ASIC Corporations (Repeal) Instrument 2016/391

Administered by Department of the Treasury

Legislation au F2016L00793 Not in force Legislative Instrument

Legislation content

 

EXPLANATORY STATEMENT
ASIC CORPORATIONS (REPEAL) INSTRUMENT 2016/391

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Repeal) Instrument 2016/391 (the repeal instrument) under subsection 341(1) of the Corporations Act 2001 (the Act).

Subsection 341(1) provides that ASIC may make an order in writing in respect of a specified class of companies, registered schemes or disclosing entities, relieving directors, the companies, registered schemes or disclosing entities themselves, or auditors of the company, registered schemes or disclosing entities, from any of the requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Act.

This instrument is a repeal instrument. 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 an instrument, the power includes a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary the instrument.

A.   Repeal of ASIC Class Order [CO 14/632]

  1. Background

Accounting Standard AASB 2011-4 deleted certain individual key management personnel disclosures from AASB 124: Related Party Disclosures (AASB 124) as of 1 July 2013.  The relevant disclosures were determined to be more in the nature of governance disclosures that are better dealt with as part of the Act and should be reported on in an entity’s remuneration report as opposed to in the notes to the financial statements.

The requirement to include the disclosures in the remuneration report was introduced into the Corporations Regulations 2001 (the Corporations Regulations) by the Corporations and Related Legislation Amendment Regulation 2013 (No.1) (the first amending regulation).

 

The new disclosures were included in subregulation 2M.3.03(1) and were effective for remuneration reports applying to financial years beginning on or after 1 July 2013.

Two issues arise with respect to the first amending regulation.

Firstly, the original requirements in AASB 124 were specifically restricted to requiring disclosure of equity instruments (such as shares and options) issued or issuable by the disclosing entity (such as a listed company) and any of its subsidiaries. The first amending regulation omitted to restrict the regulations to those equity instruments issued or issuable by the disclosing entity and its subsidiaries.

The first amending regulation therefore has the effect of requiring a director to disclose in a remuneration report all of his or her personal shareholdings in any company (where provided as remuneration), even those holdings unrelated to the company the remuneration report is being prepared for. This consequence appears unintentional as the Explanatory Statement to the first amending regulation makes it clear that intention was to directly transplant the requirements from AASB 124 into the Corporations Regulations for the purpose of related party disclosure.

Secondly, AASB 124 required the disclosures in relation to the equity instruments being disclosed to be separated into each class of equity instrument. The requirement for separate class disclosure was also omitted from subregulation 2M.3.03(1) of the Corporations Regulations. The loss of this more granular disclosure could detract from the informational value of the disclosure.

ASIC Class Order [CO 14/632] (the principal instrument) was made in June 2014 to address these issues on an interim basis pending further amendments to the Corporations Regulations. It initially applied in relation to financial years ended on or before 30 September 2014.

In November 2014, the Department of the Treasury released for public consultation an exposure draft of the Corporations Amendment (Remuneration Disclosures) Regulation 2014 (the exposure draft regulations). These exposure draft regulations will address, among other things, the issues addressed by the principal instrument. The exposure draft regulations indicate that the amendments will apply in relation to financial years ending on or after the day the amending regulation commences.

Pending the commencement of the exposure draft regulations, the principal instrument was amended by:

  • ASIC Class Order [CO 14/855] to extend its operation to apply in relation to financial years ended on or before 31 March 2015;
  • ASIC Corporations (Amendment) Instrument 2015/455 to extend its operation to apply in relation to financial years ended on or before 31 December 2015; and
  • ASIC Corporations (Amendment) Instrument 2016/45 to extend its operation to apply in relation to financial years ended on or before 31 December 2016.

The Corporations Amendment (Remuneration Disclosures) Regulation 2016 (Regulation) commenced on 16 April 2016 and applies in relation to financial years ending on or after that date.

Purpose of the instrument

The purpose of this repeal instrument is to repeal the principal instrument. The principal instrument is no longer required due to the commencement of the Regulation, which amends the Corporations Regulations to clarify and correct the remuneration disclosure requirements. 

2.             Operation of the instrument

This repeal instrument repeals the principal instrument.

3.             Consultation

ASIC consulted with the Department of the Treasury before making this repeal instrument.

ASIC did not engage in further consultation on the basis that the amendments foreshadowed by the exposure draft regulations were the subject of public consultation during November to December 2014. The Regulation has now commenced and this repeal instrument removes the temporary relief provided by the principal instrument pending commencement of the Regulation.


 

 

 

 

 

 

 

 

Overview

The Corporations Act 2001 (the Act) was enacted to provide a comprehensive regulatory framework for companies and financial markets in Australia. The Act was designed to address gaps in the regulation of corporate activities and financial markets, ensuring investor protection, market integrity, and financial system stability. The Australian Securities and Investments Commission (ASIC), as the regulator, has the authority to issue instruments to modify or clarify provisions of the Act. The ASIC Corporations (Repeal) Instrument 2016/391 was introduced under the authority of the Corporations Act 2001 to address specific issues arising from the Corporations Regulations 2001 concerning remuneration disclosures by directors. The problem it aimed to resolve involved the unintended consequences of the Corporations and Related Legislation Amendment Regulation 2013 (No.1), which failed to align certain disclosure requirements with the standards set by the Australian Accounting Standards Board (AASB). This led to the creation of ASIC Class Order [CO 14/632] to provide temporary relief. With the Corporations Amendment (Remuneration Disclosures) Regulation 2016 now in effect, the temporary measures are no longer necessary, prompting the repeal of the class order.

Scope and Application

The ASIC Corporations (Repeal) Instrument 2016/391 applies to directors, companies, registered schemes, and auditors within the scope of the Corporations Act 2001, specifically targeting those involved in the preparation of remuneration reports for financial years. The instrument operates on a Commonwealth level, reflecting the regulatory authority of the Australian Securities and Investments Commission (ASIC) under the Act. Its geographic reach is nationwide, affecting all entities subject to the Corporations Act. The repeal instrument is designed to remove the interim measures established by ASIC Class Order [CO 14/632], which had been addressing certain issues with the remuneration disclosure requirements in the Corporations Regulations. The repeal is triggered by the Corporations Amendment (Remuneration Disclosures) Regulation 2016, which has since clarified and corrected the disclosure requirements, rendering the Class Order obsolete. This repeal instrument does not introduce new exclusions or thresholds; it merely removes the temporary relief that was in place until the Regulation took effect. The Act allows ASIC to repeal, rescind, revoke, amend or vary the instrument, enabling the regulatory framework to be updated as necessary in response to changes in accounting standards and legislative amendments.

Key Provisions

The main operative sections of the ASIC Corporations (Repeal) Instrument 2016/391 (the repeal instrument) pertain to the repeal of ASIC Class Order [CO 14/632], which was made to address issues arising from the Corporations and Related Legislation Amendment Regulation 2013 (No.1). This class order was intended to provide interim relief pending further amendments to the Corporations Regulations 2001, which were subsequently addressed by the Corporations Amendment (Remuneration Disclosures) Regulation 2016 (the Regulation). The repeal instrument, made under subsection 341(1) of the Corporations Act 2001, removes the need for the class order as the Regulation now provides the necessary clarification and correction to the remuneration disclosure requirements. The repeal instrument specifically targets the class order to ensure it no longer applies after the Regulation has commenced. The repeal instrument imposes obligations on directors, companies, registered schemes, disclosing entities, and auditors to comply with the Corporations Regulations 2001 as amended by the Regulation. This includes ensuring that remuneration reports for financial years ending on or after 16 April 2016 adhere to the corrected and clarified disclosure requirements. The Regulation specifies that remuneration reports must detail equity instruments issued or issuable by the disclosing entity and its subsidiaries, separating each class of equity instrument. Companies and other entities must ensure that these requirements are met to avoid non-compliance with the Corporations Act 2001. Failure to comply with the requirements set out in the Corporations Regulations 2001, as amended by the Regulation, may result in various civil and criminal consequences. The Corporations Act 2001 provides for substantial penalties for non-compliance, including fines for individuals and corporations. For instance, under section 1317E, an individual officer can be fined up to $210,000, while under section 1317G, a corporation can be fined up to $1,050,000 for breaches of disclosure requirements. Additionally, serious breaches may also attract criminal charges, leading to potential imprisonment. These penalties underscore the importance of adhering to the updated remuneration disclosure requirements to avoid legal repercussions.

Legal classification tags

Area of Law
Corporate Law & Governance
Instrument
Regulation
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Repeal & Amendment

Interactions

Authorises

All Versions

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.