ASIC Corporations (Discretions for Setting the Issue Price and Withdrawal Price of Interests in Managed Investment Schemes) Instrument 2023/693

The instrument introduces several core legal and operational concepts and ties them to precise statutory text. The principal concepts are:

• Constitutional discretions to set issue price: New section 601GAD lists circumstances where a constitution need not make “adequate provision” for issue pricing because the constitution may permit the responsible entity to set the acquisition price. These circumstances include placements (with specific constraints for quoted classes and a 15% related‑issue threshold for non-ASX quoted classes), rights issues and options issued to members (subsection (3)), interest purchase plans (subsection (4)), distribution reinvestment plans (subsection (5)), negotiated fees where a fee is permitted under a separate ASIC instrument (subsection (6)), stapled securities (subsection (7)), schemes where there is limited or no pooling of contributions (subsection (8)), and sale of forfeited interests in accordance with section 254Q (subsection (9)).

• Formula/method discretions for issue/withdrawal pricing: New section 601GAE permits constitutions to provide a formula or method for determining issue price while giving the responsible entity specified discretions: to decide matters affecting factors in the formula, to decide aspects of the method, or to determine adjustment amounts (subsection (1)). Section 601GAF provides equivalent scope for withdrawal payments, requiring the method to be based on the value of scheme property attributable to the class of interests (subsection (2)).

• Limits on exercise of discretion: A constitutionally conferred discretion of the kinds allowed by 601GAE and 601GAF must not be exercised on the basis that it will result in a particular amount being set (601GAE(3) and 601GAF(3)). This places a textual constraint on purpose-driven exercise.

• Operational standards: The instrument modifies 601FC by adding a mandatory standard for how discretions are to be exercised (601FC(1A)): as far as practicable, consistent with ordinary commercial practice for valuing relevant assets or working out market price, and producing a value or price reasonably current at the time. It also inserts documentation requirements (601FC(1B)): the discretion may only be exercised if reasonable, and unless exercised under a current written policy, a written explanation must be prepared.

• Disclosure and access: A Product Disclosure Statement must include statements that copies of documents relating to pricing discretions are available from the responsible entity at no charge (new s 1013DAA). This ties transparency to retail investor disclosure regimes.

• Application, notice and non-revocation: The instrument’s operation is limited to certain schemes: post-30 September 2013 registered schemes or schemes whose responsible entity previously (or currently) published a reliance notice (s 8). Notices cannot be revoked (s 8(2)). For pre-2013 schemes that elect reliance, the responsible entity must publish and maintain a notice on its website that it is relying on the instrument in relation to the scheme (new 601GAG) (s 8(3)).

• Temporal scope: The instrument is time-limited, repealing on 1 October 2028 (s 9).

Definitions embedded in the inserted text are operationally significant: “placement resolution”, “related issue”, “stapled security”, “approved foreign market” (as defined elsewhere), “ASX”, and “foreign member” , each of these definitions dictates whether particular discretions can be used and under what procedures (see the inserted definitions in 601GAD and 601GAE).

Primary actors affected by this instrument are clearly identified in the text:

• Responsible entities: The instrument modifies how Chapter 5C applies “to a responsible entity” (s 5 and s 6). Responsible entities will decide whether to include the permitted discretions in their constitutions, how to exercise those discretions, what written policies to adopt, what documentation to prepare and publish, and whether to publish the reliance notices required for older schemes (see s 8 and new 601GAG).

• Members (unit holders) of registered schemes: The discretions concern the price at which members may acquire additional interests and the amounts payable on withdrawal. Sections dealing with placements (601GAD(2)) impose voting thresholds and notice content that involve members , e.g. placement resolutions require special resolutions where certain members vote only if they will not acquire new interests (definition of “placement resolution”).

• Potential investors in placements, rights issues, DRPs and interest purchase plans: The instrument affects how those offers can be priced by permitting responsible entities to set prices within constitutional formulas or under the enumerated circumstances in 601GAD, subject to conditions (e.g. 15% related‑issue cap for non‑ASX quoted classes in 601GAD(2)(b)(i)).

• Holders of stapled securities and associated bodies corporate: The instrument permits setting prices for interests that form part of stapled securities provided the constitution has adequate provisions about stapling or provisions equivalent to those otherwise permitted (601GAD(7)). The statutory definition of “stapled security” (inserted into the Act by the instrument) sets precise structural constraints relevant to bodies corporate and other financial products.

• Foreign members: The definition of “foreign member” (inserted in 601GAD(10)) identifies members with registered addresses outside the jurisdiction; this may affect offers and exclusions permitted in rights issues (see 601GAD(3)(a) and the cross-reference to paragraph 601FC(1)(d) in subsection (3)).

• Investors in schemes with limited pooling arrangements: Schemes where contributions are not commonly pooled or are limited to ADI accounts held pending disbursement, or where scheme property comprises non-proprietary rights or agreements between known co-tenants, are explicitly captured by 601GAD(8).

• Other service providers: While the instrument does not directly amend obligations for custodians, registries or financial markets, it enables responsible entities to appoint agents to exercise authorised discretions (notes to 601GAE(1) and 601GAF(1) referencing 601FB(2)), so service providers that act as valuation agents or pricing agents may see demand for engagement.

• ASIC and persons relying on Product Disclosure Statements: The new PDS disclosure requirement (s 7 creating 1013DAA) affects what information must be presented to retail investors and what must be held and provided at no cost.

Those who do not elect reliance (and whose schemes were registered on or before 30 September 2013 and have not published the requisite notices) are not covered by the relaxed constitutional discretions; the instrument’s application gate is strict (s 8(1)). Responsible entities that published a notice under the old Class Order CO 13/655 may rely on that notice until 30 June 2024 unless they publish the new instrument reliance notice earlier (s 8(4)), creating a discrete transitional population.

The instrument alters both substantive rights (the ability to set prices) and procedural and documentary duties. Key duties and rights created or modified by the inserted and modified provisions include:

Rights (what responsible entities may do)

• Constitution-based discretion to set acquisition price in enumerated circumstances: A responsible entity may be authorised by the constitution to set the consideration to acquire interests where the scheme falls within the circumstances listed in 601GAD subsections (2)-(9) , placements, rights issues, interest purchase plans, DRPs, negotiated fee arrangements, stapled securities, limited/no pooling structures, and forfeited interests (s 5; inserted 601GAD).
• Constitution-based discretion to provide formula/method for setting issue price or withdrawal payment, together with powers to decide matters affecting factors in the formula or to adjust amounts for acquisition/disposal costs etc. (inserted 601GAE(1) and 601GAF(1)).

Duties and constraints on exercise

• Duty to exercise discretions consistently, as far as practicable, with ordinary commercial practice for valuing property or calculating market price and to produce a value or price reasonably current at the time of issue/withdrawal (inserted 601FC(1A) via s 6).
• Duty that a discretion may only be exercised if it is reasonable (inserted 601FC(1B)(a)).
• Documentary duty to prepare a written explanation of how and why a discretion was exercised unless the exercise was in accordance with a current written policy (inserted 601FC(1B)(b)). This creates an operational compliance obligation: either maintain and follow a contemporaneous written policy, or create a contemporaneous written rationale each time.
• Duty of transparency in retail product disclosure: a PDS for a managed investment product must include a statement that copies of documents relating to discretions about pricing of interests are available from the responsible entity at no charge (inserted s 1013DAA via s 7).
• Duty to publish and maintain a reliance notice on the responsible entity’s website where applicable: For schemes that were registered on or before 30 September 2013 but whose responsible entity has elected to rely on the instrument (s 8(1)(b)), the responsible entity must publish and maintain a notice stating it is relying on the instrument (inserted 601GAG via s 8(3)). Notices cannot be revoked (s 8(2)).

Limits on discretion

• A constitutional discretion of the sort permitted by 601GAE and 601GAF “must not be exercised on the basis that it will result in a particular amount being set” (601GAE(3) and 601GAF(3)). This textual constraint is a legal duty limiting purposive exercise.
• For placements in classes quoted on markets, particular procedural constraints apply: if quoted on ASX the interests must not be suspended; for non-ASX quoted classes the issue plus related issues in the previous year must not, immediately before issue, comprise more than 15% unless member approvals are obtained (601GAD(2)(a)-(b)).
• For forfeited interests, sales must comply with section 254Q provisions as if the interests were shares and the scheme were a company, except as specifically excluded (601GAD(9)).

Record-keeping and evidentiary implications

• The requirement to prepare a written explanation unless exercise is in accordance with a current written policy creates a record that can be requested or produced in regulatory review or litigation (inserted 601FC(1B)(b)).
• Disclosure through the PDS that such documents are available at no charge (1013DAA) establishes an access right for investors and creates an expectation of availability.

Other operational rights and duties

• The responsible entity may appoint agents to perform authorised functions (notes referencing 601FB(2) in the inserted sections). The text explicitly contemplates delegation to service providers for valuation and pricing activities.

Collectively, these provisions create a regulated discretion architecture: an explicit right in the constitution to act (subject to enumerated scenarios) combined with procedural duties intended to constrain arbitrary or opaque price-setting.

The instrument itself does not create new criminal offences or specify monetary penalties. It operates by modifying the application of Chapter 5C and Part 7.9 of the Corporations Act to permit particular constitutional discretions and by imposing procedural obligations when those discretions are exercised (see ss 5-7). Accordingly:

• The instrument imposes compliance obligations (for example, to exercise discretions reasonably and in accordance with ordinary commercial practice, to prepare written explanations unless a policy governs exercise, and to include PDS statements about disclosure). Non-compliance with these obligations would be a breach of the Act as modified by this instrument rather than a breach of the instrument alone.

• Enforcement mechanisms that apply to breaches of the Corporations Act continue to govern outcomes. The instrument is made under the statutory powers in subsections 601QA(1) and 1020F(1) of the Act (s 3), and it changes how Chapter 5C applies; any enforcement would therefore proceed under the Act’s enforcement regime (civil penalties, injunctions, ASIC administrative powers, or other remedies available under the Act) when relevant provisions of Chapter 5C or Part 7.9 are breached. The instrument itself contains no standalone enforcement schedule or penalty table.

• The text creates obligations that produce regulatory exposure points: e.g. failure to keep or produce required written explanations (601FC(1B)(b)), failure to include the PDS statement (1013DAA), failure to publish and maintain a reliance notice where required (new 601GAG inserted by s 8(3)), or exercising a constitutional discretion in a manner inconsistent with the “ordinary commercial practice” standard in 601FC(1A). Each of these, if contravened, would be dealt with under the Act’s enforcement mechanisms.

• The instrument introduces new definitional and procedural tests (e.g. whether an exercise was “reasonable”, whether it was “consistent with ordinary commercial practice”, whether the value or price was “reasonably current”) that are fact‑specific and may be contested in regulatory investigations or litigation. Resolution of such contests would be by reference to the modified statutory text and the evidence (documents, policies, valuations) that the responsible entity retains under the new documentation duty.

• Timing and expiry are relevant to enforcement: the instrument is repealed at the start of 1 October 2028 (s 9). Obligations that arise while it is in force may be relevant to conduct during that period; after repeal, the statutory environment reverts and future exercises would be judged under whatever regime then applies.

Because the instrument works by statutory modification rather than standalone sanctioning, compliance risk is realised through the broader Act’s enforcement machinery rather than through bespoke penalties included in the instrument.

This instrument is explicitly integrated into the Corporations Act 2001 and interacts with other statutory instruments and provisions in several specific ways:

• Direct modification of Chapter 5C and Part 7.9: The instrument amends the operation of Chapter 5C to permit particular constitutional discretions (ss 5-6) and modifies Part 7.9 by adding a PDS requirement (s 7). It does not repeal Chapter 5C; it varies how the chapter applies to responsible entities meeting the application criteria.

• Cross-references to existing Act provisions:

  • The text requires certain actions to be performed “in accordance with section 254Q” for sale of forfeited interests (new 601GAD(9)(b)), thereby importing the mechanics of s 254Q (a provision related to sale of forfeited shares) and treating the scheme as if it were a company for that purpose.
  • The inserted notes reference subsection 601FB(2), which authorises responsible entities to appoint agents; the instrument therefore works with existing delegation provisions in Chapter 5C.

• Interaction with ASIC class orders and other ASIC instruments:

  • The instrument contemplates reliance on ASIC Class Order [CO 13/655] and makes transitional provision for responsible entities that published reliance notices under that class order (s 8(1)(b)(i), s 8(4)). It also expressly references another ASIC instrument, ASIC Corporations (Registered Schemes,Differential Fees) Instrument 2017/40, to permit negotiated fees to affect acquisition consideration (new 601GAD(6)). The instrument therefore operates alongside existing ASIC instruments and acknowledges their role in governing fee structures and prior relief.

• Market disclosure and quotation rules:

  • The new text treats interests quoted on the financial market operated by ASX differently in some contexts (e.g. placements under 601GAD(2)(a)(i) require that the quotation of interests in that class is not suspended). It also introduces references to “market price” for listed classes in 601GAE(2)(b). These references link the instrument to the rules and practices governing ASX and other markets, which may also be governed by the Corporations Act or the operating rules of those markets.

• Interaction with foreign market definitions:

  • The instrument uses the term “approved foreign market” as defined in section 9 of the Act (notionally inserted by a separate ASIC instrument), so exercise of discretions in respect of foreign‑quoted classes depends on the Act’s definition of approved foreign markets.

• PDS and disclosure regime:

  • The insertion of 1013DAA ties the instrument to the broader disclosure regime in Part 7.9, meaning PDS obligations, liability provisions and civil consequences for misleading or deceptive disclosure in the context of product disclosure remain relevant.

• Limits created by existing Class Order: Responsible entities that previously relied on CO 13/655 have a transitional window (s 8(4)) and may continue to rely on the class order until 30 June 2024 unless they publish a notice that they now rely on the instrument. This creates an interaction between the old class order relief and the new instrument; the instrument thus operates as a successor or alternative regime to that class order for entities that elect to adopt it.

• Temporal interaction with repeal: Because the instrument has a built‑in expiry (s 9), it will interact with any future amendments to Chapter 5C or replacement ASIC instruments; responsible entities must consider that the permissions it creates are time-limited and will intersect with any successor legal arrangements.

In short, the instrument does not operate in isolation. It modifies how specific sections of the Corporations Act apply, imports and references other sections and ASIC instruments, and ties responsible entities’ discretion to market conditions and PDS obligations established elsewhere in the Act.

The instrument itself is an amending legislative instrument that inserts new text into the Corporations Act and modifies the application of existing sections. The amendment history within this instrument is self-contained and can be itemised as follows:

• Authority and creation: The instrument is made under subsections 601QA(1) and 1020F(1) of the Corporations Act 2001 (s 3). It is a delegated legislative instrument executed by a delegate of ASIC (Leah Sciacca) dated 8 September 2023 (front matter).

• Commencement and repeal: The instrument commences the day after it is registered on the Federal Register of Legislation (s 2) and is set to be repealed at the start of 1 October 2028 (s 9). Accordingly, the inserted amendments are temporary and will expire on that date unless superseded or extended.

• Insertions to the Act effected by this instrument:

  • In Part 2 (Declaration), s 5 modifies section 601GA by adding exceptions and substituting text in subsection 601GA(4) to make it subject to a new section 601GAF (s 5(a)(i)-(ii)).
  • Section 5(b) inserts a new section 601GAD into Chapter 5C: “Constitutional provisions about the amount of the consideration for the acquisition of interests.” This contains subsections (1)-(10) enumerating circumstances and definitions.
  • Section 5(b) further inserts new sections 601GAE and 601GAF, each establishing the permissible constitutional discretions for setting issue consideration (601GAE) and working out withdrawal payments (601GAF), including the restrictions that discretions must not be exercised to obtain a particular amount.
  • Section 6 modifies Chapter 5C by inserting after subsection 601FC(1) two new subsections, 601FC(1A) and 601FC(1B), setting standards for exercise and documentation of discretions.
  • Section 7 modifies Part 7.9 by inserting after s 1013DA a new s 1013DAA requiring PDS statements that copies of pricing discretion documents are available at no charge.
  • Section 8 imposes application parameters for ss 5-7, and also inserts a new 601GAG (via 8(3)) requiring responsible entities relying on the instrument to publish and maintain a website notice.

• Transitional provision relative to existing ASIC class orders: Section 8 contains an express transitional clause allowing schemes whose responsible entities published reliance on ASIC Class Order [CO 13/655] to continue under that notice until 30 June 2024, unless they publish a notice that they rely on this instrument earlier (s 8(4)).

• Definitions inserted: The instrument inserts definitions into the Act (e.g. ASX, exchange traded fund, managed fund, stapled security, placement resolution, related issue, approved foreign market, foreign member) to support the new sections (see the definitions in the inserted 601GAD and 601GAE text). The note states that “approved foreign market” is notionally inserted by another instrument (ASIC Corporations (Definition of Approved Foreign Market) Instrument 2017/669).

The instrument therefore effects a package of textual amendments to Chapter 5C and Part 7.9 that are to be read alongside the existing Act and other ASIC instruments. The inserted text contains specific cross-references and notes that tie the amendments into the existing statutory architecture.

The instrument itself contains no litigation record or judicial interpretations. It is a legislative instrument that amends statutory text; the source material does not cite cases or report any judicial construction. Accordingly, there is no litigation history recited in the instrument to ground statements of precedent.

From the inserted text, however, parties and courts in the future would be likely to focus disputes on textual constructs contained in the instrument. The instrument points to a set of fact‑sensitive legal tests and documentary obligations that would be natural focal points in litigation or regulatory review:

• Interpretation of “reasonable” exercise of discretion (inserted 601FC(1B)(a)). Courts or tribunals would be asked to assess whether a particular exercise of a pricing or withdrawal discretion was reasonable in the circumstances.

• Application of the “ordinary commercial practice” standard (inserted 601FC(1A)(a)-(b)). Litigation could centre on whether the valuation or market pricing method adopted by a responsible entity was consistent with ordinary commercial practice for valuing the relevant asset class or calculating market price for quoted interests.

• Whether a discretion was exercised to result in a “particular amount” contrary to 601GAE(3) and 601GAF(3). Disputes may allege that an entity deliberately manipulated a formula or adjustment to achieve a pre-determined price, which the statutory text forbids.

• Adequacy of documentation and policies: the duty to prepare written explanations unless exercising under a “current written policy” (601FC(1B)(b)) creates a record-keeping issue. Litigation may contest whether a written policy was current, whether the policy was followed, or whether an ad hoc written explanation sufficed.

• Whether procedural prerequisites for placements and member approvals were observed: placements in non-ASX quoted classes are subject to the 15% related-issue threshold or placement resolution approvals with specified notice particulars (601GAD(2)(b)(i)-(ii) and definition of “placement resolution”). Disputes could focus on whether the prior year’s related issues meet the 15% test or whether the meeting particulars satisfied the statutory test.

• Application of s 254Q to forfeited interests sold under the new power (601GAD(9)). Litigation could concern the extent to which the sale procedure for forfeited interests in schemes conforms to the share forfeiture process the instrument imports.

The instrument’s documentation and disclosure obligations (PDS statement, website notices) also create administrative triggers that could arise in securities litigation or regulatory enforcement proceedings where failure to disclose or maintain specified notices is at issue. Because the instrument will be in force until 1 October 2028 (s 9), any litigation challenging the meaning or application of these inserted provisions would depend on the statutory text in this instrument.

The instrument contains precise drafting points and operational traps that are easy to miss if one reads only headlines. The following are concrete “gotchas” strictly grounded in the instrument text:

• Irrevocable reliance notice: If a responsible entity publishes a notice that it will rely on this instrument (s 8(1)(b)(ii)) or previously published a notice relying on ASIC Class Order [CO 13/655] (s 8(1)(b)(i)), that notice “cannot be revoked” (s 8(2)). In practice, once the notice is published the scheme is locked into the regime for the life of the instrument , unless the entity published the old class-order notice and elects to publish the new instrument notice prior to 30 June 2024 (s 8(4)).

• Publication and maintenance obligation for older schemes: A responsible entity of a scheme that became registered on or before 30 September 2013 and elects reliance must not only publish but also maintain a notice on its website stating it is relying on the instrument (new 601GAG inserted by s 8(3)). Failure to maintain that notice may mean the scheme no longer falls within the instrument’s application but the instrument does not specify a grace period.

• Duty to prepare written explanation unless there is a “current written policy”: New subsection 601FC(1B)(b) requires a written explanation if the discretion was not exercised “in accordance with a current written policy.” That creates a simple compliance choice: either adopt and adhere to a current written policy authorising procedures, or prepare contemporaneous written explanations for every exercise. Absent a clear policy, an entity will face a documentary workload each time it exercises a discretion.

• “Reasonable” threshold (documented): Subsection 601FC(1B)(a) requires that a discretion be exercised only if “reasonable to do so.” This is a legal threshold that interacts with the ordinary commercial practice standard (601FC(1A)). Responsible entities cannot adopt a mechanical compliance checklist; judgement and defensible rationale are required.

• 15% related-issue cap for non‑ASX quoted classes: For interests quoted on an “approved foreign market” or other non‑ASX markets, the instrument permits placements only where the issue together with any related issue in the previous year does not, immediately before the issue, comprise more than 15% of the interests in that class (601GAD(2)(b)(i)). Calculating what counts as a “related issue” (definition included) and measuring the existing number of interests “immediately before the issue” requires precise cap accounting.

• Placement resolution voting constraints: Where member approval is used instead of the 15% cap, the statutory form of the placement resolution is narrow: votes may only be cast by members who will not acquire any of the interests to be issued and who are not holding their interests on trust for a person who will acquire such interests (definition of “placement resolution”). Drafting meeting notices and managing proxy rules will need care to avoid invalid votes.

• Forfeited interest sales: The instrument treats sale of forfeited interests as if s 254Q applied, “other than subsections (1), (9), (10) and (13)” (601GAD(9)(b)). Responsible entities must therefore map the share forfeiture sale process in s 254Q and note the excluded subsections to ensure procedural compliance.

• Stapled securities complexity: The instrument permits pricing discretions for interests that form part of stapled securities only if the constitution adequately addresses the stapled securities or if the stapled securities’ acquisition pricing would be permitted under other inserted subsections or 601GAE (601GAD(7)). The statutory definition of “stapled security” is strict (inserted definition), so schemes that have complex stapling structures must check that their constitution’s stapling mechanics align exactly with the inserted definition to use the discretion.

• PDS disclosure does not itself publish the documents: The PDS obligation (new s 1013DAA) merely requires the PDS to state that documents related to pricing discretions are available from the responsible entity at no cost. It does not require the documents themselves to be appended to the PDS or publicly posted, although the new 601GAG requires a website notice for schemes electing reliance. Responsible entities must ensure document access arrangements are operable.

• Temporary nature of the instrument: The repeal at the start of 1 October 2028 (s 9) means that responsible entities relying on these discretions need to plan for the expiry of the regime and any associated transitional steps well before that date.

• Interaction with other ASIC instruments: The instrument permits certain fee effects by reference to a separate ASIC instrument (2017/40) (601GAD(6)). Entities must therefore maintain compliance with that instrument where applicable; reliance on a cross-referenced instrument is a dependency that can create additional compliance requirements.

• “Reasonably current” valuation requirement: 601FC(1A)(c) requires that valuations be consistent with producing a value or price “that is reasonably current at the time of the issue or withdrawal.” Responsible entities must define internal valuation timing and data inputs to demonstrate contemporaneity; stale inputs may raise compliance concerns.

These are specific textual obligations and constraints; each creates an operational control point that responsible entities and their service providers must address in policy and procedure.

A practical compliance roadmap based on the instrument’s text should cover constitutional drafting, policies, procedures, disclosure, recordkeeping, website notices and transaction mechanics. The steps below track the instrument’s requirements and identify where referential checks are necessary.

1. Decide if the scheme will rely on the instrument

• For schemes registered after 30 September 2013, the instrument applies automatically (s 8(1)(a)). For schemes registered on or before that date, the responsible entity must publish a notice on its website that it will rely on ASIC Class Order [CO 13/655] or this instrument (s 8(1)(b)). Remember that such a notice cannot be revoked (s 8(2)).
• If relying on CO 13/655, note the transitional window in s 8(4): the Class Order reliance continues only until 30 June 2024 unless the responsible entity publishes a notice that it is relying on this instrument earlier.

2. Amend the constitution (if electing to use the permitted discretions)

• Insert constitutional provisions that align with the permitted discretions in new sections 601GAD, 601GAE and 601GAF, ensuring the formula/method for issue price or withdrawal payment complies with the specific requirements:
  • For unlisted or exchange-tradable (ETF/managed fund) classes, the formula must be based on value of scheme property attributable to the class less liabilities divided by number on issue (601GAE(2)(a)).
  • For listed classes that are able to be traded on a market and the scheme is listed, the formula may be based on market price at or around the time of issue (601GAE(2)(b)).
• Ensure the constitution permits the responsible entity to decide matters affecting factors in the formula and to make permitted adjustments (601GAE(1) and 601GAF(1)), but also that it does not authorise exercise of discretion with the explicit object of achieving a particular amount (601GAE(3); 601GAF(3)).

3. Adopt written policies governing exercise of discretions

• Given the documentation obligation in 601FC(1B)(b), adopt a clear, current written policy that sets out valuation methodologies, permissible adjustments, escalation and approval processes, timing of valuations, use of agents, and conflict-management procedures.
• Ensure the policy explicitly addresses the ordinary commercial practice standard in 601FC(1A) and defines what “reasonably current” means for the scheme’s asset types (e.g. pricing inputs, frequency of valuation updates).

4. Prepare evidence and written explanations when ad hoc exercises occur

• If a discretion is exercised not in accordance with a current written policy, prepare contemporaneous written explanations describing how the discretion was exercised and why it was reasonable (601FC(1B)(b)). Retain evidence, valuation inputs, minutes of meetings and the responsible entity’s approvals.

5. Ensure procedures achieve the statutory standards

• Valuations and price-setting must be as far as practicable consistent with ordinary commercial practice for assets/market pricing and reasonably current at transaction time (601FC(1A)). Validate valuation models, engage independent pricing agents if needed, and document market data sources.

6. Manage placement and rights-issue mechanics precisely

• For placements in quoted classes, ensure the quotation is not suspended (601GAD(2)(a)(i)).
• For non‑ASX quoted classes, track related issues over the previous 12 months to ensure the aggregate does not exceed 15% immediately before the new issue (601GAD(2)(b)(i)). Maintain cap accounting and audit trails that demonstrate what was on issue “immediately before the issue.”
• If relying on member approvals instead of the 15% cap, convene meetings with notice particulars that include intended use of funds raised and apply the placement resolution voting rules strictly (601GAD(2)(b)(ii) and definition of “placement resolution”) so that votes are only cast by eligible members.

7. For negotiated fees and differential fees, track cross-instrument compliance

• If applying fees permitted under ASIC Corporations (Registered Schemes,Differential Fees) Instrument 2017/40 to affect acquisition consideration, ensure fee arrangements conform to that instrument as well as the constitution (601GAD(6)).

8. For stapled securities and forfeited interests, follow the special procedures

• For stapled securities, confirm the constitution contains adequate stapling provisions or provisions equivalent to those that would be permitted under other subsections (601GAD(7)). Reconcile the scheme’s stapling architecture against the statutory definition of “stapled security” inserted by the instrument.
• For forfeited interests, ensure sale procedures comply with section 254Q (except the specified excluded subsections) as if the interests were shares and the scheme the company (601GAD(9)).

9. Meet disclosure and access obligations

• Include the required PDS statement that copies of documents relating to pricing discretions are available from the responsible entity at no charge (inserted 1013DAA via s 7). Maintain a process to fulfil requests promptly and at no cost.
• If the scheme is a pre-2013 scheme electing reliance, publish and maintain the reliance notice on the website (new 601GAG via s 8(3)), and ensure the notice is kept up to date.

10. Maintain records for audit and regulatory review

• Keep valuation inputs, model runs, meeting minutes, written policies, written explanations and evidence of market data. The 601FC(1B) requirement for written explanation (or existence of policy) creates a documentary expectation that can be inspected.

11. Plan for the instrument’s expiry

• Note the repeal date of 1 October 2028 (s 9). Establish a compliance project to review the legal regime before expiry and to plan for any necessary constititional or procedural changes if the statutory environment changes.

12. Use delegation carefully

• Where valuation and pricing tasks are performed by agents under powers contemplated by the notes to 601GAE(1) and 601GAF(1) (reference to 601FB(2)), document delegation arrangements, contracts and oversight mechanisms, because the responsible entity remains ultimately responsible for lawful exercise of the discretion.

These steps translate the instrument’s statutory requirements into an operational compliance program: constitutional amendment (if electing to use the discretions), written policies and governance, transaction procedures and documentation, disclosure and website notices, and records to demonstrate reasonableness and contemporaneity in the pricing decisions.