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 5 Approval for control of certain Australian licensees

Division 1 Controlled Australian financial bodies

Corporations Act 2001

42 After Division 1 of Part 7.4

Insert:

Division 1A - Limit on control of certain Australian licensees that are not widely held market bodies

Subdivision A - Scope and interpretation

852DA Scope of Division

(1) This Division applies in relation to controlled Australian financial bodies.

Meaning of controlled Australian financial body

(2) A body corporate is a controlled Australian financial body if the body is:

(a) registered under Chapter 2A; and

(b) any of the following:

(i) a market licensee;

(ii) a CS facility licensee;

(iii) a derivative trade repository licensee;

(iv) a benchmark administrator licensee;

(v) the holding company of a licensee mentioned in any of subparagraphs (i) to (iv); and

852DB Meaning of unacceptable control situation

An unacceptable control situation exists in relation to a controlled Australian financial body and a particular person if the person's voting power in the body is more than:

(a) unless paragraph (b) applies - 20%; or

(b) if an approval of a higher percentage is in force under Subdivision C for the body and the person - that higher percentage.

852DC Meaning of passes the legitimate control test

A person passes the legitimate control test for having a particular percentage of voting power in a controlled Australian financial body unless it is reasonable to expect that the person's having of that percentage of voting power in the body would adversely affect:

(a) if the body is a licensee mentioned in any of subparagraphs 852DA(2)(b)(i) to (iv) - the body's ability to meet one or more of its obligations as such a licensee under this Act; or

(b) if the body is the holding company of a licensee mentioned in any of subparagraphs 852DA(2)(b)(i) to (iv) - the licensee's ability to meet one or more of its obligations as such a licensee under this Act.

Subdivision B - 20% voting power limit

852DD Acquisition of shares

A person contravenes this section if:

(a) the person acquires, or the person with one or more other persons under an arrangement acquire, shares in a body corporate; and

(b) the acquisition has the result that:

(i) an unacceptable control situation comes into existence in relation to a controlled Australian financial body and a person; or

(ii) if an unacceptable control situation already exists in relation to a controlled Australian financial body and a person (the controller ) - there is an increase in the voting power of the controller in the controlled Australian financial body.

Note 1: The person mentioned in subparagraph (b)(i) or (b)(ii) need not be the person who contravenes this section.

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

852DE Remedial orders

(1) If an unacceptable control situation exists in relation to a controlled Australian financial body and a person, any of the following courts may make such orders as the court considers appropriate for the purpose of ensuring that the unacceptable control situation ceases to exist:

(a) the Federal Court;

(b) the Federal Circuit and Family Court of Australia (Division 2);

(2) However, the court may only make orders under this section on application by:

(a) ASIC; or

(b) the body; or

(3) Without limiting subsection (1), the court's orders may include:

(a) an order directing the disposal of shares; or

(b) an order restraining the exercise of any rights attached to shares; or

(c) an order prohibiting or deferring the payment of any sums due to a person in respect of shares held by the person; or

(d) an order that any exercise of rights attached to shares be disregarded; or

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

(f) an order containing such ancillary or consequential provisions as the court thinks just.

(4) Before making an order under this section, the court may direct that notice of the application:

(a) be given to such persons as the court thinks fit; or

(b) be published in such manner as the court thinks fit.

(5) The court may, by order:

(a) rescind, vary or discharge an order made by the court under this section; or

(b) suspend the operation of such an order.

852DF Injunctions

(1) If any conduct (including a refusal or failure to act) amounts or would amount to a contravention of this Division in relation to a particular controlled Australian financial body, the body is taken, for the purposes of section 1324, to be a person whose interests are affected by the conduct.

(2) Subsection (1) of this section does not limit the class of persons whose interests are affected by the conduct.

(3) Sections 852DE and 1324 do not limit each other.

Subdivision C - Approvals to exceed 20% voting power limit

852DG Application for approval to exceed 20% voting power limit

A person may apply for approval to have voting power of more than 20% in a particular controlled Australian financial body by lodging with ASIC an application in the prescribed form that sets out:

(a) the percentage of voting power (if any) the person currently has in the body; and

(b) the percentage of voting power the person is seeking approval to have in the body; and

(d) the person's reasons for making the application.

Note 1: For fees in respect of lodging applications, see Part 9.10.

Note 2: For applications to vary an approved percentage, see section 852DM.

852DH Decision on the application

(1) ASIC must, by written notice given to the applicant, approve the applicant having a specified percentage of voting power in the body if:

(a) ASIC is satisfied the specified percentage is the highest percentage (up to that sought by the applicant) of voting power in the body for which the applicant passes the legitimate control test; and

(b) ASIC believes relevant information in the application, or later provided by the applicant, to be correct.

Otherwise, ASIC must, by written notice given to the applicant, refuse such an approval.

(2) A notice of approval under subsection (1) must specify that the approval to have the specified percentage of voting power in the body is in force:

(a) for a specified period, which may be extended under section 852DK; or

(b) indefinitely from a specified day;

but may be varied under section 852DM or revoked under section 852DN.

Note: The notice may also specify that the approval is subject to conditions: see subsection 852DL(1).

(3) ASIC must give a copy of a notice under subsection (1) to the body.

852DJ Duration of approval

An approval under subsection 852DH(1) is in force as specified under subsection 852DH(2) in the notice of the approval.

852DK Extension of approval

(1) If:

(a) a person has an approval under subsection 852DH(1) to have a specified percentage of voting power in a controlled Australian financial body; and

(b) the approval is in force for a specified period (including an extended period from a previous operation of this section);

the person may apply to extend that period by lodging with ASIC an application in the prescribed form that sets out:

(d) the person's reasons for making the application.

Note 1: For fees in respect of lodging applications, see Part 9.10.

Note 2: ASIC can vary the period of an approval on its own initiative: see subsection 852DM(4).

(2) ASIC must, by written notice given to the applicant, extend the period of the applicant's approval to have the specified percentage of voting power in the body if:

(a) ASIC is satisfied the specified percentage remains the highest percentage (up to that originally sought by the applicant) of voting power in the body for which the applicant passes the legitimate control test; and

(b) ASIC believes relevant information in the application, or later provided by the applicant, to be correct.

Otherwise, ASIC must, by written notice given to the applicant, refuse such an extension.

(3) A notice of extension under subsection (2) must specify that the approval:

(a) is in force for the extended period, which may be further extended under this section; and

(b) may be varied under section 852DM or revoked under section 852DN.

(4) ASIC must give a copy of a notice under subsection (2) to the body.

852DL Conditions of approval

Conditions of approval

(1) An approval under subsection 852DH(1) is subject to such conditions (if any) specified in the notice of approval given under that subsection.

Imposing, varying or revoking conditions after approval

(2) ASIC may, by written notice given to a person who holds an approval under subsection 852DH(1) to have a specified percentage of voting power in a controlled Australian financial body:

(a) impose one or more conditions or further conditions to which the approval is subject; or

(b) vary or revoke any condition:

(i) imposed under paragraph (a); or

(ii) specified in the notice of approval.

(3) ASIC must give a copy of a notice under subsection (2) to the body.

Power exercisable on own initiative or by application

(4) ASIC's power under subsection (2) may be exercised:

(a) on ASIC's own initiative; or

(b) on application by the person who holds the approval under subsection 852DH(1).

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

Notice of refusal of application

(5) If ASIC refuses to exercise its power under subsection (2) on an application made under paragraph (4)(b), ASIC must give written notice of the refusal to the applicant.

Breach of condition

(6) A person who holds an approval under subsection 852DH(1) must give written notice to ASIC if they become aware that they have breached a condition to which the approval is subject.

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

852DM Varying an approval

(1) This section applies to a person holding an approval under subsection 852DH(1) to have a specified percentage (the current approved percentage ) of voting power:

(a) in a controlled Australian financial body; and

(b) for a specified period or indefinitely (the current approved duration );

including as affected by any variation from a previous operation of this section.

Application by holder of approval to vary percentage

(2) The person may apply to vary the current approved percentage by lodging with ASIC an application in the prescribed form that sets out:

(a) the percentage of voting power the person currently has in the body; and

(b) the percentage of voting power the person is seeking approval to have in the body; and

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

(3) ASIC must, by written notice given to the applicant, approve the applicant having a new specified percentage of voting power in the body for the current approved duration if:

(a) ASIC is satisfied the new specified percentage is the highest percentage (up to that sought by the applicant and greater than the current approved percentage) of voting power in the body for which the applicant passes the legitimate control test; and

(b) ASIC believes relevant information in the application, or later provided by the applicant, to be correct.

Otherwise, ASIC must, by written notice given to the applicant, refuse such a variation.

ASIC varying percentage or period on own initiative

(4) ASIC may, on its own initiative, by written notice given to the person, vary the person's approval as follows, if ASIC is satisfied of the matters in subsection (5):

(a) vary the current approved percentage to a new specified percentage of voting power in the body for the current approved duration; or

(b) vary the current approved duration to a new specified period or an indefinite period (the new specified duration ) for the current approved percentage of voting power in the body; or

(c) vary both the current approved percentage and the current approved duration to a new specified percentage of voting power in the body for a new specified period or an indefinite period (also the new specified duration ).

Note: ASIC could, for example, vary the approval after becoming aware that information contained in the person's application for approval has ceased to be correct: see section 852DQ.

(5) The matters are that the specified percentage that is to result from the variation is the highest percentage of voting power in the body for which the person passes the legitimate control test.

Note: The specified percentage that is to result from the variation could be the current approved percentage or a new specified percentage. Similarly, the approved duration that is to result from the variation could be the current approved duration or a new specified duration.

Downwards variations

(6) If ASIC varies under subsection (4) either or both of the following:

(a) the current approved percentage to a lower new specified percentage;

(b) the current approved duration to a shorter new specified duration;

then:

(d) the specified day must be at least 90 days after the day on which the notice is given under subsection (4).

Upwards variations

(7) If ASIC:

(a) varies under subsection (3) the current approved percentage; or

(b) varies under subsection (4) the current approved percentage or the current approved duration other than as described in subsection (6);

the variation takes effect on the day the notice of variation is given under subsection (3) or (4) (as applicable).

Notice to the body

(8) ASIC must give a copy of a notice of approval under subsection (3) or a notice under subsection (4) to the body.

852DN Revoking an approval

(1) ASIC may, on its own initiative, by written notice given to a person holding an approval under subsection 852DH(1) to have a specified percentage of voting power in a controlled Australian financial body, revoke the approval if ASIC is satisfied that:

(a) the person no longer passes the legitimate control test for the specified percentage of voting power in the body; or

(b) an unacceptable control situation exists in relation to the body and the person; or

(d) information contained in an application given by the person under this Subdivision was incorrect and the person did not give ASIC the correct information before the application was decided.

Note: The specified percentage is the percentage currently applying after any variations under this Subdivision.

(2) A revocation under subsection (1) takes effect on the day specified in the notice of revocation. The specified day must be at least 90 days after the day on which the notice is given.

(3) ASIC must, by written notice given to the person, revoke the approval if the person requests ASIC to do so. A revocation under this subsection takes effect on the day specified in the notice of revocation.

(4) ASIC must give a copy of a notice of revocation under subsection (1) or (3) to the body.

852DP Further information about applications

If an application is lodged with ASIC under this Subdivision, ASIC may:

(a) by written notice given to the applicant, request the applicant to give ASIC, within a period specified in the notice, further information about the application; and

(b) refuse to consider the application until the applicant gives ASIC the information.

852DQ Applicant must update ASIC with correct information

If information contained in an application lodged under this Subdivision:

(a) is incorrect; or

(b) ceases to be correct after the application is made;

the applicant must, as soon as practicable after the applicant becomes aware of that fact, give ASIC the correct information in writing.

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

852DR Time limit for ASIC's decision

Time limit

(1) ASIC must decide an application lodged under this Subdivision within the 90-day period starting on the day the application was lodged. This subsection has effect subject to subsections (2), (3) and (5).

Extending the time limit

(2) Before the end of the period mentioned in subsection (1):

(a) ASIC may, by written notice given to the applicant, extend the period by up to 30 days; and

(b) if ASIC does so, this section has effect as if references to the period mentioned in subsection (1) were references to the period as so extended.

Stopping the clock

(3) In working out the period mentioned in subsection (1), disregard:

(a) the period:

(i) starting on the day ASIC gives the applicant a notice under section 852DP requesting information about the application; and

(ii) ending on the day the applicant gives ASIC all of the information requested under, or ASIC otherwise disposes of, the notice; and

(b) any day on which ASIC believes relevant information currently before ASIC, that was provided by the applicant in relation to the application, is incorrect.

Deemed approval

(4) If ASIC has not decided the application by the end of the period mentioned in subsection (1):

(a) ASIC is taken to have granted whatever was applied for on the day after the end of that period; and

(b) as soon as practicable afterwards, ASIC must give a notice to that effect to:

(i) the applicant; and

(ii) the controlled Australian financial body concerned.

Application of this section

(5) This section does not apply in relation to an application lodged under section 852DG or 852DM if an unacceptable control situation exists in relation to the applicant and the controlled Australian financial body concerned at any time before ASIC decides the application.

Subdivision D - Other matters

852DS Acquisition of property

(1) A court must not make an order under section 852DE if:

(a) the order would result in the acquisition of property from a person otherwise than on just terms; and

(b) the order would be invalid because of paragraph 51(xxxi) of the Constitution.

(2) To avoid doubt, this section applies in relation to the making of an order under section 852DE instead of section 1350.

(3) In this section:

acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.

just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.

852DT Anti-avoidance

(1) If:

(a) one or more persons enter into, begin to carry out or carry out a scheme; and

(b) it would be concluded that the person, or any of the persons, who:

(i) entered into; or

(ii) began to carry out; or

(iii) carried out;

the scheme or any part of the scheme did so for the sole or dominant purpose of avoiding the application of any provision of Subdivision B in relation to any person or persons (whether or not mentioned in paragraph (a)); and

(c) as a result of the scheme or a part of the scheme, a person (the controller ) increases (including from a starting point of nil) the controller's voting power in a controlled Australian financial body;

ASIC may give the controller a written direction to cease having that voting power within a time specified in the direction.

(2) A person who is subject to a written direction under subsection (1) must comply with the direction.

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

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