Our latest edition of Financial Services Thinking showcases important news from the corporate regulators.

We also share a ‘hot tip’ about a recent change to section 127 of the Corporations Act which relates to single office holder companies.

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ASIC

Relief for litigation funding schemes’ dollar disclosures in PDSs extended

ASIC has extended relief from certain dollar disclosures in PDSs for litigation funding schemes to 1 October 2026. Responsible entities of registered litigation schemes are not required to disclose certain sensitive information in dollar terms in the scheme’s PDS. The relief is in line with the current practice of Australian courts that class action claimants are permitted to not disclose certain information to the opposing party which could provide a tactical advantage to the opposing party and be adverse to the interests of scheme members.

Relief for business introduction services extended

ASIC has extended the existing relief for business introduction services until 1 October 2022. However, this is subject to a new requirement that persons who rely on the relief from 1 April 2022 must notify ASIC.

The original ASIC Class Order [CO 02/273] gave conditional relief from the fundraising, financial product disclosure, anti-hawking, and advertising requirements in the Corporations Act that would apply to a person making or calling attention to offers of securities or interests in a registered scheme through a business introduction service.

From 1 October 2022 the relief will be amended to— 

• extend the relief for interests in schemes until 1 April 2025 
• clarify that the design and distribution obligations (DDO) apply to persons who rely on the relief and would otherwise need to comply with the DDO. 

Contact a member of our Funds Management team for help with understanding what these changes mean for you.

Electronic execution and virtual company meetings now permanent

On 1 April 2022, the Corporations Amendment (Meeting and Documents) Act 2022 commenced making the following changes permanent:  

• Documents (including deeds) signed by a person under sections 126 and 127 of the Corporations Act to be executed electronically. 
• Documents relating to a meeting of members, a resolution considered by the directors or members, or a meeting of directors of the company, to be sent and executed electronically. 
• A member of a company to elect to receive meeting documents electronically, in hard copy, or not at all. 
• A company or registered scheme to hold meetings physically, at physical venues using virtual meeting technology, or if expressly permitted by the scheme’s constitution at the time the scheme was established or by special resolution of the members of the scheme, using virtual meeting technology.  

Contact our team if you have any queries and read more about the background to these changes in our recent article.

Internal dispute resolution data reporting framework finalised

On 30 March 2022, ASIC released the final mandatory requirements for the internal dispute resolution (IDR) data reporting framework.  The new data reporting framework is intended to assist firms to identify and address systemic issues that arise from complaints.

Following the introduction of Regulatory Guide 271 Internal dispute resolution on 5 October 2021, financial firms have been required to record all complaints received and implement an effective system for recording information about complaints. A group of 11 large financial firms will implement the data reporting framework by 28 February 2023 ahead of the remaining 10,500 financial firms which are required to report by 31 August 2023. The requirements for firms to report IDR data are outlined in the IDR data reporting handbook.

ASIC will commence publishing the IDR data after 31 August 2022, with the first report covering all complaints received by financial firms between 1 January 2023 and 30 June 2023.

Reach out to our Funds Management lawyers if you need to understand more about your data reporting requirements.

ASX

Proposed changes to ASX Listing Rules

The ASX has released a consultation paper seeking submissions on several proposed changes to the ASX Listing Rules.

The proposed changes include enhancements to the rules surrounding the following, amongst others—

• financial reporting for entities admitted to the official list 
• the admission and quotation requirements  
• the lodgement process of documents to be released to the market  
• transactions between listed entities and a person in a position of influence. 

Submissions are required in writing to the ASX by 27 May 2022. The ASX then intends to finalise the proposed amendments with ASIC to move forward with an expected commencement of 1 December 2022.  

AUSTRAC

Recommendations made for Australia’s AML/CTF regime 

The Legal and Constitutional Affairs References Committee of the Senate has recently released its report into the adequacy of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. The Committee focused on emerging issues in the AML sector, the effectiveness of Australia’s regime, and the regulatory and commercial costs among others. The Committee released four recommendations: 

1. Commonwealth government to accelerate stakeholder consultation on the implementation of tranche two reforms. 
2. The government should have specific regard to the impact of the regulatory burden on small businesses and embrace opportunities to gain efficiencies from technology.  
3. The government should seek advice as to whether the provision of the AML/CTF Act that provides it does not affect the law relating to legal professional privilege should be amended to ensure the proper operation of legal professional privilege. 
4. The Committee recommends that the Commonwealth government pursues a beneficial ownership register. 

The report is currently under consideration.

Partner Elliott Stumm and our Funds Management team focus on all facets of financial services compliance, including the AFS licensing and AML/CTF regimes, and can help with your queries.

HOT TIP!

Signing as the sole office holder

A proprietary company only requires one office holder – that person has to be a director, but does not need to be appointed as the secretary. Even though this is the case, section 127 of the Corporations Act has always only contemplated the execution of a document by a 'single officer company' where the sole director is also the sole secretary of the company.

A welcome change to section 127 makes it clear a 'single officer company' can execute a document in accordance with that section if it is signed by the sole director – even if they are not appointed as the secretary. This change was made by the Corporations Amendment (Meeting and Documents) Act 2022.