Following public consultation, ASIC today made a new legislative instrument to replace the employee redundancy funds class order that was due to expire (‘sunset’) on 1 October 2016. 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.
ASIC has made the ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150. This instrument provides interim relief until 1 October 2018 to employee redundancy funds from the managed investment and associated provisions in the Corporations Act 2001 (Corporations Act), including the requirements to:
- hold an Australian financial services (AFS) licence with appropriate authorisations
- register the employee redundancy fund as a managed investment scheme, and
- comply with the managed investment provisions in Chapter 5C of the Corporations Act and other associated provisions, including those relating to Product Disclosure Statements, ongoing disclosure requirements and the anti-hawking provisions.
This relief was previously provided in ASIC class order [CO 02/314] Employee redundancy funds: relief.
Consultation process
On 4 September 2015, ASIC released Consultation Paper 238 Remaking ASIC class order on employee redundancy funds: [CO 02/314] (CP 238), which outlined our proposal to remake [CO 02/314] with minor changes, including:
- specifying that the relief will expire on 1 October 2017
- updating the name and format, and
- simplifying and modernising the drafting to make the new instruments easier to understand.
ASIC received four submissions in response to CP 238. All of the submissions supported employee redundancy funds continuing to be exempt from the managed investment and associated provisions in the Corporations Act, whether this was achieved by ASIC relief or law reform.
The main issues raised by respondents related to whether employee redundancy funds are likely to meet the definition of a 'managed investment scheme' in the Corporations Act and, if they meet the definition, whether they should be subject to the managed investment and associated provisions in the Corporations Act. One of the respondents submitted that a 12-month extension to the relief was inadequate and that the relief should be extended for a longer period.
ASIC has extended the interim relief for employee redundancy funds by 24-months to sunset on 1 October 2018 in consideration of the submissions received.
ASIC intends to conduct a full policy review and to conduct further consultation before the relief provided under the new instrument sunsets or expires.
Report 463 Response to submissions on CP 238 Remaking ASIC class order on employee redundancy funds: [CO 02/314] (REP 463) highlights the key issues that arose out of the submissions received on CP 238 and our responses to those issues.
Read:
- REP 463
- Non-confidential submissions to CP 238
- ASIC Corporations (Employee Redundancy Funds Relief) Instrument 2015/1150
- ASIC Corporations (Repeal) Instrument 2015/1157
Background
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..