ASIC Corporations (Amendment) Instrument 2017/0386

Overview

The Corporations Act 2001, enacted by the Commonwealth Parliament, is the primary statute governing corporate law in Australia. It establishes the Australian Securities and Investments Commission (ASIC) and provides the framework for regulating financial markets and entities. The ASIC Corporations (Amendment) Instrument 2017/386 was introduced to address a transitional gap in the regulatory framework concerning the application of the shorter Product Disclosure Statement (PDS) regime to certain financial products. This amendment extends the interim relief, initially provided by ASIC Class Order [CO 12/749], to exclude multifunds, superannuation platforms, and hedge funds from the shorter PDS regime until 30 June 2018. The policy objective of this legislative instrument is to provide ASIC with additional time to consult on the permanent exclusion of these financial products from the shorter PDS regime, facilitating a more comprehensive and considered approach to the regulation of these specific financial products.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2017/386 applies to the regulatory framework under the Corporations Act 2001, specifically concerning the shorter Product Disclosure Statement (PDS) regime for financial products such as superannuation products and simple managed investment schemes. This legislative instrument is enacted by the Australian Securities and Investments Commission (ASIC) and amends the existing Class Order [CO 12/749], which provides temporary relief from the shorter PDS regime for certain entities, including superannuation platforms, multi-funds, and hedge funds. The amendment extends the interim relief period from 30 June 2017 to 30 June 2018, allowing ASIC additional time to consult with industry stakeholders and the Treasury regarding the permanent application of the shorter PDS regime to these specified entities. The jurisdiction of this instrument is federal, impacting entities and products regulated under the Corporations Act 2001 across Australia. No specific exclusions, exemptions, or thresholds are mentioned in the explanatory statement, though the instrument itself may provide further detail on any such conditions. The legislative instrument is subject to potential amendments or variations through subordinate instruments, as permitted by the Corporations Act 2001.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2017/386 primarily serves to amend the existing Class Order [CO 12/749], extending the relief period it provides. Specifically, it modifies paragraph 6 of the principal class order (paragraph 6) to extend the operation of the Class Order from 30 June 2017 to 30 June 2018. This amendment ensures that certain financial entities are temporarily exempt from the shorter Product Disclosure Statement (PDS) regime under Subdivision 4.2B (superannuation products) and Subdivision 4.2C (simple managed investment schemes) of Division 4 of Part 7.9 of the Corporations Regulations 2001. The intent behind this extension is to provide additional time for the Australian Securities and Investments Commission (ASIC) to consult on permanent relief for the application of the shorter PDS regime to superannuation platforms, multi-funds, and hedge funds. The obligations and requirements imposed by this legislative instrument on the parties it governs are essentially tied to the continuation of the temporary relief provided by the Class Order. Financial entities covered by the Class Order must adhere to the existing requirements that exempt them from the shorter PDS regime until the extended date of 30 June 2018. During this period, these entities are not required to comply with the shorter PDS obligations that apply to other financial products, allowing them to continue with their existing disclosure practices. It is imperative that these entities remain compliant with all other relevant provisions of the Corporations Act 2001 and associated regulations, ensuring that they do not inadvertently fall outside the scope of the temporary relief provided. In terms of potential consequences for non-compliance, the primary concern would be the inadvertent failure to adhere to the terms of the Class Order, which could result in the re-application of the shorter PDS requirements. While the legislative instrument does not explicitly detail specific penalties for breaches, the broader Corporations Act 2001 provides a framework for enforcement. Non-compliance with the Act could lead to civil penalties, including fines, as well as potential criminal charges, depending on the nature and severity of the breach. The maximum penalties for breaches of the Corporations Act can vary widely, but they may include substantial fines for both individuals and corporations, and in more severe cases, imprisonment. The specific penalties would depend on the precise nature of the breach and the discretion of the court.