EXPLANATORY STATEMENT
ASIC Corporations (Amendment) Instrument 2018/473
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Amendment) Instrument 2018/473 (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.
The legislative instrument amends ASIC Class Order [CO 12/749] (principal class order). 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 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, which commenced on 22 June 2012.
Since 2012 ASIC has deferred the operation of the shorter PDS regime to superannuation platforms, multi-funds and hedge funds (relevant products), by providing temporary relief in successive ASIC Class Orders.
The principal class order extended the relief until 30 June 2018 to permit further consideration of the final policy position in relation to permanent relief from the application of the shorter PDS regime to the relevant products.
2. Purpose of the instrument
The purpose of the legislative instrument is to continue to defer the application of the shorter PDS regime to the relevant products until 30 June 2022. This will extend the deferral, effective since 30 June 2012, for a total period consistent with the 10 year sunsetting period for legislative instruments under the Legislation Act 2003.
This deferral will allow the Government time to consider and settle its policy position. The deferral does not represent a policy view by ASIC in relation to the application of the shorter PDS regime to the relevant products nor a view as to the time likely to be taken by the Government in settling a policy view. Accordingly, the deferral until 30 June 2022 is subject to change pending and according to the finalisation of the Government's policy position.
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 2018 to 30 June 2022.
4. Consultation
Before making the legislative instrument to extend the existing relief, ASIC consulted with Treasury, but did not undertake a public consultation process. This is because the amendments made by the legislative instrument are transitional measures of a minor or machinery nature, and do not affect the position of any entity relying on the existing relief.
Overview
The ASIC Corporations (Amendment) Instrument 2018/473, enacted by the Australian Securities and Investments Commission under the Corporations Act 2001, aims to defer the application of the shorter Product Disclosure Statement (PDS) regime to certain financial products such as superannuation platforms, multi-funds, and hedge funds. This legislative instrument was introduced to provide additional time for the government to consider its policy position on the matter, extending the previous deferral period from 30 June 2018 to 30 June 2022. This extension ensures consistency with the 10-year sunsetting period for legislative instruments as per the Legislation Act 2003. The instrument amends the ASIC Class Order [CO 12/749] to implement this extension and does not represent a definitive policy stance by ASIC. ASIC consulted with Treasury before making these amendments but did not undertake a public consultation process, as the changes were considered to be transitional measures of a minor or machinery nature.
Scope and Application
The ASIC Corporations (Amendment) Instrument 2018/473 applies to the Corporations Act 2001 and specifically pertains to the temporary relief for superannuation platforms, multi-funds, and hedge funds concerning the application of the shorter Product Disclosure Statement (PDS) regime. This legislative instrument is applicable to entities operating in the financial services sector, particularly those managing superannuation products, multi-funds, and hedge funds. Geographically, its application extends across Australia as it is a Commonwealth instrument under the jurisdiction of the Australian Securities and Investments Commission (ASIC). The instrument excludes other financial products not specifically mentioned, such as general insurance and banking products. The instrument itself does not specify any exclusions but relies on the existing class order for its applicability. The legislative instrument does not introduce new thresholds or exemptions but rather modifies existing relief measures. It operates by amending ASIC Class Order [CO 12/749] to extend the deferral of the shorter PDS regime until 30 June 2022, thereby maintaining the status quo until a final policy decision is made by the government.
Key Provisions
The main sections of the ASIC Corporations (Amendment) Instrument 2018/473 involve the amendment of the ASIC Class Order [CO 12/749]. Specifically, the instrument modifies the operation of the class order to extend the relief period for certain financial products, namely superannuation products, multi-funds, and hedge funds, from 30 June 2018 to 30 June 2022 (paragraph 3). This extension defers the application of the shorter Product Disclosure Statement (PDS) regime, which was initially established under the Corporations Amendment Regulations 2010 (No 5) (section 2). The relief aims to provide the government with additional time to consider and settle its policy position on the permanent application of the shorter PDS regime to these relevant products.
The Act imposes obligations on financial product issuers, such as superannuation platforms, multi-funds, and hedge funds, by deferring the application of the shorter PDS regime. These entities are required to continue using the longer PDS format until the deferral period expires on 30 June 2022. This relief is designed to prevent any immediate disruption to the financial product market while the government deliberates on the long-term policy direction.
Failure to comply with the provisions of the amended class order does not explicitly outline specific offences, penalties, or civil/criminal consequences in the explanatory statement. However, any breach of the requirements set forth by ASIC could potentially lead to enforcement actions by ASIC under the Corporations Act 2001. Such actions might include orders for compliance, fines, or other administrative penalties. The penalties for non-compliance would be determined based on the specific breach and the discretion of ASIC under the relevant sections of the Corporations Act. The instrument does not specify maximum penalties but indicates that enforcement would align with the broader provisions of the Corporations Act.