ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993

Administered by Department of the Treasury

Legislation au F2016L01620 In force Legislative Instrument

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Explanatory Statement for
ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 and ASIC Corporations (Repeal) Instrument 2016/1005

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 and ASIC Corporations (Repeal) Instrument 2016/1005 under paragraphs 741(1)(a) and 1020F(1)(a) of the Corporations Act 2001 (the Act).

Paragraph 741(1)(a) provides that ASIC may exempt a person from a provision of Chapter 6D of the Act. Paragraph 741(2)(b) provides that the exemption may apply to all persons, specified persons or a specified class of persons.

Paragraph 1020F(1)(a) provides that ASIC may exempt a person or a class of persons from all or specified provisions of Part 7.9 of the Act.

Under subsection 33(3) of the Acts Interpretation Act 1901 (as in force as at 1 January 2005 and as applicable to the relevant powers because of section 5C of the Act), 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.

 

  1.                                             Background

Under the Legislative Instruments Act 2003, legislative instruments cease automatically, or ‘sunset’, after 10 years, unless action is taken to exempt or preserve them. To preserve its effect, a legislative instrument must be remade before its sunset date.

ASIC Class Order [CO 02/225] is scheduled to sunset on 1 April 2017. ASIC Corporations (Repeal) Instrument 2016/1005 repeals [CO 02/225] while ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 continues the relief that was given by [CO 02/225] in a new form.

ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 provides relief in connection with ‘rights issue notifications’ (i.e. the notification form that members receive in a rights offer informing them of their individual entitlement to acquire a specified number of shares or interests under the offer). The standard form used by listed companies, referred to as an ‘entitlement and acceptance form’, combines the ‘rights issue notification’ with an acceptance form and is provided to members with the offer document or disclosure document, as applicable, for the rights offer.

In a renounceable rights offer, one of the options available to the offeree includes transferring all or part of their entitlement to another person. The transfer of such an entitlement is governed by Division 3 of Part 7.11 of the Act and regulation 7.11.11(2) of the Corporations Regulations 2001 (the Regulations). The latter provides that a sufficient transfer of a ‘Division 3 right’ can be effected by a document duly completed in accordance with specified forms set out in Schedule 2A to the Regulations.

In practice, this is effected by the offeree (i.e. the transferor) sending a completed renunciation and transfer form to the relevant share registry and, if the transferee wishes to take up all or part of the entitlement transferred to them, they must then send their application money together with the entitlement and acceptance form to the registry.

Certain provisions of Chapter 6D and Part 7.9 may require these forms to be included in or accompanied by a disclosure document or Product Disclosure Statement. ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 provides disclosure relief to facilitate the sale or transfer of rights by offerees in a renounceable rights offer.

 

2.                                                Purpose of the instrument

The purpose of ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 is to preserve the effect of [CO 02/225], which was scheduled to sunset on 1 April 2017 under the Legislative Instruments Act 2003. ASIC considers that the relief in the instrument continues to form a necessary and useful part of the legislative framework.

The instrument re-makes the relief that was provided by [CO 02/225] without significant changes. Minor amendments were made to the conditions of the relief so as to facilitate electronic access to documents and to remove unnecessary references (see Consultation Paper 261: Remaking and repealing ASIC class orders on rights issue notifications and money market deposits).

 

ASIC Corporations (Repeal) Instrument 2016/1005 repeals [CO 02/225] as the relief contained within that class order is now provided by ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993.  

 

3.                                                Operation of the instrument

ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993

Chapter 6D disclosure relief

ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 provides relief from subsections 721(1), 723(1) and 727(2) of the Act to persons involved in the renunciation and transfer of rights issued under a renounceable rights issue, but only to the extent that those provisions might otherwise require a ‘rights renunciation form’ to be included in or accompanied by a disclosure document.

For the purposes of the instrument, a rights renunciation form means:

(a)  Form 5, 6, 7 or 8 in Schedule 2A to the Regulations or a form that is substantially similar to one of those Forms; or

(b) a notification form informing holders of Division 3 assets of their individual entitlement to acquire a specified number of Division 3 assets under a renounceable rights issue.

Part 7.9 disclosure relief

The instrument also provides relief from sections 1012B and 1016A of the Act to responsible entities of listed registered schemes that make offers to issue and issues interests in the scheme under a renounceable rights issue, but only to the extent that those provisions might require:

(a)  a rights renunciation form to be included in or be accompanied by a Product Disclosure Statement; and

(b)  the responsible entity to give a Product Disclosure Statement to a person (a transferee) to whom Division 3 rights are transferred or to a transferee who exercises such rights.

Conditions

In order to rely on the relief in the instrument, the listed body or the responsible entity (as applicable) must:

(a)  have arrangements in place to ensure that during the period that offers under the renounceable rights issue remain open:

(i)            the disclosure document or Product Disclosure Statement for the renounceable rights issue is made available for inspection at the registered office of the body or responsible entity or published on a website of the body or responsible entity;

(ii)            if requested by a person (other than an excluded person), the disclosure document or Product Disclosure Statement is given to the person free of charge; and

(b)  announce to each prescribed financial market on which the body or scheme is listed that the arrangements specified in paragraph (a) have been or will be put in place.

ASIC Corporations (Repeal) Instrument 2016/1005

ASIC Corporations (Repeal) Instrument 2016/1005 repeals [CO 02/225].

 

 

4.                                                Consultation

ASIC undertook public consultation in relation to its proposal to re-make the relief in [CO 02/225] in Consultation Paper 261: Remaking and repealing ASIC class orders on rights issue notifications and money market deposits. ASIC received one submission, which was in support of the proposals outlined in the paper.

 

 

Overview

The ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 and ASIC Corporations (Repeal) Instrument 2016/1005 were enacted under the Corporations Act 2001, aimed at addressing the sunsetting of ASIC Class Order [CO 02/225], which provided relief related to rights issue notifications for members participating in renounceable rights offers. These instruments were created to ensure the continued applicability of the relief provisions previously outlined in the class order, which had been scheduled to expire under the Legislative Instruments Act 2003. ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 specifically provides relief from certain disclosure requirements under the Act to facilitate the sale or transfer of rights by offerees, while ASIC Corporations (Repeal) Instrument 2016/1005 repeals the superseded class order. The objective of these instruments is to maintain a consistent and effective regulatory framework for renounceable rights issues within the legislative context of the Corporations Act. The Australian Securities and Investments Commission (ASIC) introduced these instruments to preserve and modernise the relief provisions that were previously outlined in [CO 02/225], ensuring that the necessary disclosure relief continues to support the orderly conduct of renounceable rights offers by listed companies. The relief provided by these instruments facilitates the renouncement and transfer of rights in a renounceable rights issue, allowing for the electronic access to necessary documents and the removal of unnecessary references. ASIC undertook public consultation and received support for the proposals, ensuring that the updated instruments reflect contemporary market practices and requirements.

Scope and Application

The ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 and ASIC Corporations (Repeal) Instrument 2016/1005 are legislative instruments created under the Corporations Act 2001 to manage and provide relief for renounceable rights issues in securities by listed companies and responsible entities of listed registered schemes. These instruments apply to companies and entities involved in renounceable rights issues, providing relief from certain disclosure requirements under the Act and Corporations Regulations 2001, specifically relating to the renounceable rights issue notification forms. The instruments apply nationally, impacting entities and individuals involved in securities trading across Australia. The relief applies to all entities involved in renounceable rights issues, ensuring they are exempt from certain disclosure requirements to the extent that those requirements might otherwise necessitate the inclusion of a rights renunciation form in a disclosure document or Product Disclosure Statement. However, to benefit from this relief, entities must ensure that the disclosure document or Product Disclosure Statement for the renounceable rights issue is accessible for inspection or provided free of charge upon request, and announce the arrangements to relevant financial markets. ASIC Corporations (Repeal) Instrument 2016/1005 repeals the ASIC Class Order [CO 02/225], which was due to sunset on 1 April 2017, replacing it with the new relief provided by the 2016 instrument.

Key Provisions

The ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 provides relief from certain disclosure requirements under the Corporations Act 2001 (the Act) for parties involved in renounceable rights issues. Specifically, sections 721(1), 723(1), and 727(2) of the Act, which pertain to disclosure documents, are exempted to the extent that they might otherwise require a 'rights renunciation form' to be included with the disclosure document (sections 2 and 3). This relief applies to the renouncement and transfer of rights issued under a renounceable rights issue. Similarly, sections 1012B and 1016A of the Act, which relate to the provision of a Product Disclosure Statement, are also exempted to the extent that they might require a 'rights renunciation form' to be included or the responsible entity to provide a Product Disclosure Statement to a transferee of Division 3 rights (section 3). To benefit from this relief, the listed body or the responsible entity must ensure that the disclosure document or Product Disclosure Statement for the renounceable rights issue is made available for inspection at their registered office or published on their website during the period the offer remains open (section 3(a)(i)). They must also provide the disclosure document or Product Disclosure Statement free of charge to any person (other than an excluded person) who requests it (section 3(a)(ii)). Furthermore, they must announce to each prescribed financial market on which they are listed that the arrangements specified in section 3(a) have been or will be put in place (section 3(a)(iii)). The Act imposes certain obligations on the entities seeking to benefit from this relief. Firstly, they must ensure that the disclosure document or Product Disclosure Statement is readily available for inspection or publication as specified. Secondly, they must provide the document free of charge upon request from any person, excluding certain categories of persons. Thirdly, they must make announcements to relevant financial markets regarding the arrangements they have put in place to meet the disclosure requirements. Failure to comply with these obligations may result in the loss of the relief provided by the instrument, thereby subjecting the entities to the full disclosure requirements of the Act. There are no specific offences, penalties, or consequences outlined in the ASIC Corporations (Renounceable Rights Issue Notifications) Instrument 2016/993 for non-compliance with the relief provisions. However, failure to comply with the general disclosure requirements of the Corporations Act 2001 could result in civil or criminal penalties as prescribed by the Act. For instance, under section 1317E of the Act, a person who contravenes a civil penalty provision can be fined up to $210,000 for a corporation and $42,000 for an individual, depending on the severity of the breach. Additionally, criminal penalties may apply for serious or repeated breaches, which could include fines and imprisonment as stipulated in the Act.

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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.