ASIC today made a new legislative instrument to replace a class order that was due to expire ('sunset') on 1 October 2015.

ASIC remade this class order without significant changes before it sunsets, so that its ongoing effect is preserved without any disruption to the entities that rely on it.

Read more about sunsetting class orders

Constitutional provisions for managed investment schemes registered prior to 1 October 2013

ASIC has made ASIC Corporations (Managed investment product consideration) Instrument 2015/847, which provides certainty and flexibility to responsible entities and members of registered managed investment schemes (other than time-sharing schemes) that were registered prior to 1 October 2013, in relation to the pricing provisions of their constitutions.

This relief was previously provided by ASIC Class Order [CO 05/26] Constitutional provisions about the consideration to acquire interests ('[CO 05/26]'), which was due to sunset on 1 October 2015.

The new instrument will continue the substantive effect of [CO 05/26] with some minor amendments. These include:

• allowing the responsible entity to base the consideration to acquire an interest in AQUA market traded and unitised unlisted schemes on the value of scheme property attributable to a particular class less any liabilities attributable to that class that may be met from scheme property divided by the number of interests on issue in that class
• modifying language in [CO 05/26] to reflect that used in s601GA
• removing the requirement to inform all existing members that they have a right to request a copy of the document that sets out how the responsible entity will exercise its discretion

• for stapled securities, reflecting the approach in Class Order [CO 13/655]:  Provisions about the amount of consideration to acquire interests and withdrawal amounts not covered by [CO 05/26].

ASIC will shortly be updating Regulatory Guide 134:  Managed investments: Constitutions to replace references to [CO 05/26] with references to the new instrument.

Download

ASIC Corporations (Managed investment product consideration) Instrument 2015/847

ASIC Corporations (Repeal) Instrument 2015/846

Background

Sunsetting of class orders

Under the Legislative Instruments Act 2003, all class orders are repealed automatically or 'sunset' after a specified period of time (mostly 10 years) unless we take action to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.

All government organisations are responsible for considering whether the legislative instruments they have made that are due to sunset will be relevant after their sunset date.

ASIC Class Order [CO 05/26]

The constitution of a scheme is an important document that sets out a number of obligations of the responsible entity and the rights of members.

The Corporations Act 2001 (the Act) requires that the constitution contain certain content regarding the consideration that is to be paid to acquire an interest in the scheme and any rights of members to withdraw from the scheme.

In 2005, ASIC made [CO 05/26] which replaced [CO 98/52] and modified the application of the Act allowing the responsible entity to set the amount of the consideration to acquire interests in a scheme in certain circumstances. The class order was subsequently modified a number of times, including to cover discretions exercised in relation to a formula or method used for determining withdrawal amounts.

Following public consultation, in 2013 ASIC updated its regulatory guidance and made class orders [CO 13/655], [CO 13/656] and [CO 13/657] to assist operators of registered schemes and their advisers understand ASIC's views on the content requirements of constitutions for schemes. At the time ASIC acknowledged that for existing schemes, there may be legal, operational and cost implications in implementing changes to comply with the revised guidance and did not require responsible entities of schemes registered prior to 1 October 2013 to amend their constitutions.

In remaking the relief provided by [CO 05/26], ASIC acknowledges that it remains unduly burdensome to require responsible entities of schemes registered prior to 1 October 2013 to amend their constitutions as a result of the revised guidance.