ASIC Corporations (Amendment) Instrument 2026/123

Explanatory Statement

ASIC Corporations (Amendment) Instrument 2026/123

This is the Explanatory Statement for ASIC Corporations (Amendment) Instrument 2026/123 (Amending Instrument).

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

Summary

1.              ASIC Corporations (Licence Conditions – Treatment of Lease Assets) Instrument 2021/229 (Principal Instrument) inserts a provision into the Corporations Act 2001 (Act) the effect of which is to deem that a right-of-use asset under a lease is not an excluded asset for the purposes of an Australian financial services (AFS) licensee’s general duty under paragraph 912A(1)(b) to comply with its AFS licence conditions, which includes a licensee’s financial requirements.

Purpose of the instrument

1.              The Amending Instrument extends the relief provided under the Principal Instrument for five years until 1 May 2031 and repeals the Principal Instrument at the end of that period.
2.              Generally, an AFS licensee must have adequate resources, including financial resources, to provide the financial services that it is authorised to provide under the terms of its AFS licence: see paragraph 912A(1)(d) of the Act. An AFS licensee must also comply with the conditions on its AFS licence: see paragraph 912A(1)(b) of the Act.
3.              The financial requirements imposed on AFS licensees are set out in ASIC instruments and in AFS licence conditions, which are based on Pro Forma 209 Australian financial services licence conditions (PF 209). The financial requirements include requirements for net tangible assets (NTA), surplus liquid funds (SLF) and adjusted surplus liquid funds (ASLF).
4.              To calculate its NTA, SLF and ASLF requirements, an AFS licensee must calculate its ‘adjusted assets’, which is the total assets on its balance sheet minus any ‘excluded asset’. Intangible assets, such as ‘right-of-use’ assets under a lease, were previously listed as ‘excluded assets’ in PF 209 and thus in some AFS licence conditions. A right-of-use asset arising under a lease is no longer an excluded asset under PF 209, but remains an excluded asset under some AFS licences
5.              The Principal Instrument was made to address an anomaly that flows from a lessee applying Australian Accounting Standard AASB 16 Leases (AASB 16), which requires a lessee to recognise all leases in its balance sheet as both an asset and a liability. When calculating adjusted assets, an AFS licensee may be required, under the conditions of  its AFS licence, to exclude a right-of-use asset as an intangible asset. However, the licensee will generally have to include the corresponding lease liability in the calculation of adjusted liabilities. This treatment may result in an AFS licensee being unable to satisfy their NTA, SLF or ASLF requirements.  
6.              The Principal Instrument inserts a provision in section 912A of the Act that deems that an AFS licensee’s right-of-use asset is not an excluded asset for the purpose of the AFS licensee’s duty under section 912A to comply with its licence conditions, despite anything to the contrary in a condition of the licence, including in a definition in the licence that applies for the purposes of a condition.

Consultation

1.              Before making the Amending Instrument, ASIC undertook a streamlined public consultation inviting feedback on a proposal to extend the relief under the Principal Instrument for a period of five years until 1 May 2031, as set out in CS 40 Proposed remake of relief instruments for AFS licensees and overseas banks.
2.              The consultation ran from 4 December 2025 to 23 January 2026 and involved the publication of a news item and a consultation webpage on ASIC’s website attaching a draft amending instrument. ASIC did not receive any submissions and no changes to the draft amending instrument were made following the consultation. 

Operation of the instrument

Part 1 – Preliminary

1.          Section 1 of the Amending Instrument specifies the title of the Instrument.
2.          Section 2 of the Amending Instrument specifies that the Instrument commences on the day after it is registered on the Federal Register of Legislation.
3.          Section 3 of the Amending Instrument specifies that it is made under subsections 926A(2)  of the Act.
4.          Section 4 of the Amending Instrument provides that each instrument specified in its Schedule is amended as set out in the applicable items in the Schedule.

Schedule 1 – Amendments

1.          Item 1 of the Schedule to the Amending Instrument amends the Principal Instrument to insert a simplified outline of the Principal Instrument. Its purpose is to assist readers in understanding the substantive provisions. However, the outline is not intended to be comprehensive. Readers should rely on the substantive provisions when considering the Principal Instrument’s effect.
2.          Item 2 of the Schedule to the Amending Instrument inserts a heading above notional subsection 912A(4A), as inserted by the Principal Instrument.
3.          Item 3 of the Schedule to the Amending Instrument amends the repeal date of the Principal Instrument to 1 May 2031.

Legislative instrument and primary legislation 

1.          The subject matter implemented by the Amending Instrument is appropriate for a legislative instrument rather than primary legislation because the Amending Instrument amends a legislative instrument made by ASIC.

Duration of the instrument

1.          The Amending Instrument amends the repeal date of the Principal Instrument to the start of 1 May 2031.
2.          The Amending Instrument will be repealed under section 48A of the Legislation Act 2003.

Legislative authority

1.          The Amending Instrument is a disallowable instrument made under subsection 926A(2) of the Act as it amends the Principal Instrument, which was also made under subsection 926A(2) of the Act. 
2.          Paragraph 926A(2)(c) provides that ASIC may declare that provisions to which Part 7.6 (other than Divisions 4 and 8) of the Act apply 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.
3.          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.

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 2026/123

Overview

1. ASIC Corporations (Amendment) Instrument 2026/123 (Amending Instrument) extends the relief in ASIC Corporations (Licence Conditions – Treatment of Lease Assets) Instrument 2021/229 (Principal Instrument) for five years until 1 May 2031 and repeals the Principal Instrument at the end of that period.

2. The Principal Instrument provides relief by inserting subsection 912A(4A) into the Corporations Act 2001 (Act). The effect of the inserted provision is to deem that a right-of-use asset under a lease is not an excluded asset for the purposes of an Australian financial services licensee’s general duty under paragraph 912A(1)(b) of the Act to comply with its licence conditions, which includes a licensee’s financial requirements.

Assessment of human rights implications

3. The Amending Instrument does not engage any of the applicable rights or freedoms.

Conclusion

4. The Amending 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.