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ASIC Class Order [CO 02/295]

Authoritative Version
CO 02/295 Orders/ASIC Class Orders as amended, taking into account amendments up to ASIC Class Order [CO 13/763]
Administered by: Treasury
Registered 24 Jul 2013
Start Date 01 Jul 2013
End Date 15 Dec 2016
Date of repeal 15 Dec 2016
Repealed by ASIC Corporations (Repeal) Instrument 2016/1157

ASIC Class Order [CO 02/295]

Nominee and custody services

This instrument has effect under s601QA(1)(a), 741(1)(a), 992B(1)(a) and 1020F(1)(a) of the Corporations Act 2001.

This compilation was prepared on 2 July 2013 taking into account amendments up to [CO 13/762] and [CO 13/763]. 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 — Paragraphs 601QA(1)(a), 741(1)(a), 992B(1)(a) and 1020F(1)(a) — Revocation and Exemption

Under paragraphs 601QA(1)(a) and 741(1)(a) of the Corporations Act 2001 (“the Act”), the Australian Securities and Investments Commission (ASIC) hereby revokes Class Order [00/211].

And under paragraphs 601QA(1)(a), 741(1)(a), 992B(1)(a) and 1020F(1)(a) of the Act ASIC hereby gives the following exemptions to the extent and on the conditions specified in relation to each of them.

1     Interpretation

In this instrument:

“accessible financial products” means financial products that may be held through an NCS.

“accessible investments” means assets that may be held through an NCS, including accessible securities and accessible financial products.

“accessible securities” means securities that may be held through an NCS.

“associated provisions” has the same meaning as in section 1410 of the Act.

“custodian” means a person (other than a client) that holds property to which a NCS relates (and who may also be the operator of the NCS).

“disclosure document” means a prospectus, a profile statement or an offer information statement a copy of which is lodged with ASIC, or a document required by an instrument under section 601QA or section 741 of the Act setting out information about offers of accessible securities.

“IDPS” has the same meaning as in ASIC Class Order [CO 13/763] or any class order that replaces that class order.

“IDPS-like scheme” has the same meaning as in ASIC Class Order [CO 13/762] or any class order that replaces that class order.

“issuer” means a person who is capable of issuing or making available or transferring accessible securities.

“NCS” means a nominee and custody service, being a custody and settlement system and service with the following features:

(a)   the clients of the service have the sole discretion to decide what (but not necessarily when) assets will be acquired or disposed of, except where:

(i)    there are any prior written directions to acquire or dispose of a particular asset in particular circumstances that the client has agreed not to vary (other than on the exercise of any discretion on the part of an operator); or

(ii)   the client has authorised the operator or another person to give directions on their behalf, for the purpose of the other person receiving or securing payment of moneys owing by the client to the person; and

(b)   the service is provided in such a way that clients are not led to expect, and are not likely to receive, benefits in the form of:

(i)    access to investments that the client could not otherwise access directly; or

(ii)   cost reductions by using assets contributed by the client or derived directly or indirectly from assets contributed by the client with assets contributed by other clients or derived directly or indirectly from assets contributed by other clients.

Note: Cost reductions may arise from the pooling of client funds to make large investments that can be acquired on more favourable terms than if the investments were made by each client on their own behalf. They may also arise from the ‘netting’ of transactions whereby directions of clients to buy and sell assets are offset against each other and a transaction for the net amount is entered into.

“operator” means a person who contracts with a client for the provision of the NCS or a function that forms part of the NCS.

“rights issue” means an issue of securities to a holder of securities pursuant to a right given to the holder as a holder.

2     Operators

An operator of an NCS is exempt from:

(a)   Chapter 5C of the Act for the operation of the NCS;

(b)   Parts 6D.2 and 6D.3 of the Act for an offer of accessible securities for issue or sale resulting in the acquisition of accessible securities by the custodian as part of the NCS; and

(c)   Division 8 of Part 7.8 and from Part 7.9 of the Act (other than section 1012IA and associated provisions) in relation to a financial product that is:

(i)    an interest in a managed investment scheme arising out of participation or proposed participation in the NCS; or

(ii)   held or that may be held by a client because the legal ownership of a financial product is held by a custodian for the client as part of the NCS; and

including in relation to:

(iii)     an offer to issue;

(iv)     an offer to arrange for the issue;

(v)      the issue of;

(vi)     the acceptance of an offer to acquire; and

(vii)    a recommendation to acquire,

the financial product,

on the following conditions and for as long as they are met:

(d)  The operator will not acquire or cause the custodian to acquire accessible securities unless the operator is reasonably satisfied that:

(i)    the client has been given a disclosure document for the accessible securities that would have been required had the accessible securities been offered to the client directly at the time of the acquisition of the accessible securities; or

(ii)   the accessible securities could lawfully have been offered and issued or sold, as the case may be, to the client directly without the client being required to have received a disclosure document; and the operator has no reason to suspect a disclosure document would have been required if all other holdings by a custodian or by a custodian under an IDPS or an IPDS-like scheme in the accessible securities had been acquired by the relevant clients directly.

(e)   Before a regulated acquisition of a financial product is made for a client as part of the NCS where section 1012IA of the Act requires that the client has been given a Product Disclosure Statement, the client has been given a Product Disclosure Statement for the financial product that is up to date at the time of the acquisition.

(f)   The operator will not acquire or cause the custodian to acquire accessible securities if the operator or the custodian is aware that the disclosure document for those accessible securities:

(i)    does not comply with the relevant requirements of the Act regarding the contents of the disclosure document; or

(ii)   contains a material statement which is untrue or misleading.

(g)   Except for a rights issue, the operator will not acquire or cause the custodian to acquire accessible securities unless the operator is reasonably satisfied that either:

(i)    the issuer of the disclosure document for the accessible securities has given its prior written agreement to the use of the disclosure document as disclosure to clients or prospective clients of the NCS; or

(ii)   the disclosure document indicates that the issuer of the accessible securities authorises the use of the disclosure document as disclosure to clients or prospective clients of the NCS or a class of NCS's which includes the NCS.

3     People involved in operating or promoting the NCS

A person (other than an operator) who is involved in the operation or promotion of an NCS is exempt from:

(a)   Chapter 5C of the Act for the operation of the NCS;

(b)   Parts 6D.2 and 6D.3 of the Act for an offer of accessible securities for issue or sale resulting in the acquisition of accessible securities by the custodian as part of the NCS (except where the person is the issuer of those accessible securities); and

(c)   Division 8 of Part 7.8 and from Part 7.9 of the Act (other than section 1012IA and associated provisions) in relation to a financial product that is:

(i)    an interest in a managed investment scheme arising out of participation or proposed participation in the NCS; or

(ii)   held or that may be held by a client because the legal ownership to a financial product is held by a custodian for the client as part of the NCS (but not in relation to the financial products that the custodian holds);

including in relation to:

(iii)     an offer to issue;

(iv)     an offer to arrange for the issue;

(v)      the issue of;

(vi)     the acceptance of an offer to acquire; and

(vii)    a recommendation to acquire,

the financial product,

on the condition that and for so long as the person does not:

(d)  knowingly cause or procure the operator of the NCS to breach a condition referred to paragraph 2 or a custodian to engage in conduct that if caused or procured by the operator would be a breach of a condition referred to in paragraph 2; or

(e)   engage in misleading or deceptive conduct or conduct likely to mislead or deceive in connection with the NCS.

Note:  The exemption would apply in relation to a managed investment product that is an equitable right in an interest in a registered scheme where the custodian is the member of the scheme. No exemption is given for any requirements that apply to the financial product held by the custodian. For example, an issuer of financial products to the custodian would have to comply with section 1017E of the Act in relation to money paid by the custodian for financial products.

4     Issuers of accessible securities

An issuer is exempt from Parts 6D.2 and 6D.3 of the Act for an offer of accessible securities for issue or sale resulting in the acquisition of accessible securities by the custodian as part of the NCS to the extent that those provisions may require a disclosure document to include information about the NCS or the rights attached to the accessible securities where they differ from the rights that a person would have if they acquired the accessible securities directly, on the following conditions and for so long as they are met:

(a)   The issuer has lodged (if required)) a disclosure document for the accessible securities that complies with the Act.

(b)   Except for a rights issue, the issuer has either:

(i)    agreed in writing with the operator of the NCS to the use of the disclosure document as disclosure to clients and prospective clients of the NCS; or

(ii)   stated in the disclosure document that the issuer authorises the use of the disclosure document as disclosure to clients or prospective clients of the NCS or a class of NCS's which includes the NCS.

(c)   The issuer must:

(i)    where there is an agreement of the kind referred to in subparagraph 4(b)(i) — promptly notify each operator of the NCS; and

(ii)   where the disclosure document contains a statement of the kind referred to in subparagraph 4(b)(ii) — promptly notify each applicant for accessible securities who could reasonably be suspected of being an operator or custodian of an NCS,

if, except as previously disclosed to the operator or applicant:

(iii)  a supplementary or replacement document has been lodged in relation to the disclosure document;

(iv)  the issuer would not be permitted by the Act to make offers of accessible securities under the disclosure document; or

(v)   the disclosure document is withdrawn before its original expiry.

(d)  Except for a rights issue, the issuer must not issue accessible securities to an operator or custodian in connection with an NCS unless the issuer has obtained an undertaking in writing from each person who the issuer is aware is an operator of the NCS that the operator will comply with the conditions set out in paragraph 2 of this instrument or, where the undertaking was provided before the date of this instrument the corresponding provisions of CO [00/211]. Where the issuer receives an application for accessible securities from a person who could reasonably be suspected of being an operator or custodian of an NCS in relation to which the issuer does not have such undertakings, the issuer must ask the applicant whether they are applying in connection with an NCS.

(e)   The issuer must retain a copy of the undertaking for 7 years after the issuer last issued any accessible securities to an operator or custodian of the relevant NCS.

(f)   The issuer must not issue accessible securities through an NCS if the issuer is aware of any non-compliance by the operator of the NCS with the conditions set out in paragraph 2 of this instrument.

 

Notes to ASIC Class Order [CO 02/295]

Note 1

ASIC Class Order [CO 02/295] (in force under 601QA(1)(a), 741(1)(a), 992B(1)(a) and 1020F(1)(a) 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 02/295]

11/3/2002 (see F2006B01244)

11/3/2002

 

[CO 04/602]

1/6/2004 (see F2006B01246)

1/6/2004

-

[CO 13/762]

29/6/2013 (see F2013L01282)

1/7/2013

-

[CO 13/763]

29/6/2013 (see F2013L01273)

1/7/2013

-

Table of Amendments

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

Provision affected

How affected

Paragraph 1.................

am. [CO 04/607]; [CO 13/762] and [CO 13/763]

Paragraph 2(b)............

rs. [CO 04/607]

Paragraph 2(e)

am. [CO 04/607]

Paragraph 3(b)

rs. [CO 04/607]