Australian Securities and Investments Commission
Corporations Act 2001 — Subsection 341(1) — Order Enabling provision 1.         The Australian Securities and Investments Commission (ASIC) makes this order under subsection 341(1) of the Corporations Act 2001 (the Act). Title 2.         This order is ASIC Class Order [CO 05/640]. Commencement 3.         This order commences on the date it is registered under the Legislative Instruments Act 2003. Note:      An instrument is registered when it is recorded on the Federal Register of Legislative Instruments (FRLI) in electronic form: see Legislative Instruments Act 2003, s 4 (definition of register).  The FRLI may be accessed at www.frli.gov.au. Relief for certain ADIs for related party balances and transactions
4.         An eligible entity does not have to comply with subsection 292(1) of the Act to the extent that subsection 296(1) of the Act requires a financial report (the relevant financial report) that it must prepare for a financial year commencing on or after 1 January 2005 to comply with: (a)        paragraphs 9.1 and 9.2 of AASB 1046 in relation to a loan regularly made, guaranteed or secured, directly or indirectly, by a bank other than a loan made, guaranteed or secured, directly or indirectly, by the bank to a relevant related party; and (b)       paragraphs 10.1 and 10.2 of AASB 1046 in relation to a financial instrument transaction regularly entered into by a bank (whether or not the bank is a party to the financial instrument) where a relevant related party is not a party to the transaction. 5.         The relief in paragraph 4: (a)        does not apply in relation to any loan made, guaranteed or secured, or financial instrument transaction entered into, by a bank where any director of the eligible entity should reasonably be aware that non-disclosure of the loan or transaction would have the potential to adversely affect decisions made by users of the financial report about the allocation of scarce resources; and (b)        may only be relied on by an eligible entity that complies with the conditions in paragraph 6. Conditions 6.         The eligible entity must: (a)        lodge with the relevant financial report a statutory declaration to which both of the following apply: (i)         the declaration is made by: (A)       if the eligible entity is an ADI or controls an ADI—two directors of the eligible entity; (B)       if the eligible entity is controlled by an ADI—two directors of the ADI; (ii)        the declaration states that the eligible entity has systems of internal controls and procedures which: (A)       in the case of any material financial instrument transaction, ensure that; and (B)       in any other case, are designed to provide a reasonable degree of assurance that, any financial instrument transaction entered into by a bank which may be required to be disclosed in the eligible entity’s financial report in accordance with AASB 1046 and which is not entered into regularly, is drawn to the attention of the directors of the eligible entity so that it may be disclosed; and (b)        ensure that a statement containing a summary of this order is included in the notes to the relevant financial report. Consequential variation 7.         ASIC Class Order [CO 98/110] is varied by in the introductory words of the Schedule after “report” (second occurring) inserting “for a financial year commencing before 1 January 2005”. Interpretation 8.         In this order: AASB 1046 means accounting standard AASB 1046 “Director and Executive Disclosures by Disclosing Entities”. ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959. arm’s length basis in relation to a transaction between a bank and another party, means on terms and conditions no more favourable to the other party than those which it is reasonable to expect the bank would have adopted if dealing with the other party at arm’s length in similar circumstances. bank means: (a)        a corporation which lawfully carries on the general business of banking, whether in Australia or elsewhere; and (b)        an ADI. eligible entity means a disclosing entity that: (a)        is an ADI; or (b)        controls an ADI; or (c)                is controlled by an ADI. entity means any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives. financial instrument transaction means a transaction which has as its subject matter a “financial instrument” (other than a share or share option) as defined in paragraph 11 of AASB 132 “Financial Instruments: Presentation and Disclosure” and includes, but is not limited to, transactions involving loans, financial investments (other than in shares and share options), deposits, borrowings, bills of exchange, foreign exchange contracts, forward rate agreements, interest and currency swaps, futures contracts and options, caps, collars and floor agreements and any of the following where credit related, provision of security, endorsements, guarantees and commitments and any income or expenditure relating to such a transaction, and, except for futures contracts, does not include a transaction which has as its subject matter goods (other than financial assets) or services. material has the same meaning as in paragraph 9 of accounting standard AASB 1031 “Materiality”. regularly means lawfully and in the course of its ordinary banking business and either on an arm’s length basis or with the approval of a general meeting of the eligible entity and any entity which ultimately controls it. relevant related party means in relation to an eligible entity: (a)        a director (as defined in paragraph 12.1 of AASB 1046) of the eligible entity; (b)        an executive (as defined in paragraph 12.1 of AASB 1046) of the eligible entity; (c)        a close member of the family (as defined in paragraph 9 of accounting standard AASB 124 “Related Party Disclosures”) of an individual referred to in subparagraph (a) or (b); (d)       an entity controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in subparagraph (a), (b) or (c).   Dated this 26th day of July 2005     Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission