THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 8 - Claims in respect of insolvent members

SECTION 963   CLAIM IN RESPECT OF PROPERTY ENTRUSTED TO, OR RECEIVED BY, DEALER BEFORE DEALER BECAME INSOLVENT  

963(1)  [Dealer must be member]  

Subject to this Division, where:

(a)  a dealer has at a particular time, whether before or after the commencement of this Part, become insolvent;

(b)  at an earlier time (whether before or after that commencement), property was, in the course of, or in connection with, the dealer's business of dealing in securities, entrusted to, or received by:

(i) if the dealer was, at the earlier time, a partner in a member organisation - the member organisation, or a partner in, or an employee of, the member organisation; or

(ii) otherwise - the dealer or an employee of the dealer;

and was so entrusted or received on behalf of, or because the dealer was a trustee of the property for, a person (other than an excluded person in relation to the dealer); and

(c)  as at the first-mentioned time, the obligations of the dealer, or of a member organisation in which the dealer is a partner, as the case requires, to the person in respect of the property have not been discharged;

the person may make a claim in respect of the property.

963(2)  [Board to be satisfied]  

Where a person makes a claim in respect of property and, at a particular time, the Board is satisfied that:

(a)  because of a dealer having become insolvent, this Division entitles the claimant to make the claim; and

(b)  as at that time, the obligations of the dealer, or of a member organisation in which the dealer is a partner, as the case requires, to the claimant in respect of the property have not been discharged;

SEGC shall allow the claim and:

(c)  if the property is, or includes, money - pay to the claimant an amount equal to the amount of that money; and

(d)  if the property is, or includes, property other than money - subject to subsection (3) and section 964, supply the last-mentioned property to the claimant.

963(3)  [SEGC may supply securities of like kind]  

Where:

(a)  SEGC allows a claim that, because of a dealer having become insolvent, this Division entitles a person to make in respect of property that is, or includes, a number of securities of a particular kind or documents of title to a number of securities of a particular kind; and

(b)  it is not reasonably practicable for SEGC to obtain those securities, or those documents of title to securities, as the case may be, from the dealer or, if the dealer has disposed of them, from the dealer's successor in title, before the end of:

(i) if the business rules of a participating exchange of which the dealer is a member, being those business rules as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes that claim - that period; or

(ii) otherwise - such period as the Board, having regard to all the circumstances relating to the claim, considers reasonable;

SEGC shall, subject to section 964, supply to the person, instead of those securities, or those documents of title to securities, that number of securities of that kind, or documents of title to that number of securities of that kind, as the case may be.