Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

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

PART 7.12 - MISCELLANEOUS  

Division 1 - Qualified privilege  

SECTION 1100A   QUALIFIED PRIVILEGE FOR INFORMATION GIVEN TO ASIC  

1100A(1)    

A person has qualified privilege in respect of the giving of any information to ASIC that the person:

(a)    is required to give under this Chapter or regulations made for the purposes of this Chapter; or

(b)    

gives in relation to a contravention or suspected contravention of subsection 798H(1) (complying with market integrity rules), 908CF(1) (complying with rules about financial benchmarks) or 981M(1) (complying with client money reporting rules).

1100A(2)    
A person or body that is:

(a)    a market licensee; or

(b)    a CS facility licensee; or

(c)    

a person acting under an arrangement to operate a licensed market or supervise a licensed CS facility; or

(d)    a foreign person or body responsible for the supervision of the operation in a foreign country of a financial market or clearing and settlement facility; or

(e)    

a benchmark administrator licensee;

also has qualified privilege in respect of the giving of any information to ASIC in connection with the performance or exercise of ASIC ' s functions or powers under, or in relation to, this Chapter or regulations made for the purposes of this Chapter.

1100A(3)    
A person or body that has qualified privilege under subsection (1) or (2) in respect of conduct is also not liable for any action based on breach of confidence in relation to that conduct.

SECTION 1100B   QUALIFIED PRIVILEGE FOR THE CONDUCT OF MARKET LICENSEES AND CS FACILITY LICENSEES  

1100B(1)   [Actions]  

A market licensee, or CS facility licensee, has qualified privilege in respect of actions (including the giving of information) done in connection with:

(a) the performance, or purported performance, of the licensee's obligations under this Act; or

(b) the exercise or performance, or purported exercise or performance, of the licensee's powers, functions or obligations under the operating rules of the market or facility concerned, if the licensee believes, on reasonable grounds, that the action is necessary:

(i) in the case of a market licensee - to ensure the market operates in a fair, orderly and transparent way; or

(ii) in the case of a CS facility licensee - to ensure the facility's services are provided in a fair and effective manner or to reduce systemic risk in the provision of those services.

1100B(2)   [ Giving of information]  

A market licensee, or CS facility licensee, has qualified privilege in respect of the giving of information:

(a) to the operator of a financial market (regardless of where the market is operated) for the purpose of assisting the operator to ensure that [ sic ] market operates in a fair, orderly and transparent way; or

(b) to the operator of a clearing and settlement facility (regardless of where the facility is operated) for the purpose of assisting the operator to ensure that [ sic ] facility's services are provided in a fair and effective manner or to reduce systemic risk.

1100B(3)   [ Qualified privilege does not apply]  

Despite subsections (1) and (2), a market licensee does not have qualified privilege in respect of the giving of information if:

(a) an entity included on the market's official list gave the information to the licensee under a provision of this Act or of the market's operating rules; and

(b) this Act, or those rules, expressly or impliedly authorised the entity to limit the purposes for which it gave the information to the licensee; and

(c) when giving the information to the licensee, the entity limited those purposes as so authorised; and

(d) the giving of the information by the licensee is not solely for one or more of the limited purposes.

1100B(4)   [ Scope of section]  

The protections given by this section apply to the giving of information whether or not the recipient of the information has an interest in the information.

SECTION 1100C  

1100C   QUALIFIED PRIVILEGE FOR INFORMATION GIVEN TO MARKET LICENSEES AND CS FACILITY LICENSEES ETC.  

A person has qualified privilege in respect of the giving of information if:

(a) the person gives the information to any of the following persons or bodies:

(i) a market licensee;

(ii) a CS facility licensee;

(iii) a person acting under an arrangement to operate a licensed market or supervise a licensed CS facility;

(iv) a foreign person or body responsible for the supervision of the operation in a foreign country of a financial market or clearing and settlement facility; and

(b) the information is in relation to a contravention or suspected contravention of this Act or the operating rules of themarket or facility concerned.

SECTION 1100D  

1100D   EXTENSION OF PROTECTIONS GIVEN BY THIS DIVISION  

The protections given by this Division to a person or body in respect of conduct extend to officers, employees and representatives of the person or body.

Division 1A - Employee share schemes  

Subdivision A - Introduction  

SECTION 1100E   SIMPLIFIED OUTLINE OF THIS DIVISION  

SECTION 1100F  

1100F   GEOGRAPHICAL COVERAGE OF DIVISION  

This Division applies to offers of ESS interests that are received in this jurisdiction, regardless of where any resulting issue, sale or transfer occurs.

SECTION 1100G  

1100G   OFFERS AND INVITATIONS BOTH COVERED  

For the purposes of this Division:

(a)    offering ESS interests for issue includes inviting applications for the issue of the ESS interests; and

(b)    offering ESS interests for sale includes inviting offers to purchase the ESS interests.

SECTION 1100H  

1100H   PERSON OFFERING INTERESTS  

For the purposes of this Division, the person who offers ESS interests is the person who has the capacity, or who agrees, to issue or transfer the ESS interests if the offer is accepted.

SECTION 1100J   OFFERS MAY ALSO BE MADE IN RELIANCE ON SECTION 708 OR 1012D  

1100J(1)    
The fact that a body corporate makes an offer of securities that is eligible to be made under this Division does not prevent the body corporate from also making an offer, in reliance on a provision of section 708 , of securities that are of the same class as those offered under the first-mentioned offer.

Note: The interaction of this Division with section 708 is affected by section 1100R and subsection 1100ZC(4) .

1100J(2)    
The fact that a body corporate or responsible entity of a registered scheme makes an offer of financial products that is eligible to be made under this Division does not prevent the body corporate or responsible entity from also making an offer, in reliance on a provision of section 1012D , of financial products that are of the same kind as those offered under the first-mentioned offer.

Note: The interaction of this Division with section 1012D is affected by section 1100R .

SECTION 1100K   FINANCIAL MARKETS RECOGNISED UNDER THIS DIVISION  

1100K(1)    
For the purposes of this Division, the following financial markets are covered by this section:

(a)    a financial market operated by a market licensee;

(b)    a foreign financial market determined by ASIC under subsection (2) .

1100K(2)    
ASIC may, by legislative instrument, determine one or more foreign financial markets for the purposes of this section.

Subdivision B - Key concepts  

SECTION 1100L   MEANING OF EMPLOYEE SHARE SCHEME  

Meaning of employee share scheme

1100L(1)    
An employee share scheme of a body corporate, or of a registered scheme that is included in the official list of a financial market covered by section 1100K , means a scheme under which an ESS interest of the body corporate or registered scheme may be issued, sold or transferred to:

(a)    a person (a primary participant ) who is:

(i) an employee or director of, or an individual who provides services to, the body corporate or the responsible entity of the registered scheme; or

(ii) an employee or director of, or an individual who provides services to, an associated entity of the body corporate or of the responsible entity of the registered scheme, where that associated entity is a body corporate; or

(iii) a prospective person to whom subparagraph (i) or (ii) may apply; or

(iv) a person prescribed by the regulations for the purposes of this subparagraph; or

(b)    another person (a related person ) on behalf of a primary participant, where the related person is:

(i) a spouse, parent, child or sibling of the primary participant; or

(ii) another body corporate controlled by the primary participant or a person mentioned in subparagraph (i); or

(iii) a body corporate that is the trustee of a self managed superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993 ) where the primary participant is a director of the body corporate; or

(iv) a person prescribed in relation to the primary participant by the regulations for the purposes of this subparagraph.

Note: An ESS participant who is an employee may be entitled to certain protections, conditions and minimum wages under the Fair Work Act 2009 , and protections under other laws of the Commonwealth, including section 31 of Schedule 2 to the Competition and Consumer Act 2010 (misleading conduct relating to employment).

Meaning of ESS participant

1100L(2)    
A person is an ESS participant in an employee share scheme if the person is:

(a)    a primary participant mentioned in paragraph (1)(a) in relation to the scheme; or

(b)    a related person mentioned in paragraph (1)(b) in relation to the scheme.

SECTION 1100M   MEANING OF ESS INTEREST  

Bodies corporate included in the official list of a financial market

1100M(1)    
An ESS interest , in a body corporate that is included in the official list of a financial market covered by section 1100K , meansany of the following:

(a)    a fully paid share in the body corporate that is in a class of shares that is able to be traded on the financial market;

(b)    a beneficial interest in a fully paid share in the body corporate where the beneficial interest is in a class of interests that is able to be traded on the financial market;

(c)    a fully paid share in the body corporate that is convertible into an interest referred to in paragraph (b) , where the conversion can be made without charge or for a nominal fee;

(d)    a beneficial interest in a fully paid share in the body corporate that is convertible into an interest referred to in paragraph (a) , where the conversion can be made without charge or for a nominal fee;

(e)    a unit in an interest mentioned in any of paragraphs (a) , (b) , (c) or (d) ;

(f)    a fully paid stapled security that is in a class of stapled securities that is able to be traded on the financial market, that consists of 2 or more interests, each of which would separately be:

(i) an ESS interest under any of paragraphs (a) to (e) of the body corporate, or of an associated entity of the body corporate; or

(ii) an ESS interest under paragraph (3)(a) or (b) in a registered scheme, where the responsible entity of the scheme is an associated entity of the body corporate;

(g)    a unit in a stapled security mentioned in paragraph (f) ;

(h)    an incentive right granted in relation to, or an option to acquire, an interest mentioned in any of paragraphs (a), (b), (c), (d) or (f) (the underlying ESS interest );

(i)    any other interest in the body corporate prescribed by the regulations for the purposes of this paragraph.

Meaning of ESS interest in other bodies corporate

1100M(2)    
An ESS interest , in a body corporate to which subsection (1) does not apply, means:

(a)    a fully paid share in the body corporate; or

(b)    a unit in an interest mentioned in paragraph (a) ; or

(c)    an incentive right granted in relation to, or an option to acquire, an interest mentioned in paragraph (a) (the underlying ESS interest ); or

(d)    any other interest in the body corporate prescribed by the regulations for the purposes of this paragraph.

Meaning of ESS interest in a registered scheme

1100M(3)    
An ESS interest , in a registered scheme that is included in the official list of a financial market covered by section 1100K , means:

(a)    an interest in the scheme that is of the same kind as an interest in the scheme that is able to be traded on the financial market; or

(b)    a unit in an interest mentioned in paragraph (a) ; or

(c)    an incentive right granted in relation to, or an option to acquire, an interest mentioned in paragraph (a) (the underlying ESS interest ); or

(d)    any other interest in the scheme prescribed by the regulations for the purposes of this paragraph.

Meaning of incentive right

1100M(4)   
Incentive right , in relation to a security or financial product, means:

(a)    a conditional right to acquire the security or financial product; or

(b)    a conditional right to be paid a cash amount where the amount is determined (wholly or in part) with reference to any of the following:

(i) the price or value of the security or financial product at a particular time;

(ii) the change in the price or value of the security or financial product over a particular period;

(iii) the amount of dividends or distributions paid in respect of the security or financial product at a particular time;

(iv) the change in the amount of dividends or distributions paid in respect of the security or financial product over a particular period; or

(c)    a conditional right to:

(i) acquire the security or financial product; and

(ii) be paid a cash amount where the amount is determined (wholly or in part) with reference to any of the matters mentioned in subparagraphs (b)(i) to (iv).

Subdivision C - Offers that are eligible to be made under this Division  

SECTION 1100N  

1100N   OFFERS THAT ARE ELIGIBLE TO BE MADE UNDER THIS DIVISION  

An offer for the issue, sale or transfer of ESS interests of a body corporate or registered scheme to ESS participants in connection with an employee share scheme is eligible to be made under this Division if:

(a)    the offer is covered by any of the following:

(i) section 1100P (about offers for no monetary consideration);

(ii) section 1100Q (about offers for monetary consideration);

(iii) section 1100R (about offers that would otherwise not need disclosure); and

(b)    the offer is expressed to be made under this Division.

SECTION 1100P  

1100P   OFFERS FOR NO MONETARY CONSIDERATION  

An offer for the issue or transfer of ESS interests of a body corporate or registered scheme to ESS participants in connection with an employee share scheme is covered by this section if:

(a)    no monetary consideration is to be provided for the issue or transfer of the interests; and

(b)    if the offer is of options or incentive rights - no monetary consideration is to be provided on the exercise of the options or rights; and

(c)    any trust that may issue or transfer ESS interests under the scheme meets the requirements in section 1100S ; and

(d)    the offer meets any requirements prescribed in the regulations for the purposes of this paragraph.

SECTION 1100Q   OFFERS FOR MONETARY CONSIDERATION  

1100Q(1)    
An offer for the issue, sale or transfer of ESS interests to ESS participants in connection with an employee share scheme of a body corporate or registered scheme is covered by this section if:

(a)    either or both of the following apply:

(i) the interests are offered for issue or sale in return for monetary consideration, and the interests will be acquired by the ESS participant who pays for the interests;

(ii) the interests are options or incentive rights and monetary consideration is to be provided on the exercise of the options or rights; and

(b)    any trust that may issue or transfer ESS interests under the scheme meets the requirements in section 1100S; and

(c)    any plan under which an ESS participant may acquire ESS interests by making regular payments, or having regular deductions made from the participant ' s salary or wages, is an ESS contribution plan for the offer (see section 1100T ); and

(d)    any loan offered by the body corporate or relevant responsible entity, or an associated entity of the body corporate or responsible entity, in connection with the scheme complies with section 1100U ; and

(e)    the offer complies with the issue cap (see section 1100V ); and

(f)    the offer complies with section 1100W (about disclosure); and

(g)    the terms of the offer comply with sections 1100Y and 1100Z ; and

(h)    the offer meets any additional requirements prescribed in the regulations for the purposes of this paragraph.

Additional requirements for unlisted bodies corporate

1100Q(2)    
However, if the offer is of ESS interests in a body corporate that is not included in the official list of a financial market covered by section 1100K , the offer is not eligible to be made under this Division unless:

(a)    if the interests are offered for issue or sale in return for monetary consideration - the offer is accompanied by the supporting information required by section 1100X ; and

(b)    the offer complies with section 1100ZA (about the monetary cap); and

(c)    the offer meets any additional requirements prescribed in the regulations for the purposes of this paragraph.

SECTION 1100R   OFFERS THAT WOULD OTHERWISE NOT NEED DISCLOSURE  

Offers other than small scale offerings

1100R(1)    
An offer for the issue, sale or transfer of ESS interests to ESS participants in connection with an employee share scheme of a body corporate or registered scheme is covered by this section if:

(a)    the offer would not require disclosure to any investor under Part 6D.2 (if that Part otherwise applied to the offer) because of section 708 (apart from subsection 708(1) or (15) ) or 708AA ; or

(b)    the offer would not require any person to be given a Product Disclosure Statement under Part 7.9 (if that Part otherwise applied to the offer) because of section 1012D (apart from subsection 1012D(5) or (6) ),1012DAA or 1012DA .

Note: This subsection puts beyond doubt that the no consideration exemptions from disclosure in subsections 708(15) and 1012D(5) and (6) cannot be used to exempt an offer of ESS interests from disclosure under Part 6D.2 or 7.9 .

Small scale offerings

1100R(2)    
An offer for the issue, sale or transfer of ESS interests to ESS participants in connection with an employee share scheme of a body corporate or registered scheme is covered by this section if:

(a)    either:

(i) the offer would not require disclosure to any investor under Part 6D.2 (if that Part otherwise applied to the offer) because of subsection 708(1) ; or

(ii) the offer would not require any person to be given a Product Disclosure Statement under Part 7.9 (if that Part otherwise applied to the offer) because of subsection 1012E(2) ; and

(b)    any trust that may issue or transfer ESS interests under the scheme meets the requirements in section 1100S ; and

(c)    any plan under which an ESS participant may acquire ESS interests by making regular payments, or having regular deductions made from the participant ' s salary or wages, is an ESS contribution plan for the offer (see section 1100T ); and

(d)    any loan offered by the body corporate or relevant responsible entity, or an associated entity of the body corporate or responsible entity, in connection with the scheme complies with section 1100U .

SECTION 1100S   REQUIREMENTS FOR TRUSTS  

1100S(1)    
A trust meets the requirements in this section for an employee share scheme of a body corporate or registered scheme under which an ESS interest may be issued or transferred by the trustee of the trust if:

(a)    the trust is covered by subsection (2) ; and

(b)    either:

(i) the trustee acquires the ESS interest in connection with the employee share scheme for the purposes of the trustee transferring the ESS interest to an ESS participant; or

(ii) if the ESS interest is a unit in another ESS interest - the trustee acquires the other ESS interest in connection with the employee share scheme for the purposes of the trustee issuing or transferring the unit to an ESS participant.

1100S(2)    
A trust is covered by this subsection if the trust deed of the trust:

(a)    provides that, in its capacity as trustee of the trust, the activities of the trustee are limited to managing employee share schemes of the body corporate or registered scheme referred to in subsection (1) ; and

(b)    requires the trustee of the trust to keep written records on the administration of the trust; and

(c)    prevents the trustee of the trust charging any fees or charges for administering the trust, other than:

(i) reasonable disbursements charged to the trust; or

(ii) amounts charged to the body corporate or responsible entity of the registered scheme; and

(d)    if the trustee of the trust is an associated entity of the body corporate or the relevant responsible entity - provides that the trustee may only exercise voting rights associated with the ESS interests in accordance with the instructions of the holder of the interests or consistent with the trustee ' s fiduciary duties; and

(e)    contains terms that meet any requirements prescribed in the regulations for the purposes of this paragraph.

SECTION 1100T  

1100T   MEANING OF ESS CONTRIBUTION PLAN  

An ESS contribution plan , for an offer for the issue or sale of ESS interests, means a plan with terms that:

(a)    allow an ESS participant to make regular payments, or elect to have regular deductions made from their wages or salary, for the purpose of acquiring the ESS interests under the offer; and

(b)    provide that, before the participant acquires the ESS interests under the offer, the payments or deductions are held on trust in an account with an Australian ADI that is kept solely for that purpose; and

(c)    allow the participant to elect to discontinue the deductions or payments at any time; and

(d)    provide that, if the participant so elects:

(i) any deductions from the participant ' s wages or salary will cease, and any deductions made after the election will be repaid to the participant, within 45 days of the election; and

(ii) the amount of the deductions or payments standing, at the time when the election is made, to the credit of the account for the participant, and any interest on that amount, will be repaid to the participant within 45 days of the election; and

(e)    require the participant to agree in writing to the terms of the plan before participating in the plan; and

(f)    meet any requirements prescribed in the regulations for the purposes of this paragraph.

SECTION 1100U   REQUIREMENTS FOR CONNECTED LOANS  

1100U(1)    
A loan offered by a body corporate or responsible entity, or an associated entity of a body corporate or responsible entity, in connection with an employee share scheme complies with this section if:

(a)    the loan is offered on the following terms:

(i) that the loan has no interest or fees payable;

(ii) that the rights of the body corporate, responsible entity or associated entity as against the ESS participant, in the event of default in payment of the loan, are wholly limited to forfeiture of the ESS interests acquired using the loan; and

(b)    the borrower is the ESS participant who will acquire ESS interests offered under the employee share scheme; and

(c)    the terms of the loan meet any requirements prescribed in the regulations for the purposes of this paragraph.

Additional requirement for unlisted bodies corporate

1100U(2)    
However, if the offer is of ESS interests in a body corporate that is not included in the official list of a financial market covered by section 1100K , a loan does not comply with this section if it is offered or made by the body corporate to any ESS participant who, at the time the loan is offered or made (as the case may be), is a shareholder of the body corporate.

SECTION 1100V   ISSUE CAP FOR OFFERS INVOLVING CONSIDERATION  

1100V(1)    
An offer of ESS interests in a body corporate or registered scheme complies with the issue cap if, at the time the offer is made, the body corporate or responsible entity of the registered scheme reasonably believes:

(a)    the total number of fully paid shares in the body corporate or interests in the registered scheme that are, or are covered by, the ESS interests of the body corporate or scheme that may be issued under the offer; and

(b)    the total number of fully paid shares in the body corporate or interests in the registered scheme that are, or are covered by, the ESS interests that have been issued, or could have been issued, under offers made in connection with the employee share scheme at any time during the 3 year period ending on the day the offer is made;

does not exceed the percentage referred to in subsection (2) of the number of those fully paid shares or interests actually issued by the body corporate or scheme (whether in connection with the employee share scheme or otherwise) as at the start of the day the offer is made.

1100V(2)    
The percentage is:

(a)    if the constitution of the body corporate or registered scheme specifies an issue cap percentage - that percentage; or

(b)    if paragraph (a) does not apply - the greater of the following:

(i) for a body corporate or registered scheme that is included in the official list of a financial market covered by section 1100K - 5%;

(ii) for a body corporate that is not included in the official list of a financial market covered by section 1100K - 20%;

(iii) the percentage (if any) prescribed by the regulations for the purposes of this subparagraph.

Modification for stapled securities

1100V(3)    
However, if the ESS interest is, or covers, a stapled security, then:

(a)    each body corporate or registered scheme mentioned in paragraph 1100M(1)(f) in relation to an interest that comprises the stapled security is treated as offering that interest; and

(b)    to comply with the issue cap, subsection (1) must be satisfied in relation to each of those offers.

SECTION 1100W   DISCLOSURE REQUIREMENTS FOR OFFERS INVOLVING CONSIDERATION  

1100W(1)    
An offer of ESS interests in connection with an employee share scheme complies with this section if the offer is made in, or accompanied by, a document that meets the requirements of subsections (2) and (3) .

ESS offer document

1100W(2)    
A document (an ESS offer document ) meets the requirements of this subsection for an offer of ESS interests in connection with an employee share scheme if the document:

(a)    includes the terms of the offer, or a summary of the terms of the offer with a statement that, on request, a copy of the full terms of the offer will be provided to the ESS participant; and

(b)    provides general information about the risks of acquiring and holding the ESS interests being offered; and

(c)    states that advice given in relation to the offer does not take into account the ESS participant ' s objectives, financial situation and needs; and

(d)    suggests that the ESS participant obtain personal advice in relation to the offer; and

(e)    states the period (the application period ) during which the ESS participant may accept the offer; and

(f)    for an employee share scheme of a body corporate that is included in the official list of a financial market covered by section 1100K :

(i) states either the acquisition price of the ESS interests or, if the acquisition price will be determined at a future date, how the acquisition price will be determined; and

(ii) explains how the ESS participant may ascertain the market price of the shares or, if beneficial interests, units, options or incentive rights are offered, how the ESS participant may ascertain the market price of the underlying ESS interest; and

(g)    if ESS interests may be acquired under the offer using a loan or ESS contribution plan - includes:

(i) the terms of the loan or plan; or

(ii) a summary of the terms of the loan or plan and a statement that, on request, a copy of the terms of the plan or loan will be provided to the ESS participant; and

(h)    if ESS interests will be held on trust for ESS participants (other than by a body corporate of the kind mentioned in subparagraph 1100L(1)(b)(iii) (which is about self managed superannuation funds)) - includes:

(i) the trust deed; or

(ii) a summary of the trust deed and a statement that, on request, a copy of the full deed will be provided to the ESS participant; and

(i)    includes, or directs the participant to, any of the following documents (if they exist) that relate to the same class of ESS interests as those being offered:

(i) a disclosure document prepared under Part 6D.2 in relation to an offer of securities, where that offer was made in the 12 months before the start of the application period;

(ii) a Product Disclosure Statement prepared under Part 7.9 in relation to an offer of financial products for issue or sale, where that offer was made in the 12 months before the start of the application period; and

(j)    includes any other information prescribed by the regulations for the purposes of this paragraph.

Additional requirement for unlisted bodies corporate

1100W(3)    
If the offer is of ESS interests in a body corporate that is not included in the official list of a financial market covered by section 1100K , the ESS offer document must also include the following:

(a)    a statement that the ESS interests may not have any value and that the value of the ESS interests will depend on future events that may not occur;

(b)    if the ESS interests are:

(i) shares that are not ordinary shares; or

(ii) units in, incentive rights granted in relation to, or options to acquire, shares that are not ordinary shares;

a description of the rights that attach to the shares, and how the shares differ from ordinary shares.

Regulations may provide other ways of complying with this section

1100W(4)    
An offer also complies with this section if the offer is of a kind prescribed by the regulations for the purposes of this subsection.

SECTION 1100X   ADDITIONAL DISCLOSURE REQUIREMENTS FOR OFFERS BY UNLISTED BODIES CORPORATE  

Supporting information for offers by unlisted bodies corporate

1100X(1)    
The supporting information required by this section is:

(a)    the financial information mentioned in subsection (2) , accompanied by a statement as to whether that financial information has been audited; and

(b)    a document covered by subsection (3) (about valuations) in relation to the ESS interests being offered; and

(c)    a statement that the body corporate is solvent; and

(d)    any other financial information prescribed by the regulations for the purposes of this paragraph.

Financial information

1100X(2)    
The financial information is:

(a)    if the body corporate must lodge a report for a financial year with ASIC under section 319 - a copy of the most recent report lodged with ASIC; or

(b)    if the body corporate is a registered foreign company - a copy of the most recent documents lodged with ASIC under section 601CK ; or

(c)    otherwise - a balance sheet and profit and loss statement prepared in compliance with either the accounting standards or the international accounting standards (within the meaning of the Australian Securities and Investments Commission Act 2001 ).

Valuation information

1100X(3)    
This subsection covers the following documents:

(a)    a copy of a valuation of the ESS interest that has been prepared consistently with an applicable method approved by the Commissioner of Taxation under section 960-412 of the Income Tax Assessment Act 1997 ;

(b)    if securities in the same class as the ESS interests are on offer at the same time as the ESS interests - a disclosure document for that offer that has been lodged with ASIC as mentioned in section 727 ;

(c)    if financial products in the same class as the ESS interests are on offer at the same time as the ESS interests - a disclosure document or statement (within the meaning of section 952B ) in relation to those financial products;

(d)    a copy of an executed agreement under which ESS interests in the same class as the ESS interests are to be acquired on arm ' s length terms by a third party who is not an associate of the person making the offer, where the agreement specifies the amount of monetary consideration to be paid for an ESS interest in that class;

(e)    a copy of a draft agreement under which ESS interests in the same class as the ESS interests are to be acquired on arm ' s length terms by a third party who is not an associate of the person making the offer, where the agreement specifies the amount of monetary consideration to be paid for an ESS interest in that class;

(f)    a document prescribed by the regulations for the purposes of this paragraph.

SECTION 1100Y   TERMS OF THE OFFER - DISCLOSURE ETC.  

1100Y(1)    
The terms of an offer of ESS interests in connection with an employee share scheme comply with this section if, under those terms:

(a)    an ESS participant cannot acquire an ESS interest under the offer until at least 14 days after receiving the ESS offer document and any supporting information required under section 1100X (if applicable) for the offer; and

(b)    if the ESS offer document included only a summary of the terms of the offer - the person who makes the offer must provide an ESS participant with a copy of the full terms of the offer within 10 business days of the ESS participant requesting a copy of those full terms; and

(c)    if the ESS offer document included only a summary of the terms of a loan or ESS contribution plan - the person who makes the offer must provide an ESS participant with a copy of the full terms of the loan or plan within 10 business days of the ESS participant requesting a copy of those full terms; and

(d)    if the ESS offer document included only a summary of a trust deed - the person who makes the offer must provide an ESS participant with a copy of the full trust deed within 10 business days of the ESS participant requesting a copy of the full trust deed; and

(e)    if the offer is made by a trustee of a trust that meets the requirements of section 1100S - the trustee must comply with the trust deed.

Note: If an offer contravenes a term mentioned in this subsection, or subsection (3) or (4) (if applicable), regulatory relief for the offer is revoked: see section 1100ZG .

Additional requirements for unlisted bodies corporate

1100Y(2)    
Subsections (3) and (4) apply if the offer is of ESS interests in a body corporate that is not included in the official list of a financial market covered by section 1100K .

1100Y(3)    
The terms of the offer must also provide that, if the ESS participant is given a draft sale agreement in satisfaction of paragraph 1100X(3)(e) (about valuations), the ESS participant cannot acquire an ESS interest until a sale agreement that is not materially different from the draft sale agreement has been executed.

1100Y(4)    
If the offer is of options or incentive rights, and monetary consideration is to be provided on the exercise of the options or incentive rights, the terms of the offer must also be such that:

(a)    the options cannot be exercised, or the incentive rights cannot vest, unless the following documents are provided to the ESS participant at least 14 days before the exercise of the option or vesting of the incentive right:

(i) the financial information mentioned in subsection 1100X(2) , accompanied by a statement as to whether that financial information has been audited;

(ii) a document covered by subsection 1100X(3) (about valuations) in relation to the underlying ESS interest;

(iii) a statement that the body corporate is solvent;

(iv) any other information prescribed by the regulations for the purposes of this subparagraph; and

(b)    the person who made the offer must provide the ESS participant with the information mentioned in paragraph (a) at least 14 days before the option becomes exercisable or the incentive right vests; and

(c)    if the ESS participant is given a draft sale agreement in satisfaction of subparagraph (a)(ii) - the ESS participant cannot exercise the option or right until a sale agreement that is not materially different from the draft sale agreement has been executed.

Regulations may provide other ways of complying with this section

1100Y(5)    
An offer also complies with this section if the offer is of a kind prescribed by the regulations for the purposes of this subsection.

SECTION 1100Z   TERMS OF THE OFFER - MISLEADING STATEMENTS AND OMISSIONS  

1100Z(1)    
The terms of an offer of ESS interests in connection with an employee share scheme comply with this section if, under those terms:

(a)    the ESS offer document, any supporting information required under section 1100X (if applicable), and the terms of the offer:

(i) must not include a misleading or deceptive statement; and

(ii) must not omit any information that would result in the ESS offer document, supporting information or terms of the offer being misleading or deceptive; and

(b)    the person who makes the offer (the offeror ) must provide each ESS participant with an updated ESS offer document as soon as practicable after becoming aware that the document that was provided has become out of date, or is otherwise not correct, in a material respect; and

(c)    if the offer is of options or incentive rights and monetary consideration is to be provided on the exercise of the options or incentive rights - the offeror must provide each ESS participant with updated documents in satisfaction of paragraph 1100Y(4)(a) as soon as practicable after becoming aware that the information that was provided has become out of date, or is otherwise not correct, in a material respect; and

(d)    each person mentioned in items 2, 3 and 4 of the table in subsection (2) must notify, in writing, the offeror as soon as practicable if, during the application period for the offer mentioned in paragraph 1100W(2)(e) , the person becomes aware that:

(i) a material statement in the documents mentioned in paragraph (a) is misleading or deceptive; or

(ii) information was omitted from any of those documents that has resulted in one or more of those documents being misleading or deceptive; or

(iii) a new circumstance has arisen during the application period which means the ESS offer document is out of date, or otherwise not correct, in a material respect; and

(e)    if the offer is of options or incentive rights and monetary consideration is to be provided on the exercise of the options or incentive rights - each person mentioned in items 2, 3 and 4 of the table in subsection (2) must notify, in writing, the offeror as soon as practicable if, after the documents mentioned in paragraph 1100Y(4)(a) have been provided to an ESS participant in accordance with that paragraph, the person becomes aware that:

(i) a material statement in the documents is misleading or deceptive; or

(ii) information was omitted from any of the documents that has resulted in one or more of those documents being misleading or deceptive; or

(iii) a new circumstance has arisen since the documents were provided to an ESS participant which means the documents are out of date, or otherwise not correct, in a material respect; and

(f)    an ESS participant who suffers loss or damage because of a contravention of a term of the offer covered by paragraph (a) , (b) , (c) , (d) or (e) of this subsection can recover the amount of loss or damage in accordance with the table in subsection (2) .

1100Z(2)    
For the purposes of paragraph (1)(f) , an ESS participant must be able to recover loss or damage in accordance with the following table:

Item	An ESS participant may recover loss or damage suffered as a result of a contravention of …	from these people …
1	a term of the offer covered by any of the following paragraphs:	the body corporate or responsible entity making the offer
	(a)		paragraph (1)(a) (misleading or deceptive statements and omissions);
	(b)		paragraph (1)(b) (out of date ESS offer document);
	(c)		paragraph (1)(c) (out of date option or incentive right information)
2	a term of the offer covered by any of the following paragraphs:	each director of the body corporate or responsible entity making the offer
	(a)		paragraph (1)(a) (misleading or deceptive statements and omissions);
	(b)		paragraph (1)(b) (out of date ESS offer document);
	(c)		paragraph (1)(c) (out of date option or incentive right information)
3	a term of the offer covered by any of the following paragraphs:	a person named, with their consent, in an ESS offer document, any supporting information required under section 1100X (if applicable) or the terms of the offer as a proposed director of the body corporate or responsible entity of a registered scheme whose ESS interests are being offered
	(a)		paragraph (1)(a) (misleading or deceptive statements and omissions);
	(b)		paragraph (1)(b) (out of date ESS offer document);
	(c)		paragraph (1)(c) (out of date option or incentive right information)
4	a term of the offer covered by paragraph (1)(a) (misleading or deceptive statements and omissions)	a person named, with their consent, in the ESS offer document, any supporting information required under section 1100X (if applicable) or the terms of the offer as having made:
		(a)	the misleading or deceptive statement; or
		(b)	a statement on which the misleading or deceptive statement is based
5	a term of the offer covered by paragraph (1)(d) or (e) (failure to notify body corporate or responsible entity of misleading or deceptive statement and omissions or new circumstances)	the person mentioned in item 2, 3 or 4 of this table who failed to notify the body corporate or responsible entity in accordance with the term covered by paragraph (1)(d) or (e)

Note: Item 2 - director includes a shadow director (see section 9 ).

Additional terms of the offer - no liability terms

1100Z(3)    
The terms of the offer may also include terms to the effect that a person mentioned in the table in subsection (2) is not liable for any loss or damage suffered by an ESS participant because of a contravention of a term of the offer covered by paragraph (1)(a) , (b) or (c) if:

(a)    the person:

(i) made all inquiries (if any) that were reasonable in the circumstances; and

(ii) after doing so, believed on reasonable grounds that the statement was not misleading or deceptive; or

(b)    the person did not know that the statement was misleading or deceptive; or

(c)    the person placed reasonable reliance on information given to the person by:

(i) if the person is a body corporate or a responsible entity of a registered scheme - someone other than a director, employee or agent of the body corporate or responsible entity; or

(ii) if the person is an individual - someone other than an employee or agent of the individual; or

(d)    for a person mentioned in column 2 of item 3 or 4 of the table in subsection (2) - the person proves that they publicly withdrew their consent to being named in the document in that way; or

(e)    the contravention arose because of a new circumstance that has arisen since the ESS offer document was prepared and the person proves that they were not aware of the matter.

1100Z(4)    
The terms of the offer must not limit liability of a person mentioned in the table in subsection (2) in any way other than as required by subsection (3) .

SECTION 1100ZA   MONETARY CAP FOR OFFERS BY UNLISTED BODIES CORPORATE  

1100ZA(1)    
An offer complies with this section if it is made on terms that could not result in a breach of the monetary cap for any primary participant in relation to the scheme for:

(a)    the 12-month period starting on the day that an offer was first accepted by the participant or a related person of the participant in connection with the scheme; or

(b)    any subsequent 12-month period starting immediately after the end of the previous 12-month period.

Note 1: For who is a primary participant in an employee share scheme, see paragraph 1100L(1)(a) .

Note 2: For who is a related person of a primary participant, see paragraph 1100L(1)(b) .

1100ZA(2)    
The offer breaches the monetary cap for a 12-month period if the amount worked out under subsection (3) for the participant for the period exceeds the monetary cap worked out under subsection (5) for the participant for the period.

Amounts that use up the cap

1100ZA(3)    
The amount worked out under this subsection for a 12-month period is the sum of the following amounts, worked out in accordance with subsection (4) :

(a)    the maximum amount the participant could pay in the 12-month period under the terms of any offer made in connection with any employee share scheme operated by the body corporate or an associate of the body corporate;

(b)    the maximum amount that could be paid by related persons of the participant in the 12-month period under the terms of any offer made in connection with any employee share scheme operated by the body corporate or an associate of the body corporate.

1100ZA(4)    
In working out amounts under subsection (3) :

(a)    subject to paragraph (b) , include amounts payable on the exercise of options and incentive rights, and amounts paid out of any related ESS contribution plan; and

(b)    do not include any amounts that are excluded from the monetary cap under section 1100ZB .

Amount of the monetary cap

1100ZA(5)    
The monetary cap for a primary participant for a 12-month period (the current period ) is the sum of:

(a)    the amount referred to in subsection (6) ; and

(b)    70 per cent of the amount of any distributions received in the current period by the participant or a related person on an ESS interest acquired under the scheme (whether under the offer mentioned in subsection (1) or under another offer); and

(c)    70 per cent of the amount of any cash remuneration received in the current period by the participant, to the extent the remuneration was conditional on the achievement of objectives; and

(d)    if the current period is not the first 12-month period - the sum of any amount carried forward under subsection (7) for each previous 12-month period that started:

(i) at or after the start of the first 12-month period; and

(ii) not earlier than 4 years before the start of the current period.

1100ZA(6)    
The amount (the basic cap amount ) is:

(a)    unless paragraph (b) applies - $30,000; or

(b)    if an amount is prescribed in the regulations for the purposes of this paragraph - that amount.

Carry-forward of unused cap

1100ZA(7)    
If the amount worked out for a 12-month period by:

(a)    starting with the lesser of:

(i) the basic cap amount; and

(ii) the amount that would be worked out under subsection (3) and in accordance with subsection (4) , if the only amounts included were amounts payable on the exercise of options and incentive rights; and

(b)    subtracting the total amount paid in the 12-month period by the participant and each related person under the terms of any offer made in connection with any employee share scheme operated by the body corporate or an associate of the body corporate on the exercise of options and incentive rights;

is greater than nil, then that amount is carried forward for the purposes of paragraph (5)(d) .

Regulations may provide other ways of complying with this section

1100ZA(8)    
An offer also complies with this section if the offer is of a kind prescribed by the regulations for the purposes of this subsection.

SECTION 1100ZB   AMOUNTS THAT ARE EXCLUDED FROM THE MONETARY CAP  

1100ZB(1)    
Each amount mentioned in a subsection of this section is not included in working out under section 1100ZA whether an offer breaches the monetary cap.

1100ZB(2)    
An amount paid into an ESS contribution plan for the offer.

1100ZB(3)    
An amount payable by a participant or related person for the issue or sale of ESS interests to the extent that, under the terms of the offer, the amount can only become payable during a liquidity period for the ESS interests.

1100ZB(4)    
An amount payable on the exercise of options or incentive rights to the extent that, under the terms of the offer, the amount can only become payable during a liquidity period for the underlying ESS interests.

1100ZB(5)    
An amount payable by an ESS participant for the issue or sale of ESS interests to the extent that, under the terms of the offer:

(a)    the amount can only become payable no longer than 7 days before the start of a liquidity period for the ESS interests; and

(b)    all application money received from ESS participants before the start of a liquidity period must be held on trust for the ESS participants until:

(i) the start of the liquidity period; or

(ii) the money is returned to the ESS participants; and

(c)    if application money needs to be returned to an ESS participant, it must be returned as soon as practicable.

1100ZB(6)    
An amount payable by an ESS participant on the exercise of options or incentive rights to the extent that, under the terms of the offer:

(a)    the amount can only become payable no longer than 7 days before the start of a liquidity period for the underlying ESS interests; and

(b)    all application money received from ESS participants before the start of a liquidity period must be held in trust for the ESS participants until:

(i) the start of the liquidity period; or

(ii) the money is returned to the ESS participants; and

(c)    if application money needs to be returned to an ESS participant, it must be returned as soon as practicable.

Liquidity period for ESS interests

1100ZB(7)    
A liquidity period for an ESS interest is a period during which:

(a)    the ESS interest is in a class of interests that is able to be traded on the official list of a financial market covered by section 1100K ; or

(b)    an executed sale agreement constituting an offer to acquire ESS interests in the same class as the ESS interest is open for acceptance; or

(c)    a circumstance prescribed by the regulations for the purposes of this paragraph exists.

Regulations may prescribe other amounts

1100ZB(8)    
The regulations may prescribe an amount for the purposes of this subsection.

Subdivision D - Making offers under this Division  

SECTION 1100ZC   MAKING OFFERS UNDER THIS DIVISION  

1100ZC(1)    
This section applies (subject to section 1100ZG ) in relation to an offer for the issue, sale or transfer of ESS interests in connection with an employee share scheme if the offer is eligible to be made under this Division (see Subdivision C ).

Relief relating to disclosure

1100ZC(2)    
Parts 6D.2 and 6D.3 do not apply in relation to the offer.

1100ZC(3)    
Part 7.9 does not apply in relation to the offer, or any issue or sale of the interest to an ESS participant under the offer.

1100ZC(4)    
Unless the issue or sale is eligible to be made under this Division only because of subsection 1100R(2) , issues and sales of securities or financial products that result from the offer are to be disregarded when counting issues and sales, and the amount raised from issues and sales, for the purposes of subsection 708(1) (for securities) and 1012E(2) (for financial products).

1100ZC(5)    
Section 1012A (about disclosure in relation to personal advice) does not apply in relation to financial product advice relating to the offer.

1100ZC(6)    
Part 7.8A (about the design and distribution requirements relating to financial products for retail clients) does not apply in relation to the issue, sale or transfer of a security that is an ESS interest under the offer.

Relief relating to Australian financial services licensing

1100ZC(7)    
A person is exempt from the requirement under subsection 911A(1) to hold an Australian financial services licence for a financial service they provide if:

(a)    the service:

(i) is the provision of general advice by the person in connection with the offer; or

(ii) is, or is provided incidentally to, a custodial or depository service that is provided by the person in connection with the offer; or

(iii) the service is issuing or dealing in a financial product by the person in connection with the offer; or

(iv) is dealing in an interest in an ESS contribution plan for the offer; and

(b)    the person is:

(i) the body corporate or the responsible entity of the registered scheme to which the offer relates; or

(ii) an associated entity of that body corporate or responsible entity.

Relief relating to hawking of financial products

1100ZC(8)    
Subsection 992A(1) does not apply in relation to the offer.

SECTION 1100ZD  

1100ZD   REGULATORY RELIEF FOR CERTAIN SUBSEQUENT SALE OFFERS OF ESS INTERESTS  

The provisions of Part 6D.2 , 6D.3 and 7.9 do not apply in relation to an offer of ESS interests in a body corporate or registered scheme for sale if:

(a)    the body corporate or scheme operates an employee share scheme; and

(b)    the person making the offer reasonably believes that:

(i) the person acquired the interests under the employee share scheme; and

(ii) the person is making the offer only to persons who are ESS participants in relation to the body corporate or registered scheme.

SECTION 1100ZE   DEALING WITH MONEY RECEIVED BEFORE ESS INTEREST IS ISSUED  

1100ZE(1)    
If a person offers ESS interests for issue or sale to an ESS participant in connection with an employee share scheme, the person must hold:

(a)    all application money received from ESS participants applying for ESS interests in connection with the employee share scheme; and

(b)    all other money paid by them on account of the ESS interests before they are issued or transferred;

in trust under this section for the ESS participants until:

(c)    the ESS interests are issued or transferred; or

(d)    the money is returned to the ESS participants.

1100ZE(2)    
If the application money needs to be returned to an ESS participant, the person must return the money as soon as practicable.

1100ZE(3)    
An offence based on subsection (1) or (2) is an offence of strict liability.

SECTION 1100ZF   DEALING WITH MONEY RECEIVED BEFORE LIQUIDITY PERIOD  

1100ZF(1)    
If a person is required by the terms of an offer of ESS interests in a body corporate that is not included in the official list of a financial market covered by section 1100K to hold application money received from ESS participants in trust until the start of a liquidity period, the person must hold the application money in trust under this section until:

(a)    the start of the liquidity period; or

(b)    the money is returned to the ESS participants.

1100ZF(2)    
If the application money needs to be returned to an ESS participant, the person must return the money as soon as practicable.

1100ZF(3)    
An offence based on subsection (1) or (2) is an offence of strict liability.

SECTION 1100ZG   REVOCATION OF REGULATORY RELIEF IN CERTAIN CIRCUMSTANCES  

Revocation of regulatory relief - general case

1100ZG(1)    
Section 1100ZC does not apply, and is taken never to have applied, to an offer for the issue, sale or transfer of ESS interests in connection with an employee share scheme of a body corporate or registered scheme if:

(a)    at the time the offer was made, it was eligible to be made under this Division because of the operation of section 1100Q (offers for monetary consideration); and

(b)    at any time after the offer is made, an ESS participant makes a payment to acquire ESS interests under the offer, or makes a payment to exercise options or incentive rights that were acquired under the offer; and

(c)    at any time after the offer is made, any of the following occur:

(i) for an offer under which an ESS interest of the body corporate or registered scheme may be issued or transferred by the trustee of a trust - the trust ceases to meet the requirements in section 1100S or the trustee of the trust does not comply with a term of the trust deed;

(ii) the offer results in a breach of the issue cap (see section 1100V );

(iii) the offer results in a breach of the monetary cap (if applicable) for a primary participant (see section 1100ZA );

(iv) any plan under which an ESS participant may acquire the ESS interests by making regular payments, or having regular deductions made from the participant ' s salary or wages, ceases to be an ESS contribution plan for the offer (see section 1100T );

(v) any loan offered by the body corporate or relevant responsible entity, or an associated entity of the body corporate or responsible entity, in connection with the scheme ceases to comply with section 1100U ;

(vi) the person who makes the offer contravenes a term of the offer mentioned in section 1100Y (terms of the offer - disclosure).

Note: The terms of an offer for the issue or sale of ESS interests for monetary consideration (or a summary of those terms) must be set out in the offer document for the offer: see section 1100W .

Revocation of regulatory relief - no monetary consideration offers using trusts

1100ZG(2)    
Section 1100ZC does not apply, and is taken never to have applied, to an offer for the issue, sale or transfer of ESS interests in connection with an employee share scheme of a body corporate or registered scheme if:

(a)    at the time the offer was made, it was eligible to be made under this Division because of the operation of section 1100P (offers for no monetary consideration); and

(b)    under the offer, an ESS interest of the body corporate or registered scheme may be issued or transferred by the trustee of a trust; and

(c)    at any time after the offer is made, an ESS participant acquires ESS interests under the offer; and

(d)    at any time after the offer is made, the trust ceases to meet the requirements in section 1100S or the trustee of the trust does not comply with a term of the trust deed.

Revocation of regulatory relief - small scale offers using trusts, contribution plans or loans

1100ZG(3)    
Section 1100ZC does not apply, and is taken never to have applied, to an offer for the issue, sale or transfer of ESS interests in connection with an employee share scheme of a body corporate or registered scheme if:

(a)    at the time the offer was made, it was eligible to be made under this Division because of the operation of subsection 1100R(2) (small scale offers); and

(b)    at any time after the offer is made, an ESS participant makes a payment to acquire ESS interests under the offer, or makes a payment to exercise options or incentive rights that were acquired under the offer; and

(c)    at any time after the offer is made, any of the following occur:

(i) for an offer under which an ESS interest of the body corporate or registered scheme may be issued or transferred by the trustee of a trust - the trust ceases to meet the requirements in section 1100S or the trustee of the trust does not comply with a term of the trust deed;

(ii) any plan under which an ESS participant may acquire the ESS interests by making regular payments, or having regular deductions made from the participant ' s salary or wages, ceases to be an ESS contribution plan for the offer (see section 1100T );

(iii) any loan offered by the body corporate or relevant responsible entity, or an associated entity of the body corporate or responsible entity, in connection with the scheme ceases to comply with section 1100U .

When contravention occurs

1100ZG(4)    
Subsection (5) applies if subsection (1) , (2) or (3) operates to treat section 1100ZC as never having applied to an offer of ESS interests because of an event (a revocation event ) occurring as described in any of the following provisions of this section:

(a)    subparagraphs (1)(c)(i) to (vi);

(b)    paragraph (2)(d) ;

(c)    subparagraphs (3)(c)(i) to (iii).

1100ZG(5)    
For the purposes of determining:

(a)    under section 1316 when proceedings for an offence against this Act may be instituted; and

(b)    under section 1317K when proceedings for a declaration of a contravention of a provision of this Act may be started;

the act or omission alleged to constitute the offence or the contravention (as the case requires) is taken to have occurred when the revocation event occurs.

Subdivision E - Prohibitions and defences  

SECTION 1100ZH   MISSTATEMENT IN, OR OMISSION FROM, DISCLOSURE INFORMATION  

1100ZH(1)    
A person must not make an offer that is expressed to be made under this Division, or distribute an application form for such an offer, to ESS participants if paragraph 1100Q(1)(a) applies to the offer and there is:

(a)    a misleading or deceptive statement in:

(i) a document that purports to be an ESS offer document required by section 1100W for the offer; or

(ii) information that purports to be supporting information required under section 1100X for the offer; or

(b)    an omission of information from a document mentioned in subparagraph (a)(i) or (ii) that would result in the document or information being misleading or deceptive; or

(c)    a new circumstance that:

(i) has arisen during the application period for the offer mentioned in paragraph 1100W(2)(e) ; and

(ii) if the new circumstance had occurred before the offer was made, would have been required to be included in any of the documents mentioned in paragraph (a) .

1100ZH(2)    
For the purposes of subsection (1) , a person is taken to offer ESS interests to ESS participants at all times during which the participants may accept the offer.

Forecasts and other forward-looking statements

1100ZH(3)    
A person is taken to make a misleading statement about a future matter (including the doing of, or refusing to do, an act) if they do not have reasonable grounds for making the statement. This subsection does not limit the meaning of a reference to a misleading statement or a statement that is misleading in a material particular.

Offence if statement or new circumstance is materially adverse

1100ZH(4)    
A person commits an offence if:

(a)    the person contravenes subsection (1) ; and

(b)    the misleading or deceptive statement or omission, or the new circumstance, is materially adverse from the point of view of an ESS participant.

Defence - due diligence

1100ZH(5)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in, or an omission from, a document mentioned in paragraph (1)(a) if the person proves that the person:

(a)    made all inquiries (if any) that were reasonable in the circumstances; and

(b)    after doing so, believed on reasonable grounds that the statement was not misleading or deceptive.

Defence - lack of knowledge

1100ZH(6)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in a document mentioned in paragraph(1)(a) if the person proves that the person did not know that the statement was misleading or deceptive.

1100ZH(7)    
A person does not commit an offence against subsection (4) because of an omission from a document mentioned in paragraph (1)(a) in relation to a particular matter if the person proves that the person did not know that there was an omission from the document in relation to that matter.

1100ZH(8)    
A person does not commit an offence against subsection (4) because of a new circumstance that had arisen as mentioned in paragraph (1)(c) if the person did not know that the new circumstance had arisen.

Defence - reasonable reliance on information given by someone else

1100ZH(9)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in a document mentioned in paragraph (1)(a) if the person proves that the person placed reasonable reliance on information given to them by:

(a)    if the person is a body corporate or a responsible entity of a registered scheme - someone other than a director, employee or agent of the body corporate or responsible entity; or

(b)    if the person is an individual - someone other than an employee or agent of the individual.

1100ZH(10)    
For the purposes of subsection (9) , a person is not the agent of a body corporate or responsible entity merely because the person performs a particular professional or advisory function for the body corporate or responsible entity.

Defence - provision of updated information

1100ZH(11)    
A person does not commit an offence against subsection (4) because of a new circumstance that has arisen as mentioned in paragraph (1)(c) if the person proves that, as soon as reasonably practicable after the circumstance arose:

(a)    the documents mentioned in paragraph (1)(a) were updated to include all relevant information about the new circumstance; and

(b)    copies of those updated documents were given to the ESS participants.

SECTION 1100ZI   MISSTATEMENT IN, OR OMISSION FROM, FINANCIAL INFORMATION FOR OPTIONS AND INCENTIVE RIGHTS  

1100ZI(1)    
A person must not offer ESS interests that are options or incentive rights to ESS participants if subparagraph 1100Q(1)(a)(ii) and subsection 1100Y(4) apply to the offer and there is:

(a)    a misleading or deceptive statement in any information provided to the ESS participants in purported satisfaction of the term of the offer mentioned in paragraph 1100Y(4)(a) (about the provision of valuations and financial information); or

(b)    an omission from information provided as mentioned in paragraph (a) that would result in the information provided being misleading or deceptive; or

(c)    a new circumstance that:

(i) has arisen during the period that the option is exercisable or the incentive right is vested; and

(ii) if the new circumstance had occurred before the option became exercisable or the incentive right vested, would have been required to be included in the information mentioned in paragraph (a) .

1100ZI(2)    
For the purposes of subsection (1) , a person is taken to offer options and incentive rights to ESS participants at all times during which the options are exercisable or the incentive rights are vested.

Forecasts and other forward-looking statements

1100ZI(3)    
A person is taken to make a misleading statement about a future matter (including the doing of, or refusing to do, an act) if they do not have reasonable grounds for making the statement. This subsection does not limit the meaning of a reference to a misleading statement or a statement that is misleading in a material particular.

Offence if statement or new circumstance is materially adverse

1100ZI(4)    
A person commits an offence if:

(a)    the person contravenes subsection (1) ; and

(b)    the misleading or deceptive statement or omission, or the new circumstance, is materially adverse from the point of view of an ESS participant.

Defence - due diligence

1100ZI(5)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in, or an omission from, information mentioned in paragraph (1)(a) if the person proves that the person:

(a)    made all inquiries (if any) that were reasonable in the circumstances; and

(b)    after doing so, believed on reasonable grounds that the statement was not misleading or deceptive.

Defence - lack of knowledge

1100ZI(6)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in information mentioned in paragraph (1)(a) if the person proves that the person did not know that the statement was misleading or deceptive.

1100ZI(7)    
A person does not commit an offence against subsection (4) because of an omission from information mentioned in paragraph (1)(a) in relation to a particular matter if the person proves that the person did not know that there was an omission from the information in relation to that matter.

1100ZI(8)    
A person does not commit an offence against subsection (4) because of a new circumstance that had arisen as mentioned in paragraph (1)(c) if the person did not know that the new circumstance had arisen.

Defence - reasonable reliance on information given by someone else

1100ZI(9)    
A person does not commit an offence against subsection (4) because of a misleading or deceptive statement in information mentioned in paragraph (1)(a) if the person proves that the person placed reasonable reliance on information given to them by:

(a)    if the person is a body corporate or a responsible entity of a registered scheme - someone other than a director, employee or agent of the body corporate or responsible entity; or

(b)    if the person is an individual - someone other than an employee or agent of the individual.

1100ZI(10)    
For the purposes of subsection (9) , a person is not the agent of a body corporate or responsible entity merely because the person performs a particular professional or advisory function for the body corporate or responsible entity.

Defence - provision of updated information

1100ZI(11)    
A person does not commit an offence against subsection (4) because of a new circumstance that has arisen as mentioned in paragraph (1)(c) if the person proves that, as soon as reasonably practicable after the circumstance arose:

(a)    the information mentioned in paragraph (1)(a) was updated to include all relevant information about the new circumstance; and

(b)    the updated information was given to the ESS participants.

SECTION 1100ZJ   OBLIGATION TO INFORM PERSON ABOUT DEFICIENCIES IN DISCLOSURE DOCUMENTS  

1100ZJ(1)    
This section applies to offers of ESS interests that are expressed to be made under this Division, if:

(a)    paragraph 1100Q(1)(a) applies to the offer; and

(b)    the offer is made in, or accompanied by, a document that purports to be an ESS offer document required by section 1100W for the offer.

1100ZJ(2)    
A person covered by subsection (3) must notify, in writing, the body corporate or responsible entity of a registered scheme making the offer as soon as practicable if, during the application period for the offer mentioned in paragraph 1100W(2)(e) , the person becomes aware that:

(a)    a material statement in any of the following documents is misleading or deceptive:

(i) a document that purports to be an ESS offer document required by section 1100W for the offer;

(ii) information that purports to be supporting information required under section 1100X for the offer; or

(b)    there is a material omission of information from any of the documents mentioned in paragraph (a) that would result in any of those documents being misleading or deceptive; or

(c)    a material new circumstance exists that:

(i) has arisen during the application period for the offer mentioned in paragraph 1100W(2)(e) ; and

(ii) if the new circumstance had occurred before the offer was made, would have been required to be included in any of the documents mentioned in paragraph (a) .

1100ZJ(3)    
The following persons are covered by this subsection:

(a)    each director of the body corporate or responsible entity;

(b)    a person named, with the person ' s consent, in any document mentioned in paragraph (2)(a) as a proposed director of the body corporate or responsible entity;

(c)    a person named, with the person ' s consent, in any document mentioned in paragraph (2)(a) as having made a statement:

(i) that is included in any such document; or

(ii) on which a statement made in any such document is based.

1100ZJ(4)    
An offence based on subsection (2) is an offence of strict liability.

Defence - withdrawal of consent

1100ZJ(5)    
A person does not commit an offence against subsection (2) if:

(a)    the person is named, with the person ' s consent, in any document mentioned in paragraph (2)(a) :

(i) as a director or proposed director of the body corporate or responsible entity; or

(ii) as having made a statement that is included in any such document or on which a statement made in any such document is based; and

(b)    at any time, the person publicly withdraws the person ' s consent to being named in the document in that way.

Subdivision F - ASIC powers  

SECTION 1100ZK   ASIC ' S POWER TO MAKE EXEMPTIONS AND DECLARE MODIFICATIONS ETC. IN RELATION TO THIS DIVISION  

Application

1100ZK(1)    
This section applies in relation to Chapters 2L , 5 , 5C , 6D and 7 (the covered Chapters ) and this Division.

Exemptions and declarations on application of this Division

1100ZK(2)    
ASIC may do either or both of the following:

(a)    exempt a person from all or specified provisions of the covered Chapters or this Division;

(b)    declare that the covered Chapters or this Division apply in relation to a person, as if specified provisions were omitted, modified or varied as specified in the declaration.

1100ZK(3)    
The exemption or declaration may do all or any of the following:

(a)    relate to all persons, specified persons or a specified class of persons;

(b)    relate to any other matter generally or as specified.

Imposition of conditions on exemption

1100ZK(4)    
An exemption may apply unconditionally or subject to specified conditions.

1100ZK(5)    
An entity to whom a condition specified in an exemption applies must comply with the condition.

1100ZK(6)    
The Court may order the entity to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

Exemptions and declarations relating to all or a class of persons

1100ZK(7)    
An exemption or declaration that relates to all persons, or a specified class of persons, must be made by legislative instrument.

Exemptions and declarations relating to specified persons

1100ZK(8)    
An exemption or declaration that relates to a specified person must be made by notifiable instrument.

1100ZK(9)    
ASIC must give a copy of an exemption or declaration that relates to a specified person to the person as soon as is reasonably practicable after the exemption or declaration is made.

SECTION 1100ZL   ASIC STOP ORDERS  

1100ZL(1)    
This section applies if, in relation to an offer of ESS interests that is purportedly made under this Division, ASIC is satisfied that:

(a)    information in any of the following is not worded and presented in a clear, concise and effective manner:

(i) an application form for the offer;

(ii) a document that purports to be an ESS offer document for the offer;

(iii) a document that purports to be supporting information required under section 1100X for the offer;

(iv) if the offer is not in a document mentioned in subparagraph (i) or (ii) - the document that contains the offer; or

(b)    a document that purports to be an ESS offer document for the offer does not meet the requirements of subsection 1100W(2) ; or

(c)    the terms of the offer do not comply with section 1100Y or 1100Z ; or

(d)    a document that purports to be supporting information required under section 1100X for the offer does not meet the relevant requirements under that section for that document; or

(e)    the document that purports to be the ESS offer document, information that purports to be supporting information required under section 1100X , or the terms of the offer:

(i) include a misleading or deceptive statement; or

(ii) omit information in such a way that results in any of those documents being misleading or deceptive; or

(f)    a person has contravened, or is likely to contravene, a term of the offer covered by section 1100Y or 1100Z .

1100ZL(2)    
ASIC may order that no offers, issues, sales or transfers of the ESS interests be made while the order is in force.

1100ZL(3)    
Before making an order under subsection (2) , ASIC must:

(a)    hold a hearing; and

(b)    give a reasonable opportunity to any interested people to make oral or written submissions to ASIC on whether an order should be made.

1100ZL(4)    
If ASIC considers that any delay in making an order under subsection (2) pending the holding of a hearing would be prejudicial to the public interest, ASIC may make an interim order that no offers, issues, sales or transfers of the ESS interests be made while the interim order is in force. The interim order may be made without holding a hearing and lasts for 21 days after the day on which it is made unless revoked before then.

1100ZL(5)    
At any time during the hearing, ASIC may make an interim order that no offers, issues, sales or transfers of the ESS interests be made while the interim order is in force. The interim order lasts until:

(a)    ASIC makes an order under subsection (2) after the conclusion of the hearing; or

(b)    the interim order is revoked;

whichever happens first.

1100ZL(6)    
An order under subsection (2) , (4) or (5) must be in writing and must be served on the person who is ordered not to offer, issue, sell or transfer ESS interests.

SECTION 1100ZM   ASIC ' S POWER TO REQUEST DOCUMENTS  

1100ZM(1)    
ASIC may require a person who makes, or purports to make, an offer of ESS interests to produce to ASIC such documents, or to give to ASIC such information, as ASIC thinks necessary in order to form an opinion about whether the provisions of this Division have been complied with.

1100ZM(2)    
The person must provide the information within such reasonable period, and in such form, as are specified by ASIC.

1100ZM(3)    
An offence based on subsection (2) is an offence of strict liability.

Division 2 - Codes of conduct  

Subdivision A - Approved codes of conduct  

SECTION 1101A   APPROVED CODES OF CONDUCT  

Applications

1101A(1)    
If an application is made to approve a code of conduct, ASIC may, by legislative instrument, approve the code of conduct.

Identifying enforceable code provisions

1101A(2)    
In the approval, ASIC may identify a provision of the code of conduct as an enforceable code provision if ASIC considers that:

(a)    the provision represents a commitment to a person by a subscriber to the code relating to transactions or dealings performed for, on behalf of or in relation to the person; and

(b)    a breach of the provision is likely to result in significant and direct detriment to the person; and

(c)    additional criteria prescribed by the regulations for the purposes of this paragraph (if any) are satisfied; and

(d)    it is appropriate to identify the provision of the code as an enforceable code provision, having regard to the matters prescribed by the regulations for the purposes of this paragraph (if any).

Note: See also section 1101AD .

ASIC to be satisfied of certain matters before making approval

1101A(3)    
ASIC must not approve a code of conduct unless it is satisfied that:

(a)    to the extent that the code is inconsistent with this Act or any other law of the Commonwealth under which ASIC has regulatory responsibilities - the code imposes an obligation on a subscriber that is more onerous than that imposed by this Act or any other law of the Commonwealth under which ASIC has regulatory responsibilities; and

(b)    each enforceable code provision:

(i) has been agreed with the applicant; and

(ii) is legally effective; and

(c)    it is appropriate to approve the code, having regard to the following matters:

(i) whether the obligations of subscribers to the code are capable of being enforced;

(ii) whether the applicant has effective administrative systems for monitoring compliance with the code and making information obtained as a result of monitoring publicly available;

(iii) whether the applicant has effective administrative systems for maintaining, and making publicly available, an accurate list of subscribers to the code.

Revocation

1101A(4)    
ASIC may, by legislative instrument, revoke an approval of an approved code of conduct:

(a)    on application by the applicant for the approval; or

(b)    if ASIC ceases to be satisfied of the matters mentioned in subsection (3) ; or

(c)    if a review of the operation of the code is not completed by the applicant within the timeframe required by section 1101AB .

1101A(5)    
Subsection (4) does not, by implication, limit the application of subsection 33(3) of the Acts Interpretation Act 1901 .

SECTION 1101AA   VARIATIONS TO APPROVED CODES OF CONDUCT  

1101AA(1)    
If an application is made to vary an approved code of conduct, ASIC may, by legislative instrument, approve the variation.

1101AA(2)    
Subsections 1101A(2) and (3) apply in relation to an application under subsection (1) as if it were an application to approve a code of conduct.

SECTION 1101AB   REVIEW OF APPROVED CODES OF CONDUCT  

1101AB(1)    
The applicant, in relation to an approved code of conduct, must ensure that, every 5 years, an independent review is undertaken of the operation of the approved code of conduct.

1101AB(2)    
A review under subsection (1) must make provision for public consultation.

1101AB(3)    
A review of an approved code of conduct must be completed:

(a)    for the first review - before the end of the 5 year period beginning on the day the code of conduct was approved; and

(b)    for a subsequent review - within 5 years after the completion of the previous review.

1101AB(4)    
For the purposes of this section, a review is completed when a report of the review is given to ASIC.

1101AB(5)    
Within 10 business days of completing a review, the applicant must publish the report of the review on its website.

SECTION 1101AC  

1101AC   OBLIGATION TO COMPLY WITH ENFORCEABLE CODE PROVISIONS  

If a person holds out that they comply with an approved code of conduct, the person must not breach an enforceable code provision of the approved code of conduct.

Civil penalty: 300 penalty units.

SECTION 1101AD  

1101AD   REGULATIONS  

The regulations may:

(a)    prescribe criteria of which ASIC must be satisfied before it identifies a provision of a code of conduct as an enforceable code provision; or

(b)    prescribe matters to which ASIC must have regard before it identifies a provision of a code of conduct as an enforceable code provision.

Subdivision B - Mandatory codes of conduct  

SECTION 1101AE   MANDATORY CODES OF CONDUCT  

1101AE(1)    
The regulations may prescribe a code of conduct for the purposes of this Division and declare it to be a mandatory code of conduct.

1101AE(2)    
Regulations declaring a code of conduct a mandatory code of conduct may also:

(a)    confer functions and powers on a person or body for the purposes of:

(i) monitoring compliance with the code of conduct; and

(ii) dealing with disputes or complaints arising under, or in relation to, the code of conduct; and

(iii) dealing with other associated administrative matters; or

(b)    provide for and in relation to:

(i) the keeping of records by persons bound by the code of conduct; and

(ii) reporting obligations of such persons.

1101AE(3)    
If regulations prescribe a code of conduct, the code of conduct may prescribe pecuniary penalties not exceeding 1,000 penalty units for civil penalty provisions of the code of conduct.

1101AE(4)    
To avoid doubt, subsections 1317G(3) and (4) do not apply in relation to the contravention of a civil penalty provision of a mandatory code of conduct.

SECTION 1101AF  

1101AF   OBLIGATION TO COMPLY WITH MANDATORY CODE OF CONDUCT  

A person must not contravene a mandatory code of conduct.

Division 3 - Other matters  

SECTION 1101B   POWER OF COURT TO MAKE CERTAIN ORDERS  

Court ' s power to make orders in relation to certain contraventions

1101B(1)    
The Court may make such order, or orders, as it thinks fit if:

(a)    

on the application of ASIC, it appears to the Court that a person:

(i) has contravened a provision of this Chapter, or any other law relating to dealing in financial products or providing financial services; or

(ii) has contravened a condition of an Australian market licence, Australian CS facility licence, Australian derivative trade repository licence or Australian financial services licence; or

(iii) has contravened a provision of the operating rules, or the compensation rules (if any), of a licensed market; or

(iv) (Repealed)

(v) has contravened a condition on an exemption from the requirement to hold an Australian market licence or an Australian CS facility licence; or

(vi) is about to do an act with respect to dealing in financial products or providing a financial service that, if done, would be such a contravention; or

(aa)    

on the application of ASIC or the Reserve Bank or both, it appears to the Court that a person has contravened a provision of the operating rules of a licensed CS facility; or

(b)    on the application of a market licensee, it appears to the Court that a person has contravened the operating rules, or the compensation rules (if any), of a licensed market operated by the licensee; or

(c)    on the application of a CS facility licensee, it appears to the Court that a person has contravened a provision of the operating rules of a licensed CS facility operated by the licensee; or

(d)    

on the application of a person aggrieved by an alleged contravention by another person of subsection 798H(1) (complying with market integrity rules) or 981M(1) (complying with client money reporting rules) or a provision of the operating rules, or the compensation rules (if any), of a licensed market, or subsection 908CF(1) (complying with rules about financial benchmarks), it appears to the Court that:

(i) the other person did contravene the provision; and

(ii) the applicant is aggrieved by the contravention.

However, the Court can only make such an order if the Court is satisfied that the order would not unfairly prejudice any person.

Note: For examples of orders the Court could make, see subsection (4) .

1101B(2)    
For the purposes of paragraph (1)(d) , if a body corporate contravenes a provision of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the licensed market is taken to be a person aggrieved by the contravention.

1101B(3)    
Subsection (2) does not limit the circumstances in which a person may be aggrieved by a contravention for the purposes of paragraph (1)(d) .

Examples of orders the Court may make

1101B(4)    
Without limiting subsection (1) , some examples of orders the Court may make under subsection (1) include:

(a)    

an order restraining a person from carrying on a business, or doing an act or classes of acts, in relation to financial products or financial services, if the person has persistently contravened, or is continuing to contravene:

(i) a provision or provisions of this Chapter; or

(ii) a provision or provisions of any other law relating to dealing in financial products or providing financial services; or

(iii) a condition on an Australian market licence, Australian CS facility licence, Australian derivative trade repository licence or Australian financial services licence; or

(iv) (Repealed)

(v) a condition of an exemption from a requirement to hold an Australian market licence or Australian CS facility licence; or

(vi) a provision of the operating rules, or the compensation rules (if any), of a licensed market or of the operating rules of a licensed CS facility; or

(b)    

an order giving directions about complying with a provision of the market integrity rules, of the derivative transaction rules, of the derivative trade repository rules or of the client money reporting rules, or a provision of the operating rules, or the compensation rules (if any), of a licensed market or of the operating rules of a licensed CS facility, or a provision of the financial benchmark rules or the compelled financial benchmark rules, to a person (or the directors of the body corporate, if the person is a body corporate) who contravened the provision; and

(c)    

an order requiring a person to disclose to the public or to specified persons, in accordance with the order, specified information that the person to whom the order is directed possesses or to which that person has access, if the person:

(i) contravened a provision of the market integrity rules, of the derivative transaction rules, of the derivative trade repository rules or of the client money reporting rules, or a provision of the operating rules of a licensed market, or a provision of the financial benchmark rules or the compelled financial benchmark rules, or a condition relating to the disclosure or provision of information; or

(ii) was involved in such a contravention; and

(d)    

an order requiring a person to publish advertisements in accordance with the order at that person ' s expense, if the person:

(i) contravened a provision of the market integrity rules, of the derivative transaction rules, of the derivative trade repository rules or of the client money reporting rules, or a provision of the operating rules of a licensed market, or a provision of the financial benchmark rules or the compelled financial benchmark rules, or a condition relating to the disclosure or provision of information; or

(ii) was involved in such a contravention; and

(e)    an order restraining a person from acquiring, disposing of or otherwise dealing with any financial products that are specified in the order; and

(f)    an order restraining a person from providing any financial services that are specified in the order; and

(g)    an order appointing a receiver of property (see subsection (9) ) of a financial services licensee; and

(h)    an order declaring a contract relating to financial products or financial services to be void or voidable; and

(i)    an order directing a person to do or refrain from doing a specified act, if that order is for the purpose of securing compliance with any other order under this section; and

(j)    any ancillary order considered to be just and reasonable in consequence of the making of an order under any of the preceding provisions of this subsection.

Interim orders

1101B(5)    
Before considering an application to the Court under subsection (1) , the Court may make an interim order of the kind applied for to apply pending the determination of the application, if in the opinion of the Court it is desirable to do so.

1101B(6)    
However, if ASIC, a market licensee or a CS facility licensee applies for an order under subsection (1) , the Court must not require the applicant, or any other person, to give any undertakings as to damages as a condition of making an interim order under subsection (5) .

Power to give notice of applications

1101B(7)    
Before making an order under subsection (1) , the Court may do either or both of the following:

(a)    direct that notice of the application be given to such persons as it thinks fit;

(b)    direct that notice of the application be published in such manner as it thinks fit.

Powers of receivers appointed under Court orders

1101B(8)    
A person appointed by order of the Court under subsection (1) as a receiver of the property (see subsection (12) ) of a financial services licensee:

(a)    may require the financial services licensee to:

(i) deliver to the person any property of which the person has been appointed receiver; or

(ii) give to the person all information concerning that property that may reasonably be required; and

(b)    may acquire and take possession of any property of which the person has been appointed receiver; and

(c)    may deal with any property that the person has acquired, or of which the person has taken possession, in any way in which the financial services licensee might lawfully have dealt with the property; and

(d)    has such other powers in respect of the property as the Court specifies in the order.

Duty to comply with order

1101B(10)    
A person must not, without reasonable excuse, contravene:

(a)    an order under this section; or

(b)    a requirement imposed under paragraph (8)(a) or (8)(d) by a receiver appointed by order of the Court under subsection (1) .

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

Power to rescind or vary order

1101B(11)    
The Court may rescind or vary an order made by it under this section or suspend the operation of such an order.

1101B(12)    

In this section:

compensation rules
(Repealed by No 76 of 2023, s 3, Sch 2 [ 564] (effective 20 October 2023).)

property
, in relation to a financial services licensee, includes:

(a) money; or

(b) financial products; or

(c) documents of title to financial products; or

(d) other property;

entrusted to, or received on behalf of, any other person by the financial services licensee or another person in the course of, or in connection with, a financial services business carried on by the financial services licensee.

SECTION 1101C   PRESERVATION AND DISPOSAL OF RECORDS ETC.  

1101C(1)   Registers.  

A person who is required by a provision of this Chapter to keep a register in relation to a business carried on by the person must preserve it for 5 years after the day on which the last entry was made in the register.

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

1101C(2)   Financial records.  

A person who is required by a provision of this Chapter to keep any financial record in relation to a business carried on by the person must preserve it for 7 years after the transactions covered by the record are completed.

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

1101C(3)   Other records.  

A person who is required by a provision of this Chapter or the regulations to keep any other record must preserve it for 5 years after the day on which the last entry was made in the record.

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

1101C(4)   Exceptions.  

Registers and records must be preserved in accordance with this section (even if the person stops carrying on the business to which they relate during the period for which they must be preserved), unless:

(a) the regulations provide that those documents, or a class to which they belong, need not be preserved; and

(b) any conditions specified in or under those regulations have been complied with.

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

SECTION 1101D  

1101D   DESTRUCTION OF RECORDS BY ASIC  

ASIC may destroy or otherwise dispose of any document that is lodged under, or for the purposes of, a provision of this Chapter if:

(a) ASIC is of the opinion that it is no longer necessary or desirable to retain it; and

(b) it has been in the possession of ASIC for such period as is specified in the regulations, either generally or in relation to a particular document or class of documents.

SECTION 1101E   CONCEALING ETC. OF BOOKS  

1101E(1)   [ Offences]  

A person must not:

(a) conceal, destroy, mutilate or alter a book:

(i) relating to the business carried on by a financial services licensee or an authorised representative of such a licensee; or

(ii) required under a provision of this Chapter to be kept by a market licensee, a CS facility licensee, a financial services licensee or an authorised representative of a financial services licensee; or

(b) send such a book out of this jurisdiction.

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

1101E(2)   [ Defences]  

In any proceedings against a person for an offence based on subsection (1), it is a defence if the person did not act with intent to:

(a) defraud; or

(b) defeat the objects of this Chapter; or

(c) prevent, delay or obstruct the carrying out of an examination, investigation or audit, or the exercise of a power, under this Chapter.

Note: A defendant bears an evidential burden in relation to the matters in subsection (2). See subsection 13.3(3) of the Criminal Code .

SECTION 1101F   FALSIFICATION OF RECORDS  

1101F(1A)   [ Conduct]  

A person must not engage in conduct that results in the falsification of:

(a) a book required to be kept by a provision of this Chapter; or

(b) a register or any accounting or other record referred to in section 1101C .

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

1101F(1)   [ Record keeping]  

If matter that is used, or intended to be used, in connection with:

(a) the keeping of a book required to be kept by a provision of this Chapter; or

(b) a register or any accounting or other record referred to in section 1101C ;

is recorded or stored in an illegible form by means of a mechanical device, an electronic device or any other device, a person must not:

(c) record or store by means of that device matter that the person knows to be false in a material particular or materially misleading; or

(d) destroy, remove or falsify matter that is recorded or stored by means of that device, or has been prepared for the purpose of being recorded or stored, or for use in compiling other matter to be recorded or stored, by means of that device; or

(e) fail to record or store matter by means of that device, with intent to falsify any entry made or intended to be compiled, wholly or in part, from that matter.

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

1101F(2)   [ Defence]  

In any proceedings against a person for an offence based on subsection (1A) or (1), it is a defence if it is proved that the person acted honestly and that in all the circumstances the act or omission constituting the offence should be excused.

Note: A defendant bears an evidential burden in relation to the matters in subsection (2). See subsection 13.3(3) of the Criminal Code .

SECTION 1101G  

1101G   PRECAUTIONS AGAINST FALSIFICATION OF RECORDS  

A person required by a provision of this Chapter to keep a book or record must take reasonable precautions for guarding against falsification of the book or record and for facilitating discovery of any falsification.

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

SECTION 1101GA   HOW PART 9.3 APPLIES TO BOOKS REQUIRED TO BE KEPT BY THIS CHAPTER ETC.  

1101GA(1)   [ ``Chapter 7 book'']  

In this section:

Chapter 7 book
means:

(a) a book (by whatever name it is known) that a provision of this Chapter requires to be kept; or

(b) a document lodged under, or for the purposes of, a provision of this Chapter; or

(c) a book relating to the business carried on by a financial services licensee or an authorised representative of a financial services licensee; or

(d) a register or accounting record referred to in section 1101C .

1101GA(2)   [ Application]  

Part 9.3 does not apply in relation to a Chapter 7 book except as provided in the following paragraphs:

(a) section 1303 applies to a Chapter 7 book;

(b) section 1305 , and subsections 1306(5) and (6) , apply to a Chapter 7 book as if references in section 1305 to a body corporate were instead references to a person;

(c) regulations made for the purposes of this paragraph may provide that other provisions of Part 9.3 apply in relation to a Chapter 7 book, or a class of Chapter 7 books, with such modifications (if any) as are specified in the regulations.

SECTION 1101H   CONTRAVENTION OF CHAPTER DOES NOT GENERALLY AFFECT VALIDITY OF TRANSACTIONS ETC.  

1101H(1)   [ Non-compliance does not affect enforceability]  

Subject to subsection (2), a failure to comply with any requirement of this Chapter (including requirements in regulations made for the purposes of this Chapter) does not affect the validity or enforceability of any transaction, contract or other arrangement.

1101H(2)   [ Limitation]  

Subsection (1) has effect subject to any express provision to the contrary in:

(a) this Chapter; or

(b) regulations made for the purposes of another provision of this Chapter; or

(c) regulations referred to in subsection (3).

1101H(3)   [ Regulations]  

Regulations made for the purposes of this subsection may provide that a failure to comply with a specified requirement referred to in subsection (1) has a specified effect on the validity or enforceability of a transaction, contract or arrangement.

SECTION 1101I  

1101I   GAMING AND WAGERING LAWS DO NOT AFFECT VALIDITY OF CONTRACTS RELATING TO FINANCIAL PRODUCTS  

Despite any law of a State or Territory in this jurisdiction about gaming and wagering:

(a) a person may enter into a contract that is a financial product; and

(b) the contract is valid and enforceable.

SECTION 1101J   DELEGATION  

1101J(1)    

The Minister may delegate all or any of the Minister ' s powers under this Chapter (other than powers under Part 7.2 , 7.2A , 7.3 , 7.3A , 7.3B , 7.4 , 7.5 or 7.5A ) to:

(a)    ASIC; or

(b)    a member of ASIC (within the meaning of section 9 of the Australian Securities and Investments Commission Act 2001 ); or

(c)    a staff member of ASIC who is a senior staff member (within the meaning given by subsection 5(1) of that Act).

1101J(2)    

However, the Minister must not delegate the Minister ' s powers under section 1023H , 1023J , 1023K or 1023M (which deal with product intervention orders) to a person other than ASIC.