THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.6 - MONEY AND SCRIP OF DEALERS' CLIENTS

SECTION 873   SCRIP IN DEALER'S CUSTODY  

873(1)  [Application of section]  

This section applies where the holder of a licence (in this section called the dealer ) receives for safe custody scrip that is the property of another person (in this section called the client ) and for which the dealer, or a nominee controlled by the dealer, is accountable.

873(2)  [Request to register in nominee's name]  

If the client requests that the body corporate that issued or made available the securities underlying the scrip register the scrip in the name of such a nominee, the dealer must cause the body corporate so to register them.

873(3)  [Request for deposit with dealer's bank]  

If the client requests that the scrip be deposited in safe custody with an Australian ADI with which the dealer maintains an account, the dealer must cause the scrip to be so deposited.

873(4)  [If subsec (2) and (3) do not apply]  

If:

(a)  neither of subsections (2) and (3) applies; and

(b)  the scrip is not registered in the client's name by the body corporate that issued or made available the securities underlying the scrip;

the dealer must cause the scrip to be so registered.

873(5)  [Scrip as security for loan to dealer]  

A dealer must not deposit the scrip as security for a loan or advance to the dealer unless:

(a)  the client owes the dealer an amount in connection with a transaction entered into by the dealer on the client's behalf;

(b)  the dealer gives the client a written notice that identifies the scrip and states that the dealer proposes so to deposit it; and

(c)  the amount, or the total of the amounts, that the client so owes on the day of the deposit is not less than the amount of the loan or advance.

873(6)  [Action when scrip security for loan]  

If the dealer deposits the scrip as permitted by subsection (5), the dealer:

(a)  shall, within one business day after the amount or amounts first referred to in paragraph (5)(c) are repaid, withdraw the scrip from that deposit; and

(b)  if, at the end of 3 months after the day of that deposit, or at the end of any subsequent interval of 3 months, the scrip has not been withdrawn from that deposit - give the client written notice of that fact.