ASIC invites feedback on whether the relief under ASIC Corporations (Business Introduction Services) Instrument 2022/805 (the Instrument), due to expire on 1 April 2025, should:
- be extended for a further period in relation to managed investment schemes, and
- reinstate previous relief from Chapter 6D of the Corporations Act 2001 (the Act) in relation to securities, other than debentures. If you consider that this relief should be reinstated, your submission should explain the reasons for, and benefits of, reinstating the relief and why the crowd-sourced funding (CSF) regime in Part 6D.3A of the Act does not adequately accommodate small- to medium-scale capital raisings.
The Instrument provides conditional relief from the fundraising, financial product disclosure, hawking, and advertising requirements in the Act that would apply to a person making, or calling attention to, offers through a business introduction service, of interests in managed investment schemes: see Regulatory Guide 129 Business introduction or matching services (RG 129).
The Instrument does not provide relief from the Australian financial services (AFS) licensing requirement. We expect that persons who provide business introduction services will consider whether they will be providing financial services to their clients and, therefore, need to hold an AFS licence: see RG 129.33 to RG129.36.
The Instrument requires persons to lodge a notice of reliance. Since 1 October 2022, there has been minimal reliance on the Instrument to raise funds for registered managed investment schemes.
Submissions should be sent by 5 pm (AEDT) on Wednesday, 5 February 2025 to IM.sunsettingconsultation@asic.gov.au.
Background
Business introduction services identify potential investors for issuers or sellers by circulating information about investment opportunities.
Since 2002, ASIC has provided relief to persons involved in business introduction services.
ASIC Class Order [CO 02/273] (Class Order) gave conditional relief from the fundraising, financial product disclosure, hawking and advertising requirements in the Act that would apply to a person making or calling attention to offers, through a business introduction service, of both securities and interests in managed investment schemes.
The effect of the Class Order was extended in 2017 by the ASIC Corporations (Repeal and Transitional) Instrument 2017/186. It was also extended in 2019. At this time, ASIC said the extension would provide time to assess the impact of the crowd sourced funding regime in Part 6D.3A of the Act on the Class Order: see 19-067MR. In 2022, following public consultation, ASIC issued the Instrument, which extended the relief for business introduction services for registered managed investment schemes until 1 April 2025.
ASIC decided not to extend the same relief for securities, which relates to companies, on the basis that the CSF regime facilitated flexible and low-cost access to capital for small- to medium-sized unlisted companies: see 22-267MR. We also noted that the CSF regime had investor protection features implemented by Parliament and that disclosure relief was not required for offers to wholesale or sophisticated investors: Report 723 Response to submissions on CP 357 Remaking relief for business introduction services (REP 723). At the time, it did not appear that many business introduction services were relying on the Class Order to help companies raise funds.
More information
CS 13 Extending relief for business introduction services
ASIC is Australia’s corporate, markets and financial services regulator.