THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 6C - Transfer delivery service guarantees

SECTION 954X   CLAIMS IN RESPECT OF DEFAULT BY TDS NOMINEE  

954X(1)  [Default by TDS nominee]  

This section applies if:

(a)  a person or partnership (in this Division called the ``transferor'' ) is obliged to transfer securities of a particular kind to, or as directed by, another person or partnership (in this Division called the ``transferee'' ); and

(b)  the obligation is a claimable obligation; and

(c)  for the purpose of discharging the obligation, the transferor:

(i) elects, in accordance with the transfer delivery service provisions of a settlement authority, to bring about a transfer of a particular number of securities of that kind to, or as directed by, the transferee by the means provided for in those provisions; and

(ii) for the purpose of so bringing about the transfer, transfers that number of securities of that kind to the TDS nominee; and

(d)  for the purpose of bringing about the transfer of securities referred to in subparagraph (c)(i) by the means provided for in those provisions, the TDS nominee later purports to transfer that number of securities of that kind to, or as directed by, the transferee; and

(e)  the TDS nominee is in default under the transfer delivery service provisions because the transfer documents in relation to the purported transfer, so far as they relate to a particular number of securities of that kind (in this Division called the ``default securities'' ), are not sufficient for the purpose referred to in subsection 924(2); and

(f)  if the obligation is a purchase obligation - the transferee has paid, or is ready, willing and able to pay, to the transferor, under the agreement for the purchase, the consideration for the purchase.

954X(2)  [No action by settlement authority]  

If the settlement authority has not taken action as mentioned in paragraph (3)(a) or (b), the transferee (even if it is the settlement authority) may, subject to section 954ZB, make a claim in respect of the TDS nominee's default.

954X(3)  [Action taken by settlement authority]  

If the settlement authority has, for the purpose of remedying the TDS nominee's default:

(a)  where the settlement authority is also the transferee - obtained marketable securities of the same kind and number as the default securities; or

(b)  otherwise - transferred securities of the same kind and number as the default securities to, or as directed by, the transferee;

the following provisions have effect:

(c)  unless the settlement authority is also the transferee - the settlement authority is subrogated to all the rights and remedies of the transferee in relation to the purported transfer of securities by the TDS nominee;

(d)  the settlement authority may, subject to section 954ZB, make a claim in respect of its actions to remedy the default;

(e)  any claim made under subsection (2) in respect of the TDS nominee's default is taken not to have been entitled to be made.

954X(4)  [Person may make single claim]  

A person or partnership may make a single claim under subsection (2) or (3) in respect of 2 or more defaults.

954X(5)  [Components of single claim treated separately]  

A claim made under subsection (4) is to be treated for the purposes of sections 954Z and 954ZA as if it were a separate claim in respect of each of the defaults to which it relates.

954X(6)  [Entitlement to claim]  

Entitlement to make a claim in respect of a claimable obligation is not affected by a person or partnership ceasing after the obligation arose to be a member organisation of a participating exchange.