ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186
About this compilation
Compilation No. 1
This is a compilation of ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186 as in force on 4 July 2017. It includes any commenced amendment affecting the legislative instrument to that date.
This compilation was prepared by the Australian Securities and Investments Commission.
The notes at the end of this compilation (the endnotes) include information
about amending instruments and the amendment history of each amended provision.
Contents
Part 1—Preliminary
1 Name of legislative instrument
3 Authority
4 Definitions
Part 2—Exemption
5 Relief from financial reports and record keeping for foreign licensees
6 Relief from licencing for foreign ADIs
Endnotes
Endnote 1—Instrument history
Endnote 2—Amendment history
Part 1—Preliminary
1 Name of legislative instrument
This is the ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186.
3 Authority
This instrument is made under paragraphs 926A(2)(a) and 992B(1)(a) of Corporations Act 2001.
4 Definitions
In this instrument:
Act means the Corporations Act 2001.
foreign ADI has the meaning given by section 5 of the Banking Act 1959.
Part 2—Exemption
5 Relief from financial reports and record keeping for foreign licensees
(1) A foreign company (the foreign licensee) which holds an Australian financial services licence does not have to comply with any of the following:
(a) paragraph 988A(1)(b) of the Act to the extent that it requires the foreign licensee to keep financial records in accordance with any of the following:
- section 988B of the Act;
- paragraph 988D(a) of the Act;
- any regulations made for the purposes of section 988F of the Act;
(b) Subdivisions C and D of Division 6 of Part 7.8 of the Act;
(c) if the foreign licensee is a foreign ADI—section 988E of the Act.
Note: The foreign licensee does not have to comply with regulations made for the purposes of sections 989B and 989C because of the exemptions from those provisions.
Conditions of exemption
(2) A foreign licensee that relies on this exemption must do all of the following:
(a) the foreign licensee must lodge with ASIC at least once in every calendar year and at intervals of not more than 15 months, a certified copy of:
(i) its balance sheet made up to the end of its last financial year;
(ii) its cash flow statement for its last financial year;
(iii) its profit and loss statement for its last financial year
in such form and containing such particulars which it reasonably believes is required to be prepared by the law for the time being applicable to that foreign licensee in its place of origin.
(b) the documents referred to in paragraph (a) must be accompanied by a certified copy of a document setting out the views of the licensee’s auditor about the documents in paragraph (a) which it reasonably believes were audited in accordance with the requirements for the time being applicable to the licensee in its place of origin.
Note: Where the licensee is subject to subsection 601CK(1) of the Act, compliance with that subsection will also result in this condition being satisfied.
(3) A foreign licensee that does not comply with the conditions in subsection (2) may not rely on the exemption in subsection (1).
6 Relief from licencing for foreign ADIs
A foreign ADI does not have to comply with subsection 911A(1) of the Act to the extent it requires the foreign ADI to hold an Australian financial services licence for the provision of a financial service where all of the following apply:
(a) the service consists only of either or both of the following:
(i) dealing in derivatives;
(ii) dealing in foreign exchange contracts;
(b) the service does not involve the making of a market for derivatives or foreign exchange contracts;
(c) the dealing is entered into for the purpose of managing a financial risk that arises in the ordinary course of the foreign ADI’s banking business;
(d) the dealing is entered into on the foreign ADI’s own behalf;
(e) the counterparty for the dealing is a person as a wholesale client;
(f) the foreign ADI does not hold an Australian financial services licence covering the provision of the service.
Note: ASIC Corporations (Miscellaneous Technical Relief) Instrument 2015/1115 provides relief from subsections 911A(1) and 911B(1) of the Act to a person who provides financial services on behalf of a person who does not need an Australian financial services licence because of an exemption made under section 926A of the Act.
Endnotes
Endnote 1—Instrument history
Instrument number | Date of FRL registration | Date of commencement | Application, saving or transitional provisions |
2016/186 | 31/3/2016 (see F2016L00451) | 1/4/2016 | |
2017/580 | 3/7/2017 (see F2017L00871) | 4/7/2017 | - |
Endnote 2—Amendment history
ad. = added or inserted am. = amended LA = Legislation Act 2003 rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Section 2 | rep. s48D LA |
Section 6 (note) | rs. 2017/580 |
Overview
The ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186 was enacted to provide certain exemptions and relief for foreign financial services licensees and Australian Deposit-taking Institutions (ADIs) under the Corporations Act 2001. This legislative instrument was made under the authority of the Corporations Act 2001 and aims to address the gap in the regulatory framework by offering specific relief to foreign entities operating in Australia's financial sector. The Australian Securities and Investments Commission (ASIC) is the enacting body, with the policy objective being to facilitate smoother operations for foreign financial entities while ensuring adequate oversight and transparency. The exemptions include relief from certain financial reporting and record-keeping requirements for foreign licensees and relief from holding an Australian financial services licence for foreign ADIs engaging in specific financial services.
These provisions allow foreign financial entities to operate more efficiently within Australia, provided they adhere to certain conditions such as lodging financial documents with ASIC annually. This legislative instrument thus seeks to balance regulatory requirements with the need to attract and accommodate foreign investment and services in the Australian financial sector.
Scope and Application
The ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186 applies to foreign companies holding Australian financial services licences, specifically those that are foreign authorised deposit-taking institutions (ADIs). This legislative instrument provides exemptions from certain compliance requirements under the Corporations Act 2001, primarily concerning financial reports and record-keeping obligations for foreign licensees, and licensing requirements for foreign ADIs engaged in specific financial services. The instrument is applicable nationally, extending its reach across the Commonwealth of Australia. The exemptions are subject to certain conditions, such as the foreign licensee lodging certified financial documents with ASIC annually and obtaining an auditor’s opinion on these documents. The instrument also specifies that foreign ADIs are exempt from holding an Australian financial services licence if they are dealing in derivatives or foreign exchange contracts for managing financial risks in their banking business, provided the dealings are for their own account and the counterparties are wholesale clients. This instrument is made under the authority of the Corporations Act 2001 and the Banking Act 1959, and it is complemented by subordinate instruments that further detail exemptions and conditions.
Key Provisions
The ASIC Corporations (Foreign Licensees and ADIs) Instrument 2016/186 introduces specific exemptions for foreign financial services licensees and foreign authorised deposit-taking institutions (ADIs) under the Corporations Act 2001. Section 5 of the instrument exempts a foreign licensee from the requirement to keep financial records and prepare financial reports in accordance with Australian standards, provided they meet certain conditions (section 5(2)). These conditions include lodging specific financial documents with the Australian Securities and Investments Commission (ASIC) annually, accompanied by an auditor's report. Failure to comply with these conditions disqualifies the foreign licensee from the exemption (section 5(3)). Additionally, section 6 exempts foreign ADIs from needing an Australian financial services licence for specific financial services, such as dealing in derivatives or foreign exchange contracts, if these activities are conducted under specific circumstances, such as managing financial risks for the ADI’s banking business and dealing directly with wholesale clients (section 6(a)-(f)).
The obligations imposed by this instrument primarily revolve around reporting and documentation requirements. Foreign licensees must ensure they lodge certified copies of their balance sheets, cash flow statements, and profit and loss statements with ASIC annually, along with an auditor’s report on these documents (section 5(2)(a)-(b)). This is crucial for maintaining their exemption from certain financial reporting obligations. Additionally, foreign ADIs must ensure their dealings in derivatives or foreign exchange contracts align with the specified conditions to benefit from the licencing exemption (section 6(a)-(f)).
Failure to adhere to the obligations set out in this instrument can result in significant consequences. A foreign licensee that does not comply with the reporting requirements specified in section 5(2) cannot rely on the exemption provided by section 5(1). This means they would be subject to the full financial reporting and record-keeping requirements under the Corporations Act 2001. For foreign ADIs, not meeting the conditions outlined in section 6(a)-(f) would mean they would need to obtain an Australian financial services licence for the specified financial services, potentially involving additional regulatory and compliance burdens. While the instrument does not specify penalties for non-compliance, the broader legislative framework under the Corporations Act 2001 could impose fines and other legal consequences for breaches.