ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054

Overview

The ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054 was enacted to provide relief for certain financial products, specifically targeting managed investment schemes and Continuously Offered Collective Investment Vehicles (CCIVs). This legislative instrument, created under the authority of the Corporations Act 2001, aims to streamline and reduce the administrative burden on financial institutions when issuing top-up Product Disclosure Statements (PDS). The policy objective is to exempt certain financial products from specific disclosure requirements, thereby facilitating more efficient financial transactions for existing investors. The Instrument was introduced to address the need for a more streamlined process for financial institutions when dealing with investors who already hold significant investments in the same class of product, thereby reducing unnecessary paperwork and costs without compromising investor protection.

Scope and Application

The ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054 provides relief from certain disclosure requirements for managed investment schemes and continuous capital investment vehicles (CCIVs) under the Corporations Act 2001. This legislative instrument applies to interests in managed investment schemes and shares in CCIVs that are offered to existing investors who have already invested at least $500,000 in the same class of interest or share. The exemption from sections 1012A, 1012B, and 1012C of the Act applies only to offers made to these high-value investors, aiming to reduce the administrative burden on financial institutions without compromising the protection of investors. Notably, any payment made by the investor that was lent by the issuer or an associate is disregarded in calculating the $500,000 threshold. The instrument is made under the authority of the Corporations Act and came into force on 17 November 2016, with subsequent amendments recorded in the endnotes.

Key Provisions

The ASIC Corporations (Top-up Product Disclosure Statements Relief) Instrument 2016/1054 provides relief for certain financial products, specifically interests in managed investment schemes and shares in Continuously Constituted Investment Vehicles (CCIVs), from certain disclosure requirements under the Corporations Act 2001 (referred to as the "Act"). Section 5 of the instrument exempts interests in managed investment schemes from sections 1012A, 1012B, and 1012C of the Act, where the offer, issue, sale, or recommendation to acquire the interest is made to an investor who already holds interests in the same class for which they have paid at least $500,000. Similarly, section 6 exempts shares in CCIVs, referable to a sub-fund, from the same sections of the Act under similar conditions. The amount paid for these interests or shares is calculated without including any money lent by the person offering the interest or share, or any associate of that person. The obligations under this instrument primarily concern financial entities making offers or recommendations for interests in managed investment schemes or shares in CCIVs. These entities must ensure that the offer is made to investors who meet the specified criteria, i.e., they must already hold interests or shares for which they have paid at least $500,000. Financial entities must also comply with the conditions outlined in the instrument, including disregarding any payments made out of money lent by the offeror or their associates when calculating the amount paid for the interest or share. Failure to comply with the requirements of this instrument may result in various consequences. Although the instrument does not explicitly state penalties or offences, breaches of the Corporations Act 2001 provisions from which relief is granted could lead to civil or criminal penalties. For instance, sections 1012A, 1012B, and 1012C of the Act pertain to disclosure requirements, and non-compliance could result in civil penalties under section 1317E of the Act, which can include fines up to $210,000 for individuals and $1,050,000 for bodies corporate, depending on the nature and seriousness of the breach. Additionally, in severe cases, criminal penalties may apply, which could include fines and imprisonment. However, these consequences pertain to breaches of the underlying Act rather than the instrument itself.