EXPLANATORY STATEMENT for
ASIC CORPORATIONS (REPEAL) INSTRUMENT 2016/1053
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Repeal) Instrument 2016/1053 under subsection 1020F(1) of the Corporations Act 2001 (the Act).
Section 1020F(1) of the Act provides that ASIC may:
(a) exempt a person or class of persons from all or specified provisions of Part 7.9 of the Act; or
(b) exempt a financial product or a class of financial products from all or specified provisions of Part 7.9 of the Act; or
(c) declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.
This legislative instrument repeals 3 class orders made by ASIC. Subsection 1020F(1) of the Act was the source of power for each of those class orders.
As this instrument is repealing those class orders, subsection 1020F(1) of the Act is also the source of power to make this legislative instrument. Under subsection 33(3) of the Acts Interpretations Act 1901 (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.
- Background
ASIC has recently reviewed 3 class orders which relate primarily to the disclosure requirements in Chapter 7 of the Act. ASIC has decided to remake the relief found in each of those class orders, where that relief is considered to still be both necessary and appropriate.
The Legislation Act 2003 (the LA) provides for the periodic expiry of legislative instruments (‘sunsetting’) to ensure that they are kept up to date and only remain in force for as long as they are needed. The 3 class orders reviewed, being legislative instruments, were scheduled to eventually expire under the sunsetting provisions of the LA.
ASIC’s review of the policy underlying these class orders — and subsequent decision to reissue the relief — has provided an opportunity to deal with this imminent expiry and ensure that the relevant relief will continue to be available.
2. Purpose of the instrument
The purpose of ASIC Corporations (Repeal) Instrument 2016/1053 is to repeal, in a single instrument, 3 class orders which relate primarily to the disclosure provisions in Chapter 7.
The relief found in all 3 class orders is remade in 3 new legislative instruments.
| Repealed class order | New legislative instrument |
1. | [CO 02/1072] Product Disclosure Statements: Top-up relief for managed investment schemes | ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054 |
2. | [CO 03/237] Updated information in Product Disclosure Statements | ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 |
3. | [CO 03/1092] Further relief for joint Product Disclosure Statements | ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056 |
3. Operation of the instrument
ASIC Corporations (Repeal) Instrument 2016/1053 repeals the 3 class orders specified in the schedule to that instrument.
4. Consultation
On 23 March 2016 ASIC released CP 255 Remaking ASIC class orders on financial services disclosure requirements, seeking feedback on proposals to remake, without significant changes 3 class orders relating to Chapter 7 of the Act. CP 255 referred to the expiry of class orders scheduled to eventually sunset under the LA and also sought feedback on proposals to reissue the legislative instruments. The consultation period closed on 26 April 2016.
The feedback received in response to CP 255 supported our proposals to remake the relevant class orders, without significant changes.
Following the consultation, ASIC decided to proceed to reissue the class orders as proposed by CP 255. Notwithstanding the consultation, ASIC considers that ASIC Corporations (Repeal) Instrument 2016/1053 is of a minor or machinery nature and, having regard to the contemporaneous reissuing of the class orders, does not substantially alter existing arrangements.
Overview
The ASIC Corporations (Repeal) Instrument 2016/1053 was enacted to streamline and maintain the effectiveness of regulatory relief previously provided through three class orders under the Corporations Act 2001. This instrument was created by the Australian Securities and Investments Commission (ASIC) under the authority granted by the Act, specifically section 1020F(1). The primary objective of this repeal was to address the imminent expiration of the class orders due to the sunsetting provisions of the Legislation Act 2003, while ensuring that the necessary relief measures remained in effect. ASIC reviewed the class orders and decided to reissue them with minimal changes, thereby continuing to provide essential regulatory relief related to disclosure requirements in Chapter 7 of the Corporations Act.
ASIC consulted with stakeholders through Consultation Paper 255, released on 23 March 2016, which sought feedback on the proposed remaking of the class orders. The consultation period concluded on 26 April 2016, and the feedback received supported the proposed reissuance without significant changes. Consequently, ASIC proceeded with the reissue of the class orders, resulting in the creation of three new legislative instruments: ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054, ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055, and ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056. ASIC Corporations (Repeal) Instrument 2016/1053 effectively repealed the original class orders and replaced them with these new instruments, thereby maintaining the necessary regulatory framework.
Scope and Application
The ASIC Corporations (Repeal) Instrument 2016/1053, made under the Corporations Act 2001, serves to repeal three specific class orders that were previously enacted by the Australian Securities and Investments Commission (ASIC). These class orders primarily concern disclosure requirements outlined in Chapter 7 of the Act. The repeal and subsequent reissuance of these class orders ensure the continuity of necessary relief, addressing the impending expiry of these legislative instruments under the Legislation Act 2003. This instrument effectively streamlines the regulatory framework by consolidating and updating the relief provisions into three new legislative instruments, namely ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054, ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055, and ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056. This approach allows ASIC to maintain the necessary oversight and regulatory standards without significant alterations to existing arrangements, ensuring that the relief remains both necessary and appropriate in accordance with the feedback received during the consultation process.
Key Provisions
The ASIC Corporations (Repeal) Instrument 2016/1053 serves to repeal three class orders made by ASIC under the Corporations Act 2001 (the Act). Specifically, section 1020F(1) of the Act authorises ASIC to exempt certain persons or financial products from specified provisions of Part 7.9 of the Act or to declare that such provisions apply with modifications. The repealed class orders were CO 02/1072, CO 03/237, and CO 03/1092, all of which related to disclosure requirements in Chapter 7. This repeal is intended to streamline regulatory measures and ensure the continued applicability of necessary reliefs, which are subsequently re-established in three new legislative instruments.
The obligations and requirements imposed by the repealed class orders pertain to the disclosure obligations of financial products and managed investment schemes. For instance, CO 02/1072 provided top-up relief for managed investment schemes, allowing for simplified product disclosure statements. CO 03/237 mandated updated information in product disclosure statements to ensure that investors receive current and comprehensive information. Lastly, CO 03/1092 provided relief for joint product disclosure statements, which facilitated the disclosure process for products offered jointly by multiple entities. These obligations are now reflected in the new instruments: ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054, ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055, and ASIC Corporations (Joint Product Disclosure Statements) Instrument 2016/1056, respectively.
Failure to comply with the provisions outlined in the repealed class orders could result in various consequences. Under the Corporations Act, non-compliance with disclosure requirements can lead to civil penalties. For corporations, the maximum penalty for breaches of disclosure requirements can be up to $1.65 million, as stipulated in section 1317E of the Act. Additionally, individuals responsible for the breach may face penalties of up to $198,000 and imprisonment for up to 5 years, as outlined in section 1317G. The new instruments also impose similar penalties for non-compliance, ensuring that the regulatory framework remains stringent to protect investor interests.