ASIC Corporations (Amendment) Instrument 2024/618

Administered by Department of the Treasury

Legislation au F2024L01209 Not in force Legislative Instrument

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Explanatory Statement

 

ASIC Corporations (Amendment) Instrument 2024/618

This is the Explanatory Statement for ASIC Corporations (Amendment) Instrument 2024/618.

The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).

Summary

  1.              ASIC Corporations (Amendment) Instrument 2024/618 (the Amendment Instrument) amends ASIC Corporations (Employee redundancy funds relief) Instrument 2015/1150 (the Principal Instrument) to:
    1.        extend the relief provided to employee redundancy funds under the Principal Instrument for 18 months until 1 April 2026; and
    2.       insert a new condition that a person who relies on the relief must notify ASIC by the later of 31 October or one month after the day the person first relies on the relief.

Purpose of the instrument

  1.              Employee redundancy funds accept contributions from employers in construction and allied industries on behalf of their employees. The contributions represent redundancy benefits, which will be payable to the employee upon termination or cessation of employment, generally for any reason other than misconduct. 
  2.              The Principal Instrument provides relief from the AFS licensing and managed investment provisions of the Corporations Act 2001 (Corporations Act) for operators of employee redundancy funds. Our relief means that operators of these funds are not required to hold an AFS licence, register the employee redundancy fund as a managed investment scheme, or comply with the managed investment provisions of the Corporations Act. 
  3.              Our relief under the Principal Instrument is due to expire on 1 October 2024.
  4.              The purpose of the Amendment Instrument is to extend the relief provided to employee redundancy funds under the Principal Instrument until 1 April 2026 to facilitate further work on a permanent framework for the regulation of these funds.
  5.              The purpose of the Amendment Instrument is also to insert a new condition that a person who relies on the relief must notify ASIC by the later of 31 October or one month after the day the person first relies on the relief

Consultation

  1.              In August 2024, ASIC consulted on a proposal to extend our current relief for a period of five years. We received four submissions that generally supported extending the relief and one submission that did not support our proposal. 

Operation of the instrument

  1.              Item 1 of Schedule 1 to the Amendment Instrument amends the Principal Instrument by omitting 1 October 2024 and substituting 1 April 2026. The effect is that the relief provided to employee redundancy funds under the Principal Instrument continues to apply until 1 April 2026.
  2.              Item 2 of Schedule 1 inserts a new condition that a person who relies on the relief must notify ASIC by the later of 31 October or one month after the day the person first relies on the relief.
  3.          The Amendment Instrument commences on the day after it is registered.

Legislative instrument and primary legislation 

  1.          The subject matter and policy implemented by the Amendment Instrument is more appropriate for a legislative instrument rather than primary legislation because it amends an existing legislative instrument which would otherwise expire on 1 October 2024.

Duration of the instrument

  1.          The effect of the Amendment Instrument is to extend the duration of the Principal Instrument by 18 months. ASIC considers this period is appropriate to provide certainty for operators of employee redundancy funds while further work is undertaken on a permanent framework for the regulation of these funds.

Legislative authority

  1.          The Amendment Instrument is made under paragraphs 601QA(1)(a), 926A(2)(a), 992B(1)(a) and 1020F(1)(a) of the Corporations Act.
  2.          Under subsection 33(3) of the Acts Interpretation Act 1901, 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.
  3.          The Amendment Instrument is a disallowable legislative instrument.

Statement of Compatibility with Human Rights 

  1.          The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.

Attachment

Statement of Compatibility with Human Rights

 

This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.  

ASIC Corporations (Amendment) Instrument 2024/618

Overview

  1.              ASIC Corporations (Amendment) Instrument 2024/618 amends ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150 to extend the exemption for employee redundancy schemes from financial services licensing and the managed investments and associated provisions of the Corporations Act 2001 until 1 April 2026 and insert a new condition that a person who relies on the relief must notify ASIC by the later of 31 October or one month after the day the person first relies on the relief.

Assessment of human rights implications

  1.              This instrument does not engage any of the applicable rights or freedoms.  

Conclusion

  1.              This 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 ASIC Corporations (Amendment) Instrument 2024/618 was enacted to address the impending expiration of the relief provisions under ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150, which was set to expire on 1 October 2024. This amendment, introduced by the Australian Securities and Investments Commission (ASIC), extends the relief for employee redundancy funds until 1 April 2026. The policy objective is to provide continued exemption from the AFS licensing and managed investment scheme provisions of the Corporations Act 2001, thereby allowing operators of employee redundancy funds to continue their operations without needing to hold an AFS licence or register their funds as managed investment schemes. Additionally, the Amendment Instrument imposes a new condition requiring individuals relying on the relief to notify ASIC by 31 October or one month after they first rely on the relief, whichever is later. This extension aims to offer stability and certainty to fund operators while ASIC develops a permanent regulatory framework for these funds.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2024/618 applies to operators of employee redundancy funds in the construction and allied industries. These funds accept contributions from employers on behalf of their employees, which represent redundancy benefits payable upon termination or cessation of employment, excluding cases of misconduct. The Amendment Instrument extends the relief provided by the ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150, exempting these funds from the need to hold an Australian Financial Services (AFS) licence, register as a managed investment scheme, or comply with the managed investment provisions of the Corporations Act 2001. The relief is extended until 1 April 2026, providing a transitional period for developing a permanent regulatory framework. The Amendment Instrument also introduces a new condition requiring those relying on the relief to notify ASIC by the later of 31 October or one month after first relying on the relief. The instrument operates across Australia, in line with the jurisdictional reach of the Corporations Act 2001. The Amendment Instrument is a disallowable legislative instrument, and no exclusions or exemptions are specified in the text provided.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2024/618 primarily amends the ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150 to extend the exemption for employee redundancy schemes from financial services licensing and the managed investment provisions of the Corporations Act 2001 until 1 April 2026. This extension allows operators of these funds to continue operating without the need for an Australian Financial Services (AFS) licence, registration as a managed investment scheme, or compliance with managed investment provisions. Additionally, it introduces a new condition under section 2 of Schedule 1 that requires any person relying on this relief to notify ASIC by the later of 31 October 2024 or one month after they first rely on the relief. This amendment imposes specific obligations on the parties involved. Operators of employee redundancy funds must ensure they are aware of the extended relief period and comply with the new notification requirement. This means that if they start relying on the relief after 1 October 2024, they must notify ASIC by 31 October 2024 or within one month of first relying on the relief, whichever is later. This notification requirement is designed to keep ASIC informed about the continued use of the relief and ensure transparency and accountability in the operation of these funds. The Amendment Instrument also outlines potential consequences for non-compliance. Although the specific penalties are not detailed in the explanatory statement, under the Corporations Act 2001, failure to comply with regulatory requirements can result in civil or criminal penalties. These may include fines, imprisonment, or both, depending on the severity of the breach. The exact penalties would be determined based on the specific circumstances of the non-compliance and the relevant provisions of the Corporations Act. Operators must therefore ensure they adhere to both the extended relief period and the new notification requirements to avoid any legal repercussions.

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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.