ASIC Corporations (Disclosing Entities) Instrument 2016/190

Overview

The ASIC Corporations (Disclosing Entities) Instrument 2016/190 was enacted to provide specific relief to certain entities from certain disclosure obligations under the Corporations Act 2001. This legislative instrument was made under subsection 341(1) of the Corporations Act, reflecting the need to streamline and simplify regulatory compliance for disclosing entities, particularly those with shorter financial years or those that cease to be disclosing entities before the reporting deadline. The instrument aims to alleviate administrative burdens while maintaining essential regulatory oversight. It provides relief to companies, registered schemes, and retail Collective Investment Vehicles (CCIV) by exempting them from certain disclosure requirements if they cease to be disclosing entities before specified deadlines. Additionally, it offers relief to entities with short first financial years, provided they are either listed or unlisted and comply with specific notification requirements. This instrument, prepared by the Australian Securities and Investments Commission (ASIC), is designed to address practical challenges faced by entities in complying with the disclosure provisions of the Corporations Act. By providing these exemptions, the instrument aims to balance the need for regulatory compliance with the operational realities of businesses, thereby promoting a more efficient and less burdensome regulatory environment.

Scope and Application

The ASIC Corporations (Disclosing Entities) Instrument 2016/190 applies to companies, registered schemes, and retail continuous disclosure investment vehicles (CCIV) that are classified as disclosing entities under the Corporations Act 2001. Specifically, the instrument provides relief to these entities if they cease to be disclosing entities before certain reporting deadlines. For companies and registered schemes, this relief applies if they stop being disclosing entities before the earlier of three months after the end of their financial year or, in the case of companies, 21 days before the next Annual General Meeting. For retail CCIVs, the relief applies if they cease to be disclosing entities in relation to a sub-fund before three months after the end of their financial year. Additionally, entities with short first financial years, lasting eight months or less, are exempt from certain reporting requirements for half-year periods within that financial year. These exemptions apply to listed and unlisted entities, provided they notify the relevant financial market operator or ASIC, as applicable, and disclose the reliance on this section in their directors’ reports. This legislative instrument is made under the Corporations Act 2001 and is administered by the Australian Securities and Investments Commission (ASIC), extending its reach to the Commonwealth level. The instrument has been subject to amendments, with the most recent amendment, 2023/142, coming into effect on 5 January 2024, and it includes provisions for instrument history and amendment history.

Key Provisions

The ASIC Corporations (Disclosing Entities) Instrument 2016/190 outlines specific reliefs and requirements for entities that fall under the category of "disclosing entities" under the Corporations Act 2001. According to section 5 of the instrument, companies, registered schemes, and retail continuous disclosure investment vehicles (CCIV) that cease to be disclosing entities before the reporting deadline are relieved from certain compliance requirements of Chapter 2M of the Act. This relief applies if the entity ceases to be a disclosing entity before the earlier of three months after the end of its relevant financial year or, in the case of a company, 21 days before the next Annual General Meeting (AGM) (section 5(1)). A similar provision applies to retail CCIVs in relation to their sub-funds, allowing them relief if they cease to be a disclosing entity before three months after the end of their financial year (section 5(1A)). This relief is contingent on the entity complying with Chapter 2M of the Act as if it had not been a disclosing entity and on the entity's directors resolving that there are no reasons to believe the entity may become a disclosing entity before the end of the subsequent financial year (section 5(2)). Entities with short first financial years, defined as those lasting eight months or less, are also provided with relief under section 6 of the instrument. These entities, including companies, registered schemes, and retail CCIVs, are exempt from complying with sections 302 and 306 of the Act for a half-year within their first financial year. To qualify for this relief, the entity must either be listed and provide a notice to the operator of each relevant financial market, or be unlisted and provide a notice to ASIC. Additionally, the entity's directors' report must explain the effect of this section and state the entity's reliance on it (section 6(2)). The instrument also addresses the potential consequences for non-compliance. While specific offences, penalties, or civil and criminal consequences are not detailed within the operative sections of the instrument, entities that fail to adhere to the Corporations Act 2001 and its related instruments could face legal repercussions. Penalties for non-compliance with the Corporations Act can include fines and imprisonment for individuals, and fines for bodies corporate, as stipulated in the principal Act and other relevant legislation. The exact penalties would depend on the nature and severity of the breach, as well as any specific provisions related to the type of entity involved.