Corporations Act 2001
Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .
View history note
Hide history noteNothing in this Part applies in relation to:
(a) a financial market the operation of which is licensed under subsection 795B(2) ; or
(b) an application for the grant of a licence under that subsection.
In this Act:
compensation arrangements
means arrangements that consist of:
(a) a set of rules about compensation; and
(b) a source of funds from which compensation is to be paid or provided; and
(c) associated administrative and monitoring arrangements.
Note: In Subdivision D (approved compensation arrangements) of Division 3 of Part 7.5 , see also section 885A .
compensation rules
means the set of rules forming part of compensation arrangements.
Note: In Subdivision D (approved compensation arrangements) of Division 3 of Part 7.5 , see also section 885A .
Division 3 arrangements
means compensation arrangements approved under Division
3
(approved compensation arrangements) of Part
7.5
.
Division 3 loss
means a loss described in section
885C
, other than a loss that section
885D
provides is to be taken not to be a Division
3
loss.
Division 4 arrangements
means the arrangements constituted by Division
4
(NGF Compensation regime) of Part
7.5
.
fidelity fund
, in relation to a financial market, means a fund consisting principally of contributions made by:
(a) participants and past participants in the market; or
(b) participants and past participants in:
(i) the market; and
(ii) one or more other financial markets;
the purpose, or the main purpose, of which is to provide a source of funds for the payment or provision of compensation to clients of participants. Any investments made using money in the fund are taken to form part of the fund.
SEGC
(short for Securities Exchanges Guarantee Corporation) means the body corporate in relation to which a nomination as the Securities Exchanges Guarantee Corporation is in force under section
890A
.
(a) any of the participants in a licensed market, in effecting transactions through the market, provide financial services for persons as retail clients; and
(b) in connection with the provision of those financial services, those persons will or may give money or other property, or authority over property, to those participants; and
(c) the market is not a financial market to which Division 4 applies;
there must be compensation arrangements in relation to the market that are approved in accordance with Division 3 .
881A(2) [ Application]The compensation regime applicable in relation to financial markets to which Division 4 applies is as constituted by that Division.
A person who is applying for an Australian market licence must state in their application:
(a) whether any of the participants in the market, in effecting transactions through the market, will provide financial services for persons as retail clients; and
(b) if any participants will so provide financial services to persons as retail clients - whether, in connection with the provision of those financial services, those persons will or may give money or other property, or authority over property, to those participants. 881B(2) [ Proposed compensation arrangements]
(a) participants in the market will provide financial services to persons as retail clients as mentioned in paragraph (1)(a); and
(b) in connection with the provision of those financial services, those persons will or may give money or property, or authority over property, to those participants;
the application must:
(c) contain the information, in relation to the proposed compensation arrangements, required by regulations made for the purposes of this paragraph and be accompanied by a copy of the proposed compensation rules; or
(d) state that the market is or will be covered by Division 4 , and set out evidence, in accordance with the requirements (if any) of the regulations, in support of that statement.
If a licence application contains information in relation to proposed compensation arrangements as required by paragraph 881B(2)(c) , ASIC must deal with the application in accordance with section 882A .
If a licence application contains a statement in accordance with paragraph 881B(2)(d) , ASIC must consider whether ASIC is satisfied that the market will be covered by Division 4 .
881D(2)
If ASIC is not so satisfied, the application for the licence must be rejected.
881D(3)
If ASIC is so satisfied, ASIC may (subject to the other provisions about granting licences) grant the licence.
Note: The other provisions about granting licences are in Subdivision A of Division 4 of Part 7.2 .
Division 3 - Approved compensation arrangements Subdivision A - Approval of compensation arrangements SECTION 882A HOW TO GET COMPENSATION ARRANGEMENTS APPROVED WITH GRANT OF LICENCE 882A(1)
If an application for an Australian market licence contains information in relation to proposed compensation arrangements in accordance with paragraph 881B(2)(c) , ASIC must treat the application as also being an application for approval of the compensation arrangements and, for that purpose, must consider whether the proposed arrangements are adequate.
882A(2)
If ASIC does not consider that the proposed compensation arrangements are adequate, the application for the licence must be rejected.
882A(3)
If ASIC considers that the proposed compensation arrangements are adequate, ASIC may (subject to the other provisions about granting licences) grant the licence. On the granting of the licence, ASIC is taken to have approved the compensation arrangements.
Note: The other provisions about granting licences are in Subdivision A of Division 4 of Part 7.2 .
882A(4)
In the conditions of the licence, ASIC must: (a) deal with the minimum amount of cover required in relation to the compensation arrangements in such manner as ASIC thinks appropriate; and (b) identify the source of funds available to cover claims, on the basis of which ASIC approves the arrangements (see section 885H ).
If the operator of a licensed market wants to have compensation arrangements for the market approved after the licence has been granted, to ASIC for approval in accordance with this section.
882B(2)
The application must: (a) contain the information, in relation to the proposed compensation arrangements, required by regulations made for the purposes of this paragraph; and (b) be accompanied by a copy of the proposed compensation rules.
882B(3)
If ASIC does not consider that the proposed compensation arrangements are adequate, the application for approval must be rejected.
882B(4)
If ASIC considers that the proposed compensation arrangements are adequate, ASIC must: (a) approve the compensation arrangements in writing; and (b) vary the conditions of the operator's licence so as to:
(i) deal with the minimum amount of cover required in relation to the compensation arrangements in such manner as ASIC thinks appropriate; and
(ii) identify the source of funds available to cover claims, on the basis of which ASIC approves the arrangements (see section 885H ).
882B(5)
In varying licence conditions as mentioned in paragraph (4)(b) , ASIC must proceed under section 796A as though the licensee had applied for the variation to be made.
ASIC may at any time revoke an approval of compensation arrangements if ASIC considers that the arrangements are not adequate.
If ASIC considers that a market licensee ' s approved compensation arrangements are no longer adequate, ASIC may give the licensee a written direction to do specified things that ASIC believes will ensure that the arrangements become adequate once more.
882D(2)
The licensee must comply with the direction.
882D(3)
If the licensee fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the licensee comply with the direction.
882D(4)
ASIC may vary or revoke a direction at any time by giving written notice to the licensee.
882D(5)
If, at any time after the licensee receives a direction, the licensee requests in writing that ASIC refer the matter to the Minister, ASIC must do so immediately. In that event, the Minister may, if the Minister considers it appropriate, require ASIC to vary, or to revoke, the direction. ASIC must immediately comply with such a requirement.
Compensation rules forming part of Division 3 arrangements for a financial market have effect as a contract under seal between the operator of the market and each participant in the market under which each of those persons agrees to observe the rules to the extent that they apply to the person and engage in conduct that the person is required by the rules to engage in.
If a person who is under an obligation to comply with or enforce any of the compensation rules forming part of Division 3 arrangements for a financial market fails to meet that obligation, an application to the Court may be made by: (a) ASIC; or (b) the operator of the market; or (c) the operator of a clearing and settlement facility, if:
(i) there are clearing and settlement arrangements for some or all transactions effected through the market; and
(d) a person aggrieved by the failure.
(ii) those arrangements are with the operator of the facility; or
883B(2)
After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to: (a) the person against whom the order is sought; or (b) if that person is a body corporate - the directors of the body corporate;
about compliance with, or enforcement of, the compensation rules.
883B(3)
For the purposes of this section, if the operator of the market fails to comply with or enforce provisions of the compensation rules, a person who is, under the rules, entitled to make a claim for compensation is (whether or not they have actually made a claim) taken to be a person aggrieved by the failure.
883B(4)
There may be other circumstances in which a person may be aggrieved by a failure for the purposes of this section.
SECTION 883C 883C OTHER SOURCES OF FUNDS FOR COMPENSATION
Nothing in this Division makes the operator of a financial market liable to pay compensation or provide compensation from any source of funds other than the source identified in the licence conditions under paragraph 882A(4)(b) or subparagraph 882B(4)(b)(ii) .
This section applies if, under the compensation rules forming part of Division 3 arrangements for a particular financial market, a levy is payable by all or some of the participants in the market in order to ensure that adequate funds are available for the purposes of the arrangements.
883D(2)
The levy is payable to the operator of the market, as agent for the Commonwealth, by each of the participants affected.
Note: For the imposition and amount of the levy, see the Corporations (Compensation Arrangements Levies) Act 2001 .
883D(3)
An amount of levy payable under subsection (2) must be paid within the time and in the manner specified by the operator either generally or in relation to a particular case.
883D(4)
Whenever an amount of levy (the levy amount ) is paid under this section, or under section 6 of the Corporations (Compensation Arrangements Levies) Act 2001 , to the operator of a market as agent for the Commonwealth: (a) the operator must pay an amount equal to the levy amount to the Commonwealth; and (b) the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to the operator; and (c) the Commonwealth must pay the amount so appropriated to the operator; and (d) the operator must deal with the amount it receives under paragraph (c) in accordance with the compensation rules.
883D(5)
A payment of an amount to the operator of a market as required by paragraph (4)(c) in respect of a particular levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the levy amount, the operator must pay the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund.
883D(6)
The Public Governance, Performance and Accountability Act 2013 does not apply in relation to the payment of an amount of levy under this section to the operator of a market as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected: (a) the payment of an amount to the Commonwealth as required by paragraph (4)(a); or (b) the payment of an amount by the Commonwealth as required by paragraph (4)(c).
The operator must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth.
883D(7)
An amount payable by an operator as required by paragraph (4)(a) may be set off against an amount payable to the operator as requiredby paragraph (4)(c).
Subdivision C - Changing Division 3 arrangements SECTION 884A DIVISION 3 ARRANGEMENTS MUST GENERALLY ONLY BE CHANGED IN ACCORDANCE WITH THIS SUBDIVISION 884A(1) [ Prohibition on changing compensation arrangements]
The operator of a financial market in relation to which there are Division 3 arrangements must not change those arrangements except in accordance with this Subdivision.
884A(2) [ Changing compensation arrangements]However, a change may be made to Division 3 arrangements otherwise than in accordance with this Subdivision if:
(a) the change is not to a matter required by section 885B to be dealt with in the compensation rules; and
(b) the change is merely a minor administrative change.
If the proposed change is to a matter required by section 885B to be dealt with in the compensation rules, the change may only be made by changing the rules.
884B(2)
As soon as practicable after the change is made, the operator must lodge with ASIC in a prescribed form written notice of the change.
884B(3)
The notice must: (a) set out the text of the change; and (b) specify the date on which the change was made; and (c) contain an explanation of the purpose of the change.
884B(4)
If no notice is lodged with ASIC in a prescribed form within 21 days after the change is made, the change ceases to have effect.
884B(5)
(Repealed by No 87 of 2024, s 3, Sch 3[145] (effective 24 September 2024).)
884B(6)
Within 28 days after receiving the copy of the notice, ASIC may disallow all or a specified part of the change to the compensation rules.
884B(7)
ASIC must not disallow all or part of the change unless ASIC considers that, because of the change, or that part of the change, the compensation arrangements are not adequate.
884B(8)
As soon as practicable after all or part of a change is disallowed, ASIC must give notice of the disallowance to the operator of the market concerned. The change ceases to have effect, to the extent of the disallowance, when the operator receives the notice.
If: (a) the proposed change is to a matter that is not required by section 885B to be dealt with in the compensation rules (including a matter that is dealt with in the compensation rules even though it is not required to be dealt with in those rules); and (b) the change is not merely a minor administrative change;
the operator must not make the change unless:
(c) the operator has applied for approval of the change; and (d) the change has been approved by ASIC.884C(2)
The application for approval must: (a) include the information, required by regulations made for the purposes of this paragraph, in relation to the proposed change; and (b) be lodged with ASIC in a prescribed form.
Note: For fees in respect of lodging applications, see Part 9.10 .
884C(3)
If ASIC does not consider that the compensation arrangements as proposed to be changed are adequate, the application for approval must be rejected.
884C(4)
If ASIC considers that the compensation arrangements as proposed to be changed are adequate, ASIC must approve the change.
884C(5)
If: (a) the proposed change is to a matter that is dealt with in the compensation rules even though it is not required to be dealt with in those rules; and (b) the change is approved;
the operator may make any change to the compensation rules that is necessary to give effect to the change that has been approved or that is incidental to giving effect to that change.
884C(6)
If a change to the compensation rules is made as permitted by subsection (5) , the operator must, as soon as practicable after the change is made, give ASIC written notice of the change.
884C(7)
A notice required by subsection (6) must: (a) set out the text of the change; and (b) specify the date on which it was made; and (c) contain an explanation of why it is a change that is permitted to be made by subsection (5) .
This Subdivision applies for the purpose of determining, for the purposes of a provision of this Division: (a) whether:
(i) proposed compensation arrangements are adequate; or
(b) whether compensation arrangements that have been approved are adequate.
(ii) compensation arrangements as proposed to be changed are adequate; or
885A(2)
A reference in this Subdivision to the arrangements is a reference to the proposed arrangements, the arrangements as proposed to be changed, or the arrangements that have been approved, as the case requires.
885A(3)
A reference in this Subdivision to the compensation rules is a reference to the compensation rules, or the proposed compensation rules, forming part of the arrangements under consideration.
The arrangements are adequate if, and only if, ASIC is satisfied that: (a) the compensation rules provide adequate coverage for Division 3 losses (see sections 885C and 885D ); and (b) the compensation rules provide for adequate compensation to be paid in respect of Division 3 losses (see section 885E ); and (c) the compensation rules deal adequately with how compensation in respect of Division 3 losses is to be paid (see section 885F ); and (d) the compensation rules deal adequately with the making and determination of claims in respect of Division 3 losses, and with the notification of the outcome of such claims (see section 885G ); and (e) the arrangements provide for an adequate source of funds for paying compensation, or providing compensation in a form other than money, in respect of Division 3 losses and in respect of any other losses covered by the arrangements (see section 885H ); and (f) the arrangements include adequate arrangements for administration and monitoring (see section 8 85I ); and (g) under the arrangements, potential claimants have reasonable and timely access to the compensation regime; and (h) if the licensee ceases (for whatever reason) to be required to have Division 3 arrangements, the rights of people to seek compensation under the arrangements, being rights that accrued while the licensee was required to have such arrangements, will be adequately protected.
885B(2)
In considering the matters mentioned in subsection (1) , ASIC must also have regard to the matters mentioned in section 885J .
885B(3)
The matters that may be dealt with in compensation rules are not limited to matters mentioned in this section.
Subject to section 885D , the compensation rules must cover losses ( Division 3 losses ) of a kind described in the following paragraphs: (a) a person (the client ) gave money or other property, or authority over property, to a person (the participant ):
(i) who was a participant in the market at that time; or
(b) the money or other property, or the authority, was given to the participant in connection with effecting a transaction, or proposed transaction, covered by provisions of the operating rules of the market relating to transactions effected through the market; and (c) the effecting of the transaction through the market constitutes or would constitute the provision of a financial service to the client as a retail client; and (d) the client suffers a loss because of:
(ii) who the client reasonably believed to be a participant in the market at that time and who was a participant in the market at some earlier time; and
(i) if the client gave the participant money or other property - the defalcation or fraudulent misuse of the money or other property by the participant; or
(ii) if the client gave the participant authority over property - the fraudulent misuse of that authority by the participant.
885C(2)
The compensation rules must provide that a claim relating to an alleged loss caused by defalcation or fraudulent misuse may be allowed even if: (a) the person against whom the defalcation or misuse is alleged has not been convicted or prosecuted; and (b) the evidence on which the claim is allowed would not be sufficient to establish the guilt of that person on a criminal trial in respect of the defalcation or fraudulent misuse.
885C(3)
The compensation rules may exclude losses of a kind described above that occur in specified situations. However, the compensation arrangements will not be adequate unless ASIC is satisfied that those exclusions are appropriate.
If, in relation to a loss suffered by a person:
(a) the requirements of subsection 885C(1) are satisfied in relation to a participant and 2 or more financial markets; and
(b) the person did not (expressly or impliedly) instruct the participant to use a particular one of those markets; and
(c) it is not reasonably apparent from the usual business practice of the participant which of those markets the participant would use when acting for the person;
the loss is taken not to be a Division 3 loss .
885D(2) [ Excluded loss - loss connected to financial market]If, in relation to a loss suffered by a person:
(a) the requirements of subsection 885C(1) are satisfied in relation to a participant and a financial market; and
(b) the loss is also connected (see section 888A ) with a financial market to which Division 4 applies; and
(c) the person did not (expressly or impliedly) instruct the participant to use a particular one of those markets; and
(d) it is not reasonably apparent from the usual business practice of the participant which of those markets the participant would use when acting for the person;
the loss is taken not to be a Division 3 loss .
885D(3) [ Excluded loss - transaction effected otherwise that through financial market]If, in relation to a loss suffered by a person:
(a) the transaction referred to in paragraph 885C(1) (b) could have been effected otherwise than through a financial market; and
(b) the person did not (expressly or impliedly) instruct the participant concerned to effect the transaction through a financial market; and
(c) it is not reasonably apparent from the usual business practice of the participant that the transaction would be effected through a financial market;
the loss is taken not to be a Division 3 loss .
Subject to this section, the compensation rules must provide that the amount of compensation to be paid, or the value of compensation to be provided in a form other than money in respect of a Division 3 loss is to be not less than the sum of: (a) the actual pecuniary loss suffered by the claimant, calculated by reference to the market value of any relevant assets or liabilities as at the date on which the loss was suffered; and (b) the claimant's reasonable costs of, and disbursements incidental to, the making and proof of the claim.
885E(2)
The compensation rules may provide for the amount of compensation payable in respect of a Division 3 loss to be reduced by reference to a right of set-off available to the claimant.
885E(3)
The compensation rules may impose an upper limit on the amount of compensation to which a person is entitled in respect of a claim in particular circumstances, or an upper limit on the total amount of compensation to which persons are entitled in respect of claims referable to a particular event or circumstance.
885E(4)
That upper limit may be specified in the compensation rules or determined by a method specified in the rules.
885E(5)
The compensation rules must also provide for the payment to the claimant of interest at the rate applicable under the regulations on the amount of the actual pecuniary loss, or so much of that loss as from time to time has not been compensated by an instalment or instalments of compensation, in respect of the period starting on the day when the loss was suffered and ending on the day when the compensation, or the last instalment of compensation, is paid.
885E(6)
The compensation rules may provide for what is to happen if there are insufficient funds to meet claims in respect of Division 3 losses and in respect of any other losses covered by the arrangements. For example, they may provide for the prioritisation of claims, or the apportionment of available funds between claims.
885E(7)
(Repealed by No 76 of 2023, s 3, Sch 1 [ 396] (effective 20 October 2023).)
The compensation rules must deal with how compensation in respect of Division 3 losses is to be paid or provided.
885F(2)
Without limiting subsection (1) , the compensation rules may provide for compensation to be paid in a lump sum or by instalments.
The compensation rules must provide for how claims in respect of Division 3 losses are to be made and determined, and for how claimants are notified of the outcome of their claims.
885G(2) [ Specific rules for making and determining claims]Without limiting subsection (1), the compensation rules may:
(a) require a person making a claim to pay money, or transfer other property, in support of a claim; and
(b) provide for claims to be disallowed unless persons exercise rights of set-off; and
(c) set time limits for the making of claims; and
(d) provide for claims to be partially allowed (including, for example, in a case where the operator considers that the claimant's conduct contributed to the loss).
There must be an adequate source of funds available to cover claims made under the compensation arrangements in respect of Division 3 losses and in respect of any other losses covered by the arrangements.
Note 1: For example, the source of funds may consist of:
Note 2: The source of funds does not have to consist of a single thing. It may consist of a combination of different things.
The arrangements must include arrangements for:
(a) the administration of the compensation arrangements; and
(b) monitoring compliance with the compensation arrangements and reporting breaches of the arrangements to the board of the operator of the market; and
(c) monitoring the adequacy of the arrangements and reporting to the board of the operator of the market on the need for, or desirability of, changes to the compensation arrangements. 885I(2) [ Delegation of responsibilities]
Without limiting subsection (1), the arrangements may give responsibilities to:
(a) the operator of the market, or a related company, or a director or employee of the operator or a related company; or
(b) a committee; or
(c) another person acting under an arrangement with the operator. 885I(3) [ Members of delegation]
The people who may be members of a committee referred to in paragraph (2)(b) include, but are not limited to:
(a) participants in the market, or representatives of such participants; and
(b) members of the board of the operator of the market.
In considering whether the arrangements are adequate, ASIC must also have regard to: (a) the services provided by the market and by the participants in the market; and (b) any risk assessment report in relation to the market given to ASIC under section 892K .
885J(2)
ASIC may take into account such other matters as ASIC thinks appropriate.
If: (a) a claim by a person for compensation (including interest referred to in subsection 885E(5) ) in respect of a particular Division 3 loss suffered by the person has been allowed under Division 3 arrangements; and (b) the person makes or has made another claim under those Division 3 arrangements, or under other Division 3 arrangements, in respect of the same loss;
that other claim must not be allowed.
The regulations may include provisions relating to how a fidelity fund, or part of a fidelity fund, is to be dealt with if:
(a) the operator of a financial market becomes insolvent, within the meaning of the regulations; or
(b) a financial market merges with another financial market; or
(c) a financial market ceases to operate (otherwise than because of a merger), or ceases to be required by subsection 881A(1) to have approved compensation arrangements.
This Division applies to a financial market that is operated by:
(a) a body corporate that is a member of the SEGC; or
(b) a body corporate that is a subsidiary of such a member;
other than any such market that the regulations state is not covered by this Division.
The situations in which compensation may be claimed in respect of a loss that is connected with a financial market to which this Division applies are as specified in the regulations.
888A(2) [ Loss connected with a financial market]Without limiting subsection (1), a loss is connected with a financial market if it is caused by a participant, or past participant, in the market.
The regulations may provide that compensation under this Division is to take the form of a payment of money or some other form (for example, a transfer of financial products).
The amount of compensation (including the value of any non-monetary compensation) to which a person is entitled in respect of a claim that is allowed is to be as determined in accordance with the regulations.
888C(2) [ Application of regulations]Without limiting subsection (1), the regulations may do all or any of the following:
(a) provide for the amount of compensation to be determined by agreement with the claimant, or by arbitration if agreement cannot be reached; and
(b) provide for the payment of interest on the amount of the claimant's loss; and
(c) provide for the amount of compensation to be reduced by reference to a right of set-off available to the claimant or by reference to the extent to which the claimant was responsible for causing the loss; and
(d) impose an upper limit on the amount of compensation to which a person is entitled in respect of a claim in particular circumstances, or an upper limit on the total amount of compensation to which persons are entitled in respect of claims referable to a particular event or circumstance. 888C(3) [ Upper limit]
An upper limit referred to in paragraph (2)(d) may be specified in the regulations or determined by a method specified in the regulations.
888C(4) [ Costs and disbursements]The regulations may also provide for a claimant to be paid an amount in respect of the claimant's reasonable costs of, and disbursements incidental to, the making and proof of the claim (whether or not the claim is allowed in whole or in part).
888C(5) [ Costs and disbursements]The regulations may also provide for a claimant to be paid an amount in respect of the claimant's reasonable costs of, and disbursements incidental to, attempting to recover the loss (whether or not the claim is allowed in whole or in part).
The regulations may provide for the compensation to be paid in a lump sum or by instalments.
888D(2) [ Other provisions relating to payment]The regulations may make other provisions in relation to how compensation is to be paid.
Claims are to be made and determined in accordance with:
(a) the regulations; and
(b) any relevant provisions of the SEGC's operating rules. 888E(2) [ Specific rules for making and determining claims]
Without limiting subsection (1), the regulations, or the SEGC's operating rules, may do all or any of the following:
(a) require a person making a claim to pay money, or transfer other property, to the SEGC in support of a claim;
(b) provide for claims to be disallowed unless persons exercise rights of set-off;
(c) set time limits for the making of claims;
(d) provide for claims to be partially allowed (including, for example, in a case where the SEGC considers that the claimant's conduct contributed to the loss). 888E(3) [ Additional requirements]
The regulations, or the SEGC's operating rules, may impose other requirements to be complied with by the SEGC in relation to claims (including, for example, requirements to notify claimants whether their claims have been allowed).
888E(4) [ Inconsistency]If a provision of the SEGC's operating rules is wholly or partly inconsistent with regulations made for the purposes of this section, the provision of the SEGC's operating rules is, to the extent of the inconsistency, of no effect.
The SEGC has power to determine claims in accordance with this Division.
If the SEGC allows a claim, neither the allowance of the claim, nor any other act done by SEGC as a result of allowing the claim, constitutes an admission (by anyone) of any liability, other than the liability to provide compensation in respect of the claim in accordance with this Division.
If the SEGC has disallowed a claim, the claimant may bring proceedings in the Court to establish the claim. The proceedings must be brought within 3 months of notice of the disallowance of the claim.
888H(2) [ Court proceedings where delay in determining claim]If the SEGC has neither allowed nor disallowed a claim within a reasonable period after it was made, the claimant may bring proceedings in the Court to establish the claim.
888H(3) [ Orders and directions]If, in proceedings under subsection (1) or (2), the Court is satisfied that the claim should be allowed, the Court:
(a) must, by order, make a declaration accordingly and direct the SEGC to allow the claim and deal with it in accordance with this Division; and
(b) may, at any time after the order is made, on application made (whether before or after the order is made) by the claimant or the SEGC, give such directions relating to the claim as the Court thinks just and reasonable. 888H(4) [ Costs]
In proceedings to establish a claim, all questions of costs are in the discretion of the Court.
Money or other property of the SEGC that is not part of the NGF is not available to be applied in respect of a claim that has been allowed by the SEGC, whether or not under an order of the Court.
The SEGC may enter into a contract with a person (the insurer ) carrying on a fidelity insurance business under which the SEGC will be insured or indemnified against liabilityin respect of claims to the extent and in the manner provided by the contract.
888J(2) [ Scope of indemnity or insurance]The contract may relate to all claims or only to certain claims as specified in the contract. The contract may, for example, exclude claims relating to the conduct of a particular financial services licensee.
888J(3) [ Qualified privilege]The following persons each have qualified privilege in respect of the publication of a statement that the contract does not apply with respect to claims relating to the conduct of a particular financial services licensee:
(a) the SEGC and the members of its board;
(b) any body corporate that is a member of the SEGC;
(c) any subsidiary of such a member;
(d) any employee of a body covered by paragraph (a), (b) or (c). 888J(4) [ Claimant's rights against insurer]
A person who has made a claim does not have a right of action against the insurer in respect of the contract or a right or claim in respect of money paid by the insurer in accordance with the contract.
The SEGC may pay money out of the NGF to acquire financial products for the purpose of providing compensation (in accordance with the regulations) that takes the form of a transfer of financial products.
The National Guarantee Fund that continued to exist under section 928B of this Act before the repeal of that section by the Financial Services Reform Act 2001 continues in existence as the National Guarantee Fund for the purposes of this Part.
Compensation payable under this Division is to be paid out of the NGF.
The SEGC must keep and administer the NGF.
889C(2) [ NGF assets]The assets of the NGF are the property of SEGC, but must be kept separate from all other property and must be held on trust by the SEGC for the purposes of this Division.
The NGF consists of:
(a) money and other property constituting the NGF before the commencement of this Chapter; and
(b) money paid into the NGF in accordance with section 889J or 889K ; and
(c) money paid to the SEGC in accordance with regulations referred to in section 888E in support of a claim; and
(d) money paid to the SEGC under a contract of insurance or indemnity referred to in section 888J ; and
(e) money paid into the NGF under subsection 889F(2) ; and
(f) the interest and profits from time to time accruing from the investment of the NGF; and
(g) money recovered by or on behalf of the SEGC in the exercise of a right of action that the SEGC has by virtue of a provision of this Part; and
(h) money and other property paid or transferred to the SEGC for inclusion in the NGF in accordance with regulations referred to in section 891B ; and
(i) all other money and other property lawfully paid into, or forming part of, the NGF.
If the SEGC considers that, in the interests of the sound financial management of the NGF, money should be borrowed for the purpose of meeting a payment due out of the NGF, the SEGC may borrow money for that purpose on such terms and conditions as the SEGC thinks appropriate.
889E(2) [ Power to give security]The SEGC may give security, including over the assets of the NGF, in respect of the SEGC's obligations in relation to a borrowing under subsection (1).
889E(3) [ Power to give security over member loan](a) money borrowed under subsection (1) is a loan from a body corporate that is a member of the SEGC; and
(b) the body corporate borrowed money for the purpose of making the loan to the SEGC;
the SEGC may give security, including over the assets of the NGF, in relation to the body corporate's obligations in respect of the borrowing referred to in paragraph (b).
This section applies if money borrowed by the SEGC under subsection 889E(1) is paid to the SEGC.
889F(2) [ Payment of borrowed money]The SEGC must pay the money into the NGF.
889F(3) [ Amount of money in NGF](a) the money was borrowed for the purpose of meeting a payment due out of the NGF; and
(b) the borrowed money has been paid into the NGF; and
(c) the payment due out of the NGF has not yet been made;
then, for the purposes of section 889J , the amount in the NGF is taken to be reduced by the amount of the borrowed money.
This section applies if money borrowed by the SEGC under subsection 889E(1) is not paid to the SEGC but is payable to other persons at the direction of the SEGC.
889G(2) [ Prohibition on unauthorised payments]The SEGC must not direct that any of the money be paid to a person unless the payment is of a kind that can, under section 889H , be made out of the NGF.
Subject to regulations made for the purposes of this section, the following are to be paid out of the NGF, in such order as the SEGC considers appropriate:
(a) amounts, including costs, disbursements and interest, that any provision of this Part requires to be paid in connection with claims;
(b) all legal and other expenses incurred:
(i) in investigating or defending claims; or
(ii) in relation to the NGF; or
(iii) in the exercise by the SEGC of the rights and powers vested in it by any provision of this Part in relation to the NGF;
(c) money payable out of the NGF under regulations referred to in subsection 892G(2) ;
(d) amounts to be paid to acquire financial products as mentioned in section 888K ;
(e) premiums payable in respect of contracts of insurance or indemnity entered into by the SEGC under section 888J ;
(f) payments of principal, interest and other amounts payable by the SEGC in respect of money borrowed, and security given, under section 889E ;
(g) the expenses incurred in the administration of the NGF, including the salaries and wages of persons employed by the SEGC in relation to the NGF;
(h) amounts to be paid to a body corporate in accordance with a direction of the Minister under section 891A ;
(i) any other money payable out of the NGF in accordance with a provision of this Part.
The minimum amount in relation to the NGF is:
(a) unless paragraph (b) applies - $80,000,000; or
(b) if a determination is in force under subsection (2) - the amount specified in the determination. 889I(2) [ Alternative minimum amount]
The SEGC may, in writing, determine an amount (whether greater than, or less than, $80,000,000) to be the minimum amount in relation to the NGF. The determination does not come into force until it has been approved by the Minister.
889I(3) [ Publication]The SEGC must publish in the Gazette notice of a determination that has come into force under subsection (2). The notice must specify the date when the determination came into force.
889I(4) [ Shortfall of NGF]If the amount in the NGF falls below the minimum amount, the SEGC must consider what action needs to be taken.
If the amount in the NGF is less than the minimum amount applicable under section 889I , the SEGC may determine in writing that: (a) the operators of all, or a class, of the financial markets to which this Division applies; or (b) all, or a class, of the participants in any of these markets;
must pay a levy to the SEGC.
889J(2)
The levy is payable to the SEGC, as agent for the Commonwealth, in accordance with this section.
Note: For the imposition and amount of the levy, see the Corporations (National Guarantee Fund Levies) Act 2001 . There is a limit on the amount of levy that is payable to the SEGC in a financial year under that Act.
889J(3)
A levy payable under this section must be paid within the period and in the manner determined in writing by the SEGC.
889J(4)
Whenever an amount of levy (the levy amount ) is paid under this section, or under subsection 6(2) of the Corporations (National Guarantee Fund Levies) Act 2001 , to the SEGC as agent for the Commonwealth: (a) the SEGC must pay an amount equal to the levy amount to the Commonwealth; and (b) the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to the SEGC; and (c) the Commonwealth must pay the amount so appropriated to the SEGC; and (d) the SEGC must pay the amount it receives under paragraph (c) into the NGF.
889J(5)
Whenever an amount of levy (the levy amount ) is paid under subsection 6(1) of the Corporations (National Guarantee Fund Levies) Act 2001 , to the operator of a financial market as agent for the Commonwealth: (a) the operator must pay an amount equal to the levy amount to the SEGC; and (b) the SEGC must pay an amount equal to the amount so paid to it to the Commonwealth; and (c) the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to the SEGC; and (d) the Commonwealth must pay the amount so appropriated to the SEGC; and (e) the SEGC must pay the amount it receives under paragraph (d) into the NGF.
889J(6)
A payment of an amount to the SEGC as required by paragraph (4)(c) or (5)(d) in respect of a particular levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the levy amount, the SEGC must pay the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund. The SEGC may pay, out of the NGF, any amount so required to be paid to the Commonwealth.
889J(7)
The Public Governance, Performance and Accountability Act 2013 does not apply in relation to the payment of an amount of levy under this section to the SEGC, or the operator of a financial products market, as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected: (a) the payment of an amount to the Commonwealth as required by paragraph (4)(a) or (5)(b); or (b) the payment of an amount by the Commonwealth as required by paragraph (4)(c) or (5)(d).
The SEGC must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth, and the operator of a financial market must, in accordance with the regulations, notify the Commonwealth of payments it receives as agent for the Commonwealth as mentioned in paragraph (5)(a).
889J(8)
An amount payable by the SEGC as required by paragraph (4)(a) may be set off against an amount payable to the SEGC as required by paragraph (4)(c), and an amount payable by the SEGC as required by paragraph (5)(b) may be set off against an amount payable to the SEGC as required by paragraph (5)(d).
SECTION 889K LEVY BY MARKET OPERATOR 889K(1)
An operator of a financial market who must pay an amount of levy (the primary levy amount ) under section 889J may determine in writing that participants in the market must pay a levy (the contributory levy ). The determination must be such that the total of the amounts of contributory levy payable by the participants does not exceed the primary levy amount. The contributory levy is payable to the operator as agent for the Commonwealth.
Note: For the imposition and amount of the levy, see the Corporations (National Guarantee Fund Levies) Act 2001 .
889K(2)
If a determination is made under subsection (1), the contributory levy is payable by each participant in the market who, when the determination is made, is in a class of participants in the market determined in writing by the operator for the purposes of the levy.
889K(3)
The amount of contributory levy payable by a participant under a determination under subsection (1) must be paid within the period, and in the manner, specified in writing by the operator either generally or in relation to particular participants or classes of participants.
889K(4)
Whenever an amount of levy (the levy amount ) is paid under this section, or under subsection 6(3) of the Corporations (National Guarantee Fund Levies) Act 2001 , to the operator of a financial market as agent for the Commonwealth: (a) the operator must pay an amount equal to the levy amount to the Commonwealth; and (b) the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to the SEGC; and (c) the Commonwealth must pay the amount so appropriated to the SEGC; and (d) the SEGC must pay the amount it receives under paragraph (c) into the NGF; and (e) the operator ' s liability to pay the primary levy amount is reduced by the amount paid into the NGF under paragraph (d).
889K(5)
A payment of an amount to the SEGC as required by paragraph (4)(c) in respect of a particular contributory levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the contributory levy amount, the SEGC must pay the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund. The SEGC may pay, out of the NGF, any amount so required to be paid to the Commonwealth.
889K(6)
The Public Governance, Performance and Accountability Act 2013 does not apply in relation to the payment of an amount of levy under this section to the operator of a financial market as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected: (a) the payment of an amount to the Commonwealth as required by paragraph (4)(a); or (b) the payment of an amount by the Commonwealth as required by paragraph (4)(c).
The operator must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth.
Subdivision D - The SEGC SECTION 890A MINISTER TO NOMINATE THE SEGC 890A(1)
Subject to subsection (3) , the Minister may nominate in writing as the Securities Exchanges Guarantee Corporation (the SEGC ) a body corporate (whenever incorporated) that is, for the purposes of the national corporate laws, a company limited by guarantee.
890A(2)
ASIC must cause a copy of a nomination by the Minister under subsection (1) to be published in the Gazette .
890A(3)
The Minister may only nominate a body corporate under subsection (1) if he or she is satisfied that: (a) ASX Limited is a member of the body corporate; and (b) each of the other members of the body corporate is a market licensee; and (c) the body corporate ' s constitution provides that only market licensees may become or remain members of the body corporate; and (d) the body corporate will, if nominated under subsection (1) , be able to perform and exercise the SEGC ' s functions and powers under this Division adequately and with due regard to the interests of the public; and (e) the body corporate has obtained, or will within a reasonable period after being nominated under subsection (1) obtain, indemnity insurance in respect of its liabilities for:
(i) negligence in; and
the performance or exercise of the SEGC ' s functions or powers under this Division, or has made or will make other satisfactory provisions for meeting those liabilities; and (f) the body corporate ' s business rules make satisfactory provision:
(ii) defalcation, or fraudulent misuse of property, by an officer, employee or agent of the body corporate in connection with;
(i) for ensuring the safety of property received by the body corporate; and
(ii) generally for the protection of the interests of the public.
In addition to the legal capacity and powers it has because of section 124 , the SEGC has such functions and powers as are conferred, or expressed to be conferred, on it by or under this Part.
890B(2) [ Limitation]Section 125 does not apply in relation to a function or power conferred, or expressed to be conferred, as mentioned in subsection (1) of this section.
890B(3) [ Performance of functions and powers]The SEGC is to perform the functions, and may exercise the powers, that are conferred on it by or under this Part.
890B(4) [ Administration of arrangements]The SEGC is to administer the arrangements constituted by this Division.
Subject to this section, all decisions of the SEGC in relation to the performance of its functions, and the exercise of its powers, under this Part must be made by the board of the SEGC.
890C(2)
The board of the SEGC must not delegate any of the following powers of the SEGC:
(a) the power to borrow under section 889E ;
(b) the power to determine the order of payments under section 889H ;
(c) the power to determine a minimum amount under section 889I ;
(d) the power to make operating rules under section 890D ;
(e) the power (or duty) to make a payment under section 891A .
890C(3)
Otherwise, the board of the SEGC may delegate all or any of their powers under this Part in accordance with section 198D .
SECTION 890D 890D OPERATING RULES OF THE SEGC
The SEGC may make rules ( operating rules ) relating to the performance or exercise of its powers or duties under this Part, or relating to matters permitted by this Part to be dealt with in its operating rules.
The SEGC's operating rules have effect as a contract under seal between the SEGC and each member of the SEGC under which each of those persons agrees to observe the operating rules to the extent that they apply to the person and engage in conduct that the person is required by the operating rules to engage in.
If a person who is under an obligation to comply with or enforce any of the SEGC's operating rules fails to meet that obligation, an application to the Court may be made by:
(a) ASIC; or
(b) the SEGC; or
(c) a member of the SEGC; or
(d) a person aggrieved by the failure. 890F(2) [ Court orders]
After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to:
(a) the person against whom the order is sought; or
(b) if that person is a body corporate - the directors of the body corporate;
about compliance with, or enforcement of, the operating rules.
As soon as practicable after a change is made to the SEGC's operating rules, the SEGC must lodge with ASIC in a prescribed form written notice of the change.
890G(2)
The notice must: (a) set out the text of the change; and (b) specify the date on which the change was made; and (c) contain an explanation of the purpose of the change.
890G(3)
If no notice is lodged with ASIC in a prescribed form within 21 days after the change is made, the change ceases to have effect.
Within 28 days after receiving a notice under section 890G , ASIC may disallow all or a specified part of the change to the SEGC ' s operating rules.
890H(2)
(Repealed by No 87 of 2024, s 3, Sch 3[155] (effective 24 September 2024).)
890H(3)
As soon as practicable after all or part of a change is disallowed, ASIC must give notice of the disallowance to the SEGC. The change ceases to have effect, to the extent of the disallowance, when the SEGC receives the notice.
If the Minister is satisfied that a body corporate specified in regulations made for the purposes of this section has made adequate arrangements covering all or part of the clearing and settlement system support that this Division provides for, the Minister may, in writing, direct the SEGC to pay a specified amount to that body corporate out of the NGF.
891A(2) [ Conditions on payment]The Minister may, in writing, impose conditions to be complied with by the SEGC or the body corporate, or both, in relation to the payment.
891A(3) [ Compliance with direction]The SEGC and the body corporate must comply with the direction and with any applicable conditions to which the direction is subject.
891A(4) [ Adequate funds to meet future claims]Before giving a direction under subsection (1), the Minister must be satisfied that, after the payment is made, the NGF will still have an adequate amount of assets to meet claims.
In this section:
joining market
means a financial market that:
(a) is operated by a body corporate that becomes a member of the SEGC after the commencement of this Division, or by a subsidiary of such a body corporate; and
(b) is a financial market to which this Division applies. 891B(2) [ Transitional or saving regulations]
The regulations may make provisions of a transitional or saving nature dealing with the transition, in relation to a joining market, from the compensation regime previously applicable in relation to the market to the arrangements constituted by this Division.
891B(3) [ Payment or transfer of money]Without limiting subsection (2), the regulations may require money or other property (including money or other property in a fidelity fund) to be paid or transferred to the SEGC for inclusion in the NGF.
891B(4) [ Part allocation of fund]The regulations may also provide for the allocation of part of the NGF as being for use for the purposes of claims arising in connection with the joining market.
891B(5) [ Modification]The regulations may make modifications of provisions of this Division and Division 5 that are necessary or convenient to take account of allocations of a kind referred to in subsection (4).
Regulations made for the purposes of a provision of this Division may make different provision in respect of different financial markets to which this Division applies and in respect of different circumstances.
In this Act:
(a) in relation to Division 3 arrangements of a financial market - means the operator of the market; and
(b) in relation to Division 4 arrangements - means the SEGC.
Part 7.5 regulated fund
means:
(a) a fidelity fund that is the source, or a source, of funds under Division 3 arrangements; or
(b) the NGF; or
(c) an account kept as required by subsection 892B(3) .
Money in: (a) a fidelity fund that is the source, or a source, of funds under Division 3 arrangements; or (b) the NGF;
must, until applied in paying claims or otherwise spent for the purposes of this Part, or invested in accordance with section 892C , be kept by the Part 7.5 authority in an account or accounts:
(c) with an Australian ADI; or (d) of a kind prescribed by regulations made for the purposes of this paragraph;separate from any account or accounts in which other money is kept.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
892B(2)
The regulations may impose additional requirements to be complied with in relation to the keeping of a Part 7.5 regulated fund that covers 2 or more financial markets.
892B(3)
If: (a) a source of funds under Division 3 arrangements for a financial market is something other than a fidelity fund; and (b) the operator of the market, or a person involved in the administration of the arrangements, receives money from that source of funds;
the money received must, until applied in paying claims or otherwise spent for the purposes of this Part, or invested in accordance with section 892C , be kept by the Part 7.5 authority in an account or accounts:
(c) with an Australian ADI; or (d) of a kind prescribed by regulations made for the purposes of this paragraph;separate from any account or accounts in which other money is kept.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
Money in a Part 7.5 regulated fund that is not immediately required for the purposes of meeting claims may be invested in any way in which trustees are for the time being authorised by law in force in a State or Territory in this jurisdiction to invest trust funds.
892C(2)
The Part 7.5 authority may, with the approval of ASIC, appoint a person to invest on behalf of the authority money to which subsection (1) applies.
892C(3)
ASIC must not grant approval to the appointment of a person under subsection (2) unless it is satisfied that: (a) the person has appropriate qualifications and expertise to perform the duties of the appointment; and (b) the Part 7.5 authority has adequate indemnity insurance in respect of its liabilities for any negligence, or any defalcation or fraudulent misuse of property, by the person in the performance of those duties, or has made other satisfactory provisions for meeting those liabilities.
892C(4)
A person appointed under subsection (2) must perform the duties of the appointment in accordance with the directions of the Part 7.5 authority and subject to such conditions (if any) as the authority imposes.
The Part 7.5 authority in relation to Division 3 arrangements or Division 4 arrangements may require a person: (a) to deliver to the Part 7.5 authority documents or copies of documents, including documents of, or evidencing, title to financial products; or (b) to make out and deliver to the Part 7.5 authority a statement of evidence;
that the Part 7.5 authority considers will assist it in determining a claim for compensation that has been made, or that the Part 7.5 authority considers are necessary for the purpose of exercising the subrogated rights and remedies it has in relation to aclaim (see section 892F ).
892D(2)
The requirement must be made by notice in writing given to the person. The notice must: (a) so far as it requires documents or copies referred to in paragraph (1)(a) - identify or describe the documents or copies that are required; and (b) so far as it requires a statement referred to in paragraph (1)(b) - describe the matters in relation to which the person's evidence is required, and set out any requirements to be complied with in relation to how the statement is made out.
892D(3)
The person must comply with the requirement.
892D(4)
If the person fails, without reasonable excuse, to comply with the requirement, the Part 7.5 authority may apply to the Court for, and the Court may make, an order that the person comply with the direction.
892D(5)
If the person fails, without reasonable excuse, to comply with the requirement, the Part 7.5 authority may disallow a claim made by the person.
Note: This subsection would not apply if the person subject to the requirement were someone other than a claimant.
892D(6)
The Part 7.5 authority may, in writing, delegate the power given by this section to a person involved in the administration of the Division 3 arrangements or Division 4 arrangements.
892D(7)
The relevant authority must return any documents (other than copies of documents) provided to it under this section as soon as practicable after the claim referred to in subsection (1) has been determined, and any proceedings relating to the determination of the claim (including any arising from the subrogation of the Part 7.5 authority for the claimant) have been completed.
892D(8)
Subsection (7) does not apply if: (a) another law prohibits or prevents the return of the documents; or (b) the documents are no longer in the custody of the Part 7.5 authority; or (c) the person tells the Part 7.5 authority that the person does not want the documents back.
If Division 3 arrangements give responsibilities (as mentioned in paragraph 885I(2) (c)) to a person acting under an arrangement with the operator of the market concerned, the person may give the operator a written request to give such assistance as the person requires for the purpose of fulfilling the person's responsibilities under the arrangement.
892E(2) [ Power of SEGC to require assistance]The SEGC may give a member of the SEGC, or a subsidiary of a member of the SEGC, a written request to give such assistance as the SEGC requires for the purpose of:
(a) dealing with a claim; or
(b) the assessment of risks to the NGF. 892E(3) [ Reasonableness]
A requirement for assistance under subsection (1) or (2) must be reasonable.
892E(4) [ Compliance]A person who is required under this section to give assistance must give the assistance.
892E(5) [ Failure to give assistance]If the person fails to give the assistance, the person who required the assistance may apply to the Court for, and the Court may make, an order that the other person give the assistance.
If compensation in respect of a claim is paid under Division 3 arrangements or Division 4 arrangements, the Part 7.5 authority in relation to the arrangements is subrogated, to the extent of that payment, to all the claimant's rights and remedies in relation to the loss to which the claim relates.
892F(2)
The Part 7.5 authority may also recover from the participant or participants who caused the loss the costs it incurred in determining the claim.
The regulations may determine, or provide a method for determining, when there is excess money in a Part 7.5 regulated fund.
892G(2)
The regulations may make provision in relation to how excess money in a Part 7.5 regulated fund may be, or is to be, dealt with. The regulations may make different provision in relation to different funds.
The Part 7.5 authority in relation to Division 3 arrangements or Division 4 arrangements must, in relation to each Part 7.5 regulated fund established in connection with the arrangements, keep written financial records that: (a) correctly record and explain the fund ' s transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited;
and must retain the financial records for 7 years after the transactions covered by the records are completed.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
892H(2)
Within 2 months after the end of each financial year of the Part 7.5 authority, the authority must cause financial statements and notes to those financial statements (within the meaning of section 295 ) for the Part 7.5 regulated fund to be made out as at the end of that financial year.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
892H(3)
A registered company auditor, or authorised audit company, must be appointed to audit the accounts of the Part 7.5 regulated fund in accordance with whichever of the following paragraphs applies: (a) if there is only one Part 7.5 authority for the fund, that authority must appoint a registered company auditor, or authorised audit company, to audit the fund ' s accounts; (b) if there is more than one Part 7.5 authority for the fund:
(i) each of those Part 7.5 authorities must ensure that a registered company auditor, or authorised audit company, is appointed in accordance with subparagraph (ii) to audit the fund ' s accounts; and
(ii) the appointment is to be made by one or more of the Part 7.5 authorities, with the consent of such of the authorities (if any) as do not make the appointment; and
(iii) a Part 7.5 authority must not purport to appoint a person to audit the fund ' s accounts unless each other Part 7.5 authority (if any) who has not also made the appointment has consented to the appointment.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
892H(4)
If there is more than one Part 7.5 authority for a fund and they cannot agree on which auditor to appoint, ASIC may, on the written application of any of the authorities, appoint an auditor who consents to being so appointed.
892H(5)
The auditor must: (a) audit the accounts of the Part 7.5 regulated fund and the financial statements; and (b) do the things required by sections 307 and 308 in relation to those documents, as if the audit were being done under Chapter 2M .
892H(6)
The Part 7.5 authority for the Part 7.5 regulated fund must, within 14 days after receiving the auditor ' s report, lodge with ASIC in a prescribed form a copy of the report and a copy of the financial statements. If there is more than one Part 7.5 authority for the Part 7.5 regulated fund, the copy must be given to ASIC by at least one of those authorities, or else they all contravene this subsection.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
892H(7)
If the regulated fund is the NGF, the Part 7.5 authority (being the SEGC) must: (a) give a copy of the audited financial statements to each member of the SEGC; and (b) cause a copy of the audited financial statements to be laid before the annual general meeting of each member of the SEGC next following the making of that report.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
The regulations may impose reporting requirements to be complied with by the Part 7.5 authority in relation to Division 3 arrangements in relation to situations in which compensation under the arrangements is provided otherwise than out of a Part 7.5 regulated fund.
The regulations may provide for specified persons to have qualified privilege in respect of specified things done:
(a) under compensation rules forming part of Division 3 arrangements; or
(b) under regulations made for the purposes of a provision or provisions of Subdivision B of Division 4 .
For the purposes of monitoring compliance with, and the operation of, this Part, ASIC may, by giving the operator of a financial market written notice, require the operator: (a) to cause a risk assessment report to be prepared in relation to the market in accordance with the requirements specified in the notice; and (b) to give that report to ASIC by the time specified in the notice.
892K(2)
The operator must comply with the notice.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).
(a) exempt a person or class of persons from all or specified provisions of this Part; or
(b) exempt a financial market or class of financial markets from all or specified provisions of this Part; or
(c) provide that this Part applies in relation to a person or a financial market, or a class of persons or financial markets, as if specified provisions were omitted, modified or varied as specified in the regulations. 893A(2) [ " provisions of this Part " ]
For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to references in this Part; and
(b) any provisions of Part 7.2 that refer to provisions of this Part; and
(c) any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Part.
ASIC may exempt a particular financial market, or class of financial markets, from all or specified provisions of this Part. An exemption may be unconditional, or subject to conditions specified in the exemption.
Note: The provisions of this Part include regulations made for the purposes of this Part (see section 761H ).
893B(2)
ASIC may, at any time: (a) vary an exemption to:
(i) impose conditions, or additional conditions, on the exemption; or
(b) revoke an exemption.
(ii) vary or revoke any of the conditions on the exemption; or
893B(3)
However, ASIC may only take action under subsection (2) after: (a) giving notice, and an opportunity to make submissions on the proposed action, to the operator of each financial market known by ASIC to be covered by the exemption; and (b) if the exemption covers a class of financial markets - a notice has been published on ASIC ' s website allowing a reasonable period within which the operator of each financial market covered by the exemption may make submissions on the proposed action, and that period has ended.
893B(4)
If an exemption is expressed to apply in relation to a class of financial markets (whether or not it is also expressed to apply in relation to one or more financial markets otherwise than by reference to membership of a class), then the exemption, and any variation or revocation of the exemption, is a legislative instrument.
893B(5)
If subsection (4) does not apply to an exemption, then the exemption, and any variation or revocation of the exemption, must be in writing and ASIC must publish notice of it on ASIC ' s website.