In response to stakeholder feedback, ASIC has adopted a no-action position on the financial reporting obligations of special purpose financing subsidiaries or other wholly-owned subsidiaries that issue debentures to sophisticated or professional investors, and their guarantors, that may have been relying on relief under ASIC Corporations (Wholly-Owned Companies) Instrument 2016/785 (ASIC Instrument 2016/785).
Under ASIC Instrument 2016/785, certain wholly-owned companies may be relieved from financial reporting obligations under Chapter 2M of the Corporations Act 2001, where they enter into a deed of cross guarantee with their holding entity and meet certain other conditions. Wholly-owned companies that are ‘borrowers in relation to debentures’, or ‘a guarantor of such a borrower’, are excluded from relief under ASIC Instrument 2016/785.
ASIC has been made aware that some corporate groups with special purpose financing subsidiaries or other wholly-owned subsidiaries that issue debentures to sophisticated or professional investors for the purpose of providing finance to other companies in the group may have been of the view that the exclusions do not apply to their special purpose financing vehicle or any of its guarantors.
The no-action position means that we will not take enforcement action against special purpose financing subsidiaries or other wholly-owned subsidiaries that issue debentures to sophisticated or professional investors, or their guarantors, for not preparing and lodging annual reports where, apart from the exclusions mentioned above, they otherwise comply with the requirements of ASIC Instrument 2016/785.
The no action position applies for financial years ending on or after 28 September 2016 (when ASIC Instrument 2016/785 was issued). The no-action position does not apply where there was or is a requirement under the Corporations Act for a trust deed and trustee in relation to the offer of the debentures.
ASIC adopted the no-action position in response to technical and policy considerations raised by stakeholders. The no-action position will remain in place until 1 October 2026 or earlier if we decide to remake the relief after consulting with industry.