ASIC will allow ASIC Corporations (Business Introduction Services) Instrument 2022/805 (the Instrument) to expire on 1 April 2025.
The Instrument provided conditional relief from the fundraising, financial product disclosure, hawking, and advertising requirements in the Corporations Act 2001 (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. The Instrument does not provide relief from the Australian financial services (AFS) licensing requirement.
The Instrument required persons to lodge a notice of reliance upon the relief provided by the Instrument. Since 1 October 2022, there has been minimal reliance on the Instrument to raise funds for registered managed investment schemes.
On 13 January 2025, ASIC invited feedback on whether the relief under the Instrument should:
- be extended for a further period in relation to managed investment schemes, and
- reinstate previous relief from Chapter 6D of the Act in relation to securities, other than debentures.
In response to the consultation, ASIC received two submissions. Neither of these submissions detailed an industry need for the relief for managed investment schemes to be extended for a further period.
Additionally, in ASIC’s view, the arguments in favour of reinstating the relief from Chapter 6D of the Act in relation to securities did not outweigh the need for consumer protections.
As a result of ASIC’s decision to allow the Instrument to expire, ASIC Regulatory Guide 129 Business introduction and matching services will be withdrawn.
Background
Business introduction services identify potential investors and 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 in companies 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 (CSF) 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.
ASIC 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. At the time, it did not appear that many business introduction services were relying on the Class Order to help companies raise funds.
ASIC is Australia’s corporate, markets and financial services regulator.