Financial System Inquiry (Final Report), November 2014, at p.199.

Recommendation 21 of the Financial System Inquiry (Final Report), November 2014, at p.198.

Improving Australia's financial system, Government response to the Financial System Inquiry, December 2016, at pp.7 and 19.

Design and Distribution Obligations and Product Intervention Powers, Proposals Paper, December 2016.

In addition to the definition of a financial product in Division 3, this includes, for example: when two or more arrangements are together treated as a single arrangement: see section 761B; when a financial product is part of a broader facility: see section 762B; and, when a financial product is 'incidental': see section 763E. ASIC has exemption and modification powers to address situations where the application of disclosure rules to the myriad of financial products results in unintended consequences: exemption and modification powers are discussed further below.

Financial Product is defined in Division 3 of Chapter 7 of the Corporations Act.

Regulated person is defined in section 1011B of the Corporations Act as: the issuer of a financial product; any person required to hold a financial services license or who is exempt from holding such a licence by a specified provision; any authorised representative of such a licensee; and sellers of financial products where the sale requires a PDS.

See section 1010C of the Corporations Act.

The legislative framework in Part 7.9 of the Corporations Act is generally consistent with the policy intent behind the new regime. For example, it: has appropriate exclusions, including for issuances to wholesale clients and issuances not in the course of business; and, has appropriate anti-avoidance provisions and rules for products (such as derivatives, bundled products, co-issued products, managed investment schemes, and products that are periodically renewed or rolled over) and custodial arrangements. Note that some of the rules applying to these products and arrangements are provided for by instruments made the purposes of the disclosure regime.

Margin lending facility is defined in section 761EA of the Corporations Act.

For similar reasons, the regime does not apply to products regulated under the Credit Act. Products regulated under that Act are already subject to specific rules such as the responsible lending provisions in that Act.

See section 1010A of the Corporations Act.

See sections 700 and 761A of the Corporations Act.

These include rules relating to offers of fully-paid shares under a dividend reinvestment plan or bonus share plan. In addition, existing section 708AA provides for rights issues that do not need disclosure.

See section 66A of the Corporations Act.

Ordinary share is not defined in the Corporations Act. Consistent with existing practice, the term is to take its ordinary meaning having regard to the legislative context in which it is used and the purpose of the new regime. However, the use of the term 'ordinary share' is intended to distinguish such shares from other types of shares, particularly preference shares.

Where a security is issued both under an employee scheme as well as in other circumstances, only the securities issued under the scheme are exempt from the regime.

See the definition of Employee Share Scheme in section 9 of the Corporations Act.

Section 254G provides that a company may convert an ordinary share into a preference share (except a redeemable preference share) in certain circumstances.

'Exempt bodies' is presently defined in section 66A of the Corporations Act.

'Exempt public authority' is presently defined in section 9 of the Corporations Act.

Note that the issuer of a financial product may also be a distributor of the product.

While the obligations relating to collecting information cease to apply after the product is no longer available to consumers by way of initial offering, information that has been collected must still be kept for the prescribed period.

The disclosure document may be required by Part 7.9 or Chapter 6D of the Corporations Act

Under the new regime as enacted, the person required to make a target market determination for a financial product is the issuer of the product (except in regulated sale situations, in which case it is the seller). As the person who owes the obligations under the product or the body issuing the securities, the issuer would generally be best placed to make the determination. However, it is possible for a regulation made for the purposes of subsection 994B(1)(c) to impose the obligation on someone other than the legal issuer of a product, if necessary

The target market is to be described according to the ordinary meaning of the term. A separate requirement (discussed below) requires the target market to be appropriate.

Subsection 994B(5)(c) provides that the distribution conditions do not include any such conditions or restrictions imposed by or under the Corporations Act.

See sections 1101C, 1101E and 1101F of the Corporations Act, respectively.

See section 1101C of the Corporations Act.

Note that persons who are merely engaged to support a regulated person (for example, media companies, legal advisers and search engines) do not owe the obligations.

Those engaging in retail product distribution conduct are generally the people responsible for giving disclosure documents to potential acquirers of the product.

Or equivalent secondary sale activity that requires disclosure: see the definition of regulated sale in section 994A.

Personal advice and closely related conduct is defined in the new regime as 'excluded conduct'. Excluded conduct, in turn, includes 'excluded dealings' which is defined as arranging for the issue of a product for the purpose of implementing the personal advice, whether by the advisor or their associate: see section 994A.

The obligations do not require any formal relationship (for example, contract or other arrangement) to exist between an issuer and a distributor. However, the existence or non-existence of any such relationship may be relevant in determining whether or not an issuer has meet its obligation to take 'reasonable steps'. In addition, it may be a 'reasonable step' for an issuer to formalise its relationship with a distributor or vary such a relationship where doing so is reasonably practicable and would promote distribution being consistent with a product's target market determination.

See sections 1101C, 1101E and 1101F of the Corporations Act, respectively.

See section 1101C of the Corporations Act.

This ability to make regulations also applies in relation to the record keeping obligations imposed on issuer by the new regime.

There are limited exceptions and ASIC has provided some relief in relation to this prohibition, see ASIC Regulatory Guide 254.

See sections 739 and1020E of the Corporations Act.

See section 5 of the Legislative Instruments Act 2003 .

See sections 741 and 1020F of the Corporations Act.

Attorney-General's Department, September 2011 editin.

Financial System Inquiry (Final Report), November 2014, at p 207 and 208.

Financial System Inquiry (Final Report), November 2014, at p.206.

Improving Australia's financial system, Government response to the Financial System Inquiry, December 2016, at pp.7 and 19.

Design and Distribution Obligations and Product Intervention Powers, Proposals Paper, December 2016.

See section 1010C of the Corporations Act.

Sections 707 and 1012C of the Corporations Act are anti-avoidance provisions that aim to ensure that the requirement to provide disclosure in relation to a financial product cannot be avoided by an arrangement that utilises certain sale situations.

See sections 4 and 5 of the Code.

See sections 169 and 170 of the Code.

See sections 7 and 8 of the Code.

See, for example, existing section 1020E of the Corporations Act.

See the Legislation Act 2003 .

Attorney-General's Department, September 2011 edition

The Treasury has undertaken a process equivalent to a Regulation Impact Statement through the FSI. The link to the FSI Final Report can be found here: http://fsi.gov.au/files/2014/12/FSI_Final_Report_Consolidated20141210.pdf.

Parliamentary Joint Committee on Human Rights, General Comment No 43 Article 14 : Right to equality before courts and tribunals and to a fair trial , CCPR / C / CG / 32 , 23 August 2007 , [ 30 ].

Attorney-General's Department, September 2011 edition.