EXPLANATORY STATEMENT for
ASIC Corporations (Repeal) Instrument 2018/193
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Repeal) Instrument 2018/193 (the Instrument) under paragraphs 601QA(1)(a), 911A(2)(l), 1020F(1)(a) and 1020F(1)(c) of the Corporations Act 2001.
Paragraph 601QA(1)(a) provides that ASIC may exempt a person from a provision of Chapter 5C of the Act.
Paragraph 911A(2)(l) provides that ASIC may exempt a person from the requirement to hold an Australian financial services licence for a financial service they provide. This is done by granting an exemption in writing and publishing it in the Gazette.
Paragraph 1020F(1)(a) provides that ASIC may exempt a person from a provision of Part 7.9 of the Act.
Paragraph 1020F(1)(c) provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product as if specified provisions were omitted, modified or varied as specified in the declaration.
The Instrument repeals one class order. 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
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 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 07/753] Singaporean collective investment schemes ([CO 07/753]) provides relief for Singaporean collective investment schemes from the requirement to register as a managed investment scheme, obtain an Australian financial services licence or comply with financial product disclosure requirements.
[CO 07/753] is to sunset on 1 April 2018.
After reviewing the operation of [CO 07/753], ASIC has determined that it is not operating effectively or efficiently and is not being relied on by any entity.
2. Purpose of the instrument
The purpose of the Instrument is to repeal [CO 07/753] as it is no longer operating effectively or efficiently.
3. Operation of the instrument
Paragraph 1 of Schedule 1 of the Instrument repeals [CO 07/753].
4. Consultation
ASIC consulted with the Monetary Authority of Singapore and received no adverse comments.
Overview
The ASIC Corporations (Repeal) Instrument 2018/193 was enacted to address the inefficiency and lack of reliance on ASIC Class Order [CO 07/753], which provided relief for Singaporean collective investment schemes from certain regulatory requirements. This instrument was made by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The policy objective behind the instrument is to ensure that only fit-for-purpose and necessary regulations remain in force, as legislative instruments are subject to automatic sunsetting after 10 years under the Legislation Act 2003. ASIC determined that [CO 07/753] was not operating effectively or efficiently and was not being relied on by any entity, leading to its repeal through this instrument. ASIC consulted with the Monetary Authority of Singapore and received no adverse comments regarding the repeal of the class order.
Scope and Application
The ASIC Corporations (Repeal) Instrument 2018/193 applies to the repeal of the ASIC Class Order [CO 07/753] concerning Singaporean collective investment schemes. This order is being repealed as it is deemed to no longer operate effectively or efficiently, and it is not being relied upon by any entities. The repeal is effective from the date specified in the Instrument, thereby removing the relief previously provided to Singaporean collective investment schemes from the requirement to register as managed investment schemes, obtain an Australian financial services licence, or comply with financial product disclosure requirements. The Instrument is made under specific provisions of the Corporations Act 2001, and its operation is limited to the repeal of [CO 07/753], which is set to sunset on 1 April 2018 unless action is taken to preserve it. ASIC has reviewed the class order and consulted with the Monetary Authority of Singapore, receiving no adverse comments, which supports the decision to repeal the order.
Key Provisions
The ASIC Corporations (Repeal) Instrument 2018/193 primarily operates to repeal ASIC Class Order [CO 07/753], which provided relief to Singaporean collective investment schemes from certain regulatory requirements (Schedule 1, paragraph 1). This repeal is necessary because the Class Order is no longer effective or efficient, and it is not being relied upon by any entities. The repeal takes effect upon the sunset of the Class Order on 1 April 2018.
The Act imposes several obligations on entities affected by the repealed Class Order. Specifically, the repealed Class Order provided exemptions from the requirement to register as a managed investment scheme, obtain an Australian financial services licence, and comply with financial product disclosure requirements for Singaporean collective investment schemes. With the repeal of [CO 07/753], these entities must now comply with the full regulatory framework under the Corporations Act 2001, including registering as managed investment schemes and obtaining the necessary licences and disclosures.
There are no specific offences or penalties directly associated with the breach of the repealed Class Order itself, as it is no longer in effect. However, entities that fail to comply with the Corporations Act 2001 post-repeal may face enforcement actions under the general provisions of the Act. Penalties for breaches can include substantial fines and, in severe cases, criminal charges against individuals responsible for the breaches. The maximum penalties vary depending on the specific breach but can include fines of up to $210,000 for individuals and significantly higher amounts for corporations, as well as potential imprisonment for serious offences.
ASIC’s decision to repeal [CO 07/753] was made after considering the effectiveness and efficiency of the Class Order. The review indicated that the Class Order was not achieving its intended purpose and was not being utilised by any entities, leading to its repeal to streamline regulatory requirements and ensure that only necessary and relevant provisions remain in force. This decision aligns with the broader legislative intent to keep regulatory instruments up-to-date and relevant, as stipulated by the Legislation Act 2003.