ASIC Corporations (Foreign Small Scale Offers) Instrument 2025/614

Small scale personal offers by foreign companies. The central concept is a “personal offer” as defined for securities in proposed subsection 708(7B) and for interests in proposed subsection 1012EA(3). A personal offer must be capable of acceptance only by the person to whom it is made, and must be made to a person who is likely to be interested based on previous contact, a professional or other connection, or statements or actions indicating interest. This mirrors the existing “personal offers” concept in section 708(2) of the Act but is adapted for foreign issuers. It restricts the offer to a genuine pre-existing relationship or expressed interest, preventing general advertising or broad solicitation.

20 investors ceiling and 20 purchasers ceiling. For securities, proposed subsection 708(7C) creates a ceiling: an offer breaches the limit if it results in the number of people to whom securities have been issued exceeding 20 in any 12-month period. The count excludes issues that do not need disclosure under any other subsection of section 708, offers not received in Australia, and offers made under a disclosure document (708(7D)). For managed investment scheme interests, proposed subsection 1012EA(4) creates a “20 purchasers ceiling” with the same numerical limit on issues. In counting, issues that do not need a product disclosure statement (otherwise than because of section 1012EA) or are made under a product disclosure statement are disregarded (1012EA(5)). Additionally, issues made by a body that was an unregistered managed investment scheme at the time of the offer and that became registered within 12 months may also be disregarded if the offer would not have needed a product disclosure statement had the scheme been registered at that time (1012EA(6)). These counting rules are crucial: the exemption depends on the issuer not exceeding the ceiling over a rolling 12-month period.

Foreign regulatory requirements. The exemption requires that the foreign company “reasonably believes the offers are made in accordance with foreign regulatory requirements” (708(7A)(b); 1012EA(1)(c)). This term is defined in proposed subsection 708(22) and 1012EA(8) as “laws or operating rules (however described) that, as at the time of the offer, are in force in or in part of the primary foreign jurisdiction.” The test is a reasonable belief, not strict compliance, but the belief must be held at the time of each offer and must be objectively reasonable. This imports foreign law into the Australian regulatory framework as a condition of the exemption.

Primary foreign jurisdiction. For securities, it is the place of the approved foreign market on which the securities are quoted, or if quoted on more than one approved foreign market, the place where they were first quoted (708(22)). For managed investment scheme interests, it is the place of the approved foreign market where the interests are able to be traded, or if more than one, the place where it is “reasonably expected that the most offers of securities will be received” (1012EA(8)). This definition anchors the foreign regulatory requirements to a specific jurisdiction.

Approved foreign market. The instrument does not define this term directly; it notes in the proposed subsections that the definition is notionally inserted into section 9 of the Act by the ASIC Corporations (Definition of Approved Foreign Market) Instrument 2017/669. An approved foreign market is generally a stock exchange or market outside Australia recognised by ASIC.

Documentary conditions. Australian offerees must be given, at or before the time of the offer, any document relating to the offer that would have been required under the laws of the primary foreign jurisdiction if they had received the offer there. If that document is not in English, a certified English translation must be given. The document must include or be accompanied by written statements that: (i) the documents have been prepared for foreign compliance purposes; (ii) they may not contain all information required under Australian law; and (iii) if applicable, the foreign company is not subject to Australian continuous disclosure requirements. These statements put Australian investors on notice that the disclosure standard is foreign, not domestic.

Recommendation exemption. For managed investment scheme interests, proposed subsection 1012EA(2) extends the exemption to recommendations: a recommendation to acquire interests in response to a personal offer does not need a product disclosure statement if the underlying offer itself is exempt under section 1012EA. This removes the need for a separate disclosure document for advice given in that context.

Foreign companies offering securities. Any foreign company whose securities are quoted on an approved foreign market (with trading not suspended) may use the exemption to make personal offers to Australian offerees without a prospectus, provided it complies with the conditions. The foreign company bears the burden of forming a reasonable belief about foreign regulatory requirements, preparing and translating documents, and monitoring the 20-issue ceiling. This affects companies that might otherwise avoid Australian fundraising due to the cost and liability of preparing an Australian disclosure document.

Foreign companies operating managed investment schemes. Foreign companies that offer interests in managed investment schemes where those interests are tradeable on an approved foreign market may also use the exemption. An additional requirement is that all interests in the scheme must be issued by the same person (the issuer). This affects foreign collective investment vehicles, such as exchange-traded funds or unit trusts listed on overseas exchanges, that have Australian investor demand.

Australian offerees. The instrument defines an Australian offeree as a person who receives in Australia an offer (708(22)) or a recommendation (1012EA(8)). These investors receive a foreign disclosure document rather than an Australian prospectus or product disclosure statement. They are warned that the documents may not contain all information required under Australian law and, if applicable, that the foreign company is not subject to Australian continuous disclosure. This affects the information asymmetry and legal protections available to those investors. They must rely on the foreign jurisdiction’s regulatory regime for the accuracy and completeness of the disclosure.

Financial advisers. Advisers who recommend that a client acquire interests in a managed investment scheme in response to a personal offer under section 1012EA do not need to provide a product disclosure statement for that recommendation. This reduces compliance costs for advisers but also means the client may receive less disclosure than under a standard Australian offer. Advisers must still comply with best interests duties and other obligations under the Corporations Act and the ASIC Act.

ASIC. ASIC retains oversight. The instrument is made under ASIC’s exemption powers. ASIC may monitor compliance with the conditions, particularly the reasonable belief requirement and the 20-issue ceiling. If a foreign company misapplies the exemption, ASIC can take enforcement action under the underlying provisions of the Act. The sunset clause also forces ASIC and the industry to reassess the instrument before 2030.

Other market participants. The instrument indirectly affects Australian market operators, custodians, and platforms that facilitate foreign securities trading. It may also affect competing domestic issuers who must comply with full disclosure requirements while foreign issuers can access Australian investors with less onerous obligations.

Duty to give foreign disclosure document. The foreign company must provide Australian offerees with any document relating to the offer that would have been required under the laws of the primary foreign jurisdiction (708(7A)(d); 1012EA(1)(e)). This duty arises at or before the time an offer is made. If multiple documents are required under foreign law, all must be given. If no document is required, then arguably nothing needs to be given; however the condition is phrased as “any document relating to the offer that would have been required”, implying a duty to provide what foreign law mandates. The practical risk is that failure to provide a document that foreign law would have required means the exemption is not available.

Duty to provide English translation. If the foreign disclosure document is not in English, the foreign company must give a certified English translation alongside it (708(7A)(e); 1012EA(1)(f)). The instrument does not specify who may certify the translation; presumably a qualified translator or a person authorised under foreign law.

Duty to include warning statements. The foreign disclosure document must include or be accompanied by three written statements: (i) the documents have been prepared for foreign compliance purposes; (ii) they may not contain all information required under Australian law; and (iii) if applicable, the foreign company is not subject to Australian continuous disclosure requirements (708(7A)(f); 1012EA(1)(g)). The third statement is qualified by “if applicable”. If the foreign company is subject to continuous disclosure under Australian law (e.g., because it also has a listing on an Australian exchange), the statement is not required. The duty is to include the statements; failure to do so means the exemption is lost.

Duty not to exceed the investor/purchaser ceiling. The foreign company must ensure that offers do not result in more than 20 persons being issued securities or interests (as applicable) in any 12-month period (708(7A)(a), (7C); 1012EA(1)(b), (4)). This is a strict numerical limit; the instrument does not provide de minimis or temporary overrun relief. The counting rules allow exclusions for offers that already have a disclosure exemption or are made under a disclosure document, but the foreign company must maintain records to demonstrate compliance.

Duty to form a reasonable belief about foreign regulatory requirements. The foreign company must “reasonably believe” that the offers are made in accordance with foreign regulatory requirements (708(7A)(b); 1012EA(1)(c)). This is a subjective-objective hybrid: the company must actually hold the belief, and it must be reasonable in the circumstances. The duty applies at the time each offer is made. Changes in foreign law or market rules after an offer is made do not retrospectively invalidate the exemption, but the company must reassess for new offers.

Right to rely on the exemption. If all conditions are met, the foreign company may make offers without a disclosure document under Chapter 6D (for securities) or without a product disclosure statement under Part 7.9 (for managed investment scheme interests). This right is not absolute; it depends on continuous compliance. The instrument does not provide a safe harbour or statutory confirmation of reliance.

Rights of Australian offerees. Australian offerees have the right to receive the foreign disclosure document and the prescribed warning statements before or at the time of the offer. They do not have a right to receive an Australian-standard prospectus or product disclosure statement. The instrument does not create any private right of action for failure to comply with the conditions; enforcement is left to ASIC criminal or civil proceedings under the Act.

The instrument itself does not create new penalty provisions. It operates by modifying the disclosure obligations in Chapter 6D and Part 7.9 of the Corporations Act. If a foreign company makes offers that purport to rely on the exemption but fails to satisfy any condition, the exemption is not available, and the full disclosure requirements apply. Consequently, the offers would be treated as having been made without a required disclosure document, which attracts significant penalties under the Act. For Chapter 6D, section 727 prohibits offering securities without a disclosure document; contravention is a strict liability offence with maximum penalties of 2,000 penalty units or imprisonment for 5 years, or both (see section 727(1) and Schedule 3). For Part 7.9, section 1012G prohibits issuing or arranging for issue of a financial product without a product disclosure statement; contravention is also an offence with penalties up to 2,000 penalty units or imprisonment for 5 years (see section 1311 and Schedule 3). Additionally, if the foreign disclosure document contains misleading or deceptive statements, liability may arise under section 728 (for securities) or section 1021D (for financial products), as well as under the ASIC Act’s general consumer protection provisions. The foreign company’s officers may also face personal liability under section 729 or section 1021E for defective disclosure. The instrument does not limit ASIC’s powers to investigate or take administrative action, such as issuing stop orders under section 739 (for securities) or section 1020E (for managed investment scheme interests). The reasonable belief requirement is a key enforcement risk: if ASIC considers that the foreign company did not have a reasonable basis for believing it complied with foreign regulatory requirements, the exemption fails. ASIC would look to the foreign company’s due diligence; a belief based on inadequate legal advice or superficial review of foreign laws could be challenged. The 20-issue ceiling is another potential trap. Because the count is over a rolling 12-month period, a foreign company that issues even one security or interest beyond the limit loses the exemption for all offers that contributed to the excess, not just the offending issue. The instrument does not provide a grace period or mechanism to cure an overshoot. The sunset provision (repeal at 1 October 2030) is itself a form of regulatory enforcement: after that date, the exemptions cease, and any ongoing offers would need to comply with full disclosure. Foreign companies must plan for the instrument’s expiry and cannot assume it will be renewed.

Corporations Act 2001. The instrument modifies the Act by inserting deemed provisions. It does not amend the Act itself, so the Act remains the primary source of law. The new provisions sit alongside existing exemptions. For example, a foreign company could also rely on the existing small scale offers exemption in section 708(1) to (7) if it meets the Australian requirements, or the offer to sophisticated investors exemption in section 708(8). The instrument does not override those; it provides an alternative. However, the counting rules for the 20-issue ceiling under proposed 708(7D) exclude issues that do not need disclosure under “any other subsection of this section”, which includes the new subsection 708(7A). This means a foreign company using the new exemption does not count those issues toward the existing small scale ceiling, and vice versa. That amplifies the total number of investors a foreign company can reach without disclosure across both exemptions, but the 20-issue limit under each exemption is separate.

ASIC Corporations (Definition of Approved Foreign Market) Instrument 2017/669. This instrument defines which foreign markets are “approved foreign markets”. The new exemption depends on that definition. If a market ceases to be approved (e.g., due to regulatory changes), securities or interests quoted or tradeable on that market would no longer qualify. The instrument notes the definition is notionally inserted into section 9 of the Act.

Foreign law. The instrument conditions Australian relief on compliance with foreign regulatory requirements. This creates an indirect interaction: the foreign company must satisfy both Australian and foreign law. A conflict could arise if foreign law prohibits the provision of a document to overseas investors; in that case, the condition in paragraph (d) could not be met, and the exemption would not be available. The instrument does not provide a waiver or modification for such conflicts. Similarly, if foreign law changes after the instrument is made, the reasonable belief test must be reassessed for each new offer.

Advertising restrictions. The instrument amends subsection 734(1) of the Act to include offers made under proposed 708(7A) within the advertising prohibitions. This means that advertisements for securities offered under the new exemption are subject to the same restrictions as for exempt offers under section 708(1) - generally, advertising is prohibited unless the content is limited to certain statements. For managed investment scheme interests, the advertising restrictions in Part 7.9 Division 5 would apply; the amendment to section 1018B ensures that offers under section 1012EA are captured.

Continuous disclosure. The instrument does not impose Australian continuous disclosure obligations on foreign companies using the exemption. Instead, it requires a statement in the foreign disclosure document that, if applicable, the foreign company is not subject to Australian continuous disclosure. This acknowledges that foreign companies listed on overseas markets are typically subject to the continuous disclosure rules of their home jurisdiction, which may be less stringent. Australian investors are alerted to this gap.

Managed investment scheme registration. The instrument interacts with Chapter 5C of the Act, which requires certain managed investment schemes to be registered. The new exemption applies to interests in a scheme that is not a registered scheme (the instrument refers to “a managed investment scheme (but not a registered scheme)” in counting rules). However, if the scheme later becomes registered, subsection 1012EA(6) provides that issues made while it was unregistered may be disregarded if the offer would not have required a product disclosure statement had it been registered. This allows a foreign company to “cleanse” past issues from the 20-purchaser count if it registers the scheme within 12 months. This is a transitional interaction designed not to penalise schemes that later become Australian regulated.

This is a new instrument with instrument number 2025/614, made on 19 September 2025 by ASIC delegate Amanda Zeller. It has not been amended since its making. The instrument commences on the day after it is registered on the Federal Register of Legislation. There is no amending instrument referenced in the text. However, the instrument is subject to a sunset provision: it is repealed at the start of 1 October 2030 (see Part 3). This is a scheduled repeal under the Legislation Act 2003, which requires review before expiry. The instrument will therefore have a lifespan of just under five years from commencement. Future amendment is possible; ASIC may modify or extend it via a new instrument. Users should monitor for replacement instruments or extensions. The instrument does not amend or replace any earlier instrument; it is the first of its kind codifying foreign small scale offers into the ASIC legislative instrument framework, though the underlying exemption power has existed for decades.

No litigation history exists for this instrument as it has only just been made and has not yet commenced. However, we can anticipate potential areas of dispute based on the instrument’s wording. The reasonable belief requirement in proposed 708(7A)(b) and 1012EA(1)(c) is likely to be litigated if ASIC takes action against a foreign company. Courts would need to consider what constitutes a reasonable belief under foreign law, a question that may require expert evidence on the foreign jurisdiction’s regulatory regime. The definition of “personal offer” may also generate disputes, particularly the requirement that the offeree be “likely to be interested” based on previous contact, connection, or statements. This mirrors existing provisions that have been interpreted in the context of section 708(2) of the Act. Cases such as ASIC v Onstad [2017] FCA 1299 (though not binding on this instrument) illustrate that broad offers to an unconnected public will not qualify. The 20-investor ceiling counting rules present interpretive questions, such as whether an offer to a joint account counts as one person or multiple persons, or how to treat entities associated with the same underlying investor. The instrument is silent on attribution and aggregation. The disregard for offers not received in Australia (708(7D)(b)) may be litigated if there is a dispute about where an offer was received, particularly for electronic communications. Finally, the sunset clause may prompt litigation if the instrument is not renewed and foreign companies argue that ongoing offers were promised or that reliance periods should be grandfathered. The instrument contains no grandfathering provision, so reliance after 1 October 2030 would be at the foreign company’s own risk.

The ceiling is based on issues, not offers. The 20-investor ceiling in proposed 708(7C) (“results in the number of people to whom securities of the foreign company have been issued exceeding 20”) means that a foreign company can make offers to more than 20 persons, provided only 20 or fewer accept. This creates a practical risk: if the foreign company makes offers to 25 persons and 15 accept, it remains within the ceiling. But if it makes offers to 25 and 21 accept, any one of those acceptances could trigger a breach. The foreign company must either control who it offers to or have a reliable method to revoke offers once the ceiling is reached. The instrument does not address the timing of counting - whether acceptance or issue triggers the limit. The safer approach is to limit offers to no more than 20 persons to avoid the risk of overshoot.

The 12-month period is rolling. The ceiling is “in any 12-month period”, not a fixed financial year. A foreign company must track the date of each issue and count backwards 12 months. An issue made today could cause a breach if 20 issues were already made in the preceding 12 months. This requires diligent record-keeping.

Personal offer definition is restrictive. The three limbs in proposed 708(7B) require an existing contact or expressed interest. A foreign company cannot simply put a notice on its website or email a list of Australian shareholders. It must have a specific relationship or prior indication. Using a general marketing list without evidence of connection could invalidate the exemption.

Reasonable belief is not a floor; it is a pass-fail test. The foreign company must reasonably believe offers are made in accordance with foreign regulatory requirements. A mere belief that is not grounded in proper legal advice or research could be found unreasonable. This is not a safe harbour; it is a condition that ASIC can contest.

Foreign disclosure document may not exist. The condition requires giving “any document relating to the offer that would have been required to be given to them under the laws of the primary foreign jurisdiction”. In some jurisdictions, small scale offers may not require any disclosure document. In that case, arguably nothing needs to be given. But the instrument also requires the warning statements to be included “in” or “accompanied by” that document. If no document exists, does the foreign company still need to provide the statements? The instrument is silent. A cautious approach would provide a standalone document containing the statements, even if foreign law does not require one.

Translation certification is undefined. The instrument requires a “certified English translation” but does not specify who may certify. The foreign company should ensure the translator is qualified and the certification is acceptable under Australian evidentiary standards.

Managed investment scheme condition: all interests issued by same person. Proposed 1012EA(1)(a) requires that “all of the interests in the scheme are issued by the same person (the issuer)”. This is a global condition; if the scheme has multiple issuers (e.g., different classes of interests issued by different entities), the exemption is unavailable entirely. Foreign companies must ensure the scheme’s structure is unified.

Sunset risk. The instrument is repealed at the start of 1 October 2030. Any offers made after that date, or ongoing offers that continue after that date (e.g., an offer open for acceptance), would not be protected. Foreign companies must plan for the expiry and cannot assume a replacement instrument will be in place.

Step 1: Confirm eligibility. Ensure the foreign company is not an Australian company. For securities, verify that the securities are in a class quoted on an approved foreign market and trading in that class is not suspended. For managed investment scheme interests, verify that the interests are able to be traded on an approved foreign market and trading is not suspended, and that all interests in the scheme are issued by the same person.

Step 2: Identify the primary foreign jurisdiction. For securities, this is the place of the approved foreign market where the securities are quoted, or if multiple, where first quoted. For interests, it is the place where the interests are tradeable, or if multiple, where most offers are reasonably expected to be received. Obtain legal advice in that jurisdiction to confirm the applicable regulatory requirements.

Step 3: Obtain legal advice on foreign regulatory requirements. The foreign company must form a reasonable belief that offers will comply with the laws and operating rules of the primary foreign jurisdiction. This should be documented, including advice from local counsel. The advice should address disclosure obligations, offering restrictions, and any conditions for offers made to persons outside that jurisdiction.

Step 4: Prepare the disclosure document. Identify what document (if any) would be required under foreign law if the offeree received the offer in the primary foreign jurisdiction. If foreign law requires a prospectus, offering memorandum, or equivalent, that document must be provided to Australian offerees at or before the time of the offer. If no document is required, consider preparing a document containing the warning statements to ensure compliance with the statements requirement.

Step 5: Translate the document. If the foreign disclosure document is not in English, arrange for a certified English translation. The translation should be provided at the same time as the foreign language document. Keep a record of the certification.

Step 6: Include prescribed warning statements. The foreign disclosure document must include or be accompanied by written statements that: (i) the documents have been prepared for foreign compliance purposes; (ii) the documents may not contain all information required under Australian law; and (iii) if applicable, the foreign company is not subject to Australian continuous disclosure. These statements should be prominent.

Step 7: Ensure offers are personal. Only make offers to persons who meet the definition of personal offer: previous contact, professional or other connection, or statements or actions indicating interest. Do not make general offers to the public or use mass advertising. Document the basis for each offeree’s likely interest.

Step 8: Monitor the 20-issue ceiling. Maintain a register of all issues to Australian offerees within the preceding 12 months, including the date of each issue. Before making any new offer, check that the cumulative number of persons to whom securities or interests have been issued in the 12-month period will not exceed 20. Use the counting rules in proposed 708(7D) or 1012EA(5) and (6) to exclude certain issues. For managed investment schemes, consider whether the scheme has become registered and whether the issues can be disregarded under subsection (6).

Step 9: Comply with advertising restrictions. Do not advertise the offer in a way that would contravene subsection 734(1) (for securities) or Part 7.9 Division 5 (for interests), as amended. Ensure any advertisement complies with the permitted content rules.

Step 10: Plan for the sunset. The instrument is repealed on 1 October 2030. If the foreign company intends to continue making offers after that date, it must either rely on another available exemption or prepare a full Australian disclosure document. New offers made before repeal but accepted after repeal may be unprotected; seek legal advice on transitional risks.