Financial Services Reform Act 2001 (122 of 2001)

Schedule 3   Other miscellaneous amendments

Part 2   Telephone monitoring during takeovers

Corporations Act 2001

29   At the end of Division 5 of Part 6.5 of Chapter 6

Add:

Subdivision D - Telephone monitoring

648J Requirement to record telephone calls made during bid period

(1) The bidder or target (the recorder ) must make a clear sound recording of all telephone calls the recorder makes during the bid period:

(a) to a person (the holder ) who holds:

(i) securities in the bid class; or

(ii) if the bid extends to securities that come to be in the bid class due to the conversion of or exercise of rights attached to other securities - those other securities;

(b) to discuss the takeover bid (whether or not for some other purpose as well).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(1A) If the recorder invites the holder to call the recorder to discuss the takeover bid (whether or not for some other purpose as well), then the recorder must make a clear sound recording of all telephone calls that:

(a) the holder makes to the recorder during the bid period; and

(b) are made by the holder to discuss the takeover bid (whether or not for some other purpose as well).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved .

Note 2: A contravention of this subsection is an offence (see subsection 1311(1)).

(3) Subsection (1) or (1A) does not apply if the holder is a wholesale holder.

Note: A defendant bears an evidential burden in relation to the matter in subsection (3). See subsection 13.3(3) of theCriminal Code.

(4) A holder of securities is a wholesale holder if:

(a) the value of the securities equals or exceeds the amount specified in the regulations made for the purposes of this paragraph; or

(b) a qualified accountant has given the holder a certificate referred to in paragraph 761G(7)(c) within the preceding 6 months; or

(c) the holder is a professional investor; or

(d) the holder is a person, or a member of a class of persons, prescribed in the regulations made for the purposes of this paragraph.

648K Requirement to notify holder that call is being recorded

The recorder must notify the holder that the call is being recorded for the purposes of this Act.

Note: The recorder will commit an offence under theTelecommunications (Interception) Act 1979 if the recorder fails to notify the holder.

648L Identifying recordings

The recorder must mark the medium in which the recording is stored so as to identify:

(a) the parties to the conversation; and

(b) the date and time it was made.

Note: Failure to comply with this section is an offence (see subsection 1311(1)).

648M Index of recordings

(1) The recorder must create an index (in electronic form or otherwise) of all recordings made by the recorder in relation to the takeover bid.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) The index must state in relation to each recording:

(a) the parties to the conversation; and

(b) the time and date the recording was made; and

(c) the exact place where the recording is being stored; and

(d) any other matter required by the regulations to be stated in the index.

(3) The following (the recording custodian ) must maintain the index:

(a) if paragraph (b) or (c) does not apply - the recorder;

(b) if the recorder has been wound up - each person who was a director of the recorder immediately before it was wound up;

(c) any other person who is required by the regulations to do so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

648N Keeping the index and storing the recordings

Index

(1) If the recording custodian has a registered office, the custodian must keep the index at that office.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) The recording custodian must securely keep the index in a manner that protects it from:

(a) misuse and loss; and

(b) unauthorised access, modification and disclosure.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(3) The recording custodian must keep the index in the way prescribed by regulations made for the purposes of this subsection.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Recording

(4) The recording custodian must store the recording at the place specified in the index.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(5) To avoid doubt, the recording custodian may change the place where the recording is stored.

Note: If the recording custodian changes the place where the recording is stored, the custodian must update the index under section 648M to state the new storage place of the recording.

(6) The recording custodian must securely store the recording in a manner that protects it from:

(a) misuse, loss and modification; and

(b) unauthorised access and disclosure.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(7) The recording custodian must store the recording in the way prescribed by regulations made for the purposes of this subsection.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

648P Retention and destruction of index and recordings

(1) The recording custodian must keep the index and recording for 12 months after the end of the bid period or such longer period as is determined by ASIC in writing.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) ASIC must notify the recording custodian in writing of a determination it makes under subsection (1).

(3) The recording custodian must destroy the index and recording on the day after the last day they are required to be kept under subsection (1).

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

648Q Access to index and recordings

Index

(1) The recording custodian must not use, or disclose the contents of, the entries in the index if it is not necessary to do so for the purpose of ensuring compliance with the Corporations legislation.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) The recording custodian must not allow another person to look at the entries in the index if subsection (3) does not require the custodian to do so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(3) The recording custodian must, for the purpose of ensuring compliance with the Corporations legislation, allow:

(a) if the recording custodian is not the recorder - the recorder, or a person authorised in writing by the recorder, to look at the entries in the index; and

(b) the holder who was party to the telephone call, or a person authorised in writing by the holder, to look at the entry in the index that relates to the recording of the call; and

(c) if Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001 requires the custodian to allow ASIC to see the entries in the index - ASIC; and

(d) if the court has made an order (including an order to produce the index in court) requiring the custodian to allow a person or persons to see the entries in the index, or a specific entry in the index - that person or those persons to look at the entries or the specific entry.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(4) A person who has looked at an entry in the index must not use, or disclose the contents of, the entry if it is not necessary to do so for the purpose of ensuring compliance with the Corporations legislation.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(5) The recording custodian must not give possession of the index to another person if:

(a) the court does not order the custodian to do so; and

(b) Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001does not require the custodian to do so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Recording

(6) The recording custodian must not use, or disclose the contents of, the recording if it is not necessary to do so for the purpose of ensuring compliance with the Corporations legislation.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(7) The recording custodian must not allow another person to listen to the recording if subsection (8) does not require the custodian to do so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(8) The recording custodian must, for the purpose of ensuring compliance with the Corporations legislation, allow the following persons to listen to the recording:

(a) if the recording custodian is not the recorder - the recorder, or a person authorised in writing by the recorder;

(b) the holder who was party to the telephone call, or a person authorised in writing by the holder;

(c) if Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001 requires the custodian to allow ASIC to listen to the recording - ASIC;

(d) if the court has made an order (including an order to produce the recording in court) requiring the custodian to allow a person or persons to listen to the recording - that person or those persons.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(9) A person who has listened to the recording must not use, or disclose the contents of, the recording if it is not necessary to do so for the purpose of ensuring compliance with the Corporations legislation.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(10) The recording custodian must not give possession of the recording to another person if:

(a) the court does not order the custodian to do so; and

(b) Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001does notrequire the custodian to do so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Regulations

(11) The regulations may prescribe the way in which the recording custodian is to allow a person to access the index or recording under this section, and may allow the custodian to require a person to pay a reasonable fee for such access.

Court powers

(12) The court may make an order requiring the recording custodian:

(a) to allow a person to look at the entries, or a specific entry, in the index; or

(b) to allow a person to listen to the recording; or

(c) to require the custodian to produce the index or recording in court; or

(d) to require the custodian to give possession of the index or recording to another person.

648R Copying the index or recording

(1) A person must not make a copy of an entry in the index or the recording if the person is not authorised to do so under Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) The recording custodian must not allow a person to make a copy of an entry in the index or the recording if the person is not authorised to do so under Division 3 of Part 3 of theAustralian Securities and Investments Commission Act 2001.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

648S Tampering with the index or recording

Index

(1) A person must not alter or interfere with the index other than for the purpose of maintaining it under section 648M.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(2) The recording custodian must not allow a person to alter or interfere with the index other than for the purpose ofmaintaining it undersection 648M.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Recording

(3) A person must not alter or interfere with the recording.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(4) The recording custodian must not allow a person to alter or interfere with the recording.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

648T Index and recording to be a book for some purposes

The index and recording is a book for the purposes of Division 3 of Part 3, and section 67, of theAustralian Securities and Investments Commission Act 2001.

648U Application of Criminal Code applies to offences

TheCriminal Code applies to all offences based on the provisions of this Subdivision.

Note 1: Chapter 2 of theCriminal Code sets out the general principles of criminal responsibility.

Note 2: For the meaning of offence based on a provision, see the definition in section 9.