THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.4 - CONDUCT OF SECURITIES BUSINESS

Division 3 - Recommendations about securities

SECTION 849   CLIENT TO BE TOLD IF ADVISER'S INTERESTS MAY INFLUENCE RECOMMENDATION  

849(1)  (Application of section)  

This section applies where a securities adviser makes a securities recommendation to a person (in this section called the client ) who may reasonably be expected to rely on it.

849(2)  (Particulars to be given to client)  

The securities adviser shall:

(a)  if the recommendation is made orally - when making the recommendation, disclose to the client orally; or

(b)  if the recommendation is made in writing - set out in that writing, in such a way as to be no less legible than the other material in that writing;

particulars of:

(c)  any commission or fee, or any other benefit or advantage, whether pecuniary or not and whether direct or indirect, that the securities adviser or an associate has received, or will or may receive, in connection with the making of the recommendation or a dealing by the client in securities as a result of the recommendation; and

(d)  any other pecuniary or other interest, whether direct or indirect, of the securities adviser or an associate, that may reasonably be expected to be capable of influencing the securities adviser in making the recommendation.

849(3)  (Commission or fees from client excluded)  

Subsection (2) does not apply in relation to a commission or fee that the securities adviser has received, or will or may receive, from the client.

849(4)  (Recommendation made in representative capacity)  

If by making the recommendation the securities adviser does an act as a representative of another person, then:

(a)  without limiting the generality of Division 2 of Part 1.2, the other person is an associate for the purposes of subsection (2); and

(b)  subsection (2) does not apply in relation to a commission or fee that the other person has received, or will or may receive, from the client.

849(5)  [Effect for Div 2 of Pt 1.2]  

For the purposes of Division 2 of Part 1.2, the making of securities recommendations is the matter to which a reference to an associate in subsection (2) relates.

849(6)  [When person not associate]  

Despite Division 2 of Part 1.2 and subsection (5), a person (in this subsection called the alleged associate ) is not an associate for the purposes of subsection (2) merely because of being:

(a)  a partner of the securities adviser otherwise than because of carrying on a securities business in partnership with the securities adviser; or

(b)  a director of a body corporate of which the securities adviser is also a director, whether or not the body carries on a securities business;

unless the securities adviser and the alleged associate act jointly, or otherwise act together, or under an arrangement between them, in relation to making securities recommendations.