EXPLANATORY STATEMENT for
ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055, under paragraph 1020F(1)(c) of the Corporations Act 2001 (Corporations Act).
Paragraph 1020F(1)(c) provides that ASIC may declare that Part 7.9 of the Corporations Act applies in relation to a person or financial product as if specified provisions were omitted, modified or varied as specified in the declaration.
The instrument remakes ASIC Class Order [CO 03/237] Updated information in Product Disclosure Statements which is due to sunset on 1 April 2017 under the Legislation Act 2003.
ASIC Class Order [CO 03/237] is repealed by ASIC Corporations (Repeal) Instrument 2016/1053.
- Background
This instrument grants relief from the requirement in section 1012J of the Corporations Act for information in a Product Disclosure Statement (PDS) to be up to date at the time it is given to investors, so long as:
a) there is a change to non-materially adverse information in the PDS, from the point of view of an investor;
b) the investor can obtain the up-to-date information through a facility of a kind contemplated by ASIC Regulatory Guide 155 Debenture prospectuses (RG 155); and
c) that facility is identified in the PDS.
This instrument enables a product issuer to avoid the expense and inconvenience of preparing successive supplementary PDSs, required by section 1012J, by putting in place a mechanism by which investors may conveniently obtain up-to-date information about matters that change frequently but that is not materially adverse information.
2. Purpose of the instrument
The purpose of ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 is to continue the substantive effect of the relief granted by ASIC Class Order [CO 03/237].
3. Operation of the instrument
Declaration in relation to responsible persons and regulated persons
Section 5 provides a declaration that Part 7.9 of the Act applies in relation to responsible persons who prepare a PDS and regulated persons who give a PDS as if section 1012J of the Corporations Act were omitted.
Section 6 sets out the requirements that must be satisfied for the declaration to apply, including:
(a) the PDS was up to date at the time when it was prepared;
(b) the updated information includes no materially adverse information; and
(c) the responsible person ensures the PDS contains certain information and establishes a means by which updated information can be accessed. For clarity, the means by which a person may find out any updated information could include arrangements where the updated information is made available to the person electronically without charge on request.
4. Consultation
ASIC consulted with industry stakeholders on its proposal to remake, without significant changes, ASIC Class Order [CO 03/237].
The feedback received in response to ASIC Consultation Paper CP 255 Remaking ASIC class orders on financial services disclosure requirements supported the proposal to issue a new instrument to continue the effect of the relief granted under ASIC Class Order [CO 03/237].
Overview
ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 was enacted by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. This instrument was introduced to address the need for flexibility in updating Product Disclosure Statements (PDS) without imposing excessive burdens on product issuers, particularly concerning non-materially adverse changes. The primary objective of the instrument is to continue the relief previously provided by ASIC Class Order [CO 03/237], which allowed certain updates to PDS to be managed without the necessity of producing successive supplementary PDSs. This was achieved through consultation with industry stakeholders and aligns with ASIC's mandate to balance investor protection with regulatory efficiency. The instrument operates by declaring that Part 7.9 of the Corporations Act applies to responsible persons and regulated persons with specific conditions, ensuring that PDSs remain relevant and accessible while mitigating unnecessary administrative costs.
Scope and Application
The ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 applies to responsible persons who prepare a Product Disclosure Statement (PDS) and regulated persons who give a PDS, as outlined under the Corporations Act 2001. This instrument provides relief from the requirement for a PDS to be up-to-date at the time it is given to investors, provided that the updated information includes no materially adverse information and there is a mechanism for investors to access the updated information. This mechanism can include arrangements where updated information is made available electronically without charge on request. The instrument is designed to avoid the expense and inconvenience of preparing successive supplementary PDSs by allowing issuers to maintain a single PDS and provide a means for investors to access updated information as needed. The instrument operates under the Corporations Act and its scope is national, applying across Australia. It does not include any exclusions, exemptions, or thresholds beyond those specified in the instrument itself. The instrument can be extended or restricted through subordinate instruments, which would need to be consistent with the purpose and operation of the primary instrument.
Key Provisions
The ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055 primarily operates under section 5, which declares that Part 7.9 of the Corporations Act 2001 applies in relation to responsible persons who prepare a Product Disclosure Statement (PDS) and regulated persons who give a PDS, as if section 1012J of the Corporations Act were omitted. This declaration allows for relief from the requirement that the information in a PDS must be up to date at the time it is given to investors, provided certain conditions are met (section 6). These conditions include ensuring that the PDS was up to date when it was prepared, the updated information contains no materially adverse information, and the responsible person ensures the PDS includes specific information and establishes a means by which updated information can be accessed (section 6(a), (b) and (c)).
The obligations imposed by the instrument on responsible and regulated persons are centred around ensuring that the PDS is both initially and subsequently accurate and informative. Specifically, responsible persons must ensure the PDS was up to date when it was prepared and must establish a means by which investors can access updated information. This can include arrangements where the updated information is made available to the person electronically without charge on request. The instrument also requires that any updated information provided to investors through these established means does not contain materially adverse information. Furthermore, the PDS must include certain prescribed information, although the exact details of this information are not specified in the explanatory statement.
There are no direct offences, penalties, or civil/criminal consequences outlined in the explanatory statement for breach of the provisions of the ASIC Corporations (Updated Product Disclosure Statements) Instrument 2016/1055. However, non-compliance with the Corporations Act 2001, from which this instrument derives its authority, could potentially lead to civil penalties, criminal penalties, or both, depending on the nature and severity of the breach. Civil penalties for corporations can include fines of up to $1.65 million under section 1317E of the Corporations Act, and individuals can face fines of up to $330,000 and/or imprisonment for up to five years under section 1311(1). Criminal penalties are typically reserved for more serious breaches, such as fraudulent conduct.