ASIC Corporations (Sale Offers by Controllers) Instrument 2026/95

Controller: The instrument does not redefine “controller” but relies on the meaning given by the Act. Under section 9 of the Corporations Act, a controller includes a receiver, receiver and manager, administrator under a deed of company arrangement, liquidator, or a person in possession of property under a charge. Controllers typically sell assets, including securities, to realise value for creditors.

Sale offer: This refers to an offer to sell securities or financial products that are already on issue, made by the controller rather than by the issuing body. The instrument only applies where the controller sells the securities or products within 12 months after the controller acquired them. The 12-month period is not counted from the original issue date of the securities; it is counted from the date the controller sold them. This is a key departure from the general rule in sections 707 and 1012C of the Act, which tie the exemption period to the issue date.

Disclosure exemption: Under section 708A of the Act, an entity selling quoted securities without a disclosure document can rely on an exemption if certain conditions are met, including that the securities were quoted for at least 3 months before sale, trading was not suspended for more than 5 days in the preceding 12 months, and a notice is given to the market operator. The instrument extends this exemption to controllers by clarifying that the reference period runs from the sale date, not the issue date. Similarly, section 1012DA provides an exemption from the requirement to give a Product Disclosure Statement for quoted financial products. The instrument applies the same sale-date rule.

Notice: For securities, the controller must give a notice under subparagraph (5)(e)(ii) of section 708A (as modified) to the body (issuer), not directly to the market operator. The body then gives the market operator notice under paragraph (5)(e)(i). For financial products, the controller gives notice under subparagraph (5)(e)(ii) of section 1012DA to the issuer, which then gives the market operator notice. The notice must be given within 5 business days after the sale and must state that the securities or products were sold by the controller without disclosure.

Defective notice: Both sections 708A(9) and 1012DA(9) impose obligations to correct defective notices. For securities, if the body becomes aware of a defect within 12 months after the sale, it must give the market operator a corrective notice. If the controller becomes aware of a defect within 12 months after the sale, it must make the body aware of the defect. The controller does not have an independent duty to correct the notice itself; the duty to correct falls on the issuer (body or regulated person) once notified.

Quoted securities and trading suspension: The exemption only applies if the class of securities or financial products was quoted on a declared financial market for at least 3 months before the sale date. Additionally, trading in that class must not have been suspended for more than a total of 5 days during the shorter of: the period the class was quoted, or the 12 months before the sale date. This mirrors the existing tests in sections 708A(5) and 1012DA(5) but uses the controller’s sale date rather than the issue date.

Declared financial market: Defined in section 9D of the Act. The note in the instrument clarifies that until the first declaration under subsection 9D(2) is made, a market that was prescribed as a prescribed financial market under former regulation 1.0.02A of the Corporations Regulations 2001 is taken to be a declared financial market. This ensures continuity of the exemption during the transitional period.

The instrument directly affects controllers who sell securities or financial products in a secondary market within 12 months of taking control. Controllers include receivers, administrators, liquidators, and other persons in possession of property under a charge. For such controllers, the instrument reduces compliance burdens by extending the existing disclosure exemptions to their sale offers, provided the conditions are met. Without the instrument, a controller selling securities within 12 months of issue might otherwise be required to produce a disclosure document or Product Disclosure Statement, which is costly and time consuming in an insolvency context.

Issuing bodies (the body that originally issued the securities or financial products) are affected because they remain the entity obliged to give notice to the market operator. Under the modified section 708A(5)(e)(i), the body gives the notice within 5 business days after the sale (not the issue). The body also bears a continuing obligation to correct defective notices within 12 months after the sale. If the controller notifies the body of a defect, the body must correct it within a reasonable time. This means the body must keep records of controller sales and cooperate with the controller to ensure timely and accurate disclosure.

Regulated persons (as defined in section 1011B of the Act) are affected by the modifications to Part 7.9. The instrument applies to all regulated persons who are issuers of financial products. They must receive notices from controllers and give notices to market operators within 5 business days after the controller sale. They also have the duty to correct defective notices.

Market operators (declared financial markets) are affected because they must receive and process notices from issuers that refer to controller sales. The instrument does not alter the operator’s obligations but changes the timing and content of notices.

Investors are affected indirectly. The instrument clarifies that secondary offers by controllers are exempt from disclosure if the conditions are met. Investors who purchase securities or financial products from a controller in such an exempt offer receive no disclosure document or Product Disclosure Statement. They must rely on market information and the availability of continuous disclosure. This is a trade-off: reduced compliance costs for controllers (and ultimately creditors) versus potentially less information for buyers.

Creditors and other stakeholders in insolvency benefit from the instrument because it facilitates the timely sale of securities assets by controllers. Without the exemption, a controller might delay sales to avoid disclosure costs, or might sell at a discount to reflect the cost of compliance. The instrument aims to allow quicker sales at market prices, improving returns to creditors. However, this benefit is concentrated on controllers and secured creditors, while individual investors bear the cost of reduced information.

The instrument does not affect individual controllers in their personal capacity; it applies to persons acting in their official capacity as controllers. It also does not affect controllers who sell securities more than 12 months after the controller acquired them, as the exemption already applies without modification under the general provisions of the Act.

Duty to give notice within 5 business days after sale: The controller must give a notice to the issuing body (or, for securities, to the body under subparagraph (5)(e)(ii) of section 708A as modified) within 5 business days after the controller sells the securities or financial products. The notice must state that the securities or products were sold by the controller without disclosure under the relevant Part. The body (for securities) or the regulated person (for financial products) must then give a corresponding notice to the market operator within the same 5 business day window. Failure to give the notice on time means the exemption is not available, and the sale offer may be in breach of the Act.

Right to rely on disclosure exemptions: Controllers have the right to offer securities or financial products without a disclosure document or Product Disclosure Statement, provided all conditions in sections 708A or 1012DA as modified are met. The key conditions are: (a) the class of securities or financial products must have been quoted for at least 3 months before the sale date; (b) trading in that class must not have been suspended for more than 5 days in the 12 months before the sale date (or shorter period if the class was quoted for less than 12 months); (c) the controller must give the required notice within 5 business days; and (d) no defective notice obligations are outstanding.

Duty to correct defective notices: The instrument imposes a tiered correction duty. For securities: if the body becomes aware that the notice it gave to the market operator is defective, and that awareness occurs within 12 months after the sale, the body must give a corrective notice to the market operator within a reasonable time. If the controller becomes aware of a defect in the notice it gave to the body under subparagraph (5)(e)(ii), the controller must notify the body of the defect within 12 months after the sale. The controller does not have a duty to directly correct the notice; its duty is limited to making the body aware.

For financial products: the duty is structurally identical. The issuer (regulated person) must correct the notice if it becomes aware of a defect within 12 months after the sale. The controller must notify the issuer of any defect in the notice it gave to the issuer within 12 months after the sale.

Right of the market operator to receive an accurate notice: The instrument does not grant the market operator any new rights, but the notice obligations are designed to ensure the market operator has accurate information about whether securities or products were offered without disclosure. If the notice is defective, the market operator has the benefit of a corrective mechanism.

Right of the body or issuer to be notified of defects: The controller must notify the body or issuer of a defect in the controller’s notice. This gives the body or issuer the opportunity to correct the market notice. Without this duty, the body or issuer might remain unaware of a defect and could inadvertently breach the Act.

Duty of the body or issuer to maintain records: Although not explicitly stated in the instrument, the body or issuer must keep track of controller sales and the corresponding notice deadlines. A failure to do so could result in a contravention of subsection (9) by failing to correct a defect within a reasonable time.

No duty on the controller to correct the market notice: A notable feature is that the controller’s correction duty is limited to notifying the body or issuer. This means the controller does not have to interact directly with the market operator. This reduces compliance costs for controllers but places the burden of correction on the body or issuer, which may not have direct knowledge of the controller’s actions.

The instrument itself does not create new pecuniary penalties or criminal offences. Instead, it modifies existing provisions of the Corporations Act, and contraventions of those provisions attract the penalties already prescribed by the Act.

Contravention of subsection 708A(9) as modified: A person (the body or the controller) who fails to comply with the obligations to correct a defective notice will contravene that subsection. For a body, this means if the body becomes aware of a defect in its market notice within 12 months after the sale and does not correct it within a reasonable time, the body is in contravention. For a controller, if it becomes aware of a defect in its notice to the body within 12 months after the sale and does not notify the body within a reasonable time, the controller is in contravention. The consequences of a contravention of section 708A are dealt with under the general civil penalty provisions of the Act. Section 1317E of the Act declares a contravention of a provision of Chapter 6D (including section 708A) to be a civil penalty provision. The maximum penalty for an individual is 5,000 penalty units; for a body corporate, 50,000 penalty units (or 500,000 penalty units after indexation adjustments). Currently a penalty unit is A$313, so individuals face up to A$1.565 million and companies up to A$15.65 million.

Contravention of subsection 1012DA(9) as modified: Similarly, a contravention of the correction obligations in section 1012DA attracts civil penalties under Part 9.4B of the Act. The maximum penalties are the same as for securities: 5,000 penalty units for individuals, 50,000 for bodies corporate. Additionally, the issuer or controller could face a compensation order under section 1317HA if loss or damage results from the contravention.

Failure to give the initial notice on time: If the controller or the body fails to give the required notice within 5 business days after the sale, the disclosure exemption is not available. The sale offer may then be an unlawful offer of securities or financial products without disclosure, which is a strict liability offence under sections 727 and 1012G of the Act. Criminal penalties can include imprisonment for up to 5 years for individuals and fines up to 10,000 penalty units. Civil penalties also apply.

Enforcement: ASIC has the power to issue infringement notices, seek civil penalty orders from the court, or pursue criminal prosecution depending on the seriousness of the breach. The instrument does not confer any private right of action on investors, but investors may have claims for misleading conduct or damages under other provisions (e.g., sections 1041H or 1325) if they suffer loss from reliance on defective disclosure.

Repeal and sunset: The instrument itself is repealed on 1 April 2031. However, conduct that occurred while the instrument was in force will continue to be governed by the instrument as modified. ASIC could replace the instrument before sunset if needed. Failure to replace could result in the pre-2016 regime applying again, creating uncertainty for controllers.

The instrument operates within the framework of the Corporations Act 2001. It modifies specific provisions of Chapter 6D (fundraising) and Part 7.9 (product disclosure). It does not affect other laws such as the Australian Securities and Investments Commission Act 2001, the Competition and Consumer Act 2010 (including the Australian Consumer Law), or state laws.

Relationship with section 708 (general disclosure exemptions): The instrument inserts a cross reference to section 708A into subsection 707(5). Subsection 707(5) provides that an offer of securities for sale within 12 months after their issue requires disclosure unless the offer is covered by an exemption in section 708. By adding “or 708A”, the instrument ensures that the exemption in section 708A is also available for controller sales. Without this modification, a controller selling securities within 12 months of issue might have had to rely on section 708 exemptions, which are narrower and less suitable for quoted securities.

Relationship with section 1012C: The instrument modifies paragraph 1012C(9)(b) to change the 12-month window from “within 12 months after issue” to “within 12 months after their sale by the controller”. Section 1012C applies to offers of financial products for sale by a person other than the issuer. The modification aligns the timing for controllers with the policy of the instrument.

Relationship with the definition of “declared financial market”: The instrument uses the Act’s definition, which is currently transitional. Until a declaration is made under section 9D(2), a market that was prescribed under the former Corporations Regulations is taken to be a declared financial market. This ensures continuity but also means that changes to the definition of “declared financial market” could affect the scope of the exemption. If a market ceases to be a declared financial market, securities or products traded on it would no longer qualify for the exemption, even if they were quoted at the time of sale.

Interaction with continuous disclosure obligations: The instrument does not modify continuous disclosure requirements under Chapter 6CA or Part 7.10. A controller who sells securities without disclosure is still subject to continuous disclosure obligations regarding material information. Investors who buy from a controller in an exempt offer still have the benefit of the issuer’s continuous disclosure regime.

Insolvency law interaction: Controllers often act in a formal insolvency appointment. The instrument does not override duties under the Bankruptcy Act 1966 or the Corporations Act 2001 relating to controllers’ duties to creditors and the court. However, by reducing disclosure costs, the instrument may make it easier for controllers to sell securities assets quickly, which can be consistent with their duty to realise assets in a timely manner.

Repeal of the 2016 instrument: The instrument wholly repeals ASIC Corporations (Sale Offers By Controllers) Instrument 2016/81. Prior to 1 April 2026, the 2016 instrument was in force. The 2026 instrument maintains the same policy but with drafting clarifications, including the explicit reference to “sold by the controller” instead of “issued”. This is a tightening of language rather than a substantive change, but it removes any ambiguity about whether the sale date applies.

Interaction with taxation laws: The instrument does not address tax implications. Controllers should consider capital gains tax, GST, and stamp duty consequences of selling securities separately.

This instrument is a replacement for the earlier ASIC Corporations (Sale Offers By Controllers) Instrument 2016/81, which was registered on 23 March 2016 and commenced on 1 April 2016. The 2016 instrument was made under the same provisions (subsections 741(1) and 1020F(1)) and was originally intended to sunset on 1 April 2021, but was likely extended. The 2026 instrument repeals it entirely.

The 2026 instrument itself is a new legislative instrument, not an amendment to the 2016 one. It has not been amended since its making on 23 March 2026. It has a fixed sunset date of 1 April 2031 (Part 3, section 9). This means ASIC will need to remake or extend the instrument before that date if it remains necessary. The five-year sunset aligns with the Legislative Instruments Act 2003 (now the Legislation Act 2003) requirement that legislative instruments sunset after 10 years, but ASIC has chosen a shorter period.

There is no amendment history within the instrument itself. The only amendment is the repeal of the prior instrument. Future amendments would need to be made by a new legislative instrument. ASIC has the power to modify or revoke the instrument at any time under its general powers, subject to procedural requirements.

The instrument does not reflect any legislative amendments to the Corporations Act. It is a purely ASIC-made instrument that relies on existing delegation powers. If the Act were amended in a way that conflicts with the instrument (for example, by narrowing the existing exemptions), the instrument may cease to have effect to the extent of the conflict.

This instrument is new, having been made on 23 March 2026 and commenced on 1 April 2026. As such, there is no reported litigation directly concerning it. However, its predecessor, the 2016 instrument, was the subject of some interpretive disputes in practice, though no major reported cases appear in the source. It is worth noting that the instrument is designed to resolve ambiguity, so it may reduce the likelihood of future litigation.

The key area of potential litigation is the interpretation of “sold by the controller” and whether a sale by a receiver who also acts as agent for the company qualifies. The instrument uses the term “controller” as defined in the Act, which includes agents of the company. Courts may need to determine whether a sale by a controller who is also an agent for the company is still a sale by a controller for the purposes of the exemption. The instrument does not address this nuance.

Another potential litigation issue is the timing of the notice. The instrument requires the notice to be given “within 5 business days after the day on which the relevant securities were sold by the controller”. The definition of “sold” could be contested: is it the date of the contract, the date of settlement, or the date of transfer? The instrument does not specify. Using the date of the contract is the most commercially sensible interpretation, but if litigation arises, a court would need to decide.

The defective notice provisions could also generate disputes about what constitutes a “reasonable time” to correct a defect. The instrument does not define “reasonable time”, leaving it to the circumstances. A controller who delays notification could be found in contravention. Similarly, the body’s duty to correct “within a reasonable time” could be litigated.

The trading suspension test is another area: the instrument says trading must not have been suspended for “more than a total of 5 days” in the 12 months before sale. The calculation of the “total” could be disputed if there are multiple suspensions or part-day suspensions. The Act’s definition of “day” may be relevant.

No case law is cited in the instrument. The litigation history of the underlying provisions (sections 708A and 1012DA) is extensive, but not specific to this instrument. ASIC has issued regulatory guidance on the application of the exemption for controllers, but that guidance is not binding on courts.

Sale date, not issue date: The most important change is that the 12-month window for the exemption runs from the controller’s sale date, not from the original issue date. A controller who assumes the exemption is still tied to the issue date may miss the window if the securities were issued more than 12 months ago but sold by the controller within 12 months of the controller’s acquisition. Conversely, if the controller sells the securities more than 12 months after the sale by the controller (which is impossible to read properly - actually it refers to the controller’s sale, not acquisition), but the instrument uses “within 12 months after their sale by the controller”. This means once the controller sells, the exemption is available only for that specific sale offer, not for later resales by the purchaser.

Notice deadline is 5 business days after sale: The notice must be given within 5 business days after the day of sale. Missing this deadline means the exemption is unavailable, and the controller may be in breach of the law. The date of sale must be carefully recorded. Using the date of settlement rather than contract could lead to a missed deadline if settlement is delayed.

Controller must notify the body, not the market operator: For securities, the controller gives notice to the body (paragraph 708A(5)(e)(ii) as substituted). The body then gives the market operator notice under paragraph (5)(e)(i). If the controller sends the notice directly to the market operator, it may not satisfy the modified provision. The controller must ensure the notice reaches the body within 5 business days. The body then has its own 5 business day deadline, but that deadline starts from the sale, not from receipt of the controller’s notice. If the controller delays notifying the body, the body may be unable to meet its own deadline.

Defective notice: controller’s duty is limited to notifying the body: If the controller’s notice to the body is defective, the controller must notify the body of the defect within 12 months after the sale. The controller does not have to correct the market notice itself. However, the body then has a duty to correct the market notice. The body may be unaware of the defect unless the controller notifies it. If the controller fails to notify, the body may inadvertently contravene the Act.

The 3-month pre-quotation period runs from the sale date: The class of securities must have been quoted at all times in the 3 months before the sale date. If the controller sells securities shortly after the controller acquires control, and the securities were not continuously quoted for the full 3 months before the sale, the exemption is unavailable. This is a trap for controllers who sell quickly.

Trading suspension test uses the controller’s sale date: The 12-month lookback for suspensions runs from the sale date. If a suspension occurred more than 12 months before the issue date but less than 12 months before the sale date, it may disqualify the exemption. This is different from the issuer’s perspective.

The instrument sunsets on 1 April 2031: After that date, the modifications will cease unless extended. Controllers who plan sales after that date should check whether a new instrument has been made. If not, the general provisions of the Act (using issue date) will apply, which may be less favourable.

Only applies to “declared financial markets”: If a market loses its declared status, securities quoted on that market no longer qualify. Controllers should verify the status of the market at the time of sale.

Step 1: Determine if the securities or financial products are quoted on a declared financial market. The class must have been quoted at all times in the 3 months before the sale. Check the market’s declaration status. If not, the exemption is not available and a disclosure document or Product Disclosure Statement is required.

Step 2: Check trading suspension history. Ensure that trading in the class was not suspended for more than a total of 5 days in the 12 months before the sale (or shorter period if quoted for less). Obtain records from the market operator or issuer.

Step 3: Record the exact date of sale. Use the date of contract or settlement, but be consistent. The notice deadline runs from this date. Keep documentary evidence of the sale date.

Step 4: Prepare the notice. For securities: the controller must prepare a notice stating that the securities were sold by the controller without disclosure under Part 6D. The content is not specified in detail by the instrument, but it must conform to the requirements of section 708A(5)(e) as modified. For financial products: the notice must state that the products were sold without a Product Disclosure Statement. The notice should be in writing and contain sufficient detail to identify the securities and the basis for the exemption.

Step 5: Give the notice to the issuer within 5 business days. The controller must give the notice to the body (for securities) or the regulated person (for financial products). Do not send it to the market operator. Use registered post, email with read receipt, or courier. Keep proof of delivery. The body then has the obligation to forward the notice to the market operator, but the controller should confirm receipt and follow up to ensure the market operator receives it.

Step 6: Monitor for defects. For 12 months after the sale, the controller must monitor whether the notice given to the body was defective. If the controller becomes aware of a defect, it must notify the body of the defect within a reasonable time. “Reasonable time” will depend on the circumstances, but prompt notification (within days) is recommended. The controller should keep a diary of the 12-month period.

Step 7: Cooperate with the issuer. The issuer may need additional information to correct a defective market notice. The controller should provide that information promptly. Failure to cooperate could lead to a contravention by the issuer, but the controller’s duty is only to notify, not to correct.

Step 8: Document compliance. Keep records of: the date of sale, the class of securities, the quotation period, the suspension history, the notice given to the body, proof of delivery, any defects identified, and any notifications of defects. This documentation will be crucial if ASIC investigates or if the exemption is challenged.

Step 9: If the sale occurs within 12 months of the controller’s appointment, check if the securities were quoted for 3 months before the controller’s sale. If the controller took control recently, the pre-quotation period may not be met. In that case, the exemption is unavailable and a disclosure document is needed.

Step 10: Stay updated on sunset. The instrument ends on 1 April 2031. Plan any controller sales after that date with the assumption that the exemption will not apply unless a new instrument is made. Consider lobbying ASIC or industry bodies for an extension if necessary.