EXPLANATORY STATEMENT for
ASIC Corporations (Repeal) Instrument 2017/246
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Repeal) Instrument 2017/246 under subsections 341(1) and 601CK(7), of the Corporations Act 2001 (the Corporations 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 any of the directors, the companies, registered schemes or disclosing entities themselves, or the auditors of the companies, registered schemes or disclosing entities from all or specified requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Corporations Act.
Subsection 601CK(7) provides that ASIC may, by Gazette notice declare that section 601CK does not apply to specified foreign companies.
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.
ASIC Corporations (Repeal) Instrument 2017/246 repeals Class Order [CO 98/98] Small proprietary companies which are controlled by a foreign company but which are not part of a large group and Class Order [CO 02/1432] Registered foreign companies – financial reporting requirements.
- Background
Under the Legislation Act 2003, legislative instruments cease automatically, or ʻsunsetʼ, after 10 years, unless action is taken to exempt or preserve them.
To preserve its effect, a legislative instrument, such as a class order, 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.
[CO 98/98] and [CO 02/1432] are due to sunset on 1 April 2017. ASIC has reviewed its policy underlying the relief. In light of this review and following public consultation, ASIC considers that the class order relief is necessary, fit-for-purpose and relevant.
As such, ASIC has decided to reissue the relief underlying [CO 98/98] and [CO 02/1432] in a new legislative instrument, ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204.
2. Purpose of the instrument
In light of the relief in [CO 98/98] and [CO 02/1432] being remade in a new legislative instrument, the purpose of ASIC Corporations (Repeal) Instrument 2017/246 is to repeal [CO 98/98] and [CO 02/1432].
3. Operation of the instrument
Schedule 1 of ASIC Corporations (Repeal) Instrument 2017/246 repeals [CO 98/98] and [CO 02/1432.
4. Consultation
ASIC has not consulted on this instrument as it is machinery in nature.
Overview
The ASIC Corporations (Repeal) Instrument 2017/246 was enacted under the Corporations Act 2001 and was designed to address the issue of legislative instruments, such as class orders, that are subject to automatic sunsetting. This instrument was introduced to ensure that the relief provided by Class Order [CO 98/98] Small proprietary companies which are controlled by a foreign company but which are not part of a large group and Class Order [CO 02/1432] Registered foreign companies – financial reporting requirements, remain in effect as they were deemed to be necessary, fit-for-purpose, and relevant. The Australian Securities and Investments Commission (ASIC) made this instrument to preserve the effect of these class orders, which were set to expire on 1 April 2017. Following a review and public consultation, ASIC decided to reissue the relief in a new legislative instrument, ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204. The purpose of this repeal instrument is to sunset the existing class orders to make way for the new instrument.
Scope and Application
The ASIC Corporations (Repeal) Instrument 2017/246, made under the Corporations Act 2001, serves to repeal Class Order [CO 98/98] and Class Order [CO 02/1432], which previously provided relief from certain financial reporting requirements for small proprietary companies controlled by foreign companies and registered foreign companies, respectively. This legislative instrument applies to entities that were previously subject to the repealed class orders, specifically small proprietary companies controlled by foreign companies that are not part of a large group and registered foreign companies. The repeal is necessitated by the sunset provisions of the Legislation Act 2003, which mandates that legislative instruments cease after ten years unless action is taken to preserve them. ASIC has reviewed the underlying policy and, following public consultation, has decided to reissue the relief in a new instrument, ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204. The instrument has a national reach within Australia, as it operates under the authority of the Commonwealth through the Corporations Act 2001. No specific exclusions, exemptions, or thresholds are noted within this repeal instrument itself, though any such provisions would be detailed in the new instrument that replaces it.
Key Provisions
The ASIC Corporations (Repeal) Instrument 2017/246, under subsections 341(1) and 601CK(7) of the Corporations Act 2001, primarily serves to repeal two class orders: Class Order [CO 98/98], which concerns small proprietary companies controlled by a foreign company but not part of a large group, and Class Order [CO 02/1432], which pertains to registered foreign companies and their financial reporting requirements. The instrument effectively removes these class orders to make way for new regulatory provisions, as outlined in ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204, which aim to better suit current regulatory needs and public consultation feedback.
The repealed class orders imposed certain obligations and requirements on specific entities, such as small proprietary companies controlled by foreign entities and registered foreign companies, in terms of their financial reporting and other corporate governance duties. These obligations were intended to streamline compliance for these entities, ensuring they met necessary regulatory standards without undue burden. The repeal of these orders suggests a reassessment of these obligations, either through the new instrument or other regulatory updates.
Breaches of the repealed class orders could have led to various consequences, depending on the specific requirements of the class orders. However, the new instrument aims to address these compliance issues under updated provisions. The exact penalties for non-compliance under the repealed orders are not detailed in the explanatory statement but would typically include fines and other civil or administrative penalties as stipulated under the Corporations Act. The maximum penalties would depend on the specific breach and the discretion of ASIC in enforcing the relevant provisions.
ASIC Corporations (Repeal) Instrument 2017/246 aims to ensure that legislative instruments remain relevant and effective. Given that class orders like [CO 98/98] and [CO 02/1432] were set to sunset on 1 April 2017, the repeal was necessary to prevent the automatic cessation of these regulatory measures. By reissuing the relief in a new instrument, ASIC ensures the continuity of regulatory oversight and compliance requirements for the specified entities, thereby maintaining the integrity and relevance of corporate governance standards in Australia.