ASIC Corporations (Amendment) Instrument 2026/123

Administered by Department of the Treasury

Legislation au F2026L00368 In force Legislative Instrument

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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.

 

Overview

The ASIC Corporations (Amendment) Instrument 2026/123 was enacted by the Australian Securities and Investments Commission (ASIC) to address a specific issue affecting Australian financial services (AFS) licensees in their compliance with financial requirements. This instrument amends the ASIC Corporations (Licence Conditions – Treatment of Lease Assets) Instrument 2021/229 (the Principal Instrument) by extending its relief provisions for five years until 1 May 2031. The original Principal Instrument had been introduced to resolve an anomaly that arose when AFS licensees applied the Australian Accounting Standard AASB 16 Leases, which required lessees to recognise all leases as both assets and liabilities on their balance sheets. This accounting treatment sometimes caused discrepancies when calculating the net tangible assets, surplus liquid funds, and adjusted surplus liquid funds, essential components of an AFS licensee's financial requirements. The Amending Instrument maintains the relief by deeming that right-of-use assets under leases are not excluded assets for the purposes of AFS licensees' duties to comply with their licence conditions, ensuring consistency in financial compliance until the instrument's repeal on 1 May 2031.

Scope and Application

The ASIC Corporations (Amendment) Instrument 2026/123 applies to Australian financial services (AFS) licensees who are entities authorised to provide financial services in Australia, as defined under the Corporations Act 2001. This Amending Instrument extends and eventually repeals the relief provided under the ASIC Corporations (Licence Conditions – Treatment of Lease Assets) Instrument 2021/229 (Principal Instrument), which deals with the treatment of right-of-use assets under leases for AFS licensees. The Amending Instrument operates nationally across Australia, aligning with the jurisdictional reach of the Corporations Act 2001. It does not specify any exclusions, exemptions, or thresholds beyond the scope of the Principal Instrument it amends. The Amending Instrument extends the relief for five years until 1 May 2031 and repeals the Principal Instrument at the end of that period, thereby ensuring that right-of-use assets under leases are not considered excluded assets for the purpose of satisfying the AFS licensee's financial requirements.

Key Provisions

The ASIC Corporations (Amendment) Instrument 2026/123 (Amending Instrument) extends the relief provided by the ASIC Corporations (Licence Conditions – Treatment of Lease Assets) Instrument 2021/229 (Principal Instrument) for a period of five years, until 1 May 2031, and repeals the Principal Instrument at the end of that period. The Principal Instrument inserts a provision into the Corporations Act 2001 (Act) 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 duty to comply with its AFS licence conditions, including financial requirements (section 912A(1)(b) of the Act). This relief addresses an anomaly arising from the application of Australian Accounting Standard AASB 16 Leases, which requires lessees to recognise all leases as both an asset and a liability in their balance sheets. The Amending Instrument thus continues to support AFS licensees in meeting their financial obligations by ensuring right-of-use assets under leases are not considered excluded assets when calculating net tangible assets, surplus liquid funds, or adjusted surplus liquid funds. The Amending Instrument imposes specific obligations on AFS licensees by extending the relief initially provided by the Principal Instrument. AFS licensees must continue to adhere to their AFS licence conditions, which include financial requirements, but are now relieved from considering right-of-use assets under leases as excluded assets when calculating their adjusted assets. This means that AFS licensees can include the corresponding lease liability in their adjusted liabilities calculations without the offsetting requirement to exclude the right-of-use asset from their adjusted assets calculations. By doing so, the Amending Instrument ensures that AFS licensees can meet their financial requirements more effectively and without the anomaly caused by the recognition of right-of-use assets under leases. Breaches of the provisions in the Amending Instrument, or failure to comply with the obligations imposed by the Act, could result in significant consequences for AFS licensees. The Act provides for civil and criminal penalties for non-compliance with AFS licence conditions and financial requirements. Civil penalties can include substantial fines, as outlined in the Act, while criminal penalties can include imprisonment and/or fines, depending on the severity and intent of the breach. The precise penalties are not specified in the Amending Instrument itself but are detailed in the Corporations Act 2001, where contraventions of AFS licence conditions and financial requirements can attract significant penalties. The Act also provides for other remedies, including the ability for ASIC to cancel or suspend an AFS licence, which could severely impact an AFS licensee's operations and reputation.

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Corporate Law & Governance
Instrument
Instrument
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Definitions & Interpretation
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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.