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ASIC Class Order [CO 04/526]

Authoritative Version
CO 04/526 Orders/ASIC Class Orders as amended, taking into account amendments up to ASIC Class Order [CO 12/1267]
Administered by: Treasury
Registered 04 Oct 2012
Start Date 25 Sep 2012
Date of repeal 31 Mar 2017
Repealed by ASIC Corporations (Repeal and Transitional) Instrument 2017/271

ASIC Class Order [CO 04/526]

Foreign collective investment schemes

This instrument has effect under s601QA(1)(a) and 911A(2)(l) of the Corporations Act 2001.

This compilation was prepared on 25 September 2012 taking into account amendments up to [CO 12/1267]. See the table at the end of this class order.

Prepared by the Australian Securities and Investments Commission.

Australian Securities and Investments Commission
Corporations Act 2001 — Paragraphs 601QA(1)(a) and 911A(2)(l) — Exemptions

ASIC power

1.    The Australian Securities and Investments Commission (ASIC) grants this exemption under paragraphs 601QA(1)(a) and 911A(2)(l) of the Corporations Act 2001 (the Act).

Schemes covered by this class order

2.    A managed investment scheme that is not registered under section 601EB of the Act is an exempt FCIS for this instrument as long as both of the follow apply:

(a)   the scheme is of a kind referred to in Schedule A – Foreign regulation applicable to FCISs; and

(b)   having regard to all offers of interests in the scheme that have been made at any time (whether in this jurisdiction or elsewhere), promotion of membership of the scheme has not been principally aimed at persons in this jurisdiction and there is no reason to believe that the operator intends that promotion of membership of the scheme will be principally aimed at persons in this jurisdiction.

Operators covered by this class order

3.    A foreign company that operates an exempt FCIS is an exempt operator for this instrument as long as all of the following apply:

(a)   the foreign company is registered under Division 2 of Part 5B.2 of the Act;

(b)   the foreign company has provided ASIC with the information in Schedule B – Documents to be provided to ASIC and ASIC has notified the operator in writing that such information provided by the operator is adequate;

(c)   ASIC has not notified the foreign company in writing that it is excluded from relying on this instrument;

(d)   10 business days have not passed since the foreign company became or should reasonably have become aware of matters that give it reason to believe that it has failed, other than in an immaterial respect, to comply with a requirement set out in paragraph 6 or Schedule C – Notification of significant changes to ASIC without full particulars of the failure having been provided to ASIC (to the extent that the foreign company knows those particulars or would have known them if it had made reasonable enquiries); and

(e)   having provided particulars under paragraph (d) within the time allowed by that paragraph, 20 business days have not passed from the provision of those particulars, without ASIC having notified the foreign company in writing that it may continue to rely on this instrument.

Relief from the requirement to register a managed investment scheme

4.    An exempt operator does not have to comply with section 601ED of the Act in relation to an exempt FCIS.

Relief from the requirement to obtain an AFSL

5.    An exempt operator does not have to hold an Australian financial services licence for the provision of the following financial services:

(a)   dealing in financial products in the ordinary course of the operation of the exempt FCIS other than by issuing financial products;

(b)   dealing in derivatives or foreign exchange contracts for the purpose of managing a financial risk to an exempt FCIS that arises in the ordinary course of the operation of the exempt FCIS (provided dealings in derivatives or foreign exchange contracts with persons in this jurisdiction is not a significant part of the exempt operator’s business);

(c)   providing a custodial or depositary service by holding assets of an exempt FCIS.

Conditions

6.    An exempt operator who relies on paragraphs 4 or 5 must comply with each of the following conditions:

Periodic reports and cooling off

(a)   The exempt operator must comply with section 1017D and Division 5 of Part 7.9 of the Act as if an interest in the exempt FCIS were a managed investment product.

Disclosure to Australian clients

(b)   The exempt operator must disclose prominently in each Product Disclosure Statement it gives a retail client for interests in an exempt FCIS that:

(i)    the exempt FCIS and its exempt operator are regulated by the laws of a foreign jurisdiction, and that those laws differ from Australian laws; and

(ii)   the rights and remedies available to Australian investors who acquire interests in the exempt FCIS may differ from those of Australian investors acquiring interests in Australian managed investment schemes; and

(iii)  the main rights and remedies available to Australian investors under the home regulatory requirements and how those rights and remedies can be accessed; and

(iv)  the nature of any special risks associated with cross-border investing, such as risks arising from foreign taxation requirements, foreign currency or time differences; and

(v)   the nature and consequences of significant differences between the home regulatory requirements and the Australian regulatory requirements.

(c)   The exempt operator must notify in writing all wholesale clients in this jurisdiction before they become a member of an exempt FCIS or apply for an interest in an exempt FCIS that the exempt FCIS and its exempt operator are regulated by the laws of a foreign jurisdiction, and that those laws differ from Australian laws.

Information about the exempt FCIS

(d)   The exempt operator must make available on request, to members in this jurisdiction, any publicly available information about the exempt FCIS that has been produced by, or on behalf of, the exempt operator and that relates to the exempt FCIS, unless members in this jurisdiction can otherwise obtain that information conveniently and for no greater charge (if any) than would apply in the place of origin of the exempt operator.  The information must be provided in English and at no greater charge (if any) than applies in the place of origin of the exempt operator.

(e)   The exempt operator must promptly give ASIC any annual financial statement of the exempt FCIS when the financial statement is published together with any associated audit and other reports.  The exempt operator must give ASIC an English translation of any such statement or report in a reasonable time if ASIC requests such a translation.

(f)   The exempt operator must maintain in this jurisdiction, at a place disclosed in writing to members in this jurisdiction, a register of members that it reasonably believes are in this jurisdiction and their contact details.

(fa)  If ASIC gives the exempt operator a written notice directing the operator to lodge with ASIC, within the time specified in the notice, a written statement containing specified information relating to the provision of financial services in relation to the exempt FCIS or the operation of the exempt FCIS in this jurisdiction, the operator must comply with the notice.

Targeting

(g)   The exempt operator must take all reasonable steps to ensure that no more than 30% by value of all interests in the exempt FCIS are held by persons who the operator has reason to believe are in this jurisdiction.

Schedule A - Foreign regulation applicable to FCISs

A1. A scheme operated by an exempt operator incorporated or formed in the United States of America (the USA) or a State of the USA that:

(a)   is registered under section 8 of the Investment Company Act of 1940 of the USA (the Investment Company Act); and

(b)   is either:

(i)    an “open ended company” as defined in section 5.a.(1) of the Investment Company Act; or

(ii)   a “unit investment trust” as defined in section 4(2) of the Investment Company Act; and

(c)   invests primarily in market traded securities.

A2. A scheme operated by an exempt operator incorporated or formed in New Zealand that is or involves either:

(a)   a “unit trust” as defined in section 2 of the Unit Trusts Act 1960 of New Zealand and in relation to which a trust deed has been approved by the Registrar or District Registrar of Companies and an authenticated copy of the trust deed has been lodged with the District Registrar of Companies under sections 8 and 9 of that Act; or

(b)   the issue of participatory securities as defined in subsection 2(1) of the Securities Act 1978 of New Zealand where:

(i)    in relation to the issue of participatory securities, a statutory supervisor has been appointed and a deed of participation registered by the Registrar of Companies under sections 33(3) and 46 of that Act; and

(ii)   the scheme assets are primarily invested in market traded securities.

A3. A scheme operated by an exempt operator incorporated or formed in Jersey that is declared by the Jersey Financial Services Commission to be a Recognized Fund under the Collective Investment Funds (Recognized Funds) (General Provisions) (Jersey) Order 1988, or the Collective Investment Funds (Recognized Funds) (Rules) (Jersey) Order 2003 or any provisions that replace those Orders.

Schedule B – Documents to be provided to ASIC

An operator of an exempt FCIS must provide the following information to ASIC before relying on this instrument in relation to an exempt FCIS:

B1. evidence that the operator is authorised to operate the exempt FCIS and that the exempt FCIS is of a kind referred to in Schedule A – Foreign regulation applicable to FCISs;

B2. a deed of the operator for the benefit of and enforceable by ASIC, the other persons referred to in subsection 659B(1) of the Act and any member of the exempt FCIS in this jurisdiction, which applies notwithstanding that the operator may have ceased to rely, or never have relied, on this instrument, and which provides that:

(a)   the deed is irrevocable except with the prior written consent of ASIC;

(b)   the operator submits to the non-exclusive jurisdiction of the Australian courts in legal proceedings conducted by any of the following:

(i)    ASIC (including under section 50 of the ASIC Act);

(ii)   any member (or former member) of the exempt FCIS in this jurisdiction;

(iii)  in relation to proceedings relating to a financial services law — any person referred to in subsection 659B(1) of the Act;

and in the case of proceedings brought by a person covered by subparagraph (i) or (iii), whether brought in their name, on behalf of the Crown or otherwise;

(c)   the operator covenants to comply with any order of an Australian court in respect of any matter relating to the provision of the financial services in relation to the exempt FCIS or the operation of the exempt FCIS; and

(d)   the operator covenants that, on written request of either its home regulator or ASIC, it will give or vary written consent and take all other practicable steps to enable and assist its home regulator to disclose to ASIC and ASIC to disclose to its home regulator any information or document that its home regulator or ASIC has that relates to the operator or the exempt FCIS;

B3. written consents to the disclosure by the home regulator to ASIC and ASIC to the home regulator of any information or document that the home regulator or ASIC has that relates to the operator; 

B4. the most recent financial statements of the exempt FCIS proposed to be operated in this jurisdiction by the operator, any audit report, and any subsequent public disclosures by that exempt FCIS about its financial position or compliance with the home regulatory requirements;

B5. a copy of the most recent disclosure document (however described) required under the relevant home regulatory requirements relating to an offer of interests in the exempt FCIS;

B6. a copy of the constitution or other governing rules (however described) of the exempt FCIS;

B7. a description of how the operator will plan for, monitor and assess its compliance with the requirements and conditions of this instrument and any Australian regulatory requirements to which it will be subject;

B8. a description of the financial services relating to the exempt FCIS it intends to provide in this jurisdiction; and

B9. information about the interests in the exempt FCIS that the operator intends to offer in this jurisdiction and how it plans to seek members in this jurisdiction.

Schedule C – Notification of significant changes to ASIC

The exempt operator must notify ASIC, as soon as practicable and in any event within 15 business days after the operator became aware or should reasonably have become aware, and in such form if any as ASIC may from time to time specify in writing, of the details of:

C1. each significant change to a licence, registration, authorisation or other approval (however described) granted by the home regulator relevant to the operation of the exempt FCIS;

C2. [deleted]

C3. each significant exemption or other relief which the exempt operator obtains from the home regulatory requirements; and

C4. each action or investigation of the following kinds taken by the home regulator or other overseas regulatory authority against the exempt operator in a foreign jurisdiction relating to the provision of financial services in the foreign jurisdiction:

(a)   significant enforcement action;

(b)   significant disciplinary action;

(c)   significant investigation (unless, after having taken reasonable steps to enable notification to be given to ASIC, the operator is prohibited by law from giving such notification but only to the extent of the prohibition).

Interpretation

In this instrument:

1.    Australian regulatory requirements means the Australian legislative provisions that apply in relation to managed investment schemes and financial services, including any instruments made under those legislative provisions and any relevant policies or other documents (however described) issued by ASIC;

2.    custodial or depositary services  has the meaning given by section 766E of the Act;

3.    exempt FCIS has the meaning given by paragraph 2;

4.    exempt operator has the meaning given by paragraph 3;

5.    financial services law has the meaning given by section 761A of the Act;

6.    foreign exchange contract has the meaning given by section 761A of the Act;

7.    home regulator means the relevant regulator of the exempt operator in its place of origin;

8.    home regulatory requirements means the rules that apply in relation to an exempt FCIS and an exempt operator in the operator’s place of origin, including any applicable legislation, instruments made under that legislation and any relevant policies or other documents (however described) issued by the home regulator;

9.    issuer, in relation to a financial product, has a meaning affected by section 761E of the Act;

10.  market traded securities means:

(a)   financial products which are able to be traded on a financial market and that it is reasonable for the exempt operator to believe are capable of being realised within 7 business days; or

(b)   other financial products that it is reasonable for the exempt operator to believe can be valued by reference to reasonably comparable products that are able to be traded on a financial market;

11.  offer has a meaning affected by subsection 1010C(2) of the Act;

12.  overseas regulatory authority means a foreign regulatory authority (other than the home regulator) which regulates financial services and which is established by or for the purposes of a foreign government or legislative body;

13.  retail client has the meaning given by section 761G of the Act; and

14.  wholesale client has the meaning given by section 761G of the Act.

Commencement

This instrument takes effect on gazettal.

Notes to ASIC Class Order [CO 04/526]

Note 1

ASIC Class Order [CO 04/526] (in force under s601QA(1)(a) and 911A(2)(l) 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 04/526]

27/5/2004 (see F2006B01273)

1/6/2004

 

[CO 04/1031]

20/8/2004 (see F2006B01274)

31/8/2004

-

[CO 12/573]

4/7/2012 (see F2012L01502)

4/7/2012

-

[CO 12/1267]

25/9/2012 (see F2012L01919)

25/9/2012

-

Table of Amendments

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

Provision affected

How affected

Subpara 6(fa) .............

Sch A..........................

Sch C..........................

ad. [CO 12/573]

am. [CO 04/1031]

am. [CO 12/573] and [CO 12/1267]