Download ASIC CLASS ORDER [CO 06/

ASIC CLASS ORDER [CO 07/9]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
Paragraphs 741(1)(a) and 1020F(1)(a) – Exemptions
The Australian Securities and Investments Commission (ASIC) makes Class Order
[CO 07/9] Prospectus relief for foreign schemes of arrangement and PDS relief for
Part 5.1 schemes and foreign schemes of arrangement under paragraphs 741(1)(a)
and 1020F(1)(a) of the Corporations Act 2001 (the Act). Paragraph 741(1)(a) provides
that ASIC may exempt a person from a provision of Chapter 6D of the Act, and
paragraph 1020F(1)(a) provides that ASIC may exempt a person from a provision of
Part 7.9 of the Act.
1.
Background
Prospectus relief for foreign schemes
Chapter 6D regulates the making of offers for the issue or sale of securities. It
provides a disclosure and liability regime so as to ensure adequate investor protection
in circumstances where an investor may not know all the information needed to make
a decision whether to accept the offer of securities.
The provisions set out where an offer for the issue or sale of securities needs
disclosure to investors. The following offers need disclosure under Chapter 6D
(unless an exemption applies):




an offer of securities for issue;
an offer of a body's securities for sale by the body's controller where the
securities are either not quoted or not offered for sale in the ordinary course of
trading on a relevant financial market;
an offer of a body's securities for sale within 12 months after their issue
without disclosure where either the body issued the securities, or the person to
whom they were issued acquired them, with the purpose of the securities being
on-sold ; and
an offer of a body's securities for sale within 12 months after their sale without
disclosure by the body's controller where the securities were at the time of sale
by the controller either not quoted or not offered for sale in the ordinary course
of trading on a relevant financial market and either the controller sold the
securities, or the person to whom they were sold acquired them, with the
purpose of the securities being on-sold .
Offers made under an Australian scheme of arrangement are expressly exempted from
the disclosure requirement under subsection 708(17) because adequate disclosure and
protection is provided to investors as a substitute for the requirements in Chapter 6D.
Chapter 6D would capture offers made under a foreign scheme of arrangement which
are received in Australia. This means that such offers would need to be accompanied
by a disclosure document in accordance with Chapter 6D.
However, schemes of arrangement (foreign schemes) regulated by or under a law in
force in certain foreign jurisdictions are likely to be accompanied by adequate
disclosure. This is because these jurisdictions provide scheme regulation that offers a
comparable level of disclosure and investor protection to that provided in Australia.
PDS relief for Part 5.1 schemes and foreign schemes
Part 7.9 regulates the issue, sale and purchase of financial products. It provides a
disclosure and liability regime so as to ensure adequate protection in circumstances
where a person may not know all the information needed to make a decision whether
to acquire a financial product.
The provisions set out where the issue or sale of a financial product needs disclosure,
generally in the form of a Product Disclosure Statement (PDS). A PDS may need to
be given (unless an exemption applies):



by a person who gives personal advice recommending a particular financial
product;
by a person who offers to issue, offers to arrange the issue of or issues a
financial product to a person; and
by a person who sells a financial product in certain situations.
Offers of securities made under a compromise or arrangement under Part 5.1 (a Part
5.1 scheme) are expressly exempted from the prospectus requirement under
subsection 708(17) of the Act. However, offers or issues of a financial product under
a Part 5.1 scheme are not exempt from the PDS requirement. This means that an
entity conducting a Part 5.1 scheme where a financial product is given as
consideration to members must provide the members with a PDS.
However, Part 5.1 schemes are likely to provide adequate disclosure, as shown by
their express exemption from the prospectus requirement. Similarly, foreign schemes
are likely to provide adequate disclosure. This is because schemes in the relevant
jurisdictions provide regulation of schemes that offers a comparable level of
disclosure and investor protection to that provided in Australia.
2.
Purpose of the class order
The purpose of [CO 07/9] is to provide relief from the disclosure requirements to
persons who:
(a)
make offers of securities to Australian residents under a foreign scheme; or
(b)
offer a financial product as consideration under a Part 5.1 scheme or a foreign
scheme.
3.
The class order
Prospectus relief for foreign schemes
[CO 07/9] provides an exemption from Parts 6D.2 and 6D.3 of the Act in relation to
an offer of securities under a compromise or arrangement:
(a)
between a foreign corporation and its members; and
(b)
regulated under the laws of one of the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Hong Kong;
Malaysia;
New Zealand;
Singapore;
South Africa; or
the United Kingdom.
PDS relief for Part 5.1 schemes and foreign schemes
[CO 07/9] provides an exemption from sections 1012A, 1012B and 1012C of the Act
in relation to a recommendation to acquire, an issue or sale, or an offer to issue or sell,
a financial product under:
(a)
a Part 5.1 scheme; or
(b)
a compromise or arrangement:
(i)
between a foreign corporation and its members; and
(ii)
regulated under the laws of one of the following:
(A)
(B)
(C)
(D)
(E)
(F)
4.
Hong Kong;
Malaysia
New Zealand;
Singapore;
South Africa; or
the United Kingdom.
Consultation
In July 2005, ASIC released a Policy Proposal Paper Disclosure in reconstructions
(PPP) seeking submissions from interested parties on a range of proposals, including
the relief in [CO 07/9]. Submissions received in response to the PPP supported the
relief in [CO 07/9].