ASIC Corporations (Repeal) Instrument 2016/994

Administered by Department of the Treasury

Legislation au F2016L01621 Not in force Legislative Instrument

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Explanatory Statement for
ASIC Corporations (Repeal) Instrument 2016/994

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Repeal) Instrument 2016/994 under paragraphs 283GA(1)(a) and 741(1)(a) of the Corporations Act 2001 (the Act).

Paragraph 283GA(1)(a) provides that ASIC may exempt a person from a provision of Chapter 2L of the Act. Paragraph 283GA(2)(b) provides that the exemption may apply to all persons, specified persons, or a specified class of persons.

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.

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.

Background

[CO 00/231] provides relief from Parts 2L.1-2L.5 and sections 718, 727(2) and 736 of the Act to corporations that deal in the short-term money market in the ordinary course of their business. The relief is only available when offering a highly rated short-term money market facility to depositors who regularly deal in the short-term money market or invest in securities in the ordinary course of their business.

The class order was originally made under s260MA(1) and 741(1) of the Corporations Law and continues in force under section 1399 of the Act. The class order refers to provisions of the Corporations Law, which under section 1407 of the Act are taken to include a reference to the corresponding provision of the Act. When the Act replaced the Corporations Law on 15 July 2001, the clauses comprising Chapter 2L of the Corporations Law were renumbered as sections 283AA to 283I (see the Explanatory Memorandum to the Corporations Bill 2001 at [6.16]). Accordingly, the reference to s260MA(1) of the Corporations Law in [CO 00/231] is taken to include a reference to s283GA(1) of the Act, which is the corresponding provision.

2. Purpose of the instrument

The purpose of ASIC Corporations (Repeal) Instrument 2016/994 is to repeal ASIC Class Order [CO 00/231]. Under the Legislative Instruments Act 2003, legislative instruments cease automatically, or ‘sunset’, after 10 years, unless action is taken to exempt or preserve them. Where a legislative instrument no longer serves a regulatory purpose, ASIC will repeal the instrument rather than allow it to sunset so that industry is certain of our intentions and confident that, where instruments are removed, this was our intention.

ASIC Class Order [CO 00/231] no longer serves a regulatory purpose. The principal circumstances contemplated by the class order are not likely to trigger the operation of Chapters 6D or 2L of the Act. These circumstances mainly relate to the activities of professional or sophisticated investors dealing in the short-term money market, which is a wholesale market.

The provisions of the Act from which [CO 00/231] provides relief would only be triggered if the relevant offers to accept deposits constituted offers of debentures. This is because:

(a) section 700 of the Act provides that chapter 6D only applies to offers of securities. If the relevant offers to accept deposits are not debentures, those offers will fall outside the definition of securities in section 92 of the Act; and

(b) section 283AA of the Act provides that Ch 2L only applies to offers of debentures.

However, the definition of debentures in section 9 of the Act specifically excludes an undertaking by an Australian authorised deposit-taking institution (ADI) to repay money deposited with it, or lent to it, in the ordinary course of its banking business. The persons most likely to be offering highly rated short-term money market facilities to depositors are also likely to be Australian ADIs operating in the ordinary course of their banking business.

Accordingly, because offers to accept deposits by these persons are excluded from the definition of debentures and therefore are not subject to Chapters 6D or 2L, these persons would not need to rely on the relief in [CO 00/231].

Further, the relief only applies to offers to accept deposits of more than $100,000 from persons whose ordinary business is or includes the investment of funds on the short-term money market or investment in securities. Offers to such persons are likely to fall under existing exceptions to the disclosure, securities hawking and debenture provisions in Chapters 6D and 2L, such as:

(a) subsection 708(8), which provides an exception to the disclosure requirements in Chapter 6D for certain offers of securities to sophisticated investors;

(b) subsection 708(11), which provides an exception to the disclosure requirements in Chapter 6D for certain offers of securities to professional investors;

(c) subsection 708(19), which provides an exception to the disclosure requirements in Chapter 6D for offers of debentures by Australian ADIs and bodies registered under section 21 of the Life Insurance Act 1995;

(d) subsection 736(2), which provides an exception to the securities hawking prohibition in Chapter 6D for, among other things, certain offers to sophisticated or professional investors; and

(e) paragraph 283AA(1)(a), which excludes the operation of Chapter 2L for offers of debentures that do not require disclosure under Chapter 6D (except where disclosure is not required because of s708A or 708(14)).

Where the relevant offer falls under one of these exceptions, the relief in [CO 00/231] would not be necessary. An offer of the type contemplated by [CO 00/231] would very rarely not fall within one of the above exceptions and any residual need for the relief provided by the class order is more appropriately considered on a case-by-case basis by application to ASIC.

3. Operation of the instrument

ASIC Corporations (Repeal) Instrument 2016/994 repeals [CO 00/231] as it no longer forms a necessary and useful part of the regulatory framework.

4. Consultation

ASIC undertook public consultation in relation to its proposal to repeal [CO 00/231] 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 (Repeal) Instrument 2016/994, made under the Corporations Act 2001, aims to repeal ASIC Class Order [CO 00/231]. This legislative instrument was enacted to address the redundancy of Class Order [CO 00/231], which provided relief to certain corporations dealing in the short-term money market from specific sections of the Corporations Act. The repealing instrument was introduced by the Australian Securities and Investments Commission (ASIC) to ensure that outdated or unnecessary regulatory provisions are removed from the legal framework, thereby maintaining a relevant and efficient regulatory environment. The policy objective behind this repeal is to streamline regulations and ensure that the Corporations Act remains responsive to current market practices and circumstances. The repeal reflects a conscious effort to eliminate provisions that are no longer serving a regulatory purpose, particularly those that are infrequently triggered or are superseded by other regulatory mechanisms within the Act.

Scope and Application

The ASIC Corporations (Repeal) Instrument 2016/994 pertains to the repeal of ASIC Class Order [CO 00/231], which previously provided relief from certain provisions of the Corporations Act 2001 to corporations dealing in the short-term money market. The class order applied to corporations offering highly rated short-term money market facilities to depositors who regularly engage in short-term money market activities or invest in securities. The relief was applicable to offers exceeding $100,000 to sophisticated or professional investors. However, this class order is being repealed because it no longer serves a regulatory purpose, as the circumstances that triggered the relief are unlikely to occur. Specifically, the class order's provisions would only apply if offers to accept deposits were considered debentures, which is not the case for Australian authorised deposit-taking institutions. Additionally, offers to accept deposits by these entities fall under existing exceptions to the disclosure, securities hawking, and debenture provisions. The repeal of [CO 00/231] is in line with the legislative requirement that instruments cease to operate after ten years unless exempted or preserved, and ASIC’s policy to ensure industry certainty and confidence in regulatory intentions.

Key Provisions

The ASIC Corporations (Repeal) Instrument 2016/994 (Instrument) is a legislative instrument made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The primary purpose of this Instrument is to repeal ASIC Class Order [CO 00/231]. Class Order [CO 00/231] provided relief from certain provisions of the Corporations Act to corporations dealing in the short-term money market under specific circumstances. The Instrument repeals this Class Order because it is no longer considered necessary for the regulatory framework. The Corporations Act 2001 imposes various obligations on entities and individuals within its purview. However, Class Order [CO 00/231] provided specific exemptions for certain corporations dealing in the short-term money market. These exemptions allowed such corporations to avoid certain regulatory requirements when offering highly rated short-term money market facilities to specific depositors. With the repeal of [CO 00/231], these exemptions are no longer available, meaning that corporations in the short-term money market must now comply with the relevant provisions of the Act without the previously provided relief. The repeal of Class Order [CO 00/231] removes the specific exemptions that were previously available. Consequently, corporations that previously benefited from these exemptions must now comply with the full regulatory requirements under the Corporations Act 2001. Non-compliance with the Act's provisions can result in various consequences, including civil and criminal penalties. For example, breaches of disclosure requirements or prohibitions against securities hawking could lead to civil penalties under the Act, including fines and, in some cases, imprisonment. Additionally, ASIC has the authority to take enforcement action against individuals and entities that fail to comply with the Act's provisions, which can include seeking injunctions, compensation orders, and other remedies. The Instrument repeals [CO 00/231] because it is no longer necessary and serves no useful regulatory purpose. This repeal ensures that the regulatory framework remains current and effective. The decision to repeal was made following consultation with stakeholders, as outlined in Consultation Paper 261, which received support for the proposed changes.

Area of Law: Corporate Law & Governance
Instrument: Legislative Instrument
Concepts: Definitions & Interpretation; Regulatory Standards; Repeal & Amendment

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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.

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