ASIC remake real estate companies class orders

ASIC has remade two class orders that were due to expire in 2016. 

Class Order [CO 00/213] Real estate companies and Class Order [CO 05/1243] Licensing relief for valuations of real estate companies have been remade and consolidated into ASIC Corporations (Real Estate Companies) Instrument 2015/1049.

ASIC Corporations (Real Estate Companies) Instrument 2015/1049 provides relief for vendors, licensed real estate agents and valuers from the licensing and disclosure requirements of the Corporations Act 2001 with respect to real estate companies,

ASIC remade and consolidated the previous class orders without significant change before they sunset in 2016. 

The new instrument will continue the substantive effects of [CO 00/213] and [CO05/1243] with some minor amendments. These minor amendments include:

• clarifying that the disclosure relief applies to general advice and dealing and the licensing relief applies to general advice only; and
• combining the relief provided under [CO 00/213] and [CO 05/1243] into one instrument, giving relief from s707 and 911A(1) and covering vendors, real estate agents and valuers of real estate companies.

The repeal of the class orders follows ASIC consultation in August 2015 (refer: Consultation Paper 237 Remaking ASIC class orders on real estate companies: [CO 00/213] and [CO 05/1243]). Only one submission was received.  This submission supported ASIC’s proposals and no concerns were identified.

ASIC’s policy on real estate companies is set out in Regulatory Guide 67Real Estate Companies (RG 67), which has also been updated.

Background

Under the Legislative Instruments Act 2003, legislative instruments such as class orders sunset after 10 years unless action is taken to exempt or preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.

A real estate company is a company formed for the purpose of owning and managing land and buildings. Shares in the real estate company are held by persons who wish to have an exclusive right of occupation and use of a particular area within the land or building owned by the real estate company.  A real estate company is less common than strata title and has historically been used where owners wish to exercise control over occupiers, or where conversion to strata title is not practicable.

The Corporations Act 2001 regulates interests in real estate companies because they involve ownership of shares in a company. Therefore, without relief, vendors of shares in real estate companies, real estate agents who regularly market or sell shares in real estate companies, or valuers who provide valuations of real estate companies would be subject to a regulatory burden that is unnecessary and disproportionate to the need for consumer protection.