EXPLANATORY STATEMENT
ASIC Corporations (Amendment) Instrument 2016/56
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Amendment) Instrument 2016/56 (legislative instrument) under paragraph 1020F(1)(c) of the Corporations Act 2001 (Act). Paragraph 1020F(1)(c) 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 Interpretations Act 1901 (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.
- Background
The Corporations Amendment Regulations 2010 (No 5) established a new shorter Product Disclosure Statement (PDS) regime under Subdivision 4.2B (for superannuation products) and Subdivision 4.2C (for simple managed investment schemes) of Division 4 of Part 7.9 of the Corporations Regulations 2001. The shorter PDS regime fully commenced on 22 June 2012.
ASIC Class Order [CO 12/749] (principal class order) provides interim relief, until 30 June 2016, excluding multifunds, superannuation platforms and hedge funds from the shorter PDS regime.
2. Purpose of the instrument
The legislative instrument extends the relief given by Class Order [CO 12/749] until 30 June 2017, pending further work by Government on the application of the shorter PDS regime to superannuation platforms, multi-funds and hedge funds.
3. Operation of the instrument
The legislative instrument amends paragraph 6 of the principal class order to extend the operation of the principal class order from 30 June 2016 to 30 June 2017.
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 industry and Treasury.
Overview
The ASIC Corporations (Amendment) Instrument 2016/56, made under the Corporations Act 2001, extends the relief provided by ASIC Class Order [CO 12/749] until 30 June 2017. This temporary measure was introduced by the Australian Securities and Investments Commission to provide additional time for the government to finalise its work on applying the shorter Product Disclosure Statement (PDS) regime to superannuation platforms, multi-funds, and hedge funds. The instrument amends the principal class order to extend the interim relief from 30 June 2016 to 30 June 2017, reflecting a transitional approach requested by industry and Treasury. Given the minor and machinery nature of this extension, ASIC did not undertake a formal consultation process for this legislative instrument.
Scope and Application
The ASIC Corporations (Amendment) Instrument 2016/56 applies to the Australian Securities and Investments Commission (ASIC) and those entities and individuals subject to the Corporations Act 2001, specifically relating to the shorter Product Disclosure Statement (PDS) regime. This amendment extends the relief provided by ASIC Class Order [CO 12/749], which initially excluded multifunds, superannuation platforms, and hedge funds from the shorter PDS regime, until 30 June 2017. The instrument was created under the authority granted to ASIC by the Corporations Act 2001 and the Acts Interpretation Act 1901, allowing for the amendment of existing class orders. The instrument operates within the Commonwealth jurisdiction and extends its reach to entities involved in financial products, specifically those mentioned in the class order. The amendment does not introduce new exclusions but continues the interim relief provided by the original class order until the specified date, allowing further consideration by the Government on the application of the shorter PDS regime to the excluded categories.
Key Provisions
The main operative sections of ASIC Corporations (Amendment) Instrument 2016/56, as outlined in the explanatory statement, are primarily concerned with the extension of relief provided by Class Order [CO 12/749] until 30 June 2017. This class order, which offers interim relief by excluding certain entities such as multifunds, superannuation platforms, and hedge funds from the shorter Product Disclosure Statement (PDS) regime, was set to expire on 30 June 2016. The legislative instrument amends this to extend the relief period by an additional year, as stated in section 2. The amendment specifically affects paragraph 6 of Class Order [CO 12/749], which governs the operational period of this relief.
The obligations and requirements imposed by this Act on the entities it governs primarily revolve around compliance with the extended relief period under Class Order [CO 12/749]. Specifically, entities such as multifunds, superannuation platforms, and hedge funds are not required to adhere to the shorter PDS regime until the new expiration date of 30 June 2017. This transitional measure is intended to provide additional time for the government to further assess and possibly revise the application of the shorter PDS regime to these entities. The entities are thus required to continue operating under the existing PDS regime during this extended period.
The Act also delineates potential consequences for non-compliance with the provisions of Class Order [CO 12/749]. While the explanatory statement does not explicitly detail penalties for breach, it is reasonable to infer that non-compliance with the extended relief period could lead to civil or criminal penalties as stipulated by the broader framework of the Corporations Act 2001. Given the nature of the relief and the transitional nature of the amendment, penalties may include fines, enforcement actions, or other sanctions as determined by the Australian Securities and Investments Commission (ASIC). However, the exact penalties would need to be referenced within the broader legislative framework of the Corporations Act 2001.