Consultation paper: Review of the Small Co-operatives and Irrigation Companies Class Exemptions

December 2022

These two exemptions have been granted on the terms outlined further below. 

FMC (Small Co-operatives) Exemption Notice 2022 
This notice comes into force on 23 December 2022 and continues for five years until the close of 22 December 2027. It applies to issuers of co-operative shares (being registered co-operative companies and industrial and provident societies) that meet the small aggregate investment threshold or the low revenue investment threshold (as described below). 

FMC (Irrigation Companies) Exemption Notice 2022
This notice comes into force on 1 January 2023 and continues for approximately five years until the close of 22 December 2027. This timing is to align the commencement and revocation of both notices. It applies to irrigation companies that are not co-operative companies that meet certain co-operative principles and extends the same relief as the Small Co-operatives notice. It also allows all irrigation companies to access the same tailored Product Disclosure Statement relief under the FMC Act and Regulations as registered co-operative companies.

July 2022 update

After considering submissions to support our review of the small co-operatives and irrigation companies notices, we have decided to extend relief for a further 5-year period on the following terms:

• continue the ability for irrigation companies to use the same tailored Product Disclosure Statement relief as registered co-operative companies.
• increase the small aggregate investment threshold from $5,000 to $10,000 (which exempts from certain disclosure, governance, and FMC financial reporting obligations).
• increase the low revenue investment threshold from $2 million to $5 million (which exempts from FMC financial reporting obligations).

About the consultation

We are seeking feedback on two class exemption notices, being:

• the Financial Markets Conduct (Small Co-operatives) Exemption Notice 2021
• the Financial Markets Conduct (Irrigation Companies) Exemption Notice 2018.

The notices provide small co-operative companies, industrial and provident societies, and irrigation companies with a lighter regulatory compliance pathway for:

• offers of co-operative shares or certain equity securities where investors have, or will have, paid no more than $5,000 in total
• financial reporting obligations where the entity had revenue of $2 million or less in the relevant accounting period

We invite views on whether or not each of the class exemptions should be renewed and seek to establish in particular on:

• whether the policy rationale for each class exemption still supports a view that regulatory relief is likely to be appropriate, or whether circumstances have changed;
• whether the $5,000 aggregate level of investment for all offers and/or $2 million revenue thresholds would be suitable for further 5-year class exemptions, if they were granted.

All irrigation companies are also afforded generally equivalent treatment to co-operative companies when making a regulated offer of equity securities.

The small co-operatives notice expires on 31 December 2022 and the irrigation companies notice expires on 22 December 2022.

Feedback closes 11 April 2022