Act provides that ASIC may make an order in writing in respect of a specified class of companies, registered schemes or disclosing entities, relieving any of the directors, the companies, registered schemes or disclosing entities themselves, or the auditors of the companies, registered schemes or disclosing entities from all or specified requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Act. These requirements relate to financial reporting and audit. 

Under subsection 33(3) of the Acts Interpretation Act 1901 (as in force as at 1 January 2005 and as applicable to the relevant powers because of section 5C of the Act), where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

  1.                                             Background

The Instrument amends ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Principal Instrument).

The Principal Instrument relieves a wholly-owned company from financial reporting and audit requirements provided it enters into a deed of cross guarantee with its holding entity and other wholly owned entities of the group, and meets certain other conditions.

The Principal Instrument replaced ASIC Class Order [CO 98/1418], which provided similar relief. The Principal Instrument applies in relation to financial years ending on or after 1 January 2017. Under transitional provisions, Class Order [CO 98/1418] continues to apply in relation to financial years ending before 1 January 2017. Among other matters, Class Order [CO 98/1418] required a company relying on the financial reporting relief in relation to a financial year to have become party to a deed of cross guarantee before the end of that financial year: see condition (l) of the First Order in Class Order [CO 98/1418].

The deed of cross guarantee required under the Principal Instrument must be in the form of ASIC Pro Forma 24 as at 28 September 2016 (subject to certain minor permitted variations and provisions grandfathering deeds of cross guarantee that conformed with a previous version of ASIC Pro Forma 24).

ASIC Pro Forma 24 was updated on 28 September 2016, the same day that the Principal Instrument and the instrument repealing Class Order [CO 98/1418] were made. The Principal Instrument commenced on 29 September 2016 and the repeal of Class Order [CO 98/1418] also took effect on 29 September 2016. The previous update to ASIC Pro Forma 24 occurred on 31 March 2008.

2.                                                Purpose of the instrument

The current version of ASIC Pro Forma 24 came into force on 28 September 2016, the day before Class Order [CO 98/1418] was repealed. There is doubt as to whether, without the amendments made by the Instrument, a deed of cross guarantee based on the 31 March 2008 version of ASIC Pro Forma 24 would be acceptable for the purposes of an entity wishing to take advantage of financial reporting relief under [CO 98/1418] (as continued in force) or the Principal Instrument in relation to a financial year ending on or after 28 September 2016.

The purpose of the Instrument is to amend the Principal Instrument so that the 31 March 2008 version of the deed of cross guarantee continues to be an acceptable form of deed of cross guarantee for the purposes of the financial reporting relief given by the Principal Instrument and Class Order [CO 98/1418] where the deed of cross guarantee was entered into before 28 September 2016.

3.                                                Operation of the instrument

The Instrument takes effect on the day after its registration.

The Instrument amends the Principal Instrument as follows:

  • paragraph (a) of  the definition of deed of cross guarantee in the Principal Instrument is amended so that a deed of cross guarantee for the purposes of the Principal Instrument will include a deed of cross guarantee under Class Order [CO 98/1418] (as continued in force by the Principal Instrument); and
  • section 13 of the Principal Instrument continues Class Order [CO 98/1418] in force in relation to a financial year ending before 1 January 2017. Section 13 of the Principal Instrument is amended so that a deed of cross guarantee for the purposes of the Class Order [CO 98/1418] (as continued in force by the Principal Instrument) includes both a deed of cross guarantee in the form of ASIC Pro Forma 24 as at 31 March 2008 and a deed of cross guarantee in the form of ASIC Pro Forma 24 as at 28 September 2016. Deeds of cross guarantee based on previous versions of ASIC Pro Forma 24 are also accommodated by Class Order [CO 98/1418] and the Principal Instrument.

 

4.                                                Documents incorporated by reference

The Instrument incorporates by reference ASIC Pro Forma 24 as at 31 March 2008 and as at 28 September 2016. ASIC Pro Forma 24 as at 31 March 2008 is available in the ASIC Digest, published by Thomson Reuters. ASIC Pro Forma 24 as at 28 September 2016 is available at ASIC’s website, www.asic.gov.au.

5.                                                Consultation

ASIC did not undertake consultation with respect to the Instrument because it is minor and machinery in nature and is consistent with the intention of the Principal Instrument.

 

Overview

The ASIC Corporations (Amendment) Instrument 2016/1211 was enacted to address a specific issue arising from the transition of financial reporting relief provisions from ASIC Class Order [CO 98/1418] to the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785. The Instrument amends the latter to ensure that the deed of cross guarantee under the older version of ASIC Pro Forma 24, dated 31 March 2008, remains acceptable for financial reporting relief purposes. This change was necessary because there was uncertainty about whether such deeds would be valid following the update of ASIC Pro Forma 24 on 28 September 2016. The Instrument was made by the Australian Securities and Investments Commission (ASIC) under subsection 341(1) of the Corporations Act 2001, which allows ASIC to relieve specified classes of companies from certain financial reporting and audit requirements. The policy objective of the Instrument is to provide clarity and continuity in the application of financial reporting relief for wholly-owned companies.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2016/1211 applies to wholly-owned companies and their holding entities, specifically those that wish to avail themselves of financial reporting and audit relief under certain conditions. This instrument modifies the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, which originally set out the conditions under which wholly-owned companies could be relieved from certain financial reporting and audit requirements. The relief is contingent upon the wholly-owned company entering into a deed of cross guarantee with its holding entity and other wholly owned entities of the group, and satisfying certain other specified conditions. The Instrument is designed to ensure that deeds of cross guarantee executed before the update of ASIC Pro Forma 24 on 28 September 2016 remain acceptable for the purposes of financial reporting relief. This amendment applies nationally across Australia and is intended to maintain consistency and continuity in the application of the financial reporting relief provisions. No explicit exclusions or thresholds are stated in the Instrument, but it implicitly applies only to those entities meeting the specified conditions for relief.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2016/1211 (Instrument) amends the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Principal Instrument) to provide relief from certain financial reporting and audit requirements for wholly-owned companies. Section 2 of the Instrument modifies the definition of 'deed of cross guarantee' in the Principal Instrument (section 2(1)(a)), ensuring that deeds of cross guarantee executed before 28 September 2016, in the form of ASIC Pro Forma 24 as at 31 March 2008, remain acceptable for the purposes of the financial reporting relief provided by the Principal Instrument and Class Order [CO 98/1418]. The Instrument also updates section 13 of the Principal Instrument to include deeds of cross guarantee executed before the update to ASIC Pro Forma 24 on 28 September 2016 (section 2(2)). These amendments aim to clarify the applicability of older deeds of cross guarantee in the context of the financial reporting relief. The Instrument imposes several obligations on parties subject to it. Firstly, wholly-owned companies seeking financial reporting relief must ensure that they enter into a deed of cross guarantee with their holding entity and other wholly-owned entities within the group, and that this deed conforms to either the ASIC Pro Forma 24 as at 31 March 2008 or 28 September 2016. This deed must be in place before the end of the financial year for which relief is sought. Additionally, companies must ensure compliance with any other conditions stipulated in the Principal Instrument and Class Order [CO 98/1418] to qualify for the financial reporting relief. Failure to comply with the requirements of the Instrument may result in severe consequences. Although the Explanatory Statement does not explicitly outline specific penalties, companies that do not adhere to the financial reporting and audit requirements may still face penalties under the Corporations Act 2001. These penalties can include fines, imprisonment, or both, depending on the severity of the breach and the specific provisions of the Act that are contravened. Companies that fail to meet the conditions for financial reporting relief may also be required to prepare financial reports and undergo audits, which could be resource-intensive and costly. Given the regulatory context, it is imperative for companies to understand and comply with the conditions set out in the Instrument and the Principal Instrument. Failure to do so could result in significant financial and legal repercussions, including potential penalties under the Corporations Act. Ensuring adherence to these requirements is crucial for companies seeking to benefit from the financial reporting relief provided by the Instrument.

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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.