Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.9 - FINANCIAL PRODUCT DISCLOSURE AND OTHER PROVISIONS RELATING TO ISSUE, SALE AND PURCHASE OF FINANCIAL PRODUCTS  

Division 2 - Product Disclosure Statements  

Subdivision B - Requirement for a Product Disclosure Statement to be given  

SECTION 1012C   OBLIGATION TO GIVE PRODUCT DISCLOSURE STATEMENT - OFFERS RELATED TO SALE OF FINANCIAL PRODUCTS  

Section sets out sale situations in which Product Disclosure Statement required

1012C(1)    
This section sets out situations in which an offer relating to the sale of a financial product gives rise to an obligation on a regulated person to give another person a Product Disclosure Statement for the product.

1012C(2)    

For the purposes of this Act:

(a)    each of the situations is a sale situation ; and

(b)    the relevant conduct for that situation is the offer; and

(c)    the client for that situation is the person to whom the product is to be sold.

Sale offers that require a Product Disclosure Statement

1012C(3)    
A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a)    the regulated person offers to sell the financial product to the person; and

(b)    a sale of the product to the person pursuant to the offer would take place in circumstances covered by subsection (5) , (6) or (8) ; and

(c)    the financial product is to be sold to the person as a retail client.

The Product Disclosure Statement must be given at or before the time when the regulated person makes the offer and must be given in accordance with this Division.

1012C(4)    
A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a)    the person makes an offer to the regulated person to acquire the financial product; and

(b)    the person would acquire the financial product by way of the transfer of the product to the person; and

(c)    a sale of the product to the person pursuant to the offer would take place in the circumstances described in subsection (5) , (6) or (8) ; and

(d)    the financial product is to be sold to the person as a retail client.

The Product Disclosure Statement must be given to the person before the person becomes bound by a legal obligation to acquire the financial product pursuant to the offer and must be given in accordance with this Division.

Off-market sale by controller

1012C(5)    
This subsection covers the circumstances in which:

(a)    the seller controls the issuer of the financial product; and

(b)    either:

(i) the product is not able to be traded on any licensed market; or

(ii) although the product is able to be traded on a licensed market, the offer is not made in the ordinary course of trading on a licensed market.

Note: See section 50AA for when a person controls a body.

Sale amounting to indirect issue

1012C(6)    
This subsection covers the circumstances in which:

(a)    the offer is made within 12 months after the issue of the financial product; and

(b)    the product was issued without a Product Disclosure Statement for the product being prepared; and

(c)    either:

(i) the issuer issued the product with the purpose of the person to whom it was issued selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product; or

(ii) the person to whom the product was issued acquired it with the purpose of selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product.

The purpose test in subsection (6)

1012C(7)    
For the purposes of subsection (6):

(a)    a financial product is taken to be:

(i) issued with the purpose referred to in subparagraph (6)(c)(i); or

(ii) acquired with the purpose referred to in subparagraph (6)(c)(ii);

if there are reasonable grounds for concluding that the product was issued or acquired with that purpose (whether or not there were or may have been other purposes for the issue or acquisition); and

(b)    without limiting paragraph (a), a financial product is taken to be:

(i) issued with the purpose referred to in subparagraph (6)(c)(i); or

(ii) acquired with the purpose referred to in subparagraph (6)(c)(ii);

if the financial product, or any financial product of the same kind that was issued at the same time, is subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the product was issued or acquired with that purpose.

Sale amounting to indirect off-market sale by controller

1012C(8)    
This subsection covers the circumstances in which:

(a)    the offer is made within 12 months after the sale of the financial product by a person (the controller ) who controlled the issuer of the product at the time of the sale; and

(b)    either:

(i) at the time of the sale by the controller, the product was not able to be traded on any licensed market; or

(ii) although the product was able to be traded on a licensed market at that time, the sale by the controller did not occur in the ordinary course of trading on a licensed market; and

(c)    a Product Disclosure Statement was not prepared by, or on behalf of, the controller before the sale of the product by the controller; and

(d)    either:

(i) the controller sold the product with the purpose of the person to whom it was sold selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product; or

(ii) the person to whom the controller sold the product acquired it with the purpose of selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product.

Note: See section 50AA for when a person controls a body.

The purpose test in subsection (8)

1012C(9)    
For the purposes of subsection (8):

(a)    a financial product is taken to be:

(i) sold with the purpose referred to in subparagraph (8)(d)(i); or

(ii) acquired with the purpose referred to in subparagraph (8)(d)(ii);

if there are reasonable grounds for concluding that the product was sold or acquired with that purpose (whether or not there were or may have been other purposes for the sale or acquisition); and

(b)    without limiting paragraph (a), a financial product is taken to be:

(i) sold with the purpose referred to in subparagraph (8)(d)(i); or

(ii) acquired with the purpose referred to in subparagraph (8)(d)(ii);

if the financial product, or any financial product of the same kind that was sold by the controller at the same time, is subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the initial sale and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the product was sold or acquired (in the initial sale) with that purpose.

This section has effect subject to other provisions

1012C(10)    

This section does not apply to a regulated person for a sale situation if:

(a)    one or more of sections 1012D , 1012DA , 1012E or 1014E apply to a regulated person for that sale situation; and

(b)    for each of those sections that so applies - the regulated person complies with the requirements (if any) in that section for that sale situation.

Civil liability

1012C(11)    

A person contravenes this subsection if the person contravenes this section.

Note: This subsection is a civil penalty provision (see section 1317E ).