ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2017/184

Administered by Department of the Treasury

Legislation au F2017L00190 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for
ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes the ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 under subsection 992B(1) of the Corporations Act 2001 (the Act).

Subsection 992B(1) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.8 of the Act.

 

  1.                                             Background

What is hawking?

Under the Act, a person (the offeror) must not offer financial products for issue or sale in the course of, or because of, an unsolicited meeting or telephone call. An offer includes inviting an application for their issue or sale. An offeror includes issuers and sellers of financial products, as well as their agents and representatives. Offering financial products for issue or sale in the course of, or because of, an unsolicited meeting or telephone call is commonly known as ‘hawking’.

How does the legislation currently operate?

The Act prohibits hawking. The hawking prohibitions are set out in the following sections:

(a) s 736 — for securities (eg shares and debentures);

(b) s 992AA — for managed investments (eg units in trusts); and

(c) s 992A — for other financial products (eg superannuation, life and general insurance, derivatives and deposit products).

The hawking prohibitions aim to prevent pressure selling of financial products to retail clients (eg “badgering” and “boiler room” practices).

Existing relief

The existing relief provided by ASIC Class Order [CO 02/641] ([CO 02/641]) is technical in nature. It provides that:

  1. securities and interests in managed investment schemes are exempt from s992A(3) of the Act; and
  2. interests in managed investment schemes that are no managed investment products are exempt from s 992A(1).

The relief is required because, in its absence, securities and registered and unregistered interests in managed investment schemes would be subject to two differing hawking prohibitions. The relief provides certainty of obligation. 

s 992A(3) provides that a person must not make an offer to issue or sell a financial product in the course of or because of, a series of unsolicited circumstances. Securities and interests in managed investment schemes (both financial products) are provided with relief from this provision because both have hawking prohibition provisions that specifically relate to them (s 736 in the case of securities and s 992AA in the case of managed investment products).     

s 992A(1) provides that a person must not offer financial products for issue or sale in the course of, or because of, an unsolicited meeting with another person. s 992A(2) provides that s 992A(1) does not apply to securities and managed investment products because they have separate anti-hawking provisions, detailed above. This does not apply to interests in unregistered managed investment schemes as ‘managed investment product’ relates only to registered schemes: s 764A(1)(b).  

s 992AA Prohibition of hawking of managed investment products, despite its title, prohibits hawking ‘interests in managed investment schemes’ rather than ‘managed investment products’. ‘Interests in managed investment schemes’ includes both registered and unregistered scheme interests. Accordingly without the exemption unregistered managed investment scheme interests would be required to comply with both s 992AA and s 992A.     

Under the Legislation 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 its sunset date.

[CO 02/641] is scheduled to cease on 1 April 2017 unless ASIC takes action to remake it.

 

2.                                                Purpose of the instrument

The purpose of the ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 is to provide relief from hawking prohibitions. This relief has been granted to address concerns about the disproportionate burden that would be placed on entities should they be required to comply with multiple anti-hawking provisions when offering one financial product for issue or sale.

ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 will continue the relief provided by [CO 02/641] in a new legislative instrument that reflects current drafting practice, without any significant changes. 

3.                                                Operation of the instrument

Part 1—Preliminary

Paragraph 1 provides that the name of the legislative instrument is to be ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184.

Paragraph 2 provides that the instrument commences on the day after it is registered on the Federal Register of Legislation.

Paragraph 3 provides that the instrument is made under s 992B(1) of the Act.

Paragraph 4 outlines relevant definitions for key terms used in the instrument. 'Act' is defined as meaning the Corporations Act 2001.

Part 2—Exemptions

Relief for unregistered managed investment schemes

Paragraph 5(1) of the instrument provides relief from the operation of s 992A(1) of the Act to offerings of interests in managed investment schemes that are not managed investment products.

Relief for securities and interests in managed investment schemes

Paragraph 5(2) of the instrument provides relief from the operation of s 992A(3) of the Act so that it does not apply to securities and interests in managed investment schemes.

 

4.                                                Consultation

 

In November 2016 ASIC released ASIC Consultation Paper 271 Remaking and repealing ASIC class orders on internet offers, hawking and PDS obligations (CP 271), which consulted on remaking [CO 02/246] and [CO 02/641] and repealing [CO 02/286]. ASIC did not receive any submissions in response to CP 271.

 

 

Overview

The ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 was enacted by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. The purpose of this instrument is to provide relief from the prohibitions on hawking financial products, which refers to the practice of offering financial products for issue or sale during unsolicited meetings or telephone calls. The existing prohibitions are detailed in sections 736, 992AA, and 992A of the Corporations Act, and aim to prevent pressure selling practices such as "badgering" and "boiler room" activities. The instrument provides relief to ensure entities are not unduly burdened by having to comply with multiple anti-hawking provisions when offering a single financial product. This instrument replaces the ASIC Class Order [CO 02/641], which is set to expire on 1 April 2017, thereby preserving the relief provisions in a new legislative instrument that adheres to current drafting practices. The instrument operates by exempting certain financial products from specific sections of the Corporations Act that prohibit hawking. Specifically, it exempts offerings of interests in unregistered managed investment schemes from section 992A(1) and securities and interests in managed investment schemes from section 992A(3). This relief ensures that these entities are not subject to conflicting hawking prohibitions, thereby providing clarity and certainty regarding their obligations under the Act. The instrument was developed following consultation with stakeholders, although no submissions were received in response to the ASIC Consultation Paper 271 issued in November 2016.

Scope and Application

The ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 applies to financial products, issuers, sellers, and their agents and representatives who are subject to the Corporations Act 2001. This instrument provides relief from certain prohibitions on hawking, which refers to offering financial products for issue or sale in the course of, or because of, an unsolicited meeting or telephone call. The instrument aims to prevent the imposition of multiple anti-hawking provisions on entities offering financial products, which would otherwise create a disproportionate burden. This relief is applicable nationally across Australia under the Commonwealth jurisdiction. The instrument does not introduce any new exclusions or exemptions beyond those provided in the existing ASIC Class Order [CO 02/641] it replaces. The instrument is effective until remade or preserved under the Legislation Act 2003, with a sunset clause that mandates it cease automatically after 10 years unless action is taken to extend its effect. No subordinate instruments extend or restrict the application of this instrument.

Key Provisions

The ASIC Corporations (Securities and Managed Investment Scheme Hawking Relief) Instrument 2016/184 (the Instrument) was made under section 992B(1) of the Corporations Act 2001 (the Act) and it provides relief from certain hawking prohibitions. The Instrument allows certain financial products to be offered without breaching the prohibitions in sections 736, 992AA and 992A of the Act, which generally prohibit the offering of securities, managed investments and other financial products in the course of an unsolicited meeting or telephone call. Specifically, the Instrument provides relief for interests in unregistered managed investment schemes from section 992A(1) of the Act (paragraph 5(1)) and for securities and interests in managed investment schemes from section 992A(3) of the Act (paragraph 5(2)). These sections have been amended so that they do not apply to the specified financial products, thereby allowing them to be offered without contravening the Act. The Instrument imposes obligations on entities that wish to offer financial products under the relief it provides. Firstly, entities must ensure that the financial products they offer are those specified in the Instrument. Secondly, entities must ensure that the offers are not made in the course of an unsolicited meeting or telephone call. The Instrument does not provide relief from the general prohibition on offering financial products in the course of an unsolicited meeting or telephone call; it only provides relief for certain financial products. Entities must also ensure that they comply with any other relevant provisions of the Act when offering financial products. Failure to comply with these obligations may result in civil or criminal penalties, depending on the nature and extent of the breach. The Instrument does not create new offences or penalties. However, entities that breach the hawking prohibitions in sections 736, 992AA and 992A of the Act may be subject to civil or criminal penalties. For example, a person who contravenes section 736 of the Act is liable for a civil penalty of up to $210,000 for each contravention. In addition, a person who contravenes section 992A or 992AA of the Act is liable for a civil penalty of up to $210,000 for each contravention, or imprisonment for up to five years, or both. The maximum penalties for these offences may be higher for companies or other entities. The Instrument does not specify the penalties for breaches of the Act, but these are set out in other provisions of the Act.

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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.