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ASIC Class Order [CO 00/229]

Authoritative Version
CO 00/229 Orders/ASIC Class Orders as amended, taking into account amendments up to ASIC Class Order [CO 02/187]
Administered by: Treasury
Registered 15 Sep 2006
Start Date 11 Mar 2002
End Date 17 Mar 2016
Date of repeal 17 Mar 2016
Repealed by ASIC Corporations (Repeal) Instrument 2016/171

ASIC Class Order [CO 00/229]

Solicitors mortgage investment companies

This instrument has effect under subsections 283GA(1) and  741(1) of the Corporations Act 2001.

This compilation was prepared on 4 October 2005 taking into account amendments up to [CO 02/187].

Prepared by the Australian Securities and Investments Commission.

Australian Securities and Investments Commission
Corporations Act 2001 — Subsections  283GA(1) and  741(1) — Exemption

Pursuant to subsections 283GA(1) and 741(1) of the Corporations Act 2001 (the Act) the Australian Securities and Investments Commission (ASIC) hereby exempts, for so long as there are in force deeds in the form or to the effect of Annexures “A” and “B”, persons included in the class of persons mentioned in Schedule A (each person within the class is hereinafter referred to as “a Solicitors Mortgage Investment Company”) and an officer, servant or agent of a Solicitors Mortgage Investment Company, from Parts 2L.1, 2L.2, 2L.3, 2L.4, 2L.5, 6D.2, and from sections 727, 734, 735 and 736 of the Act in the case referred to in Schedule B on the following conditions and for so long as they are met.

1.    The Solicitors Mortgage Investment Company at all times holds a securities dealer's licence or an Australian financial services licence.

2.    The Solicitors Mortgage Investment Company maintains an amount equal to not less than 20 percent of moneys deposited with it invested or deposited in the following form:

(a)   at least 10 percent in deposits at call or in deposits which will fall due for repayment within 90 days with or in one or more of the following:

(i)         an Australian bank; or

(ii)        a cash management trust which is a registered scheme or a cash common fund within the meaning of Part VII of the Trustee Companies Act 1984 of the State of Victoria or a corresponding State law which is a registered scheme; and

(b)   where the total of the deposits invested in the form specified in (a) is less than 20 percent, the remainder of the 20 percent is invested in one or more of the following:

(i)         bank-accepted or endorsed bills of exchange; or

(ii)        Government or semi-Government securities;

except when investments or deposits are realised to repay its depositors and the Solicitors Mortgage Investment Company restores that proportion and form as soon as practicable and in any event within 90 days after investments or deposits are realised to repay its depositors.

3.    No person is a director of the Solicitors Mortgage Investment Company unless that person either holds a practising certificate under the Legal Practice Act 1996 of the State of Victoria or has been approved for the purpose by the Law Institute of Victoria.

4.    Subject to condition 5, no moneys deposited with the Solicitors Mortgage Investment Company are invested except in investments or deposits mentioned in condition 2 or a loan mentioned in condition 6(a).

5.    Condition 4 does not apply in respect of:

(a)   an investment in real property made prior to 1 June 1992 provided that not more than 10 percent of moneys deposited with the Solicitors Mortgage Investment Company is invested in real property;

(b)   an investment in a loan made prior to 1 June 1992 and secured by a mortgage over the legal title to land situated in the Commonwealth of Australia.

6.    The Solicitors Mortgage Investment Company shall not make a loan:

(a)   unless the loan is secured by a mortgage over the legal title to land situated in the Commonwealth of Australia, which has been professionally valued at not less than

(i)         subject to (iii), 125 percent of the total amount of the loan and all other indebtedness secured over land with equal or prior security;

or

(ii)        subject to (iii), where the loan is insured in full by a person authorised to insure mortgages under the Trustee Act 1958 of the State of Victoria, 105 percent of the total amount of the loan and all other indebtedness secured over land with equal or prior security; or

(iii)       such higher figure as may be specified by the Law Institute of Victoria;

(b)   to a director or to a member of the Solicitors Mortgage Investment Company or to an associate of a director or member of the Solicitors Mortgage Investment Company without the prior approval of the Law Institute of Victoria in writing; and

(c)   to any person where the total of all loans made by the Solicitors Mortgage Investment Company to that person and that person's associates would, if the loan were made, equal or exceed 10 percent of depositors' funds, without the prior approval of the Law Institute of Victoria in writing.

7.    The Solicitors Mortgage Investment Company does not appoint as its auditor a person who is not approved by the Law Institute of Victoria for that purpose.

8.    The Solicitors Mortgage Investment Company does not give security over its property for any purpose except that it may give security over its property for standby credit facilities with the prior approval of the Law Institute of Victoria.

9.    The Solicitors Mortgage Investment Company maintains proper registers of mortgages and other investments made by it.

10.  The amount on deposit with the Solicitors Mortgage Investment Company does not at any time exceed 50 million Australian dollars.

SCHEDULE A

A public company which:

(a)   carries on a scheme of the kind mentioned in Schedule B;

(b)   is and remains registered by the Law Institute of Victoria; and

(c)   is a member of The Association of Solicitors Mortgage Investment Companies Inc.;

(“the Company”) and the directors of which jointly and severally guarantee the repayment of all moneys deposited with the Company pursuant to the scheme.

SCHEDULE B

Offers of debentures of the Company for issue or sale, and the issue of forms of application for, and the issue of, such debentures.

Interpretation

In this instrument “Law Institute of Victoria” means Victorian Lawyers RPA Limited (ACN 075 475 731) (VLRPA), including the division of VLRPA going by that name.


ANNEXURE A TO CLASS ORDER [CO 00/229]

THIS DEED is made the  day of March 2000

BETWEEN:

The Australian Securities and Investments Commission established pursuant to subsection 7(1) of the Australian Securities and Investments Commission Act 1989 (“ASIC” ) of the one part

AND

Victoria Lawyers RPA Limited (ACN 075 475 731) (“VLRPA”), which has power pursuant to the Legal Practice Act 1996 of the State of Victoria to regulate the conduct of solicitors, of the other part

WHEREAS

A.   On 15 October 1992 ASIC (under its former name the “Australian Securities Commission”) decided to exempt pursuant to section  1084(2) of the Corporations Law (the “Law”), on certain conditions, members of the Association of Solicitors Mortgage Investment Companies Inc. (“Solicitors Mortgage Investment Companies” and each a “Solicitors Mortgage Investment Company”) from compliance with the prospectus and debenture provisions of the Law in relation to the offer of debentures for issue or sale.

B.    On or about that same date, in connection with the conditions imposed by ASIC on such an exemption, the VLRPA (under its former name “The Law Institute of Victoria”) and ASIC entered into a deed whereby VLRPA agreed to register and scrutinise as therein provided Solicitors Mortgage Investment Companies in relation to the offer of debentures for issue or sale.

C.   Schedule 1 to the Corporate Law Economic Reform Program Act 1999 (the “CLERP Act”) is scheduled to commence on 13 March 2000. The CLERP Act will amend the fundraising and debenture provisions of the Law in various ways on and from that date. In particular, those amendments will mean that the exemption referred to in Recital A will no longer be operative.

D.   ASIC has decided to grant a new exemption (“the ASIC Exemption”), similar in terms to the exemption referred to in Recital A with changes consequent upon the amendments to the Law effected by the CLERP Act.

E.    In connection with the conditions imposed by ASIC on the ASIC Exemption the VLRPA has agreed to register and scrutinise as herein provided Solicitors Mortgage Investment Companies in relation to the offer of debentures for issue or sale.

NOW THIS AGREEMENT WITNESSES as follows:

1.    ASIC and VLRPA hereby revoke the deed dated on or about 15 October 1992 referred to in Recital A with effect from the time of commencement of Schedule 1 of the CLERP Act.

2.    VLRPA shall maintain a register of Solicitors Mortgage Investment Companies (“the Register”).

3.    VLRPA shall:

(a)   to the extent that it is within its power to do so, make rules governing the manner in which Solicitors Mortgage Investment Companies are to be conducted, to ensure as far as is reasonably possible that the Solicitors Mortgage Investment Companies are conducted in a proper and efficient manner and that the rights and interests of the relevant debenture holders are protected;

(b)   ensure that the books of account in relation to each Solicitors Mortgage Investment Company are audited at least once annually by a registered company auditor appointed or approved by the VLRPA for that purpose;

(c)   ensure that, in relation to each Solicitors Mortgage Investment Company, it receives and examines a profit and loss account and balance sheet which has been certified by the directors of the relevant Solicitors Mortgage Investment Company as giving a true and fair view of the Solicitors Mortgage Investment Company's state of affairs for a period or at the end of a period to be determined by the VLRPA as appropriate in the context of carrying out its obligations under this deed; and

(d)   conduct inspections of Solicitors Mortgage Investment Companies in a manner similar to the manner in which it conducts inspections of solicitors' trust accounts, contributory mortgage practices and nominee companies under section 192 of the Legal Practice Act 1996 of the State of Victoria and in particular shall:

(i)         conduct an inspection without notice on each Solicitors Mortgage Investment Company at least once every two years; and

(ii)        in the course of each inspection, sample in accordance with accepted audit standards, each aspect of the activities of the Solicitors Mortgage Investment Company for compliance with the ASIC Exemption, the Law and any other applicable rule or law.

4.    Where the VLRPA forms a view that a Solicitors Mortgage Investment Company is not being conducted in a proper and efficient manner or is in breach of the conditions of the ASIC Exemption, the Law or any other applicable rule or law, it shall promptly remove  the relevant Solicitors Mortgage Investment Company from the Register and notify ASIC in writing of its action and the reasons therefor and may only reinstate the Solicitors Mortgage Investment Company with the written consent of ASIC.

5.    The VLRPA may terminate this agreement by giving six months' notice to ASIC of its intention to do so.

IN WITNESS whereof the parties hereto have executed this deed on the day and in the year hereinbefore written.

The Common Seal of the Australian Securities and Investments Commission

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The Common Seal of Victorian Lawyers RPA Ltd was hereunto affixed in accordance with its Articles of Association in the presence of:

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ANNEXURE B TO CLASS ORDER [00/229]

THIS DEED is made the  day of March 2000

BETWEEN:

The Australian Securities and Investments Commission established pursuant to subsection 7(1) of the Australian Securities and Investments Commission Act 1989 (“ASIC”) of the one part

AND

The Association of Solicitors Mortgage Investment Companies Inc. (“the SMIC Association”) whose Rules provide that the SMIC Association may cancel the membership or suspend the membership of a person in the SMIC Association, of the other part

WHEREAS

A.   On 15 October 1992 ASIC (under its former name the “Australian Securities Commission”) decided to exempt pursuant to section 1084(2) of the Corporations Law (the “Law”), on certain conditions, members of the SMIC Association (“Solicitors Mortgage Investment Companies” and each a “Solicitors Mortgage Investment Company”) from compliance with the prospectus and debenture provisions of the Law in relation to the offer of debentures for issue or sale.

B.    On or about that same date, in connection with the conditions imposed by ASIC on such an exemption, the SMIC Association and ASIC entered into a deed whereby the SMIC Association agreed to monitor as therein provided Solicitors Mortgage Investment Companies in relation to the offer of debentures for issue or sale.

C.   Schedule 1 to the Corporate Law Economic Reform Program Act 1999 (the "CLERP Act") is scheduled to commence on 13 March 2000. The CLERP Act will amend the fundraising and debenture provisions of the Law in various ways on and from that date. In particular, those amendments will mean that the exemption referred to in Recital A will no longer be operative.

D.   ASIC has decided to grant a new exemption (“the ASIC Exemption”), similar in terms to the exemption referred to in Recital A with changes consequent upon the amendments to the Law effected by the CLERP Act.

E.    In connection with the conditions imposed by ASIC on the ASIC Exemption the SMIC Association has agreed to monitor as herein provided Solicitors Mortgage Investment Companies in relation to the offer of debentures for issue or sale.

NOW THIS AGREEMENT WITNESSES as follows:

1.    ASIC and the SMIC Association hereby revoke the deed dated on or about 15 October 1992 referred to in Recital A with effect from the time of commencement of Schedule 1 of the CLERP Act.

2.    The SMIC Association shall ensure that its Rules will continue to expressly and effectively provide for:

(a)   proper and efficient conduct of each Solicitors Mortgage Investment Company;

(b)   adequate protection of the rights and interests of the relevant debenture holders;

(c)   compliance by the relevant Solicitors Mortgage Investment Company with any direction or request given or made by the Law Institute of Victoria in performance of or in connection with its rights, duties or obligations pursuant to the ASIC Exemption and pursuant to the deed made between ASIC and the Law Institute of Victoria of even date herewith; and

(d)   the cancellation or suspension of membership of a person in the SMIC Association in the event that the SMIC Association is of the reasonable opinion that:

(i)         the relevant Solicitors Mortgage Investment Company is not or is unlikely to be conducted in a proper and efficient manner;

(ii)        the rights and interests of the relevant debenture holders are not adequately protected;

(iii)       the relevant Solicitors Mortgage Investment Company is otherwise not conducted in accordance with the Rules of the SMIC Association; or

(iv)       the relevant Solicitors Mortgage Investment Company breached a condition of its dealers licence issued pursuant to Part 7.3 of the Law.

3.    The SMIC Association shall, with diligence and vigilance, monitor the conduct of each Solicitors Mortgage Investment Company from time to time to the extent necessary to satisfy itself that:

(a)   the Solicitors Mortgage Investment Company is conducted in a proper and efficient manner; and

(b)   the rights and interests of the relevant debenture  holders are protected.

4.    Where the SMIC Association cancels or suspends membership of a person in the SMIC Association, it shall notify ASIC and the  Law Institute of Victoria in writing of its action and the reasons  therefor.

IN WITNESS whereof the parties hereto have executed this deed on the day and in the year hereinbefore written.

The Common Seal of the Australian Securities and Investments Commission

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The Common Seal of The Association of Solicitors Mortgage Investment Companies Inc.

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Notes to ASIC Class Order [CO 00/229]

Note 1

ASIC Class Order [CO 00/229] (in force under subsections 283GA(1) and  741(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the Tables below.

Table of Instruments

Instrument number

Date of making or FRLI registration

Date of commencement

Application, saving or transitional provisions

[CO 00/229]

9/3/2000

13/3/2000

-

[CO 02/187]

16/2/2002

11/3/2002

-

Table of Amendments

ad. = added or inserted     am. = amended     rep. = repealed     rs. = repealed and substituted

Provision affected

How affected

para 1

am. [CO 02/187]

para 2(a)(ii)

rs. [CO 02/187]

class order

am. [CO 02/187]