Corporations Regulations 2001
These Regulations are the Corporations Regulations 2001. REGULATION 1.0.01A 1.0.01A COMMENCEMENT
(Repealed by LA, s 48D.) REGULATION 1.0.02 DEFINITIONS
Note: A number of expressions used in these Regulations are defined in the Act, including the following:
In these Regulations:
ABN
(Repealed by FRLI No F2023L01458, Sch 1[4(a)] (effective 1 November 2023).)
ACH
means Australian Clearing House Pty Limited.
Act
means the Corporations Act 2001.
agent
means a person appointed under subsection 601CG(1) of the Act.
APFRN
(Repealed by FRLI No F2023L01458, Sch 1[4(b)] (effective 1 November 2023).)
approved deposit fund
(Repealed by FRLI No F2023L01458, Sch 1[4(c)] (effective 1 November 2023).)
approved foreign bank
:
(a)
in relation to a participant of a licensed market, means a bank:
(i) established by or under the law of a foreign country; and
(ii) in relation to which there is in force an approval given by the market licensee in accordance with its operating rules or by ASIC under the market integrity rules; and
(b) in relation to a financial services licensee other than a participant of a licensed market, means a bank:
(i) regulated by an overseas regulator; and
(ii) in relation to which there is in force an approval given by ASIC for the purposes of this definition.
approved form
, in relation to a provision of the Act or of these Regulations, means the form that is approved under paragraph 350(1)(b) of the Act for use for that provision.
associated provisions
, in relation to provisions (the
core provisions
) of the relevant old legislation as in force at a particular time, include (but are not limited to):
(a) any regulations or other instruments that are or were in force for the purposes of any of the core provisions at that time; and
(b) any interpretation provisions that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(c) any provisions relating to liability (civil or criminal) that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(d) any provisions that limit or limited, or that otherwise affect or affected, the operation of any of the core provisions at that time (whether or not they also limit or limited, or affect or affected, the operation of other provisions).
ASTC
means ASX Settlement and Transfer Corporation Pty Limited.
ASTC certificate cancellation provisions
means the provisions of the ASTC operating rules that deal with:
(a) the cancellation of certificates or other documents of title to Division 4 financial products; and
(b) matters incidental to the cancellation of those certificates or documents.
ASTC-regulated transfer
means a transfer of a Division 4 financial product:
(a) within the meaning of:
(i) Division 4 of Part 7.11 of the Act; and
(ii) regulations relating to transfer made for sections 1074A and 1074E of the Act; and
(b) that is effected through ASTC; and
(c) that, according to the ASTC operating rules, is an ASTC-regulated transfer.
Australian Passport Fund Registration Number
(Repealed by FRLI No F2023L01458, Sch 1[4(d)] (effective 1 November 2023).)
benefit fund
has the meaning given by section 16B of the Life Insurance Act 1995.
building society
has the same meaning as in section 16 of the RSA Act.
capital guaranteed
, for a superannuation product or an RSA, means that the contributions and accumulated earnings may not be reduced by a negative investment return or a reduction in the value of an asset in which the product is invested.
capital guaranteed FHSA product
(Repealed by SLI 2015 No 91, Sch 1[11] (effective 1 July 2015).)
[ CCH Note: Act No 91 of 2015, Sch 1, Pt 3 contained the following application and transitional provisions (which was effective 1 July 2015):
]PART 3 - APPLICATION AND TRANSITIONAL PROVISIONS
40 General savings provision
The repeals and amendments made by this Schedule do not apply in relation to acts done or omitted to be done, or states of affairs existing:
(a) before 1 July 2015; or
(b) on or after 1 July 2015 as a result of the operation of:
(i) Part 3 of Schedule 1 to the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015; or41 Making and amending assessments, and doing other things, in relation to past matters
(ii) this Part (including this item).
Even though a legislative instrument is amended by this Schedule, the amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument:
(a) making or amending an assessment (including under a provision that is itself repealed or amended);
(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.
42 Saving of provisions about effect of assessments
If a provision or part of a provision that is repealed or amended by this Schedule deals with the effect of an assessment, the repeal or amendment is disregarded in relation to assessments made, before or after the repeal or amendment applies, in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies. 43 Repeals disregarded for the purposes of dependent provisions
If the operation of a provision (the subject provision ) of any Act or legislative instrument made under any Act depends to any extent on a provision of a legislative instrument that is repealed by this Schedule, the repeal is disregarded so far as it affects the operation of the subject provision. 44 Interaction with other laws
This Part does not limit the operation of section 7 of the Acts Interpretation Act 1901. 45 Repeal of this Part
This Part is repealed on 1 January 2020.
capital guaranteed fund
means a public offer superannuation fund, or a sub-fund of a public offer superannuation fund, that has the following characteristics:
(a) its investments comprise 1 or more of the following only:
(i) deposits with an ADI;
(ii) investments in a capital guaranteed superannuation product or RSA;
(b) the contributions and accumulated earnings of its members cannot be reduced by negative investment returns (within the meaning of subregulation 5.01(1) of the SIS Regulations) or by any reduction in the value of its assets.
capital guaranteed member
means a member whose interest in a public offer superannuation fund is fully invested in a capital guaranteed fund.
carbon abatement contract
has the same meaning as in the Carbon Credits (Carbon Farming Initiative) Act 2011.
cash management trust interest
means an interest that:
(a) is an interest in a registered scheme or a notified foreign passport fund; and
(b) relates to an undertaking of the kind commonly known as a cash management trust.
choice product
(Repealed by FRLI No F2023L01458, Sch 1[4(e)] (effective 1 November 2023).)
client money reporting infringement notice
: see regulation 7.8.05A.
client money reporting infringement notice period
: see regulation 7.8.05A.
CPI
means the Consumer Price Index number (being the weighted average of the 8 capital cities) published by the Australian Bureau of Statistics.
(a) shares mentioned in paragraph 1073A(1)(a) of the Act; or
(b) debentures mentioned in paragraph 1073A(1)(b) of the Act; or
(c) interests in a registered scheme mentioned in paragraph 1073A(1)(c) of the Act; or
(ca) a CGS depository interest mentioned in paragraph 1073A(1)(da) of the Act; or
(d) securities mentioned in paragraph 1073A(1)(e) of the Act.
(a) rights mentioned in paragraph 1073A(1)(d) of the Act; and
(b) rights related to securities mentioned in paragraph 1073A(1)(e) of the Act.
Division 3 securities
means Division 3 assets and Division 3 rights.
Division 4 financial product
has the meaning given by regulation 7.11.03.
eligible termination payment
(Repealed by SLI 2007 No 102, Sch 1[1].)
enduring power of attorney
means an enduring power of attorney that complies with a law of a State or Territory.
(a) Australian Stock Exchange Limited; or
(b) a subsidiary of Australian Stock Exchange Limited.
excluded ADF
(Repealed by FRLI No F2023L01458, Sch 1[4(f)] (effective 1 November 2023).)
exempt public sector superannuation scheme (EPSSS)
(Repealed by FRLI No F2023L01458, Sch 1[4(g)] (effective 1 November 2023).)
FHSA deposit account
(Repealed by SLI 2015 No 91, Sch 1[11] (effective 1 July 2015).)
FHSA life policy
(Repealed by SLI 2015 No 91, Sch 1[11] (effective 1 July 2015).)
financial business
means a business that:
(a) consists of, or includes, the provision of financial services; or
(b) relates wholly or partly to the provision of financial services.
form
means an approved form or a prescribed form.
friendly society
has the meaning given by section 16C of the Life Insurance Act 1995.
friendly society funeral product
: see subregulation 7.6.01(7).
FSR commencement
means the commencement of item 1 of Schedule 1 to the Financial Services Reform Act 2001.
funeral services entity
: see subregulation 7.6.01(7).
generic MySuper product
: a class of beneficial interest in a superannuation entity is a
generic MySuper product
if:
(a) the superannuation entity is a regulated superannuation fund; and
(b) the RSE licensee of the fund is authorised to offer that class of beneficial interest in the fund as a MySuper product under section 29T of the SIS Act; and
(c) the RSE licensee of the fund is not authorised to offer that class of beneficial interest in the fund as a MySuper product because section 29TA or 29TB of the SIS Act is satisfied in relation to the class.
income stream financial product
means an annuity or other facility that is a financial product which provides an income stream, including:
(a) an income stream that is an investment life insurance product; or
(b) an income designated under section 9 of the Social Security Act 1991 or section 5H of the Veterans' Entitlements Act 1986;
but does not include any of the following:
(c) a financial product under paragraph 764A(1)(ba) of the Act;
(d) anything that is not a financial product under section 765A of the Act;
(e) available money;
(f) deposit money;
(g) a managed investment product;
(ga) a foreign passport fund product;
(h) a security;
(i) a loan that has not been repaid in full;
(j) gold, silver or platinum bullion.
Note: In accordance with subsections 761G(6) and (7) of the Act, superannuation products and RSAs are not income stream financial products.
investment-based financial product
means:
(a) a financial product under section 763B of the Act; or
(b) a financial product under paragraph 764A(1)(ba), (bb) or (j) of the Act; or
(c) a financial product under paragraph 764A(1)(m) of the Act that is specified to be an investment-based financial product; or
(d) a security; or
(e) a managed investment product; or
(f) an investment life insurance product; or
(g) a deposit product; or
(ga) a carbon unit;
(gb) an Australian carbon credit unit;
(gc) an eligible international emissions unit;
but does not include any of the following:
(h) anything that is not a financial product under section 765A of the Act;
(i) an income stream financial product.
Note: In accordance with subsections 761G(6) and (7) of the Act, superannuation products and RSAs are not income stream financial products.
Lloyd's
has the same meaning as in the Insurance Act 1973.
margin loan
(Repealed by FRLI No F2023L01458, Sch 1[6] (effective 1 November 2023).)
medical indemnity insurance product
means an arrangement:
(a) under which medical indemnity cover is provided to:
(i) a medical practitioner as defined in section 4 of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003; or
(ii) a registered health professional prescribed by regulations made under the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 for the purposes of a provision of Part 3 of that Act; and
(b) to which the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 applies.
medical practitioner
(Repealed by SR 2003 No 368, Sch 1[1].)
minor fee
, for a standard margin lending facility, means a fee or cost for the facility that:
(a) does not relate to the ordinary acquisition, operation or closure of the facility; and
(b) is less than $10.
MySuper product
(Repealed by FRLI No F2023L01458, Sch 1[8(a)] (effective 1 November 2023).)
NFPFRN
: see
Notified Foreign Passport Fund Registration Number
.
non-cash payment financial product
means a financial product under section 763D of the Act, other than:
(a) a derivative; or
(b) a financial product under paragraph 764A(1)(k) of the Act; or
(c) anything that is not a financial product under section 765A of the Act.
non-Division 3 securities
means financial products to which Division 3 or 4 of Part 7.11 of the Act applies because of a declaration made by ASIC under paragraph 1075A(1)(b) of the Act.
Notified Foreign Passport Fund Registration Number
or
NFPFRN
, for a notified foreign passport fund, is the unique registration code allocated to the fund by the home regulator for the fund.
OCH
(Repealed by SR 2004 No 398, Sch 1[2].)
old Corporations Act
means the Corporations Act 2001 as in force immediately before the FSR commencement.
policy committee
has the same meaning as in the SIS Act.
pooled superannuation trust
(Repealed by FRLI No F2023L01458, Sch 1[8(b)] (effective 1 November 2023).)
pre-FSR securities
means securities defined in subsection 92(3) of the old Corporations Act.
preserved benefits
means preserved benefits under:
(a) Subdivision 6.1.2 of the SIS Regulations; or
(b) Subdivision 4.1.2 of the RSA Regulations.
(a) an ASTC-regulated transfer of a Division 4 financial product effected:
(i) through the prescribed CS facility operated by the ASTC; and
(ii) in accordance with the operating rules of the ASTC; and
(b) an ASTC-regulated transfer that the ASTC, in accordance with its operating rules, determines:
(i) to comply substantially with the applicable provisions of those operating rules; and
(ii) to be taken to be, and always to have been, a proper ASTC transfer.
public offer entity
has the same meaning as in the SIS Act.
public offer superannuation fund
has the same meaning as in the SIS Act.
qualifying gas exchange product
means an arrangement for the physical delivery of natural gas or related goods or services, including pipeline capacity.
qualifying gas trading exchange
means a facility:
(a) established by the Australian Energy Market Operator Limited (ACN 072 010 327) exercising its functions under subsection 91BRK(1) of the National Gas Law set out in the Schedule to the National Gas (South Australia) Act 2008 (SA); and
(b) through which persons may elect to buy and sell natural gas or related goods or services (including pipeline capacity).
quarter day
means 31 March, 30 June, 30 September or 31 December.
(a) in relation to an infringement notice given under regulation 7.2A.04, has the meaning given by regulation 7.2A.03; and
(b) in relation to a client money reporting infringement notice, has the meaning given by regulation 7.8.05A; and
(c) in relation to an infringement notice given under regulation 7.5A.104, has the meaning given by regulation 7.5A.103.
(a) for a company - the number allotted to the company under paragraph 118(1)(a) or 601BD(1)(a) of the Act; or
(b) for a registered body - the number allotted to it under section 601CB or 601CE of the Act; or
(c) for an auditor - the number allotted to a person on registration of that person as an auditor.
regulated superannuation fund
(Repealed by FRLI No F2023L01458, Sch 1[8(c)] (effective 1 November 2023).)
restricted non-preserved benefits
means restricted non-preserved benefits under:
(a) Subdivision 6.1.3 of the SIS Regulations; or
(b) Subdivision 4.1.3 of the RSA Regulations.
retirement savings account
(Repealed by FRLI No F2023L01458, Sch 1[8(d)] (effective 1 November 2023).)
risk-based financial product
means:
(a) a financial product that is a facility through which, or through the acquisition of which, a person manages financial risk; or
(b) a life risk insurance product;
but does not include any of the following:
(c) a derivative;
(d) anything that is not a financial product under section 765A of the Act.
Note: In accordance with subsections 761G(5) and (7) of the Act, general insurance products are not risk-based financial products.
RSA Act
means the Retirement Savings Accounts Act 1997.
RSA Regulations
means the Retirement Savings Accounts Regulations 1997.
settlement authority
(Repealed by SLI 2005 No 38, Sch 1[1].)
settlement documents
, in relation to a transaction, means:
(a) if the agreement for the transaction has not been discharged - documents the supply of which in accordance with the agreement is sufficient to discharge the obligations of the seller under the agreement, in so far as the obligations relate to the supply of documents in connection with the transaction; or
(b) if the agreement for the transaction has been discharged, whether by performance or otherwise - documents the supply of which in accordance with the agreement would, if the agreement had not been discharged, be sufficient to discharge the obligations of the seller under the agreement, in so far as the obligations relate to the supply of documents in connection with the transaction.
simple managed investment scheme
means a registered scheme (other than a passport fund) which is or was offered because it meets 1 of the following requirements:
(a) the scheme invests at least 80% of its assets in money in an account with a bank on the basis that the money is available for withdrawal:
(i) immediately during the bank's normal business hours; or
(ii) at the end of a fixed-term period that does not exceed 3 months;
(b) the scheme invests at least 80% of its assets in money on deposit with a bank on the basis that the money is available for withdrawal:
(i) immediately during the bank's normal business hours; or
(ii) at the end of a fixed-term period that does not exceed 3 months;
(c) the scheme invests at least 80% of its assets under 1 or more arrangements by which the responsible entity of the scheme can reasonably expect to realise the investment, at the market value of the assets, within 10 days.
simple sub-fund product
means a security in a retail CCIV that is, or was, offered because the security is referable to a sub-fund of the CCIV (other than a passport fund) that meets one of the following requirements:
(a) the CCIV, in respect of the sub-fund, invests at least 80% of the assets of the sub-fund in money in an account with a bank on the basis that the money is available for withdrawal:
(i) immediately during the bank's normal business hours; or
(ii) at the end of a fixed-term period that does not exceed 3 months;
(b) the CCIV, in respect of the sub-fund, invests at least 80% of the assets of the sub-fund in money on deposit with a bank on the basis that the money is available for withdrawal:
(i) immediately during the bank's normal business hours; or
(ii) at the end of a fixed-term period that does not exceed 3 months;
(c) the CCIV, in respect of the sub-fund, invests at least 80% of the assets of the sub-fund under one or more arrangements by which the corporate director of the CCIV can reasonably expect to realise the investment, at the market value of the assets, within 10 days.
SIS Act
means the Superannuation Industry (Supervision) Act 1993.
SIS Regulations
means the Superannuation Industry (Supervision) Regulations 1994.
sub-plan
, in relation to a regulated superannuation fund, means a segment of the fund comprising a member or members of the fund, being a sub-plan that the trustee determines should be made.
successor fund
has the same meaning as in the SIS Regulations.
superannuation entity
(Repealed by FRLI No F2023L01458, Sch 1[8(e)] (effective 1 November 2023).)
superannuation interest
has the same meaning as in the SIS Act.
superannuation lump sum
has the meaning given by subsection995-1(1) of the Income Tax Assessment Act 1997.
superannuation scheme
means a complying superannuation fund within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997.
superannuation-sourced money
means money in relation to which:
(a) the provider of a financial service knows that the money:
(i) will be paid to a person as a superannuation lump sum by the trustee of a regulated superannuation fund; or
(ii) has been paid as an eligible termination payment (within the meaning of these Regulations as in force immediately before 1 July 2007) or as a superannuation lump sum at any time during the previous 6 months; or
(b) the provider of the financial service ought reasonably to know that fact.
TDS nominee
(Repealed by SR 2002 No 282, Sch 1[2].)
transfer delivery service provision
(Repealed by SR 2002 No 282, Sch 1[2].)
trustee
(Repealed by FRLI No F2023L01458, Sch 1[8(f)] (effective 1 November 2023).)
unauthorised foreign insurer
has the same meaning as in the Insurance Regulations 2024.
unrestricted non-preserved benefits
means unrestricted non-preserved benefits under:
(a) Subdivision 6.1.4 of the SIS Regulations; or
(b) Subdivision 4.1.4 of the RSA Regulations.
(a) a derivative that is transferable; or
(b) a financial product that is transferable and that would, apart from the effect of paragraph 761D(3)(c) of the Act, be a derivative, and is excluded by that paragraph only because it is:
(i) a security mentioned in paragraph 92(5)(c) of the Act; or
(ii) a legal or equitable right or interest mentioned in subparagraph 764A(1)(b)(ii) of the Act; or
(iii) a legal or equitable right or interest mentioned in subparagraph 764A(1)(ba)(ii) of the Act; or
(iv) a legal or equitable right or interest mentioned in subparagraph 764A(1)(bb)(ii) of the Act.
1.0.02(2)
In these Regulations, a reference to a form by number is a reference to the form so numbered in Schedule 2.
1.0.02(3)
(Repealed by SR 2001 No 319, Sch 1[1].)
This regulation is made for the purposes of subparagraph (d)(ii) of the definition of basic deposit product in section 9 of the Act.
1.0.02AA(2)
The prior notice requirement for an ADI included in the class of ADIs specified in subregulation (3) is a period of not more than 7 days before a withdrawal or transfer of funds from a facility made available by the ADI.
1.0.02AA(3)
The class of ADIs is ADIs entitled under the Banking Act 1959 to use any of the following expressions in relation to their financial business: (a) credit union; (b) credit society; (c) credit co-operative; (d) building society.
For the purposes of the definition of prescribed CS facility in section 9 of the Act, ASX Settlement and Transfer Corporation Pty Limited (also known as 'ASTC') is prescribed.
For the definition of prescribed financial market in section 9 of the Act, the following financial markets are prescribed: (a) Asia Pacific Exchange Limited; (b) ASX Limited; (c) Chi-X Australia Pty Ltd; (d) National Stock Exchange of Australia Limited; (e) SIM Venture Securities Exchange Ltd.
For the purposes of paragraphs 45A(2)(a) and (3)(a) of the Act, the amount of $50 million is prescribed.
1.0.02B(2)
For the purposes of paragraphs 45A(2)(b) and (3)(b) of the Act, the amount of $25 million is prescribed.
1.0.02B(3)
For the purposes of paragraphs 45A(2)(c) and (3)(c) of the Act, the number 100 is prescribed.
A form in Schedule 2 mentioned in an item in column 4 of Schedule 1 is prescribed for the provision of the Act, or of these Regulations, that is specified in the item in column 2.
Note: Under section 350 of the Act, a document that the Act requires to be lodged with ASIC in a prescribed form must:
In a form, unless the contrary intention appears, a reference to a Chapter, Part, Division, section, subsection, paragraph or subparagraph is a reference to that Chapter, Part, Division, section, subsection, paragraph or subparagraph of the Act.
REGULATION 1.0.03A DOCUMENTS THAT MUST BE IN THE PRESCRIBED FORMDocuments lodged under the Act
1.0.03A(1)
A document mentioned in the table under a provision of the Act mentioned in the table must be in the prescribed form.
Item | Document | Provision of the Act |
1A | (Repealed) | |
1B | (Repealed) | |
1C | (Repealed) | |
1 | Notice of appointment to administer a compromise or arrangement | Subsection 415(1) |
2 | Notice that an order for the appointment of a receiver of property has been obtained or of the appointment of a receiver | Paragraph 427(1)(a) |
3 | Notice of the appointment of a person to enter into possession or take control of the property of a corporation | Paragraph 427(1A)(a) |
4 | Notice of entering into possession or taking control | Paragraph 427(1B)(a) |
5 | Notice that the person has ceased to be a controller | Paragraph 427(4)(a) |
6 | Written notice stating that a company is taken to have passed a resolution to wind up the company | Paragraph 446A(5)(a) |
7 | Notice of the appointment of an administrator | Paragraph 450A(1)(a) |
8 | Notice of failure to execute deed of company arrangement | Paragraph 450C(a) |
9 | Notice of termination of deed of company arrangement | Paragraph 450D(a) |
10 | Notice of filing of application to wind up a company | Paragraph 470(1)(a) |
11 | Notice of making of order to wind up a company | Paragraph 470(1)(b) |
12 | Notice of withdrawal or dismissal of application to wind up a company | Paragraph 470(1)(c) |
13 | (Repealed) | |
14 | (Repealed) | |
15 | Written notice disclaiming property | Subsection 568A(1) |
16 | (Repealed) | |
20 | A copy of the whole or a specified part of the register of members of a notified foreign passport fund | Subsection 1213P(4) |
Documents lodged under the Passport Rules
1.0.03A(2)
If the Passport Rules for this jurisdiction contain a requirement to lodge a document with ASIC (however the lodgement is described), the document must be lodged with ASIC in the prescribed form.
Note: The requirement in the Passport Rules need not use the word "lodge". For example, if the Passport Rules contain a requirement to notify ASIC of a matter or to provide a document to ASIC, subregulation (2) requires the notification or document to be in the prescribed form.
Note: Under section 350 of the Act, a document that the Act requires to be lodged with ASIC in a prescribed form must:
A document mentioned in an item in the table for a provision mentioned in the item must be lodged:
(a) with ASIC; and
(b) if the document is mentioned for subsection 430(1) of the Act - by a controller, within 7 days of the controller receiving a report under that subsection.
Item | Document | Provision of the Act |
1 | Statement in writing in the prescribed form verifying a report about the affairs of a company | Subsection 430(1) or 475(1) or (2) |
2 | Report about the affairs of a company | Subsection 430(1) |
Note: Under section 350 of the Act, a document that the Act requires to be lodged with ASIC in a prescribed form must:
On 23 December 2004, forms for the documents mentioned in item 1 of the table are not prescribed in these Regulations.
A document mentioned in the table under a provision of the Act mentioned in the table must be in a form approved by ASIC (if a form has been approved).
Item | Document | Provision of the Act |
1 | (Repealed) | |
2 | (Repealed) | |
3 | Notice of termination of deed of company arrangement | Paragraph 450D(b) |
Note: The documents mentioned in the table are not required to be lodged with ASIC under the Act, and are not documents to which section 350 of the Act applies.
A form must be completed in accordance with the directions and instructions specified in the form. REGULATION 1.0.05 DOCUMENTS AND INFORMATION REQUIRED BY FORMS 1.0.05(1) [Documents or information]
(a) the lodging of a document; or
(b) the giving of information:
(i) by completing the form in the prescribed manner; or
(ii) by supplying or completing another document;
the document or information is taken to be the document or information required for the provision of the Act or of these Regulations for which the form is approved under paragraph 350(1)(b) of the Act or included in Schedule 2.
If the Act requires particulars to be provided by the giving of information in a form, the particulars included in the form are taken to be the particulars required:
(a) if the form is an approved form - for the provision of the Act for which the form is approved under paragraph 350(1)(b) of the Act; and
(b) if the form is a prescribed form - for the provision of the Act for which the form is included in Schedule 2.
(Repealed by FRLI No F2023L01458, Sch 1[131] (effective 1 November 2023).). REGULATION 1.0.06 ANNEXURES ACCOMPANYING FORMS 1.0.06(1) [``annexure'']
In this regulation:
annexure
includes a document that is with a form.
(a) have an identifying mark; and
(b) be endorsed with the words:
; and``This is the annexure of (insert the number of pages) pages marked (insert an identifying mark) mentioned in the (insert a description of the form) signed by (insert `me' or `us') and dated (insert the date of signing)''
(c) be signed by each person signing the form to which the document is annexed. 1.0.06(3) [Numbering of pages]
The pages in an annexure must be numbered consecutively.
1.0.06(4) [Particulars of annexure]If a form has a document annexed, the following particulars of the annexure must be written on the form:
(a) the identifying mark; and
(b) the number of pages. REGULATION 1.0.07 1.0.07 GENERAL REQUIREMENTS FOR DOCUMENTS
Unless ASIC otherwise approves, a document to be lodged must: (a) be on white or light pastel colour paper:
(i) of international A4 size; and
(b) be clearly printed or written in black or dark blue in a manner that is permanent and will make possible a reproduction, by photographic, computerised or other electronic means that is satisfactory to ASIC; and (c) not be a carbon copy or a copy reproduced by any spirit duplication method; and (d) subject to paragraph (h), have margins of not less than 10 millimetres on all sides; and (e) if it comprises 2 or more sheets, be fastened together securely in the top left-hand corner; and (f) for a document for a corporation, managed investment scheme or sub-fund of a CCIV (the subject ) - display on the first page of the document or, if the document is a single sheet, on that sheet:
(ii) of medium weight and good quality; and
(i) the subject's name; and
(ii) subject to regulation 7.6.03, the subject's ACN, ARBN, ARSN or ARFN; and
(iii) subject to regulation 7.6.03, if the last 9 digits of the subject's ABN are the same, and in the same order, as the last 9 digits of the subject's ACN, ARBN, ARSN or ARFN - the subject's ABN; and
(fa) for all documents - display on the first page of the document or, if the document is a single sheet, on that sheet:
(iv) if the subject is a managed investment scheme that is a notified foreign passport fund - the NFPFRN for the fund and any other unique number for the fund allocated to the fund by ASIC; and
(i) the title of the document; and
(g) have the following information at the top left-hand of the first sheet:
(ii) the section number of the Act under which the document is being lodged; and
(i) registered agent number (if any); and
(ii) lodging party or agent name; and
(iii) address; and
(iv) telephone number; and
(v) facsimile number (if any); and
(h) at the top right-hand of the first sheet, have a blank space that measures 35 millimetres from the top of the page and 65 millimetres from the right-hand side of the page; and
(vi) DX number and applicable suburb or city (if any); and
[ CCH Note: There is no paragraph 1.0.07(i).]
Note: In addition to the requirements in paragraph (f), if a managed investment scheme is also an Australian passport fund, all documents relating to the fund lodged with ASIC must also include the scheme's APFRN: see section 1212B of the Act.
A document lodged under subsection 319(1) of the Act for a financial year must be accompanied by the approved form setting out the following information: (a) if the disclosing entity is a company (other than a retail CCIV):
(i) the ACN of the company or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN, the ABN of the company; and
(ii) the dates on which the financial year to which the document relates begins and ends; and
(b) if the disclosing entity is a body (other than a company):
(iii) a statement of certification in accordance with regulation 1.0.16; or
(i) the ARBN of the body or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARBN, the ABN of the body; and
(ii) the dates on which the financial year to which the document relates begins and ends; and
(c) if the disclosing entity is a registered scheme:
(iii) a statement of certification in accordance with regulation 1.0.16; or
(i) the ARSN of the scheme or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARSN, the ABN of the scheme; and
(ii) the dates on which the financial year to which the document relates begins and ends; and
(iii) the name of the responsible entity of the scheme and the name of the scheme; and
(d) if the disclosing entity is a retail CCIV:
(iv) a statement of certification in accordance with regulation 1.0.16; or
(i) the name of the sub-fund of the CCIV in respect of which the document is lodged; and
(ii) the name of the corporate director of the CCIV; and
(iii) the ACN of the CCIV or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN, the ABN of the company; and
(iv) the ARFN of that sub-fund of the CCIV or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARFN, the ABN of that sub-fund; and
(v) the dates on which the financial year to which the document relates begins and ends; and
(e) if the disclosing entity is a registrable superannuation entity:
(vi) a statement of certification in accordance with regulation 1.0.16; or
(i) the entity's ABN; and
(ii) the dates on which the financial year to which the document relates begins and ends; and
(iii) the name of the entity and its RSE licensee; and
(iv) a statement of certification in accordance with regulation 1.0.16.
Note: Section 1232C of the Act extends section 292 of the Act to preparing annual financial reports and directors' reports for sub-funds of retail CCIVs, and applies Division 1 of Part 2M.3 of the Act accordingly.
1.0.08(2)
A document lodged by a notified foreign passport fund under subsection 319(1AA) of the Act for a financial year must be accompanied by the approved form setting out the following information: (a) the NFPFRN for the fund and any other unique number for the fund allocated to the fund by ASIC; (b) the name of the fund; (c) the name and ARBN of the operator of the fund; (d) the dates on which the financial year to which the document relates begins and ends; (e) a statement of certification in accordance with regulation 1.0.16.
REGULATION 1.0.09 1.0.09 INFORMATION TO ACCOMPANY FINANCIAL DOCUMENTS ETC LODGED FOR HALF-YEARS
A document lodged under section 320 of the Act for a half-year must be accompanied by the approved form setting out the following information: (a) if the disclosing entity is a company (other than a retail CCIV):
(i) the ACN of the company or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN, the ABN of the company; and
(ii) the dates on which the half-year to which the document relates begins and ends; and
(b) if the disclosing entity is a body (other than a company):
(iii) a statement of certification in accordance with regulation 1.0.16; or
(i) the ARBN of the body or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARBN, the ABN of the body; and
(ii) the dates on which the half-year to which the document relates begins and ends; and
(c) if the disclosing entity is a registered scheme:
(iii) a statement of certification in accordance with regulation 1.0.16; or
(i) the ARSN of the scheme or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARSN, the ABN of the scheme; and
(ii) the dates of the beginning and end of the half-years to which the document relates; and
(iii) the name of the responsible entity of the scheme and the name of the scheme; and
(d) if the disclosing entity is a retail CCIV:
(iv) a statement of certification in accordance with regulation 1.0.16; or
(i) the name of the sub-fund of the CCIV in respect of which the document is lodged; and
(ii) the name of the corporate director of the CCIV; and
(iii) the ACN of the CCIV or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN, the ABN of the company; and
(iv) the ARFN of that sub-fund of the CCIV or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARFN, the ABN of that sub-fund; and
(v) the dates on which the financial year to which the document relates begins and ends; and
(vi) a statement of certification in accordance with regulation 1.0.16.
Note: Section 1232F of the Act extends section 302 of the Act to preparing half-year financial reports and directors' reports for sub-funds of retail CCIVs (if there are ED securities referable to the sub-fund), and applies Division 2 of Part 2M.3 of the Act accordingly.
A document lodged under section 675 or 675A of the Act must be accompanied by Form 1003 setting out the following information:
(a) if the disclosing entity is a body:
(i) the ACN or ARBN of the body or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ACN or ARBN, the ABN of the body; and
(ii) a statement of certification in accordance with regulation 1.0.16; or
(b) if the disclosing entity is a registered scheme:
(i) the ARSN of the scheme or, if the last 9 digits of its ABN are the same, and in the same order, as the last 9 digits of its ARSN, the ABN of the scheme; and
(ii) the name of the responsible entity of the scheme and the name of the scheme; and
(iii) a statement of certification in accordance with regulation 1.0.16.
Unless these Regulations state otherwise, a document relating to a corporation that is a proprietary company to which section 201F of the Act applies that does not have a director or secretary must be signed by the personal representative or trustee mentioned in that section. REGULATION 1.0.12 1.0.12 FORM OF NOTICE OF RESOLUTION
A copy of a resolution lodged under subsection 136(5), 157(2), 162(3), 246F(3), 254H(4), 254N(2), 256C(3), 260B(7), 461(2), 506(1B), 507(11) or 510(1A) of the Act must be set out in, or annexed to, a notice in accordance with the approved form.
If:
(a) a document must be lodged; and
(b) the period within which the document must be lodged is not prescribed;
the document must be lodged:
(c) if paragraph (d) does not apply - within one month; or
(d) if the document is to be lodged by a foreign company and ASIC allows a further period because of special circumstances - that further period;
after the happening of the event to which the document relates.
REGULATION 1.0.14 1.0.14 ADDRESS OF REGISTERED OFFICE OR PLACE OF BUSINESSIf notice must be given under these Regulations of:
(a) the address of an office or a proposed office; or
(b) the address of a place of business;
of a corporation or a person, the notice must include:
(c) if applicable, the number of the room in which; and
(d) if applicable, the number of the floor or level on which; and
(e) the place in Australia in which;
the office or place of business is, or is to be, situated.
REGULATION 1.0.15 AFFIDAVITS AND STATEMENTS IN WRITING 1.0.15(1) [Who may swear or make on behalf of corporation]An affidavit or statement in writing must be sworn or made, on behalf of a corporation, by a director or a secretary of the corporation.
1.0.15(2) [Affidavit sworn outside Australia]If an affidavit is sworn outside Australia, the affidavit is sufficient if it appears to be sworn in accordance with the requirements of the law of that place.
REGULATION 1.0.16 CERTIFICATION AND VERIFICATION OF CERTAIN DOCUMENTS 1.0.16(1)A document relating to a corporation or registered scheme that is to be certified or verified must be certified or verified in the approved form and signed by: (a) a director or secretary of the corporation, or of the responsible entity of the scheme, who resides in Australia or an external territory; or (b) an agent of the corporation or entity or, if the agent is a company, a director or secretary of the company who resides in Australia or an external territory.
1.0.16(2)
Subregulation (1) does not apply to a document relating to a notified foreign passport fund.
1.0.16(3)
A document relating to a notified foreign passport fund that is to be certified or verified must be certified or verified in the approved form and signed by: (a) a director or secretary of the operator of the fund; or (b) the local agent for the operator of the fund; or (c) if the local agent is a company - a director or secretary of that company.
1.0.16(4)
A document relating to a registrable superannuation entity that is to be certified or verified must be certified or verified in the approved form and signed by a director of the entity.
REGULATION 1.0.17 DOCUMENTS SIGNED OR SWORN IN ACCORDANCE WITH THE RULES OF COURT 1.0.17(1)
A document that is signed in accordance with the rules of court is taken to have been signed in accordance with regulation 1.0.11.
1.0.17(2)
An affidavit or statement that is sworn or made in accordance with the rules of court is taken to have been sworn or made in accordance with regulation 1.0.15.
REGULATION 1.0.18 1.0.18 PRESCRIBED PROVISIONS (ACT s 53)
For section 53 of the Act, the following provisions of the Act are prescribed:
(a) section 657A;
(b) paragraphs 12(2)(b) and (c) of the Act.
[ CCH Note: There is no regulation 1.0.19.]
A person who obtains an order of the Court under or for:
[ CCH Note: There are no paragraphs 1.0.20(a)-(b).]
(c) (Repealed)
(d) (Repealed) (e) subsection 484(1); or (ea) paragraph 484(2)(c); or (f) section 583; or (g) section 585; or (h) section 601ND; or
[ CCH Note: There is no paragraph 1.0.20(i).]
of the Act, must lodge an office copy of the order with ASIC.
If an order or copy of an order of a court is lodged with ASIC, it must be accompanied by a cover page in Form 105 identifying the legislative provision or other law under which the order was made and the nature of the order. REGULATION 1.0.22 1.0.22 MEANING OF THIS JURISDICTION - SPECIFICATION OF EXTERNAL TERRITORIES FOR SPECIFIED PROVISIONS OF CHAPTER 7 OF THE ACT
For the purposes of subsection 5(9) of the Act, each of the external Territories is included in this jurisdiction for the purposes of Chapter 7 of the Act (except Parts 7.2 to 7.5 and Part 7.11) in relation to: (a) a superannuation product; and (b) an RSA; and (c) a financial service that relates to a superannuation product; and (d) a financial service that relates to an RSA.
The amount specified in an item in column 3 of Schedule 4 is prescribed in relation to the matter specified in the item in column 2. PART 1.2 - INTERPRETATION
For paragraph 9B(2)(f) of the Act, a recommendation, or advice or information, provided in relation to one or more members of the key management personnel for a company by an employee of a company within the same consolidated entity, is not a remuneration recommendation.
For section 111AJ of the Act, the following securities are declared not to be ED securities:
(a) securities of a body that, under the listing rules of the Australian Stock Exchange Limited, is an exempt foreign entity; or
(b) securities that are quoted on Australian Bloodstock Exchange Limited. REGULATION 1.2A.02 FOREIGN COMPANIES ISSUING SECURITIES UNDER FOREIGN SCRIP OFFERS ETC EXEMPT FROM DISCLOSING ENTITY PROVISIONS 1.2A.02(1) [Conditions of exemption]
For section 111AS of the Act, a foreign company is exempt from the disclosing entity provisions in respect of ED securities under section 111AG of the Act if:
(a) the company issues the securities in connection with a foreign takeover bid or foreign scheme of arrangement; and
(b) the securities issued are, at the time of issue, securities in a class of securities quoted on an approved foreign exchange; and
(c) the terms and conditions of the issue to citizens and Australian permanent residents are the same as those applying to each other person receiving securities that are in the same class; and
(d) the same notices, documents or other information (or, where applicable, an English translation of these) (modified, if necessary, to include any additional information for the purposes of complying with Chapter 6D of the Act) are given to Australian citizens or permanent residents as are given to each other person; and
(e) the notices, documents and other information are given to Australian citizens and permanent residents at the same time, or as soon as practicable after, they are given to those other persons; and
(f) in relation to the issue - the company complies with all legislative and stock exchange requirements in the place in which is located:
(i) the approved foreign exchange; or
on which the company's securities are quoted. 1.2A.02(2) [Definitions]
(ii) if more than one - the principal approved exchange;
In this regulation:
approved foreign exchange
includes:
(a) American Stock Exchange Inc.;
(b) New York Stock Exchange Inc.;
(c) New Zealand Stock Exchange;
(d) The Stock Exchange of Hong Kong Ltd;
(e) Stock Exchange of Singapore Limited;
(f) The Amsterdam Stock Exchange;
(g) the Frankfurt Stock Exchange;
(h) The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited;
(i) the Milan Stock Exchange;
(j) the NASDAQ National Market;
(k) the Paris Bourse;
(l) the Tokyo Stock Exchange;
(m) the Toronto Stock Exchange;
(n) the Zurich Stock Exchange.
foreign scheme of arrangement
means a compromise or arrangement that is subject to court approval under subsection 411(6) of the Act, between:
(a) a foreign company and a class of its creditors; or
(b) a foreign company and a class of its members.
foreign takeover bid
means a bid to acquire some or all of the securities of:
(a) all holders of a class of securities of a foreign company; or
(b) all holders of those securities except the bidder or the bidder and associates of the bidder. REGULATION 1.2A.03 FOREIGN COMPANIES ISSUING SECURITIES UNDER EMPLOYEE SHARE SCHEME EXEMPT FROM THE DISCLOSING ENTITY PROVISIONS 1.2A.03(1) [Exemption]
For section 111AS of the Act, a foreign company is exempt from the disclosing entity provisions in respect of an offer of shares in the company for issue or sale:
(a) that is made to employees of the company, or of an associated body corporate, under an employee share scheme; and
(b) in relation to which a disclosure document is lodged with ASIC. 1.2A.03(2) [Non-employees obtaining interest under employee share scheme]
Subregulation (1) is not affected by any action of an employee, the result of which is that another person who is not an employee acquires an interest in a share issued under the employee share scheme.
1.2A.03(3) [Definitions](a) an employee share scheme is a scheme under which a company offers for issue or sale shares (or options over issued shares) in the company only to a person who is a full-time or part-time director or employee of the company or of an associated body corporate when the offer is made; and
(b) a body corporate is an associated body corporate in relation to a foreign company if:
(i) the body corporate is related to the company within the meaning of section 50 of the Act; or
(ii) the body corporate is entitled to at least 20% of the voting shares of the company; or
CHAPTER 2A - REGISTRATION OF COMPANIES PART 2A.1 - SIZE OF PARTNERSHIPS OR ASSOCIATIONS (ACT s 115(2)) REGULATION 2A.1.01 SIZE OF PARTNERSHIPS OR ASSOCIATIONS 2A.1.01(1) [Prescribed number for kind of partnership or association]
(iii) the company is entitled to at least 20% of the voting shares of the body corporate.
For paragraph 115(1)(b) of the Act, the number prescribed for a kind of partnership or association is the number specified in the following table for that kind of partnership or association:
Item | Kind of partnership or association | Number |
1 | (a) Actuaries, medical practitioners, patent attorneys, sharebrokers, stockbrokers or trade mark attorneys | 50 |
(b) Partnerships or associations of the kind specified in subregulation (2) | ||
2 | Architects, pharmaceutical chemists or veterinary surgeons | 100 |
3 | Legal practitioners | 400 |
4 | Accountants | 1,000 |
For paragraph (b) of item 1 of the table in subregulation (1), the partnership or association is one that:
(a) has as its primary purpose collaborative scientific research; and
(b) includes as members:
(i) at least 1 university; and
whether or not it also includes government agencies or publicly funded research bodies.
(ii) at least 1 private sector participant;
In subregulation (2):
private sector participant
means an entity that obtains the majority of its revenue from sources other than Commonwealth, State or Territory appropriations.
An application to ASIC for a change in the State or Territory in this jurisdiction in which a company is taken to be registered must be approved by a special resolution of the company.
2A.2.01(2) [Copy must be given to ASIC]A copy of the special resolution must be given to ASIC within 14 days after the day on which it is passed.
REGULATION 2A.2.02 SPECIAL RESOLUTION MAY BE SET ASIDE BY COURT ORDER 2A.2.02(1) [Application]Within 28 days after the passing of a special resolution approving an application for a change in the State or Territory in this jurisdiction in which a company is taken to be registered, a member, or members, of the company having at least 10% of the votes capable of being cast on the special resolution may apply in writing to the Court to have the resolution set aside.
2A.2.02(2) [Representative action]A member may, with the written consent of other members mentioned in subregulation (1), apply on their behalf to the Court under that subregulation.
2A.2.02(3) [Ground for setting aside]The Court may order the special resolution to be set aside if the Court is satisfied that it would unfairly prejudice the applicant or applicants if the State or Territory in which the company is taken to be registered were changed in accordance with the resolution.
2A.2.02(4) [Copy must be given to ASIC]The company must give ASIC a copy of the Court order within 14 days after the day on which it is made.
REGULATION 2A.2.03 APPLICATION FOR CHANGE OF PLACE OF REGISTRATION 2A.2.03(1) [Application to ASIC]A company may, in accordance with a special resolution of the company, apply to ASIC for a change in the State or Territory in this jurisdiction in which the company is taken to be registered.
2A.2.03(2) [Approved form]The application must be in accordance with the approved form.
REGULATION 2A.2.04 CHANGE OF PLACE OF REGISTRATION 2A.2.04(1) [ASIC must alter details]On application under regulation 2A.2.03, ASIC must alter the details of the company's registration to show the change in the State or Territory in this jurisdiction in which the company is taken to be registered if:
(a) the company has passed a special resolution approving the application for the change; and
(b) the Court has not made an order setting aside the special resolution; and
(c) the relevant Minister of the State or Territory in which the company is taken to be registered has approved the change under subparagraph 119A(3)(a)(i) of the Act; and
(d) ASIC is not aware of any other reason why the change should not be made. 2A.2.04(2) [Alteration 28 days after application]
ASIC must not alter details of the company's registration until 28 days after the day on which the application was made.
2A.2.04(3) [New certificate of registration]ASIC must give the company a new certificate of registration after it alters details of the company's registration.
CHAPTER 2B - BASIC FEATURES OF A COMPANY PART 2B.6 - NAMES REGULATION 2B.6.01 AVAILABILITY OF NAMES (ACT s 147) 2B.6.01(1) [Identical names]For paragraphs 147(1)(a) and (b) of the Act, the rules for ascertaining whether a name is identical with another name are the rules set out in Part 1 of Schedule 6.
2B.6.01(2) [Unacceptable names]For paragraph 147(1)(c) of the Act, a name is unacceptable for registration under the regulations if it is unacceptable under the rules set out in Part 2 of Schedule 6.
REGULATION 2B.6.02 CONSENTS REQUIRED FOR USE OF CERTAIN LETTERS, WORDS AND EXPRESSIONS 2B.6.02(1) [Application]This regulation applies to a name if:
(a) the name:
(i) is the subject of an application for registration of a name under section 117 of the Act; or
(ii) is the subject of an application for reservation of a name under section 152 of that Act; or
(iii) for an application for a change of name under section 157 of the Act - is the name to which the previous name is to be changed; and
(b) the name is, uses or includes:
(i) letters, or a word or expression, specified in column 2 of an item in Part 4 or 5 of Schedule 6; or
2B.6.02(2) [Interpretation]
(ii) other letters, or another word or expression (whether or not in English), that is of like import to the letters, word or expression specified in the item.
In paragraph (1)(b), a reference to letters, a word or an expression being used includes a reference to the letters, word or expression being used:
(a) as part of another word or expression; or
(b) in combination with other words or letters, or other symbols. 2B.6.02(3) [Use of ``ADI'']
However, this regulation does not apply to use of the letters ADI as part of another word.
Example
The letters adi appear in the word traditional . This regulation does not apply to use of the word traditional .
2B.6.02(4) [Consent of Minister]If an item in Part 4 of Schedule 6 applies in relation to the name, the application must be accompanied by the written consent of the Minister who is specified in the item.
2B.6.02(5) [Consent of public authority or agency]If an item in Part 5 of Schedule 6 applies in relation to the name, the application must be accompanied by the written consent of the public authority, instrumentality or agency that is specified in the item.
REGULATION 2B.6.02A EXEMPTION FROM REQUIREMENT TO INCLUDE "LIMITED" IN NAME 2B.6.02A(1)For the purposes of subsections 5H(5) and 5I(1) of the Act, subsection 148(2) of the Act does not apply in relation to Westpac Banking Corporation (ABN 33 007 457 141).
2B.6.02A(2)
For the purposes of subsection 5I(1) of the Act, the Westpac Banking Corporation (Transfer of Incorporation) Act 2000 (NSW) is the specified law.
For section 155 of the Act, the exemptions provided for in Schedule 7 apply in relation to the requirements of subsection 153(2) of the Act. CHAPTER 2C - REGISTERS PART 2C.1 - REGISTERS GENERALLY
A notice to be lodged under subsection 172(2) of the Act must be in a form approved by ASIC (if a form has been approved).
For subsection 173(3) of the Act, a copy of a register must be provided as a delimited text file:
(a) produced by a commercially available spreadsheet or database application; and
(b) copied onto a CD-ROM or a USB portable memory device.
For paragraph 173(3A)(b) of the Act, the following purposes are prescribed:
(a) soliciting a donation from a member of a company;
(b) soliciting a member of a company by a person who is authorised to assume or use the word stockbroker or sharebroker in accordance with section 923B of the Act;
(c) gathering information about the personal wealth of a member of a company;
(d) making an offer that satisfies paragraphs 1019D(1)(a) to (d) of the Act;
(e) making an invitation that, were it an offer to purchase a financial product, would be an offer that satisfies paragraphs 1019D(1)(a) to (d) of the Act.
Note: See subsection 1019D(1) of the Act for a description of unsolicited offers to purchase financial products off-market.
For paragraph 173(3A)(c) of the Act, the information that must be contained in an application is the name and address of the applicant.
Note: An application must also state the purpose for accessing a copy of a register - see subsection 173(3A) of the Act.
This regulation applies if a body corporate mentioned in regulation 12.8.02 has failed to give a person a copy of the part of the register of members of the body who hold member shares:
(a) within 28 days after the person's request for a copy; or
(b) if a longer period has been allowed by ASIC - within the longer period. 2C.1.05(2) [Purpose and procedure]
(a) makes a statutory declaration that the person intends to use information that is contained in that part of the register:
(i) for the purpose of contacting members of the body, or sending material to members of the body, for a purpose mentioned in subsection 177(1A) of the Act; and
(ii) in a way that does not contravene that subsection or another law; and
(b) gives the statutory declaration to the body corporate; and
(c) pays the reasonable costs of contacting the members, or sending material to the members;
the body corporate must do everything that is reasonably possible to arrange for the members to be contacted, or for the material to be sent to the members, on the person's behalf by a third party service provider nominated by the body corporate.
2C.1.05(3) [Suspicion of improper use]If the body corporate believes on reasonable grounds that the person intends to use information that is contained in that part of the register:
(a) for a purpose that is not in accordance with subparagraph (2)(a)(i); or
(b) in a way that is not in accordance with subparagraph (2)(a)(ii);
the body corporate is not required to arrange for the members to be contacted or for the material to be sent to the members on the person's behalf, and may terminate any existing arrangement.
2C.1.05(4) [Obligations of body corporate]The arrangements made by the body corporate must ensure that, to the extent reasonably possible:
(a) the details, from the register of members, of each member to whom material is to be sent, or with whom contact is to be made, will be provided to the third party service provider within 14 days after the person pays the costs mentioned in subregulation (2); and
(b) a copy of any material that is to be sent to a member will be provided to the third party service provider within 28 days after the person provides the material to the body corporate; and
(c) if material is not to be sent to a member - written details of the contact that is to be made with a member must be provided to the third party service provider within 28 days after the person provides the written details to the body corporate; and
(d) for any material that is to be sent to a member - the material will be sent to the member within 14 days after the body corporate provides the material to the third party service provider; and
(e) if material is not to be sent to a member - contact will be made with the member within 14 days after the body corporate provides, to the third party service provider, the written details of the contact that is to be made with the member. 2C.1.05(5) [Timing and cost of arrangement]
An arrangement made under subregulation (2) must:
(a) allow for contact to be made, or material to be sent, for a period of 6 months after the period mentioned in subregulation (1); and
(b) require the person to pay the reasonable costs of contacting the members or sending material to the members to be paid on each occasion before the contact is made or the material is sent. 2C.1.05(6) [Further application]
A reference in subregulation (1) to the register of members of a body corporate who hold member shares includes a reference to:
(a) the register of members of a body corporate that is a company limited by guarantee; and
(b) the register of members of a body corporate limited by shares and guarantee, who do not hold shares in the body.
For the definition of base salary in section 9 of the Act, the matters specified in the following table are base salary.
Item | Matter | |
1 | The components of a short-term employee benefit that: | |
(a) | are not dependent on the satisfaction of a performance condition; and | |
(b) | are specified in paragraphs (a), (c) and (d) of column 3 of item 6 in the table in subregulation 2M.3.03(1); and | |
(c) | are paid during the relevant period | |
2 | A superannuation contribution that: | |
(a) | is not dependent on the satisfaction of a performance condition; and | |
(b) | is paid during the relevant period | |
3 | A share-based payment that: | |
(a) | is not dependent on the satisfaction of a performance condition; and | |
(b) | is specified in column 3 of item 11 in the table in subregulation 2M.3.03(1); and | |
(c) | is paid during the relevant period | |
4 | A liability or prospective liability to pay tax in respect of a fringe benefit taxable amount under: | |
(a) | the Fringe Benefits Tax Assessment Act 1986; or | |
(b) | the Fringe Benefits Tax Act 1986; | |
that relates to the provision of a matter specified in item 1, 2 or 3 |
(a) if a person has held an office in relation to a company:
(i) throughout a period of more than 12 months; or
the relevant period for that person is the last 12 months of that period or the last 12 months of the total period; and
(ii) throughout a number of periods of more than 12 months in total;
(b) if a person has held an office in relation to a company:
(i) throughout a period of 12 months or less; or
the relevant period for that person is that period or the total period.
(ii) throughout a number of periods of 12 months or less in total;
For paragraph 200AB(1)(e) of the Act, each of the following things is specified:
(a) any kind of pension, other than a pension paid from a superannuation fund or a superannuation annuity (whether it is paid from an Australian or a foreign fund);
(b) an amount paid as a voluntary out-of-court settlement in a matter relating to the termination of employment;
(c) a payment:
(i) that is made as part of a restrictive covenant, restraint-of-trade clause or non-compete clause (however described); and
(ii) the value of which, when added to the value of all other payments (if any) already made or payable in connection with the person's retirement from board or managerial offices in the company and related bodies corporate, exceeds the payment limit set by section 200G of the Act.
Note: Subsection 200AB(1) of the Act provides that a benefit includes specified things. Paragraph 200AB(1)(e) of the Act provides that a benefit includes a thing specified in regulations. Things that are not specified in subsection 200AB(1) of the Act or subregulation (1) may also be benefits for the purposes of the Act.
2D.2.02(2) [Things that are not benefits]For subsection 200AB(2) of the Act, each of the following things is specified:
(a) a deferred bonus, including a benefit attributable to:
(i) the release of the deferred bonus from a restriction relating to death or incapacity; or
(ii) the investment of the deferred bonus; or
(iii) another change to the value of the deferred bonus;
(b) a payment from a defined benefits superannuation scheme that was in existence when this regulation commenced;
(c) a genuine superannuation contribution that is paid by an employer or employee on or after the commencement of this regulation;
(d) genuine accrued benefits that are payable under a law within the meaning of section 200H of the Act;
(e) a payment made under a requirement imposed by a law of another country;
(f) a reasonable payment that is made:
(i) in accordance with a policy of the company or body that applies to all employees; and
(ii) as a result of a genuine redundancy; and
(iii) having regard to the length of a person's service in an office or position;
(g) a payment from a prescribed superannuation fund due to death or incapacity.
Example for paragraph (d)
A payment of annual leave, long service leave or sick leave.
Note: Subsection 200AB(2) of the Act provides that a benefit does not include a thing specified in regulations. Things that are not specified in subregulation (2) may also not be benefits for the purposes of the Act.
2D.2.02(3) [Definitions]In this regulation:
deferred bonus
includes an amount, or property, that:
(a) is earned by, accrued by or allocated to a person as remuneration in respect of a period of employment before the person's retirement; and
(b) is not paid, provided or released to the person at the time at which it is earned, accrued or allocated.
prescribed superannuation fund
has the meaning given by section 200B of the Act.
For subsection 200A(1A) of the Act, each of the following circumstances is specified in relation to a benefit:
(a) circumstances in which the benefit is the automatic vesting of share-based payments for a person on or as a result of retirement from an office or a position;
(b) circumstances in which the benefit is the accelerated vesting of share-based payments for a person on or as a result of retirement from an office or a position; and
(c) circumstances in which the benefit is a payment made to a person in lieu of the giving of notice of termination.
Note: Subsection 200A(1A) of the Act provides that a benefit is given in connection with a person's retirement from an office or a position if the benefit is given in circumstances specified in regulations.
2D.2.03(2) [Exempt benefits]For paragraph 200F(1)(b) of the Act, a benefit requires shareholder approval:
(a) if it:
(i) is a deferred bonus under paragraph 2D.2.02(2)(a); and
(ii) is subject to automatic or accelerated vesting under subregulation (1); and
(iii) exceeds the payment limit set by section 200G of the Act; and
(b) if it is not a benefit attributable to the release of a deferred bonus from a restriction due to death or incapacity.
For section 206B of the Act, a foreign country, or part of a foreign country, mentioned in the following table is prescribed.
Item | Country or part of country | |
1 | New Zealand |
For subsection 206J(3) of the Act, an arrangement in the following table is to be treated as an arrangement that has the effect of limiting the exposure of a member mentioned in subsection 206J(1) of the Act to the risk mentioned in that subsection.
Item | Arrangement |
1 | A put option on incentive remuneration |
2 | A short position on shares that forms part of incentive remuneration |
3 | An income protection insurance contract in which the insurable risk event affects the financial value of remuneration or equity or an equity-related instrument for the key management personnel |
2D.7.01(2)
For subsection 206J(3) of the Act, an arrangement in the following table is not to be treated as an arrangement that has the effect of limiting the exposure of a member mentioned in subsection 206J(1) of the Act to the risk mentioned in that subsection.
Item | Arrangement |
1 | An income protection insurance contract in which the insurable risk event is the death, incapacity or illness of any of the key management personnel |
2 | A foreign currency risk arrangement |
2D.7.01(3)
In this regulation, a short position is a position in relation to shares in a listed entity where the quantity of the shares that a person has is less than the quantity of the shares that the person has an obligation to deliver.
2D.7.01(4)
In subregulation (3), the person has the shares if:
(a) the person is holding the shares on the person's own behalf; or
(b) another person is holding the shares on the person's behalf; or
(c) the person has entered into an agreement to buy the shares but has not received the shares; or
(d) the person has vested title in the shares in a borrower, or in an entity nominated by the borrower, under a securities lending arrangement.
2D.7.01(5)
In subregulation (3), the shares that the person has an obligation to deliver are the shares that the person:
(a) has an obligation to deliver under a sale agreement where the shares have not been delivered; or
(b) has an obligation to vest title in a lender under a securities lending arrangement; or
(c) has any other non-contingent legal obligation to deliver.
For subsection 213(1) of the Act, $5 000 is prescribed.
For subsection 250A(1) of the Act, an electronic authentication of an appointment of a proxy must include:
(a) a method of identifying the member; and
(b) an indication of the member's approval of the information communicated. 2G.2.01(2) [Email or internet votes]
If a member appoints a proxy by e-mail or Internet-based voting:
(a) the member must be identified by personal details (for example, the member's name, address and date of birth); and
(b) the member's approval of the information communicated must be communicated by a form of security protection (for example, the entering of a confidential identification number such as a shareholder registration number or holder identification number).
For subsection 262(5) of the Act, each of the following laws is a prescribed law of a State or Territory:
NEW SOUTH WALES
Parts II and III of the Liens on Crops and Wool and Stock Mortgages Act 1898
Parts 2 and 3 (to the extent that Part 3 applies to agricultural goods mortgages) of the Security Interests in Goods Act 2005
VICTORIA
Parts VII and VIII of the Instruments Act 1958
QUEENSLAND
Part II (being provisions that apply in relation to registration of instruments that are stock mortgages, liens upon crops and liens on wool) and Part IV (other than section 24) of the Bills of Sale and Other Instruments Act 1955
The Liens on Crops of Sugar Cane Act 1931
WESTERN AUSTRALIA
Sections 7 and 8 and Parts IX, X and XI of the Bills of Sale Act 1899
SOUTH AUSTRALIA
Liens on Fruit Act, 1923
Stock Mortgages and Wool Liens Act, 1924
TASMANIA
Sections 36 of the Bills of Sale Act 1900
Stock, Wool and Crop Mortgages Act 1930
AUSTRALIAN CAPITAL TERRITORY
Parts IV and V of the Instruments Act 1933.
For paragraph 265(5)(b) of the Act, the period in which a certificate to the effect set out in paragraph 265(4)(b) of the Act must be produced to ASIC is 90 days after the notice is lodged. REGULATION 2K.2.03 2K.2.03 CHARGE THAT IS A REGISTRABLE SECURITY: SPECIFIED LAW - PARAGRAPHS 273A(4)(b), 273B(3)(b) AND 273C(3)(b) OF THE ACT
For paragraphs 273A(4)(b), 273B(3)(b) and 273C(3)(b) of the Act the following law is a specified law of a State or Territory:
NEW SOUTH WALES
Security Interests in Goods Act 2005
For subsection 283BCA(2) of the Act, ASIC must enter the following details in the register in relation to a trustee for debenture holders:
(a) the name and address of the trustee;
(b) either:
(i) if the trustee has an ACN - the trustee's ACN; or
(ii) the trustee's ABN;
(c) the name and address of the borrower who appointed the trustee;
(d) the name of the trust for which the trustee has been appointed to act;
(e) the day the trust deed was executed. 2L.2.01(2) [ASIC to amend register if notified of change]
If ASIC receives a notice from a borrower under subsection 283BC(2) of the Act that the trustee has revoked the trust deed, it must amend the register by removing the details entered on the register in relation to the trustee.
For paragraph 295(3)(a) of the Act, if paragraph 295(2)(b) of the Act applies to a parent entity, the following disclosures are required in the notes to the financial statements of the consolidated entity: (a) current assets of the parent entity; (b) total assets of the parent entity; (c) current liabilities of the parent entity; (d) total liabilities of the parent entity; (e) shareholders' equity in the parent entity separately showing issued capital and each reserve; (f) profit or loss of the parent entity; (g) total comprehensive income of the parent company; (h) details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries; (i) details of any contingent liabilities of the parent entity; (j) details of any contractual commitments by the parent entity for the acquisition of property, plant or equipment; (k) comparative information for the previous period for each of paragraphs (a) to (j).
2M.3.01(2)
The disclosures in subregulation (1) must be calculated in accordance with accounting standards in force in the financial year to which the disclosure relates.
2M.3.01(3)
In this regulation:
parent entity
means a company, registered scheme, registrable superannuation entity or disclosing entity that is required by the accounting standards to prepare financial statements in relation to a consolidated entity.
REGULATION 2M.3.03 PRESCRIBED DETAILS (ACT s 300A) 2M.3.03(1)
For paragraph 300A(1)(c) of the Act, the details set out in the table relating to a person are prescribed.
Item | Condition (if any) | Details | ||||
General | ||||||
1 | The person's name | |||||
2 | Each position held by the person in the financial year | |||||
3 | If the person has held a position mentioned in item 2 for less than the whole financial year | (a) | The date on which the person began holding the position | |||
(b) | The date (if any) on which the person ceased to hold the position | |||||
4 | If there has been a change in the chief executive officer or a director of the entity during the period: | (a) | The name of each person involved in the change | |||
(a) | starting immediately after the reporting date; and | (b) | The position involved | |||
(b) | ending immediately before the date on which the financial report is authorised for issue | (c) | The date on which the change occurred | |||
5 | If a person (other than a director or chief executive officer) has retired during the period: | (a) | The person's name | |||
(a) | starting immediately after the reporting date; and | (b) | The position involved | |||
(b) | ending immediately before the date on which the financial report is authorised for issue | (c) | The date on which the retirement took effect | |||
Payments and benefits | ||||||
6 | Note See subregulation (2). | The person's short-term employee benefits, divided into at least the following components: | ||||
(a) | cash salary, fees and short-term compensated absences; | |||||
(b) | short-term cash profit-sharing and other bonuses; | |||||
(c) | non-monetary benefits; | |||||
(d) | other short-term employee benefits | |||||
7 | Note See subregulation (2). | The person's post-employment benefits, divided into at least the following components: | ||||
(a) | pension and superannuation benefits; | |||||
(b) | other post-employment benefits | |||||
8 | Note See subregulation (2). | The person's long-term employee benefits other than benefits mentioned in items 6 and 7, separately identifying any amount attributable to a long-term incentive plan | ||||
9 | Note See subregulation (2). | The person's termination benefits | ||||
10 | For any position the person started to hold during the financial year | Payments (if any) made to the person, before the person started to hold the position, as part of the consideration for the person agreeing to hold the position, including: | ||||
(a) | the monetary value of the payment; and | |||||
(b) | the date of the payment | |||||
11 | Note See subregulation (2). | Share-based payments made to the person, divided into at least the following components: | ||||
(a) | equity-settled share-based payment transactions, showing separately: | |||||
(i) | shares and units; and | |||||
(ii) | options and rights; | |||||
(b) | cash-settled share-based payment transactions; | |||||
(c) | all other forms of share-based payment compensation (including hybrids) | |||||
Compensation | ||||||
12 | For each grant of a cash bonus, performance-related bonus or share-based payment compensation benefit made to a person, whether part of a specific contract for services or not | The terms and conditions of each grant affecting compensation in the reporting period or a future reporting period, including the following: | ||||
(a) | the grant date; | |||||
(b) | the nature of the compensation granted; | |||||
(c) | the service and performance criteria used to determine the amount of compensation; | |||||
(d) | if there has been any alteration of the terms or conditions of the grant since the grant date - the date, details and effect of each alteration; | |||||
(e) | the percentage of the bonus or grant for the financial year that was paid to the person, or that vested in the person, in the financial year; | |||||
(f) | the percentage of the bonus or grant for the financial year that was forfeited by the person (because the person did not meet the service and performance criteria for the bonus or grant) in the financial year; | |||||
(g) | the financial years, after the financial year to which the report relates, for which the bonus or grant will be payable if the person meets the service and performance criteria for the bonus or grant; | |||||
(h) | estimates of the maximum and minimum possible total value of the bonus or grant (other than option grants) for financial years after the financial year to which the report relates | |||||
13 | For each contract for services between a person and the disclosing entity (or any of its subsidiaries) | Any further explanation that is necessary in addition to those prescribed in paragraph 300A(1)(ba) of the Act and item 12 to provide an understanding of: | ||||
(a) | how the amount of compensation in the current reporting period was determined; and | |||||
(b) | how the terms of the contract affect compensation in future periods | |||||
14 | If the terms of share-based payment transactions (including options or rights) granted as compensation to key management personnel have been altered or modified by the disclosing entity or any of its subsidiaries during the reporting period | (a) | The date of the alteration | |||
(b) | The market price of the underlying equity instrument at the date of the alteration | |||||
(c) | The terms of the grant of compensation immediately before the alteration, including: | |||||
(i) | the number and class of the underlying equity instruments, exercise price; and | |||||
(ii) | the time remaining until expiry; and | |||||
(iii) | each other condition in the terms that affects the vesting or exercise of an option or other right | |||||
(d) | The new terms | |||||
(e) | The difference between: | |||||
(i) | the total of the fair value of the options or other rights affected by the alteration immediately before the alteration; and | |||||
(ii) | the total of the fair value of the options or other rights immediately after the alteration | |||||
15 | If options and rights over an equity instrument issued or issuable by the disclosing entity or any of its subsidiaries have been provided as compensation to a person during the reporting period | (a) | The number of options and the number of rights that: | |||
Note See subregulation (3). | (i) | have been granted; and | ||||
(ii) | have vested; | |||||
during the reporting period | ||||||
(b) | The terms and conditions of each grant made during the reporting period, including: | |||||
(i) | the fair value per option or right at grant date; and | |||||
(ii) | the exercise price per share or unit; and | |||||
(iii) | the amount, if any, paid or payable by the recipient; and | |||||
(iv) | the expiry date; and | |||||
(v) | the date or dates when the options or rights may be exercised; and | |||||
(vi) | a summary of the service and performance criteria that must be met before the beneficial interest vests in the person | |||||
16 | If an equity instrument that is issued or issuable by the disclosing entity or any of its subsidiaries has been provided as a result of the exercise during the reporting period of options and rights that have been granted as compensation to a person | (a) | The number of equity instruments | |||
Note See subregulation (3). | (b) | If the number of options or rights exercised differs from the number of equity instruments disclosed under paragraph (a) - the number of options or rights exercised | ||||
(c) | The amount paid per instrument | |||||
(d) | The amount unpaid per instrument | |||||
Remuneration disclosure | ||||||
17 | For an option or right over equity instruments: | The number of each of the following: | ||||
(a) | issued or issuable by the disclosing entity or any of its subsidiaries; and | (a) | options and rights held at the start of the reporting period; | |||
(b) | held, whether directly, indirectly or beneficially, by any of the following: | (b) | options and rights granted during the reporting period as compensation; | |||
(i) | each key management person; | (c) | options and rights exercised during the reporting period; | |||
(ii) | a close member of the family of that person; | (d) | options and rights resulting from any other change during the reporting period; | |||
(iii) | an entity over which the person or the family member has, either directly or indirectly, control, joint control or significant influence | (e) | options and rights held at the end of the reporting period; | |||
(f) | options and rights vested at the end of the reporting period; | |||||
(g) | options and rights vested and exercisable at the end of the reporting period; | |||||
(h) | options and rights vested and unexercisable at the end of the reporting period | |||||
18 | For an equity instrument (other than an option or a right): | The number of each of the following: | ||||
(a) | issued or issuable by the disclosing entity or any of its subsidiaries; and | (a) | equity instruments held at the start of the reporting period; | |||
(b) | held, whether directly, indirectly or beneficially, by any of the following: | (b) | equity instruments granted during the reporting period as compensation; | |||
(i) | each key management person; | (c) | equity instruments received during the reporting period on the exercise of an option or right; | |||
(ii) | a close member of the family of that person; | (d) | equity instruments resulting from any other change during the reporting period; | |||
(iii) | an entity over which the person or the family member has, either directly or indirectly, control, joint control or significant influence | (e) | equity instruments held at the end of the reporting period; | |||
(f) | equity instruments if included in the number disclosed under paragraph (e), held nominally at the end of the reporting period | |||||
19 | For a transaction (other than share-based payment compensation) that: | (a) | The nature of each different type of transaction | |||
(a) | involves an equity instrument issued or issuable by the disclosing entity or any of its subsidiaries; and | (b) | For each transaction, the terms and conditions of the transaction | |||
(b) | has occurred, during the reporting period, between the disclosing entity or any of its subsidiaries and any of the following: | |||||
(i) | a key management person; | |||||
(ii) | a close member of the family of that person; | |||||
(iii) | an entity over which the person or the family member has, either directly or indirectly, control, joint control or significant influence; | |||||
if the terms or conditions of the transaction were more favourable than those that it is reasonable to expect the entity would adopt if dealing at arms-length with an unrelated person | ||||||
20 | For the aggregate of loans made, guaranteed or secured, directly or indirectly, by the disclosing entity and any of its subsidiaries, in the reporting period in relation to: | (a) | The amount outstanding at the start of the reporting period | |||
(a) | all key management personnel; and | (b) | The amount of interest paid and payable in the reporting period to the disclosing entity or to any of the entity's subsidiaries | |||
(b) | close members of the family of a member of the key management personnel; and | (c) | The difference between the amount disclosed under paragraph (b) and the amount of interest that would have been charged on an arms-length basis | |||
(c) | an entity over which any of the persons mentioned in paragraphs (a) and (b) have, directly or indirectly, control, joint control or significant influence | (d) | Each write-down and each allowance for doubtful receivables recognised by the disclosing entity or by any of the entity's subsidiaries | |||
(e) | The amount outstanding at the end of the reporting period | |||||
(f) | The number of key management personnel included in the group aggregate at the end of the reporting period | |||||
(g) | A summary of the terms and conditions of the loans | |||||
21 | If the aggregate of loans made, guaranteed or secured, directly or indirectly, by the disclosing entity and any of its subsidiaries, in the reporting period in relation to: | (a) | The amount outstanding at the start of the reporting period | |||
(a) | a particular key management person; and | (b) | The amount of interest paid and payable in the reporting period to the disclosing entity or to any of the entity's subsidiaries | |||
(b) | close members of the family of the key management person; and | (c) | The difference between the amount disclosed under paragraph (b) and the amount of interest that would have been charged on an arms-length basis | |||
(c) | an entity over which any of the persons mentioned in paragraphs (a) and (b) has, directly or indirectly, control, joint control or significant influence; | (d) | Each write-down and each allowance for doubtful receivables recognised by the disclosing entity or by any of the entity's subsidiaries | |||
is greater than $100 000 | (e) | The amount outstanding at the end of the reporting period | ||||
(f) | The highest amount of the key management person's indebtedness during the reporting period | |||||
(g) | A summary of the terms and conditions of the loans | |||||
22 | For a transaction during the reporting period between the disclosing entity, or any of its subsidiaries, and a key management person, a close member of the family of that person, or an entity over which the key management person or the family member has, directly or indirectly, control, joint control or significant influence, other than a transaction mentioned in item 19, 20 or 21 or subregulation (3B) | (a) | Each type of transaction of a different nature | |||
(b) | The terms and conditions of each type of transaction or, if there are different categories of terms and conditions within a type of transaction, the terms and conditions of each category of transaction | |||||
(c) | For each type of transaction or, if there are different categories of terms and conditions within a type of transaction, for each category of transaction: | |||||
(i) | the names of the persons involved in the transaction; and | |||||
(ii) | the aggregate amount recognised | |||||
23 | For each aggregate amount disclosed under item 22 | (a) | The total of amounts recognised as revenue, separately identifying, if applicable, the total amounts recognised as: | |||
(i) | interest revenue; or | |||||
(ii) | dividend revenue | |||||
(b) | The total of amounts recognised as expense, separately identifying, if applicable, the total amounts recognised as: | |||||
(i) | interest expense; or | |||||
(ii) | write-downs of receivables and allowances made for doubtful receivables | |||||
(c) | Any further disclosures necessary to provide an understanding of the effects of the transactions on the financial statements prepared in accordance with Australian Accounting Standards | |||||
24 | For each transaction identified under item 22 | (a) | The total of all assets, classified into current and non-current assets, and, if applicable, any allowance for doubtful receivables at the end of the reporting period | |||
(b) | The total of all liabilities, classified into current and non-current liabilities |
2M.3.03(2)
For items 6, 7, 8, 9 and 11 of the table:
(a) the information of the kind described in the item for the previous financial year must also be disclosed in the financial year to which the item relates (to give comparative information for the purposes of the item); but
(b) paragraph (a) does not apply in relation to the first financial year in which paragraph 300A(1)(c) of the Act applies in relation to a person.
Note: The effect of paragraph (b) is that no comparative information is required in the first period of reporting on a specific individual.
2M.3.03(3)
For items 15 to 19 of the table, a disclosure required by the item must:
(a) be separated into each class of equity instrument; and
(b) identify each class of equity instrument by:
(i) the name of the disclosing entity or the relevant subsidiary that issued the equity instrument; and
(ii) the class of equity instrument; and
(iii) if the instrument is an option or right - the class and number of equity instruments for which it may be exercised.
2M.3.03(3A)
For items 20 and 21 of the table in subregulation (1), loans do not include loans involved in transactions that are in substance options, including non-recourse loans.
2M.3.03(3B)
A transaction with, or an amount that is receivable from or payable under a transaction to, a key management person, a close member of the family of that person, or an entity over which the person or the family member has, directly or indirectly, control, joint control or significant influence, is excluded from the requirements of items 22 to 24 if:
(a) the transaction occurs within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those that it is reasonable to expect the entity would have adopted if dealing at arms-length with an unrelated person; and
(b) information about the transaction does not have the potential to affect adversely decisions about the allocation of scarce resources made by users of the financial statements, or the discharge of accountability by the key management person; and
(c) the transaction is trivial or domestic in nature.
2M.3.03(3C)
Items 17 to 24 of the table in subregulation (1) apply in relation to a directors' report for a financial year commencing on or after 1 July 2013.
2M.3.03(4)
For subregulation (1), a company must apply the requirements of relevant accounting standards when disclosing the information mentioned in the subregulation.
2M.3.03(5)
In subregulation (1), an expression that is:
(a) used in the subregulation; and
(b) defined in a relevant accounting standard that is applied for the purpose of disclosing information;
has the meaning given by that accounting standard.
REGULATION 2M.3.04 PRESCRIBED DETAILS - ANNUAL DIRECTORS' REPORT OF A REGISTRABLE SUPERANNUATION ENTITY 2M.3.04(1)
For the purposes of paragraph 300C(1)(a) of the Act, the details in the following table in relation to the remuneration of each member of the key management personnel of a registrable superannuation entity are prescribed.
Prescribed details | |||||
Item | Applicable members | Details | |||
General | |||||
1 | Each member | The name of the member | |||
2 | Each member who: | The date on which the member: | |||
(a) | began to hold a position as a member of the key management personnel during the most recently completed financial year; or | (a) | began holding the position; or | ||
(b) | retired from a position as a member of the key management personnel during the most recently completed financial year | (b) | retired from the position | ||
3 | Each member whose position changed during the most recently completed financial year | Both of the following: | |||
(a) | the member's name and position; | ||||
(b) | when the change occurred | ||||
4 | Each member who retired during the most recently completed financial year | Both of the following: | |||
(a) | the member's name and position; | ||||
(b) | when the retirement took effect | ||||
Payments and benefits | |||||
5 | Each member | The short-term employee benefits of the member for the most recently completed financial year, divided into at least the following components: | |||
(a) | cash salary, fees and short-term compensated absences; | ||||
(b) | short-term cash profit-sharing and other bonuses; | ||||
(c) | non-monetary benefits; | ||||
(d) | other short-term employee benefits | ||||
6 | Each member | The post-employment benefits of the member for the most recently completed financial year, divided into at least the following components: | |||
(a) | pension and superannuation benefits; | ||||
(b) | other post-employment benefits | ||||
7 | Each member | The long-term employee benefits other than benefits mentioned in items 5 and 6 for the member for the most recently completed financial year (any amount attributable to a long-term incentive plan being separately identified) | |||
8 | Each member whose position as a member of the key management personnel was terminated during the most recently completed financial year | The member's termination benefits | |||
9 | Each member who: | Details of the payment, including: | |||
(a) | began to hold a position as a member of the key management personnel during the most recently completed financial year; and | (a) | the monetary value of the payment; and | ||
(b) | received a payment as part of the consideration for agreeing to hold the position | (b) | the date of the payment | ||
10 | Each member | The share-based payments made to the member during the most recently completed financial year, divided into at least the following components: | |||
(a) | equity-settled share-based payment transactions, showing separately: | ||||
(i) | shares and units; and | ||||
(ii) | options and rights; | ||||
(b) | cash-settled share-based payment transactions; | ||||
(c) | all other forms of share-based payment compensation (including hybrids) | ||||
Compensation | |||||
11 | If a grant of a cash bonus, performance-related bonus or share-based payment compensation benefit, whether part of a specific contract for services or not, was made to a member during the most recently completed financial year - each such member | The terms and conditions of each grant affecting compensation, including the following: | |||
(a) | the grant date; | ||||
(b) | the nature of the compensation granted; | ||||
(c) | the service and performance criteria used to determine the amount of compensation; | ||||
(d) | if there has been any alteration of the terms or conditions of the grant since the grant date - the date, details and effect of each alteration; | ||||
(e) | the percentage of the bonus or grant for the financial year that was paid to the member, or that vested in the member, in the financial year; | ||||
(f) | the percentage of the bonus or grant for the financial year that was forfeited by the member (because the member did not meet the service and performance criteria for the bonus or grant) in the financial year; | ||||
(g) | the financial years, after the most recently completed financial year, for which the bonus or grant will be payable if the member meets the service and performance criteria for the bonus or grant; | ||||
(h) | estimates of the maximum and minimum possible total value of the bonus or grant (other than option grants) for financial years after the most recently completed financial year | ||||
12 | If, during the most recently completed financial year, a contract for services was negotiated between the RSE licensee and a member - each such member | An explanation of: | |||
(a) | how the amount of compensation was determined; and | ||||
(b) | how the terms of the contract affect compensation in future periods | ||||
13 | If the terms of share-based payment transactions (including options or rights) granted as compensation to a member were altered or modified by the RSE licensee during the most recently completed financial year - each such member | All of the following: | |||
(a) | the date of the alteration or modification; | ||||
(b) | the market price of the underlying equity instrument at the date of the alteration or modification; | ||||
(c) | the terms of the grant of compensation immediately before the alteration or modification, including: | ||||
(i) | the number and class of the underlying equity instruments; and | ||||
(ii) | the exercise price for any option or other right affected by the alteration or modification, immediately before and after the alteration or modification; and | ||||
(iii) | the time remaining until expiry of the underlying equity instruments; and | ||||
(iv) | each other condition in the terms affecting the vesting or exercise of an option or other right; | ||||
(d) | the modified or altered terms; | ||||
(e) | the difference between: | ||||
(i) | the total of the fair value of the options or other rights affected by the alteration or modification immediately before the alteration or modification; and | ||||
(ii) | the total of the fair value of the options or other rights immediately after the alteration or modification | ||||
14 | If, during the most recently completed financial year, options and rights over an equity instrument issued or issuable by the RSE licensee or by a related body corporate were provided as compensation to a member - each such member | All of the following: | |||
(a) | the number of options and the number of rights that, during the financial year, were: | ||||
(i) | granted; and | ||||
(ii) | vested; | ||||
(b) | the terms and conditions of each grant made during the financial year, including: | ||||
(i) | the fair value per option or right at grant date; and | ||||
(ii) | the exercise price per share or unit; and | ||||
(iii) | the amount, if any, paid or payable by the member; and | ||||
(iv) | the expiry date of the grant; and | ||||
(v) | when the options or rights may be exercised; and | ||||
(vi) | a summary of the service and performance criteria that must be met before the beneficial interest vests in the member | ||||
15 | If an equity instrument that is issuable by the RSE licensee or a related body corporate was issued as a result of the exercise, during the most recently completed financial year, of options and rights that were granted as compensation to a member - each such member | All of the following: | |||
(a) | how many equity instruments were issued; | ||||
(b) | if the number of options or rights exercised differs from the number of equity instruments disclosed under paragraph (a) - how many options or rights were exercised; | ||||
(c) | the amount paid under each instrument; | ||||
(d) | the amount payable under each instrument that is yet to be paid | ||||
16 | If an amount attributable to the service of a member for the most recently completed financial year is paid to an organisation or entity rather than to the member - each such member | Both of the following: | |||
(a) | the amount; | ||||
(b) | the name of the organisation or entity |
2M.3.04(2)
If: (a) a member of the key management personnel receives a payment, benefit or compensation from a related party of the registrable superannuation entity; and (b) all or part of the payment, benefit or compensation relates to work performed for the registrable superannuation entity;
then, to the extent that the payment, benefit or compensation relates to that work, the table applies to the payment, benefit or compensation in the same way as if it were paid or given by the registrable superannuation entity.
2M.3.04(3)
The details referred to in item 14 or 15 of the table must be separated into each class of equity instrument, and each class of equity instrument must be identified by: (a) the name of the issuing entity; and (b) the class of equity instrument; and (c) if the instrument is an option or right - the class and number of equity instruments for which it may be exercised.
Accounting standards apply to the reporting of prescribed details
2M.3.04(4)
The details are to be determined in accordance with the requirements of any relevant accounting standards.
2M.3.04(5)
If an expression used in the table, or in subregulation (2) or (3), is defined in a relevant accounting standard, the expression has the meaning given by the standard.
For paragraph 324BE(1)(b) of the Act, a designation mentioned in an item of the table is prescribed for membership of the professional accounting body mentioned in the item.
Membership designations | ||
Item | Professional accounting body | Designation |
1 | Institute of Chartered Accountants in Australia | CA; or
FCA |
2 | CPA Australia | CPA; or
FCPA |
3 | Institute of Public Accountants | FIPA; or
MIPA |
The responsible entity of a registered scheme must lodge a notice in the approved form telling ASIC of the appointment by the entity of an auditor of the scheme under section 331AAA or 331AAB of the Act within 14 days of the appointment.
This Part applies in relation to annual transparency reports for:
(a) the transparency reporting year in which Schedule 1 to the Corporations Legislation Amendment (Audit Enhancement) Act 2012 commences; and
(b) all later transparency reporting years.
Note: For the definitions of annual transparency report and transparency reporting year , see section 9 of the Act.
For subsection 332B(1) of the Act, Schedule 7A sets out the information that an annual transparency report published in accordance with subsection 332A(2) of the Act must contain.
2M.4A.02(2)
If the report is published by an audit firm or authorised audit company, see Part 2 of Schedule 7A.
2M.4A.02(3)
If the report is published by an individual auditor, see Part 3 of Schedule 7A.
For section 343 of the Act, the operation of Chapter 2M of the Act is modified in accordance with this Part.
[ CCH Note: There is no regulation 2M.6.02.]
(Omitted by SLI 2007 No 194, Sch 1[1] (effective 30 June 2007).) REGULATION 2M.6.04 2M.6.04 ANNUAL FINANCIAL REPORTS - LISTED COMPANIES
(Omitted by SLI 2007 No 193, Sch 1[2] (effective 30 June 2007).) REGULATION 2M.6.05 2M.6.05 CONDUCT OF AUDITOR - RELEVANT RELATIONSHIPS
The operation of Chapter 2M of the Act in relation to:
(a) all companies; and
(b) all registered schemes; and
(c) all disclosing entities;
is modified as set out in Schedule 5C.
Particulars for a company
2N.2.01(1)
For the purposes of section 346B of the Act, the following particulars are prescribed for a company (other than a CCIV): (a) ACN; (b) name; (c) address of registered office; (d) address of principal place of business in this jurisdiction; (e) for each director and company secretary:
(i) the person's name; and
(ii) the person's usual residential address, or, if the person is entitled to have an alternative address under subsection 205D(2) of the Act, that alternative address; and
(f) the date of appointment or cessation of each director, secretary or alternate director; (g) for issued shares - the classes into which the shares are divided, and for each class of share issued:
(iii) the person's date and place of birth;
(i) the number of shares in the class; and
(ii) the total amount paid up for the class; and
(h) for a proprietary company - the names and addresses of:
(iii) the total amount unpaid for the class;
(i) if the company has 20 or fewer members - all members; or
(i) for a proprietary company that has a share capital:
(ii) if the company has more than 20 members - the top 20 members in each class;
(i) the total number of shares in each class held by each of the members mentioned in paragraph (h); and
(ii) whether or not the shares are fully paid; and
(j) for the ultimate holding company - its name and either:
(iii) whether or not the shares are beneficially owned;
(i) its ACN or ARBN if registered in this jurisdiction; or
(ii) the place at which it was incorporated or formed if not registered in this jurisdiction.
Particulars for a CCIV
2N.2.01(1A)
For the purposes of section 346B of the Act, the following particulars are prescribed for a CCIV: (a) ACN; (b) name; (c) address of registered office; (d) for the corporate director of the CCIV:
(i) the ACN of the corporate director; and
(ii) the name of the corporate director; and
(e) for each sub-fund of the CCIV:
(iii) the date of appointment of the corporate director;
(i) the ARFN of the sub-fund; and
(f) for issued shares - the sub-funds to which the shares are referable, and for each sub-fund:
(ii) the name of the sub-fund;
(i) the classes of shares referable to the sub-fund; and
(ii) the number of shares referable to the sub-fund in each of those classes; and
(iii) for each of those classes - the total amount paid up for shares referable to the sub-fund in the class; and
(iv) for each of those classes - the total amount unpaid for shares referable to the sub-fund in the class.
Particulars for a registered scheme
2N.2.01(2)
For the purposes of section 346B of the Act, the following particulars are prescribed for a registered scheme: (a) ARSN; (b) name; (c) name and ACN of the responsible entity; (d) if the scheme is a managed investment scheme that is a unit trust:
(i) issued interests in the scheme; and
(ii) the classes into which the interests are divided; and
(e) if the scheme is a managed investment scheme that is not a unit trust:
(iii) for each class of interest issued - the number of interests in the class, the total amount paid up for the class and the total amount unpaid for the class;
(i)issued interests in the scheme; and
(ii) a description of the nature of the interests (for example, interest in a limited partnership, right to participate in a timesharing scheme); and
(iii) the number of the interests; and
(iv) the total amount paid for the interests; and
(v) the total amount unpaid for the interests.
Additional particulars for an Australian passport fund
2N.2.01(3)
For the purposes of section 346B of the Act, the following particulars are prescribed for a registered scheme that is an Australian passport fund, in addition to the particulars prescribed for the scheme under subregulation (2): (a) the APFRN for the fund; (b) if the fund has or had a name in a participating economy (including Australia) that is different from its current name in Australia, then for each name that the fund has or had in a participating economy:
(i) that name; and
(ii) the name of each participating economy in which the fund has or had that name; and
(iii) for each such economy - the start date and (if applicable) the end date of each period during which the fund has or had that name in that economy.
Particulars for a notified foreign passport fund
2N.2.01(4)
For the purposes of section 346B of the Act, the following particulars are prescribed for a notified foreign passport fund: (a) the NFPFRN for the fund and any other unique number for the fund allocated to the fund by ASIC; (b) the name of the fund; (c) the name of the home economy for the fund; (d) in relation to the operator of the fund:
(i) the name and ARBN of the operator; and
(ii) the name and address of each local agent of the operator; and
(e) if the fund has or had a name in a participating economy (including Australia) that is different from its current name in Australia, then for each name that the fund has or had in a participating economy:
(iii) the address of the operator's registered office or principal place of business in its place of origin;
(i) that name; and
(ii) the name of each participating economy in which the fund has or had that name; and
(iii) for each such economy - the start date and (if applicable) the end date of each period during which the fund has or had that name in that economy.
2N.2.01(5)
(Repealed by FRLI No F2023L01458, Sch 1[305] (effective 1 November 2023).)
Particulars for a company
2N.4.01(1)
For the purposes of section 348B of the Act, the following particulars are prescribed for a company (other than a CCIV): (a) the personal details of a director, secretary or alternate director mentioned in subsection 205B(3) of the Act; (b) the date of appointment or cessation of a director, secretary or alternate director; (c) the date of change of name or change of address of a director, secretary or alternate director; (d) evidence that a specified person is (or is not) a director, secretary or alternate director; (e) completion of a declaration indicating that the company is a special purpose company within the meaning of regulation 3 of the Corporations (Review Fees) Regulations 2003; (f) the name of the ultimate holding company; (g) the date on which a company became, or ceased to be, the ultimate holding company; (h) the previous name, or the new name, of the ultimate holding company; (i) the date of issue, cancellation, or transfer of shares; (j) the date of any change to amounts paid on shares; (k) a statement of whether or not shares for one or more members are beneficially owned; (l) the date of any change to beneficial ownership of shares; (m) any of the following information from the share structure table for a class of share:
(i) the share class code;
(ii) the full title of the class of share;
(iii) the total number of shares in the class that have been issued;
(iv) the total amount paid for shares in the class;
(n) the date on which a new member's name was entered in the register of members; (o) a statement that the company is:
(v) the total amount unpaid for shares in the class;
(i) a small proprietary company mentioned in subsection 45A(2) of the Act; or
(ii) a large proprietary company mentioned in subsection 45A(3) of the Act; or
(p) a statement that the company is listed (or not listed) on a financial market, and the name of the financial market (if any); (q) a statement of whether the company complies with subsection 348C(2) or (3) of the Act; (r) information that the company is required to provide under subsection 142(2), 146(1), 205B(1) or (4), 254X(1) or 319(1) of the Act.
(iii) a foreign controlled small proprietary company mentioned in paragraph 292(2)(b) of the Act;
Particulars for a CCIV
2N.4.01(1A)
For the purposes of section 348B of the Act, the following particulars are prescribed for a CCIV: (a) for the corporate director of the CCIV:
(i) the name of the corporate director; and
(ii) the address of the corporate director; and
(iii) the date of appointment or cessation of the corporate director; and
(iv) the date of change of name or change of address of the corporate director; and
(b) the date on which a new member's name was entered in the register of members kept by the CCIV; (c) for each sub-fund of the CCIV:
(v) evidence that a specified person is (or is not) the corporate director;
(i) the date of issue, cancellation, or transfer of shares referable to the sub-fund; and
(ii) the classes of shares referable to the sub-fund; and
(iii) for each of those classes - the total number and value of shares referable to the sub-fund in the class; and
(iv) for each of those classes - the total amount paid up for shares referable to the sub-fund in the class; and
(d) for each sub-fund of the CCIV - a statement that the sub-fund is listed (or not listed) and, if the sub-fund is listed, the name of the prescribed financial market for which the sub-fund or the CCIV is included in the official list; (e) for each financial year specified in the return of particulars for each sub-fund of a retail CCIV - the name of each auditor of a financial report for the sub-fund for that year; (f) for a retail CCIV - the name of the auditor of the compliance plan for the retail CCIV; (g) if a sub-fund of the CCIV is an Australian passport fund - the name of the implementation reviewer for the Australian passport fund for each review period for the Australian passport fund specified in the return of particulars.
(v) for each of those classes - the total amount unpaid for shares referable to the sub-fund in the class;
Particulars for a registered scheme
2N.4.01(2)
For the purposes of section 348B of the Act, the following particulars are prescribed for a registered scheme: (a) the date on which a new member's name was entered in the register of members; (b) the new name of the responsible entity of the scheme; (c) information that the scheme is required to provide under subsection 319(1) of the Act; (d) for each financial year for the scheme specified in the return of particulars - the name of each auditor of a financial report for the scheme for that year; (e) the name of the auditor of the compliance plan for the scheme; (f) if the scheme is an Australian passport fund - the name of the implementation reviewer for the fund for each review period for the fund specified in the return of particulars.
Particulars for a notified foreign passport fund
2N.4.01(3)
For the purposes of section 348B of the Act, the following particulars are prescribed for a notified foreign passport fund: (a) the date on which a new member's name was entered in the register of members; (b) the new name of the operator of the fund; (c) information that the fund is required to provide under subsection 319(1AA) of the Act; (d) for each financial year for the fund specified in the return of particulars - the name of each auditor of a report for the fund for that year that is prepared in accordance with the financial reporting requirements applying to the fund under the Passport Rules for the home economy for the fund; (e) the name of the implementation reviewer for the fund for each review period for the fund specified in the return of particulars.
Definitions
2N.4.01(4)
In this regulation:
implementation reviewer
, for a passport fund, has the same meaning as in the Passport Rules for this jurisdiction.
review period
, for a passport fund, has the meaning given by subsection 15(1) of the Passport Rules for this jurisdiction.
For paragraph 411(3)(b) and subparagraph 412(1)(a)(ii) of the Act, unless ASIC otherwise allows, the explanatory statement must:
(a) for a proposed arrangement between a Part 5.1 body and its creditors, or a class of its creditors:
(i) state the matters set out; and
in Part 2 of Schedule 8; and
(ii) have annexed to it the reports and copies of documents mentioned;
(b) for a proposed arrangement between a Part 5.1 body and its members, or a class of its members, other than a proposed arrangement mentioned in paragraph (c):
(i) state the matters set out; and
in Part 3 of Schedule 8; and
(ii) have annexed to it the reports and copies of documents mentioned;
(c) for a proposed arrangement between a Part 5.1 body and its members, or a class of its members, in relation to the reconstruction of a corporation, or the amalgamation of 2 or more corporations, if:
(i) the whole or part of the undertaking or of the property of a corporation is to be transferred to a trustee to be held beneficially on behalf of the unit holders of the trust; or
(ii) the shares in the corporation that are held by members are to be cancelled and control is to pass to a trustee to be held on behalf of a unit holder of the trust;
state the matters set out and have annexed to it the documents and, if the trustee of that business operates no other business in relation to that trust, the reports mentioned, in Part 4 of Schedule 8.
5.1.01(2) [``securities exchange'']For the purposes of Schedule 8, securities exchange means Australian Stock Exchange Limited.
REGULATION 5.1.02 5.1.02 GIVING NOTICE UNDER SUBSECTION 414(2) OR (9) OF THE ACT(Repealed by FRLI No F2023L01423, Sch 1[1] (effective 28 October 2023).) REGULATION 5.1.50 5.1.50 PRESCRIBED KINDS OF CONTRACTS, AGREEMENTS OR ARRANGEMENTS UNDER WHICH RIGHTS ARE NOT SUBJECT TO THE STAY IN SECTION 415D OF THE ACT
For the purposes of subparagraph 415D(6)(b)(i) of the Act, each of the kinds of contracts, agreements or arrangements referred to in subregulation 5.3A.50(2) is prescribed.
A notice under subsection 419A(3) of the Act must be given to the owner or lessor, as the case may be, by personal delivery or by prepaid post to the owner's or lessor's usual place of residence or business or the place of residence or business last known to the controller. REGULATION 5.2.02 5.2.02 CERTIFIED COPIES OF REPORTS
A copy of:
(a) a report that must be lodged; and
(b) a certificate or other document annexed to that report;
must be certified in writing to be a true copy by:
(c) for a copy lodged for paragraph 429(2)(c) of the Act - the controller of property of the corporation; or
[ CCH Note: There are no paragraphs 5.2.02(d)-(e).]
(f) for a copy lodged for subsection 475(7) of the Act - by the liquidator or provisional liquidator of the company.
[ CCH Note: SR 2001 No 193 has been reproduced exactly, including the reproduction of two regulations 5.2.01.]
For the purposes of subparagraph 434J(5)(b)(i) of the Act, each of the kinds of contracts, agreements or arrangements referred to in subregulation 5.3A.50(2) is prescribed.
(Repealed by FRLI No F2016L01926, r 4, Sch 1[79] (effective 1 September 2017).) REGULATION 5.3A.02 5.3A.02 ADMINISTRATOR TO SPECIFY VOIDABLE TRANSACTIONS IN STATEMENT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[79] (effective 1 September 2017).) REGULATION 5.3A.03 5.3A.03 ADMINISTRATOR TO LODGE NOTICE OF APPOINTMENT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[79] (effective 1 September 2017).) REGULATION 5.3A.03A NOTICE OF FIRST MEETING OF CREDITORS 5.3A.03A(1)
This regulation is made for paragraph 436E(3)(b) of the Act.
5.3A.03A(2)
The information about a meeting that is to be set out in a notice is at least the following information:
(a) the name of the company;
(b) any trading name of the company;
(c) the ACN of the company;
(d) the section of the Act or, in the case of a combined notice, the sections of the Act under which the notice is being given;
(e) the time, date and place for the meeting;
(f) the purpose for which the meeting is being convened under that section;
(g) the time and date by which proofs of debt, and proxies for the meeting, are to be submitted;
(h) the name and contact details of the administrator;
(i) the date on which the administrator was appointed;
(j) the section of the Act under which the administrator was appointed.
(Repealed by FRLI No F2016L01926, r 4, Sch 1[81] (effective 1 September 2017).) REGULATION 5.3A.04 5.3A.04 NOTICE OF CHANGE OF ADMINISTRATOR'S ADDRESS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[34] (effective 1 March 2017).) REGULATION 5.3A.05 5.3A.05 ADMINISTRATOR'S NOTICE TO OWNER OR LESSOR OF PROPERTY - HOW GIVEN
A notice under subsection 443B(3) of the Act must be given to the owner or lessor, as the case may be, by personal delivery or by prepaid post to the owner's or lessor's usual place of residence or business or the place of residence or business last known to the administrator. REGULATION 5.3A.06 5.3A.06 PROVISIONS INCLUDED IN DEED OF COMPANY ARRANGEMENT
For subsection 444A(5) of the Act, the prescribed provisions are those set out in Schedule 8A. REGULATION 5.3A.06A NOTICE OF RESOLUTION TO WIND UP VOLUNTARILY 5.3A.06A(1)
This regulation is made for paragraph 446A(5)(b) of the Act.
5.3A.06A(2)
The notice must be published by the end of the next business day after a liquidator is appointed to administer the winding up of the company.
(Repealed by FRLI No F2016L01926, r 4, Sch 1[83] (effective 1 September 2017).) REGULATION 5.3A.07 5.3A.07 ADMINISTRATOR BECOMES LIQUIDATOR - ADDITIONAL CASES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[35] (effective 1 March 2017).) REGULATION 5.3A.07A NOTICE OF APPOINTMENT OF ADMINISTRATOR 5.3A.07A(1)
This regulation is made for paragraph 450A(1)(b) of the Act.
5.3A.07A(2)
The information about an appointment that is to be set out in a notice is at least the following information:
(a) the name of the company;
(b) any trading name of the company;
(c) the ACN of the company;
(d) the section of the Act or, in the case of a combined notice, the sections of the Act under which the notice is being given;
(e) the name and contact details of the administrator;
(f) the date on which the administrator was appointed;
(g) the section of the Act under which the administrator was appointed.
5.3A.07A(3)
The period within which the notice is to be published is 3 business days after an administrator is appointed.
(Repealed by SLI 2007 No 325, Sch 1[2] (effective 31 December 2007).) REGULATION 5.3A.09 5.3A.09 PUBLICATION OF NOTICE OF TERMINATION OF DEED BY CREDITORS
(Repealed by SLI 2007 No 325, Sch 1[2] (effective 31 December 2007).) REGULATION 5.3A.50 PRESCRIBED KINDS OF CONTRACTS, AGREEMENTS OR ARRANGEMENTS UNDER WHICH RIGHTS ARE NOT SUBJECT TO THE STAY IN SECTION 451E OF THE ACT 5.3A.50(1)
For the purposes of subparagraph 451E(5)(b)(i) of the Act, each of the kinds of contracts, agreements or arrangements referred to in subregulation (2) is prescribed.
5.3A.50(2)
The kinds of contracts, agreements or arrangements are as follows: (a) an agreement (within the meaning of the Convention defined in section 3 of the International Interests in Mobile Equipment (Cape Town Convention) Act 2013); (b) a contract, agreement or arrangement that is a licence, permit or approval issued by:
(i) the Commonwealth, a State or a Territory; or
(ii) an authority of the Commonwealth or of a State or a Territory; or
(c) a contract, agreement or arrangement relating to Australia's national security, border protection or defence capability; (d) a contract, agreement or arrangement for the supply of goods or services to a public hospital or a public health service; (e) a contract, agreement or arrangement for the supply of goods or services by or on behalf of a public hospital or a public health service; (f) a contract, agreement or arrangement for the supply of essential or critical goods or services to, or the carrying out of essential or critical works for:
(iii) a local governing body established by or under a law of a State or Territory;
(i) the Commonwealth, a State or a Territory; or
(ii) an authority of the Commonwealth or of a State or a Territory; or
(iii) a local governing body established by or under a law of a State or Territory; or
(iv) the public on behalf of an entity covered by subparagraph (i), (ii) or (iii);
Note: Examples of these essential or critical goods, services or works include public transport services, public security or safety services, and works affecting essential public infrastructure.
(g) a contract, agreement or arrangement that is, or is directly connected with, a derivative; (h) a contract, agreement or arrangement that is, or is directly connected with, a securities financing transaction; (i) a contract, agreement or arrangement for the underwriting of an issue, or sale, of securities, financial products, bonds, promissory notes, or syndicated loans; (j) a contract, agreement or arrangement under which a party is or may be liable to subscribe for, or to procure subscribers for, securities, financial products, bonds, promissory notes, or syndicated loans; (k) a contract, agreement or arrangement that is, or governs, securities, financial products, bonds, promissory notes, or syndicated loans; (l) a contract, agreement or arrangement under which securities are offered, or may be offered, under a rights issue; (m) a contract, agreement or arrangement for the sale of all or part of a business, including by way of the sale of securities or financial products; (n) a contract, agreement or arrangement for the issue of an instrument that:
(i) is a security, financial product, bond, promissory note, or syndicated loan; and
(o) a contract, agreement or arrangement that is, or is directly connected with, a margin lending facility; (p) a contract, agreement or arrangement that is:
(ii) belongs to a class of such instruments, each of which is fungible, and the first of which was issued before 1 July 2018;
(i) a covered bond (within the meaning of the Banking Act 1959); or
(ii) for issuing such a bond; or
(q) a contract, agreement or arrangement providing for the management of financial investments; (r) a contract, agreement or arrangement that involves a special purpose vehicle, and that provides for securitisation or a public-private partnership; (s) a contract, agreement or arrangement that involves a special purpose vehicle, and that provides for a project finance arrangement under which:
(iii) directly connected with such a bond or the issuing of such a bond;
(i) a financial accommodation is to be repaid or otherwise discharged primarily from the project's cash flow; and
(t) a contract, agreement or arrangement for the keeping in escrow of:
(ii) all or substantially all of the project's assets, rights and interests are to be held as security for the financial accommodation;
(i) code, or passwords, for computer software; or
(u) a contract, agreement or arrangement for the commercial charter of a ship if:
(ii) material directly associated with such code or passwords;
(i) the ship is not an Australian ship (within the meaning of the Shipping Registration Act 1981); and
(v) a contract, agreement or arrangement under which the priority of security interests in particular property is changed or can change; (w) a contract, agreement or arrangement that is a flawed asset arrangement; (x) a contract, agreement or arrangement that is, or is directly connected with, a factoring arrangement (within the meaning of the ASIC Corporations (Factoring Arrangements) Instrument 2017/794); (y) a contract, agreement or arrangement that is the operating rules (other than the listing rules) of a financial market;
(ii) the charter is by an Australian national (within the meaning of that Act) for the purposes of exporting goods from Australia, or from an external Territory, to another country;
Note: The operating rules of a licensed market are a contract, see subsection 793B(1) of the Act.
(z) a contract, agreement or arrangement that is the operating rules of a clearing and settlement facility;Note: The operating rules of a licensed CS facility are a contract, see subsection 822B(1) of the Act.
(za) a contract, agreement or arrangement that confers rights on the operator of a financial market, or the operator of a clearing and settlement facility, in relation to the operation of the market or facility; (zb) a contract, agreement or arrangement of which the parties include the Reserve Bank of Australia and the operator of a clearing and settlement facility; (zc) a contract, agreement or arrangement under which participants in a clearing and settlement facility may settle obligations on behalf of other participants in the facility; (zd) a legally enforceable arrangement referred to in paragraph 9(1)(b) of the Payment Systems and Netting Act 1998 that supports an approved RTGS system (within the meaning of that Act);Note: The arrangement includes the rules that are part of that arrangement.
(ze) an approved netting arrangement (within the meaning of the Payment Systems and Netting Act 1998);Note: The arrangement includes the rules that are part of that arrangement.
(zf) a contract, agreement or arrangement that confers rights on:
(i) the operator of an approved RTGS system (within the meaning of the Payment Systems and Netting Act 1998); or
(ii) the coordinator of an approved netting arrangement (within the meaning of that Act);
in relation to the operation of that system or netting arrangement;
(zg) a contract, agreement or arrangement under which the parties to an arrangement covered by paragraph (zd) or (ze) (the main arrangement ) may settle obligations on behalf of other parties to the main arrangement; (zh) a close-out netting contract (within the meaning of the Payment Systems and Netting Act 1998); (zi) a contract, agreement or arrangement under which security is given over financial property (within the meaning of the Payment Systems and Netting Act 1998) in respect of eligible obligations (within the meaning of that Act) of a party to a contract covered by paragraph (zh); (zj) a netting market (within the meaning of the Payment Systems and Netting Act 1998); (zk) a market netting contract (within the meaning of the Payment Systems and Netting Act 1998); (zl) a contract, agreement or arrangement under which security is given, in accordance with a market netting contract covered by paragraph (zk), in respect of obligations of a party to the market netting contract; (zm) a contract, agreement or arrangement that is an outsourcing arrangement for the purposes of Prudential Standard CPS 231 Outsourcing or Prudential Standard SPS 231 Outsourcing;Note 1: In 2018, Prudential Standard CPS 231 Outsourcing was set out in the Banking, Insurance and Life Insurance (prudential standard) determination No. 6 of 2016.
Note 2: In 2018, Prudential Standard SPS 231 Outsourcing was set out in the Superannuation (prudential standard) determination No. 3 of 2012.
(zn) a contract, agreement or arrangement entered into or renewed on or after 1 July 2018, but before 1 July 2023, as a result of either of the following:
(i) the novation of, or the assignment of one or more rights under, a contract, agreement or arrangement entered into before 1 July 2018;
(zo) a contract, agreement or arrangement entered into on or after 1 July 2018, but before 1 July 2023, for the provision of any of the following kinds of work, goods or services for a particular project:
(ii) a variation of a contract, agreement or arrangement entered into before 1 July 2018;
(i) building work (within the meaning of the Federal Safety Commissioner Act 2022);
(ii) work to be carried out anywhere in Australia that, if carried out in New South Wales, would be covered by paragraph 5(1)(d) or (f) of the Building and Construction Industry Security of Payment Act 1999 (NSW) and not be excluded by subsection 5(2) of that Act;
(iii) goods or services to be provided anywhere in Australia that, if provided in New South Wales, would be related goods and services (within the meaning of the Building and Construction Industry Security of Payment Act 1999 (NSW));
if the total payments under all contracts, agreements or arrangements for the project for work, goods or services of those kinds is at least $1 billion;
(zp) a contract, agreement or arrangement that:
(i) is entered into to enable the satisfactory completion of a contract, agreement or arrangement covered by paragraph (zo); and
(zq) a contract, agreement or arrangement that is for reinsurance or retrocession.
(ii) is for the provision of a kind of work, goods or services covered by that paragraph.
In this Part, unless the contrary intention appears:
accepted
, in relation to a proposal to make a restructuring plan, has the meaning given by subregulation 5.3B.25(1).
admissible debt or claim
, in relation to a company under restructuring or a company's restructuring plan, means a debt or claim that would be admissible to proof against the company under subsection 553(1) of the Act if:
(a) the company were wound up; and
(b) the relevant date were:
(i) if the company is under restructuring - the beginning of the restructuring; and
(ii) if the company has made a restructuring plan - the beginning of the restructuring that ended when the plan was made;
but does not include:
(c) the entitlements of an employee of the company; or
(d) a debt or claim that would be admissible to proof under subsection 553(1A) of the Act.
Note: Employee entitlements are defined in subsections 596AA(2) and (3) of the Act and include superannuation contributions payable by the company.
(a) in relation to a proposal to vary or terminate a company's restructuring plan - a creditor of the company who is a party (as creditor) to the plan; or
(b) in relation to a proposal by a company to make a restructuring plan - a person who would be a party to the restructuring plan if it were made.
excluded creditor
, in relation to a company under restructuring, means a creditor of the company who:
(a) is the restructuring practitioner for the company; or
(b) was, at the time the restructuring began, a related creditor of the company; or
(c) was, on becoming an affected creditor, a related entity of the restructuring practitioner.
make
, in relation to a restructuring plan, has the meaning given by regulation 5.3B.26.
proposal period
, in relation to a company under restructuring, has the meaning given by regulation 5.3B.17.
propose
, in relation to a restructuring plan, has the meaning given by regulation 5.3B.14.
related creditor
of a company means a person who is a related entity, and a creditor, of the company.
restructuring proposal statement
means a statement made by a company under regulation 5.3B.16.
For the purposes of paragraph 453A(b) of the Act, the restructuring of a company ends if: (a) the company makes a declaration under subregulation (2); or (b) the company fails to propose a restructuring plan within the proposal period; or (c) the company's proposal to make a restructuring plan lapses under regulation 5.3B.20; or (d) the restructuring practitioner for the company terminates the restructuring under section 453J of the Act; or (e) the Court orders that the restructuring of the company is to end; or (f) an administrator of the company is appointed under section 436A, 436B or 436C of the Act; or (g) a liquidator or provisional liquidator of the company is appointed; or
(h) (Repealed)
(i) (Repealed) (j) the company makes a restructuring plan.
5.3B.02(2)
The directors of a company under restructuring: (a) may make a declaration in writing that the restructuring of the company is to end on a specified day for any reason; and (b) must give a copy of the declaration to:
(i) the company's restructuring practitioner; and
(ii) the company's creditors;
before the day specified in the declaration.
For the purposes of paragraph 453C(1)(a) of the Act, the test for eligibility is that on the day the restructuring begins the total liabilities of the company to pay any admissible debts and claims must not exceed $1 million.
5.3B.03(2)
For the purposes of paragraph 453C(1)(b) of the Act, a period of 7 years is prescribed.
5.3B.03(3)
For the purposes of paragraph 453C(1)(c) of the Act, a period of 7 years is prescribed.
5.3B.03(4)
For the purposes of paragraph 453C(2)(b) of the Act, a prescribed circumstance is that: (a) the other company is a related body corporate of the company in relation to which the eligibility criteria are to be met; and (b) the other company is, or has been:
(i) under restructuring; or
(c) if subparagraph (b)(i) applies - the restructuring practitioner for the other company was appointed no more than 20 business days before the day on which the restructuring of the company in relation to which the eligibility criteria are to be met began; and (d) if subparagraph (b)(ii) applies - the other company began to follow the simplified liquidation process no more than 20 business days before the day on which the restructuring of the company in relation to which the eligibility criteria are to be met began.
(ii) the subject of a simplified liquidation process; and
5.3B.03(5)
(Repealed by FRLI No F2023L01458, Sch 1[81] (effective 1 November 2023).)
For the purposes of subsection 453L(4) of the Act, this regulation prescribes the circumstances in which entering into a transaction or dealing by a company is to not be treated as in the ordinary course of the company's business.
5.3B.04(2)
The circumstances are as follows: (a) the transaction or dealing is for the purposes of satisfying an admissible debt or claim; (b) the transaction or dealing relates to the transfer or sale of the whole or a part of the business; (c) the transaction or dealing relates to the payment of a dividend.
This regulation applies if the restructuring practitioner for a company under restructuring consents to a transaction or dealing under paragraph 453L(2)(b) of the Act.
5.3B.05(2)
The consent must be given: (a) in writing; or (b) if the restructuring practitioner is satisfied that the delay caused by giving a written consent would not be in the best interests of the company's creditors as a whole - orally.
5.3B.05(3)
If the consent is given in writing, the written consent must specify any conditions imposed on the consent.
5.3B.05(4)
If the consent is given orally, the restructuring practitioner must, within 2 business days after the day on which the consent is given: (a) make a written record of the consent and any conditions imposed on the consent; and (b) provide a copy of the written record to the company.
5.3B.05(5)
The restructuring practitioner must keep a record of the consent for 5 years after the day on which the consent is given.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
For the purposes of paragraph 453J(3)(b) of the Act, the following information is prescribed: (a) the following details about the company:
(i) the name of the company;
(ii) any trading name of the company;
(iii) the ACN of the company;
(iv) the address of the company's registered office;
(v) any website maintained by or on behalf of the company;
(b) the following details about the restructuring practitioner:
(vi) the company's email address (if any);
(i) the restructuring practitioner's name;
(ii) the address and telephone number of the principal place where the restructuring practitioner practises as a registered liquidator;
(iii) if the restructuring practitioner practises as a registered liquidator as a member of a firm or under a name or style other than the person's own name - the name of that firm or the name or style under which the person practises;
(c) the day on which the restructuring of the company began; (d) the day on which the notice is given to the company; (e) the reason for terminating the restructuring of the company; (f) the signature of the restructuring practitioner; (g) any other information that the restructuring practitioner considers appropriate.
(iv) the Registered Liquidator Number for the restructuring practitioner as specified on the Register of Liquidators;
This Subdivision is made for the purposes of subsection 453E(2) of the Act.
The restructuring practitioner for a company under restructuring has the power to investigate the company's business, property, affairs and financial circumstances for the purposes of: (a) preparing a declaration under regulation 5.3B.18; or (b) deciding whether to terminate the restructuring of the company; or (c) resolving a disagreement under regulation 5.3B.22; or (d) performing or exercising any other function, duty or power as restructuring practitioner for the company.
This regulation applies in relation to a restructuring practitioner for a company (the replacement practitioner) who is appointed under subsection 456E(1) of the Act.
Replacement practitioner must resolve existing creditor disputes
5.3B.09(2)
If: (a) before the appointment, a notice was given under subregulation 5.3B.22(2) to the restructuring practitioner for the company (the former practitioner ) setting out a creditor's disagreement with the schedule of debts and claims included with the company's restructuring proposal statement; and (b) at the time of the appointment, the former practitioner has not given notice under subregulation 5.3B.22(6) or (7) in relation to the disagreement;
the replacement practitioner must give the notice under subregulation 5.3B.22(6) or (7), as the case requires, as soon as practicable after the appointment.
Replacement practitioner must lodge outstanding notices etc.
5.3B.09(3)
If: (a) before the appointment, a restructuring practitioner for the company was required to do a thing under Subdivision B or C of Division 5; and (b) at the time of the appointment, the thing has not been done;
the replacement practitioner must do the thing within 2 business days after the day on which the replacement practitioner is appointed.
(Repealed by FRLI No F2021L01847, Sch 1[11] (effective 21 December 2021).) REGULATION 5.3B.11 5.3B.11 PROTECTION FROM LIABILITY
A person who is or has been the restructuring practitioner for a company under restructuring is not subject to any liability to any person in respect of anything done, or omitted to be done, in good faith and without negligence in the exercise or performance, or the purported exercise or performance, of powers, functions or duties under the Act or these regulations relating to the restructuring of the company.
For the purposes of subparagraph 454N(5)(c)(i) of the Act, each of the kinds of contracts, agreements or arrangements referred to in subregulation 5.3A.50(2) is prescribed.
Unless otherwise specified, this Division is made under section 455B of the Act.
A company under restructuring proposes a restructuring plan if: (a) the company prepares:
(i) a restructuring plan that complies with the requirements in regulation 5.3B.15; and
(b) the company executes the restructuring plan during the proposal period; and (c) the company's restructuring practitioner prepares and signs a declaration in accordance with regulation 5.3B.18; and (d) the restructuring practitioner gives a copy of the restructuring plan, restructuring proposal statement and declaration in accordance with subregulation 5.3B.21(1); and (e) immediately before the restructuring practitioner gives the copies in accordance with subregulation 5.3B.21(1), regulation 5.3B.24 is satisfied in relation to the company.
(ii) a restructuring proposal statement that complies with the requirements in regulation 5.3B.16; and
5.3B.14(2)
For the purposes of subsection 455A(3) of the Act, the company is taken to have proposed the restructuring plan on the day the company's restructuring practitioner does the things mentioned in paragraph (1)(d).
A company under restructuring must prepare a restructuring plan that complies with the requirements of this regulation.
5.3B.15(2)
The restructuring plan must: (a) be in the form approved under regulation 5.3B.65 (if any); and (b) identify the company's property that is to be dealt with; and (c) specify how the property is to be dealt with; and (d) provide for the remuneration of the restructuring practitioner for the plan; and (e) specify the date on which the restructuring plan was executed.
5.3B.15(3)
The restructuring plan may: (a) authorise the restructuring practitioner for the plan to deal with the identified property in the way specified in the plan; and (aa) provide that, when performing a function or duty, or exercising a power, as restructuring practitioner for the plan, the restructuring practitioner is taken to act as agent for and on behalf of the company; and (b) provide for any matter relating to the company's financial affairs; and (c) be expressed to be conditional on the occurrence of a specified event within a specified period of no longer than 10 business days after the day on which the proposal to make the restructuring plan is accepted.
5.3B.15(4)
The restructuring plan must not: (a) provide for the transfer of property (other than money) to a creditor; or (b) provide for the company to make payments under the plan, in respect of an admissible debt or claim, after 3 years beginning on the day the plan is made.
A restructuring plan must be accompanied by a restructuring proposal statement.
5.3B.16(2)
The restructuring proposal statement must: (a) include a schedule of debts and claims; and (b) be in the form approved under regulation 5.3B.65 (if any); and (c) contain such information as the form requires.
The proposal period , in relation to a company that is under restructuring, is the period of 20 business days beginning on the day the restructuring begins.
Restructuring practitioner may extend proposal period
5.3B.17(2)
The company's restructuring practitioner may, on application by the company, extend the proposal period by no more than 10 business days if the restructuring practitioner is satisfied on reasonable grounds that requiring the company to give arestructuring plan within the proposal period would not be reasonable in the circumstances.
5.3B.17(3)
The restructuring practitioner may not extend the proposal period more than once under subregulation (2).
Court may extend proposal period
5.3B.17(4)
The Court may, on application by the company, order an extension of the proposal period.
Notification of extension
5.3B.17(5)
Within 2 business days after the day on which the proposal period is extended under subregulation (2) or (4), the restructuring practitioner must: (a) lodge with ASIC notice of the extension:
(i) in the prescribed form (if any); and
(b) give a copy of the notice to as many of the company's creditors as reasonably practicable.
(ii) in accordance with subregulation 5.6.75(4); and
As soon as practicable after a company executes a restructuring plan, the company's restructuring practitioner must make a declaration in accordance with this regulation.
5.3B.18(2)
The declaration must: (a) if the restructuring practitioner believes on reasonable grounds that:
(i) the eligibility criteria for restructuring are met in relation to the company; and
(ii) if the restructuring plan is made, the company is likely to be able to discharge the obligations created by the plan as and when they become due and payable;
state that; and
(b) if the restructuring practitioner believes on reasonable grounds that all information required to be set out in the company's restructuring proposal statement has been set out in that statement - state that; and (c) if the restructuring practitioner does not believe on reasonable grounds a matter mentioned in paragraph (a) or (b) - identify the matter in relation to which a belief on reasonable grounds could not be formed and set out the reasons for that conclusion; and (d) if, at the time a person became an affected creditor, the person was a related entity of the restructuring practitioner - specify the name of the affected creditor and the nature of the relationship between the affected creditor and the restructuring practitioner.Note: A declaration must not be false or misleading in a material particular, or omit anything that would render it materially false or misleading: see section 1308 of the Act.
5.3B.18(3)
The declaration must be signed by the restructuring practitioner.
Offence
5.3B.18(4)
The restructuring practitioner for a company commits an offence if: (a) the restructuring practitioner prepares a declaration under this regulation; and (b) the restructuring practitioner does not:
(i) make reasonable inquiries into the company's business, property, affairs and financial circumstances; or
(ii) take reasonable steps to verify the company's business, property, affairs and financial circumstances;
for the purpose of assessing the accuracy and completeness of the information provided by the company in the restructuring plan and restructuring proposal statement.
Penalty: 50 penalty units.
5.3B.18(5)
An offence based on subregulation (4) is an offence of strict liability.
The restructuring practitioner for a company under restructuring commits an offence if: (a) at any time before the restructuring practitioner prepares a declaration under regulation 5.3B.18 in relation to the company's restructuring plan:
(i) the restructuring practitioner becomes aware that the information in the plan, or in the restructuring proposal statement that accompanies the plan, is incomplete or inaccurate; and
(b) the restructuring practitioner does not, as soon as practicable after becoming so aware:
(ii) the restructuring practitioner has reasonable grounds to believe that, if the plan is made, the matter to which the incompleteness or inaccuracy relates is likely to affect the company's ability to meet its obligations under the plan; and
(i) notify the company of the incompleteness or inaccuracy; and
(ii) provide an opportunity for the company to address the incompleteness or inaccuracy.
Penalty: 50 penalty units.
5.3B.19(2)
An offence based on subregulation (1) is an offence of strict liability.
A company's proposal to make a restructuring plan lapses if: (a) the restructuring plan is not accepted in accordance with subregulation 5.3B.25(1); or (b) the company's restructuring practitioner cancels the proposal to make the plan in accordance with subregulation (2).
5.3B.20(2)
The restructuring practitioner for a company may cancel the company's proposal to make a restructuring plan if, before the restructuring plan is made, the restructuring practitioner: (a) becomes aware that the information in the plan is incomplete or inaccurate, and has reasonable grounds to believe that, if the plan is made, the matter to which the incompleteness or inaccuracy relates is likely to affect the company's ability to meet its obligations under the plan; or (b) becomes aware that one or more affected creditors were not disclosed in the company's restructuring proposal statement; or (c) becomes aware that the company's restructuring proposal statement was deficient because it omitted a material particular or because it was incorrect in a material particular; or (d) becomes aware of a material change in the company's circumstances that:
(i) was not foreshadowed in the company's restructuring proposal statement; and
(ii) in the opinion of the restructuring practitioner, is capable of affecting an affected creditor's decision whether or not to accept the restructuring plan.
As soon as practicable after a company executes a restructuring plan, the restructuring practitioner for the company must do the following: (a) give to as many of the company's affected creditors as reasonably practicable a copy of:
(i) the company's restructuring plan; and
(ii) the restructuring plan standard terms; and
(iii) the company's restructuring proposal statement; and
(b) ask each affected creditor to:
(iv) the declaration prepared by the restructuring practitioner under regulation 5.3B.18;
(i) give a written statement setting out whether or not the restructuring plan should be accepted; and
(ii) if the creditor agrees with the company's assessment of the amount of the creditor's admissible debts or claims - verify the creditor's admissible debts or claims as set out in the schedule of debts and claims included with the restructuring proposal statement; and
(c) inform each affected creditor of the person to whom the statement should be given and of the need to give the statement before the end of the acceptance period.
(iii) if the creditor disagrees with the company's assessment of the amount of the creditor's admissible debts or claims - notify the restructuring practitioner in accordance with regulation 5.3B.22;
5.3B.21(2)
Paragraphs (1)(b) and (c) do not apply in relation to an excluded creditor.
Definitions
5.3B.21(3)
In this regulation:
(a) the period of 15 business days beginning on the day the company's restructuring practitioner gives documents in accordance with subregulation (1); or
(b) if creditors are given a notice under paragraph 5.3B.22(7)(d) - the longer of:
(i) the period of 15 business days beginning on the day the company's restructuring practitioner gives documents in accordance with subregulation (1) of this regulation; and
(ii) the period beginning on the day the company's restructuring practitioner gives documents in accordance with subregulation (1) of this regulation and ending on the last day of the period of 5 business days after the day on which the notice under paragraph 5.3B.22(7)(d) is given; or
(c) such other period as the Court orders under regulation 5.3B.60.
restructuring plan standard terms
means the terms specified in subregulation 5.3B.27(1).
This regulation applies in relation to a person if: (a) the person is a creditor of a company that is proposing to make a restructuring plan; and (b) the plan has not been made; and (c) the person disagrees with the schedule of debts and claims included with the company's restructuring proposal statement because:
(i) the person's admissible debts or claims are not specified; or
(ii) the company's assessment of the person's admissible debts or claims is incorrect; or
(iii) the person is incorrectly specified as an excluded creditor.
Creditor may notify restructuring practitioner of disagreement
5.3B.22(2)
The person may give written notice of the disagreement to the company's restructuring practitioner.
5.3B.22(3)
The notice: (a) may be given:
(i) if the person received a copy of the plan - within 5 business days after the day on which the person receives the plan; or
(ii) if the person otherwise became aware of the plan - within 5 business days after the day on which the person becomes so aware; or
(b) if the disagreement relates to the person's admissible debts or claims:
(iii) after the period specified in subparagraph (i) or (ii), if the notice includes a statement setting out the person's reasons for not giving the notice within that period; and
(i) must include detailed particulars of the debt or claim sought to be proved; and
(ii) in the case of a debt, must include a statement of account; and
(c) if the disagreement relates to the person's status as an excluded creditor - must include detail sufficient to resolve the disagreement.
(iii) must specify the vouchers (if any) by which the statement can be substantiated; and
5.3B.22(4)
The restructuring practitioner may, after receiving the notice, request that the person or the directors of the company: (a) give the restructuring practitioner information about the company's business, property, affairs and financial circumstances; and (b) verify the information by statutory declaration.
Restructuring practitioner may refuse to consider disagreement
5.3B.22(5)
If the notice is given after the period specified in subparagraph (3)(a)(i) or (ii), the restructuring practitioner may refuse to consider the disagreement if the restructuring practitioner is satisfied that the person did not take all reasonable steps to give notice within that period.
5.3B.22(6)
If the restructuring practitioner refuses to consider the disagreement: (a) the restructuring practitioner is taken to have recommended that the schedule of debts and claims not be varied; and (b) the restructuring practitioner must give written notice to the company and the person setting out the restructuring practitioner's reasons for the refusal; and (c) subregulation (7) does not apply.
Restructuring practitioner must resolve disagreement as soon as practicable
5.3B.22(7)
If: (a) a person gives notice under subregulation (2) of a disagreement to the restructuring practitioner for a company; and (b) the restructuring practitioner has not refused to consider the disagreement under subregulation (5);
the restructuring practitioner must:
(c) give written notice to the company and the person:
(i) setting out the restructuring practitioner's recommendations for resolving the disagreement; and
(d) if the restructuring practitioner recommends that the schedule of debts and claims be varied and is of the opinion that the variation is significant - give written notice to the company and as many of the company's creditors as reasonably practicable:
(ii) giving reasons for the recommendations; and
(i) stating that fact; and
(ii) outlining the creditors' rights under regulation 5.3B.23.
5.3B.22(8)
If the restructuring practitioner recommends that the schedule of debts and claims be varied, the company must vary the schedule in accordance with the recommendation as soon as practicable.
This regulation applies if: (a) a company proposes to make a restructuring plan; and (b) an affected creditor of the company gave a statement under paragraph 5.3B.21(1)(b) in relation to the plan.
5.3B.23(2)
At any time before the end of the acceptance period, the creditor may: (a) withdraw the statement; and (b) give a new statement under paragraph 5.3B.21(1)(b) in relation to the plan.
5.3B.23(3)
A statement may be withdrawn, and a new statement may be given, more than once before the end of the acceptance period.
Definitions
5.3B.23(4)
In this regulation:
acceptance period
has the same meaning as in subregulation 5.3B.21(3).
This regulation is satisfied in relation to a company under restructuring if: (a) the company has:
(i) paid the entitlements of its employees that are payable; and
(b) the company is substantially complying with the matter concerned.
(ii) given returns, notices, statements, applications or other documents as required by taxation laws (within the meaning of the Income Tax Assessment Act 1997); or
Note: Employee entitlements are defined in subsections 596AA(2) and (3) of the Act and include superannuation contributions payable by the company.
When restructuring plan is accepted
5.3B.25(1)
A company's restructuring plan is accepted if, at the end of the last day of the acceptance period, the majority in value of those creditors from whom the restructuring practitioner for the plan has received a statement under paragraph 5.3B.21(1)(b) stated that the restructuring plan should be accepted.
5.3B.25(2)
For the purposes of subregulation (1): (a) the value of an affected creditor is to be worked out:
(i) by reference to the value of the creditor's admissible debts or claims that are known at the time the restructuring began; or
(b) where there have been mutual credits, mutual debts or other mutual dealings between the company and an affected creditor:
(ii) if a person is an affected creditor because the person purchased another creditor's admissible debts or claims - by reference to the value of the purchase price; and
(i) an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and
(ii) the sum due from the one party is to be set off against any sum due from the other party; and
(c) disregard an affected creditor who is an excluded creditor.
(iii) the value of the affected creditor is to be worked out only by reference to the balance of the account; and
Note: For the purposes of subparagraph (a)(ii), the purchase price would normally be the price stated in the contract for the purchase of the admissible debt or claim. However, if the amount paid by the person is different from the price stated in the contract, then the purchase price would be the amount that was actually paid.
Offence
5.3B.25(3)
A person commits an offence if: (a) the person gives, or agrees or offers to give, to an affected creditor any valuable consideration; and (b) the person does so with the intention of securing the affected creditor's acceptance or non-acceptance of the restructuring plan.
Penalty: 50 penalty units.
5.3B.25(4)
(Repealed by FRLI No F2022L01627, Sch 1[16] (effective 13 December 2022).)
Definitions
5.3B.25(5)
In this regulation:
acceptance period
has the same meaning as in subregulation 5.3B.21(3).
If a company's proposal to make a restructuring plan is accepted in accordance with regulation 5.3B.25, the company is taken to have made the restructuring plan.
5.3B.26(2)
The restructuring plan is taken to have been made : (a) if the plan is expressed to be conditional on the occurrence of a specified event within a specified period and the event occurs within that period - on the day after the end of that period; and (b) otherwise - on the day after the end of the acceptance period.
5.3B.26(3)
A restructuring plan that has been made has the same force and validity as if it were a deed executed by each of the parties to the plan.
Definitions
5.3B.26(4)
In this regulation:
acceptance period
has the same meaning as in subregulation 5.3B.21(3).
A restructuring plan made by a company is taken to include all of the following terms: (a) all admissible debts and claims rank equally; (b) if the total amount paid by the company under the plan in respect of those debts or claims is insufficient to meet those debts or claims in full, those debts or claims will be paid proportionately; (c) a creditor is not entitled to receive, in respect of an admissible debt or claim, more than the amount of the debt or claim; (d) the amount of an admissible debt or claim will be ascertained as at the time immediately before the restructuring began; (e) if a creditor is a secured creditor:
(i) if the creditor does not realise the creditor's security interest while the plan is in force, the creditor is taken, for the purposes of working out the amount payable to the creditor under the plan, to be a creditor only to the extent (if any) by which the amount of the creditor's admissible debt or claim exceeds the value of the creditor's security interest; and
(ii) if the creditor realises the creditor's security interest while the plan is in force, the creditor is taken, for the purposes of working out the amount payable to the creditor under the plan, to be a creditor only to the extent of any balance due to the creditor after deducting the net amount realised.
5.3B.27(2)
A restructuring plan is void to the extent that it is inconsistent with any of the matters set out in subregulation (1).
The parties to a restructuring plan are: (a) the company to which the plan relates; and (b) any person who has an admissible debt or claim in relation to the plan.
This regulation applies on and after the day on which a restructuring plan is made in relation to a company.
5.3B.29(2)
The plan is binding on: (a) subject to subregulations (3) and (4) - a creditor of the company to the extent that the creditor has an admissible debt or claim in relation to the plan; and (b) the company; and (c) the company's officers and members; and (d) the restructuring practitioner for the plan.
5.3B.29(3)
If a creditor of the company is a secured creditor, the plan is binding on the creditor: (a) if the value of the creditor's security interest is less than the value of the creditor's admissible debts or claims - only to the extent of the difference between the values; and (b) if the value of the creditor's security interest is equal to or more than the value of the creditor's admissible debts or claims - only to the extent that the creditor consents to be bound by the plan.
5.3B.29(4)
The fact that a restructuring plan has been made does not prevent a secured creditor from realising or otherwise dealing with the security interest, unless: (a) the secured creditor accepted the proposal to make the plan and the plan prevents the secured creditor from doing so; or (b) the Court so orders under subregulation 5.3B.64(2).
5.3B.29(5)
The fact that a restructuring plan has been made does not affect a right that an owner or lessor of property has in relation to that property, unless: (a) the owner or lessor accepted the proposal to make the plan and the plan affects that right; or (b) the Court so orders under subregulation 5.3B.64(4).
5.3B.29(6)
Subregulation (5) does not apply in relation to an owner or lessor of PPSA retention of title property of the company.
Note: Subregulation (3) applies in relation to an owner or lessor of PPSA retention of title property of the company. Such an owner or lessor is a secured creditor of the company (see section 51F of the Act (meaning of PPSA retention of title property )).
Until a restructuring plan terminates, this regulation applies to a person bound by the plan.
5.3B.30(2)
A person bound by the plan cannot: (a) make an application for an order to wind up the company on the basis of an admissible debt or claim; or (b) proceed with such an application made before the plan became binding on the person.
5.3B.30(3)
A person bound by the plan cannot: (a) begin or proceed with a proceeding against the company or in relation to any of its property to recover an admissible debt or claim; or (b) begin or proceed with an enforcement process in relation to property of the company to recover an admissible debt or claim;
except:
(c) with the leave of the Court; and (d) in accordance with such terms (if any) as the Court imposes.5.3B.30(4)
(Repealed by FRLI No F2023L01458, Sch 1[77] (effective 1 November 2023).)
A company's restructuring plan terminates: (a) on the day on which all of the following conditions are satisfied:
(i) the company's obligations under the plan have been fulfilled;
(ii) the obligations of any other party to the plan have been fulfilled;
(b) if the Court makes an order under regulation 5.3B.63 terminating the plan - on the day the Court determines and specifies in the order; or (c) if both of the following conditions are satisfied:
(iii) all admissible debts or claims have been dealt with in accordance with the plan; or
(i) the plan is expressed to be subject to the occurrence of a specified event within a specified period of no longer than 10 business days after the day on which the plan is made;
(ii) the event does not occur within that period;
on the next business day after the end of that period; or
(d) if both of the following conditions are satisfied:
(i) there has been a contravention of the plan by a person bound by the plan;
(ii) the contravention has not been rectified within the period of 30 business days beginning on the day the contravention occurred;
on the next business day after the end of that period; or
(e) on the day on which an administrator of the company is appointed under section 436A, 436B or 436C of the Act; or (f) on the day on which a liquidator or provisional liquidator of the company is appointed;whichever happens first.
5.3B.31(2)
If a company's restructuring plan terminates because of the happening of the event mentioned in paragraph (1)(a): (a) the company is entitled to any property that was subject to the plan but that was not required by the plan to be distributed to creditors; and (b) the company is released from all admissible debts or claims.
5.3B.31(3)
If a company's restructuring plan terminates because of the happening of an event mentioned in paragraph (1)(b), (c), (d), (e) or (f), any admissible debt or claim that has not been dealt with in accordance with the plan is taken to be due and payable on the business day after the day on which the termination occurs.
The termination or avoidance, in whole or in part, of a restructuring plan does not affect the validity of anything that was done in good faith under the plan by a person before the person had notice of the termination or avoidance.
If a company under restructuring makes a restructuring plan, the company's restructuring practitioner is to be the restructuring practitioner for the restructuring plan unless the company, by resolution of the board, appoints someone else to be the restructuring practitioner for the plan.
Where the restructuring practitioner for a company's restructuring plan: (a) dies; or (b) becomes prohibited from acting as restructuring practitioner for the plan; or (c) resigns by notice in writing given to the company;
the appointer may appoint someone else as restructuring practitioner for the restructuring plan.
5.3B.34(2)
In subregulation (1):
appointer
, in relation to the restructuring practitioner for a company's restructuring plan, means:
(a) if the restructuring practitioner was appointed by the Court under Division 90 of Schedule 2 to the Act (review of the external administration of a company) or subregulation (4) of this regulation - the Court; or
(b) the company.
5.3B.34(3)
An appointment under subregulation (1) by the company must be made by resolution of the board.
5.3B.34(4)
Where a company has made a restructuring plan, but for some reason no restructuring practitioner for the plan is acting, the Court may appoint a person as restructuring practitioner for the plan on the application of ASIC or of an officer, member or creditor of the company.
This regulation applies in relation to a person if:
(a) the person is the restructuring practitioner for a company's restructuring plan; and
(b) either:
(i) the person was not the company's restructuring practitioner immediately before the person was appointed as the restructuring practitioner for the plan; or
(ii) the person was appointed as the restructuring practitioner for the plan under subregulation 5.3B.34(1) otherwise than by the Court.
5.3B.35(2)
As soon as practicable after being appointed, the person must make a declaration of relevant relationships.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.35(3)
The person must give a copy of the declaration under subregulation (2) to as many of the company's creditors as reasonably practicable.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.35(4)
As soon as practicable after making a declaration under subregulation (2), the person must lodge a copy of the declaration with ASIC.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.35(5)
In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this regulation, it is a defence if the defendant proves that: (a) the defendant made reasonable enquiries; and (b) after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration.
If: (a) at a particular time, the restructuring practitioner for a company's restructuring plan makes a declaration of relevant relationships under section 453D of the Act or regulation 5.3B.35; and (b) at a later time:
(i) the declaration has become out-of-date; or
(ii) the restructuring practitioner becomes aware of an error in the declaration;
the restructuring practitioner must, as soon as practicable, make a replacement declaration of relevant relationships.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.36(2)
The restructuring practitioner must give a copy of the replacement declaration under subregulation (1) to as many of the company's creditors as reasonably practicable.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.36(3)
As soon as practicable after making a replacement declaration under subregulation (1), the person must lodge a copy of the replacement declaration with ASIC.
Note: Failure to comply with this subregulation is an offence (see subsection 1311(1) of the Act).
5.3B.36(4)
In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this regulation, it is a defence if the defendant proves that: (a) the defendant made reasonable enquiries; and (b) after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration.
The functions of the restructuring practitioner for a company's restructuring plan are: (a) to receive money from, and hold money on trust for, the company; and (b) to pay the money to creditors in accordance with the plan; and (c) if requested to do so by the company's directors:
(i) to realise the property of the company that is available to pay creditors in accordance with the plan; and
(d) to answer questions about the performance or exercise of any of the restructuring practitioner's functions and powers as restructuring practitioner for the plan; and (e) to do anything that is incidental to the performance or exercise of those functions and powers; and (f) to do anything else that is necessary or convenient for the purpose of administering the plan.
(ii) to distribute the proceeds of the realisation of the property among the creditors in accordance with the plan; and
This regulation applies in relation to a restructuring practitioner for a restructuring plan (the replacement practitioner ) who is appointed under subregulation 5.3B.34(1).
5.3B.38(2)
If: (a) before the appointment, a restructuring practitioner for the plan was required to do a thing under:
(i) Division 4; or
(b) at the time of the appointment, the thing has not been done;
(ii) Subdivision B or C of Division 5; and
the replacement practitioner must do the thing within:
(c) 2 business days after the day on which the replacement practitioner is appointed; or (d) if the requirement arose because the restructuring practitioner was given notice or became aware of a thing - within 2 business days after the day on which the replacement practitioner is given the notice or becomes so aware.The restructuring practitioner for a company's restructuring plan must not dispose of: (a) property of the company that is subject to a security interest; or (b) property (other than PPSA retention of title property) that is used or occupied by, or is in the possession of, the company but of which someone else is the owner or lessor.
Note: PPSA retention of title property is subject to a PPSA security interest, and so is covered by paragraph (a) (see definition of PPSA retention of title property in section 51F of the Act).
5.3B.39(2)
Subregulation (1) does not prevent a disposal: (a) in the ordinary course of the company's business; or (b) with the written consent of the secured party, owner or lessor, as the case may be; or (c) with the leave of the Court.
5.3B.39(3)
The Court may only give leave under paragraph (2)(c) if satisfied that arrangements have been made to adequately protect the interests of the secured party, owner or lessor, as the case may be.
5.3B.39(4)
If the restructuring practitioner proposes to dispose of property under paragraph (2)(a), the Court may, by order, direct the restructuring practitioner not to carry out that proposal.
5.3B.39(5)
The Court may only make an order under subregulation (4) on the application of: (a) if paragraph (1)(a) applies - the secured party; or (b) if paragraph (1)(b) applies - the owner or lessor, as the case may be.
5.3B.39(6)
The Court may only make an order under subregulation (4) if it is not satisfied that arrangements have been made to protect adequately the interests of the applicant for the order.
5.3B.39(7)
If: (a) a company has made a restructuring plan that has not terminated; and (b) property of the company is subject to a security interest; and (c) the restructuring practitioner disposes of the property;
the disposal extinguishes the security interest.
5.3B.39(8)
For the purposes of paragraph (2)(a), if: (a) property is used or occupied by, or is in the possession of, a company; and (b) another person is the owner of the property; and (c) either:
(i) the property is PPSA retention of title property; or
(d) the owner demands the return of the property;
(ii) the property is subject to a retention of title clause under a contract; and
a disposal of the property that occurs after the demand is made does not mean that the disposal is not in the ordinary course of the company's business.
(Repealed by FRLI No F2021L01847, Sch 1[13] (effective 21 December 2021).) REGULATION 5.3B.41 5.3B.41 RESTRUCTURING PRACTITIONER HAS QUALIFIED PRIVILEGE
(Repealed by FRLI No F2021L01847, Sch 1[13] (effective 21 December 2021).) REGULATION 5.3B.42 5.3B.42 PROTECTION FROM LIABILITY
A person who is or has been the restructuring practitioner for a company's restructuring plan is not subject to any liability to any person in respect of anything done, or omitted to be done, in good faith and without negligence in the exercise or performance, or the purported exercise or performance, of powers, functions or duties under the Act or these regulations relating to the plan.
A person who is or has been the restructuring practitioner for a company's restructuring plan is entitled to be indemnified out of the company's property (other than any PPSA retention of title property subject to a PPSA security interest that is perfected within the meaning of the Personal Property Securities Act 2009) for: (a) any debts or liabilities incurred, or damages or losses sustained, in good faith and without negligence, by the restructuring practitioner:
(i) in the performance or purported performance of the restructuring practitioner's functions or duties; or
(b) the remuneration to which the restructuring practitioner is entitled under Insolvency Practice Rules made under Subdivision DA of Division 60 of Schedule 2 to the Act.
(ii) in the exercise or purported exercise of the restructuring practitioner's powers; and
General rule
5.3B.44(1)
Subject to section 556 of the Act, a right of indemnity under regulation 5.3B.43 has priority over: (a) all the company's unsecured debts; and (b) any debts of the company secured by a PPSA security interest in property of the company if, when the restructuring of the company begins, the security interest is vested in the company because of the operation of any of the following provisions:
(i) section 267 or 267A of the Personal Property Securities Act 2009 (property subject to unperfected security interests);
(c) subject otherwise to this section - debts of the company secured by a circulating security interest in property of the company.
(ii) section 588FL of the Act (collateral not registered within time); and
Debts secured by circulating security interests - receiver appointed before the beginning of restructuring etc.
5.3B.44(2)
A right of indemnity under regulation 5.3B.43 does not have priority over debts of the company that are secured by a circulating security interest in property of the company, except so far as the secured party agrees, if: (a) before the making of the restructuring plan, the secured party:
(i) appointed a receiver of property of the company under a power contained in an instrument relating to the security interest; or
(ii) obtained an order for the appointment of a receiver of property of the company for the purpose of enforcing the security interest; or
(iii) entered into possession, or assumed control, of property of the company for that purpose; or
(b) the receiver or person is still in office, or the secured party is still in possession or control of the property.
(iv) appointed a person so as to enter into possession or assume control (whether as agent for the secured party or for the company); and
Debts secured by circulating security interests - receiver appointed after restructuring plan made etc.
5.3B.44(3)
Subregulation (4) applies if: (a) debts of the company are secured by a circulating security interest in property of the company; and (b) after the company's restructuring plan is made, the secured party, consistently with Part 5.3B of the Act:
(i) appoints a receiver of property of the company under a power contained in an instrument relating to the security interest; or
(ii) obtains an order for the appointment of a receiver of property of the company for the purpose of enforcing the security interest; or
(iii) enters into possession, or assumes control, of property of the company for that purpose; or
(iv) appoints a person to enter into possession or assume control (whether as agent for the secured party or for the company).
5.3B.44(4)
A right of indemnity of the restructuring practitioner under regulation 5.3B.43 has priority over those debts only in so far as it is a right of indemnity for debts incurred, or remuneration accruing, before written notice of the appointment, or of the entering into possession or assuming of control, as the case may be, was given to the restructuring practitioner.
Debts secured by circulating security interests - priority over right of indemnity in relation to repayment of money borrowed etc.
5.3B.44(5)
A right of indemnity under regulation 5.3B.43 does not have priority over debts of the company that are secured by a circulating security interest in property of the company, except so far as the secured party consents in writing, to the extent that the right of indemnity relates to debts incurred for: (a) the repayment of money borrowed; or (b) interest in respect of money borrowed; or (c) borrowing costs.
To secure a right of indemnity under regulation 5.3B.43, the restructuring practitioner has a lien on the company's property.
5.3B.45(2)
A lien under subregulation (1) has priority over another security interest only in so far as the right of indemnity under regulation 5.3B.43 has priority over debts secured by the other security interest.
This Division is made for the purposes of subsection 456G(1) of the Act.
The directors of a company that has made a restructuring plan that has not terminated must, within 2 business days after the day on which the directors become aware of the happening of an event mentioned in subregulation (4), give written notice of the event to the restructuring practitioner for the plan.
5.3B.47(2)
The restructuring practitioner must, within 2 business days after the day on which the restructuring practitioner receives the notice: (a) lodge with ASIC notice in the prescribed form (if any) of the happening of the event; and (b) give a copy of the notice to as many of the company's creditors as reasonably practicable.
5.3B.47(3)
If: (a) a restructuring practitioner for the plan (the replacement practitioner ) is appointed under subregulation 5.3B.34(1); and (b) at the time of the appointment, notice of the happening of the event has not been lodged or given in accordance with subregulation (2);
the directors must give written notice of the event to the replacement practitioner within 2 business days after the day on which the replacement practitioner is appointed.
5.3B.47(4)
The events that must be notified are as follows: (a) an administrator of the company is appointed under section 436A, 436B or 436C of the Act; (b) a liquidator or provisional liquidator of the company is appointed.
This Division is made for the purposes of section 457A of the Act.
Within 5 business days after the day on which the restructuring of a company begins or such longer period as the company's restructuring practitioner allows, the directors of the company must give to the restructuring practitioner a declaration in accordance with this regulation.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
5.3B.49(2)
The declaration must: (a) be in the form approved under regulation 5.3B.65 (if any); and (b) state whether, in the directors' opinion, there are reasonable grounds to believe that the company has entered into a transaction that would be voidable under section 588FE of the Act if:
(i) the company were being wound up because the company had resolved by special resolution that it be wound up voluntarily; and
(ii) the resolution had been passed on the day on which the declaration is given; and
(iii) the company were under restructuring immediately before the company passed the resolution; and
(iv) the relation-back day were the day on which the restructuring of the company began;
other than a transaction that would be an unfair preference; and
(c) state whether, in the directors' opinion, there are reasonable grounds to believe that the eligibility criteria for restructuring were met in relation to the company at the time the restructuring began, and set out the reasons for that opinion.Note: A declaration must not be false or misleading in a material particular, or omit anything that would render it misleading in a material respect: see section 1308 of the Act.
5.3B.49(3)
The declaration must be signed by each director of the company.
Within 1 business day after the day on which a restructuring practitioner for a company is appointed, the restructuring practitioner must lodge with ASIC notice of the appointment: (a) in the prescribed form (if any); and (b) in accordance with subregulation 5.6.75(4).
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
5.3B.50(2)
Within 1 business day after the day on which a restructuring practitioner for a company is appointed, the restructuring practitioner must give information about the following to as many of the company's creditors as reasonably practicable: (a) the fact that the restructuring practitioner has been appointed in relation to the company; (b) the name of the company; (c) any trading name of the company; (d) the ACN of the company; (e) the name and contact details of the restructuring practitioner; (f) the date on which the restructuring practitioner was appointed; (g) the restructuring process and the process of making a restructuring plan, including:
(i) the proposal period in relation to the company; and
(ii) the amount of time in which an affected creditor may decide whether a proposed restructuring plan should be accepted; and
(h) how a person may obtain further information about the restructuring process and the process of making a restructuring plan; (i) the right of creditors to request information, reports and documents under sections 70-40 and 70-45 of Schedule 2 to the Act.
(iii) how an affected creditor may verify or dispute the creditor's admissible debts or claims;
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Within 2 business days after the day on which the appointment of a person as restructuring practitioner for a company terminates, notice in the prescribed form (if any) of the termination must be lodged with ASIC: (a) if the termination is because of the death of the person - by the company; and (b) otherwise - by the person.
Within 2 business days after the day on which the restructuring practitioner for a company gives, in accordance with subregulation 5.3B.21(1), a copy of: (a) the company's restructuring plan; and (b) the company's restructuring proposal statement; and (c) the declaration prepared by the restructuring practitioner under regulation 5.3B.18;
the restructuring practitioner must lodge with ASIC in the prescribed form (if any):
(d) the plan; and (e) the restructuring proposal statement; and (f) the declaration.If the restructuring of a company ends because of the happening of an event mentioned in subregulation 5.3B.02(1), the person who was the restructuring practitioner for the company immediately before the restructuring ended must, within 2 business days after the day on which the event happens: (a) lodge with ASIC notice in the prescribed form (if any) of:
(i) the ending of the restructuring; and
(b) give a copy of the notice to as many of the company's creditors as reasonably practicable.
(ii) the reason for the ending; and
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Within 2 business days after the day on which a restructuring practitioner for a restructuring plan is appointed, the restructuring practitioner must lodge with ASIC notice of the appointment: (a) in the prescribed form (if any); and (b) in accordance with subregulation 5.6.75(4).
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
If a company makes a restructuring plan, the restructuring practitioner for the plan must, within 2 business days after the day on which the plan is made: (a) give to as many of the company's creditors as reasonably practicable a written notice:
(i) stating that the plan has been made; and
(b) lodge with ASIC notice in the prescribed form (if any) of the making of the plan, including information about:
(ii) specifying the day on which the plan was made; and
(i) the total value of the debts and claims set out in the schedule of debts and claims included with the company's restructuring proposal statement; and
(ii) the number of affected creditors to whom the restructuring practitioner gave a copy of the documents mentioned in paragraph 5.3B.21(1)(a); and
(iii) the proportion in value of affected creditors that gave, before the end of the acceptance period, a statement under paragraph 5.3B.21(1)(b) that the plan should be accepted.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Director to notify restructuring practitioner
5.3B.56(1)
If a director of a company that has made a restructuring plan becomes aware that: (a) there has been a contravention of the plan by a person bound by the plan (who may be the director); or (b) there is likely to be a contravention of the plan by a person bound by the plan (who may be the director);
the director must, within 2 business days after the day on which the director becomes aware of the contravention or likely contravention, give written notice of the contravention or likely contravention to the restructuring practitioner for the plan.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Restructuring practitioner to notify company's creditors
5.3B.56(2)
If the restructuring practitioner for a restructuring plan receives notice under subregulation (1), or otherwise becomes aware, that: (a) there has been a contravention of the plan by a person bound by the plan (who may be the restructuring practitioner); or (b) there is likely to be a contravention of the plan by a person bound by the plan (who may be the restructuring practitioner);
the restructuring practitioner must, within 2 business days after the day on which the restructuring practitioner receives the notice or becomes so aware:
(c) lodge with ASIC notice in the prescribed form (if any) of the contravention or likely contravention; and (d) give a copy of the notice to as many of the company's creditors as reasonably practicable.Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
If a company's restructuring plan terminates because of the happening of the event mentioned in paragraph 5.3B.31(1)(a): (a) the directors of the company must, within 2 business days after the day on which the directors become aware of the happening of the event, give written notice of the termination to the person (the former practitioner ) who was the restructuring practitioner for the plan immediately before the termination; and (b) the former practitioner must, within 2 business days after the day on which the former practitioner receives the notice:
(i) lodge with ASIC notice in the prescribed form (if any) of the termination; and
(ii) give a copy of the notice to as many of the company's creditors as reasonably practicable.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
5.3B.57(2)
If a company's restructuring plan terminates because of the happening of an event mentioned in paragraph 5.3B.31(1)(b), (c), (d), (e) or (f): (a) the directors of the company must, within 2 business days after the day on which the directors become aware of the happening of the event, give written notice of the termination and the reason for the termination to the person (the former practitioner ) who was the restructuring practitioner for the plan immediately before the termination; and (b) the former practitioner must, within 2 business days after the day on which the former practitioner receives the notice:
(i) lodge with ASIC notice in the prescribed form (if any) of the termination and the reason for the termination; and
(ii) give a copy of the notice to as many of the company's creditors as reasonably practicable.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Within 2 business days after the day on which the appointment of a person as restructuring practitioner for a company's restructuring plan terminates, notice in the prescribed form (if any) of the termination must be lodged with ASIC: (a) if the termination is because of the death of the person - by the company; and (b) otherwise - by the person.
This Division is made for the purposes of subsection 458B(1) of the Act.
This regulation applies if: (a) a company proposes to make a restructuring plan; and (b) a person notifies the company's restructuring practitioner under subregulation 5.3B.22(2) that the person disagrees with the schedule of debts and claims included with the company's restructuring proposal statement; and (c) the restructuring practitioner:
(i) refuses to consider the disagreement under subregulation 5.3B.22(5); or
(ii) makes, or refuses to make, a recommendation under subregulation 5.3B.22(7) to vary the schedule of debts and claims.
5.3B.60(2)
The Court may, on the application of the company or a creditor of the company, make one or more of the following orders: (a) that the restructuring practitioner consider the disagreement and make a recommendation in accordance with subregulation 5.3B.22(7); (b) that the schedule of debts and claims be varied as set out in the order; (c) that the acceptance period for the proposal to make the restructuring plan be extended.
5.3B.60(3)
If the Court makes an order under subregulation (2), the restructuring practitioner must, within 2 business days after the day on which the order is made: (a) lodge with ASIC notice in the prescribed form (if any):
(i) setting out the terms of the order; and
(b) give a copy of the notice to as many of the company's creditors as reasonably practicable.
(ii) outlining the creditors' rights under regulation 5.3B.23; and
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
A restructuring plan that has been made by a company must not be varied except in accordance with this regulation.
5.3B.61(2)
The Court may make an order varying a restructuring plan: (a) on its own initiative; or (b) on the application of:
(i) the company; or
(ii) an affected creditor; or
(iii) the restructuring practitioner for the plan; or
(iv) ASIC.
Voiding of restructuring plan
5.3B.62(1)
The Court may make an order declaring that all or part of a company's restructuring plan is void if the Court is satisfied that: (a) there are reasonable grounds to believe that the plan, or a part of the plan, was not made in accordance with, or does not comply with, the Act or these regulations; or (b) the restructuring practitioner for the plan has committed a breach of duty in relation to the plan; or (c) the restructuring practitioner for the plan has breached a condition of the restructuring practitioner's registration as a liquidator; or (d) the restructuring practitioner for the plan has breached a condition imposed under section 20-35 of Schedule 2 to the Act, to the extent that the condition relates to restructuring plans.
5.3B.62(2)
The Court may make any other order that it thinks appropriate in relation to the declaration.
Validity of plan despite contravention
5.3B.62(3)
The Court may make an order declaring that all or part of a company's restructuring plan is valid, despite a contravention of a provision of the Act or these regulations, if the Court is satisfied that: (a) the provision was substantially complied with; and (b) no injustice will result for anyone bound by the plan if the contravention is disregarded.
Applications for orders under this regulation
5.3B.62(4)
The Court may make an order under this regulation on the application of: (a) the company; or (b) an affected creditor; or (c) the company's restructuring practitioner; or (d) ASIC.
5.3B.62(5)
However, an application for an order under this regulation must not be made if the plan has terminated because of paragraph 5.3B.31(1)(a).
The Court may make an order terminating a company's restructuring plan if the Court is satisfied that: (a) information about the company's business, property, affairs or financial circumstances that:
(i) was false or misleading; and
(ii) can reasonably be expected to have been material to the affected creditors in deciding whether to accept the plan;
was contained in the plan or the restructuring proposal statement that accompanied the plan; or
(b) there was an omission from the plan or statement and the omission can reasonably be expected to have been material to such creditors in so deciding; or (c) there has been a material contravention of the plan by a person bound by the plan; or (d) effect cannot be given to the plan without injustice or undue delay; or (e) the plan or a provision of it is, an act or omission done or made under the plan was, or an act or omission proposed to be so done or made would be contrary to the interests of the creditors of the company as a whole; or (f) the plan should be terminated for some other reason.5.3B.63(2)
The Court may make an order under this regulation: (a) on its own initiative; or (b) on the application of:
(i) the company; or
(ii) an affected creditor; or
(iii) the restructuring practitioner for the company or for the plan; or
(iv) ASIC.
This regulation applies where: (a) a company is under restructuring; or (b) a company makes a restructuring plan that has not terminated.
5.3B.64(2)
Subject to subsection 454C(3) of the Act, the Court may order a secured creditor of the company not to realise or otherwise deal with the security interest, except as permitted by the order.
5.3B.64(3)
The Court may only make an order under subregulation (2) if satisfied that: (a) for the creditor to realise or otherwise deal with the security interest would have a material adverse effect on achieving the purposes of the plan; and (b) having regard to:
(i) the terms of the plan; and
(ii) the terms of the order; and
(iii) any other relevant matter;
the creditor's interests will be adequately protected.
5.3B.64(4)
The Court may order the owner or lessor of property that is used or occupied by, or is in the possession of, the company not to take possession of the property or otherwise recover it.
5.3B.64(5)
Subregulation (4) does not apply in relation to PPSA retention of title property of the company.
5.3B.64(6)
The Court may only make an order under subregulation (4) if satisfied that: (a) for the owner or lessor to take possession of the property or otherwise recover it would have a material adverse effect on achieving the purposes of the plan; and (b) having regard to:
(i) the terms of the plan; and
(ii) the terms of the order; and
(iii) any other relevant matter;
the interests of the owner or lessor will be adequately protected.
5.3B.64(7)
An order under this regulation may be made subject to conditions.
5.3B.64(8)
An order under this regulation may only be made on the application of: (a) if paragraph (1)(a) applies - the restructuring practitioner for the company; or (b) if paragraph (1)(b) applies - the restructuring practitioner for the plan.
ASIC may, in writing, approve a form for the purposes of a provision of this Part.
(Repealed) REGULATION 5.4.01AAA MEANING OF STATUTORY MINIMUM AND STATUTORY PERIOD - PRESCRIBED AMOUNTS 5.4.01AAA(1)
For the purposes of paragraph (a) of the definition of statutory minimum in section 9 of the Act, the amount prescribed is: (a) in relation to a company that is eligible for temporary restructuring relief - $20,000; and (b) otherwise - $4,000.
5.4.01AAA(2)
For the purposes of paragraph (a) of the definition of statutory period in section 9 of the Act, the period prescribed is: (a) in relation to a company that is eligible for temporary restructuring relief - 6 months; and (b) otherwise - 21 days.
5.4.01AAA(3)
Paragraphs (1)(a) and (2)(a) do not apply in relation to statutory demands served on or after 1 August 2021.
The Australian Prudential Regulation Authority is a prescribed agency for paragraph 459P(1)(g) of the Act. REGULATION 5.4.01A NOTICE OF APPLICATION TO WIND UP A COMPANY 5.4.01A(1)
This regulation is made for paragraph 465A(1)(c) of the Act.
5.4.01A(2)
The information about an application that is to be set out in a notice is at least the following information: (a) if the rules of court require particular information to be published for the application and the court has not dispensed with publication under the rules of court - that information; (b) if the rules of court do not require particular information to be published, or the court has dispensed with publication under the rules of court:
(i) the name of the company; and
(ii) any trading name of the company; and
(iii) the ACN of the company; and
(iiia) if paragraph 465A(1)(c) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund; and
(iv) the date on which the application was filed; and
(v) the identifying number allocated by the court when the application was filed; and
(vi) the name of the applicant; and
(vii) the address for service of the applicant; and
(viii) the name and address of the court where the application will be heard; and
(ix) the time and date of the court hearing; and
(x) the way in which documents that are filed in relation to the application may be obtained.
Note: If paragraph 465A(1)(c) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this sub-regulation's references to the company so that they are references to the sub-fund.
This regulation is made for the purposes of subsection 465A(2) of the Act.
5.4.01B(2)
The information about an order by the Court that must be set out in a notice is at least the following information: (a) the Court that made the order; (b) the date the order was made; (c) the name of the liquidator appointed to administer the winding up; (d) the name of the company; (e) any business name of the company; (f) any ABN of the company; (g) any ACN of the company; (h) if subsection 465A(2) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund.
Note: If subsection 465A(2) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this sub-regulation's references to the company so that they are references to the sub-fund.
For paragraph 477(2A)(a) of the Act, the amount of $100,000 is prescribed.
For subparagraph 489EA(6)(b)(ii) of the Act, this regulation prescribes the manner of publishing notice of ASIC's intention to make an order under subsection 489EA(1), (2), (3) or (4) of the Act.
5.4C.01(2)
Notice is to be published on the publication website, established under subsection 5.6.75(1), at least 10 business days before ASIC makes the order.
This regulation is made for paragraph 491(2)(b) of the Act.
5.5.01(2)
The information about a resolution that is to be set out in a notice is at least the following information: (a) the name of the company; (b) any business name of the company; (c) the ACN of the company; (ca) if paragraph 491(2)(b) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund; (d) the section of the Act under which the notice is being given; (e) the name and contact details of the liquidator; (f) the date on which the resolution was passed.
5.5.01(3)
The notice must be published by the end of the next business day after a liquidator is appointed to administer the winding up of the company.
Note: If paragraph 491(2)(b) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this regulation's references to the company so that they are references to the sub-fund.
For the purposes of subsection 498(3) of the Act, the following information is prescribed: (a) whether, in the directors' opinion, there are reasonable grounds to believe that the company has entered into a transaction that would be voidable under section 588FE of the Act, other than a transaction that would be an unfair preference; (b) whether, in the directors' opinion, there are reasonable grounds to believe that, on the declaration being given, the eligibility criteria for the simplified liquidation process will be met in relation to the company, and the reasons for that opinion.
For the purposes of paragraph 500AA(1)(d) of the Act, the test for eligibility is that the total liabilities of the company on the day on which the triggering event occurred must not exceed $1 million.
5.5.03(2)
For the purposes of paragraph 500AA(1)(e) of the Act, a period of 7 years is prescribed.
5.5.03(3)
For the purposes of paragraph 500AA(1)(f) of the Act, a period of 7 years is prescribed.
5.5.03(4)
For the purposes of paragraph 500AA(2)(b) of the Act, a prescribed circumstance is that: (a) the other company is a related body corporate of the company in relation to which the eligibility criteria are to be met; and (b) the other company is, or has been:
(i) under restructuring; or
(c) if subparagraph (b)(i) applies - the restructuring practitioner for the other company was appointed no more than 20 business days before the day on which the company in relation to which the eligibility criteria are to be met began to follow the simplified liquidation process; and (d) if subparagraph (b)(ii) applies - the other company began to follow the simplified liquidation process no more than 20 business days before the day on which the company in relation to which the eligibility criteria are to be met began to follow the simplified liquidation process.
(ii) the subject of a simplified liquidation process; and
5.5.03(5)
For the purposes of paragraph 500AA(2)(c) of the Act, a prescribed circumstance is that: (a) the company has been under restructuring; and (b) the restructuring terminated no more than 20 business days before the day on which the company began to follow the simplified liquidation process.
5.5.03(6)
(Repealed by FRLI No F2023L01458, Sch 1[82] (effective 1 November 2023).)
This regulation is made for the purposes of paragraph 500AE(3)(b) of the Act.
5.5.04(2)
An unfair preference of a company is not voidable despite subsection 588FE(2) of the Act, provided either subregulation (3) or (4) is satisfied.
5.5.04(3)
This subregulation is satisfied if: (a) the company is subject to the simplified liquidation process; and (b) the transaction was entered into, or an act was done for the purposes of giving effect to it, before the day that is 3 months before the relation-back day; and (c) no creditor under the transaction is a related entity of the company.
5.5.04(4)
This subregulation is satisfied if: (a) the company is subject to the simplified liquidation process; and (b) the transaction was entered into, or an act was done for the purposes of giving effect to it:
(i) during the 3 months ending on the relation-back day; or
(c) either:
(ii) after that day but on or before the day when the winding up began; and
(i) the transaction results in the creditor receiving from the company no more than $30,000 in value; or
(d) no creditor under the transaction is a related entity of the company.
(ii) if the transaction forms part of a series of related transactions, all of the related transactions result in the creditor receiving from the company no more than $30,000 in value; and
This regulation is made for the purposes of paragraph 500AE(3)(f) of the Act and applies in relation to the liquidator of a company that is subject to the simplified liquidation process.
5.5.05(2)
If, in the opinion of the liquidator, there are reasonable grounds to believe that: (a) a past or present officer or employee, or a member or contributory, of the company; or (b) a person who has taken part in the formation, promotion, administration, management or winding up of the company;
may have engaged in conduct constituting an offence under a law of the Commonwealth or a State or Territory in relation to the company that has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole, the liquidator must:
(c) as soon as practicable, and in any event within 6 months, after first forming the opinion, lodge with ASIC a report in the prescribed form (if any) with respect to the matter and state in the report whether the liquidator proposes to make an application for an examination or order under section 597 of the Act; and (d) give ASIC such information, and give to it such access to and facilities for inspecting and taking copies of any documents, as ASIC requires.5.5.05(3)
The liquidator may also, if the liquidator thinks fit, lodge further reports specifying any other matter that, in the liquidator's opinion, it is desirable to bring to the notice of ASIC.
5.5.05(4)
If it appears to the Court, in the course of winding up a company, that: (a) a person mentioned in paragraph (2)(a) or (b) has engaged in conduct constituting an offence under a law of the Commonwealth or a State or Territory in relation to the company that has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole; and (b) the liquidator has not lodged with ASIC a report with respect to the matter;
the Court may, on the application of a person interested in the winding up, direct the liquidator to lodge such a report.
This regulation is made for the purposes of paragraph 500AE(3)(f) of the Act.
5.5.06(2)
If the liquidator of a company adopts the simplified liquidation process on a day, the liquidator must, within 2 business days after that day, lodge with ASIC: (a) notice in the prescribed form (if any) of the adoption; and (b) a copy of the declaration given by the directors of the company to the liquidator in accordance with section 498 of the Act.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
For the purposes of paragraph 500AC(1)(b) of the Act, a prescribed circumstance is that the liquidator believes on reasonable grounds that: (a) the company, or a director of the company, has engaged in conduct; and (b) the conduct involved fraud or dishonesty; and (c) the conduct has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole.
5.5.07(2)
The liquidator is taken to have ceased to follow the simplified liquidation process on the day on which the liquidator first held the belief.
This regulation is made for the purposes of subsection 500AC(2) of the Act.
Notice of cessation of process
5.5.08(2)
If the liquidator of a company ceases to follow the simplified liquidation process on a day, the liquidator must, within 2 business days after that day, lodge with ASIC notice in the prescribed form (if any) of the cessation.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Validity of things done during process
5.5.08(3)
Subject to this regulation, the cessation of the simplified liquidation process in relation to a company does not affect the validity of anything that was done in good faith in relation to the company before the cessation.
Reports by liquidator
5.5.08(4)
If, at any time during the simplified liquidation process, it appeared to the liquidator that one or more of the circumstances in paragraph 533(1)(a), (b) or (c) existed, section 533 of the Act applies in relation to the liquidator as if paragraph 533(1)(d) were modified by omitting "within 6 months" and substituting "within 6 months after the day on which the simplified liquidation process in relation to the company ended".
For the purposes of paragraph 500AD(b) of the Act, a person who is a related entity, and a creditor, of the company is not to be taken into account.
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.02 5.6.02 INSPECTION OF BOOKS KEPT UNDER SECTION 531 OF THE ACT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.06 5.6.06 PAYMENT INTO LIQUIDATOR'S GENERAL ACCOUNT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.07 5.6.07 DEPOSIT OF SECURITIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.08 5.6.08 DELIVERY OF SECURITIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.09 5.6.09 SPECIAL BANK ACCOUNT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.10 5.6.10 PAYMENTS OUT OF LIQUIDATOR'S GENERAL ACCOUNT
(Repealed by FRLI No F2016L01926, r 4, Sch 1[89] (effective 1 September 2017).) REGULATION 5.6.11 5.6.11 MEANING OF PROOF OF DEBT OR CLAIM
In regulations 5.6.37 to 5.6.57, unless the contrary intention appears:
proof of debt or claim
includes a statement of particulars of a debt or claim submitted in accordance with regulation 5.6.39, as well as a formal proof of debt or claim.
(Repealed by FRLI No F2020L01654, Sch 4[1] (effective 22 December 2020).) REGULATION 5.6.12 5.6.12 NOTICE OF MEETING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.13 5.6.13 PROOF OF NOTICE
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.13A 5.6.13A IF TELEPHONE CONFERENCE FACILITIES ARE AVAILABLE
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.13B 5.6.13B PERSONS, OR THEIR PROXIES OR ATTORNEYS, PARTICIPATING BY TELEPHONE
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.14 5.6.14 TIME AND PLACE OF MEETING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.14A 5.6.14A ADVERTISEMENT OF A MEETING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.14B 5.6.14B MEETINGS NOT CONVENED IN ACCORDANCE WITH REGULATIONS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.15 5.6.15 COSTS OF CONVENING MEETINGS OF CREDITORS ETC
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.16 5.6.16 QUORUM
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.17 5.6.17 CHAIRPERSON
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.18 5.6.18 ADJOURNMENT OF MEETING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.19 5.6.19 VOTING ON RESOLUTIONS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.20 5.6.20 TAKING A POLL
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.21 5.6.21 CARRYING OF RESOLUTIONS AFTER A POLL HAS BEEN DEMANDED AT A MEETING OF CREDITORS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.22 5.6.22 CARRYING OF RESOLUTION AFTER A POLL HAS BEEN DEMANDED AT A MEETING OF CONTRIBUTORIES OR MEMBERS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.23 5.6.23 CREDITORS WHO MAY VOTE
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.23A 5.6.23A VOTING STATUS OF PERSONS BY WHOM MONEY IS ADVANCED TO A COMPANY
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.24 5.6.24 VOTES OF SECURED CREDITORS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.26 5.6.26 ADMISSION AND REJECTION OF PROOFS FOR PURPOSES OF VOTING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.27 5.6.27 MINUTES OF MEETING
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.28 5.6.28 APPOINTMENT OF PROXIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.29 5.6.29 FORM OF PROXIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.30 5.6.30 INSTRUMENTS OF PROXY
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.31 5.6.31 PROXY FORMS TO ACCOMPANY NOTICE OF MEETINGS
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.31A 5.6.31A PERSON MAY ATTEND AND VOTE BY ATTORNEY
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.32 5.6.32 LIQUIDATOR ETC MAY ACT AS PROXY
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.33 5.6.33 VOTING BY PROXY IF FINANCIALLY INTERESTED
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.34 5.6.34 LIQUIDATOR ETC MAY APPOINT DEPUTY
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.36 5.6.36 TIME FOR LODGING PROXIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.36A 5.6.36A FACSIMILE COPIES OF PROXIES
(Repealed by FRLI No F2016L01926, r 4, Sch 1[94] (effective 1 September 2017).) REGULATION 5.6.37 5.6.37 ESTABLISHING TITLE TO PRIORITY
Regulations 5.6.39 to 5.6.57 (inclusive) apply to the establishment of a title to priority as if it were a debt or claim.
[ CCH Note: There is no regulation 5.6.38.]
Companies not subject to the simplified liquidation process
5.6.39(1)
Subject to subregulations (1A) and (1B), a liquidator may from time to time fix a day, not less than 14 days after the day on which notice is given in accordance with subregulation (2), on or before which a creditor may submit particulars of his or her debt or claim.
Companies subject to the simplified liquidation process
5.6.39(1A)
Subregulation (1) does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
5.6.39(1B)
A liquidator of a company that is subject to the simplified liquidation process must fix a single day that is 14 days after the day on which notice is given in accordance with subregulation (2), on or before which a creditor may submit particulars of his or her debt or claim.
Notice requirements
5.6.39(2)
A notice under subregulation (1) or (1B) must be lodged with ASIC in accordance with subregulation 5.6.75(4).
5.6.39(3)
A notice under subregulation (1) or (1B) must state at least the following information: (a) the name of the company; (b) any trading name of the company; (c) the ACN of the company; (ca) if Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund; (d) the day fixed under subregulation (1) or (1B), as the case requires.
5.6.39(4)
A notice under subregulation (1B) may include a requirement that all, or a specified class, of debts or claims must be proved formally.
Note: If Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this regulation's references to the company so that they are references to the sub-fund.
A proof of debt or claim may be prepared by the creditor personally or by a person authorised by the creditor.
5.6.40(2) [Authorised person]A proof prepared by an authorised person must state his or her authority and means of knowledge.
REGULATION 5.6.41 5.6.41 DISCLOSURE OF SECURITYA proof of debt or claim must state:
(a) whether the creditor is or is not a secured creditor; and
(b) the value and nature of the creditor's security (if any); and
(c) whether the debt is secured wholly or in part. REGULATION 5.6.42 5.6.42 DISCOUNTS
In preparing a proof of debt or claim, a creditor must allow for all discounts for which an allowance would have been made if the company were not being wound up. REGULATION 5.6.43 PERIODICAL PAYMENTS 5.6.43(1) [Proof of debt]
(a) falls due at stated times; and
(b) the relevant date is a time other than one of those times;
the person entitled to the rent or other payment may submit a proof of debt or claim for a proportionate part of the rent or other payment, up to the date of the winding up order or resolution, as if the rent or payment accrued from day to day.
5.6.43(2) [Liquidator in control of premises]If the liquidator remains in control of premises rented to a company that is being wound up, subregulation (1) does not affect the right of the landlord of the premises to claim payment of rent by the company or the liquidator during the period of the company's occupation or the liquidator's control.
REGULATION 5.6.43A DEBT OR CLAIM OF UNCERTAIN VALUE - APPEAL TO COURT 5.6.43A(1)An appeal to the Court under subsection 554A(3) of the Act must be made: (a) within 21 days after the person aggrieved becomes aware of the liquidator's estimate or, if the period is extended under subregulation (2), within the extended period; and (b) in accordance with the rules of court.
5.6.43A(2)
On application by the person aggrieved before or after the end of the period of 21 days mentioned in subregulation (1), the Court may extend the period within which an appeal must be made.
REGULATION 5.6.44 5.6.44 DEBT DISCOUNT RATE (ACT s 554B)
The discount by which the amount payable on the future date is to be reduced under section 554B of the Act is 8% a year calculated from the declaration of the dividend to the time when the debt would have become payable according to the terms on which it was contracted. REGULATION 5.6.45 EMPLOYEES' WAGES 5.6.45(1) [One proof of debt]
If the employees of a company make demands:
(a) for wages or salaries (whether or not earned wholly or in part by way of commission), whether or not payable to the employees for annual leave or long service leave; or
(b) for retrenchment payments;
one proof of debt or claim may be prepared and submitted on behalf of those employees.
5.6.45(2) [Names of employees]A proof of debt or claim prepared and submitted under subregulation (1):
(a) must have annexed to it a schedule setting out the names of the employees and the amounts due to each of them; and
(b) has the same effect as if separate proofs had been prepared and submitted by each of the employees named in the schedule. REGULATION 5.6.46 5.6.46 PRODUCTION OF BILL OF EXCHANGE AND PROMISSORY NOTE
If a company is, or may become, liable on:
(a) a bill of exchange; or
(b) a promissory note; or
(c) any other negotiable instrument or security;
it must be produced to the liquidator before a proof of debt or claim for the liability can be admitted, unless the Court otherwise orders.
REGULATION 5.6.47 ADMISSION OF DEBT OR CLAIM WITHOUT FORMAL PROOF[ CCH Note: There is no subregulation 5.6.47(1).]
If a liquidator admits a debt or claim without formal proof, it is not necessary for the liquidator formally to admit the debt or claim in writing.
5.6.47(3) [Notice of dividend as notice of admission]If a creditor's debt or claim has been admitted without formal proof, a notice of dividend is sufficient notice of the admission.
5.6.47(4) [Prerequisites to rejection of proof]A liquidator must not reject a debt or claim without:
(a) notifying the creditor of the grounds of the liquidator's rejection; and
(b) requiring that a formal proof of debt or claim be submitted for that debt or claim. REGULATION 5.6.48 NOTICE TO CREDITORS TO SUBMIT FORMAL PROOF
Companies not subject to the simplified liquidation process
5.6.48(1)
Subject to subregulation (1A), a liquidator may from time to time fix a day, not less than 14 days after the day on which notice is given in accordance with subregulation (2), on or before which creditors of the company whose debts or claims have not been admitted are formally to prove their debts or claims.
Companies subject to the simplified liquidation process
5.6.48(1A)
Subregulation (1) does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
Note: A notice given under subregulation 5.6.39(1B) may include a requirement that the creditors of a company that is subject to the simplified liquidation process must formally prove all or a specified class of debts or claims (see subregulation 5.6.39(4)).
Notice requirements
5.6.48(2)
A liquidator must give a notice under subregulation (1): (a) by lodging the notice with ASIC in accordance with subregulation 5.6.75(4); and (b) to every person who, to the knowledge of the liquidator, claims to be a creditor of the company, and whose debt or claim has not been admitted.
5.6.48(3)
A notice under subregulation (1) must state at least the following information: (a) the name of the company; (b) any trading name of the company; (c) the ACN of the company; (ca) if Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund; (d) the day fixed under subregulation (1).
Failure to comply with liquidator's requirements
5.6.48(4)
A creditor of the company who fails to comply with a requirement of a liquidator under subregulation (1) is excluded: (a) from the benefit of a distribution made before his or her debt or claim is admitted; and (b) from objecting to that distribution.
Note: If Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this regulation's references to the company so that they are references to the sub-fund.
A debt or claim may be formally proved by delivering or sending by post a formal proof of debt or claim to the liquidator.
5.6.49(2) [Forms for proof]A formal proof of debt or claim:
(a) that is prepared and submitted in accordance with regulation 5.6.45 - must be in accordance with Form 536; and
(b) in any other case - must be in accordance with Form 535. REGULATION 5.6.50 CONTENTS OF FORMAL PROOF OF DEBT OR CLAIM 5.6.50(1) [Contents of proof]
A formal proof of debt or claim must:
(a) contain detailed particulars of the debt or claim sought to be proved; and
(b) in the case of a debt, include a statement of account; and
(c) specify the vouchers (if any) by which the statement can be substantiated. 5.6.50(2) [Vouchers]
The liquidator may at any time call for the production of the vouchers mentioned in subregulation (1).
REGULATION 5.6.51 5.6.51 COSTS OF PROOFA creditor must bear the cost:
(a) of proving his or her debt or claim; or
(b) of amending a proof of debt or claim;
unless the Court otherwise orders.
REGULATION 5.6.52 5.6.52 LIQUIDATOR TO NOTIFY RECEIPT OF PROOF OF DEBT OR CLAIMIf a liquidator is requested to do so by the person submitting a proof of debt or claim, the liquidator must notify that person of the receipt of the proof and whether or not it has been admitted under regulation 5.6.47. REGULATION 5.6.53 TIME FOR LIQUIDATOR TO DEAL WITH PROOFS 5.6.53(1)
A liquidator must, within:
(a) 28 days after receiving a request in writing from a creditor to do so; or
(b) if ASIC allows - any further period;
in writing:
(c) admit all or part of the formal proof of debt or claim submitted by the creditor; or
(d) reject all or part of the formal proof of debt or claim; or
(e) require further evidence in support of it.
5.6.53(2)
If the liquidator does not deal with a request under subregulation (1) in accordance with that subregulation, the creditor who submitted the proof may apply to the Court for a decision in respect of it.
5.6.53(3)
If the liquidator gives notice in writing to a creditor that further evidence is required in support of the formal proof of debt or claim submitted by the creditor under subregulation (1), the period mentioned in that subregulation is taken not to have begun to run until the day on which the liquidator receives a sufficient written answer to his or her notice.
REGULATION 5.6.54 GROUNDS OF REJECTION AND NOTICE TO CREDITOR 5.6.54(1)
Within 7 days after the liquidator has rejected all or part of a formal proof of debt or claim, the liquidator must:
(a) notify the creditor of the grounds for that rejection in accordance with Form 537; and
(b) give notice to the creditor at the same time:
(i) that the creditor may appeal to the Court against the rejection within the time specified in the notice, being not less than 14 days after service of the notice, or such further period as the Court allows; and
(ii) that unless the creditor appeals in accordance with subparagraph (i), the amount of his or her debt or claim will be assessed in accordance with the liquidator's endorsement on the creditor's proof.
5.6.54(2)
A person may appeal against the rejection of a formal proof of debt or claim within:
(a) the time specified in the notice of the grounds of rejection; or
(b) if the Court allows - any further period.
5.6.54(3)
The Court may extend the time for filing an appeal under subregulation (2), even if the period specified in the notice has expired.
5.6.54(4)
If the liquidator has admitted a formal proof of debt or claim, the notice of dividend is sufficient notice of the admission.
REGULATION 5.6.55 REVOCATION OR AMENDMENT OF DECISION OF LIQUIDATOR 5.6.55(1)
If the liquidator considers that a proof of debt or claim has been wrongly admitted, the liquidator may:
(a) revoke the decision to admit the proof and reject all of it; or
(b) amend the decision to admit the proof by increasing or reducing the amount of the admitted debt or claim.
5.6.55(2)
If the liquidator considers that all of a proof of debt or claim has been wrongly rejected, the liquidator may:
(a) revoke the decision to reject the proof of debt or claim; and
(b) admit all of the proof or admit part of it and reject part of it.
5.6.55(3)
If the liquidator:
(a) revokes a decision to admit a proof of debt or claim and rejects all of it; or
(b) amends that decision by reducing the amount of the admitted debt or claim;
the liquidator must inform the creditor by whom it was lodged, in writing, of his or her grounds for the revocation or amendment.
5.6.55(4)
If the liquidator revokes a decision to admit a proof of debt or claim and rejects all of it, or amends that decision by reducing the amount of the admitted debt or claim, the creditor must at once repay to the liquidator:
(a) the amount received as dividend for the proof; or
(b) the amount received as dividend that exceeds the amount that the creditor would have been entitled to receive if his or her debt or claim had been originally admitted for the reduced amount.
5.6.55(5)
If the liquidator:
(a) revokes a decision to reject all of a proof of debt or claim; or
(b) amends a decision to admit part of a proof of debt or claim;
by increasing the amount of the admitted debt or claim, the creditor by whom it was lodged is entitled to be paid, out of available money for the time being in the hands of the liquidator:
(c) the dividend; or
(d) an additional amount of dividend;
that the creditor would have been entitled to receive if all of the debt or claim had been originally admitted, or the increased amount had been admitted, before the available money is applied to pay a further dividend.
5.6.55(6)
The creditor is not entitled to disturb the distribution of any dividends declared before the liquidator revoked or amended the decision.
REGULATION 5.6.56 5.6.56 WITHDRAWAL OR VARIATION OF PROOF OF DEBT OR CLAIM
A proof of debt or claim may be withdrawn, reduced or varied by a creditor with the consent of the liquidator. REGULATION 5.6.57 5.6.57 OATHS
The liquidator in a winding up by the Court may:
(a) administer an affirmation or oath; and
(b) take an affidavit;
for the purposes of the liquidator's duties in relation to admitting a debt or claim.
REGULATION 5.6.58 5.6.58 LIQUIDATOR TO MAKE OUT PROVISIONAL LIST OF CONTRIBUTORIESIf the liquidator of a company considers it necessary to make calls on or adjust the rights of contributories, the liquidator must, as soon as practicable, make out a provisional list of contributories in accordance with Form 538. REGULATION 5.6.59 TIME AND PLACE FOR SETTLEMENT OF LIST 5.6.59(1)
The liquidator must give to each person included in the list not less than 14 days' notice in writing, in accordance with Form 539, of the time and place appointed to settle the list.
5.6.59(2)
The liquidator or a person acting on his or her behalf must lodge a statement in writing in the prescribed form that notice under subregulation (1) was given to each person included in the provisional list of contributories.
Note: Under section 350 of the Act, a document that the Act requires to be lodged with ASIC in a prescribed form must:
On 23 December 2004, a form for the document mentioned in subregulation (2) is not prescribed in these Regulations.
5.6.59(3)
A statement under subregulation (2) is evidence that the notice was sent to a person on the list at the address shown for that person, in the absence of evidence to the contrary.
REGULATION 5.6.60 SETTLEMENT OF LIST OF CONTRIBUTORIES 5.6.60(1) [Objections to be heard and determined]
Before settling the list of contributories, the liquidator must hear and determine any objection by a person to being included in the list.
5.6.60(2) [Form 541]The liquidator must settle the list of contributories and certify it, in accordance with Form 541, at the time and place specified in the notice given under regulation 5.6.59.
REGULATION 5.6.61 SUPPLEMENTARY LIST 5.6.61(1) [Variation or addition to list]The liquidator may at any time vary or add to the list of contributories by:
(a) making out a provisional supplementary list of contributories in accordance with Form 542; and
(b) settling and certifying that list in accordance with Form 543. 5.6.61(2) [Application]
Regulation 5.6.59 and subregulation 5.6.60(1) apply to making out, or settling and certifying, a supplementary list by the liquidator.
REGULATION 5.6.62 NOTICE TO CONTRIBUTORIES 5.6.62(1)Within 14 days after the settlement of the list, or supplementary list, of contributories, the liquidator must:
(a) notify each person included in the list, or supplementary list, of his or her inclusion; and
(b) at the same time give each person notice that he or she may appeal to the Court against his or her inclusion within:
(i) 21 days after service of the notice; or
(ii) if the Court allows - any further period.
5.6.62(2)
A person may appeal against his or her inclusion in the list, or supplementary list, of contributories, within:
(a) 21 days after service on the person of the notice under subregulation (1); or
(b) if the Court allows - any further period.
5.6.62(3)
The Court may extend the time for filing an appeal under subregulation (2), even if the period of 21 days specified in subregulation (1) has expired.
5.6.62(4)
A notice for subregulation (1) must be in accordance with Form 544.
5.6.62(5)
The liquidator, or a person acting on the liquidator's behalf, must lodge a statement in writing in the prescribed form that notice under subregulation (1) was given to each person placed on the list, or supplementary list, of contributories.
Note: Under section 350 of the Act, a document that the Act requires to be lodged with ASIC in a prescribed form must:
On 23 December 2004, a form for the document mentioned in subregulation (5) is not prescribed in these Regulations.
5.6.62(6)
A statement under subregulation (5) is sufficient evidence that the notice was sent to a person on the list at the address shown for that person, in the absence of evidence to the contrary.
REGULATION 5.6.63 5.6.63 DIVIDEND PAYABLE ONLY ON ADMISSION OF A DEBT OR CLAIM
A dividend in the winding up of the affairs of a company may be paid only to a creditor whose debt or claim has been admitted by the liquidator at the date of the distribution of dividends. REGULATION 5.6.64 5.6.64 APPLICATION OF REGULATIONS 5.6.37 TO 5.6.57
For regulations 5.6.64 to 5.6.71, regulations 5.6.37 to 5.6.57 apply:
(a) to the formal proof of a debt or claim; and
(b) to the rejection and to an appeal against the rejection of all or part of a formal proof of a debt or claim. REGULATION 5.6.65 LIQUIDATOR TO GIVE NOTICE OF INTENTION TO DECLARE A DIVIDEND 5.6.65(1)
Subject to subregulation (1A), the liquidator must give notice of his or her intention to declare a dividend not more than 2 months before the intended date: (a) by lodging a notice with ASIC in accordance with subregulation 5.6.75(4); and (b) in writing, in accordance with Form 547 or, for a final dividend, in accordance with Form 548, to any person whose debt or claim has not been admitted and who:
(i) for a winding up by the Court - is shown as a creditor in the report on the affairs of the company under subsection 475(1) of the Act; or
(ii) for a members' voluntary winding up - appears in the company's records to be a creditor; or
(iii) for a creditors' voluntary winding up - is shown as a creditor in the list of creditors prepared in accordance with subparagraph 497(1)(a)(ii) of the Act; or
(iv) to the knowledge of the liquidator claims to be, or might claim to be, a creditor of the company.
5.6.65(1A)
The requirement in subregulation (1) that the notice must be given not more than 2 months before the intended date does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
5.6.65(2)
A notice in accordance with subregulation (1) must specify a date, not less than 21 days after the date of the notice, on or before which formal proof, in accordance with Form 535 or 536, of a debt or claim must be submitted to participate in the distribution.
5.6.65(2A)
Also, the notice must state at least the following information: (a) the name of the company; (b) any trading name of the company; (c) the ACN of the company; (d) if Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund.
5.6.65(3)
Subject to regulation 5.6.68, a person: (a) who claims to be a creditor; and (b) who does not submit a formal proof of a debt or claim on or before the date specified in the notice given under subregulation (1);
is excluded from participating in the distribution to which that notice relates.
Note: If Division 1 of Part 5.6 of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this regulation's references to the company so that they are references to the sub-fund.
If the liquidator has given notice in accordance with subregulation 5.6.65(1), the liquidator must:
(a) within 14days after the date shown in the notice; or
(b) within such further period as ASIC allows;
in writing:
(c) before the end of that period:
(i) admit a formal proof of debt or claim received by the liquidator; or
(ii) reject it; or
(iii) admit part of it and reject part of it; or
(iv) require further evidence in support of it; and
(d) give notice of the liquidator's decision to the creditor who submitted the proof.
5.6.66(2)
If, within whichever period is applicable under paragraph (1)(a) or (b) or subregulation (3), the liquidator does not, in writing, deal with a formal proof of debt or claim in accordance with paragraphs (1)(c) and (d), the creditor who submitted the proof may apply to the Court for a decision on it.
5.6.66(3)
If the liquidator gives notice to a creditor that further evidence is required in relation to a formal proof of debt or claim submitted by the creditor:
(a) the liquidator must, in writing, deal with the formal proof of debt or claim in accordance with paragraphs (1)(c) and (d), within whichever period mentioned in paragraph (1)(a) or (b) is applicable; and
(b) that period must be taken not to have begun to run until the day on which the liquidator receives a sufficient written answer to his or her request.
REGULATION 5.6.67 DECLARATION AND DISTRIBUTION OF DIVIDEND 5.6.67(1) [Declaration and distribution]
The liquidator must, as soon as practicable, declare and distribute a dividend among the creditors whose debts or claims have been admitted.
5.6.67(2) [Costs of administration, etc]The liquidator must distribute as dividend all money in hand except enough:
(a) to meet the costs of administration; or
(b) to give effect to the provisions of the Act. 5.6.67(3) [Form 549]
If the liquidator declares a dividend, he or she must send a notice of that declaration, in accordance with Form 549, to every person entitled to receive payment of the dividend.
REGULATION 5.6.67A 5.6.67A SINGLE DECLARATION AND DISTRIBUTION OF DIVIDEND FOR COMPANIES IN SIMPLIFIED LIQUIDATIONThe liquidator of a company that is subject to the simplified liquidation process may declare and distribute a dividend only once among creditors whose debts or claims have been admitted.
If:
(a) a creditor's debt or claim has not been admitted before the declaration of a dividend; and
(b) the debt or claim is admitted;
the creditor is entitled to be paid dividends that the creditor has failed to receive, out of any available money for the time being in the hands of the liquidator, before that money is applied to the payment of a further dividend.
5.6.68(2)
A creditor is not entitled to disturb the distribution of a dividend declared before the creditor's debt or claim was admitted.
5.6.68(3)
This regulation does not apply in relation to a creditor of a company that is subject to the simplified liquidation process.
REGULATION 5.6.69 5.6.69 POSTPONEMENT OF DECLARATION
If the liquidator postpones the declaration of a dividend past the date shown for that purpose in the notice lodged with ASIC in accordance with subregulation 5.6.75(4), the liquidator must lodge another notice with ASIC for publication on the publication website of the liquidator's intention to declare a dividend.
If a person to whom a dividend is payable lodges an authority in accordance with Form 550 with the liquidator, the liquidator must pay the dividend to the person to whom payment is directed by that authority. REGULATION 5.6.70A 5.6.70A PRESCRIBED RATE OF INTEREST ON DEBTS AND CLAIMS FROM RELEVANT DATE TO DATE OF PAYMENT
Forsection 563B of the Act, the prescribed rate of interest on the amount paid in respect of an admitted debt or claim for the period starting on the relevant date and ending on the day on which the payment is made is 8% a year. REGULATION 5.6.70B NOTICE OF DISCLAIMER 5.6.70B(1)
This regulation is made for subsection 568A(2) of the Act.
5.6.70B(2)
The information about a disclaimer that is to be set out in a notice is at least the following information: (a) the name of the company; (b) any trading name of the company; (c) the ACN of the company; (ca) if subsection 568A(2) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act - the ARFN of the sub-fund; (d) the paragraph of subsection 568(1) of the Act under which the property is disclaimed; (e) a description of the property; (f) if the property is a contract (other than an unprofitable contract or a lease of land) - the date on which the Court granted leave under subsection 568(1A) of the Act; (g) the name and contact details of the liquidator.
Note: If subsection 568A(2) of the Act applies for a sub-fund of a CCIV because of section 1237B of the Act, that section translates most of this sub-regulation's references to the company so that they are references to the sub-fund.
An order in a winding up by the Court authorising the liquidator to distribute any surplus to a person entitled to it must, unless the Court otherwise directs, have annexed to it a schedule in accordance with Form 551.
5.6.71(2) [Form 552]The liquidator must send to each person to whom any surplus is distributed a notice in accordance with Form 552.
REGULATION 5.6.72 5.6.72 DISTRIBUTION OF SURPLUS AS DIRECTEDIf a person who receives a notice of distribution of surplus in accordance with subregulation 5.6.71(2) lodges with the liquidator an authority in accordance with Form 553, the liquidator must distribute that surplus to the person to whom payment is directed by that authority. REGULATION 5.6.73 ELIGIBLE UNSECURED CREDITOR 5.6.73(1) Creditors that are eligible unsecured creditors.
For paragraph 579Q(1)(b) of the Act, the following creditors are specified:
(a) a creditor to which either of the following applies as a result of a modification of the Act made under paragraph 571(1)(d) of the Act:
(i) a debt payable by a company or companies in a group to any other company or companies in the group is not extinguished;
(ii) a claim that a company or companies in a group has against any other company or companies in the group is not extinguished;
(b) a creditor that is determined by a Court to be an eligible unsecured creditor. 5.6.73(2) Creditors that are not eligible unsecured creditors.
For subsection 579Q(2) of the Act, a creditor that is determined by a Court not to be an eligible unsecured creditor is specified.
For the purposes of subparagraph 581(2)(a)(iii) of the Act, the following countries are prescribed: (a) the Bailiwick of Jersey; (b) Canada; (c) the Independent State of Papua New Guinea; (d) Malaysia; (e) New Zealand; (f) the Republic of Singapore; (g) Switzerland; (h) the United Kingdom; (i) the United States of America.
ASIC must establish and maintain a website (the publication website ) on which it publishes notices that have to be: (a) published in the prescribed manner under Part 5.1, 5.3A, 5.3B, 5.4, 5.4B, 5.4C, 5.5, 5.6, 5.8, 5A.1 or 5B.2 of the Act; or (b) lodged in accordance with this section.
5.6.75(2)
ASIC is taken to have complied with a requirement to publish a notice, or a copy of a notice, in the prescribed manner if ASIC publishes the notice on the publication website.
5.6.75(3)
A person (other than ASIC) is taken to have complied with a requirement to publish a notice, or a copy of a notice, in the prescribed manner if the person electronically lodges the notice with ASIC for publication by ASIC.
5.6.75(4)
A person electronically lodges a notice, or a copy of a notice, with ASIC if: (a) the person:
(i) pays the fee prescribed under the Corporations (Fees) Regulations 2001; and
(ii) sends the notice in an electronic communication to the portal for ASIC's publication website, in the format required by ASIC; and
(b) the notice, or a copy of the notice, appears on the publication website.
(iii) receives an electronic communication from ASIC that confirms the fee has been paid and the notice has been lodged; or
5.6.75(5)
If a person lodges a notice, or a copy of a notice, in accordance with subsection (4), ASIC must publish the notice or copy of the notice on the publication website.
5.6.75(6)
(Repealed by FRLI No F2020L01654, Sch 4[11] (effective 22 December 2020).)
For the purposes of subparagraph 588GAAA(1)(b)(ii) of the Act, the period prescribed is the period starting on the day that section 588GAAA of the Act commenced and ending at the end of 31 December 2020.
For paragraphs 601CB(a) and 601CE(a) of the Act, a certified copy of a current certificate of the incorporation or registration in its place of origin, or a document of similar effect, of:
(a) a registrable Australian body; or
(b) a foreign company;
that is lodged with an application for registration under Division 1 or 2 of Part 5B.2 of the Act, must be a copy that:
(c) within the 3 months immediately before the day on which it is lodged; or
(d) if ASIC permits - within a longer period;
has been certified to be a true copy by a person:
(e) who has the custody of the original document under a law in force in the place of origin of the corporation or company; and
(f) who exercises under that law functions similar to those exercised by ASIC. REGULATION 5B.2.02 5B.2.02 MANNER OF CERTIFYING CONSTITUENT DOCUMENTS
For paragraphs 601CB(b) and 601CE(b) of the Act, a certified copy of a constitution of:
(a) a registrable Australian body; or
(b) a foreign company;
must be a copy that:
(c) within the period of 3 months immediately preceding the day on which it is lodged; or
(d) if ASIC permits - a longer period;
has been certified to be a true copy:
(e) by a person:
(i) to whom the custody of the original document is committed under a law in force in the place of origin of the corporation or company; and
(ii) who exercises under that law functions similar to those exercised by ASIC; or
(f) by a notary public; or
(g) by a director or secretary of the body:
(i) if the body is a registrable Australian body - by a statement in writing; or
REGULATION 5B.2.03 5B.2.03 MANNER OF SENDING LETTERS (ACT ss 601CC(2) AND 601CL(3))
(ii) if the body is a foreign company - by affidavit.
For subsections 601CC(2) and 601CL(3) of the Act, a letter must be sent by post. REGULATION 5B.2.04 5B.2.04 MANNER OF SENDING NOTICES (ACT ss 601CC(3) AND 601CL(4))
For subsections 601CC(3) and 601CL(4) of the Act, a notice must be sent by prepaid certified mail. REGULATION 5B.2.05 5B.2.05 PRESCRIBED COUNTRIES (ACT s 601CDA(a))
For paragraph 601CDA(a) of the Act, a country mentioned in the following table is prescribed:
Item | Country |
1 | New Zealand |
A notice in writing of a change in a constitution or other document, in accordance with paragraph 601CV(1)(b) of the Act, must be accompanied by a copy of the instrument effecting the change or a copy of the document as changed, being a copy that is certified to be a true copy of that instrument or document by a person mentioned in paragraph 5B.2.02(e), (f) or (g).
5B.2.06(2) [Change in director's powers]A notice in writing of a change in director's powers, in accordance with subparagraph 601CV(1)(d)(i) of the Act, must be accompanied by a memorandum in writing executed by or on behalf of the foreign company after a change in those powers stating the powers of its directors as changed.
PART 5B.3 - NAMES OF REGISTRABLE AUSTRALIAN BODIES AND FOREIGN COMPANIES REGULATION 5B.3.01 AVAILABILITY OF NAMES (ACT s 601DC) 5B.3.01(1) [Identical names]For paragraphs 601DC(1)(a) and (b) of the Act, the rules for ascertaining whether a name is identical with another name are the rules set out in Part 1 of Schedule 6.
5B.3.01(2) [Unacceptable names]For paragraph 601DC(1)(c) of the Act, a name is unacceptable for registration under the regulations if the name is unacceptable under the rules set out in Part 2 of Schedule 6.
REGULATION 5B.3.02 CONSENTS REQUIRED FOR USE OF CERTAIN LETTERS, WORDS AND EXPRESSIONS 5B.3.02(1) [Application]This regulation applies to a name if:
(a) the name:
(i) is the subject of an application for registration of a name under section 601BC, 601CB or 601CE of the Act; or
(ii) is the subject of an application for reservation of a name under section 601DA of that Act; or
(iii) for a notice of change of name under section 601DH of the Act - is the name to which the previous name is to be changed; and
(b) the name is, uses or includes:
(i) letters, or a word or expression, specified in column 2 of an item in Part 4 or 5 of Schedule 6; or
5B.3.02(2) [Interpretation]
(ii) other letters, or another word or expression (whether or not in English), that is of like import to the letters, word or expression specified in the item.
In paragraph (1)(b), a reference to letters, a word or an expression being used includes a reference to the letters, word or expression being used:
(a) as part of another word or expression; or
(b) in combination with other words or letters, or other symbols. 5B.3.02(3) [Use of ``ADI'']
However, this regulation does not apply to use of the letters ADI as part of another word.
Example
The letters adi appear in the word traditional . This regulation does not apply to use of the word traditional .
5B.3.02(4) [Consent of Minister]If an item in Part 4 of Schedule 6 applies in relation to the name, the application or notice must be accompanied by the written consent of the Minister who is specified in the item.
5B.3.02(5) [Consent of public authority or agency]If an item in Part 5 of Schedule 6 applies in relation to the name, the application or notice must be accompanied by the written consent of the public authority, instrumentality or agency that is specified in the item.
REGULATION 5B.3.03 5B.3.03 EXEMPTIONS FROM REQUIREMENT TO SET OUT ARBN ETC ON CERTAIN DOCUMENTS (ACT s 601DG)For section 601DG of the Act, the exemptions provided for in Schedule 7 apply in relation to the requirements of paragraphs 601DE(1)(b), (c) and (d) of the Act. REGULATION 5B.3.04 NOTICES (ACT s 601DH(1)) 5B.3.04(1) [Change of name]
A notice in writing of a change of name in accordance with subsection 601DH(1) of the Act, must have annexed to it:
(a) a copy of the certificate of incorporation or registration of the registered body, or a document of similar effect, being a certificate or document evidencing the change; or
(b) if no certificate or document of that kind exists - a copy of the instrument effecting the change;
being a copy that is certified by a person mentioned in paragraph 5B.2.02(e), (f) or (g) to be a true copy of that certificate, document or instrument.
[ CCH Note: SR 2001 No 193 has been reproduced exactly, including the existence of only a subsec (1) in reg 5B.3.04.]
An application under section 601EA of the Act to register a managed investment scheme must be in the approved form.
5C.1.01(2)
The form must state the name of the managed investment scheme.
5C.1.01(3)
The stated name must not be the same as the name of:
(a) another managed investment scheme that is the subject of an application for registration under section 601EA of the Act that is lodged but not yet determined; or
(b) a registered scheme; or
(c) a foreign passport fund in relation to which a notice of intention has been lodged under section 1213 of the Act if:
(i) the operator of the fund has not withdrawn the notice under subsection 1213(3) of the Act; and
(ii) ASIC has not rejected the notice of intention under section 1213B of the Act; or
(d) a notified foreign passport fund.
5C.1.01(4)
A statement made for paragraph 601EA(4)(c) of the Act must be in the approved form.
REGULATION 5C.1.02 CHANGE OF NAME OF REGISTERED SCHEMES 5C.1.02(1)
To change the name of a registered scheme, the responsible entity of the scheme must lodge a notice in the approved form stating the proposed name of the scheme.
5C.1.02(2)
The stated name must not be the same as the name of:
(a) another managed investment scheme that is the subject of an application for registration under section 601EB of the Act that is lodged but not yet determined; or
(b) a registered scheme; or
(c) a foreign passport fund in relation to which a notice of intention has been lodged under section 1213 of the Act if:
(i) the operator of the fund has not withdrawn the notice under subsection 1213(3) of the Act; and
(ii) ASIC has not rejected the notice of intention under section 1213B of the Act; or
(d) a notified foreign passport fund.
5C.1.02(3)
On application in accordancewith this regulation, ASIC must amend the record of the registration of the scheme to include the name of the scheme as proposed to be amended.
REGULATION 5C.1.03 MODIFICATION (ACT s 601QB) 5C.1.03(1) [Modification]
For section 601QB of the Act, the operation of Chapter 5C of the Act is modified in accordance with this regulation.
5C.1.03(2) [Limitation](a) a managed investment scheme is registered under section 601EB of the Act; and
(b) the managed investment scheme is also registered on the Australian Business Register; and
(c) the last 9 digits of the ABN of the registered scheme are the same, and in the same order, as the last 9 digits of its ARSN; and
(d) a document relating to the scheme is lodged with ASIC, and displays that ABN;
section 601EC of the Act does not apply to the document.
PART 5C.2 - THE RESPONSIBLE ENTITY REGULATION 5C.2.01 5C.2.01 DUTY OF RESPONSIBLE ENTITIES' AGENTS - SURVEILLANCE CHECKSThe agent of a responsible entity must take all reasonable steps to assist the entity and ASIC when ASIC is conducting a check whether the entity is complying with the constitution and compliance plan of a registered scheme and with the Act. REGULATION 5C.2.02 5C.2.02 APPOINTMENT OF TEMPORARY RESPONSIBLE ENTITIES
ASIC, or a member of a registered scheme, may apply to the Court for the appointment of a temporary responsible entity of the scheme if ASIC or member reasonably believes that the appointment is necessary to protect scheme property or the interests of members of the scheme. REGULATION 5C.2.03 5C.2.03 FORM OF NOTICES (ACT ss 601FL(2) AND 601FM(2))
A notice to be lodged under subsection 601FL(2) or 601FM(2) of the Act must be in the approved form. REGULATION 5C.2.04 5C.2.04 NOTICE OF APPOINTMENT OF TEMPORARY RESPONSIBLE ENTITIES
As soon as practicable after the Court appoints a temporary responsible entity for a registered scheme on application by a member of the scheme under section 601FN of the Act, the member must lodge a notice in the approved form that tells ASIC of the appointment. REGULATION 5C.2.05 5C.2.05 FORM OF NOTICES (ACT s 601FP(3))
A notice to be lodged under subsection 601FP(3) of the Act must be in the approved form. PART 5C.4 - THE COMPLIANCE PLAN REGULATION 5C.4.01 5C.4.01 AGENTS' AUTHORITIES TO BE LODGED
If a compliance plan, or modification of a plan, lodged with ASIC under section 601HC or subsection 601HE(3) of the Act is signed by an agent of the directors of the responsible entity of the registered scheme to which the plan relates, the authority to do so, or a copy of the authority verified by a director of the entity, must be attached to the plan or modification. REGULATION 5C.4.02 5C.4.02 AGENTS TO ASSIST AUDITORS OF COMPLIANCE PLANS
An agent of the responsible entity of a registered scheme, and an officer of the agent, must:
(a) allow the auditor of the scheme's compliance plan to have access to the books of the scheme; and
(b) if the auditor requires the agent or entity to give the auditor information or an explanation for the audit - give the information or explanation to the auditor; and
(c) otherwise assist the conduct of the audit. PART 5C.5 - THE COMPLIANCE COMMITTEE REGULATION 5C.5.01 RESPONSIBLE ENTITIES ETC TO ASSIST COMPLIANCE COMMITTEES 5C.5.01(1) [Application]
This regulation applies to a person who is the responsible entity of a registered scheme, an officer of the entity, an agent of the entity or an officer of the agent.
5C.5.01(2) [Assistance](a) allow the compliance committee to have access to the books of the scheme; and
(b) if the committee requires the person to give the committee information or an explanation about the scheme - give the information or explanation to the committee; and
(c) otherwise assist the committee in the performance of its functions. PART 5C.9 - WINDING UP REGULATION 5C.9.01 5C.9.01 NOTICE OF COMMENCEMENT OF WINDING UP
The responsible entity of a registered scheme must lodge a notice in the approved form telling ASIC that winding up of the scheme has commenced, or been completed, within 14 days of the commencement or completion. PART 5C.11 - EXEMPTIONS AND MODIFICATIONS Division 1 - Exemptions REGULATION 5C.11.01 CERTAIN SCHEMES NOT MANAGED INVESTMENT SCHEMES 5C.11.01(1)
This regulation is made for the purposes of paragraph (n) of the definition of managed investment scheme in section 9 of the Act.
5C.11.01(2)
An approved benefit fund (within the meaning of subsection 16B(1) of the Life Insurance Act 1995) is declared not to be a managed investment scheme.
5C.11.01(2A)
A scheme (a litigation funding scheme ) that has all of the following features is declared not to be a managed investment scheme: (a) the dominant purpose of the scheme is for each of its general members to seek remedies to which the general member may be legally entitled; (b) the possible entitlement of each of its general members to remedies arises out of:
(i) the same, similar or related transactions or circumstances that give rise to a common issue of law or fact; or
(c) the possible entitlement of each of its general members to remedies relates to transactions or circumstances that occurred before or after the first funding agreement (dealing with any issue of interests in the scheme) is finalised; (d) the steps taken to seek remedies for each of its general members include a lawyer providing services in relation to:
(ii) different transactions or circumstances but the claims of the general members can be appropriately dealt with together;
(i) making a demand for payment in relation to a claim; or
(ii) lodging a proof of debt; or
(iii) commencing or undertaking legal proceedings; or
(iv) investigating a potential or actual claim; or
(v) negotiating a settlement of a claim; or
(e) a person (the funder ) provides funds, indemnities or both under a funding agreement (including an agreement under which no fee is payable to the funder or lawyer if the scheme is not successful in seeking remedies) to enable the general members of the scheme to seek remedies; (f) the funder is not a lawyer or legal practice that provides a service for which some or all of the fees, disbursements or both are payable only on success.
(vi) administering a deed of settlement or scheme of settlement relating to a claim;
5C.11.01(3)
A scheme (a litigation funding scheme ) that has all of the following features is declared not to be a managed investment scheme: (a) the scheme relates to a Chapter 5 body corporate; (b) the creditors or members of the body corporate provide funds (including through a trust), indemnities or both to the body corporate or external administrator; (c) the funds, indemnities or both enable the external administrator or the body corporate to:
(i) conduct investigations; or
(ii) seek or enforce a remedy against a third party; or
(iii) defend proceedings brought against the body corporate in relation to the external administration of the body corporate (other than in relation to allegations, made by creditors or members of the body corporate, of negligence or non-performance of duties by the external administrator).
5C.11.01(4)
An arrangement (a litigation funding arrangement ) that has all of the following features is declared not to be a managed investment scheme: (a) the dominant purpose of the arrangement is proving claims made by a general member who is an individual under Division 6 of Part 5.6 of the Act (which may include the funding of the preparation and the lodgement of the proofs); (b) the steps taken under the arrangement include a lawyer providing services in relation to:
(i) making a demand for payment in relation to a claim; or
(ii) lodging a proof of debt; or
(iii) commencing or undertaking legal proceedings; or
(iv) investigating a potential or actual claim; or
(v) negotiating a settlement of a claim; or
(c) a person (the funder ) provides funds, indemnities or both under a funding agreement (including an agreement under which no fee is payable to the funder or lawyer if the arrangement is not successful in proving claims) to enable the general member to prove the claims; (d) the funder is not a lawyer or legal practice that provides a service for which some or all of the fees, disbursements or both are payable only on success; (e) the arrangement is not a litigation funding scheme.
(vi) administering a deed of settlement or scheme of settlement relating to a claim;
[ CCH Note: Reg 5C.11.01(4) will be amended by FRLI No F2021L01608, Sch 1[5], by substituting para (e)(ii) (effective on the later of: (a) the day after this instrument is registered; and (b) the day the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Act 2021 commences. However, the provisions do not commence at all if the event mentioned in paragraph (b) does not occur). Para (e)(ii) will read:
(ii) a class action litigation funding scheme.]
5C.11.01(5)
An arrangement (a litigation funding arrangement ) that has all of the following features is declared not to be a managed investment scheme: (a) the dominant purpose of the arrangement is for a general member to seek remedies to which the general member may be legally entitled; (b) the steps taken to seek remedies include a lawyer providing services in relation to:
(i) making a demand for payment in relation to a claim; or
(ii) lodging a proof of debt; or
(iii) commencing or undertaking legal proceedings; or
(iv) investigating a potential or actual claim; or
(v) negotiating a settlement of a claim; or
(c) a person (the funder ) provides funds, indemnities or both under a funding agreement (including an agreement under which no fee is payable to the funder or lawyer if the arrangement is not successful in seeking remedies) to enable the general member to seek remedies; (d) the funder is not a lawyer or legal practice that provides a service for which some or all of the fees, disbursements or both are payable only on success; (e) the arrangement is not a litigation funding scheme.
(vi) administering a deed of settlement or scheme of settlement relating to a claim;
[ CCH Note: Reg 5C.11.01(5) will be amended by FRLI No F2021L01608, Sch 1[5], by substituting para (e)(ii) (effective on the later of: (a) the day after this instrument is registered; and (b) the day the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Act 2021 commences. However, the provisions do not commence at all if the event mentioned in paragraph (b) does not occur). Para (e)(ii) will read:
(ii) a class action litigation funding scheme.]
5C.11.01(6)
In this regulation:
external administrator
includes an administrator, a liquidator (including a provisional liquidator) and a controller.
(a) in relation to a litigation funding scheme - means a member of the scheme who:
(i) is not the funder; and
(ii) is not a lawyer providing services for the purposes of the scheme; and
(b) in relation to a litigation funding arrangement - means the party to the arrangement who:
(i) is not the funder; and
(ii) is not a lawyer providing services for the purposes of the arrangement.
For section 601QB of the Act, the operation of the Act is modified in accordance with this Division. REGULATION 5C.11.03 5C.11.03 REGISTER OF MEMBERS OF REGISTERED SCHEMES (ACT s 169(1))
The register of members of a registered scheme need not contain information about a member whose only interest in the scheme is as the holder of an option. REGULATION 5C.11.03A 5C.11.03A HOW TO WORK OUT THE VALUE OF AN INTEREST
If a registered scheme is quoted on 2 or more prescribed financial markets, paragraph 253F(a) of the Act is to be applied so that the value of an interest in the registered scheme is taken to be the last sale price, on the market on which the scheme is listed, on the trading day immediately before the day on which the poll is taken.
ASIC must not register a managed investment scheme under Part 5C.1 of the Act if the name of the scheme stated under subregulation 5C.1.01(2) does not comply with subregulation 5C.1.01(3).
[ CCH Note: There is no regulation 5C.11.05.]
Subsection 601ED(2) of the Act has effect as if the words `and Division 2 of Part 7.9 applied to the interests at that time' were inserted after the words `when the issues were made'.
In determining the liability under subsection 601FB(2) of the Act of the responsible entity of a registered scheme to the members of the scheme for an act or omission of an agent appointed by the entity under that subsection, the amount recovered under subsection 601FB(4) of the Act is to be disregarded. CHAPTER 5D - LICENSED TRUSTEE COMPANIES
(Repealed by FRLI No F2023L01423, Sch 2[2] (effective 1 January 2024).) REGULATION 5D.1.01A MEANING OF TRUSTEE COMPANY 5D.1.01A(1)
For subsection 601RAB(1) of the Act, a company that is listed in Schedule 8AA is a trustee company for the purpose of the Act.
5D.1.01A(2)
A company that performs the function of the Public Trustee of a State or Territory may only be listed in Schedule 8AA if:
(a) the State or Territory requests the Minister to prescribe the company as a trustee company; and
(b) the Minister agrees to the request.
For paragraph 601RAC(3)(f) of the Act, acting in any of the following capacities is prescribed: (a) as trustee for the holders of debt securities of a body; (b) as trustee of a trust established for purposes that include issuing debt securities (including loan-backed securities and mortgage-backed securities) or managing or servicing the assets of the trust; (c) as trustee for the benefit of present or future creditors of another person when holding:
(i) mortgages, charges, guarantees, indemnities or other rights or benefits that have been given to secure debts owing to the creditors; and
(d) as custodian for another trustee or for the responsible entity of a registered scheme or other commercial entity; (e) as trustee of a managed investment scheme the main assets of which consist of land and improvements on the land where the trustee is not responsible for the daily management of the land or any business conducted on the land; (f) as trustee for employee share or benefit schemes; (g) as trustee for trusts the main activities of which consist of making loans to, or otherwise investing in, companies or other commercial entities; (h) as an escrow agent; (i) as a person named in a will as an executor when not actively providing a service or function; (j) as a person named in a power of attorney as an attorney when not actively providing a service or function; (k) preparing a power of attorney for a person's medical treatment or for guardianship of a person's affairs; (l) preparing a living will or advance health directive of any kind.
(ii) the proceeds from the enforcement of any of those things that have been given in subparagraph (i);
5D.1.02(1A)
Paragraph (1)(d) does not apply to a custodian that is a trustee establishing and operating a common fund.
5D.1.02(2)
In this regulation:
custodian
(Repealed by FRLI No F2023L01458, Sch 1[141] (effective 1 November 2023).)
(a) any debenture, debenture stock, bond, note or other security of a corporation or body; or
(b) any convertible note issued by a company or any convertible note in a unit trust scheme issued by the trustee of a unit trust scheme; or
(c) any right to a security mentioned in paragraph (a) or (b);
whether or not it is a charge on the assets of the corporation, company, society or unit trust scheme.
employee share or benefit scheme
means a scheme under which a company offers for issue or sale shares (or options over issued shares) in the company, or some other benefit in the company, only to a director or employee of the company, or of an associated body corporate, when the offer is made.
escrow agent
means a person with whom is deposited a contract, deed, bond or other written agreement or property for delivery to the grantee, promisee or some other person on resolution of a dispute or fulfilment of some condition.
(a) an instrument or property:
(i) creating a right or interest (whether described as a unit, bond or otherwise) for a beneficiary; or
(ii) conferring a right or interest (whether described as a unit, bond or otherwise) on a beneficiary; or
(iii) consisting of a right or interest (whether described as a unit, bond or otherwise) of a beneficiary;
in a scheme under which the profits, distributions of capital or income in which beneficiaries share arise or arises from the acquisition, holding, management or disposal of a loan or pool of loans; or
(b) an instrument which evidences a right or interest mentioned in paragraph (a); or
(c) a debt security:
(i) the payments under which by the person that issues or makes the instrument are derived mainly from the acquisition, holding, management or disposal of a loan or pool of loans; and
(ii) that is secured by a mortgage or charge over a loan or pool of loans.
mortgage-backed security
has the meaning given in regulation 5D.1.03.
A mortgage-backed security is:
(a) an interest in a trust that entitles the holder of, or beneficial owner under, the interest to:
(i) the whole, or any part, of the rights or entitlements of a mortgagee and any other rights or entitlements in respect of a mortgage or pool of mortgages; or
(ii) any amount payable by the mortgagor or mortgagors under a mortgage or mortgages (whether or not the amount is payable to the holder of, or beneficial owner under, the interest on the same terms as under the mortgage or mortgages); or
(iii) payments that are derived mainly from the income or receipts of a mortgage or pool of mortgages;
and that may, in addition, entitle the holder, or beneficial owner, to a transfer or assignment of the mortgage or mortgages; or
(b) a debt security (whether or not in writing) the payments under which by the person who issues or makes the debt security are derived mainly from the income or receipts of a mortgage or pool of mortgages; or
(c) any of the following:
(i) an interest in a trust:
(A) creating a right or interest (whether described as a unit, bond or otherwise) for a beneficiary; or
(B) conferring a right or interest (whether described as a unit, bond or otherwise) on a beneficiary; or
(C) consisting of a right or interest (whether described as a unit, bond or otherwise) of a beneficiary;in a scheme under which any profit or income in which the beneficiaries share arises from the acquisition, holding, management or disposal of a mortgage, pool of mortgages or the income or receipts of a mortgage or pool of mortgages;
(ii) any instrument that evidences a right or interest mentioned in subparagraph (i);
(iii) a security (whether or not in writing) the payments under which by the person who issues or makes the security are derived mainly from the income or receipts of a mortgage or pool of mortgages;
(iv) an interest in a trust or a debt security (whether or not in writing);
(v) an instrument or property that creates an interest in, or charge over an interest in, a trust;
(vi) a debt security (whether or not in writing);
5D.1.03(2) [What mortgage-backed security does not include]
(vii) any other property to which paragraph (a) or (b) or subparagraph (i), (ii) or (iii) applies.
However, a mortgage-backed security does not include an instrument or property consisting of any of the following:
(a) a mortgage;
(b) the transfer of a mortgage;
(c) a declaration of trust.
For paragraph 601RAE(4)(a) of the Act, the trustee company provisions are intended to apply to theexclusion of the provisions of State or Territory laws prescribed in Schedule 8AB.
5D.1.04(2) [Provisions not intended to apply to exclusion of State or Territory laws in sch 8AC]For paragraph 601RAE(4)(b) of the Act, the trustee company provisions are intended not to apply to the exclusion of the State or Territory laws, or the provisions of State or Territory laws, prescribed in Schedule 8AC, so far as those laws relate to an administrator of a person's estate.
5D.1.04(3) [Provisions not intended to apply to exclusion of State or Territory laws in Sch 8AD]For paragraph 601RAE(4)(b) of the Act, the trustee company provisions are intended not to apply to the exclusion of the State or Territory laws, or the provisions of State or Territory laws, prescribed in Schedule 8AD.
For section 601SAB of the Act, this regulation prescribes the obligation of a licensed trustee company to provide an annual information return.
5D.2.01(2)
The licensed trustee company commits an offence if:
(a) a person mentioned in subregulation (3) requests an annual information return; and
(b) the company does not provide the return to the person in accordance with the requirements in subregulations (5), (6) and (8) and regulation 5D.2.02.
Penalty: 500 penalty units.
5D.2.01(2A)
A person commits an offence if the person is involved in a contravention of subregulation (1) by a licensed trustee company.
Penalty:
5D.2.01(3)
A person may request an annual information return if the person is one of the following:
(a) in the case of the estate of a deceased person:
(i) if the person died testate - a beneficiary under the deceased person's will; or
(ii) if the person died intestate - a person who, under a law of a State or Territory, has, is entitled to, or claims to be entitled to, an interest in the deceased person's estate; or
(iii) a person who has commenced a proceeding in a court, under a law of a State or Territory, to seek to be included as a beneficiary of the deceased person's estate;
(b) in relation to a charitable trust:
(i) the settlor, or one of the settlors, of the trust; or
(ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or
(iii) a person, or a person's appointed successor, who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustee or trustees before distributing or applying money or other property for the purposes of the trust;
(c) in the case of any other trust:
(i) the settlor, or one of the settlors, of the trust; or
(ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or
(iii) a beneficiary of the trust.
5D.2.01(4)
The person must make the request for an annual information return in writing to the licensed trustee company and may indicate in the request which one of the following forms of return is required:
(a) by sending it to the person's postal address;
(b) by emailing it to a nominated email address.
5D.2.01(5)
The annual information return must be provided within 30 days after the request from the person is received by the licensed trustee company, and then annually.
5D.2.01(6)
The annual information return must be for the last financial year that the licensed trustee company has provided a service to the person who has requested the return.
5D.2.01(7)
However, the licensed trustee company is not required to provide an annual information return covering a period:
(a) before 1 July 2010; or
(b) before it provided a service to the person.
5D.2.01(8)
The annual information return must be provided as follows:
(a) if requested in a particular form - in the form requested;
(b) in all other cases - by sending it to the person's postal address.
The annual information return provided by a licensed trustee company must include the following:
(a) for a person mentioned in subparagraphs 5D.2.01(3)(a)(i) and (ii) and (c)(iii):
(i) details of income earned on the person's interest in the trust or estate; and
(ii) details of expenses in operating the trust or estate in relation to the person's interest in the trust or estate; and
(iii) the net value of the person's interest in the trust or estate;
(b) for any other person mentioned in subregulation 5D.2.01(3):
(i) details of income earned on the trust's assets; and
(ii) details of expenses in operating the trust's assets, including remuneration, commission or other benefits received by the trustee company; and
(iii) the net value of the trust's assets;
(c) if required under the terms of the trust - a copy of the trust's audit report and financial statements for the year.
This Division is made for section 601SCC of the Act.
A licensed trustee company may:
(a) establish accounts within a common fund; and
(b) establish a common fund on the basis of units or another suitable basis. 5D.2.04(2) [Money held on trust]
If the common fund includes money that is not estate money and that is not otherwise held in trust, the licensed trustee company is taken to hold the money in trust for the person on whose behalf the money is invested in the common fund.
A licensed trustee company that is establishing a common fund commits an offence if, at the time of establishing the fund, it does not ensure that its Board makes a decision, in writing, about the following:
(a) any limitation on the amount of money that will form the common fund;
(b) the investment strategy for the common fund, including the following:
(i) the class of investments in which the common fund may be invested;
(ii) the procedure for valuing the investments;
(iii) if the trustee company is to seek expert advice about proposed investments - the type of expert advice to be sought;
(c) the amount of fees that are to be paid by:
(i) the common fund for the provision of traditional trustee company services; and
(ii) each account in the common fund;
(d) the manner in which a withdrawal can be made from the common fund;
(e) the procedure for auditing the common fund;
(f) if the common fund is to have a limited life - the duration of the common fund;
(g) if the common fund is to have a minimum amount that may be invested in the fund on account of each estate - the minimum amount.
Penalty: 500 penalty units.
5D.2.05(2)
The licensed trustee company commits an offence if it does not:
(a) within 14 days of making the decision:
(i) send a copy of the decision to ASIC; and
(ii) publish a copy of the decision on its website; and
(b) if requested by a person entitled to request an annual information return under subregulation 5D.2.01(3), make a copy of the decision available to the person within 30 days of the request being received.
Penalty: 500 penalty units.
5D.2.05(3)
A person commits an offence if the person is involved in a contravention of subregulation (1) or (2) by a licensed trustee company.
Penalty:
Compliance with the Act and regulations
5D.2.06(1)
A licensed trustee company may, from time to time and without liability for breach of trust, pay into or withdraw an amount from a common fund in accordance with the Act and these Regulations.
Note: Payments into a common fund may be prohibited where this is contrary to the conditions on which the company holds the money: see subsection 601SCB(3) of the Act.
Withdrawals
5D.2.06(2)
A licensed trustee company may do the following:
(a) withdraw an amount from a common fund for a purpose relating to a trust or estate that is part of the fund and is managed or administered by the company;
(b) withdraw from a common fund an amount at credit in the fund on account of a trust matter or a managed estate and invest the amount on the separate account of the matter or estate.
5D.2.06(3)
A licensed trustee company commits an offence if it pays interest from the common fund on withdrawn amounts on or after the day of the withdrawal.
Penalty: 500 penalty units.
Derivatives
5D.2.06(4)
A licensed trustee company commits an offence if:
(a) when managing and administering a common fund, the trustee company enters into a derivative; and
(b) at the time of entering into the derivative:
(i) the trustee company did not do so for the purpose of managing a financial risk arising from:
(A) variations in the expenses of the common fund; or
(B) variations in the revenue obtainable from investments made by the common fund; and
(ii) the arrangement was not in accordance with the trustee company's equitable and other duties as a trustee under the relevant State or Territory provisions set out in Schedule 8AE.
Penalty: 500 penalty units.
Applying income from investment
5D.2.06(5)
A licensed trustee company commits an offence if it applies income from investment of a common fund other than for:
(a) payment of the company's fee for the proper administration and management of the fund under the Act, regulations and terms of the common fund, proportionate to the value of the work done or the services rendered; and
(b) allocation in accordance with subregulation (6) in relation to the accounts from which the fund is derived.
Penalty: 500 penalty units.
5D.2.06(6)
For paragraph (5)(b), the allocation must be made at intervals not exceeding 6 months.
Investments
5D.2.06(7)
A licensed trustee company commits an offence if:
(a) the trustee company invests money committed to its administration or management; and
(b) the investment is:
(i) not in accordance with a decision of the Board made for the purpose of regulation 5D.2.05; and
(ii) not made in a manner in which trust funds may be invested by a trustee under the relevant State or Territory provisions set out in Schedule 8AE.
Penalty: 500 penalty units.
Valuation of investments
5D.2.06(8)
A licensed trustee company commits an offence if it does not comply with the following requirements about the valuation of investments of common funds:
(a) by the third business day of each month, the trustee company must decide the value of the investments in each common fund as at the first business day of the month;
(b) subject to subregulation (9), in deciding the value of securities listed on a financial market for a month, the trustee company must take the last sale price of the first business day of the month published by the market operator as the value of the listed securities;
(c) the trustee company must make withdrawals from the common fund and further investments on the basis of the last valuation of investments made by the company.
Penalty: 500 penalty units.
5D.2.06(9)
The requirement in paragraph 8(b) does not apply if, in a particular month, the licensed trustee company decides it is in the best interests of each account in the common fund that a sale price used for the valuation be one taken later in that month.
Realising investments
5D.2.06(10)
A licensed trustee company may sell investments belonging to a common fund.
5D.2.06(11)
A licensed trustee company that has realised an investment in a common fund commits an offence if it does not credit or debit a profit or loss from the investment to the unit holders of the common fund:
(a) in proportion to the amount invested in the common fund by the unit holders at the time of the realisation; and
(b) within 14 days of the realisation.
Penalty: 500 penalty units.
Offence for involvement in contravention
5D.2.06(12)
A person commits an offence if the person is involved in a contravention of subregulation (3), (4), (5), (7), (8) or (11) by a licensed trustee company.
Penalty:
A licensed trustee company commits an offence if it does not maintain a register of investments for each common fund in accordance with subregulation (2).
Penalty: 500 penalty units.
5D.2.07(2)
The register must contain:
(a) a record identifying each investment made by the common fund; and
(b) details of amounts held to the credit of the common fund.
Note: For other obligations relating to common funds: see section 601SCB of the Act.
5D.2.07(3)
A person commits an offence if the person is involved in a contravention of subregulation (1) by a licensed trustee company.
Penalty:
A licensed trustee company must comply with this regulation in relation to each common fund established by the company that is not a registered scheme.
Account keeping
5D.2.08(2)
The licensed trustee company commits an offence if it does not keep accounts that:
(a) correctly record and explain its transactions for the common fund and the fund's financial position and performance; and
(b) would enable true and fair financial statements to be prepared and audited.
Penalty: 500 penalty units.
Auditing
5D.2.08(3)
The licensed trustee company commits an offence if it does not:
(a) have the financial statements for a financial year for the common fund audited by a registered company auditor; and
(b) obtain an auditor's report for the financial statements.
Penalty: 500 penalty units.
Lodging financial statements with ASIC
5D.2.08(4)
The licensed trustee company commits an offence if it does not lodge the audited financial statements for the fund with ASIC within 3 months of the end of the financial year.
Penalty: 500 penalty units.
Request for financial information
5D.2.08(5)
A person who is entitled to request an annual information return under subregulation 5D.2.01(3) may request, in writing, that the licensed trustee company provide the information mentioned in subregulation (7).
5D.2.08(6)
The licensed trustee company commits an offence if it does not provide the information mentioned in subregulation (7) to the person within 30 days of receiving the request under subregulation (5).
Penalty: 500 penalty units.
5D.2.08(7)
The information that must be provided is:
(a) a copy of the common fund's financial statements and audit report; and
(b) the classes of investments in which the common fund is invested and how the investment is divided between each class; and
(c) the trustee company's investment strategy for the common fund.
Offence for involvement in contravention
5D.2.08(8)
A person commits an offence if the person is involved in a contravention of subregulation (2), (3), (4), or (6) by a licensed trustee company.
Penalty:
(Omitted by SLI 2012 No 43, Sch 2[4] (effective 12 April 2012).) PART 5D.3 - REGULATION OF FEES CHARGED BY LICENSED TRUSTEE COMPANIES REGULATION 5D.3.01 5D.3.01 MODIFICATION OF SECTION 601TAB OF THE ACT: DISCLOSURE TO CLIENTS OF CHANGED FEES
For paragraph 601YAB(1)(b) of the Act, Chapter 5D of the Act applies as if section 601TAB of the Act were modified by inserting after subsection (3) the following subsections:
'(4)
A licensed trustee company is not required to comply with paragraph (1)(a) or (b) or (3)(a) in relation to a client who is a lost client, or an agent who is a lost agent.
(5)
In subsection (4):lost client
means a client who, at a particular time, is uncontactable.lost agent
means an agent who, at a particular time, is uncontactable.
(6)
In subsection (5):uncontactable,
in relation to a person who is a client or an agent of a licensed trustee company, means:
(a) the licensed trustee company:
(i) never had an address for the person; or
(ii) sent at least 1 written communication to the person's last known address which was returned unclaimed and the person has not, since the communication, given the company a contact address; and
(b) if the person is an agent, the licensed trustee company made a reasonable attempt to get the agent's address from the agent's client or the client's carers.'
This regulation applies if ASIC makes a determination under subsection 601WBA(1) of the Act that there is to be a transfer of estate assets and liabilities from a transferring company to a receiving company.
5D.4.01(2)
For the purposes of section 601SAB of the Act, the obligations of the receiving company include the provision to retail clients of access to the following in relation to a complaint arising from the provision of traditional trustee services by the transferring company: (a) the arrangements for compensation the receiving company is required to have under subsection 912B(1) of the Act; (b) the dispute resolution system the receiving company is required to have under subparagraph 912A(1)(g)(i) of the Act.
5D.4.01(3)
(Repealed by FRLI No F2023L01458, Sch 1[84] (effective 1 November 2023).)
For the purposes of paragraph 601WBH(1)(c) of the Act, ASIC must publish a notice mentioned in that paragraph on the ASIC website.
For the purposes of paragraph (b) of item 19A of the table in section 611 of the Act, the requirement that the company is an eligible CSF company at the time of the acquisition of the relevant interest is prescribed.
For item 20 in the table in section 611 of the Act, the acquisition of a relevant interest in voting shares in a following body corporate is prescribed:
(a) a body corporate that is incorporated within Australia or an external Territory and is a public authority or an instrumentality or agency of the Crown in right of a State or Territory;
(b) a corporation sole;
[ CCH Note: There are no paragraphs 6.2.01(c)-(e).]
(f) a foreign company or recognised company in respect of which an exemption from compliance with subsection 61(1) of the Co-operation Act 1923 of New South Wales is in force;
(g) a society within the meaning of The Co-operative and Other Societies Act of 1967 or The Co-operative Housing Societies Act of 1958 of Queensland;
[ CCH Note: There is no paragraph 6.2.01(h).]
(i) an association within the meaning of The Primary Producers' Co-operative Associations Act of 1923 of Queensland;
(j) an association, society, institution or body incorporated under the Associations Incorporation Act 1981 of Queensland;
(k) a body incorporated or deemed to be incorporated by or under a law of South Australia other than the Corporations Law of South Australia, the Companies Code (South Australia) or a corresponding previous enactment of South Australia;
(l) a society (other than a society that is a financial institution) within the meaning of section 5 of the Building Societies Act 1976 of Western Australia;
[ CCH Note: There is no paragraph 6.2.01(m).]
(n) a co-operative company registered under Part VI of the Companies (Co-operative) Act 1943 or a corresponding previous enactment of Western Australia;
(o) a society registered under the Co-operative and Provident Societies Act 1903 of Western Australia;
(p) an association, society, institution or body incorporated under the Associations Incorporation Act 1895 of Western Australia;
(q) a trustee bank registered under the Trustee Banks Act 1984 of Tasmania;
(r) a society (other than a society that is a financial institution) registered under the Co-operative Industrial Societies Act 1928 of Tasmania;
(ra) a society registered under the Co-operative Housing Societies Act 1963 of Tasmania;
(s) an association, society, institution or body incorporated under the Associations Incorporations Act 1964 of Tasmania;
(t) a body corporate created by section 75Q of the Conveyancing and Law of Property Act 1884 of Tasmania;
(u) a society (other than a society that is a financial institution) registered under the Co-operative Societies Act 1939 of the Australian Capital Territory;
(v) an association, society, institution or body incorporated under the Associations Incorporation Act 1953 of the Australian Capital Territory;
(w) a corporation constituted under the Unit Titles Act 1970 of the Australian Capital Territory;
(x) a society registered under the Co-operatives Act 1997 of the Northern Territory. REGULATION 6.2.02 6.2.02 OTHER PRESCRIBED CIRCUMSTANCES (ACT s 611)
For item 20 in the table in section 611 of the Act, the acquisition by a person of a relevant interest in voting shares in a body corporate that results from the person holding an office specified in Schedule 3 is prescribed. PART 6.5 - THE TAKEOVER PROCEDURE
For paragraph 650E(3)(a) of the Act, a notice under paragraph 650E(2)(a) of the Act relating to securities entered on a register or subregister of a prescribed CS facility must be in a form approved by the operating rules of that prescribed CS facility for Part 6.6 of the Act (which may include an electronic form).
6.6.01(2) [Return of securities]For paragraph 650E(4)(a) of the Act, if securities are entered on a register or subregister of a prescribed CS facility, a person to whom section 650E of the Act applies must take the action that the operating rules of the prescribed CS facility require in relation to the return of the securities.
6.6.01(3) [Withdrawal of acceptance of offer]For paragraph 650E(5)(a) of the Act, if a person withdraws an acceptance of an offer, the bidder must take any action that the operating rules of the prescribed CS facility require in relation to any of the securities:
(a) to which the acceptance relates; and
(b) that are entered on a register or subregister of the prescribed CS facility.
For paragraph 653A(b) of the Act, if the operating rules of a prescribed CS facility require an acceptance of an offer to which paragraph 653A(a) applies to be made in a particular way, to the extent that the acceptance relates to the securities in the offer, the acceptance must be made in that way.
For paragraph 653B(4)(a) of the Act, a notice relating to securities entered on a register or subregister of a prescribed CS facility must be in a form approved by the operating rules of the prescribed CS facility for Part 6.8 of the Act (which may include an electronic form).
[ CCH Note: There is no Part 6.9]
For subsection 657EA(3) of the Act, an application for review of a decision of the Takeovers Panel must not be made later than 2 business days after the day on which the decision was made.
For paragraph 661C(4)(a) of the Act, an election relating to securities entered on an electronic register or subregister of a prescribed CS facility must be in an electronic form approved by the operating rules of the prescribed CS facility.
For paragraph 675(2)(d) of the Act, the disclosure of information under section 675 of the Act is not required if:
(a) a reasonable person would not expect the information to be disclosed; and
(b) the information is confidential; and
(c) at least 1 of the following applies:
(i) the disclosure of the information would contravene a law;
(ii) the information is about a matter of supposition;
(iii) the information is not definite enough to make disclosure appropriate;
(iv) the information relates to an incomplete proposal or a matter that is in the course of negotiation;
(v) the information was prepared or created for the internal management purposes of the entity;
(vi) the information is a trade secret.
Part 6D.2 of the Act does not apply to an offer of a member share within the meaning given by regulation 12.8.03. REGULATION 6D.2.02 6D.2.02 EXEMPTION - FOREIGN COMPANIES
Part 6D.2 of the Act does not apply to an offer under a dividend reinvestment plan or bonus share plan of fully-paid shares in a foreign company to an existing holder of shares in the foreign company. REGULATION 6D.2.03 SOPHISTICATED INVESTORS 6D.2.03(1) [Net assets threshold]
For subparagraph 708(8)(c)(i) of the Act, $2.5 million is specified.
6D.2.03(2) [Gross income threshold]For subparagraph 708(8)(c)(ii) of the Act, $250,000 is specified.
Note: Under subsection 708(8) of the Act, an offer of a body's securities does not need disclosure to investors under Part 6D.2 of the Act if it appears from a certificate given by a qualified accountant no more than 6 months before the offer is made that the person to whom the offer is made:
For subsections 713C(5) and (6) of the Act, this regulation specifies:
(a) the information that must be contained in a base prospectus for simple corporate bonds; and
(b) the statements that must be set out in a base prospectus for simple corporate bonds.
6D.2.04(2)
Subregulation (1) does not prevent a base prospectus from containing other material or setting out other statements.
6D.2.04(3)
A base prospectus must contain a table of contents and sections dealing with the following matters:
(a) Section 1: What you need to know;
(b) Section 2: About the bonds;
(c) Section 3: About the issuer;
(d) Section 4: Risks;
(e) Section 5: Other information you should consider;
(f) Section 6: Glossary.
Section 1: What you need to know
6D.2.04(4)
The following statements, or statements to the same effect as the following statements, must be set out in section 1 of a base prospectus:
(a) This document will be the base prospectus for these bonds for 3 years from the time it is lodged with the Australian Securities and Investments Commission.
(b) There will be a separate offer-specific prospectus for each offer of bonds during the life of this base prospectus.
(c) To make an informed investment decision about these bonds, you should read the offer-specific prospectus and this base prospectus before investing.
(d) This base prospectus alone is not an offer. The offer is contained in the offer-specific prospectus, this base prospectus and other information that is incorporated by reference into the offer-specific prospectus and this base prospectus.
(e) To find out more about the pros and cons of investing in corporate bonds, visit ASIC's MoneySmart website: http://moneysmart.gov.au.
Section 2: About the bonds
6D.2.04(5)
The following information must be contained in section 2 of a base prospectus:
(a) information on the program of the bonds (if applicable), including any pre-planned future issues of bonds;
(b) details of the key aspects of the bonds, including information about the following matters:
(i) the interaction between the coupon rate and yield;
(ii) the interest rate of the bonds;
(iii) the term of the bonds;
(iv) the maturity and redemption of the bonds;
(v) events that will constitute default;
(vi) guarantees in relation to the bonds and information about any guarantors;
(vii) security and ranking.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, a base prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
Section 3: About the issuer
6D.2.04(6)
The following information must be contained in section 3 of a base prospectus:
(a) brief information about the issuing body that includes a summary of the body's:
(i) business; and
(ii) management personnel (including directors and senior managers); and
(iii) business strategy; and
(iv) governance arrangements;
(b) the trust deed relating to the issuing body;
(c) an explanation of the role of the trustee;
(d) additional information about the issuing body that relates to the investment decision, and where that information can be obtained, including:
(i) a reference to the issuing body's annual report and financial report; and
(ii) a reference to any half-year report that the issuing body lodged with ASIC after it lodged an annual financial report and before it lodged the most recent copy of the base prospectus with ASIC; and
(e) the key financial ratios, calculated in accordance with regulation 6D.2.06, that are relevant to the issuing body, accompanied by:
(i) an explanation of those key financial ratios; and
(ii) information about how a change to those key financial ratios may affect the bonds to be issued under the base prospectus.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, a base prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
6D.2.04(7)
The following statements, or statements to the same effect as the following statements, must be set out in section 3 of a base prospectus:
A publicly listed entity must release financial reports and continuously disclose information that may have an impact on its share or bond price. This information is available publicly on the relevant market exchange. You should consider this information when making an investment decision about bonds. While this information is important, it is not considered part of the disclosure document for the offer of bonds using this base prospectus.
Section 4: Risks
6D.2.04(8)
The following information must be contained in section 4 of a base prospectus:
(a) the main risks associated with bonds and an explanation of those risks;
(b) the issuing body's main business risks;
(c) if other risks specific to bonds may be relevant to a consumer's investment decision - an explanation of those other risks;
(d) if other business risks may be relevant to a consumer's investment decision - an explanation of those other risks.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, a base prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
Section 5: Other information you should consider
6D.2.04(9)
The following information must be contained in section 5 of a base prospectus:
(a) an explanation of the consequences, relating to taxation, of investing in bonds;
(b) information relating to privacy in general and the issuing body's obligations under privacy laws;
(c) any applicable selling restrictions.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, a base prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
6D.2.04(10)
The following statements, or statements to the same effect as the following statements, must be set out in section 5 of a base prospectus:
(a) More information on the tax implications associated with investing in bonds can be found on the Australian Taxation Office's website: http://www.ato.gov.au.
(b) The following is a list of material referred to, but not set out in full, in this base prospectus. However, the material (or relevant extracts of the material) is incorporated by reference and, as such, forms part of the offer of bonds covered by this base prospectus.
6D.2.04(11)
Section 5 of a base prospectus must contain a list of material referred to, but not set out in full, in the prospectus.
Section 6: Glossary
6D.2.04(12)
The information that section 6 of a base prospectus must contain is information that is adequate to explain the meanings of terms required to understand the content of:
(a) the base prospectus; or
(b) the offer-specific prospectus that is combined with the base prospectus to create a 2-part simple corporate bonds prospectus.
Note: See section 713B of the Act.
For subsections 713D(6) and (7) of the Act, this regulation specifies:
(a) the information that must be contained in an offer-specific prospectus for an offer of simple corporate bonds; and
(b) the statements that must be set out in an offer-specific prospectus for an offer of simple corporate bonds.
6D.2.05(2)
Subregulation (1) does not prevent an offer-specific prospectus from containing other material or setting out other statements.
6D.2.05(3)
An offer-specific prospectus for an offer of simple corporate bonds must contain a table of contents and sections dealing with the following matters:
(a) Section 1: What you need to know;
(b) Section 2: Key dates and offer details;
(c) Section 3: Offer-specific information you should consider.
Section 1: What you need to know
6D.2.05(4)
The following statements, or statements to the same effect as the following statements, must be set out in section 1 of an offer-specific prospectus:
(a) This offer-specific prospectus is not a summary of the information contained in the base prospectus.
(b) This offer-specific prospectus is only relevant for this offer of bonds.
(c) A base prospectus applies to this offer of bonds.
(d) This offer-specific prospectus provides offer details, key dates and other relevant information for the offer. The base prospectus for this offer provides additional information that is also critical to your decision. You should take all of the information in the base prospectus into consideration before making your decision in relation to this offer.
(e) To find out more about the pros and cons of investing in corporate bonds, visit ASIC's MoneySmart website: http://moneysmart.gov.au.
Section 2: Key dates and offer details
6D.2.05(5)
The following information must be contained in section 2 of an offer-specific prospectus:
(a) the terms of the offer, which must include the following:
(i) the name of the issuing body;
(ii) the size of the series, or tranche, to which the offer relates;
(iii) the face value of the bonds;
(iv)the term of the bonds;
(v) the maturity date of the bonds;
(vi) guarantees in relation to the bonds and information about any guarantors;
(vii) the interest rate of the bonds;
(viii) interest payment dates;
(ix) events that will constitute default;
(x) details of any existing security;
(xi) the structure of the offer;
(xii) the minimum size of an application for the bonds;
(xiii) the prescribed financial market on which the bonds will be listed;
(b) a short explanation of the circumstances in which the bonds can be redeemed;
(c) any fees and costs associated with the offer;
(d) either:
(i) if a provision of the base prospectus contains information about any selling restrictions - a reference to the provision; or
(ii) if subparagraph (i) does not apply - information about any selling restrictions;
(e) an explanation of where investors can obtain additional information about the offer, including:
(i) a reference to financial advisors or other professional advisors; and
(ii) the contact details of the issuing body.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, an offer-specific prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
Section 3: Offer-specific information you should consider
6D.2.05(6)
The following information must be contained in section 3 of an offer-specific prospectus:
(a) any significant information necessary to update the information in the base prospectus;
(b) any notices that the issuing body has issued to explain changes that have occurred to the base prospectus since it was lodged with ASIC;
(c) the key financial ratios, calculated in accordance with regulation 6D.2.06, that are relevant to the issuing body, accompanied by:
(i) details of any change in those key financial ratios since the last offer-specific prospectus was issued; or
(ii) if no offer-specific prospectus has previously been issued - details of any change in those key financial ratios compared with the key financial ratios at the time the base prospectus was lodged with ASIC;
(d) an explanation of how the issuing body will use the funds raised by issuing the bonds;
(e) a brief summary of the effect of the offer on the issuing body;
(f) the ranking of the bonds and any other debt on issue;
(g) an explanation of any changes to the risks disclosed in the base prospectus;
(h) the amount that anyone has paid or agreed to pay, or the nature and value of any benefit that anyone has given or agreed to give, to:
(i) any directors or proposed directors of the issuing body; or
(ii) a person named in the prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the prospectus; or
(iii) a promoter of the issuing body; or
(iv) an underwriter (but not a sub-underwriter) to the issue or sale or a financial services licensee named in the prospectus as a financial services licensee involved in the issue or sale.
Note: If information mentioned in this subregulation is contained in another document that has been lodged with ASIC, an offer-specific prospectus may refer to that lodged document instead of setting out the information (see section 713E of the Act).
For paragraphs 6D.2.04(6)(e) and 6D.2.05(6)(c), the key financial ratios that are relevant to an issuing body are:
(a) the gearing ratio; and
(b) the working capital ratio; and
(c) the interest cover ratio.
6D.2.06(2)
The key financial ratios referred to in subregulation (1) must be calculated in accordance with subregulations (3) to (5), based on the issuing body's most recent financial statements or, if applicable, the issuing body's consolidated financial statements.
6D.2.06(3)
The gearing ratio must be calculated using the following formula:
Total liabilities |
Total equity |
6D.2.06(4)
The working capital ratio must be calculated using the following formula:
Current assets |
Current liabilities |
6D.2.06(5)
The interest cover ratio must be calculated using the following formula:
EBITDA |
Net interest expense |
where:
EBITDA
means earnings before net interest expense, taxes, depreciation and amortisation, for the period to which the issuing body's most recent financial statements relate.
net interest expense
means the interest expense net of interest revenue, taking account of any related hedging arrangements recognised in the profit and loss statements, for the period to which the issuing body's most recent financial statements relate.
Note: The issuing body's most recent financial statements may relate to a period that is less than 12 months.
PART 6D.3A - CROWD-SOURCED FUNDING
Class of securities
6D.3A.01(1)
For the purposes of paragraph 738G(1)(c) of the Act, this subregulation specifies fully-paid ordinary shares as a class of securities.
Note: Paragraph 738G(1)(c) of the Act requires securities to be of a class specified in the regulations for an offer for the issue of the securities to be eligible to be made under Part 6D.3A of the Act.
Other requirements
6D.3A.01(2)
For the purposes of paragraph 738G(1)(f) of the Act, this subregulation specifies the requirement that the funds sought to be raised by the offer are not intended by the company to be used, to any extent, by:
(a) the company to issue a credit facility (within the meaning of regulation 7.1.06) to a related party of the company that is not a wholly-owned subsidiary of the company; or
(b) a related party of the company to issue a credit facility (within the meaning of regulation 7.1.06) to the company or to another related party of the company.
For the purposes of subsection 738J(2) of the Act, this regulation, and regulations 6D.3A.03, 6D.3A.04, 6D.3A.05 and 6D.3A.06, specify the information that must be contained in a CSF offer document for a CSF offer of securities (the securities on offer ) made by a company (the offering company ).
6D.3A.02(2)
Subregulation (1) does not prevent a CSF offer document from containing other information.
Note 1: The other information may becontained in a section identified in subregulation (3), in another section of the offer document or in an appendix to the offer document.
Note 2: An appendix to the offer document is part of the offer document.
6D.3A.02(3)
The offer document must contain a table of contents and sections dealing with the following matters:
(a) Section 1: Risk warnings;
(b) Section 2: Information about the offering company;
(c) Section 3: Information about the offer;
(d) Section 4: Information about investor rights.
6D.3A.02(4)
Information required to be contained in a section of the offer document may be presented in any order within the section.
Note: The contents of the CSF offer document may be published in a commonly accessible digital format.
The following statement must be set out in section 1 of the offer document:
"Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of ventures is speculative and carries high risks.
You may lose your entire investment, and you should be in a position to bear this risk without undue hardship.
Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares.
Your investment is unlikely to be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need the money or decide that this investment is not right for you.
Even though you have remedies for misleading statements in the offer document or misconduct by the company, you may have difficulty recovering your money.
There are rules for handling your money. However, if your money is handled inappropriately or the person operating the platform on which this offer is published becomes insolvent, you may have difficulty recovering your money.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.".
The following information must be contained in section 2 of the offer document:
(a) the name, ACN and type of the offering company;
(b) the address of the registered office of the offering company;
(c) the address of the principal place of business of the offering company;
(d) the names of each of the following persons, as well as his or her skills and experience relevant to the management of the offering company:
(i) each director of the offering company, and any person proposed by the offering company to be a director of the offering company;
(ii) each senior manager of the offering company, and any person proposed by the offering company to be a senior manager of the offering company;
(e) a description of the offering company's business and its organisational structure;
(f) a description, or a summary, of the capital structure of the offering company (relating to both equity and debt in the offering company), including the classes (if any) of securities in the offering company, and the rights associated with the securities in the offering company;
(g) a description of the main risks facing the offering company's business;
(h) a description, or a summary, of the key provisions of the offering company's constitution that deal with any rights and liabilities that attach to the securities in the issuing company;
(i) if the offering company is a proprietary company, a description or summary of the following:
(i) the key provisions of any agreement or proposed agreement between shareholders that deal with any rights and liabilities that attach to, or may affect, the securities in the issuing company;
(ii) any right of the directors of the company to refuse to register a transfer of shares in the company.
Note: For paragraph (a), the offering company will be one of the types set out in subsection 112(1) of the Act.
6D.3A.04(1A)
If a summary of the information in paragraph (1)(f) is contained in section 2 of the offer document, then:
(a) the information in full must be contained in another section of, or in an appendix to, the offer document; and
(b) section 2 of the offer document must include a cross reference to the location of that information.
6D.3A.04(2)
Section 2 of the offer document must also contain a copy, or a summary, of:
(a) if the offering company was registered before the financial year in which the CSF offer is to be made - the financial statements, that comply with the accounting standards, for the company for the most recently completed financial year; or
(b) if the offering company was registered during the financial year in which the CSF offer is to be made - the financial statements for the company for at least so much of that financial year as ends 1 month before the CSF offer is to be made.
6D.3A.04(2A)
If a summary of the financial statements mentioned in subregulation (2) is contained in section 2 of the offer document, then:
(a) a copy of the statements must be contained in another section of, or in an appendix to, the offer document; and
(b) section 2 of the offer document must include a cross reference to the location of the statements.
6D.3A.04(3)
Section 2 of the offer document must also contain the following information:
(a) if the offering company, or any person referredto in paragraph (1)(d), has been convicted of an offence against the Act - details of the offence, including a description of the circumstances giving rise to it;
(b) if a civil penalty under the Act has been imposed on the offering company, or any person referred to in paragraph (1)(d) - details of the penalty, including a description of the circumstances giving rise it;
(c) if a person referred to in paragraph (1)(d) is or has been disqualified from managing corporations under Part 2D.6 of the Act - details of the disqualification, including a description of the circumstances giving rise to it;
(d) if a person referred to in paragraph (1)(d) is or has been subject to a banning order under section 920A of the Act - details of the order, including a description of the circumstances giving rise to it;
(e) if a person referred to in paragraph (1)(d) is or has been subject to a court order under paragraph 921A(2)(a) of the Act - details of the order, including a description of the circumstances giving rise to it;
(f) if a person referred to in paragraph (1)(d) is or has been a director, secretary or senior manager of a corporation when it became insolvent - details of the insolvency, including a description of the circumstances giving rise to it;
(g) if ASIC has accepted under subsection 93AA(1) of the ASIC Act an undertaking given by the offering company, or by any person referred to in paragraph (1)(d) in relation to the offering company - details of the undertaking, including a description of the circumstances giving rise to it;
(h) if, during the 10-year period before the CSF offer is to be made, the offering company has:
(i) been convicted of any offence other than one against the Act; or
(ii) had imposed on it any penalty under any law other than the Act;
details of the offence or penalty, including a description of the circumstances giving rise to it;
(i) if, during the 10-year period before the CSF offer is to be made, any person referred to in paragraph (1)(d) has, in any of the capacities referred to in that paragraph with any company:
(i) been convicted of any offence other than one against the Act; or
(ii) had imposed on him or her a penalty under any law other than the Act;
details of the offence or penalty, including a description of the circumstances giving rise to it.
The following information must be contained in section 3 of the offer document:
(a) a description, or a summary, of the securities on offer, including information on the rights associated with those securities;
(b) the minimum subscription amount for the offer (see subsection 738L(8) of the Act);
(c) the maximum subscription amount for the offer (see subsection 738L(7) of the Act);
(d) the period that the offering company expects the offer to remain open;
(e) a description of how the offering company intends to usethe proceeds from the offer (including a description of how the company intends to use any proceeds of the offer in excess of the minimum subscription amount for the offer).
6D.3A.05(1A)
If a summary of the information mentioned in paragraph (1)(a) is contained in section 3 of the offer document, then:
(a) the information in full must be contained in another section of, or in an appendix to, the offer document; and
(b) section 3 of the offer document must include a cross reference to the location of that information.
6D.3A.05(2)
If any of the proceeds of the offer will be paid, directly or indirectly, to any of the following persons, section 3 of the offer document must also contain a description of the payment:
(a) a person referred to in paragraph 6D.3A.04(1)(d);
(b) the CSF intermediary that will publish the offer, or any other person that is a related party (within the meaning of subsection 738G(3) of the Act) of that CSF intermediary;
(c) a person promoting or marketing the offer;
(d) a person that holds securities entitling the person to exercise more than 20% of the rights to vote at a general meeting of the offering company;
(e) a person that controls the offering company;
(f) any other person that is a related party (within the meaning of subsection 738G(3) of the Act) of the offering company.
6D.3A.05(3)
Without limiting subregulation (2), proceeds of the offer will be paid indirectly to a person if those proceeds will be paid for the benefit of the person by an intermediary entity such as a nominee, trust or partnership.
6D.3A.05(4)
Section 3 of the offer document must also contain a description of each previous CSF offer (if any) of securities by the following entities:
(a) the offering company;
(b) for each person referred to in paragraph 6D.3A.04(1)(d) for the offering company - any other company that had, at the time of a previous CSF offer by that other company, the person as a director or senior manager;
(c) for each person that controls the offering company - any other company that the person controlled at the time of a previous CSF offer by that other company;
(d) any other company that is a related party (within the meaning of subsection 738G(3) of the Act) of the offering company.
6D.3A.05(5)
The description of a previous CSF offer referred to in subregulation (4) must include a description of the outcome of the offer.
The following information must be contained in section 4 of the offer document:
(a) a description of the cooling off rights contained in section 738ZD of the Act;
(b) a description of the effect of subsection 738ZA(5) of the Act (responsible intermediary for CSF offer to provide communication facility).
6D.3A.06(2)
To the extent that any of the following provisions apply to the offering company, section 4 of the offer document must also contain a description of the effect of those provisions:
(aa) subsection 301(2) of the Act (about when financial reports have to be audited);
(a) subsection 301(5) of the Act (about financial accounts not required to be audited for up to 5 years);
(b) subsections 250N(5) and (6) of the Act (about company not required to hold an AGM for up to 5 years);
(c) subsections 314(1AF) and (2A) of the Act (about annual financial reporting to members and making the reports accessible online);
(d) item 19A of the table in section 611 of the Act (about the exception to the prohibition on acquiring relevant interests in voting shares);
(e) section 738ZK of the Act (about Chapter 2E of the Act applying to proprietary companies that have one or more CSF shareholders).
Note: The provisions mentioned in paragraph (2)(a) or (b) only apply to an offering company covered under section 738ZI of the Act.
For the purposes of paragraph 738ZA(3)(b) of the Act, this regulation sets out the requirements for an acknowledgement by a person making an application pursuant to a CSF offer.
6D.3A.07(2)
The following statement must be set out in the acknowledgement:
"I have read the CSF offer document. I understand this document is not a prospectus and contains less information than a prospectus.
I have read the risk warning and I understand that it contains some of the important information for making a decision about investing. However:
I am aware that I can use the communication facility to ask questions and that there is a 5 business day cooling off period in relation to this investment.".
For the purposes of subsection 738Q(1) of the Act, this regulation prescribes the checks that a CSF intermediary needs to conduct before publishing any of the following documents (the offer document ) on a platform of the intermediary:
(a) a CSF offer document (or a document purporting to be a CSF offer document);
(b) a supplementary CSF offer document (or a document purporting to be a supplementary CSF offer document);
(c) a replacement CSF offer document (or a document purporting to be a replacement CSF offer document);
for a CSF offer of securities made by a company (the offering company ).
Identity of offering company
6D.3A.08(2)
The CSF intermediary must check the following information:
(a) the name, ACN and type of the offering company;
(b) the address of the registered office of the offering company;
(c) the address of the principal place of business of the offering company.
Eligibility to crowd fund
6D.3A.08(3)
The CSF intermediary must check whether:
(a) the company satisfies the requirements in paragraphs 738H(1)(a), (b), (c), (d), (e) and (f) of the Act; and
(b) the offer document satisfies the requirements in subsection 738J(2) and section 738K of the Act.
Information on directors etc.
6D.3A.08(4)
The CSF intermediary must check the following:
(a) the names and addresses of each person referred to in paragraph 6D.3A.04(1)(d);
(b) whether the offer document contains the information required by subregulation 6D.3A.04(3).
For the purposes of subsection 738Q(2) of the Act, this regulation prescribes what constitutes a reasonable standard in relation to all the checks referred to in regulation 6D.3A.08.
6D.3A.09(2)
To the extent that information to be checked is of a kind that is included in a register kept by ASIC under the Act, or on ASIC's website, a reasonable standard is to check:
(a) whether the information is included in that register or on that website; and
(b) if the information is so included - whether the information is contrary to any other information that the CSF intermediary has; and
(c) if the information is the name and address of a person referred to in paragraph 6D.3A.04(1)(d) - whether the name and address is consistent with the name and address used by that person on an original, a certified copy or an authenticated electronic copy of:
(i) a primary photographic identification document; or
(ii) both a primary non photographic identification document and a secondary identification document.
6D.3A.09(3)
Subject to subregulation (4), for all other kinds of information or matters to be checked, a reasonable standard is to:
(a) explain in writing to the offering company what information or matters are required, including the level of detail required for such information and matters; and
(b) require the offering company to provide such information and matters to the CSF intermediary in accordance with a reasonable process that the CSF intermediary has developed, documented and implemented for this purpose.
6D.3A.09(4)
A reasonable standard for checking whether the offer document (see subregulation 6D.3A.08(1)) satisfies the requirements in section 738K of the Act is to check the offer document in accordance with a reasonable process that the CSF intermediary has developed, documented and implemented for this purpose.
6D.3A.09(5)
In this regulation:
certified copy
has the same meaning as in the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1).
primary non photographic identification document
has the same meaning as in the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1).
primary photographic identification document
has the same meaning as in the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1).
secondary identification document
has the same meaning as in the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No 1).
For the purposes of subsection 738ZA(2) of the Act, this regulation specifies the terms of a general CSF risk warning.
6D.3A.10(2)
Those terms are as follows:
"Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of ventures is speculative and carries high risks.
You may lose your entire investment, and you should be in a position to bear this risk without undue hardship.
Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares.
Your investment is unlikely to be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need the money or decide that this investment is not right for you.
Even though you have remedies for misleading statements in the offer document or misconduct by the company, you may have difficulty recovering your money.
There are rules for handling your money. However, if your money is handled inappropriately or the person operating this platform becomes insolvent, you may have difficulty recovering your money.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.".
For paragraph 742(1)(b) of the Act, a warrant that is a security is exempted from all provisions of Chapter 6D of the Act.
For paragraph 742(1)(c) of the Act, section 708 of the Act applies as if paragraph 708(8)(c) of the Act were modified by omitting "6 months" and substituting "2 years".
For the purposes of paragraph 742(1)(c) of the Act, Chapter 6D of the Act applies as if section 738X of the Act were modified so that subsection 738X(7) of the Act only applies if the defect in the CSF offer document referred to in paragraph 738X(5)(a) of the Act is materially adverse from the point of view of an investor.
[ CCH Note: Pursuant to the Corporations Amendment Regulations 2001 (No 4) (SR 2001 No 319) effective 11 March 2002, Chapter 7 (Securities) comprising reg 7.1.01-7.15.01 and Chapter 8 (The futures industry) comprising reg 8.1.01-8.7.03 are replaced by a new Chapter 7 (Financial services and markets) comprising reg 7.1.01-7.12.01. As the subject matter of the new Chapter 7 relates to the new financial services reform regime, "inserted" has been used in the history notes for each provision, and all references to the former provisions have been removed.]
(Omitted by SLI 2011 No 193, Sch 1[3] (effective 31 October 2011).) REGULATION 7.1.02 7.1.02 PARTICIPANT
(Repealed by FRLI No F2022L01689, Sch 1[2] (effective 15 September 2023).) REGULATION 7.1.03 7.1.03 MEANING OF PRESCRIBED CS FACILITY
(Repealed by FRLI No F2023L01458, Sch 1[142] (effective 1 November 2023).) REGULATION 7.1.03A 7.1.03A MEANING OF BASIC DEPOSIT PRODUCT - ADDITIONAL CONDITIONS
(Repealed by FRLI No F2023L01458, Sch 1[142] (effective 1 November 2023).) REGULATION 7.1.03B 7.1.03B SELF MANAGED SUPERANNUATION FUNDS
(Repealed by FRLI No F2023L01458, Sch 1[142] (effective 1 November 2023).) REGULATION 7.1.04 DERIVATIVES 7.1.04(1)
For paragraph 761D(1)(b) of the Act, the prescribed period is: (a) for a foreign exchange contract - 3 business days; and (b) in any other case - 1 business day.
7.1.04(2)
For subsection 761D(2) of the Act, and subject to this regulation, an arrangement is declared to be a derivative if the following conditions are satisfied in relation to the arrangement: (a) the arrangement is not a foreign exchange contract; (b) under the arrangement, a party to the arrangement must, or may be required to, provide at some future time (which may be less than 1 day after the arrangement is entered into) consideration of a particular kind or kinds to someone; (c) the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:
(i) an asset;
(ii) a rate (including an interest rate or exchange rate);
(iii) an index;
(iv) a commodity.
7.1.04(3)
(Omitted by SR 2003 No 126, Sch 1[2].)
7.1.04(4)
An arrangement under which: (a) a party has, or may have, an obligation to buy tangible property (other than Australian or foreign currency) at a price and on a date in the future; and (b) another party has, or may have, an obligation to sell that property; and (c) the arrangement does not permit the seller's obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and (d) neither usual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller's obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy;
is not an arrangement to which subregulation (2) applies to the extent only that the arrangement deals with that purchase and sale.
7.1.04(5)
An arrangement under which: (a) a party has an obligation to buy property; and (b) another party has an obligation to sell the property;
is not an arrangement to which subregulation (2) applies merely because the arrangement provides for the consideration to be varied by reference to a general inflation index (for example, the Consumer Price Index).
7.1.04(6)
A contract for the future provision of services is not an arrangement to which subregulation (2) applies.
7.1.04(7)
A thing that is described in subsection 764A(1) of the Act, other than paragraph 764A(1)(c), is not an arrangement to which subregulation (2) applies.
7.1.04(8)
For paragraph 761D(3)(d) of the Act, each of the following is declared not to be a derivative: (a) tradeable water rights; (b) an arrangement:
(i) under which a person (the seller ) has, or may have, an obligation to sell tradeable water rights at a future date; and
(ii) under which another person (the buyer ) has, or may have, an obligation to buy the tradeable water rights, or replacement water rights, at a future date; and
(iii) that does not permit the seller's obligations to be wholly settled by cash, or by set-off between the seller and the buyer, rather than by transfer of ownership of the tradeable water rights or replacement water rights; and
(c) a carbon abatement contract.
(iv) in relation to which neither usual market practice, nor the rules of a licensed market or of a licensed CS facility, allow the seller's obligations to be closed out by matching up the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy the tradeable water rights or replacement water rights;
Note: For carbon abatement contract , see subregulation 1.0.02(1).
7.1.04(9)
Subregulations (4) to (8) apply whether or not a matter mentioned in those subregulations is described in subsection 761D(1) of the Act.
7.1.04(10)
In subregulation (8):
replacement water rights
means tradeable water rights that are granted, issued or authorised as a replacement for the seller's tradeable water rights, including as a result of transformation arrangements mentioned in subsection 97(1) of the Water Act 2007.
rules
(Repealed by FRLI No F2022L01689, Sch 1[30] (effective 15 September 2023).)
tradeable water rights
has the same meaning as in the Water Act 2007.
REGULATION 7.1.04A MEANING OF KIND OF FINANCIAL PRODUCTS (SECTION 1012IA OF THE ACT)
For section 761CA of the Act, this regulation applies in relation to paragraph (a) of the definition of custodial arrangement in subsection 1012IA(1) of the Act.
Each of the following is a kind of financial product:
(a) for interests in a managed investment scheme, all the interests in that managed investment scheme;
(b) in any other case, all the financial products issued by a person or the person's related bodies corporate.
For section 761CA of the Act, this regulation applies in relation to paragraph 1017F(4)(d) of the Act.
An interest in a managed investment scheme is in the same class as another interest in a managed investment scheme if they are both interests in the same managed investment scheme.
For section 761CA of the Act, this regulation applies in relation to paragraph 1017F(4)(d) of the Act.
A superannuation product is in the same class as another superannuation product if they are both issued by the same superannuation entity.
For the purposes of subsection 761CAA(2) of the Act, a person is not a claimant intermediary in the circumstances set out in subregulation (2), (4), (5), (6), (7), (8), (9), (10), (11) or (12).
Mortgage brokers and mortgage intermediaries
7.1.04CAA(2)
The circumstances are: (a) the person is a mortgage broker or mortgage intermediary; and (b) the mortgage broker or mortgage intermediary provides a credit service to a consumer; and (c) the mortgage broker or mortgage intermediary represents the consumer in pursuing a claim under an insurance product.
7.1.04CAA(3)
Expressions used in subregulation (2) that are also used in the National Consumer Credit Protection Act 2009 have the same meaning in that subregulation as they have in that Act.
Insurance brokers
7.1.04CAA(4)
The circumstances are that the person is an insurance broker (within the meaning of the Insurance Contracts Act 1984).
Qualified accountants
7.1.04CAA(5)
The circumstances are: (a) the person is a qualified accountant; and (b) the qualified accountant provides one or more of the following services to a person (the client ):
(i) preparing a financial report or financial statements (including, but not limited to, a financial report or financial statements required under the Act);
(ii) auditing financial records;
(iii) a tax agent service (within the meaning of the Tax Agent Services Act 2009);
(c) the qualified accountant represents the client in pursuing a claim under an insurance product.
(iv) if the qualified accountant is a limited licensee (within the meaning of subregulation 7.6.04(3)) or supervises and has responsibility for the provision of financial services covered by the financial services licence of a limited licensee - a financial service covered by the financial services licence of the limited licensee; and
Veterinarians
7.1.04CAA(6)
The circumstances are: (a) the person (the veterinarian ) is registered under the law of a State or Territory as a veterinarian, veterinary practitioner or veterinary surgeon; and (b) the veterinarian represents a person insured under an insurance product in pursuing a claim under the product; and (c) the claim relates to the management or prevention of a disease, injury or condition of an animal covered by the insurance product.
Travel agents
7.1.04CAA(7)
The circumstances are: (a) the person is a travel agent; and (b) the travel agent represents a person insured under an insurance product in pursuing a claim under the product; and (c) the claim relates to any of the following matters covered by the insurance product:
(i) financial loss for fares for any form of transport or accommodation to be used in the course of a specified journey if the insured person does not start or complete the journey;
(ii) loss or damage to personal belongings while the insured person is on a specified journey;
(iii) a sickness or disease contracted, or injury sustained, by the insured person on a specified journey;
(iv) loss, damage or compensation for an event affecting the insured person on a specified journey that ordinarily forms a part of insurance commonly regarded as travel insurance, including loss of cash or credit cards, legal liability, hijack, kidnap or ransom.
Financial advisers
7.1.04CAA(8)
The circumstances are: (a) the person is a financial services licensee whose Australian financial services licence covers the provision of financial product advice; or (b) both of the following are satisfied:
(i) the person is an authorised representative of a financial services licensee whose Australian financial services licence covers the provision of financial product advice;
(ii) the person is authorised by the licensee to provide financial product advice on behalf of the licensee.
Financial counsellors
7.1.04CAA(9)
The circumstances are that the person is a member of one of the following bodies, acting in that capacity: (a) Financial Counselling Australia Ltd; (b) Financial Counsellors Association of New South Wales Inc; (c) Financial and Consumer Rights Council Inc.; (d) Financial Counsellors Association of Queensland Inc.; (e) Financial Counsellors Association of Western Australia Inc; (f) The South Australian Financial Counsellors' Association Incorporated; (g) Financial Counselling Tasmania Inc.; (h) Financial Counsellors ACT; (i) Money Workers Association of the Northern Territory Incorporated.
Property managers
7.1.04CAA(10)
The circumstances are: (a) the person (the property manager ) carries on a business of managing property; and (b) the property manager manages property on behalf of one or more other persons; and (c) the property manager represents a person insured under an insurance product in pursuing a claim in relation to the property under the insurance product.
Estate management
7.1.04CAA(11)
The circumstances are: (a) the person (the estate manager ) administers the estate of a person who is:
(i) deceased; or
(b) the estate manager represents a person insured under an insurance product in pursuing a claim under the insurance product; and (c) the claim relates to the estate or its administration.
(ii) incapable of managing the person's own affairs because of physical or mental incapacity; and
Public Trustees etc.
7.1.04CAA(12)
The circumstances are: (a) the person (the estate manager ) is the Public Trustee (however described) of a State or Territory; and (b) the estate manager administers the estate of a person; and (c) the estate manager represents a person insured under an insurance product in pursuing a claim under the insurance product; and (d) the claim relates to the estate or its administration.
For section 761CA of the Act, this regulation applies in relation to paragraph 917C(3)(ba) of the Act.
7.1.04CA(2) ["financial product"]The following are kinds of financial product:
(a) motor vehicle insurance;
(b) home building insurance;
(c) home contents insurance;
(d) sickness and accident insurance;
(e) consumer credit insurance;
(f) travel insurance.
For the purposes of paragraph 761DA(2)(b) of the Act, circumstances in which a person's provision of claims handling and settling services on behalf of one or more insurers is taken not to be the primary part of a business carried on by the person are when those services are: (a) investigating the validity of claims under insurance products, or providing assistance in relation to such investigations; or (b) assessing the extent of insurers' liabilities to other persons under insurance products under which claims are made, or providing assistance in relation to such assessments.
This regulation applies in relation to a financial product that:
(a) is a derivative; and
(b) is entered into, or acquired through a facility conducted in accordance with:
(i) the Corporations (Exempt Futures Market - National Wholesale Electricity) Declaration 1999; or
(ii) the Corporations (Exempt Futures Market) Declaration 2001.
For paragraph 761E(7)(a) of the Act, each person who is a party to the financial product is taken to be an issuer of the financial product.
For paragraph 761E(7)(a) of the Act, subsections 761E(5) and (6) of the Act do not apply to the financial product.
This regulation applies if a member of a superannuation fund, who has a superannuation interest in the growth phase, elects to receive a pension in relation to that interest or part of that interest.
7.1.04E(2) [When financial product issued]For paragraph 761E(7)(a) of the Act, the superannuation fund is taken to issue a new financial product when:
(a) it acknowledges receipt of the member's election; or
(b) it makes the first payment of the pension;
whichever occurs first.
7.1.04E(3) [Definitions]For this regulation:
growth phase
has the meaning given by regulation 1.03AB of the SIS Regulations.
pension
has the meaning given by subregulation 1.06(1) of the SIS Regulations.
For section 761CA of the Act, this regulation applies for subsections 917A(3), 917C(2) and 917C(3) of the Act.
7.1.04F(2)
Each of the following is a class of financial services: (a) the provision of financial product advice relating to a general insurance product; (b) the provision of financial product advice relating to an investment life insurance product; (c) the provision of financial product advice relating to a life risk insurance product; (d) dealing in a financial product that is a general insurance product; (e) dealing in a financial product that is an investment life insurance product; (f) dealing in a financial product that is a life risk insurance product; (g) the provision of a claims handling and settling service in relation to a general insurance product; (h) the provision of a claims handling and settling service in relation to an investment life insurance product; (i) the provision of a claims handling and settling service in relation to a life risk insurance product.
REGULATION 7.1.04G MEANING OF ISSUER FOR A FOREIGN EXCHANGE CONTRACT 7.1.04G(1) [Application]
This regulation applies to a financial product that is a foreign exchange contract that is not entered into, or traded, on a financial market.
7.1.04G(2) [Who is an issuer?]For paragraph 761E(7)(a) of the Act, each party to the foreign exchange contract is an issuer of the product.
This regulation is made for the purposes of paragraph 764A(1)(m) of the Act.
7.1.04N(2)
The following are declared to be financial products: (a) an interest in a litigation funding scheme mentioned in regulation 5C.11.01; (b) an interest in a litigation funding arrangement mentioned in that regulation.
7.1.04N(3)-(4)
(Repealed by FRLI No F2022L01614, Sch 1[9] (effective 10 December 2022).)
For paragraph 765A(1)(q) of the Act, an exempt public sector superannuation scheme is prescribed.
For subparagraph 765A(1)(h)(i) of the Act, each of the following is a credit facility : (a) the provision of credit:
(i) for any period; and
(ii) with or without prior agreement between the credit provider and the debtor; and
(iii) whether or not both credit and debit facilities are available; and
(iv) that is not a financial product mentioned in paragraph 763A(1)(a) of the Act; and
(v) that is not a security, a managed investment product, a foreign passport fund product, an investment life insurance product, a superannuation product or an RSA; and
(va) that is not a financial product mentioned in paragraph 764A(1)(ba), or (j) of the Act; and
(b) a facility:
(vi) that is not a financial product mentioned in paragraph 764A(1)(i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;
(i) known as a bill facility; and
(c) the provision of credit by a pawnbroker in the ordinary course of a pawnbroker's business (being a business which is being lawfully conducted by the pawnbroker); (d) the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate; (e) the provision of credit by an employer, or a related body corporate of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person); (f) a mortgage:
(ii) under which a credit provider provides credit by accepting, drawing, discounting or indorsing a bill of exchange or promissory note;
(i) that secures obligations under a credit contract (other than a lien or charge arising by operation of any law or by custom); and
(ii) that is not a financial product mentioned in paragraph 763A(1)(a) of the Act; and
(iii) that is not a security, a managed investment product, a foreign passport fund product, an investment life insurance product, a superannuation product or an RSA; and
(iiia) that is not a financial product mentioned in paragraph 764A(1)(ba), or (j) of the Act; and
(g) a guarantee related to a mortgage mentioned in paragraph (f); (h) a guarantee of obligations under a credit contract.
(iv) that is not a financial product mentioned in paragraph 764A(1)(i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;
7.1.06(2)
The provision of consumer credit insurance that includes a contract of general insurance for the Insurance Contracts Act 1984 is not a credit facility.
7.1.06(2A)
The following are not credit facilities: (a) a litigation funding scheme mentioned in regulation 5C.11.01; (b) a litigation funding arrangement mentioned in regulation 5C.11.01.
7.1.06(2B)
(Repealed by FRLI No F2020L00942, Sch 1[3] (effective 24 July 2020).)
7.1.06(3)
In this regulation:
credit
means a contract, arrangement or understanding:
(a) under which:
(i) payment of a debt owed by one person (a debtor ) to another person (a credit provider ) is deferred; or
(ii) one person (a debtor ) incurs a deferred debt to another person (a credit provider ); and
(b) including any of the following:
(i) any form of financial accommodation;
(ii) a hire purchase agreement;
(iii) credit provided for the purchase of goods or services;
(iv) a contract, arrangement or understanding for the hire, lease or rental of goods or services, other than a contract, arrangement or understanding under which:
(A) full payment is made before or when the goods or services are provided; and
(B) for the hire, lease or rental of goods - an amount at least equal to the value of the goods is paid as a deposit in relation to the return of the goods;
(v) an article known as a credit card or charge card;
(vi) an article, other than a credit card or a charge card, intended to be used to obtain cash, goods or services;
(vii) an article, other than a credit card or a charge card, commonly issued to customers or prospective customers by persons who carry on business for the purpose of obtaining goods or services from those persons by way of a loan;
(viii) a liability in respect of redeemable preference shares;
(ix) a financial benefit arising from or as a result of a loan;
(x) assistance in obtaining a financial benefit arising from or as a result of a loan;
(xi) issuing, indorsing or otherwise dealing in a promissory note;
(xii) drawing, accepting, indorsing or otherwise dealing in a negotiable instrument (including a bill of exchange);
(xiii) granting or taking a lease over real or personal property;
(xiv) a letter of credit.
REGULATION 7.1.06A ARRANGEMENTS FOR CERTAIN FINANCIAL PRODUCTS THAT ARE NOT CREDIT FACILITIES 7.1.06A(1)
This regulation applies in relation to a financial product that would be a credit facility in accordance with regulation 7.1.06 if subparagraphs 7.1.06(1)(a)(iv), (v), (va) and (vi), and 7.1.06(1)(f)(ii), (iii), (iiia) and (iv) did not apply.
7.1.06A(2)
For paragraph 761E(7)(a) of the Act, and in relation to the financial product: (a) the credit provider is not taken to be the issuer of the financial product; and (b) the debtor is taken to be the issuer of the financial product.
7.1.06A(3)
For paragraph 766A(2)(b) of the Act, and in relation to the financial product: (a) the provision of financial product advice to the debtor, or the debtor's representative, is taken not to be the provision of a financial service; and (b) a dealing in the credit facility by the credit provider, or the credit provider's representative, is taken not to be the provision of a financial service.
7.1.06A(4)
In this regulation:
credit, credit provider and debtor
have the same meanings as in subregulation 7.1.06(3).
REGULATION 7.1.06B 7.1.06B SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS: SUPERANNUATION INTERESTS
(Repealed by FRLI No F2019L01641, Sch 1[2] (effective 18 December 2019).) REGULATION 7.1.07 SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS: SURETY BONDS 7.1.07(1) [Application]
This regulation applies to an arrangement between 2 persons ( person 1 and person 2 ) made in the following circumstances:
(a) person 1 enters into the arrangement in order to meet a requirement of another arrangement between person 1 and a person other than person 2 ( person 3 );
(b) under the arrangement, person 2 undertakes to make a payment to, or perform an obligation for the benefit of, person 3 in circumstances specified as part of the arrangement;
(c) under the arrangement, person 1 is liable to person 2 for any payments made, or liabilities, costs or expenses incurred, by person 2 in making the payment to, or performing the obligation for the benefit of, person 3;
(d) the arrangement does not constitute a financial product under section 764A of the Act, other than a derivative.
For paragraph 765A(1)(y) of the Act, the arrangement is not a financial product.
This regulation applies to an arrangement between 2 persons ( person 1 and person 2 ) made in the following circumstances:
(a) person 1 leases or rents something from person 2;
(b) under the arrangement, person 1 makes a payment to person 2 to reduce the amount that person 1 would otherwise have to pay to person 2 under the leasing or rental agreement;
(c) the payment relates to the event of an accident or other eventuality affecting the thing that is being leased or rented.
7.1.07A(2) [Arrangement not financial product]Example
Collision damage waiver insurance for a rental car.
For paragraph 765A(1)(y) of the Act, the arrangement is not a financial product.
For paragraph 765A(1)(y) of the Act, a bank draft, including (but not limited to):
(a) a cheque drawn by a financial institution on itself; or
(b) a cheque drawn by a financial institution on a financial institution other than itself;
is not a financial product.
For paragraph 765A(1)(y) of the Act, insurance under an overseas student health insurance contract is not a financial product.
7.1.07C(2)
In this regulation:
overseas student health insurance contract
has the same meaning as in Private Health Insurance Rules made for the purposes of Part 4-2 of the Private Health Insurance Act 2007 (which is about health insurance business).
Note: In 2019, the meaning was given by rule18 of the Private Health Insurance (Health Insurance Business) Rules 2018.
(Repealed by FRLI No F2019L01533, Sch 1[2] (effective 1 April 2020).) REGULATION 7.1.07E SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS: RIGHTS OF THE HOLDER OF A DEBENTURE 7.1.07E(1) [Application]
This regulation applies to a facility that consists of the rights of the holder of a debenture against a trustee under a trust deed entered into under:
(a) section 283AA of the Act; or
(b) Chapter 2L or Division 4 of Part 7.12 of the old Corporations Law. 7.1.07E(2) [Facility not financial product]
For paragraph 765A(1)(y) of the Act, the facility is not a financial product.
For paragraph 765A(1)(y) of the Act, a money order issued as a money order by, or for, Australia Post is not a financial product.
For paragraph 765A(1)(y) of the Act, a non-cash payment facility is not a financial product if:
(a) the issuer is:
(i) a body corporate that is an ADI (within the meaning of the Banking Act 1959); or
(ii) an operator of a payment system; and
(b) under the facility, as instructed by the client, the issuer makes money available (or causes it to be made available) to a person nominated by the client:
(i) within 2 business days of receiving the client's instruction; or
(ii) within the time reasonably required to complete the transaction subject to any constraints imposed by law; and
(c) under the facility the funds are transferred by electronic means for collection by, or for the credit of, the payer or another person; and
(d) the issuer and the payer do not have a standing arrangement to transfer funds in this manner.
Example
Telegraphic transfers and international money transfers offered by banks and remittance dealers.
For paragraph 765A(1)(y) of the Act, Australian Capital Territory insurance, including insurance entered into by the Australian Capital Territory and another insurer as joint insurers, is not a financial product.
(Repealed by FRLI No F2022L01689, Sch 1[3] (effective 15 September 2023).) REGULATION 7.1.07J 7.1.07J SPECIFIC THINGS THAT ARE NOT FINANCIAL PRODUCTS - CARBON ABATEMENT
For paragraph 765A(1)(y) of the Act, a carbon abatement contract is declared not to be a financial product.
Note: For carbon abatement contract , see subregulation 1.0.02(1).
Advice about how to structure or use insurance claim payouts
7.1.08AA(1)
For the purposes of paragraph 766B(7B)(b) of the Act, giving a recommendation or statement of opinion, or a report of either of those things, cannot reasonably be regarded as a necessary part of providing a claims handling and settling service if the recommendation, statement or report relates to: (a) how an amount to be paid to a person in settlement of a claim under an insurance product should be structured; or (b) the management or use of an amount paid, or to be paid, to a person in settlement of a claim under an insurance product.
Advice about other insurance products or financial products
7.1.08AA(2)
For the purposes of paragraph 766B(7B)(b) of the Act, giving a recommendation or statement of opinion, or a report of either of those things, cannot reasonably be regarded as a necessary part of providing a claims handling and settling service if the recommendation, statement or report: (a) is given in response to a claim, or potential claim, made under an insurance product; and (b) relates to other insurance products not held by the person making the claim or financial products.
For subparagraph (a)(ii) of the definition of exempt document or statement in subsection 766B(9) of the Act, the following documents and statements are prescribed (and so excluded from the definition):
(a) a Product Disclosure Statement that:
(i) contains personal advice; or
(ii) contains general advice about a financial product other than a financial product to which the Statement relates;
(b) a Financial Services Guide that contains personal advice;
(c) a document or statement that would, but for this regulation, be an exempt document or statement only because it is prepared or given in accordance with section 1018A of the Act;
(d) a record of advice mentioned in subsection 946B(3A) of the Act.
7.1.08(2)
For subregulation (1), if a person:
(a) acquires a financial product ( product 1 ); and
(b) will be able, by acquiring product 1, to give the product issuer an instruction to acquire a particular financial product or a financial product of a particular kind (within the meaning of section 1012IA of the Act) under a custodial arrangement (within the meaning of section 1012IA of the Act);
the Product Disclosure Statement for product 1 is taken to relate to the other financial product.
7.1.08(3)
For paragraph (b) of the definition of exempt document or statement in subsection 766B(9) of the Act, documents, information and statements that:
(a) do not contain personal advice; and
(b) are required by, and prepared as a result of, a requirement under an Australian law; and
(c) are included in a class of documents, information or statements specified by ASIC in a list published in the Gazette for this subregulation;
are prescribed (and so included in the definition).
7.1.08(3A)
For the purposes of paragraph (b) of the definition of exempt document or statement in subsection 766B(9) of the Act, the following documents and statements are prescribed (and so included in the definition):
(a) a CSF offer document that does not contain personal advice;
(b) a document or statement to the extent that it contains or draws information from a CSF offer document and attributes that information to the CSF offer document, if:
(i) the information is published on the platform on which the CSF offer document is published, and does not contain personal advice; or
(ii) the information is a statement made on the communication facility for the CSF offer, and does not contain personal advice;
(c) an advertisement or publication to the extent that the advertisement or publication:
(i) contains or draws information from a CSF offer document and attributes that information to the CSF offer document; and
(ii) does not contravene subsection 738ZG(1) of the Act; and
(iii) does not contain personal advice.
7.1.08(4)
For paragraph (b) of the definition of exempt document or statement in subsection 766B(9) of the Act:
(a) an assessment under subsection 985E(1) of the Act that a margin lending facility will not be unsuitable for the person to whom the margin lending facility is to be issued is prescribed (and so excluded from the definition); and
(b) an assessment under subsection 985E(1) of the Act that a margin lending facility whose limit is proposed to be increased will not be unsuitable for the person for whom the limit of the margin lending facility is to be increased is prescribed (and so excluded from the definition).
Note: The effect of paragraph (b) of the definition of exempt document or statement in subsection 766B(9), is that a prescribed document or statement is an exempt document or statement.
REGULATION 7.1.08A 7.1.08A MODIFICATION OF SECTION 766D OF THE ACT - FREE CARBON UNITS
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies in relation to free carbon units (within the meaning of the Clean Energy Act 2011) as if section 766D of the Act were modified by inserting after subsection 766D(2) the following subsection:
"(3)
A person who holds a free carbon unit (within the meaning of the Clean Energy Act 2011) that has been issued to the person by the Clean Energy Regulator is taken not to be making a market for a financial product if the person states the price of the free carbon unit."
For paragraph 768A(1)(b) of the Act, the following obligations are prescribed: (a) each obligation arising from a contract to transfer a security; (b) each obligation arising from a contract to transfer a managed investment product; (c) each obligation arising from acquiring or providing a financial product mentioned in paragraph 764A(1)(c) of the Act; (d) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(j) of the Act; (e) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(ba) of the Act; (ea) each obligation arising from a contract to transfer a foreign passport fund product; (f) each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(k) of the Act; (fa) each obligation arising from a contract to transfer a carbon unit, an Australian carbon credit unit or an eligible international emissions unit;
Note: See paragraphs 764A(1)(ka) and (kb) of the Act.
(g) each obligation arising from a contract to transfer a right that includes an undertaking by a body to repay, as a debt, money deposited with or lent to the body; (h) each obligation arising from the entry into a repurchase agreement.7.1.09(2)
In this regulation, repurchase agreement means a repurchase transaction, in relation to a financial product, entered into pursuant to:
REGULATION 7.1.10 CONDUCT THAT DOES NOT CONSTITUTE OPERATING A CLEARING AND SETTLEMENT FACILITY 7.1.10(1)
(Omitted by SR 2002 No 16, Sch 1[9] (effective 11 March 2002).)
7.1.10(2) [Stock Exchange of Newcastle Limited, Bendigo Stock Exchange Limited]
For paragraph 768A(2)(i) of the Act, the conduct of:
(a) National Stock Exchange of Australia Limited, or an agent of that body; or
(b) a participant of the National Stock Exchange of Australia Limited, or an agent of the participant; or
(c) Bendigo Stock Exchange Limited, or an agent of that body; or
(d) a participant of the Bendigo Stock Exchange Limited, or an agent of the participant;
in operating a facility in accordance with the operating rules of a licensed market does not constitute operating a clearing and settlement facility if the requirements of subregulation (3) are met.
For subregulation (2), the requirements are:
(a) the market licensee must have, and must be responsible for enforcing, operating rules that apply to a participant of the licensed market in relation to the participant's obligations arising from transactions carried out on the licensed market; and
(b) a participant mentioned in paragraph (a), or an agent of the participant appointed in accordance with the operating rules of the licensed market, must be responsible for fulfilling the obligations owed to another participant or agent arising from transactions carried out on the licensed market; and
(c) the market licensee is not the operator of any other clearing and settlement facility; and
(d) each participant of the licensed market is not the operator of any other clearing and settlement facility; and
(e) each agent of a participant of the licensed market is not the operator of any other clearing and settlement facility.
(Omitted by SR 2002 No 16, Sch 1[9] (effective 11 March 2002).)
Division 2 - Retail clients and wholesale clients REGULATION 7.1.11 MEANING OF RETAIL CLIENT AND WHOLESALE CLIENT : MOTOR VEHICLE INSURANCE PRODUCT 7.1.11(1) [``motor vehicle insurance product'']
For subparagraph 761G(5)(b)(i) of the Act, a motor vehicle insurance product is a contract or part of a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of one or more of the following:
(a) loss of, or damage to, a motor vehicle;
(b) liability for loss of, or damage to, property caused by or resulting from impact of a motor vehicle with some other thing.
A motor vehicle insurance product does not include:
(a) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation.
In this regulation:
motor vehicle
means a vehicle that is designed:
(a) to travel by road; and
(b) to use volatile spirit, steam, gas, oil, electricity or any other power (not being human power or animal power) as its principal means of propulsion; and
(c) to carry passengers;
and includes a motor cycle.
However, a motor vehicle does not include:
(a) an omnibus; or
(b) a tram; or
(c) a motor vehicle the carrying capacity of which exceeds 2 tonnes.
For subparagraph 761G(5)(b)(ii) of the Act, a home building insurance product is a contract or part of a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of destruction of or damage to a home building.
A home building insurance product does not include insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to building or construction work in relation to a home building.
In this regulation:
(a) a building used, or intended to be used, principally and primarily as a place of residence; and
(b) out-buildings, fixtures and structural improvements used for domestic purposes, being purposes related to the use of the principal residence;
on the site and, without limiting the generality of the expression, includes:
(c) fixed wall coverings, fixed ceiling coverings and fixed floor coverings (other than carpets); and
(d) services (whether underground or not) that are the property of the insured or that the insured is liable to repair or replace or pay the cost of repairing and replacing; and
(e) fences and gates wholly or partly on the site.
site
, in relation to a building, means the site specified in the relevant contract of insurance as the site on which the building is situated.
A home building does not include:
(a) a hotel; or
(b) a motel; or
(c) a boarding house; or
(d) a building that:
(i) is in the course of construction; and
(ii) is being constructed by the insured, or an intending insured, in the course of a construction business; or
(e) a temporary building or structure or a demountable or moveable structure; or
(f) a caravan (whether fixed to the site or not).
For subparagraph 761G(5)(b)(iii) of the Act, a home contents insurance product is a contract or part of a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of loss of or damage to the contents of a residential building.
A home contents insurance product does not include:
(a) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation.
In this regulation:
contents
, in relation to a residential building, means any of the following items:
(a) furniture, furnishings and carpets (whether fixed or unfixed);
(b) household goods;
(c) clothing and other personal effects;
(d) a picture;
(e) a work of art;
(f) a fur;
(g) a piece of jewellery;
(h) a gold or silver article;
(i) a document of any kind;
(j) a collection of any kind;
(k) swimming pools that:
(i) are not fixtures; and
but does not include an article or thing to which the definition of residential building applies.
(ii) are owned by the insured or by a member of the insured's family ordinarily residing with the insured;
(a) a building used principally and primarily as a place of residence on the site; and
(b) out-buildings used for domestic purposes, being purposes related to the use of the principal residence on the site.
A residential building does not include:
(a) a hotel; or
(b) a motel; or
(c) a boarding house; or
(d) a building that is in the course of construction; or
(e) a temporary building or structure or a demountable or moveable structure.
For subparagraph 761G(5)(b)(iv) of the Act, a sickness and accident insurance product is a contract or part of a contract that has either of the following characteristics:
(a) the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of the insured person contracting a sickness or disease or a specified sickness or disease or sustaining an injury or a specified injury;
(b) if the insured person dies as a result of the sickness, disease or injury, the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of the death.
A sickness and accident insurance product does not include:
(a) sickness and accident policies which are guaranteed ``renewable'' at the option of the insured or where the insurer guarantees not to cancel the policy in response to a change in the risk where such a policy has been effected for a predetermined period of years in excess of 1 year; or
(b) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(c) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation; or
(d) insurance that:
(i) provides cover for the death of, or injury to, a driver of a motor vehicle which is caused by the fault of that person when driving; and
(ii) is provided only in conjunction with, and at no extra cost to, insurance mentioned in subparagraph (c)(ii).
Note: See also regulation 7.9.14B.
For subparagraph 761G(5)(b)(v) of the Act, a consumer credit insurance product is a contract or part of a contract that has the following characteristics:
(a) the contract provides insurance cover (whether the cover is limited or restricted in any way) in respect of:
(i) the death of the insured person; or
(ii) the insured person contracting a sickness or disease; or
(iii) the insured person sustaining an injury; or
(iv) the insured person becoming unemployed;
(b) the amount of the liability of the insurer under the contract is to be ascertained by reference to a liability of the insured person under a specified agreement to which the insured person is a party.
A consumer credit insurance product does not include:
(a) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation.
For subparagraph 761G(5)(b)(vi) of the Act, a travel insurance product is a contract or part of a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of one or more of the following:
(a) financial loss in respect of:
(i) fares for any form of transport to be used; or
in the course of the specified journey in the event that the insured person does not commence or complete the specified journey;
(ii) accommodation to be used;
(b) loss of or damage to personal belongings that occurs while the insured person is on the specified journey;
(c) a sickness or disease contracted or an injury sustained by the insured person while on the specified journey;
(d) loss, damage or compensation for an event occurring to the insured person during a specified journey that ordinarily forms a part of insurance commonly regarded as travel insurance, including
(i) loss of cash or credit cards; and
(ii) legal liability; and
(iii) hijack; and
(iv) kidnap; and
(v) ransom.
A travel insurance product does not include:
(a) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation.
In this regulation:
specified journey
means a journey in relation to which insurance cover is provided by the contract.
For subparagraph 761G(5)(b)(vii) of the Act, a personal and domestic property insurance product is a contract or part of a contract that provides insurance cover (whether or not the cover is limited or restricted in any way) in respect of loss or damage to property that is:
(a) wholly or predominantly used for personal, domestic or household purposes by:
(i) the insured; or
(ii) a relative of the insured; or
(iii) any person with whom the insured resides; and
(b) ordinarily used for that purpose.
7.1.17(2)
A personal and domestic property insurance product does not include:
(a) insurance to or in relation to which the Marine Insurance Act 1909 applies; or
(b) insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to:
(i) workers' compensation; or
(ii) compulsory third party compensation.
7.1.17(3)
In this regulation:
property
includes any of the following:
(a)moveables;
(b) valuables;
(c) a caravan or mobile home;
(d) an on-site mobile home;
(e) a trailer;
(f) a marine pleasure craft;
(g) a horse;
(h) a domestic pet;
(i) a mobile phone.
relative
means any of the following relatives of an insured person:
(a) mother;
(b) step-mother;
(c) father;
(d) step-father;
(e) brother;
(f) half-brother;
(g) sister;
(h) half-sister;
(i) spouse (including de facto spouse);
(j) son;
(k) step-son;
(l) adopted son;
(m) daughter;
(n) step-daughter;
(o) adopted daughter;
(p) grandparent;
(q) grandchild;
(r) nephew;
(s) niece;
(t) uncle;
(u) aunt;
(v) mother-in-law;
(w) father-in-law.
7.1.17(4)
For paragraph (1)(a), property is taken to be wholly or predominantly used for personal, domestic or household purposes if the insured gives the insurer a statement, before the insurance product is issued, that the property is intended to be used wholly or predominantly for 1 or more of those purposes.
REGULATION 7.1.17A 7.1.17A GENERAL INSURANCE PRODUCTS: MEDICAL INDEMNITY INSURANCE PRODUCTS
For subparagraph 761G(5)(b)(viii) of the Act, a medical indemnity insurance product is prescribed.
For paragraph 761G(10)(a) of the Act, this regulation applies in relation to a class of financial products that:
(a) are provided by the same product issuer to:
(i) a particular person; or
(ii) an associate of the person; or
(iii) a body corporate controlled and wholly owned by the person; and
(b) are provided at or about the same time. 7.1.17B(2) [Price]
The price for the provision of the financial products may be calculated by:
(a) calculating the total price for the provision of all of the financial products in the class; and
(b) treating the total price as the price for the provision to the particular person of a single financial product. 7.1.17B(3) [Value]
The value of the financial products may be calculated by:
(a) calculating the total value of all of the financial products in the class; and
(b) treating the total value as the value of a single financial product provided to the particular person.
For subsection 761G(6A) of the Act, a traditional trustee company service is not provided to a person as a retail client if:
(a) the service is provided to the person for use in relation to a business that is not a small business; or
(b) the person to whom the service is provided is a professional investor.
Note Small business is defined in subsection 761G(12) of the Act and professional investor is defined in section 9 of the Act.
This regulation makes arrangements about the price for the provision of an investment-based financial product.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the "price" of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G(7)(a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500,000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
7.1.18(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to an investment-based financial product is $500,000.
Working out price: general rule
7.1.18(3)
For paragraph 761G(10)(a) of the Act, the price of an investment-based financial product: (a) is the amount that is paid or payable to acquire or purchase the investment-based financial product; and (b) does not include any amount paid for or in respect of the investment-based financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note: An amount deposited in a deposit account will not generally be regarded as part of the ``price'' paid to acquire or purchase the financial product.
7.1.18(4)
For subregulation (3), in calculating any amount payable or paid to acquire or purchase the investment-based financial product: (a) disregard any amount payable to the extent to which it is to be paid out of money lent by:
(i) the person offering the investment-based financial product; or
(b) disregard any amount paid to the extent to which it was paid out of money lent by:
(ii) an associate of that person; and
(i) the person offering the investment-based financial product; or
(c) include any amount paid or payable to cover:
(ii)an associate of that person; and
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and
(d) despite paragraph (c), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the investment-based financial product; and
(i) the client; or
(ii) another person acting on behalf of the client.
Group products
7.1.18(5)
If the investment-based financial product is a group product covered by section 1012H of the Act: (a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the investment-based financial product; and (b) subregulation (3) is to be used to determine the amount to be paid for the person to be covered by the investment-based financial product.
REGULATION 7.1.19 RETAIL CLIENTS AND WHOLESALE CLIENTS: VALUE OF INVESTMENT-BASED FINANCIAL PRODUCTS 7.1.19(1)
This regulation makes arrangements about the value of an investment-based financial product to which a financial service relates.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the "value" of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G(7)(a) of the Act will usually be used to assess a client's status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
7.1.19(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to an investment-based financial product is $500,000.
Workingout value: general rule
7.1.19(3)
For paragraph 761G(10)(a) of the Act, the value of an investment-based financial product on a day is: (a) if the financial product is a security, or a financial product under paragraph 764A(1)(j) of the Act - the market value of the investment-based financial product; or (b) if paragraph (a) does not apply - the amount of money that stands to the client's credit in relation to that investment-based financial product.
7.1.19(4)
For subregulation (3), in calculating the value of an investment-based financial product: (a) disregard any amount standing to the client's credit in relation to the investment-based financial product to the extent that it is to be paid, or was paid, out of money lent by:
(i) the person offering the investment-based financial product; or
(b) disregard any amount of fees or charges:
(ii) an associate of that person; and
(i) that the product issuer has an actual or accrued right to deduct, or otherwise to have access to, from the value of the investment-based financial product (whether or not the amount has been deducted); or
(ii) that has accrued as at the time that the client's status as a retail or wholesale client is assessed.
Cumulative value of products
7.1.19(5)
If, at a single point in time: (a) a financial service that is being provided to a client is:
(i) financial product advice; or
(b) the financial service is provided in respect of:
(ii) arranging for a person to engage in conduct in accordance with subsection 766C(2) of the Act; and
(i) more than 1 investment-based financial product; or
(ii) more than 1 income financial stream financial product; or
(c) either:
(iii) a combination of investment-based financial products and income financial stream financial products; and
(i) the total price for the provision of those financial products is at least $500,000; or
(ii) the price or value of all of those financial products is at least $500,000;
the value of the financial products is taken, for subregulation (3), to be greater than the amount mentioned in subregulation (2).
7.1.19(6)
Subregulation (5) does not affect the operation of Part 7.9 of the Act, and Part 7.9 of these Regulations, to the extent that they require the provision of a Product Disclosure Statement in relation to the financial product advice.
Note: Although the effect of subregulation (5) is that the value of the investment-based financial products is taken to be at least $500,000 in the circumstances mentioned in that subregulation, a client must still be provided with appropriate product disclosure and other requirements in accordance with Part 7.9 of the Act as a retail client in relation to a particular investment-based financial product where the price of the product is less than $500,000.
In any situation in which a Product Disclosure Statement would be required for a retail client (the situations described in Subdivision B of Division 2 of Part 7.9 of the Act), the limit of $500,000 must be reached for any single investment-based financial product, or income stream financial product, before the client will be treated as a wholesale client.
Group products
7.1.19(7)
If the investment-based financial product is a group product covered by subsection 1012H(1) of the Act: (a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the investment-based financial product; and (b) subregulation (3) is to be used to determine the value of the investment-based financial product to the extent that it stands, or will stand, to the credit of, each person who elects, or may elect, to be covered by the investment-based financial product.
Time of assessment
7.1.19(8)
If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note: Subregulation (8) will ensure that a provider of financial services may assess a client's status at any time (for example, the provider may need to ascertain whether a periodic statement must be sent to the client under section 1017D of the Act because the client is a retail client).
REGULATION 7.1.19A RETAIL CLIENTS AND WHOLESALE CLIENTS: PRICE OF MARGIN LENDING FACILITIES 7.1.19A(1)
This regulation makes arrangements about the price for the provision of a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the 'price' of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G(7)(a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays $500 000 or more to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
7.1.19A(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to the margin lending facility is $500 000.
Working out price
7.1.19A(3)
For paragraph 761G(10)(a) of the Act, the price of a margin lending facility is to be worked out so that it is the same as the value of the secured property or transferred securities contributed by the client for establishing the facility.
7.1.19A(4)
For paragraph 761G(10)(a) of the Act, the price of a margin lending facility whose limit is proposed to be increased is to be worked out so that it is the sum of: (a) the current value of any secured property or transferred securities previously contributed by a client for establishing the facility or increasing the limit; and (b) the value of any additional secured property or transferred securities contributed by the client in relation to the latest increase of the limit of the facility.
7.1.19A(5)
For subregulations (3) and (4), any secured property or transferred securities contributed by the client that is funded by borrowings from a third party is not to be taken into consideration when working out the price of a margin lending facility.
This regulation makes arrangements about the price for the provision of an income stream financial product.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the "price" of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G(7)(a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500,000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
7.1.20(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to an income stream financial product is $500,000.
Working out price: general rule
7.1.20(3)
The price of an income stream financial product: (a) is the amount that is paid or payable to acquire or purchase the income stream financial product; and (b) does not include any amount paid for or in respect of the income stream financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note: Additional amounts contributed to an allocated annuity will not generally be regarded as part of the "price" paid to acquire or purchase the financial product.
7.1.20(4)
For subregulation (3), in calculating any amount payable or paid to acquire or purchase the income stream financial product: (a) disregard any amount payable to the extent to which it is to be paid out of money lent by:
(i) the person offering the income stream financial product; or
(b) disregard any amount paid to the extent to which it was paid out of money lent by:
(ii) an associate of that person; and
(i) the person offering the income stream financial product; or
(c) include any amount paid or payable to cover:
(ii) an associate of that person; and
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the income stream financial product; and
(d) despite paragraph (c), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the income stream financial product; and
(i) the client; or
(ii) another person acting on behalf of the client.
REGULATION 7.1.21 RETAIL CLIENTS AND WHOLESALE CLIENTS: VALUE OF INCOME STREAM FINANCIAL PRODUCTS 7.1.21(1)
This regulation makes arrangements about the value of an income stream financial product.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
In general, the "value" of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G(7)(a) of the Act will usually be used to assess a client's status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
7.1.21(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to an income stream financial product is $500,000.
Working out value: general rule
7.1.21(3)
For paragraph 761G(10)(a) of the Act, the value of an income stream [sic] product is the amount worked out in accordance with any of the following paragraphs: (a) if the terms of the income stream financial product provide for the calculation of a commutation value - the commutation value; (b) if the terms of the income stream financial product do not permit commutation - the minimum commutation amount calculated in accordance with ordinarily accepted actuarial standards; (c) if the income stream financial product is of a kind in relation to which money stands to the client's credit for the income stream financial product - the amount of money standing to the client's credit.
7.1.21(4)
For subregulation (3), in calculating the value of an income stream financial product: (a) disregard any amount standing to the client's credit in relation to the income stream financial product to the extent that it is to be paid, or was to be paid, out of money lent by:
(i) the person offering the income stream financial product; or
(b) disregard any amount of fees or charges:
(ii) an associate of that person; and
(i) that the product issuer has an actual or accrued right to deduct from the value of the income stream financial product (whether or not the amount has been deducted); or
(ii) that has accrued as at the time that the client's status as a retail or wholesale client is assessed.
7.1.21(5)
If it is not reasonably practicable to ascertain an amount in accordance with subregulation (3), the value of the income stream product is an amount calculated as follows: (a) identify the price for the provision of the income stream; (b) subtract the total of any amounts paid out of the income stream (including any regular payments and any capital amounts); (c) subtract an amount representing the reasonable administrative fees or other expenses of the issuer (including any costs or fees relating to the product that were disclosed to the client at or before the time the product was issued); (d) add interest on:
(i) the amount paid for the income stream financial product; or
based on movements in the rate of the All Groups Consumer Price Index number (being the weighted average of the 8 Australian capital cities) published by the Australian Statistician.
(ii) an amount, or a reasonable notional amount, representing the value of the income stream financial product;
Group products
7.1.21(6)
If the income stream financial product is a group product covered by subsection 1012H(1) of the Act: (a) the amount in subregulation (2) is to be used to determine the status of each person who elects, or may elect, to be covered by the income stream financial product; and (b) subregulation (3) is to be used to determine the value of the income stream financial product to the extent that it stands, or will stand, to the credit of, each person who elects, or may elect, to be covered by the income stream financial product.
Time of assessment
7.1.21(7)
If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note: Subregulation (7) will ensure that a provider of financial services may assess a client's status at any time (for example, the provider may need to ascertain whether a periodic statement must be sent to the client under section 1017D of the Act because the client is a retail client).
REGULATION 7.1.22 RETAIL CLIENTS AND WHOLESALE CLIENTS: VALUE OF DERIVATIVES 7.1.22(1)
This regulation makes arrangements about the value of a derivative: (a) that is a financial product; and (b) to which section 765A of the Act does not apply; and (c) to which regulation 7.1.22AA does not apply.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
Value
7.1.22(2)
For paragraph 761G(7)(a) of the Act: (a) the amount applicable in relation to a single derivative is $500,000; and (b) if the derivative is included in 2 or more related financial products, the amount applicable in relation to the related financial products is $500,000.
Working out value: general rule
7.1.22(3)
For paragraph 761G(10)(a) of the Act, the value of a derivative is the face value, or the notional amount in respect of, the financial product (in dollar terms) as at the date on which the relevant arrangement is entered into by the parties.
Time of assessment
7.1.22(4)
If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note: Subregulation (4) will ensure that a provider of financial services may assess a client's status at any time (for example, the provider may need to ascertain whether ongoing disclosure of a significant event must be sent to the client under section 1017B of the Act because the client is a retail client).
REGULATION 7.1.22AA RETAIL CLIENTS AND WHOLESALE CLIENTS: CONTRACT FOR DIFFERENCE 7.1.22AA(1)
This regulation makes arrangements about the value of a derivative that: (a) is a contract for difference; and (b) is provided by a person who carries on a business of issuing contracts for difference to other persons ( holders ).
7.1.22AA(2)
Paragraph 761G(7)(a) of the Act does not apply to the derivative.
7.1.22AA(3)
In this regulation:
contractfor difference
means a derivative to which all of the following apply:
(a) the value of the derivative, or the amount of consideration to be provided under the derivative, is ultimately determined, derived from or varies by reference to (wholly or in part) the change, between the acquisition and termination of the derivative, in the amount or value of an underlying specified under the terms of the derivative;
Note 1: For example, a derivative under which, at termination, the amount of consideration payable depends (wholly or in part) on the change in the level of a stock market index over the term of the derivative.
Note 2: There may be other factors that affect the value of the derivative. For example, fees and costs.
(b) the derivative is not able to be traded on a licensed market;
(c) the derivative:
(i) does not terminate on a fixed date; or
(ii) if the derivative terminates on a fixed date - it is a derivative of a kind that are typically terminated before the fixed date;
Note 1: For example, the derivative may have a fixed termination date if the underlying has a fixed termination date.
Note 2: This means that options, futures, swaps and forward rate agreements will generally not be contracts for difference.
(d) the holder has the right to terminate the derivative;
Note: The terms of the derivative may provide for its termination in other circumstances. For example, on the occurrence of an event of default or on the issuer (other than the holder) exercising a right to terminate the derivative.
(e) on termination, the obligations of the parties are settled in cash or by set-off between the parties.
terminate
, in relation to a derivative, includes the derivative being closed out.
underlying
, in relation to a derivative, means any thing (of any nature whatsoever and whether or not deliverable) other than the derivative, including, for example, one or more of the following:
(a) an asset;
(b) a rate (including an interest rate or exchange rate);
(c) an index;
(d) a commodity.
This regulation makes arrangements about the value of a foreign exchange contract that is not a derivative.
7.1.22A(2) Value.For paragraph 761G(7)(a) of the Act, the amount applicable to a foreign exchange contract is $500,000.
7.1.22A(3) Working out value: general rule.For paragraph 761G(10)(a) of the Act, the value of a foreign exchange contract is the amount paid or payable under the foreign exchange contract.
This regulation makes arrangements about the price for the provision of a non-cash payment financial product.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
In general, the "price" of a product will be the amount that is paid to acquire or be issued with the financial product. The test for the price of the product in paragraph 761G(7)(a) of the Act will be determined at or before the time the client acquires, or is issued with, the financial product. If a client pays over $500,000 to acquire or be issued with the financial product, the client will be a wholesale client in respect of the product.
Price
7.1.23(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to a non-cash payment financial product is $500,000.
Working out price: general rule
7.1.23(3)
The price of a non-cash payment financial product: (a) is the amount that is paid or payable to acquire or purchase the non-cash payment financial product; and (b) does not include any amount paid for or in respect of the non-cash payment financial product following its issue or acquisition unless the issue or acquisition would not have taken place without an arrangement to pay the amount.
Note: Additional amounts paid into a smart card or cheque account after its issue will not generally be regarded as part of the "price" paid to acquire or purchase the financial product.
7.1.23(4)
For subregulation (3), in calculating any amount payable or paid to acquire or purchase the non-cash payment financial product: (a) include any amount paid or payable to cover:
(i) fees or charges that are paid to the issuer or any other person that relates to the issue of the non-cash payment financial product; and
(b) despite paragraph (a), disregard any amount of remuneration or other benefits paid or payable to a person for the provision of financial product advice or other related services provided directly to:
(ii) fees or charges that are paid to the issuer or any other person that relates to the issue of the non-cash payment financial product; and
(i) the client; or
(ii) another person acting on behalf of the client.
REGULATION 7.1.24 RETAIL CLIENTS AND WHOLESALE CLIENTS: VALUE OF NON-CASH PAYMENT PRODUCTS 7.1.24(1)
This regulation makes arrangements about the value of a non-cash payment financial product to which a financial service relates.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
In general, the "value" of a product will be the amount that the product is worth once it is issued or acquired by the client. It is anticipated that the test for the value of the product in paragraph 761G(7)(a) of the Act will usually be used to assess a client's status as a retail or wholesale client at or before the time that a financial service (eg financial product advice, disposal of the product) is provided to the client in respect of an existing product.
Value
7.1.24(2)
For paragraph 761G(7)(a) of the Act, the amount applicable in relation to a non-cash payment financial product is $500,000.
Working out value: general rule
7.1.24(3)
For paragraph 761G(10)(a) of the Act, the value of a non-cash payment financial product on a day is the amount of money that stands to the client's credit in respect of that product.
7.1.24(4)
For subregulation (3), in calculating an amount of money, disregard any amount of fees or charges: (a) that the product issuer has an actual or accrued right to deduct, or otherwise to have access to, from the value of the non-cash payment financial product (whether or not the amount has been deducted); or (b) that has accrued as at the time that the client's status as a retail or wholesale client is assessed.
Time of assessment
7.1.24(5)
If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.
Note: Subregulation (5) will ensure that a provider of financial services may assess a client's status at any time (for example, the provider may need to ascertain whether ongoing disclosure of a significant event must be sent to the client under section 1017B of the Act because the client is a retail client).
REGULATION 7.1.25 RETAIL CLIENTS AND WHOLESALE CLIENTS: LIFE RISK INSURANCE AND OTHER RISK-BASED FINANCIAL PRODUCTS 7.1.25(1)
This regulation makes arrangements about the value of a risk-based financial product.
7.1.25(2)
Paragraph 761G(7)(a) of the Act does not apply to a risk-based financial product.
Note: Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.
Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.
Under paragraph 761G(10)(b) of the Act, the regulations may also modify the way in which paragraph 761G(7)(a) applies in particular circumstances.
For the purpose of assessing the price of a financial product, or the value of a financial product to which a financial service relates, under paragraph 761G(7)(a) of the Act, superannuation-sourced money is not to be counted if: (a) the financial service provided to a person is:
(i) financial product advice; or
(b) the financial product to which the financial service relates is a product other than a non-cash payment financial product; and (c) the person who was the holder of the relevant superannuation interest in the regulated superannuation fund was or would have been a retail client under subsection 761G(6) of the Act if they had held or acquired the product after FSR commencement.
(ii) if the person was a retail client - the provision of a financial product in circumstances in which a Product Disclosure Statement would need to be given to the client under Part 7.9 of the Act (including section 1012A, 1012B, 1012C or 1012IA); and
Example
If:
(a) the price for an income stream financial product or an investment-based financial product is $700,000; and (b) the client uses $400,000 of superannuation-sourced money and $300,000 of other funds; then, unless the client is a wholesale client for another reason, the client will be a retail client due to the operation of paragraph 761G(7)(a) of the Act.
Note: Under subsections 761G(5), (6) and (7) of the Act, general insurance products, superannuation products and RSAs are not financial products to which the restriction on counting superannuation-sourced money towards the price applies. This applies in addition to the exclusion for non-cash payment products under paragraph (b) of this regulation.
For subsection 761G(10) of the Act if, at any time, the holder of a financial product is a wholesale client in relation to the product because of paragraph 761G(7)(a) of the Act:
(a) the holder is taken, on and after that time, to be a wholesale client in relation to the product as between the holder and:
(i) the issuer of the product; or
for the period during which the holder holds the product; and
(ii) if a related body corporate of the issuer of the product provides a custodial or depository service to the holder of the product in relation to the product - the related body corporate;
(b) paragraph (a) applies whether or not the holder would, but for that paragraph, have otherwise been or become a retail client in relation to that product at some time.
For subsection 761G(10) of the Act, if:
(a) a person is a wholesale client in relation to the product because of paragraph 761G(7)(a) or paragraph (1)(a); and
(b) another person becomes a holder of the financial product; and
(c) the issuer did not know, and could not reasonably be expected to have known:
(i) whether another person had become the holder of the financial product; or
(ii) whether any subsequent holder of the financial product was a retail client or a wholesale client;
the issuer is taken not to be guilty of any offence, or to be liable under civil penalty or civil liability provisions under the Act, merely because the issuer has not treated any subsequent holder of that financial product as a retail client.
For subparagraph 761G(7)(c)(i) of the Act, $2.5 million is specified.
7.1.28(2)
For subparagraph 761G(7)(c)(ii) of the Act, $250,000 is specified.
Note: Under paragraph 761G(7)(c) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA, the product or service is provided to the person as a retail client unless:
For paragraph 766A(1)(f) of the Act, the provision of financial product advice to an employer about the choice of a fund to which to contribute for the benefit of those employees for whom there is no chosen fund (within the meaning of the Superannuation Guarantee (Administration) Act 1992) is prescribed.
Note: The financial product advice provided to the employer is a financial service provided to a person as a retail client: see paragraph 761G(6)(b) of the Act.
For subsection 766A(1B) of the Act, a person who is one of the following:
(a) a person who may request an annual information return under subregulation 5D.2.01(3);
(b) a person who requests the preparation of a will, a trust instrument, a power of attorney or an agency arrangement;
is, in relation to an estate management function, prescribed as the person to whom the service is taken to be provided.
For paragraph 766A(2)(b) of the Act, a person who provides an eligible service is taken not to provide a financial service if: (a) the person provides the eligible service in the course of conducting an exempt service; and (b) it is reasonably necessary to provide the eligible service in order to conduct the exempt service; and (c) the eligible service is provided as an integral part of the exempt service.
7.1.29(2)
For this regulation, a person provides an eligible service if the person engages in conduct mentioned in paragraphs 766A(1)(a) to (f) of the Act.
7.1.29(3)
For this regulation, a person who does any of the following provides an exempt service : (a) provides advice in relation to the preparation or auditing of financial reports or audit reports; (b) provides advice on a risk that another person might be subject to and identifies generic financial products or generic classes of financial product that will mitigate that risk, other than advice for inclusion in an exempt document or statement; (c) provides advice on the acquisition or disposal, administration, due diligence, establishment, structuring or valuation of an incorporated or unincorporated entity, if the advice:
(i) is given to a person who is, or is likely to become, an interested party in the entity; and
(ii) to the extent that it is financial product advice - is confined to advice on a decision about:
(A) securities of a body corporate, or related body corporate, that carries on or may carry on the business of the entity; or
(B) interests in a trust (other than a superannuation fund, a managed investment scheme that is registered or required to be registered under Part 5C.1 of the Act, or a notified foreign passport fund), the trustee of which carries on or may carry on the business of the entity in the capacity of trustee; and
(iii) does not relate to other financial products that the body corporate or the trustee of the trust may acquire or dispose of; and
(d) provides advice on financial products that are:
(iv) is not advice for inclusion in an exempt document or statement;
(i) securities in a company (other than securities that are to be offered under a disclosure document under Chapter 6D of the Act); or
if the company or trust is not carrying on a business and has not, at any time, carried on a business; (e) provides advice in relation to the transfer of financial products between associates; (f) arranges for another person to engage in conduct referred to in subsection 766C(1) in relation to interests in a self managed superannuation fund in the circumstances in paragraphs (5)(b) and (c); (g) arranges for another person to engage in conduct referred to in subsection 766C(1), by preparing a document of registration or transfer in order to complete administrative tasks on instructions from the person; (h) provides advice about the provision of financial products as security, other than where the security is provided for the acquisition of other financial products.
(ii) interests in a trust (other than a superannuation fund, a managed investment scheme that is registered or required to be registered under Part 5C.1 of the Act, or a notified foreign passport fund);
7.1.29(3A)
For this regulation, a person also provides an exempt service if the person:
(a) is registered as an auditor under Part 9.2 of the Act; and
(b) performs any of the functions of a cover pool monitor mentioned in subsection 30(4) of the Banking Act 1959.
7.1.29(4)
For this regulation, a person also provides an exempt service if: (a) the person provides advice to another person on taxation issues including advice in relation to the taxation implications of financial products; and (b) the person will not receive a benefit (other than from the person advised or an associate of the person advised) as a result of the person advised acquiring a financial product mentioned in the advice, or a financial product that falls within a class of financial products mentioned in the advice; and (c) either:
(i) the advice does not constitute financial product advice to a retail client; or
(ii) the advice constitutes financial product advice to a retail client and it includes, or is accompanied by, a written statement that:
(A) the person providing the advice is not licensed to provide financial product advice under the Act; and
(B) taxation is only one of the matters that must be considered when making a decision on a financial product; and
(C) the client should consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.
7.1.29(5)
For this regulation, a person also provides an exempt service if: (a) the person provides advice in relation to the establishment, operation, structuring or valuation of a superannuation fund, other than advice for inclusion in an exempt documentor statement; and (b) the person advised is, or is likely to become:
(i) a trustee; or
(ii) a director of a trustee; or
(iii) an employer-sponsor; or
of the superannuation fund; and (c) except for advice that is given for the sole purpose, and only to the extent reasonably necessary for the purpose, of ensuring compliance by the person advised with the SIS Act (other than paragraph 52(2)(f)), the SIS Regulations (other than regulation 4.09) or the Superannuation Guarantee (Administration) Act 1992 - the advice:
(iv) a person who controls the management;
(i) does not relate to the acquisition or disposal by the superannuation fund of specific financial products or classes of financial products; and
(ii) does not include a recommendation that a person acquire or dispose of a superannuation product; and
(d) if the advice constitutes financial product advice provided to a retail client - the advice includes, or is accompanied by, a written statement that:
(iii) does not include a recommendation in relation to a person's existing holding in a superannuation product to modify an investment strategy or a contribution level; and
(i) the person providing the advice is not licensed to provide financial product advice under the Act; and
(ii) the client should consider taking advice from the holder of an Australian Financial Services Licence before making a decision on a financial product.
7.1.29(6)
In this regulation:
employer sponsor
(Repealed by FRLI No F2023L01458, Sch 1[164(a)] (effective 1 November 2023).)
exempt document or statement
has the meaning given by subsection 766B(9) of the Act.
generic
means without reference to a particular brand or product issuer.
(a) an associate within the meaning of Division 2 of Part 1.2 of the Act; or
(b) a manager; or
(c) an officer; or
(d) a trustee or director of a trustee.
self managed superannuation fund
(Repealed by FRLI No F2023L01458, Sch 1[164(b)] (effective 1 November 2023).)
REGULATION 7.1.29A 7.1.29A SELF-MANAGED SUPERANNUATION FUNDS
(Repealed by SLI 2013 No 101, s 4, Sch 2[1] (effective 1 July 2016).) REGULATION 7.1.30 7.1.30 INFORMATION AND ADVICE ABOUT VOTING
For paragraph 766A(2)(b) of the Act, a circumstance in which a person is taken not to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act is that: (a) the service provided by the person consists only of advising another person in relation to the manner in which:
(i) voting rights attaching to securities; or
may or should be exercised; and (b) the advice is not intended to influence any decision in relation to financial products other than a decision about voting; and (c) the advice could not be reasonably be regarded as intended to influence a decision in relation to financial products, other than a decision about voting; and (d) the advice does not relate to a vote that relates to a dealing in financial products.
(ii) voting rights attaching to interests in managed investment schemes;
Note: A service that includes advice which is intended to influence the decision to acquire securities in another company would be not provided in circumstances covered by this regulation.
For paragraph 766A(2)(b) of the Act, a circumstance in which a person ( person 1 ) is taken not to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act is that:
(a) person 1 provides a service to a person; and
(b) the service consists only of passing on, publishing, distributing or otherwise disseminating a document that contains financial product advice; and
(c) the document was provided by another person ( person 2 ); and
(d) person 2 is not acting on behalf of person 1; and
(e) person 1 is not the holder of a financial services licence that authorises person 1 to provide financial product advice; and
(f) person 1 does not select the content of the document, modify the content of the document or otherwise exercise control over the content of the document; and
(g) a reasonable person would not consider that person 1 provided, endorsed or otherwise assumed responsibility for the financial product advice contained in the document.
For paragraph 766A(2)(b) of the Act, a circumstance in which a person ( person 1 ) is taken not to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act is that:
(a) person 1 provides advice to another person; and
(b) the advice relates only to the structuring of remuneration packages for the other person's employees.
(Repealed by FRLI No F2021L00127, Sch 2[4] (effective 19 February 2021).) REGULATION 7.1.33A 7.1.33A ALLOCATION OF FUNDS AVAILABLE FOR INVESTMENT
For paragraph 766A(2)(b) of the Act, a circumstance in which a person is taken not to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act is the provision of a service that consists only of a recommendation or statement of opinion provided to a person about the allocation of the person's funds that are available for investment among 1 or more of the following:
(a) shares;
(b) debentures;
(c) debentures, stocks or bonds issued, or proposed to be issued, by a government;
(d) deposit products;
(e) managed investment products;
(ea) foreign passport fund products;
(f) investment life insurance products;
(g) superannuation products;
(h) other types of asset.
Note: This regulation does not apply to a recommendation or statement of opinion that relates to specific financial products or classes of financial products.
For paragraph 766A(2)(b) of the Act, this regulation applies in relation to the provision of a service by a person to another person in the following circumstances:
(a) the service consists only of general advice in relation to a financial product or class of financial products;
(b) the advice is prepared by a product issuer of the financial product or class of financial products who is not a financial services licensee;
(c) the advice is provided by a financial services licensee whose financial services licence covers the provision of the advice.
The product issuer is taken not to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act.
The financial services licensee is taken to provide a financial service within the meaning of paragraph 766A(1)(a) of the Act.
(Omitted by SR 2003 No 369, Sch 2[1] (effective 14 January 2004).) REGULATION 7.1.33D 7.1.33D INVESTMENT-LINKED LIFE INSURANCE PRODUCTS
For paragraph 766A(2)(b) of the Act, a person is taken not to provide a financial service if: (a) the person makes a market for a financial product; and (b) the person is the issuer of the product; and (c) the product is an investment-linked life insurance policy under an investment-linked contract (within the meaning of subsection 14(4) of the Life Insurance Act 1995).
For paragraph 766A(2)(b) of the Act, a person is taken not to provide a financial service if: (a) the person provides advice about a custodial or depository service; and (b) the advice is not about a financial product; and (c) the advice is not intended to influence, and could not reasonably be regarded as being intended to influence, a decision about a financial product other than a product that is a financial product only because it is an equitable right or interest in:
(i) a share in a body; or
(ii) a debenture of a body; or
(iii) an interest in a registered scheme; or
(iv) an interest in a notified foreign passport fund.
Note: Paragraph (c) of this regulation refers to financial products described in paragraph 92(5)(c) of the Act and in subparagraphs 764A(1)(b)(ii) and (bb)(ii) of the Act.
For paragraph 766A(2)(b) of the Act, a person is taken not toprovide a financial service if:
(a) the service is:
(i) arranging for the issue, or the acquisition, of a school banking product; or
(ii) the provision of general advice intended to influence a decision in relation to a school banking product; and
(b) the person:
(i) is employed by a school; or
(ii) provides the service on behalf of a school; and
(c) the person does not receive any financial benefit for the provision of the service; and
(d) the Product Disclosure Statement for the product discloses any commissions or other benefits that the school might receive in connection with the issue of the product. 7.1.33F(2) ["school banking product"]
In this regulation:
school banking product
means a basic deposit product, issued by an ADI in the following circumstances:
(a) it is offered for issue to pupils at a school;
(b) there is no regular account keeping fee charged for the product.
For subsection 766A(2) of the Act, a person (the advisor ) is taken not to provide a financial service if:
(a) the advisor gives advice to another person; and
(b) the advice:
(i) is not about a particular financial product or an interest in a particular financial product; and
(ii) is not personal advice; and
(c) the advice:
(i) is not intended to influence the other person in making a decision in relation to a particular financial product or an interest in a particular financial product; or
(ii) could not reasonably be regarded as being intended to have such an influence; and
(d) by giving the advice neither the advisor, nor an associate of the advisor, receives any remuneration (including commission) or other benefit that is related to the advice given apart from remuneration (including commission) or other benefit that the advisor or the associate would have received if the advice was not given.
For subsection 766A(2) of the Act, a financial product issuer is not taken to provide a financial service if:
(a) the issuer gives advice to another person about:
(i) a particular financial product or class of financial products issued by the issuer; or
(ii) an interest in a particular financial product or a class of financial products issued by the issuer; and
(b) the advice is not personal advice; and
(c) the advice is given to the person at the same time as the issuer:
(i) advises the person that the issuer is not licensed to provide financial product advice in relation to the product, class or interest, as the case may be; and
(ii) recommends to the person that the person obtain a Product Disclosure Statement, if appropriate, and read it before making a decision to acquire the product or a product from the class of products, as the case may be; and
(iii) if it is advice about the offer, issue or sale of a financial product - notifies the person about the availability or otherwise of a cooling-off regime that applies in respect of the acquisition of the product, a product from the class of products or an interest in a product as the case may be (whether the regime is provided for by law or otherwise).
This regulation does not apply in relation to a margin lending facility.
For subsection 766C(7) of the Act, the following conduct does not constitute dealing in a financial product:
(a) the enforcement of rights under a credit facility, including the enforcement of rights by a person acting under a power of attorney;
(b) the disposal of a financial product that is subject to a mortgage or the transfer of such a product to the mortgagor, whether the disposal or transfer is carried out at the direction of the mortgagor or occurs as a result of the mortgagor fulfilling its obligations under the mortgage.
Example for paragraph (a)
A mortgagee exercising a power of sale under a mortgage.
For subsection 766C(7) of the Act, conduct is not taken to be dealing in a financial product if:
(a) the conduct is of a kind:
(i) mentioned in paragraph 766C(1)(a), (d) or (e) of the Act; or
(ii) mentioned in paragraph 766C(1)(b) of the Act, where it is the issue of a beneficial interest in a financial product, that arises from conduct that would constitute providing a custodial or depository service but for the operation of regulation 7.1.40; and
(b) the conduct is carried out by a person ( person 1 ) in relation to a product that person 1 holds on trust for, or on behalf of, another person ( person 2 ) and the holding of that financial product would not constitute the provision of a custodial or depository service because of paragraphs 7.1.40(a), (b), (c), (d), (g) and (i).
Subregulation (1) does not apply to conduct carried out by person 1 in relation to a financial product that is held under a custodial arrangement as defined in section 1012IA of the Act unless:
(a) person 2 is an associate of person 1; or
(b) the financial product is held in the manner mentioned in paragraph 7.1.40(d).
For subsection 766C(7) of the Act, a financial service provided by a lawyer is taken not to be dealing in a financial product if:
(a) the financial service consists of:
(i) arranging for a person to engage in conduct referred to in subsection 766C(1) of the Act; or
(ii) dealing as an agent or otherwise on behalf of a client, an associate of a client or a relative of a client; and
(b) the lawyer is acting:
(i) on the instructions of the client, an associate of the client or a relative of the client; and
(ii) in his or her professional capacity; and
(iii) in the ordinary course of his or her activities as a lawyer; and
(c) the financial service can reasonably be regarded as a necessary part of those activities; and
(d) the lawyer has not received, and will not receive, a benefit in connection with those activities other than:
(i) the payment of professional charges in relation to those activities; and
from the client or from another person on behalf of the client.
(ii) reimbursement for expenses incurred or payment on account of expenses to be incurred on behalf of the client, an associate of the client or a relative of the client;
For subsection 766C(7) of the Act, a financial service provided by a person is taken not to be dealing in a financial product if:
(a) the financial product is a carbon unit, an Australian carbon credit unit or an eligible international emissions unit; and
(b) the person is:
(i) the Clean Energy Regulator; or
(ii) the Clean Development Mechanism Executive Board; or
(iii) the government of a country other than Australia; or
(iv) an authority acting on behalf of the government of a country other than Australia; and
(c) the financial service consists of issuing the carbon unit, Australian carbon credit unit or eligible international emissions unit.
For subsection 766C(7) of the Act, a financial service provided by a person is taken not to be dealing in a financial product if:
(a) the financial product is a carbon unit, an Australian carbon credit unit or an eligible international emissions unit; and
(b) the financial service consists of dealing in the carbon unit, Australian carbon credit unit or eligible international emissions unit on behalf of:
(i) a related body corporate of the person; or
(ii) an associated entity of the person; and
(c) the related body corporate or associated entity is an entity that is a liable entity entered in the information database under section 183 of the Clean Energy Act 2011.
For paragraph 766E(3)(e) of the Act, conduct that is mentioned in subsection 766E(1) of the Act does not constitute providing a custodial or depository service if: (a) the financial product held by the provider is a basic deposit product or is an account mentioned in subsection 981B(1) of the Act; or (b) the client is an associate of the provider (within the meaning of Division 2 of Part 1.2 of the Act); or (c) the provider and its associates have no more than 20 clients in aggregate for all custodial or depository services that they provide; or (d) the financial product is held as part of the arrangements for securing obligations under:
(i) a credit facility; or
(e) the provider is a participant in a licensed market and the financial product held is a derivative acquired on the licensed market by the provider on behalf of a client; or (f) the provider is a participant in a licensed clearing and settlement facility and the financial product held is a derivative registered on the licensed clearing and settlement facility by the provider on behalf of the client; or (g) the financial product is held under:
(ii) a debenture that is held as trustee under a trust deed:
(A) entered into under section 283AA of the Act or former section 260FA of the Corporations Law of a State or Territory; or
(B) mentioned in former section 1052 of the Corporations Law of a State or Territory; or
(i) an order of a court; or
(ii) an order of a board or tribunal established under a law of a State or Territory; or
(h) the service is provided by a lawyer in the following circumstances:
(iii) a direction by the holder of a statutory office established under a law of a State or Territory; or
(i) the financial service consists of acquiring, holding or disposing of a cash management trust interest, being an interest to which a law of a State or Territory relating to the audit of trust or controlled monies applies;
(ii) the lawyer is acting:
(A) on instructions from the client, an associate of the client or a relative of the client; and
(B) in his or her professional capacity; and
(C) in the ordinary course of his or her activities as a lawyer;
(iii) the financial service can reasonably be regarded as a necessary part of those activities;
(i) the financial product is held by a trustee appointed under:
(iv) the lawyer has not received, and will not receive, a benefit in connection with the activities other than:
(A) the payment of professional charges related to those activities; andfrom the client or from another person on behalf of the client; or
(B) reimbursement for expenses incurred or payment on account of expenses to be incurred on behalf of the client, an associate of the client or a relative of the client;
(i) a law of a State or Territory to administer monies awarded to a person as compensation; or
(ii) a trust formed for a charitable purpose.
7.1.40(2)
For paragraph 766E(3)(e) of the Act, conduct that is mentioned in subsection 766E(1) of the Act does not constitute providing a custodial or depository service if the financial product is an Australian carbon credit unit that has been issued to: (a) a special native title account in accordance with section 49 of the Carbon Credits (Carbon Farming Initiative) Act 2011; or (b) a nominee account in accordance with section 141 of that Act.
Division 6 - Operating a financial market
For paragraph 767A(2)(a) of the Act, the following circumstances are specified as circumstances in which the conduct of a person making or accepting offers or invitations to acquire or dispose of financial products, on the person's own behalf or on behalf of one party to the transaction only, constitutes the operating of a financial market: (a) the Clean Energy Regulator making or accepting offers or invitations to acquire or dispose of carbon units on its own behalf, or on behalf of the Commonwealth only, in the course of conducting an auction of carbon units under the Clean Energy Act 2011; (b) a person making or accepting offers or invitations to acquire or dispose of carbon units on behalf of the Clean Energy Regulator only, in the course of assisting the Clean Energy Regulator to conduct an auction of carbon units under the Clean Energy Act 2011.
For paragraph 792B(3)(b) of the Act, a matter to which that paragraph relates is any matter that, in the opinion of a market licensee, constitutes or may constitute a contravention of:
(a) a condition of a licence held by a financial services licensee; or
(b) Subdivision A or B of Division 2 of Part 7.8 of the Act; or
(c) Division 3 of Part 7.8 of the Act; or
(d) Subdivision B of Division 6 of Part 7.8 of the Act.
This regulation applies if a person becomes a director, secretary or executive officer of a market licensee or of a holding company of a market licensee (including when the person changes from one of those positions to another).
7.2.02(2) [Information to be given to ASIC]For subsection 792B(5) of the Act, the information to be given to ASIC by the market licensee is:
(a) the person's name and contact details; and
(b) the date of appointment to the position; and
(c) the person's educational qualifications and financial market experience; and
(d) if the market licensee is aware of any details of a conviction of the kind mentioned in subsection 206B(1) of the Act - the details; and
(e) whether the market licensee knows whether the person:
(i) is an undischarged bankrupt; or
and, if the market licensee knows the information, details of what the market licensee knows.
(ii) has entered into a deed of arrangement or composition of a kind mentioned in subsections 206B(3) and (4) of the Act;
For subsection 792B(5) of the Act, this regulation applies if a person ceases to be a director, secretary or executive officer of a market licensee or of a holding company of a market licensee (including when the person changes from one of those positions to another).
7.2.03(2) [Information to be given to ASIC]The information to be given to ASIC by the market licensee is:
(a) the person's name and contact details; and
(b) the position that the person held; and
(c) the date on which the person ceased to hold the position; and
(d) if the person ceases to be a director, secretary or executive officer because the person is changing from the position to another in the company, the new position; and
(e) if the reason for ceasing to hold the position is:
(i) because of a contravention of the Corporations Act or another law of a State or Territory; or
details of the reason.
(ii) because the person has become an undischarged bankrupt;
This regulation applies if a market licensee becomes aware that a person has come to have, or has ceased to have, more than 15% of the voting power in the market licensee or in a holding company of the market licensee.
7.2.04(2) [Information to be given to ASIC]For subsection 792B(5) of the Act, the information to be given to ASIC by the market licensee is:
(a) the person's name and contact details; and
(b) if known by the market licensee, the date on which the person came to have, or ceased to have, more than 15% of the voting power; and
(c) if the market licensee knows the voting power that the person had immediately before the person came to have, or ceased to have, more than 15% of the voting power, that voting power; and
(d) whether the market licensee knows the manner in which the person came to have, or ceased to have, more than 15% of the voting power, and, if the market licensee knows the manner, details of what the market licensee knows.
For subsection 792C(2) of the Act, the following information is prescribed:
(a) a stock exchange automated trading system notification message;
(b) an Australian Stock Exchange voiceline announcement. 7.2.05(2) [Definitions]
In this regulation:
Australian Stock Exchange voiceline announcement
means a message from the Australian Stock Exchange that is:
(a) spoken over an announcement system; and
(b) a summary of information lodged with the Australian Stock Exchange by a company or other entity that is included in the official list of a financial market.
Stock exchange automated trading system notification message
means a brief message that is:
(a) transmitted to computer terminals of persons linked to the Stock Exchange Automated Trading System; and
(b) a summary of information lodged with the Australian Stock Exchange by a company or other entity that is included in the official list of a financial market.
For subsection 792F(2) of the Act, if an annual report by a market licensee does not contain any of the following information, the information must accompany the annual report:
(a) a description of the activities the market licensee has undertaken in the financial year;
(b) the resources (including financial, technological and human resources) that the market licensee had available, and used, in order to ensure that it has complied with its obligations in Chapter 7 of the Act, and, in particular, the obligation contained in subparagraph 792A(1)(c)(i) of the Act;
(c) an analysis of the extent to which the market licensee considers that the activities undertaken, and resources used, have resulted in full compliance with all its obligations under Chapter 7 of the Act.
For subsection 793A(1) of the Act, the following matters are matters with which the operating rules of a licensed market must deal to the extent that a matter is not dealt with in the market integrity rules:
(a) access to the licensed market, including the criteria for determining persons who are eligible to be participants;
(b) ongoing requirements for participants, including:
(i) the conduct of participants in relation to the licensed market with the objective of promoting honesty and fair practice; and
(ii) provision for the monitoring of participants' compliance with the operating rules; and
(iii) (Omitted)
(iv) provision for the expulsion or suspension of, or enforcement action against, a participant for breaches of the operating rules; and
(v) provision for the expulsion or suspension of a participant for breaches of Chapter 7 of the Act, or regulations made under that Chapter; and
(vi) (Omitted)
(vii) provision for the expulsion or suspension of, or enforcement action against, a participant for a failure or expected failure to meet the participant's obligations under commitments entered into on the licensed market;
(c) execution of orders;
(d) the way in which disorderly trading conditions are to be dealt with, including disruptions to trading;
(e) the class or classes of financial products that are to be dealt with on the licensed market by participants, including:
(i) a description of the nature of each class of financial product; and
(ii) for a class of derivatives, if most of the terms of the arrangement constituting the derivative are determined in advance by the market operator (including price, if determined in advance):
(A) the standard terms of the arrangement that constitutes the derivative; and
(B) a description of the asset, rate, index, commodity or other thing that is used for the matters mentioned in paragraph 761D(1)(c) of the Act;
(f) the terms of the contract formed between participants that enter into a transaction through the licensed market (to the extent to which paragraph (e) does not require that information);
(g) if appropriate, the listing of entities, including:
(i) admitting an entity to the official list of the licensed market for the purpose of enabling financial products of the entity to be traded on the licensed market, and removing an entity from the official list; and
(ii) the activities or conduct of an entity that is included on the official list of the licensed market, including a description of the arrangements for the disciplining of the entity for a breach of the operating rules;
(h) mechanisms through which market-related disputes between participants may be settled (for example, arbitration arrangements);
(i) the power to facilitate the assessment and, if appropriate, the investigation of market-related disputes between participants;
(j) any obligations on participants and listed entities that are necessary to ensure that the market licensee is able to comply with subparagraph 792A(1)(c)(i) of the Act and regulations made under section 798E of the Act.
For subsection 793A(2) of the Act, the following matters are matters in respect of which a licensed market must have written procedures to the extent that the market integrity rules do not deal with a matter:
(a) exchange of appropriate information with:
(i) clearing and settlement facilities; and
(ii) other financial markets; and
(iii) ASIC;
(b) arrangements to ensure the integrity and security of systems (including computer systems);
(c) arrangements for the monitoring of compliance by participants and listed entities with the operating rules of the licensed market;
(d) the assessment, investigation (if justified) and settlement of market-related disputes between participants;
(e) (Omitted)
(f) the recording and effective disclosure of transactions;
(g) the provision of information about market processes.
For paragraph 794C(5)(d) of the Act, the following agencies are prescribed:
(a) the Clean Energy Regulator;
(aa) the Australian Competition and Consumer Commission;
(b) the Australian Prudential Regulation Authority;
(c) the Australian Taxation Office;
(d) the Australian Transaction Reports and Analysis Centre;
(e) an authority of a State or Territory having functions and powers similar to those of the Director of Public Prosecutions;
(f) the police force or service of each State and the Northern Territory;
(g) the Department of Consumer and Employment Protection of Western Australia;
(ga) the Commissioner of State Revenue of Western Australia;
(h) the Department of Fair Trading of New South Wales;
(i) the Office of Fair Trading and Business Affairs of Victoria;
(ia) the State Revenue Office of Victoria;
(j) the Office of Consumer Affairs of Queensland;
(ja) the Office of State Revenue of Queensland;
(k) the Office of Consumer and Business Affairs of South Australia;
(l) the Office of Consumer Affairs and Fair Trading of Tasmania;
(la) the Department of Treasury and Finance of Tasmania;
(m) the Consumer Affairs Bureau of the Australian Capital Territory;
(n) the Fair Trading Group of the Northern Territory.
This Division applies in relation to a body corporate that applies for an Australian market licence that may be granted under subsection 795B(1) of the Act.
For paragraph 795A(1)(a) of the Act, the following information is required as part of an application by the body corporate for an Australian market licence:
(a) the body corporate's name, address and contact details;
(b) the name, address and contact details of any person who will act on behalf of the body corporate in relation to the application;
(c) details of the body corporate's major shareholders and organisation, including:
(i) the name, address and contact details of each director; and
(ii) the name, address and contact details of each secretary; and
(iii) the name, address and contact details of each executive officer of the body corporate; and
(iv) whether any director, secretary or executive officer is, or has been, disqualified from managing a corporation under a law of this jurisdiction or another jurisdiction;
(d) a description of the body corporate's business or functions, other than the operation of the proposed market;
(e) details of the financial products to be traded on the proposed market;
(f) whether the proposed market will involve the provision of a financial product to a person as a retail client;
(g) details of the clearing and settlement arrangements that have been made, or are proposed, for the proposed market;
(h) details of the technological resources that will be used in the operation of the market, including details of:
(i) the purpose of the resources; and
(ii) how the resources are to be supplied, managed, maintained and upgraded; and
(iii) how the security of information technology systems is to be protected;
(i) details of the arrangements for dealing with conflicts between the body corporate's commercial interests and its obligations to supervise and monitor the market;
(j) details of the arrangements for the supervision of employees of the body corporate who have duties and responsibilities of a kind that supervision of the employees is necessary to protect the integrity of the operation of the proposed market;
(k) if the ACCC has made a decision in relation to the market that the body corporate will operate - details of the decision.
For paragraph 795A(1)(b) of the Act, the following documents are required as part of an application by the body corporate for an Australian market licence:
(a) the body corporate's current or proposed operating rules and written procedures;
(b) if applicable - the body corporate's constitution;
(c) a copy of any agreement material to:
(i) the way in which the proposed market is to be operated; and
(ii) the way in which the financing of the proposed market, and the other resources used to operate it, will be organised; and
(iii) the body corporate's constitution or governance; and
(iv) the appointment or employment of directors, secretaries and executive officers of the body corporate;
(d) a copy of any agreement, or proposed agreement, relating to the outsourcing or delegation of a function, facility or service in relation to the proposed market by the body corporate to another person;
(e) if the body corporate is a disclosing entity - a copy of each half-year financial report of the body corporate for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(f) if the body corporate is not a disclosing entity - a copy of each annual financial report of the body corporate for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(g) if the body corporate is a related body corporate - a copy of the relevant consolidated annual and half-year financial reports for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(h) a report, by a qualified person who is independent of the body corporate, about the anticipated financial resource requirements of the proposed market, including details of:
(i) the total anticipated fixed expenditure and variable expenditure for the first 12 months of operation of the market; and
(ii) the total anticipated revenue for the first 12 months of operation of the market and other sources of financial resources; and
(iii) the body corporate's contingency arrangements in the event of circumstances occurring that affect the body corporate's ability to operate the market;
(i) details of the body corporate's business plan, or other strategic planning, for the first 12 months of operation of the market, that are not included in the other documentsmentioned in this regulation.
This Division applies in relation to a body corporate that applies for an Australian market licence that may be granted under subsection 795B(2) of the Act.
For paragraph 795A(1)(a) of the Act, the following information is required as part of an application by the body corporate for an Australian market licence:
(a) the body corporate's name, address and contact details in this jurisdiction;
(b) the address and contact details of the body corporate's principal place of business in the foreign country in which its financial market is located (the home country );
(c) whether the body corporate is registered under Division 2 of Part 5B.2 of the Act;
(d) details of the financial products that are traded on the financial market in the home country;
(e) details of the clearing and settlement arrangements for the financial market in the home country;
(f) details of the body corporate's major shareholders and organisation, including any details that have not already been given to ASIC in accordance with Division 2 of Part 5B.2 of the Act of:
(i) each person whose duties are comparable to those of a director; and
(ii) each person whose duties are comparable to those of a secretary; and
(iii) each person whose duties are comparable to those of an executive officer of the body corporate.
For paragraph 795A(1)(b) of the Act, the documents required as part of an application by the body corporate for an Australian market licence are:
(a) the body corporate's authorisation to operate the financial market in its home country, including a copy of any conditions imposed on the body corporate's operation of its financial market in the home country; and
(b) sufficient documentation to allow the Minister to be satisfied that the regulation of the financial market in its home country is equivalent to regulation under the Act.
Example for paragraph (b)
Copies of the relevant legislation, rules and procedures in the home country.
For subsection 798E(1) of the Act, this regulation applies in relation to specific and significant conflicts, or potential conflicts that would be specific and significant, between:
(a) the commercial interests of Australian Stock Exchange Limited ( ASX ) in dealing with a body (the competitor ) that operates a business with which:
(i) ASX is in competition; or
(ii) a subsidiary of ASX is in competition; or
(iii) a joint venture (however described) to which ASX is a party is in competition; or
(iv) a joint venture (however described) to which a subsidiary of ASX is a party is in competition; and
(b) the need for ASX to ensure that the market operated by it operates in the way mentioned in paragraph 792A(1)(a) of the Act.
7.2.16(2)
The competitor may lodge with ASIC in the prescribed form, an application for ASIC to decide that ASIC, instead of ASX, will make decisions and take action (or require ASX to take action on ASIC's behalf) in relation to:
(a) if the competitor is seeking to be listed - the compliance by the competitor with the applicable listing rules of the market operated by ASX; or
(b) if the competitor is listed on the market operated by ASX - the compliance by the competitor with the applicable listing rules of the market operated by ASX.
7.2.16(3)
As soon as practicable after receiving an application under subregulation (2), ASIC must:
(a) consider whether a conflict, or potential conflict, exists as described in subregulation (1); and
(b) if it considers that a conflict, or potential conflict, exists - consider whether, having regard to ASX's obligations under subparagraph 792A(1)(c)(i) of the Act, the conflict, or potential conflict, would be dealt with more appropriately and efficiently by a means other than taking the action mentioned in subregulation (2); and
(c) decide whether (and to what extent):
(i) to make decisions and take action; or
in relation to the matters mentioned in paragraphs (2)(a) and (b).
(ii) to require ASX to take action on ASIC's behalf;
7.2.16(4)
If ASIC decides to make decisions and take action (or to require ASX to take action on ASIC's behalf) as mentioned in subregulation (2), ASIC:
(a) may consult with ASX and the competitor to identify the listing rules of the market operated by ASX for which ASIC needs to make the decisions and take the action; and
(b) must, as soon as practicable, decide the extent of ASIC's role, having regard to:
(i) the rationale for the listing rules of the market operated by ASX; and
(ii) the desirability of treating the competitor consistently with other entities listed, or seeking to be listed, on that market; and
(iii) the extent to which action taken by ASIC is severable from the wider supervision of the competitor's compliance with the listing rules; and
(iv) its consultations (if any) with the competitor and ASX.
7.2.16(5)
ASIC must, as soon as practicable, advise ASX and the competitor, in writing, of decisions under paragraphs (3)(c) and (4)(b).
7.2.16(6)
If ASIC decides to make decisions and take action (or to require ASX to take action on ASIC's behalf) as mentioned in subregulation (2):
(a) the decisions made and actions taken have effect despite anything in the listing rules of the market operated by ASX; and
(b) decisions made and actions taken by ASIC (or action taken by ASX on ASIC's behalf) have effect as if they were decisions made and actions taken under the listing rules.
Note 1: It is expected that the listing rules of the market will support ASIC's power to take a supervisory role in relation to compliance with some or all of the listing rules.
Note 2: Under section 246 of the Australian Securities and Investments Commission Act 2001, ASIC is not liable to an action or other proceeding for damages for or in relation to an act done or omitted in good faith in performance or purported performance of any function, or in exercise or purported exercise of any power, conferred or expressed to be conferred by or under the corporations legislation.
Note 3: The powers available to ASIC include the power:
7.2.16(7)
If ASIC believes, on reasonable grounds, that:
(a) the period during which decisions will be made and action will be taken in a particular case is likely to be more than 3 months; and
(b) the decisions and actions likely to be required are not adequately reflected in the listing rules of the market operated by ASX;
ASIC must notify ASX, in writing, of its belief.
7.2.16(8)
ASX must, as soon as practicable after being notified under subregulation (7), amend the listing rules of the market operated by ASX to the extent necessary to meet ASIC's concerns.
Note: Amendments of the listing rules are subject to procedural requirements, including possible disallowance, mentioned in sections 793D and 793E of the Act.
7.2.16(9)
If ASIC decides that it is no longer necessary for decisions to be made and action to be taken in relation to the particular conflict or potential conflict, ASIC must notify ASX and the competitor of its decision as soon as practicable.
7.2.16(10)
ASX may repeal any listing rule or amendment made for subregulation (8) only if:
(a) the repeal or amendment is necessary or convenient to meet ASIC's concerns more effectively; or
(b) ASIC has notified ASX under subregulation (9).
7.2.16(11)
Paragraph (10)(b) does not prevent ASIC from:
(a) reviewing a particular conflict or potential conflict; and
(b) deciding, at any time (with or without complying with paragraph (4)(a)), that it has again become necessary for ASIC to make decisions and take action (or for ASIC to require ASX to take action on ASIC's behalf) in relation to the conflict or potential conflict.
7.2.16(12)
If ASIC makes the decision mentioned in paragraph (11)(b), ASIC must notify ASX and the competitor of its decision as soon as practicable.
7.2.16(13)
For this regulation, ASX must:
(a) give ASIC the information and documentation that ASIC reasonably needs to make decisions and take action under this regulation; and
(b) establish administrative and procedural arrangements for that purpose.
7.2.16(14)
A competitor may notify ASIC that the competitor no longer wishes ASIC to make decisions and take action (or for ASIC to require ASX to take action on ASIC's behalf) in relation to the conflict or potential conflict.
7.2.16(15)
If ASIC is notified under subregulation (14), ASIC must, as soon as practicable:
(a) decide whether it will cease to make the decisions and take the action (or cease to require ASX to take action on ASIC's behalf); and
(b) notify ASX and the competitor of its decision.
7.2.16(16)
If ASIC decides to cease to make decisions and take action (or to cease to require ASX to take action on ASIC's behalf), ASIC must cease to make decisions and take action (or must cease to require ASX to take action on ASIC's behalf) in relation to the conflict or potential conflict.
7.2.16(17)
If ASIC decides not to cease to make decisions and take action (or not to cease to require ASX to take action on ASIC's behalf), ASIC must continue to make decisions and take action (or must require ASX to take action on ASIC's behalf) in relation to the conflict or potential conflict.
PART 7.2A - SUPERVISION OF FINANCIAL MARKETS
For paragraph 798K(1)(d) of the Act, ASIC may accept a written undertaking, entered into by a person who is alleged to have contravened subsection 798H(1) of the Act, as an alternative to civil proceedings.
7.2A.01(2) [Undertakings ASIC may accept]Without limiting subregulation (1), ASIC may accept an undertaking that includes any of the following:
(a) an undertaking to take specified action within a specified period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.
Note: An undertaking may relate to an infringement notice given under Division 7.2A.2 in relation to the alleged contravention. For example, an infringement notice may require a person to enter into an undertaking; a person may enter into an undertaking to comply with an infringement notice; a person may enter into an undertaking if the person does not comply with an infringement notice or the infringement notice is withdrawn.
7.2A.01(3) [Withdrawal or variation of undertaking]If ASIC agrees, in writing, to the withdrawal or variation of the undertaking, the person who entered into the undertaking may withdraw or vary the undertaking.
7.2A.01(4) [Application to Court on breach of undertaking]If ASIC is satisfied that the person who entered into the undertaking has breached a term of the undertaking, ASIC may apply to a Court for an order under subregulation (5).
7.2A.01(5) [Court orders on breach of undertaking]If the Court is satisfied that the person has breached a term of the undertaking, the Court may make one or more of the following orders:
(a) an order directing the person to comply with the term of the undertaking;
(b) an order directing the person to pay to the Commonwealth an amount not exceeding the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;
(c) an order directing the person to compensate another person who has suffered loss or damage as a result of the breach;
(d) any other order that the Court considers appropriate. 7.2A.01(6) [No affect on liability if undertaking not accepted]
This regulation does not affect the liability of a person to civil proceedings if ASIC does not accept an undertaking in relation to the alleged contravention of subsection 798H(1) of the Act.
For subsection 798K(1) of the Act, the purpose of this Division is to set out a scheme under which a person who is alleged to have contravened subsection 798H(1) of the Act may do one or more of the following as an alternative to civil proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education programs);
(c) accept sanctions other than the payment of a penalty to the Commonwealth (including public censure, suspension for no more than six months from performing certain financial services in relation to a licensed market, or disgorgement of profits);
(d) enter into an undertaking under regulation 7.2A.01, including an undertaking to do an action mentioned in paragraph (a), (b) or (c). 7.2A.02(2) [No requirement to give infringement notice]
This Division does not require ASIC to give an infringement notice to a person in relation to the alleged contravention of subsection 798H(1) of the Act.
7.2A.02(3) [No affect on liability if no infringement notice]This Division does not affect the liability of a person to civil proceedings if ASIC does not give an infringement notice to the person in relation to the alleged contravention of subsection 798H(1) of the Act.
7.2A.02(4) [When no affect on liability if infringement notice]This Division does not affect the liability of a person to civil proceedings if:
(a) ASIC gives an infringement notice to the person in relation to the alleged contravention of subsection 798H(1) of the Act; and
(b) either:
(i) the notice is withdrawn; or
7.2A.02(5) [No limitation on penalties Court could impose]
(ii) the person does not comply with the notice in accordance with regulation 7.2A.08.
This Division does not limit or otherwise affect the penalty that a Court could impose on the person for a contravention of subsection 798H(1) of the Act.
In this Division:
compliance period
has the meaning given by subregulation 7.2A.08(2).
infringement notice
means an infringement notice given under regulation 7.2A.04.
recipient,
in relation to an infringement notice, means the person to whom ASIC gives the infringement notice or intends to give the infringement notice under regulation 7.2A.04.
If ASIC has reasonable grounds to believe that a person has contravened subsection 798H(1) of the Act, ASIC may give to the person an infringement notice in relation to the alleged contravention.
7.2A.04(2)
ASIC may give a person an infringement notice that is in relation to more than one alleged contravention of subsection 798H(1) of the Act.
7.2A.04(3)
If ASIC withdraws an infringement notice given to a person in relation to the alleged contravention of subsection 798H(1) of the Act, ASIC may give the person a new infringement notice in relation to the alleged contravention.
Example for subregulation (3)
An infringement notice given to a person in relation to an alleged contravention of subsection 798H(1) of the Act may be withdrawn, and a new infringement notice given to the person in relation to that alleged contravention, if the original infringement notice contained an error.
REGULATION 7.2A.05 STATEMENT OF REASONS MUST BE GIVEN 7.2A.05(1)
Before giving a recipient an infringement notice, ASIC must:
(a) give the recipient a written statement that sets out ASIC's reasons for believing that the recipient has contravened subsection 798H(1) of the Act; and
(b) give the recipient, or a representative of the recipient, an opportunity to:
(i) appear at a private hearing before ASIC; and
(ii) give evidence to ASIC; and
in relation to the alleged contravention of subsection 798H(1) of the Act.
(iii) make submissions to ASIC;
7.2A.05(2)
If a recipient, or a representative of a recipient, gives ASIC evidence or information under paragraph (1)(b) in relation to the alleged contravention of subsection 798H(1) of the Act, the evidence or information is not admissible in evidence in any proceedings against the recipient, other than proceedings relating to the evidence or information being false or misleading.
REGULATION 7.2A.06 7.2A.06 CONTENTS OF INFRINGEMENT NOTICE
An infringement notice:
(a) must state the date on which it is given; and
(b) must be identified by a unique code; and
(c) must state the name and address of the recipient; and
(d) must state that it is being given by ASIC under regulation 7.2A.04; and
(e) must specify details of each alleged contravention of subsection 798H(1) of the Act to which the infringement notice relates, including:
(i) the conduct that made up each alleged contravention (including, to the extent known, the date on which it occurred and the place at which it occurred); and
(ii) each market integrity rule that ASIC alleges the recipient has contravened; and
(f) must, in relation to each market integrity rule that ASIC alleges the recipient has contravened, state the maximum pecuniary penalty that a Court could order the recipient to pay for contravening the market integrity rule; and
(g) must, in relation to each alleged contravention of subsection 798H(1) of the Act to which the infringement notice relates:
(i) specify the penalty (if any) payable for each alleged contravention of subsection 798H(1) of the Act; and
(ii) if subparagraph (i) applies:
(A) specify the total penalty that the recipient must pay to the Commonwealth; and
(B) state that the penalty is payable to ASIC on behalf of the Commonwealth; and
(C) explain how payment of the penalty can be made; and
(iii) specify the remedial measures (if any) that the recipient must undertake or institute; and
(iv) specify the sanctions (if any) that the recipient must accept; and
(v) specify the terms of an undertaking (if any) that the recipient must enter into under regulation 7.2A.01; and
(h) must state that the recipient may choose not to comply with the infringement notice, but that if the recipient does not comply, civil proceedings may be brought against the recipient in relation to the alleged contravention; and
(i) must explain what the recipient must do to comply with the infringement notice and the effect of compliance with the infringement notice; and
(j) must state that the recipient may apply to ASIC:
(i) for withdrawal of the notice under regulation 7.2A.11; and
(ii) for an extension of time under regulation 7.2A.09; and
(k) must state that ASIC may publish details of the infringement notice under regulation 7.2A.15; and
(l) may include any other information that ASIC considers necessary.
Note: For sub-subparagraph (g)(ii)(A), the total penalty is the sum of the penalties payable under subparagraph (g)(i).
The penalty payable (if any) for an alleged contravention of subsection 798H(1) of the Act is the amount determined by ASIC.
Note: See subsection 798K(2) of the Act for the maximum penalty payable.
7.2A.07(2)
If an infringement notice is in relation to more than one alleged contravention of subsection 798H(1) of the Act, the total penalty payable under the infringement notice is the sum of the penalties payable (if any) for the alleged contraventions.
REGULATION 7.2A.08 COMPLIANCE WITH INFRINGEMENT NOTICE 7.2A.08(1)
A recipient complies with an infringement notice if, during the compliance period, the recipient does all of the following:
(a) pays the penalty specified in the infringement notice under sub-subparagraph 7.2A.06(g)(ii)(A) (if any);
(b) undertakes or institutes the remedial measures specified in the infringement notice under subparagraph 7.2A.06(g)(iii) (if any);
(c) accepts the sanctions specified in the infringement notice under subparagraph 7.2A.06(g)(iv) (if any);
(d) enters into an undertaking (including an undertaking to comply with the infringement notice) with the terms specified in the infringement notice under subparagraph 7.2A.06(g)(v) (if any).
7.2A.08(2)
The compliance period for an infringement notice:
(a) starts on the day on which the infringement notice is given to the recipient; and
(b) ends:
(i) 27 days after the day on which the infringement notice is given to the recipient; or
(ii) on another day permitted by this regulation.
7.2A.08(3)
If the recipient applies for a further period of time in which to comply with the infringement notice, and the application is granted, the compliance period ends at the end of the further period allowed.
7.2A.08(4)
If the recipient applies for a further period of time in which to comply with the infringement notice, and the application is refused, the compliance period ends on the later of:
(a) 28 days after the day on which the infringement notice was given to the recipient; and
(b) 7 days after the notice of refusal is given to the recipient.
7.2A.08(5)
If the recipient applies for the infringement notice to be withdrawn, and the application is refused, the compliance period ends 28 days after the notice of refusal is given to the recipient.
REGULATION 7.2A.09 EXTENSION OF COMPLIANCE PERIOD 7.2A.09(1) [Application during compliance period]
During the compliance period, a recipient may apply, in writing, to ASIC for a further period of no more than 28 days in which to comply with the infringement notice.
7.2A.09(2) [Requirements for application](a) specify the infringement notice's unique identification code; and
(b) set out the reasons for the application. 7.2A.09(3) [Requirements for ASIC's decision]
Within 14 days after receiving the application, ASIC must:
(a) grant or refuse a further period no longer than the period sought (and no more than 28 days); and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision. 7.2A.09(4) [No further applications]
If ASIC refuses a further period under paragraph (3)(a), the recipient may not make a further application under subregulation (1) in relation to that infringement notice.
7.2A.09(5) [Deemed refusal to extend]If ASIC has not granted or refused a further period under paragraph (3)(a) within 14 days after receiving the application, ASIC is taken to have refused a further period.
Subject to subregulation (3), if:
(a) an infringement notice is given to a recipient in relation to an alleged contravention of subsection 798H(1) of the Act; and
(b) the infringement notice is not withdrawn; and
(c) the recipient complies with the infringement notice;
the effects in subregulation (2) apply.
7.2A.10(2) [Effects](a) any liability of the recipient to the Commonwealth for the alleged contravention of subsection 798H(1) of the Act is discharged; and
(b) no civil or criminal proceedings may be brought or continued by the Commonwealth against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of subsection 798H(1) of the Act; and
(c) no administrative action may be taken by ASIC under section 914A, 915B, 915C or 920A of the Act against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of subsection 798H(1) of the Act; and
(d) the recipient is not taken to have admitted guilt or liability in relation to the alleged contravention; and
(e) the recipient is not taken to have contravened subsection 798H(1) of the Act.
Note: Third parties are not prevented from commencing civil proceedings against the recipient, including under sections 793C and 1101B of the Act, and under section 1317J of the Act in relation to sections 1317G and 1317HB of the Act. ASIC is not prevented from applying for an order on behalf of a plaintiff in accordance with the Act.
7.2A.10(3) [When effects do not apply]Subregulation (2) does not apply if the recipient has knowingly:
(a) provided false or misleading information to ASIC; or
(b) withheld evidence or information from ASIC;
in relation to the alleged contravention of subsection 798H(1) of the Act.
During the compliance period, a recipient of an infringement notice may apply, in writing, to ASIC for the infringement notice to be withdrawn.
7.2A.11(2) [Requirements for application](a) specify the infringement notice's unique identification code; and
(b) set out the reasons for the application. 7.2A.11(3) [Requirements for ASIC's decision]
Within 14 days after receiving the application, ASIC must:
(a) withdraw or refuse to withdraw the infringement notice; and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision. 7.2A.11(4) [Matters taken into account]
Without limiting subregulation (3), ASIC may withdraw the infringement notice after taking into account the following matters:
(a) whether the recipient has previously been found to have contravened subsection 798H(1) of the Act;
(b) the circumstances in which the contravention set out in the infringement notice is alleged to have occurred;
(c) whether an infringement notice has previously been given to the recipient in relation to an alleged contravention of subsection 798H(1) of the Act, and whether the recipient complied with the infringement notice;
(d) any other relevant matter. 7.2A.11(5) [No further applications]
If, under paragraph (3)(a), ASIC refuses to withdraw the infringement notice, the recipient may not make a further application under subregulation (1) in relation to that infringement notice.
7.2A.11(6) [Deemed refusal to withdraw]If ASIC has not withdrawn, or refused to withdraw, the infringement notice within 14 days after receiving the application, ASIC is taken to have refused to withdraw the infringement notice.
ASIC may withdraw an infringement notice given by ASIC without an application under regulation 7.2A.11 having been made.
7.2A.12(2) [Matters taken into account]Without limiting subregulation (1), ASIC may withdraw the infringement notice after taking into account a matter mentioned in paragraph 7.2A.11(4)(a), (b), (c) or (d).
A notice withdrawing an infringement notice must include the following information:
(a) the name and address of the recipient;
(b)the date the infringement notice was given;
(c) the infringement notice's unique identification code. 7.2A.13(2) [Must state infringement notice withdrawn]
The notice must also state that the infringement notice is withdrawn.
ASIC may withdraw an infringement notice after the recipient has complied with the infringement notice only if the recipient agrees, in writing, to the withdrawal.
7.2A.14(2) [Refund of penalty]If an infringement notice is withdrawn after the penalty specified in it (if any) has been paid, the Commonwealth must refund the amount of the penalty to the person who paid it.
7.2A.14(3) [Requirements in notice no longer enforceable]If an infringement notice is withdrawn after the recipient has complied with a requirement specified in the infringement notice:
(a) to undertake or institute remedial measures; or
(b) to accept sanctions other than a payment of a penalty to the Commonwealth; or
(c) to enter into an undertaking;
the remedial measures, sanctions or undertaking are taken to no longer be enforceable by ASIC.
If ASIC gives an infringement notice to a recipient, ASIC may, at the end of the compliance period, publish details of the infringement notice.
7.2A.15(2) [Requirements for publication]If ASIC decides to publish details of the infringement notice, ASIC must publish the details in accordance with either or both of subregulations (3) and (4).
7.2A.15(3) [Publication in Gazette]ASIC may publish details of an infringement notice by publishing in the Gazette:
(a) a copy of the infringement notice; and
(b) the following statements:
(i) a statement as to whether the recipient has complied with the infringement notice;
(ii) if the recipient has complied with the infringement notice, a statement that:
(A) compliance is not an admission of guilt or liability; and
(B) the recipient is not taken to have contravened subsection 798H(1) of the Act;
7.2A.15(4) [Publication by issue of statement]
(iii) if the recipient has not complied with the infringement notice, a statement that:
(A) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened subsection 798H(1) of the Act; and
(B) the recipient is not taken to have contravened subsection 798H(1) of the Act.
ASIC may publish details of an infringement notice by issuing a written or oral statement that:
(a) includes an accurate summary of the details of the infringement notice, including:
(i) the name of the recipient; and
(ii) the amount of the penalty specified in the infringement notice (if any); and
(iii) the remedial measures specified in the infringement notice (if any); and
(iv) the sanctions specified in the infringement notice (if any); and
(v) the terms of an undertaking specified in the infringement notice (if any); and
(vi) the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of subsection 798H(1) of the Act; and
(b) includes the following statements:
(i) a statement as to whether the recipient has complied with the infringement notice;
(ii) if the recipient has complied with the infringement notice, a statement that:
(A) compliance is not an admission of guilt or liability; and
(B) the recipient is not taken to have contravened subsection 798H(1) of the Act;
(iii) if the recipient has not complied with the infringement notice, a statement that:
(A) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened subsection 798H(1) of the Act; and
(B) the recipient is not taken to have contravened subsection 798H(1) of the Act.
This regulation applies if a person becomes a director, secretary or executive officer of a market licensee or of a holding company of a CS facility licensee (including when the person changes from one of those positions to another).
7.3.01(2) [Information to be given to ASIC]For subsection 821B(4) of the Act, the information to be given to ASIC by the CS facility licensee is:
(a) the person's name and contact details; and
(b) the date of appointment to the position; and
(c) the person's educational qualifications and financial market experience; and
(d) if the CS facility licensee is aware of any details of a conviction of the kind mentioned in subsection 206B(1) of the Act - the details; and
(e) whether the CS facility licensee knows whether the person:
(i) is an undischarged bankrupt; or
and, if the CS facility licensee knows the information, details of what the CS facility licensee knows.
(ii) has entered into a deed of arrangement or composition of a kind mentioned in subsections 206B(3) and (4) of the Act;
This regulation applies if a person ceases to be a director, secretary or executive officer of a CS facility licensee or of a holding company of a CS facility licensee (including when the person changes from one of those positions to another).
7.3.02(2) [Information to be given to ASIC]For subsection 821B(4) of the Act, the information to be given to ASIC by the CS facility licensee is:
(a) the name and contact details of the person; and
(b) the position that the person held; and
(c) the date on which the person ceased to hold the position; and
(d) if the person ceases to be a director, secretary or executive officer because the person is changing from the position to another in the company, the new position; and
(e) if the reason for ceasing to hold the position is:
(i) because of a contravention of the Corporations Act or another law of a State or Territory; or
details of the reason.
(ii) because the person has become an undischarged bankrupt;
This regulation applies if a CS facility licensee becomes aware that a person has come to have, or has ceased to have, more than 15% of the voting power in the CS facility licensee or in a holding company of the CS facility licensee.
7.3.03(2) [Information to be given to ASIC]For subsection 821B(4) of the Act, the information to be given to ASIC by the CS facility licensee is:
(a) the person's name and contact details; and
(b) if known by the CS facility licensee, the date on which the person came to have, or ceased to have, more than 15% of the voting power; and
(c) if the CS facility licensee knows the voting power that the person had immediately before the person came to have, or ceased to have, more than 15% of the voting power, that voting power; and
(d) whether the CS facility licensee knows the manner in which the person came to have, or ceased to have, more than 15% of the voting power, and, if the CS facility licensee knows the manner, details of what the CS facility licensee knows.
For subsection 821E(2) of the Act, if an annual report by a CS facility licensee does not contain any of the following information, the information must accompany the annual report:
(a) a description of the activities the CS facility licensee has undertaken in the financial year;
(b) the resources (including financial, technological and human resources) that the CS facility licensee had available, and used, in order to ensure that it has complied with its obligations in Chapter 7 of the Act, and, in particular, the obligation contained in subparagraph 821A(1)(c)(i) of the Act;
(c) an analysis of the extent to which the CS facility licensee considers that the activities undertaken, and resources used, have resulted in full compliance with all its obligations under Chapter 7 of the Act.
For subsection 822A(1) of the Act, the following matters are matters with which the operating rules of a licensed CS facility must deal:
(a) the regulated services provided by the licensed CS facility, including the means by which obligations of parties to transactions relating to financial products will be met through the licensed CS facility;
(b) matters relating to risk in the licensed CS facility;
(c) access to the licensed CS facility, including the criteria for determining persons who are eligible to be participants and the ongoing requirements for participants;
(d) suspension and expulsion of participants from the licensed CS facility;
(e) disciplinary action against participants;
(f) procedures, to be followed by participants, to address risks that are relevant to the licensed CS facility;
(g) requirements to facilitate the monitoring of compliance by participants with the operating rules of the licensed CS facility;
(h) the handling of defaults;
(i) any obligations on participants and issuers that are necessary to ensure that the CS facility licensee is able to comply with subparagraph 821A(1)(c)(i) of the Act;
(j) if the licensed CS facility is a prescribed CS facility - arrangements for the transfer of financial products that are likely to be transferred using the licensed CS facility.
For subsection 822A(2) of the Act, the following matters are matters in respect of which a licensed CS facility must have written procedures:
(a) arrangements to ensure the integrity and security of systems (including computer systems);
(b) identifying and monitoring risks that are relevant to the licensed CS facility;
(c) the development of rules and procedures to address those risks;
(d) exchange of appropriate information with:
(i) other clearing and settlement facilities; and
(ii) financial markets; and
relating to participants and their activities that are relevant to the licensed CS facility;
(iii) ASIC and the Reserve Bank of Australia;
(e) the provision of information about the procedures of the licensed CS facility, including rights, obligations and risks relating to the facility;
(f) arrangements for supervising the licensed CS facility, including the monitoring of compliance by participants and issuers with the operating rules of the licensed CS facility.
For paragraph 823C(5)(d) of the Act, the followingagencies are prescribed:
(a) the Clean Energy Regulator;
(aa) the Australian Competition and Consumer Commission;
(b) the Australian Prudential Regulation Authority;
(c) the Australian Taxation Office;
(d) the Australian Transaction Reports and Analysis Centre;
(e) an authority of a State or Territory having functions and powers similar to those of the Director of Public Prosecutions;
(f) the police force or service of each State and the Northern Territory;
(g) the Department of Consumer and Employment Protection of Western Australia;
(ga) the Commissioner of State Revenue of Western Australia;
(h) the Department of Fair Trading of New South Wales;
(i) the Office of Fair Trading and Business Affairs of Victoria;
(ia) the State Revenue Office of Victoria;
(j) the Office of Consumer Affairs of Queensland;
(ja) the Office of State Revenue of Queensland;
(k) the Office of Consumer and Business Affairs of South Australia;
(l) the Office of Consumer Affairs and Fair Trading of Tasmania;
(la) the Department of Treasury and Finance of Tasmania;
(m) the Consumer Affairs Bureau of the Australian Capital Territory;
(n) the Fair Trading Group of the Northern Territory.
For paragraph 823CA(4)(d) of the Act, the following agencies are prescribed:
(a) the Clean Energy Regulator;
(aa) the Australian Competition and ConsumerCommission;
(b) the Australian Prudential Regulation Authority;
(c) the Australian Taxation Office;
(d) the Australian Transaction Reports and Analysis Centre;
(e) an authority of a State or Territory having functions and powers similar to those of the Director of Public Prosecutions;
(f) the police force or service of each State and the Northern Territory;
(g) the Department of Consumer and Employment Protection of Western Australia;
(ga) the Commissioner of State Revenue of Western Australia;
(h) the Department of Fair Trading of New South Wales;
(i) the Office of Fair Trading and Business Affairs of Victoria;
(ia) the State Revenue Office of Victoria;
(j) the Office of Consumer Affairs of Queensland;
(ja) the Office of State Revenue of Queensland;
(k) the Office of Consumer and Business Affairs of South Australia;
(l) the Office of Consumer Affairs and Fair Trading of Tasmania;
(la) the Department of Treasury and Finance of Tasmania;
(m) the Consumer Affairs Bureau of the Australian Capital Territory;
(n) the Fair Trading Group of the Northern Territory.
This Division applies in relation to a body corporate that applies for an Australian CS facility licence that may be granted under subsection 824B(1) of the Act.
For paragraph 824A(1)(a) of the Act, the following information is required as part of an application by the body corporate for an Australian CS facility licence: (a) the body corporate's name, address and contact details; (b) the name, address and contact details of any person who will act on behalf of the body corporate in relation to the application; (c) details of the body corporate's major shareholders and organisation, including:
(i) the name, address and contact details of each director; and
(ii) the name, address and contact details of each secretary; and
(iii) the name, address and contact details of each executive officer of the body corporate; and
(d) a description of the body corporate's business or functions, other than the operation of the clearing and settlement facility; (e) the services in respect of which the Australian CS facility licence is sought, including details of:
(iv) whether any director, secretary or executive officer is, or has been, disqualified from managing a corporation under a law of this jurisdiction or another jurisdiction;
(i) the financial products for which clearing and settlement facilities are to be provided; and
(ii) the nature of each interest in a financial product that is to be transferred using the clearing and settlement facility; and
(f) whether the body corporate has applied, or intends to apply, to become a prescribed CS facility; (g) details of the technological resources that will be used in the operation of the clearing and settlement facility, including details of:
(iii) the mechanisms to be used by the body corporate to operate the clearing and settlement facility, including (if applicable) arrangements to limit the risk of default by a party to a transaction;
(i) the purpose of the resources; and
(ii) how the resources are to be supplied, managed, maintained and upgraded; and
(h) details of the arrangements for dealing with conflicts between the body corporate's commercial interests and its obligations to supervise and monitor the clearing and settlement facility; (i) details of the arrangements for the supervision of employees of the body corporate who have duties and responsibilities of a kind that supervision of the employees is necessary to protect the integrity of the operation of the clearing and settlement facility; (j) details of the arrangements for managing counterparty risk, including the risks arising from a counterparty being unable to meet its obligations arising out of clearing, settlement or clearing and settlement transactions using the facility; (k) if the ACCC has made a decision in relation to the clearing and settlement facility that the body corporate will operate - details of the decision.
(iii) how the security of information technology systems is to be protected;
Example of interests in a financial product
Legal title or an equitable interest.
Example of mechanisms to operate the clearing and settlement facility
1. The way in which transfers are to be effected.
2. The way in which payment obligations are to be settled.
For paragraph 824A(1)(b) of the Act, the following documents are required as part of an application by the body corporate for an Australian CS facility licence:
(a) the body corporate's current or proposed operating rules and written procedures;
(b) if applicable - the body corporate's constitution;
(c) a copy of any agreement material to:
(i) the way in which the clearing and settlement facility is to be operated; and
(ii) the way in which the financing of the clearing and settlement facility, and the other resources used to operate it, will be organised; and
(iii) the body corporate's constitution or governance; and
(iv) the appointment or employment of directors, secretaries and executive officers of the body corporate;
(d) a copy of any agreement, or proposed agreement, between the body corporate and a market licensee relating to services to be offered to the market licensee;
(e) a copy of any agreement, or proposed agreement, relating to the outsourcing or delegation of a function, facility or service in relation to the facility by the body corporate to another person;
(f) if the body corporate:
(i) uses, or is likely to use, a counterparty; or
an assessment by an independent auditor of the adequacy of the body corporate's arrangements for managing counterparty risk;
(ii) will be operating as a central counterparty;
(g) if the body corporate is a disclosing entity - a copy of each half-year financial report of the body corporate for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(h) if the body corporate is not a disclosing entity - a copy of each annual financial report of the body corporate for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(i) if the body corporate is a related body corporate - a copy of the relevant consolidated annual and half-year financial reports for:
(i) the period of 3 years immediately before the application was made; or
(ii) the shorter period in which the body corporate has carried on a business;
(j) a report, by a qualified person who is independent of the body corporate, about the anticipated financial resource requirements of the clearing and settlement facility, including details of:
(i) the total anticipated fixed expenditure and variable expenditure for the first 12 months of operation of the clearing and settlement facility; and
(ii) the total anticipated revenue for the first 12 months of operation of the clearing and settlement facility and other sources of financial resources; and
(iii) the body corporate's contingency arrangements in the event of circumstances occurring that affect the body corporate's ability to operate the clearing and settlement facility;
(k) details of the body corporate's business plan, or other strategic planning, for the first 12 months of operation of the clearing and settlement facility, that are not included in the other documents mentioned in this regulation.
This Division applies in relation to a body corporate that applies for an Australian CS facility licence that may be granted under subsection 824B(2) of the Act.
For paragraph 824A(1)(a) of the Act, the following information is required as part of an application by the body corporate for an Australian CS facility licence:
(a) the body corporate's name, address and contact details in this jurisdiction;
(b) the address and contact details of the body corporate's principal place of business in the foreign country in which its clearing and settlement facility is located;
(c) whether the body corporate is registered under Division 2 of Part 5B.2 of the Act;
(d) the services in respect of which the Australian CS facility licence is sought, including details of the financial products for which clearing and settlement facilities are to be provided;
(e) details of the body corporate's major shareholders and organisation, including any details that have not already been given to ASIC in accordance with Division 2 of Part 5B.2 of the Act of:
(i) each person whose duties are comparable to those of a director; and
(ii) each person whose duties are comparable to those of a secretary; and
(iii) each person whose duties are comparable to those of an executive officer of the body corporate.
For paragraph 824A(1)(b) of the Act, the documents required as part of an application by the body corporate for an Australian CS facility licence are:
(a) the body corporate's authorisation to operate the clearing and settlement facility in the foreign country in which its clearing and settlement facility is located (the home country ), including any conditions imposed on the body corporate's operation of its clearing and settlement facility in the home country; and
(b) a copy of any agreement, or draft agreement, between the body corporate and a market licensee relating to the clearing and settlement facility services to be provided; and
(c) sufficient documentation to allow the Minister to be satisfied that the regulation of the clearing and settlement facility in its home country is equivalent to regulation under the Act.
Example for paragraph (c)
Copies of the relevant legislation, rules and procedures in the home country.
For the purposes of paragraph 850A(b) of the Act, the following bodies corporate are prescribed: (a) Australian Stock Exchange Limited (in its capacity as a body corporate that has an Australian market licence or an Australian CS facility licence); (b) ASX Settlement and Transfer Corporation Pty Limited (also known as 'ASTC') (in its capacity as a body corporate that has an Australian CS facility licence); (c) SFE Corporation Limited, in its capacity as the holding company of the following bodies corporate that have an Australian market licence or an Australian CS facility licence:
(i) Austraclear Limited;
(ii) SFE Clearing Corporation Pty Limited;
(d) SFE Clearing Corporation Pty Limited (in its capacity as a body corporate that has an Australian CS facility licence); (e) Sydney Futures Exchange Limited (in its capacity as a body corporate that has an Australian market licence); (f) ACH (in its capacity as a body corporate that has an Australian CS facility licence); (g) Austraclear Limited (in its capacity as a body corporate that has an Australian CS facility licence).
(iii) Sydney Futures Exchange Limited;
For paragraph 854A(1)(b) of the Act, a market licensee must keep the following records:
(a) a list of names and contact details of the directors, secretaries and executive officers of the market licensee;
(b) a list of names and contact details of individuals who hold more than 15% of the voting power in the market licensee, prepared in accordance with the information given under regulation 7.4.04. 7.4.02(2) [Retention for at least five years]
The market licensee must keep the records for at least 5 years.
For paragraph 854A(1)(b) of the Act, a CS facility licensee must keep the following records:
(a) a list of names and contact details of the directors, secretaries and executive officers of the CS facility licensee;
(b) a list of names and contact details of individuals who hold more than 15% of the voting power in the CS facility licensee, prepared in accordance with the information given under regulation 7.4.04. 7.4.03(2) [Retention for at least five years]
The CS facility licensee must keep the records for at least 5 years.
This regulation applies to a person who has:
(a) a substantial holding in a widely held market body; and
(b) voting power in the widely held market body. 7.4.04(2) [Obligation to give information]
For paragraph 854A(1)(d) of the Act, the person must give that information to the widely held market body.
7.4.04(3) [Information already given in accordance with Ch 6C]However, subregulation (2) does not require the person to give information that the person has already given to the widely held market body in accordance with Chapter 6C of the Act.
7.4.04(4) [Time limit]The person must give the information by the time described in subsection 671B(6) of the Act.
In this Part:
becoming insolvent
has the meaning given by regulation 7.5.02.
borrower
(Omitted by SLI 2005 No 38, Sch 1[3].)
claim
means a claim against the SEGC.
claimable obligation
(Omitted by SLI 2005 No 38, Sch 1[3] (effective 31 March 2005).)
clearing nominee
(Omitted by SR 2002 No 282, Sch 1[3].)
completion period
(Omitted by SLI 2005 No 38, Sch 1[3].)
compliance period
(Omitted by SLI 2005 No 38, Sch 1[3].)
dealer
has the meaning given by regulation 7.5.03.
discharge
, in relation to an obligation, means:
(a) in the case of a purchase obligation - discharge the whole of the obligation; or
(b) in any other case - discharge the whole or a part of the obligation.
excluded amount
(Omitted by SLI 2005 No 38, Sch 1[3].)
excluded person
has the meaning given by regulation 7.5.04.
guaranteed securities loan
(Omitted by SLI 2005 No 38, Sch 1[3] (effective 31 March 2005).)
lender
(Omitted by SLI 2005 No 38, Sch 1[3].)
obligations
:
(a)
in relation to a participant of a participating market licensee, in relation to a person, includes obligations arising under:
(i) a law; or
(ii) the participating market licensee's operating rules; or
(iii) (Omitted)
(iv) an agreement between:
(A) in any case - the participant and the person; or
(B) if the participant is a partner in a participant of the participating market licensee - the last-mentioned participant and the person; and
(b) in relation to a participant of the licensed CS facility operated by ACH, in relation to a person, includes obligations arising under:
(i) a law; or
(ii) the operating rules of ACH; or
(iii) (Omitted)
(iv) an agreement between:
(A) in any case - the participant and the person; or
(B) if the participant is a partner in a participant of the licensed CS facility operated by ACH - the last-mentioned participant and the person; and
(c) in relation to a participant of the licensed CS facility operated by ASTC, in relation to a person, includes obligations arising under:
(i) a law; or
(ii) the ASTC operating rules; or
(iii) an agreement between:
(A) in any case - the participant and the person; or
(B) if the participant is a partner in a participant of the licensed CS facility operated by ASTC - the last-mentioned participant and the person.
orderly market
means an orderly market on a financial market of:
(a) a participating market licensee; or
(b) an Exchange body.
participating market licensee
means a market licensee that is a member of the SEGC.
prescribed period
, in relation to a sale or purchase of securities by a dealer, means:
(a) if the operating rules of ACH or a participating market licensee, in which the dealer is a participant, being those operating rules as in force when the agreement for the sale or purchase is made, prescribe a period, for this paragraph, in relation to a class of sales or purchases that includes the sale or purchase - that period; or
(b) in any other case - a period that is reasonable, having regard to all the circumstances relating to the sale or purchase.
property
includes money, securities and scrip.
purchase obligation
means an obligation to transfer securities under an agreement for the purchase of securities, if the purchase is, for Subdivision 4.3, a reportable transaction.
purchase price
, in relation to a purchase of securities by a dealer on behalf of a person, means the total of:
(a) the amount of the consideration for the purchase; and
(b) any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the person to the dealer in connection with the purchase.
relative
, in relation to a person, means a parent or remoter lineal ancestor, son, daughter or remoter issue, or brother or sister, of the person.
replacement agreement
(Omitted by SLI 2005 No 38, Sch 1[5].)
reportable transaction
means a transaction that is entered into before or after the commencement of this Part in relation to securities, and:
(a) is or has at any time been a sale or purchase, by a participant (the first dealer ) of a participating market licensee, of securities, if the securities are quoted on a financial market of a participating market licensee when the agreement for the sale or purchase is made, and:
(i) in any case - the participating market licensee's operating rules, as in force when the agreement for the sale or purchase is made, require or permit the first dealer to report the sale or purchase to the participating market licensee; or
(ii) if the sale or purchase is to or from, as the case may be, a participant (the second dealer ) of a participating market licensee - the last-mentioned participating market licensee's operating rules, as in force when the agreement for the sale or purchase is made, require or permit the second dealer to report to the last-mentioned participating market licensee the purchase or sale of the securities by the second dealer from or to, as the case may be, the first dealer; or
(b) is an agreement to buy or sell securities, because of the exercise of an option contract over securities, if:
(i) the option contract was entered into on the financial market of a participating market licensee; and
(ii) the agreement is required or permitted, by the operating rules of ACH or the participating market licensee, to be reported to the participating market licensee.
sale and purchase of securities
has the meaning given by regulation 7.5.06.
securities business
has the meaning given by regulations 7.5.07 and 7.5.08.
security
has the meaning given by regulation 7.5.09.
security benefit
(Omitted by SLI 2005 No 38, Sch 1[6].)
transfer of securities
has the meaning given by regulation 7.5.10.
transferor
has the meaning given by paragraph 7.5.53(4)(b).
transferred securities
has the meaning given by paragraph 7.5.53(4)(c).
unauthorised execution
has the meaning given by paragraph 7.5.53(4)(a).
For subsection 893A(1) of the Act, Part 7.5 of the Act is modified in relation to a licensed market as set out in Schedule 8C.
A body corporate becomes insolvent at a particular time if, and only if, at that time:
(a) an administrator of the body corporate is appointed under section 436A, 436B or 436C; or
(b) the body corporate commences to be wound up or ceases to carry on business; or
(c) a receiver, or a receiver and manager, of property of the body corporate is appointed, whether by a court or otherwise; or
(d) the body corporate enters into a compromise or arrangement with its creditors or a class of them. 7.5.02(2) [Natural person]
A natural person becomes insolvent at a particular time if, and only if, at that time:
(a) a creditor's petition or a debtor's petition is presented under Division 2 or 3 of Part IV of the Bankruptcy Act 1966 against:
(i) the person; or
(ii) a partnership in which the person is a partner; or
(iii) 2 or more joint debtors who include the person; or
(b) the person's property becomes subject to control under Division 2 of Part X of the Bankruptcy Act 1966; or
(c) the person executes a deed of assignment or deed of arrangement under Part X of the Bankruptcy Act 1966; or
(d) the person's creditors accept a composition under Part X of the Bankruptcy Act 1966. 7.5.02(3) [References to Bankruptcy Act 1966]
A reference in subregulation (2) to a Division or Part of the Bankruptcy Act 1966 includes a reference to provisions of a law of an external Territory, or a country other than Australia or an external Territory, that correspond to that Division or Part.
For this Part (other than Subdivisions 4.7, 4.9 and 4.10), a person is a dealer if the person is, or has been at any time, a participant of a participating market licensee.
(Omitted by SLI 2005 No 38, Sch 1[8] (effective 31 March 2005).)
7.5.03(3) [Subdiv 4.7, 4.9 and 4.10]
For Subdivisions 4.7, 4.9 and 4.10, a person is a dealer if the person is:
(a) a participant of a participating market licensee; or
(b) a participant of the licensed CS facility operated by ACH.
For this Part, an excluded person , in relation to a participant of a participating market licensee, or a participant of the licensed CS facility operated by ACH, means:
(a) in any case - the participant; or
(b) if the participant is not a body corporate:
(i) a person who is the spouse, or who is a relative, of the participant; or
(ii) a trustee of a trust in relation to which the participant or a person of a kind mentioned in subparagraph (i) is capable of benefiting; or
(iii) a body corporate of which the participant is an officer; or
(iv) a body corporate in which the participant or a person of a kind mentioned in subparagraph (i) has a controlling interest; or
(v) a body corporate in which the participant, and a person of a kind mentioned in subparagraph (i) have a controlling interest; or
(vi) a body corporate in which the participant and 2 or more persons of a kind mentioned in subparagraph (i) have a controlling interest; or
(vii) a body corporate in which 2 or more persons of a kind mentioned in subparagraph (i) together have a controlling interest; or
(c) if the participant is:
(i) a person who is an officer of the body corporate; or
(ii) a body corporate that is related to the first-mentioned body corporate; or
(iii) a person who is the spouse, or who is a relative, of a person of a kind mentioned in subparagraph (i); or
(iv) a trustee of a trust in relation to which a person of a kind mentioned in subparagraph (i) or (iii) is capable of benefiting; or
(v) a body corporate in which a person of a kind mentioned in subparagraph (i) or (iii) has, or 2 or more such persons together have, a controlling interest; or
(d) if the participant is a partner in a participant of the participating market licensee or licensed CS facility and is not a body corporate:
(i) a person who is a partner in the participant; or
(ii) a person who is the spouse, or who is a relative, of a partner (not being a body corporate) in the participant; or
(iii) a trustee of a trust in relation to which a person of a kind mentioned in subparagraph (i) or (ii) is capable of benefiting; or
(iv) a person who is an officer of a body corporate that is a partner in the participant; or
(v) a body corporate of which a person of a kind mentioned in subparagraph (i), (ii) or (iii) is an officer, or in which such a person has, or 2 or more such persons together have, a controlling interest; or
(vi) a person who is a participant of the licensed CS facility operated by ACH; or
(e) if the participant is a partner in a participant of the participating market licensee or licensed CS facility and is a body corporate:
(i) a person who is an officer of a body corporate that is a partner in the participant; or
(ii) a body corporate that is related to the first-mentioned body corporate; or
(iii) a person who is a partner in the participant; or
(iv) a person who is the spouse, or who is a relative, of a person (other than a body corporate) of a kind mentioned in subparagraph (i) or (iii); or
(v) a trustee of a trust in relation to which a person of a kind mentioned in subparagraph (i), (iii) or (iv) is capable of benefiting; or
(vi) a body corporate in which a person of a kind mentioned in subparagraph (i), (iii) or (iv) has, or 2 or more such persons together have, a controlling interest; or
(vii) a person who is a participant of the licensed CS facility operated by ACH.
(Omitted by SR 2004 No 26, Sch 2[20] (effective 11 March 2004).)
7.5.04(2) [Relative of a person]
A reference in subregulation (1) or (1A) to a relative of a person includes a reference to a relative of the spouse (if any) of the person.
A reference in subregulation (1) or (1A) to an officer of a body corporate is a reference to:
(a) a director, secretary or executive officer of the body corporate; or
(b) a person who is an officer of the body corporate by virtue of paragraph (b), (c), (d) or (e) of the definition of officer in section 9 of the Act.
(Omitted by SLI 2005 No 38, Sch 1[10] (effective 31 March 2005).)
A sale and purchase of securities are taken to consist of 2 distinct transactions:
(a) the sale of the securities by the seller to the buyer; and
(b) the purchase of the securities by the buyer from the seller.
Except so far as the contrary intention appears, a reference in this Part to a sale, or to a purchase, includes a reference to a sale or purchase the agreement for which is made outside this jurisdiction.
For this Part, an agreement to buy or sell securities, because of the exercise of an option contract over securities, if:
(a) the option contract was entered into on the financial market of a participating market licensee; and
(b) the agreement is required, by the operating rules of ACH or the participating market licensee, to be reported to the participating market licensee;
is taken to be a sale and purchase of securities .
For this Part (other than Subdivision 4.9), a securities business is a financial services business of dealing in securities.
Subregulations (4), (5) and (6) apply for the purposes of determining:
(a) whether or not a person carries on, or holds himself, herself or itself out as carrying on, a securities business; and
(b) what constitutes such a business carried on by a person.
Subregulation (6) also applies for the purposes of determining whether or not a person deals in securities.
An act done on behalf of the person by:
(a) the holder of a dealers licence; or
(b) an exempt dealer; or
(c) the holder of an Australian financial services licence; or
(d) a person who is exempted from holding an Australian financial services licence by virtue of subsection 911A(2), (2A), (2B), (2C), (2D) or (2E) of the Act;
must be disregarded.
(a) while employed by, or acting for or by arrangement with, a dealer; and
(b) as an employee or agent of, or otherwise on behalf of, on account of, or for the benefit of, the dealer; and
(c) in connection with a securities business carried on by the dealer;
is to be disregarded.
An act or acts done by the person that constitutes or together constitute a dealing by the person in a futures contract (within the meaning of the old Corporations Act) is or are to be disregarded.
For Subdivision 4.9, each of the following is a securities business :
(a) a financial services business of dealing in securities;
(b) a financial services business of dealing in financial products that were option contracts within the meaning of paragraph 92(1)(e) of the old Corporations Act.
For this Part (other than Subdivision 4.7), each of the following is a security :
(a) a security mentioned in section 761A of the Act;
(b) Division 3 securities;
(c) non-Division 3 securities;
(d) an interest in a notified foreign passport fund that is quoted on the financial market of the Australian Stock Exchange Limited;
(e) rights (whether existing or future, and whether contingent or not) to acquire, by way of issue, an interest referred to in paragraph (d) (whether or not on payment of any money or for any other consideration).
7.5.09(2)
For Subdivision 4.7, each of the following is a security :
(a) Division 3 securities;
(b) non-Division 3 securities;
(c) an interest in a notified foreign passport fund that is quoted on the financial market of the Australian Stock Exchange Limited;
(d) rights (whether existing or future, and whether contingent or not) to acquire, by way of issue, an interest referred to in paragraph (c) (whether or not on payment of any money or for any other consideration).
REGULATION 7.5.10 MEANING OF TRANSFER OF SECURITIES 7.5.10(1) [``transfer of securities'']
A transfer of securities takes place between a person (the transferor ) and another person (the transferee ) only if:
(a) in the case of an ASTC-regulated transfer - the transferor does, or causes to be done, all things that the ASTC operating rules require to be done by or on behalf of the transferor to effect the transfer; or
(b) in any other case - the transferor delivers, or causes to be delivered, to the transferee documents ( transfer documents ) that are sufficient to enable the transferee:
(i) except in the case of Division 3 rights - to become registered as the holder of the securities; or
without the transferor doing anything more, or causing anything more to be done, by way of executing or supplying documents. 7.5.10(2) [Property and documents (other than securities or money)]
(ii) in the case of Division 3 rights - to obtain the issue to the transferee of the securities to which the Division 3 rights relate;
(a) causes property (other than securities or money) to be transferred to another person; or
(b) causes documents that are sufficient to enable another person to become the legal owner of property (other than securities or money) to be delivered to another person;
the first-mentioned person is taken to have transferred the property to the other person.
7.5.10(3) [Payment of money]If a person causes money to be paid to another person, the first-mentioned person is taken to have paid the money to the other person.
(Omitted by SLI 2005 No 38, Sch 1[13] (effective 31 March 2005).)
(Omitted by SLI 2005 No 38, Sch 1[13] (effective 31 March 2005).)
A contravention of a provision of this Part does not constitute an offence.
For paragraph 881B(2)(c) of the Act, the following information, relating to proposed compensation arrangements, is prescribed:
(a) the services and products provided by the financial market, and participants connected with the financial market;
(b) the sources of all funds to be used for compensation;
(c) the proposed minimum amount of cover, and how that amount has been calculated;
(d) the number of markets to which the compensation arrangements are intended to apply;
(e) details of any arrangement between the market operator and any other person associated with the operation of the compensation arrangement;
(f) details of the payments that will be able to be made, in accordance with the compensation arrangements, that will not be payments required by the Act or another law;
(g) the names of the persons responsible for the administration and monitoring functions mentioned in paragraphs 885I(1)(a), (b) and (c) of the Act, and details of the financial, technological and other resources to be used for those purposes;
(h) the name of the proposed auditor of the accounts relating to the compensation arrangements;
(i) the way in which the compensation arrangements will be monitored to ensure that they comply with the Act and these Regulations;
(j) the way in which the compensation arrangements will be monitored to ensure that they are adequate.
For paragraph 882B(2)(a) of the Act, the following information, relating to proposed compensation arrangements, is prescribed:
(a) the services and products provided by the financial market, and participants connected with the financial market;
(b) the sources of all funds to be used for compensation;
(c) the proposed minimum amount of cover, and how that amount has been calculated;
(d) the number of markets to which the compensation arrangements are intended to apply;
(e) details of any arrangement between the market operator and any other person associated with the operation of the compensation arrangement;
(f) details of the payments that will be able to be made, in accordance with the compensation arrangements, that will not be payments required by the Act or another law;
(g) the names of the persons responsible for the administration and monitoring functions mentioned in paragraphs 885I(1)(a), (b) and (c) of the Act, and details of the financial, technological and other resources to be used for those purposes;
(h) the name of the proposed auditor of the accounts relating to the compensation arrangements;
(i) the way in which the compensation arrangements will be monitored to ensure that they comply with the Act and these Regulations;
(j) the way in which the compensation arrangements will be monitored to ensure that they are adequate.
For subsection 883D(6) of the Act, a notification to the Commonwealth of payments of levy received by the operator of a market as agent for the Commonwealth must:
(a)be given for each period of 6 months ending on 31 December and 30 June; and
(b) be given in writing to:
(i) the Secretary of the Department of the Treasury; or
(ii) another officer of that Department notified in writing by the Secretary to the receiver of the levy; and
(c) set out the total of the levies (if any) that became payable in the period; and
(d) set out the total of the levies (if any) received in the period; and
(e) be given not later than 2 weeks after the end of the period.
For subsection 885E(5) of the Act, the rate of interest is 5%.
For sections 888A, 888B, 888C, 888D and 888E of the Act, this Division sets out arrangements relating to compensation in respect of a loss that is connected with a financial market to which Division 4 of Part 7.5 of the Act applies.
Note: The financial markets to which Division 4 of Part 7.5 of the Act applies are set out in section 887A of the Act.
A liability of the SEGC under Subdivision 4.3, 4.7, 4.8 or 4.9 to pay an amount in relation to a claim allowed under that Subdivision is subject to regulations 7.5.72A (participant-related limits of compensation) and 7.5.72B (claimant-related limits of compensation).
Note: A liability of the SEGC arising under other provisions of Subdivision 4.10 is also subject to regulations 7.5.72A and 7.5.72B.
For Subdivision 4.3, if:
(a) a participant of Australian Stock Exchange Limited (the transacting participant ) enters into a reportable transaction; and
(b) under Australian Stock Exchange Limited's operating rules or under ACH's operating rules, another participant (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulations 7.5.24 to 7.5.27 (inclusive) apply in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.
For Subdivision 4.9, if:
(a) a participant of Australian Stock Exchange Limited (the transacting member ) enters into a reportable transaction; and
(b) under Australian Stock Exchange Limited's operating rules or under ACH's operating rules, another participant (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulation 7.5.66 applies in relation to the function of completing the transaction as if the clearing participant, and not the transacting participant, had entered into the transaction.
For Subdivision 4.3, if:
(a) a participant of the licensed CS facility operated by ACH (the transacting participant ) enters into a reportable transaction; and
(b) under the operating rules of ACH, another participant (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulations 7.5.24 to 7.5.27 (inclusive) apply in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.
For Subdivision 4.3, if:
(a) a participant of Australian Stock Exchange Limited (the transacting participant ) enters into a reportable transaction; and
(b) under the operating rules of Australian Stock Exchange Limited or ACH, a participant of the licensed CS facility operated by ACH (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulations 7.5.24 to 7.5.27 (inclusive) apply in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.
For Subdivision 4.9, if:
(a) a participant of the licensed CS facility operated by ACH (the transacting member ) enters into a reportable transaction; and
(b) under the operating rules of ACH, another participant (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulation 7.5.66 applies in relation to the function of completing the transaction as if the clearing participant, and not the transacting participant, had entered into the transaction.
For Subdivision 4.9, if:
(a) a participant of Australian Stock Exchange Limited (the transacting participant ) enters into a reportable transaction; and
(b) under the operating rules of Australian Stock Exchange Limited or ACH, a participant of the licensed CS facility operated by ACH (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;
regulation 7.5.66 applies in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.
(Omitted by SLI 2005 No 38, Sch 1[17] (effective 31 March 2005).)
(Omitted by SLI 2005 No 38, Sch 1[17] (effective 31 March 2005).)
(Omitted by SLI 2005 No 38, Sch 1[17] (effective 31 March 2005).)
(Omitted by SLI 2005 No 38, Sch 1[17] (effective 31 March 2005).)
This regulation applies to a person (the selling client ) if:
(a) a dealer enters into a reportable transaction on behalf of the selling client; and
(b) the reportable transaction is a sale of securities; and
(c) a transfer of the securities concerned pursuant to the sale would be an ASTC-regulated transfer; and
(d) at the end of the prescribed period for the transaction:
(i) if subparagraph (ii) does not apply - the selling client has done all things necessary to enable the dealer to do all things that the dealer is required to do under the operating rules of a participating market licensee or ACH to effect a transfer of the securities pursuant to the sale; and
(ii) the dealer has been suspended by the participating market licensee concerned or ACH, that suspension has not been removed and the selling client has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the operating rules of the participating market licensee or ACH to effect a transfer of the securities pursuant to the sale; and
(iii) the dealer's obligations to the selling client in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged.
The selling client may make a claim in respect of the sale.
The selling client may make a single claim under this regulation in respect of 2 or more sales.
A claim made under subregulation (3) is to be treated for subregulation (5) as if it consisted of a separate claim in respect of each of the sales to which it relates.
The SEGC must allow the claim if the SEGC is satisfied that:
(a) subregulation (1) entitles the selling client to make the claim; and
(b) the selling client:
(i) has done all things necessary to enable the dealer to do all things that the dealer is required to do under the operating rules of ACH to effect a transfer of the securities pursuant to the sale; or
(ii) has, for the purposes of the claim, in accordance with the operating rules of ACH, transferred to the SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and
(c) the dealer's obligations to the selling client in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged.
If the SEGC allows a claim, the SEGC must pay to the selling client the amount of the consideration less so much (if any) of the total of any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the selling client in connection with the sale as has not already been paid by the selling client.
If a selling client transfers securities to an Exchange body as mentioned in subparagraph (5)(b)(ii), the Exchange body must account to the SEGC for those securities in accordance with the operating rules of ACH.
Reg 7.5.24(7) amended by SR 2004 No 398, Sch 1[15] (effective 23 December 2004).
Reg 7.5.24(7) amended by SR 2004 No 26, Sch 2[30] (effective 11 March 2004).
Reg 7.5.24(7) inserted by SR 2001 No 319, Sch 1[15] (effective 11 March 2002).
This regulation applies to a person (the selling client ) if:
(a) a dealer enters into a reportable transaction on behalf of the selling client; and
(b) the reportable transaction is a sale of securities; and
(c) a transfer of the securities concerned pursuant to the sale would not be an ASTC-regulated transfer; and
(d) at the end of the prescribed period for the transaction:
(i) if subparagraph (ii) does not apply - the selling client has supplied to the dealer settlement documents for the purposes of the sale; and
(ii) if the dealer has been suspended by the participating market licensee concerned or ACH, and that suspension has not been removed - the selling client has supplied, or is ready, willing and able to supply, to the dealer settlement documents for the purposes of the sale; and
(iii) the dealer's obligations to the selling client in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged.
The selling client may make a claim in respect of the sale.
The selling client may make a single claim under this regulation in respect of 2 or more sales.
A claim made under subregulation (3) is to be treated for subregulation (5) as if it consisted of a separate claim in respect of each of the sales to which it relates.
The SEGC must allow the claim if the SEGC is satisfied that:
(a) subregulation (1) entitles the selling client to make the claim; and
(b) the selling client has:
(i) supplied to the dealer settlement documents in relation to the sale under the agreement for the sale; or
(ii) supplied to the SEGC settlement documents in relation to the sale for the purposes of the claim; and
(c) the dealer's obligations to the selling client in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged.
If the SEGC allows a claim, the SEGC must pay to the selling client the amount of the consideration less so much (if any) of the total of any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the selling client in connection with the sale as has not already been paid by the selling client.
This regulation applies to a person (the buying client ) if:
(a) a dealer enters into a reportable transaction on behalf of the buying client; and
(b) the reportable transaction is a purchase of securities; and
(c) a transfer of the securities concerned pursuant to the purchase would be an ASTC-regulated transfer; and
(d) at the end of the prescribed period for the transaction:
(i) if subparagraph (ii) does not apply, the buying client has paid to the dealer the purchase price in relation to the purchase; and
(ii) the dealer has been suspended by the participating market licensee concerned or ACH, that suspension has not been removed and the buying client has paid, or is ready, willing and able to pay, to the dealer the purchase price in relation to the purchase; and
(iii) the dealer's obligations to the buying client in respect of the purchase, in so far as they relate to the transfer of securities to the person, have not been discharged.
The buying client may make a claim in respect of the purchase.
The buying client may make a single claim under this regulation in respect of 2 or more purchases.
A claim made under subregulation (3) is to be treated for subregulation (5) as if it consisted of a separate claim in respect of each of the purchases to which it relates.
The SEGC must allow the claim if the SEGC is satisfied that:
(a) subregulation (1) entitles the buying client to make the claim; and
(b) either:
(i) the buying client has paid to the dealer the amount of the consideration for the purchase under the agreement for the purchase; or
(ii) the buying client has paid to the SEGC the amount of the consideration for the purchase for the purposes of the claim; and
(c) the dealer's obligations to the buying client in respect of the purchase, in so far as they relate to the transfer of securities to the buying client, have not been discharged.
If the SEGC allows a claim in respect of a purchase of securities, the SEGC must, subject to regulation 7.5.28, transfer to the buying client securities of the same kind and number as the first-mentioned securities.
This regulation applies to a person (the buying client ) if:
(a) a dealer enters into a reportable transaction on behalf of the buying client; and
(b) the reportable transaction is a purchase of securities; and
(c) a transfer of the securities concerned pursuant to the purchase would not be an ASTC-regulated transfer; and
(d) at the end of the prescribed period for the transaction:
(i) if subparagraph (ii) does not apply, the buying client has paid to the dealer the purchase price in relation to the purchase; and
(ii) the dealer has been suspended by the participating market licensee concerned or ACH, that suspension has not been removed and the buying client has paid, or is ready, willing and able to pay, to the dealer the purchase price in relation to the purchase; and
(iii) the dealer's obligations to the buying client in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged.
The buying client may make a claim in respect of the purchase.
The buying client may make a single claim under this regulation in respect of 2 or more purchases.
A claim made under subregulation (3) is to be treated for subregulation (5) as if it consisted of a separate claim in respect of each of the purchases to which it relates.
The SEGC must allow the claim if the SEGC is satisfied that:
(a) subregulation (1) entitles the buying client to make the claim; and
(b) either:
(i) the buying client has paid to the dealer the amount of the consideration for the purchase under the agreement for the purchase; or
(ii) the buying client has paid to the SEGC the amount of the consideration for the purchase for the purposes of the claim; and
(c) the dealer's obligations to the buying client in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged.
If the SEGC allows a claim in respect of a purchase of securities, the SEGC must, subject to regulation 7.5.29, supply to the buying client settlement documents in relation to the purchase.
(a) the SEGC allows a claim under subregulation 7.5.26(5) in respect of a purchase of securities by a dealer on behalf of a buying client; and
(b) it is not reasonably practicable for the SEGC to obtain securities of the same kind and number as the first-mentioned securities from the dealer before the end of:
(i) if the ASTC operating rules, as in force when the SEGC allows the claim, prescribe a period, for this regulation, in relation to a class of claims that includes the claim - that period; or
(ii) in any other case - such period as the SEGC, having regard to all the circumstances of the claim, considers reasonable; and
(c) it is not reasonably practicable for the SEGC to obtain, otherwise than from the dealer, securities of that kind and number before the end of that period because:
(i) that dealing in those securities is suspended or for any other reason, there exists at no time during that period an orderly market in those securities; or
(ii) the total number of those securities offered for sale on financial markets of participating market licensees or Exchange bodies at times during that period when there exists an orderly market in those securities is insufficient.
The SEGC must satisfy the claim by paying to the claimant the amount that, when the claimant became entitled to make the claim, was the amount of the actual pecuniary loss suffered by the claimant in respect of the purchase.
(a) the SEGC allows a claim under subregulation 7.5.27(5) in respect of a purchase of securities by a dealer on behalf of a buying client; and
(b) it is not reasonably practicable for the SEGC to obtain from the dealer settlement documents in relation to the purchase before the end of:
(i) if the operating rules of a participating market licensee of which the dealer is a participant, being those operating rules as in force when the SEGC allows the claim, prescribe a period, for this regulation, in relation to a class of claims that includes the claim - that period; or
(ii) in any other case - such period as the SEGC, having regard to all the circumstances of the claim, considers reasonable; and
(c) it is not reasonably practicable for the SEGC to obtain otherwise than from the dealer settlement documents in relation to the purchase before the end of that period because:
(i) there exists at no time during that period an orderly market in those securities, whether because that dealing in those securities is suspended or for any other reason; or
(ii) the total number of those securities offered for sale on financial markets of participating market licensees or Exchange bodies at times during that period when there exists an orderly market in those securities is insufficient.
The SEGC must satisfy the claim by paying to the claimant the amount that, when the claimant became entitled to make the claim, was the amount of the actual pecuniary loss suffered by the claimant in respect of the purchase.
(Omitted by SLI 2005 No 38, Sch 1[20].)
7.5.30(2)
Subregulations 7.5.24(1), 7.5.25(1), 7.5.26(1) and 7.5.27(1) do not entitle a person ( person 1 ) to make a claim in respect of:
(a) a sale of securities by another person on behalf of person 1; or
(b) a purchase of securities by another person on behalf of person 1;
as the case may be, unless, on the day on which the agreement for the sale or purchase was entered into, the other person was a participant and carried on a securities business in Australia.
7.5.30(3)
A claim must be in writing and must be served on the SEGC within 6 months after the day on which the claimant became entitled to make the claim.
7.5.30(4)
A claim that is not made within the period prescribed by subregulation (3) is barred unless the SEGC otherwise determines.
7.5.30(5)
The SEGC may publish, in accordance with subregulation (5A), a notice that:
(a) (Omitted) (b) names a particular dealer; and (c) requires that all claims under this Subdivision, by the named dealer, during a period (the applicable period ) specified in the notice in accordance with subregulation (6) must be served on the SEGC before the day (the last application day ) specified in the notice in accordance with subregulation (7).
7.5.30(5A)
The notice is published in accordance with this subregulation if it is published in a manner that results in the notice being accessible to the public and reasonably prominent.
7.5.30(6)
The applicable period must be a period that starts and ends before the day on which the notice is first published.
7.5.30(7)
The last application day must be at least 3 months after the day on which the notice is first published.
7.5.30(8)
The SEGC, a member of the Board and any employee of, or person acting on behalf of, the SEGC each has qualified privilege in respect of the publication of a notice under subregulation (5).
REGULATION 7.5.31 7.5.31 EFFECT OF NOVATION, UNDER OPERATING RULES, OF AGREEMENT FOR PURCHASE
(Omitted by SLI 2005 No 38, Sch 1[21] (effective 31 March 2005).)
(Omitted by SR 2002 No 282, Sch 1[22] (effective 1 December 2002).) Subdivision 4.4 - Securities loans guarantees
(a) a dealer executes a document of transfer of securities on behalf of a person as transferor of the securities; and
(b) the transfer is not an ASTC-regulated transfer; and
(c) apart from the effect of subregulation 7.11.17(3), the person did not authorise the dealer to execute the document. 7.5.53(2) [Dealer taken to have executed document of transfer]
For subregulation (1), a dealer is taken to have executed a document of transfer in relation to securities on behalf of a person as transferor of the securities if the document states that the person is the transferor of the securities and purports to have been stamped with the dealer's stamp as the transferor's broker.
7.5.53(3) [Further application]This Subdivision also applies if:
(a) a dealer effects, or purports to effect, a proper ASTC transfer of securities on behalf of a person; and
(b) apart from the effect of regulation 7.11.26, the person did not authorise the dealer to effect the transfer. 7.5.53(4) [``unauthorised execution'', ``transferor'', ``transferred securities'']
(a) the dealer's action mentioned in whichever of paragraphs (1)(a) and (3)(a) is applicable is an unauthorised execution ; and
(b) the person mentioned in whichever of those paragraphs is applicable is the transferor ; and
(c) the securities mentioned in whichever of those paragraphs is applicable are the transferred securities .
If, as a result of the unauthorised execution, the transferor suffers loss in respect of any of the transferred securities, the transferor may make a claim in respect of the loss.
If, as a result of the unauthorised execution, a person (the claimant ), being:
(a) in any case:
(i) if subregulation 7.5.53(1) applies - the person stated in the document as the transferee of the transferred securities; or
(ii) if subregulation 7.5.53(3) applies - the person in whose favour the proper ASTC transfer was effected, or purported to be effected; or
(b) if that person has disposed of any of the transferred securities - a successor in title of that person to any of the transferred securities;
suffers loss in respect of any of the transferred securities, the claimant may make a claim in respect of that loss.
7.5.55(2) [Limitation]A person is not entitled to make a claim under this regulation if the person:
(a) had actual knowledge that the transferor did not in fact authorise the unauthorised execution; or
(b) is an excluded person in relation to the dealer.
A claim must: (a) be in writing; and (b) be served on the SEGC:
(i) if a notice under subregulation (4) applies to the claim - before the end of the last application day specified in the notice; or
(ii) in any other case - within 6 months after the day on which the claimant first became aware that the claimant had suffered loss as a result of the unauthorised execution.
7.5.56(2)
For subregulation (1), a notice under subregulation (4) applies to a claim if the claim is in respect of an unauthorised execution, by the dealer named in the notice, during the applicable period specified in the notice.
7.5.56(3)
A claim that is not served on the SEGC by the time required by paragraph (1)(b) is barred unless the SEGC otherwise determines.
7.5.56(4)
The SEGC may publish, in accordance with subregulation (4A), a notice, using Form 719A, that: (a) names a particular dealer; and (b) requires that all claims in respect of unauthorised executions, by the named dealer, during a period (the applicable period ) specified in the notice in accordance with subregulation (5) must be served on the SEGC before the day (the last application day ) specified in the notice in accordance with subregulation (6).
7.5.56(4A)
The notice is published in accordance with this subregulation if it is published in a manner that results in the notice being accessible to the public and reasonably prominent.
7.5.56(5)
The applicable period must be a period that starts and ends before the day on which the notice is first published.
7.5.56(6)
The last application day must be at least 3 months after the day on which the notice is first published.
7.5.56(7)
The SEGC, a member of the Board and any employee of, or person acting on behalf of, the SEGC each has qualified privilege in respect of the publication of a notice under subregulation (4).
REGULATION 7.5.57 HOW CLAIM IS TO BE SATISFIED 7.5.57(1) [Obligation to allow claim]
The SEGC must allow a claim if the SEGC is satisfied that regulation 7.5.54 or 7.5.55 entitles the claimant to make the claim.
7.5.57(2) [Obligation to supply securities, pay amount of actual pecuniary loss]If the SEGC allows the claim, and the claimant has, as a result of the unauthorised execution, ceased to hold some or all of the transferred securities, the SEGC must:
(a) subject to paragraph (b), supply to the claimant securities of the same kind and number as those of the transferred securities that the claimant has so ceased to hold; or
(b) if the SEGC is satisfied that it is not practicable for the SEGC to obtain such securities, or to obtain such securities within a reasonable time - pay to the claimant the amount that, as at the time when the SEGC decides that it is so satisfied, is the actual pecuniary loss suffered by the claimant, in respect of the transferred securities, as a result of the unauthorised execution (other than loss suffered as mentioned in subregulation (3)). 7.5.57(3) [Obligation to pay amount of actual pecuniary loss]
If the SEGC allows the claim, it must pay to the claimant the amount that, as at the time when the claim is allowed, or when the SEGC decides as mentioned in paragraph (2)(b), as the case requires, is the actual pecuniary loss suffered by the claimant, as a result of the unauthorised execution, in respect of payments or other benefits:
(a) in any case - to which the claimant would have become entitled, as the holder of such of the transferred securities as the claimant has, as a result of the unauthorised execution, ceased to hold, if the claimant had continued to hold the securities concerned until that time; or
(b) if the claim was made under regulation 7.5.55 - that the claimant has received as holder of any of the transferred securities. 7.5.57(4) [Deeming provision]
For this regulation, if securities are purportedly transferred from a person to another person, the first-mentioned person is taken to cease to hold, and the other person is taken to hold, the securities even if the other person did not by virtue of the transfer get a good title to the securities.
(a) the SEGC allows a claim made under regulation 7.5.54; and
(b) the SEGC is satisfied that the supply of securities, or the payment of money, or both, as the case requires, to the claimant under regulation 7.5.57 will not adequately compensate the claimant for a pecuniary or other gain that the claimant might, if the claimant had continued to hold the transferred securities, have made but did not in fact make;
the SEGC may determine in writing that there be paid to the claimant in respect of that gain a specified amount that the SEGC considers to be fair and reasonable in all the circumstances.
7.5.58(2) [Obligation to make payment]If a determination is made under subregulation (1), the SEGC must pay to the claimant the amount specified in the determination.
Regulations 7.5.54 and 7.5.55 do not entitle a person to make a claim unless the dealer was on the day of the unauthorised execution a participant of a participating market licensee and:
(a) the dealer was carrying on a securities business in Australia on that day; or
(b) if the dealer was not so carrying on such a business and was not carrying on a securities business outside Australia on that day - the last securities business that the dealer carried on before that day was carried on in Australia.
A person who suffers pecuniary loss in respect of a contravention, by a dealer, of the ASTC certificate cancellation provisions may make a claim in respect of the loss.
7.5.60(2) [Loss in respect of unauthorised execution]The loss must not be a loss in respect of an unauthorised execution (within the meaning of paragraph 7.5.53(4)(a)) in respect of which the person has made, or is entitled to make, a claim under Subdivision 4.7.
7.5.60(3) [Involvement in contravention]The person must not have been involved in the contravention.
7.5.60(4) [Matters to be satisfied]The following paragraphs must be satisfied in relation to the dealer:
(a) the dealer was a participant of a participating market licensee on the day of the contravention;
(b) either:
(i) the dealer was carrying on a securities business in Australia on that day; or
(ii) if the dealer was not so carrying on such a business on that day - the last securities business that the dealer carried on before that day was carried on in Australia.
A claim must: (a) be in writing; and (b) be served on the SEGC:
(i) if a notice under subregulation (4) applies to the claim - before the end of the last application day specified in the notice; or
(ii) in any other case - within 6 months after the day on which the claimant first became aware that the claimant had suffered loss as a result of the dealer's contravention of the ASTC certificate cancellation provisions.
7.5.61(2)
For subregulation (1), a notice under subregulation (4) applies to a claim if the claim is in respect of a contravention of the ASTC certificate cancellation provisions, by the dealer named in the notice, during the applicable period specified in the notice.
7.5.61(3)
A claim that is not served on the SEGC by the time required by paragraph (1)(b) is barred unless the SEGC otherwise determines.
7.5.61(4)
The SEGC may publish, in accordance with subregulation (4A), a notice, using Form 719B, that: (a) names a particular dealer; and (b) requires that all claims in respect of contraventions of the ASTC certificate cancellation provisions, by the named dealer, during a period (the applicable period ) specified in the notice in accordance with subregulation (5) must be served on the SEGC before the day (the last application day ) specified in the notice in accordance with subregulation (6).
Reg 7.5.61(4A)
The notice is published in accordance with this subregulation if it is published in a manner that results in the notice being accessible to the public and reasonably prominent.
Reg 7.5.61(5)
The applicable period must be a period that starts and ends before the day on which the notice is first published.
Reg 7.5.61(6)
The last application day must be at least 3 months after the day on which the notice is first published.
7.5.61(7)
The SEGC, a member of the Board and any employee of, or person acting on behalf of, the SEGC each has qualified privilege in respect of the publication of a notice under subregulation (4).
REGULATION 7.5.62 HOW CLAIM IS TO BE SATISFIED 7.5.62(1) [Obligation to allow claim]
The SEGC must allow a claim if the SEGC is satisfied that regulation 7.5.60 entitles the claimant to make the claim.
7.5.62(2) [Obligation to pay amount of actual pecuniary loss]If the SEGC allows the claim, it must pay to the claimant the amount that, when the claim is allowed, is the actual pecuniary loss suffered by the claimant because of the contravention in respect of which the claim was made.
7.5.62(3) [Loss in respect of unauthorised execution]For subregulation (2), the actual pecuniary loss suffered by the claimant does not include any loss in respect of an unauthorised execution (within the meaning of paragraph 7.5.53(4)(a)) in respect of which the claimant has made, or is entitled to make, a claim under Subdivision 4.7.
(a) the SEGC allows a claim made under regulation 7.5.60; and
(b) the SEGC is satisfied that the payment of money to the claimant under regulation 7.5.62 will not adequately compensate the claimant for a pecuniary or other gain that the claimant did not make, but might have made, were it not for the contravention in respect of which the claim was made;
the SEGC may determine in writing that the claimant should be paid in respect of that gain a specified amount that the SEGC considers to be fair and reasonable in all the circumstances.
7.5.63(2) [Obligation to make payment]If a determination is made under subregulation (1), the SEGC must pay the claimant the amount specified in the determination.
A person may make a claim in respect of property if:
(a) a dealer has become insolvent at a particular time (whether before or after the commencement of this regulation); and
(b) at an earlier time (whether before or after that commencement), the property was, in the course of, or in connection with, the dealer's securities business entrusted to, or received by:
(i) if the dealer was, at the earlier time, a partner in a participant - the participant, or a partner in, or an employee of, the participant; or
and was so entrusted or received on behalf of, or because the dealer was a trustee of the property for, the person (other than an excluded person in relation to the dealer); and
(ii) in any other case - the dealer or an employee of the dealer;
(c) at the time the dealer became insolvent, the obligations of the dealer, or of a participant of which the dealer is a partner, as the case requires, to the person in respect of the property have not been discharged.
The SEGC must allow the claim if the SEGC is satisfied that:
(a) subregulation (1) entitles the claimant to make the claim; and
(b) at the time the SEGC considers the claim, the obligations of the dealer, or of a participant of which the dealer is a partner, as the case requires, to the claimant in respect of the property have not been discharged.
If the property is, or includes, money, the SEGC must pay to the claimant an amount equal to the amount of that money.
If the property is, or includes, property other than money, the SEGC must, subject to subregulation (5) and regulation 7.5.65, supply the property other than money to the claimant.
(a) the SEGC allows a claim in respect of property that is, or includes:
(i) a number of securities of a particular kind; or
(ii) documents of title to a number of securities of a particular kind; and
(b) it is not reasonably practicable for the 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 operating rules of a participating market licensee or licensed CS facility of which the dealer is a participant, being those operating rules as in force when the SEGC allows the claim, prescribe a period, for this regulation, in relation to a class of claims that includes that claim - that period; or
(ii) in any other case - such period as the SEGC, having regard to all the circumstances relating to the claim, considers reasonable;
the SEGC must, subject to regulation 7.5.65, supply to the person, instead of those securities, or those documents of title to securities, the number of securities of that kind, or documents of title to the number of securities of that kind, as the case may be.
(a) the SEGC allows a claim 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 the 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 operating rules of a participating market licensee or licensed CS facility of which the dealer is a participant, being those operating rules as in force when the SEGC allows the claim, prescribe a period, for this regulation, in relation to a class of claims that includes the claim - that period; or
(ii) in any other case - such period as the SEGC, having regard to all the circumstances relating to the claim, considers reasonable; and
(c) it is not reasonably practicable for the SEGC to obtain that number of securities of that kind, or documents of title to that number of securities of that kind, as the case may be, before the end of that period because:
(i) whether by reason that dealing in securities of that kind is suspended or for any other reason, there exists at no time during that period an orderly market in such securities; or
(ii) the total number of securities of that kind offered for sale on financial markets of market licensees or Exchange bodies at times during that period when there exists an orderly market in such securities is insufficient;
the SEGC may decide to pay to the claimant the amount that, when the decision is made, is the actual pecuniary loss suffered by the claimant in respect of the first-mentioned securities, or the first-mentioned documents of title, as the case may be, and if the SEGC does so, the SEGC must pay that amount to the claimant.
(a) the 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, property (the relevant property ) other than money, securities or documents of title to securities; and
(b) it is not reasonably practicable for the SEGC to obtain the relevant property from the dealer or, if the dealer has disposed of it, from the dealer's successor in title, before the end of such period as the SEGC considers reasonable;
the SEGC may decide to pay to the claimant the amount that, when the decision is made, is the actual pecuniary loss suffered by the claimant in respect of the relevant property, and if the SEGC does so, the SEGC must pay that amount to the claimant.
(a) a participant has received under the agreement for a sale or purchase of securities by the participant on behalf of a person, the consideration for the sale or settlement documents in relation to the purchase, as the case may be; and
(b) subregulation 7.5.24(1), 7.5.25(1), 7.5.26(1) or 7.5.27(1) entitles the person to make a claim against the SEGC under Subdivision 4.3 in respect of the sale or purchase. 7.5.66(2) [Entitlement to make claim in respect of consideration or settlement documents]
This Subdivision does not, because of:
(a) a dealer, being the participant or a partner in the participant, having become insolvent at a particular time; and
(b) the participant having received, under the agreement, the consideration or the settlement documents;
entitle the person to make a claim in respect of the consideration or the settlement documents, as the case may be, unless the participant's obligations to the person in respect of the sale or purchase, as the case may be, in so far as those obligations related to the consideration or the settlement documents, were discharged before that time.
7.5.66(3) [Allowance of other claims](a) because of a dealer having become insolvent on a particular day, this Subdivision entitles a person to make a claim (the first claim ) in respect of property; and
(b) because of a dealer having become insolvent on a later day, this Subdivision entitles a person to make another claim in respect of the property;
the SEGC must not allow the other claim unless:
(c) the person has made the first claim and the SEGC has allowed or disallowed it; or
(d) the SEGC is satisfied that if the first claim had been made the SEGC would have disallowed it; or
(e) the SEGC is satisfied that, when the person first became aware of the dealer mentioned in paragraph (b) having become insolvent on the later day:
(i) the first claim was barred; or
7.5.66(4) [Prevention of double recovery]
(ii) it was no longer reasonably practicable for the person to make the first claim before it became barred.
(a) at a particular time, the SEGC allows a claim in respect of property; and
(b) because of:
(i) a dealer having become insolvent (whether before, at or after that time); and
this Subdivision entitles the claimant to make another claim in respect of the property;
(ii) the property having, before that time, been entrusted or received as mentioned in paragraph 7.5.64(1)(b);
the SEGC must not allow the other claim.
If, at the time when a dealer becomes insolvent:
(a) a person has lent money to the dealer; and
(b) the liability of the dealer to repay the money remains undischarged;
this Subdivision does not, because of the dealer having become insolvent at that time, entitle the person to make a claim in respect of the money.
This Subdivision does not, because of a person (the dealer ) having become insolvent at a particular time, entitle a person to make a claim in respect of property unless:
(a) the dealer was at that time a participant of at least 1 of the following:
(i) a participating market licensee;
(ii) the licensed CS facility operated by ACH; and
(b) either:
(i) the dealer was carrying on a securities business in Australia at that time; or
(ii) the last business that the dealer carried on in Australia before that time was a securities business, and the person's claim relates to that business as it was carried on in Australia.
This Subdivision does not, because of a dealer having become insolvent on a particular day, entitle a person to make a claim in respect of property if:
(a) before that day the property had, in due course of the administration of a trust, ceased to be under the sole control of the dealer; or
(b) the SEGC, or the Court, is satisfied that circumstances that materially contributed to the dealer becoming insolvent on that day were due to, or caused directly or indirectly by, an act or omission of the person.
The SEGC may publish, in accordance with subregulation (1A), a notice, using Form 720, specifying a day, not being earlier than 3 months after the publication of the notice, on or before which claims against the SEGC may be made, being claims that, because of a dealer specified in the notice having become insolvent, this Subdivision entitles persons to make.
7.5.70(1A)
The notice is published in accordance with this subregulation if it is published in a manner that results in the notice being accessible to the public and reasonably prominent.
7.5.70(2)
If this Subdivision entitles a person to make a claim, the claim must be in writing and must be served on the SEGC: (a) if there has been published in accordance with subregulation (1) a notice specifying a day on or before which claims may be made, being claims that, because of the dealer having become insolvent on that day, this Subdivision entitles persons to make - on or before that day; or (b) in any other case - within 6 months after the person becomes aware of the dealer having become insolvent on that day.
7.5.70(3)
A claim that is not made in accordance with subregulation (2) is barred unless the SEGC otherwise determines.
7.5.70(4)
The SEGC, a member of the Board and any employee of, or person acting on behalf of, the SEGC each has qualified privilege in respect of the publication of a notice under subregulation (1).
REGULATION 7.5.71 7.5.71 LIMITS OF COMPENSATION
(Repealed by FRLI No F2019L01474, Sch 1[2] (effective 19 November 2019).) Subdivision 4.10 - General REGULATION 7.5.72 POWER OF SEGC TO ALLOW AND SETTLE CLAIM 7.5.72(1) [Power]
The SEGC may, at any time after a person becomes entitled to make a claim, allow and settle the claim.
7.5.72(2) [Partial allowance of claim]Subregulation (1) authorises the SEGC to partially allow a claim (including, for example, in a case where the SEGC considers that the claimant's conduct contributed to the loss).
If:
(a) a claim made under this Division relates to a loss connected with a particular participant, or past participant, in a financial market; and
(b) the participant or past participant becomes insolvent on a day before the claim is settled by the SEGC (whether or not the insolvency is the cause of the loss mentioned in paragraph (a));
the total amounts paid out of the Fund in connection with claims relating to losses connected with the participant or past participant must not exceed an amount equal to 15% of the minimum amount of the Fund as at the end of that day.
7.5.72A(2)
For the purposes of subregulation (1):
(a) the SEGC must disregard an amount paid out of the Fund in connection with a claim to the extent to which the amount has been repaid to the Fund; and
(b) if money or other property has been recovered by, or on behalf, of the SEGC because of the exercise of a right or remedy in relation to the loss to which a claim relates, being a right or remedy of the claimant who makes the claim to which the SEGC is subrogated, the SEGC must disregard so much of the amount, or of the total of the amounts, paid out of the Fund in connection with the claim as does not exceed the sum of:
(i) the amount of that money; and
(ii) the value of so much (if any) of that other property as has not been, and is not required to be, supplied in respect of the claim.
7.5.72A(3)
The SEGC may, in relation to each claim, determine in writing:
(a) whether the claim meets the requirements of paragraphs (1)(a) and (b); and
(b) an amount to be the maximum amount in relation to the claim.
7.5.72A(4)
If the SEGC makes determinations under paragraph (3)(b) in relation to 2 or more claimants, the SEGC must ensure that, as far as practicable, the proportion of any claimant's claim for which compensation is received is the same for each claimant.
7.5.72A(5)
For the purposes of subregulation (4):
(a) the amount of a claimant's claim is taken to be reduced by any reduction under subregulation 7.5.72B(3) of the maximum amount in relation to the claimant; and
(b) the compensation received by a claimant is the amount of compensation received by the claimant from all sources (including the Fund).
7.5.72A(6)
If a determination is in force under paragraph (3)(b), the amount paid out of the Fund in connection with the claim must not exceed the amount that has been determined.
If: (a) a claim made by a claimant under this Division relates to a loss connected with a particular participant, or past participant, in a financial market; and (b) the loss is referable to a particular event or circumstance;
the sum of the amounts paid out of the Fund to the claimant (the maximum amount ) in connection with claims relating to losses connected with the participant or past participant that are referable to the event or circumstance (the eligible claims ):
(c) must not exceed $1 million; and (d) to the extent that the eligible claims relate to cash held with the participant or past participant immediately before the event or circumstance - must not exceed $250,000.7.5.72B(2)
For the purposes of subregulation (1): (a) the SEGC must disregard an amount paid out of the Fund in connection with a claim to the extent to which the amount has been repaid to the Fund; and (b) if money or other property has been recovered by, or on behalf, of the SEGC because of the exercise of a right or remedy in relation to the loss to which a claim relates, being a right or remedy of the claimant who makes the claim to which the SEGC is subrogated, the SEGC must disregard so much of the amount, or of the total of the amounts, paid out of the Fund in connection with the claim as does not exceed the sum of:
(i) the amount of that money; and
(ii) the value of so much (if any) of that other property as has not been, and is not required to be, supplied in respect of the claim.
7.5.72B(3)
If: (a) the participant or past participant becomes insolvent on a day before the eligible claims are settled by the SEGC (whether or not the insolvency is connected with the loss mentioned in paragraph (1)(a)); and (b) the sum of what would, apart from this subregulation, be the maximum amounts in relation to all claimants in connection with eligible claims (the total claimants' amounts ) exceeds the amount worked out under subregulations 7.5.72A(1) and (2);
the maximum amount in relation to the claimant is reduced by an amount worked out as follows:
Claimant's amount × Excess |
Total claimants' amounts |
where:
claimant's amount
means the amount that would, apart from this subregulation, be the claimant's maximum amount.
excess
means the amount of the excess mentioned in paragraph (b).
7.5.72B(4)
The SEGC may determine in writing: (a) whether the claimant's claims are eligible claims; and (b) an amount to be the maximum amount in relation to the eligible claims.
7.5.72B(5)
If a determination is in force under paragraph (4)(b), the amount paid out of the Fund to the claimant must not exceed the amount that has been determined.
This regulation applies if the SEGC acquires financial products in accordance with section 888K of the Act for the purpose of providing compensation.
7.5.73(2) [Financial products form part of Fund]The financial products form part of the Fund until they are supplied in accordance with this Part to a claimant or sold in accordance with subregulation (3).
7.5.73(3) [Proceeds of sale of financial products](a) acquires the financial products; and
(b) satisfies the claim by paying an amount to the claimant;
the SEGC must, as soon as practicable after satisfying the claim, sell the financial products and pay the proceeds of the sale into the Fund.
This regulation applies if the SEGC is satisfied that:
(a) a person (the defaulter ) has failed to discharge an obligation to transfer securities to another person (the entitled entity ); and
(b) the entitled entity:
(i) has made a claim in respect of the failure and has had securities transferred to it, or an amount paid to it, in satisfaction of the claim; or
(ii) would have been entitled to make a claim in respect of the failure if securities had not been transferred to it for the purpose of remedying the failure; and
(iii) (Omitted)
(c) if the defaulter had duly transferred securities in accordance with the obligation, an amount would have been paid, or property would have been transferred, to the entitled entity as the holder of the securities; and
(d) the entitled entity has not received, and is not entitled to receive (otherwise than from the defaulter):
(i) the amount or property; or
(ii) an equivalent amount or equivalent property in respect of securities transferred or obtained as mentioned in paragraph (b); and
(e) if subparagraph (b)(i) applies, and an amount has been paid in satisfaction of the claim, the amount paid does not adequately compensate the entitled entity for the loss of the amount or property mentioned in paragraph (c).
The SEGC may determine in writing that the entitled entity is to be paid, in respect of the loss of the amount or property mentioned in paragraph (1)(c), a specified amount that the SEGC considers to be fair and reasonable in the circumstances.
If a determination is made under subregulation (1), the SEGC must pay to the entitled entity the amount specified in the determination.
The SEGC may reduce an amount of compensation by reference to 1 or more of the following:
(a) a right of set-off available to the claimant;
(b) the extent to which the claimant was responsible for causing the loss.
7.5.75(2)
If:
(a) the claimant has assigned any of its rights or remedies in relation to the loss; and
(aa) the claimant has received a benefit from any person for assigning the right or remedy; and
(b) the claimant assigned rights or remedies as mentioned in paragraph (a) without the written consent of the SEGC; and
(c) the claimant continues to suffer a loss at the date of the determination of the claim;
the SEGC may reduce the amount of compensation by the amount that fairly represents the extent to which the claimant has, without the written consent of the SEGC, adversely affected the SEGC's ability under section 892F of the Act to recover the amount of the compensation that would otherwise be payable to the claimant in respect of the claimant's claim.
7.5.75(3)
In determining an amount of compensation payable to a claimant in respect of a claim, the SEGC may reduce the amount by reference to any money or other property that the claimant has received, or is likely to receive, from sources other than the Fund as compensation for money or property to which the claim relates.
REGULATION 7.5.76 CLAIMANT MAY BE REQUIRED TO EXERCISE RIGHT OF SET-OFF 7.5.76(1) [SEGC may refuse to allow claim]
(a) a person (the claimant ) has made a claim in respect of a liability of another person (the defaulter ); and
(b) the claimant has a right, whether under an agreement or otherwise, to set off a liability of the claimant to the defaulter against the liability mentioned in paragraph (a);
the SEGC may refuse to allow the claim until the claimant has exercised the right.
7.5.76(2) [Notice requiring person to give information]The SEGC may, by notice in writing served on a person, require the person to give the SEGC specified information relating to the existence or exercise of rights of set-off.
(a) the SEGC allows a claim by a person (the claimant ) in respect of a liability of another person (the defaulter ); and
(b) the liability of the defaulter to the claimant has been reduced, by an amount of money or a number of securities (the set-off reduction ), because of:
(i) the exercise by the claimant or the defaulter of a right of set-off, whether under an agreement or otherwise; or
(ii) the operation of an agreement so far as it provides for the automatic set-off of liabilities; and
(c) but for this regulation, the reduction of the defaulter's liability would not be taken into account when working out the obligations of the SEGC in respect of the claim;
this regulation applies for the purposes of working out those obligations.
7.5.77(2) [SEGC to pay amount - set-off reduction consists of amount](a) the SEGC is required to satisfy the claim by paying an amount; and
(b) the set-off reduction consists of an amount;
the amount the SEGC must pay in respect of the claim is reduced by the amount of the set-off reduction.
7.5.77(3) [SEGC to pay amount - set-off reduction consists of securities](a) the SEGC is required to satisfy the claim by paying an amount; and
(b) the set-off reduction consists of a number of securities;
then:
(c) the SEGC must work out the value of the securities; and
(d) the amount the SEGC must pay in respect of the claim is reduced by the value worked out under paragraph (c). 7.5.77(4) [SEGC to transfer securities - set-off reduction consists of securities of that kind]
(a) the SEGC is required to satisfy the claim by transferring securities of a particular kind; and
(b) the set-off reduction consists of a number of securities of that kind;
the number of securities that the SEGC must transfer in respect of the claim is reduced by the number mentioned in paragraph (b).
7.5.77(5) [SEGC to transfer securities - set-off reduction consists of other securities](a) the SEGC is required to satisfy the claim by transferring securities of a particular kind; and
(b) the set-off reduction consists of a number of securities that are not of that kind;
then:
(c) the SEGC must work out:
(i) the value of the securities that constitute the set-off reduction; and
(ii) the number of securities of the kind mentioned in paragraph (a) that are equal in value to the value worked out under subparagraph (i); and
(d) the number of securities that the SEGC is required to transfer in respect of the claim is reduced by the number worked out under subparagraph (c)(ii). 7.5.77(6) [SEGC to transfer securities - set-off reduction consists of amount of money]
(a) the SEGC is required to satisfy the claim by transferring securities of a particular kind; and
(b) the set-off reduction consists of an amount of money;
then:
(c) the SEGC must work out the number of securities of that kind that are equal in value to that amount; and
(d) the number of securities that the SEGC must transfer in respect of the claim is reduced by the number worked out under paragraph (c).
This regulation applies if the SEGC:
(a) allows a claim in whole or in part; or
(b) disallows a claim in whole in the following circumstances:
(i) the dealer compensated the claimant before the claim was determined;
7.5.78(2) [Making and proof of claim]
(ii) the claim would have been allowed if the dealer had not compensated the claimant.
The claimant is entitled to be paid out of the Fund an amount equal to the total of the reasonable costs of, and the reasonable disbursements incidental to, the making and proof of the claim.
7.5.78(3) [Attempt to recover loss]The claimant is also entitled to be paid out of the Fund an amount in respect of the claimant's reasonable costs of, and disbursements incidental to, attempting to recover the loss.
7.5.78(4) [Claimant's other rights]Subregulations (2) and (3) apply in addition to the claimant's other rights under this Division.
In addition to an amount that is payable to a person out of the Fund in respect of a claim, interest at the rate of 5% per annum or, if another rate is determined in writing by the SEGC, at that other rate, is payable to the person out of the Fund, on so much of that amount as is not attributable to costs and disbursements, in respect of the period beginning on the day on which the person became entitled to make the claim and ending on:
(a) if the SEGC has made a determination under subregulation 7.5.82(1) to pay that amount in instalments - the day on which that amount would, if no such determination had been made and the money in the Fund were unlimited, have been paid to the person; or
(b) if, because of insufficiency of the Fund, no part of that amount is paid to the person on the day on which that amount would, if the money in the Fund were unlimited, have been so paid - that day; or
(c) in any other case - the day on which that amount is paid to the person. 7.5.79(2) [Limits on interest payable]
A rate of interest determined by the SEGC for subregulation (1):
(a) must not exceed the rate that, when the determination is made, is fixed by Rules of Court for the purposes of paragraph 52(2)(a) of the Federal Court of Australia Act 1976; and
(b) must not be less than 5% per year. 7.5.79(3) [Publication of rate]
As soon as practicable after determining a rate of interest, the SEGC must publish a copy of the determination in the Gazette.
7.5.79(4) [Interest on unpaid amount](a) under subregulation (1), interest is payable to a person on an amount in respect of a period; and
(b) that amount, or a part of that amount, remains unpaid throughout a period beginning immediately after the period mentioned in paragraph (a);
interest, in addition to that amount and that interest, is payable to the person, at the rate of 5% per annum, out of the Fund on that amount, or on that part of that amount, as the case may be, in respect of that period first mentioned in paragraph (b).
The SEGC must, after wholly or partly disallowing a claim, serve on the claimant, or on the claimant's solicitor, notice of the disallowance using Form 721.
If:
(a) a cash settlement provision requires the SEGC to pay an amount in respect of a claim; and
(b) the amount cannot be determined by agreement between the SEGC and the claimant;
the amount must be determined by arbitration in accordance with this regulation.
7.5.81(2)
If:
(a) in relation to a claim, paragraph 7.5.77(3)(c), (5)(c) or (6)(c) requires the SEGC to work out the value of securities, or the number of securities that are equal in value to another value or amount; and
(b) the value or number cannot be determined by agreement between the SEGC and the claimant;
the value or number is to be determined by arbitration in accordance with this regulation.
7.5.81(3)
The reference to arbitration is a reference to persons appointed, in accordance with subregulation (4), for the purposes of the reference.
7.5.81(4)
For the purposes of the reference to arbitration:
(a) if the claim relates to a participating market licensee - the participating market licensee must make the appointment, or the participating market licensees must jointly make the appointment; and
(aa) if the claim relates to the licensed CS facility operated by ACH - ACH must make the appointment; and
(ab) if the claim relates to a participating market licensee and to the licensed CS facility operated by ACH - the participating market licensee and ACH must jointly make the appointment; and
(b) 3 persons must be appointed; and
(c) the Minister must have approved the appointment of each person in writing; and
(d) at least 2 of the persons must not be any of the following:
(i) if the claim relates to a participating market licensee:
(A) a representative of the participating market licensee;
(B) a participant of the participating market licensee;
(C) a representative of a participant of the participating market licensee;
(ii) if the claim relates to the licensed CS facility operated by ACH:
(A) a representative of ACH;
(B) a participant of the licensed CS facility;
(C) a representative of a participant of the licensed CS facility;
(iii) if the claim relates to a participating market licensee and to the licensed CS facility operated by ACH:
(A) a representative of the participating market licensee;
(B) a participant of the participating market licensee;
(C) a representative of a participant of the participating market licensee;
(D) a representative of ACH;
(E) a participant of the licensed CS facility;
(F) a representative of a participant of the licensed CS facility;
(iv) in any case - a representative of the SEGC.
7.5.81(5)
If, before the commencement of this regulation, an arbitration:
(a) was to take place but had not begun; or
(b) had begun but had not been concluded;
the arbitration must take place, or continue, as if it were an arbitration under this regulation.
7.5.81(6)
In this regulation:
cash settlement provision
means any of the following provisions:
(a) regulation 7.5.28;
(b) regulation 7.5.29;
(c)-(i) (Omitted)
(j) regulation 7.5.57;
(k) regulation 7.5.62;
(l) subregulation 7.5.65(1);
(m) subregulation 7.5.65(2).
REGULATION 7.5.82 INSTALMENT PAYMENTS 7.5.82(1) [Application]
This regulation applies if, at a particular time, the SEGC is of the opinion that, if all the amounts that, as at that time, are payable out of the Fund in connection with claims were so paid, the Fund would be exhausted or substantially depleted.
7.5.82(2) [Power to make determination]The SEGC may determine in writing that amounts so payable as at that time must be so paid in instalments of specified amounts payable on specified days.
For subsection 889J(7) of the Act, a notification to the Commonwealth of payments of levy received by the operator of a financial market as agent for the Commonwealth must:
(a) be given for each period of 6 months ending on 31 December and 30 June; and
(b) be given in writing to:
(i) the Secretary of the Department of the Treasury; or
(ii) another officer of that Department notified in writing by the Secretary to the receiver of the levy; and
(c) set out the total of the levies (if any) that became payable in the period; and
(d) set out the total of the levies (if any) received in the period; and
(e) be given not later than 2 weeks after the end of the period.
For subsection 889K(6) of the Act, a notification to the Commonwealth of payments of levy received by an operator of a financial market as agent for the Commonwealth must:
(a) be given for each period of 6 months ending on 31 December and 30 June; and
(b) be given in writing to:
(i) the Secretary of the Department of the Treasury; or
(ii) another officer of that Department notified in writing by the Secretary to the receiver of the levy; and
(c) set out the total of the levies (if any) that became payable in the period; and
(d) set out the total of the levies (if any) received in the period; and
(e) be given not later than 2 weeks after the end of the period.
For subsection 891A(1) of the Act, each of the following bodies is a prescribed body corporate:
(a) ASX Settlement and Transfer Corporation Pty Limited (also known as ``ASTC'');
(b) ACH.
This regulation is made for the purposes of section 891B of the Act.
7.5.85A(2)
This regulation applies in relation to a joining market (within the meaning of that section) if:
(a) the market is operated by Chi-X Australia Pty Ltd, or by a subsidiary of Chi-X Australia Pty Ltd; and
(b) the day on which Chi-X Australia Pty Ltd becomes a member of the SEGC (the joining day ) is on or after the commencement of this regulation.
7.5.85A(3)
Compensation may be claimed under a provision of these Regulations set out in column 1 of the following table in respect of a loss that is:
(a) connected with the joining market; and
(b) not connected with any other financial market to which Division 4 of Part 7.5 of the Act applies;
only if the loss meets the transitional condition set out in column 2 of that table item.
Joining of Chi-X - transitional conditions for compensation claims | ||
Item |
Column 1
Provision |
Column 2
Transitional condition |
1 | Regulation 7.5.24, 7.5.25, 7.5.26 or 7.5.27 (about contract guarantees) | The prescribed period for the relevant reportable transaction ends on or after the joining day. |
2 | Regulation 7.5.54 or 7.5.55 (about unauthorised transfers) | The unauthorised execution occurs on or after the joining day. |
3 | Regulation 7.5.64 (about claims in respect of insolvent participants) | The time at which the dealer becomes insolvent is on or after the joining day. |
The Minister may notify the SEGC that the Minister is satisfied that:
(a) a market licensee specified in the notification is operating a financial market to which Division 4 of Part 7.5 of the Act applies; or
(b) each market licensee specified in the notification is operating a financial market to which Division 4 of Part 7.5 of the Act applies. 7.5.86(2) [Excess money]
For section 892G of the Act, if, on a day, the amount in the NGF is greater than the minimum amount identified in accordance with section 889I of the Act, the amount by which it is greater is excess money.
For section 892G of the Act, if, on a day:
(a) a fidelity fund (other than the NGF) is the sole source of funds available to cover claims for the purposes of Division 3 arrangements; and
(b) the amount in the fidelity fund is greater than the minimum amount of cover identified in accordance with paragraph 882A(4)(a) of the Act;
the amount by which it is greater is excess money.
7.5.87(2) [Fidelity fund not sole source of funds]For section 892G of the Act, if, on a day:
(a) a fidelity fund (other than the NGF) is not the sole source of funds available to cover claims for the purposes of Division 3 arrangements; and
(b) the amount in the fidelity fund is greater than the minimum amount of cover specified in accordance with paragraph 882A(4)(a) of the Act, reduced by the sum of the amounts of cover from each other source of funds available for the purposes of the same Division 3 arrangements;
the amount by which it is greater is excess money.
The Minister may approve, in writing, a matter as an approved purpose for which excess money may be used by a market licensee.
(a) the creation of, or participation in, a program for the development of the financial industry that:
(i) is conducted primarily for a public benefit; and
(ii) is not conducted primarily to promote the profitability of the commercial operations of any market; or
(b) the payment of premiums for fidelity insurance or other compensation arrangements for the financial market as part of an approved compensation arrangement for Division 3 of Part 7.5 of the Act; or
(c) costs paid by the market licensee in relation to ASIC's responsibilities for market supervision created by the Corporations Amendment (Financial Market Supervision) Act 2010; or
(d) the making of payments to ASIC by the market licensee in relation to ASIC's responsibilities for market supervision created by the Corporations Amendment (Financial Market Supervision) Act 2010.
Examples for paragraph (2)(a)
1. Public education activities.
2. Research into future product or service needs.
3. Research and consulting services intended to improve the international performance of Australian financial markets.
4. Improvement of Australia's role as a financial centre.
The Minister may, in relation to an approved purpose, determine conditions to which the use of excess money for the approved purpose must be subject.
If the Minister notifies the SEGC in accordance with subregulation 7.5.86(1), the SEGC may determine, in writing, that an amount of excess money specified in the determination be paid to 1 or more of the market licensees specified in the Minister's notification.
7.5.89(2)
The amount must be paid in accordance with the SEGC's determination.
7.5.89(3)
A market licensee that receives a payment of excess money from the NGF must pay the excess money into an account that:
(a) is kept separately from other accounts used by the market licensee; and
(b) is designated as a 'financial industry development account'.
A market licensee that receives a payment of excess money from the NGF must use the money only:
(a) for a purpose approved under subregulation 7.5.88(1), and in accordance with any conditions to which the use of the money is subject under subregulation 7.5.88(3); or
(b) in accordance with subregulation (3); or
(c) to make a repayment to the NGF.
If the market licensee contravenes subregulation (1), the market licensee must:
(a) notify the SEGC of the contravention as soon as practicable; and
(b) repay the amount involved into its financial industry development account.
If there is no immediate requirement for the market licensee to use an amount of excess money in its financial industry development account:
(a) the market licensee may invest the amount in a way authorised by section 892C of the Act; and
(b) if the market licensee invests excess money during a financial year, the market licensee must pay any interest or profit from the investment into its financial industry development account.
The market licensee must, in respect of each financial year during which, at any time, there is money in its financial industry development account, lodge a completed Form 719 with ASIC not later than 3 months after the end of the financial year.
If there is excess money in a fidelity fund (other than the NGF), the market licensee to which the excess money relates may pay an amount of the excess money into an account that:
(a) is kept separately from other accounts used by the market licensee; and
(b) is designated as a 'financial industry development account'.
A market licensee that receives a payment of excess money from a fidelity fund must use the money only:
(a) for a purpose approved under subregulation 7.5.88(1), and in accordance with any conditions to which the use of the money is subject under subregulation 7.5.88(3); or
(b) in accordance with subregulation (3); or
(c) to make a repayment to the fidelity fund.
If the market licensee contravenes subregulation (1), the market licensee must repay the amount involved into its financial industry development account.
If there is no immediate requirement for the market licensee to use an amount of excess money in its financial industry development account:
(a) the market licensee may invest the amount in a way authorised by section 892C of the Act; and
(b) if the market licensee invests excess money during a financial year, the market licensee must pay any interest or profit from the investment into its financial industry development account.
The market licensee must, in respect of each financial year during which, at any time, there is money in its financial industry development account, lodge a completed Form 719 with ASIC not later than 3 months after the end of the financial year.
For section 892J of the Act, the following persons each have qualified privilege in respect of the publication of a statement, in accordance with Division 3 of Part 7.5 of the Act, that a contract of insurance does, or does not cover a particular participant:
(a) a market licensee;
(b) the board of the market licensee;
(c) an agent of the board of the market licensee;
(d) an employee of a market licensee. 7.5.93(2) [Notice seeking claims re particular participant]
For section 892J of the Act, the following persons each have qualified privilege in respect of a notice, in accordance with Division 3 of Part 7.5 of the Act, seeking claims in relation to a particular participant of a financial market:
(a) a market licensee;
(b) the board of the market licensee;
(c) an agent of the board of the market licensee;
(d) an employee of a market licensee.
This regulation is made for paragraph 901A(6)(b) of the Act.
7.5A.30(2)
Each facility in the following list is prescribed in relation to a class of derivatives if the facility is licensed, authorised or registered to operate as a derivative trade repository for that class of derivatives under a law of a foreign jurisdiction:
(a) DTCC Data Repository (U.S.) LLC;
(b) DTCC Derivatives Repository Ltd.;
(c) DTCC Data Repository (Japan) KK;
(d) DTCC Data Repository (Singapore) Pte Ltd;
(e) Chicago Mercantile Exchange Inc.;
(f) INFX SDR, Inc.;
(g) ICE Trade Vault, LLC;
(h) the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance of Hong Kong;
(i) UnaVista Limited;
(j) a facility determined by ASIC for the purposes of this paragraph.
7.5A.30(2A)
ASIC must not determine a facility under paragraph (2)(j), unless ASIC is satisfied that:
(a) either:
(i) the facility has adopted rules, procedures or processes that substantially implement the CPSS-IOSCO Principles applicable to the regulation of derivative trade repositories; or
(ii) the foreign jurisdiction concerned has adopted legislation, policies, standards or practices that substantially implement the CPSS-IOSCO Principles applicable to the regulation of derivative trade repositories; and
(b) adequate arrangements exist for cooperation between ASIC and an appropriate authority responsible for licensing, authorising or registering the facility as a derivative trade repository in the foreign jurisdiction.
7.5A.30(2B)
A determination made under paragraph (2)(j):
(a) must be published by ASIC in the Gazette; and
(b) is not a legislative instrument.
7.5A.30(3)
Paragraphs (2)(a) to (i) cease to have effect at the end of 30 June 2015.
7.5A.30(4)
In this regulation:
CPSS-IOSCO Principles
means the principles for financial market infrastructures:
(a) issued in April 2012 by the Committee on Payment and Settlement Systems (the CPSS ) and the International Organization of Securities Commissions (the IOSCO ); and
(b) as supplemented, superseded or modified from time to time by principles, recommendations or standards issued by the CPSS or IOSCO (or a successor of the CPSS or IOSCO).
This regulation is made for paragraph 901D(a) of the Act.
7.5A.50(2)
The class of persons on whom the derivative transaction rules cannot impose requirements consists of end users.
7.5A.50(2A)
Also, the derivative transaction rules cannot impose requirements relating to a class of derivatives on financial services licensees:
(a) who are taken not to be end users only because of paragraph (3)(c); and
(b) whose Australian financial services licences do not authorise them to provide financial services in relation to that class of derivatives.
7.5A.50(3)
An end user is a person who is not:
(a) an Australian ADI; or
(b) a CS facility licensee; or
(c) a financial services licensee; or
(d) a person:
(i) who, in this jurisdiction, provides financial services relating to derivatives to wholesale clients only; and
(ii) whose activities, relating to derivatives, are regulated by an overseas regulatory authority.
7.5A.50(4)
This regulation does not apply to a provision of any derivative transaction rules to the extent that the provision imposes clearing requirements or requirements that are incidental or related to clearing requirements.
In this Subdivision:
Australian clearing entity
, inrelation to a derivative transaction, has the meaning given by regulation 7.5A.61.
Derivative Transaction Rules (Reporting)
means the ASIC Derivative Transaction Rules (Reporting) 2013.
foreign clearing entity
, in relation to a derivative transaction, has the meaning given by regulation 7.5A.62.
representative capacity
: an entity is a party to a derivative transaction, or holds a position relating to a derivative transaction, in a
representative capacity
if the entity is such a party, or holds such a position, in a capacity as:
(a) the responsible entity of a registered scheme; or
(b) the operator of a notified foreign passport fund; or
(c) the responsible holding party for a notified foreign passport fund; or
(d) the trustee of a trust; or
(e) the corporate director of a CCIV.
total gross notional outstanding positions
, in relation to an entity, means an amount worked out for the entity under derivative transaction rules, in accordance with subregulation (2).
7.5A.60(2)
For the purposes of this Subdivision, derivative transaction rules may: (a) set out a method for working out the total gross notional outstanding positions held by an entity in a representative capacity, or otherwise; and (b) provide for an entity that starts, or stops, meeting a threshold referred to in subparagraph 7.5A.61(1)(a)(ii), 7.5A.62(1)(a)(ii) or (b)(iv) to be taken to meet, or not to meet, the threshold for transitional purposes specified by the rules.
An entity is an
Australian clearing entity
, in relation to a derivative transaction to which it is a party otherwise than in a representative capacity, if:
(a) the entity is an Australian ADI, or a financial services licensee, that:
(i) is incorporated or formed in Australia; and
(ii) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or
(b) the entity is any other entity that:
(i) is incorporated or formed in Australia; and
(ii) has, in accordance with any derivative transaction rules, opted to be treated, for the purposes of those rules, as an Australian clearing entity in relation to derivative transactions to which the entity is a party otherwise than in a representative capacity.
7.5A.61(2)
An entity is an
Australian clearing entity
in relation to a derivative transaction to which it is a party in a representative capacity in the circumstances set out in derivative transaction rules.
An entity is a
foreign clearing entity
, in relation to a derivative transaction to which it is a party otherwise than in a representative capacity, if:
(a) the entity is an ADI, or a financial services licensee, that:
(i) is incorporated or formed outside Australia; and
(ii) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or
(b) the entity:
(i) is incorporated or formed outside Australia; and
(ii) in this jurisdiction, provides financial services relating to derivatives to wholesale clients only; and
(iii) is exempt under the Act (including these Regulations, or another instrument made under or for the purposes of the Act) from the requirement to hold a financial services licence for those financial services; and
(iv) is an entity whose activities relating to derivatives are regulated by an overseas regulatory authority; and
(v) holds $100 billion or more in total gross notional outstanding positions otherwise than in a representative capacity; or
(c) the entity is any other entity that:
(i) is incorporated or formed outside Australia; and
(ii) has, in accordance with any derivative transaction rules, opted to be treated, for the purposes of those rules, as a foreign clearing entity in relation to derivative transactions to which it is a party otherwise than in a representative capacity.
7.5A.62(2)
An entity is a
foreign clearing entity
in relation to a derivative transaction to which it is a party in a representative capacity in the circumstances set out in the derivative transaction rules.
This regulation is made for paragraph 901A(7)(b) of the Act.
7.5A.63(2)
Each facility in the following list is prescribed in relation to all derivatives:
(a) CME Clearing Europe Limited;
(b) Eurex Clearing AG;
(c) Japan Securities Clearing Corporation;
(d) NASDAQ OMX Clearing AB;
(e) OTC Clearing Hong Kong Limited.
7.5A.63(3)
A facility determined by ASIC for the purposes of this subregulation is prescribed in relation to the class of derivatives specified in the determination.
7.5A.63(4)
ASIC may, by notifiable instrument, determine a facility for the purposes of subregulation (3) in relation to a specified class of derivatives, but only if ASIC is satisfied that:
(a) the facility's principal place of business is located in a foreign country; and
(b) the facility is authorised to operate as a central counterparty for the specified class of derivatives in that country; and
(c) the regulatory regime in the facility's principal place of business has substantially implemented the CPSS-IOSCO Principles applicable to the regulation of central counterparties; and
(d) adequate arrangements exist for ASIC and the Reserve Bank of Australia to have access to information about the level of clearing activity by participants that are incorporated or formed in Australia, in relation to derivatives that are subject to clearing requirements under the derivative transaction rules.
7.5A.63(5)
(Repealed by SLI 2015 No 157, r 4, Sch 1[9] (effective 5 March 2016).)
7.5A.63(6)
In this regulation:
CPSS-IOSCO Principles
means the principles for financial market infrastructures:
(a) issued in April 2012 by the Committee on Payment and Settlement Systems (the CPSS) and the International Organization of Securities Commissions (the IOSCO); and
(b) as supplemented, superseded or modified from time to time by principles, recommendations or standards issued by the CPSS or IOSCO (or a successor of the CPSS or IOSCO).
This regulation is made for paragraph 901D(a) of the Act.
7.5A.64(2)
The derivative transaction rules cannot impose clearing requirements in relation to a derivative transaction on a person who is not:
(a) an Australian clearing entity in relation to the transaction; or
(b) a foreign clearing entity in relation to the transaction.
Example:
This regulation prevents the derivative transaction rules imposing clearing requirements on, among other things, a range of foreign public entities including the following (subject to paragraphs (2)(a) and (b)):
(a) central banks; (b) Government debt offices; (c) multilateral development banks; (d) the Bank for International Settlements and other similar international organisations.
This regulation is made for paragraph 901D(b) of the Act.
7.5A.65(2)
The derivative transaction rules can only impose clearing requirements in relation to a derivative transaction on an entity that is an Australian clearing entity in relation to the transaction if the other party to the transaction is:
(a) an Australian clearing entity in relation to the transaction; or
(b) a foreign clearing entity in relation to the transaction; or
(c) a foreign internationally active dealer.
7.5A.65(3)
The derivative transaction rules can only impose clearing requirements in relation to a derivative transaction on an entity that is a foreign clearing entity in relation to the transaction if the other party to the transaction is:
(a) an Australian clearing entity in relation to the transaction; or
(b) a foreign clearing entity in relation to the transaction; or
(c) a foreign internationally active dealer.
7.5A.65(4)
In this regulation:
foreign internationally active dealer
means any foreign entity, other than a foreign clearing entity, that is registered or provisionally registered as:
(a) a swap dealer with the Commodity Futures Trading Commission of the United States of America; or
(b) a securities-based swap dealer with the Securities and Exchange Commission of the United States of America.
In this Subdivision:
ASIC exemption instrument
means ASIC Instrument [14/0633].
Derivative Transaction Rules (Reporting)
means the ASIC Derivative Transaction Rules (Reporting) 2013.
OTC derivative
(short for over-the-counter derivative) means an OTC Derivative within the meaning of the Derivative Transaction Rules (Reporting).
OTC derivative position
means a position relating to an OTC derivative transaction.
OTC derivative position information
means Derivative Position Information within the meaning of the Derivative Transaction Rules (Reporting), as in force on 1 October 2015, about OTC derivative positions.
OTC derivative transaction
means a derivative transaction relating to an OTC derivative.
phase 3 reporting entity
means a Phase 3 Reporting Entity within the meaning of the ASIC exemption instrument as in force on 1 October 2015.
reporting counterparty
: see regulation 7.5A.72.
reporting entity
means a Reporting Entity within the meaning of the Derivative Transaction Rules (Reporting), as in force on 1 October 2015.
representative capacity
: an entity is a party to an OTC derivative transaction, or holds an OTC derivative position, in a
representative capacity
if the entity is such a party, or holds such a position, in a capacity as:
(a) the responsible entity of a registered scheme; or
(b) the operator of a notified foreign passport fund; or
(c) the responsible holding party for a notified foreign passport fund; or
(d) the trustee of a trust; or
(e) the corporate director of a CCIV.
total gross notional outstanding positions
, in relation to a phase 3 reporting entity, has a meaning affected by the ASIC exemption instrument, as in force on 1 October 2015.
This regulation is made for paragraph 907E(2)(a) of the Act.
Exemptions
7.5A.71(2)
A phase 3 reporting entity is exempt from a provision of the Derivative Transaction Rules (Reporting) requiring the entity, at a particular time, to report information about an OTC derivative transaction to which the entity is a party if, at that time:
(a) regulation 7.5A.73 applies to the entity in relation to the transaction; and
(b) the other party to the transaction is a reporting counterparty in relation to the phase 3 reporting entity and the information.
7.5A.71(3)
A phase 3 reporting entity is exempt from a provision of the Derivative Transaction Rules (Reporting) requiring the entity, at a particular time, to report OTC derivative position information in relation to an OTC derivative position to which the entity is a party if, at that time:
(a) regulation 7.5A.73 applies to the entity in relation to the position; and
(b) the other party to the position is a reporting counterparty in relation to the phase 3 reporting entity and the information.
Effect of exemption on ASIC exemption instrument
7.5A.71(4)
Subregulation (5) applies if a phase 3 reporting entity is exempt under this regulation from a provision of the Derivative Transaction Rules (Reporting) requiring the entity to report information about a particular OTC derivative transaction or OTC derivative position.
7.5A.71(5)
The entity is also exempt from subsection 907D(3) of the Act in relation to a provision of the ASIC exemption instrument that imposes a requirement to report information about the transaction or position as a condition of an exemption under that instrument.
This regulation sets out, for the purposes of regulation 7.5A.71, the circumstances in which an entity (the other entity ) is a reporting counterparty in relation to:
(a) a phase 3 reporting entity that proposes to rely on an exemption in that regulation (the exempt entity ); and
(b) information that is:
(i) information about an OTC derivative transaction; or
(ii) OTC derivative position information.
Reporting entities
7.5A.72(2)
The other entity is a reporting counterparty in relation to the exempt entity and the information if:
(a) the other entity has made a representation to the exempt entity:
(i) that the other entity is a reporting entity, other than a phase 3 reporting entity, that is required to report such information under the Derivative Transaction Rules (Reporting); or
(ii) that the other entity is a phase 3 reporting entity that is required to report such information under the Derivative Transaction Rules (Reporting), and that regulation 7.5A.73 does not apply to the other entity in relation to such OTC derivative transactions or OTC derivative positions; and
(b) the exempt entity makes regular enquiries reasonably designed to determine whether the representation is correct; and
(c) the exempt entity has no reason to suspect that the representation is incorrect.
7.5A.72(3)
The other entity is a reporting counterparty in relation to the exempt entity and the information if:
(a) the other entity has made the following representations to the exempt entity:
(i) that the other entity is a reporting entity;
(ii) that the other entity will report such information in accordance with the Derivative Transaction Rules (Reporting); and
(b) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representation referred to in subparagraph (a)(ii); and
(c) the exempt entity has no reason to suspect that the other entity has not been making such reports.
Foreign entities
7.5A.72(4)
The other entity is a reporting counterparty in relation to the exempt entity and the information if:
(a) the other entity is a foreign entity; and
(b) the other entity has made the following representations to the exempt entity:
(i) that the other entity is subject to reporting requirements ( alternative reporting requirements ) in one or more foreign jurisdictions that are substantially equivalent to requirements under the Derivative Transaction Rules (Reporting);
(ii) that the other entity will report such information to a facility prescribed by or under subregulation 7.5A.30(2), in accordance with the alternative reporting requirements;
(iii) that the other entity will designate such information reported to that facility as information that has been reported in accordance with the Derivative Transaction Rules (Reporting); and
(c) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representations referred to in subparagraphs (b)(ii) and (iii); and
(d) the exempt entity has no reason to suspect that the other entity has not been making such reports.
7.5A.72(5)
The other entity is a reporting counterparty in relation to the exempt entity and the information if:
(a) the other entity is a foreign entity; and
(b) the other entity has made the following representations to the exempt entity:
(i) that the other entity will report such information to a licensed derivative trade repository in accordance with the Derivative Transaction Rules (Reporting);
(ii) that the other entity will designate such information reported to that repository as information that has been reported in accordance with the Derivative Transaction Rules (Reporting); and
(c) the exempt entity makes regular enquiries reasonably designed to determine whether the other entity has been making reports in accordance with the representations referred to in paragraph (b); and
(d) the exempt entity has no reason to suspect that the other entity has not been making such reports.
Subregulations do not limit each other
7.5A.72(6)
Subregulations (2), (3), (4) and (5) do not limit each other.
New phase 3 reporting entities
7.5A.73(1)
For the purposes of regulations 7.5A.71 and 7.5A.72, this regulation applies to a new phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period: (a) starting on the day the entity becomes a phase 3 reporting entity; and (b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity.
Example:
An entity becomes a phase 3 reporting entity on 1 November 2015. However, 31 December 2015 and 31 March 2016 are both disqualifying quarter days for the entity.
This regulation applies to the entity during a period starting on 1 November 2015 and ending at the end of 30 June 2016 (the quarter day that next follows the disqualifying quarter days on 31 December 2015 and 31 March 2016).
Continuing phase 3 reporting entities
7.5A.73(2)
For the purposes of regulations 7.5A.71 and 7.5A.72, this regulation applies to a continuing phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, at all times during a period: (a) starting on the day after the quarter day that next follows 2 successive qualifying quarter days for the entity; and (b) ending at the end of the quarter day that next follows 2 successive disqualifying quarter days for the entity.
Example:
An entity becomes a phase 3 reporting entity on 1 November 2015. However, 31 December 2015 and 31 March 2016 are both disqualifying quarter days for the entity, so this regulation stops applying under subregulation (1) at the end of 30 June 2016.
30 June 2016 and 30 September 2016 are qualifying quarter days for the entity. This regulation applies to the entity again during the period starting on 1 January 2017 (the day after the quarter day that next follows the qualifying quarter days) and ending as provided for by paragraph (2)(b).
7.5A.73(3)
In this regulation:
continuing phase 3 reporting entity
means:
(a) an entity that was a phase 3 reporting entity on 30 September 2015; or
(b) a new phase 3 reporting entity for which the period mentioned in subregulation (1) has ended.
Note: For when this regulation first applies to an entity that was a phase 3 entity on 30 September 2015, see regulation 10.21.01.
disqualifying quarter day
, for an entity, means a quarter day at the end of which the total gross notional outstanding positions held by the entity in the relevant capacity is 5 billion Australian dollars or more.
new phase 3 reporting entity
means an entity that becomes a phase 3 reporting entity on or after 1 October 2015.
qualifying quarter day
, for an entity, means a quarter day at the end of which the total gross notional outstanding positions held by the entity in the relevant capacity is less than 5 billion Australian dollars.
quarter day
(Repealed by FRLI No F2022L01689, Sch 1[4] (effective 15 September 2023).)
relevant capacity
: a position is held by the entity in the
relevant capacity
, for the purpose of the definition of
qualifying quarter day
or
disqualifying quarter day
in this subregulation, if:
(a) the position is held by the entity otherwise than in a representative capacity, in the following circumstances:
(i) in a case in which the relevant definition is applied in relation to an OTC derivative transaction to which the entity is a party otherwise than in a representative capacity;
(ii) in a case in which the relevant definition is applied in relation to an OTC derivative held by the entity otherwise than in a representative capacity; or
(b) the position is held by the entity in a representative capacity in relation to a particular registered scheme, notified foreign passport fund, trust or CCIV, in the following circumstances:
(i) in a case in which the relevant definition is applied in relation to an OTC derivative transaction to which the entity is a party in that capacity;
(ii) in a case in which the relevant definition is applied in relation to an OTC derivative held by the entity in that capacity.
Scope
7.5A.74(1)
This regulation applies to a phase 3 reporting entity, in relation to an OTC derivative transaction or an OTC derivative position, if:
(a) regulation 7.5A.73 applies in relation to the entity, in relation to the transaction or position, during a particular period, and the period has ended (at the exemption end time ); and
(b) the entity is a counterparty to the relevant OTC derivative (including the derivative as modified) at the exemption end time; and
(c) in reliance on an exemption under regulation 7.5A.71 (the applicable exemption ), the entity does not report OTC derivative position information (the exempt information ) in relation to the transaction or position during that period; and
(d) if it were not for the applicable exemption, the entity would have been required to report the exempt information under:
(i) the Derivative Transaction Rules (Reporting); or
(ii) subsection 907D(3) of the Act, in relation to a provision of the ASIC exemption instrument that imposes a requirement, as a condition of an exemption under that instrument, to report that information.
Single-sided reporting requirement
7.5A.74(2)
Despite the applicable exemption, the entity must report OTC derivative position information in relation to the OTC derivative, as at the exemption end time, in accordance with the Derivative Transaction Rules (Reporting), within 6 months after the exemption end time.
7.5A.74(3)
If the entity fails to comply with subregulation (2), the applicable exemption is taken never to have applied to the entity in relation to the transaction or position.
This regulation is made for paragraphs 901F(1)(d) and 903E(1)(d) of the Act.
7.5A.101(2)
ASIC may accept a written undertaking, entered into by a person who is alleged to have contravened section 901E or 903D of the Act, as an alternative to civil proceedings.
7.5A.101(3)
Without limiting subregulation (2), ASIC may accept an undertaking that includes any of the following:
(a) an undertaking to take specified action within a specified period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.
Note: An undertaking may relate to an infringement notice given in relation to the alleged contravention. For example, an infringement notice may require a person to enter into an undertaking; a person may enter into an undertaking to comply with an infringement notice; a person may enter into an undertaking if the person does not comply with an infringement notice or the infringement notice is withdrawn.
7.5A.101(4)
If ASIC agrees, in writing, to the withdrawal or variation of the undertaking, the person who entered into the undertaking may withdraw or vary the undertaking.
7.5A.101(5)
If ASIC is satisfied that the person who entered into the undertaking has breached a term of the undertaking, ASIC may apply to a Court for an order under subregulation (6).
7.5A.101(6)
If the Court is satisfied that the person has breached a term of the undertaking, the Court may make one or more of the following orders:
(a) an order directing the person to comply with the term of the undertaking;
(b) an order directing the person to pay to the Commonwealth an amount not exceeding the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;
(c) an order directing the person to compensate another person who has suffered loss or damage as a result of the breach;
(d) any other order that the Court considers appropriate.
7.5A.101(7)
This regulation does not affect the liability of a person to civil proceedings if ASIC does not accept an undertaking in relation to the alleged contravention of section 901E or 903D of the Act.
This Subdivision is made for sections 901F and 903E of the Act.
7.5A.102(2)
This Subdivision does not require ASIC to give an infringement notice to a person in relation to the alleged contravention of those sections.
7.5A.102(3)
This Subdivision does not affect the liability of a person to civil proceedings if ASIC does not give an infringement notice to the person in relation to the alleged contravention of those sections.
7.5A.102(4)
This Subdivision does not affect the liability of a person to civil proceedings if:
(a) ASIC gives an infringement notice to the person in relation to the alleged contravention of those sections; and
(b) either:
(i) the notice is withdrawn; or
(ii) the person does not comply with the notice in accordance with regulation 7.5A.108.
7.5A.102(5)
This Subdivision does not limit or otherwise affect the penalty that a Court could impose on the person for a contravention of those sections.
In this Subdivision:
compliance period
has the meaning given by subregulation 7.5A.108(2).
infringement notice
means an infringement notice given under regulation 7.5A.104.
recipient
, in relation to an infringement notice, means the person to whom ASIC gives the infringement notice or intends to give the infringement notice under regulation 7.5A.104.
(a) the derivative transaction rules mentioned in section 901E of the Act; or
(b) derivative trade repository rules mentioned in section 903D of the Act.
If ASIC has reasonable grounds to believe that a person has contravened a rule, ASIC may give the person an infringement notice in relation to the alleged contravention.
7.5A.104(2)
ASIC may give a person an infringement notice that is in relation to more than one alleged contravention of a rule.
7.5A.104(3)
If ASIC withdraws an infringement notice given to a person in relation to the alleged contravention of a rule, ASIC may give the person a new infringement notice in relation to the alleged contravention.
Example: An infringement notice given to a person in relation to an alleged contravention of a rule may be withdrawn, and a new infringement notice given to the person in relation to that alleged contravention, if the original infringement notice contained an error.
Before giving a recipient an infringement notice, ASIC must:
(a) give the recipient a written statement that sets out ASIC's reasons for believing that the recipient has contravened a rule; and
(b) give the recipient, or a representative of the recipient, an opportunity to:
(i) appear at a private hearing before ASIC; and
(ii) give evidence to ASIC; and
(iii) make submissions to ASIC;
in relation to the alleged contravention of the rule.
7.5A.105(2)
If a recipient, or a representative of a recipient, gives ASIC evidence or information under paragraph (1)(b), the evidence or information is not admissible in evidence in any proceedings against the recipient, other than proceedings relating to the evidence or information being false or misleading.
An infringement notice:
(a) must state the date on which it is given; and
(b) must be identified by a unique code; and
(c) must state the name and address of the recipient; and
(d) must state that it is being given by ASIC under regulation 7.5A.104; and
(e) must specify details of each alleged contravention of the rule to which the infringement notice relates, including:
(i) the conduct that made up each alleged contravention (including, to the extent known, the date on which it occurred and the place at which it occurred); and
(ii) each rule that ASIC alleges the recipient has contravened; and
(f) must, in relation to each rule that ASIC alleges the recipient has contravened, state the maximum pecuniary penalty that a Court could order the recipient to pay for contravening the rule; and
(g) must, in relation to each alleged contravention of the rule to which the infringement notice relates:
(i) specify the penalty (if any) payable for each alleged contravention of the rule; and
(ii) if subparagraph (i) applies:
(A) specify the total penalty that the recipient must pay to the Commonwealth; and
(B) state that the penalty is payable to ASIC on behalf of the Commonwealth; and
(C) explain how payment of the penalty can be made; and
(iii) specify the remedial measures (if any) that the recipient must undertake or institute; and
(iv) specify the sanctions (if any) that the recipient must accept; and
(v) specify the terms of an undertaking (if any) that the recipient must enter into under regulation 7.5A.101; and
(h) must state that the recipient may choose not to comply with the infringement notice, but that if the recipient does not comply, civil proceedings may be brought against the recipient in relation to the alleged contravention; and
(i) must explain what the recipient must do to comply with the infringement notice and the effect of compliance with the infringement notice; and
(j) must state that the recipient may apply to ASIC:
(i) for withdrawal of the notice under regulation 7.5A.111; or
(ii) for an extension of time under regulation 7.5A.109; and
(k) must state that ASIC may publish details of the infringement notice under regulation 7.5A.115; and
(l) may include any other information that ASIC considers necessary.
Note: For sub-subparagraph (g)(ii)(A), the total penalty is the sum of the penalties payable under subparagraph (g)(i).
The penalty payable (if any) for an alleged contravention of a rule is the amount determined by ASIC.
Note: See subsections 901F(2) and 903E(2) of the Act for the maximum penalty payable.
7.5A.107(2)
If an infringement notice is in relation to more than one alleged contravention of a rule, the total penalty payable under the infringement notice is the sum of the penalties payable (if any) for the alleged contraventions.
A recipient complies with an infringement notice if, during the compliance period, the recipient does all of the following:
(a) pays the penalty specified in the infringement notice under sub-subparagraph 7.5A.106(g)(ii)(A) (if any);
(b) undertakes or institutes the remedial measures specified in the infringement notice under subparagraph 7.5A.106(g)(iii) (if any);
(c) accepts the sanctions specified in the infringement notice under subparagraph 7.5A.106(g)(iv) (if any);
(d) enters into an undertaking (including an undertaking to comply with the infringement notice) with the terms specified in the infringement notice under subparagraph 7.5A.106(g)(v) (if any).
7.5A.108(2)
The compliance period for an infringement notice:
(a) starts on the day on which the infringement notice is given to the recipient; and
(b) ends:
(i) 27 days after the day on which the infringement notice is given to the recipient; or
(ii) on another day permitted by this regulation.
7.5A.108(3)
If the recipient applies for a further period of time in which to comply with the infringement notice, and the application is granted, the compliance period ends at the end of the further period allowed.
7.5A.108(4)
If the recipient applies for a further period of time in which to comply with the infringement notice, and the application is refused, the compliance period ends on the later of:
(a) 28 days after the day on which the infringement notice was given to the recipient; and
(b) 7 days after the notice of refusal is given to the recipient.
7.5A.108(5)
If the recipient applies for the infringement notice to be withdrawn, and the application is refused, the compliance period ends 28 days after the notice of refusal is given to the recipient.
During the compliance period, a recipient may apply, in writing, to ASIC for a further period of no more than 28 days in which to comply with the infringement notice.
7.5A.109(2)
The application must:
(a) specify the infringement notice's unique code; and
(b) set out the reasons for the application.
7.5A.109(3)
Within 14 days after receiving the application, ASIC must:
(a) grant or refuse a further period no longer than the period sought (and no more than 28 days); and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.
7.5A.109(4)
If ASIC refuses a further period under paragraph (3)(a), the recipient may not make a further application under subregulation (1) in relation to that infringement notice.
7.5A.109(5)
If ASIC has not granted or refused a further period under paragraph (3)(a) within 14 days after receiving the application, ASIC is taken to have refused the further period.
Subject to subregulation (3), if:
(a) an infringement notice is given to a recipient in relation to an alleged contravention of a rule; and
(b) the infringement notice is not withdrawn; and
(c) the recipient complies with the infringement notice;
the effects in subregulation (2) apply.
7.5A.110(2)
The effects are:
(a) any liability of the recipient to the Commonwealth for the alleged contravention of the rule is discharged; and
(b) no civil or criminal proceedings may be brought or continued by the Commonwealth against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of the rule; and
(c) no administrative action may be taken by ASIC under section 914A, 915B, 915C or 920A of the Act against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of the rule; and
(d) the recipient is not taken to have admitted guilt or liability in relation to the alleged contravention; and
(e) the recipient is not taken to have contravened the rule.
Note: Third parties are not prevented from commencing civil proceedings against the recipient, including under section 1101B of the Act. ASIC is not prevented from applying for an order on behalf of a plaintiff in accordance with the Act.
7.5A.110(3)
Subregulation (2) does not apply if the recipient has knowingly:
(a) provided false or misleading information to ASIC; or
(b) withheld evidence or information from ASIC;
in relation to the alleged contravention of the rule.
During the compliance period, a recipient of an infringement notice may apply, in writing, to ASIC for the infringement notice to be withdrawn.
7.5A.111(2)
The application must:
(a) specify the infringement notice's unique code; and
(b) set out the reasons for the application.
7.5A.111(3)
Within 14 days after receiving the application, ASIC must:
(a) withdraw or refuse to withdraw the infringement notice; and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.
7.5A.111(4)
Without limiting subregulation (3), ASIC may withdraw the infringement notice after taking into account the following matters:
(a) whether the recipient has previously been found to have contravened the rule to which the notice relates;
(b) the circumstances in which the contravention set out in the infringement notice is alleged to have occurred;
(c) whether an infringement notice has previously been given to the recipient in relation to an alleged contravention of the rule to which the notice relates, and whether the recipient complied with the infringement notice;
(d) any other relevant matter.
7.5A.111(5)
If, under paragraph (3)(a), ASIC refuses to withdraw the infringement notice, the recipient may not make a further application under subregulation (1) in relation to that infringement notice.
7.5A.111(6)
If ASIC has not withdrawn, or refused to withdraw, the infringement notice within 14 days after receiving the application, ASIC is taken to have refused to withdraw the infringement notice.
ASIC may withdraw an infringement notice given by ASIC without an application under regulation 7.5A.111 having been made.
7.5A.112(2)
Without limiting subregulation (1), ASIC may withdraw the infringement notice after taking into account a matter mentioned in paragraph 7.5A.111(4)(a), (b), (c) or (d).
A notice withdrawing an infringement notice must include the following information:
(a) the name and address of the recipient;
(b) the date the infringement notice was given;
(c) the infringement notice's unique code.
7.5A.113(2)
The notice must also state that the infringement notice is withdrawn.
ASIC may withdraw an infringement notice after the recipient has complied with the infringement notice only if the recipient agrees, in writing, to the withdrawal.
7.5A.114(2)
If an infringement notice is withdrawn after the penalty specified in it (if any) has been paid, the Commonwealth must refund the amount of the penalty to the person who paid it.
7.5A.114(3)
If an infringement notice is withdrawn after the recipient has complied with a requirement specified in the infringement notice:
(a) to undertake or institute remedial measures; or
(b) to accept sanctions other than a payment of a penalty to the Commonwealth; or
(c) to enter into an undertaking;
the remedial measures, sanctions or undertaking are taken to no longer be enforceable by ASIC.
If ASIC gives an infringement notice to a recipient, ASIC may, at the end of the compliance period, publish details of the infringement notice.
7.5A.115(2)
If ASIC decides to publish details of the infringement notice, ASIC must publish the details in accordance with either or both of subregulations (3) and (4).
7.5A.115(3)
ASIC may publish details of an infringement notice by publishing in the Gazette:
(a) a copy of the infringement notice; and
(b) the following statements:
(i) a statement as to whether the recipient has complied with the infringement notice;
(ii) if the recipient has complied with the infringement notice, a statement that:
(A) compliance is not an admission of guilt or liability; and
(B) the recipient is not taken to have contravened the rule;
(iii) if the recipient has not complied with the infringement notice, a statement that:
(A) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened the rule; and
(B) the recipient is not taken to have contravened the rule.
7.5A.115(4)
ASIC may publish details of an infringement notice by issuing a written or oral statement that:
(a) includes an accurate summary of the details of the infringement notice, including:
(i) the name of the recipient; and
(ii) the amount of the penalty specified in the infringement notice (if any); and
(iii) the remedial measures specified in the infringement notice (if any); and
(iv) the sanctions specified in the infringement notice (if any); and
(v) the terms of an undertaking specified in the infringement notice (if any); and
(vi) the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of the rule; and
(b) includes the following statements:
(i) a statement as to whether the recipient has complied with the infringement notice;
(ii) if the recipient has complied with the infringement notice, a statement that:
(A) compliance is not an admission of guilt or liability; and
(B) the recipient is not taken to have contravened the rule;
(iii) if the recipient has not complied with the infringement notice, a statement that:
(A) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened the rule; and
(B) the recipient is not taken to have contravened the rule.
This regulation is made for subsection 903A(5) of the Act and applies to information given to ASIC, by the operator (or an officer of the operator) of a licensed derivative trade repository, under a provision of:
(a) Part 7.5A of the Act; or
(b) the regulations made for that Part; or
(c) the derivative transaction rules or derivative trade repository rules.
7.5A.150(2)
The information is taken, for the purpose of section 127 (confidentiality) of the ASIC Act, to be given to ASIC in confidence in connection with the performance of ASIC's functions under the Act, unless:
(a) the information has been made publicly available in accordance with the provisions mentioned in paragraph (1)(a), (b) or (c); or
(b) a law requires or permits the information to be released.
For paragraph 904B(2)(d) of the Act, the persons or bodies mentioned in Article 81(3)(a) to (e), (g), (h) and (j) of Regulation (EU) No 648/2012 of the European Parliament and the Council of the European Union, dated 4 July 2012, may request a derivative trade repository licensee to provide the person or body with derivative trade data that is retained in the derivative trade repository.
7.5A.150A(2)
For subsection 904B(4) of the Act, information must not be included in derivative trade data provided in response to a request under subregulation (1) unless:
(a) the information relates to a transaction or position that is required to be reported under either of the following:
(i) rules made under paragraph 901A(2)(b) of the Corporations Act 2001;
(ii) the conditions of an exemption given under section 907D of the Corporations Act 2001; and
(b) subregulation (3) or (4) applies.
7.5A.150A(3)
This subregulation applies if the information relates to a transaction or position that would, but for mutual regulatory recognition arrangements, be required to be reported under one or more of the following:
(a) Regulation (EU) No 648/2012 of the European Parliament and the Council of the European Union dated 4 July 2012;
(b) Commission Implementing Regulation (EU) No 1247/2012 of the European Parliament and the Council of the European Union, dated 19 December 2012;
(c) Commission Delegated Regulation (EU) No 148/2013 of the European Commission, dated 19 December 2012.
7.5A.150A(4)
This subregulation applies if the information:
(a) relates to a European Union or European Economic Area underlying asset, index, rate or currency; and
(b) is not covered by subregulation (3).
For paragraph 904B(2)(d) of the Act, each of the following persons or bodies may request a derivative trade repository licensee to provide it with derivative trade data that is retained in the derivative trade repository: (a) the Bank of England; (b) the Financial Conduct Authority of the United Kingdom; (c) the Monetary Authority of Singapore.
7.5A.150B(2)
A request under subregulation (1) must be made in accordance with the standards set out in the report "Authorities' access to trade repository data":
(a) issued jointly by the Committee on Payment and Settlement Systems (the CPSS ) and the International Organization of Securities Commissions (the IOSCO ); and
(b) as supplemented, superseded or modified from time to time by principles, recommendations or standards issued by the CPSS or IOSCO (or a successor of the CPSS or IOSCO).
7.5A.150B(3)
If part of a request under subregulation (1) is made in accordance with the standards mentioned in subregulation (2), the part is taken to be a request for the purpose of this regulation.
7.5A.150B(4)
For subsection 904B(4) of the Act, information must not be included in derivative trade data provided to a person or body in response to a request under subregulation (1) unless:
(a) the information relates to a transaction or position that is required to be reported under either of the following:
(i) rules made under paragraph 901A(2)(b) of the Corporations Act 2001;
(ii) the conditions of an exemption given under section 907D of the Corporations Act 2001; and
(b) subregulation (5) or (6) applies.
7.5A.150B(5)
This subregulation applies if the information:
(a) relates to a transaction or position that is, or would be, but for mutual regulatory recognition arrangements, required to be reported under the laws of the jurisdiction in which the person or body is located; and
(b) is required by the person or body as part of the performance of its functions or exercise of its powers.
7.5A.150B(6)
This subregulation applies if the information:
(a) either:
(i) relates to an underlying asset, index, rate or currency of the jurisdiction in which the person or body is located; or
(ii) relates to a counterparty located in the jurisdiction in which the person or body is located; and
(b) is required by the person or body as part of the performance of its functions or exercise of its powers; and
(c) is not covered by subregulation (5).
For subparagraph 904B(5)(b)(i) of the Act, every derivative trade repository licensee is excused from complying with a request for derivative trade data under paragraph 904B(2)(e) of the Act.
This regulation is made for paragraph 904J(4)(d) of the Act.
7.5A.200(2)
The following persons or bodies are prescribed for that paragraph:
(a) the Clean Energy Regulator;
(b) the Australian Competition and Consumer Commission;
(c) the Australian Prudential Regulation Authority;
(d) the Australian Taxation Office;
(e) the Australian Transaction Reports and Analysis Centre;
(f) an authority of a State or Territory having functions and powers similar to those of the Director of Public Prosecutions;
(g) the police force or service of each State and the Northern Territory;
(h) Consumer Protection, Western Australia;
(i) the Commissioner of State Revenue of Western Australia;
(j) NSW Fair Trading;
(k) Consumer Affairs Victoria;
(l) the State Revenue Office of Victoria;
(m) the Office of Fair Trading of Queensland;
(n) the Office of State Revenue of Queensland;
(o) Consumer and Business Services, South Australia;
(p) Consumer Affairs and Fair Trading, Tasmania;
(q) the Department of Treasury and Finance of Tasmania;
(r) the Office of Regulatory Services of the Australian Capital Territory;
(s) Consumer Affairs, the Northern Territory.
This regulation is made for subsection 906A(3) of the Act and applies to information given to ASIC, by the operator (or an officer of the operator) of a prescribed derivative trade repository, under a provision of:
(a) Part 7.5A of the Act; or
(b) the regulations made for that Part; or
(c) the derivative transaction rules or derivative trade repository rules.
7.5A.250(2)
The information is taken, for the purpose of section 127 (confidentiality) of the ASIC Act, to be given to ASIC in confidence in connection with the performance of ASIC's functions under the Act, unless:
(a) the information has been made publicly available in accordance with the provisions mentioned in paragraph (1)(a), (b) or (c); or
(b) a law requires or permits the information to be released.
This regulation is made for paragraph 854A(1)(b) of the Act.
7.5A.270(2)
A derivative trade repository licensee must keep the following records:
(a) a list of names and contact details of each director, secretary and senior manager of the licensee;
(b) a list of names and contact details of individuals who hold more than 15% of the voting power in the licensee.
7.5A.270(3)
The licensee must keep the records for at least 5 years.
For paragraph 911A(2)(k) of the Act, the provision of the following services is covered by an exemption from the requirement to hold an Australian financial services licence:
(a) (Repealed)
(aa) (Repealed) (b) dealing in a financial product by a person in the capacity of the trustee of a pooled superannuation trust in the following circumstances:
(i) the pooled superannuation trust is used for investment of the assets of a regulated superannuation fund;
(ba) a superannuation trustee service provided by the trustee of a pooled superannuation trust in the circumstances set out in paragraph (b); (c) dealing in a financial product by a person in the capacity of the trustee of a pooled superannuation trust in the following circumstances:
(ii) the regulated superannuation fund has net assets of at least $10 million on the date that it first invests in the pooled superannuation trust;
(i) the pooled superannuation trust is used for investment of the assets of a regulated superannuation fund;
(ii) the regulated superannuation fund has net assets of at least $5 million, but less than $10 million, on the date that it first invests in the pooled superannuation trust (whether that date is before or after the FSR commencement);
(ca) a superannuation trustee service provided by the trustee of a pooled superannuation trust in the circumstances set out in paragraph (c); (d) dealing in a financial product by a person in the capacity of the trustee of a pooled superannuation trust in circumstances in which the pooled superannuation trust is not used for the investment of the assets of a regulated superannuation fund; (da) a superannuation trustee service provided by the trustee of a pooled superannuation trust in the circumstances set out in paragraph (d); (db) dealing in a financial product by a person in the capacity of the trustee of a registrable superannuation entity in the ordinary course of operation of the registrable superannuation entity (other than a financial product that is an interest in the registrable superannuation entity); (e) a financial service provided by a person ( person 1 ) in the following circumstances:
(iii) the trustee has a reasonable expectation that the net assets of the regulated superannuation fund will equal or exceed $10 million not later than 3 months of the date on which it first invests in the pooled superannuation trust (whether that date is before or after the FSR commencement);
(i) the service consists only of:
(A) informing a person ( person 2 ) that a financial services licensee, or a representative of the financial services licensee, is able to provide a particular financial service, or a class of financial services; and
(B) giving person 2 information about how person 2 may contact the financial services licensee or representative;
(ii) person 1 is not a representative of the financial service licensee, or of a related body corporate of the financial services licensee;
(iii) person 1 discloses to person 2, when the service is provided:
(A) any benefits (including commission) that person 1, or an associate of person 1, may receive in respect of the service; and
(B) any benefits (including commission) that person 1, or an associate of person 1, may receive that are attributable to the service;
(ea) a financial service provided by a person ( person 1 ) in the following circumstances:
(iv) the disclosure mentioned in subparagraph (iii) is provided in the same form as the information mentioned in subparagraph (i);
(i)the service consists only of:
(A) informing a person ( person 2 ) that a financial services licensee, or a representative of the financial services licensee, is able to provide a particular financial service, or a class of financial services; and
(B) giving person 2 information about how person 2 may contact the financial services licensee or representative;
(f) a financial service provided in the following circumstances:
(ii) person 1 is a representative of the financial service [sic] licensee, or of a related body corporate of the financial services licensee;
(i) a person ( person 1 ) is a person that is not in the jurisdiction;
(ii) person 1 arranges, on behalf of another person ( person 2 ), for a holder of an Australian financial services licence to deal in a financial product;
(fa) a financial service is provided in the following circumstances:
(iii) person 1 believes on reasonable grounds that person 2 is not in the jurisdiction;
(i) a person ( person 1 ) is a person that is not in the jurisdiction;
(ii) person 1 enters into an arrangement with the holder of an Australian financial services licence under which a financial product, or a beneficial interest in a financial product, is to be held on trust for, or on behalf of, another person ( person 2 );
(g) a financial service provided in the following circumstances:
(iii) person 1 believes on reasonable grounds that person 2 is not in the jurisdiction;
(i) a person ( person 1 ) is a person that is not in the jurisdiction;
(ii) person 1 believes on reasonable grounds that another person ( person 2 ) is not in the jurisdiction;
(iii) person 1 deals on behalf of person 2 in a financial product that cannot be traded on a licensed market;
(h) a dealing in a financial product that consists only of an employer-sponsor paying contributions on behalf of an employee into a superannuation product or RSA;
(iv) person 1 believes on reasonable grounds that each person who is a party to the dealing or any transaction to which the dealing relates is a person that is not in the jurisdiction;
(ha) (Repealed) (hb) a dealing in a financial product that consists only of an RSA provider paying the benefits of an RSA holder into a superannuation product or RSA; (hc) a dealing in a financial product that consists only of an employer-sponsor arranging for the issue of a superannuation product to an employee;
(i)-(j) (Omitted) (k) a financial service provided in the following circumstances:
(i) the financial service is provided in respect of a financial product by a person (who may be described as a "sub-custodian") under an arrangement with a financial services licensee (the master-custodian );
(ii) the master-custodian is authorised by its Australian financial services licence to provide a custodial or depository service;
(l) a financial service provided by a person ( person 1 ) in the following circumstances:
(iii) a beneficial interest in the financial product is held by the master-custodian on trust for or on behalf of a client as part of providing a custodial or depository service authorised by its Australian financial services licence;
(i) the financial service is provided to another person ( person 2 ) in the ordinary course of person 1's business;
(ii) person 1 does not provide financial services as a significant part of person 1's business;
(iii) the financial service consists only of either or both of:
(A) advising person 2 in relation to a non-cash payments facility that person 2 may use or has used to pay person 1 for goods or services; and
(B) arranging to deal in a non-cash payments facility that person 2 will use to pay person 1 for goods or services;
(iv) the goods and services do not include any financial products or financial services;
(la) a financial service provided by a person ( person 1 ) to another person ( person 2 ), if:Example
A retailer might offer its customers a variety of payment methods for payment for goods and services, such as a credit card, Bpay, or direct debit.
A recommendation of a particular payment method, or the expression of an opinion about the payment methods available to the customer, should not require an Australian financial services licence.
(i) the financial service is provided in the ordinary course of person 1's business; and
(ii) person 1:
(A) holds an Australian financial services licence authorising the provision of financial services other than the financial service mentioned in subparagraph (i); or
(B) does not hold an Australian financial services licence; and
(lb) a financial service that is the issue of a non-cash payment facility if:
(iii) the financial service consists of either or both of the following:
(A) advising person 2 in relation to a non-cash payments facility that person 2 may use, or has used, to pay person 1 for a financial product or a financial service;
(B) arranging to deal in a non-cash payments facility that person 2 will use to pay person 1 for a financial product or a financial service;
(i) it is a facility for making non-cash payments; and
(lc) an Australia Post presentment and payment processing facility known as POSTbillpay or billmanager; (m) a financial service provided by a person in the following circumstances:
(ii) under the facility, payments may be made only to the issuer of the facility or a related body corporate of the issuer;
(i) the service consists only of either or both of:
(A) dealing in derivatives; and
(B) dealing in foreign exchange contracts;
(ii) the service does not involve the making of a market for derivatives or foreign exchange contracts;
(iii) the dealing is entered into for the purpose of managing a financial risk that arises in the ordinary course of a business;
(iv) the person does not deal in derivatives or foreign exchange contracts as a significant part of the person's business;
(v) the dealing is entered into on the person's own behalf;
(ma) a financial service provided by a person in the following circumstances:Example of financial service to which paragraph (m) applies
A series of forward foreign exchange contracts entered into by a gold mining company to hedge against the risk of a fall in the price of gold.
Example of financial service to which paragraph (m) does not apply
The issue and disposal of derivatives relating to the wholesale price of electricity are not transactions to which this paragraph applies.
(i) the service consists only of 1 or more of the following:
(A) dealing in derivatives over carbon units, Australian carbon credit units or eligible international emissions units;
(B) dealing in a carbon unit, an Australian carbon credit unit or an eligible international emissions unit;
(C) dealing in foreign exchange contracts for carbon units, Australian carbon credit units or eligible international emissions units;
(ii) the service does not involve the making of a market for those derivatives, units or foreign exchange contracts;
(iii) the dealing is entered into for the purpose of managing financial risk in relation to the surrender, cancellation or relinquishment of carbon units, Australian carbon credit units or eligible international emissions units by:
(A) the person; or
(B) a related body corporate of the person; or
(C) an associated entity of the person;Note: Section 175 of the Carbon Credits (Carbon Farming Initiative) Act 2011 deals with the relinquishment of Australian carbon credit units. Section 210 of the Clean Energy Act 2011 deals with the relinquishment of carbon units.
(iv) the person does not deal in those derivatives, units or foreign exchange contracts as the principal activity of the person's business;
(mb) a financial service that a person is engaged by the Clean Energy Regulator to provide to the Clean Energy Regulator, or on behalf of the Clean Energy Regulator, that relates to the conduct of an auction of carbon units under the Clean Energy Act 2011, other than a financial service that arises in the course of the following activities:
(v) the dealing is entered into:
(A) on the person's own behalf; or
(B) on behalf of a related body corporate of the person; or
(C) on behalf of an associated entity of the person;
(i) the management of any deposit lodged to participate in an auction under the Clean Energy Act 2011;
(n) a financial service provided by a person ( person 1 ) to another person ( person 2 ) in the following circumstances:
(ii) direct participation in an auction under the Clean Energy Act 2011, whether on the person's own behalf or on behalf of a person other than the Clean Energy Regulator;
(i) person 1 is not in this jurisdiction;
(ii) person 2 is in this jurisdiction;
(iii) the service consists only of dealing in a financial product or class of financial products;
(na) a financial service provided by a person ( person 1 ) to another person ( person 2 ) in the following circumstances:
(iv) a financial services licensee whose financial services licence covers the provision of the service arranges for person 1 to provide the service to person 2;
(i) person 1 is not in this jurisdiction;
(ii) person 2 is in this jurisdiction;
(iii) the service consists only of 1 or more of:
(A) the provision of financial product advice to person 2; and
(B) person 1 making a market; and
(C) the provision of a custodial or depositary service to person 2;
(iv) person 1 is:
(A) a related body corporate of a financial services licensee whose financial services licence covers the provision of the service; or
(B) a party to a business joint venture with a financial services licensee whose financial services licence covers the provision of the service;
(v) the financial services licensee arranges for person 1 to provide the service;
(o) a financial service that is the provision of financial product advice in the following circumstances:
(vi) the financial service licensee's licence is subject to a condition requiring it to assume responsibility for the conduct of person 1 in the provision of the financial service mentioned in this paragraph;
(i) the advice is only general advice in relation to a financial product or class of financial products;
(ii) the advice is provided by the product issuer of the financial product or class of financial products;
(iii) the advice is provided in the media;
(oa) the provision of financial product advice if the advice:
(iv) the product issuer provides the following information:
(A) the advice has been prepared without taking account of the client's objectives, financial situation or needs;
(B) for that reason, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client's objectives, financial situation and needs;
(C) if the advice relates to the acquisition, or possible acquisition, of a particular financial product, the client should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product;
(i) is provided by an actuary in the ordinary course of providing actuarial services; and
(ii) could not reasonably be expected to be included in a document that is to be given to a retail client; and
(p) a financial service provided by a person in the following circumstances:
(iii) is provided to:
(A) a wholesale client; or
(B) the Commonwealth, a State or a Territory; or
(C) an exempt public authority;
(i) the financial service relates to insurance entered into, or proposed to be entered into, for the purposes of a law (including a law of a State or Territory) that relates to workers compensation;
(ii) the person is licensed to provide the service under the law of the State or Territory in which the service is provided;
Example
The activities of a licensed insurer under the Workers Compensation Act 1987 of New South Wales.
Note: A licensed insurer would require an Australian financial services licence to the extent that the licensed insurer provides a financial service in respect of a non-workers compensation product or a non-workers compensation component of a product.
(pa) a financial service provided to a wholesale client by a body that:
(i) is not a company; and
(ii) is established or constituted under a law of the Commonwealth or a State or Territory; and
(iii) is required under a law of the Commonwealth or a State or Territory to carry on the business of insurance or to undertake liability under a contract of insurance; and
(q) a financial service provided by a person in the following circumstances:
(iv) is regulated for the provision of insurance under a law of the Commonwealth or a State or Territory;
(i) the financial service consists only of the variation or disposal of a financial product by the person;
(ii) the person also issued the original product;
(r) a financial service that is a dealing (or arranging for a dealing) in:
(iii) the person provides the financial service under the terms of the financial product;
(i) a debenture; or
(ii) a legal or equitable right or interest in a debenture; or
by the issuer of the debenture, the legal or equitable right or interest or the option; (s) the provision of financial product advice if the advice:
(iii) an option to acquire, by way of issue or transfer, a debenture or a legal or equitable right or interest in a debenture;
(i) is provided to a financial services licensee; and
(ii) is only general advice in relation to a financial product or a class of financial products; and
(iii) is advice that the financial services licensee is authorised to provide; and
(t) advising in relation to, or dealing in, a medical indemnity insurance product; (ta) a financial service provided by a person in the following circumstances:
(iv) is provided by:
(A) the product issuer; or
(B) a related body corporate of the product issuer;
(i) the financial service is providing financial product advice in relation to a friendly society funeral product, or dealing in a friendly society funeral product;
(ii) the person is a funeral services entity, or an employee, director or other officer of a funeral services entity;
(u) a financial service provided by a person in the following circumstances:
(iii) the financial service is provided in the funeral services entity's ordinary course of business as a funeral services entity;
(i) the financial service is advice included in a document issued in connection with a takeover bid or an offer of a financial product;
(ii) the advice is an opinion on matters other than financial products and does not include advice on a financial product;
(iii) the document includes a statement that the person is not operating under an Australian financial services licence when giving the advice;
(iv) the person discloses, in the document, the information mentioned in paragraphs 947B(2)(d) and (e) of the Act;
(v) a financial service provided by a person (the nominee ) in the following circumstances:Example
A geologist's report on a mining lease included in a PDS.
(i) the nominee holds a financial product or a beneficial interest in a financial product on trust for or on behalf of a client of a financial services licensee who is a participant in a licensed market (the participant );
(ii) the financial product:
(A) was acquired on the licensed market by the participant on behalf of the client; or
(B) is to be disposed of on the licensed market by the participant on behalf of the client;
(iii) the participant is authorised by an Australian financial services licence to provide a custodial or depository service;
(iv) the participant's licence is subject to a condition requiring it to assume responsibility for the conduct of the nominee in relation to the provision of a financial service mentioned in this paragraph;
(w) a financial service that is provided:
(v) the nominee is a wholly-owned subsidiary of the participant;
(i) by the Export Finance and Insurance Corporation established by the Export Finance and Insurance Corporation Act 1991; and
(x) a service in relation to a litigation funding scheme mentioned in regulation 5C.11.01; (y) a service in relation to a litigation funding arrangement mentioned in regulation 5C.11.01; (z) a financial service provided by a person in the following circumstances:
(ii) only to a wholesale client;
(i) the person is:
(A) the operator of a qualifying gas trading exchange; or
(B) a participant in relation to a qualifying gas trading exchange;
(za) the provision of financial product advice to a client by a financial capability service provider as part of the provision of a financial capability service in the following circumstances:
(ii) the service is provided in relation to a qualifying gas exchange product traded on the qualifying gas trading exchange;
(i) the advice relates to a basic deposit product;
(ii) no fees or charges (however described) are payable by or on behalf of the client in relation to the financial capability service;
(iii) no remuneration (whether by way of commission or otherwise) is payable to, or for the benefit of, the financial capability service provider, its representatives or its associates in relation to any action by or on behalf of the client arising from the financial capability service (including the advice);
(iv) the financial capability service provider does not carry on or otherwise participate in a financial services business involving the provision of a financial service, other than a financial service of the kind to which this paragraph applies;
(v) the financial capability service provider takes all reasonable steps to ensure that none of its representatives provides or participates in the provision of a financial service, other than a financial service of the kind to which this paragraph applies;
(zb) the provision of financial product advice to a client by a financial counselling agency as part of the provision of a financial counselling service if the advice:
(vi) the financial capability service provider takes all reasonable steps to ensure that each person who provides the financial capability service (including the advice) on its behalf has undertaken appropriate training to ensure that they have adequate skills and knowledge to satisfactorily provide that service (including that advice);
(i) relates to a deposit product, a facility for making non-cash payments, an insurance product, an RSA or a superannuation product; or
(ii) is to the effect that the client should or may dispose of a security, a managed investment product, a financial product referred to in paragraph 764A(1)(ba) of the Act, or a debenture, stock or bond issued by a government;
and the following circumstances apply:
(iii) no fees or charges (however described) are payable by or on behalf of the client in relation to the financial counselling service, other than any fees or charges payable on behalf of the client by the Commonwealth, a State or a Territory;
(iv) no remuneration (whether by way of commission or otherwise) is payable to, or for the benefit of, the financial counselling agency, its representatives or its associates in relation to any action by or on behalf of the client arising from the financial counselling service (including the advice);
(v) the financial counselling agency does not carry on or otherwise participate in a financial services business involving the provision of a financial service, other than a financial service of the kind to which this paragraph applies or a claims handling and settling service;
(vi) the financial counselling agency takes all reasonable steps to ensure that none of its representatives provides or participates in the provision of a financial service, other than a financial service of the kind to which this paragraph applies or a claims handling and settling service;
(vii) the financial counselling agency takes all reasonable steps to ensure that each person who provides the financial counselling service (including the advice) on its behalf is a member of, or is eligible to be a member of, a financial counselling association;
(viii) the financial counselling agency takes all reasonable steps to ensure that each person who provides the financial counselling service (including the advice) on its behalf has undertaken appropriate training to ensure that they have adequate skills and knowledge to satisfactorily provide that service (including that advice).
7.6.01(2)
If paragraph (1)(c) or (ca) applies, and the net assets of the regulated superannuation fund do not equal or exceed $10 million at the end of the 3 month period mentioned in subparagraph (1)(c)(ii): (a) the trustee of the pooled superannuation trust must offer to redeem the investment of the regulated superannuation fund as soon as practicable after the end of the period; and (b) the regulated superannuation fund has not accepted the redemption offer within 3 months after the offer was made; and (c) the net assets of the regulated superannuation fund do not equal or exceed $10 million by the end of the 3 month period mentioned in paragraph (b);
the trustee of the pooled superannuation trust must apply for an Australian financial services licence.
7.6.01(3)
Subregulation (1) is not intended to affect the determination of whether the provision of a service that is not described by that paragraph is, or is not, the provision of a financial service.
7.6.01(4)
In relation to a regulated principal under Division 1 of Part 10.2 of the Act: (a) a reference in paragraph (1)(e) or (ea) to a financial services licensee includes the regulated principal; and (b) paragraph (a) ceases to apply at the end of the transition period in relation to the regulated principal.
7.6.01(5)
For paragraphs (1)(b), (ba), (c) and (ca), if a pooled superannuation trust is used for investment of the assets of more than 1 regulated superannuation fund: (a) each of the regulated superannuation funds must comply with paragraph (1)(b) or (c); and (b) it is not necessary for each of the regulated superannuation funds to comply with the same paragraph in relation to a particular pooled superannuation trust.
7.6.01(6)
Paragraph (1)(r) ceases to have effect at the end of 2 years after the FSR commencement.
7.6.01(6A)
Paragraph (1)(t) ceases to have effect in respect of a person advising in relation to, or dealing in, a medical indemnity insurance product, on the earlier of: (a) the date on which the person obtains an Australian financial services licence in respect of the product; and (b) 11 March 2004.
7.6.01(7)
In this regulation:
business joint venture
means a contractual agreement between 2 or more parties for the purpose of carrying on a business undertaking.
financial capability service
means a financial literacy and capacity building service provided mainly to improve the financial knowledge and skills of persons.
financial capability service provider
means a body that is funded wholly or partly by the Commonwealth to provide a financial capability service.
financial counselling agency
means a person that provides a financial counselling service.
financial counselling association
means each of the following:
(a) Financial Counselling Australia Ltd;
(b) Financial Counsellors Association of New South Wales Inc;
(c) Financial Counselling Victoria Inc;
(d) Financial Counsellors Association of Queensland Inc.;
(e) Financial Counsellors Association of Western Australia Inc;
(f) The South Australian Financial Counsellors' Association Incorporated;
(g) Financial Counselling Tasmania Inc.;
(h) Financial Counsellors ACT.
financial counselling service
means a counselling and advocacy service provided mainly for the purposes of assisting individuals or small businesses who are in financial difficulty to resolve their problems.
friendly society funeral product
means a financial product that is an account (however described):
(a) provided by:
(i) a body that is a friendly society for the purposes of the Life Insurance Act 1995; or
(ii) a body that is registered or incorporated as a friendly society under a law of a State or Territory; or
(iii) a body that is permitted, by a law of a State or Territory, to assume or use the expression friendly society ; or
(iv) a body that, immediately before the date that is the transfer date for the purposes of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999, was registered or incorporated as a friendly society under a law of a State or Territory; and
(b) the sole purpose of which is to save money for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of a person on the death of that person.
funeral services entity
means an entity of one of the following kinds:
(a) a body corporate;
(b) a partnership;
(c) an unincorporated body;
(d) an individual;
(e) for a trust that has only one trustee - a trustee;
(f) for a trust that has more than one trustee - the trustees together;
that carries on a business in this jurisdiction of supplying:
(g) services for the care and preparation of human bodies for burial or cremation; and
(h) services for the arrangement, supervision or conduct of a funeral, burial or cremation; and
(i) products in connection with the services mentioned in paragraphs (g) and (h).
media
means any of the following:
(a) a newspaper, magazine, journal or other periodical;
(b) a radio or television broadcasting service;
(c) an electronic service (including a service provided by the Internet) that is:
(i) operated on a commercial basis; and
(ii) similar to a newspaper, a magazine, a radio broadcast or a television broadcast.
small business
means a business with less than 100 employees.
For the purposes of subparagraph 911A(2)(ek)(vi) of the Act, general insurance products are prescribed.
For the purposes of subparagraph 911A(2)(el)(ii) of the Act, the following issuers of insurance products are prescribed: (a) Lloyd's underwriters (within the meaning of the Insurance Act 1973); (b) unauthorised foreign insurers.
For subsection 911A(5A) of the Act, the exemption under paragraph 911A(2)(b) of the Act does not apply in relation to a margin lending facility.
(Repealed by SLI 2015 No 91, Sch 1[12] (effective 1 July 2015).)
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if section 911A of the Act were modified to insert the following subsection after subsection (5B):
"(5C)
If the regulations prescribe an exemption under paragraph (2)(k) that covers the provision of a service by a person in relation to:
(a) a litigation funding scheme mentioned in regulation 5C.11.01 of the Corporations Regulations 2001; or
(b) a litigation funding arrangement mentioned in that regulation;the regulations may require the person to have adequate practices, and follow certain procedures, for managing conflicts of interest in relation to the scheme or arrangement."
7.6.01AB(2)
For subsection 911A(5C) of the Act, if a person is providing, or has provided, a financial service covered by the exemption mentioned in paragraph 7.6.01(1)(x) or (y), the person must: (a) maintain, for the duration of the litigation funding scheme or litigation funding arrangement, adequate practices for:
(i) managing any conflict of interest that may arise in relation to activities undertaken by the person, or an agent of the person, in relation to the scheme or arrangement; and
(b) follow the written procedures mentioned in subregulation (4) for the duration of the scheme or arrangement.
(ii) ensuring that a lawyer providing services in relation to the scheme or arrangement, and any immediate family member of such a lawyer, do not have or obtain a direct or indirect material financial interest in the person; and
Note: The exemption mentioned in paragraph 7.6.01(1)(x) relates to a litigation funding scheme mentioned in regulation 5C.11.01. The exemption mentioned in paragraph 7.6.01(1)(y) relates to a litigation funding arrangement mentioned in that regulation.
7.6.01AB(3)
A person commits an offence if the person contravenes subregulation (2).
Penalty:
7.6.01AB(4)
For subregulation (2), a person has adequate practices for managing a conflict of interest that may arise if the person can show through documentation that: (a) the person has conducted a review of the person's business operations that relate to the scheme or arrangement to identify and assess potential conflicting interests; and (b) the person:
(i) has written procedures for identifying and managing conflicts of interest; and
(c) the written procedures are reviewed at intervals no greater than 12 months; and (d) the written procedures include procedures about the following:
(ii) has implemented the procedures; and
(i) monitoring the person's operations to identify potential conflicting interests;
(ii) how to disclose conflicts of interest to general members and prospective general members;
(iii) managing situations in which interests may conflict;
(iv) protecting the interests of general members and prospective general members;
(v) how to deal with situations in which a lawyer acts for both the funder and general members;
(vi) how to deal with a situation in which there is a pre-existing relationship between any of a funder, a lawyer and a general member;
(vii) reviewing the terms of a funding agreement to ensure the terms are consistent with Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001;
(e) the terms of the funding agreement are reviewed to ensure the terms are consistent with Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001; and (f) the matters mentioned in paragraphs (a) to (e) are implemented, monitored and managed by:
(viii) recruiting prospective general members; and
(i) if the person is an entity other than an individual - the senior management or partners of the person; or
(ii) if the person is an individual that represents an entity - the senior management or partners of the entity.
For subparagraph 911B(1)(c)(iv) of the Act, travellers' cheques are prescribed.
For paragraph 911A(5)(a) of the Act, the exemptions from the requirement to hold an Australian financial services licence provided for in paragraphs 911A(2)(ea), (eb) and (ec) apply subject to the condition that a person mentioned in any of those paragraphs, or a representative of a person mentioned in any of those paragraphs, who provides financial product advice states the following matters, to the extent to which they would reasonably be expected to influence, or be capable of influencing, the provision of the financial product advice:
(a) any remuneration the person or the person's representative is to receive for providing the advice;
(b) any pecuniary or other interest that the provider of the advice, or an associate of the provider, has in relation to the advice, if the provider of the advice, or an associate of the provider, would be likely to obtain a material financial benefit, or avoid a material financial loss, if the advice were acted upon.
7.6.01B(2)
The statement mentioned in subregulation (1) must be presented in a way that:
(a) will adequately bring it to the attention of a reasonable person who may read or hear the financial product advice to which the statement relates; and
(b) is easy for a reasonable person to understand.
7.6.01B(3)
Subregulation (1) does not apply if:
(a) a person mentioned in paragraph 911A(2)(ea), (eb) or (ec) of the Act, and the person's representatives:
(i) comply with an industry code of practice; or
(ii) comply with the Statement of Principles laid down by the Australian Press Council; or
(iii) are subject to an internal policy that is approved by the board or governing body of the person; and
(b) the code, Statement of Principles or policy contains requirements relating to:
(i) the manner in which financial conflicts of interest are dealt with; or
(ii) the prevention of financial conflicts of interest.
7.6.01B(4)
Subregulation (1) does not apply in relation to:
(a) a newspaper or periodical, a transmission made by means of an information service, or a sound recording, video recording or data recording, the principal purpose of which is to report and provide comment on news, and not to provide financial product advice; and
(b) paid advertising in relation to which a reasonable person is able to distinguish the advertising from other material in the newspaper, periodical, transmission, sound recording, video recording or data recording.
7.6.01B(5)
A reference in subparagraph 911A(2)(eb)(ii) of the Act to transmissions that are generally available to the public includes transmissions provided as part of a subscription broadcasting service within the meaning of the Broadcasting Services Act 1992.
7.6.01B(6)
For paragraph 911A(6)(d) of the Act, each of the following services is an information service:
(a) a broadcasting service within the meaning of the Broadcasting Services Act 1992;
(b) a datacasting service within the meaning of the Broadcasting Services Act 1992;
(c) a service provided by the Internet.
7.6.01B(7)
In this regulation:
(a) in relation to a body corporate - a related body corporate; and
(b) in relation to an individual - a spouse (including a de facto partner), child, step-child, parent, step-parent, brother, half-brother, sister or half-sister of the individual.
internal policy
includes a code of ethics or editorial guidelines.
material financial benefit
means a financial benefit exceeding $10,000 in value.
material financial loss
means a financial loss exceeding $10,000 in value.
REGULATION 7.6.01BA 7.6.01BA MODIFICATION OF SECTION 912A OF THE ACT
(Repealed by No 101 of 2013, Sch 3[1] (effective 1 July 2019). REGULATION 7.6.01C OBLIGATION TO CITE LICENCE NUMBER IN DOCUMENTS 7.6.01C(1)
For subsection 912F(1) of the Act, the following documents are specified: (a) a Financial Services Guide; (b) a Supplementary Financial Services Guide; (c) a Product Disclosure Statement; (d) a Supplementary Product Disclosure Statement; (e) a Statement of Advice; (f) an application form for an application under section 1016A of the Act; (g) a document containing information required by regulations made under section 1017DA of the Act; (h) a document prepared for section 1017B of the Act, notifying a person of changes and events; (i) a Replacement Product Disclosure Statement.
7.6.01C(2)
On and after 1 July 2004, for subsection 912F(1) of the Act, a periodic statement under section 1017D of the Act is specified.
REGULATION 7.6.02 ALTERNATIVE DISPUTE RESOLUTION SYSTEMS 7.6.02(1)
For subparagraph 912A(2)(a)(i) of the Act, ASIC must take the following matters into account when considering whether to make or approve standards or requirements relating to internal dispute resolution:
(a) Australian/New Zealand Standard AS/NZS 10002:2014 Guidelines for complaint management in organizations published jointly by, or on behalf of, Standards Australia and Standards New Zealand, as in force or existing on 29 October 2014;
(b) any other matter ASIC considers relevant.
7.6.02(2)
ASIC may:
(a) vary or revoke a standard or requirement that it has made in relation to an internal dispute resolution procedure; and
(b) vary or revoke the operation of a standard or requirement that it has approved in its application to an internal dispute resolution procedure.
7.6.02(3)-(4)
(Repealed by FRLI No F2018L00515, Sch 1[36] (effective 25 April 2018).)
7.6.02(5)
For paragraph 926B(1)(a) of the Act, a financial services licensee who provides a financial service in the capacity of any of the following:
(a) a trustee appointed under the will or on the intestacy of a person;
(b) a trustee appointed under an express trust if:
(i) the settlor is a natural person; and
(ii) the interest in the trust is not a financial product;
(c) an attorney appointed under an enduring power of attorney;
does not have to comply with paragraph 912A(2)(c) of the Act in relation to the provision of the service if complaints about the service provided by the licensee may be made to the Ombudsman of a State or Territory.
7.6.02(6)
For paragraph 926B(1)(a) of the Act, a financial services licensee who provides a financial service in the capacity as administrator of the estate of an individual does not have to comply with paragraph 912A(1)(g) of the Act in relation to the provision of the service if complaints about the service provided by the licensee may be made under a State or Territory law listed in Schedule 8AC.
REGULATION 7.6.02AAA ARRANGEMENTS FOR COMPENSATION IF FINANCIAL SERVICES PROVIDED TO PERSONS AS RETAIL CLIENTS (ACT s 912B) 7.6.02AAA(1)
For paragraph 912B(2)(a) of the Act, arrangements mentioned in subsection 912B(1) of the Act are, unless the financial services licensee is an exempt licensee, subject to the requirement that the licensee hold professional indemnity insurance cover that is adequate, having regard to: (a) the licensee's membership of the scheme mentioned in paragraph 912A(2)(c) of the Act, taking account of the maximum liability that has, realistically, some potential to arise in connection with:
(i) any particular claim against the licensee; and
(b) relevant considerations in relation to the financial services business carried on by the licensee, including:
(ii) all claims in respect of which the licensee could be found to have liability; and
(i) the volume of business; and
(ii) the number and kind of clients; and
(iii) the kind, or kinds, of business; and
(iv) the number of representatives of the licensee.
7.6.02AAA(2)
For paragraph 912B(3)(c) of the Act, a matter that ASIC must have regard to, before approving particular arrangements under paragraph 912B(2)(b) of the Act, is whether those arrangements provide coverage that is adequate, having regard to matters of the kind mentioned in subregulation (1).
7.6.02AAA(3)
In this regulation, exempt licensee means:
(a) a company or institution of any of the following kinds:
(i) a general insurance company regulated by APRA under the Insurance Act 1973;
(ii) a life insurance company regulated by APRA under the Life Insurance Act 1995;
(iii) an authorised deposit-taking institution regulated by APRA under the Banking Act 1959; or
(b) a licensee ( related licensee ):
(i) that is related, within the meaning of section 50 of the Act, to a company or institution mentioned in paragraph (a); and
(ii) in respect of which the company or institution has provided a guarantee that:
(A) ensures payment of the obligations of the related licensee to its retail clients to an extent that is adequate within the meaning of subregulation (1); and
(B) is approved in writing by ASIC.
Note: A decision to refuse to approve a guarantee is a reviewable decision under section 1317B of the Act.
Security bonds held by ASIC
7.6.02AAA(4)
A security bond lodged with ASIC by a licensee in consequence of the operation of regulation 7.6.02AA (as affected by any instrument made by ASIC under paragraph 926A(2)(c) of the Act) may be discharged or returned by ASIC (in whole or in part), without application from the licensee or surety who provided the security, in any of the following circumstances: (a) the licensee certifies, in the form approved by ASIC, that it holds professional indemnity insurance, or has an alternative compensation arrangement in place that provides compensation protection for clients of the licensee, that is adequate to cover claims to which the security bond could apply; (b) the licensee certifies, in the form approved by ASIC, that it holds professional indemnity insurance, or has an alternative compensation arrangement in place that, together with other financial resources available to it, provides compensation protection for clients of the licensee, that is adequate to cover claims to which the security bond could apply; (c) the licensee is a company or institution of any of the following kinds:
(i) a general insurance company regulated by APRA under the Insurance Act 1973;
(ii) a life insurance company regulated by APRA under the Life Insurance Act 1995;
(d) the licensee certifies, in the form approved by ASIC, that it holds a guarantee given by a company or institution mentioned in paragraph (c) that, together with other financial resources available to it, provides compensation protection for clients of the licensee that is adequate to cover claims to which the security bond could apply.
(iii) an authorised deposit-taking institution regulated by APRA under the Banking Act 1959;
Note: A decision to refuse to approve a guarantee is a reviewable decision under section 1317B of the Act.
Transitional
7.6.02AAA(5)
Subregulations (1), (2) and (3) take effect as follows: (a) for a financial services licensee whose licence commences before 1 January 2008 - on 1 July 2008; (b) for a financial services licensee whose licence commences on or after 1 January 2008 - on the date of commencement of the licence.
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if section 912B of the Act were modified by substituting that section with the following:
"912B Financial services provided to persons as retail clients - requirements in certain circumstances
(1)
Subsection (2) applies in relation to a financial services licensee if the licensee's financial services licence authorises the licensee to carry on an activity:
(a) to which paragraph 19(1)(b) or subparagraph 31B(1)(a)(ii) or (b)(ii) of the Insurance (Agents and Brokers) Act 1984 (the repealed Act ) would have applied if that Act were not repealed; and
(b) for which the licensee would have been required under those provisions to have in force an acceptable contract of professional indemnity insurance.
(2)
The repealed Act, and any associated provisions, continue to apply in relation to the licensee to the extent necessary to require the licensee to have in force an acceptable contract of professional indemnity insurance in relation to the activity.
(3)
Subsections (4) and (5) apply in relation to a financial services licensee if the licensee's financial services licence authorises the licensee to carry on an activity:
(a) to which Part 7.3 of the old Corporations Act would have applied if that Part were not repealed; and
(b) for which the licensee would have been required under that Part to have a dealers licence or investment advisers licence that could have been subject to the condition specified in paragraph 786(2)(d) of the old Corporations Act.
(4)
Section 914A of the Act is taken to authorise ASIC to impose the condition specified in paragraph 786(2)(d) of the old Corporations Act as a condition of the licensee's financial services licence.
(5)
If ASIC acts under subsection (4), Part 7.3 of the old Corporations Act, and any associated provisions, continue to apply to the extent necessary to specify the content of the condition specified in paragraph 786(2)(d) of the old Corporations Act.
(6)
In this section:
associated provisions,
in relation to provisions (the core provisions ) of a particular Act as in force at a particular time, include (but are not limited to):
(a) any regulations or other instruments that are or were in force for the purposes of any of the core provisions at that time; and
(b) any interpretation provisions that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(c) any provisions relating to liability (civil or criminal) that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and
(d) any provisions that limit or limited, or that otherwise affect or affected, the operation of any of the core provisions at that time (whether or not they also limit or limited, or affect or affected, the operation of other provisions).
old Corporations Act
means this Act as in force immediately before the FSR commencement.".
7.6.02AA(2)
Subregulation (1) operates only in relation to a financial services licensee (other than an exempt licensee under regulation 7.6.02AAA): (a) who has not complied with subsection 912B(1) of the Act, in its unmodified form; and (b) until the licensee does so comply.
7.6.02AA(3)
Subregulations (1) and (2) are not taken to displace, or diminish, the requirement for a financial services licensee to comply with subsection 912B(1) of the Act in its unmodified form.
7.6.02AA(4)
A security bond lodged with ASIC by a financial services licensee in compliance with section 912B of the Act as modified by subregulation (1), or with any provision of the old Corporations Act, may be released by ASIC, at its discretion, if: (a) ASIC considers that, in relation to the licensee, a security bond is no longer required because the licensee:
(i) has complied with subsection 912B(1) of the Act, in its unmodified form; or
(b) ASIC has published, in accordance with subregulation (5):
(ii) is an exempt licensee within the meaning of regulation 7.6.02AAA; and
(i) a proposal that it release the security bond; and
(c) ASIC has advertised, at that web address, the existence of the security bond, and an invitation to submit valid claims against the bond; and (d) 3 months after publication of the advertisement, no valid claim has been submitted.
(ii) a direction to the web address at which further information may be obtained; and
7.6.02AA(5)
A proposal and direction mentioned in paragraph (4)(b) are published in accordance with this subregulation if they are published in a manner that results in the proposaland direction being accessible to the public and reasonably prominent.
REGULATION 7.6.02AB 7.6.02AB MODIFICATION OF SECTION 761G OF THE ACT: MEANING OF RETAIL CLIENT AND WHOLESALE CLIENT
For the provisions of the Act set out in column 2 of the following table, the Parts of the Act specified in column 3 apply as if section 761G of the Act were modified by inserting after paragraph 761G(7)(c), the following paragraph:
"(ca) the financial product, or the financial service, is acquired by a company or trust controlled by a person who meets the requirements of subparagraph (c)(i) or (ii);"
Column 1 | Column 2 | Column 3 |
Item | Provisions of Act | |
1 | paragraph 926B(1)(c) | Part 7.6 |
2 | paragraph 951C(1)(c) | Part 7.7 |
2A | section 1368 | Part 7.7A |
3 | paragraph 992C(1)(c) | Part 7.8 |
4 | paragraph 1020G(1)(c) | Part 7.9 |
For the provisions of the Act set out in column 2 of the following table, the Parts of the Act specified in column 3 apply as if section 761G of the Act were modified by inserting after subsection 761G(7), the following subsections:
"(7A)
In determining the net assets of a person under subparagraph (7)(c)(i), the net assets of a company or trust controlled by the person may be included.Note: Control is defined in section 50AA.
(7B)
In determining the gross income of a person under subparagraph (7)(c)(ii), the gross income of a company or trust controlled by the person may be included.Note: Control is defined in section 50AA."
Column 1 | Column 2 | Column 3 |
Item | Provisions of Act | |
1 | paragraph 926B(1)(c) | Part 7.6 |
2 | paragraph 951C(1)(c) | Part 7.7 |
2A | section 1368 | Part 7.7A |
3 | paragraph 992C(1)(c) | Part 7.8 |
4 | paragraph 1020G(1)(c) | Part 7.9 |
For the provisions of the Act set out in column 2 of the following table, the Parts of the Act specified in column 3 apply as if section 761G of the Act were modified by inserting after subsection 761G(4), the following subsection:
"(4A)
If a financial product, or a financial service, is or would be provided to, or acquired by, a body corporate as a wholesale client, related bodies corporate of the client are taken to be wholesale clients in respect of the provision or acquisition of that financial product or financial service."
Column 1 | Column 2 | Column 3 |
Item | Provisions of Act | |
1 | paragraph 926B(1)(c) | Part 7.6 |
2 | paragraph 951C(1)(c) | Part 7.7 |
2A | section 1368 | Part 7.7A |
3 | paragraph 992C(1)(c) | Part 7.8 |
4 | paragraph 1020G(1)(c) | Part 7.9 |
For the provisions of the Act set out in column 2 of the following table, the Parts of the Act specified in column 3 apply as if section 9 of the Act were modified by omitting paragraph (e) of the definition of professional investor and substituting the following paragraph:
"(e) the person has or controls gross assets of at least $10 million (including any assets held by an associate or under a trust that the person manages);"
Column 1 | Column 2 | Column 3 |
Item | Provisions of Act | |
1 | paragraph 926B(1)(c) | Part 7.6 |
2 | paragraph 951C(1)(c) | Part 7.7 |
2A | section 1368 | Part 7.7A |
3 | paragraph 992C(1)(c) | Part 7.8 |
4 | paragraph 1020G(1)(c) | Part 7.9 |
[ CCH Note: Reg 2 of SLI 2005 No 324 specifies that Sch 6[2] of that instrument commences immediately after the commencement of Sch 6[1]. Sch 6[1] inserted reg 7.6.02AB-7.6.02AD.]
For the provisions of the Act set out in column 2 of the following table, the Parts of the Act specified in column 3 apply as if section 761G of the Act were modified by omitting from paragraph 761G(7)(c) "6 months" and substituting "2 years".
Column 1 | Column 2 | Column 3 |
Item | Provisions of Act | |
1 | paragraph 926B(1)(c) | Part 7.6 |
2 | paragraph 951C(1)(c) | Part 7.7 |
2A | section 1368 | Part 7.7A |
3 | paragraph 992C(1)(c) | Part 7.8 |
4 | paragraph 1020G(1)(c) | Part 7.9 |
[ CCH Note: Reg 2 of SLI 2005 No 324 specifies that Sch 6[4] of that instrument commences immediately after the commencement of Sch 6[2]. Sch 6[2] inserted reg 7.6.02AE.]
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if section 911A of the Act were modified by inserting after subsection 911A(2) the following subsections:
"(2A)
Also, a person ( person 1 ) is exempt from the requirement to hold an Australian financial services licence for a financial service they provide to a person ( person 2 ) in the following circumstances:
(a) person 1 is not in this jurisdiction;
(b) person 2 is an Australian citizen or is resident in Australia;
(c) the service is provided from outside this jurisdiction;
(d) person 1 does not engage in conduct that is:
(i) intended to induce people in this jurisdiction to use the service; or
(ii) likely to have that effect.
(2B)
Also, a person ( person 1 ) is exempt from the requirement to hold an Australian financial services licence for a financial service they provide to a person ( person 2 ) in the following circumstances:
(a) person 1 is not in this jurisdiction;
(b) person 1 believes on reasonable grounds that person 2 is not in this jurisdiction;
(c) person 1 is a participant in a financial market in this jurisdiction that is licensed under subsection 795B(2) of the Act;
(d) the service relates to a financial product traded on the licensed market.
(2C)
Also, a person ( person 1 ) is exempt from the requirement to hold an Australian financial services licence for a financial service they provide to a person ( person 2 ) in the following circumstances:
(a) person 1 is not in this jurisdiction;
(b) person 2 is:
(i) the holder of an Australian financial services licence; or
(ii) exempt from the requirement to hold an Australian financial services licence under paragraph 911A(2)(h);
(c) person 2 is not, in relation to the service:
(i) acting as a trustee; or
(ii) acting as a responsible entity of a registered scheme; or
(iia) acting as a corporate director of a CCIV; or
(iii) otherwise acting on someone else's behalf.
(2D)
Also, a person ( person 1 ) is exempt from the requirement to hold an Australian financial services licence for a financial service they provide to a person ( person 2 ) in the following circumstances:
(a) person 1 is not in this jurisdiction;
(aa) person 1 is not a notified foreign passport fund or the operator of a notified foreign passport fund;
(b) person 2 is in this jurisdiction;
(c) the service relates to a financial product:
(i) issued by person 1 following an application by, or inquiry from, person 2; or
(ii) issued by person 1 and acquired by person 2 when person 2 was not in this jurisdiction; or
(iii) that supplements a financial product mentioned in subparagraphs (i) or (ii); or
(iv) that is of the same kind as, and is issued in substitution for, a financial product mentioned in subparagraphs (i) or (ii);
(d) person 1 does not actively solicit persons in this jurisdiction in relation to the financial products mentioned in subparagraphs (c)(i) to (iv);
(e) paragraph (d) does not preclude person 1 from contacting person 2 in relation to the financial products mentioned in subparagraphs (c)(i) to (iv) after they have been acquired by person 2.Note 1: For subparagraph (c)(iii), an example of this kind of financial product includes a non-cash payment facility (such as a cheque facility) that is added to an existing transaction or investment account.
Note 2: For subparagraph (c)(iv), examples of this kind of financial product include:
(a) a transaction or investment account that is replaced by another transaction or investment account; or (b) the renewal of an insurance policy.
(2E)
Also, a person ( person 1 ) is exempt from the requirement to hold an Australian financial services licence for a financial service they provide to a person ( person 2 ) in the following circumstances:
(a) person 1 is not in this jurisdiction;
(b) person 2 is a professional investor;
(c) the service consists of any or all of the following:
(i) dealing in derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emissions units;
(ii) providing advice on derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emissions units;
(iii) making a market in derivatives, foreign exchange contracts, carbon units, Australian carbon credit units or eligible international emissions units.
(2F)
Also, a person is exempt from the requirement to hold an Australian financial services licence for a financial service that the person provides by bidding at an auction conducted in accordance with a legislative instrument made for subsection 113(1) of the Clean Energy Act 2011, if the bidding is:
(a) on the person's own behalf; or
(b) for a related body corporate of the person; or
(c) for an associated entity of the person."
[ CCH Note: Reg 2 of SLI 2005 No 324 specifies that Sch 9[4] of that instrument commences immediately after the commencement of Sch 6[4]. Sch 6[4] inserted reg 7.6.02AF.]
(Repealed by FRLI No F2022L01689, Sch 1[5] (effective 15 September 2023).) REGULATION 7.6.02AH 7.6.02AH MODIFICATION OF PARAGRAPH 911B(1)(e) OF THE ACT
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if paragraph 911B(1)(e) of the Act were modified by omitting "911A(2)" and substituting "911A(2), (2A), (2B), (2C), (2D), (2E) or (2F)".
[ CCH Note: Reg 2 of SLI 2005 No 324 specifies that Sch 9[4] of that instrument commences immediately after the commencement of Sch 6[4]. Sch 6[4] inserted reg 7.6.02AF.]
(Repealed by FRLI No F2017L00117, Sch 1[15] (effective 15 March 2017).) REGULATION 7.6.02A OBLIGATION TO NOTIFY ASIC OF CERTAIN MATTERS 7.6.02A(1)
For paragraph 912D(3)(c) of the Act, the following Commonwealth legislation is specified: (a) Australian National Registry of Emissions Units Act 2011; (aa) Banking Act 1959; (ab) Carbon Credits (Carbon Farming Initiative) Act 2011;
(ac) (Repealed) (b) Financial Sector (Collection of Data) Act 2001; (c) Financial Sector (Shareholdings) Act 1998; (d) Financial Sector (Transfer and Restructure) Act 1999; (e) Insurance Acquisitions and Takeovers Act 1991; (f) Insurance Act 1973; (g) Insurance Contracts Act 1984; (h) Life Insurance Act 1995; (i) Retirement Savings Accounts Act 1997; (j) Superannuation Industry (Supervision) Act 1993.
Certain breaches not required to be notified
7.6.02A(2)
For the purposes of paragraph 912D(4)(b) of the Act: (a) the following civil penalty provisions of the Act are prescribed:
(i) subsection 798H(1);
(ii) subsection 901E(1);
(iia) subsection 921BA(5) in so far as it relates to subsection 921BA(4);
(iib) subsection 921BB(4);
(iic) subsection 921E(3);
(iii) subsection 922M(5);
(iv) subsection 941A(3);
(v) subsection 941B(4);
(va) subsection 943G(3);
(vb) subsection 943H(4);
(vc) subsection 943K(2);
(vd) subsection 943L(2);
(vi) (Repealed)
(vii) subsection 962S(5);
(viii) subsection 962S(8);
(ix) (Repealed)
(x) (Repealed)
(xi) subsection 981B(3);
(xii) subsection 981C(2);
(xiii) subsection 1012A(5);
(xiv) subsection 1012B(6);
(xv) subsection 1012C(11);
(xvi) subsection 1017BA(4B);
(xvii) subsection 1017BB(5AA);
(xviii) subsection 1021E(8);
(xix) subsection 1021G(3);
(b) all civil penalty provisions of Commonwealth legislation that is specified in subregulation (1) are prescribed.
(xx) section 1101AC; and
For paragraph 913A(a) of the Act, the following information is required as part of an application by [sic] person for an Australian financial services licence:
(a) if the person is a body corporate:
(i) the person's name (including the person's principal business name, if any); and
(ii) the name and address of each director; and
(iii) the name and address of each secretary;
(b) if the person is applying on behalf of a partnership - the partnership's name and address, and the name of each partner;
(c) if paragraphs (a) and (b) do not apply - the person's name (including the person's principal business name, if any);
(d) the person's principal business address;
(e) if the person has an ABN - the ABN;
(f) a description of the financial services that the person proposes to provide;
(g) the arrangements (including a description of systems) by which the person will comply with its general obligations set out in section 912A of the Act;
(h) any other information that ASIC requires for the purpose of considering the application.
For paragraph 913B(1)(d) of the Act, a foreign entity that:
(a) is not a foreign company; and
(b) applies for an Australian financial services licence;
must meet the requirements in subregulations (2) and (3).
7.6.03A(2) [Appointment of agent](a) have appointed, as an agent, a person who is:
(i) a natural person or a company; and
(ii) resident in this jurisdiction; and
(iii) authorised to accept, on the foreign entity's behalf, service of process and notices; and
(b) lodge, with the application, a memorandum of appointment or a power of attorney that is duly executed by or on behalf of the foreign entity and states the name and address of the agent. 7.6.03A(3) [Lodgment of authorisation document]
If the memorandum of appointment, or power of attorney, lodged under paragraph (2)(b) was executed on behalf of the foreign entity, the foreign entity must also lodge a copy declared in writing to be a true copy of the document authorising the execution.
For paragraph 912A(1)(j) of the Act, a foreign entity that:
(a) is not a foreign company; and
(b) is a financial services licensee;
must meet the requirements in subregulation (2).
7.6.03B(2) [Obligations for agent retention](a) at all times, have an agent who is:
(i) a natural person or a company; and
(ii) resident in this jurisdiction; and
(iii) authorised to accept, on the foreign entity's behalf, service of process and notices; and
(b) notify ASIC of any change to:
(i) the agent; or
not later than 1 month after the change; and
(ii) the name or address of the agent;
(c) make arrangements that ensure that ASIC may treat a document as being served on the foreign entity by leaving it at, or by sending it by post to:
(i) an address of the agent that has been notified to ASIC; or
(ii) if a notice or notices of a change or alteration to that address has or have been given to ASIC - the address shown in the most recent notice.
For the purposes of paragraph 912A(1)(j) of the Act, a financial services licensee that is required by paragraph 912A(1)(g) of the Act to be a member of the AFCA scheme must comply with the obligation in subregulation (2).
7.6.03C(2)
The licensee must take reasonable steps to cooperate with AFCA in resolving any complaint under the AFCA scheme to which the licensee is a party, including by:
(a) giving reasonable assistance to AFCA in resolving the complaint; and
(b) identifying, locating and providing to AFCA any documents and information that AFCA reasonably requires for the purposes of resolving the complaint; and
(c) giving effect to any determination made by AFCA in relation to the complaint.
7.6.03C(3)
Subregulation (2) does notapply to superannuation complaints.
Note: For provisions relating to superannuation complaints, see Division 3 of Part 7.10A of the Act.
For subsection 914A(8) of the Act, an Australian financial services licence is subject to the following conditions: (a) subject to subregulation (1A) - a condition that, if any event occurs that may make a material adverse change to the financial position of the financial services licensee by comparison with its financial position:
(i) at the time of the application for the Australian financial services licence; or
the financial services licensee must lodge with ASIC in the prescribed form a notice setting out particulars of the event as soon as practicable, and in any case not later than 3 business days, after the financial services licensee becomes aware of the event; (b) a condition that, if:
(ii) as described in documents lodged with ASIC after the application for the Australian financial services licence;
(i) there is a change in a matter particulars of which are entered in a register of financial services licensees; and
the financial services licensee must lodge with ASIC in the prescribed form particulars of the change within 10 business days after the change; (c) a condition that, if:
(ii) the change is not a direct consequence of an act by ASIC;
(i) there is a change in a matter particulars of which are entered in a register of authorised representatives of financial services licensees; and
(ii) the change is not required to be reported in accordance with section 916F of the Act; and
the financial services licensee must ensure that particulars of the change are lodged with ASIC in the prescribed form within 30 business days after the change; (ca) a condition that the financial services licensee must ensure that each representative of the financial services licensee that may give an authorisation to another representative is aware of the requirements in subsections 916F(1) and (3) of the Act; (d) a condition that the financial services licensee must maintain a record of the training (relevant to the provision of financial services) that each of its representatives has undertaken, including:
(iii) the change is not a direct consequence of an act by ASIC;
(i) training undertaken after the representative became a representative of the licensee; and
(e) a condition that the financial services licensee must ensure that, before:
(ii) any training undertaken before the representative became a representative of the licensee to the extent that the financial services licensee is able to obtain the information by reasonable inquiry;
(i) the financial services licensee authorises a person to provide a financial service on its behalf as mentioned in section 916A of the Act; or
reasonable inquiries are made to establish:
(ii) a body corporate that is an authorised representative of the financial services licensee authorises an individual to provide a financial service on behalf of the financial services licensee as mentioned in section 916B of the Act;
(iii) the person's identity; and
(f) a condition that the financial services licensee must ensure that, if:
(iv) whether the person has already been allocated a number by ASIC as an authorised representative;
(i) ASIC has allocated a number to an authorised representative; and
the document refers to the number. (g) a condition that the financial services licensees must provide a copy of an authorisation of any of its authorised representatives:
(ii) the financial services licensee, or a body corporate that has authorised an individual to provide a financial service on behalf of the financial services licensee as mentioned in section 916B of the Act, lodges a document with ASIC that refers to the authorised representative;
(i) on request by any person; and
(ii) free of charge; and
(h) a condition that the financial services licensees must take reasonable steps to ensure that each of its authorised representatives supplies a copy of its authorisation by the financial services licensee:
(iii) as soon as practicable after receiving the request and, in any event, within 10 business days after the day on which it received the request;
(i) on request by any person; and
(ii) free of charge; and
(i) a condition that, if a financial services licensee becomes aware of any change in control of the financial services licensee, the financial services licensee must lodge with ASIC, in the prescribed form, particulars of the change not later than 10 business days after the change; (j) a condition that, on the request of any person, the financial services licensee must make available a copy of its financial services licence within a reasonable time for inspection by that person; (k) if the financial services licensee is a limited licensee - a condition that the licensee must, within 3 years from the date on which the licence is granted and if requested in writing by ASIC, demonstrate to the satisfaction of ASIC that:
(iii) as soon as practicable after receiving the request and, in any event, within 10 business days after the day on which it received the request;
(i) if the licensee is an individual - the licensee has:
(A) knowledge of the licensee's obligations under the Act and these Regulations; and
(B) the competence to provide the financial services covered by the licence; or
(ii) if the licensee is a partnership or corporation - each recognised accountant that supervises and has responsibility for the provision of financial services covered by the licence has:
(A) knowledge of the licensee's obligations under the Act and these Regulations; and
(B) the competence to provide the financial services covered by the licence.
(l) (Repealed)
[ CCH Note: Reg 7.6.04(1) will be amended by FRLI No F2021L01608, Sch 1[9], by substituting "paragraph 9AAA(1)(c) of the Act in relation to a class action litigation funding scheme" for "paragraph 7.1.04N(3)(e) in relation to a litigation funding scheme mentioned in subregulation 7.1.04N(3)" in para (l) (effective immediately after the commencement of the provisions covered by table item 3. However, the provisions do not commence at all if the provisions covered by table item 3 do not commence).]
7.6.04(1A)
Paragraph (1)(a) does not apply to a body regulated by APRA, unless the body is an RSE licensee that is also: (a) the responsible entity of a registered scheme; or (b) the corporate director of a CCIV.
7.6.04(2)
For paragraph (1)(i): (a) a change in control , in relation to a financial services licensee, includes a transaction, or a series of transactions in a 12 month period, that results in a person having control of the financial services licensee (either alone or together with associates of the person); and (b) control , in relation to a financial services licensee, means:
(i) if the financial services licensee is a body corporate:
(A) having the capacity to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the financial services licensee; or
(B) directly or indirectly holding more than one half of the issued share capital of the financial services licensee (not including any part of the issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or
(ii) the capacity to control the composition of the financial services licensee's board or governing body; or
(c) for subparagraph (b)(iii), the following matters must be taken into account in determining whether a person has the capacity to determine the outcome of decisions about a financial services licensee's financial and operating policies:
(iii) the capacity to determine the outcome of decisions about the licensee's financial and operating policies; and
(i) the practical influence the person can exert (rather than the rights it can enforce);
(ii) any practice or pattern of behaviour affecting the financial services licensee's financial or operating policies is to be taken into account (whether or not it involves a breach of an agreement or a breach of trust).
7.6.04(2A)
(Repealed by FRLI No F2022L01614, Sch 1[19] (effective 10 December 2022).)
7.6.04(3)
In this regulation:
class of product advice
(Repealed by FRLI No F2023L01458, Sch 1[183] (effective 1 November 2023).)
limited financial services
means the following financial services:
(a) financial product advice on self-managed superannuation funds;
(b) financial product advice on superannuation products in relation to a person's existing holding in a superannuation product but only to the extent required for:
(i) making a recommendation that the person establish a self managed superannuation fund; or
(ii) providing advice to the person on contributions or pensions under a superannuation product;
(c) class of product advice on the following:
(i) superannuation products;
(ii) securities;
(iii) simple managed investment schemes;
(iv) general insurance products;
(v) life risk insurance products;
(vi) basic deposit products;
(d) arrange to deal in an interest in a self managed superannuation fund.
Note 1: (Repealed)
Note 2: See subregulation 1.0.02(1) for the meaning of simple managed investment scheme .
Note 3: Financial product advice on self managed superannuation funds includes advice about acquiring or disposing of an interest in a self managed superannuation fund.
limited licensee
means a financial services licensee that:
(a) is:
(i) a recognised accountant; or
(ii) a corporation that has one or more recognised accountants that supervise and have responsibility for the provision of financial services covered by its licence; or
(iii) a partnership that has one or more recognised accountants that supervise and have responsibility for the provision of financial services covered by its licence; and
(b) applied for the financial services licence between 1 July 2013 and 30 June 2016; and
(c) is only licensed to provide one or more limited financial services.
(a) a member of CPA Australia who:
(i) holds a Public Practice Certificate issued by CPA Australia Ltd; and
(ii) is entitled to use the letters "CPA" or "FCPA"; and
(iii) is subject to, and complies with, CPA Australia's continuing professional education requirements; or
(b) a member of The Institute of Chartered Accountants in Australia ( ICAA ) who:
(i) holds a Certificate of Public Practice issued by ICAA; and
(ii) is entitled to use the letters "ACA", "CA" or "FCA"; and
(iii) is subject to, and complies with, ICAA's continuing professional education requirements; or
(c) a member of the Institute of Public Accountants ( IPA ) who:
(i) holds a Public Practice Certificate issued by IPA; and
(ii) is entitled to use the letters "FIPA" or "MIPA"; and
(iii) is subject to, and complies with, IPA's continuing professional education requirements.
REGULATION 7.6.04AA 7.6.04AA TIME LIMITS FOR NOTIFICATION OF AUTHORISED REPRESENTATIVES - MODIFICATION OF SECTION 916F OF THE ACT
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if:
(a) subsection 916F(1) were modified by omitting "15 business days" and substituting "30 business days"; and
(b) subsection 916F(3) were modified by omitting "10 business days" and substituting "30 business days".
For paragraph 916F(1AA)(d) of the Act, each of the following financial products is prescribed:
(a) a general insurance product;
(b) a basic deposit product;
(c) a facility for making non-cash payments that is related to a basic deposit product;
(d) a consumer credit insurance product;
(e) a cash management trust interest.
(f) (Repealed)
[ CCH Note: Sch 11, [1-2] of SLI 2005 No 324, commences immediately after item 8 of Sch 10 of that instrument. Item 8 of Sch 10 is the following savings provision (which was effective 20 December 2005):
]Savings
Despite the modification to Part 7.6 of the Corporations Act 2001 made by subregulation 7.6.08(3), on the commencement of this item, regulation 7.6.04A is taken to have been made for paragraph 916F(1AA)(d) of that Act, as substituted by the subregulation.
(Omitted by SLI 2005 No 324, Sch 10[2] (effective 20 December 2005).) REGULATION 7.6.05 REGISTER OF FINANCIAL SERVICES LICENSEES AND REGISTER OF AUTHORISED REPRESENTATIVES OF FINANCIAL SERVICES LICENSEES 7.6.05(1) [Register of financial services licensees]
For subsection 922A(2) of the Act, ASIC must include the following details for each financial services licensee in the register of financial service licensees:
(a) the financial services licensee's name (including the financial services licensee's principal business name, if any);
(b) the principal business address of the financial services licensee;
(c) the date on which the financial services licensee's licence was granted;
(d) the number of the financial services licence of the financial services licensee;
(e) if the financial services licensee has an ABN - the ABN;
(f) details of any conditions on the financial services licensee's licence, including details of the financial service, or class of financial services, that the financial services licensee is authorised to provide;
(g) any other information that ASIC believes should be included in the register. 7.6.05(2) [Register of authorised representatives of financial services licensees]
For subsection 922A(2) of the Act, ASIC must include the following details for each authorised representative of a financial services licensee in the register of authorised representatives of financial services licensees:
(a) the authorised representative's name (including the authorised representative's principal business name, if any);
(b) the authorised representative's principal business address;
(c) if the authorised representative is a body corporate - the name of each director and secretary;
(d) the number allocated to the authorised representative by ASIC;
(e) the name of each financial services licensee for which the authorised representative is an authorised representative;
(f) the number of the financial services licence of each financial services licensee for which the authorised representative is an authorised representative;
(g) if the authorised representative has an ABN - the ABN;
(h) the date of the authorised person's authorisation, and any other information about the authorisation that ASIC believes should be included in the register;
(i) any other information that ASIC believes should be included in the register.
For subsection 922A(2) of the Act, ASIC must include the following details for each person against whom a banning order is made in the register of persons against whom a banning order under Division 8 of Part 7.6 of the Act is made:
(a) the person's name;
(b) the day on which the banning order took effect;
(c) whether the banning order is permanent or for a fixed period;
(d) if the banning order is for a fixed period - the period;
(e) the terms of the banning order;
(f) whether the banning order has been varied or cancelled;
(g) if the banning order has been varied:
(i) the date of the variation; and
(ii) the terms of the variation;
(h) if the banning order has been cancelled - the date of the cancellation;
(i) any other information that ASIC believes should be included in the register. 7.6.06(2) [Register of disqualified persons]
For subsection 922A(2) of the Act, ASIC must include the following details for each person against whom a disqualification order is made in the register of persons against whom a disqualification order under Division 8 of Part 7.6 of the Act is made:
(a) the person's name;
(b) the day on which the disqualification order took effect;
(c) whether the disqualification order is permanent or for a fixed period;
(d) if the disqualification order is for a fixed period - the period;
(e) the terms of the disqualification order;
(f) whether the disqualification order has been varied or revoked;
(g) if the disqualification order has been varied:
(i) the date of the variation; and
(ii) the terms of the variation;
(h) if the disqualification order has been revoked - the date of the revocation;
(i) any other information that ASIC believes should be included in the register.
(Repealed by FRLI No F2017L00117, Sch 1[15] (effective 15 March 2017).) REGULATION 7.6.06B 7.6.06B REGISTER OF RELEVANT PROVIDERS
(Repealed by FRLI No F2017L00117, Sch 1[15] (effective 15 March 2017).) REGULATION 7.6.06C 7.6.06C CORRECTING REGISTERS
ASIC may correct any error in or omission from a register maintained under regulation 7.6.05 or 7.6.06.
Note: Australian Privacy Principle 13 applies to ASIC and requires it to take reasonable steps to correct personal information that is wrong or misleading so that the information is accurate, up to date, complete, relevant and not misleading (see Schedule 1 to the Privacy Act 1988).
For the purposes of subsection 922Q(3) of the Act, the following kinds of instrument made under subsection 921K(1) of the Act are prescribed: (a) a direction (other than a direction covered by subregulation (2)) that a relevant provider:
(i) undertake specified training; or
(ii) receive specified counselling; or
(iii) receive specified supervision; or
(b) a registration suspension order; (c) a registration prohibition order.
(iv) report specified matters to ASIC;
7.6.06D(2)
A direction is covered by this subregulation if: (a) on a particular occasion, one or more instruments are made under subsection 921K(1) of the Act in relation to a relevant provider; and (b) the direction is that instrument or one of those instruments; and (c) that occasion is the first occasion on which an instrument is made under that subsection in relation to the relevant provider.
For subparagraph 923A(2)(b)(iii) of the Act, any other person in respect of whom section 942B or 942C of the Act makes provision for information to be provided in a financial services guide in relation to the receipt of remuneration or other benefits is prescribed.
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if subsections 923C(1) to (10) of the Act were modified to read as follows:
(1)
An individual contravenes this subsection if:
(a) the individual carries on a financial services business or provides a financial service (whether or not on behalf of another person); and
(b) the individual assumes or uses, in this jurisdiction, a restricted word or expression in relation to the service; and
(c) any of the following apply:
(i) the individual is not a relevant provider;
(ii) the individual is a provisional relevant provider;
(iii) the individual is a limited-service time-sharing adviser.Note 1: For the meanings of restricted word or expression and assume or use , see subsections (8) and (9) of this section.
Note 2: A contravention of this subsection is an offence (see subsection 1311(1)).
(2)
A person contravenes this subsection if:
(a) the person carries on a financial services business or provides a financial service; and
(b) an individual provides a financial service on behalf of the person; and
(c) the person assumes or uses, in this jurisdiction, a restricted word or expression in relation to the service; and
(d) any of the following apply:
(i) the individual is not a relevant provider;
(ii) the individual is a provisional relevant provider;
(iii) the individual is a limited-service time-sharing adviser.Note 1: For the meanings of restricted word or expression and assume or use , see subsections (8) and (9) of this section.
Note 2: A contravention of this subsection is an offence (see subsection 1311(1)).
Advice to wholesale clients
(3)
It is not a contravention of subsection (1) for an individual to assume or use a restricted word or expression if:
(a) the individual provides advice to wholesale clients; and
(b) the individual assumes or uses the restricted word or expression only in relation to that advice.Note: A defendant bears an evidential burden in relation to the matters in subsection (3). See subsection 13.3(3) of the Criminal Code.
(4)
It is not a contravention of subsection (2) for a person to assume or use a restricted word or expression if:
(a) another person (the adviser ) provides a financial service on behalf of the person; and
(b)the adviser provides advice to wholesale clients; and
(c) the person assumes or uses the restricted word or expression only in relation to that advice.Note: A defendant bears an evidential burden in relation to the matters in subsection (4). See subsection 13.3(3) of the Criminal Code.
Advice as employee or director
(5)
It is not a contravention of subsection (1) for an individual to assume or use a restricted word or expression if:
(a) the individual is an employee or director of a body; and
(b) the individual provides advice to the body; and
(c) the individual assumes or uses the restricted word or expression only in relation to that advice.Note: A defendant bears an evidential burden in relation to the matters in subsection (5). See subsection 13.3(3) of the Criminal Code.
(6)
It is not a contravention of subsection (2) for a person to assume or use a restricted word or expression if:
(a) another person (the adviser ) is an employee or director of a body; and
(b) the adviser provides advice to the body; and
(c) the person assumes or uses the restricted word or expression only in relation to that advice.Note: A defendant bears an evidential burden in relation to the matters in subsection (6). See subsection 13.3(3) of the Criminal Code.
Continuing contravention
(7)
If a person assumes or uses a word or expression in circumstances that give rise to the person committing an offence under subsection (1) or (2), the person commits the offence in respect of:
(a) the first day on which the offence is committed; and
(b) each subsequent day (if any) on which the circumstances that gave rise to the person committing the offence continue (including the day of conviction for any such offence or any later day).
References to restricted word or expression
(8)
In this section:
(a) a reference to a restricted word or expression is a reference to:
(i) the expression financial adviser or financial planner ; or
(ii) any other word or expression specified in the regulations as a restricted word or expression for the purposes of this section; or
(iii) any other word or expression (whether or not in English) that is of like import to a word or expression covered by any of the previous subparagraphs; and
(b) a reference to a restricted word or expression being assumed or used includes a reference to the restricted word or expression being assumed or used:
(i) as part of another word or expression; or
(ii) in combination with other words, letters or other symbols.
(9)
However, a reference in this section to a restricted word or expression does not include a reference to a word or expression mentioned in paragraph (8)(a) if:
(a) the word or expression mentioned in that paragraph is assumed or used in relation to a provisional relevant provider; and
(b) the word or expression is assumed or used as part of a word or expression specified by the standards body for the purposes of subparagraph 921U(2)(a)(v).
Contravention does not affect arrangements for compensation
(10)
To avoid doubt, this section does not affect the obligation of a financial services licensee to have arrangements in place under section 912B.Note: Section 912B requires financial services licensees to have in place arrangements for compensation if the licensee provides financial services to retail clients.
For the purposes of paragraph 1684B(a) of the Act, 1 October 2022 is prescribed in relation to an existing provider who is a relevant provider if, at least twice before 1 January 2022, the existing provider sat an exam approved for the purposes of subsection 921B(3) of the Act as in force immediately before 1 January 2022.
7.6.07B(2)
In this regulation:
existing provider
has the meaning given by section 1546A of the Act.
REGULATION 7.6.07C 7.6.07C DEFERRAL OF REQUIREMENT FOR RELEVANT PROVIDERS TO BE REGISTERED
(Repealed by FRLI No F2022L01668, reg 7.6.07C(2) (effective 30 June 2023).) PART 7.6A - AUTHORISED REPRESENTATIVES
In this Part:
general insurer
has the same meaning as in subsection 3(1) of the Insurance Act 1973.
Lloyd's underwriter
has the same meaning as in subsection 3(1) of the Insurance Act 1973.
unauthorised foreign insurer
(Repealed by FRLI No F2024L00199, Sch 2[3] (effective 1 March 2024).)
This Part applies to a person who is a financial services licensee authorised to deal in general insurance products.
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if section 912CA of the Act were modified to read as follows:
"912CA Regulations may require information to be provided
(1)
The regulations may require a financial services licensee, or each financial services licensee in a class of financial services licensees, to provide APRA (acting as ASIC's agent) with specified information about:
(a) the financial services provided by the licensee or its representatives; or
(b) the financial services business carried on by the licensee.
(2)
The specified information:
(a) must be lodged in the prescribed form; and
(b) must include:
(i) the information, statements, explanations or other matters required by the form; and
(ii) any further information requested by APRA in relation to any of the matters in subparagraph (i); and
(c) must be accompanied by any other material required by the form."
This regulation applies in relation to a general insurance product that:
(a) is entered into as a result of a dealing in the product, either wholly or partially, by the person, with a general insurer, Lloyd's underwriter or an unauthorised foreign insurer; and
(b) is not a reinsurance contract or a retrocession contract.
7.6.08D(2)
However, if the person is a general insurer, this regulation does not apply in relation to a general insurance product issued by the person.
7.6.08D(3)
For section 912CA of the Act, the person must provide information to APRA about the general insurance product entered into in a reporting period specified in subregulation (5):
(a) in accordance with Table 1 in Form 701; and
(b) either:
(i) within the time specified by ASIC or APRA if that is a reasonable time; or
(ii) if ASIC or APRA do not specify a time - within 20 business days after the last day of the applicable reporting period.
Penalty:
7.6.08D(4)
For section 912CA of the Act, the person must provide further information to APRA relating to the information provided in accordance with Table 1 in Form 701:
(a) if APRA makes a request in writing for the further information; and
(b) either:
(i) within 5 business days of receiving the request; or
(ii) if ASIC or APRA specifies a later date - by that date.
Penalty:
7.6.08D(5)
The reporting periods are:
(a) 1 May to 30 June 2010; and
(b) 1 July to 31 December 2010; and
(c) 1 January to 30 June in any year after 2010; and
(d) 1 July to 31 December in any year after 2010.
7.6.08D(6)
Strict liability applies to subregulations (3) and (4).
This regulation applies in relation to a general insurance product: (a) that is entered into as a result of a dealing in the product, either wholly or partially, by the person; and (b) that is not a reinsurance contract or a retrocession contract; and (c) in relation to which an unauthorised foreign insurer is a party to the contract that is the general insurance product.
Note: An unauthorised foreign insurer may be a party to a contract of insurance to which Part 2 of the Insurance Regulations 2024 applies. These are insurance contracts for:
7.6.08E(2)
However, if the general insurance product has been dealt with by more than 1 person, this regulation only applies, in relation to the general insurance product, to the person who has: (a) dealt directly with the unauthorised foreign insurer; or (b) dealt indirectly with the unauthorised foreign insurer through a foreign intermediary.
7.6.08E(3)
For section 912CA of the Act, the person must provide information to APRA about the general insurance product entered into within a reporting period specified in subregulation (5): (a) in accordance with Table 2 in Form 701; and (b) either:
(i) within the time specified by ASIC or APRA if that is a reasonable time; or
(ii) if ASIC or APRA do not specify a time - within 20 business days after the last day of the applicable reporting period.
Penalty:
7.6.08E(4)
For section 912CA of the Act, the person must provide further information to APRA relating to the information provided in accordance with Table 2 in Form 701: (a) if APRA makes a request in writing for the further information; and (b) either:
(i) within 5 business days of receiving the request; or
(ii) if ASIC or APRA specify a later date - by that date.
Penalty:
7.6.08E(5)
The reporting periods are: (a) 1 May to 30 June 2010; and (b) 1 July to 31 December 2010; and (c) 1 January to 30 June in any year after 2010; and (d) 1 July to 31 December in any year after 2010.
7.6.08E(6)
Strict liability applies to subregulations (3) and (4).
For subsection 940C(3) of the Act:
(a) if general advice is given orally in a public forum, information that subsection 941C(5) of the Act requires to be given must be given orally; and
(b) if general advice is given in electronic form in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in electronic form; and
(c) if general advice is given in writing (otherwise than in electronic form) in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in writing; and
(d) if general advice is given in any other manner in a public forum, information that subsection 941C(5) of the Act requires to be given must be given in the same manner.
For paragraph 940C(7)(a) of the Act, a Financial Services Guide and a Statement of Advice may be given to a person in either of the following ways:
(a) making the Guide or Statement available to the person in any way that:
(i) is agreed to by the person; and
(ii) allows the regulated person to be satisfied, on reasonable grounds, that the person has received the Guide or Statement;
(b) making the Guide or Statement available to the person's agent in any way that:
(i) is agreed to by the agent; and
(ii) allows the regulated person to be satisfied, on reasonable grounds, that the agent has received the Guide or Statement.
For paragraph 940C(7)(b) of the Act, a document, information or statement that is to be given in electronic form must, as far as practicable, be presented in a way that will allow the person to whom it is given to keep a copy of it so that the person can have ready access to it in the future.
A document or statement that is to be given in electronic form must be presented in a way that clearly identifies the information that is part of the document or statement.
For paragraph 941C(6)(c) of the Act, the following are prescribed: (a) a deposit product that is a facility in relation to which:
(i) there is no minimum period before which funds cannot be withdrawn or transferred from the facility without a reduction in the return generated for the depositor; or
(b) travellers' cheques; (c) a cash management trust interest.
(ii) if there is such a period, it expires on or before the end of the period of 2 years starting on the day on which funds were first deposited in the facility;
7.7.02(2)
For subsection 941C(4) of the Act: (a) providing general advice to the public, or a section of the public, at an event organised by or for financial services licensees to which retail clients are invited is prescribed; and (b) a broadcast of general advice to the public, or a section of the public, that may be viewed or heard by any person is prescribed; and (c) distributing or displaying promotional material that:
(i) provides general advice to the public, or a section of the public; and
(ii) is available in a place that is accessible to the public is prescribed.
Examples
1. Television or radio broadcasts.
2. Distributing promotional material contained in newspapers and magazines.
3. Sending a broadcast via an Internet website or webcast.
4. Giving a public lecture or seminar for retail clients, including employees of a workplace.
Note: If general advice is given to the public, or a section of the public, the requirements of subsection 941C(5) of the Act must be complied with. Additionally, if general advice is provided to 1 or more retail clients, the providing entity must comply with section 949A of the Act.
7.7.02(3)
For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in the following circumstances: (a) a person ( person 1 ) makes an inquiry by telephone in relation to the rental of a vehicle from another person ( person 2 ); (b) as a result of that inquiry, it becomes apparent to person 2 that a financial service will be, or is likely to be, provided to person 1; (c) the financial service is the issue of an insurance product that relates to either or both of:
(i) the accidental death of, or bodily injury to, a person caused by an accident in connection with the use of the rented vehicle during the rental period; and
(d) person 2 makes arrangements for a document that is the equivalent of a Financial Services Guide to be given to person 1 no later than the start of the use to which the insurance product relates.
(ii) the loss or destruction of, or damage to, either or both of baggage and personal effects belonging to a person in the rented vehicle caused by an insured event during the rental period;
Example
The commencement of a journey of the rental vehicle is a use to which the insurance product relates.
7.7.02(3A)
For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client for a financial service provided in the circumstances specified in paragraph 7.6.01(1)(la).
7.7.02(4)
For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in respect of advice that: (a) is provided by a providing entity that is:
(i) a product issuer; or
(ii) a related body corporate of a product issuer; or
(iii) a product distributor; or
(b) is only general advice in relation to a financial product that is, or a class of financial products that includes, a financial product that is:
(iv) an authorised representative of an entity mentioned in subparagraph (i), (ii) or (iii); and
(i) issued by the providing entity or a related body corporate of the providing entity; or
(c) is not provided during a meeting; and (d) is not provided during a telephone call, unless:
(ii) offered by the providing entity; and
(i) the advice:
(A) concerns a class of financial products that includes a financial product already held by the client; and
(B) is provided by the providing entity for that financial product; or
(ii) there is no issue or sale of any financial product during the telephone call.
Note: The providing entity must meet obligations under the Act in relation to the telephone call such as the prohibition of hawking in sections 992A and 992AA of the Act and the requirements for Product Disclosure Statements in Part 7.9 of the Act.
7.7.02(4A)
If general advice is provided during a telephone call in accordance with paragraph (4)(d), the providing entity must tell the client that: (a) a Financial Services Guide exists; and (b) the provider will send out a Financial Services Guide on request.
Note: The providing entity is not required to tell the client that a Financial Services Guide exists or that the provider will send out a Financial Services Guide on request if the provider makes website disclosure information available in accordance with Division 2A of Part 7.7 of the Act (see subsection 941C(5A) of the Act).
7.7.02(5)
If subregulation (4) applies and the providing entity does not give a Financial Services Guide to the client when the advice is provided, the providing entity must give to the client: (a) the information that would be required to be in the Financial Services Guide by paragraphs 942B(2)(a), (e) and (f) of the Act; or (b) the information that would be required to be in the Financial Services Guide by paragraphs 942C(2)(a), (c), (f) and (g) of the Act;
as the case requires.
Note: If general advice is provided to 1 or more retail clients, the providing entity must comply with section 949A of the Act.
7.7.02(5A)
For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in the following circumstances: (a) the advice is provided in circumstances in which section 1018A of the Act applies or will apply at the end of the transition period; (b) the advice is only general advice in relation to a financial product that is, or a class of financial products that includes, a financial product issued by the product issuer; (c) the advice is in the form of advertising the financial product:
(i) on a billboard or a poster; or
(ii) in the media within the meaning of subregulation 7.6.01(7);
(d) the advertisement indicates that a person should consider whether or not the product is appropriate for the person.
7.7.02(5B)
For subsection 941C(8) of the Act, a Financial Services Guide does not have to be given to a client in the following circumstances: (a) the providing entity is an issuer of derivatives that are able to be traded on a financial market; (b) the financial service is a dealing in a derivative by the providing entity; (c) at the time of the dealing, the providing entity is not a participant in the financial market on which the particular derivative may be traded; (d) the only financial service that the providing entity provides to the client is the issuing of the derivative.
7.7.02(6)
In this regulation:
product distributor
means a licensee that offers a financial product for sale.
7.7.02(7)
If: (a) a financial service is provided by a person (the secondary service provider ) to a client by causing or authorising another person (the intermediary ) to provide or pass on the service; and (b) but for the operation of section 52 of the Act, the secondary service provider would not be taken to be providing the financial service to the client; and (c) the intermediary does not act on behalf of the secondary service provider in providing or passing on the service for the secondary service provider (see section 911B of the Act); and (d) the intermediary is a financial services licensee or an authorised representative of a financial services licensee; and (e) the secondary service provider has a written agreement with the intermediary under which the intermediary agrees to either:
(i) give the secondary service provider's Financial Services Guide relating to the financial service provided by the secondary service provider to the client; or
(ii) inform the client how to obtain the secondary service provider's Financial Services Guide relating to the financial service provided by the secondary service provider;
then, for subsection 941C(8) of the Act, the secondary service provider does not have to give the client a Financial Services Guide for the financial service.
For paragraph 951C(1)(c) of the Act, section 941C of the Act is modified by inserting after subsection 941C(1) the following subsection:
"(1A)
The providing entity does not have to give the client a Financial Services Guide if the client has already received the documents referred to in paragraphs (7A)(b) and (c), in the circumstances set out in that subsection, that together contain all of the information that the new Financial Services Guide is required to contain."
7.7.02A(2)
For the purposes of paragraph 951C(1)(c) of the Act, section 941C of the Act is modified by inserting after subsection 941C(7) the following subsections:
"(7AA)
The providing entity does not have to give the client a Financial Services Guide in the following circumstances:
(a) if the providing entity will, or is likely to, provide a financial service to the client in a recommendation situation (see section 1012A), an issue situation (see section 1012B) or a sale situation (see section 1012C);
(b) the providing entity gives to the client a Product Disclosure Statement;
(c) the providing entity gives to the client a statement that:
(i) contains so much of the information required by section 942B or 942C (as the case may be), and any regulations made for the purposes of the appropriate section, as is not already set out in the Product Disclosure Statement; and
(ii) complies with the requirements set out in subsection (7AB);
(d) the statements mentioned in paragraphs (b) and (c) are given at the same time.
(7AB)
The statement referred to in paragraph (7AA)(c) must:
(a) be up to date as at the time it is given to the client; and
(b) may contain information apart from that referred to in subparagraph (7AA)(c)(i); and
(c) meet the requirements of subsections 942B(3) and (6A) or subsections 942C(3) and (6A) (as the case may be)."
REGULATION 7.7.03 FINANCIAL SERVICES GUIDE GIVEN BY FINANCIAL SERVICES LICENSEE: DESCRIPTION OF DOCUMENTS 7.7.03(1)
For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include a statement that: (a) describes the purpose and content of the Financial Services Guide; and (b) if appropriate:
(i) informs the client that the client may also receive either or both of a Statement of Advice and a Product Disclosure Statement; and
(ii) describes the purpose and content of those documents.
Note: This regulation (other than paragraph (5)(b) and subregulation (6)) is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(a) of the Act).
7.7.03(2)
In describing the purpose and content of the Financial Services Guide as mentioned in subregulation (1), the client's attention must be drawn to the following matters: (a) the Guide is designed to assist the client in deciding whether to use any of the services offered in the Guide; (b) the Guide contains information about remuneration that may be paid to the financial services licensee and other relevant persons in relation to the services offered; (c) the Guide contains information on how complaints against the financial services licensee are dealt with.
7.7.03(3)
In describing the purpose and content of a Statement of Advice or Product Disclosure Statement, the client's attention must be drawn to a description of the circumstances in which the Statement of Advice or Product Disclosure Statement will be given.
7.7.03(4)
Subregulations (2) and (3) do not prevent the statement required under subregulation (1) from drawing attention to other matters relating to the purpose and content of the Financial Services Guide, the Statement of Advice or the Product Disclosure Statement.
7.7.03(5)
The statement required under subregulation (1) must be: (a) presented in a manner that is easy for the client to understand; and (b) displayed prominently in the Financial Services Guide.
7.7.03(6)
A statement is displayed prominently if it: (a) appears at, or close to, the front of the Financial Services Guide; and (b) stands out from the other information contained in the Guide.
Note: Ideally, the statement should be placed:
REGULATION 7.7.03A FINANCIAL SERVICES GUIDE GIVEN BY FINANCIAL SERVICES LICENSEE: ARRANGEMENTS FOR COMPENSATION 7.7.03A(1)
For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include a statement about: (a) the kind of arrangements for compensation that the licensee has in place; and (b) whether those arrangements satisfy the requirements under section 912B of the Act for arrangements for compensation.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(a) of the Act).
7.7.03A(2)
This regulation commences, for a particular financial services licensee, on the date that subregulations 7.6.02AAA(1), (2) and (3) take effect for that licensee.
For paragraph 942B(2)(k) of the Act, the Financial Services Guide given by a financial services licensee must include information, to the extent that the information is able to be ascertained at the time the Financial Services Guide is given to the client, about all remuneration (including commission) and other benefits that a person ( person 1 ) has received, or is to receive, for referring another person to the financial services licensee.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(a) of the Act).
7.7.04(2) Overview of regulation.
For paragraph 942B(4)(c) of the Act, the information required in particular situations by paragraph 942B(2)(e) in relation to persons mentioned in paragraph 942B(2)(e) or person 1 (see subregulation (1)) is as set out in subregulations (3), (4) and (5).
The following information is required if the remuneration, commission or other benefits are able to be worked out at the time the Financial Services Guide is given to the client:
(a) in a case where the remuneration, commission or other benefits are to be received by a person who is a licensed trustee company, either:
(i) the remuneration, commission or other benefits; or
(b) in any other case - the remuneration, commission or other benefits.
(ii) the remuneration, commission or other benefits stated as a percentage of the income from the estate or as a percentage of the capital value of the estate;
If:
(a) the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and (b) the providing entity reasonably believes that personal advice will be given to the client;the following information is required:
(c) either:
(i) particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or
(d) a statement that:
(ii) general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;
(i) if the remuneration (including commission) or other benefits are calculable at the time the personal advice is given, the remuneration (including commission) or other benefits the person receives on specific financial products to which the personal advice relates will be disclosed at the time the personal advice is given or as soon as practicable after that time; or
(ii) if the remuneration (including commission) or other benefits are not calculable at the time the personal advice is given, the manner in which the remuneration (including commission) or other benefits are to be calculated will be disclosed at the time the personal advice is given or as soon as practicable after that time.
If:
(a) the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and (b) the providing entity reasonably believes that personal advice will not be given to the client;the following information is required:
(c) particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or (d) both of the following:
(i) general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;
(ii) a statement that the client may request particulars of the remuneration (including commission) or other benefits but that the request must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.
Note: If website disclosure information is made available in accordance with Division 2A of Part 7.7 of the Act, the statement required by subparagraph (d)(ii) of this subregulation must set out that the client may request particulars of the remuneration (including commissions) or other benefits but that the request must be made before any financial service identified in the website disclosure information is provided to the client.
For subsection 942B(7) of the Act, if: (a) the remuneration (including commission) or other benefits that a person mentioned in paragraph 942B(2)(e) or person 1 in subregulation 7.7.04(1) has received, or is to receive, are not able to be ascertained at the time the Financial Services Guide is given to the client or the website disclosure information is made available; and (b) the providing entity reasonably believes that personal advice will not be given to the client; and (c) the Financial Services Guide or the website disclosure information does not contain particulars of the remuneration (including commission) or other benefits;
the client may request, from the financial services licensee, particulars of the remuneration (including commission) or other benefits.
7.7.04A(2)
A request under subregulation (1) must be made: (a) if the providing entity makes website disclosure information available in accordance with Division 2A of Part 7.7 of the Act - before any financial service identified in the website disclosure information is provided to the client; or (b) otherwise - within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.
7.7.04A(3)
For subregulation (1), the particulars must, to the extent relevant, include a statement of the range of amounts or rates of remuneration (including commission) or other benefits.
Examples
1. Remuneration is paid within the range of $X to $Y.
2. Commission is paid at rates between X% and Y%.
7.7.04A(4)
The particulars mentioned in subregulation (3) must be presented in a manner that is easy for the client to understand.
This regulation is made for paragraph 942B(4)(b) of the Act.
7.7.04AA(2)
Information about a non-monetary benefit that, in accordance with paragraph 963C(1)(b) of the Act, is not conflicted remuneration is not required by paragraph 942B(2)(e) of the Act.
Note 1: Under paragraph 963C(1)(b) of the Act, if a non-monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.
Note 2: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(a) of the Act).
This regulation is made for paragraph 942C(4)(b) of the Act.
7.7.04AB(2)
Information about a non-monetary benefit that, in accordance with paragraph 963C(1)(b) of the Act, is not conflicted remuneration is not required by paragraph 942C(2)(f) of the Act.
Note 1: Under paragraph 963C(1)(b) of the Act, if a non-monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.
Note 2: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
For subparagraph 942B(2)(g)(iii) of the Act, the period within which a client may request a record of the advice to which that subparagraph relates is 7 years after the day on which the advice is provided.
For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative must include the authorised representative number allocated by ASIC to the authorised representative.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
7.7.05A(2)
Subregulation (1) does not apply to a Financial Services Guide to which regulation 7.7.05B applies.
REGULATION 7.7.05B PERSONALISED FINANCIAL SERVICES GUIDE 7.7.05B(1)
This regulation applies if: (a) a financial services licensee; or (b) an authorised representative (the authoriser ) of a financial services licensee;
authorises an individual to provide financial services on behalf of the licensee.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
7.7.05B(2)
For paragraph 942C(4)(b) of the Act, the Financial Services Guide in relation to a financial service does not have to include the information in paragraph 942C(2)(a) of the Act, in respect of the individual, if: (a) the financial service is dealing in a financial product or the provision of general advice or both; and (b) the individual provides the financial service in accordance with the authorisation; and (c) the licensee has reasonable grounds to believe that the identity or remuneration of the individual would not be material to a decision by a retail client whether or not to obtain the financial service; and (d) the Financial Services Guide includes:
(i) the contact details and licence number of the licensee; and
(ii) a statement setting out, in general terms, the individual's role and capacity in providing the financial service.
7.7.05B(2A)
For paragraph 942C(4)(b) of the Act, the Financial Services Guide in relation to a financial service does not have to include a statement setting out the name and contact details of a person if: (a) the person is:
(i) a franchisee of the holder of an Australian financial services licence (the franchisor ) and a corporate authorised representative of the franchisor; or
(b) the franchisor is an authorised deposit-taking institution (within the meaning of the Banking Act 1959) and regulated by APRA; and (c) the franchise agreement:
(ii) an employee of a franchisee of the holder of an Australian financial services licence; and
(i) subjects the person to the policies of the franchisor; and
(d) the Financial Services Guide produced by the franchisor explains that the franchisor takes responsibility for the services provided by the person.
(ii) requires compliance by the person with the policies of the franchisor that were made to give effect to the franchisor's obligations under the Australian financial services licence; and
7.7.05B(3)
For paragraph 942C(4)(b) of the Act, the Financial Service Guide in relation to a financial service does not have to include the information in paragraph 942C(2)(a) of the Act, in respect of an authoriser, if: (a) the financial service is dealing in a financial product or the provision of general advice or both; and (b) the authoriser provides the financial service in accordance with the authorisation; and (c) the licensee has reasonable grounds to believe that the identity or remuneration of the authoriser would not be material to a decision by a retail client whether or not to obtain the financial service; and (d) the Financial Services Guide includes:
(i) the contact details and licence number of the licensee; and
(ii) a statement setting out, in general terms, the authoriser's role and capacity in providing the financial service.
Note: The Financial Services Guide will contain all information otherwise required by section 942C of the Act.
REGULATION 7.7.05C EXEMPTION FROM PROVIDING CERTAIN INFORMATION IN A FINANCIAL SERVICES GUIDE 7.7.05C(1)
For paragraph 942B(4)(b) of the Act, for a Financial Services Guide: (a) information is not required by paragraph 942B(2)(c) of the Act about a financial service to which subsection 941C(6) of the Act applies; and (b) information is not required by paragraph 942B(2)(e) of the Act in relation to remuneration (including commission) or other benefits that are received only in respect of, or that are only attributable to, a financial service to which subsection 941C(6) of the Act applies.
Note: This subregulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(a) of the Act).
7.7.05C(2)
For paragraph 942C(4)(b) of the Act, for a Financial Services Guide: (a) information is not required by paragraph 942C(2)(d) of the Act, about a financial service to which subsection 941C(6) of the Act applies; and (b) information is not required by paragraph 942C(2)(f) of the Act, in relation to remuneration (including commission) or other benefits that are received only in respect of, or that are only attributable to, a financial service to which subsection 941C(6) of the Act applies.
This subregulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
REGULATION 7.7.06 FINANCIAL SERVICES GUIDE GIVEN BY AUTHORISED REPRESENTATIVE OF FINANCIAL SERVICES LICENSEE: DESCRIPTION OF DOCUMENTS 7.7.06(1)
For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative must include a statement that: (a) describes the purpose and content of the Financial Services Guide; and (b) if appropriate:
(i) informs the client that the client may also receive either or both of a Statement of Advice and a Product Disclosure Statement; and
(ii) describes the purpose and content of those documents.
Note: This regulation (other than paragraph (5)(b) and subregulation (6)) is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
7.7.06(2)
In describing the purpose and content of the Financial Services Guide as mentioned in subregulation (1), the client's attention must be drawn to the following matters: (a) the Guide is designed to assist the client in deciding whether to use any of the services offered in the Guide; (b) the Guide contains information about remuneration that may be paid to the authorised representative and other relevant persons in relation to the services offered; (c) the Guide contains information on how complaints against the authorised representative are dealt with.
7.7.06(3)
In describing the purpose and content of a Statement of Advice or Product Disclosure Statement, the client's attention must be drawn to a description of the circumstances in which the Statement of Advice or Product Disclosure Statement will be given.
7.7.06(4)
Subregulations (2) and (3) do not prevent the statement required under subregulation (1) from drawing attention to other matters relating to the purpose and content of the Financial Services Guide, the Statement of Advice or the Product Disclosure Statement.
7.7.06(5)
The statement required under subregulation (1) must be: (a) presented in a manner that is easy for the client to understand; and (b) displayed prominently in the Financial Services Guide.
7.7.06(6)
A statement is displayed prominently if it: (a) appears at, or close to, the front of the Financial Services Guide; and (b) stands out from the other information contained in the Guide.
Note: Ideally, the statement should be placed:
REGULATION 7.7.06A 7.7.06A FINANCIAL SERVICES GUIDE GIVEN BY AUTHORISED REPRESENTATIVE OF FINANCIAL SERVICES LICENSEE - LICENCE NUMBER
For paragraph 942C(2)(m) of the Act, a providing entity that is an authorised representative of a financial services licensee must include the licensee's licence number in a Financial Services Guide given to a client.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by the authorised representative of a financial services licensee must include a statement about: (a) the kind of arrangements for compensation that the licensee has in place; and (b) whether those arrangements satisfy the requirements under section 912B of the Act for arrangements for compensation.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
7.7.06B(2)
This regulation commences, for a particular authorised representative, on the date that subregulations 7.6.02AAA(1), (2) and (3) take effect for the financial services licensee for whom he or she is a representative.
For paragraph 942C(2)(m) of the Act, the Financial Services Guide given by an authorised representative of a financial services licensee must include information, to the extent that the information is able to be ascertained at the time the Financial Services Guide is given to the client, about all remuneration (including commission) and other benefits that a person ( person 1 ) has received, or is to receive, for referring another person to: (a) the authorised representative; or (b) the financial services licensee.
Note: This regulation is also relevant to website disclosure information made available in accordance with Division 2A of Part 7.7 of the Act (see paragraph 943J(b) of the Act).
7.7.07(2) Overview of regulation.
For paragraph 942C(4)(c) of the Act, the information required in particular situations by paragraph 942C(2)(f) in relation to persons mentioned in paragraph 942C(2)(f) or person 1 (see subregulation (1)) is as set out in subregulations (3), (4) and (5).
The following information is required if the remuneration, commission or other benefits are able to be worked out at the time the Financial Services Guide is given to the client:
(a) in a case where the remuneration, commission or other benefits are to be received by a person who is a licensed trustee company, either:
(i) the remuneration, commission or other benefits; or
(b) in any other case - the remuneration, commission or other benefits.
(ii) the remuneration, commission or other benefits stated as a percentage of the income from the estate or as a percentage of the capital value of the estate;
If:
(a) the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and (b) the providing entity reasonably believes that personal advice will be given to the client;the following information is required:
(c) either:
(i) particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or
(d) a statement that:
(ii) general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;
(i) if the remuneration (including commission) or other benefits are calculable at the time the personal advice is given, the remuneration (including commission) or other benefits the person receives on specified financial products to which the personal advice relates will be disclosed at the time the personal advice is given or as soon as practicable after that time; or
(ii) if the remuneration (including commission) or other benefits are not calculable at the time the personal advice is given, the manner in which the remuneration (including commission) or other benefits are to be calculated will be disclosed at the time the personal advice is given or as soon as practicable after that time.
If:
(a) the remuneration (including commission) or other benefits are not able to be ascertained at the time the Financial Services Guide is given to the client; and (b) the providing entity reasonably believes that personal advice will not be given to the client;the following information is required:
(c) particulars of the remuneration (including commission) or other benefits, including, to the extent relevant, a statement of the range of amounts or rates of remuneration (including commission) or other benefits; or (d) both of the following:
(i) general information about the remuneration (including commission) or other benefits and the manner in which the remuneration (including commission) or other benefits are to be calculated;
(ii) a statement that the client may request particulars of the remuneration (including commission) or other benefits but that the request must be made within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.
Note: If website disclosure information is made available in accordance with Division 2A of Part 7.7 of the Act, the statement required by subparagraph (d)(ii) of this subregulation must set out that the client may request particulars of the remuneration (including commissions) or other benefits but that the request must be made before any financial service identified in the website disclosure information is provided to the client.
For subsection 942C(7) of the Act, if: (a) the remuneration (including commission) or other benefits that a person mentioned in paragraph 942C(2)(f) or person 1 in subregulation 7.7.07(1) has received, or is to receive, are not able to be ascertained at the time the Financial Services Guide is given to the client or the website disclosure information is made available; and (b) the providing entity reasonably believes that personal advice will not be given to the client; and (c) the Financial Services Guide or the website disclosure information does not contain particulars of the remuneration (including commission) or other benefits;
the client may request, from the authorised representative, particulars of the remuneration (including commission) or other benefits.
7.7.07A(2)
A request under subregulation (1) must be made: (a) if the providing entity makes website disclosure information available in accordance with Division 2A of Part 7.7 of the Act - before any financial service identified in the website disclosure information is provided to the client; or (b) otherwise - within a reasonable time after the client is given the Financial Services Guide and before any financial service identified in the Guide is provided to the client.
7.7.07A(3)
For subregulation (1), the particulars must, to the extent relevant, include a statement of the range of amounts or rates of remuneration (including commission) or other benefits.
Examples
1. Remuneration is paid within the range of $X to $Y.
2. Commission is paid at rates between X% and Y%.
7.7.07A(4)
The particulars mentioned in subregulation (3) must be presented in a manner that is easy for the client to understand.
For subparagraph 942C(2)(h)(iii) of the Act, the period within which a client may request a record of the advice to which that subparagraph relates is 7 years after the day on which the advice is provided.
For subsection 942DA(1) of the Act, this regulation specifies the circumstances in which a Financial Services Guide and a Product Disclosure Statement may be combined in a single document.
7.7.08A(1A)
(Repealed by SLI 2015 No 91, Sch 1[17].)
7.7.08A(1B)
This regulation does not apply if the Product Disclosure Statement is for a standard margin lending facility.
7.7.08A(1C)
This regulation does not apply if the Product Disclosure Statement is for a superannuation product to which Subdivision 4.2B of Division 4 of Part 7.9 applies.
7.7.08A(1D)
This regulation does not apply if the Product Disclosure Statement is for: (a) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of Part 7.9 applies; or (b) a simple sub-fund product to which Subdivision 4.2D of Division 4 of Part 7.9 applies.
7.7.08A(2)
A combined Financial Services Guide and Product Disclosure Statement may be issued as a single document if: (a) the providing entity for the financial service and the product issuer for a product issued in relation to that financial service are the same person; and (b) the document is divided into 2 separate parts:
(i) a part identifiable as a Financial Services Guide that satisfies the requirements under the Act for a Financial Services Guide; and
(c) the title "Combined Financial Services Guide and Product Disclosure Statement" is marked on or near the front of the document; and (d) the document is provided to a client at the earlier of the time at which a Financial Services Guide must be provided and the time at which a Product Disclosure Statement must be provided.
(ii) a part identifiable as a Product Disclosure Statement that satisfies the requirements for a Product Disclosure Statement; and
7.7.08A(3)
A combined Financial Services Guide and Product Disclosure Statement may be issued as a single document if: (a) the providing entity for the financial service is a representative or a related body corporate of the product issuer; and (b) the product is only a basic deposit product, a non-cash payment facility that is related to a basic deposit product, a general insurance product or a life risk insurance product; and (c) the document is divided into 2 separate parts:
(i) a part identifiable as a Financial Services Guide that satisfies the requirements under the Act for a Financial Services Guide; and
(d) the title "Combined Financial Services Guide and Product Disclosure Statement" is marked on or near the front of the document; and (e) the document clearly and prominently discloses:
(ii) a part identifiable as a Product Disclosure Statement that satisfies the requirements for a Product Disclosure Statement; and
(i) the identity of the providing entity and the product issuer; and
(ii) the nature of the relationship between the providing entity and the product issuer; and
(f) the document is provided to a client at the earlier of the time at which a Financial Services Guide must be provided and the time at which a Product Disclosure Statement must be provided.
(iii) the liability of the providing entity and the product issuer in relation to the document; and
7.7.08A(4)
For the single document: (a) the Financial Services Guide and the Product Disclosure Statement may provide for matters by the use of cross-references to each other rather than by fully setting out material; and (b) if the document includes cross-references:
(i) the document as a whole must include all of the information required by subsections 942B(6A) and 1013C(3) of the Act; and
(ii) the use of the cross-references must not have the effect that the document is misleading or deceptive.
Division 2AA - Combined Financial Services Guide and credit guide
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if section 942DA of the Act were modified by substituting the heading of the section with the following section heading and subsection heading:
7.7.08B(2) [Combining FSG and credit guide]"942DA Combining a Financial Services Guide and another instrument
Financial Services Guide and a Product Disclosure Statement"
Part 7.7 of the Act applies as if section 942DA of the Act were also modified by inserting after subsection (3) the following subsection heading and subsections:
"Financial Services Guide and a credit guide
(4)
If:
(a) a person:
(i) is:
(A) a financial services licensee; or
(B) an authorised representative of a financial services licensee; and
(ii) is required to give a Financial Services Guide to a client under this Act; and
(b) the person:
(i) either:
(A) holds an Australian credit licence under the National Consumer Credit Protection Act 2009; or
(B) is a credit representative (within the same meaning as in the National Consumer Credit Protection Act 2009); and
(ii) is required to give a credit guide to a consumer under that Act;the person may combine the Financial Services Guide and credit guide in a single document.
(5)
If the person combines the Financial Services Guide and credit guide in a single document, any statements or information to be included in the credit guide that are identical to statements or information to be included in the Financial Services Guide need only be included once."
For subsection 946AA(4) of the Act, a record of advice to a client must set out:
(a) the matters set out in subregulation (2); and
(b) the information that, if a Statement of Advice were to be given, would be required in that statement by paragraphs 947B(2)(d) and (e) of the Act or paragraphs 947C(2)(e) and (f) of the Act. 7.7.08C(2) [Matters to be set out]
For paragraph (1)(a), the matters that the record of advice must set out are:
(a) brief particulars of the recommendations made to the client and the basis on which the recommendations are made; and
(b) brief particulars of the information that would be required by subsection 947D(2) of the Act if a Statement of Advice were given to the client; and
(c) the statement that would be required by subsection 947D(3) of the Act if a Statement of Advice were given to the client.
Note: A client is entitled to ask the providing entity for a record of advice and the providing entity must give a copy of the record of advice to the client - see paragraph 946AA(5)(a) of the Act.
For subsection 946B(3A) of the Act, a record of advice must set out:
(a) the following:
(i) the advice given to the client by the providing entity;
(ii) if information or a statement required by subsections 947D(2) and (3) is given - the information and statement; or
(b) the following:
(i) brief particulars of the recommendations made and the basis on which the recommendations are made;
(ii) if information under subsection 947D(2) is given - brief particulars of the information;
(iii) if a statement under subsection 947D(3) is given - an acknowledgement that the statement has been given.
The providing entity may keep the record in any form, for example, a tape recording.
The providing entity must keep the record for 7 years after the day on which the further advice is provided.
For subparagraph 946AA(1)(a)(i) of the Act, the threshold amount is $15,000.
7.7.09A(2)
Subregulations (3) and (4) apply to each of the following financial products: (a) shares; (b) rights issues; (c) options over unissued shares; (d) partly paid shares; (e) debentures; (f) stapled securities; (g) securities in a CCIV.
7.7.09A(3)
For small investment advice to a client that is related to the acquisition of one or more of the financial products listed in paragraphs (2)(a) to (g), the threshold amount in subregulation (1) must be calculated to include the total value of all financial investments that would be committed to by the client if the advice were accepted by the client.
Examples:
1 If the small investment advice related to the purchase of options over unissued shares the total cost of the options would be both the cost to buy the options and the cost of the exercise price on the face of the options.
2 If the small investment advice relates to the purchase of partly paid shares the total cost of the shares must be calculated as if all calls had been made on the shares.
Note: The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.
7.7.09A(4)
For small investment advice to a client that is related to the disposal of one or more of the financial products listed in paragraphs (2)(a) to (g), the threshold amount in subregulation (1) must be calculated to include the total value of all financial investments that would be disposed of by the client if the advice were accepted by the client.
Note: The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.
7.7.09A(5)
Subregulations (6) and (7) apply to each of the following financial products: (a) superannuation; (b) managed investment schemes; (c) non-derivative instalment warrants.
7.7.09A(6)
For small investment advice to a client that is related to the acquisition of one or more of the financial products listed in paragraphs (5)(a) to (c), the threshold amount in subregulation (1) must be calculated to include: (a) both:
(i) the cost to the client of the initial investment; and
(b) if the investment is not finite - the value of the investment is calculated for the 12-month period beginning from the date that the record of advice is required by subregulation (10), (11) or (12) to be given to the client.
(ii) other amounts that would be committed to by the client if the advice is taken; and
Examples
1 Advice given in relation to switching superannuation funds
A person earning $50,000 per annum is given advice to switch an existing superannuation fund balance of $12,000 to another superannuation fund and direct all future superannuation guarantee contributions to that same fund. In this event the total of the superannuation guarantee contributions in the first 12-month period (ie $50,000 × 0.09 = $4,500) when added to the initial $12,000 transfer, would exceed the $15,000 threshold. In this example the exemption, in section 946AA of the Act, from the requirement to provide a Statement of Advice would not apply.
2 Advice given to acquire non-derivative instalment warrants
The terms of the non-derivative instalment warrants are that $10,000 must be paid initially, a second payment of $12,000 in 18 months time and a third and final payment of $12,000 in 3 years time. The investment advice, assuming the client has committed to implementing the advice, concerns a $34,000 investment and therefore the exemption, in section 946AA of the Act, from the requirement to provide a Statement of Advice would not apply.
Note: The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.
7.7.09A(7)
For small investment advice to a client that is related to the disposal of one or more of the financial products listed in paragraphs (5)(a) to (c), the threshold amount in subregulation (1) must be calculated to include:
(a) the value to the client of the total divestment; and
(b) other amounts reasonably related to the divestment that would be expended if the advice is taken.
Note: The total value of all financial investments in relation to which small investment advice is provided is calculated in accordance with subsection 946AA(2) of the Act.
7.7.09A(8)
If the total value of an investment, to which investment advice to a client relates, is not able to be ascertained under subsection 946AA(2) of the Act, the investment advice is taken to exceed the threshold amount in subregulation (1).
7.7.09A(9)
If an investment, to which investment advice relates, is jointly held by more than 1 client, the sum of the values of each client's investment must be calculated to determine whether the threshold amount in subregulation (1) is exceeded.
When record of advice is given
7.7.09A(10)
For subsection 946AA(4) of the Act, a record of advice is required to be given to a client when, or as soon as practicable after, investment advice is provided to the client and, in any event, subject to subregulation (12), before the providing entity provides the client with any further financial service that arises out of or in connection with the investment advice.
Statement of certain information if record of advice not given when advice provided
7.7.09A(11)
If the record of advice is not given to the client when the investment advice is provided, the providing entity must, at the time the investment advice is provided, give the client a statement that contains the information that would be required to be in a Statement of Advice by: (a) paragraphs 947B(2)(d) and (e) of the Act; or (b) paragraphs 947C(2)(e) and (f) of the Act;
as the case requires, and by section 947D of the Act, if applicable.
Time-critical cases
7.7.09A(12)
If: (a) a client expressly instructs that they require a further financial service to be provided immediately, or by a specified time; and (b) the further financial service arises out of, or in connection with, the investment advice given to the client; and (c) it is not reasonably practicable to give a record of advice to the client before the further service is provided as so instructed;
the providing entity must give the client the record of advice:
(d) unless paragraph (e) applies - within 5 days after providing the further service, or as soon as practicable; or (e) if the further financial service is the provision to the client of a financial product and section 1019B of the Act applies to the acquisition of the product by the client - before the start of the period applicable under subsection 1019B(3) of the Act, or sooner if practicable.REGULATION 7.7.09AA STATEMENT OF ADVICE FROM FINANCIAL SERVICES LICENSEE 7.7.09AA(1)
For paragraph 947B(2)(g) of the Act, a Statement of Advice given by a financial services licensee in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act must include the following information:
(a) whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;
Note: This is sometimes referred to as 'double gearing'.
(b) if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out - whether the security for the loan includes the primary residential property of the client;
(c) whether there is a guarantor for the margin lending facility, and, if so:
(i) if the financial services licensee has the necessary information - a statement as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee; or
(ii) if the financial services licensee does not have the necessary information - a statement that the financial services licensee does not have the information;
(d) the amount of any other debt incurred by the client;
(e) any other matter that ASIC has specified in a legislative instrument for subregulation (2).
7.7.09AA(2)
ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947B(4) of the Act were modified by:
(a) substituting the full stop at the end of paragraph (c) with a semi-colon; and
(b) inserting after paragraph (c) the following paragraph:
"(d) that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 947B(2)(g) of the Act."
For paragraphs 947B(4)(b) and 947C(4)(b) of the Act, a providing entity is not required to include a statement or information mentioned in Part 7.7 of the Act in a Statement of Advice to the client if the Statement of Advice:
(a) refers to the statement or information; and
(b) provides sufficient details about the statement or information to enable the client:
(i) to identify by a unique identifier the document, or part of the document, that contains the statement or information; and
(ii) to decide whether or not to read the statement or information or obtain a copy of the statement or information; and
(c) states that a copy of the statement or information may be obtained from the providing entity on request, at no charge.
Subject to subregulation (3), the providing entity must give the client the document, or part of the document (whichever is applicable), unless the providing entity has already given the document or part of the document to the client.
7.7.09B(3) [Who may provide document]If the providing entity is an authorised representative of an Australian financial services licensee, the document, or part of the document (whichever is applicable), may be provided to the client:
(a) by another authorised representative appointed by and acting on behalf of the licensee; or
(b) by the licensee. 7.7.09B(4) [Copy must be provided on request]
If the client requests a copy of a statement or information that the providing entity is not required to include in accordance with subregulation (1), the providing entity must provide the copy as soon as practicable, at no charge.
7.7.09B(5) [Statement taken to be included]If a statement or information is not required to be included in a Statement of Advice because of subregulation (1), the statement or information is taken to be included in the Statement of Advice.
7.7.09B(6)The exemption in subregulation (1) does not apply to a statement or information that is required by section 947D or 961H of the Act.
7.7.09B(7)
(Repealed by SLI 2012 No 268, Sch 2[1] (effective 1 July 2013).)
7.7.09B(8)
(Repealed by SLI 2012 No 268, Sch 2[1] (effective 1 July 2013).)
For paragraph 947C(2)(h) of the Act, a Statement of Advice given by an authorised representative in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act must include the following information:
(a) whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;
Note: This is sometimes referred to as 'double gearing'.
(b) if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out - whether the security for the loan includes the primary residential property of the client;
(c) whether there is a guarantor for the margin lending facility, and, if so:
(i) if the authorised representative has the necessary information - a statement as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee; or
(ii) if the authorised representative does not have the necessary information - a statement that the authorised representative does not have the information;
(d) the amount of any other debt incurred by the client;
(e) any other matter that ASIC has specified in a legislative instrument for subregulation (2).
7.7.09BA(2)
ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947C(4) of the Act were modified by:
(a) substituting the full stop at the end of paragraph (c) with a semi-colon; and
(b) inserting after paragraph (c) the following paragraph:
"(d) that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 947C(2)(h) of the Act."
This regulation is made for paragraph 947B(4)(b) of the Act.
7.7.09BC(2)
Information about a non-monetary benefit that, in accordance with paragraph 963C(1)(b) of the Act, is not conflicted remuneration is not required by paragraph 947B(2)(d) of the Act.
Note: Under paragraph 963C(1)(b) of the Act, if a non-monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.
This regulation is made for paragraph 947C(4)(b) of the Act.
7.7.09BD(2)
Information about a non-monetary benefit that, in accordance with paragraph 963C(1)(b) of the Act, is not conflicted remuneration is not required by paragraph 947C(2)(e) of the Act.
Note: Under paragraph 963C(1)(b) of the Act, if a non-monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.
A Statement of Advice and a document, or part of a document, mentioned in the Statement, must be retained, by the providing entity that gave the Statement, for 7 years after the day on which the Statement is provided to the client.
For paragraph 946B(5)(c) of the Act, the following are prescribed:
(a) a deposit product that is a facility in relation to which:
(i) there is no minimum period before which funds cannot be withdrawn or transferred from the facility without a reduction in the return generated for the depositor; or
(ii) if there is such a period, it expires on or before the end of the period of 2 years starting on the day on which funds were first deposited in the facility;
(b) travellers' cheques;
(c) a cash management trust interest;
(d) a motor vehicle insurance product (see regulation 7.1.11);
(e) a home building insurance product (see regulation 7.1.12);
(f) a home contents insurance product (see regulation 7.1.13);
(g) a travel insurance product (see regulation 7.1.16);
(h) a personal and domestic property insurance product (see regulation 7.1.17);
(i) a general insurance product prescribed by regulations made for the purposes of subparagraph 761G(5)(b)(viii) (see regulation 7.1.17A).
(j) (Repealed)
[ CCH Note: Reg 2 of SLI 2005 No 324 specifies that Sch 5[4] of that instrument commences immediately after the commencement of Sch 4[7].]
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 941B(2) were omitted and the following subsection were substituted:
"(2)
A Financial Services Guide must not be given to the person by the providing entity unless the authorising licensee, or each of the authorising licensees, on whose behalf the providing entity provides the financial services, has authorised its distribution by the providing entity."
For subsection 946B(9) of the Act, a record of advice must set out the following: (a) the investment advice given to a client by the providing entity; (b) brief particulars of the recommendations made to the client and the basis on which the recommendations are made; (c) if the providing entity is a financial services licensee - the information that, if a Statement of Advice were to be given, would be required in that Statement by paragraphs 947B(2)(d) and (e) of the Act; (d) if the providing entity is an authorised representative - the information that, if a Statement of Advice were to be given, would be required in that Statement by paragraphs 947C(2)(e) and (f) of the Act.
Note: A client is entitled to ask the providing entity for a record of advice under subsections 942B(8) and 942C(8) (Financial Services Guides) and section 943N (website disclosure information) of the Act.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942B(2)(c) of the Act were omitted and the following paragraph were substituted:
"(c) either:
(i) information about the financial services (the authorised services ) that the providing entity will be, or is likely to be, providing to the client, and the kinds of financial products to which those services relate; or
(ii) information about the kinds of financial services (the authorised services ) that the providing entity is authorised by its licence to provide, and the kinds of financial products to which those services relate; and".
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraphs 942C(2)(c), (d) and (e) of the Act were omitted and the following paragraphs were substituted:
"(c) either:
(i) information about the financial services (the authorised services ) that the providing entity will be, or is likely to be, providing to the client, and the kinds of financial products to which those services relate; or
(ii) information, in relation to the authorising licensee or each of the authorising licensees, about the kinds of financial services (the authorised services ) that the providing entity provides as representative of the authorising licensee, and the kinds of financial products to which those services relate; and
(d) information about who the authorising licensee, or each of the authorising licensees, acts for when the authorised services are provided on their behalf by the providing entity; and
(e) a statement:
(i) setting out the name and contact details of the authorising licensee, or of each of the authorising licensees, mentioned in paragraph (d); and
(ii) stating that the providing entity is the authorised representative of that licensee or those licensees; and".
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942B(2)(g) were omitted and the following paragraph were substituted:
"(g) if the providing entity provides further advice - a statement in relation to which the following requirements are satisfied:
(i) the statement must indicate that the client may request a record of further advice that is provided to them, if they have not already been provided with a record of that advice;
(ii) the statement must set out particulars of how the client may request such a record;
(iii) any limitation in those particulars relating to the time within which the client may request such a record must be consistent with any applicable requirements in regulations made for the purposes of this subparagraph or, if there are no such applicable requirements, must be such as to allow the client a reasonable opportunity to request a record of the advice; and".
[ CCH Note: Sch 2[4] of SLI 2005 No 324 commenced immediately after Sch 1[1] of that instrument. Sch 1[1] commenced on 20 December 2005 and inserted reg 7.7.10AA and reg 7.7.10AB.]
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 942B(8) were omitted and the following subsection were substituted:
"(8)
If:
(a) the Financial Services Guide includes a statement to the effect that a client may request a record of further advice; and
(b) the client is provided with further advice to which that statement applies; and
(c) the client has not already been provided with a record of that advice;the providing entity must comply with a request made in accordance with that statement for a record of that advice.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1))."
[ CCH Note: Sch 2[4] of SLI 2005 No 324 commenced immediately after Sch 1[1] of that instrument. Sch 1[1] commenced on 20 December 2005 and inserted reg 7.7.10AA and reg 7.7.10AB.]
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 942C(2)(h) were omitted and the following paragraph were substituted:
"(h) if the providing entity, when acting as representative of the authorising licensee or any of the authorising licensees, provides further advice - a statement in relation to which the following requirements are satisfied:
(i) the statement must indicate that the client may request a record of further advice that is provided to them, if they have not already been provided with a record of that advice;
(ii) the statement must set out particulars of how the client may request such a record;
(iii) any limitation in those particulars relating to the time within which the client may request such a record must be consistent with any applicable requirements in regulations made for the purposes of this subparagraph or, if there are no such applicable requirements, must be such as to allow the client a reasonable opportunity to request a record of the advice; and".
[ CCH Note: Sch 2[4] of SLI 2005 No 324 commenced immediately after Sch 1[1] of that instrument. Sch 1[1] commenced on 20 December 2005 and inserted reg 7.7.10AA and reg 7.7.10AB.]
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 942C(8) were omitted and the following subsection were substituted:
"(8)
If:
(a) the Financial Services Guide includes a statement to the effect that a client may request a record of further advice; and
(b) the client is provided with further advice to which that statement applies; and
(c) the client has not already been provided with a record of that advice;the providing entity must comply with a request made in accordance with that statement for a record of that advice.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1))."
[ CCH Note: Sch 2[4] of SLI 2005 No 324 commenced immediately after Sch 1[1] of that instrument. Sch 1[1] commenced on 20 December 2005 and inserted reg 7.7.10AA and reg 7.7.10AB.]
For the purposes of paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if section 943N of the Act were omitted and the following section were substituted:
"943N Record of advice must be provided in certain circumstances
If:
(a) the website disclosure information includes a statement to the effect that a client may request a record of further advice; and
(b) the client is provided with further advice to which that statement applies; and
(c) the client has not already been provided with a record of that advice;the providing entity must comply with a request made in accordance with that statement for a record of that advice.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1))."
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if section 946B of the Act were omitted and the following section were substituted:
"946B Situations in which a Statement of Advice is not required
(1) First situation: further adviceThe providing entity does not have to give the client a Statement of Advice for particular advice (the further advice ) if subsection (2) or (2A) applies.
(2)
This subsection applies if:
(a) the providing entity has previously given the client a Statement of Advice that set out the client's relevant personal circumstances in relation to the advice (the previous advice ) set out in that Statement; and
(b) the client's relevant personal circumstances in relation to the further advice (determined having regard to the client's objectives, financial situation and needs as currently known to the providing entity) are not significantly different from the client's relevant personal circumstances in relation to the previous advice; and
(c) so far as the basis on which advice is given relates to other matters - the basis on which the further advice is given is not significantly different from the basis on which the previous advice was given.Note: Paragraphs 947B(2)(b) and 947C(2)(b) require a Statement of Advice to include information about the basis on which the advice is or was given, which may include the client's relevant personal circumstances, in which case paragraph (a) of this subsection would be satisfied.
(2A)
This subsection applies if:
(a) the client had a relationship with the providing entity before:
(i) if the providing entity is a licensee - the day on which the providing entity obtained its Australian financial services Licence; or
(ii) if the providing entity is an authorised representative - the day on which the licensee on whose behalf the advice is provided obtained its Australian financial services Licence; and
(b) the providing entity gave the client advice (the earlier advice ) of a kind that if it were given after the day the Australian financial services Licence was obtained would be considered to be personal advice; and
(c) the client's relevant personal circumstances in relation to the further advice are not significantly different from the client's investment objectives, financial situation and particular needs that were determined for the earlier advice; and
(d) so far as the basis on which advice is given relates to other matters - the basis on which the further advice is given is not significantly different from the basis on which the earlier advice was given.
(3)
At the same time or as soon as practicable after the further advice is given to the client, the client must be given a statement that contains the information that would, if a Statement of Advice were to be given, be required to be in the Statement by paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case requires, and by section 947D, if applicable.
(3A)
The providing entity must keep a record of the further advice and, in doing so, must comply with any applicable requirements of regulations made for the purposes of this subsection.
Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Note 2: For the client's right to a record of the advice, see subsections 942B(8) and 942C(8) (Financial Services Guides) and section 943N (website disclosure information) of the Act.
Note 3: Subsections 947D(2) and (3) require additional information to be included in the record in certain circumstances.
(5) Second situation: certain basic deposit and other products
The providing entity does not have to give the client a Statement of Advice if the advice relates to any or all of the following:
(a) a basic deposit product;
(b) a facility for making non-cash payments (see section 763D) that is related to a basic deposit product;
(c) a financial product of a kind prescribed by regulations made for the purposes of this paragraph.
(6)
However, if subsection (4) applies and the client is not given a Statement of Advice, the client must instead, when, or as soon as practicable after, the advice is provided, be given the information that would be required to be in the Statement of Advice by paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case requires."
[ CCH Note 1: Sch 2[4] of SLI 2005 No 324 commenced immediately after Sch 1[1] of that instrument. Sch 1[1] commenced on 20 December 2005 and inserted reg 7.7.10AA and reg 7.7.10AB.]
[ CCH Note 2: SLI 2005 No 324, Sch 2[5] contained the following savings provision (which was effective 20 December 2005):
]Savings
Despite the modification to Part 7.7 of the Corporations Act 2001 made by regulation 7.7.10AE, on the commencement of this item, regulation 7.7.10 is taken to have been made for paragraph 946B(5)(c) of that Act, as substituted by the regulation.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provision set out in column 2 of the following table were modified as set out in columns 3 and 4:
Column 1 | Column 2 | Column 3 | Column 4 |
Item | provision of Act | is modified by... | and... |
1 | paragraph (a) of the definition of defective in subsection 952B(1) | omitting "941D(2)" | substituting "941D(2) or paragraph 941C(7A)(c) or" |
2 | subparagraph (a)(iv) of the definition of defective in subsection 952B(1) | omitting "941D(2)" | substituting "941D(2) or paragraph 941C(7A)(c) or" |
3 | paragraph (d) of the definition of disclosure document or statement in subsection 952B(1) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
4 | paragraph 952E(2)(a) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
5 | paragraph 952F(1)(b) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
6 | subparagraph 952F(1)(c)(i) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
7 | paragraph 952G(1)(b) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
8 | subparagraph 952G(1)(c)(i) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
9 | paragraph (a) of the definition of defective in subsection 953A(1) | omitting "941D(2)" | substituting "941D(2) or paragraph 941C(7A)(c) or" |
10 | subparagraph (a)(iv) of the definition of defective in subsection 953A(1) | omitting "941D(2)" | substituting "941D(2) or paragraph 941C(7A)(c) or" |
11 | paragraph (d) of the definition of disclosure document or statement in subsection 953A(1) | omitting "946C(2)" | substituting "946C(2) or paragraph 941C(7A)(c)," |
[ CCH Note: Sch 1, Pt 2[3] of SLI 2005 No 324, commenced immediately after item 4 of Sch 2 of that instrument. Item 4 of Sch 2 inserted reg 7.7.10AC-reg 7.7.10AE.]
7.7.10AF(2)
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 940C(1) were modified by omitting "or a Statement of Advice" and substituting ", a Statement of Advice or a statement referred to in paragraph 941C(7A)(c)".
[ CCH Note: Sch 1, Pt 2[3] of SLI 2005 No 324, commenced immediately after item 4 of Sch 2 of that instrument. Item 4 of Sch 2 inserted reg 7.7.10AC-reg 7.7.10AE.]
7.7.10AF(3)
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 941D(4) were omitted and the following subsection were substituted:
"(4)
The client must then be given:
(a) the statement referred to in paragraph 941C(7A)(c) together with a Product Disclosure Statement as required by paragraph 941C(7A)(b) in accordance with the requirements of subsections 941C(7A) and (7B); or
(b) a Financial Services Guide;within 5 business days after having given the statement referred to in subsection (3), or sooner if practicable."
[ CCH Note: Sch 1, Pt 2[3] of SLI 2005 No 324, commenced immediately after item 4 of Sch 2 of that instrument. Item 4 of Sch 2 inserted reg 7.7.10AC-reg 7.7.10AE.]
7.7.10AF(4)
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the following subsection were inserted at the end of section 941F:
"(2)
If:
(a) a statement referred to in paragraph 941C(7A)(c) is given to the client before the financial service is provided; and
(b) the following conditions are satisfied:
(i) there is a change in circumstances before the service is provided and the statement does not contain the information it would be required to contain if it were given to a person immediately after that change;
(ii) the fact that the statement does not contain the up to date information is materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to proceed to be provided with the financial service;the providing entity must, before the service is provided, give the client another statement of the kind referred to in paragraph 941C(7A)(c) that contains the up to date information before the service is provided."
[ CCH Note: Sch 1, Pt 2[3] of SLI 2005 No 324, commenced immediately after item 4 of Sch 2 of that instrument. Item 4 of Sch 2 inserted reg 7.7.10AC-reg 7.7.10AE.]
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provisions set out in column 2 of the following table were modified as set out in columns 3 and 4:
Column 1 | Column 2 | Column 3 | Column 4 |
Item | provision of Act | is modified by... | and... |
1 | paragraph (b) of the definition of defective in subsection 952B(1) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
2 | paragraph 952E(2)(a) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
3 | paragraph 952F(1)(b) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
4 | subparagraph 952F(1)(c)(i) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
5 | paragraph 952G(1)(b) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
6 | subparagraph 952G(1)(c)(i) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
7 | paragraph (b) of the definition of defective in subsection 953A(1) | omitting "Statement of Advice" | substituting "Statement of Advice, a record of advice required by subsection 946B(3A)," |
[ CCH Note: Sch 2[6] of SLI 2005 No 324 commenced immediately after Sch 1[3] of that instrument. Sch 1[3] inserted reg 7.7.10AF.]
7.7.10AG(2)
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the provisions set out in column 2 of the following table were modified as set out in column 3:
Column 1 | Column 2 | Column 3 |
Item | provision of Act | is modified by... |
1 | the definition of defective in subsection 952B(1) | inserting after subparagraph 952B(1)(b)(ii): |
(iiA) | if it is a record of advice required by subsection 946B(3A) - there is an omission from the record of advice of material required by subsection 946B(3A) or section 947D; or | |
2 | the definition of disclosure document or statement in subsection 952B(1) | inserting after paragraph (c) of the definition the following paragraph: |
(ca) | a record of advice required by subsection 946B(3A); or | |
3 | the definition of defective in subsection 953A(1) | inserting after subparagraph 952B(1)(b)(ii) the following paragraph: |
(iiA) | if it is a record of advice required by subsection 946B(3A) - there is an omission from the record of advice of material required by subsection 946B(3A) or section 947D; or | |
4 | the definition of disclosure document or statement in subsection 953A(1) | inserting after paragraph (c) of the definition the following paragraph: |
(ca) | a record of advice required by subsection 946B(3A); or |
[ CCH Note: Sch 2[6] of SLI 2005 No 324 commenced immediately after Sch 1[3] of that instrument. Sch 1[3] inserted reg 7.7.10AF.]
REGULATION 7.7.10AH 7.7.10AH BUSINESS DAYS
(Repealed by FRLI No F2022C00319, Sch 1[17] (effective 23 February 2022).) REGULATION 7.7.10AI 7.7.10AI OBLIGATION TO WARN CLIENT THAT ADVICE DOES NOT TAKE ACCOUNT OF CLIENT'S OBJECTIVES, FINANCIAL SITUATION OR NEEDS - CARBON UNITS, AUSTRALIAN CARBON CREDIT UNITS AND ELIGIBLE INTERNATIONAL EMISSIONS UNITS
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies in relation to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit as if paragraph 949A(2)(c) read as follows:
"(c) if the advice relates to the acquisition, or possibleacquisition, of a carbon unit, the providing entity must:
(i) provide the client with the address of the website of the Clean Energy Regulator mentioned in section 202 of the Clean Energy Act 2011; and
(ii) inform the client that the client should consider each statement mentioned in section 202 of the Clean Energy Act 2011 before making any decision about whether to acquire the financial product; and
(d) if the advice relates to the acquisition, or possible acquisition, of an Australian carbon credit unit, the providing entity must:
(i) provide the client with the address of the website of the Clean Energy Regulator mentioned in section 162 of the Carbon Credits (Carbon Farming Initiative) Act 2011; and
(ii) inform the client that the client should consider each statement mentioned in section 162 of that Act before making any decision about whether to acquire the financial product; and
(e) if the advice relates to the acquisition, or possible acquisition, of an eligible international emissions unit, the providing entity must:
(i) provide the client with the address of the website of the Clean Energy Regulator mentioned in section 61 of the Australian National Registry of Emissions Units Act 2011; and
(ii) inform the client that the client should consider each statement mentioned in section 61 of the Australian National Registry of Emissions Units Act 2011 before making any decision about whether to acquire the financial product.".
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947B(2)(h) of the Act were modified to read as follows:
7.7.10A(2) [Time to provide information]
"(h) unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (d) and subparagraph (e)(i) must be stated as amounts in dollars.".
For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947B(2)(h) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.
7.7.10A(3) [Modification]For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947C(2)(i) of the Act were modified to read as follows:
7.7.10A(4) [Time to provide information]
"(i) unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (e) and subparagraph (f)(i) must be stated as amounts in dollars.".
For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947C(2)(i) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.
7.7.10A(5) [Modification]For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if paragraph 947D(2)(d) of the Act were modified to read as follows:
7.7.10A(6) [Time to provide information]
"(d) unless in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraph (a) must be stated as amounts in dollars."
For paragraph 951C(1)(a) of the Act, a providing entity does not have to provide the information mentioned in paragraph 947D(2)(d) of the Act, in the form required by that paragraph, in a Statement of Advice prepared before 1 January 2005.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the following definition were inserted in section 9:
"further advice
means advice to which subsection 946B(2) or (2A) applies."
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if the definition of "further market-related advice" were omitted from section 9.
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947D(2) of the Act were modified by omitting "Statement of Advice" and substituting "Statement of Advice or the record of advice under subsection 946B(3A), as the case requires,".
For paragraph 951C(1)(c) of the Act, Part 7.7 of the Act applies as if subsection 947D(3) of the Act were modified by omitting "Statement of Advice" and substituting "Statement of Advice or the record of advice under subsection 946B(3A), as the case requires".
For paragraph 947B(2)(g) of the Act, a Statement of Advice given by a financial services licensee must include information about all remuneration (including commission) and other benefits that a person ( person 1 ) has received, or is to receive, for referring another person to the financial services licensee.
For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947B(2)(d) or subparagraph 947B(2)(e)(i) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947B(2)(d) or subparagraph 947B(2)(e)(i) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).
A determination under subregulation (2) or (3) must be:
(a) in writing; and
(b) published in the Gazette.
The statements and descriptions must be presented in a manner that is easy for the client to understand.
For paragraph 947C(2)(h) of the Act, a providing entity that is an authorised representative of a financial services licensee must include the licensee's licence number in a Statement of Advice given to a client.
For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.7.11B(2) [Method of calculation]For paragraph 947B(2)(h) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).
7.7.11B(3) [Publication]A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 947C(2)(h) of the Act, a Statement of Advice given by an authorised representative of a financial services licensee must include information about all remuneration (including commission) and other benefits that a person ( person 1 ) has received, or is to receive, for referring another person to the authorised representative or the financial services licensee.
For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947C(2)(e) or subparagraph 947C(2)(f)(i) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947C(2)(e) or subparagraph 947C(2)(f)(i) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).
A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
[ CCH Note: The reference to subregulation (1) or (2) is a legislative oversight. The reference should be to subregulation (2) or (3).]
The statements and descriptions must be presented in a manner that is easy for the client to understand.
For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.7.13(2) [Method of calculation]For paragraph 947C(2)(i) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the method of calculating the remuneration, benefits or interests (including worked dollar examples, unless that is inappropriate).
7.7.13(3) [Publication]A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947D(2)(a) as an amount in dollars, the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.7.13A(2) [Method of calculation]For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 947D(2)(a) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the charge or benefit (including worked dollar examples, unless that is inappropriate).
7.7.13A(3) [Publication]A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.7.13B(2) [Method of calculation]For paragraph 947D(2)(d) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:
(a) would impose an unreasonable burden on a providing entity, or a class of providing entities; or
(b) would impose an unreasonable burden on a providing entity, or a class of providing entities, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the method of calculating the charge or benefit (including worked dollar examples, unless that is inappropriate).
7.7.13B(3) [Publication]A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 926B(1)(a) of the Act, a providing entity that is giving general advice in relation to a financial product for which, under Part 7.9 of the Act, a Product Disclosure Statement is not required, does not have to give the warning in paragraph 949A(2)(c) of the Act.
For paragraph 949A(1)(c) of the Act, the provision of general advice in the circumstances set out in subregulation 7.7.02(5A) is specified.
For paragraph 949B(1)(e) of the Act, a person must give a wholesale client the information set out in subregulation (3) for a financial service provided by that person to the wholesale client if: (a) the service relates to an insurance contract that, because of subparagraph 8(2)(b)(ii) or (iii) of the Insurance Regulations 2024, may be issued by an unauthorised foreign insurer (the insurer ); and (b) either:
(i) the person would be required to give a Statement of Advice if the service were provided to a retail client; or
(ii) the contract is offered or issued to the wholesale client.
Note: Subparagraphs 8(2)(b)(ii) and (iii) of the Insurance Regulations 2024 apply in relation to insurance contracts for:
7.7.20A(2)
(Repealed by FRLI No F2024L00199, Sch 2[8] (effective 1 March 2024).)
7.7.20A(3)
The information is: (a) a statement that the insurer is not authorised under the Insurance Act 1973 to conduct insurance business in Australia; and (b) a statement that the insurer is not subject to the provisions of the Insurance Act 1973, which establishes a system of financial supervision of general insurers in Australia; and (c) a statement that the wholesale client should consider whether to obtain further information, including:
(i) the country in which the insurer is incorporated, and whether the country has a system of financial supervision of insurers; and
(ii) the paid up capital of the insurer; and
(d) a statement that the insurer cannot be a declared general insurer for the purpose of Part VC of the Insurance Act 1973, and, if the insurer becomes insolvent, the wholesale client will not be covered by the financial claims scheme provided under Part VC of that Act.
(iii) which country's laws will determine disputes in relation to the financial product; and
For paragraph 951C(1)(a) of the Act, Part 7.7 of the Act does not apply to a financial services licensee or an authorised representative in respect of financial services provided to retail clients who are not in this jurisdiction.
Note: Regulation 7.9.98 also contains exemptions from the operation of Part 7.7 of the Act.
Note: Regulations 7.7A.01 to 7.7A.04 are reserved for future use.
This regulation:
(a) is made for paragraph 961B(5)(b) of the Act; and
(b) prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e), (f) and (g) of the Act in relation to advice that relates to a basic banking product or general insurance product.
7.7A.05(2)
The provider is not required to prove that he or she has taken the steps if:
(a) the provider is:
(i) an agent or employee of an Australian ADI; or
(ii) otherwise acting by arrangement with an Australian ADI under the name of the Australian ADI; and
(b) the subject matter of the advice sought by the client relates only to the following:
(i) a basic banking product;
(ii) a general insurance product;
(iii) consumer credit insurance;
(iv) a combination of any of those products.
This regulation:
(a) is made for paragraph 961B(5)(b) of the Act; and
(b) prescribes a circumstance in which the provider is not required to prove that he or she has taken the steps mentioned in paragraphs 961B(2)(d), (e), (f) and (g) of the Act.
7.7A.06(2)
The provider is not required to prove that he or she has taken the steps to the extent that the subject matter of the advice sought by the client is a general insurance product.
(Repealed by FRLI No F2023L01458, Sch 1[196] (effective 1 November 2023).) Division 3 - Charging ongoing fees to clients
This regulation is made for subsection 962A(5) of the Act.
7.7A.10(2)
An arrangement of a kind mentioned in subsection 962A(1) or (2) of the Act is not an ongoing fee arrangement to the extent that the arrangement relates to a product fee mentioned in subregulation (3).
7.7A.10(3)
Each of the following is a product fee:
(a) a fee for the administration, management or operation of a financial product that is charged to a retail client to which the product is issued by the issuer of the product;
Example 1:
A monthly account keeping fee charged by the provider of a basic deposit product.
Example 2:
A monthly administration or investment fee charged by a trustee of a superannuation fund or a responsible entity of a registered scheme.
(b) a fee that:
(i) is a cost of providing financial product advice; and
(ii) under section 99F of the Superannuation Industry (Supervision) Act 1993, is not prohibited or prevented from being passed on to a member of a regulated superannuation fund.
(Repealed by FRLI No F2024L01152, Sch 1[4] (effective 17 September 2024).) REGULATION 7.7A.11AA COMPLIANCE RECORDS REQUIRED TO BE KEPT BY FEE RECIPIENTS 7.7A.11AA(1)
This regulation is made for the purposes of section 962X of the Act.
7.7A.11AA(2)
A fee recipient must keep the following records in relation to an ongoing fee arrangement the fee recipient has with the client:
(a) (Repealed)
(b) (Repealed) (c) if the client gives any of the following notifications to the fee recipient - the notification and the date on which the notification was given:
(i) a notification of an election to renew the ongoing fee arrangement;
(ii) a notification of an election not to renew the ongoing fee arrangement;
(ca) each consent given by the client to enter into or renew an ongoing fee arrangement for the purposes of section 962G of the Act; (cb) the matters disclosed to the client under subsection 962G(2) of the Act; (d) if the ongoing fee arrangement has terminated - the date on which the arrangement terminated and the basis on which the arrangement terminated.
(iii) a notification terminating the ongoing fee arrangement;
7.7A.11AA(3)
A fee recipient must also keep the following records in relation to an ongoing fee arrangement: (a) each consent for deductions relating to the ongoing fee arrangement given to the fee recipient for the purposes of section 962R or 962S of the Act; (b) the date on which each such consent was given; (ba) the matters set out in section 962T of the Act; (c) each notice given to the fee recipient under subsection 962U(1) of the Act withdrawing or varying such consent; (d) the date on which each such notice was given; (e) each confirmation of receipt of such notice given by the fee recipient under subsection 962U(2) of the Act; (f) each of the following communications in relation to the consent referred to in paragraph (a), and the date on which the communication occurred:
(i) giving a copy of the consent as required under paragraph 962S(3)(c) of the Act;
(ii) giving a copy of a notice withdrawing or varying the consent as required under paragraph 962U(2)(b) of the Act;
(g) if the fee recipient arranges with another person (the account provider ) for deductions relating to the ongoing fee arrangement to be made, as referred to in paragraph 962S(1)(d) of the Act - the details of the arrangement with the account provider.
(iii) giving written notice of the cessation of the consent under subsection 962V(2) of the Act;
This Subdivision:
(a) is made for the purposes of section 963AA of the Act; and
(b) prescribes circumstances, in addition to those set out in section 963A, in which a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product, or life risk insurance products, is conflicted remuneration.
Giving information in relation to life risk insurance products
7.7A.11B(1)
A benefit given to a financial services licensee, or a representative of a financial services licensee, is conflicted remuneration if:
(a) the benefit is given to the licensee or representative in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products; and
(b) access to the benefit, or the value of the benefit, is dependent on:
(i) the value of a life risk insurance product, or life risk insurance products, subsequently acquired by a person or persons to whom, or in relation to whom, the information is given; or
(ii) the value of a life risk insurance product, or life risk insurance products, subsequently varied that are held by a person or persons to whom, or in relation to whom, the information is given; or
(iii) the number of life risk insurance products subsequently acquired by a person or persons to whom, or in relation to whom, the information is given; or
(iv) the number of life risk insurance products subsequently varied that are held by a person or persons to whom, or in relation to whom, the information is given; and
(c) the information is not given in the course of, or as a result of, the licensee or representative, or an associate of the licensee or representative, providing financial product advice; and
(d) if the information is given in the course of providing a financial product - the information is not given in the course of providing that product to a person as a wholesale client, or to persons as wholesale clients.
Dealing in life risk insurance products
7.7A.11B(2)
A benefit given to a financial services licensee, or a representative of a financial services licensee, is conflicted remuneration if:
(a) the benefit is given to the licensee or representative in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients; and
(b) access to the benefit, or the value of the benefit, is dependent on:
(i) the value of the life risk insurance product to which the dealing relates, or the life risk insurance products to which the dealings relate; or
(ii) the number of life risk insurance products to which the dealings relate; and
(c) the dealing, or dealings, do not occur in the course of, or as a result of, the licensee or representative, or an associate of the licensee or representative:
(i) providing financial product advice; or
(ii) giving information in circumstances in which the benefit would be conflicted remuneration under subregulation (1).
Monetary benefits
7.7A.11C(1)
Despite subregulation 7.7A.11B(1), a monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products, is not conflicted remuneration if: (a) because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:
(i) whether the licensee or representative gives the information to the person or persons; or
(b) none of the products is a life risk insurance product covered by subsection 963B(2) of the Act and either:
(ii) the way in which the licensee or representative presents the information in giving it to the person or persons; or
(i) the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or
(c) the benefit is given to the licensee or representative in relation to consumer credit insurance; or
(ii) the benefit ratio requirements and clawback requirements are satisfied in relation to the benefit; or
(d) (Repealed) (e) the benefit is given to the licensee as part of the purchase or sale of all or part of the licensee's business, or to the representative as part of the purchase or sale of all or part of the representative's business.
Non-monetary benefits
7.7A.11C(2)
Despite subregulation 7.7A.11B(1), a non-monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to information given to a person, or persons, in relation to a life risk insurance product, or life risk insurance products, is not conflicted remuneration if: (a) because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:
(i) whether the licensee or representative gives the information to the person or persons; or
(b) each of the following is satisfied:
(ii) the way in which the licensee or representative presents the information in giving it to the person or persons; or
(i) the licensee or representative is the final recipient of the benefit, or all or part of the benefit passes through the licensee or representative to another financial services licensee, or representative of a financial services licensee, who is the final recipient of the benefit;
(ii) the value of the benefit in the hands of each final recipient is less than $300;
(c) each of the following is satisfied:
(iii) identical or similar benefits are not given on a frequent or regular basis; or
(i) the benefit has a genuine education or training purpose;
(ii) the benefit is relevant to giving information in relation to life risk insurance products;
(iii) if education or training is provided through an education or training course (within the meaning of regulation 7.7A.14) - subregulations 7.7A.14(3) and (4) are satisfied in relation to the education or training;
(d) each of the following is satisfied:
(iv) if education or training is provided other than through an education or training course - the dominant purpose of the benefit is education and training; or
(i) the benefit is the provision of information technology software or support;
(ii) the benefit is relevant to giving information in relation to a life risk insurance product, or life risk insurance products.
(e) (Repealed)
Monetary benefits
7.7A.11D(1)
Despite subregulation 7.7A.11B(2), a monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients, is not conflicted remuneration if: (a) because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:
(i) whether the licensee or representative deals in the life risk insurance product, or life risk insurance products; or
(b) none of the products is a life risk insurance product covered by subsection 963B(2) of the Act and either:
(ii) the way in which the licensee or representative deals in the life risk insurance product, or life risk insurance products; or
(i) the benefit ratio for the benefit is the same for the year in which the product or products are issued as it is for each year in which the product or products are continued; or
(c) the benefit is given to the licensee or representative in relation to consumer credit insurance; or
(ii) the benefit ratio requirements and clawback requirements are satisfied in relation to the benefit; or
(d) (Repealed) (e) the benefit is paid to the licensee as part of the purchase or sale of all or part of the licensee's business, or to the representative as part of the purchase or sale of all or part of the representative's business.
Non-monetary benefits
7.7A.11D(2)
Despite subregulation 7.7A.11B(2), a non-monetary benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a dealing in a life risk insurance product with a person as a retail client, or dealings in life risk insurance products with persons as retail clients, is not conflicted remuneration if: (a) because of the nature of the benefit or the circumstances in which it is given, the benefit could not reasonably be expected to influence:
(i) whether the licensee or representative deals in the life risk insurance product, or life risk insurance products; or
(b) each of the following is satisfied:
(ii) the way in which the licensee or representative deals in the life risk insurance product, or life risk insurance products; or
(i) the licensee or representative is the final recipient of the benefit, or all or part of the benefit passes through the licensee or representative to another financial services licensee, or representative of a financial services licensee, who is the final recipient of the benefit;
(ii) the value of the benefit in the hands of each final recipient is less than $300;
(c) each of the following is satisfied:
(iii) identical or similar benefits are not given on a frequent or regular basis; or
(i) the benefit has a genuine education or training purpose;
(ii) the benefit is relevant to dealing in life risk insurance products;
(iii) if the education or training is provided through an education or training course (within the meaning of regulation 7.7A.14) - subregulations 7.7A.14(3) and (4) are satisfied in relation to the education or training;
(d) each of the following is satisfied:
(iv) if the education or training is provided other than through an education or training course - the dominant purpose of the benefit is education and training; or
(i) the benefit is the provision of information technology software or support;
(ii) the benefit is relevant to dealing in life risk insurance products.
(e) (Repealed)
This subdivision: (a) is made for paragraph 963B(1)(e) of the Act; and (b) prescribes the circumstances in which a monetary benefit given to a financial services licensee, or representative of a financial services licensee, (the provider ) who provides financial product advice to persons as retail clients is not conflicted remuneration.
(Repealed by FRLI No F2017L00212, s 4, Sch 1[3] (effective 1 January 2018).) REGULATION 7.7A.12B STAMPING FEES 7.7A.12B(1)
A monetary benefit is not conflicted remuneration if:
(a) it is a stamping fee given to facilitate an approved capital raising; and
(b) in a case where the benefit is given on or after 1 July 2020 - the approved capital raising does not relate to an approved financial product that consists of:
(i) interests, or proposed interests, in a company (other than an infrastructure entity) that is listed, or proposed to be listed, and whose main purpose is investing in passive investments; or
(ii) interests, or proposed interests, in a managed investment scheme (other than a real estate investment trust or an infrastructure entity) that is listed or proposed to be listed.
7.7A.12B(2)
In this regulation:
approved capital raising
means:
(a) an offer to issue an approved financial product; or
(b) an offer to sell an approved financial product;
where the purpose of the offer is to raise funds for the person issuing or selling the approved financial product.
approved financial product
means:
(a) debentures, stocks or bonds that are, or are proposed to be, issued by a government; or
(b) shares in, or debentures of, a body that are, or are proposed to be, quoted on a prescribed financial market; or
(c) interests in a managed investment scheme that are, or are proposed to be, quoted on a prescribed financial market; or
(d) a right to acquire, by way of issue, shares, debentures or interests mentioned in paragraph (b) or (c).
infrastructure assets
means any of the following:
(a) airports;
(b) electricity generation, transmission or distribution facilities;
(c) gas transmission or distribution facilities;
(d) hospitals;
(e) ports;
(f) prisons;
(g) railways;
(h) roads;
(i) sewerage facilities;
(j) telecommunication facilities;
(k) water supply facilities.
infrastructure entity
means a company or managed investment scheme whose main purpose is to operate or invest in infrastructure assets.
interest
, in a company or managed investment scheme, does not include a stapled real estate or infrastructure interest in the company or managed investment scheme.
passive investments
, in relation to a company, means any of the following:
(a) shares, units, options, rights or similar interests;
(b) financial instruments (such as loans, debts, debentures, bonds, promissory notes, futures contracts, forward contracts, currency swap contracts and a right or option in respect of a share, security, loan or contract);
(c) an asset whose main use by the company in the course of carrying on its business is to derive interest, an annuity, rent, royalties or foreign exchange gains unless:
(i) the asset is an intangible asset and has been substantially developed, altered or improved by the company so that its market value has been substantially enhanced; or
(ii) its main use for deriving rent was only temporary;
(d) goodwill.
real estate investment trust
means a managed investment scheme whose main purpose is to invest in real property.
stamping fee
means a fee, or a part of a fee:
(a) that a person, including an issuer of a financial product, or a person acting on behalf of the issuer, pays either directly or indirectly to a provider in connection with:
(i) an offer by the issuer to issue the financial product; or
(ii) an invitation by the issuer for an application to issue the financial product; or
(b) that a person, including a holder of a financial product, or person acting on behalf of the holder, pays either directly or indirectly to a provider in connection with:
(i) an offer by the holder to sell the financial product; or
(ii) an invitation by the holder for an application to sell the financial product.
stapled real estate or infrastructure interest
: an interest is a
stapled real estate or infrastructure interest
if:
(a) the interest is an interest in a company or managed investment scheme; and
(b) the interest can only be transferred together with one or more other interests in one or more companies, managed investment schemes or other entities; and
(c) the companies, managed investment schemes or other entitiesmentioned in paragraphs (a) and (b) are engaging in activities together for the main purpose of:
(i) investing in real property; or
(ii) operating or investing in infrastructure assets.
A monetary benefit is not conflicted remuneration if the benefit is given for advice that relates to an interest in a time-sharing scheme.
A monetary benefit is not conflicted remuneration if:
(a) the benefit consists of a percentage, of no more than 100%, of a brokerage fee that is given to a provider who is a trading participant of a prescribed financial market or the market known as the ASX24; and
(b) the provider, directly or indirectly, gives the benefit to a representative of the provider.
Note 1: For prescribed financial market , see regulation 1.0.02A.
Note 2: The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.
7.7A.12D(1A)
A monetary benefit is not conflicted remuneration if:
(a) the benefit is a fee paid between a financial services licensee that is a trading participant of a prescribed financial market and a financial services licensee that is not a trading participant in respect of dealings undertaken by a retail client through a specified service; and
(b) each of those trades is executed by the trading participant on behalf of the retail client; and
(c) the fee is a percentage, not exceeding 100%, of a brokerage fee paid directly or indirectly by the retail client; and
(d) no portion of the benefit is paid to a person other than the trading participant or the licensee that is not a trading participant.
7.7A.12D(2)
In this regulation:
brokerage fee
means a fee that a retail client pays to a provider in relation to a transaction in which the provider, on behalf of the retail client, deals in a financial product that is traded on:
(a) a prescribed financial market; or
(aa) the market known as the ASX24; or
(b) a prescribed foreign financial market.
Note 1: Regulations 7.7A.17 and 7.7A.18 relate to exemptions in relation to the charging of asset-based fees on borrowed amounts.
Note 2: The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.
prescribed foreign financial market
means a financial market that:
(a) has its principal place of business in a foreign country; and
(b) has been authorised by an authority in that country that is a signatory to the International Organization of Securities Commissions' Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information of May 2002.
specified service
means a service which:
(a) is provided for retail clients under the name or brand name of:
(i) the financial services licensee that is not a trading participant; or
(ii) the trading participant and the financial services licensee that is not a trading participant; and
(b) relates to the dealing, on behalf of the retail client, in a financial product traded on:
(i) a prescribed financial market; or
(ii) a prescribed foreign financial market; and
(c) is provided in either or both of the following ways:
(i) by direct electronic access;
(ii) by telephone, but only if:
(A) direct electronic access is not available for a temporary period, or the retail client expresses a preference that the service be provided by telephone; and
(B) neither the trading participant nor the financial services licensee that is not a trading participant is to provide financial product advice to the retail client by telephone in relation to the dealing undertaken on the retail client's behalf; and
(d) is provided in circumstances in which neither the trading participant nor the financial services licensee that is not a trading participant provides personal advice to the retail client in relation to the dealing undertaken on the retail client's behalf.
trading participant
of a prescribed financial market or the market known as the ASX24 means a person who:
(a) is a participant of the market admitted under the market's operating rules; and
(b) is allowed, under the market's operating rules, to deal in one or more of the financial products that are able to be traded on the market.
Note: The ASX24 is the financial market operated by Australian Securities Exchange Limited that was formerly known as the Sydney Futures Exchange.
(Repealed by FRLI No F2024L01152, Sch 1[54] (effective 17 September 2024).) REGULATION 7.7A.12EA 7.7A.12EA APPLICATION OF BAN ON CONFLICTED REMUNERATION - PURCHASE OR SALE OF FINANCIAL ADVICE BUSINESS
A monetary benefit is not conflicted remuneration to the extent that:
(a) the benefit is given to a financial services licensee or a representative of the licensee; and
(b) the benefit is paid as part of:
(i) the purchase or sale of all or part of the licensee's financial advice business; or
(ii) the purchase or sale of all or part of the representative's financial advice business; and
(c) the price is calculated using a formula:
(i) which is based, in whole or in part, on the number or value of all or part of the financial products held by the licensee's clients or the representative's clients; and
(ii) in which the weighting attributed to the financial products issued by the licensee or a related body corporate or other person is the same as the weighting attributed to other similar financial products.
For the purposes of subparagraph 963BA(3)(a)(i) of the Act, the prescribed circumstances are that the life risk insurance product, or the relevant one of the life risk insurance products, is cancelled or is not continued because:
(a) the person insured dies; or
(b) the person insured commits an act of self-harm; or
(c) the person insured reaches an age that, under the terms of the life risk insurance product under which the person is insured, has the result that the product is cancelled or is not continued; or
(d) an administrative error has been made.
For the purposes of subparagraph 963BA(3)(a)(ii) of the Act, the prescribed circumstances are that the policy cost for the life risk insurance product, or the relevant one of the life risk insurance products, is reduced because:
(a) the person who issued the product and the person to whom the product is issued agree that there is a reduction in a risk in relation to a person insured under the product; or
(b) the person who issued the product reduces the premium for the product without changing the risks covered, or the benefits available, in relation to any person insured under the product; or
(c) each of the following is satisfied:
(i) a rebate is paid or a discount applied;
(ii) it is reasonable in all the circumstances to conclude that the rebate is paid or discount applied to induce the person to whom the product is issued to acquire, or to continue to hold, the product; or
(d) a benefit payable in relation to a person insured under the product has been, or is being, paid; or
(e) an administrative error has been made.
This subdivision: (a) is made for paragraphs 963B(1)(e) and 963C(1)(f) of the Act; and (b) prescribes the circumstances in which a monetary or non-monetary benefit given to a financial services licensee, or representative of a financial services licensee, (the provider ) who provides financial product advice to persons as retail clients is not conflicted remuneration.
A benefit is not conflicted remuneration if the benefit is given in relation to a general insurance product.
Note: If a benefit is given in relation to a financial product that consists of both general insurance and life risk insurance, the benefit is to be treated as relating to a general insurance product and a life risk insurance product.
[ CCH Note 1: Reg 7.7A.12G will be amended by FRLI No F2024L01152, Sch 1[73], by inserting "(1)" before "A benefit", (effective 17 September 2024).]
[ CCH Note 2: Reg 7.7A.12G(2) will be inserted by FRLI No F2024L01152, Sch 1[74], (effective 17 September 2024). Reg 7.7A.12G(2) will read:
]
(2)
Section 963BB of the Act (about informed consent for insurance commissions) applies in relation to subregulation (1) in the same way it applies in relation to paragraph 963B(1)(a) of the Act.
(Repealed by FRLI No F2024L01152, Sch 1[56] (effective 17 September 2024).) REGULATION 7.7A.12I MIXED BENEFITS 7.7A.12I(1)
A benefit that is given in one or more of the circumstances set out in the prescribed provisions is not conflicted remuneration even if: (a) the benefit also relates to other activities, but only to the extent that the part of the benefit that relates to the other activities is not conflicted remuneration; or (b) the provider, at the same time, provides other services (whether or not financial services).
7.7A.12I(2)
However, subregulation (1) does not apply to the extent that the prescribed provisions under which the benefit is given provide that: (a) the benefit may only relate to particular financial products or services; or (b) the provider must not receive the benefit if the provider is, at the same time, providing other specified financial services.
7.7A.12I(3)
In this regulation:
(a) paragraph 963B(1)(a), (b) or (ba) of the Act, or a regulation made under paragraph 963B(1)(e) of the Act; or
(b) paragraph 963C(1)(a), (b), (c) or (d) of the Act, or a regulation made under paragraph 963C(1)(f) of the Act.
For subparagraph 963C(1)(b)(i) of the Act, the amount is $300 for each financial services licensee, or each representative of a financial services licensee, who is the final recipient of a non-monetary benefit.
Note: Under paragraph 963C(1)(b) of the Act, if a non-monetary benefit is given to a financial services licensee, or a representative of a financial services licensee, who provides financial advice, is less than the prescribed amount and identical or similar benefits are not given on a frequent or regular basis, the benefit is not conflicted remuneration.
This regulation is made for subparagraph 963C(1)(c)(iii) of the Act.
7.7A.14(2)
This regulation sets out requirements if a non-monetary benefit to which subparagraphs 963C(1)(c)(i) and (ii) of the Act apply is the provision of an education or training course to a financial services licensee, or a representative of a financial services licensee.
Note: Under paragraph 963C(1)(c) of the Act, if certain non-monetary benefits have a genuine education or training purpose, are relevant to the provision of financial product advice to retail clients and comply with the regulations, the benefits are not conflicted remuneration.
7.7A.14(3)
Education or training activities for the professional development of the participants in the course must take up at least: (a) 75% of the time spent on the course; or (b) 6 hours a day;
whichever is the lesser.
7.7A.14(4)
The participant, or the participant's employer or licensee, must pay for the costs of: (a) travel and accommodation relating to the course; and (b) events and functions held in conjunction with the course.
Example
The cost of day trips or dinners.
7.7A.14(5)
In this regulation:
education or training course
includes a conference or seminar.
This regulation is made for subparagraph 963C(1)(c)(iii) of the Act.
7.7A.15(2)
This regulation sets out a requirement if a non-monetary benefit to which subparagraphs 963C(1)(c)(i) and (ii) of the Act apply is not the provision of an education or training course to which regulation 7.7A.13 applies.
Note: Under paragraph 963C(1)(c) of the Act, if certain non-monetary benefits have a genuine education or training purpose, are relevant to the provision of financial product advice to retail clients and comply with the regulations, the benefits are not conflicted remuneration.
7.7A.15(3)
The dominant purpose of the non-monetary benefit must be education and training.
This regulation: (a) is made for paragraph 963C(1)(f) of the Act; and (b) prescribes the circumstances in which a non-monetary benefit given to a financial services licensee, or representative of a financial services licensee, who provides financial product advice to persons as retail clients is not conflicted remuneration.
7.7A.15A(2)
The benefit is not conflicted remuneration if the benefit: (a) has a genuine education or training purpose; and (b) is relevant to the carrying on of a financial services business; and (c) complies with regulations made for the purposes of subparagraph 963C(1)(c)(iii) of the Act.
This Subdivision is made for the purposes of subsection 963N(1) of the Act.
7.7A.15AJ(2)
This Subdivision provides for a scheme under which a person (the covered person ) covered by section 963M of the Act in relation to conflicted remuneration must pay amounts, or provide monetary benefits, based on that conflicted remuneration, to product holders mentioned in section 963N of the Act.
The covered person must pay amounts, or provide monetary benefits, to the product holders no later than 1 year after the day by which the covered person is legally obliged (disregarding Subdivision C of Division 4 of Part 7.7A of the Act) to give the conflicted remuneration to another person (see paragraph 963M(1)(a) of the Act).
7.7A.15AK(2)
The amounts paid, or the amounts of the monetary benefit provided, to the product holders under subregulation (1) must be amounts that are just and equitable in the circumstances.
7.7A.15AK(3)
For the purposes of subregulation (2), in determining whether an amount is just and equitable in the circumstances, take account of the following matters: (a) the amount of the conflicted remuneration; (b) the amount invested by each product holder in the financial products mentioned in subsection 963N(2) of the Act; (c) the structure of the fees (if any) that the product holders have paid in respect of those financial products; (d) the extent to which the sum of the amounts to be paid, and the amount of the monetary benefits to be provided, to the product holders under subregulation (2) equals the amount of, or the present value of, the conflicted remuneration; (e) any other relevant matter.
7.7A.15AK(4)
However, for the purposes of subregulation (2), in determining whether an amount is just and equitable in the circumstances, do not take account of the costs of the covered person in paying the amounts or providing the monetary benefits.
In this Subdivision:
amending Act
means the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017.
commencement day
means the day on which Schedule 1 to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 commences.
This regulation is made for the purposes of subsection 1549B(3) of the Act.
7.7A.16H(2)
The amendments made by Schedule 1 to the amending Act do not apply to a benefit given to a financial services licensee, or a representative of a financial services licensee, in relation to a life risk insurance product issued to a person on or after the commencement day (the post-commencement product ) if:
(a) the person held another life risk insurance product immediately before the commencement day (the pre-commencement product ); and
(b) either:
(i) the person acquires the post-commencement product by exercising an option given to the person under the pre-commencement product; or
(ii) the person acquires the post-commencement product because the pre-commencement product was cancelled due to an administrative error.
For subsection 964D(4) of the Act, a circumstance in which subsections 964D(1) and (2) of the Act do not apply is that the asset-based fee being charged is a brokerage fee within the meaning of regulation 7.7A.12D.
For subsection 964E(3) of the Act, a circumstance in which subsection 964E(1) of the Act does not apply is that the asset-based fee being charged is a brokerage fee within the meaning of regulation 7.7A.12D.
For paragraph 1368(d) of the Act, Part 7.7A of the Act does not have effect in relation to a financial services licensee or an authorised representative in respect of financial services provided to retail clients who are not in this jurisdiction.
For the purposes of paragraph 981A(4)(a) of the Act, money paid as mentioned in subsection 981A(1) of the Act is exempt from Subdivision A of Division 2 of Part 7.8 of the Act at a time if:
(a) at that time the licensee has the client's written agreement to the money being dealt with other than in accordance with that Subdivision; and
Note 1: It is not necessary for the agreement to mention that Subdivision explicitly.
Note 2: If the licensee obtains the agreement after the money is paid, that Subdivision ceases to apply to the money when the licensee obtains the agreement.
(b) either:
(i) the financial service referred to in subparagraph 981A(1)(a)(i) of the Act is or relates to a dealing in a derivative; or
(ii) the financial product referred to in subparagraph 981A(1)(a)(ii) of the Act is a derivative; and
(c) the entry into of the derivative was not or will not be cleared through a clearing and settlement facility; and
(d) the financial service or product would have been provided to the client as a wholesale client if:
(i) the service or product were provided to the client when the money was paid; and
(ii) section 761GA of the Act (about sophisticated investors) did not apply.
For subparagraph 981B(1)(a)(i) of the Act, the reference in that subparagraph to an account with an Australian ADI does not prevent a financial services licensee that is an ADI from paying money into an account held by itself.
For subparagraph 981B(1)(a)(ii) of the Act, the following accounts are prescribed:
(a) an account with an approved foreign bank;
(b) a cash management trust.
For subparagraph 981B(1)(b)(iv) of the Act, if, in accordance with an agreement mentioned in paragraph 7.8.02(3)(a), a financial services licensee is required to pay an amount mentioned in subparagraph 7.8.02(3)(a)(iv), that amount is money which must be paid into an account to which that subparagraph applies.
For subparagraph 981B(1)(b)(iv) of theAct:
(a) money paid to a financial services licensee:
(i) from or on behalf or [sic] an insured or intending insured for or on account of an insurer; and
is money which may be paid into an account to which that subparagraph applies; and
(ii) in connection with a contract of insurance or proposed contract of insurance;
(b) money paid to a financial services licensee from or on behalf of an insurer for or on account of an insured or intending insured is money which may be paid into an account to which that subparagraph applies.
For subparagraph 981B(1)(b)(iv) of the Act, if a financial services licensee is required, by the market integrity rules or the operating rules of a licensed market, to pay an amount into an account to which section 981B relates, the amount is money which may be paid into that account.
For paragraph 981B(1)(c) of the Act, a financial services licensee must:
(a) operate an account to which that paragraph applies as a trust account; and
(b) designate the account to be a trust account; and
(c) hold all moneys paid into the account (other than moneys paid to the financial services licensee under the financial services licensee's obligation to call margins from clients under the market integrity rules, the operating rules of a licensed market or the operating rules of a licensed CS facility) on trust for the benefit of the person who is entitled to the moneys.
For subparagraph 981B(1)(b)(iv) of the Act, money received under section 1017E of the Act is money which may be paid into:
(a) an account to which section 981B relates; or
(b) an insurance broking account maintained under section 26 of the Insurance (Agents and Brokers) Act 1984.
For paragraph 981B(1)(c) of the Act, if money received under section 1017E of the Act is paid into an account under subregulation (6), Part 7.8 of the Act applies to the money.
Note: See also subregulation 7.9.08(3).
For paragraph 981B(1)(c) of the Act, if a financial services licensee is required to call margins from a client under the market integrity rules, the operating rules of a licensed market or the operating rules of a licensed CS facility:
(a) the financial services licensee may operate an account to which that paragraph applies as:
(i) a clients' segregated account; or
(ii) a trust account;
in accordance with the operating rules or market integrity rules; and
(b) if:
(i) the account is operated outside Australia; and
the financial services licensee must designate the account in that way.
(ii) the law in force in the jurisdiction where it is maintained requires the account to be designated in a particular way;
Note: The operating rules or market integrity rules may require client moneys, including moneys used for margining, to be held in either a clients' segregated account or a trust account.
For subparagraph 981B(1)(b)(iv) of the Act, if an account is operated in accordance with subregulation (8), all money received by the financial services licensee under Subdivision A of Division 2 of Part 7.8 of the Act is money that may be paid into that account.
Subregulation (8) does not affect the operation of section 981E of the Act.
For subparagraph 981B(1)(b)(iv) of the Act, each of the following is money that may be paid into an account:
(a) mixed money;
(b) unidentified money.
For paragraph 981B(1)(c) of the Act, if mixed money is paid into an account under subregulation (11), the licensee must, as soon as practicable, but within 1 month after the mixed money is paid into the account, remove from the account the part of the money that is not section 981B money.
For paragraph 981B(1)(c) of the Act, if unidentified money is paid into an account under subregulation (11), the licensee must, as soon as practicable after the unidentified money is paid into the account:
(a) identify any part of the money that is section 981B money; and
(b) remove from the account any part of the money that is not section 981B money.
For subregulations (11) to (13):
(a) is received by the licensee as a single payment; and
(b) is not wholly section 981B money, but includes section 981B money.
section 981B money
means:
(a) money to which Subdivision A of Division 2 of Part 7.8 of the Act applies; or
(b) money that is allowed to remain in the account because of the operation of subparagraphs 981B(1)(b)(ii) and (iii) of the Act; or
(c) money mentioned in subregulation (4).
unidentified money
means money that:
(a) is received by the licensee as a single payment; and
(b) at the time of receipt, is unable to be identified as section 981B money or mixed money; and
(c) might include section 981B money.
Withdrawals from account
7.8.02(1)
For paragraph 981C(1)(a) of the Act, payments may be made out of an account maintained for section 981B of the Act in any of the following circumstances:
(a) making a payment to, or in accordance with the written direction of, a person entitled to the money (subject to regulation 7.8.02A);
(b) defraying brokerage and other proper charges;
(c) paying to the financial services licensee money to which the financial services licensee is entitled (subject to regulation 7.8.02A);
(d) making a payment of moneys due to an insurer in connection with a contract of insurance;
(e) making a payment that is otherwise authorised by law;
(f) paying to the financial services licensee money to which the financial services licensee is entitled pursuant to the market integrity rules or the operating rules of a licensed market.
7.8.02(1A)
For paragraph 981C(1)(a) and subparagraph 981B(1)(b)(iv) of the Act, if, under paragraph (1)(a), a financial services licensee (the paying licensee ) withdraws money from an account maintained for section 981B of the Act and pays it to another financial services licensee (the receiving licensee ):
(a) the paying licensee must ensure that the receiving licensee is notified, at the same time as the payment is made or as soon as practicable, that the money:
(i) has been withdrawn from an account of the paying licensee maintained for section 981B of the Act; and
(ii) should be paid into an account of the receiving licensee maintained for section 981B of the Act; and
(b) not later than the day after the receiving licensee receives the payment, the receiving licensee must pay the money into an account of the receiving licensee maintained for section 981B of the Act.
Permissible investments
7.8.02(2)
For paragraph 981C(1)(a) of the Act, and subject to subregulations (3), (4) and (5), the following kinds of investment may be made in relation to an account maintained for section 981B of the Act:
(a) investment in any manner in which trustees are for the time being authorised by law to invest trust funds;
(b) investment on deposit with an eligible money market dealer;
(c) investment on deposit at interest with an Australian ADI;
(d) the acquisition of cash management trust interests;
(e) investment in a security issued or guaranteed by the Commonwealth or a State or Territory;
(f) investment on deposit with a licensed CS facility.
7.8.02(3)
A financial services licensee must not invest an amount in a way permitted by subregulation (2) unless:
(a) the financial services licensee has obtained the client's written agreement to the following matters:
(i) the making of the investment;
(ii) how earnings on the investment are to be dealt with (including whether or not the earnings are to be shared, and whether or not the earnings are to be paid into the account);
(iii) how the realisation of the investment is to be dealt with (including whether or not the capital invested, and the proceeds of the investment, are to be deposited into the account);
(iv) how any losses made on the investment are to be dealt with (including the circumstances in which the financial services licensee is required to pay an amount equal to the difference between the amount invested and the amount received, into the account or otherwise);
(v) the fee (if any) that the financial services licensee proposes to charge for the investment; and
(b) the money is money to which the client is entitled.
Note: The investment arrangement may be a managed investment scheme.
7.8.02(4)
For paragraph 981A(4)(a) of the Act, subregulation (3) does not apply to money to which subregulation 7.8.01(4) applies.
7.8.02(5)
In subregulation (2):
investment
does not include the making of an investment in accordance with the specific direction of a client.
Note: Paragraph (1)(a) deals with the withdrawal of money from an account in accordance with the written direction of a person entitled to the money.
7.8.02(6)
For paragraph 981C(1)(b) of the Act, in relation to moneys received in relation to insurance products, the financial services licensee must ensure that:
(a) the balance of moneys in an account maintained by the financial services licensee under section 981B of the Act; and
(b) the total amount previously withdrawn from the account and currently invested under subregulation (2);
is at least the sum of:
(c) any amounts that an insurer is entitled to receive from the account; and
(d) any amounts that an insured or intending insured is entitled to receive from the account.
7.8.02(6A)
For paragraph (6)(c), if, at a particular time, money received by a financial services licensee for or on account of an insurer as mentioned in paragraph 7.8.01(4)(a) is paid into the account, the insurer is taken to be entitled to receive payment of:
(a) the amount; or
(b) if any deductions from the amount are authorised by a written agreement between the insurer and the broker - the amount less the deductions;
throughout the period:
(c) beginning at that time; and
(d) ending when the payment is actually made to the insurer;
whether or not the amount has been invested under subregulation (2).
7.8.02(6B)
For paragraph (6)(d), if, at a particular time, money received by a financial services licensee for or on account of an insured or intending insured as mentioned in paragraph 7.8.01(4)(b) is paid into an account, the insured or intending insured is taken to be entitled to receive payment of the amount throughout the period:
(a) beginning at that time; and
(b) ending when the payment is actually made to the insured or intending insured;
whether or not the amount has been invested under subregulation (2).
7.8.02(6C)
On application by a financial services licensee in the prescribed form, ASIC may consent in writing to the minimum balance of monies received in relation to insurance products being less than the level specified in subregulation (6).
7.8.02(7)
For paragraph 981C(1)(c) of the Act, if money is held in an account maintained for section 981B of the Act:
(a) the financial services licensee is entitled to the interest on the account; and
(b) the interest on the account isnot required to be paid into the account;
only if the financial services licensee discloses to the client that the financial services licensee is keeping the interest (if any) earned on the account.
Interest and other earnings on investments
7.8.02(8)
For paragraph 981C(1)(d) of the Act, interest or other earnings on:
(a) an investment of money withdrawn from an account maintained for section 981B of the Act; or
(b) the proceeds of the realisation of such an investment;
must be dealt with in accordance with the written agreement between the financial services licensee and the client under subregulation (3).
REGULATION 7.8.02A ACCOUNTS MAINTAINED FOR THE PURPOSES OF SECTION 981B OF THE ACT - SPECIAL RULES FOR RETAIL CLIENTS 7.8.02A(1)
Paragraph 7.8.02(1)(a) does not apply to a written direction to the extent the direction allows the financial services licensee to use derivative retail client money as mentioned in subregulation (3) of this regulation.
7.8.02A(2)
Paragraph 7.8.02(1)(c) does not apply to an entitlement of the financial services licensee to use derivative retail client money as mentioned in subregulation (3) of this regulation.
7.8.02A(3)
Subregulations (1) and (2) apply to using the money:
(a) as the licensee's capital, including working capital; or
(b) for the purpose of meeting obligations incurred by the licensee other than on behalf of the client; or
(c) for the purpose of entering into, or meeting obligations under, transactions that the licensee enters into to hedge, counteract or offset the risk to the licensee associated with a transaction between the licensee and the client.
For paragraph 981F(a) of the Act, this regulation applies if a financial services licensee ceases to be licensed (including a cessation because the financial services licensee's licence has been suspended or cancelled).
7.8.03(2) [Application]For paragraph 981F(b) of the Act, this regulation applies if a financial services licensee:
(a) becomes insolvent under an administration; or
(b) is the subject of any of the following arrangements:
(i) the appointment of an administrator under section 436A, 436B or 436C of the Act;
(ii) the commencement of winding up;
(iii) the appointment of a receiver of property of the financial services licensee, whether by a court or otherwise;
(iv) the appointment of a receiver and manager of property of the financial services licensee, whether by a court or otherwise;
(v) entry into a compromise or arrangement with creditors of the financial services licensee, or a class of creditors;
(vi) if the financial services licensee is deceased - administration of the estate of the financial services licensee under Part XI of the Bankruptcy Act 1966;
(vii) if the financial services licensee is deceased - administration of the estate of the financial services licensee under the law of an external Territory that provides for the administration of the insolvent estate of a deceased person;
7.8.03(3) [Application]
(viii) an arrangement under the law of a foreign country that provides for a matter mentioned in subparagraphs (i) to (vii).
For paragraph 981F(d) of the Act, this regulation applies if:
(a) a financial services licensee ceases to carry on a particular activity authorised by the financial services licence; and
(b) money is paid in connection with that activity. 7.8.03(4) [Account subject to trust]
For each person who is entitled to be paid money from an account of the financial services licensee maintained for section 981B of the Act, the account is taken to be subject to a trust in favour of the person.
7.8.03(5) [Investment subject to trust]If money in an account of the financial services licensee maintained for section 981B of the Act has been invested, for each person who is entitled to be paid money from the account, the investment is taken to be subject to a trust in favour of the person.
7.8.03(6) [Priorities]Money in the account of the financial services licensee maintained for section 981B of the Act is to be paid as follows:
(a) the first payment is of money that has been paid into the account in error;
(b) if money has been received on behalf of insureds in accordance with a contract of insurance, the second payment is payment to each insured person who is entitled to be paid money from the account, in the following order:
(i) the amounts that the insured persons are entitled to receive from the moneys in the account in respect of claims that have been made;
(ii) the amounts that the insured persons are entitled to receive from the moneys in the account in respect of other matters;
(c) if:
(i) paragraph (b) has been complied with; or
the next payment is payment to each person who is entitled to be paid money from the account;
(ii) paragraph (b) does not apply;
(d) if the money in the account is not sufficient to be paid in accordance with paragraph (a), (b) or (c), the money in the account must be paid in proportion to the amount of each person's entitlement;
(e) if there is money remaining in the account after payments made in accordance with paragraphs (a), (b) and (c), the remaining money is taken to be money payable to the financial services licensee. 7.8.03(7) [Paramountcy]
This regulation applies despite anything to the contrary in the Bankruptcy Act 1966 or a law relating to companies.
For paragraph 981H(3)(b) of the Act, if client money is held by an investment mentioned in subregulation 7.8.02(5) following a breach of a financial services law:
(a) the money is subject to a trust in favour of the client to the extent that the client is entitled to the money; and
(b) any investment of the money is subject to a trust in favour of the client to the extent that the client is entitled to the investment; and
(c) the proceeds of a realisation of an investment of the money are subject to a trust in favour of the client to the extent that the client is entitled to the proceeds.
For paragraph 981H(3)(b) of the Act, this regulation applies if, in relation to an insurance product:
(a) a financial services licensee is holding money to which Subdivision A of Division 2 of Part 7.8 of the Act applies; and
(b) the risk in relation to the insurance product has been accepted by an insurer.
7.8.05(2)
The financial services licensee holds the money on trust for the insurer in accordance with Division 2 of Part 7.8 of the Act, subject to the agreement of the insurer.
7.8.05(3)
This regulation does not affect the operation of regulations 7.8.03 and 7.8.08.
7.8.05(4)
For paragraph 981C(1)(c) of the Act, if money to which this regulation applies is held in an account maintained for section 981B of the Act:
(a) the financial services licensee is entitled to the interest on the account; and
(b) the interest on the account is not required to be paid into the account.
Subdivision AA - Client money reporting rules
In this Subdivision:
client money reporting infringement notice
means an infringement notice given under regulation 7.8.05C.
client money reporting infringement notice period
has the meaning given by subregulation 7.8.05H(2).
recipient
, in relation to a client money reporting infringement notice, means the person to whom ASIC gives the infringement notice, or intends to give the infringement notice, under regulation 7.8.05C.
For the purposes of paragraph 981N(1)(d) of the Act, ASIC may accept a written undertaking, given by a person who is alleged to have contravened subsection 981M(1) of the Act, as an alternative to civil proceedings.
7.8.05B(2)
Without limiting subregulation (1), ASIC may accept an undertaking that includes any of the following:
(a) an undertaking to take specified action within a specified period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.
Note: An undertaking may relate to a client money reporting infringement notice given in relation to the alleged contravention. For example, an infringement notice may require a person to give an undertaking, a person may give an undertaking to comply with an infringement notice or a person may give an undertaking if the person does not comply with an infringement notice or if the infringement notice is withdrawn.
7.8.05B(3)
If ASIC agrees, in writing, to the withdrawal or variation of the undertaking, the person who gave the undertaking may withdraw or vary the undertaking.
7.8.05B(4)
If ASIC is satisfied that the person who gave the undertaking has breached a term of the undertaking, ASIC may apply to a Court for an order under subregulation (5).
7.8.05B(5)
If the Court is satisfied that the person has breached a term of the undertaking, the Court may make one or more of the following orders:
(a) an order directing the person to comply with the term of the undertaking;
(b) an order directing the person to pay to the Commonwealth an amount not exceeding the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;
(c) an order directing the person to compensate another person who has suffered loss or damage as a result of the breach;
(d) any other order that the Court considers appropriate.
7.8.05B(6)
This regulation does not affect the liability of a person to civil proceedings if ASIC does not accept an undertaking in relation to the alleged contravention referred to in subregulation (1).
This regulation is made for the purposes of subsection 981N(1) of the Act.
7.8.05C(2)
If ASIC has reasonable grounds to believe that a person has contravened subsection 981M(1) of the Act, ASIC may give the person an infringement notice (a client money reporting infringement notice ) in relation to the alleged contravention.
7.8.05C(3)
A client money reporting infringement notice may relate to one or more alleged contraventions of a client money reporting rule.
7.8.05C(4)
If ASIC withdraws a client money reporting infringement notice given to a person in relation to an alleged contravention of a client money reporting rule, ASIC may give the person a new infringement notice in relation to the alleged contravention.
Example: A client money reporting infringement notice given to a person in relation to an alleged contravention of a client money reporting rule may be withdrawn, and a new infringement notice given to the person in relation to that alleged contravention, if the original infringement notice contained an error.
Regulations 7.8.05C to 7.8.05Q do not require ASIC to give a client money reporting infringement notice to a person in relation to an alleged contravention of a client money reporting rule.
7.8.05D(2)
Regulations 7.8.05C to 7.8.05Q do not affect the liability of a person to civil proceedings if ASIC does not give a client money reporting infringement notice to the person in relation to an alleged contravention of a client money reporting rule.
7.8.05D(3)
Regulations 7.8.05C to 7.8.05Q do not affect the liability of a person to civil proceedings if:
(a) ASIC gives a client money reporting infringement notice to the person in relation to an alleged contravention of a client money reporting rule; and
(b) either:
(i) the infringement notice is withdrawn; or
(ii) the person does not comply with the infringement notice in accordance with regulation 7.8.05H.
7.8.05D(4)
Regulations 7.8.05C to 7.8.05Q do not limit or otherwise affect the penalty that a Court could impose on the person for a contravention of a client money reporting rule.
Before giving a recipient a client money reporting infringement notice, ASIC must:
(a) give the recipient a written statement that sets out ASIC's reasons for believing that the recipient has contravened a client money reporting rule; and
(b) give the recipient, or a representative of the recipient, an opportunity to:
(i) appear at a private hearing before ASIC; and
(ii) give evidence to ASIC; and
(iii) make submissions to ASIC;
in relation to the alleged contravention of the client money reporting rule.
7.8.05E(2)
If a recipient, or a representative of a recipient, gives ASIC evidence or information under paragraph (1)(b) in relation to the alleged contravention of a client money reporting rule, the evidence or information is not admissible in evidence in any proceedings against the recipient, other than proceedings relating to the evidence or information being false or misleading.
A client money reporting infringement notice:
(a) must state the date on which it is given; and
(b) must be identified by a unique code; and
(c) must state the name and address of the recipient; and
(d) must state that it is being given by ASIC under regulation 7.8.05C; and
(e) must specify details of each alleged contravention of a client money reporting rule to which the infringement notice relates, including:
(i) the conduct that made up each alleged contravention (including, to the extent known, the date on which it occurred and the place at which it occurred); and
(ii) each client money reporting rule that ASIC alleges the recipient has contravened; and
(f) must, in relation to each client money reporting rule to which the infringement notice relates, state the maximum pecuniary penalty that a Court could order the recipient to pay for contravening the rule; and
(g) must, in relation to each alleged contravention of a client money reporting rule to which the infringement notice relates:
(i) specify the penalty (if any) payable for the alleged contravention; and
(ii) specify the remedial measures (if any) that the recipient must undertake or institute; and
(iii) specify the sanctions (if any) that the recipient must accept; and
(iv) specify the terms of an undertaking (if any) that the recipient must give under regulation 7.8.05B; and
(h) if one or more penalties are specified in the infringement notice - must:
(i) specify the total penalty that the recipient must pay to the Commonwealth; and
(ii) state that the penalty is payable to ASIC on behalf of the Commonwealth; and
(iii) explain how the penalty can be paid; and
(i) must state that the recipient may choose not to comply with the infringement notice, but that if the recipient does not comply, civil proceedings may be brought against the recipient in relation to the alleged contravention; and
(j) must explain what the recipient must do to comply with the infringement notice and the effect of compliance with the infringement notice; and
(k) must state that the recipient may apply to ASIC:
(i) for withdrawal of the notice under regulation 7.8.05L; or
(ii) for an extension of time under regulation 7.8.05J; and
(l) must state that ASIC may publish details of the infringement notice under regulation 7.8.05Q; and
(m) may include any other information that ASIC considers necessary.
Note: For the purposes of subparagraph (h)(i), the total penalty is the sum of the penalties payable under subparagraph (g)(i).
The penalty payable for an alleged contravention of a client money reporting rule is the amount determined by ASIC (which may be nil), subject to subsection 981N(2) of the Act.
Note: See subsection 981N(2) of the Act for the maximum penalty payable.
7.8.05G(2)
If a client money reporting infringement notice relates to more than one alleged contravention, the total penalty payable under the infringement notice is the sum of the penalties (if any) payable for the alleged contraventions.
A recipient complies with a client money reporting infringement notice if, during the client money reporting infringement notice period, the recipient does all of the following:
(a) pays the total penalty specified in the infringement notice under subparagraph 7.8.05F(h)(i) (if any);
(b) undertakes or institutes the remedial measures specified in the infringement notice under subparagraph 7.8.05F(g)(ii) (if any);
(c) accepts the sanctions specified in the infringement notice under subparagraph 7.8.05F(g)(iii) (if any);
(d) gives an undertaking (including an undertaking to comply with the infringement notice) with the terms specified in the infringement notice under subparagraph 7.8.05F(g)(iv) (if any).
7.8.05H(2)
The client money reporting infringement notice period for a client money reporting infringement notice:
(a) starts on the day on which the infringement notice is given to the recipient; and
(b) ends:
(i) 27 days after the day on which the infringement notice is given to the recipient; or
(ii) on another day permitted by this regulation.
7.8.05H(3)
If the recipient applies for a further period of time in which to comply with the client money reporting infringement notice, and the application is granted, the client money reporting infringement notice period ends at the end of the further period allowed.
7.8.05H(4)
If the recipient applies for a further period of time in which to comply with the client money reporting infringement notice, and the application is refused, the client money reporting infringement notice period ends on the later of:
(a) 28 days after the day on which the infringement notice was given to the recipient; and
(b) 7 days after the notice of refusal is given to the recipient.
7.8.05H(5)
If the recipient applies for the client money reporting infringement notice to be withdrawn, and the application is refused, the client money reporting infringement notice period ends 28 days after the notice of refusal is given to the recipient.
During the client money reporting infringement notice period, a recipient may apply, in writing, to ASIC for a further period of no more than 28 days in which to comply with the client money reporting infringement notice.
7.8.05J(2)
The application must:
(a) specify the client money reporting infringement notice's unique identification code; and
(b) set out the reasons for the application.
7.8.05J(3)
Within 14 days after receiving the application, ASIC must:
(a) grant or refuse a further period no longer than the period sought (and no longer than 28 days); and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.
7.8.05J(4)
If ASIC refuses a further period under paragraph (3)(a), the recipient may not make a further application under subregulation (1) in relation to that client money reporting infringement notice.
7.8.05J(5)
If ASIC does not grant or refuse a further period under paragraph (3)(a) within 14 days after receiving the application, ASIC is taken to have refused a further period.
Subject to subregulation (3), if:
(a) a client money reporting infringement notice is given to a recipient in relation to an alleged contravention of a client money reporting rule; and
(b) the infringement notice is not withdrawn; and
(c) the recipient complies with the infringement notice;
the effects in subregulation (2) apply.
7.8.05K(2)
The effects are:
(a) any liability of the recipient to the Commonwealth for the alleged contravention of the client money reporting rule is discharged; and
(b) no civil or criminal proceedings may be brought or continued by the Commonwealth against the recipient for the conduct specified in the client money reporting infringement notice as being the conduct that made up the alleged contravention of the client money reporting rule or rules; and
(c) no administrative action may be taken by ASIC under section 914A, 915B, 915C or 920A of the Act against the recipient for the conduct specified in the infringement notice as being the conduct that made up the alleged contravention of the client money reporting rule; and
(d) the recipient is not taken to have admitted guilt or liability in relation to the alleged contravention; and
(e) the recipient is not taken to have contravened the client money reporting rule.
Note: Third parties are not prevented from commencing civil proceedings against the recipient, including under section 1101B of the Act. ASIC is not prevented from applying for an order on behalf of a plaintiff in accordance with the Act.
7.8.05K(3)
Subregulation (2) does not apply if the recipient has knowingly:
(a) provided false or misleading information to ASIC; or
(b) withheld evidence or information from ASIC;
in relation to the alleged contravention of the client money reporting rule.
During the client money reporting infringement notice period, a recipient of a client money reporting infringement notice may apply, in writing, to ASIC for the infringement notice to be withdrawn.
7.8.05L(2)
The application must:
(a) specify the client money reporting infringement notice's unique identification code; and
(b) set out the reasons for the application.
7.8.05L(3)
Within 14 days after receiving the application, ASIC must:
(a) withdraw or refuse to withdraw the client money reporting infringement notice; and
(b) notify the recipient in writing of the decision and, if the decision is a refusal, the reasons for the decision.
7.8.05L(4)
In deciding whether to withdraw the client money reporting infringement notice, ASIC may take the following matters into account:
(a) whether the recipient has previously been found to have contravened subsection 981M(1) of the Act;
(b) the circumstances in which the contravention set out in the infringement notice is alleged to have occurred;
(c) whether an infringement notice has previously been given to the recipient in relation to an alleged contravention of subsection 981M(1) of the Act, and whether the recipient complied with the infringement notice;
(d) any other relevant matters.
7.8.05L(5)
If ASIC refuses to withdraw the client money reporting infringement notice, the recipient may not make a further application under subregulation (1) in relation to that infringement notice.
7.8.05L(6)
If ASIC has not withdrawn, or refused to withdraw, the client money reporting infringement notice within 14 days after receiving the application, ASIC is taken to have refused to withdraw the infringement notice.
ASIC may withdraw a client money reporting infringement notice given by ASIC without an application under regulation 7.8.05L having been made.
7.8.05M(2)
In deciding whether to withdraw a client money reporting infringement notice under this regulation, ASIC may take the matters referred to in subregulation 7.8.05L(4) into account.
A notice withdrawing a client money reporting infringement notice must include the following information:
(a) the name and address of the recipient;
(b) the date the infringement notice was given;
(c) the infringement notice's unique identification code.
7.8.05N(2)
The notice must also state that the client money reporting infringement notice is withdrawn.
ASIC may withdraw a client money reporting infringement notice after the recipient has complied with the infringement notice only if the recipient agrees, in writing, to the withdrawal.
7.8.05P(2)
If a client money reporting infringement notice is withdrawn after the penalty specified in it (if any) has been paid, the Commonwealth must refund the amount of the penalty to the person who paid it.
7.8.05P(3)
If a client money reporting infringement notice is withdrawn after the recipient has complied with a requirement specified in the infringement notice:
(a) to undertake or institute remedial measures; or
(b) to accept sanctions other than a payment of a penalty to the Commonwealth; or
(c) to give an undertaking;
the remedial measures, sanctions or undertaking are taken to no longer be enforceable by ASIC.
If ASIC gives a client money reporting infringement notice to a recipient, ASIC may, at the end of the client money reporting infringement notice period, publish details of the infringement notice.
7.8.05Q(2)
If ASIC decides to publish details of the client money reporting infringement notice, ASIC must publish the details in accordance with either or both of subregulations (3) and (4).
7.8.05Q(3)
ASIC may publish details of a client money reporting infringement notice by publishing in the Gazette:
(a) a copy of the infringement notice; and
(b) a statement as to whether the recipient has complied with the infringement notice; and
(c) if the recipient has complied with the infringement notice - a statement that:
(i) compliance is not an admission of guilt or liability; and
(ii) the recipient is not regarded as having contravened a client money reporting rule; and
(d) if the recipient has not complied with the infringement notice - a statement that:
(i) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened a client money reporting rule; and
(ii) the recipient is not regarded as having contravened the client money reporting rule or rules specified in the infringement notice.
7.8.05Q(4)
ASIC may publish details of a client money reporting infringement notice by issuing a written or oral statement that includes:
(a) an accurate summary of the details of the infringement notice, including:
(i) the name of the recipient; and
(ii) the amount of the penalty specified in the infringement notice (if any); and
(iii) the remedial measures specified in the infringement notice (if any); and
(iv) the sanctions specified in the infringement notice (if any); and
(v) the terms of an undertaking specified in the infringement notice (if any); and
(vi) the conduct specified in the infringement notice as being the conduct that made up the alleged contravention; and
(b) a statement as to whether the recipient has complied with the infringement notice; and
(c) if the recipient has complied with the infringement notice - a statement that:
(i) compliance is not an admission of guilt or liability; and
(ii) the recipient is not regarded as having contravened a client money reporting rule; and
(d) if the recipient has not complied with the infringement notice - a statement that:
(i) the giving of an infringement notice to a recipient is only an allegation that the recipient has contravened a client money reporting rule; and
(ii) the recipient is not regarded as having contravened the client money reporting rule or rules specified in the infringement notice.
For subsection 982C(1) of the Act, the financial services licensee must give a client a disclosure document that contains, as far as practicable, the matters required for Division 2 of Part 7.9 of the Act.
For paragraph 984A(2)(a) of the Act, property given as security for a standard margin lending facility is exempt from Division 3 of Part 7.8 of the Act.
Note: Paragraph 984A(2)(a) of the Act provides that the regulations may exempt property given in specified circumstances from some or all of the provisions of Division 3 of Part 7.8 of the Act.
For the purposes of paragraph 984A(2)(a) of the Act, property given as mentioned in subsection 984A(1) of the Act is exempt from Division 3 of Part 7.8 of the Act at a time if:
(a) at that time the licensee has the client's written agreement to the property being dealt with other than in accordance with that Division; and
Note 1: It is not necessary for the agreement to mention that Division explicitly.
Note 2: If the licensee obtains the agreement after the property is given, that Division ceases to apply to the property when the licensee obtains the agreement.
(b) either:
(i) the financial service referred to in subparagraph 984A(1)(a)(i) of the Act is or relates to a dealing in a derivative; or
(ii) the financial product referred to in subparagraph 984A(1)(a)(ii) of the Act is a derivative; and
(c) the entry into of the derivative was not or will not be cleared through a clearing and settlement facility; and
(d) the financial service or product would have been provided to the client as a wholesale client if:
(i) the service or product were provided to the client when the property was given; and
(ii) section 761GA of the Act (about sophisticated investors) did not apply.
For paragraph 984B(1)(a) of the Act, this regulation sets out requirements in relation to property to which Division 3 of Part 7.8 of the Act applies.
The financial services licensee must hold the property on trust for the benefit of the person who is entitled to it.
7.8.07(3)
If the client requests the financial services licensee, in writing, to deposit the property in safe custody with an ADI: (a) the licensee must deposit the property; or (b) if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.
7.8.07(4)
If the client requests the financial services licensee, in writing, to deposit the property in safe custody with a financial services licensee that provides a custodial or depositary service: (a) the licensee must deposit the property; or (b) if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.
7.8.07(5)
If the client requests the financial services licensee, in writing, to deposit the property in safe custody in the place where the property was deposited with, or received by, the licensee: (a) the licensee must deposit the property in accordance with the request; and (b) if the licensee does not comply with the request for any reason, the licensee must notify the client, as soon as practicable, of the failure to comply with the request.
7.8.07(6)
If the client requests that the body corporate that issued or made available the securities, managed investment products or foreign passport fund products underlying the property register the property in the name of a nominee controlled by the financial services licensee, the financial services licensee must arrange for the body corporate to register the securities, managed investment products or foreign passport fund products in that way.
7.8.07(7)
If: (a) none of subsections (3) to (6) applies; and (b) the property is not registered in the client's name by the body corporate that issued or made available the securities, managed investment products or foreign passport fund products underlying the property;
the financial services licensee must arrange to have the property registered in the client's name.
7.8.07(8)
A financial services licensee must not deposit property as security for a loan or advance to the financial services licensee unless: (a) the client owes the financial services licensee an amount in connection with a transaction entered into by the financial services licensee on the client's behalf; and (b) the financial services licensee gives the client a written notice that identifies the property and states that the dealer proposes to deposit it as security for a loan or advance to the financial services licensee; and (c) the amount, or total of the amounts, that the client owes on the day of the deposit is at least the amount of the loan or advance.
7.8.07(9)
If a financial services licensee deposits property as security for a loan or advance to the financial services licensee, in accordance with subregulation (8): (a) the financial services licensee must, not later than 1 business day after the amount, or total of the amounts, that the client owes on the day of the deposit are repaid, withdraw the property 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 property has not been withdrawn from that deposit - the financial services licensee must give the client written notice of that fact.
7.8.07(10)
In this regulation:
property
includes scrip, but does not include money.
Division 4 - Special provisions relating to insurance
Subregulations (2) to (4) apply if:
(a) money is received by a financial services licensee:
(i) from, or on behalf of, an insured or intending insured, or from another financial services licensee on behalf of an insured or intending insured; and
(ii) as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and
(b) the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and
(c) the financial services licensee who so received the money is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid.
7.8.08(2)
The financial services licensee who received the money must pay to the insurer an amount equal to the amount of the premium or instalment to be paid:
(a) in the period of 90 days (the relevant period ) after:
(i) the day on which the cover provided by the insurer under the contract starts to have effect; or
(ii) the first day of the period to which the instalment relates; or
(b) if it is not practicable for the financial services licensee to pay the amount in the relevant period - as soon as practicable after the end of that period.
7.8.08(3)
If the financial services licensee has not received the amount of the premium, or of an instalment of the premium, payable in respect of a contract of insurance at the end of the relevant period, the financial services licensee must notify the insurer in writing, not later than 7 days after the end of the relevant period, that the financial services licensee has not received the amount.
7.8.08(4)
Subregulation (3) does not apply if the financial services licensee receives the amount:
(a) in the period of 7 days mentioned in subregulation (3); and
(b) before notifying the insurer in accordance with subregulation (3).
7.8.08(5)
Subregulations (6) and (7) apply if:
(a) a financial services licensee receives money from, or on behalf of:
(i) an insured or intending insured; or
as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and
(ii) another financial services licensee on behalf of an insured or intending insured;
(b) the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and
(c) the financial services licensee who received the money has not been informed of, and has not otherwise ascertained, the amount of the premium or instalment to be paid.
7.8.08(6)
The financial services licensee who received the money must pay the amount mentioned in subregulation (7) to the insurer:
(a) in the period of 90 days (the relevant period ) after:
(i) the day on which the cover provided by the insurer under the contract starts to have effect; or
(ii) the first day of the period to which the instalment relates; or
(b) if it is not practicable for the financial services licensee to pay the amount in the relevant period - as soon as practicable after the end of that period.
7.8.08(7)
For subregulation (6), the amount is:
(a) for a new contract of insurance, an amount not less than the lesser of:
(i) the amount of the money received; or
(ii) 75% of the amount fairly estimated by the financial services licensee to be the premium or instalment that is to be paid; and
(b) for a renewal of a contract of insurance, an amount not less than the lesser of:
(i) the amount of the money so received; or
(ii) 75% of the previous year's premium for the risk, or of the last instalment of that year's premium.
7.8.08(8)
Subregulation (9) applies if:
(a) the risk, or a part of the risk, to which a contract of insurance or a proposed contract of insurance relates is accepted by or on behalf of an insurer; and
(b) the contract of insurance or proposed contract of insurance has been, or is being, arranged or effected by a financial services licensee ( licensee 1 ), either directly or through another financial services licensee; and
(c) licensee 1 has not been informed of, and has not otherwise ascertained, the amount of a premium or of an instalment of a premium to be paid in connection with the contract or proposed contract.
7.8.08(9)
Licensee 1 must, notify the insurer in writing, within 10 days after the day on which the risk, or that part of the risk, was accepted, that:
(a) the risk, or that part of the risk, has been accepted; and
(b) licensee 1 does not know the amount of the premium or instalment to be paid;
unless licensee 1 is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid before notifying the insurer.
7.8.08(10)
Nothing in this regulation prevents:
(a) an insurer from making a contract or arrangement with a financial services licensee providing for the financial services licensee to pay an amount to the insurer before the time by which the financial services licensee is required by the provision concerned to pay that amount to the insurer; or
(b) an insurer from authorising a financial services licensee in writing to pay on behalf of the insurer, out of the money received by the financial services licensee as a premium or instalment of a premium in respect of a contract of insurance arranged with the insurer, any charges required by law to be paid by the insurer in respect of the contract; or
(c) a financial services licensee from exercising any legal right available to the financial services licensee to deduct from any moneys payable by the financial services licensee to the insurer any remuneration payable by the insurer to the financial services licensee in relation to a contract of insurance.
7.8.08(11)
For subregulation (1) or (5), if the risk, or a part of the risk, to which a contract or proposed contract mentioned in that subregulation is accepted on behalf of an insurer by an insurance intermediary other than the insurance financial services licensee who received the moneys from or on behalf of the insured or intending insured, the payment of the premium, or part of the premium, by the financial services licensee to the intermediary is taken to be a payment of the premium or part of the premium by the financial services licensee to the insurer.
7.8.08(12)
For subregulation (3) or (8), if:
(a) a financial services licensee is required to notify an insurer in accordance with that subregulation; and
(b) an insurance intermediary other than the financial services licensee has accepted the risk, or a part of the risk, to which the contract or proposed contract relates on behalf of the insurer;
a notification by the financial services licensee to the intermediary is taken to be a notification by the financial services licensee to the insurer.
7.8.08(13)
Subregulations (14) and (15) apply if:
(a) a financial services licensee receives money from, or on behalf of, an insured or intending insured in connection with a contract of insurance or proposed contract of insurance; and
(b) at the end of 30 days after the day on which the money was received, the risk, or a part of the risk, to which the contract or proposed contract relates has not been accepted.
7.8.08(14)
If the risk has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:
(a) give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, that the risk has not been accepted; and
(b) return the money to the insured or intending insured.
7.8.08(15)
If a part of the risk to which the contract or proposed contract relates has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:
(a) give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, of the extent to which the risk has not been accepted; and
(b) return that part of the money that relates to the part of the risk that has not been accepted to the insured or intending insured.
7.8.08(16)
If a financial services licensee receives money from, or on behalf of, an insurer for payment to, or on behalf of, an insured, the financial services licensee must pay an amount equal to the money to, or on behalf of, the insured:
(a) within 7 days after the day on which the financial services licensee received the money; or
(b) if it is not practicable for the financial services licensee to pay the amount in that period - as soon as practicable after the end of the period.
7.8.08(17)
Nothing in subregulation (16) prevents:
(a) an insured from making a contract or arrangement with an insurance financial services licensee providing for the financial services licensee to pay an amount mentioned in that subregulation to or on behalf of the insured before the time by which the financial services licensee is required by that subregulation to pay that amount to or on behalf of the insured; or
(b) a financial services licensee from exercising any legal right available to the financial services licensee to deduct from an amount payable by the financial services licensee to the insured any money payable by the insured to the financial services licensee in connection with a contract of insurance.
7.8.08(18)
A person is guilty of an offence if the person contravenes subregulation (2), (3), (6), (9), (14) or (16), whether or not it was done with the consent of the insurer or of the insured or intending insured.
Penalty:
7.8.08(19)
Subregulation (18) does not apply if the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matter in subregulation (18) (see subsection 13.3(3) of the Criminal Code).
7.8.08(20)
Strict liability applies to subregulation (18).
Note: For strict liability , see section 6.1 of the Criminal Code.
7.8.08(21)
If:
(a) under subregulation (2), (3), (6) or (9), a financial services licensee is required to pay an amount to, or to notify, an insurer; and
(b) under the contract or proposed contract of insurance concerned the insurer is an underwriting member of Lloyd's;
it is sufficient compliance with the subregulation if the financial services licensee pays the amount to, or notifies, as the case may be, the Lloyd's broker concerned.
Division 4A - Special provisions relating to margin lending facilities
For paragraph 985E(3)(a) of the Act, the limit of a margin lending facility is taken to be increased, despite subsection 985E(2) of the Act, if: (a) the increase is a result of a contribution of further secured property or transferred securities that occurs without the prior knowledge or agreement of the provider; and (b) the provider permits the increase to continue; and (c) the increase is no more than 5% of the current limit of the margin lending facility.
7.8.08A(2)
If the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1), subsection 985E(1) of the Act is modified by omitting 'before the critical day:' and inserting 'after the critical day:'.
Note: Paragraph 992C(1)(c) of the Act provides that the regulations may provide that Part 7.8 of the Act applies as if specified provisions were omitted, modified or varied as specified in the regulations.
7.8.08A(3)
For subregulation (1), if: (a) more than one contribution of further secured property or transferred securities under the margin lending facility occurs on a day; and (b) each of the contributions is taken to increase the limit of the facility; and (c) either:
(i) the cumulative increase is no more than 5% of the current limit of the margin lending facility; or
(ii) if the cumulative increase is more than 5% of the current limit of the margin lending facility, the provider ensures that the increases are reduced so that the cumulative increase becomes no more than 5% of the current limit of the margin lending facility;
the increases are taken to be one increase for this regulation.
Increase prior to assessment only to occur once
7.8.08A(4)
Subregulation (5) applies if: (a) the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and (b) an assessment has not yet been made in accordance with section 985F of the Act.
7.8.08A(5)
If the limit of the margin lending facility would be taken to increase further in accordance with subregulation (1): (a) the limit is taken not to be further increased until:
(i) an assessment has been made in accordance with section 985F of the Act; and
(b) the provider must ensure that the increase does not continue unless paragraph (a) permits it.
(ii) it is assessed that the facility will not be unsuitable for the client if the limit is increased; and
If facility assessed as unsuitable
7.8.08A(6)
If:
(a) the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and
(b) the assessment made in accordance with section 985F of the Act assesses that the facility is unsuitable for the client because of the increased limit;
the limit is taken to be reduced to the limit of the margin lending facility before the increase, and the provider must ensure that the limit is reduced within 90 days of the day the assessment is made.
Facility not unsuitable for subsection 985K(4) of the Act
7.8.08A(7)
For subsection 985K(4) of the Act, a margin lending facility is taken not to be unsuitable if: (a) the limit of the margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1); and (b) the assessment made in accordance with section 985F of the Act assesses that the facility:
(i) is not unsuitable for the client; or
(c) in the case of subparagraph (b)(ii), the provider ensures that the limit is reduced, within 90 days of the day the assessment is made, to the limit of the margin lending facility before the increase.
(ii) is unsuitable for the client because of the increased limit; and
For paragraph 992C(1)(a) of the Act, a person is exempt from the requirement in paragraph 985E(1)(c) of the Act to make an assessment if the margin lending facility mentioned in paragraph 985E(1)(a) or (b) of the Act is a facility mentioned in subregulation (2): (a) in respect of the full amount of the loan, including any interest, fees and charges; and (b) in relation to which the client has not taken out a loan to fund the secured property contributed by the client for establishing the margin lending facility.
7.8.08B(2)
For subregulation (1), the facility is a standard margin lending facility under the terms of which: (a) the credit provided must be applied wholly:
(i) to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; or
(b) the secured property mentioned in paragraphs (c) and (d) of that subsection:
(ii) to repay another credit facility, under the terms of which the credit provided was applied wholly to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; and
(i) consists wholly of one or more marketable securities, or a beneficial interest in one or more marketable securities; or
(c) the liability of the client to the provider is limited to the rights relating to the secured property.
(ii) consists:
(A) partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and
(B) partly of cash given to the provider and held in trust for the client for the sole purpose of servicing obligations under the facility; and
For paragraph 985G(1)(c) of the Act, the following inquiries about a client are prescribed in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act:
(a) reasonable inquiries as to whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;
Note: This is sometimes referred to as 'double gearing'.
(b) if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out - reasonable inquiries as to whether the security for the loan includes the primary residential property of the client;
(c) if there is a guarantor for the margin lending facility - reasonable inquiries as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee;
(d) reasonable inquiries as to the amount of any other debt incurred by the client;
(e) any other matter that ASIC has specified in a legislative instrument for subregulation (2). 7.8.09(2) [Specification of matters relevant to unsuitability]
ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 985G of the Act were modified by inserting after subsection (2) the following subsection:
"(2A)
The regulations may provide that ASIC may specify in a legislative instrument matters ASIC considers to be relevant for the purposes of paragraph 985G(1)(c) of the Act."
For paragraph 985H(2)(b) of the Act, a margin lending facility, or a margin lending facility whose limit is proposed to be increased, is unsuitable for a retail client if the client: (a) is, on an ongoing basis, unable to be contacted by any of the usual means of communication; and (b) has not appointed an agent to act on the client's behalf.
For subsection 985K(4) of the Act, a margin lending facility is taken not to be unsuitable:
(a) if:
(i) an assessment of unsuitability was undertaken in accordance with the Act; and
(ii) the assessment reasonably concluded that the margin lending facility is not unsuitable; or
(b) if a person is exempt under regulation 7.8.08B from the requirement to make an assessment of unsuitability in relation to the margin lending facility.
For paragraph 988E(g) of the Act, the following matters are specified:
(a) all underwriting transactions entered into by the financial services licensee;
(b) all financial products dealt with by the licensee under instructions from another person;
(c) each person who gave instructions to deal with financial products;
(d) all property:
(i) that is not the property of the financial services licensee; and
(ii) for which the financial services licensee, or a nominee controlled by the financial services licensee, is accountable;
(e) each person by whom, or for whom, property mentioned in paragraph (d) is held;
(f) the extent to which property mentioned in paragraph (d) is:
(i) held in safe custody; or
(ii) deposited with a third party as security for a loan or advance made to the financial services licensee;
(g) all transactions in relation to insurance products entered into with, or on behalf of, foreign insurers.
This regulation is made for paragraph 988E(g) and section 988F of the Act.
7.8.11A(2)
The following table sets out matters in relation to a non-monetary benefit that:
(a) is given to a financial services licensee or a representative of a financial services licensee; and
(b) either:
(i) is not conflicted remuneration in accordance with paragraph 963C(1)(b) of the Act, and is over $100; or
(ii) is not conflicted remuneration in accordance with paragraph 963C(1)(c) or (d) of the Act; or
Note: Particulars of the matters must be shown in the records kept by the financial services licensee.
Item | Matter |
1 | A description of the benefit |
2 | Either:
(a) the value of the benefit; or (b) if the value is not known, the estimated value of the benefit; expressed as a dollar amount or as a range of dollars |
3 | The date on which the benefit was given |
4 | The name of the person who gave the benefit and, if relevant, the number of the person's financial services licence |
5 | Whether the benefit was given to the licensee or to a representative of the licensee |
6 | If the benefit was given to an authorised representative of the licensee, the name and contact details of the authorised representative |
7 | If the benefit was given to another representative of the licensee, the name and contact details of the other representative |
7.8.11A(3)
At the request of a person, a financial services licensee must give the person the particulars in its records relating to the matters in items 1 to 4 of the table for the last financial year.
7.8.11A(4)
The licensee may require the person making the request to pay a charge for obtaining the particulars.
7.8.11A(5)
The amount of the charge must not exceed the reasonable costs that the licensee incurs that are reasonably related to giving the particulars (including any costs incurred in photocopying the document containing the particulars).
Note: This would include the costs of collating the information.
7.8.11A(6)
The licensee must give the particulars to the person as soon as practicable, and no later than one month after the person makes the request to the licensee.
For the purposes of paragraph 988E(g) of the Act, the following matters are specified in relation to records that must be kept by a financial services licensee who is a person covered by section 963M of the Act:
(a) all conflicted remuneration thatthe financial services licensee is legally obliged (disregarding Subdivision C of Division 4 of Part 7.7A of the Act) to give another person for a financial year;
(b) all amounts that the financial services licensee is required by regulation 7.7A.15AK to pay, and all monetary benefits that the financial services licensee is required by that regulation to provide, for a financial year, and the following:
(i) all such amounts paid, and all such monetary benefits provided, by the financial services licensee for the financial year;
(ii) all cases where the financial services licensee determined that an amount that was just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2) was nil.
7.8.11B(2)
For the purposes of section 988F of the Act, subregulation (3) sets out additional requirements for things to be contained in records, and relating to the level of detail to be shown in records, that are imposed in relation to records that must be kept by a financial services licensee who is a person covered by section 963M of the Act, for:
(a) all amounts that the financial services licensee is required by regulation 7.7A.15AK to pay, and all monetary benefits that the financial services licensee is required by that regulation to provide; and
(b) all cases where the financial services licensee determined that an amount that was just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2) was nil.
7.8.11B(3)
The requirements are as follows:
(a) an explanation of how the financial services licensee ascertained the identity of the product holders;
(b) an explanation of:
(i) if paragraph (2)(a) applies - how the financial services licensee determined that the amounts to pay, or the amounts of the monetary benefit to provide, were just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2); and
(ii) if paragraph (2)(b) applies - how the financial services licensee determined that nil amounts were just and equitable in the circumstances for the purposes of subregulation 7.7A.15AK(2);
(c) a description of the financial product or products to which the conflicted remuneration relates, including the following information:
(i) the name of that product (or the names of those products);
(ii) the product identification number of that product (or the product identification numbers of those products) (if any);
(d) if paragraph (2)(a) applies:
(i) the date by which the financial services licensee was required under regulation 7.7A.15AK to pay the amounts or provide the monetary benefits; and
(ii) the date or dates on which the amounts were paid, or the monetary benefits were provided; and
(iii) a description of the manner in which the amounts were paid, or the monetary benefits were provided.
For section 988F of the Act, the financial records of a financial services licensee must be kept in sufficient detail as to show or include, for basic deposit products:
(a) separate particulars of every transaction by the financial services licensee; and
(b) the day on which, or the period during which, each transaction by the financial services licensee took place.
For section 988F of the Act, the financial records of a financial services licensee must be kept in sufficient detail as to show or include, for all financial products other than basic deposit products:
(a) the information mentioned in subregulation (1); and
(b) if the financial services licensee is not a partner in a firm - separate particulars of each transaction by the financial services licensee with, or for the account of:
(i) clients of the financial services licensee; or
(ii) the financial services licensee's own account; or
(iii) other financial services licensees; or
(iv) representatives of the financial services licensee; or
(v) employees of the financial services licensee; and
(c) if the financial services licensee is a partner in a firm - separate particulars of each transaction by the financial services licensee with, or for the account of:
(i) clients of the financial services licensee other than the partners in the firm; or
(ii) the partners in the firm; or
(iii) the financial services licensee's own account; or
(iv) other financial services licensees; or
(v) representatives of the financial services licensee; or
(vi) employees of the financial services licensee; and
(d) copies of acknowledgments of the receipt of financial products or documents of title to financial products.
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 989B(3) were modified to read as follows:
"(3)
The licensee must, with the statement and balance sheet, lodge with ASIC:
(a) for a licensee who is a limited licensee for the whole of a financial year - a compliance certificate containing the information and matters required by the regulations; or
(b) for a licensee who is a limited licensee for part of a financial year:
(i) a compliance certificate containing the information and matters required by the regulations for the part of the financial year that the licensee was a limited licensee; and
(ii) an auditor's reporting containing the information and matters required by the regulations for the part of the financial year that the licensee was not a limited licensee; or
(c) for all other licensees - an auditor's report containing the information and matters required by the regulations.Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).".
7.8.12A(2)
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 989B of the Act were modified by inserting after subsection 989B(3) the following subsection:
"(4)
In this section:class of product advice
(Repealed by FRLI No F2023L01458, Sch 1[206] (effective 1 November 2023).)limited financial service
means the following financial services:
(a) financial product advice on self managed superannuation funds;
(b) financial product advice on superannuation products in relation to a person's existing holding in a superannuation product but only to the extent required for:
(i) making a recommendation that the person establish a self managed superannuation fund; or
(ii) providing advice to the person on contributions or pensions under a superannuation product;
(c) class of product advice on the following:
(i) superannuation products;
(ii) securities;
(iii) simple managed investment schemes;
(iv) general insurance products;
(v) life risk insurance products;
(vi) basic deposit products;
(d) arrange to deal in an interest in a self managed superannuation fund.Note: Financial product advice on self managed superannuation funds includes advice about acquiring or disposing of an interest in a self managed superannuation fund.
limited licensee
means a financial services licensee that:
(a) does not deal with money to which Division 2 of Part 7.8 of the Act applies; and
(b) is only licensed to provide one or more limited financial services.simple managed investment scheme
has the same meaning as in the regulations.".
For subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act, an auditor's report lodged with a true and fair profit and loss statement and balance sheet in respect of a financial year must be lodged with ASIC in the prescribed form.
7.8.13(2)
For subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act, an auditor's report lodged with a true and fair profit and loss statement and balance sheet in respect of a financial year must contain a statement of the auditor's opinion on the following matters: (a) the effectiveness of internal controls used by a financial services licensee to comply with:
(i) Divisions 2, 3, 4, 4A, 5 and 6 of Part 7.8 of the Act; and
(b) whether each account required by sections 981B and 982B of the Act to be maintained by the financial services licensee has been operated and controlled in accordance with those sections; (c) whether all necessary records, information and explanations were received from the financial services licensee.
(ii) Division 7 of Part 7.8 of the Act other than section 991A;
REGULATION 7.8.13A 7.8.13A COMPLIANCE CERTIFICATE WITH PROFIT AND LOSS STATEMENT AND BALANCE SHEET
For paragraph 989B(3)(a) and subparagraph 989B(3)(b)(i) of the Act, a compliance certificate lodged by a licensee with a true and fair profit and loss statement and balance sheet in respect of a financial year must:
(a) be lodged with ASIC in the prescribed form; and
(b) be signed by:
(i) if the licensee is an individual - the licensee; or
(ii) if the licensee is a corporation - an officer of the corporation; or
(iii) if the licensee is a partnership or the trustees of a trust - a partner or trustee who performs duties in relation to financial services.
For paragraph 989C(a) of the Act, a true and fair profit and loss statement and balance sheet in respect of a financial year must contain a declaration by the financial services licensee that:
(a) the profit and loss statement and balance sheet give a true and fair view of the matters stated in it; and
(b) if the licensee is required to lodge an auditor's report under subparagraph 989B(3)(b)(ii) or paragraph 989B(3)(c) of the Act - the auditor's report lodged with the profit and loss statement and balance sheet is a true copy of the report on the profit and loss statement and balance sheet of the financial services licensee; and
(c) if the licensee is required to lodge a compliance certificate under paragraph 989B(3)(a) or subparagraph 989B(3)(b)(i) of the Act - the information in the compliance certificate lodged with the profit and loss statement and balance sheet is complete and accurate.
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if paragraph 989D(1)(b) were modified to read as follows:
"(b) if the licensee is:
(i) a body corporate that is a disclosing entity or a registered scheme - the day that is 3 months after the end of that financial year; or (ii) a body corporate that is not a disclosing entity or a registered scheme - the day that is 4 months after the end of that financial year.".
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 990B(1) of the Act were modified by:
(a) omitting "must, within 1 month after beginning to hold the licence," and substituting "who is not a limited licensee must"; and
(b) omitting "(4) and (5)" and substituting "(4), (5) and (5A)".
7.8.14B(2)
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 990B of the Act were modified by inserting after subsection 990B(5) the following subsection:
"(5A)
The licensee must appoint an auditor or auditors within:
(a) if the licensee was a limited licensee - one month after the licensee ceased to be a limited licensee; or
(b) for all other licensees - one month after beginning to hold the licence.".
7.8.14B(3)
For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if subsection 990B(9) of the Act were modified to read as follows:
"(9)
In this section:class of product advice
(Repealed by FRLI No F2023L01458, Sch 1[209] (effective 1 November 2023).)limited financial services
means the following financial services:
(a) financial product advice on self managedsuperannuation funds;
(b) financial product advice on superannuation products in relation to a person's existing holding in a superannuation product but only to the extent required for:
(i) making a recommendation that the person establish a self managed superannuation fund; or
(ii) providing advice to the person on contributions or pensions under a superannuation product;
(c) class of product advice on the following:
(i) superannuation products;
(ii) securities;
(iii) simple managed investment schemes;
(iv) general insurance products;
(v) life risk insurance products;
(vi) basic deposit products;
(d) arrange to deal in an interest in a self managed superannuation fund.Note: Financial product advice on self managed superannuation funds includes advice about acquiring or disposing of an interest in a self managed superannuation fund.
limited licensee
means a financial services licensee that:
(a) does not deal with money to which Division 2 of Part 7.8 of the Act applies; and
(b) is only licensed to provide one or more limited financial services.person
means:
(a) an individual auditor; or
(b) an authorised audit company.simple managed investment scheme
has the same meaning as in the regulations.".
For subsections 990B(7) and (8) of the Act, this regulation:
(a) sets out matters related to the appointment of a firm as auditor of the financial statements of a financial service [sic] licensee; and
(b) modifies the effect of section 990E of the Act.
If an applicant for a financial services licence:
(a) specifies, in the application for the licence, the name of a person or firm that is to be, or has been, appointed to audit the applicant's financial statements; and
(b) the auditor or auditors specified are appointed before the end of 1 month after the licence takes effect;
the applicant is taken to have lodged a notice under subsection 990B(6) of the Act.
The appointment is taken to be an appointment of each person who is:
(a) a member of the firm; and
(b) a registered company auditor;
whether the person is resident in Australia or not at the date of the appointment.
Unless subregulation (4) applies, the appointment of the members of a firm as auditors that is taken by subregulation (2) to have been made because of the appointment of the firm as auditor of the holder is not affected by the dissolution of the firm.
If a firm that has been appointed as auditor is reconstituted because of the death, retirement or withdrawal of a member or members, or because of the admission of a new member or new members, or both:
(a) a person who:
(i) was taken under subregulation (2) to be an auditor of the financial services licensee; and
is taken to have resigned as auditor as from the day of the retirement or withdrawal; and
(ii) has retired or withdrawn from the firm as previously constituted;
(b) a person who:
(i) is a registered company auditor; and
is taken to have been appointed as an auditor of the holder as from the date of the admission; and
(ii) is admitted to the firm;
(c) the reconstitution of the firm does not affect the appointment of the continuing members of the firm who are registered company auditors as auditors; and
(d) nothing in paragraphs (a) to (c) affects the operation of section 990C of the Act.
Sections 990F to 990H of the Act do not apply to a resignation mentioned in paragraph (4)(a) unless:
(a) the person who is taken to have resigned was the only member of the firm who was a registered company auditor; and
(b) there is no member of the firm who is a registered company auditor after the retirement or withdrawal of that person.
A report or notice that purports to be made or given by a firm appointed as auditor is taken not to have been duly made or given unless it is signed by a member of the firm who is a registered company auditor:
(a) in the firm's name; and
(b) in his or her own name.
If a vacancy in the office of an auditor continues, the surviving or continuing auditor or auditors (if any) may act as auditor while the vacancy continues.
If a vacancy occurs in the office of an auditor, and there is no surviving or continuing auditor of the financial services licensee, the financial services licensee must, within 14 days after the vacancy occurs appoint as auditor:
(a) a person who is eligible to act as auditor; or
(b) 2 or more persons each of whom is eligible to act as auditor; or
(c) a firm that is eligible to act as auditor; or
(d) 2 or more firms each of which is eligible to act as auditor; or
(e) a combination of persons and firms each of which is eligible to act as auditor.
If an auditor ceases to hold office in accordance with paragraph 990E(a) or (d) of the Act, the financial services licensee for which the auditor acted must lodge with ASIC a notice in the prescribed form stating that the auditor has ceased to hold the office.
For section 990C of the Act, a person is ineligible to act as auditor of a financial services licensee in any of the following circumstances:
(a) the person is not a registered company auditor;
(b) the person is indebted in an amount exceeding $5 000 to:
(i) the financial services licensee; or
(ii) if the financial services licensee is a body corporate - to a body corporate related to the financial services licensee;
(c) a body corporate in which the person has a substantial holding is indebted in an amount exceeding $5 000 to:
(i) the financial services licensee; or
(ii) if the financial services licensee is a body corporate - to a body corporate related to the financial services licensee;
(d) the person is a partner or employee of the financial services licensee;
(e) if the financial services licensee is a body corporate - the person is:
(i) an officer of the body; or
(ii) a partner, employer or employee of an officer of the body; or
7.8.16(2) [Circumstances in which firm ineligible]
(iii) a partner or employee of an employee of an officer of the body.
For section 990C of the Act, a firm is ineligible to act as auditor of a financial services licensee at a particular time unless:
(a) at least 1 member of the firm is a registered company auditor who is ordinarily resident in Australia; and
(b) if the business name under which the firm is carrying on business is not registered under a law of a State or Territory - a return has been lodged in the prescribed form showing, in relation to each member of the firm:
(i) the member's full name; and
(ii) the member's address at that time; and
(c) no member of the firm is indebted in an amount exceeding $5 000 to:
(i) the financial services licensee; or
(ii) if the financial services licensee is a body corporate - to a body corporate related to the financial services licensee; and
(d) no body corporate in which any member of the firm has a substantial holding is indebted in an amount exceeding $5 000 to:
(i) the financial services licensee; or
(ii) if the financial services licensee is a body corporate - to a body corporate related to the financial services licensee; and
(e) no member of the firm is a partner or employee of the financial services licensee; and
(f) if the financial services licensee is a body corporate - no member of the firm is:
(i) an officer of the body; or
(ii) a partner, employer or employee of an officer of the body; or
(iii) a partner or employee of an employee of an officer of the body; and
(g) if the financial services licensee is a body corporate - no officer of the financial services licensee receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters. 7.8.16(3) [Debt owed by a natural person to a body corporate]
For paragraphs (1)(b), (1)(c), (2)(c) and (2)(d), a debt owed by a natural person to a body corporate is to be disregarded if:
(a) the body corporate is:
(i) an Australian ADI; or
(ii) a body corporate registered under the Life Insurance Act 1995; and
(b) the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and
(c) the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence. 7.8.16(4) [Officer of body corporate]
For subregulations (1) and (2), a person is taken to be an officer of a body corporate if:
(a) the person is an officer of a related body corporate; or
(b) unless ASIC directs that this paragraph not apply in relation to the person - the person has, at any time within the immediately preceding period of 12 months, been an officer or promoter of the body corporate or of a related body corporate. 7.8.16(5) [Liquidator not officer]
For this regulation, a person is not taken to be an officer of a body corporate by reason only of being or having been the liquidator of the body corporate or of a related body corporate.
7.8.16(6) [Person not officer]For this regulation, a person is not taken to be an officer of a body corporate:
(a) by reason only of having been appointed as an auditor of that body corporate or of a related body corporate; or
(b) for any purpose relating to taxation, a public officer of a body corporate; or
(c) by reason only of being or having been authorised to accept on behalf of the body corporate or a related body corporate:
(i) service of process; or
(ii) any notices required to be served on the body corporate or related body corporate.
For paragraph 991B(3)(b) of the Act, if a participant in a licensed market:
(a) enters into a transaction; and
(b) complies with all of the participant's obligations in relation to the transaction under the market integrity rules and the operating rules of the licensed market;
subsection 991B(2) of the Act does not apply in relation to the transaction.
Subject to subregulation (3), for paragraph 991B(3)(b) of the Act, subsection 991B(2) of the Act does not apply to a transaction if, at the time that the instruction is issued, the financial services licensee is not a participant in the licensed market on which the particular financial product is being traded.
Subregulation (2) does not apply if:
(a) the financial services licensee deals, or has dealt, in a financial product traded on that market:
(i) on the licensee's own behalf (whether directly or through an agent or other representative); or
(ii) on behalf of a client; or
(b) an associate of the financial services licensee is a participant in the market mentioned in that subregulation.
For section 991C of the Act, this regulation applies in relation to all instructions received by a financial services licensee to deal in financial products through licensed markets, except to the extent that the market integrity rules, or the operating rules of a licensed market in relation to which the financial services licensee is a participant, otherwise provide.
Subject to subregulation (3), the financial services licensee must transmit, in the sequence in which they are received, all instructions to deal in a class of financial products at or near the market price for financial products of that class prevailing immediately before execution of the instructions.
7.8.18(3) [Proposed dealing by licensee on own account](a) a financial services licensee proposes to deal in a class of financial products on the financial services licensee's own account; and
(b) the person by whom or on whose instructions the instructions for the dealing are to be transmitted is aware of instructions of a client of the financial services licensee to deal in that class of financial products at or near the market price for a financial product of that class prevailing at that time (being instructions that have not been transmitted);
that person must not transmit, and must not give instructions to any other person to transmit, the instructions to give effect to the proposal of the financial services licensee to deal in that class of financial products before the instructions of the client are transmitted.
7.8.18(4) [Licensee must allocate dealings](a) during a particular period, a financial services licensee transmits instructions (whether or not those instructions consist of, or include, instructions giving effect to a proposal of the financial services licensee to deal in the class of financial products concerned on the financial services licensee's own account) to deal in a class of financial products at or near the market price for a financial product of that class prevailing immediately before execution of the instructions; and
(b) dealings in that class of financial products are effected pursuant to those instructions;
the financial services licensee must allocate the dealings to those instructions:
(c) in the sequence in which the dealings were effected; and
(d) in the sequence in which the financial services licensee transmitted the instructions. 7.8.18(5) [Non-disclosure of client's instructions]
A financial services licensee ( licensee 1 ), or a director, partner, officer or employee of a financial services licensee, must not disclose to any other financial services licensee, or to a person engaged or employed in the business of licensee 1 or any other financial services licensee, instructions of a client to deal in a class of financial products, except:
(a) to the extent necessary to execute the instructions; or
(b) as required by this Act or any other law. 7.8.18(6) [Interpretation]
In this regulation, a reference to the transmission by a financial services licensee of instructions to deal in a class of financial products is a reference:
(a) if the financial services licensee has direct access to the licensed market on which the instructions are to be executed - to the transmission of the instructions to that licensed market; or
(b) if the financial services licensee has access to the licensed market on which the instructions are to be executed only through another financial services licensee - to the transmission of the instructions to that other financial services licensee.
For section 991D of the Act, this regulation applies in relation to:
(a) instructions received by a financial services licensee to deal in financial products, on behalf of a client, through licensed markets or through other financial markets (whether inside or outside Australia); and
(b) instructions received by a financial services licensee to deal in financial products, on the financial service [sic] licensee's own account, through licensed markets or through other financial markets (whether inside or outside Australia). 7.8.19(2) [Contents]
The financial services licensee must keep records setting out brief particulars of the following matters:
(a) the instructions;
(b) if the instructions were received on behalf of a client - the client;
(c) the person who gave the instructions to the financial services licensee;
(d) the date and time of receipt of the instructions, and the person who received the instructions;
(e) the date and time of transmission of the instructions, and the person who transmitted the instructions;
(f) the date and time of execution of the instructions. 7.8.19(3) [Execution outside Australia]
(a) a financial services licensee transmits for execution on a financial market outside Australia and the external Territories instructions to deal in financial products; and
(b) it is not reasonably practicable for the financial services licensee to set out the date and time of execution of those instructions in its records;
the financial services licensee must set out the date and time as precisely as is reasonably practicable.
7.8.19(4) [Client's records to be kept separately]The financial services licensee must keep records relating to instructions given by a client to deal in financial products in a manner that makes the records identifiable separately from records relating to instructions to deal in financial products on the financial services licensee's own account.
7.8.19(5) [Records to be kept for five years]The financial services licensee must keep the records mentioned in subregulation (2) for at least 5 years after the particulars are created.
For the purposes of subsection 991E(1) of the Act, section 991E of the Act does not apply in relation to the sale or purchase of the following financial products by the body corporate by which the financial products were made available: (a) a security made available in accordance with Chapters 5C and 6D of the Act; (b) a managed investment product made available in accordance with Chapters 5C, 7 and 8A of the Act; (c) a foreign passport fund product made available in accordance with Chapters 7 and 8A of the Act.
7.8.20(1A)
Subject to subregulation (1B), for subsection 991E(1) of the Act, the subsection does not apply to a transaction if, at the time of the transaction, the financial services licensee is not a participant in the licensed market on which the particular financial product is being traded.
7.8.20(1B)
Subregulation (1A) does not apply if: (a) the financial services licensee deals, or has dealt, in a financial product traded on that market:
(i) on the licensee's own behalf (whether directly or through an agent or other representative); or
(b) an associate of the financial services licensee is a participant in the market mentioned in that subregulation.
(ii) on behalf of a client; or
7.8.20(2)
For subsection 991E(2) of the Act: (a) a disclosure referred to in paragraph 991E(1)(c) of the Act must be given by the financial services licensee to the non-licensee:
(i) in writing; and
(b) a consent referred to in paragraph 991E(1)(d) of the Act:
(ii) if the transaction is an on-market transaction - in relation to the particular transaction, a class of on-market transactions which includes the transaction, or all on-market transactions; and
(i) may be given orally, or in writing, by the non-licensee; and
(c) if the non-licensee gives an oral consent to the financial services licensee, or revokes a consent orally, the financial services licensee must:
(ii) is effective until it is revoked, either orally or in writing, by the non-licensee; and
(i) make a written record of the consent or revocation; and
(ii) provide a copy of the written record to the non-licensee within 10 business days after the day on which the consent is given or revoked.
7.8.20(3)
For subsection 991E(3) of the Act, a brokerage, commission or other fee is permitted in respect of a transaction between a financial services licensee and a non-licensee only if:
(a) the financial services licensee is a participant in a licensed market; and
(b) the financial services licensee has complied with all of the financial services licensee's obligations in relation to the transaction under the market integrity rules and the operating rules of the relevant licensed market; and
(c) the market integrity rules or the operating rules permit a brokerage, commission or fee to be charged to non-licensees of the same kind as the non-licensee; and
(d) the non-licensee has authorised the financial services licensee to charge the non-licensee in respect of the transaction; and
(e) the financial services licensee discloses to the non-licensee the amount of the brokerage, commission or fee, or the basis on which it will be calculated, before the non-licensee gives the authorisation mentioned in paragraph (d); and
(f) the amount of the brokerage, commission or fee is reasonable having regard to the amount that would have been charged by the financial services licensee to the non-licensee if the financial services licensee had entered the transaction with the non-licensee as agent and not on its own behalf.
7.8.20(4)
For subregulation (3):
(a) an authorisation given to the financial services licensee by the non-licensee:
(i) may be given orally, or in writing, by the non-licensee; and
(ii) is effective until it is revoked, either orally or in writing, by the non-licensee; and
(b) if the non-licensee gives an oral authorisation to the financial services licensee, or revokes an authorisation orally, the financial services licensee must:
(i) make a written record of the authorisation or revocation; and
(ii) provide a copy of the written record to the non-licensee within 10 business days after the day on which the authorisation is given or revoked; and
(c) a disclosure of the amount of the brokerage, commission or fee, or the basis on which it will be calculated must be given by the financial services licensee to the non-licensee:
(i) in writing; and
(ii) if the transaction is an on-market transaction - in relation to the particular transaction, a class of on-market transactions that includes the transaction, or all on-market transactions.
7.8.20(5)
For subsection 991E(7) of the Act, a financial services licensee must:
(a) keep records of the following matters relating to each financial products transaction entered into by the financial services licensee on the financial service [sic] licensee's own behalf:
(i) a description of the financial products transaction;
(ii) the date and time of receipt of the instructions for the financial products transaction;
(iii) the date and time of transmission of the instructions to the licensed market concerned;
(iv) the date and time of execution of the instructions;
(v) the source of the funds, or financial products, used to effect the financial products transaction; and
(b) keep the records in a manner that makes the records identifiable separately from records of the financial services licensee.
Note: Other requirements for record-keeping are in Division 6 of Part 7.8 of the Act.
REGULATION 7.8.20A 7.8.20A DEALINGS INVOLVING EMPLOYEES OF FINANCIAL SERVICE LICENSEES - RISK INSURANCE PRODUCTS
For subsection 991F(1) of the Act, a financial services licensee and one or more employees of the financial services licensee may, on their own behalves, jointly acquire a financial product if it is a risk insurance product.
For subsection 991F(2) of the Act, that subsection does not have effect in relation to:
(a) a bank; or
(b) a body corporate that gives credit in good faith to a person (not being a director of the body corporate) employed by the body corporate, or by another body corporate that is related to the first body corporate, to enable the person to acquire financial products that are:
(i) fully paid shares in the body corporate; and
(ii) to be held in beneficial ownership by the person.
For subsection 991F(2) of the Act, that subsection does not have effect in relation to a financial services licensee that gives credit in good faith to a person employed by:
(a) the financial services licensee; or
(b) a person related to the financial services licensee;
to enable the person to acquire an insurance product in relation to a credit facility provided by the financial services licensee to the person.
Example
Mortgage insurance is an insurance product in relation to a credit facility.
For subsection 991F(3) of the Act, a body corporate that is related to a financial services licensee may act as the agent of an employee of the financial services licensee, in respect of the acquisition mentioned in that subsection, only if:
(a) before the acquisition, the employee has informed the related body corporate that the employee is acquiring, or agreeing to acquire, the financial product on the employee's own behalf; and
(b) the financial services licensee has in place arrangements with the related body corporate to allow the licensee to be informed of, and to gain access to records relating to, the acquisition.
For subsection 991F(3) of the Act, a body corporate may act as the agent of a person who is an employee of a financial services licensee that is a participant in a licensed market and is so employed in connection with a business of dealing in financial products, in respect of an acquisition mentioned in that subsection, if:
(a) the body corporate holds an Australian financial services licence; and
(b) the body corporate is a participant in the same licensed market as the licensee; and
(c) the employer has given consent in writing to the particular acquisition before the acquisition takes place; and
(d) the employee gives the employer a copy of the confirmation of the transaction.
For subsection 991F(3) of the Act, a person who is:
(a) an employee of a financial services licensee that is a participant in a licensed market; and
(b) employed in connection with a business of dealing in financial products;
may, on the person's own behalf, acquire, or agree to acquire, a financial product that is able to be traded on that licensed market, without the licensee's [sic] acting as an agent in respect of the transaction, if the person's employment is not directly connected with the licensee's business of dealing in financial products on that licensed market.
Subject to subregulation (6), for subsection 991F(3) of the Act, the subsection does not apply unless:
(a) the particular financial product that is acquired or proposed to be acquired is a financial product traded on a market in which the financial services licensee is not a participant at the time of the acquisition or the proposed acquisition; or
(b) the particular financial product is a derivative the value of which is derived from a financial product mentioned in paragraph (a).
Subregulation (5) does not apply if:
(a) the financial services licensee deals, or has dealt, in a financial product traded on that market:
(i) on the licensee's own behalf (whether directly or through an agent or other representative); or
(ii) on behalf of a client; or
(b) an associate of the financial services licensee is a participant in the market mentioned in that subregulation.
For the purposes of paragraph 992A(2)(c) of the Act, the following kinds of offer, request or invitation are prescribed: (a) an offer for the issue or sale of:
(i) listed securities; or
that is made by telephone by a financial services licensee; (b) an offer for the issue or sale of securities that is made to a client by a financial services licensee through whom the client has bought or sold securities in the last 12 months; (c) an offer for the issue or sale of an interest in a managed investment scheme that is made to a client by a financial services licensee through whom the client has acquired or disposed of an interest in a managed investment scheme in the last 12 months; (d) a CSF offer;
(ii) an interest in a listed managed investment scheme;
(e) (Repealed) (f) an offer of, or a request or invitation relating to, a financial product that is an arrangement under which medical indemnity cover to which the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 applies is provided to:
(i) a medical practitioner (within the meaning of that Act); or
(g) an offer of, or a request or invitation relating to, a financial product that is an interest in a scheme that is in the nature of a litigation funding scheme, or a litigation funding arrangement, mentioned in regulation 5C.11.01; (h) an offer of, or a request or invitation relating to, a financial product that is a basic banking product, if the offer, request or invitation was made in the course of contact with the consumer that the consumer initiated for any purpose; (i) an offer of, or a request or invitation relating to, a financial product that is a facility if:
(ii) a registered health professional (within the meaning of that Act) in relation to whom regulations made for the purposes of Part 3 of that Act apply;
(i) the definition of basic deposit product in section 9 of the Act does not apply to the facility, but would apply to the facility if paragraph (d) of that definition were disregarded; and
(ii) funds are able to be withdrawn or transferred from the facility on the instruction of, or by authority of, the depositor with prior notice of 31 days or less to the ADI that makes the facility available (whether or not the withdrawal or transfer will attract a reduction in the return generated for the depositor); and
(j) an offer for the issue or sale of a financial product that is substantially similar to a financial product (the current financial product ) that the recipient of the offer:
(iii) the offer, request or invitation was made in the course of contact with the consumer that the consumer initiated for any purpose;
(i) already holds with the offeror; or
and that is in the nature of an offer to renew the current financial product.
(ii) held with the offeror at any time during the period of 30 day before the day on which the offer is made;
(Repealed by FRLI No F2021L01080, Sch 1[1] (effective 5 October 2021).) REGULATION 7.8.22 7.8.22 HOURS FOR HAWKING CERTAIN FINANCIAL PRODUCTS
(Repealed by FRLI No F2021L01080, Sch 1[1] (effective 5 October 2021).) REGULATION 7.8.22A 7.8.22A MODIFICATION OF PART 7.8
(Repealed by FRLI No F2021L01080, Sch 1[1] (effective 5 October 2021).) REGULATION 7.8.22B 7.8.22B RETURN OF FINANCIAL PRODUCT: FIRST HOME SAVER ACCOUNTS
(Repealed by SLI 2015 No 91, Sch 1[20] (effective 1 July 2015).)
For the purposes of paragraph 992AA(2)(c) of the Act, this regulation applies in relation to a superannuation product or an RSA that has been issued to the holder of the product as a result of a transfer between superannuation entities or RSAs.
7.8.23(2)
It is a requirement of the exercise of the right to return the superannuation product or RSA that, if the money to be repaid includes: (a) restricted non-preserved benefits; or (b) preserved benefits;
the holder of the superannuation product, or the RSA holder, must nominate a superannuation fund, approved deposit fund or RSA into which the money representing restricted non-preserved benefits or preserved benefits is to be repaid.
7.8.23(3)
For the purposes of paragraph 992AA(2)(c) of the Act, if the right of return is exercised, the responsible person must return the money as directed.
REGULATION 7.8.24 7.8.24 RIGHT OF RETURN NOT TO APPLY
For the purposes of paragraph 992AA(3)(a) of the Act, the following classes of financial products are excluded from section 992AA of the Act: (a) a financial product offered or issued under a distribution reinvestment plan or switching facility; (b) a financial product the acquisition of which is an additional contribution required by an existing agreement or contract; (c) a financial product issued as consideration for an offer made under a takeover bid under Chapter 6 of the Act; (d) an interim contract of insurance within the meaning of subsection 11(2) of the Insurance Contracts Act 1984; (e) a superannuation product that is issued in relation to:
(i) a non-public offer superannuation entity; or
(f) a risk insurance product that is:
(ii) a public offer superannuation entity mentioned in paragraph 7.6.01(1)(b), (c) or (d);
(i) of less than 12 months duration; and
(ii) a renewal of an existing product on the terms and conditions to which the product is currently subject.
For the purposes of paragraph 992AA(2)(c) of the Act, if a financial product is subject to a distribution, the amount that would otherwise be repaid on the exercise of the right to return the financial product may be reduced by the amount of that distribution.
(Repealed by FRLI No F2021L01080, Sch 1[5] (effective 5 October 2021).) PART 7.8A - DESIGN AND DISTRIBUTION REQUIREMENTS RELATING TO FINANCIAL PRODUCTS FOR RETAIL CLIENTS
In this Part:
credit
has the same meaning as in subregulation 2B(3) of the Australian Securities and Investments Commission Regulations 2001.
credit facility
has the same meaning as in the Australian Securities and Investments Commission Regulations 2001.
extended operation financial product
means a financial product that:
(a) is a financial product within the meaning of Division 2 of Part 2 of the ASIC Act; and
(b) is not a financial product within the meaning of the Act.
This regulation is made for the purposes of paragraph (c) of the definition of regulated person in subsection 994A(2) of the Act.
Persons who are exempt from having an Australian financial services licence
7.8A.02(2)
A person is prescribed in relation to a financial product if the person is exempt from the requirement in section 911A of the Act to hold an Australian financial services licence under either of the following provisions of the Act: (a) paragraph 926A(2)(a); (b) paragraph 926B(1)(a).
Product distributors
7.8A.02(3)
A product distributor within the meaning of section 910A of the Act (as modified by the ASIC Corporations (Basic Deposit and General Insurance Product Distribution) Instrument 2015/682) is prescribed in relation to the following financial products: (a) a basic deposit product; (b) a general insurance product; (c) a bundled consumer credit insurance product (within the meaning of that instrument).
Credit licensees
7.8A.02(4)
Each of the following persons is prescribed in relation to a financial product that is a credit facility: (a) a person who is a licensee within the meaning of the National Consumer Credit Protection Act 2009 (the Credit Act ); (b) a person who is a credit representative (within the meaning of the Credit Act) of such a licensee; (c) a person who is exempt from the operation of section 29 of the Credit Act (which is about the requirement to hold a credit licence) under any of the following provisions of that Act:
(i) paragraph 109(1)(a);
(ii) paragraph 109(3)(a);
(d) a person who engages in a credit activity (within the meaning of section 6 of the Credit Act) on the person's own behalf; (e) a person who contravenes section 29 of the Credit Act.
(iii) paragraph 110(1)(a);
Issuers and sellers of extended operation financial products
7.8A.02(5)
Each of the following persons is prescribed in relation to an extended operation financial product: (a) a person who issues the product; (b) a person who sells the product under a regulated sale.
This Division is made for the purposes of paragraphs 994B(1)(c) and 994B(2)(b) of the Act.
A person is not required by this Division to make a target market determination for a financial product if the product is: (a) a financial product that is not available for acquisition by issue, or by regulated sale, in this jurisdiction; or (b) securities (as defined in subsection 92(7) of the Act) offered under a recognised offer in relation to a recognised jurisdiction.
A person must make a target market determination for a financial product if: (a) the product is a simple corporate bonds depository interest where the bonds are to be issued under a 2-part simple corporate bonds prospectus; and (b) the person is the person required to prepare a disclosure document for the bonds.
Note: The person must make the determination before any person engages in retail product distribution conduct in relation to the product: see subparagraph 994B(2)(b)(ii) of the Act.
A person must make a target market determination for a financial product if: (a) the product is a debenture of a body that is:
(i) an ADI (short for authorised deposit-taking institution) within the meaning of the Banking Act 1959; or
(b) but for subsection 708(19) of the Act, disclosure to investors under Part 6D.2 of the Act would be needed for an offer of the debenture for issue or sale; and (c) the person is the person who, but for subsection 708(19) of the Act, would be required to prepare a disclosure document for an offer of the debenture for issue or sale.
(ii) registered under section 21 of the Life Insurance Act 1995; and
Note: The person must make the determination before any person engages in retail product distribution conduct in relation to the product: see subparagraph 994B(2)(b)(ii) of the Act.
CCH note: This provision is modified by legislative instruments. See the CCH note at the end of the provision for details.
A person must make a target market determination for a financial product if: (a) the product is a basic banking product; and (b) the person issues, or offers to issue, the product.
Note: The person must make the determination before any person engages in retail product distribution conduct in relation to the product: see subparagraph 994B(2)(b)(ii) of the Act.
CCH note - modifying legislative instruments: Regulation 7.8A.07 is modified by the following legislative instruments that commenced or were amended on or after 1 January 2022: Class Order 14/1262: Relief for 31 Day Notice Term Deposits.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
A person must make a target market determination for a financial product if: (a) the product is an interest in a managed investment scheme; and (b) the interest arises out of participation or proposed participation in an IDPS, but is not IDPS property; and (c) but for ASIC Class Order [CO 13/763], Part 7.9 of the Act would give rise to an obligation on a person to give another person a Product Disclosure Statement for the interest; and (d) the person is the operator of the IDPS.
Note: The person must make the determination before any person engages in retail product distribution conduct in relation to the product: see subparagraph 994B(2)(b)(ii) of the Act.
7.8A.08(2)
The following terms used in this regulation have the same meaning as in the section 912AD set out in paragraph 6 of ASIC Class Order [CO 13/763]: (a) IDPS; (b) IDPS property; (c) operator, in relation to an IDPS.
A person must make a target market determination for a financial product if: (a) the product is covered by subregulation (4); and (b) the product is, or will be, able to be traded on a licensed market; and (c) the issuer issued the product with the purpose mentioned in subparagraph 1012C(6)(c)(i) of the Act; and (d) it is reasonably likely that a regulated person will offer to sell the product to a person as a retail client within 12 months of the issue of the product; and (e) the person is the issuer of the product.
Note: Subsection 1012C(7) of the Act affects whether the issuer is taken to have a particular purpose.
7.8A.09(2)
The time before which the issuer is required to make the determination is the close of business on the day on which the issuer first issues the product with the purpose mentioned in paragraph (1)(c).
7.8A.09(3)
This regulation does not apply to a financial product if the issuer issued, or offered to issue, the product to a person as a retail client at or before the time specified in subregulation (2).
7.8A.09(4)
This subregulation covers the following financial products: (a) an interest in a managed investment scheme; (b) a share in a foreign company that has the economic features of a managed investment scheme and is an open-end investment company registered with the U.S. Securities and Exchange Commission under the Investment Company Act 1940 of the United States of America; (c) a legal or equitable right or interest in a financial product covered by paragraph (a) or (b); (d) an option to acquire, by way of issue, a financial product covered by paragraph (a), (b) or (c).
A person must make a target market determination for a financial product if: (a) the product includes a custodial or depository service; and (b) but for this regulation, Part 7.8A of the Act would not apply in relation to the financial product; and (c) the custodial or depository service is to be provided to a retail client; and (d) the person is the issuer of the product.
Note: The person must make the determination before any person engages in retail product distribution conduct in relation to the product: see subparagraph 994B(2)(b)(ii) of the Act.
For the purposes of paragraph 994B(3)(f) of the Act, each kind of financial product covered by a subregulation of this regulation is prescribed.
Superannuation
7.8A.20(2)
This subregulation covers an interest in an eligible rollover fund (within the meaning of the Superannuation Industry (Supervision) Act 1993).
7.8A.20(3)
This subregulation covers a defined benefit interest (within the meaning of the Superannuation Industry (Supervision) Regulations 1994).
Insurance products
7.8A.20(4)
This subregulation covers a medical indemnity insurance product.
Depository interests
7.8A.20(5)
This subregulation covers a depository interest in fully paid ordinary shares in a foreign company, being shares in relation to which, if they were offered directly to retail clients, Part 7.8A of the Act would not apply.
Money products
7.8A.20(6)
This subregulation covers a bank draft, including (but not limited to): (a) a cheque drawn by a financial institution on itself; or (b) a cheque drawn by a financial institution on a financial institution other than itself.
7.8A.20(7)
This subregulation covers a money order issued as a money order by, or for, Australia Post.
Extended operation financial products not received in this jurisdiction
7.8A.20(8)
This subregulation covers an extended operation financial product, if the offer to issue or sell the product is not received in this jurisdiction.
Credit facilities
7.8A.20(9)
This subregulation covers each of the following: (a) a credit facility that is not or was not issued, or that will not be issued, in the course of a business that is wholly or partly a business of providing credit; (b) a credit facility under the terms of which the credit is, or must be, applied wholly or predominantly for business purposes; (c) a credit facility that:
(i) involves a matter referred to in paragraph (b) of the definition of credit in subregulation 2B(3) of the Australian Securities and Investments Commission Regulations 2001; but
(d) a credit facility that is the provision of a mortgage that secures obligations under a credit contract (but not the credit contract); (e) the provision of credit by a pawnbroker in the ordinary course of a pawnbroker's business (being a business which is being lawfully conducted by the pawnbroker).
(ii) does not involve credit of a kind referred to in paragraph (a) of that definition;
Income management regimes
7.8A.20(10)
This subregulation covers a financial product that is: (a) a BasicsCard bank account (within the meaning of Part 3AA of the Social Security (Administration) Act 1999); or (b) a debit card that is attached to an account referred to in paragraph (a); or (c) an income management account (within the meaning of Part 3B of that Act); or (d) either:
(i) a stored value card (within the meaning of Part 3B of that Act); or
that relates to an account referred to in paragraph (c).
(ii) a voucher given under subsection 123YC(2) or 123YD(2) of that Act;
For the purposes of paragraph 1368(d) of the Act, Part 7.8A does not have effect in relation to a person in relation to a transaction that involves retail product distribution conduct if: (a) the person is an employer; and (b) the relevant retail client is an employee of the employer; and (c) the conduct is covered by subregulation (2).
7.8A.25(2)
The following retail product distribution conduct is covered by this subregulation: (a) under Part 7.9, giving the employee a Product Disclosure Statement for a product that is a default fund product for the employer and employee; (b) dealing in a financial product that consists only of the employer paying contributions on behalf of the employee into a product that is:
(i) a default fund product for the employer and employee; or
(c) dealing in a financial product that consists only of the employer arranging for the issue to the employee of a product that is:
(ii) a chosen fund product for the employee;
(i) a default fund product for the employer and employee; or
(ii) a chosen fund product for the employee.
7.8A.25(3)
In this regulation:
chosen fund product
, for an employee, means a financial product that is an interest in a chosen fund (within the meaning of Part 3A of the Superannuation Guarantee (Administration) Act 1992) for the employee.
default fund product
: a financial product that is an interest in a fund is a
default fund product
for an employer and an employee at a time if, assuming that the employee were a member of the fund and the employer were to make a contribution to the fund at the time for the benefit of the employee, the employer could rely on a provision of section 32C of the Superannuation Guarantee (Administration) Act 1992 (other than subsection 32C(1)) to satisfy the choice of fund requirements in relation to the contribution.
fund
has the same meaning as in Part 3A of the Superannuation Guarantee (Administration) Act 1992.
Modifying legislative instruments: The application of Pt 7.9 is affected by the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
For other legislative instruments or class orders before 1 January 2022 that affect the application of Pt 7.9, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
In this Part:
annuity
has the same meaning as in regulation 1.05 of the SIS Regulations.
charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
child account
(Omitted by SR 2004 No 145, Sch 2[1].)
child contributions
(Omitted by SR 2004 No 145, Sch 2[1].)
contact details
, in relation to a superannuation entity, means:
(a) the name of the superannuation entity and, if relevant, of the sub-plan; and
(b) a contact address for the superannuation entity; and
(c) a contact person and telephone number for the contact person.
contact person
, in relation to a superannuation entity, means a named individual, or a person holding a designated office or position, who is available to receive and deal with inquiries or complaints by product holders (as the case may be).
contribution
includes a benefit that is rolled over or transferred to a fund.
contribution charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
death and disability insurance charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
direct account charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
exit charge
means a charge that:
(a) is made against:
(i) a product holder's benefits in a fund or financial product; or
(ii) a product holder or another person on the product holder's behalf; and
(b) is only made when a payment is:
(i) made in respect of a product holder; or
(ii) transferred.
fund information
, in relation to a superannuation product or an RSA, means information required to be given under Subdivision 5.5.
fund reporting period
means a reporting period for fund information.
Government co-contribution
means a Government co-contribution payable under the Superannuation (Government Co-contribution for Low Income Earners) Act 2003.
investment management charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
legal personal representative
has the meaning given by section 10 of the SIS Act.
lost member
has the meaning given by the SIS regulations.
lost RSA holder
has the meaning given by the RSA regulations.
net amount of Government co-contribution received
means all amounts of Government co-contributions credited to the member of a superannuation fund (other than a self managed superannuation fund) or an RSA holder, less any amounts deducted by the superannuation provider or providers to reimburse it or them for repaying a co-contribution amount to the Commissioner of Taxation, during the reporting period.
net earnings
means the investment return on the assets of a fund after payment of transaction costs, government charges, taxes and duties and charges relating to the management of investment of fund assets.
ongoing management charge
(Definition omitted by SLI 2005 No 31, Sch 1[1].)
prescribed net earnings rate
, in relation to a fixed-rate option offered by a capital guaranteed fund for a period, means the net earnings rate declared, in advance, by the fund.
publication date
(Omitted by SLI 2007 No 324, Sch 1[7].)
remuneration
, for an Australian financial services licensee or an authorised representative, means a payment that:
(a) is made to the Australian financial services licensee or authorised representative because a superannuation interest is issued to a member; and
(b) is not made under an agreement by which the member, or another person on the member's behalf, has retained the Australian financial services licensee or authorised representative on a fee-for-service basis.
Note: Also see subregulation (5).
RSA institution
(Omitted by SR 2004 No 145, Sch 2[1].)
RSA
(Repealed by FRLI No F2023L01458, Sch 1[222(a)] (effective 1 November 2023).)
service provider
(Omitted by SLI 2005 No 31, Sch 1[1].)
sub-fund
, in relation to a capital guaranteed fund, means a segment of a public offer superannuation fund that has the following characteristics:
(a) the sub-fund has separately identifiable assets and separately identifiable beneficiaries;
(b) the interest of each beneficiary of the sub-fund is determined by reference only to the conditions governing that sub-fund;
(c) there is no transfer of assets, benefits or money between the sub-fund and another sub-fund without a transfer of a corresponding beneficial interest;
(d) the insurance and administration costs of the sub-fund are attributable only to that sub-fund.
superannuation provider
(Repealed by FRLI No F2023L01458, Sch 1[222(b)] (effective 1 November 2023).)
switching charge
(Omitted by SLI 2005 No 31, Sch 1[1].)
(a) brokerage paid because of an investment transaction; or
(b) a cost arising from maintenance of a property investment; or
(c) stamp duty on an investment transaction.
underlying investment
(Omitted by SLI 2005 No 31, Sch 1[1].)
unfunded defined benefits fund
means a defined benefits fund under which all or some of the amounts that will be required for the payment of a benefit are not paid into the fund until the member concerned becomes entitled to receive the benefit.
withdrawal benefit
has the same meaning as in the SIS Regulations.
7.9.01(2)
In this Part, unless the contrary intention appears, a reference to a member is taken to mean:
(a) in relation to a superannuation entity - a person who:
(i) is a member of the entity; or
(ii) receives a pension from the entity; or
(iii) has deferred his or her entitlement to receive a benefit from the entity; and
(b) in relation to an approved deposit fund - a depositor in the fund; and
(c) in relation to a pooled superannuation trust - a unit-holder.
7.9.01(3)
In a Division of this Part, a reference to a fund is a reference to a fund of the kind to which the Division applies.
7.9.01(4)
(Omitted by SLI 2005 No 31, Sch 1[2].)
7.9.01(5)
For the definition of remuneration , payment is taken to have been given to an Australian financial services licensee or an authorised representative for issuing an interest to a member if:
(a) issuing the interest is taken into account to increase the payment given to the Australian financial services licensee or authorised representative for other matters (for example, bonus commission); or
(b) the payment is given after the interest is issued and only if the member remains a member of the fund (for example, trailing commission).
REGULATION 7.9.02 SUB-PLANS 7.9.02(1) [Application]
This regulation applies if the trustee of a regulated superannuation fund proposes to make a determination as to whether a sub-plan should be made.
In making a determination, the trustee must have regard to all relevant matters, including each of the following:
(a) whether there is a common factor in a segment of the fund (for example, whether a group of members of the fund have the same employer);
(b) whether the governing rules of the fund provide for a particular segment to be a sub-plan.
For subsection 1017C(9) of the Act, the sub-plan is a relevant sub-plan.
For paragraph 761E(7)(a) of the Act, if:
(a) a person is a member of a superannuation fund in relation to a sub-plan; and
(b) either:
(i) the person's membership changes to membership in relation to another sub-plan; or
(ii) the person holds interests in 2 or more sub-plans at the same time;
the change to membership in relation to the other sub-plan is taken to be the issue of a new interest in the superannuation fund.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to the fund (including a sub-plan) as set out in Part 1 of Schedule 10A.
For subsection 1015C(4) of the Act, the following are alternative ways of giving a Statement to a person:
(a) making the Statement available to the person in any way that:
(i) is agreed to by the person; and
(ii) allows the regulated person to be satisfied, on reasonable grounds, that the person has received the Statement;
(b) making the Statement available to the person's agent in any way that:
(i) is agreed to by the agent; and
(ii) allows the regulated person to be satisfied, on reasonable grounds, that the agent has received the Statement.
If a provision of the Act or these Regulations imposes additional requirements in relation to a matter in subregulation (1), the alternative way of giving a Statement is subject to the requirements.
Note: Regulation 7.9.02B is an example of an additional requirement.
For paragraph 1015C(5)(b) of the Act, a statement that is to be given in electronic form must, as far as practicable, be presented in a way that will allow the person to whom it is given to keep a copy of it so that the person can have ready access to it in the future.
A statement that is to be given in electronic form must be presented in a way that clearly identifies the information that is part of the statement.
(Omitted by SR 2003 No 369, Sch 1[12] (effective 23 December 2003).) Division 2 - Arrangements for Product Disclosure Statements in relation to superannuation products and RSAs
This Division applies in relation to superannuation products and RSAs.
Note: See paragraphs 764A(1)(g) and (h) of the Act.
For section 1012F of the Act, the following superannuation products are specified:
(a) a superannuation interest issued by the trustee of a regulated superannuation fund that is not a public offer superannuation fund, other than:
(i) (Omitted)
(ii) a financial product taken to be issued because of regulation 7.1.04E; or
(iii) an annuity or pension taken to be issued because of subregulation 7.9.02(4); or
(iv) an interest in a self managed superannuation fund that is not acquired at the time that the fund is established;
(b) a pension issued by a superannuation fund the rules of which do not allow a member to receive accumulated benefits in a form other than a pension from that fund;
(c) a superannuation interest issued by the trustee of a successor fund in relation to the transfer of benefits in the fund;
(d) a superannuation interest issued by the trustee of a regulated superannuation fund as a result of complying with a commutation authority issued to the trustee under Subdivision 136-B in Schedule 1 to the Taxation Administration Act 1953.
7.9.04(2)
For paragraph 1020G(1)(c) of the Act:
(a) section 1012B of the Act is modified in its application in relation to the specified superannuation product as set out in Part 17 of Schedule 10A; and
(b) section 1012I of the Act is modified in its application in relation to the specified superannuation product as set out in Part 17 of Schedule 10A.
Subdivision 2.3 - Product Disclosure Statement for RSA
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to an RSA as set out in Part 2 of Schedule 10A.
(Omitted by SR 2002 No 41, Sch 1[51] (effective 11 March 2002).) REGULATION 7.9.06A 7.9.06A MEANING OF RELEVANT SUPERANNUATION ENTITY
For the definition of relevant superannuation entity in subsection 1016A(1) of the Act, a public offer superannuation entity is specified.
For paragraph 1016A(2)(f) of the Act, the following situation in which a restricted issue occurs is prescribed: (a) the financial product is a superannuation product; (b) the interest is issued by the trustee of a public offer superannuation entity in relation to the payment of benefits to the entity:
(i) from an exempt public sector superannuation scheme; and
(c) if the application is the first application under the applied provisions made to the trustee of the public offer superannuation entity by the trustee of the exempt public sector superannuation scheme on behalf of any person - the application is an eligible application.
(ii) in accordance with an application made under the provisions of section 243 of the SIS Act, as applied by subregulation (2) (the applied provisions );
7.9.06B(2)
For paragraph (1)(b), section 243 of the SIS Act applies in relation to the payment of benefits from the exempt public sector superannuation scheme to a public offer superannuation entity as if: (a) a reference in that section to a transferor fund were a reference to the exempt public sector superannuation scheme; and (b) a reference in that section to an eligible rollover fund were a reference to the public offer superannuation entity.
Subdivision 2.5 - Product Disclosure Statement for insurance options REGULATION 7.9.07 7.9.07 MODIFICATION OF ACT: PRODUCT DISCLOSURE STATEMENT IN RELATION TO INSURANCE OPTIONS
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to a superannuation entity or an RSA as set out in Part 3 of Schedule 10A.
(Omitted by SR 2004 No 145, Sch 2[3] (effective 1 October 2004).) Division 2A - Product Disclosure Statement for warrants
This regulation applies in relation to warrants.
For paragraph 1020G(2)(a) of the Act, section 1010A of the Act is modified by adding after subsection 1010A(1):
"(1A)
Despite subsection (1), this Part applies in relation to a financial product to which regulation 7.9.07A of the Corporations Regulations 2001 applies.".
For paragraph 761E(7)(a) of the Act, if the financial product is entered into, or acquired, on a financial market through an arrangement made by a financial services licensee acting on behalf of another person:
(a) the financial services licensee is not taken to be the issuer of the financial product; and
(b) the warrant issuer is taken to be the issuer of the financial product.
For paragraph 761E(7)(a) of the Act, if the financial product is entered into, or acquired, on a financial market through an arrangement made by an authorised representative of a financial services licensee acting on behalf of another person (not being the licensee):
(a) the financial services licensee is not taken to be the issuer of the financial product; and
(b) the warrant issuer is taken to be the issuer of the financial product.
For paragraph 1013F(2)(f) of the Act:
(a) information that is, or is required to be, disclosed to the market in relation to the underlying thing from which a warrant derives its value, including information published by a market operator in relation to financial products (including warrants and types of warrants) in the form of market data or educational material which is generally made available to the public by the market operator is a matter that may be taken into account for section 1013F of the Act; and
(b) other information that a market operator is required to disclose to the market, in accordance with the Act, including:
(i) information that was required to be disclosed to the market operator; and
is a matter that may be taken into account for section 1013F of the Act; and
(ii) information that the operator was required to disclose in order to meet its obligations under the Act;
(c) information that is generally made available to the public by a market operator in relation to financial products, including information published about a warrant that is entered into or acquired on a financial market in the form of market data or educational material, is a matter that may be taken into account for section 1013F of the Act.
For paragraph 1017B(3)(c) of the Act, a way in which the warrant issuer may notify a holder of a matter to which that paragraph applies is by giving the relevant information to the operator of the financial market on which the warrant was entered into or acquired.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies in relation to a warrant as if the words ``but not more than 3 months after, the change or event occurs'' in item 1 of the table in subsection 1017B(5) of the Act were omitted.
In this regulation:
warrant issuer
, in relation to a warrant, means the person who:
(a) determines the terms of the warrant, including the rights and conditions of the warrant; and
(b) is responsible for obligations owed under the terms of the warrant.
For paragraph 1020G(1)(c) of the Act, subregulations (2) and (3) apply if:
(a) the standard terms and conditions relating to a type of derivative are:
(i) specified by the market operator; and
(ii) made generally available to the public; and
(b) the financial services licensee in relation to the derivative is taken to be the issuer of the derivative under subsection 761E(6) of the Act; and
(c) a retail client for the derivative has agreed to the terms and conditions as applicable to the financial product or products that are the subject of the transaction.
Subsection 1013D(1) of the Act is modified in its application to the derivative as if the information required by paragraphs 1013D(1)(b), (c), (d) and (f) were required to be included as general information about the type of derivative, including, for example:
(a) general information about exercise prices for the type of derivative; and
(b) general information about expiry dates for the type of derivative; and
(c) general information about exercise styles for the type of derivative.
For paragraph 1013F(2)(f) of the Act:
(a) information that is, or is required to be, disclosed to the market in relation to the underlying thing from which a derivative derives its value, including information published by a market operator in relation to financial products (including derivatives and types of derivatives) in the form of market data or educational material which is generally made available to the public by the market operator is a matter that may be taken into account for section 1013F of the Act; and
(b) other information that a market operator is required to disclose to the market, in accordance with the Act, including:
(i) information that was required to be disclosed to the market operator; and
is a matter that may be taken into account for section 1013F of the Act; and
(ii) information that the operator was required to disclose in order to meet its obligations under the Act;
(c) information that is generally made available to the public by a market operator in relation to financial products, including information published about derivatives and types of derivatives in the form of market data or educational material, is a matter that may be taken into account for section 1013F of the Act.
For paragraph 1016F(7)(a) of the Act, financial products that are derivatives are excluded from section 1016F if the operating rules of a licensed market or a licensed CS facility permit the closing out of the derivatives by the matching up of the arrangement with another arrangement of the same kind under which a person has assumed an offsetting position.
For paragraph 949B(1)(e) of the Act, a regulated person must give a wholesale client a Product Disclosure Statement or a Supplementary Product Disclosure Statement for a financial product if:
(a) the financial product is offered or issued by a discretionary mutual fund (within the meaning given by subsections 5(5) and (6) of the Financial Sector (Collection of Data) Act 2001); and
(b) the regulated person would be required to give the Statement if the product were offered or issued to a retail client.
7.9.07CA(2)
The Product Disclosure Statement or Supplementary Product Disclosure Statement required to be given under this regulation must be the same as that which would be given to a retail client.
For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):
"(9G)
In an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for a financial product if:
(a) the financial product is a general insurance product; and
(b) the product would be provided to the person as a retail client; and
(c) the financial product would be provided as part of a contract of insurance that offers more than one kind of insurance cover; and
(d) the regulated person reasonably believes that the client does not intend to acquire the product.".
For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):
"(9J)
In an issue situation or sale situation, the regulated person does not have to give the client a Product Disclosure Statement for a financial product if:
(a) the situation is an offer to issue or sell the financial product; and
(b) the client informs the regulated person, in the course of the contact during which the offer is made, that the client does not intend to acquire the financial product; and
(c) no issue or sale results from the offer.
(9K)
For paragraph (9J)(c), the client must inform the regulated person explicitly but may inform the regulated person orally or in any other way.".
For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D(10):
"(9L)
In an issue situation, the regulated person does not have to give the client a Product Disclosure Statement, if:
(a) the regulated person has not given the client a Product Disclosure Statement because the regulated person did not need to give a Product Disclosure Statement at or before the time when it would otherwise be required to be given because of the operation of section 1012F or 1012G of the Act, regulation 7.9.04 or Part 17 of Schedule 10A; and
(b) either:
(i) the regulated person:
(A) has an address for the client; and
(B) is satisfied, on reasonable grounds that the address is incorrect; and
(C) has taken reasonable steps to locate the client but is unable to do so; or
(ii) the regulated person:
(A) does not have an address for the client; and
(B) is unable to obtain an address for the client; and
(C) has taken reasonable steps to locate the client but has been unable to do so.
(9M)
If a regulated person does not give a client a Product Disclosure Statement in reliance on subsection (9L), and the regulated person becomes aware of the address or location of the client, the regulated person must give the client a Product Disclosure Statement as soon as practicable.".
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1012D of the Act were modified by inserting the following subsection after subsection 1012D(7):
"Recommendation, issue or sale situation - when Product Disclosure Statement not required
(7A)
In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if:
(a) the product is:
(i) a basic deposit product; or
(ii) a facility for making non-cash payments (see section 763D) that is related to a basic deposit product; or
(iii) a traveller's cheque; and
(b) the regulated person has provided information about the cost of the product (if any) to the client; and
(c) the regulated person has informed the client as to whether or not any amounts will or may be payable by the holder of the product, in respect of the product, after its acquisition; and
(ca) if the product is a protected account under the Banking Act 1959 - the regulated person has informed the client that:
(i) the account-holder may be entitled to payment under the financial claims scheme; and
(ii) payments under the scheme are subject to a limit for each depositor; and
(iii) information about the financial claims scheme can be obtained from the APRA website at http://www.fcs.gov.au; and
(d) the regulated person has asked the client whether or not the client would like further information about the amounts mentioned in paragraph (c); and
(e) if the client indicates that the client would like the further information about the amounts mentioned in paragraph (c) - the regulated person has provided that information.".
For paragraph 1020G(1)(c) of the Act, section 1012D of the Act is modified by inserting after subsection 1012D(8):
"(8A)
In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if the client is not in this jurisdiction."
[ CCH Note: Sch 9[6] of SLI 2005 No 324 commenced immediately after Sch 4[8] of that instrument. Sch 4[8] inserted reg 7.9.07FA.]
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified by adding after section 1014E of the Act the following section:
"1014EA General insurance product situation in which only a Supplementary Product Disclosure Statement need be given
(1)
This section applies if:
(a) a person (the client ) acquires a general insurance product (the original product ) from another person (the regulated person ); and
(b) the client received a Product Disclosure Statement (the original PDS ) relating to the product as required by the Act; and
(c) the contract of insurance provides a renewable insurance cover (within the meaning of subsection 58(1) of the Insurance Contracts Act 1984); and
(d) the regulated person offers to renew the client's contract of insurance (the new product ); and
(e) the regulated person is required to give the client a Product Disclosure Statement (the new PDS ) relating to the new product; and
(f) the original PDS contains some but not all of the information that the new PDS is required to contain.
(2)
The regulated person may give the client a new PDS.
(3)
If the regulated person does not give the client a new PDS, the regulated person must give the client a Supplementary Product Disclosure Statement that contains the additional information.
(4)
If the regulated person gives the client a Supplementary Product Disclosure Statement under subsection (3), for the purposes of this Act:
(a) the original PDS is taken to be the new PDS; and
(b) the new PDS is taken to have been given to the client as required by this Act."
[ CCH Note: Sch 5, Pt 2[3] of SLI 2005 No 324 commenced immediately after the commencement of Sch 9[6] of that instrument. Sch 9[6] inserted reg 7.9.07FB.]
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1013A of the Act were modified by adding after subsection 1013A(3):
``(3A)
A Product Disclosure Statement for a product that is not a jointly issued product may be prepared by, or on behalf of, only 1 responsible person.''.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1022A of the Act were varied by omitting paragraph (b) of the definition of defective in subsection (1) and the following paragraph were inserted:
"(b) if it is a Product Disclosure Statement, a Short-Form PDS or a Replacement Product Disclosure Statement - either:
(i) it is not prepared in accordance with section 1013A; or
(ii) there is an omission from the Product Disclosure Statement, Short-Form PDS or Replacement Product Disclosure Statement of material required by section 1013C, other than material required by section 1013B or 1013G; or".
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017BA of the Act were modified as set out in Part 6A of Schedule 10A.
This Subdivision is made for paragraphs 1017BA(1)(c) and (e) and subsection 1017BA(2) of the Act.
In this Subdivision:
lifecycle exception
has the meaning given by subsection 29TC(2) of the SIS Act.
lifecycle MySuper product
means a MySuper product to which a lifecycle exception applies.
lifecycle stage
, of a MySuper product offered by a regulated superannuation fund, means a subclass of members of the fund who hold the MySuper product, determined on the basis of:
(a) age; or
(b) age and the factors mentioned in regulation 9.47 of the SIS Regulations.
(a) for a MySuper product other than a lifecycle MySuper product:
(i) if the MySuper product has been offered for less than 10 financial years and there is no predecessor product - the number of whole financial years for which the product has been offered; or
(ii) if the MySuper product and a predecessor product have been offered for a total of less than 10 financial years - the number of whole financial years for which the products have been offered; or
(b) for a lifecycle stage of a lifecycle MySuper product:
(i) if the lifecycle stage of the MySuper product has been offered for less than 10 financial years and there is no equivalent lifecycle stage of a predecessor product - the number of whole financial years for which the lifecycle stage has been offered; or
(ii) if the lifecycle stage of the MySuper product and an equivalent lifecycle stage of a predecessor product have been offered for a total of less than 10 financial years - the number of whole financial years for which the lifecycle stage of the MySuper product and the predecessor product have been offered.
predecessor product
, in relation to a MySuper product, means a default investment option in existence on 30 June 2013 in relation to which, if a member's accrued default amount were attributed to the MySuper product, the RSE licensee would be exempted from disclosure requirements under subregulation 9.46(2) of the SIS Regulations.
reporting standard
means a reporting standard determined by APRA under subsection 13(1) of the Financial Sector (Collection of Data) Act 2001, as in force from time to time.
For this Subdivision, a reporting standard is a MySuper product dashboard reporting standard if the reporting standard contains a clause stating that it relates to information that will be included in a product dashboard for a MySuper product.
Information for a MySuper product must be set out in a product dashboard as follows (including the headings):
PRODUCT DASHBOARD | |
Return target | |
Return | |
Comparison between return target and return | |
Level of investment risk | |
Statement of fees and other costs |
7.9.07Q(2)
For a lifecycle MySuper product, the information mentioned in each item of the table must be set out in relation to each lifecycle stage of the product.
The return target for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.
7.9.07R(2)
The return target for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.
7.9.07R(3)
The period in relation to which the return target must be worked out is the period of 10 years starting at the beginning of the current financial year.
MySuper product other than lifecycle MySuper product
7.9.07S(1)
The return for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.
7.9.07S(2)
The period in relation to which the return must be worked out is:
(a) the last 10 whole financial years, if:
(i) the MySuper product has been offered for at least 10 financial years; or
(ii) the MySuper product and a predecessor product have been offered for a total of at least 10 financial years; or
(b) the offering period.
Lifecycle MySuper product
7.9.07S(3)
The return for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.
7.9.07S(4)
The period in relation to which the return in relation to a lifecycle stage of a lifecycle MySuper product must be worked out is:
(a) the last 10 whole financial years, if:
(i) the lifecycle stage of the MySuper product has been offered for at least 10 financial years; or
(ii) the lifecycle stage of the MySuper product and an equivalent stage of a predecessor product have been offered for a total of at least 10 financial years; or
(b) the offering period.
MySuper product other than lifecycle MySuper product
7.9.07T(1)
The comparison between the return target and the return for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.
7.9.07T(2)
The period in relation to which the comparison must be worked out is:
(a) the last 10 whole financial years, if:
(i) the MySuper product has been offered for at least 10 financial years; or
(ii) the MySuper product and a predecessor product, or a lifecycle stage have been offered for a total of at least 10 financial years; or
(b) the offering period.
Lifecycle MySuper product
7.9.07T(3)
The comparison between the return target and the return for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.
7.9.07T(4)
The period in relation to which the comparison in relation to a lifecycle stage of a MySuper product must be worked out is:
(a) the last 10 whole financial years, if:
(i) the lifecycle stage of the MySuper product has been offered forat least 10 financial years; or
(ii) the lifecycle stage of the MySuper product and an equivalent stage of a predecessor product have been offered for a total of at least 10 financial years; or
(b) the offering period.
A product dashboard must set out a comparison mentioned in regulation 7.9.07T as a graph.
7.9.07U(2)
The graph must contain:
(a) a column representing the return for each year in the comparison period; and
(b) a line representing the moving average return target for the comparison period; and
(c) a line representing the moving average return for the comparison period.
7.9.07U(3)
The column and the lines mentioned in subregulation (2) must be identified in accordance with the MySuper product dashboard reporting standards.
7.9.07U(4)
In this regulation:
comparison period
means the period mentioned in subregulation 7.9.07S(3) that is applicable in the circumstances.
moving average return
has the meaning given by the MySuper product dashboard reporting standards.
moving average return target
has the meaning given by the MySuper product dashboard reporting standards.
The level of investment risk for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.
7.9.07V(2)
The level of investment risk for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.
7.9.07V(3)
The level of investment risk must be expressed using the relevant risk label set out in the MySuper product dashboard reporting standards.
7.9.07V(4)
The period in relation to which the level of investment risk must be worked out is the current financial year.
The statement of fees and other costs for a MySuper product other than a lifecycle MySuper product must be worked out in accordance with the MySuper product dashboard reporting standards.
7.9.07W(2)
The statement of fees and other costs for a lifecycle MySuper product must be worked out in relation to each lifecycle stage of the product in accordance with the MySuper product dashboard reporting standards.
7.9.07W(3)
The period in relation to which the statement of fees and other costs must be worked out is the current financial year.
7.9.07W(4)
For paragraph 1017BA(1)(c) of the Act, the period is 14 days after a change to the fees or other costs.
For the purposes of subsection 1017BB(1A) of the Act, investment items of a kind described in an item of Table 1 in Schedule 8D to these Regulations are a prescribed kind of disclosable item if the table provides that individual asset names are not required to be disclosed for investments items that meet that description.
Example:
Cash assets are required to be organised by the name of the institution and are a prescribed kind of disclosable item as the words "Individual asset names not required to be disclosed" appear immediately below "Name of institution" for cash.
7.9.07Z(2)
For the purposes of subsection 1017BB(1A) of the Act, investment items of a kind described in an item of Table 2, 3 or 4 in Schedule 8D are a prescribed kind of disclosable item.
General rule
7.9.07ZA(1)
For the purposes of subsection 1017BB(3) of the Act, the trustee, or the trustees, of the registrable superannuation entity must organise the information about an investment option in a way that: (a) is consistent with the tables in Schedule 8D to these Regulations; and (b) is easily downloadable and readable; and (c) is in one or more formats, with at least one of those formats being a delimited file format.
Different rows or columns in tables
7.9.07ZA(2)
For the purposes of paragraph (1)(a), when organising the information about an investment option in a way that is consistent with the tables in Schedule 8D, the tables used for the investment option may have a different number of rows or columns from those in the tables in that Schedule.
Using subsidiary tables
7.9.07ZA(3)
Subregulation (1) does not prevent the information about the investment option from being expressed in a table that: (a) deals only with the investment option; and (b) makes use of one or more subsidiary tables;
if all of the information referred to in Schedule 8D is readily accessible from that combination of tables.
This regulation is made for the purposes of paragraph 1017DA(1)(a) of the Act.
7.9.07ZB(2)
The trustee of a superannuation entity (other than an entity referred to in subparagraph (b)(i), (ii) or (iii) of the definition of registrable superannuation entity in section 9 of the Act or a self managed superannuation fund) must provide the holder of a superannuation product (being an interest in that entity) with the information, relating to the entity and any relevant sub-plan (within the meaning of section 1017C of the Act), specified in an item in the table in subregulation (3).
7.9.07ZB(3)
Subject to subregulations (5) to (7), the information specified in an item in the following table must be provided by making it publicly available on the entity's website from: (a) if, immediately before the day Schedule 6 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 commences, the information was required under paragraph 29QB(1)(b) of the SIS Act to be made publicly available - the time the Treasury Laws Amendment (Financial Reporting and Auditing of Registrable Superannuation Entities) Regulations 2023 commences; or (b) otherwise - the time specified in that item.
If that item specifies an end time, the trustee is not required to provide the information after that time.
Information to be provided | |||
Item | Information | Time from which information must be made publicly available | |
1 | The current trust deed and any material not incorporated in the current version of the trust deed | Either: | |
(a) | no later than 20 business days after the deed or material begins to apply; or | ||
(b) | if the deed or material is amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
2 | The governing rules | Either: | |
(a) | no later than 20 business days after the governing rules begin to apply; or | ||
(b) | if the governing rules are amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
3 | The rules relating to the nomination, appointment and removal of the trustee or a director of the trustee | Either: | |
(a) | no later than 20 business days after the rules begin to apply; or | ||
(b) | if the rules are amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
4 | The most recent actuarial report, provided in relation to the entity under a provision of the RSE licensee law, for each defined benefit fund or each defined benefit sub-fund in each defined benefit fund | For each report, no later than 20 business days after the trustee receives the report | |
5 | The most recent Product Disclosure Statement, Supplementary Product Disclosure Statement or Replacement Product Disclosure Statement, for the product | No later than 20 business days after the statement is first given to a person in respect of a recommendation, issue or sale of the product | |
6 | If on 31 August in the current financial year both of the following circumstances exist: | From 1 business day after 31 August in the current financial year until 1 business day after 31 August in the following financial year | |
(a) | APRA has given the trustee a notification of a determination under subsection 60C(2) of the SIS Act that the requirement in subsection 60D(1) of that Act has not been met for a Part 6A product (within the meaning of that Act) offered by the entity, in relation to the most recently completed financial year; | ||
(b) | APRA had not given the trustee a notification of another determination under subsection 60C(2) of the SIS Act that the requirement in subsection 60D(1) of that Act had not been met for the Part 6A product, in relation to the financial year 2 years before the current financial year; | ||
a description of those circumstances | |||
7 | The most recent Financial Services Guide | No later than 20 business days after the Financial Services Guide is first given to a person under section 941A or 941B of the Act | |
8 | A summary of each change or event that the holder has been notified of under section 1017B of the Act in the previous 2 years | No later than 20 business days after the most recent notice is given | |
9 | The register of relevant interests, and the register of relevant duties, provided in relation to the entity under a provision of the RSE licensee law | No later than 20 business days after the end of each period of 3 months ending on 31 March, 30 June, 30 September or 31 December | |
10 | A summary of the conflicts management policy | Either: | |
(a) | no later than 20 business days after the policy begins to apply; or | ||
(b) | if the policy is amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
11 | The proxy voting policies | For each policy - either: | |
(a) | no later than 20 business days after the policy begins to apply; or | ||
(b) | if the policy is amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
12 | A summary of when, during the previous financial year of the entity, and how the entity has exercised its voting rights in relation to shares in listed companies | No later than 20 business days after the end of the previous financial year | |
13 | If the trustee is a body corporate - the constitution of the body corporate | Either: | |
(a) | no later than 20 business days after the constitution begins to apply; or | ||
(b) | if the constitution is amended or replaced - the later of: | ||
(i) | the date of the amendment or replacement; and | ||
(ii) | the effective date of the amendment or replacement | ||
14 | The annual financial statement for the previous financial year that the trustee, as a financial services licensee, is required to lodge with ASIC under Part 7.6 of the Act | The day that the annual financial statement is first lodged with ASIC |
7.9.07ZB(4)
The information must be: (a) readily accessible from the entity's website; and (b) kept up to date.
Exception - personal information
7.9.07ZB(5)
If: (a) the trustee is required under subregulations (2) and (3) to make available a document referred to in item 1, 2, 4, 5 or 8 of the table in subregulation (3); and (b) the document contains personal information in relation to a beneficiary or former beneficiary of the registrable superannuation entity;
the trustee may instead comply with the requirement by making available a version of the document that has been redacted to exclude personal information (within the meaning of the Privacy Act 1988) in relation to a beneficiary or former beneficiary of the registrable superannuation entity.
Transitional exceptions - standard employer-sponsored sub-plan
7.9.07ZB(6)
If: (a) before 1 July 2024, the trustee is required under subregulations (2) and (3) to make available a document referred to in item 1, 2, 4, 5 or 8 of the table in subregulation (3); and (b) the document only relates to the entity because it relates to a standard employer-sponsored sub-plan;
the trustee may instead comply with the requirement by making the document available from 1 July 2024.
7.9.07ZB(7)
If: (a) before 1 July 2024, the trustee is required under subregulations (2) and (3) to make available a document referred to in item 1, 2, 4, 5 or 8 of the table in subregulation (3); and (b) the document contains information that only relates to the registrable entity because it relates to a standard employer-sponsored sub-plan;
then, until 1 July 2024, the trustee may instead comply with the requirement by making available a version of the document that has been redacted to exclude information that only relates to the registrable entity because it relates to a standard employer-sponsored sub-plan.
7.9.07ZB(8)
A standard employer-sponsored sub-plan means a segment of a public offer superannuation fund for which each member of the segment is: (a) a standard employer-sponsored member; or (b) a member of a class that is a prescribed class for the purposes of sub-subparagraph 18(1)(a)(ii)(B) of the SIS Act.
This regulation is made for the purposes of paragraph 1017DA(1)(a) of the Act.
7.9.07ZC(2)
The trustee of a superannuation entity (other than an entity referred to in subparagraph (b)(i), (ii) or (iii) of the definition of registrable superannuation entity in section 9 of the Act or a self managed superannuation fund) must provide the holder of a superannuation product (being an interest in that entity) with the information, relating to the entity and any relevant sub-plan (within the meaning of section 1017C of the Act), specified in subregulations (3), (5) and (7).
Remuneration details - on commencement
7.9.07ZC(3)
If, immediately before the day Schedule 6 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 commences, the trustee was required under paragraph 29QB(1)(a) of the SIS Act to make details of remuneration publicly available, the information is those details.
7.9.07ZC(4)
The information referred to in subregulation (3) must be provided by making it publicly available on the entity's website throughout the period: (a) starting on the day the Treasury Laws Amendment (Financial Reporting and Auditing of Registrable Superannuation Entities) Regulations 2023 commences; and (b) ending on the day before the start of the period referred to in subregulation (6).
The information must be readily accessible from the entity's website.
Remuneration details - 2022-23 financial year
7.9.07ZC(5)
The information is the details set out in regulation 2M.3.04 in relation to the remuneration of each member of the key management personnel of the superannuation entity for the entity's 2022-23 financial year.
7.9.07ZC(6)
The information referred to in subregulation (5) must be provided by making it publicly available on the entity's website throughout the period: (a) starting on the day that is 3 months after the later of the following:
(i) the day the Treasury Laws Amendment (Financial Reporting and Auditing of Registrable Superannuation Entities) Regulations 2023 commences;
(b) ending on the day before the entity first reports to members under section 314AA of the Act.
(ii) the last day of the entity's 2022-23 financial year; and
The information must be readily accessible from the entity's website.
Annual report - on commencement
7.9.07ZC(7)
If, immediately before the day Schedule 6 to the Treasury Laws Amendment (2022 Measures No. 4) Act 2023 commences, the trustee was required under paragraph 29QB(1)(b) of the SIS Act to make an annual report publicly available, the information is the annual report.
7.9.07ZC(8)
Subject to subregulation (9), the information referred to in subregulation (7) must be provided by making it publicly available throughout the period: (a) starting on the day the Treasury Laws Amendment (Financial Reporting and Auditing of Registrable Superannuation Entities) Regulations 2023 commences; and (b) ending on the day that the entity next provides fund information under regulation 7.9.32.
The information must be readily accessible from the entity's website.
7.9.07ZC(9)
Subregulations 7.9.07ZB(5) to (7) apply to the requirement under this regulation to provide the information referred to in subregulation (7) of this regulation in the same way subregulations 7.9.07ZB(5) to (7) would apply if the information were a document referred to in item 1 of the table in subregulation 7.9.07ZB(3).
Note: Subregulations 7.9.07ZB(5) to (7) permit later provision of information or provision of redacted information in certain circumstances, for example, in relation to standard employer-sponsored sub-plans.
For subparagraph 1017E(2)(a)(ii) of the Act, the following accounts are prescribed:
(a) an account with a foreign deposit taking institution that is regulated by a foreign regulatory body that ASIC has approved in writing for this paragraph;
(b) an account with a cash management trust;
(c) a statutory fund under section 29 of the Life Insurance Act 1995.
For paragraph 1017E(2)(c) of the Act, a product provider to which subsection 1017E(2) of the Act applies must:
(a) operate an account to which paragraph 1017E(2)(a) of the Act applies as a trust account; and
(b) designate the account to be a trust account; and
(c) hold all moneys paid into the account on trust for the benefit of the person who is entitled to the moneys.
For paragraph 1020G(1)(c) of the Act, if money received under section 1017E of the Act is paid into an account under subregulation 7.8.01(6), Part 7.8 of the Act applies to the money.
Note: See also subregulation 7.8.01(7).
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by omitting paragraph 1017E(2)(b) and inserting the following paragraph:
"(b) any money may be paid into the account, provided that:
(i) money to which this section applies; and (ii) interest on the amount from time to time standing tothe credit of the account; is identified and held in accordance with all other provisions of this section; and".
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(2C):
``(2D)
In relation to money to which this section applies:
(a) the product provider is entitled to the interest on the account; and
(b) the interest on the account is not required to be paid into the account;only if the product provider discloses to the person who paid the money that the product provider is keeping the interest (if any) earned on the account.".
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(1):
"(1A)
This section also applies to money paid by a product provider in the following circumstances:
(a) the product provider knows, or believes on reasonable grounds, that money (the client's money ) will be paid to the product provider to acquire, or acquire an increased interest in, one or more of the financial products mentioned in paragraph (1)(a) or (b) from the product provider (whether or not the acquisition would be by a person as a retail client);
(b) either:
(i) the financial product or increased interest was offered in this jurisdiction; or
(ii) the application for the financial product or increased interest was made in this jurisdiction; or
(iii) the money will be received in this jurisdiction;
(c) before receiving the client's money, the product provider pays an equivalent amount of money (the product provider's money ) into an account described in subsection (2).''.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1017E of the Act were modified by adding after subsection 1017E(5):
``(5A)
If subsection (1A) applies:
(a) the product provider is not required to comply with this section in relation to the client's money; and
(b) subsections (2A), (2B), (2C), (2D), (3), (4), (5) and (6) apply to the product provider's money as if the money had been paid by the person who paid, or is expected to pay, the client's money.''.
For paragraph 1017E(3)(d) of the Act, money may be taken out of an account if:
(a) the circumstances described in the modified subsection 1017E(1A) of the Act exist; and
(b) after paying the product provider's money, the product provider becomes aware, or has reasonable grounds to believe, that the client's money will not be paid.
For subsection 1017E(2C) of the Act, if money is paid to a product provider for a financial product that is a superannuation product or an RSA: (a) subsection 1017E(2A) of the Act does not apply in relation to the money; and (b) the money is taken to be held in trust by the product provider for the benefit of the person who is entitled to the money.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies in relation to an account mentioned in paragraph 7.9.08(1)(c) of these Regulations as if paragraph 1017E(2)(b) were omitted.
This Division applies in relation to: (a) superannuation products; and (b) RSAs; and (c) annuity products; and
(d) (Repealed) (e) a standard margin lending facility; and (f) a superannuation product to which Subdivision 4.2B of this Division applies; and (g) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of Part 7.9 applies; and (h) a simple sub-fund product to which Subdivision 4.2D of this Division applies.
7.9.09(2)
Each of the Subdivisions of this Division has an application provision: (a) stating the types of entity in relation to which the Subdivision applies; and (b) referring to any provisions that limit or restrict the application of the Subdivision or a particular provision.
Note: Information content requirements are set out in the main provisions of section 1013D of the Act. These Regulations set out a more detailed statement of the information required under subsection 1013D(1) that the retail clients of superannuation products and RSAs would reasonably require for the purpose of making a decision whether to acquire the financial product.
Subdivision 4.1A - No Product Disclosure Statement for carbon units, Australian carbon credit units and eligible international emissions units
This Subdivision applies: (a) to a person who, apart from this Subdivision, would be required to give a Product Disclosure Statement for a carbon unit, an Australian carbon credit unit or an eligible international emissions unit; and (b) in relation to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit.
For paragraph 1020G(1)(b) of the Act, the following provisions of Part 7.9 of the Act do not apply in relation to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit:
(a) subparagraph 1012A(3)(b)(i);
(b) subparagraph 1012A(3)(b)(ii);
(c) subparagraph 1012B(3)(a)(ii);
(d) paragraph 1012C(3)(b);
(e) paragraph 1012C(4)(c);
(f) subsection 1012C(6);
(g) section 1013A;
(h) section 1013B;
(i) section 1013C;
(j) section 1013D;
(k) section 1013E;
(l) section 1013F;
(m) section 1013G.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application to a carbon unit, an Australian carbon credit unit or an eligible international emissions unit as set out in Part 19 of Schedule 10A.
This Subdivision applies to: (a) a person who is required to prepare a Product Disclosure Statement for a standard margin lending facility; and (b) a Product Disclosure Statement for a standard margin lending facility.
For paragraph 951C(1)(b) of the Act, section 942DA of the Act does not apply in relation to a standard margin lending facility.
In this Subdivision and in Schedule 10C:
Approved Securities List
means the list of secured properties that are acceptable for the provider or potential provider of a standard margin lending facility as security for the facility and includes the amount of credit the provider will give for each of the properties.
7.9.11B(2)
In this Subdivision and in Schedule 10C, a provision of the Act that is modified in accordance with regulation 7.9.11C is referred to as modified .
Example
Paragraphs 1013C(1)(a) and (b) of the Act as modified by subitem 5A.2(1) of Part 5A of Schedule 10A are referred to in this Subdivision as 'modified paragraphs 1013C(1)(a) and (b)'.
REGULATION 7.9.11C 7.9.11C MODIFICATION OF ACT - STANDARD MARGIN LENDING FACILITY
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application to a standard margin lending facility as set out in Part 5A of Schedule 10A.
For modified paragraph 1013C(1)(a) of the Act, a Product Disclosure Statement for a standard margin lending facility must include the information and statements mentioned in Schedule 10C.
7.9.11D(2)
For modified paragraph 1013C(1)(b) of the Act, a Product Disclosure Statement for a standard margin lending facility must be in the form mentioned in Schedule 10C.
REGULATION 7.9.11E REQUIREMENTS FOR REFERENCES TO INCORPORATED INFORMATION FOR STANDARD MARGIN LENDING FACILITY 7.9.11E(1)
For subsection 1013C(1D) of the Act, as modified by Part 5A of Schedule 10A, this regulation prescribes requirements for applying, adopting or incorporating, in a Product Disclosure Statement for a standard margin lending facility, a matter contained in writing.
7.9.11E(2)
A Product Disclosure Statement may apply, adopt or incorporate a matter only if a provision of these Regulations requires or permits the matter to be applied, adopted or incorporated by the Statement.
7.9.11E(3)
If a Product Disclosure Statement applies, adopts or incorporates a matter: (a) the matter must be:
(i) in writing; and
(ii) clearly distinguishable from any other matters that are not applied, adopted or incorporated; and
(b) the responsible person for the Statement must identify the matter by:
(iii) publicly available in a document other than the Statement; and
(i) including in the Statement a concise description of the matter; and
(c) the responsible person for the Statement must:
(ii) ensuring that the reference to the matter is clearly distinguishable from the other contents of the Statement; and
(i) identify each version of the matter (by including the date on which the version was prepared) so that a person who, at a particular time, is considering a standard margin lending facility can identify the version that is relevant to the standard margin lending facility at that time; and
(d) the responsible person for the Statement must ensure that a person who is relying on the Statement is able to have access to:
(ii) state the date on which the version was prepared in a prominent position at or near the front of the version; and
(i) the matter; or
reasonably easily and reasonably quickly.
(ii) if there is more than 1 version of the matter - each version;
7.9.11E(4)
The responsible person for the Product Disclosure Statement must also ensure that the Statement includes the statements in the following table relating to the matter, and sets them out in each place at which the matter has been applied, adopted or incorporated.
Item | Statement |
1 | You should read the important information about [the subject] before making a decision. Go to [location of the matter that has been applied, adopted or incorporated] |
2 | The material relating to [matter] may change between the time when you read this Statement and the day when you sign the application form |
7.9.11E(5)
The responsible person for the Product Disclosure Statement must also ensure that each document mentioned in subregulation (3) includes the statement in the following table relating to the matter.
Item | Statement |
1 | The information in this document forms part of the Product Disclosure Statement [identification by name, date and version (if applicable) of each Statement] |
7.9.11E(6)
For the avoidance of doubt: (a) the giving of a Product Disclosure Statement to which this Subdivision applies is taken to be the giving of every matter that is applied, adopted or incorporated in accordance with subregulations (1) to (5); and (b) if a document mentioned in subparagraph (3)(a)(iii) refers to more than one PDS, the document:
(i) must include a statement to the effect that the information in the document forms part of the Product Disclosure Statement offered by the responsible entity; but
(ii) is not required to name each Product Disclosure Statement of which it forms part.
7.9.11E(7)
If the Product Disclosure Statement applies, adopts or incorporates a matter, the information dealing with the matter is taken to have been given to a person on the day on which the person signs the application form accompanying the Statement.
REGULATION 7.9.11F RETENTION OF COPIES OF PRODUCT DISCLOSURE STATEMENT FOR STANDARD MARGIN LENDING FACILITY 7.9.11F(1)
The responsible person for a Product Disclosure Statement for a standard margin lending facility must retain a copy of each version of the Statement that the responsible person issues for a period of 7 years starting on the day on which the version is prepared.
7.9.11F(2)
The responsible person for the Product Disclosure Statement must retain a copy of the document from which a matter is applied, adopted or incorporated by the Statement as mentioned in paragraph 7.9.11E(3)(c) for a period of 7 years commencing on the day on which the Statement is prepared.
7.9.11F(3)
If a document from which a matter is adopted, applied or incorporated by the Product Disclosure Statement as mentioned in paragraph 7.9.11E(3)(c) is changed in a way that changes the description of, or reference to, the matter, the responsible person for the Statement must retain a copy of the document for a period of 7 years commencing on the day on which the document is changed.
REGULATION 7.9.11G REQUIREMENT TO PROVIDE COPY OF PRODUCT DISCLOSURE STATEMENT FOR STANDARD MARGIN LENDING FACILITY FREE OF CHARGE 7.9.11G(1)
For paragraph 1015C(5)(a) of the Act, this regulation specifies requirements as to the manner in which a Product Disclosure Statement for a standard margin lending facility must be given to a person if the person requests a copy of the Statement.
7.9.11G(2)
The responsible person for the Product Disclosure Statement must give the person, free of charge: (a) a copy of the Statement within 8 business days; and (b) a copy of a matter in writing that is applied, adopted or incorporated by the Statement within 8 business days.
REGULATION 7.9.11H NOTIFICATION ABOUT CHANGE TO APPROVED SECURITIES LIST OR CURRENT INTEREST RATE FOR STANDARD MARGIN LENDING FACILITY 7.9.11H(1)
For paragraph 1017B(1A)(b) of the Act, a change to the Approved Securities List or current interest rate for a standard margin lending facility is specified.
7.9.11H(2)
For paragraph 1017B(3)(c) of the Act, the issuer of the standard margin lending facility must notify the holder of the change by: (a) sending notice of the change to the holder:
(i) by pre-paid post to a postal address nominated by the holder; or
(b) placing a notice on a webpage that is likely to come to the holder's attention if the holder is monitoring the holder's standard margin lending facility.
(ii) to an email address nominated by the holder; or
Subdivision 4.2B - Content of Product Disclosure Statement for superannuation product
CCH Note: Regulation 7.9.11K is modified by the ASIC Corporations (Shorter PDS and Delivery of Accessible Financial Products Disclosure by Platform Operators and Superannuation Trustees) Instrument 2022/497.
This Subdivision applies to: (a) a superannuation trustee that is required to prepare a Product Disclosure Statement for a superannuation product; and (b) a Product Disclosure Statement for a superannuation product.
7.9.11K(2)
However, this Subdivision does not apply to the following financial products: (a) an interest in a superannuation product that is solely a defined benefit interest; (b) a superannuation product that is solely a pension product; (c) a superannuation product that has no investment component (also known as a risk-only superannuation product).
REGULATION 7.9.11L 7.9.11L PROVISIONS OF PART 7.7 OF ACT THAT DO NOT APPLY IN RELATION TO SUPERANNUATION PRODUCT
For paragraph 951C(1)(b) of the Act, section 942DA of the Act does not apply in relation to a superannuation product. REGULATION 7.9.11LA 7.9.11LA ATTRIBUTION OF ACCRUED DEFAULT AMOUNT TO MYSUPER PRODUCT - EXEMPTION FROM SIGNIFICANT EVENT NOTICE REQUIREMENTS
For paragraph 1020G(1)(a) of the Act, a person is exempt from section 1017B of the Act in relation to the attribution or transfer of an accrued default amount if the person: (a) is an RSE licensee; and (b) must comply with a requirement under regulation 9.46 of the Superannuation Industry (Supervision) Regulations 1994 in relation to the attribution or transfer.
If a person: (a) is an RSE licensee; and (b) is exempted under subregulation 9.46(2) of the Superannuation Industry (Supervision) Regulations 1994 from notice requirements in relation to the attribution or transfer of an accrued default amount;
then, for paragraph 1020G(1)(c) of the Act, section 1017B of the Act applies to the person as if subsection 1017B(4) were omitted and the following subsection were substituted:
"(4)
The notice must mention the following:
(a) the accrued default amount that was attributed or transferred;
(b) the name of the MySuper product to which the amount was attributed or transferred;
(c) how the member may obtain a product disclosure statement for the MySuper product;
(d) any other information that the member needs to understand the attribution or transfer."
For paragraph 1020G(1)(b) of the Act, Subdivision D of Division 2 of Part 7.9 of the Act does not apply in relation to a superannuation product.
7.9.11M(2)
If a person: (a) proposes to prepare a Product Disclosure Statement or a Supplementary Product Disclosure Statement for a superannuation product during the period commencing on the day on which this subregulation commences and ending on 22 June 2012; and (b) is permitted to decide, in accordance with regulation 4 of the Corporations Amendment Regulations 2010 (No. 5), to prepare the Product Disclosure Statement or Supplementary Product Disclosure Statement in accordance with Subdivision D of Division 2 of Part 7.9 of the Act; and (c) prepares the Product Disclosure Statement or Supplementary Product Disclosure Statement in accordance with that Subdivision;
the preparation of the Product Disclosure Statement or Supplementary Product Disclosure Statement is taken to be full compliance with all requirements of Part 7.9 of the Act and these Regulations relating to how the Product Disclosure Statement or Supplementary Product Disclosure Statement is to be prepared.
Note The Corporations Amendment Regulations 2010 (No. 5) amended these Regulations to make new arrangements for the preparation of Product Disclosure Statements for superannuation products, including identifying that Subdivision D of Division 2 of Part 7.9 of the Act would no longer apply. However, the transitional arrangements in subregulations 4(1) to (7) of the Amendment Regulations allowed certain persons to decide to rely on Subdivision D of Division 2 of Part 7.9 of the Act for the purpose of preparing the Product Disclosure Statement.
REGULATION 7.9.11N 7.9.11N MODIFICATION OF ACT - SUPERANNUATION PRODUCT
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application to a superannuation product to which this Subdivision applies as set out in Part 5B of Schedule 10A. REGULATION 7.9.11O FORM AND CONTENT OF PRODUCT DISCLOSURE STATEMENT FOR SUPERANNUATION PRODUCT 7.9.11O(1) [PDS content for modified s 1013C(1)(a)]
For modified paragraph 1013C(1)(a) of the Act, a Product Disclosure Statement for a superannuation product to which this Subdivision applies must include the information and statements mentioned in Schedule 10D.
7.9.11O(2) [PDS form for modified s 1013C(1)(b)]For modified paragraph 1013C(1)(b) of the Act, a Product Disclosure Statement for a superannuation product to which this Subdivision applies must be in the form mentioned in Schedule 10D.
REGULATION 7.9.11P REQUIREMENTS FOR REFERENCES TO INCORPORATED INFORMATION FOR SUPERANNUATION PRODUCT 7.9.11P(1)For subsection 1013C(1D) of the Act, as modified by Part 5B of Schedule 10A, this regulation prescribes requirements for applying, adopting or incorporating, in a Product Disclosure Statement for a superannuation product to which this Subdivision applies, a matter contained in writing.
7.9.11P(2)
A Product Disclosure Statement may apply, adopt or incorporate a matter only if a provision of these Regulations requires or permits the matter to be applied, adopted or incorporated by the Statement.
7.9.11P(3)
If a Product Disclosure Statement applies, adopts or incorporates a matter:
(i) in writing; and
(ii) clearly distinguishable from any other matters that are not to be applied, adopted or incorporated; and
(b) the responsible person for the Statement must identify the matter by:
(iii) if the superannuation product is not issued to a standard employer-sponsored member - publicly available in a document other than the Statement; and
(i) including in the Statement a concise description of the matter; and
(c) the responsible person for the Statement must:
(ii) ensuring that the reference to the matter is clearly distinguishable from the other contents of the Statement; and
(i) identify each version of the matter (by including the date on which the version was prepared) so that a person who, at a particular time, is considering a superannuation product can identify the version that is relevant to the superannuation product at that time; and
(d) the responsible person for the Statement must ensure that a person who is relying on the Statement is able to have access to:
(ii) state the date on which a version was prepared in a prominent position at or near the front of the version; and
(i) the document containing the matter; or
reasonably easily and reasonably quickly.
(ii) if there is more than 1 version of the document containing the matter - each version;
7.9.11P(4)
The responsible person for the Product Disclosure Statement must also ensure that the Statement includes the statements in the following table relating to the matter, and sets them out in each place at which the matter has been applied, adopted or incorporated.
Item | Statement |
1 | You should read the important information about [the subject] before making a decision. Go to [location of the matter that has been applied, adopted or incorporated] |
2 | The material relating to [matter] may change between the time when you read this Statement and the day when you acquire the product |
7.9.11P(5)
The responsible person for the Product Disclosure Statement must also ensure that each document mentioned in subregulation (3) includes the statement in the following table relating to the matter.
Item | Statement |
1 | The information in this document forms part of the Product Disclosure Statement [identification by name, date and version (if applicable) of each Statement] |
7.9.11P(6)
For the avoidance of doubt, the giving of a Product Disclosure Statement to which this Subdivision applies is taken to be the giving of every matter that is applied, adopted or incorporated in accordance with subregulations (1) to (5).
7.9.11P(7)
If the Product Disclosure Statement applies, adopts or incorporates a matter, the information dealing with the matter is taken to have been given to a person on the day on which the product is acquired.
REGULATION 7.9.11Q RETENTION OF COPIES OF PRODUCT DISCLOSURE STATEMENT FOR SUPERANNUATION PRODUCT 7.9.11Q(1) [Application]
(a) section 1015B of the Act does not apply to require a Product Disclosure Statement to be lodged with ASIC; and
(b) the Statement is for a superannuation product to which this Subdivision applies. 7.9.11Q(2) [Product Disclosure Statements]
The responsible person for the Product Disclosure Statement must retain a copy of each version of the Statement that the responsible person issues for a period of 7 years starting on the day on which the version is prepared.
7.9.11Q(3) [Documents information incorporated from]The responsible person for the Product Disclosure Statement must retain a copy of the document from which a matter is applied, adopted or incorporated by the Statement as mentioned in paragraph 7.9.11P(3)(c) for a period of 7 years commencing on the day on which the Statement is prepared.
7.9.11Q(4) [Where documents information incorporated from changed]If a document from which a matter is adopted, applied or incorporated by the Product Disclosure Statement as mentioned in paragraph 7.9.11P(3)(c) is changed in a way that changes the description of, or reference to, the matter, the responsible person for the Statement must retain a copy of the document for a period of 7 years commencing on the day on which the document is changed.
REGULATION 7.9.11R REQUIREMENT TO PROVIDE COPY OF PRODUCT DISCLOSURE STATEMENT FOR SUPERANNUATION PRODUCT FREE OF CHARGE 7.9.11R(1) [Application]For paragraph 1015C(5)(a) of the Act, this regulation specifies requirements as to the manner in which a Product Disclosure Statement for a superannuation product to which this Subdivision applies must be given to a person if the person requests a copy of the Statement.
7.9.11R(2) [Requirements]The responsible person for the Product Disclosure Statement must give the person, free of charge:
(a) a copy of the Statement within 8 business days; and
(b) a copy of a matter in writing that is applied, adopted or incorporated by the Statement within 8 business days. Subdivision 4.2C - Content of Product Disclosure Statement for simple managed investment scheme
CCH Note: Regulation 7.9.11S is modified by the ASIC Corporations (Shorter PDS and Delivery of Accessible Financial Products Disclosure by Platform Operators and Superannuation Trustees) Instrument 2022/497; and the ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668.
This Subdivision applies to: (a) a person that is required to prepare a Product Disclosure Statement for a simple managed investment scheme; and (b) a Product Disclosure Statement for a simple managed investment scheme.
7.9.11S(2)
This Subdivision does not apply to the extent that the simple managed investment scheme relates to a financial product (known as a "quoted product") which is, or is intended to be, traded on a prescribed financial market.
7.9.11S(3)
This Subdivision does not apply to the extent that the simple managed investment scheme relates to a financial product (known as a "stapled security") to which the following requirements apply: (a) the product consists of interests in 2 or more financial products; (b) the interests include at least 1 interest in a registered scheme; (c) under the terms on which each of the interests is to be traded, the interests must be transferred together; (d) there are no financial products in the same class as the interests which may be transferred separately.
7.9.11S(4)
This Subdivision does not apply to the extent that the simple managed investment scheme is a managed investment scheme that has a constitution that provides that: (a) a member may direct that an amount of money corresponding to part or all of the amount invested by the member in the scheme be invested in accessible investments; and (b) the distributions of capital and income from the scheme to the member in relation to the member's interests in the scheme will be determined by reference to amounts received by the responsible entity or a custodian in relation to the accessible investments acquired in accordance with the direction.
REGULATION 7.9.11T 7.9.11T PROVISIONS OF PART 7.7 OF ACT THAT DO NOT APPLY IN RELATION TO SIMPLE MANAGED INVESTMENT SCHEME
For paragraph 951C(1)(b) of the Act, section 942DA of the Act does not apply in relation to a simple managed investment scheme to which this Subdivision applies. REGULATION 7.9.11U PROVISIONS OF PART 7.9 OF ACT THAT DO NOT APPLY IN RELATION TO SIMPLE MANAGED INVESTMENT SCHEME 7.9.11U(1)
For paragraph 1020G(1)(b) of the Act, Subdivision D of Division 2 of Part 7.9 of the Act does not apply in relation to a simple managed investment scheme to which this Subdivision applies.
7.9.11U(2)
If a person: (a) proposes to prepare a Product Disclosure Statement or a Supplementary Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies during the period commencing on the day on which this subregulation commences and ending on 22 June 2012; and (b) is permitted to decide, in accordance with regulation 4 of the Corporations Amendment Regulations 2010 (No. 5), to prepare the Product Disclosure Statement or Supplementary Product Disclosure Statement in accordance with Subdivision D of Division 2 of Part 7.9 of the Act; and (c) prepares the Product Disclosure Statement or Supplementary Product Disclosure Statement in accordance with that Subdivision;
the preparation of the Product Disclosure Statement or Supplementary Product Disclosure Statement is taken to be full compliance with all requirements of Part 7.9 of the Act and these Regulations relating to how the Product Disclosure Statement or Supplementary Product Disclosure Statement is to be prepared.
Note The Corporations Amendment Regulations 2010 (No. 5) amended these Regulations to make new arrangements for the preparation of Product Disclosure Statements for simple managed investment schemes, including identifying that Subdivision D of Division 2 of Part 7.9 of the Act would no longer apply. However, the transitional arrangements in subregulations 4(1) to (7) of the Amendment Regulations allowed certain persons to decide to rely on Subdivision D of Division 2 of Part 7.9 of the Act for the purpose of preparing the Product Disclosure Statement.
REGULATION 7.9.11V 7.9.11V MODIFICATION OF ACT - SIMPLE MANAGED INVESTMENT SCHEME
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application to a simple managed investment scheme to which this Subdivision applies as set out in Part 5C of Schedule 10A. REGULATION 7.9.11W FORM AND CONTENT OF PRODUCT DISCLOSURE STATEMENT FOR SIMPLE MANAGED INVESTMENT SCHEME 7.9.11W(1) [PDS content for modified s 1013C(1)(a)]
For modified paragraph 1013C(1)(a) of the Act, a Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies must include the information and statements mentioned in Schedule 10E.
7.9.11W(2) [PDS form for modified s 1013C(1)(b)]For modified paragraph 1013C(1)(b) of the Act, a Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies must be in the form mentioned in Schedule 10E.
REGULATION 7.9.11X REQUIREMENTS FOR REFERENCES TO INCORPORATED INFORMATION FOR SIMPLE MANAGED INVESTMENT SCHEME 7.9.11X(1) [Application]For subsection 1013C(1D) of the Act, as modified by Part 5C of Schedule 10A, this regulation prescribes requirements for applying, adopting or incorporating, in a Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies, a matter contained in writing.
A Statement may apply, adopt or incorporate a matter only if a provision of these Regulations requires or permits the matter to be applied, adopted or incorporated by the Statement.
7.9.11X(3) [Requirements]If a Product Disclosure Statement applies, adopts or incorporates a matter:
(a) the matter must be:
(i) in writing; and
(ii) clearly distinguishable from any other matters that are not applied, adopted or incorporated; and
(iii) publicly available in a document other than the Statement; and
(b) the responsible person for the Statement must identify the matter by:
(i) including in the Statement a concise description of the matter; and
(ii) ensuring that the reference to the matter is clearly distinguishable from the other contents of the Statement; and
(c) the responsible person for the Statement must:
(i) identify each version of the matter (by including the date on which the version was prepared) so that a person who, at a particular time, is considering a simple managed investment scheme to which this Subdivision applies can identify the version that is relevant to the simple managed investment scheme at that time; and
(ii) state the date on which the version was prepared in a prominent position at or near the front of the version; and
(d) the responsible person for the Statement must ensure that a person who is relying on the Statement is able to have access to:
(i) the matter; or
reasonably easily and reasonably quickly. 7.9.11X(4) [Required statements for PDS]
(ii) if there is more than 1 version of the matter - each version;
The responsible person for the Product Disclosure Statement must also ensure that the Statement includes the statements in the following table relating to the matter, and sets them out in each place at which the matter has been applied, adopted or incorporated.
Item | Statement |
1 | You should read the important information about [the subject] before making a decision. Go to [location of the matter that has been applied, adopted or incorporated] |
2 | The material relating to [matter] may change between the time when you read this Statement and the day when you acquire the product |
The responsible person for the Product Disclosure Statement must also ensure that each document mentioned in subregulation (3) includes the statement in the following table relating to the matter.
Item | Statement |
1 | The information in this document forms part of the Product Disclosure Statement [identification by name, date and version (if applicable) of each Statement] |
(a) the giving of a Product Disclosure Statement to which this Subdivision applies is taken to be the giving of every matter that is applied, adopted or incorporated in accordance with subregulations (1) to (5); and
(b) if a document mentioned in subparagraph (3)(a)(iii) refers to more than one PDS, the document:
(i) must include a statement to the effect that the information in the document forms part of the Product Disclosure Statement offered by the responsible entity; but
7.9.11X(7) [When incorporated information taken as given]
(ii) is not required to name each Product Disclosure Statement of which it forms part.
If the Product Disclosure Statement applies, adopts or incorporates a matter, the information dealing with the matter is taken to have been given to a person on the day on which the product is acquired.
The responsible person for a Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies must retain a copy of each version of the Statement that the responsible person issues for a period of 7 years starting on the day on which the version is prepared.
7.9.11Y(2) [Documents information incorporated from]The responsible person for the Product Disclosure Statement must retain a copy of the document from which a matter is applied, adopted or incorporated by the Statement as mentioned in paragraph 7.9.11X(3)(c) for a period of 7 years commencing on the day on which the Statement is prepared.
7.9.11Y(3) [Where documents information incorporated from changed]If a document from which a matter is adopted, applied or incorporated by the Product Disclosure Statement as mentioned in paragraph 7.9.11X(3)(c) is changed in a way that changes the description of, or reference to, the matter, the responsible person for the Statement must retain a copy of the document for a period of 7 years commencing on the day on which the document is changed.
REGULATION 7.9.11Z REQUIREMENT TO PROVIDE COPY OF PRODUCT DISCLOSURE STATEMENT FOR SIMPLE MANAGED INVESTMENT SCHEME FREE OF CHARGECCH Note: Regulation 7.9.11Z is modified by the ASIC Corporations (Shorter PDS and Delivery of Accessible Financial Products Disclosure by Platform Operators and Superannuation Trustees) Instrument 2022/497.
For paragraph 1015C(5)(a) of the Act, this regulation specifies requirements as to the manner in which a Product Disclosure Statement for a simple managed investment scheme to which this Subdivision applies must be given to a person if the person requests a copy of the Statement.
7.9.11Z(2)
The responsible person for the Product Disclosure Statement must give the person, free of charge: (a) a copy of the Statement within 8 business days; and (b) a copy of a matter in writing that is applied, adopted or incorporated by the Statement within 8 business days.
Subdivision 4.2D - Content of Product Disclosure Statement for simple sub-fund products
This Subdivision applies to: (a) a person that is required to prepare a Product Disclosure Statement for a simple sub-fund product; and (b) a Product Disclosure Statement for a simple sub-fund product.
7.9.11ZA(2)
This Subdivision does not apply to the extent that the simple sub-fund product is a financial product (known as a "quoted product") that is, or is intended to be, traded on a prescribed financial market.
7.9.11ZA(3)
This Subdivision does not apply to the extent that the simple sub-fund product relates to a financial product (known as a "stapled security") to which the following requirements apply: (a) the product consists of interests in 2 or more financial products; (b) the interests include at least one security in a CCIV; (c) under the terms on which each of the interests is to be traded, the interests must be transferred together; (d) there are no financial products in the same class as the interests that may be transferred separately.
7.9.11ZA(4)
This Subdivision does not apply to the extent that the simple sub-fund product is a security in a CCIV (referable to a sub-fund of the CCIV) and the CCIV has a constitution that provides: (a) that a member of the sub-fund may direct that an amount of money corresponding to part or all of the amount invested by the member in the sub-fund be invested in accessible investments; and (b) that any distributions to members of the sub-fund will be determined by reference to amounts received by the CCIV in relation to the accessible investments acquired in accordance with the direction.
For the purposes of paragraph 951C(1)(b) of the Act, section 942DA of the Act does not apply in relation to a simple sub-fund product to which this Subdivision applies.
For the purposes of paragraph 1020G(1)(b) of the Act, Subdivision D of Division 2 of Part 7.9 of the Act does not apply in relation to a simple sub-fund product to which this Subdivision applies.
For the purposes of paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application to a simple sub-fund product to which this Subdivision applies as set out in Part 5D of Schedule 10A.
For the purposes of paragraph 1013C(1)(a) of the Act, as modified by Part 5D of Schedule 10A, a Product Disclosure Statement for a simple sub-fund product to which this Subdivision applies must include the statements and information mentioned in Schedule 10F.
7.9.11ZE(2)
For the purposes of paragraph 1013C(1)(b) of the Act, as modified by Part 5D of Schedule 10A, a Product Disclosure Statement for a simple sub-fund product to which this Subdivision applies must be in the form mentioned in Schedule 10F.
For the purposes of subsection 1013C(1D) of the Act, as modified by Part 5D of Schedule 10A, this regulation prescribes requirements for applying, adopting or incorporating, in a Product Disclosure Statement for a simple sub-fund product to which this Subdivision applies, a matter contained in writing.
7.9.11ZF(2)
A Statement may apply, adopt or incorporate a matter only if a provision of these Regulations requires or permits the matter to be applied, adopted or incorporated by the Statement.
7.9.11ZF(3)
If a Product Disclosure Statement applies, adopts or incorporates a matter: (a) the matter must be:
(i) in writing; and
(ii) clearly distinguishable from any other matters that are not applied, adopted or incorporated; and
(b) the responsible person for the Statement must identify the matter by:
(iii) publicly available in a document other than the Statement; and
(i) including in the Statement a concise description of the matter; and
(c) the responsible person for the Statement must:
(ii) ensuring that the reference to the matter is clearly distinguishable from the other contents of the Statement; and
(i) identify each version of the matter (by including the date on which the version was prepared) so that a person who, at a particular time, is considering a simple sub-fund product to which this Subdivision applies can identify the version that is relevant to the simple sub-fund product at that time; and
(d) the responsible person for the Statement must ensure that a person who is relying on the Statement is able to have access to:
(ii) state the date on which the version was prepared in a prominent position at or near the front of the version; and
(i) the matter; or
reasonably easily and reasonably quickly.
(ii) if there is more than one version of the matter - each version;
7.9.11ZF(4)
The responsible person for the Product Disclosure Statement must also ensure that the Statement includes the statements in the following table relating to the matter, and sets them out in each place at which the matter has been applied, adopted or incorporated.
Item | Statement |
1 | You should read the important information about [the subject] before making a decision. Go to [location of the matter that has been applied, adopted or incorporated] |
2 | The material relating to [matter] may change between the time when you read this Statement and the day when you acquire the product |
7.9.11ZF(5)
The responsible person for the Product Disclosure Statement must also ensure that each document mentioned in subregulation (3) includes the statement in the following table relating to the matter.
Item | Statement |
1 | The information in this document forms part of the Product Disclosure Statement [identification by name, date and version (if applicable) of each Statement] |
7.9.11ZF(6)
For the avoidance of doubt: (a) the giving of a Product Disclosure Statement to which this Subdivision applies is taken to be the giving of every matter that is applied, adopted or incorporated in accordance with subregulations (1) to (5); and (b) if a document mentioned in subparagraph (3)(a)(iii) refers to more than one Product Disclosure Statement, the document:
(i) must include a statement to the effect that the information in the document forms part of the ProductDisclosure Statement offered by the responsible person; but
(ii) is not required to name each Product Disclosure Statement of which it forms part.
7.9.11ZF(7)
If the Product Disclosure Statement applies, adopts or incorporates a matter, the information dealing with the matter is taken to have been given to a person on the day on which the product is acquired.
The responsible person for a Product Disclosure Statement for a simple sub-fund product to which this Subdivision applies must retain a copy of each version of the Statement that the responsible person issues for a period of 7 years starting on the day on which the version is prepared.
7.9.11ZG(2)
The responsible person for the Product Disclosure Statement must retain a copy of the document from which a matter is applied, adopted or incorporated by the Statement as mentioned in paragraph 7.9.11ZF(3)(c) for a period of 7 years commencing on the day on which the Statement is prepared.
7.9.11ZG(3)
If a document from which a matter is adopted, applied or incorporated by the Product Disclosure Statement as mentioned in paragraph 7.9.11ZF(3)(c) is changed in a way that changes the description of, or reference to, the matter, the responsible person for the Statement must retain a copy of the document for a period of 7 years commencing on the day on which the document is changed.
For the purposes of paragraph 1015C(5)(a) of the Act, this regulation specifies requirements as to the manner in which a Product Disclosure Statement for a simple sub-fund product to which this Subdivision applies must be given to a person if the person requests a copy of the Statement.
7.9.11ZH(2)
The responsible person for the Product Disclosure Statement must give the person, free of charge: (a) a copy of the Statement within 8 business days; and (b) a copy of a matter in writing that is applied, adopted or incorporated by the Statement within 8 business days.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to superannuation products and RSAs as set out in Part 6 of Schedule 10A.
(Omitted by SR 2004 No 145, Sch 2[4] (effective 1 October 2004).) REGULATION 7.9.13 OFFER OF SUPERANNUATION INTEREST WITHOUT APPLICATION OR ELIGIBLE APPLICATION 7.9.13(1)
For paragraph 1016A(4)(a) of the Act, if a trustee of a public offer entity issues a superannuation interest in the entity to a person without first receiving an application, or an eligible application, the trustee is taken not to have contravened section 1016A of the Act if:
(a) the entity is a standard employer-sponsored fund; and
(b) the person holds the interest as a standard employer-sponsored member of the entity; and
(c) after issuing the interest, the trustee makes reasonable efforts:
(i) to obtain an application or eligible application (as the case requires under paragraph 1016A(2)(b) or (c) of the Act) from the person's standard employer-sponsor; or
(ii) to obtain an eligible application mentioned in paragraph 1016A(2)(a) of the Act from the person; and
(d) if the trustee has not obtained the application or eligible application within 90 days after issuing the interest, the trustee does not accept any more contributions from the standard employer-sponsor in respect of the person until the trustee receives the application or eligible application.
7.9.13(2)
For paragraph 1016A(4)(b) of the Act, if a trustee has not obtained the application or eligible application under subregulation (1) within 90 days after issuing the interest, the trustee must not intentionally or recklessly accept any more contributions from the standard employer-sponsor in respect of the person until the trustee receives the application or eligible application.
Penalty:
7.9.13(3)
Subregulation (2) does not apply if the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matter in subregulation (2) (see subsection 13.3(3) of the Criminal Code).
7.9.13(4)
Strict liability applies to subregulation (2).
Note: For strict liability , see section 6.1 of the Criminal Code.
REGULATION 7.9.13A 7.9.13A REMEDIES FOR PERSON ACQUIRING FINANCIAL PRODUCT UNDER DEFECTIVE PRODUCT DISCLOSURE STATEMENT: FIRST HOME SAVER ACCOUNTS
(Repealed by SLI 2015 No 91, Sch 1[24] (effective 1 July 2015).)
This regulation applies to a financial product: (a) that is:
(i) a superannuation product to which requirements of the SIS Act relating to preservation rules and cashing restrictions apply; or
(b) that has been issued or sold in contravention of section 1016E of the Act.
(ii) an RSA to which requirements of the RSA Regulations relating to preservation rules and cashing restrictions apply; and
7.9.14(2)
For subsection 1016F(3) of the Act, to exercise a right of return for the financial product in circumstances in which the moneys paid to acquire the financial product are subject to the preservation rules and cashing restrictions, the client must: (a) nominate a superannuation entity or RSA into which the monies subject to the preservation rules and cashing restrictions, and to which preservation conditions apply, are to be repaid; and (b) make the nomination not later than 1 month after notifying the responsible person of the right to exercise the right of return.
7.9.14(2A)
The right of return is taken to have been exercised only on receipt by the responsible person of the nomination.
7.9.14(3)
The client must notify the responsible person in writing or by electronic means.
7.9.14(4)
For subsection 1016F(6) of the Act, the responsible person must repay the monies as directed.
7.9.14(5)
For subsection 1019B(7) of the Act, if: (a) a financial product mentioned in this regulation is subject to the nomination of a further superannuation entity or RSA; and (b) the application in relation to the financial product is not accepted by the nominated superannuation entity or RSA;
the responsible person may rollover or transfer the client's benefits to an eligible rollover fund.
REGULATION 7.9.14A 7.9.14A TREATMENT OF ARRANGEMENTS UNDER WHICH A PERSON CAN INSTRUCT ANOTHER PERSON TO ACQUIRE A FINANCIAL PRODUCT
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if the definition of instruction in subsection 1012IA(1) of the Act were modified by adding at the end `, including a direction to follow an investment strategy mentioned in paragraph 52(4)(a) of the Superannuation Industry (Supervision) Act 1993'.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to financial products as if:
(a) that Part applied to a financial product mentioned in paragraph 7.1.14(2)(d); and
(b) the following section were inserted after section 1019B of the Act:
"1019C Information about certain vehicle insurance
(1)
This section applies in relation to the issue of a financial product mentioned in paragraph 7.1.14(2)(d) of the Corporations Regulations 2001.
(2)
The product issuer of the financial product must, as soon as practicable after issuing the financial product, give the holder of the financial product a statement that contains the information mentioned in paragraphs 1013D(1)(a) and (b) unless:
(a) the product holder already has a statement containing that information; or
(b) the product issuer believes on reasonable grounds that the product holder has already received a statement containing that information.
(3)
The product issuer must give the statement in the same way as a Product Disclosure Statement is to be given under subsection 1015C.
(4)
The product issuer is not required to comply with any other requirements in Divisions 2 to 6 (inclusive) in relation to the issue of the financial product.
(5)
The product issuer must not refuse, or intentionally or recklessly fail, to comply with subsections (2) and (3).Penalty:
(a) for an individual - 50 penalty units; and (b) for a body corporate - 500 penalty units.
(6)
Subsection (5) does not apply to the extent that the product issuer has a reasonable excuse.Note: A defendant bears an evidential burden in relation to the matter in subsection (6A), see subsection 13.3(3) of the Criminal Code.
(7)
Divisions 1 and 7 do not apply in relation to the product issuer in relation to the financial product mentioned in paragraph 7.1.14(2)(d) of the Corporations Regulations 2001.".
For paragraph 1013D(4)(c) of the Act, the more detailed information to be included in a Product Disclosure Statement about the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of an investment is:
(a) a statement that the product issuer does, or does not, take into account labour standards for the purpose of selecting, retaining or realising the investment; and
(b) a statement that the product issuer does, or does not, take into account environmental, social or ethical considerations for the purpose of selecting, retaining or realising the investment; and
(c) if the Product Disclosure Statement includes a statement that the product issuer does take into account labour standards for the purpose of selecting, retaining or realising the investment - a statement outlining:
(i) the standards that the product issuer considers to be labour standards for that purpose; and
(ii) the extent to which the product issuer takes those standards into account in the selection, retention or realisation of the investment; and
(d) if the Product Disclosure Statement includes a statement that the product issuer does take into account environmental, social or ethical considerations for the purpose of selecting, retaining or realising the investment - a statement outlining:
(i) the considerations that the product issuer regards as environmental, social or ethical considerations for that purpose; and
(ii) the extent to which the product issuer takes those considerations into account in the selection, retention or realisation of the investment.
For paragraph 1013D(1)(k) of the Act, the following further statements must be included in a Product Disclosure Statement that relates to a protected policy issued by a general insurer or a protected account issued by an authorised deposit-taking institution: (a) if the Product Disclosure Statement relates to a protected policy - a statement that:
(i) the person entitled to claim under insurance cover under a protected policy may be entitled to payment under the financial claims scheme; and
(b) if the Product Disclosure Statement relates to a protected account - a statement that:
(ii) access to the scheme is subject to eligibility criteria;
(i) the account-holder may be entitled to payment under the financial claims scheme; and
(c) a statement that information about the scheme can be obtained from the APRA website at /law/view/images/plusbox.gif" title="View history note" /> View history note
(ii) payments under the scheme are subject to a limit for each depositor;
7.9.14D(2)
In this regulation:
authorised deposit-taking institution
has the meaning given by subsection 5(1) of the Banking Act 1959.
financial claims scheme
means:
(a) the scheme provided for in Division 2AA of Part II of the Banking Act 1959; and
(b) the scheme provided for in Part VC of the Insurance Act 1973.
general insurer
has the meaning given by section 11 of the Insurance Act 1973.
protected account
has the meaning given by subsections 5(4) to (7) of the Banking Act 1959.
protected policy
has the meaning given by subsection 3(1) of the Insurance Act 1973.
For paragraph 1013D(4)(c) of the Act, the more detailed information that must be included in a Product Disclosure Statement that relates to a financial product issued by an unauthorised foreign insurer is:
(a) a statement that the product issuer is:
(i) an unauthorised foreign insurer; and
(ii) not authorised under the Insurance Act 1973 to conduct insurance business in Australia; and
(b) a statement that an insurer of that kind is not subject to the provisions of the Insurance Act 1973, which establishes a system of financial supervision of general insurers in Australia; and
(c) a statement that the person should consider whether to obtain further information, including:
(i) the country in which the product issuer is incorporated, and whether the country has a system of financial supervision of insurers; and
(ii) the paid up capital of the product issuer; and
(iii) which country's laws will determine disputes in relation to the financial product; and
(d) a statement that an insurer of that kind cannot be a declared general insurer for the purpose of Part VC of the Insurance Act 1973, and, if the insurer becomes insolvent, the person will not be covered by the financial claims scheme provided under Part VC of that Act.
In this regulation:
unauthorised foreign insurer
means:
(a) an insurer that:
(i) does not have an authority under the Insurance Act 1973 to carry on insurance business; and
(ii) is not a person who, because of section 5 of that Act, is not required to have such an authority; and
(iii) carries on insurance business outside Australia and the external Territories to which the Insurance Act 1973 extends; or
(b) if a direction is in force under section 74 of the Insurance Act 1973 - a Lloyd's underwriter.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if paragraph 1013D(1)(m) of the Act were modified to read as follows:
7.9.15A(2) [Time to provide information]
``(m) unless, in accordance with the regulations and a determination by ASIC, information to be disclosed in accordance with paragraphs (b), (d) and (e) must be stated as amounts in dollars.''.
For paragraph 1020G(1)(a) of the Act, an issuer of a financial product does not have to provide the information mentioned in paragraph 1013D(1)(m) of the Act in the form required by that paragraph, in a Product Disclosure Statement prepared before 1 January 2005.
For paragraph 1013D(1)(m) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 1013D(1)(b), (d) or (e) as an amount in dollars, the information may be set out as a description of the benefit, cost, amount or payment as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.9.15B(2) [Method of calculation]For paragraph 1013D(1)(m) of the Act, if ASIC determines that, for a compelling reason, it is not possible to state information to be disclosed in accordance with paragraph 1013D(1)(b), (d) or (e) as an amount in dollars, or to describe the amount as a percentage, the information may be set out as a description of the method of calculating the benefit, cost, amount or payment (including worked dollar examples, unless that is inappropriate).
7.9.15B(3) [Publication]A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 1013D(1)(m) of the Act, if ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
For paragraph 1013D(1)(m) of the Act, if ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a client, or a class of clients;
the information may be set out as a description of the method of calculating the charge or benefit (including worked dollar examples, unless that is inappropriate).
A determination under subregulation (1) or (2) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 1013D(1)(m) of the Act, for a Product Disclosure Statement that is required in relation to a general insurance product, if:
(a) information is required to be stated in dollars; and
(b) the amount can only be determined:
(i) after the responsible person assesses the risk of the insured; or
(ii) after the insured has nominated desired levels of insurance cover;
the responsible person may comply with the requirement to state the information by either of the ways mentioned in subregulation (5).
For subregulation (4), the responsible person may state the information by:
(a) stating an amount in dollars in the Product Disclosure Statement; or
(b) giving to the insured:
(i) a document containing the information, as soon as practicable (but in any case, not later than 5 business days after the responsible person issues the general insurance product); and
(ii) a statement in the Product Disclosure Statement that sets out the information in at least 1 of the following formats:
(A) as a range of amounts in dollars;
(B) as a percentage of a matter that is mentioned in the statement;
(C) as a description.
This regulation applies from 18 April 2010 to 11 October 2011.
7.9.15CA(2) [Exception]For paragraph 1013D(4)(b) of the Act, paragraphs 1013D(1)(b) and (f) of the Act do not require a Product Disclosure Statement to contain information relating to Division 2AA of Part II of the Banking Act 1959 or Part VC of the Insurance Act 1973.
For paragraph 1013D(4)(a) of the Act, the following provisions do not apply to a Product Disclosure Statement that relates to a general insurance product:
(a) paragraph 1013D(1)(c);
(b) subparagraph 1013D(1)(d)(iii);
(c) paragraph 1013D(1)(e);
(d) paragraph 1013D(1)(h);
(e) paragraph 1013D(1)(j);
(f) paragraph 1013D(1)(l).
[
CCH Note:
SLI 2005 No 324, Sch 5, Pt 1[2] contained the following transitional provision:
commencing day
new sections 1013C and 1013D
old sections 1013C and 1013D
transition period
Transitional
]
(1)
If, on or after the commencing day, a Product Disclosure Statement for a general insurance product complies with the requirements of old sections 1013C and 1013D, then, for the transition period only, the Product Disclosure Statement is taken to be complying with the requirements of new sections 1013C and 1013D.
(2)
In this item:
means the day item 1 of this Schedule commences.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force on and after the commencing day.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force immediately before the commencing day.
means the period of 18 months commencing on the commencing day.
For paragraph 1020G(1)(c) of the Act, and subject to subregulation (1A) and (4), a responsible person is not required to include a statement or information mentioned in Part 7.9 of the Act in a Product Disclosure Statement if: (a) the statement or information is in writing and is publicly available in a document other than the Product Disclosure Statement; and (b) the Product Disclosure Statement:
(i) refers to the statement or information; and
(ii) provides sufficient details about the statement or information to enable a person:
(A) to identify by a unique identifier the document, or part of the document, that contains the statement or information; and
(B) to locate the statement or information; and
(C) to decide whether or not to read the statement or information or obtain a copy of the statement or information; and
(c) the statement or information is not a statement or information that is in a Short-Form Product Disclosure Statement.
(iii) states that a copy of the statement or information may be obtained from the responsible person on request, at no charge; and
7.9.15DA(1A)
This regulation does not apply if the Product Disclosure Statement is for: (a) a standard margin lending facility; or (b) a superannuation product to which Subdivision 4.2B of Division 4 of this Part applies; or (c) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of this Part applies; or (d) a simple sub-fund product to which Subdivision 4.2D of Division 4 of this Part applies.
7.9.15DA(2)
If the client requests a copy of the statement or information that the responsible person is not required to include in accordance with subregulation (1), the responsible person must provide the copy as soon as practicable, at no charge.
7.9.15DA(3)
If a statement or information is not included in a Product Disclosure Statement because of subregulation (1), the statement or information is taken to be included in the Product Disclosure Statement.
7.9.15DA(4)
Despite subregulation (3), if a responsible person does not include a statement or information in a Product Disclosure Statement in accordance with subregulation (1), the responsible person must include the following information in the Product Disclosure Statement: (a) for information required by paragraph 1013D(1)(b) or (f) of the Act - a description, in summary, of the purpose and key features of the product; (b) for information required by paragraph 1013D(1)(c) of the Act - a description, in summary, of the key risks of the product; (c) the informationrequired by:
(i) paragraphs 1013D(1)(a), (g) and (i) of the Act; and
(ii) Divisions 1 and 2 of Part 2 of Schedule 10; and
(iii) paragraphs 209(e) and (h) of Division 4 of Part 2 of Schedule 10; and
(d) the Consumer Advisory Warning in Division 7 of Part 2 of Schedule 10.
(iv) Divisions 5 and 6 of Part 2 of Schedule 10;
Modifying legislative instruments: Regulation 7.9.15DA is modified by the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
REGULATION 7.9.15DB REQUIREMENT TO KEEP RECORD OF PRODUCT DISCLOSURE STATEMENT AND OTHER DOCUMENTS 7.9.15DB(1)
If section 1015B of the Act does not require a copy of a Product Disclosure Statement to be lodged with ASIC, the Statement and a document, or part of a document, mentioned in the Statement must be retained by the responsible person for that Statement for 7 years after the date of the Statement.
7.9.15DB(2)
This regulation does not apply if the Product Disclosure Statement is for: (a) a standard margin lending facility; or (b) a superannuation product to which Subdivision 4.2B of Division 4 of this Part applies; or (c) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of this Part applies; or (d) a simple sub-fund product to which Subdivision 4.2D of Division 4 of this Part applies.
A document, or part of a document, mentioned in a Product Disclosure Statement that was required to be lodged with ASIC under section 1015B of the Act must be lodged with ASIC as if the document, or part of the document, were a Statement within the meaning of section 1015B of the Act.
7.9.15DC(2)
This regulation does not apply if the Product Disclosure Statement is for: (a) a standard margin lending facility; or (b) a superannuation product to which Subdivision 4.2B of Division 4 of this Part applies; or (c) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of this Part applies; or (d) a simple sub-fund product to which Subdivision 4.2D of Division 4 of this Part applies.
REGULATION 7.9.15E 7.9.15E MORE DETAILED INFORMATION IN PRODUCT DISCLOSURE STATEMENT: GENERAL INSURANCE PRODUCT
For paragraph 1013D(4)(c) of the Act, the more detailed statement of the information, for paragraph 1013D(1)(f), that must be included in a Product Disclosure Statement that relates to a general insurance product is:
(a) the terms and conditions of the policy document (within the meaning of the Insurance Contracts Act 1984) being terms and conditions that are not provided in a Schedule to the policy document; and
(b) information that, if the issuer were seeking to rely on subsection 35(2) and section 37 of the Insurance Contracts Act 1984, the issuer would have had to provide to the insured before the contract of insurance was entered into.
[
CCH Note:
SLI 2005 No 324, Sch 5, Pt 1[2] contained the following transitional provision:
commencing day
new sections 1013C and 1013D
old sections 1013C and 1013D
transition period
Transitional
]
(1)
If, on or after the commencing day, a Product Disclosure Statement for a general insurance product complies with the requirements of old sections 1013C and 1013D, then, for the transition period only, the Product Disclosure Statement is taken to be complying with the requirements of new sections 1013C and 1013D.
(2)
In this item:
means the day item 1 of this Schedule commences.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force on and after the commencing day.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force immediately before the commencing day.
means the period of 18 months commencing on the commencing day.
For paragraph 1020G(1)(b) of the Act, Part 7.9 of the Act applies to general insurance products as if subparagraph 1013C(1)(a)(ii) and section 1013E were omitted.
[
CCH Note:
SLI 2005 No 324, Sch 5, Pt 1[2] contained the following transitional provision:
commencing day
new sections 1013C and 1013D
old sections 1013C and 1013D
transition period
Transitional
]
(1)
If, on or after the commencing day, a Product Disclosure Statement for a general insurance product complies with the requirements of old sections 1013C and 1013D, then, for the transition period only, the Product Disclosure Statement is taken to be complying with the requirements of new sections 1013C and 1013D.
(2)
In this item:
means the day item 1 of this Schedule commences.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force on and after the commencing day.
means those sections of the Corporations Act 2001, and any regulations made for the purposes of, or modifying those sections, as in force immediately before the commencing day.
means the period of 18 months commencing on the commencing day.
If, at any time during the transition period, a Product Disclosure Statement for a general insurance product complies with the requirements of old sections 1013C and 1013D, the Product Disclosure Statement is taken to comply with the requirements of:
(a) sections 1013C and 1013D of the Act; and
(b) the provisions of any regulations made for the purposes of, or modifying, sections 1013C and 1013D of the Act;
as in force at that time.
7.9.15FA(2) [Definitions]In this regulation:
commencing day
means the day on which this regulation commences.
old sections 1013C and 1013D
means:
(a) sections 1013C and 1013D of the Act; and
(b) the provisions of any regulations made for the purposes of, or modifying, those sections;
as in force immediately before the commencing day.
transition period
means the period starting on the commencing day and ending at the end of 30 June 2008.
Note: Before the commencement of this regulation, transitional arrangements in similar terms were provided for regulations 7.9.15D, 7.9.15E and 7.9.15F by item 2 of Schedule 5 to the Corporations Amendment Regulations 2005 (No. 5) (SLI 2005 No. 324).
(Repealed by FRLI No F2022C00319, Sch 1[18] (effective 23 February 2022).) REGULATION 7.9.15H 7.9.15H NEW SECTION 1012G: PRODUCT DISCLOSURE STATEMENT MAY SOMETIMES BE PROVIDED LATER
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if section 1012G were omitted and the following section were substituted:
"1012G Product disclosure statement may sometimes be provided later: financial products subject to a cooling off period
Application of section
(1)
The regulated person may deal with a financial product under this section only if the financial product is one for which an application form is not required under section 1016A and section 1019B (cooling off period) will apply if the client enters into a legal obligation to acquire the product pursuant to the recommendation or offer that constitutes the relevant conduct.
No need to give Product Disclosure Statement in certain circumstances
(2)
In a recommendation situation or an issue situation, the regulated person need not give the client a Product Disclosure Statement for the financial product at or before the time when it would otherwise be required to be given if:
(a) the client expressly instructs the regulated person that they require:
(i) in a recommendation situation - the advice constituting the recommendation; orto be provided or issued immediately, or by a specified time; and
(ii) in an issue situation - the financial product;
(b) it is not reasonably practicable, while complying with the client's instructions, to give the client the Product Disclosure Statement at or before the time when it would otherwise be required to be given.The regulated person must comply instead with subsection (3).
Requirements to be complied with to be able to give Product Disclosure statement later
(3)
The regulated person must:
(a) at or before the time referred to in paragraph (2)(b), orally communicate the following information to the client:
(i) the name and contact details of the issuer of the financial product;
(ii) information about the cooling off regime that applies in respect of acquisitions of the product (whether this regime is provided for by law or otherwise);
(iii) that the client should consider the information in the Product Disclosure Statement that will be provided to the client;
(iv) the further information (if any) requested by the client in response to a question under paragraph (b); and
(b) at or before the time referred to in paragraph (2)(b), ask the client whether the client would like further information about the financial product; and
(c) give the client the Product Disclosure Statement as soon as practicable after that time, and in any event not later than:
(i) the time when the confirmation requirement (if applicable) is complied with; or
(ii) the end of the fifth business day after the day on which the financial product was issued or sold to the client.
How information to be communicated
(4)
The information referred to in paragraph (3)(a) must be communicated in a clear, concise and effective manner.
How confirmation requirement to be complied with
(5)
For the purposes of subparagraph (3)(c)(i), the confirmation requirement is complied with when:
(a) the client receives confirmation, as mentioned in paragraph 1017F(5)(a), of the transaction by which they acquired the financial product; or
(b) confirmation of that transaction is available to the client by a facility as mentioned in paragraph 1017F(5)(b)."
[ CCH Note: Sch 4, Pt 1[1] of SLI 2005 No 324 commenced immediately after the commencement of Sch 11[4] of that instrument. Sch 11[4] inserted reg 7.9.15G.]
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if subparagraph 1012IA(4)(b)(ii) were omitted and the following subparagraph was inserted:
"(ii) subsection 1012G(3) applies in relation to the provider, the client and the regulated acquisition as if the reference to the regulated person were instead a reference to the provider, as if subparagraph 1012G(3)(c)(i) were omitted and as if the reference in subparagraph 1012G(3)(c)(ii) to the day on which the financial product was issued or sold to the client were instead a reference to the day on which the regulated acquisition occurs."
[ CCH Note: Sch 4, Pt 1[1] of SLI 2005 No 324 commenced immediately after the commencement of Sch 11[4] of that instrument. Sch 11[4] inserted reg 7.9.15G.]
For paragraph 1013D(4)(c) of the Act, the more detailed information that must be included in a Product Disclosure Statement that relates to a consumer credit insurance product is:
(a) a brief explanation of the purposes of consumer credit insurance; and
(b) an outline statement of general areas covered by the consumer credit insurance product, or the kind of consumer credit insurance product; and
(c) a statement that it is important that the insured read the Product Disclosure Statement carefully to understand the extent of cover provided by the consumer credit insurance product, and its limitations; and
(d) if all of the following matters apply under the consumer credit insurance product:
(i) a person who applies for, or obtains, consumer credit insurance is not obliged to buy the consumer credit insurance;
(ii) cover is provided under the consumer credit insurance product in respect of losses caused by certain contingencies;
a statement to that effect, accompanied by examples of the contingencies; and
(iii) the extent of loss to the consumer credit insurance product applies is measured by reference to the liability of the insured under the credit agreement to which the consumer credit insurance applies;
(e) a table of the benefit limits applicable under the consumer credit insurance product; and
(f) a statement that the insured:
(i) is required to be truthful; and
(ii) is able to arrange consumer credit insurance through a different insurer; and
(g) a statement of the commission paid or payable in relation to the provision of the consumer credit insurance product. 7.9.16(2) [``consumer credit insurance product'']
In this regulation:
consumer credit insurance product
means a general insurance product provided by a class of contracts of insurance that is:
(a) declared, in accordance with the Insurance Contracts Act 1984 to be a class of contracts to which Division 1 of Part V of that Act applies; and
(b) identified as consumer credit insurance as part of that declaration.
For paragraph 1012E(1)(b) of the Act, interests in financial products covered by paragraph 764A(1)(ba) of the Act (which deals with financial products in relation to certain managed investment schemes that are not registered schemes) are prescribed.
For paragraph 1017B(1)(d) of the Act, the circumstances in subregulation (2) are specified.
7.9.16G(2) [Financial product acquired by retail client]The circumstances are that the product issuer issued a financial product that was acquired by a holder as a retail client:
(a) in a sale situation in which the issuer is not required to give a Product Disclosure Statement for the product under section 1012C of the Act; or
(b) in a situation in which a Product Disclosure Statement is not required because of the operation of section 1012D of the Act other than subsection (1), (2), (2A) or (2B) of that section; or
(c) in an offer situation in which a Product Disclosure Statement is not required under section 1012E of the Act. 7.9.16G(3)
For paragraph 1017B(1A)(c) of the Act, the attribution, on the recommendation of the trustee, of an amount in relation to a member in a MySuper product to another class of beneficial interest in the fund is specified.
Division 4C - Fee Disclosure for certain financial products
This Division applies to: (a) superannuation products other than:
(i) self managed superannuation funds; and
(ii) superannuation products that have no investment component (also known as risk-only superannuation products); and
(iii) annuities (except market-linked annuities); and
(b) managed investment products; and (c) foreign passport fund products; and (d) securities in a CCIV.
(iv) non-investment or accumulation life insurance policies offered through a superannuation fund; and
Modifying legislative instruments: Regulation 7.9.16J is modified by the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
For paragraph 1020G(1)(a) of the Act: (a) an issuer of a superannuation product to which this Division applies does not have to provide the information mentioned in subparagraph 1013D(1)(d)(iii) of the Act in a Product Disclosure Statement issued before 1 July 2005; and (b) an issuer of a financial product, other than a superannuation product to which this Division applies, does not have to provide the information mentioned in subparagraph 1013D(1)(d)(iii) of the Act in a Product Disclosure Statement issued before 1 July 2006.
This Division applies: (a) in relation to superannuation products:
(i) to periodic statements (other than exit statements) in relation to a reporting period commencing on or after 1 July 2005; and
(ii) to periodic statements that are exit statements issued on or after 1 July 2006; and
(b) in relation to managed investment products:
(iii) to Product Disclosure Statements issued on or after 1 July 2005; and
(i) to periodic statements (other than exit statements) in relation to a reporting period commencing on or after 1 July 2006; and
(ii) to periodic statements that are exit statements issued on or after 1 July 2007; and
(c) in relation to securities in a CCIV:
(iii) to Product Disclosure Statements issued on or after 1 July 2006; and
(i) to periodic statements (including exit statements) in relation to a reporting period commencing on or after 1 July 2022; and
(ii) to Product Disclosure Statements issued on or after 1 July 2022.
For paragraph 1013D(4)(c) of the Act, a Product Disclosure Statement must include the details of fees and costs set out in Part 2 of Schedule 10.
7.9.16L(2)
This regulation does not apply if the Product Disclosure Statement is for: (a) a standard margin lending facility; or (b) a superannuation product to which Subdivision 4.2B of Division 4 of this Part applies; or (c) a simple managed investment scheme to which Subdivision 4.2C of Division 4 of this Part applies; or (d) a simple sub-fund product to which Subdivision 4.2D of Division 4 of this Part applies.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies in relation to a product mentioned in regulation 7.9.16J as if paragraph 1015C(5)(b) of the Act were modified to omit the words `that is to be given in electronic form'.
For paragraph 1015C(5)(b) of the Act, the information required by paragraphs 1013D(1)(d) and (e) of the Act must be set out in a single section of the Product Disclosure Statement ( fees section ) with the heading `Fees and other costs'.
7.9.16N(2)
The fees section of a Product Disclosure Statement must include: (a) the Fees and Costs Template, comprising the template and the additional explanation of fees and costs set out in Part 2 of Schedule 10; and (b) an example of annual fees and costs and associated notes as set out in Part 2 of Schedule 10; and (c) the boxed Consumer Advisory Warning Statement set out in Part 2 of Schedule 10.
Modifying legislative instruments: Regulation 7.9.16N is modified by the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
Subdivision 4C.3 - Periodic statements REGULATION 7.9.16O PRESENTATION, STRUCTURE AND FORMAT OF FEES AND CHARGES IN PERIODIC STATEMENTS 7.9.16O(1) [Regulation may specify requirements]
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies in relation to a product mentioned in regulation 7.9.16J as if section 1017D of the Act were modified to add, after subsection (7):
7.9.16O(2) [Presentation of information]
"(8)
The regulations may specify requirements as to the presentation, structure and format of a periodic statement.".
For subsection 1017D(8) of the Act, the information required by paragraph 1017D(5)(c) of the Act must be set out in the periodic statement:
(a) in the manner specified in Part 3 of Schedule 10; and
(b) using the terminology used in Part 3 of Schedule 10.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act applies as if paragraph 1015D(2)(b) of the Act were omitted and the following paragraph and note were inserted:
"(b) a change is made to the fees and charges set out in the enhanced fee disclosure table in the Statement;Note: The templates for the enhanced fee disclosure table are set out in items 201 and 202 of Schedule 10 to the Corporations Regulations 2001."
Modifying legislative instruments: Regulation 7.9.16T is modified by the ASIC Corporations (Disclosure of Fees and Costs) Instrument 2019/1070.
For other modifying legislative instruments or class orders, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
This Division applies in relation to the following entities:
(a) a regulated superannuation fund;
(b) an approved deposit fund;
(c) a pooled superannuation trust;
(d) an RSA.
This Subdivision applies in relation to:
(a) a regulated superannuation fund; and
(b) an approved deposit fund; and
(c) an RSA.
For paragraph 1017D(5)(g) of the Act, a periodic statement for a superannuation product, given to a member of a superannuation fund (other than a self managed superannuation fund) or an RSA given to an RSA holder must include the following details: (a) the contact details of the fund or the RSA provider; (b) the amount of withdrawal benefit for the member or RSA holder at the start of the reporting period; (c) the amount of the withdrawal benefit for the member or RSA holder at the end of the reporting period, and the method by which that amount was worked out; (d) the amount (if any) of the withdrawal benefit for the member or RSA holder, at the end of the reporting period, that consists of preserved benefits; (e) the amount (if any) of the withdrawal benefit for the member or RSA holder, at the end of the reporting period, that consists of restricted non-preserved benefits; (f) the amount (if any) of the withdrawal benefit for the member or RSA holder, at the end of the reporting period, that consists of unrestricted non-preserved benefits; (g) if, in providing details of the amount of the withdrawal benefit at the end of the reporting period, a deduction for fees, charges or expenses has been made or might be made - details of the deduction; (h) if relevant, a statement informing the product holder that:
(i) the information about the withdrawal benefit for the product holder at the end of the reporting period is based on notional amounts that would have been attributable to the product holder if the product holder had disposed of his or her interest in the product on the date shown in the statement; and
(ii) the amounts on which that information is based might change; and
(i) a statement informing the product holder that the product issuer is obliged to provide a member with any information that he or she reasonably requires to understand his or her benefit entitlements; (j) a statement of the way in which a product holder is able to gain access to information in relation to his or her investment in the financial product.
(iii) before disposing of that product, the product holder should seek information from the product issuer on the withdrawal benefit at that time;
For subsection 1017D(5A) of the Act, in providing details of a deduction for fees, charges or expenses in accordance with paragraph 7.9.19(g), the amount must be stated in dollars.
7.9.19A(2) [Where not possible to state amount in dollars]If ASIC determines that, for a compelling reason, it is not possible to state the amount of a deduction in dollars the amount of the deduction may be set out as a description of the fees, charges or expenses as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.9.19A(3) [Statement of fees and charges]If ASIC determines that, for a compelling reason, it is not possible to state the amount of a deduction in dollars, or to set out the amount as a percentage, the product issuer may provide:
(a) a statement informing the holder of the product that amounts for fees, charges or expenses are applicable; and
(b) if information about access to the information about the amount of the deduction is not provided in the statement mentioned in paragraph 7.9.19(h) - details of the means by which a product holder can gain access to information relating to the amount of the deduction. 7.9.19A(4) [Publication]
A determination under subregulation (2) or (3) must be:
(a) in writing; and
(b) published in the Gazette.
For subsection 1017D(5A) of the Act, this regulation applies to details of a deduction for fees, charges or expenses in accordance with paragraph 7.9.19(g).
7.9.19B(2) [Description of amount as percentage]If ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a product holder, or a class of product holders;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.9.19B(3) [Required information]If ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, to state the information as an amount in dollars, or to describe the amount as a percentage:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a product holder, or a class of product holders;
the product issuer must provide the information in subregulation (4).
7.9.19B(4) [Requirements]If subregulation (3) applies, the product issuer must provide:
(a) a statement informing the product holder that amounts for fees, charges or expenses are applicable; and
(b) if information about access to the information is not provided in the statement mentioned in paragraph 7.9.19(i) - details of the means by which a product holder can gain access to information relating to the amount of the deduction. 7.9.19B(5) [Publication]
A determination under subregulation (2) or (3) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 1017D(5)(g) of the Act, a periodic statement for a member of a fund (other than a self managed superannuation fund) must include the following details:
(a) the amount of the member's contributions during the reporting period;
(b) the amount of benefits rolled-over or otherwise transferred into the fund during the reporting period;
(c) the amount of withdrawals during the reporting period;
(d) the information about costs of transactions mentioned in regulation 7.9.75;
(e) the amount of any allotment of employer contributions during the reporting period;
(f) the amount of any allotment of net earnings during the reporting period (including, for a unitised product, the presentation of changes in price as amounts in dollars);
(g) the rate of any allotment of net earnings during the reporting period;
(h) the amount of bonuses that have accrued at the end of the reporting period;
(i) the amount of the sum assured;
(j) the amount payable in the event of the member's death:
(i) at the end of the reporting period; or
or the method by which that amount is worked out;
(ii) on the first day of the next reporting period;
(k) for a reporting period (within the meaning of subsection 1017D(2) of the Act) commencing before 1 July 2004 - details, including the amount or method of working out, of other significant benefits, including, in particular, disability benefits;
(ka) for a reporting period (within the meaning of subsection 1017D(2) of the Act) commencing on or after 1 July 2004:
(i) details of other significant benefits, including disability benefits, and the amount of the benefits at the end of the reporting period, or the method of working out the amount of the benefits; and
(ii) if the periodic statement includes an amount mentioned in subparagraph (i) - a statement informing the holder of the product that:
(A) the details of the significant benefit reflects the situation for the member on the date shown in the statement and the amount might change; and
(B) the issuer is obliged to provide product holders with any information they reasonably require for the purpose of understanding their benefit entitlements; and
(iii) details of the means by which a product holder is able to gain access to information relating to the amount of a significant benefit;
(kb) if, in providing details of other significant benefits for a reporting period, a deduction for fees, charges or expenses has been made or might be made - details of the deduction;
(l) if the trustee is aware, or ought reasonably to be aware, of contributions that are due and payable during the reporting period but have not been paid to the fund at, or shortly before, the date of issue of the report, details of the amount of those contributions and of action that the trustee has taken, or proposes to take, to have the contributions paid;
(m) the net amount of Government co-contribution received during the reporting period;
(n) for a regulated superannuation fund - a statement of long-term returns, in accordance with regulation 7.9.20AA, of:
(i) the MySuper product or investment option within a choice product in which a member is invested; or
(ii) the sub-plan, or, if none, the fund in which the member holds an interest;
(o) for a regulated superannuation fund, if the trustee is required to make publicly available a product dashboard for the investment option, under section 1017BA of the Act - the latest product dashboard for the investment option.
7.9.20(2)
For paragraph (1)(g), if the earnings rate for members of the fund is reflected in the price of units of the fund, rather than being credited or debited against the accounts of members, an earnings rate allotted to members in respect of a period is taken to be a change in the value of the members' units being determined by the trustee in respect of that period.
7.9.20(2A)
For paragraph (1)(m), the periodic statement may state separately:
(a) the amount of Government co-contributions received; and
(b) the amount of low income superannuation contributions received; and
(c) the amount of low income superannuation tax offsets received.
Note: See section 12B of the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 for the way in which a law that applies in relation to a Government co-contribution applies in relation to a low income superannuation tax offset.
7.9.20(3)
A nil amount need not be disclosed.
REGULATION 7.9.20AA SPECIFIC REQUIREMENTS FOR CERTAIN PERIODIC STATEMENTS: SUPERANNUATION FUNDS (OTHER THAN SELF MANAGED SUPERANNUATION FUNDS) - LONG-TERM RETURNS 7.9.20AA(1)
For paragraph 7.9.20(1)(n), this regulation sets out requirements that apply to a trustee of a regulated superannuation fund (other than a self managed fund).
7.9.20AA(1A)
This regulation does not apply if: (a) the superannuation product is a non-investment or accumulation life insurance policy that is offered through the regulated superannuation fund; or (b) the superannuation product has no investment component (also known as a risk-only superannuation product); or (c) the statement is a periodic statement to be given to a member of the regulated superannuation fund for a reporting period mentioned in paragraph 1017D(2)(d) of the Act.
7.9.20AA(2)
(Repealed by FRLI No F2021L01841, Sch 1[5] (effective 18 December 2021).)
7.9.20AA(3)-(7)
(Repealed by FRLI No F2021L01841, Sch 1[6] (effective 18 December 2021).)
7.9.20AA(8)
The trustee must provide the following, in the periodic statement for a reporting period that is provided from 1 July 2011, to each member of the regulated superannuation fund: (a) if the member is invested in an investment option at the end of the reporting period - a statement of the long-term returns of the investment option; (b) if the member is not invested in an investment option at the end of the reporting period - a statement of the long term returns of the sub-plan, or, if none, the fund in which the member holds an interest at the end of the reporting period.
7.9.20AA(9)
For paragraph (8)(a), the long-term returns must be stated as: (a) the compound average effective rate of net earnings of the investment option for the period of 5 years ending at the end of the last financial year or reporting period before the provision of the periodic statement; and (b) the compound average effective rate of net earnings of the investment option for the period of 10 years ending at the end of that financial year or reporting period.
7.9.20AA(10)
For paragraph (8)(b), the long-term returns must be stated as: (a) the compound average effective rate of net earnings of the sub-plan or fund for the period of 5 years ending at the end of the last financial year or reporting period before the provision of the periodic statement; and (b) the compound average effective rate of net earnings of the sub-plan or fund for the period of 10 years ending at the end of that financial year or reporting period.
7.9.20AA(11)
The trustee must include in the periodic statement, near to the statement of long-term returns, a statement to the effect that the returns are not the returns of the member's investment in the investment option, sub-plan or fund.
General requirements
7.9.20AA(12)
For subregulations (3), (4), (9) and (10), if the investment option, sub-plan or fund has been in operation for less than the 5-year or 10-year period to be reported on, the trustee must provide: (a) the long-term return for the period in which the investment option, sub-plan or fund has been in operation; and (b) the date on which the investment option, sub-plan or fund came into operation.
7.9.20AA(13)
If the long-term returns are provided in the periodic statement, they must be positioned near to the statement of the rate of any allotment of earnings during the reporting period.
7.9.20AA(14)
The long-term returns must be presented in a clear, concise and effective manner.
For subsection 1017D(5A) of the Act, in providing details of a deduction for fees, charges or expenses in accordance with paragraph 7.9.20(1)(kb):
(a) the amount must be stated in dollars; or
(b) if ASIC determines that, for a compelling reason, it is not possible to state the amount of a deduction in dollars the amount of the deduction may be set out as a description of the fees, charges or expenses as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate); or
(c) if ASIC determines that, for a compelling reason, it is not possible to state the amount of a deduction in dollars, or to set out the amount as a percentage, the product issuer may provide:
(i) a statement informing the holder of the product that amounts for fees, charges or expenses are applicable; and
7.9.20A(2) [Form of publication]
(ii) if information about the deduction is not provided in the statement mentioned in sub-subparagraph 7.9.20(1)(ka)(ii)(B) - details of the means by which a product holder can gain access to information relating to the amount.
A determination under paragraph (1)(b) or (c) must be:
(a) in writing; and
(b) published in the Gazette.
For subsection 1017D(5A) of the Act, this regulation applies to details of a deduction for fees, charges or expenses mentioned in paragraph 7.9.20(1)(kb).
7.9.20B(2) [Where not possible to state amount in dollars]If ASIC determines that, for a compelling reason based on the nature of a financial product or service, or the nature of the information, to state the amount of the deduction in dollars:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a product holder, or a class of product holders;
the information may be set out as a description of the amount as a percentage of a specified matter (including worked dollar examples, unless that is inappropriate).
7.9.20B(3) [Required information]If ASIC determines that, for a compelling reason, based on the nature of a financial product or service, or the nature of the information, tostate the amount of a deduction in dollars, or, to describe the amount as a percentage:
(a) would impose an unreasonable burden on a product issuer, or a class of product issuers; or
(b) would impose an unreasonable burden on a product issuer, or a class of product issuers, within a period specified in the determination; or
(c) would not be in the interests of a product holder, or a class of product holders;
the product issuer must provide the information in subregulation (4).
7.9.20B(4) [Requirements]If subregulation (3) applies, the product issuer must provide:
(a) a statement informing the product holder that amounts for fees, charges or expenses are applicable; and
(b) if information about the deduction is not provided in the statement mentioned in sub-subparagraph 7.9.20(1)(ka)(ii)(B) - details of the means by which a product holder can gain access to information relating to the amount of the deduction. 7.9.20B(5) [Publication]
A determination under subregulation (2) or (3) must be:
(a) in writing; and
(b) published in the Gazette.
For paragraph 1017D(5)(g) of the Act, and in addition to regulations 7.9.19 and 7.9.20, a periodic statement for a member (other than a capital guaranteed member) of a fund (other than a self managed superannuation fund) must include the following details:
(a) if the fund is an unfunded defined benefits fund - details of the surcharge debt account kept by the trustee, under subsection 16(2) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, for the member, including:
(i) the balance of the account at the start of the reporting period; and
(ii) the amount debited to the account for superannuation contributions surcharge assessed, by the Commissioner of Taxation, to be payable on the member's surchargeable contributions; and
(iii) the amount of interest debited, under subsection 16(4) of that Act, to the account during the reporting period; and
(iv) the balance of the account at the end of the reporting period;
(b) if the trustee reduced the member's benefits in connection with payment of a superannuation contributions surcharge or an advance instalment of surcharge:
(i) the amount deducted; and
(ii) if there is a difference between the amount deducted and the amount assessed under subsection 15(1) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 or between the amount deducted and the amount determined under subsection 15(2) of that Act - a statement explaining the difference;
(c) a description of the nature, effect and significant features of surcharge debt accounts. 7.9.21(2) [Nil amount]
A nil amount need not be disclosed.
For paragraph 1017D(5)(g) of the Act, and in addition to regulations 7.9.19 and 7.9.20, a periodic statement for a member of a capital guaranteed fund must include the following details:
(a) a statement that outlines the means by which the fund is to be maintained as a capital guaranteed fund and sets out the name of the institution providing the investments that back the fund;
(b) a statement that outlines the effect of the lower-risk/lower-return nature of the product on possible benefits in the long term;
(c) a statement that the member may wish to consider:
(i) other superannuation arrangements that may provide a greater return over the long term; and
7.9.22(2) [Additional requirements for RSA holder]
(ii) seeking advice on alternative investment arrangements that may be more suitable.
For paragraph 1017D(5)(g) of the Act, and in addition to regulation 7.9.19, a periodic statement for an RSA holder must include the following details:
(a) a statement that outlines the effect of the lower-risk/lower-return nature of the product on possible benefits in the long term;
(b) a suggestion that the RSA holder may wish to consider:
(i) other superannuation arrangements that may provide a greater return over the long term; and
(ii) seeking advice on alternative investment strategies that may be more suitable.
For paragraph 1017D(5)(g) of the Act, and in addition to regulations 7.9.19 and 7.9.22, if the amount of the benefits of a member in a capital guaranteed fund at the end of a reporting period is at least $10 000, the periodic statement for that reporting period must include the following details:
(a) a statement of that fact;
(b) a statement that the information contained in the periodic statement is important and that the notice must be read carefully;
(c) a statement that outlines the effect of the lower-risk/lower-return nature of the product on possible benefits in the long term;
(d) a statement that the member may wish to consider:
(i) other superannuation arrangements that may provide a greater return over the long term; and
(ii) seeking advice on alternative investment arrangements that may be more suitable.
For paragraph 1020G(1)(c) of the Act, Part 7.9 of the Act is modified in its application in relation to a superannuation entity or an RSA to which this Subdivision applies as set out in Part 7 of Schedule 10A.
This Subdivision applies in relation to an RSA provider.
For paragraph 1017D(5)(g) of the Act, and in addition to regulation 7.9.19, a periodic statement for an RSA holder must include details of the following matters in respect of the RSA holder so far as they are applicable:
(a) the amount of the RSA holder's contributions during the reporting period;
(b) the amount of employer contributions during the reporting period;
(c) the amount of benefits rolled-over or transferred into the RSA during the reporting period;
(d) the amount of withdrawals during the reporting period;
(e) information about the cost of transactions mentioned in Division 8;
(f) the amount of interest credited to the RSA during the reporting period;
(g) the annual effective rate of net interest applied to the RSA during the reporting period;
(h) a statement of:
(i) the annual effective rate of net earnings in each of the most recent reporting periods that, in total, constitute a period of at least 5 years; and
(ii) the compound average effective rate of net earnings for the period of 5 years ending at the end of the reporting period;
(i) the effect of the RSA holder-protection standards under the RSA Regulations;
(j) the amount of bonuses that have accrued at the end of the reporting period;
(k) if a risk insurance product is held by the RSA provider - the amount of the sum assured;
(l) the circumstances when benefits may be paid to an eligible rollover fund, the effect of that payment and the contact details of the eligible rollover fund;
(m) the amount payable in the event of the RSA holder's death:
(i) at the end of the reporting period; or
or the method by which that amount is worked out;
(ii) on the first day of the next reporting period;
(n) the amount, or method of working out, of other benefits including, in particular, disability benefits;
(o) if the RSA provider reduced the RSA holder's benefits in connection with payment of a superannuation contributions surcharge or an advance instalment of surcharge:
(i) the amount deducted; and
(ii) if there is a difference between the amount deducted and the amount assessed under subsection 15(1) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 or between the amount deducted and the amount determined under subsection 15(2) of that Act - a statement explaining the difference;
(p) the net amount of Government co-contribution received during the reporting period.
A nil amount need not be disclosed.
Reg 7.9.26(2) inserted by SR 2001 No 319, Sch 1[15] (effective 11 March 2002).