Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (87 of 2024)

Schedule 2   Financial market infrastructure: new and enhanced regulatory powers

Part 11   Fit, proper, capable and competent person standards

Division 2   Financial market infrastructure banning orders

Corporations Act 2001

135   After Division 2 of Part 7.4

Insert:

Division 2A - Financial market infrastructure banning orders

Subdivision A - Making financial market infrastructure banning orders

853H ASIC's power to make financial market infrastructure banning orders

(1) ASIC may, in writing, make one or more orders ( FMI banning orders ) against an individual if:

(a) the individual becomes an insolvent under administration; or

(b) the individual is convicted of fraud; or

(c) ASIC has reason to believe that the individual is not a fit and proper person to:

(i) perform one or more functions of a core officer of an FMI licensee; or

(ii) control an FMI licensee; or

(d) without limiting paragraph (c) - ASIC has reason to believe that the individual is not capable of:

(i) performing one or more functions of a core officer of an FMI licensee; or

(ii) controlling an FMI licensee;

including because the individual is not competent to perform the functions or control an FMI licensee; or

(e) the individual has not complied with a financial services law; or

(f) ASIC has reason to believe that the individual is likely to contravene a financial services law; or

(g) the individual has been involved in the contravention of a financial services law by another person; or

(h) ASIC has reason to believe that the individual is likely to become involved in the contravention of a financial services law by another person; or

(i) section 853M applies to the individual in relation to one or more corporations.

Copy of banning order to be given to the individual

(2) ASIC must give a copy of a banning order to the individual against whom it was made.

853J Individual to be given an opportunity to be heard before ASIC makes financial market infrastructure banning order

(1) Despite subsection 853H(1), ASIC may make an FMI banning order against an individual only after giving the individual an opportunity:

(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and

(b) to make submissions to ASIC on the matter.

(2) However, ASIC may make an FMI banning order against an individual without giving the individual the opportunities mentioned in subsection (1) if ASIC's grounds for making the order are, or include:

(a) that the individual is not a fit and proper person under paragraph 853H(1)(c) because the individual is or has been a core officer of an entity that has had a licence suspended or cancelled (see paragraph 853K(2)(a)); or

(b) that the individual has been convicted of serious fraud.

853K When an individual is not a fit and proper person

(1) ASIC must have regard to the matters set out in subsection (2) (subject to Part VIIC of the Crimes Act 1914) for the purposes of applying paragraph 853H(1)(c) of this Act to an individual.

Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve individuals from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.

(2) The matters are as follows:

(a) whether the individual has ever been a core officer of an entity that has held:

(i) an Australian market licence; or

(ii) an Australian CS facility licence; or

(iii) an Australian derivative trade repository licence; or

(iv) a benchmark administrator licence;

that has been suspended or cancelled;

(b) whether any of the following has ever been made against the individual:

(i) an FMI banning order;

(ii) a banning order, or a disqualification order under Subdivision B of Division 8 of Part 7.6;

(iii) a banning order, or a disqualification order, under Part 2-4 of the National Consumer Credit Protection Act 2009;

(c) whether the individual has ever been disqualified under this Act, or any other law of the Commonwealth or of a State or Territory, from managing corporations;

(d) whether the individual has ever been banned from engaging in a credit activity (within the meaning of the National Consumer Credit Protection Act 2009) under a law of a State or Territory;

(e) whether the individual has ever been linked to a refusal or failure to give effect to a determination made by AFCA;

(f) whether the individual has ever been an insolvent under administration;

(g) whether, in the last 10 years, the individual has been convicted of an offence;

(h) any relevant information given to ASIC by a State or Territory, or an authority of a State or Territory, in relation to the individual;

(i) any other matter prescribed by the regulations;

(j) any other matter ASIC considers relevant.

Note: To work out whether an individual has been linked as described in paragraph (e), see section 910C.

853L When an individual contravenes a financial services law

For the purposes of subsection 853H(1), an individual contravenes a financial services law if the individual fails to comply with a duty imposed under that law, even if the provision imposing the duty is not an offence provision or a civil penalty provision.

853M When an individual has been a core officer of a corporation unable to pay its debts

This section applies to an individual in relation to a corporation if, within the last 7 years:

(a) the individual was a core officer of the corporation when the corporation was an FMI licensee; and

(b) the corporation was wound up either:

(i) while the individual was a core officer of the corporation; or

(ii) within the 12 months after the individual ceased to be a core officer of the corporation; and

(c) a liquidator lodged a report under subsection 533(1) (including that subsection as applied by section 526-35 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006) about the corporation's inability to pay its debts.

Subdivision B - Matters relating to financial market infrastructure banning orders

853N What a financial market infrastructure banning order prohibits

(1) An FMI banning order made against an individual may specify that the individual is prohibited from doing one or more of the following:

(a) controlling, whether alone or in concert with one or more other entities, an FMI licensee;

(b) performing any functions of a core officer of an FMI licensee;

(c) performing specified functions of a core officer of an FMI licensee.

(2) An FMI banning order may specify that a particular prohibition specified in the order applies against the individual:

(a) for a specified period; or

(b) permanently.

Note: This subsection applies separately to each prohibition specified in the order.

(3) A FMI banning order may include a provision allowing the individual against whom it was made, subject to any specified conditions:

(a) to do specified acts; or

(b) to do specified acts in specified circumstances;

that the order would otherwise prohibit them from doing.

853P Effect of financial market infrastructure banning orders

(1) An individual against whom an FMI banning order is made must not engage in conduct in breach of the banning order.

Fault-based offence

(2) An individual commits an offence if the individual contravenes subsection (1).

Civil liability

(3) An individual contravenes this subsection if the individual contravenes subsection (1).

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

853Q Variation or cancellation of financial market infrastructure banning orders

(1) ASIC may vary or cancel an FMI banning order, by giving written notice to the individual against whom the order was made, if ASIC is satisfied that it is appropriate to do so because of a change in any of the circumstances based on which ASIC made the order.

(2) ASIC may do so:

(a) on its own initiative; or

(b) if the individual against whom the order was made lodges with ASIC an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.

Note: For fees in respect of lodging applications, see Part 9.10.

(3) If ASIC proposes not to vary or cancel an FMI banning order in accordance with an application lodged by an individual under paragraph (2)(b), ASIC must give the individual an opportunity:

(a) to appear, or be represented, at a hearing before ASIC that takes place in private; and

(b) to make submissions to ASIC on the matter.

853R Date of effect and publication of financial market infrastructure banning orders, variation or cancellation

Date of effect

(1) An FMI banning order, or variation or cancellation of an FMI banning order, takes effect when it is given to the individual against whom the order is made.

Publication

(2) If ASIC makes, varies or cancels an FMI banning order, ASIC must publish a notice on ASIC's website. ASIC must do so:

(a) as soon as practicable after the action takes effect; or

(b) sooner.

(3) The notice must state:

(a) when the action takes effect; and

(b) subject to subsection (4):

(i) in the case of the making of an FMI banning order - set out a copy of the FMI banning order; or

(ii) in the case of the variation of an FMI banning order - set out a copy of the FMI banning order as varied.

(4) However, if:

(a) the FMI banning order contains a provision of the kind referred to in subsection 853N(3); and

(b) ASIC considers that the notice on ASIC's website would be unreasonably long if that provision were included;

the notice may instead set out a summary of the provision's effect.

853S Statements of reasons

(1) An FMI banning order given to an individual must be accompanied by a statement of reasons for the order.

(2) If ASIC varies an FMI banning order made against an individual, ASIC must, on request by the individual, give the individual a statement of reasons for the variation.