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ASIC Class Order [CO 05/641]

Authoritative Version
  • - F2005L02099
  • No longer in force
CO 05/641 Orders/ASIC Class Orders as made
Class Order [CO 05/641] varies a number of ASIC class orders that provide financial reporting relief. Orders updated include [CO 98/2395] "Transfer of information from the directors' report" and [CO 98/100] "Rounding in financial reports and directors' reports". The changes relate to the introduction of the Australian equivalents of International Financial Reporting Standards and the CLERP 9 amendments.
Administered by: Treasury
General Comments: ASIC Class Order [CO 04/1575] was repealed by the Legislative Instruments Act 2003 with effect from 29 January 2006 due to the operation of section 32 of the Act.
Registered 28 Jul 2005
Tabling HistoryDate
Tabled HR09-Aug-2005
Tabled Senate09-Aug-2005
Date of repeal 09 Aug 2013
Repealed by Treasury (Spent and Redundant Instruments) Repeal Regulation 2013

ASIC CLASS ORDER [CO 05/0641]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

Subsections  341(1), 601QA(1), 741(1) and 1020F(1) – Variations and Revocations

 

Subsections 341(1) of the Corporations Act 2001 (the Act) provides that the Australian Securities and Investments Commission (ASIC) may make an order in respect of a specified class of companies, registered schemes or disclosing entities that relieves the entities in question, their directors and/or auditors from specified requirements of Parts 2M.2, 2M.3 or 2M.4 (other than Division 4) of the Act.

 

Subsections 601QA(1), 741(1) and 1020F(1) of the Act provide that ASIC may make an order exempting a person from a provision of Chapter 5C (managed investment schemes), Chapter 6D (fundraising) or Part 7.9 (financial product disclosure and other provisions relating to issue, sale and purchase of financial products) of the Act or declare that Chapter 5C, Chapter 6D or Part 7.9 applies as if specified provisions were omitted, modified or varied as specified in the declaration.

 

1.         Background

 

For financial reports for years commencing on or after 1 January 2005, entities preparing financial reports under Chapter 2M of the Act must comply with the Australian equivalents of International Financial Reporting Standards (“AIFRS”).  For years commencing on or after 1 July 2004, the CLERP 9 legislation introduced changes to a number of other requirements of the Act relating to directors’ reports that accompany financial reports.

 

ASIC Class Order [CO 05/0641] “Miscellaneous amendments to financial reporting class orders” varies several ASIC class orders, mainly in relation to the adoption of AIFRS and the CLERP 9 changes.

 

2.         Changes to ASIC Class Order [CO 98/0100] “Rounding in financial reports and directors’ reports

 

ASIC Class Order [CO 98/0100] “Rounding in financial reports and directors’ reports” allows rounding of amounts in financial reports and directors’ reports to different levels depending upon the size of an entity.  The level of rounding is limited for certain disclosure requirements of the Act and accounting standards, such as director and executive remuneration.

 

[CO 98/0100] has been varied by [CO 05/0641] to refer to the new accounting standards and CLERP 9 directors’ report requirements.  However, the level of rounding permitted by [CO 98/0100] for entities of particular sizes and for particular types of financial information has not changed.


3.         Changes to Class Order [CO 98/1416] “Comparative information

 

ASIC Class Order [CO 98/1416] “Comparative information” relieves entities that do not prepare a financial report for the immediately preceding half-year or full year from including comparative information in their financial reports.

 

[CO 98/1416] addressed unintended consequences in some of the current accounting standards that require comparative information where an entity did not report in the immediately preceding half-year or full financial year but did report in some earlier period. The relief was consistent with the general approach in the accounting standards that apply for financial years commencing before 1 January 2005.

 

[CO 98/1416] will cease to apply for financial years commencing on or after 1 January 2005. Unlike the previous accounting standards, AIFRS require entities that did not report in the immediately prior period to provide comparative information.

 

4.         Changes to ASIC Class Order [CO 98/2395] “Transfer of information from the directors’ report”

 

New CLERP 9 requirements

 

Subject to conditions, ASIC Class Order [CO 98/2395] “Transfer of information from the directors’ report” allows information to be transferred out of the directors' report to other documents attached to the directors’ report, such as the notes to the financial statements or a Chairman's review.  That class order doesn't extend to the following new requirements introduced by CLERP 9 to disclose information in the directors' report:

 

(a)        the auditor's independence declaration (full years and half-years) (s.298(1)(c) and s.306(2) as first occurring);

(b)       statements concerning information included in the financial report to give a true and fair view (full years and half-years) (s.298(1A) and s.306(2) as second occurring);

(c)        management discussion and analysis (full years) (s.299A);  and

(d)       details of fees for non-audit services and related statements (full years) (ss.300(11B)(a) to 300(11E)).

 

[CO 05/0642] varies [CO 98/2395] to allow the information referred to in paragraphs (a) to (c) above to be transferred from the directors’ report to an attached document, subject to conditions.

 

Subsection 300(2) already allows the details of fees for non-audit services required by ss.300(11B)(a) to (11E) to be transferred into the financial report, which is required to include total fees for audit services and total fees for non-audit services pursuant to accounting standards.  Subsection 300(2A) specifies that any transferred information must be included under a heading "Non-audit services" with a cross reference in the directors' report.  Hence, no relief under [CO 98/2395] is necessary or appropriate in relation to that item.

 

Section 300A disclosures

 

[CO 98/2395] permitted listed companies to transfer the director and executive remuneration disclosures required by s.300A of the Act from the directors’ report to an attached document. The s.300A disclosures could then be included in the note to the financial statements containing remuneration disclosures required by accounting standard AASB 1046 “Director and Executive Disclosures by Disclosing Entities”.

 

Corporations Amendment Regulations 2005 (No.4) (registered on 8 July 2005) allows listed companies to transfer the remuneration disclosures required by AASB 1046 from the notes to the financial statements. The AASB 1046 disclosures must then be included in the directors’ report under the heading “Remuneration report” with the s.300A disclosures. The “Remuneration report” is the subject of a non-binding member vote under s.250SA of the Act.

 

In view of the new regulation, it is no longer necessary or appropriate for listed companies to transfer the s.300A disclosures from the directors’ report. [CO 98/2395] has been varied by [CO 05/0641] to remove this option.

 

5.         Changes to ASIC Class Order [CO 01/1455] “Continuously quoted securities” and ASIC Class Order [CO 04/0672] “Extension of on-sales exemptions

 

[CO 05/0641] varies ASIC Class Order [CO 01/1455] “Continuously quoted securities” and ASIC Class Order [CO 04/0672] “Extension of on-sales exemptions” to permit an entity whose that has taken advantage of relief under certain recent ASIC class orders relating to financial reports prepared under Chapter 2M to:

 

(a)        rely on transaction specific disclosure;  and

 

(b)       take advantage of disclosure exemptions for secondary sales of securities and financial products.

 

The changes to [CO 01/1455] and [CO 04/0672] are minor.  The recent class orders under Chapter 2M which are now referred to in [CO 01/1455] and [CO 04/0672] do not reduce the quality of information available to users of financial reports.

 

6.         Changes to Class Order [CO 04/1575] “Managed investment schemes: unit pricing”

 

Class Order [CO 05/0641] varies Class Order [CO 04/1575] “Managed investment schemes: unit pricing” to correct an internal cross referencing error.

 

7.         Revocation of [CO 98/0109] “Victorian workers compensation statutory funds

 

Class Order [CO 05/0641] revokes Class Order [CO 98/0109] “Victorian workers compensation statutory funds”.  [CO 98/0109] provided certain relief in relation to the treatment of Victorian workers compensation statutory funds by private sector insurers but such funds are no longer managed by private sector insurers and the relief is no longer required.

 

8.         Revocation of [CO 98/0111] “Half-year balance sheet format for certain financial institutions”

 

Class Order [CO 05/0641] revokes Class Order [CO 98/0111] “Half-year balance sheet format of certain financial institutions”.  The relief provided by [CO 98/0111] is now available under both accounting standards that apply for half-years commencing before 1 January 2005 and under AIFRS for half-years commencing on or after 1 January 2005, and so the [CO 98/0111] is no longer required.


9.         Consultation

 

As [CO 05/0641] is minor and machinery in nature, ASIC did not undertake any consultation with stakeholders before that class order was made.