Funds Update – 20 October 2023

In this Funds Update for 20 October 2023:

1. Amendments to the reportable situations regime
2. ASIC releases 2022-2023 Annual Report
3. ASIC makes Instrument 2023/673

Amendments to the reportable situations regime 

On 20 October 2023, ASIC Corporations and Credit (Amendment) Instrument 2023/589 (Instrument) took effect, providing welcome relief in relation to the reportable situations (breach reporting) regime for Australian financial services licensees under section 912D of the Corporations Act 2001 (the Act).

The Instrument modifies the reporting requirements so that breaches of the misleading or deceptive conduct provisions in subsection 104H(1) of the Act or subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the false or misleading misrepresentations provision in section 12DB(1) of the ASIC Act are not deemed significant breaches of a core obligation and so automatically reportable in the following circumstances:

• the breach involves only a single reportable situation;
• there is no additional contravention of any other core obligation;
• only one client is, or is likely to be, impacted by the reportable situation (or if the contravention relates to a financial product that is held jointly by more than one person, only those clients are impacted); and
• no financial loss or damage resulted, or is likely to result, from the reportable situation.

Additionally, under the Instrument, if the underlying circumstances of the reportable situation are the same as or similar to any underlying circumstances of a reportable situation previously reported to ASIC, licensees will have up to 90 days (instead of 30 days) to lodge a report with ASIC from when they knew (or were reckless as to whether) there were reasonable grounds to believe a reportable situation had arisen.

For more information, please read the article published by our financial services regulatory team, available here.

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ASIC releases 2022-2023 Annual Report

In a media release on 13 October 2023, ASIC announced that it has published its 2022–23 Annual Report (Report).

The Report outlines ASIC’s latest interventions including:

• since October 2022, when ASIC launched its first action against alleged greenwashing conduct, ASIC has issued more than 20 infringement notices to a range of entities following concerns regarding their marketing and promotional content; and
• ASIC issuing approximately 80 design and distribution obligations interim stop orders over the course of the year, with ASIC describing these interim stop orders as its “go-to regulatory tool”.

In relation to the managed funds sector, the Report outlines that ASIC:

• shifted its activities from educating the regulated population about the need to develop good practices in this area to taking direct enforcement action; and
• has a strategy to enforce existing laws and work closely with domestic and international bodies to contribute to proposed domestic law reform and guidance.

We have previously reported on greenwashing regulations and DDO breaches enforced by ASIC in our Funds Updates of 17 June 2022, 21 October 2022, 19 May 2023, 28 July 2023 and 22 September 2023.

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ASIC makes Instrument 2023/673

On 10 October 2023, ASIC announced that it has made ASIC Corporations (Financial Reporting by Stapled Entities) Instrument 2023/673 (Instrument).

The Instrument will continue to provide the relief previously provided under ASIC Class Order [CO 13/1050] ([CO 13/1050]), which was due to sunset on 1 October 2023. CO 13/1050 provides relief to stapled entities that are disclosing entities to present combined financial statements or consolidated financial statements of the stapled group. It also allows the stapled entity in a stapled group to present their respective financial statements jointly in a single financial report.

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