ASIC Corporations (Amendment) Instrument 2016/397

Administered by Department of the Treasury

Legislation au F2016L00789 Not in force Legislative Instrument

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ASIC Corporations (Amendment) Instrument 2016/397

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Amendment) Instrument 2016/397 under paragraphs 926A(2)(c), 951B(1)(c) and 1020F(1)(c) of the Corporations Act 2001 (the Act).

 

Paragraph 926A(2)(c) of the Act provides that ASIC may declare that Part 7.6 (other than Divisions 4 and 8) applies in relation to a person or financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.

 

Paragraph 951B(1)(c) of the Act provides that ASIC may declare that Part 7.7 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.

 

Paragraph 1020F(1)(c) of the Act provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument, 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

 

ASIC Class Order [CO 14/1262] (principal class order) provides interim conditional relief to enable 31-day notice term deposits of up to five years to be treated as basic deposit products under the Act. The principal class order commenced on 22 December 2014, and provides relief for:

  • 31-day notice term deposits entered into on or before until 22 June 2016; and
  • 31-day notice term deposits that are entered into as a result of rolling over a term deposit that has the benefit of the relief.

 

The relief does not apply other term deposit entered into after 22 June 2016.

 

The principal class order was intended to give Government the opportunity to consider legislative reform regarding the meaning of basic deposit product under the Act, as it applies to 31-day notice term deposits.

 

The House of Representatives and the Senate were dissolved on 9 May 2016, with an election to be held on 2 July 2016. Consequently, there will not be an opportunity for any legislative changes to be made until after the election.

 

2.      Purpose of the instrument

 

In order to preserve the current treatment of 31-day notice term deposits as an interim measure, the ASIC Corporations (Amendment) Instrument 2016/397extends the relief given by the principal class order to:

  • 31-day notice term deposits entered into on or before until 30 June 2017; and
  • 31-day notice term deposits that are entered into as a result of rolling over such term deposits.

 

It will be a matter for an incoming government whether or not to amend the definition of basic deposit product under the Act.

 

3.      Operation of the instrument

 

The legislative instrument amends sub-subparagraph (c)(i) of the definition of affected term deposit in paragraph 6 of the principal class order. The effect of this is to extend the operation of the relief given by the principal class order so that it applies to:

  • 31-day notice term deposits entered into on or before until 30 June 2017; and
  • 31-day notice term deposits that are entered into as a result of rolling over such term deposits.

 

4.      Consultation

ASIC did not undertake a formal consultation process on extending the operation of the principal class order as the extension is a transitional measure of a minor and machinery nature, and was requested by Treasury.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

ASIC Corporations (Amendment) Instrument 2016/397

 

ASIC Corporations (Amendment) Instrument 2016/397 (the legislative instrument) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview

 

The purpose of the legislative instrument is to amend ASIC Class Order [CO 14/1262] (the principal class order). The principal class order provides conditional relief to enable 31-day notice term deposits of up to five years to be treated as basic deposit products under the Corporations Act 2001 (Act), for an interim period of 18 months from 22 December 2014 (i.e. the relief will apply to 31-day notice term deposits entered into on or before 22 June 2016 and to rollovers of such term deposits). This was intended to give Government the opportunity to consider legislative reform regarding the meaning of basic deposit product under the Act, as it applies to 31-day notice term deposits.

 

The House of Representatives and the Senate were dissolved on 9 May 2016, with an election to be held on 2 July 2016. Consequently, there will not be an opportunity for any legislative changes to be made until after the election.

 

In order to preserve the current treatment of 31-day notice term deposits as an interim measure, the legislative instrument extends the relief given by the principal class order so that it applies to such term deposits entered into on or before 30 June 2017 (and to rollovers of such term deposits). It will be a matter for an incoming government whether or not to amend the definition of basic deposit product under the Act.

 

Human rights implications

 

This class order does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This class order is compatible with human rights as it does not raise any human rights issues.

Overview

The ASIC Corporations (Amendment) Instrument 2016/397 was enacted by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001 to address the gap in legislative treatment of 31-day notice term deposits as basic deposit products. This legislative instrument was necessary as the existing ASIC Class Order [CO 14/1262] provided only a temporary solution and was set to expire before the opportunity for legislative reform could be realised due to the impending federal election. By extending the relief until 30 June 2017, ASIC aimed to maintain the status quo for 31-day notice term deposits, ensuring they continue to be classified as basic deposit products until the government can address this matter in a new legislative framework. The instrument ensures that the relief applies not only to new deposits but also to rollovers of existing eligible deposits.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2016/397 applies to 31-day notice term deposits entered into on or before 30 June 2017, and to rollovers of such term deposits. This legislative instrument is an amendment to ASIC Class Order [CO 14/1262], which provides interim conditional relief to enable such term deposits to be treated as basic deposit products under the Corporations Act 2001. The extension of the relief is a transitional measure intended to maintain the current treatment of these term deposits as basic deposit products while allowing the incoming government to consider legislative reform regarding the definition of basic deposit products under the Act. The instrument is applicable nationwide, covering all entities and persons entering into or rolling over such term deposits within the specified timeframe. The instrument does not specify any exclusions, exemptions, or thresholds, but rather extends the scope of the principal class order as requested by Treasury. This legislative instrument is compatible with human rights as it does not engage any applicable rights or freedoms.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2016/397 amends the Corporations Act 2001 by extending the relief provided by ASIC Class Order [CO 14/1262]. This extension applies to 31-day notice term deposits entered into on or before 30 June 2017 and those resulting from rollovers of term deposits that have the benefit of the relief (sections 2 and 3). The original class order, which began on 22 December 2014, allowed for such deposits to be treated as basic deposit products until 22 June 2016. This legislative amendment ensures that the treatment remains consistent until June 2017, providing an interim measure while the government considers potential legislative changes. Entities governed by this Act, such as financial institutions offering term deposits, must adhere to the extended relief provisions. This means they must treat 31-day notice term deposits entered into by 30 June 2017 as basic deposit products, aligning with the protections and requirements specified in the Corporations Act. Financial institutions should ensure their practices and documentation reflect these obligations to remain compliant. Failure to comply with the provisions of the ASIC Corporations (Amendment) Instrument 2016/397 may result in regulatory action. While the explanatory statement does not specify particular offences or penalties, non-compliance with the Corporations Act can generally lead to civil or criminal penalties, including fines and potential imprisonment, depending on the severity of the breach. The maximum penalties for breaches of the Corporations Act can vary widely, reflecting the nature and impact of the non-compliance. Therefore, entities must ensure they are fully aware of and adhere to the amended requirements to avoid any adverse legal consequences.

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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.