EXPLANATORY STATEMENT for
ASIC Corporations (Repeal) Instrument 2016/896
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes the ASIC Corporations (Repeal) Instrument 2016/896 under subsection 1075A(1) of the Corporations Act 2001 (the Act).
Subsection 1075A(1) of the Act provides that ASIC may, among other things, declare that Part 7.11 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.
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 the sunset date. The purpose of sunsetting is to ensure that instruments are kept up to date and only remain in force while they are fit for purpose, necessary and relevant.
ASIC Class Order [CO 02/284] (‘[CO 02/284]’) allows the provisions relating to takeovers in the articles of association of James Hardie Industries N.V. (JHI), a company incorporated in the Netherlands, to apply directly to holders of CHESS Units of Foreign Securities (CUFS). This instrument is due to sunset on 1 October 2016.
ASIC has reviewed the operation of [CO 02/284] and has determined that it no longer forms a necessary or useful part of the legislative framework. [CO 02/284] provided that Division 4 of Part 7.11 of the Act, and any regulations made for the purposes of that Division, apply to CUFS issued by JHI and quoted on the ASX as if:
(a) the CUFS are Division 4 financial products;
(b) the CUFS are held subject to the terms and conditions on which the depository nominee holds the securities to which the CUFS relate;
(c) the holder of the CUFS is bound by the issuer’s constitution as it applies to CUFS, and the issuer of the foreign securities underlying the CUFS can enforce those aspects against the holder; and
(d) the issuer of the foreign securities underlying the CUFS is bound by its constitution as it applies to CUFS, and the holder can enforce those aspects against the issuer.
It is ASIC’s view that each aspect of the instrument is sufficiently covered in the existing legislative framework. The ASIC Corporations (Division 4 Financial Products) Instrument 2015/1010 provides that all CDIs, including CUFS are Division 4 financial products. In addition, the effect of [CO 02/284]’s provisions in relation to:
(a) the operation of the CUFS issuer’s constitution; and
(b) the terms and conditions on which a depository nominee holds the securities underlying the CUFS,
is replicated in section 13 of the ASX Settlement Operating Rules. Section 822C(1) of the Act also provides that if a person who is under an obligation to comply with any of a license CS facility’s operating rules fails to meet that obligation, a person aggrieved by the failure may apply to the Court for an order in relation to the compliance with, or enforcement of, the operating rules.
As a result ASIC proposes to repeal [CO 02/284] prior to its sunsetting so that industry can be certain that ASIC’s intention is for the class order to be repealed.
2. Purpose of the instruments
ASIC Corporations (Repeal) Instrument 2016/896 is made to repeal the relief provided by [CO 02/284].
3. Operation of the legislative instruments
ASIC Corporations (Repeal) Instrument 2016/896 repeals [CO 02/284].
4. Consultation
The repeal of [CO 02/284] was the subject of Consultation Paper 262 Remaking and repealing ASIC class orders on markets and securities (CP 262). CP 262 was published in July 2016. ASIC did not receive any feedback opposing the repeal of [CO 02/284]. ASIC also consulted with JHI in relation to the repeal of the [CO 02/284] and it was agreed that the relief provided by it was no longer required.
The Office of Best Practice Regulation advised that a Regulatory Impact Statement is not required in order to make ASIC Corporations (Repeal) Instrument 2016/896.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
ASIC Corporations (Repeal) Instrument 2016/896
ASIC Corporations (Repeal) Instrument 2016/896 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
ASIC Corporations (Repeal) Instrument 2016/896 discontinues ASIC Class Order [CO 02/284], an instrument which ASIC has determined no longer forms a necessary or useful part of the legislative framework.
Human rights implications
The legislative instrument does not engage any of the applicable rights or freedoms.
Conclusion
The legislative instrument is compatible with human rights as it does not raise any human rights issues.
Australian Securities and Investments Commission