Commonwealth Coat of Arms of Australia

Corporations Act 2001

No. 50, 2001

Compilation No. 120

Compilation date: 1 October 2022

Includes amendments up to: Act No. 35, 2022

Registered: 20 October 2022

This compilation is in 7 volumes

Volume 1: sections 1–260E

Volume 2: sections 283AA–600K

Volume 3: sections 601–742

Volume 4: sections 760A–994Q

Volume 5: sections 1010A–1369A

Volume 6: sections 1370–1697

 Schedules

Volume 7: Endnotes

Each volume has its own contents

This compilation includes commenced amendments made by Act No. 14, 2022

About this compilation

This compilation

This is a compilation of the Corporations Act 2001 that shows the text of the law as amended and in force on 1 October 2022 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Selfrepealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

Chapter 5A—Deregistration, and transfer of registration, of companies

Part 5A.1—Deregistration

601 Definitions

601AA Deregistration—voluntary

601AB Deregistration—ASIC initiated

601AC Deregistration—following amalgamation or winding up

601AD Effect of deregistration

601AE What the Commonwealth or ASIC does with the property

601AF The Commonwealth’s and ASIC’s power to fulfil outstanding obligations of deregistered company

601AG Claims against insurers of deregistered company

601AH Reinstatement

Part 5A.2—Transfer of registration

601AI Transferring registration

601AJ Applying to transfer registration

601AK ASIC makes transfer of registration declaration

601AL ASIC to deregister company

Chapter 5B—Bodies corporate registered as companies, and registrable bodies

Part 5B.1—Registering a body corporate as a company

Division 1—Registration

601BA Bodies corporate may be registered as certain types of companies

601BB Bodies registered as proprietary companies

601BC Applying for registration under this Part

601BD ASIC gives body ACN, registers as company and issues certificate

601BE Registered office

601BF Name

601BG Constitution

601BH Modifications of constitution

601BJ ASIC may direct company to apply for Court approval for modifications of constitution

601BK Establishing registers and minute books

601BL Registration of registered bodies

Division 2—Operation of this Act

601BM Effect of registration under this Part

601BN Liability of members on winding up

601BP Bearer shares

601BQ References in preregistration contracts and other documents to par value in existing contracts and documents

601BR First AGM

601BS Modification by regulations

Part 5B.2—Registrable bodies

Division 1A—Preliminary

601C Definitions

Division 1—Registrable Australian bodies

601CA When a registrable Australian body may carry on business in this jurisdiction and outside its place of origin

601CB Application for registration

601CC Cessation of business etc.

Division 2—Foreign companies

601CD When a foreign company may carry on business in this jurisdiction

601CDA Limited disclosure if place of origin is a prescribed country

601CE Application for registration

601CF Appointment of local agent

601CG Local agent: how appointed

601CH Local agent: how removed

601CJ Liability of local agent

601CK Balancesheets and other documents

601CL Cessation of business etc.

601CM Register of members of foreign company

601CN Register kept under section 601CM

601CP Notifying ASIC about register kept under section 601CM

601CQ Effect of right to acquire shares compulsorily

601CR Index of members and inspection of registers

601CS Certificate as to shareholding

Division 3—Bodies registered under this Part

601CTA Limited disclosure if place of origin is a prescribed country

601CT Registered office

601CU Certificate of registration

601CV Notice of certain changes

601CW Body’s name etc. must be displayed at office and place of business

601CX Service of documents on registered body

601CY Power to hold land

Division 4—Register of debenture holders for noncompanies

601CZA Certain documents are debentures

601CZB Register of debenture holders to be maintained by noncompanies

601CZC Location of register

601CZD Application of sections 173 to 177

Part 5B.3—Names of registrable Australian bodies and foreign companies

601DA Reserving a name

601DB Acceptable abbreviations

601DC When a name is available

601DD Registered Australian bodies and registered foreign companies can carry on business with some names only

601DE Using a name and ARBN

601DF Exception to requirement to have ARBN on receipts

601DG Regulations may exempt from requirement to set out information on documents

601DH Notice of name change must be given to ASIC

601DJ ASIC’s power to direct a registered name be changed

Chapter 5C—Managed investment schemes

Part 5C.1—Registration of managed investment schemes

601EA Applying for registration

601EB Registration of managed investment scheme

601EC All documents etc. lodged with ASIC to bear ARSN or ABN

601ED When a managed investment scheme must be registered

601EE Unregistered schemes may be wound up

Part 5C.2—The responsible entity

Division 1—Responsibilities and powers

601FA Responsible entity to be public company and hold Australian financial services licence

601FB Responsible entity to operate scheme

601FC Duties of responsible entity

601FD Duties of officers of responsible entity

601FE Duties of employees of responsible entity

601FF Surveillance checks by ASIC

601FG Acquisition of interest in scheme by responsible entity

601FH Liquidator etc. of responsible entity entitled to exercise indemnity rights

Division 2—Changing the responsible entity

601FJ Changes only take effect when ASIC alters record of registration

601FK Requirements of section 601FA must be met

601FL Retirement of responsible entity

601FM Removal of responsible entity by members

601FN ASIC or scheme member may apply to Court for appointment of temporary responsible entity

601FP Appointment of temporary responsible entity by Court

601FQ Temporary responsible entity to take steps for appointment of new responsible entity

Division 3—Consequences of change of responsible entity

601FR Former responsible entity to hand over books and provide reasonable assistance

601FS Rights, obligations and liabilities of former responsible entity

601FT Effect of change of responsible entity on documents etc. to which former responsible entity is party

Part 5C.3—The constitution

601GA Contents of the constitution

601GB Constitution must be legally enforceable

601GC Changing the constitution

Part 5C.4—The compliance plan

601HA Contents of the compliance plan

601HB Compliance plan may incorporate provisions from another scheme’s plan

601HC Directors must sign lodged copy of compliance plan

601HD ASIC may require further information about compliance plan

601HE Changing the compliance plan

601HF ASIC may require consolidation of compliance plan to be lodged

601HG Audit of compliance plan

601HH Removal and resignation of auditors

601HI Action on change of auditor of compliance plan

Part 5C.5—The compliance committee

601JA When is a compliance committee required?

601JB Membership of compliance committee

601JC Functions of compliance committee

601JD Duties of members

601JE Compliance committee members have qualified privilege in certain cases

601JF When can responsible entity indemnify compliance committee members?

601JG When can responsible entity pay insurance premiums for compliance committee members?

601JH Proceedings of compliance committee

601JJ Disclosure of interests

Part 5C.6—Members’ rights to withdraw from a scheme

601KA Members’ rights to withdraw

601KB Nonliquid schemes—offers

601KC Nonliquid schemes—only one withdrawal offer to be open at any time

601KD Nonliquid schemes—how payments are to be made

601KE Nonliquid schemes—responsible entity may cancel withdrawal offer

Part 5C.7—Related party transactions

601LA Chapter 2E applies with modifications

601LB Replacement section 207

601LC Replacement section 208

601LD Omission of sections 213, 214 and 224

601LE Modification of section 225

Part 5C.8—Effect of contraventions (civil liability and voidable contracts)

601MA Civil liability of responsible entity to members

601MB Voidable contracts where subscription offers and invitations contravene this Act

Part 5C.9—Winding up

601NA Winding up required by scheme’s constitution

601NB Winding up at direction of members

601NC Winding up if scheme’s purpose accomplished or cannot be accomplished

601ND Winding up ordered by Court

601NE The winding up of the scheme

601NF Other orders about winding up

601NG Unclaimed money to be paid to ASIC

Part 5C.10—Deregistration

Division 1—Registered schemes that are not Australian passport funds

601PAA Application of this Division

601PA Deregistration—voluntary

601PB Deregistration by ASIC

Division 2—Registered schemes that are Australian passport funds

601PBA Application of this Division

601PBB Deregistration—voluntary

601PBC Deregistration—initiated by ASIC

601PBD Notices relating to deregistration process

601PBE Consequences of deregistration on status as an Australian passport fund

601PC Reinstatement

Part 5C.11—Exemptions and modifications

601QA ASIC’s power to make exemption and modification orders

601QB Modification by regulations

Chapter 5D—Licensed trustee companies

Part 5D.1—Preliminary

601RAA Definitions

601RAB Meaning of trustee company and client of trustee company

601RAC Meaning of traditional trustee company services and estate management functions

601RAD Meaning of person with a proper interest

601RAE Interaction between trustee company provisions and State and Territory laws

Part 5D.2—Powers etc. of licensed trustee companies

Division 1—General provisions

601SAA Jurisdiction of courts not affected etc.

601SAB Regulations may prescribe other powers etc.

601SAC Powers etc. conferred by or under this Chapter are in addition to other powers etc.

Division 2—Accounts

601SBA Licensed trustee company not required to file accounts

601SBB Licensed trustee company may be required to provide account in relation to estate

601SBC Court may order audit

Division 3—Common funds

601SCA Common funds of licensed trustee companies

601SCAA Common funds that are also registered schemes

601SCB Obligations relating to common funds

601SCC Regulations relating to establishment or operation of common funds

601SCD Arm’s length transactions

Part 5D.3—Regulation of fees charged by licensed trustee companies

Division 1—Disclosure of fees

601TAA Schedule of fees to be published and available

601TAB Disclosure to clients of changed fees

Division 2—General provisions about charging fees

601TBA Charging of fees for the provision of traditional trustee company services

601TBB Part does not prevent charging of fees as agreed etc.

601TBC Part does not prevent charging fee for provision of account

601TBD Part does not prevent reimbursement

601TBE Estate management functions: payment of fees out of estate

Division 3—Fees otherwise than for being trustee or manager of a charitable trust

601TCA Fees otherwise than for being the trustee or manager of a charitable trust

601TCB Additional amount for preparation of returns etc.

Division 4—Fees for being trustee or manager of a charitable trust

Subdivision A—New client charitable trusts

601TDA Subdivision applies to new client charitable trusts

601TDB What the trustee company may charge

601TDC Option 1: capital commission and income commission

601TDD Option 2: annual management fee

601TDE Additional amount if trust money is in a common fund

601TDF Additional amount for preparation of returns etc.

Subdivision B—Existing client charitable trusts

601TDG Subdivision applies to existing client charitable trusts

601TDH Trustee company not to charge more than was being charged before section commenced

601TDI Additional amount if trust money is in a common fund

601TDJ Additional amount for preparation of returns etc.

Division 5—Miscellaneous

601TEA Power of the Court with respect to excessive fees

601TEB Directors’ fees

Part 5D.4—Duties of officers and employees of licensed trustee companies

601UAA Duties of officers of licensed trustee company

601UAB Duties of employees of licensed trustee company

Part 5D.5—Limit on control of licensed trustee companies

Division 1—15% voting power limit

601VAA Meaning of unacceptable control situation

601VAB Acquisitions of shares

601VAC Remedial orders

601VAD Injunctions

Division 2—Approval to exceed 15% voting power limit

601VBA Application for approval to exceed 15% voting power limit

601VBB Approval of application

601VBC Duration of approval

601VBD Conditions of approval

601VBE Varying percentage approved

601VBF Revoking an approval

601VBG Minister may require further information from applicants

601VBH Minister may seek views of licensed trustee company and its clients

601VBI Time limit for Minister’s decision

Division 3—Other matters

601VCA Acquisition of property

601VCB Interests of clients to be viewed as a group

601VCC Antiavoidance

Part 5D.6—ASICapproved transfers of estate assets and liabilities

Division 1—Preliminary

601WAA Definitions

Division 2—Transfer of estate assets and liabilities

601WBA Transfer determinations

601WBB When consent of receiving company is in force

601WBC Complementary State or Territory legislation

601WBD Minister’s power to decide that his or her consent is not required

601WBE Determinations may impose conditions

601WBF Notice of determination

601WBG Certificate of transfer

601WBH Notice of certificate

601WBI Time and effect of transfer

601WBJ Substitution of trustee company

601WBK Liabilities for breach of trust and other matters not affected by this Part

Division 3—Other matters related to the transfer of estate assets and liabilities

601WCA Certificates evidencing operation of Act etc.

601WCB Certificates in relation to land and interests in land

601WCC Certificates in relation to other assets

601WCD Documents purporting to be certificates

601WCE Construction of references to transferring company

601WCF Income or other distribution received by transferring company

601WCG Access to books

601WCH Minister or ASIC may seek views of trustee company and its clients

Division 4—Miscellaneous

601WDA Transferring company required to contact certain persons

Part 5D.7—Contraventions and holding out

601XAA Civil liability of licensed trustee companies

601XAB Prohibition on holding out

Part 5D.8—Exemptions and modifications

601YAA Exemptions and modifications by ASIC

601YAB Exemptions and modifications by regulations

Chapter 6—Takeovers

602 Purposes of Chapter

602A Substantial interest concept

603 Chapter extends to some listed bodies that are not companies

604 Chapter extends to listed registered schemes

605 Classes of securities

605A Chapter does not apply to MCIs

Part 6.1—Prohibited acquisitions of relevant interests in voting shares

606 Prohibition on certain acquisitions of relevant interests in voting shares

607 Effect on transactions

608 Relevant interests in securities

609 Situations not giving rise to relevant interests

610 Voting power in a body or managed investment scheme

Part 6.2—Exceptions to the prohibition

611 Exceptions to the prohibition

612 Effect of noncompliance with takeover rules for exceptions 1 to 4

613 Bidder not to exercise voting rights if failure to send bids for offmarket acquisition—exception 2 or 3

615 Treatment of foreign holders under equal access issue—exception 10

Part 6.3—The different types of takeover bid

616 Offmarket bids and market bids

Part 6.4—Formulating the takeover offer

Division 1—General

617 Securities covered by the bid

618 Offers must be for all or a proportion of securities in the bid class

619 General terms of the offer

620 Offmarket bid (offer formalities)

Division 2—Consideration for the offer

621 Consideration offered

622 Escalation agreements

623 Collateral benefits not allowed

Division 3—The offer period

624 Offer period

Division 4—Conditional offers

625 Conditional offers—general

626 Maximum acceptance conditions in offmarket bids

627 Discriminatory conditions not allowed for offmarket bids

628 Conditions requiring payments to officers of target not allowed in offmarket bids

629 Conditions turning on bidder’s or associate’s opinion not allowed in offmarket bids

630 Defeating conditions

Part 6.5—The takeover procedure

Division 1—The overall procedure

631 Proposing or announcing a bid

632 Overview of steps in an offmarket bid

633 Detailed steps in an offmarket bid

634 Overview of steps in a market bid

635 Detailed steps in a market bid

Division 2—The bidder’s statement

636 Bidder’s statement content

637 Bidder’s statement formalities

Division 3—The target’s response

638 Target’s statement content

639 Target’s statement formalities

640 Expert’s report to accompany target’s statement if bidder connected with target

641 Target must inform bidder about securities holdings

642 Expenses of directors of target companies

Division 4—Updating and correcting the bidder’s statement and target’s statement

643 Supplementary bidder’s statement

644 Supplementary target’s statement

645 Form of supplementary statement

646 Consequences of lodging a supplementary statement

647 To whom supplementary statement must be sent

Division 5—General rules on takeover procedure

Subdivision A—Experts’ reports

648A Experts’ reports

Subdivision B—Sending documents to holders of securities

648B Address at which bidder may send documents to holders of securities

648C Manner of sending documents to holders of securities

Subdivision C—Effect of proportional takeover approval provisions

648D Constitution may contain proportional takeover approval provisions

648E Resolution to be put if proportional bid made

648F Effect of rejection of approval resolution

648G Including proportional takeover provisions in constitution

648H Effect of Subdivision

Part 6.6—Variation of offers

Division 1—Market bids

649A General

649B Market bids—raising bid price

649C Market bids—extending the offer period

Division 2—Offmarket bids (express variation by bidder)

650A General

650B Offmarket bids—consideration offered

650C Offmarket bids—extension of offer period

650D Offmarket bids—method of making variation

650E Right to withdraw acceptance

650F Freeing offmarket bids from defeating conditions

650G Contracts and acceptances void if defeating condition not fulfilled

Division 3—Offmarket bids (automatic variations)

651A Offmarket bid—effect on bid consideration of purchases made outside bid

651B How to make an election for new forms of consideration

651C Returning securities as part of election

Part 6.7—Withdrawal and suspension of offers

652A Withdrawal of unaccepted offers under takeover bid

652B Withdrawal of takeover offers with ASIC consent

652C Withdrawal of market bids

Part 6.8—Acceptances

653A Acceptance of offers made under offmarket bid

653B Acceptances by transferees and nominees of offers made under offmarket bid

Part 6.9—Other activities during the bid period

654A Bidder not to dispose of securities during the bid period

654B Disclosures about substantial shareholdings in listed companies

654C Disclosures about substantial shareholdings in unlisted companies

Part 6.10—Review and intervention

Division 1—ASIC’s power to exempt and modify

655A ASIC’s power to exempt and modify

655B Notice of decision and review rights

Division 2—The Takeovers Panel

Subdivision A—Review of ASIC’s exercise of its exemption or modification powers

656A Review of exercise of exemption or modification powers

656B Operation and implementation of a decision that is subject to review

Subdivision B—Unacceptable circumstances

657A Declaration of unacceptable circumstances

657B When Panel may make declaration

657C Applying for declarations and orders

657D Orders that Panel may make following declaration

657E Interim orders

657EA Internal Panel reviews

657EB References by Courts

657F Offence to contravene Panel order

657G Orders by the Court where contravention or proposed contravention of Panel order

657H ASIC may publish report about application to Panel or Court

Subdivision C—General provisions

658A Power of Panel where a proceeding is frivolous or vexatious

658B Evidentiary value of findings of fact by Panel

658C Panel’s power to make rules

658D Inconsistency between Panel rules and ASIC exemption or declaration

Division 3—Court powers

659A Panel may refer questions of law to the Court

659AA Object of sections 659B and 659C

659B Court proceedings before end of bid period

659C Court proceedings after end of bid period

Chapter 6A—Compulsory acquisitions and buyouts

660A Chapter extends to some listed bodies that are not companies

660B Chapter extends to listed registered schemes

660C Chapter does not apply to MCIs

Part 6A.1—Compulsory acquisitions and buyouts following takeover bid

Division 1—Compulsory acquisition of bid class securities

661A Compulsory acquisition power following takeover bid

661B Compulsory acquisition notice

661C Terms on which securities to be acquired

661D Holder may obtain names and addresses of other holders

661E Holder may apply to Court to stop acquisition

661F Signpost—completing the acquisition of the securities

Division 2—Compulsory buyout of bid class securities

662A Bidder must offer to buy out remaining holders of bid class securities

662B Bidder to tell remaining holders of their right to be bought out

662C Right of remaining holder of securities in the bid class to be bought out

Division 3—Compulsory buyout of convertible securities

663A Bidder must offer to buy out holders of convertible securities

663B Bidder to tell holders of convertible securities of their right to be bought out

663C Right of holders of convertible securities to be bought out

Part 6A.2—General compulsory acquisitions and buyouts

Division 1—Compulsory acquisition of securities by 90% holder

664A Threshold for general compulsory acquisition power

664AA Time limit on exercising compulsory acquisition power

664B The terms for compulsory acquisition

664C Compulsory acquisition notice

664D Benefits outside compulsory acquisition procedure

664E Holder’s right to object to the acquisition

664F The Court’s power to approve acquisition

664G Signpost—completing the acquisition of the securities

Division 2—Compulsory buyout of convertible securities by 100% holder

665A 100% holder must offer to buy out holders of convertible securities

665B 100% holder to tell holders of convertible securities of their right to be bought out

665C Right of holders of convertible securities to be bought out

Part 6A.3—Completion of compulsory acquisition of securities

666A Completing the acquisition of securities

666B Statutory procedure for completion

Part 6A.4—Experts’ reports and valuations

667A Expert’s report

667AA Expert to be nominated

667B Expert must not be an associate and must disclose prior dealings and relationships

667C Valuation of securities

Part 6A.5—Records of unclaimed consideration

668A Company’s power to deal with unclaimed consideration for compulsory acquisition

668B Unclaimed consideration to be transferred to ASIC

Part 6A.6—ASIC powers

669 ASIC’s power to exempt and modify

Chapter 6B—Rights and liabilities in relation to Chapter 6 and 6A matters

670A Misstatements in, or omissions from, takeover and compulsory acquisition and buyout documents

670B Right to recover for loss or damage resulting from contravention

670C People liable on takeover or compulsory acquisition statement to inform maker about deficiencies in the statement

670D Defences against prosecutions under subsection 670A(3) and actions under section 670B

670E Liability for proposing a bid or not carrying through with bid

670F Defences

Chapter 6C—Information about ownership of listed companies, listed registered schemes and listed notified foreign passport funds

671A Chapter extends to some listed bodies that are not companies

Part 6C.1—Substantial holding information

671B Information about substantial holdings must be given to company, responsible entity, fund operator and relevant market operator

671C Civil liability

Part 6C.2—Tracing beneficial ownership of shares

672A Disclosure notices

672B Disclosure by member of relevant interests and instructions

672C ASIC may pass information on to person who made request

672D Fee for complying with a direction given by a company, scheme or fund under this Part

672DA Register of information about relevant interests in listed company, listed registered scheme or listed notified foreign passport fund

672E No notice of rights

672F Civil liability

Part 6C.3—ASIC powers

673 ASIC’s power to exempt and modify

Chapter 6CA—Continuous disclosure

674 Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rules—reasonable person’s expectations

674A Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rules—knowledge, recklessness or negligence

675 Continuous disclosure—other disclosing entities—reasonable person’s expectations

675A Continuous disclosure—other disclosing entities—knowledge, recklessness or negligence

676 When information is generally available

677 Material effect on price or value

678 Application of Criminal Code to offences based on subsection 674(2), 674(5) or 675(2)

Chapter 6D—Fundraising

Part 6D.1—Application of the fundraising provisions

700 Coverage of the fundraising rules

702 Treatment of offers of options over securities

703 Chapter may not be contracted out of

703A Operating a clearing and settlement facility is not offering securities etc.

Part 6D.2—Disclosure to investors about securities (other than for CSF offers)

Division 1—Overview

703B Part generally does not apply in relation to CSF offers

704 When disclosure to investors is needed

705 Types of disclosure document

Division 2—Offers that need disclosure to investors

706 Issue offers that need disclosure

707 Sale offers that need disclosure

708 Offers that do not need disclosure

708AA Rights issues that do not need disclosure

708A Sale offers that do not need disclosure

Division 3—Types of disclosure documents

709 Prospectuses, shortform prospectuses, profile statements and offer information statements

Division 4—Disclosure requirements

710 Prospectus content—general disclosure test

711 Prospectus content—specific disclosures

712 Prospectus content—short form prospectuses

713 Special prospectus content rules for continuously quoted securities

713A Offer of simple corporate bonds

713B Simple corporate bonds—2part simple corporate bonds prospectus

713C Simple corporate bonds—base prospectus

713D Simple corporate bonds—offerspecific prospectus

713E Simple corporate bonds—prospectus may refer to other material lodged with ASIC

714 Contents of profile statement

715 Contents of offer information statement

715A Presentation etc. of disclosure documents

716 Disclosure document date and consents

Division 5—Procedure for offering securities

717 Overview of procedure for offering securities

718 Lodging of disclosure document

719 Lodging supplementary or replacement document—general

719A Lodging supplementary or replacement document—2part simple corporate bonds prospectus

720 Consents needed for lodgment

721 Offer must be made in, or accompanied by, the disclosure document

722 Application money to be held on trust

723 Issuing or transferring the securities under a disclosure document

724 Choices open to person making the offer if disclosure document condition not met or disclosure document defective

725 Expiration of disclosure document

Part 6D.3—Prohibitions, liabilities and remedies (other than for CSF offers)

Division 1A—Introduction

725A Part generally does not apply in relation to CSF offers

Division 1—Prohibitions and liabilities

726 Offering securities in a body that does not exist

727 Offering securities without a current disclosure document

728 Misstatement in, or omission from, disclosure document

729 Right to recover for loss or damage resulting from contravention

730 People liable on disclosure document to inform person making the offer about deficiencies in the disclosure document

731 Due diligence defence for prospectuses

732 Lack of knowledge defence for offer information statements and profile statements

733 General defences for all disclosure documents

734 Restrictions on advertising and publicity

735 Obligation to keep consents and other documents

Division 2—Remedies

737 Remedies for investors

Part 6D.3A—Crowdsourced funding

Division 1—Introduction

738A Object

738B Meaning of CSF offer

738C Meaning of CSF intermediary

738D Meaning of retail client in relation to a CSF offer

738E Offer of the securities may also be made in reliance on section 708

738F Application of provisions of Chapter 7 relating to how obligations etc. apply to different kinds of persons

Division 2—Offers that are eligible to be made under this Part

738G Offers that are eligible to be made under this Part

738H Meaning of eligible CSF company

Division 3—Making offers under this Part

738J CSF offer document to be prepared

738K Other requirements for CSF offer document

738L CSF offer document to be published on platform of a single CSF intermediary

738M Consents needed for publication of CSF offer document

738N When a CSF offer is made, open, closed, suspended and complete

738P CSF offer document to be removed from offer platform if offer closes in certain circumstances

738Q Gatekeeper obligations of CSF intermediaries

738R Company and related parties not to have more than one CSF offer open at any one time

738S Company may notify responsible intermediary that it wants CSF offer withdrawn

738T Withdrawal of applications made pursuant to CSF offer

Division 4—Defective etc. CSF offer documents

738U When a CSF offer document is defective

738V Obligation to notify company making offer, and responsible intermediary, if CSF offer document is defective

738W Company may provide replacement or supplementary CSF document in certain circumstances

738X Responsible intermediary’s obligations on becoming aware that CSF offer document is defective

738Y Other liabilities relating to defective CSF offer documents

738Z Exceptions to liability under section 738Y

Division 5—Other obligations of CSF intermediaries

738ZA General obligations of CSF intermediaries relating to their platforms etc.

738ZB Responsible intermediary’s obligations relating to application money

Division 6—Additional protections for retail clients

738ZC Caps on investment by retail clients pursuant to CSF offers

738ZD Coolingoff rights for retail clients

738ZE Company making CSF offer or CSF intermediary etc. must not financially assist retail client to acquire securities

Division 7—Other matters

738ZF Offering securities of a company that does not exist

738ZG Restrictions on advertising and publicity

738ZH Liabilities under other laws not affected

738ZI Companies eligible for limited governance requirements

738ZJ Regulations relating to how CSF intermediaries are to deal with applications

738ZK Related party transactions—proprietary companies that have one or more CSF shareholders

Part 6D.4—ASIC’s powers

739 ASIC stop orders

740 Antiavoidance determinations

741 ASIC’s power to exempt and modify

Part 6D.5—Miscellaneous

742 Exemptions and modifications by regulations

Chapter 5ADeregistration, and transfer of registration, of companies

Part 5A.1Deregistration

Note 1: This Part applies to the deregistration of CCIVs with modifications: see Subdivision A of Division 9 of Part 8B.6.

Note 2: For the deregistration of subfunds of CCIVs, see Subdivision A of Division 9 of Part 8B.6.

 

601  Definitions

  In this Part:

property of a company includes PPSA retention of title property, if the security interest in the property is vested in the company because of the operation of any of the following provisions:

 (a) section 267 or 267A of the Personal Property Securities Act 2009 (property subject to unperfected security interests);

 (b) section 588FL of this Act (collateral not registered within time).

Note: See sections 9 (definition of property) and 51F (PPSA retention of title property).

601AA  Deregistration—voluntary

Who may apply for deregistration

 (1) An application to deregister a company may be lodged with ASIC by:

 (a) the company; or

 (b) a director or member of the company; or

 (c) a liquidator of the company.

If the company lodges the application, it must nominate a person to be given notice of the deregistration.

Circumstances in which application can be made

 (2) A person may apply only if:

 (a) all the members of the company agree to the deregistration; and

 (b) the company is not carrying on business; and

 (c) the company’s assets are worth less than $1,000; and

 (d) the company has paid all fees and penalties payable under this Act; and

 (e) the company has no outstanding liabilities; and

 (f) the company is not a party to any legal proceedings.

ASIC may ask for information about officers

 (3) The applicant must give ASIC any information that ASIC requests about the current and former officers of the company.

Deregistration procedure

 (4) If:

 (a) ASIC decides to deregister the company under this section; and

 (b) ASIC is not aware of any failure to comply with subsections (1) to (3);

ASIC must:

 (c) give notice of the proposed deregistration on ASIC database; and

 (d) publish notice of the proposed deregistration in the prescribed manner.

 (4A) When 2 months have passed since the publication of the notice under paragraph (4)(d), ASIC may deregister the company.

 (5) ASIC must give notice of the deregistration to:

 (a) the applicant; or

 (b) the person nominated in the application to be given the notice.

 (6) ASIC may refuse to deregister a company under this section if ASIC decides to order under section 489EA that the company be wound up.

 (7) Subsection (6) does not limit ASIC’s power to refuse to deregister the company.

601AB  Deregistration—ASIC initiated

Circumstances in which ASIC may deregister

 (1) ASIC may decide to deregister a company if:

 (a) the response to a return of particulars given to the company is at least 6 months late; and

 (b) the company has not lodged any other documents under this Act in the last 18 months; and

 (c) ASIC has no reason to believe that the company is carrying on business.

 (1A) ASIC may also decide to deregister a company if the company’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment.

 (1B) ASIC may also decide to deregister a company if:

 (a) the company is liable to pay levy imposed by the ASIC Supervisory Cost Recovery Levy Act 2017; and

 (b) the company has not paid in full at least 12 months after the due date for payment:

 (i) the amount of the levy; and

 (ii) the amount of any late payment penalty payable in relation to the levy; and

 (iii) the amount of any shortfall penalty payable in relation to the levy.

 (2) ASIC may also decide to deregister a company if the company is being wound up and ASIC has reason to believe that:

 (a) the liquidator is no longer acting; or

 (b) the company’s affairs have been fully wound up and a return that the liquidator should have lodged is at least 6 months late; or

 (c) the company’s affairs have been fully wound up under Part 5.4 and the company has no property or not enough property to cover the costs of obtaining a Court order for the company’s deregistration.

Deregistration procedure

 (3) If ASIC decides to deregister a company under this section, it must:

 (a) give notice of the proposed deregistration:

 (i) to the company; and

 (ii) to the company’s liquidator (if any); and

 (iii) to the company’s directors; and

 (iv) on ASIC database; and

 (b) publish notice of the proposed deregistration in the prescribed manner.

 (3A) When 2 months have passed since the publication of the notice under paragraph (3)(b), ASIC may deregister the company.

 (4) ASIC does not have to give a person notice under paragraph (3)(a) if ASIC does not have the necessary information about the person’s identity or address.

 (5) ASIC must give notice of the deregistration to everyone who was notified of the proposed deregistration under subparagraph (3)(a)(ii) or (iii).

 (6) ASIC may refuse to deregister a company under this section if ASIC decides to order under section 489EA that the company be wound up.

 (7) Subsection (6) does not limit ASIC’s power to refuse to deregister the company.

601AC  Deregistration—following amalgamation or winding up

 (1) ASIC must deregister a company if the Court orders the deregistration of the company under:

 (a) paragraph 413(1)(d) (reconstruction and amalgamation of Part 5.1 bodies); or

 (b) paragraph 481(5)(b) (release of liquidator); or

 (c) subsection 509(2) (deregistration after end of administration return is lodged).

601AD  Effect of deregistration

Company ceases to exist

 (1) A company ceases to exist on deregistration.

Note: Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered.

Trust property vests in the Commonwealth

 (1A) On deregistration, all property that the company held on trust immediately before deregistration vests in the Commonwealth. If property is vested in a liquidator on trust immediately before deregistration, that property vests in the Commonwealth. This subsection extends to property situated outside this jurisdiction.

Other company property vests in ASIC

 (2) On deregistration, all the company’s property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction.

Rights and powers in respect of property

 (3) Under subsection (1A) or (2), the Commonwealth or ASIC takes only the same property rights that the company itself held. If the company held particular property subject to a security or other interest or claim, the Commonwealth or ASIC takes the property subject to that interest or claim.

Note: See also subsection 601AE(3)—which deals with liabilities that a law imposes on the property (particularly liabilities such as rates, taxes and other charges).

 (3A) The Commonwealth has, subject to its obligations as trustee of the trust, all the powers of an owner over property vested in it under subsection (1A).

Note: Section 601AF confers additional powers on the Commonwealth to fulfil outstanding obligations of the deregistered company.

 (4) ASIC has all the powers of an owner over property vested in it under subsection (2).

Note: Section 601AF confers additional powers on ASIC to fulfil outstanding obligations of the deregistered company.

Company books to be kept by former directors

 (5) The directors of the company immediately before deregistration must keep the company’s books for 3 years after the deregistration.

 (6) Subsection (5) does not apply to books that a liquidator has to keep under subsection 542(2), or subsection 7035(1) of Schedule 2 (retention and return or destruction of books).

Note: A defendant bears an evidential burden in relation to the matter in subsection (6), see subsection 13.3(3) of the Criminal Code.

Strict liability offences

 (7) An offence based on subsection (5) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601AE  What the Commonwealth or ASIC does with the property

Trust property vested in the Commonwealth

 (1) If property vests in the Commonwealth under subsection 601AD(1A), the Commonwealth may:

 (a) continue to act as trustee; or

 (b) apply to a court for the appointment of a new trustee.

Note: Under paragraph (1)(a), the Commonwealth may be able to transfer the property to a new trustee chosen in accordance with the trust instrument.

 (1A) If the Commonwealth continues to act as trustee in respect of the property, subject to its obligations as trustee, the Commonwealth:

 (a) in the case of money—must credit the amount of the money to a special account (within the meaning of the Public Governance, Performance and Accountability Act 2013); or

 (b) otherwise:

 (i) may sell or dispose of the property as it thinks fit; and

 (ii) if the Commonwealth does so—must credit the amount of the proceeds to a special account (within the meaning of the Public Governance, Performance and Accountability Act 2013).

Note: ASIC may, for and on behalf of the Commonwealth, perform all the duties and exercise all the powers of the Commonwealth as trustee in relation to property held on trust by the Commonwealth (see subsection 8(6) of the ASIC Act).

Property vested in ASIC

 (2) If property vests in ASIC under subsection 601AD(2), ASIC may:

 (a) dispose of or deal with the property as it sees fit; and

 (b) apply any money it receives to:

 (i) defray expenses incurred by ASIC in exercising its powers in relation to the company under this Chapter; and

 (ii) make payments authorised by subsection (3).

ASIC must deal with the rest (if any) under Part 9.7.

Obligations attaching to property vested in the Commonwealth

 (2A) For the purposes of subsection (3), if any liability is imposed on property under a law of the Commonwealth immediately before the property vests in the Commonwealth under subsection 601AD(1A), then:

 (a) immediately after that time, the liability applies to the Commonwealth as if the Commonwealth were a body corporate; and

 (b) the Commonwealth is liable to make notional payments to discharge that liability.

Obligations attaching to property

 (3) Any property that vests in the Commonwealth or ASIC under subsection 601AD(1A) or (2) remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in the Commonwealth or ASIC. These liabilities include a liability that:

 (a) is a security interest in or claim on the property; and

 (b) arises under a law that imposes rates, taxes or other charges.

Extent of Commonwealth’s and ASIC’s obligation

 (4) The Commonwealth’s or ASIC’s obligation under subsection (2A) or (3) is limited to satisfying the liabilities out of the company’s property to the extent that the property is properly available to satisfy those liabilities.

Accounts

 (5) The Commonwealth or ASIC (as the case requires) must keep:

 (a) a record of property that it knows is vested in it under this Chapter; and

 (b) a record of its dealings with that property; and

 (c) accounts of all money received from those dealings; and

 (d) all accounts, vouchers, receipts and papers relating to the property and that money.

601AF  The Commonwealth’s and ASIC’s power to fulfil outstanding obligations of deregistered company

  The Commonwealth or ASIC may do an act on behalf of the company or its liquidator if the Commonwealth or ASIC is satisfied that the company or liquidator would be bound to do the act if the company still existed.

Note: This power is a general one and is not limited to acts in relation to property vested in the Commonwealth under subsection 601AD(1A), or ASIC under subsection 601AD(2). The Commonwealth or ASIC has all the powers that automatically flow from the vesting of property under that subsection (see subsections 601AD(3A) and (4)) and may exercise those powers whether or not the company was bound to do so.

601AG  Claims against insurers of deregistered company

  A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:

 (a) the company had a liability to the person; and

 (b) the insurance contract covered that liability immediately before deregistration.

601AH  Reinstatement

Reinstatement by ASIC

 (1) ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.

 (1A) ASIC may reinstate the registration of a company deregistered under subsection 601AB(1B) if:

 (a) ASIC receives an application in relation to the reinstatement of the company’s registration; and

 (b) the levy imposed on the company by the ASIC Supervisory Cost Recovery Levy Act 2017 is paid in full; and

 (c) the amount of any late payment penalty payable in relation to the levy is paid in full; and

 (d) the amount of any shortfall penalty payable in relation to the levy is paid in full.

Reinstatement by Court

 (2) The Court may make an order that ASIC reinstate the registration of a company if:

 (a) an application for reinstatement is made to the Court by:

 (i) a person aggrieved by the deregistration; or

 (ii) a former liquidator of the company; and

 (b) the Court is satisfied that it is just that the company’s registration be reinstated.

 (3) If:

 (a) ASIC reinstates the registration of a company under subsection (1) or (1A); or

 (b) the Court makes an order under subsection (2);

the Court may:

 (c) validate anything done during the period:

 (i) beginning when the company was deregistered; and

 (ii) ending when the company’s registration was reinstated; and

 (d) make any other order it considers appropriate.

Note: For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

ASIC to give notice of reinstatement

 (4) ASIC must give notice of a reinstatement in the Gazette.

 (4A) If an application was made to ASIC for the reinstatement of a company’s registration, ASIC must give notice of the reinstatement to the applicant.

Effect of reinstatement

 (5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.

 (6) Subsection 601AH(5) does not affect the cancellation of an Australian financial services licence held by the company if the cancellation occurs because the company was deregistered.

Part 5A.2Transfer of registration

Note: This Part does not apply to a CCIV or a subfund of a CCIV: see Subdivision B of Division 9 of Part 8B.6.

 

601AI  Transferring registration

  A company may transfer its registration to registration under a law of the Commonwealth, or of a State or Territory, by:

 (a) passing a special resolution resolving to transfer its registration to registration under that law; and

 (b) complying with sections 601AJ and 601AK.

The company may transfer its registration to registration under the law of a State or Territory only if the State or Territory is the one in which it is taken to be registered.

Note 1: Section 119A tells you which State or Territory the company is taken to be registered in.

Note 2: In order to be registered under the State or Territory law, the company may need to amend its constitution, or adopt a new one, and the provisions of this Act (including the class rights provisions in Part 2F.2) will apply to the amendment or adoption.

601AJ  Applying to transfer registration

 (1) To transfer its registration, a company must lodge an application with ASIC together with:

 (a) a copy of the special resolution that resolves to change the company’s registration to a registration under the law of the Commonwealth or of the State or Territory; and

 (b) a statement signed by the directors of the company that in their opinion the company’s creditors are not likely to be materially prejudiced by the change and sets out their reasons for that opinion.

 (2) The application must be in the prescribed form.

601AK  ASIC makes transfer of registration declaration

  ASIC may make a transfer of registration declaration in relation to the company under this section if ASIC is satisfied that:

 (a) the application complies with section 601AJ; and

 (b) the company’s creditors are not likely to be materially prejudiced by the transfer of the company’s registration; and

 (c) the law of the Commonwealth or of the State or Territory concerned adequately provides for:

 (i) the continuation of the company’s legal personality after the transfer; and

 (ii) the preservation of any rights or claims against the company (other than the right of a member as a member) that accrued while the company was registered under this Act.

601AL  ASIC to deregister company

 (1) ASIC must deregister the company if:

 (a) ASIC makes a transfer of registration declaration in relation to the company; and

 (b) the company is registered under the law of the Commonwealth or of the State or Territory.

Note: Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered.

 (2) Sections 601AD, 601AE, 601AF and 601AG do not apply to the deregistration of a company under this section.

Chapter 5BBodies corporate registered as companies, and registrable bodies

Part 5B.1Registering a body corporate as a company

Division 1Registration

601BA  Bodies corporate may be registered as certain types of companies

 (1) A body corporate that is not a company or corporation sole may be registered under this Act as a company of one of the following types:

 (a) a proprietary company limited by shares;

 (b) an unlimited proprietary company with share capital;

 (c) a public company limited by shares;

 (d) a company limited by guarantee;

 (e) an unlimited public company with share capital;

 (f) a no liability company.

 (2) A body corporate may be registered as a no liability company only if:

 (a) the body has a share capital; and

 (b) the body’s constitution states that its sole objects are mining purposes; and

 (c) under the constitution the body has no contractual right to recover calls made on its shares from a member who fails to pay them.

Note: Section 9 defines mining purposes and minerals.

601BB  Bodies registered as proprietary companies

 (1) The body must have no more than 50 nonemployee shareholders if it is to be registered as a proprietary company under this Part.

 (2) In applying subsection (1):

 (a) count joint holders of a particular parcel of shares as 1 person; and

 (b) an employee shareholder is:

 (i) a shareholder who is an employee of the body or of a subsidiary of the body; or

 (ii) a shareholder who was an employee of the body, or of a subsidiary of the body, when they became a shareholder.

601BC  Applying for registration under this Part

 (1) To register the body as a company under this Part, a person must lodge an application with ASIC.

Note 1: For the types of companies that can be registered under this Part, see section 601BA.

Note 2: A name may be reserved for a company to be registered under this Part before the application is lodged (see Part 2B.6).

 (2) The application must state the following:

 (a) the type of company that the body is proposed to be registered as under this Act;

 (b) the name of the body;

 (c) if the body is a registered body—its ARBN;

 (d) the proposed name under which the body is to be registered (unless the ACN is to be used);

 (e) the name and address of each member of the body;

 (f) the present given and family name, all former given and family names and the date and place of birth of each person who consents in writing to become a director;

 (g) the present given and family name, all former given and family names and the date and place of birth of each person who consents in writing to become a company secretary;

 (h) the address of each person who consents in writing to become a director or company secretary;

 (i) the address of the body’s proposed registered office;

 (j) for a body proposed to be registered as a public company—the proposed opening hours of its registered office (if they are not the standard opening hours);

 (k) the address of the body’s proposed principal place of business (if it is not the address of the proposed registered office);

 (l) for a body proposed to be registered as a company limited by shares or an unlimited company—the following:

 (i) the number and class of shares each member already holds or has agreed, in writing, to take up;

 (ii) the amount each member has already paid or agreed, in writing, to pay for each share;

 (iia) whether the shares each member already holds or has agreed, in writing, to take up will be fully paid on registration;

 (iii) the amount unpaid on each share;

 (iv) whether or not the shares each member agrees in writing to take up will be beneficially owned by the member on registration;

 (v) on registration, the classes into which shares will be divided;

 (vi) for each class of share on issue on registration—the number of shares in the class on registration;

 (vii) for each class of share on issue on registration—the total amount paid up for the class on registration;

 (viii) for each class of share on issue on registration—the total amount unpaid for the class on registration;

 (la) whether or not, on registration, the company will have an ultimate holding company;

 (lb) if, on registration, the company will have an ultimate holding company—the following:

 (i) the name of the ultimate holding company;

 (ii) if the ultimate holding company is registered in Australia—its ABN, ACN or ARBN;

 (iii) if the ultimate holding company is not registered in Australia—the place at which it was incorporated or formed;

 (lc) for a body proposed to be registered as a company limited by shares or an unlimited company—the top 20 members of each class (worked out according to the number and class of shares each member holds and has agreed, in writing, to take up);

Note: See also section 107.

 (m) for a body proposed to be registered as a public company, if shares have been issued for noncash consideration—the prescribed particulars about the issue of the shares, unless the shares were issued under a written contract and a copy of the contract is lodged with the application;

 (n) for a body proposed to be registered as a company limited by guarantee—the amount of the guarantee that each member has agreed to in writing;

 (o) the State or Territory in this jurisdiction in which the company is to be taken to be registered.

Note 1: Paragraph (h)—the address that must be stated is usually the residential address, although an alternative address can sometimes be stated instead (see section 205D).

Note 2: Paragraph (i)—if the body when it is registered under this Part is not to be the occupier of premises at the address of its registered office, the application must state that the occupier has consented to the address being specified in the application and has not withdrawn that consent (see section 100).

 (3) If the body is proposed to be registered as a public company, the application must be accompanied by a copy of each document (including an agreement or consent) or resolution that is necessary to ascertain the rights attached to issued or unissued shares of the body.

 (4) The application must be in the prescribed form.

 (5) An applicant must have the consents and agreements referred to in subsection (2) when the application is lodged. After the body is registered as a company, the applicant must give the consents and agreements to the company. The company must keep the consents and agreements.

 (5A) An offence based on subsection (5) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (6) The following documents must be lodged with the application:

 (a) a certified copy of a current certificate of the body’s incorporation in its place of origin, or of a document that has a similar effect;

 (b) a certified printed copy of the body’s constitution (if any);

 (d) any other documents that are prescribed;

 (e) any other documents that ASIC requires by written notice given to the body.

A document need not be lodged if ASIC already has the document and agrees not to require its lodgment.

 (7) The application must be accompanied by evidence that:

 (a) the body is not a Chapter 5 body corporate; and

 (b) no application to wind up the body has been made to a court (in Australia or elsewhere) that has not been dealt with; and

 (c) no application to approve a compromise or arrangement between the body and another person has been made to a court (in Australia or elsewhere) that has not been dealt with.

 (8) The application must be accompanied by evidence that under the law of the body’s place of origin:

 (a) the body’s type is the same or substantially the same as the proposed type specified in the application; and

 (b) if the members of the body have limited liability—the body’s constitution defines how and to what extent that liability is limited; and

 (d) the transfer of the body’s incorporation is authorised; and

 (e) the body has complied with the requirements (if any) of that law for the transfer of its incorporation; and

 (f) if those requirements do not include consent to the transfer by the members of the body—the members:

 (i) have consented to the transfer by a resolution that has been passed at a meeting by at least 75% of the votes cast by members entitled to vote on the resolution; and

 (ii) were given at least 21 days notice of the meeting and the proposed resolution.

 (9) The evidence lodged in accordance with subsections (7) and (8) must be satisfactory proof to ASIC of the matters referred to in those subsections.

Note: Section 1304 requires documents that are not in English to be translated into English.

601BD  ASIC gives body ACN, registers as company and issues certificate

Registration

 (1) If an application is lodged under section 601BC, ASIC may:

 (a) give the body an ACN; and

 (b) register the body as a company of the proposed type specified in the application; and

 (c) issue a certificate that states:

 (i) the company’s name; and

 (ii) the company’s ACN; and

 (iii) the company’s type; and

 (iv) that the company is registered as a company under this Act; and

 (v) the State or Territory in which the company is taken to be registered; and

 (vi) the date of registration.

Note: For the evidentiary value of a certificate of registration, see subsection 1274(7A).

ASIC must keep record of registration

 (2) ASIC must keep a record of the registration. Subsections 1274(2) and (5) apply to the record as if it were a document lodged with ASIC.

601BE  Registered office

  The address specified in the application as the body’s proposed registered office becomes the address of its registered office as a company on registration.

601BF  Name

  A company registered under this Part has a name on registration that is:

 (a) an available name; or

 (b) the expression “Australian Company Number” followed by the company’s ACN.

The name must also include the words required by subsection 148(2) or 148(3).

601BG  Constitution

 (1) The constitution on registration (if any) of a company registered under this Part is the constitution lodged with the application.

 (2) If any text in a constitution lodged with the application is not in English, the English translation of that text lodged with the application for registration is taken to be the relevant text in the constitution on registration.

601BH  Modifications of constitution

 (1) A company registered under this Part must modify its constitution within 3 months after registration to give effect to this Part.

 (2) If the constitution specifies amounts of money expressed in foreign currency, the company must:

 (a) fix a single rate of conversion by resolution; and

 (b) modify its constitution by special resolution to convert those amounts into Australian currency using that rate.

The modification must be made within 3 months after registration.

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

Note: For strict liability, see section 6.1 of the Criminal Code.

 (3) An amendment of a company’s constitution under this section does not affect the number and class of shares held by each member.

601BJ  ASIC may direct company to apply for Court approval for modifications of constitution

 (1) ASIC may give the company a written direction to apply to the Court within a specified period for an order approving the modified constitution.

 (2) The Court may make an order:

 (a) declaring that the company has complied with section 601BH; or

 (b) declaring that the company will comply with section 601BH if it makes further modifications of its constitution as specified in the order.

 (3) The company must lodge a copy of the order with ASIC within 14 days after the order is made.

 (4) An offence based on subsection (3) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601BK  Establishing registers and minute books

 (1) A company registered under this Part must, within 14 days after registration:

 (a) set up the register required by section 168; and

 (b) include in the register the information that is required to be included in the register and that is available to the company on registration; and

 (c) set up the minute books required by section 251A.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) During the 14 days the company need not comply with a person’s request to inspect or obtain a copy of:

 (a) information in a register; or

 (b) a minute of a general meeting.

However, the period within which the company must comply with the request begins at the end of the 14 days.

601BL  Registration of registered bodies

 (1) If a registered body becomes registered as a company under this Part, it ceases to be a registered body. ASIC must remove the body’s name from the appropriate register kept for the purposes of Division 1 or 2 of Part 5B.2.

 (2) ASIC may keep any of the documents relating to the company that were lodged because the company used to be a registered body.

Division 2Operation of this Act

601BM  Effect of registration under this Part

 (1) Registration under this Part does not:

 (a) create a new legal entity; or

 (b) affect the body’s existing property, rights or obligations (except as against the members of the body in their capacity as members); or

 (c) render defective any legal proceedings by or against the body or its members.

 (2) This Part sets out special provisions for companies registered under this Part.

601BN  Liability of members on winding up

  A person who stopped being a member of the body before it was registered as a company under this Part is to be treated as a past member of the company in applying Division 2 of Part 5.6 to a winding up of the company. However, the person’s liability to contribute to the company’s property is further limited by this section to an amount sufficient for the following:

 (a) payment of debts and liabilities contracted by the company before the day on which the company was registered under this Part;

 (b) payment of the costs, charges and expenses of winding up the company, so far as those costs, charges and expenses relate to those debts and liabilities;

 (c) the adjustment of the rights between the contributories, so far as the adjustment relates to those debts and liabilities.

601BP  Bearer shares

 (1) A bearer of a bearer share in a company registered under this Part may surrender the share to the company. The company must:

 (a) cancel the share; and

 (b) include the bearer’s name in the company’s register of members.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) The company is liable to compensate anyone who suffers a loss because the company includes the bearer’s name in the company’s register of members despite the fact that:

 (a) the share was not surrendered to the company; or

 (b) the company failed to cancel the share.

 (3) Subject to this section, the constitution of a company registered under this Part may provide that the bearer of a bearer share in the company is taken to be a member of the company for all purposes or for specified purposes.

Note: A body must not issue bearer shares after it is registered as a company under this Part (see paragraph 254F(a)).

601BQ  References in preregistration contracts and other documents to par value in existing contracts and documents

 (1) This section applies in relation to a company registered under this Part for the purpose of interpreting and applying after registration:

 (a) a contract entered into before the registration; or

 (b) a trust deed or other document executed before the registration.

 (2) A reference to the par value of a share is taken to be a reference to the par value of the share immediately before the registration, or the par value that the share would have had if it had been issued then.

 (3) A reference to a right to a return of capital on a share is taken to be a reference to a right to a return of capital of a value equal to the amount paid before the registration in respect of the share’s par value, or the par value that the share would have had if it had been issued then.

 (4) A reference to the aggregate par value of the company’s issued share capital is taken to be a reference to that aggregate as it existed immediately before the registration.

601BR  First AGM

 (1) Despite subsection 250N(1), a public company registered under this Part must hold its first AGM after registration in the calendar year of its registration.

 (2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601BS  Modification by regulations

  The regulations may modify the operation of this Part in relation to a company registered under this Part.

Part 5B.2Registrable bodies

Division 1APreliminary

601C  Definitions

  In this Part:

property of a corporation includes PPSA retention of title property, if the security interest in the property is vested in the corporation because of the operation of any of the following provisions:

 (a) section 267 or 267A of the Personal Property Securities Act 2009 (property subject to unperfected security interests);

 (b) section 588FL of this Act (collateral not registered within time).

Note: See sections 9 (definition of property) and 51F (PPSA retention of title property).

Division 1Registrable Australian bodies

601CA  When a registrable Australian body may carry on business in this jurisdiction and outside its place of origin

  A registrable Australian body must not carry on business in a State or Territory in this jurisdiction unless:

 (a) that State or Territory is its place of origin; or

 (b) it has its head office or principal place of business in that State or Territory; or

 (c) it is registered under this Division; or

 (d) it has applied to be so registered and the application has not been dealt with.

601CB  Application for registration

  Subject to this Part, where a registrable Australian body lodges an application for registration under this Division that is in the prescribed form and is accompanied by:

 (a) a certified copy of a current certificate of its incorporation or registration in its place of origin, or a document of similar effect; and

 (b) a certified copy of its constitution; and

 (c) a list of its directors containing personal details of those directors that are equivalent to the personal details of directors referred to in subsection 242(2); and

 (e) notice of the address of:

 (i) if it has in its place of origin a registered office for the purposes of a law (other than this Act) there in force—that office; or

 (ii) otherwise—its principal place of business in its place of origin; and

 (f) notice of the address of its registered office under section 601CT;

ASIC must:

 (g) grant the application and register the body under this Division by entering the body’s name in a register kept for the purposes of this Division; and

 (h) allot to the body an ARBN distinct from the ARBN or ACN of each body corporate (other than the body) already registered as a company or registered body under this Act.

601CC  Cessation of business etc.

 (1) Within 7 days after ceasing to carry on business interstate, a registered Australian body must lodge written notice that it has so ceased.

 (1A) For the purposes of this section, a body carries on business interstate if, and only if, the body carries on business at a place that is in this jurisdiction and outside the body’s place of origin.

 (2) Where ASIC has reasonable cause to believe that a registered Australian body does not carry on business interstate, ASIC may send to the body in the prescribed manner a letter to that effect and stating that, if no answer showing cause to the contrary is received within one month from the date of the letter, a notice will be published in the Gazette with a view to striking the body’s name off the register.

 (3) Unless ASIC receives, within one month after the date of the letter, an answer to the effect that the body is still carrying on business interstate, it may publish in the Gazette, and send to the body in the prescribed manner, a notice that, at the end of 3 months after the date of the notice, the body’s name will, unless cause to the contrary is shown, be struck off the register.

 (4) At the end of the period specified in a notice sent under subsection (3), ASIC may, unless cause to the contrary has been shown, strike the body’s name off the register and must publish in the Gazette notice of the striking off.

 (5) Nothing in subsection (4) affects the power of the Court to wind up a body whose name has been struck off the register.

 (6) Where a body’s name is struck off the register under subsection (4), the body ceases to be registered under this Division.

 (7) If ASIC is satisfied that a body’s name was struck off the register as a result of an error on ASIC’s part, ASIC may restore the body’s name to the register, and thereupon the body’s name is taken never to have been struck off and the body is taken never to have ceased to be registered under this Division.

 (8) A person who is aggrieved by a body’s name having been struck off the register may, within 15 years after the striking off, apply to the Court for the body’s name to be restored to the register.

 (9) If, on an application under subsection (8), the Court is satisfied that:

 (a) at the time of the striking off, the body was carrying on business interstate; or

 (b) it is otherwise just for the body’s name to be restored to the register;

the Court may, by order:

 (c) direct the body’s name to be restored to the register; and

 (d) give such directions, and make such provisions, as it thinks just for placing the body and all other persons in the same position, as nearly as practicable, as if the body’s name had never been struck off.

 (10) On the lodging of an office copy of an order under subsection (9), the body’s name is taken never to have been struck off.

 (11) Where a body’s name is restored to the register under subsection (7) or (9), ASIC must cause notice of that fact to be published in the Gazette.

 (12) Where a body ceases to be registered under this Division, an obligation to lodge a document that this Act imposes on the body by virtue of the doing of an act or thing, or the occurrence of an event, at or before the time when the body so ceased, being an obligation not discharged at or before that time, continues to apply in relation to the body even if the period prescribed for lodging the document has not ended at or before that time.

 (13) Where a registered Australian body commences to be wound up, or is dissolved or deregistered, in its place of origin, the Court must, on application by the person who is the liquidator for the body’s place of origin, or by ASIC, appoint a liquidator of the body.

 (14) A liquidator of a registered Australian body who is appointed by the Court:

 (a) must, before any distribution of the body’s property is made, by advertisement in a daily newspaper circulating generally in each State or Territory where the body carried on business at any time during the 6 years before the liquidation, invite all creditors to make their claims against the body within a reasonable time before the distribution; and

 (b) must not, without obtaining an order of the Court, pay out a creditor of the body to the exclusion of another creditor of the body; and

 (c) must, unless the Court otherwise orders, recover and realise the property of the body that is located:

 (i) in this jurisdiction; and

 (ii) outside the body’s place of origin;

  and must pay the net amount so recovered and realised to the liquidator of the body for its place of origin.

 (15) If a registered Australian body has been wound up so far as its property located:

 (a) in this jurisdiction; and

 (b) outside its place of origin;

is concerned and there is no liquidator for its place of origin, the liquidator may apply to the Court for directions about the disposal of the net amount recovered under subsection (14).

Division 2Foreign companies

601CD  When a foreign company may carry on business in this jurisdiction

 (1) A foreign company must not carry on business in this jurisdiction unless:

 (a) it is registered under this Division; or

 (b) it has applied to be so registered and the application has not been dealt with.

 (2) For the purposes of this Division, a foreign company carries on business in this jurisdiction if it:

 (a) offers debentures in this jurisdiction; or

 (b) is a guarantor body for debentures offered in this jurisdiction;

and Part 2L.1 applies to the debentures.

601CDA  Limited disclosure if place of origin is a prescribed country

  A foreign company is not required to lodge information or a copy of a document with ASIC under this Division if:

 (a) the company’s place of origin is a country prescribed by the regulations; and

 (b) the company has given the information or a copy of the document to an authority in that country whose functions under the law of the country include functions equivalent to any of those of ASIC under this Act.

601CE  Application for registration

  Subject to this Part, where a foreign company lodges an application for registration under this Division that is in the prescribed form and is accompanied by:

 (a) a certified copy of a current certificate of its incorporation or registration in its place of origin, or a document of similar effect; and

 (b) a certified copy of its constitution; and

 (c) a list of its directors containing personal details of those directors that are equivalent to the personal details of directors referred to in subsection 205B(3); and

 (d) if that list includes directors who are:

 (i) resident in Australia; and

 (ii) members of a local board of directors;

  a memorandum that is duly executed by or on behalf of the foreign company and states the powers of those directors; and

 (f) notice of the address of:

 (i) if it has in its place of origin a registered office for the purposes of a law there in force—that office; or

 (ii) otherwise—its principal place of business in its place of origin; and

 (g) notice of the address of its registered office under section 601CT;

ASIC must:

 (h) grant the application and register the foreign company under this Division by entering the foreign company’s name in a register kept for the purposes of this Division; and

 (j) allot to the foreign company an ARBN distinct from the ARBN or ACN of each body corporate (other than the foreign company) already registered as a company or registered body under this Act.

601CF  Appointment of local agent

 (1) A foreign company may at any time appoint a person as a local agent.

 (2) ASIC must not register a foreign company under this Division unless the foreign company has at least one local agent in relation to whom the foreign company has complied with section 601CG.

 (3) Where:

 (a) because a person ceased on a particular day to be a local agent of the foreign company, a registered foreign company has no local agent; and

 (b) the foreign company carries on business, or has a place of business, in this jurisdiction;

the foreign company must, within 21 days after that day, appoint a person as a local agent.

601CG  Local agent: how appointed

 (1) A foreign company that lodges a memorandum of appointment, or a power of attorney, that is duly executed by or on behalf of the foreign company and states the name and address of a person who is:

 (a) a natural person or a company; and

 (b) resident in this jurisdiction; and

 (c) authorised to accept on the foreign company’s behalf service of process and notices;

is taken to appoint that person as a local agent.

 (2) Where a memorandum of appointment, or a power of attorney, lodged under subsection (1) is executed on the foreign company’s behalf, the foreign company must, unless it has already done so, lodge a copy, verified in writing in the prescribed form to be a true copy, of the document authorising the execution.

 (3) A copy lodged under subsection (2) is taken for all purposes to be the original of the document.

 (4) A foreign company that appoints a local agent must lodge a written statement that is in the prescribed form and is made by the local agent.

 (5) A person whom a foreign company appoints as a local agent is a local agent of the foreign company until the person:

 (a) ceases by virtue of section 601CH to be such a local agent; or

 (b) dies or ceases to exist.

601CH  Local agent: how removed

 (1) Where a person is a local agent of a foreign company, the foreign company or the person may lodge a written notice stating that the person’s appointment as a local agent has terminated, or will terminate, on a specified day.

 (2) Where a notice is lodged under subsection (1), the person ceases to be a local agent of the foreign company at the end of:

 (a) the period of 21 days beginning on the day of lodgment; or

 (b) the day specified in the notice;

whichever is the later.

601CJ  Liability of local agent

  A local agent of a registered foreign company:

 (a) is answerable for the doing of all acts, matters and things that the foreign company is required by or under this Act to do; and

 (b) is personally liable to a penalty imposed on the foreign company for a contravention of this Act if the court or tribunal hearing the matter is satisfied that the local agent should be so liable.

601CK  Balancesheets and other documents

 (1) Subject to this section, a registered foreign company must, at least once in every calendar year and at intervals of not more than 15 months, lodge a copy of its balancesheet made up to the end of its last financial year, a copy of its cash flow statement for its last financial year and a copy of its profit and loss statement for its last financial year, in such form and containing such particulars and including copies of such documents as the company is required to prepare by the law for the time being applicable to that company in its place of origin, together with a statement in writing in the prescribed form verifying that the copies are true copies of the documents so required.

 (2) ASIC may extend the period within which subsection (1) requires a balancesheet, profit and loss statement, cash flow statement or other document to be lodged.

 (3) ASIC may, if it is of the opinion that the balancesheet, the profit and loss statement and the other documents referred to in subsection (1) do not sufficiently disclose the company’s financial position:

 (a) require the company to lodge a balancesheet; or

 (b) require the company to lodge an audited balancesheet; or

 (ba) require the company to lodge a cash flow statement; or

 (bb) require the company to lodge an audited cash flow statement; or

 (c) require the company to lodge a profit and loss statement; or

 (d) require the company to lodge an audited profit and loss statement;

within such period, in such form, containing such particulars and including such documents as ASIC by notice in writing to the company requires, but this subsection does not authorise ASIC to require a balancesheet or a profit and loss statement to contain any particulars or include any documents that would not be required to be given if the company were a public company within the meaning of this Act.

 (4) The registered foreign company must comply with the requirements set out in the notice.

 (5) Where a registered foreign company is not required by the law of the place of its incorporation or formation to prepare a balancesheet, the company must prepare and lodge a balancesheet, or, if ASIC so requires, an audited balancesheet, within such period, in such form and containing such particulars and including such documents as the company would have been required to prepare if the company were a public company incorporated under this Act.

 (5A) If a registered foreign company is not required by the law of the place of its incorporation or formation to prepare a cash flow statement, the company must prepare and lodge a cash flow statement, or, if ASIC so requires, an audited cash flow statement, within the period, in the form, containing the particulars and including the documents that the company would have been required to prepare if the company were a public company registered under this Act.

 (6) Where a registered foreign company is not required by the law of its place of origin to prepare a profit and loss statement, the company must prepare and lodge a profit and loss statement or, if ASIC so requires, an audited profit and loss statement, within such period, in such form, containing such particulars and including such documents as the company would have been required to prepare if the company were a public company incorporated under this Act.

 (7) ASIC may, by Gazette notice, declare that this section does not apply to specified foreign companies.

 (8) Subsections (1) to (6), inclusive, do not apply in relation to a foreign company in relation to which a notice is in force under subsection (7).

 (9) A registered foreign company in relation to which a notice is in force under subsection (7) must, at least once in every calendar year, lodge with ASIC a return in the prescribed form made up to the date of its annual general meeting.

 (10) The return must be lodged within 1 month after the date to which it is made up, or within such further period as ASIC, in special circumstances, allows.

601CL  Cessation of business etc.

 (1) Within 7 days after ceasing to carry on business in this jurisdiction, a registered foreign company must lodge written notice that it has so ceased.

 (2) Where ASIC receives notice from a local agent of a registered foreign company that the foreign company has been dissolved or deregistered, ASIC must remove the foreign company’s name from the register.

 (3) Where ASIC has reasonable cause to believe that a registered foreign company does not carry on business in this jurisdiction, ASIC may send to the foreign company in the prescribed manner a letter to that effect and stating that, if no answer showing cause to the contrary is received within one month from the date of the letter, a notice will be published in the Gazette with a view to striking the foreign company’s name off the register.

 (4) Unless ASIC receives, within one month after the date of the letter, an answer to the effect that the foreign company is still carrying on business in this jurisdiction, it may publish in the Gazette, and send to the foreign company in the prescribed manner, a notice that, at the end of 3 months after the date of the notice, the foreign company’s name will, unless cause to the contrary is shown, be struck off the register.

 (5) At the end of the period specified in a notice sent under subsection (4), ASIC may, unless cause to the contrary has been shown, strike the foreign company’s name off the register and must publish in the Gazette notice of the striking off.

 (6) Nothing in subsection (5) affects the power of the Court to wind up a foreign company whose name has been struck off the register.

 (7) Where a foreign company’s name is struck off the register under subsection (5), the foreign company ceases to be registered under this Division.

 (8) If ASIC is satisfied that a foreign company’s name was struck off the register as a result of an error on ASIC’s part, ASIC may restore the foreign company’s name to the register, and thereupon the foreign company’s name is taken never to have been struck off and the foreign company is taken never to have ceased to be registered under this Division.

 (9) A person who is aggrieved by a foreign company’s name having been struck off the register may, within 15 years after the striking off, apply to the Court for the foreign company’s name to be restored to the register.

 (10) If, on an application under subsection (9), the Court is satisfied that:

 (a) at the time of the striking off, the foreign company was carrying on business in this jurisdiction; or

 (b) it is otherwise just for the foreign company’s name to be restored to the register;

the Court may, by order:

 (c) direct the foreign company’s name to be restored to the register; and

 (d) give such directions, and make such provision, as it thinks just for placing the foreign company and all other persons in the same position, as nearly as practicable, as if the foreign company’s name had never been struck off.

 (11) On the lodging of an office copy of an order under subsection (10), the foreign company’s name is taken never to have been struck off.

 (12) Where a foreign company’s name is restored to the register under subsection (8) or (10), ASIC must cause notice of that fact to be published in the Gazette.

 (13) Where a foreign company ceases to be registered under this Division, an obligation to lodge a document that this Act imposes on the foreign company by virtue of the doing of an act or thing, or the occurrence of an event, at or before the time when the foreign company so ceased, being an obligation not discharged at or before that time, continues to apply in relation to the foreign company even if the period prescribed for lodging the document has not ended at or before that time.

 (14) Where a registered foreign company commences to be wound up, or is dissolved or deregistered, in its place of origin:

 (a) each person who, on the day when the winding up proceedings began, was a local agent of the foreign company must, within the period of 1 month after that day or within that period as extended by ASIC in special circumstances, lodge or cause to be lodged notice of that fact and, when a liquidator is appointed, notice of the appointment; and

 (b) the Court must, on application by the person who is the liquidator for the foreign company’s place of origin, or by ASIC, appoint a liquidator of the foreign company.

 (15) A liquidator of a registered foreign company who is appointed by the Court:

 (a) must, before any distribution of the foreign company’s property is made, by advertisement in a daily newspaper circulating generally in each State or Territory where the foreign company carried on business at any time during the 6 years before the liquidation, invite all creditors to make their claims against the foreign company within a reasonable time before the distribution; and

 (b) must not, without obtaining an order of the Court, pay out a creditor of the foreign company to the exclusion of another creditor of the foreign company; and

 (c) must, unless the Court otherwise orders, recover and realise the property of the foreign company in this jurisdiction and must pay the net amount so recovered and realised to the liquidator of the foreign company for its place of origin.

 (16) Where a registered foreign company has been wound up so far as its property in this jurisdiction is concerned and there is no liquidator for its place of origin, the liquidator may apply to the Court for directions about the disposal of the net amount recovered under subsection (15).

601CM  Register of members of foreign company

 (1) A registered foreign company that has a share capital may cause a branch register of members to be kept in this jurisdiction.

 (2) If a member of a registered foreign company is resident in this jurisdiction and requests the foreign company in writing to register in a branch register kept under subsection (1) shares held by the member, then:

 (a) if the foreign company already keeps a register under subsection (1)—the foreign company must register in that register the shares held by the member; or

 (b) otherwise—the foreign company must, within 1 month after receiving the request:

 (i) keep at its registered office or at some other place in this jurisdiction a branch register of members; and

 (ii) register in that register the shares held by the member.

 (3) Subsection (2) does not apply in relation to a foreign company whose constitution prohibits any invitation to the public to subscribe for, and any offer to the public to accept subscriptions for, shares in the foreign company.

 (4) Subject to this section, a registered foreign company may discontinue a register kept under subsection (1) and must, if it does so, transfer all entries in that register to a register of members kept outside Australia.

 (5) If shares held by a member of a registered foreign company who is resident in this jurisdiction are registered in a register kept by the foreign company under subsection (1), the foreign company must not discontinue that register without that member’s written consent.

601CN  Register kept under section 601CM

 (1) This section has effect where a registered foreign company keeps a register under section 601CM.

 (2) The foreign company must keep the register in the same manner as this Act requires a company to keep its register of members.

 (3) Subject to subsection (2), the foreign company must register a transaction in the register in the same way, and at the same charge, as it would have registered the transaction in the register of members that the foreign company keeps in its place of origin.

 (4) A transfer of shares in the foreign company that is lodged at the foreign company’s registered office, or at the place where the register is kept, is binding on the foreign company.

 (5) The Court has the same powers in relation to correction of the register as it has in relation to correction of a company’s register of members.

 (6) The register is taken to be part of the foreign company’s register of members.

 (7) At the written request of a member who holds shares registered in the register, the foreign company must remove the shares from the register and register them in such other register as is specified in the request.

 (8) The register is prima facie evidence of matters that this Act requires or authorises to be entered in the register.

601CP  Notifying ASIC about register kept under section 601CM

  Within 14 days after:

 (a) beginning to keep a register under section 601CM; or

 (b) changing the place where a register is so kept; or

 (c) discontinuing a register under section 601CM;

a registered foreign company must lodge a written notice of that fact specifying, if paragraph (a) or (b) applies, the address or new address, as the case may be, where the register is kept.

601CQ  Effect of right to acquire shares compulsorily

  Where:

 (a) a law of the place of origin of a foreign company that corresponds to section 414, 661A or 664A entitles a person to give notice to another person that the firstmentioned person wishes to acquire shares in the foreign company that the other person holds; and

 (b) some or all of those shares are registered in a register kept under section 601CM;

sections 601CM, 601CN and 601CP cease to apply in relation to the foreign company until the firstmentioned person acquires, or ceases to be entitled to acquire, the shares so registered.

601CR  Index of members and inspection of registers

  Subsection 169(2) and sections 173, 174 and 177 apply in relation to a register kept under section 601CM.

601CS  Certificate as to shareholding

  A certificate under the seal of a foreign company specifying shares held by a member of that company and registered in a register kept under section 601CM is prima facie evidence of the title of the member to the shares and of the fact that the shares are registered in the register.

Division 3Bodies registered under this Part

601CTA  Limited disclosure if place of origin is a prescribed country

  A foreign company is not required to lodge information or a copy of a document with ASIC under this Division if:

 (a) the company’s place of origin is a country prescribed by regulations made for the purposes of section 601CDA; and

 (b) the company has given the information or a copy of the document to an authority in that country whose functions under the law of the country include functions equivalent to any of those of ASIC under this Act.

601CT  Registered office

 (1) A registered body must have a registered office in this jurisdiction to which all communications and notices may be addressed and that must be open:

 (a) if the body has:

 (i) lodged a notice under subsection (2); or

 (ii) lodged a notice under subsection (2) and a notice or notices under subsection (4);

  for such hours (being not fewer than 3) between 9 am and 5 pm on each business day as are specified in that notice, or in the later or last of those notices, as the case may be; or

 (b) otherwise—each business day from at least 10 am to 12 noon and from at least 2 pm to 4 pm;

and at which a representative of the body is present at all times when the office is open.

 (2) A registered body may lodge written notice of the hours (being not fewer than 3) between 9 am and 5 pm on each business day during which the body’s registered office is open.

 (3) Within 7 days after a change in the situation of its registered office, a registered body must lodge a written notice of the change and of the new address of that office.

 (4) A registered body that has lodged a notice under subsection (2) must, within 7 days after a change in the hours during which its registered office is open, lodge a notice, in the prescribed form, of the change.

601CU  Certificate of registration

 (1) On registering a body corporate under Division 1 or 2 or registering under section 601DH or 601DJ a change in a registered body’s name, ASIC must issue to the body a certificate, under ASIC’s common seal and in the prescribed form, of the body’s registration under that Division.

 (2) A certificate under subsection (1) is prima facie evidence of the matters stated in it.

601CV  Notice of certain changes

 (1) A registered body must, within 1 month after a change in:

 (b) its constitution or any other document lodged in relation to the body; or

 (c) its directors; or

 (d) if the body is a foreign company;

 (i) the powers of any directors who are resident in Australia and members of an Australian board of directors of the foreign company; or

 (ii) a local agent or local agents; or

 (iii) the name or address of a local agent; or

 (e) the situation of:

 (i) if it has in its place of origin a registered office for the purposes of a law (other than this Act) there in force—that office; or

 (ii) otherwise—its principal place of business in its place of origin;

lodge a written notice of particulars of the change, together with such documents (if any) as the regulations require.

 (2) ASIC may in special circumstances extend the period within which subsection (1) requires a notice or document to be lodged.

601CW  Body’s name etc. must be displayed at office and place of business

 (1) Subject to subsection (2), this section applies to a registrable body.

 (2) If the registrable body is a registrable Australian body, this section does not apply to a place at which the body carries on business if the place is in the body’s place of origin.

 (9) Unless the body is an Australian ADI, it must paint or affix and keep painted or affixed, in a conspicuous position and in letters easily legible, on the outside of every office and place (including its registered office) that is in this jurisdiction, at which its business is carried on and that is open and accessible to the public:

 (a) its name and the name of its place of origin; and

 (b) if the liability of its members is limited and the last word of its name is neither the word “Limited” nor the abbreviation “Ltd.”—notice of the fact that the liability of its members is limited; and

 (c) in the case of its registered office—the expression “Registered Office”.

 (10) If the body is an Australian ADI, it must paint or affix its name, and must keep its name painted or affixed, in a conspicuous position and in letters easily legible, on the outside of every office or place (including its registered office) that is in this jurisdiction, at which its business is carried on and that is open and accessible to the public.

 (11) An offence based on subsection (9) or (10) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601CX  Service of documents on registered body

 (1) A document may be served on a registered body:

 (a) by leaving it at, or by sending it by post to, the registered office of the body; or

 (b) in the case of a registered foreign company—by leaving it at, or by sending it by post to, the address of a local agent of the foreign company, being:

 (i) in a case to which subparagraph (ii) does not apply—an address notice of which has been lodged under subsection 601CG(1); or

 (ii) if a notice or notices of a change or alteration in that address has or have been lodged under subsection 601CV(1)—the address shown in that lastmentioned notice or the later or latest of those lastmentioned notices.

 (2) For the purposes of subsection (1), the situation of the registered office of a registered body:

 (a) in a case to which neither paragraph (b) nor paragraph (c) applies—is taken to be the place notice of the address of which has been lodged under paragraph 601CB(e) or 601CE(g); or

 (b) if only one notice of a change in the situation of the registered office has been lodged with ASIC under subsection 601CT(3)—is, on and from:

 (i) the day that is 7 days after the day on which the notice was lodged; or

 (ii) the day that is specified in the notice as the day from which the change is to take effect;

  whichever is later, taken to be the place the address of which is specified in the notice; or

 (c) if 2 or more notices of a change in the situation of the registered office have been lodged under subsection 601CT(3)—is, on and from:

 (i) the day that is 7 days after the day on which the later or latest of those notices was lodged; or

 (ii) the day that is specified in the later or latest of those notices as the day from which the change is to take effect;

  whichever is later, taken to be the place the address of which is specified in the relevant notice;

and is so taken to be that place irrespective of whether the address of a different place is shown as the address of the registered office of the registered body in a return or other document (not being a notice under subsection 601CT(3)) lodged after the notice referred to in paragraph (a) or (b), or the later or latest of the notices referred to in paragraph (c), was lodged.

 (3) Without limiting the operation of subsection (1), if 2 or more directors of a registered body reside in Australia or an external Territory, a document may be served on the body by delivering a copy of the document personally to each of 2 of those directors.

 (3A) Without limiting the operation of subsection (1), a document may be served on a registered body that is registered as a proprietary company and has only one director by delivering a copy personally to that director.

 (4) Where a liquidator of a registered body has been appointed, a document may be served on the body by leaving it at, or by sending it by post to, the last address of the office of the liquidator notice of which has been lodged.

 (5) Nothing in this section affects the power of the Court to authorise a document to be served on a registered body in a manner not provided for by this section.

 (6) Subject to subsection 8(4), subsection 8(3) applies in relation to a reference in this section.

601CY  Power to hold land

  A registered body has power to hold land in this jurisdiction.

Division 4Register of debenture holders for noncompanies

601CZA  Certain documents are debentures

  For the purposes of this Division, choses in action (including an undertaking) that fall into one of the exceptions in paragraphs (a), (b), (e) and (f) of the definition of debenture in section 9 must also be entered into the register of debenture holders.

601CZB  Register of debenture holders to be maintained by noncompanies

 (1) A body that is not a company must set up and maintain a register of debenture holders if it issues debentures covered by Chapter 2L.

Note 1: Companies have to keep a register of debenture holders under sections 168 and 171.

Note 2: The register may be kept on computer (see section 1306).

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) The register must contain the following information about each debenture holder:

 (a) their name and address;

 (b) the amount of the debentures held.

 (3) A body’s failure to comply with this section in relation to a debenture does not affect the debenture itself.

601CZC  Location of register

 (1) The register must be kept at:

 (a) the body’s registered office; or

 (b) the body’s principal place of business in this jurisdiction; or

 (c) a place in this jurisdiction (whether of the body or of someone else) where the work involved in maintaining the register is done; or

 (d) another place approved by ASIC.

 (2) The body must lodge with ASIC a notice of the address at which the register is kept within 7 days after the register is:

 (a) established at an office that is neither the body’s registered office nor at its principal place of business; or

 (b) moved from one office to another.

Notice is not required for moving the register between the registered office and an office at the principal place of business.

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

Note: For strict liability, see section 6.1 of the Criminal Code.

601CZD  Application of sections 173 to 177

  Sections 173 to 177 apply to a register kept under this Division as if it were kept under Chapter 2C.

Note: Sections 173 to 177 deal with rights to inspect the register and get copies, the obligations of agents who maintain the register, correction of the register, the evidential value of the register and the use of information on the register.

Part 5B.3Names of registrable Australian bodies and foreign companies

 

601DA  Reserving a name

 (1) A person may lodge an application in the prescribed form with ASIC to reserve a name for a registrable Australian body or a foreign company. If the name is available, ASIC must reserve it.

Note: For available names, see section 601DC.

 (2) The reservation lasts for 2 months from the date when the application was lodged. An applicant may ask ASIC in writing for an extension of the reservation during a period that the name is reserved, and ASIC may extend the reservation for 2 months.

 (3) ASIC must cancel a reservation if the applicant asks ASIC in writing to do so.

601DB  Acceptable abbreviations

 (1) The abbreviations set out in the following table may be used:

 (a) instead of words that this Act requires to be part of a registrable Australian body’s or foreign company’s name or to be included in a document; and

 (b) instead of words that are part of a registrable Australian body’s or foreign company’s name; and

 (c) with or without full stops.

 

Acceptable abbreviations

[operative table]

 

Word

Abbreviation

1

Company

Co or Coy

2

Proprietary

Pty

3

Limited

Ltd

4

Australian

Aust

5

Number

No

6

and

&

7

Australian Registered Body Number

ARBN

8

Registered

Regd

 (2) If a registrable Australian body’s or foreign company’s name includes any of these abbreviations, the word corresponding to the abbreviation may be used instead.

601DC  When a name is available

Name is available unless identical or unacceptable

 (1) A name is available to a registrable Australian body or a foreign company unless the name is:

 (a) identical (under rules set out in the regulations) to a name that is reserved or registered under this Act for another body; or

 (b) identical (under rules set out in the regulations) to a name that is held or registered on the Business Names Register in respect of another individual or body who is not the person applying to have the name; or

 (c) unacceptable for registration under the regulations.

Minister may consent to a name being available

 (2) The Minister may consent in writing to a name being available to a registrable Australian body or foreign company even if the name is:

 (a) identical to a name that is reserved or registered under this Act for another body; or

 (b) unacceptable for registration under the regulations.

 (3) The Minister’s consent may be given subject to conditions.

Note: If the body or company breaches a condition, ASIC may direct it to change its name under section 601DJ.

 (4) The regulations may specify that a particular unacceptable name is available to a registrable Australian body or foreign company if:

 (a) a specified public authority, or an instrumentality or agency of the Crown in right of the Commonwealth, a State or an internal Territory has consented to the body or company using or assuming the name; or

 (b) the body or company is otherwise permitted to use or assume the name by or under a specified provision of an Act of the Commonwealth, a State or an internal Territory.

The consent of the authority, instrumentality or agency may be given subject to conditions.

Note: If the consent is withdrawn, the body or company ceases to be permitted or it breaches a condition, ASIC may direct it to change its name under section 601DJ.

601DD  Registered Australian bodies and registered foreign companies can carry on business with some names only

 (1) A registered Australian body or registered foreign company must not carry on business under a name in this jurisdiction unless subsection (2) or (3) authorises the body or company to use the name.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) The body or company may use the name if the company or body is registered under that name under Part 5B.2.

 (3) A registered Australian body may use a name in the State or Territory that is its place of origin if the name is registered to the body on the Business Names Register.

601DE  Using a name and ARBN

Requirements for bodies that are not Australian ADIs

 (1) Subject to sections 601DF and 601DG, a registered Australian body or registered foreign company must set out the following on all its public documents and negotiable instruments published or signed in this jurisdiction:

 (a) its name;

 (b) either:

 (i) the expression “Australian Registered Body Number” followed by the body’s ARBN; or

 (ii) if the last 9 digits of the body’s ABN are the same, and in the same order, as the last 9 digits of its ARBN—the words “Australian Business Number” followed by the body’s ABN;

 (c) its place of origin;

 (d) if the liability of its members is limited and this is not apparent from its name—notice of the limited liability of its members.

Paragraphs (c) and (d) do not apply to an Australian ADI.

Note: In any case where the body’s ARBN would be used, the body’s ABN may be used instead if section 1344 is satisfied.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Where information to be set out

 (2) Subject to sections 601DF and 601DG, the information required by paragraph (1)(b) must be set out with the company’s or body’s name, or 1 of the references to its name in the document or instrument. If the name appears on 2 or more pages of the document or instrument, this must be done on the first of those pages.

601DF  Exception to requirement to have ARBN on receipts

  A registered Australian body or a registered foreign company does not have to set out the expression “Australian Registered Body Number” followed by its ARBN on a receipt (for example, a cash register receipt) that sets out information recorded in the machine that produced the receipt.

601DG  Regulations may exempt from requirement to set out information on documents

  The regulations may exempt a specified registered Australian body or registered foreign company, or a class of those bodies or companies, from the requirement in paragraphs 601DE(1)(b), (c) and (d) to set out information on its public documents and negotiable instruments. The exemption may relate to specified documents or instruments, or a class of documents or instruments.

601DH  Notice of name change must be given to ASIC

 (1) A registered Australian body or a registered foreign company must give ASIC written notice of a change to its name within 14 days after the date the change occurred.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) If the proposed name is available, ASIC must alter the details of the body’s or foreign company’s registration to reflect the change. For the purposes of this Act (other than subsection (1)), the change of name takes effect when ASIC alters the details of the body’s or foreign company’s registration.

Note 1: For the reservation of names, see section 601DA.

Note 2: For available names, see section 601DC.

Note 3: ASIC must issue a new certificate reflecting the name change (see section 601CU).

601DJ  ASIC’s power to direct a registered name be changed

 (1) ASIC may direct a registered Australian body or registered foreign company in writing to change the name under which the body or company is registered within 2 months if:

 (a) the name should not have been registered; or

 (b) the body or company has breached a condition under subsection 601DC(3) on the availability of the name; or

 (c) a consent given under subsection 601DC(4) to use or assume the name has been withdrawn; or

 (d) the body or company has breached a condition on a consent given under subsection 601DC(4); or

 (e) the body or company ceases to be permitted to use or assume the name (as referred to in paragraph 601DC(4)(b)).

 (2) The body or company must comply with the direction within 2 months after being given it by doing everything necessary to change its name for the purposes of this Act under section 601DH.

 (3) If the body or company does not comply with subsection (2), ASIC may change the body’s or company’s name to a name that includes its ARBN by altering the details of the body’s or company’s registration to reflect the change.

 (4) For the purposes of this Act, a change of name under subsection (3) takes effect when ASIC alters the details of the body’s or foreign company’s registration.

Note: ASIC must issue a new certificate reflecting the name change (see section 601CU).

Chapter 5CManaged investment schemes

Part 5C.1Registration of managed investment schemes

 

601EA  Applying for registration

 (1) To register a managed investment scheme, a person must lodge an application with ASIC.

 (2) The application must state:

 (a) the name, and the address of the registered office, of the proposed responsible entity; and

 (b) the name and address of a person who has consented to be the auditor of the compliance plan.

 (3) The applicant must have the consent referred to in paragraph (2)(b) when the application is lodged. After the scheme is registered, the applicant must give the consent to the responsible entity. The responsible entity must keep the consent.

 (4) The following must be lodged with the application:

 (a) a copy of the scheme’s constitution;

 (b) a copy of the scheme’s compliance plan;

 (c) a statement signed by the directors of the proposed responsible entity that:

 (i) the scheme’s constitution complies with sections 601GA and 601GB; and

 (ii) the scheme’s compliance plan complies with section 601HA.

Note: Section 601HC requires that the copy of the compliance plan be signed by the directors of the responsible entity.

601EB  Registration of managed investment scheme

 (1) ASIC must register the scheme within 14 days of lodgment of the application, unless it appears to ASIC that:

 (c) the application does not comply with section 601EA; or

 (d) the proposed responsible entity does not meet the requirements of section 601FA; or

 (e) the scheme’s constitution does not meet the requirements of sections 601GA and 601GB; or

 (f) the scheme’s compliance plan does not meet the requirements of section 601HA; or

 (g) the copy of the compliance plan lodged with the application is not signed as required by section 601HC; or

 (h) arrangements are not in place that will satisfy the requirements of section 601HG in relation to audit of compliance with the plan.

 (2) If ASIC registers the scheme, ASIC must give it an ARSN.

 (3) ASIC must keep a record of the registration of the scheme.

 (4) For the purpose of determining whether subsection (1) is satisfied in relation to the scheme:

 (a) references in Parts 5C.3, 5C.4 and 5C.5 to a registered scheme are taken to include a reference to the scheme; and

 (b) references in those Parts to the responsible entity of a registered scheme are taken to include a reference to the proposed responsible entity of the scheme.

601EC  All documents etc. lodged with ASIC to bear ARSN or ABN

  After a managed investment scheme is registered, all documents relating to the scheme that are lodged with ASIC must set out:

 (a) the scheme’s ARSN; or

 (b) if the last 9 digits of the scheme’s ARSN are the same, and in the same order, as the last 9 digits of its ABN—the scheme’s ABN.

Note: In any case where the scheme’s ARSN would be used, the scheme’s ABN may be used instead if section 1344 is satisfied.

601ED  When a managed investment scheme must be registered

 (1) Subject to subsections (2) and (2A), a managed investment scheme must be registered under section 601EB if:

 (a) it has more than 20 members; or

 (b) it was promoted by a person, or an associate of a person, who was, when the scheme was promoted, in the business of promoting managed investment schemes; or

 (c) a determination under subsection (3) is in force in relation to the scheme and the total number of members of all of the schemes to which the determination relates exceeds 20.

 (2) A managed investment scheme does not have to be registered if all the issues of interests in the scheme that have been made would not have required the giving of a Product Disclosure Statement under Division 2 of Part 7.9 if the scheme had been registered when the issues were made.

 (2A) A notified foreign passport fund does not have to be registered.

 (3) ASIC may, in writing, determine that a number of managed investment schemes are closely related and that each of them has to be registered at any time when the total number of members of all of the schemes exceeds 20. ASIC must give written notice of the determination to the operator of each of the schemes.

 (4) For the purpose of this section, when working out how many members a scheme has:

 (a) joint holders of an interest in the scheme count as a single member; and

 (b) an interest in the scheme held on trust for a beneficiary is taken to be held by the beneficiary (rather than the trustee) if:

 (i) the beneficiary is presently entitled to a share of the trust estate or of the income of the trust estate; or

 (ii) the beneficiary is, individually or together with other beneficiaries, in a position to control the trustee.

 (5) A person must not operate in this jurisdiction a managed investment scheme that this section requires to be registered under section 601EB unless the scheme is so registered.

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

 (6) For the purpose of subsection (5), a person is not operating a scheme merely because:

 (a) they are acting as an agent or employee of another person; or

 (b) they are taking steps to wind up the scheme or remedy a defect that led to the scheme being deregistered.

 (7) A person who would otherwise contravene subsection (5) because an interest in a scheme is held in trust for 2 or more beneficiaries (see paragraph (4)(b)) does not contravene that subsection if they prove that they did not know, and had no reason to suspect, that the interest was held in that way.

Note: In criminal proceedings, a defendant in the prosecution of an offence under subsection (5) bears an evidential burden in relation to the matter in subsection (7). See subsection 13.3(3) of the Criminal Code.

 (8) A person contravenes this subsection if the person contravenes subsection (5).

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

601EE  Unregistered schemes may be wound up

 (1) If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up:

 (a) ASIC;

 (b) the person operating the scheme;

 (c) a member of the scheme.

 (2) The Court may make any orders it considers appropriate for the winding up of the scheme.

Part 5C.2The responsible entity

Division 1Responsibilities and powers

601FA  Responsible entity to be public company and hold Australian financial services licence

  The responsible entity of a registered scheme must be a public company that holds an Australian financial services licence authorising it to operate a managed investment scheme.

601FB  Responsible entity to operate scheme

 (1) The responsible entity of a registered scheme is to operate the scheme and perform the functions conferred on it by the scheme’s constitution and this Act.

 (2) The responsible entity has power to appoint an agent, or otherwise engage a person, to do anything that it is authorised to do in connection with the scheme. For the purpose of determining whether:

 (a) there is a liability to the members; or

 (b) the responsible entity has properly performed its duties for the purposes of subsection 601GA(2);

the responsible entity is taken to have done (or failed to do) anything that the agent or person has done (or failed to do) because of the appointment or engagement, even if they were acting fraudulently or outside the scope of their authority or engagement.

Note: A scheme’s constitution may provide for the responsible entity to be indemnified for liabilities—see subsection 601GA(2).

 (3) An agent appointed, or a person otherwise engaged, by:

 (a) the agent or person referred to in subsection (2); or

 (b) a person who is taken under this subsection to be an agent of the responsible entity;

to do anything that the responsible entity is authorised to do in connection with the scheme is taken to be an agent appointed by the responsible entity to do that thing for the purposes of subsection (2).

 (4) If:

 (a) an agent holds scheme property on behalf of the responsible entity; and

 (b) the agent is liable to indemnify the responsible entity against any loss or damage that:

 (i) the responsible entity suffers as a result of a wrongful or negligent act or omission of the agent; and

 (ii) relates to a failure by the responsible entity to perform its duties in relation to the scheme;

any amount recovered under the indemnity forms part of the scheme property.

601FC  Duties of responsible entity

 (1) In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:

 (a) act honestly; and

 (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity’s position; and

 (c) act in the best interests of the members and, if there is a conflict between the members’ interests and its own interests, give priority to the members’ interests; and

 (d) treat the members who hold interests of the same class equally and members who hold interests of different classes fairly; and

 (e) not make use of information acquired through being the responsible entity in order to:

 (i) gain an improper advantage for itself or another person; or

 (ii) cause detriment to the members of the scheme; and

 (f) ensure that the scheme’s constitution meets the requirements of sections 601GA and 601GB; and

 (g) ensure that the scheme’s compliance plan meets the requirements of section 601HA; and

 (h) comply with the scheme’s compliance plan; and

 (i) ensure that scheme property is:

 (i) clearly identified as scheme property; and

 (ii) held separately from property of the responsible entity and property of any other scheme; and

 (j) ensure that the scheme property is valued at regular intervals appropriate to the nature of the property; and

 (k) ensure that all payments out of the scheme property are made in accordance with the scheme’s constitution and this Act; and

 (m) carry out or comply with any other duty, not inconsistent with this Act, that is conferred on the responsible entity by the scheme’s constitution.

 (2) The responsible entity holds scheme property on trust for scheme members.

Note: Under subsection 601FB(2), the responsible entity may appoint an agent to hold scheme property separately from other property.

 (3) A duty of the responsible entity under subsection (1) or (2) overrides any conflicting duty an officer or employee of the responsible entity has under Part 2D.1.

 (5) A responsible entity who contravenes subsection (1), and any person who is involved in a responsible entity’s contravention of that subsection, contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: Subsection (5) is a civil penalty provision (see section 1317E).

601FD  Duties of officers of responsible entity

 (1) An officer of the responsible entity of a registered scheme must:

 (a) act honestly; and

 (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the officer’s position; and

 (c) act in the best interests of the members and, if there is a conflict between the members’ interests and the interests of the responsible entity, give priority to the members’ interests; and

 (d) not make use of information acquired through being an officer of the responsible entity in order to:

 (i) gain an improper advantage for the officer or another person; or

 (ii) cause detriment to the members of the scheme; and

 (e) not make improper use of their position as an officer to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the scheme; and

 (f) take all steps that a reasonable person would take, if they were in the officer’s position, to ensure that the responsible entity complies with:

 (i) this Act; and

 (ii) any conditions imposed on the responsible entity’s Australian financial services licence; and

 (iii) the scheme’s constitution; and

 (iv) the scheme’s compliance plan.

 (2) A duty of an officer of the responsible entity under subsection (1) overrides any conflicting duty the officer has under Part 2D.1.

 (3) A person who contravenes, or is involved in a contravention of, subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: Subsection (3) is a civil penalty provision (see section 1317E).

 (4) A person must not intentionally or recklessly contravene, or be involved in a contravention of, subsection (1).

601FE  Duties of employees of responsible entity

 (1) An employee of the responsible entity of a registered scheme must not:

 (a) make use of information acquired through being an employee of the responsible entity in order to:

 (i) gain an improper advantage for the employee or another person; or

 (ii) cause detriment to members of the scheme; or

 (b) make improper use of their position as an employee to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the scheme.

 (2) A duty of an employee of the responsible entity under subsection (1) overrides any conflicting duty the employee has under Part 2D.1.

 (3) A person who contravenes, or is involved in a contravention of, subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: Subsection (3) is a civil penalty provision (see section 1317E).

 (4) A person must not intentionally contravene, or be involved in a contravention of, subsection (1).

601FF  Surveillance checks by ASIC

 (1) ASIC may, from time to time, check whether the responsible entity of a registered scheme is complying with the scheme’s constitution and compliance plan and with this Act.

Note: For this purpose ASIC may exercise the powers set out in Division 3 of Part 3 of the ASIC Act.

 (2) The responsible entity and its officers must take all reasonable steps to assist ASIC in carrying out a check under subsection (1).

 (3) A person must not intentionally or recklessly fail to comply with subsection (2).

601FG  Acquisition of interest in scheme by responsible entity

 (1) The responsible entity of a registered scheme may acquire and hold an interest in the scheme, but it must only do so:

 (a) for not less than the consideration that would be payable if the interest were acquired by another person; and

 (b) subject to terms and conditions that would not disadvantage other members.

Note: If the responsible entity holds an interest in the scheme, it does so subject to section 253E (certain members cannot vote or be counted).

 (2) A responsible entity who contravenes subsection (1), and any person who is involved in a responsible entity’s contravention of that subsection, contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: Subsection (2) is a civil penalty provision (see section 1317E).

 (3) A person must not intentionally be involved in a responsible entity’s contravention of subsection (1).

601FH  Liquidator etc. of responsible entity entitled to exercise indemnity rights

  If the company that is a registered scheme’s responsible entity is being wound up, is under administration, has executed a deed of company arrangement that has not terminated, is under restructuring or has made a restructuring plan that has not terminated:

 (a) a provision of the scheme’s constitution, or of another instrument, is void against the liquidator, the administrator of the company or the deed or the restructuring practitioner for the company or the plan, if it purports to deny the company a right to be indemnified out of the scheme property that the company would have had if it were not being wound up, were not under administration, had not executed a deed of company arrangement, were not under restructuring or had not made a restructuring plan; and

 (b) a right of the company to be indemnified out of the scheme property may only be exercised by the liquidator, the administrator of the company or the deed or the restructuring practitioner for the company or the plan.

Division 2Changing the responsible entity

601FJ  Changes only take effect when ASIC alters record of registration

 (1) Despite anything in this Division, the company named in ASIC’s record of registration as the responsible entity or temporary responsible entity of a registered scheme remains the scheme’s responsible entity until the record is altered to name another company as the scheme’s responsible entity or temporary responsible entity.

 (2) A purported change of the scheme’s responsible entity is ineffective unless it is in accordance with this Division.

601FK  Requirements of section 601FA must be met

  A company cannot be chosen or appointed as the responsible entity or temporary responsible entity of a registered scheme unless it meets the requirements of section 601FA.

601FL  Retirement of responsible entity

 (1) If the responsible entity of a registered scheme wants to retire, it must call a members’ meeting to explain its reason for wanting to retire and to enable the members to vote on a resolution to choose a company to be the new responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed.

 (2) If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity:

 (a) as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

 (b) if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

 (c) ASIC must comply with the notice when it is lodged.

 (3) If the members do not choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the current responsible entity may apply to the Court for appointment of a temporary responsible entity under section 601FP.

 (4) A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

601FM  Removal of responsible entity by members

 (1) If members of a registered scheme want to remove the responsible entity, they may take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider and vote on a resolution that the current responsible entity should be removed and a resolution choosing a company to be the new responsible entity. The resolutions must be extraordinary resolutions if the scheme is not listed.

 (2) If the members vote to remove the responsible entity and, at the same meeting, choose a company to be the new responsible entity that consents, in writing, to becoming the scheme’s responsible entity:

 (a) as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

 (b) if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

 (c) ASIC must comply with the notice when it is lodged.

 (3) A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

Note: If the members vote to remove the responsible entity but do not, at the same meeting, choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the scheme must be wound up (see section 601NE).

601FN  ASIC or scheme member may apply to Court for appointment of temporary responsible entity

  ASIC or a member of the registered scheme may apply to the Court for the appointment of a temporary responsible entity of the scheme under section 601FP if the scheme does not have a responsible entity that meets the requirements of section 601FA.

601FP  Appointment of temporary responsible entity by Court

 (1) On application under section 601FL or 601FN, the Court may, by order, appoint a company as the temporary responsible entity of a registered scheme if the Court is satisfied that the appointment is in the interest of the members.

 (2) The Court may make any further orders that it considers necessary.

 (3) If the application was made by the current responsible entity, it must, as soon as practicable after the Court’s order appointing the temporary responsible entity, lodge a notice with ASIC informing ASIC of the appointment made by the Court.

 (4) As soon as practicable after the appointment, ASIC must alter the record of the scheme’s registration to name the appointed company as the scheme’s temporary responsible entity.

601FQ  Temporary responsible entity to take steps for appointment of new responsible entity

 (1) The temporary responsible entity of a registered scheme must call a members’ meeting for the purpose of the members, by resolution, choosing a company to be the new responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed. The temporary responsible entity must call the meeting as soon as practicable and, in any event, within 3 months of becoming the temporary responsible entity.

 (2) Within that 3 months, the temporary responsible entity may call further members’ meetings for the purpose of choosing a company to be the new responsible entity. Before the end of the 3 months, it may apply to the Court for an extension of that period. If the Court grants the extension, the temporary responsible entity may, within the extended period, call further members’ meetings for the purpose of choosing a company to be the new responsible entity.

 (3) Provided it still meets the requirements in section 601FA, nothing prevents the company that is the temporary responsible entity from being chosen as the new responsible entity.

 (4) If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity, the temporary responsible entity must, as soon as practicable, lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity. ASIC must comply with the notice when it is lodged.

 (5) The temporary responsible entity must apply to the Court for an order directing it to wind up the scheme, and the Court may make the order, if:

 (a) no meeting is called within the 3 months or extended period for the purpose of choosing a new company to be the responsible entity; or

 (b) the meeting or meetings called within that period for that purpose have not resulted in the members choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

ASIC or a member of the scheme may apply for the order if the temporary responsible entity does not do so.

 (6) The temporary responsible entity must not lodge a notice under subsection (4) unless the consent referred to in that subsection has been given before the notice is lodged.

Division 3Consequences of change of responsible entity

601FR  Former responsible entity to hand over books and provide reasonable assistance

  If the responsible entity of a registered scheme changes, the former responsible entity must:

 (a) as soon as practicable give the new responsible entity any books in the former responsible entity’s possession or control that this Act requires to be kept in relation to the scheme; and

 (b) give other reasonable assistance to the new responsible entity to facilitate the change of responsible entity.

601FS  Rights, obligations and liabilities of former responsible entity

 (1) If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity.

 (2) Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity:

 (a) any right of the former responsible entity to be paid fees for the performance of its functions before it ceased to be the responsible entity; and

 (b) any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and

 (c) any right, obligation or liability that the former responsible entity had as a member of the scheme; and

 (d) any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme’s responsible entity.

601FT  Effect of change of responsible entity on documents etc. to which former responsible entity is party

 (1) If the responsible entity of a registered scheme changes, a document:

 (a) to which the former responsible entity is a party, in which a reference is made to the former responsible entity, or under which the former responsible entity has acquired or incurred a right, obligation or liability, or might have acquired or incurred a right, obligation or liability if it had remained the responsible entity; and

 (b) that is capable of having effect after the change;

has effect as if the new responsible entity (and not the former responsible entity) were a party to it, were referred to in it or had or might have acquired or incurred the right, obligation or liability under it.

 (2) Subsection (1) does not apply to a right, obligation or liability that remains a right, obligation or liability of the former responsible entity because of subsection 601FS(2).

Part 5C.3The constitution

 

601GA  Contents of the constitution

 (1) The constitution of a registered scheme must make adequate provision for:

 (a) the consideration that is to be paid to acquire an interest in the scheme; and

 (b) the powers of the responsible entity in relation to making investments of, or otherwise dealing with, scheme property; and

 (c) the method by which complaints made by members in relation to the scheme are to be dealt with; and

 (d) winding up the scheme.

 (2) If the responsible entity is to have any rights to be paid fees out of scheme property, or to be indemnified out of scheme property for liabilities or expenses incurred in relation to the performance of its duties, those rights:

 (a) must be specified in the scheme’s constitution; and

 (b) must be available only in relation to the proper performance of those duties;

and any other agreement or arrangement has no effect to the extent that it purports to confer such a right.

 (3) If the responsible entity is to have any powers to borrow or raise money for the purposes of the scheme:

 (a) those powers must be specified in the scheme’s constitution; and

 (b) any other agreement or arrangement has no effect to the extent that it purports to confer such a power.

 (4) If members are to have a right to withdraw from the scheme, the scheme’s constitution must:

 (a) specify the right; and

 (b) if the right may be exercised while the scheme is liquid (as defined in section 601KA)—set out adequate procedures for making and dealing with withdrawal requests; and

 (c) if the right may be exercised while the scheme is not liquid (as defined in section 601KA)—provide for the right to be exercised in accordance with Part 5C.6 and set out any other adequate procedures (consistent with that Part) that are to apply to making and dealing with withdrawal requests.

The right to withdraw, and any provisions in the constitution setting out procedures for making and dealing with withdrawal requests, must be fair to all members.

601GB  Constitution must be legally enforceable

  The constitution of a registered scheme must be contained in a document that is legally enforceable as between the members and the responsible entity.

601GC  Changing the constitution

 (1) The constitution of a registered scheme may be modified, or repealed and replaced with a new constitution:

 (a) by special resolution of the members of the scheme; or

 (b) by the responsible entity if the responsible entity reasonably considers the change will not adversely affect members’ rights.

 (2) The responsible entity must lodge with ASIC a copy of the modification or the new constitution. The modification, or repeal and replacement, cannot take effect until the copy has been lodged.

 (3) The responsible entity must lodge with ASIC a consolidated copy of the scheme’s constitution if ASIC directs it to do so.

 (4) The responsible entity must send a copy of the scheme’s constitution to a member of the scheme within 7 days if the member:

 (a) asks the responsible entity, in writing, for the copy; and

 (b) pays any fee (up to the prescribed amount) required by the responsible entity.

Part 5C.4The compliance plan

 

601HA  Contents of the compliance plan

 (1) The compliance plan of a registered scheme must set out adequate measures that the responsible entity is to apply in operating the scheme to ensure compliance with this Act and the scheme’s constitution, including the arrangements for:

 (a) ensuring that all scheme property is clearly identified as scheme property and held separately from property of the responsible entity and property of any other scheme (see paragraph 601FC(1)(i)); and

 (b) if the scheme is required to have a compliance committee (see section 601JA)—ensuring that the compliance committee functions properly, including adequate arrangements relating to:

 (i) the membership of the committee; and

 (ii) how often committee meetings are to be held; and

 (iii) the committee’s reports and recommendations to the responsible entity; and

 (iv) the committee’s access to the scheme’s accounting records and to the auditor of the scheme’s financial statements; and

 (v) the committee’s access to information that is relevant to the responsible entity’s compliance with this Act; and

 (c) ensuring that the scheme property is valued at regular intervals appropriate to the nature of the property; and

 (d) ensuring that compliance with the plan is audited as required by section 601HG; and

 (e) ensuring adequate records of the scheme’s operations are kept; and

 (f) any other matter prescribed by the regulations.

 (2) If:

 (a) a registration application is made as a result of a resolution passed under subparagraph 1457(1)(a)(i); and

 (b) the resolution included a direction under subsection 1457(1A);

the compliance plan lodged with the application must provide for scheme property to be held by a person other than the responsible entity, or a person that is not related to the responsible entity, as the responsible entity’s agent.

601HB  Compliance plan may incorporate provisions from another scheme’s plan

 (1) The responsible entity of a registered scheme may lodge with ASIC a compliance plan for the scheme that is expressed to incorporate specified provisions, as in force at a specified time, of a compliance plan of another registered scheme of which it is also the responsible entity.

 (2) The specified provisions, as in force at the specified time, are taken to be included in the plan.

601HC  Directors must sign lodged copy of compliance plan

  The copy of a scheme’s compliance plan that is lodged with ASIC must be signed by all the directors of the responsible entity.

601HD  ASIC may require further information about compliance plan

 (1) ASIC may direct the responsible entity of a registered scheme to give it information about the arrangements contained in the compliance plan. The direction is to be given by notice in writing to the responsible entity.

 (2) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601HE  Changing the compliance plan

Responsible entity’s powers

 (1) The responsible entity of a registered scheme may modify the scheme’s compliance plan or repeal it and replace it with a new compliance plan.

ASIC may require modifications

 (2) ASIC may direct the responsible entity of a registered scheme to modify the scheme’s compliance plan, as set out in the direction, to ensure that the plan is consistent with section 601HA. The direction is to be given by notice in writing to the responsible entity.

Lodgment of modification or new plan

 (3) The responsible entity must lodge with ASIC a copy of a modification of the scheme’s compliance plan or of a new compliance plan within 14 days after the modification is made or the old plan is repealed. The copy must be signed by all the directors of the responsible entity.

601HF  ASIC may require consolidation of compliance plan to be lodged

 (1) ASIC may direct the responsible entity of a registered scheme to lodge a consolidated copy of the scheme’s compliance plan.

 (2) The consolidation must set out:

 (a) the plan as modified to the time of lodgment; and

 (b) if required by ASIC’s direction—the full text of provisions taken to be included in the plan by subsection 601HB(2).

601HG  Audit of compliance plan

 (1) The responsible entity of a registered scheme must ensure that at all times a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the scheme’s compliance plan in accordance with this section. This auditor, firm or company is referred to as the auditor of the compliance plan.

 (2) A person is not eligible to act as the individual auditor, lead auditor or review auditor of the compliance plan if the person is:

 (a) an associate of the responsible entity; or

 (b) an agent holding scheme property on behalf of the responsible entity or an associate of an agent of that kind; or

 (c) the auditor of the responsible entity’s financial statements.

 (2A) However:

 (a) the auditor of the compliance plan and the auditor of the responsible entity’s financial statements may work for the same firm of auditors or audit company; and

 (b) the lead auditor or review auditor of the compliance plan (on the one hand) and the lead auditor or review auditor of the responsible entity’s financial statements (on the other hand) may work for the same firm of auditors or audit company.

 (3) Within 3 months after the end of a financial year of the scheme, the auditor of the compliance plan must:

 (a) examine the scheme’s compliance plan; and

 (b) carry out:

 (i) if the scheme has only had one responsible entity during the financial year—an audit of the responsible entity’s compliance with the compliance plan during the financial year; or

 (ii) if the scheme has had more than one responsible entity during the financial year—an audit of each responsible entity’s compliance with the compliance plan during that part of the financial year when it was the scheme’s responsible entity; and

 (c) give to the scheme’s current responsible entity a report that states whether, in the auditor’s opinion:

 (i) the responsible entity, or each responsible entity, complied with the scheme’s compliance plan during the financial year or that part of the financial year when it was the scheme’s responsible entity; and

 (ii) the plan continues to meet the requirements of this Part.

Contravention by individual auditor

 (4) An individual auditor conducting an audit of a compliance plan contravenes this subsection if:

 (a) the auditor is aware of circumstances that:

 (i) the auditor has reasonable grounds to suspect amount to a contravention of this Act; or

 (ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

 (iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

 (b) if subparagraph (a)(i) applies:

 (i) the contravention is a significant one; or

 (ii) the contravention is not a significant one and the auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

 (c) the auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the auditor becomes aware of those circumstances.

Contravention by audit company

 (4A) An audit company conducting an audit of a compliance plan contravenes this subsection if:

 (a) the lead auditor for the audit is aware of circumstances that:

 (i) the lead auditor has reasonable grounds to suspect amount to a contravention of this Act; or

 (ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

 (iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

 (b) if subparagraph (a)(i) applies:

 (i) the contravention is a significant one; or

 (ii) the contravention is not a significant one and the lead auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

 (c) the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor becomes aware of those circumstances.

Contravention by lead auditor

 (4B) A person contravenes this subsection if:

 (a) the person is the lead auditor for an audit of a compliance plan; and

 (b) the person is aware of circumstances that:

 (i) the person has reasonable grounds to suspect amount to a contravention of this Act; or

 (ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

 (iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

 (c) if subparagraph (b)(i) applies:

 (i) the contravention is a significant one; or

 (ii) the contravention is not a significant one and the person believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

 (d) the person does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the person becomes aware of those circumstances.

 (5) The auditor of the compliance plan:

 (a) has a right of access at all reasonable times to the books of the scheme; and

 (b) may require an officer of the responsible entity to give the auditor information and explanations for the purposes of the audit.

 (6) An officer of the responsible entity must:

 (a) allow the auditor of the compliance plan to have access to the books of the scheme; and

 (b) give the auditor information or an explanation required under subsection (5); and

 (c) otherwise assist the conduct of the audit.

 (7) The responsible entity must lodge the auditor’s report under subsection (3) with ASIC at the same time as the financial statements and reports in respect of the scheme are to be lodged with ASIC (see sections 292 and 321).

 (7A) An offence based on subsection (1), (3), (6) or (7) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (8) The auditor of the compliance plan has qualified privilege in respect of:

 (a) a statement made in a report under subsection (3); or

 (b) a notification to ASIC under subsection (4).

 (9) This section does not prevent the responsible entity from arranging for the auditor of the compliance plan to carry out audits in addition to those required by this section.

Significant contraventions

 (10) In determining for the purposes of this section whether a contravention of this Act is a significant one, have regard to:

 (a) the level of penalty provided for in relation to the contravention; and

 (b) the effect that the contravention has, or may have, on:

 (i) the overall financial position of the company, registered scheme, notified foreign passport fund or disclosing entity; or

 (ii) the adequacy of the information available about the overall financial position of the company, registered scheme, notified foreign passport fund or disclosing entity; and

 (c) any other relevant matter.

 (11) Without limiting paragraph (10)(a), a penalty provided for in relation to a contravention of a provision of Part 2M.2 or 2M.3, or section 324DAA, 324DAB or 324DAC, includes a penalty imposed on a director, because of the operation of section 344, for failing to take reasonable steps to comply with, or to secure compliance with, that provision.

Person involved in audit

 (12) In this section:

person involved in the conduct of an audit means:

 (a) the auditor; or

 (b) the lead auditor for the audit; or

 (c) the review auditor for the audit; or

 (d) a professional member of the audit team for the audit; or

 (e) any other person involved in the conduct of the audit.

601HH  Removal and resignation of auditors

Removal of auditor by responsible entity

 (1) The responsible entity:

 (a) must remove the auditor of the compliance plan if the auditor becomes ineligible under subsection 601HG(2) to act as auditor of the compliance plan; and

 (b) may, with ASIC’s consent, remove the auditor of the compliance plan.

Resignation of auditor

 (2) The auditor of the compliance plan may resign by written notice to the responsible entity if:

 (a) the auditor:

 (i) applies to ASIC in writing for its consent to the resignation; and

 (ii) gives the responsible entity written notice of the application at or about the same time as applying to ASIC; and

 (b) ASIC consents to the resignation.

 (3) As soon as practicable after receiving the application, ASIC must notify the auditor and the responsible entity whether it consents to the resignation.

 (4) A statement by the auditor in the application or in answer to an inquiry by ASIC relating to the reasons for the application:

 (a) is not admissible in evidence in any civil or criminal proceedings against the auditor (other than proceedings for a contravention of section 1308); and

 (b) may not be made the ground of a prosecution (other than a prosecution for a contravention of section 1308), action or suit against the auditor.

A certificate by ASIC that the statement was made in the application, or in answer to an inquiry by ASIC, is conclusive evidence that the statement was so made.

 (5) The auditor’s resignation takes effect on the later of:

 (a) the day (if any) specified in the notice of resignation; or

 (b) the day ASIC consents to the resignation; or

 (c) the day (if any) fixed by ASIC for the purpose.

601HI  Action on change of auditor of compliance plan

  If the auditor of the compliance plan of a registered scheme changes, the responsible entity must, as soon as practicable after the change and in writing, ask ASIC to alter the record of the scheme’s registration to show the name of the new auditor as the auditor of the scheme’s compliance plan. ASIC must comply with the request if the change complies with this Act.

Part 5C.5The compliance committee

 

601JA  When is a compliance committee required?

 (1) The responsible entity of a registered scheme must establish a compliance committee if less than half of the directors of the responsible entity are external directors.

 (2) A director of the responsible entity is an external director if they:

 (a) are not, and have not been in the previous 2 years, an employee of the responsible entity or a related body corporate; and

 (b) are not, and have not been in the previous 2 years, a senior manager of a related body corporate; and

 (c) are not, and have not been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

 (d) are not a member of a partnership that is, or has been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

 (e) do not have a material interest in the responsible entity or a related body corporate; and

 (f) are not a relative of a person who has a material interest in the responsible entity or a related body corporate.

 (3) The responsible entity must establish the compliance committee within 14 days after it is required to do so by subsection (1) or within any longer period that ASIC has agreed to in writing.

 (3A) A person must not intentionally or recklessly fail to comply with subsection (3).

 (4) In agreeing to a longer period under subsection (3), ASIC may impose conditions to be complied with and the responsible entity must comply with them.

 (4A) An offence based on subsection (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601JB  Membership of compliance committee

 (1) A scheme’s compliance committee must have at least 3 members, and a majority of them must be external members.

 (2) A member of the compliance committee is an external member if they:

 (a) are not, and have not been in the previous 2 years, a nonexternal director, a senior manager or an employee of the responsible entity or a related body corporate; and

 (b) are not, and have not been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

 (c) are not a member of a partnership that is, or has been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

 (d) do not have a material interest in the responsible entity or a related body corporate; and

 (e) are not a relative of a person who has a material interest in the responsible entity or a related body corporate.

 (3) For the purposes of paragraph (2)(a), a person who is a director of a related body corporate, but not of the responsible entity itself, is an external director of the related body corporate if they would have been an external director of the responsible entity under subsection 601JA(2) had they been a director of the responsible entity.

 (4) A person who is, or has been, either:

 (a) an external director of the responsible entity; or

 (b) a member of a compliance committee for the scheme or another registered scheme operated by the responsible entity;

is not, merely because of that directorship or membership, taken to be, or to have been, substantially involved in business dealings, or in a professional capacity, with the responsible entity.

 (5) If the membership of the scheme’s compliance committee ceases to satisfy subsection (1), the responsible entity must make appointments to the committee to satisfy that subsection within 14 days or within any longer period that ASIC has agreed to in writing.

 (6) In agreeing to a longer period under subsection (5), ASIC may impose conditions to be complied with and the responsible entity must comply with them.

 (7) An offence based on subsection (5) or (6) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

601JC  Functions of compliance committee

 (1) The functions of a scheme’s compliance committee are:

 (a) to monitor to what extent the responsible entity complies with the scheme’s compliance plan and to report on its findings to the responsible entity; and

 (b) to report to the responsible entity:

 (i) any breach of this Act involving the scheme; or

 (ii) any breach of the provisions included in the scheme’s constitution in accordance with section 601GA;

  of which the committee becomes aware or that it suspects; and

 (c) to report to ASIC if the committee is of the view that the responsible entity has not taken, or does not propose to take, appropriate action to deal with a matter reported under paragraph (b); and

 (d) to assess at regular intervals whether the compliance plan is adequate, to report to the responsible entity on the assessment and to make recommendations to the responsible entity about any changes that it considers should be made to the plan.

 (2) In carrying out its functions, the compliance committee may commission independent legal, accounting or other professional advice or assistance, at the reasonable expense of the responsible entity.

601JD  Duties of members

 (1) A member of a scheme’s compliance committee must:

 (a) act honestly; and

 (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the member’s position; and

 (c) not make use of information acquired through being a member of the committee in order to:

 (i) gain an improper advantage for the member or another person; or

 (ii) cause detriment to the members of the scheme; and

 (d) not make improper use of their position as a member of the committee to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the scheme.

 (2) A member of the compliance committee is to take all reasonable steps to assist ASIC in carrying out a check under subsection 601FF(1).

 (3) A person who contravenes, or is involved in a contravention of, subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: Subsection (3) is a civil penalty provision (see section 1317E).

 (4) A person must not intentionally or recklessly contravene, or be involved in a contravention of, subsection (1).

601JE  Compliance committee members have qualified privilege in certain cases

  A member of a scheme’s compliance committee has qualified privilege in respect of a statement concerning the operation of the scheme made by or on behalf of the committee, or a member of the committee, to the responsible entity or to ASIC.

601JF  When can responsible entity indemnify compliance committee members?

 (1) A scheme’s responsible entity or a related body corporate must not:

 (a) indemnify a person who is or has been a member of the scheme’s compliance committee against a liability incurred by the person as a member; or

 (b) exempt the person from such a liability.

 (2) A provision of the scheme’s constitution or a body corporate’s constitution is void in so far as it provides for the responsible entity or a related body corporate to do something that subsection (1) prohibits.

 (3) Subsection (1) does not prevent a person from being indemnified against a liability to another person (other than the responsible entity or a related body corporate) unless the liability arises out of conduct involving a lack of good faith.

 (4) Subsection (1) does not prevent a person from being indemnified against a liability for costs and expenses incurred by them:

 (a) in defending proceedings, whether civil or criminal, in which judgment is given in favour of them or in which they are acquitted; or

 (b) in connection with an application, in relation to such proceedings, in which the Court grants relief to them under this Act.

 (5) In this section:

indemnify includes indemnify indirectly through one or more interposed entities.

601JG  When can responsible entity pay insurance premiums for compliance committee members?

 (1) A scheme’s responsible entity or a related body corporate must not pay, or agree to pay, a premium in respect of a contract insuring a person who is or has been a member of the scheme’s compliance committee against a liability:

 (a) incurred by the person as a member; and

 (b) arising out of conduct involving a wilful breach of a duty referred to in section 601JD.

 (2) If subsection (1) is contravened, the contract is void in so far as it insures the person against the liability.

 (3) Subsections (1) and (2) do not apply to a liability for costs and expenses incurred by a person in defending proceedings, whether civil or criminal and whatever their outcome.

 (4) In this section:

pay includes pay indirectly through one or more interposed entities.

601JH  Proceedings of compliance committee

 (1) Subject to the requirements of the compliance plan, a scheme’s compliance committee may regulate its proceedings as it thinks appropriate.

 (2) The committee must keep:

 (a) minutes of its meetings; and

 (b) records of its reports and recommendations.

 (3) A committee meeting may be held using any technology agreed to by all the members.

601JJ  Disclosure of interests

 (1) A member of a scheme’s compliance committee must disclose to the committee a direct or indirect pecuniary interest that they have in a matter being considered, or about to be considered, by the committee if their interest could conflict with the proper performance of their duties in relation to the consideration of the matter.

 (2) A disclosure under subsection (1) must occur at the first meeting of the committee after the relevant facts have come to the member’s knowledge and must be recorded in the minutes of the meeting.

Part 5C.6Members’ rights to withdraw from a scheme

 

601KA  Members’ rights to withdraw

Withdrawal from schemes that are liquid

 (1) The constitution of a registered scheme may make provision for members to withdraw from the scheme, wholly or partly, at any time while the scheme is liquid (see subsection 601GA(4)).

Withdrawal from schemes that are not liquid

 (2) The constitution of a registered scheme may make provision for members to withdraw from the scheme, wholly or partly, in accordance with this Part while the scheme is not liquid (see subsection 601GA(4)).

Restrictions on withdrawal from schemes

 (3) The responsible entity must not allow a member to withdraw from the scheme:

 (a) if the scheme is liquid—otherwise than in accordance with the scheme’s constitution; or

 (b) if the scheme is not liquid—otherwise than in accordance with the scheme’s constitution and sections 601KB to 601KE.

 (3A) An offence based on subsection (3) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Liquid schemes

 (4) A registered scheme is liquid if liquid assets account for at least 80% of the value of scheme property.

Liquid assets

 (5) The following are liquid assets unless it is proved that the responsible entity cannot reasonably expect to realise them within the period specified in the constitution for satisfying withdrawal requests while the scheme is liquid:

 (a) money in an account or on deposit with a bank;

 (b) bank accepted bills;

 (c) marketable securities (as defined in section 9);

 (d) property of a prescribed kind.

 (6) Any other property is a liquid asset if the responsible entity reasonably expects that the property can be realised for its market value within the period specified in the constitution for satisfying withdrawal requests while the scheme is liquid.

601KB  Nonliquid schemes—offers

 (1) The responsible entity of a registered scheme that is not liquid may offer members an opportunity to withdraw, wholly or partly, from the scheme to the extent that particular assets are available and able to be converted to money in time to satisfy withdrawal requests that members may make in response to the offer.

 (2) The withdrawal offer must be in writing and be made:

 (a) if the constitution specifies procedures for making the offer—in accordance with those procedures; or

 (b) otherwise—by giving a copy of the offer to all members of the scheme or to all members of a particular class.

 (3) The withdrawal offer must specify:

 (a) the period during which the offer will remain open (this period must last for at least 21 days after the offer is made); and

 (b) the assets that will be used to satisfy withdrawal requests; and

 (c) the amount of money that is expected to be available when those assets are converted to money; and

 (d) the method for dealing with withdrawal requests if the money available is insufficient to satisfy all requests.

The method specified under paragraph (d) must comply with section 601KD.

 (4) For joint members, a copy of the withdrawal offer need only be given to the joint member named first in the register of members.

 (5) As soon as practicable after making the withdrawal offer, the responsible entity must lodge a copy of the offer with ASIC.

601KC  Nonliquid schemes—only one withdrawal offer to be open at any time

  Only one withdrawal offer may be open at any time in relation to a particular interest in a registered scheme that is not liquid.

601KD  Nonliquid schemes—how payments are to be made

  The responsible entity of a registered scheme that is not liquid must ensure that withdrawal requests made in response to a withdrawal offer are satisfied within 21 days after the offer closes. No request made under the withdrawal offer may be satisfied while the offer is still open. If an insufficient amount of money is available from the assets specified in the offer to satisfy all requests, the requests are to be satisfied proportionately in accordance with the formula:

Start formula Amount of money available times start fraction Amount member requested to withdraw over Total of all amounts members request to withdraw end fraction end formula

601KE  Nonliquid schemes—responsible entity may cancel withdrawal offer

 (1) The responsible entity of a registered scheme that is not liquid:

 (a) may cancel a withdrawal offer before it closes if the offer contains a material error; or

 (b) must cancel a withdrawal offer before it closes if it is in the best interests of members to do so.

 (2) The cancellation must be made:

 (a) if the constitution specifies procedures for cancelling the withdrawal offer—in accordance with those procedures; or

 (b) otherwise—by notice in writing to the members to whom the withdrawal offer was made.

 (3) The responsible entity must lodge written notice of the cancellation with ASIC.

Part 5C.7Related party transactions

 

601LA  Chapter 2E applies with modifications

  Chapter 2E applies to a registered scheme with the modifications set out in sections 601LB to 601LE and as if:

 (a) references to a public company were instead references to the responsible entity of the scheme; and

 (b) references to a benefit being given to or received by a related party of a public company were instead references to a benefit being given to or received by the responsible entity or a related party; and

 (c) references to a resolution of a public company were instead references to a resolution of the members of the scheme; and

 (d) references to a general meeting were instead references to a members’ meeting of the scheme; and

 (e) references to members of a public company were instead references to members of the scheme; and

 (f) references to the company’s best interests were instead references to the best interests of the scheme’s members.

601LB  Replacement section 207

  Chapter 2E applies as if section 207 were replaced by the following section:

207  Purpose

  The rules in this Chapter, as they apply to a registered scheme, are designed to protect the interests of the scheme’s members as a whole, by requiring member approval for giving financial benefits to the responsible entity or its related parties that come out of scheme property or that could endanger those interests.

601LC  Replacement section 208

  Chapter 2E applies as if section 208 were replaced by the following section:

208  Need for member approval for financial benefit

 (1) If all the following conditions are satisfied in relation to a financial benefit:

 (a) the benefit is given by:

 (i) the responsible entity of a registered scheme; or

 (ii) an entity that the responsible entity controls; or

 (iii) an agent of, or person engaged by, the responsible entity

 (b) the benefit either:

 (i) is given out of the scheme property; or

 (ii) could endanger the scheme property

 (c) the benefit is given to:

 (i) the person or a related party; or

 (ii) another person referred to in paragraph (a) or a related party of that person;

then, for the person referred to in paragraph (a) to give the benefit, either:

 (d) the person referred to in paragraph (a) must:

 (i) obtain the approval of the scheme’s members in the way set out in sections 217 to 227; and

 (ii) give the benefit within 15 months after the approval; or

 (e) the giving of the benefit must fall within an exception set out in sections 210 to 216.

Note: Section 228 defines related party, section 191 defines entity, section 191 defines control and section 229 affects the meaning of giving a financial benefit.

 (2) If:

 (a) the giving of the benefit is required by a contract; and

 (b) the making of the contract was approved in accordance with subparagraph (1)(d)(i) as a financial benefit given to the entity or related party; and

 (c) the contract was made:

 (i) within 15 months after that approval; or

 (ii) before that approval, if the contract was conditional on the approval being obtained;

member approval for the giving of the benefit is taken to have been given and the benefit need not be given within the 15 months.

 (3) Subsection (1) does not prevent the responsible entity from paying itself fees, and exercising rights to an indemnity, as provided for in the scheme’s constitution under subsection 601GA(2).

601LD  Omission of sections 213, 214 and 224

  Chapter 2E applies as if sections 213, 214 and 224 were omitted.

Note: Instead of section 224, the rule in section 253E will apply.

601LE  Modification of section 225

  Chapter 2E applies as if subsection 225(1) were amended by omitting “subsection 224(1)” and substituting “section 253E”.

Part 5C.8Effect of contraventions (civil liability and voidable contracts)

 

601MA  Civil liability of responsible entity to members

 (1) A member of a registered scheme who suffers loss or damage because of conduct of the scheme’s responsible entity that contravenes a provision of this Chapter may recover the amount of the loss or damage by action against the responsible entity whether or not the responsible entity has been convicted of an offence, or has had a civil penalty order made against it, in respect of the contravention.

 (2) An action under subsection (1) must be begun within 6 years after the cause of action arises.

 (3) This section does not affect any liability that a person has under other provisions of this Act or under other laws.

601MB  Voidable contracts where subscription offers and invitations contravene this Act

 (1) If:

 (a) a managed investment scheme is being operated in contravention of subsection 601ED(5) and a person (the offeror) offers an interest in the scheme for subscription, or issues an invitation to subscribe for an interest in the scheme; or

 (b) a person (the offeror) fails to comply with Division 2 of Part 7.9 when offering an interest in a registered scheme for subscription or issuing an invitation to subscribe for an interest in a registered scheme;

a contract entered into by a person (other than the offeror) to subscribe for the interest as a result of the person accepting the offer, or of the acceptance of an offer made by the person in response to the invitation, is voidable at the option of that person by notice in writing to the offeror.

 (2) If the person gives a notice under subsection (1), the obligations of the parties to the contract are suspended:

 (a) during the period of 21 days after the notice is given; and

 (b) during the period beginning when an application is made under subsection (4) in relation to the notice and ending when the application, and any appeals arising out of it, have been finally determined or otherwise disposed of.

 (3) Subject to subsection (6), the notice takes effect to void the contract:

 (a) at the end of 21 days after the notice is given; or

 (b) if, within that 21 days, the offeror applies under subsection (4)—at the end of the period when the obligations of the parties are suspended under paragraph (2)(b).

 (4) Within 21 days after the notice is given, the offeror may apply to the Court for an order declaring the notice to have had no effect.

 (5) The Court may extend the period within which the offeror may apply under subsection (4), even if the notice has taken effect.

 (6) On application under subsection (4), the Court may declare the notice to have had no effect if it is satisfied that, in all the circumstances, it is just and equitable to make the declaration.

Part 5C.9Winding up

 

601NA  Winding up required by scheme’s constitution

  The constitution of a registered scheme may provide that the scheme is to be wound up:

 (a) at a specified time; or

 (b) in specified circumstances or on the happening of a specified event;

but a provision of the constitution that purports to provide that the scheme is to be wound up if a particular company ceases to be its responsible entity is of no effect (including for the purposes of paragraph 601NE(1)(a)).

601NB  Winding up at direction of members

  If members of a registered scheme want the scheme to be wound up, they may take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider and vote on an extraordinary resolution directing the responsible entity to wind up the scheme.

601NC  Winding up if scheme’s purpose accomplished or cannot be accomplished

 (1) If the responsible entity of a registered scheme considers that the purpose of the scheme:

 (a) has been accomplished; or

 (b) cannot be accomplished;

it may, in accordance with this section, take steps to wind up the scheme.

 (2) The responsible entity must give to the members of the scheme and to ASIC a notice in writing:

 (a) explaining the proposal to wind up the scheme, including explaining how the scheme’s purpose has been accomplished or why that purpose cannot be accomplished; and

 (b) informing the members of their rights to take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider the proposed winding up of the scheme and to vote on any extraordinary resolution members propose about the winding up of the scheme; and

 (c) informing the members that the responsible entity is permitted to wind up the scheme unless a meeting is called to consider the proposed winding up of the scheme within 28 days of the responsible entity giving the notice to the members.

 (3) If no meeting is called within that 28 days to consider the proposed winding up, the responsible entity may wind up the scheme.

601ND  Winding up ordered by Court

 (1) The Court may, by order, direct the responsible entity of a registered scheme to wind up the scheme if:

 (a) the Court thinks it is just and equitable to make the order; or

 (b) within 3 months before the application for the order was made, execution or other process was issued on a judgment, decree or order obtained in a court (whether an Australian court or not) in favour of a creditor of, and against, the responsible entity in its capacity as the scheme’s responsible entity and the execution or process has been returned unsatisfied.

 (2) An order based on paragraph (1)(a) may be made on the application of:

 (a) the responsible entity; or

 (b) a director of the responsible entity; or

 (c) a member of the scheme; or

 (d) ASIC.

 (3) An order based on paragraph (1)(b) may be made on the application of a creditor.

601NE  The winding up of the scheme

 (1) The responsible entity of a registered scheme must ensure that the scheme is wound up in accordance with its constitution and any orders under subsection 601NF(2) if:

 (a) the scheme’s constitution provides that the scheme is to be wound up at a specified time, in specified circumstances or on the happening of a specified event and that time is reached, those circumstances occur or that event occurs; or

 (b) the members pass an extraordinary resolution directing the responsible entity to wind up the scheme; or

 (c) the Court makes an order directing the responsible entity to wind up the scheme; or

 (d) the members pass a resolution removing the responsible entity but do not, at the same meeting, pass a resolution choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

Note: For the Court’s power to order winding up, see subsection 601FQ(5) and section 601ND.

 (2) The responsible entity of a registered scheme may wind up the scheme in accordance with its constitution and any orders under subsection 601NF(2) if the responsible entity is permitted by subsection 601NC(3) to wind up the scheme.

 (3) Interests must not be issued in a registered scheme at a time after the responsible entity has become obliged to ensure the scheme is wound up, or after the scheme has started to be wound up.

601NF  Other orders about winding up

 (1) The Court may, by order, appoint a person to take responsibility for ensuring a registered scheme is wound up in accordance with its constitution and any orders under subsection (2) if the Court thinks it necessary to do so (including for the reason that the responsible entity has ceased to exist or is not properly discharging its obligations in relation to the winding up).

 (2) The Court may, by order, give directions about how a registered scheme is to be wound up if the Court thinks it necessary to do so (including for the reason that the provisions in the scheme’s constitution are inadequate or impracticable).

 (3) An order under subsection (1) or (2) may be made on the application of:

 (a) the responsible entity; or

 (b) a director of the responsible entity; or

 (c) a member of the scheme; or

 (d) ASIC.

601NG  Unclaimed money to be paid to ASIC

  If, on completion of the winding up of a registered scheme, the person who has been winding up the scheme has in their possession or under their control any unclaimed or undistributed money or other property that was part of the scheme property, the person must, as soon as practicable, pay the money or transfer the property to ASIC to be dealt with under Part 9.7.

Part 5C.10Deregistration

Division 1Registered schemes that are not Australian passport funds

601PAA  Application of this Division

  This Division applies to a registered scheme that is not an Australian passport fund.

601PA  Deregistration—voluntary

Responsible entity may apply for deregistration

 (1) The responsible entity of the registered scheme may lodge an application for deregistration of the scheme with ASIC.

 (2) The responsible entity may only apply if:

 (a) the scheme:

 (i) has 20 or less members (calculated in accordance with subsection 601ED(4)) and all the members agree that the scheme should be deregistered; and

 (ii) is not required to be registered by paragraph 601ED(1)(b) or (c); or

 (b) because of subsection 601ED(2) (exemption based on Division 2 of Part 7.9 not applying), the scheme is not required to be registered and all the members agree that the scheme should be deregistered; or

 (c) the scheme is not a managed investment scheme.

 (3) If ASIC is satisfied that the application complies with subsections (1) and (2), it must give notice of the proposed deregistration:

 (a) on the national database; and

 (b) in the Gazette.

When 2 months have passed since the Gazette notice, ASIC may deregister the scheme.

 (4) ASIC must give notice of the deregistration to the applicant.

601PB  Deregistration by ASIC

 (1) ASIC may decide to deregister the registered scheme if:

 (a) the scheme does not have a responsible entity that meets the requirements of section 601FA; or

 (b) the scheme does not have a constitution that meets the requirements of sections 601GA and 601GB; or

 (c) the scheme does not have a compliance plan that meets the requirements of section 601HA; or

 (d) the scheme’s property is not being:

 (i) clearly identified as the scheme’s property; and

 (ii) held separately from property of the responsible entity and property of any other scheme;

  in accordance with the scheme’s compliance plan; or

 (e) the following conditions are satisfied:

 (i) the response to a return of particulars given to the responsible entity of the scheme is at least 6 months late; and

 (ii) no other documents have been lodged by or on behalf of the scheme in the last 18 months; and

 (iii) ASIC has no reason to believe that the scheme is being operated; or

 (ea) the scheme’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment; or

 (f) the scheme has been wound up.

Deregistration procedure

 (2) If ASIC decides to deregister a scheme under this section, it must give notice of the proposed deregistration:

 (a) to the scheme’s responsible entity; and

 (b) to any other person who is winding up the scheme; and

 (c) on the national database; and

 (d) in the Gazette.

If the notice is given under paragraph (1)(a), (b), (c) or (d), the notice must specify the period at the end of which ASIC proposes to deregister the scheme.

 (3) ASIC may deregister the scheme:

 (a) if paragraph (1)(a), (b), (c) or (d) applies—at the end of the period set out in the Gazette notice; or

 (b) if paragraph (1)(e) or (f) applies—when 2 months have passed since the Gazette notice.

 (4) ASIC does not have to give a person notice under subsection (2) if ASIC does not have the necessary information about the person’s address.

 (5) ASIC must give notice of the deregistration to everyone who was notified of the proposed deregistration under paragraph (2)(a) or (b).

Division 2Registered schemes that are Australian passport funds

601PBA  Application of this Division

  This Division applies to a registered scheme that is an Australian passport fund (the fund).

601PBB  Deregistration—voluntary

Application

 (1) The operator of the fund may lodge an application with ASIC for deregistration of the fund as a registered scheme.

Note: The responsible entity of a registered scheme that is an Australian passport fund is also the operator of the fund. In this Division, the responsible entity is referred to as the operator.

 (2) The application must be in the prescribed form.

ASIC to deregister

 (3) On an application under subsection (1), ASIC must deregister the fund as a registered scheme if:

 (a) the fund satisfies one of the criteria mentioned in paragraphs 601PA(2)(a), (b) and (c) (usual grounds on which a registered scheme can be voluntarily deregistered); and

 (b) there are no members of the fund who became members (whether in this jurisdiction or any host economy for the fund) after the fund became an Australian passport fund; and

 (c) there are no members of the fund who became members (whether in this jurisdiction or any host economy for the fund) on the expectation that the fund would become an Australian passport fund.

 (4) For the purposes of subsection (3), ignore any member of the fund that:

 (a) is, or has at any time been, the operator of the fund; or

 (b) is a related party of an entity that is, or has at any time been, the operator of the fund.

Note: See section 1216B for the circumstances in which a person becomes a member of a fund on the expectation that it would become an Australian passport fund.

601PBC  Deregistration—initiated by ASIC

 (1) ASIC may decide to deregister the fund as a registered scheme if:

 (a) the fund does not have a responsible entity that meets the requirements of section 601FA; or

 (b) the fund does not have a constitution that meets the requirements of sections 601GA and 601GB; or

 (c) the fund does not have a compliance plan that meets the requirements of section 601HA; or

 (d) the fund’s property is not being:

 (i) clearly identified as the fund’s property; and

 (ii) held separately from property of the operator and property of any other scheme;

  in accordance with the fund’s compliance plan; or

 (e) the following conditions are satisfied:

 (i) the response to a return of particulars given to the operator of the fund is at least 6 months late;

 (ii) no other documents have been lodged by or on behalf of the fund in the last 18 months;

 (iii) ASIC has no reason to believe that the fund is being operated; or

 (f) the fund’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment; or

 (g) the fund has been wound up.

 (2) However, ASIC must not decide to deregister an Australian passport fund if ASIC is of the opinion that to do so would not be in the interests of:

 (a) members of the fund who became members (whether in this jurisdiction or any host economy for the fund) after the fund became an Australian passport fund; and

 (b) members of the fund who became members (whether in this jurisdiction or any host economy for the fund) on the expectation that the fund would become an Australian passport fund.

 (3) For the purposes of subsection (2), ignore any member of the fund that:

 (a) is, or has at any time been, the operator of the fund; or

 (b) is a related party of an entity that is, or has at any time been, the operator of the fund.

Note: See section 1216B for the circumstances in which a person becomes a member of a fund on the expectation that it would become an Australian passport fund.

 (4) Before deciding to deregister the fund as a registered scheme, ASIC must give the operator written notice that requires the operator to show cause, at a hearing before a specified person, why the fund should not be deregistered as a registered scheme.

 (5) The notice must specify:

 (a) the grounds on which it is proposed to deregister the fund as a registered scheme; and

 (b) a reasonable time and place at which the hearing is to be held.

However, if the operator consents, the person conducting the hearing may fix a different time or place.

 (6) The person conducting the hearing must:

 (a) give the operator an opportunity to be heard at the hearing; and

 (b) give ASIC:

 (i) a report about the hearing; and

 (ii) a recommendation about the grounds in the notice on which it is proposed to deregister the fund as a registered scheme.

 (7) After considering the report and recommendation, ASIC may:

 (a) decide to take no further action in relation to the matter and give written advice of that decision to the operator; or

 (b) deregister the fund as a registered scheme.

 (8) Neither of the following is a legislative instrument:

 (a) a notice under subsection (4);

 (b) a report under subsection (6) (if it is in writing).

601PBD  Notices relating to deregistration process

Notice before deregistration

 (1) If ASIC proposes to deregister a registered scheme that is an Australian passport fund under subsection 601PBB(3) or paragraph 601PBC(7)(b), ASIC must give written notice setting out the date on which ASIC proposes to deregister the registered scheme:

 (a) to the operator; and

 (b) to each host regulator for the Australian passport fund.

 (2) The notice must be given at least 5 business days before the fund is deregistered as a registered scheme.

Notice of deregistration

 (3) If ASIC deregisters a registered scheme that is an Australian passport fund under subsection 601PBB(3) or paragraph 601PBC(7)(b), ASIC must give written notice that the fund has been deregistered as a registered scheme and the date on which it has been deregistered:

 (a) to the operator; and

 (b) to each host regulator for the Australian passport fund.

 (4) The notice must be given within 5 business days after the fund is deregistered as a registered scheme.

601PBE  Consequences of deregistration on status as an Australian passport fund

 (1) A scheme ceases to be an Australian passport fund at the same time as it ceases to be a registered scheme.

 (2) ASIC must annotate the Register of Passport Funds to indicate that the scheme is no longer a registered scheme or an Australian passport fund, or cause that annotation to be made on the Register.

601PC  Reinstatement

 (1) ASIC may reinstate the registration of a managed investment scheme if ASIC is satisfied that the scheme should not have been deregistered or if the defect that led to the scheme being deregistered has been remedied.

 (2) The Court may make an order that ASIC reinstate the registration of a managed investment scheme if:

 (a) an application for reinstatement is made to the Court by:

 (i) a person aggrieved by the deregistration; or

 (ii) a person who was winding up the scheme; and

 (b) the Court is satisfied that it is just that the scheme’s registration be reinstated.

 (3) The Court may give any directions it thinks just for putting the scheme and other people in the same position, as far as possible, as if the scheme had not been deregistered.

ASIC to give notice of reinstatement

 (4) ASIC must give notice of a reinstatement in the Gazette. If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant.

 (5) The reinstatement of the registration of a managed investment scheme as a registered scheme does not result in the scheme becoming an Australian passport fund, even if the scheme was an Australian passport fund immediately before its deregistration.

Part 5C.11Exemptions and modifications

 

601QA  ASIC’s power to make exemption and modification orders

 (1) ASIC may:

 (a) exempt a person from a provision of this Chapter; or

 (b) declare that this Chapter applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.

Without limiting this, ASIC may declare that this Chapter applies to a person as if section 601HA included a requirement for scheme property to be held by a person other than the responsible entity as the responsible entity’s agent.

 (2) The exemption or declaration may:

 (a) apply to all or specified provisions of this Chapter; and

 (b) apply to all persons, specified persons, or a specified class of persons; and

 (c) relate to all securities, specified securities or a specified class of securities; and

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

 (3) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

 (4) The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette.

 (5) For the purposes of this section, the provisions of this Chapter include:

 (a) regulations made for the purposes of this Chapter; and

 (b) definitions in this Act or the regulations as they apply to references in:

 (i) this Chapter; or

 (ii) regulations made for the purposes of this Chapter; and

 (c) the old Division 11 of Part 11.2 transitionals.

601QB  Modification by regulations

  The regulations may modify the operation of this Chapter or any other provisions of this Act relating to securities in relation to:

 (a) a managed investment scheme; or

 (b) all managed investment schemes of a specified class.

Chapter 5DLicensed trustee companies

Part 5D.1Preliminary

 

601RAA  Definitions

  In this Chapter:

client, in relation to a trustee company, has the meaning given by subsection 601RAB(3).

estate management functions has the meaning given by subsection 601RAC(2).

estate that is administered or managed, in relation to a trustee company, means all or any of the estate of a person (whether living or dead) that is administered or managed by the trustee company in the course of performing estate management functions.

fees means fees in the nature of remuneration (including commission).

law means a law of the Commonwealth or of a State or Territory, and includes a rule of common law or equity.

licensed trustee company means a trustee company that holds an Australian financial services licence covering the provision of one or more traditional trustee company services.

Note: Traditional trustee company services are financial services for the purpose of Chapter 7: see subsection 766A(1A).

person with a proper interest, in relation to an estate, has the meaning given by section 601RAD.

publish: if the regulations prescribe requirements to be complied with in relation to an obligation in a provision of this Part to publish something, publish (in that provision) means publish in accordance with those requirements.

traditional trustee company services has the meaning given by subsection 601RAC(1).

trustee company has the meaning given by section 601RAB.

will includes a codicil and any other testamentary writing.

601RAB  Meaning of trustee company and client of trustee company

 (1) A trustee company is a company:

 (a) that is a corporation to which paragraph 51(xx) of the Constitution applies; and

 (b) that is prescribed by the regulations as a trustee company for the purpose of this Act.

 (2) For the purpose of paragraph (1)(b), companies may (for example) be prescribed:

 (a) by setting out a list of companies in the regulations; or

 (b) by providing a mechanism in the regulations for the determination of a list of companies.

 (2A) Before the GovernorGeneral makes a regulation that includes a company in a list set out for the purposes of paragraph (2)(a), the company must satisfy the Minister of the following:

 (a) that it is a corporation to which paragraph 51(xx) of the Constitution applies;

 (b) that its purposes include:

 (i) providing services of the kind referred to in paragraph 601RAC(1)(c); and

 (ii) performing functions of a kind referred to in paragraph 601RAC(2)(b) and at least one other estate management function;

 (c) that it is, and will continue to be, capable of providing the services, and performing the functions, referred to in paragraph (b) of this subsection;

 (d) that it is a fit and proper person;

 (e) that an unacceptable control situation (as defined in section 601VAA) does not exist in relation to it in relation to any person;

 (f) any other matter the Minister specifies by written notice to the company.

Note: Under Division 137 of the Criminal Code it may be an offence for a company to provide false or misleading information or documents to the Minister in purported compliance with this requirement.

 (3) A client of a trustee company is a person to whom, within the meaning of Chapter 7, a financial service (being a traditional trustee company service) is provided by the trustee company.

Note: Regulations made for the purpose of subsection 766A(1B) may prescribe the person or persons to whom a class of traditional trustee company services is taken to be provided.

601RAC  Meaning of traditional trustee company services and estate management functions

 (1) The following are traditional trustee company services:

 (a) performing estate management functions (see subsection (2));

 (b) preparing a will, a trust instrument, a power of attorney or an agency arrangement;

 (c) applying for probate of a will, applying for grant of letters of administration, or electing to administer a deceased estate;

 (d) establishing and operating common funds;

 (e) any other services prescribed by the regulations for the purpose of this paragraph.

 (2) The following are estate management functions (whether provided alone or jointly with another person or persons):

 (a) acting as a trustee of any kind, or otherwise administering or managing a trust;

 (b) acting as executor or administrator of a deceased estate;

 (c) acting as agent, attorney or nominee;

 (d) acting as receiver, controller or custodian of property;

 (e) otherwise acting as manager or administrator (including in the capacity as guardian) of the estate of an individual;

 (f) acting in any other capacity prescribed by the regulations for the purpose of this paragraph.

 (3) Subsections (1) and (2) do not apply to:

 (a) operating a registered scheme; or

 (b) providing a custodial or depository service; or

 (c) acting as trustee for debenture holders under Chapter 2L; or

 (d) acting as a receiver or other controller of property of a corporation under Part 5.2; or

 (e) acting as trustee of a superannuation fund, an approved deposit fund or a pooled superannuation trust (within the meaning of the Superannuation Industry (Supervision) Act 1993); or

 (f) acting in any other capacity prescribed by the regulations for the purpose of this paragraph.

601RAD  Meaning of person with a proper interest

 (1) A person with a proper interest, in relation to an estate, includes (but is not limited to) the following:

 (a) ASIC;

 (b) in relation to a charitable trust:

 (i) the settlor, or one of the settlors, of the trust; or

 (ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or

 (iii) a Minister of a State or Territory who has responsibilities relating to charitable trusts; or

 (iv) a person who is named in the instrument establishing the trust as a person who may receive payments on behalf of the trust; or

 (v) a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustee or trustees before distributing or applying money or other property for the purposes of the trust; or

 (vi) a person of a class that the trust is intended to benefit;

 (c) in the case of the estate of a deceased person:

 (i) if the person died testate—a beneficiary under the person’s will; or

 (ii) if the person died intestate—a person who, under a law of a State or Territory, has, or is entitled to, an interest in the deceased’s estate;

 (d) in the case of any other trust:

 (i) the settlor, or one of the settlors, of the trust; or

 (ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or

 (iii) a beneficiary of the trust;

 (e) in relation to an application to a court relating to the estate—a person that the court considers, in the circumstances of the case, has a proper interest in the estate;

 (f) a person prescribed by the regulations as having a proper interest in the estate;

 (g) if a person covered by any of the above paragraphs is under a legal disability—an agent of the person.

 (2) None of the paragraphs or subparagraphs of subsection (1) limits, or is limited by, any of the other paragraphs or subparagraphs of that subsection.

601RAE  Interaction between trustee company provisions and State and Territory laws

 (1) The trustee company provisions are:

 (a) the provisions of this Chapter, and regulations or other instruments made for the purposes of this Chapter; and

 (b) the provisions of Chapter 7, and regulations or other instruments made for the purposes of Chapter 7, as they apply in relation to financial services that are traditional trustee company services.

 (2) Subject to subsections (3) and (4), the trustee company provisions are intended to apply to the exclusion of laws of a State or Territory of the following kinds:

 (a) laws that authorise or license companies to provide traditional trustee company services generally (as opposed to laws that authorise or license companies to provide a particular traditional trustee company service);

 (b) laws that regulate the fees that may be charged by companies for the provision of traditional trustee company services, and laws that require the disclosure of such fees;

 (c) laws that deal with the provision of accounts by companies in relation to traditional trustee company services that they provide;

 (d) laws that deal with the duties of officers or employees of companies that provide traditional trustee company services;

 (e) laws that regulate the voting power that people may hold in companies that provide traditional trustee company services, or that otherwise impose restrictions on the ownership or control of companies that provide traditional trustee company services;

 (f) laws (other than laws referred to in section 601WBC) that deal with what happens to assets and liabilities held by a company, in connection with the provision by the company of traditional trustee company services, if the company ceases to be licensed or authorised to provide such services.

 (3) Subject to subsection (4), the trustee company provisions are not intended to apply to the exclusion of laws of a State or Territory that require a company to have (or to have staff who have) particular qualifications or experience if the company is to provide traditional trustee company services of a particular kind.

 (4) The regulations may provide:

 (a) that the trustee company provisions are intended to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws; or

 (b) that the trustee company provisions are intended not to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws.

 (5) The provisions of this Chapter have effect subject to this section.

Note: For example, section 601SAC (which provides that the powers etc. conferred by or under this Chapter are in addition to other powers etc.) is to be interpreted subject to this section.

 (6) Part 1.1A does not apply in relation to the trustee company provisions.

Part 5D.2Powers etc. of licensed trustee companies

Division 1General provisions

601SAA  Jurisdiction of courts not affected etc.

 (1) Any inherent power or jurisdiction of courts in respect of the supervision of the performance of traditional trustee company services is not affected by anything in this Chapter.

 (2) A licensed trustee company that is performing traditional trustee company services of a particular kind is subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of courts, in the same manner as any other person who performs traditional trustee company services of that kind.

601SAB  Regulations may prescribe other powers etc.

  A licensed trustee company also has, in relation to the provision of traditional trustee company services, such other powers, functions, liabilities and obligations, and such privileges and immunities, as are prescribed by the regulations.

601SAC  Powers etc. conferred by or under this Chapter are in addition to other powers etc.

  The powers, functions, liabilities and obligations, and the privileges and immunities, conferred or imposed on licensed trustee companies by or under this Chapter are in addition to, and not in derogation of, any powers, functions, liabilities and obligations, and any privileges and immunities, conferred or imposed by any other law:

 (a) on trustee companies; or

 (b) on persons who perform estate management functions or who provide other traditional trustee company services.

Division 2Accounts

601SBA  Licensed trustee company not required to file accounts

 (1) A licensed trustee company, when acting alone in relation to any estate of a deceased person, is not required to file, or file and pass, accounts relating to the estate unless the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders.

 (2) If a licensed trustee company is appointed and acts jointly with any other person in relation to any estate of a deceased person, the trustee company and that other person are not required to file, or file and pass, accounts relating to the estate unless:

 (a) that other person intends to charge fees for acting in relation to the estate; or

 (b) the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders.

601SBB  Licensed trustee company may be required to provide account in relation to estate

 (1) On application by a person with a proper interest in an estate that is administered or managed by a licensed trustee company, the trustee company must provide the person with an account of:

 (a) the assets and liabilities of the estate; and

 (b) the trustee company’s administration or management of the estate; and

 (c) any investment made from the estate; and

 (d) any distribution made from the estate; and

 (e) any other expenditure (including fees and commissions) from the estate.

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

Note 2: Failure to comply with this subsection may also lead to the consequences set out in subsection (4) of this section.

 (2) If:

 (a) a licensed trustee company has provided an account to a person under this section; and

 (b) the person applies for a further account within 3 months from the date on which the person was provided with the previous account;

the trustee company need not provide a further account in response to that application until the expiration of that period of 3 months.

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

 (3) A licensed trustee company may charge a reasonable fee for providing an account under this section.

 (4) If a licensed trustee company fails to provide a proper account under this section, the Court may, on application by the person who sought the account or any other person with a proper interest in the estate, make any order that the Court considers appropriate, including an order requiring the preparation and delivery of proper accounts.

601SBC  Court may order audit

 (1) The Court may, on any application under section 601SBB, in addition to or in substitution for any account to be provided by the licensed trustee company under that section, order that a person named in the order must examine the accounts of the trustee company relating to the estate in respect of which the order is made.

 (2) On the making of any such order, the trustee company must:

 (a) give to the person named in the order a list of all the accounts kept by the company relating to the estate; and

 (b) produce to the person, at an office of the trustee company at all reasonable times when required, all books in the company’s possession relating to the estate; and

 (c) provide the person with all necessary information and all other necessary facilities for enabling the person to make the examination.

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

Division 3Common funds

601SCA  Common funds of licensed trustee companies

 (1) A licensed trustee company may, for the purposes of investment, pool together into a fund or funds money (estate money) from 2 or more estates that are administered or managed by the trustee company in the performance of estate management functions.

 (2) A fund into which money is pooled as mentioned in subsection (1) is a common fund.

Note: A common fund may also be regulated under Chapter 5C (if the fund constitutes a managed investment scheme) but see also section 601SCAA, which deals with any inconsistencies in regulation between the Chapters.

 (3) A common fund may also include other money.

 (4) This section has effect subject to regulations made for the purpose of section 601SCC.

Note: For example, the regulations may limit the circumstances in which other money may be pooled together with estate money.

601SCAA  Common funds that are also registered schemes

  If, in relation to a common fund that is also a registered scheme, a provision of this Chapter or a regulation or other instrument made for the purposes of this Chapter is inconsistent with any of the following (a registered scheme provision):

 (a) a provision of Chapter 5C or a regulation or other instrument made for the purposes of that Chapter;

 (b) a provision of Part 7.9 of Chapter 7 or a regulation or other instrument made for the purposes of that Part;

the registered scheme provision prevails to the extent of the inconsistency.

601SCB  Obligations relating to common funds

 (1) If a licensed trustee company establishes more than one common fund, each must be allocated an appropriate distinguishing number.

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

 (2) For each common fund, the licensed trustee company must keep accounts showing at all times the current amount for the time being at credit in the fund on account of each estate.

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

 (3) A licensed trustee company must not put estate money into a common fund if doing so is contrary to an express provision of the conditions subject to which the estate money is held by the trustee company.

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

601SCC  Regulations relating to establishment or operation of common funds

  The regulations may include provisions relating to the establishment or operation of common funds.

601SCD  Arm’s length transactions

 (1) A licensed trustee company that operates a common fund that is not a registered scheme must not give a financial benefit in relation to the common fund to a related party.

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

 (2) Subsection (1) does not apply if the financial benefit is given on terms that:

 (a) would be reasonable in the circumstances if the trustee company and the related party were dealing at arm’s length; or

 (b) are less favourable to the related party than the terms referred to in paragraph (a).

 (3) In this section:

financial benefit has a meaning that is affected by section 229.

related party has the meaning given by section 228, as if references in that section to a public company were references to a licensed trustee company.

Part 5D.3Regulation of fees charged by licensed trustee companies

Division 1Disclosure of fees

601TAA  Schedule of fees to be published and available

  A licensed trustee company must ensure that an uptodate schedule of the fees that it generally charges for the provision of traditional trustee company services:

 (a) is made available to the public at all times on a website maintained by or on behalf of the trustee company; and

 (b) is made available to the public free of charge at offices of the trustee company during the usual opening hours of those offices.

Note 1: The schedule is of fees generally charged, and does not include fees that are agreed to etc. as mentioned in section 601TBB.

Note 2: Failure to comply with this section is an offence (see subsection 1311(1)).

601TAB  Disclosure to clients of changed fees

 (1) If, while a licensed trustee company continues to provide a particular traditional trustee company service to a client or clients, the trustee company changes the fees that it will charge for the provision of the service, the trustee company must, within 21 days of the change of fees taking effect, comply with paragraph (a) or (b) in relation to the client or each client:

 (a) if the client has requested to be sent copies of changed fees—send the client a copy of the changed fees in accordance with subsection (2); or

 (b) in any other case—directly notify the client, in writing, that the changed fees are available on the internet on a specified website maintained by or on behalf of the trustee company.

Note 1: Initial disclosure to a client of the fees that a trustee company will charge for the provision of a trustee company service will generally occur through the provision to the client of a Financial Services Guide under Part 7.7. However, this section is not limited just to situations where there has been an initial disclosure through a Financial Services Guide.

Note 1A: Other provisions in this Part and in the regulations limit the ability of licensed trustee companies to increase fees.

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

 (2) A copy of changed fees that is sent to a client under paragraph (1)(a) must be:

 (a) an electronic copy, if that is what the client has requested; or

 (b) a hard copy, in any other case.

 (3) If a client to whom a traditional trustee company service is provided is under a legal disability, the following provisions have effect:

 (a) a copy of changed fees required by paragraph (1)(a), or a notice required by paragraph (1)(b), must instead be given to an agent of the client;

 (b) a request referred to in paragraph (1)(a) or (2)(a) may instead be made by an agent of the client.

Division 2General provisions about charging fees

601TBA  Charging of fees for the provision of traditional trustee company services

 (1) Subject to this Part, a licensed trustee company may charge fees for the provision of traditional trustee company services.

 (2) If a provision of this Part limits the fees that a licensed trustee company may charge for the provision of a particular traditional trustee company service, the trustee company must not charge fees for that service in excess of that limit.

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

Note 2: Excess fees may also be recovered under section 601XAA.

601TBB  Part does not prevent charging of fees as agreed etc.

 (1) Nothing in this Part prevents a licensed trustee company from charging:

 (a) any fees that a testator, in his or her will, has directed to be paid; or

 (b) any fees that have been agreed on in accordance with subsection (2).

 (2) An agreement referred to in paragraph (1)(b) that relates to the fees that may be charged by a licensed trustee company for the provision of a particular traditional trustee company service must be between the trustee company and:

 (a) subject to paragraph (b) of this subsection—a person or persons who have authority to deal with the trustee company on matters relating to the provision of the service; or

 (b) if the regulations prescribe the person or persons with whom the agreement must be made—that person or those persons.

601TBC  Part does not prevent charging fee for provision of account

  Nothing in the Part prevents a licensed trustee company from charging a fee permitted by subsection 601SBB(3) for the provision of an account.

601TBD  Part does not prevent reimbursement

  Nothing in this Part prevents the reimbursement to a licensed trustee company of all disbursements properly made by the trustee company in the provision of a traditional trustee company service.

601TBE  Estate management functions: payment of fees out of estate

 (1) This section applies to the performance by a licensed trustee company of an estate management function relating to a particular estate.

 (2) Subject to subsection (3), fees charged by the trustee company, in accordance with this Part, for the performance of the function are payable to the trustee company out of the capital or income of the relevant estate.

 (3) Unless ASIC approves it under subsection (4):

 (a) a management fee referred to in section 601TDD can only come out of the income of the relevant estate; and

 (b) a common fund administration fee referred to in section 601TDE or 601TDI can only come out of the income received by the common fund on the assets of the charitable trust concerned that are included in the fund.

 (4) ASIC may, on application in writing by a licensed trustee company, approve payment of a proposed fee that, if paid without the approval, would contravene subsection (3), if ASIC is satisfied that:

 (a) the payment of the fee will not significantly affect the capital of the relevant estate or charitable trust concerned; and

 (b) the fee is a fair reflection of the work and expertise required to perform the estate management function.

Division 3Fees otherwise than for being trustee or manager of a charitable trust

601TCA  Fees otherwise than for being the trustee or manager of a charitable trust

 (1) This section applies to a particular provision of a traditional trustee company service by a licensed trustee company, unless:

 (a) the service consists of being the trustee or manager of a charitable trust (see Division 4); or

 (b) the provision of the service started before the commencement of this section.

 (2) The trustee company must not charge fees that are in excess of its schedule of fees that was most recently published as required by section 601TAA before the trustee company started to provide the service.

 (3) This section does not limit anything in Division 2.

601TCB  Additional amount for preparation of returns etc.

  A licensed trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to an estate that is administered or managed by the trustee company.

Division 4Fees for being trustee or manager of a charitable trust

Subdivision ANew client charitable trusts

601TDA  Subdivision applies to new client charitable trusts

  This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if:

 (a) the service consists of being the trustee or manager of a charitable trust; and

 (b) the provision of the service started on or after the commencement of this section.

601TDB  What the trustee company may charge

 (1) For the provision of the service, the trustee company must only charge:

 (a) either:

 (i) a capital commission, and an income commission, as provided for in section 601TDC; or

 (ii) a management fee as provided for in section 601TDD; and

 (b) if applicable, common fund administration fees under section 601TDE; and

 (c) if applicable, fees permitted by section 601TDF in respect of the preparation of returns etc.

 (2) This section does not limit anything in Division 2.

601TDC  Option 1: capital commission and income commission

Oneoff capital commission

 (1) The trustee company may charge a capital commission (GST inclusive) at a rate not exceeding 5.5% of the gross value of the charitable trust’s assets.

 (2) The capital commission must be charged only once during the period while the trustee company is trustee or manager of the charitable trust.

 (3) The regulations may make provision relating to the capital commission, including (but not limited to):

 (a) the calculation of the commission or of the gross value of the charitable trust’s assets; and

 (b) when, during the period referred to in subsection (2), the commission may be charged.

Annual income commission

 (4) The trustee company may charge an annual income commission (GST inclusive) at a rate not exceeding 6.6% of the income received on account of the charitable trust’s assets.

 (5) The regulations may make provision relating to the income commission, including (but not limited to):

 (a) the calculation of the commission or of the income received on the charitable trust’s assets; and

 (b) when, during a year, the commission may be charged; and

 (c) apportionment of the amount of the commission for partyears.

601TDD  Option 2: annual management fee

 (1) Instead of a capital commission and income commission under section 601TDC, the trustee company may charge an annual management fee (GST inclusive) at a rate not exceeding 1.056% of the gross value of the charitable trust’s assets.

 (2) The regulations may make provision relating to the management fee, including (but not limited to):

 (a) the calculation of the management fee or of the gross value of the charitable trust’s assets; and

 (b) when, during a year, the management fee may be charged; and

 (c) apportionment of the amount of the management fee for partyears.

601TDE  Additional amount if trust money is in a common fund

 (1) If any of the charitable trust’s assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust’s assets in the fund.

 (2) The regulations may make provision relating to the common fund administration fee, including (but not limited to):

 (a) the calculation of the common fund administration fee or of the gross value of the charitable trust’s assets in the fund; and

 (b) when, during a year, the common fund administration fee may be charged; and

 (c) the apportionment of the common fund administration fee for partyears.

601TDF  Additional amount for preparation of returns etc.

  The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust.

Subdivision BExisting client charitable trusts

601TDG  Subdivision applies to existing client charitable trusts

  This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if:

 (a) the service consists of being the trustee or manager of a charitable trust; and

 (b) the provision of the service started before the commencement of this section.

601TDH  Trustee company not to charge more than was being charged before section commenced

  Subject to section 601TDI and 601TDJ, the trustee company must not charge fees in excess of the fees than it could have charged in relation to the charitable trust immediately before the commencement of this section.

601TDI  Additional amount if trust money is in a common fund

 (1) If any of the charitable trust’s assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust’s assets in the fund.

 (2) The regulations may make provision relating to the common fund administration fee, including (but not limited to):

 (a) the calculation of the common fund administration fee or of the gross value of the charitable trust’s assets in the fund; and

 (b) when, during a year, the common fund administration fee may be charged; and

 (c) the apportionment of the common fund administration fee for partyears.

601TDJ  Additional amount for preparation of returns etc.

  The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust.

Division 5Miscellaneous

601TEA  Power of the Court with respect to excessive fees

 (1) If the Court is of the opinion that fees charged by a licensed trustee company in respect of any estate are excessive, the Court may review the fees and may, on the review, reduce the fees.

 (2) Subsection (1) does not apply to fees:

 (a) that are charged as permitted by section 601TBB; or

 (b) that relate to a charitable trust and that are charged as permitted by Subdivision A of Division 4.

 (3) In considering whether fees are excessive, the Court may consider any or all of the following matters:

 (a) the extent to which the work performed by the trustee company was reasonably necessary;

 (b) the extent to which the work likely to be performed by the trustee company is likely to be reasonably necessary;

 (c) the period during which the work was, or is likely to be, performed by the trustee company;

 (d) the quality of the work performed, or likely to be performed, by the trustee company;

 (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the trustee company;

 (f) the extent (if any) to which the trustee company was, or is likely to be, required to deal with extraordinary issues;

 (g) the extent (if any) to which the trustee company was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;

 (h) the value and nature of any property dealt with, or likely to be dealt with, by the trustee company;

 (i) if the fees are ascertained, in whole or in part, on a time basis—the time properly taken, or likely to be properly taken, by the trustee company in performing the work;

 (j) any other relevant matters.

 (4) The Court may exercise its powers under subsection (1) either on its own motion or on the application by or on behalf of a person with a proper interest in the estate.

 (5) If the fees are reduced by more than 10%, the trustee company must, unless the Court in special circumstances otherwise orders, pay the costs of the review.

 (6) Subject to subsection (5), all questions of costs of the review are in the discretion of the Court.

601TEB  Directors’ fees

 (1) This section applies if:

 (a) an estate that is administered or managed by a licensed trustee company has an interest in a corporation; and

 (b) an officer of the trustee company, in his or her capacity as such an officer, acts as a director of the corporation for purposes connected with the administration or management of the estate.

 (2) The trustee company is entitled to receive from the corporation (and to retain) any director’s fees that would be payable to the officer had he or she so acted otherwise than in his or her capacity as such an officer.

 (3) Neither the officer nor the estate is entitled to receive the fees that the trustee company is entitled to receive under subsection (2).

Part 5D.4Duties of officers and employees of licensed trustee companies

 

601UAA  Duties of officers of licensed trustee company

 (1) An officer of a licensed trustee company must:

 (a) act honestly; and

 (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the officer’s position; and

 (c) not make use of information acquired through being an officer of the trustee company for the purpose (or for purposes including the purpose) of:

 (i) gaining an improper advantage for the officer or another person; or

 (ii) causing detriment to the clients of the trustee company; and

 (d) not make improper use of their position as an officer for the purpose (or for purposes including the purpose) of:

 (i) gaining, directly or indirectly, an advantage for the officer or for any other person; or

 (ii) causing detriment to the clients of the trustee company; and

 (e) take all steps that a reasonable person would take, if they were in the officer’s position, to ensure that the trustee company complies, in relation to the provision of traditional trustee company services, with:

 (i) this Act; and

 (ii) any conditions imposed on the trustee company’s Australian financial services licence.

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

 (2) A person who contravenes, or is involved in a contravention of, subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: This subsection is a civil penalty provision (see section 1317E).

 (3) A duty of an officer of the trustee company under subsection (1) overrides any conflicting duty the officer has under Part 2D.1, but is subject to any conflicting duty the officer has under Part 5C.2.

 (4) A reference in this section to the clients of a licensed trustee company is a reference to the clients, when viewed as a group.

601UAB  Duties of employees of licensed trustee company

 (1) An employee of a licensed trustee company must not:

 (a) make use of information acquired through being an employee of the trustee company for the purpose (or for purposes including the purpose) of:

 (i) gaining an improper advantage for the employee or another person; or

 (ii) causing detriment to the clients of the trustee company; or

 (b) make improper use of their position as an employee for the purpose (or for purposes including the purpose) of:

 (i) gaining, directly or indirectly, an advantage for the employee or for any other person; or

 (ii) causing detriment to the clients of the trustee company.

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

 (2) A person who contravenes, or is involved in a contravention of, subsection (1) contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: This subsection is a civil penalty provision (see section 1317E).

 (3) A duty of an employee of the trustee company under subsection (1) overrides any conflicting duty the employee has under Part 2D.1, but is subject to any conflicting duty the employee has under Part 5C.2.

 (4) A reference in this section to the clients of a licensed trustee company is a reference to the clients, when viewed as a group.

Part 5D.5Limit on control of licensed trustee companies

Division 115% voting power limit

601VAA  Meaning of unacceptable control situation

  For the purposes of this Part, an unacceptable control situation exists in relation to a licensed trustee company and in relation to a particular person if the person’s voting power in the trustee company is more than:

 (a) 15%; or

 (b) if an approval of a higher percentage is in force under Division 2 in relation to the trustee company and in relation to the person—that higher percentage.

601VAB  Acquisitions of shares

  If:

 (a) a person, or 2 or more persons under an arrangement, acquire shares in a body corporate; and

 (b) the acquisition has the result, in relation to a licensed trustee company, that:

 (i) an unacceptable control situation comes into existence in relation to the trustee company and in relation to a person; or

 (ii) if an unacceptable control situation already exists in relation to the trustee company and in relation to a person—there is an increase in the voting power of the person in the trustee company;

the person or persons mentioned in paragraph (a) contravene this section.

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

601VAC  Remedial orders

 (1) If an unacceptable control situation exists in relation to a licensed trustee company, the Court may make such orders as the Court considers appropriate for the purpose of ensuring that the unacceptable control situation ceases to exist.

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

 (a) the Minister; or

 (b) ASIC; or

 (c) the trustee company; or

 (d) a person who has any voting power in the trustee company; or

 (e) a client of the trustee company.

 (3) 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) Subsection (3) does not, by implication, limit subsection (1).

 (5) Before making an order under this section, the Court may direct that notice of the application be given to such persons as the Court thinks fit or be published in such manner as the Court thinks fit, or both.

 (6) 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.

601VAD  Injunctions

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

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

 (3) The Minister has the same powers as ASIC to apply for an injunction under section 1324 in relation to a contravention of this Part.

 (4) The powers in sections 601VAC and 1324 do not, by implication, limit each other.

Division 2Approval to exceed 15% voting power limit

601VBA  Application for approval to exceed 15% voting power limit

 (1) A person may apply for approval to have voting power of more than 15% in a particular licensed trustee company by lodging with ASIC an application that:

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

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

 (c) sets out the person’s reasons for making the application.

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

 (2) ASIC must give the application to the Minister as soon as possible.

601VBB  Approval of application

 (1) The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

 (2) If the Minister grants the application, the Minister must:

 (a) give written notice of the approval to the applicant; and

 (b) specify the percentage of the voting power the Minister approves the applicant having in the licensed trustee company (which may or may not be the percentage the applicant applied for); and

 (c) either:

 (i) specify the period during which the approval remains in force; or

 (ii) specify that the approval remains in force indefinitely.

 (3) If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

 (4) As soon as practicable, the Minister must arrange for a copy of a notice of approval under this section to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

601VBC  Duration of approval

 (1) An approval under section 601VBB remains in force:

 (a) if the notice of approval specifies a period during which the approval remains in force—until the end of that period, or if the Minister extends that period, until the end of that extended period; or

 (b) otherwise—indefinitely.

Extension of approval

 (2) A person who holds an approval under section 601VBB that is in force for a specified period may apply to extend that period by lodging with ASIC an application that sets out the person’s reasons for making the application.

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

 (3) ASIC must give the application to the Minister as soon as possible.

 (4) The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

 (5) If the Minister grants the application, the Minister must:

 (a) give written notice of the extension to the applicant; and

 (b) specify the extended period during which the approval remains in force (which may or may not be the period the applicant applied for).

 (6) If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

 (7) As soon as practicable, the Minister must arrange for a copy of a notice of extension under this section to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

601VBD  Conditions of approval

 (1) An approval under section 601VBB is subject to such conditions (if any) as are specified in the notice of approval.

 (2) The Minister may, by written notice given to a person who holds an approval under section 601VBB:

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

 (b) revoke or vary any condition:

 (i) imposed under paragraph (a); or

 (ii) specified in the notice of approval.

 (3) The Minister’s power under subsection (2) may be exercised:

 (a) on the Minister’s own initiative; or

 (b) on application by the person who holds the approval.

 (4) An application made by a person under paragraph (3)(b) must be lodged with ASIC and must set out the person’s reasons for making the application.

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

 (5) ASIC must give the application to the Minister as soon as possible.

 (6) If the Minister refuses an application under paragraph (3)(b), the Minister must give written notice of the refusal to the applicant.

 (7) As soon as practicable, the Minister must arrange for a copy of a notice under subsection (2) to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

 (8) A person who holds an approval under section 601VBB must give written notice to ASIC as soon as practicable after 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)).

601VBE  Varying percentage approved

Application by holder of approval

 (1) A person who holds an approval under section 601VBB may apply to vary the percentage specified in the approval by lodging with ASIC an application that:

 (a) specifies the percentage of the voting power the person currently has in the licensed trustee company concerned; and

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

 (c) sets out the person’s reasons for making the application.

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

 (2) ASIC must give the application to the Minister as soon as possible.

 (3) The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

 (4) If the Minister grants the application, the Minister must:

 (a) give written notice of the variation to the applicant; and

 (b) specify the variation granted (which may or may not be the variation the applicant applied for).

 (5) If the Minister refuses an application, the Minister must give written notice of the refusal to the applicant.

Minister’s own initiative

 (6) The Minister may, by written notice given to a person who holds an approval under section 601VBB, vary the percentage specified in the approval if the Minister is satisfied that the variation would be in the interests of the licensed trustee company and its clients.

Percentage varied upwards

 (7) If the Minister varies a percentage upwards, the variation takes effect on the day the notice of variation is given.

Percentage varied downwards

 (8) If the Minister varies a percentage downwards, the variation takes effect on the day specified in the notice of variation. The specified day must be a day at least 90 days after the day on which the notice is given.

Notification of variation

 (9) As soon as practicable, the Minister must arrange for a copy of a notice of variation under this section to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

601VBF  Revoking an approval

 (1) The Minister may, by written notice given to a person who holds an approval under section 601VBB in relation to a licensed trustee company, revoke the approval if:

 (a) the Minister is satisfied that it would be in the interests of the trustee company and its clients for the approval to be revoked; or

 (b) the Minister is satisfied that an unacceptable control situation exists in relation to the trustee company and in relation to the person; or

 (c) the Minister is satisfied that there has been a contravention of a condition to which the approval is subject.

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

 (3) If a person who holds an approval under section 601VBB applies to the Minister for revocation of the approval, the Minister must, by written notice given to the person, revoke the approval. The revocation takes effect on the day specified in the notice of revocation.

 (4) As soon as practicable, the Minister must arrange for a copy of a notice of revocation under this section to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

601VBG  Minister may require further information from applicants

 (1) If a person has made an application under this Division, the Minister may, by written notice given to the person, require the person to give the Minister, within a specified period, further information about the application.

 (2) The Minister may refuse to consider the application until the person gives the Minister the information.

601VBH  Minister may seek views of licensed trustee company and its clients

  For the purpose of making a decision under this Division (whether or not in response to an application) in relation to a licensed trustee company, the Minister may seek the views of the trustee company and its clients.

601VBI  Time limit for Minister’s decision

 (1) The Minister must make a decision on an application under this Division within 30 days after receiving the application.

 (2) However, before the end of the 30 days, the Minister may decide to extend the period for considering the application until the end of 60 days after the application was received.

 (3) If the Minister has not made a decision within the 30 days (or the 60 days, if subsection (2) applies), the Minister is taken to have granted whatever was applied for. As soon as practicable after that happens, the Minister must arrange for a notice to that effect to be:

 (a) published in the Gazette; and

 (b) given to the licensed trustee company concerned.

 (4) The time for making the decision stops running if the Minister gives a notice under subsection 601VBG(1) in relation to the application, and does not start again until the notice is complied with.

 (5) The time limit in this section does not apply to an application under section 601VBB or 601VBE if an unacceptable control situation exists in relation to the applicant and in relation to the relevant licensed trustee company at any time before the Minister makes a decision.

Division 3Other matters

601VCA  Acquisition of property

 (1) The Court must not make an order under section 601VAC 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) Section 1350 does not apply in relation to the making of an order under section 601VAC.

 (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.

601VCB  Interests of clients to be viewed as a group

  A reference in this Part to the interests of the clients of a licensed trustee company is a reference to the interests of the clients, when viewed as a group.

601VCC  Antiavoidance

 (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 entered into, began to carry out or 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 Division 1 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 the controller’s voting power in a licensed trustee company;

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

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

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

 (3) A direction under subsection (1) is not a legislative instrument.

 (4) In this section:

increase voting power includes increasing it from a starting point of nil.

Part 5D.6ASICapproved transfers of estate assets and liabilities

Division 1Preliminary

601WAA  Definitions

 (1) In this Part:

asset means property, or a right, of any kind, and includes:

 (a) any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and

 (b) any chose in action; and

 (c) any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and

 (d) any CGT asset within the meaning of the Income Tax Assessment Act 1997.

authorised ASIC officer, when used in a particular provision of this Part, means a person authorised under subsection (2) to perform or exercise the functions or powers of an authorised ASIC officer under that provision.

cancel, in relation to a licence, means:

 (a) cancel the licence under Part 7.6; or

 (b) vary the conditions of the licence under Part 7.6 so that the licence ceases to cover traditional trustee company services.

certificate of transfer has the meaning given by subsection 601WBG(1).

compulsory transfer determination has the meaning given by subsection 601WBA(1).

estate assets and liabilities, of a company, means assets (including assets in common funds) and liabilities of an estate, or incurred in relation to an estate, in relation to which the company was performing estate management functions, if the assets and liabilities were vested in or otherwise belonged to the company:

 (a) because of its performance of those functions; and

 (b) immediately before:

 (i) if ASIC has cancelled the company’s licence—the cancellation; or

 (ii) otherwise—a relevant certificate of transfer comes into force.

Note: This Part does not apply to liabilities for breach of trust etc.: see section 601WBK.

interest, in relation to land, includes:

 (a) a legal or equitable estate or interest in the land; or

 (b) a right, power or privilege over, or in relation to, the land.

liability includes a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective).

licence means an Australian financial services licence that is held by a trustee company and that covers the provision of one or more traditional trustee company services.

receiving company has the meaning given by subsection 601WBA(1).

transfer determination has the meaning given by subsection 601WBA(1).

transferring company has the meaning given by subsection 601WBA(1).

voluntary transfer determination has the meaning given by subsection 601WBA(1).

 (2) ASIC may, in writing, authorise a person who is a member of ASIC, or of its staff, to perform or exercise the functions or powers of an authorised ASIC officer under a particular provision of this Part.

Division 2Transfer of estate assets and liabilities

601WBA  Transfer determinations

 (1) ASIC may, in writing, make a determination (a transfer determination) that there is to be a transfer of estate assets and liabilities from a specified company (the transferring company) to another specified company (the receiving company) if:

 (a) ASIC has cancelled the licence of the transferring company (the determination is a compulsory transfer determination); or

 (b) the transferring company has applied in the prescribed form for a determination (the determination is a voluntary transfer determination).

 (2) ASIC may make a transfer determination only if:

 (aa) for a compulsory transfer determination—the receiving company is a licensed trustee company or the Public Trustee of a State or Territory; and

 (ab) for a voluntary transfer determination:

 (i) the transferring company is a licensed trustee company or a company that was previously authorised as a trustee company under a law of a State or Territory; and

 (ii) the receiving company is a licensed trustee company; and

 (a) either:

 (i) the Minister has consented to the transfer; or

 (ii) the Minister’s consent to the transfer is not required (see section 601WBD); and

 (b) ASIC is satisfied that:

 (i) the transfer is in the interests of clients of the transferring company (when viewed as a group); and

 (ii) unless the receiving company is a Public Trustee—the transfer is in the interests of clients of the receiving company (when viewed as a group); and

 (iii) the board of the receiving company has consented to the transfer; and

 (iv) legislation to facilitate the transfer that satisfies the requirements of section 601WBC has been enacted in the State or Territory in which the transferring company is registered and the State or Territory in which the receiving company is registered or of which it is the Public Trustee.

 (2A) Even if the Public Trustee of a State or Territory is not a company:

 (a) the Public Trustee may still be specified as a receiving company for the purposes of a compulsory transfer determination; and

 (b) references in this Part (however expressed) to:

 (i) a company; or

 (ii) the board of a company;

  are taken to be references to that Public Trustee.

 (3) The determination must include particulars of the transfer, including:

 (a) the names of the transferring company and the receiving company; and

 (b) for a compulsory transfer determination—whether it will be a total transfer or a partial transfer of the transferring company’s estate assets and liabilities; and

 (c) if it will be a partial transfer—an indication of the part of the transferring company’s estate assets and liabilities that is to be transferred; and

 (d) for a voluntary transfer determination—that it will be a total transfer of the transferring company’s estate assets and liabilities.

 (4) The determination must include a statement of the reasons why the determination has been made.

 (5) The determination is not a legislative instrument.

601WBB  When consent of receiving company is in force

 (1) The consent referred to in subparagraph 601WBA(2)(b)(iii) remains in force until it is withdrawn by the receiving company’s board with the agreement of ASIC.

 (2) ASIC may agree to the consent being withdrawn if ASIC considers it appropriate to allow the consent to be withdrawn having regard to any of the following:

 (a) circumstances that have arisen since the consent was given;

 (b) circumstances that were in existence at or before the time when the consent was given but that were not known to the receiving company’s board when it gave its consent;

 (c) any other relevant matter.

601WBC  Complementary State or Territory legislation

  State or Territory legislation referred to in subparagraph 601WBA(2)(b)(iv) must include provision to ensure that, when a certificate of transfer comes into force under this Division, the receiving company is taken to be the successor in law in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular, the legislation must provide that:

 (a) assets of the transferring company become assets of the receiving company, to the extent of the transfer; and

 (b) liabilities of the transferring company become liabilities of the receiving company, to the extent of the transfer; and

 (c) the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company, to the extent of the transfer; and

 (d) if the certificate of transfer includes provisions of a kind referred to in subsection 601WBG(3) specifying:

 (i) that particular things are to happen or are taken to be the case—those things are taken to happen, or to be the case, in accordance with those provisions; or

 (ii) a mechanism for determining things that are to happen or are taken to be the case—things determined in accordance with that mechanism are taken to happen, or to be the case, as determined in accordance with that mechanism.

601WBD  Minister’s power to decide that his or her consent is not required

 (1) The Minister’s consent to the transfer of estate assets and liabilities is not required if the Minister has, in writing, determined that his or her consent is not required in relation to:

 (a) the transfer; or

 (b) a class of transfers that includes the transfer.

 (2) The regulations may prescribe criteria to be taken into account by the Minister in deciding whether to make a determination.

 (3) A determination is a legislative instrument if it is expressed to apply in relation to a class of transfers (whether or not it is also expressed to apply in relation to one or more transfers identified otherwise than by reference to membership of a class).

 (4) If subsection (3) does not apply to a determination, the determination is not a legislative instrument.

601WBE  Determinations may impose conditions

 (1) The transfer determination may impose conditions of either or both of the following kinds:

 (a) conditions to be complied with by the transferring company or the receiving company before a certificate of transfer is issued in relation to the transfer of estate assets and liabilities;

 (b) conditions to be complied with by the transferring company or the receiving company after a certificate of transfer has been issued or has come into force in relation to the transfer of estate assets and liabilities.

 (2) ASIC may, by notice in writing given to the transferring company or the receiving company, vary or revoke any condition of a determination if ASIC is satisfied that the variation or revocation is appropriate.

 (3) The transferring company or the receiving company may apply in writing to ASIC to have a condition of a kind referred in paragraph (1)(b) that applies to it varied or revoked.

 (4) ASIC may, by notice in writing given to the company that made the application, approve the variation or revocation if ASIC is satisfied that the variation or revocation is appropriate. A variation or revocation that is approved by ASIC has effect accordingly.

 (5) The transferring company or the receiving company must comply with any conditions that are imposed under subsection (1) as conditions to be complied with by that company.

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

 (6) The transferring company or the receiving company does not commit an offence against this Act merely because the company is complying with a condition imposed under subsection (1).

Note: A defendant bears an evidential burden in relation to the matter in subsection (6), see subsection 13.3(3) of the Criminal Code.

601WBF  Notice of determination

  ASIC must give a copy of the transfer determination to the transferring company and the receiving company.

601WBG  Certificate of transfer

 (1) If:

 (a) ASIC has made a transfer determination; and

 (b) ASIC considers that the transfer should go ahead; and

 (c) the consent referred to in subparagraph 601WBA(2)(b)(iii) has not been withdrawn under section 601WBB;

ASIC must, in writing, issue a certificate (a certificate of transfer) stating that the transfer is to take effect.

 (2) The certificate of transfer must:

 (a) include the names of the transferring company and the receiving company; and

 (b) for a compulsory transfer determination—state whether the transfer is a total transfer or a partial transfer; and

 (c) if the transfer is a partial transfer—include, or have attached to it, a list of the estate assets and liabilities that are being transferred to the receiving company; and

 (ca) for a voluntary transfer determination—state that the transfer is a total transfer; and

 (d) state when the certificate is to come into force (either by specifying a date as the date it comes into force, or by specifying that the date it comes into force is a date worked out in accordance with provisions of the certificate).

 (3) The certificate may include provisions specifying, or specifying a mechanism for determining, other things that are to happen, or that are taken to be the case, in relation to assets and liabilities that are to be transferred, or in relation to the transfer of estate assets and liabilities that is to be effected, whether the transfer is total or partial.

 (4) The certificate comes into force in accordance with the statement included in the certificate as required by paragraph (2)(d).

 (5) The certificate is not a legislative instrument.

601WBH  Notice of certificate

  ASIC must:

 (a) give a copy of the certificate of transfer to the transferring company and the receiving company; and

 (b) publish notice of the issue of the certificate.

601WBI  Time and effect of transfer

 (1) When a certificate of transfer comes into force, the receiving company becomes the successor in law of the transferring company in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular:

 (a) if the transfer is a total transfer—all the estate assets and liabilities of the transferring company, wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

 (b) if the transfer is a partial transfer—all the estate assets and liabilities included in the list referred to in paragraph 601WBG(2)(c), wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

 (c) to the extent of the transfer, the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company.

 (2) If the certificate includes provisions of a kind referred to in subsection 601WBG(3):

 (a) if the provisions specify that particular things are to happen or are taken to be the case—those things are, by force of this section, taken to happen, or to be the case, in accordance with those provisions; and

 (b) if the provisions specify a mechanism for determining things that are to happen or are taken to be the case—things determined in accordance with the mechanism are, by force of this section, taken to happen, or to be the case, as determined in accordance with that mechanism.

601WBJ  Substitution of trustee company

  When a certificate of transfer comes into force, any appointment or nomination of the transferring company to a particular capacity (for example, as trustee, executor or administrator) in relation to the transferred estate assets and liabilities is taken to be an appointment or nomination of the receiving company to that capacity in relation to those assets and liabilities.

601WBK  Liabilities for breach of trust and other matters not affected by this Part

 (1) Nothing in this Part applies to or affects liabilities of the transferring company, or of an officer or employee of the transferring company, for:

 (a) any breach of trust; or

 (b) any other misfeasance or nonfeasance; or

 (c) any exercise of, or failure to exercise, any discretion.

 (2) Nothing in this Part affects any rights of the transferring company, or of an officer or employee of the transferring company, to indemnity in respect of such liabilities.

Division 3Other matters related to the transfer of estate assets and liabilities

601WCA  Certificates evidencing operation of Act etc.

 (1) An authorised ASIC officer, by signed writing, may certify that a specified asset or liability has become an asset or liability of the receiving company under this Part.

 (2) For all purposes and in all proceedings, a certificate under subsection (1) is prima facie evidence of the matters certified.

601WCB  Certificates in relation to land and interests in land

  If:

 (a) the receiving company becomes, under this Part, the owner of land, or of an interest in land, that is situated in a State or Territory; and

 (b) there is lodged with the Registrar of Titles or other appropriate officer of the State or Territory in which the land is situated a certificate that:

 (i) is signed by an authorised ASIC officer; and

 (ii) identifies the land or interest; and

 (iii) states that the receiving company has, under this Part, become the owner of that land or interest;

the officer with whom the certificate is lodged may:

 (c) register the matter in the same manner as dealings in land or interests in land of that kind are registered; and

 (d) deal with, and give effect to, the certificate.

601WCC  Certificates in relation to other assets

 (1) If:

 (a) an asset (other than land or an interest in land) becomes, under this Part, an asset of the receiving company; and

 (b) there is lodged with the person or authority who has, under a law of the Commonwealth, a State or a Territory, responsibility for keeping a register in respect of assets of that kind a certificate that:

 (i) is signed by an authorised ASIC officer; and

 (ii) identifies the asset; and

 (iii) states that the asset has, under this Part, become an asset of the receiving company;

that person or authority may:

 (c) register the matter in the same manner as transactions in relation to assets of that kind are registered; and

 (d) deal with, and give effect to, the certificate.

 (2) This section does not affect the operation of:

 (a) other provisions of this Act; or

 (b) if the regulations prescribe provisions of one or more other Acts—those provisions of those Acts.

601WCD  Documents purporting to be certificates

  A document purporting to be a certificate given under this Division is, unless the contrary is established, taken to be such a certificate and to have been properly given.

601WCE  Construction of references to transferring company

  From when a certificate of transfer comes into force, in any instrument of any kind, a reference to the transferring company, in relation to assets or liabilities transferred under this Part, is taken to be a reference to the receiving company.

601WCF  Income or other distribution received by transferring company

  The transferring company must promptly account to the receiving company for any income or other distribution received by the transferring company after a certificate of transfer comes into force, if the income or distribution arises from assets transferred to the receiving company under this Part.

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

601WCG  Access to books

  The transferring company must, at the request of the receiving company, give the receiving company access to all books in its possession that relate to assets or liabilities transferred under this Part.

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

601WCH  Minister or ASIC may seek views of trustee company and its clients

  For the purpose of deciding whether to exercise powers under this Part, the Minister or ASIC may seek the views of a trustee company or its clients in relation to the possible exercise of the powers.

Division 4Miscellaneous

601WDA  Transferring company required to contact certain persons

Notice of cancellation of licence

 (1) If the licence of a trustee company is cancelled, the trustee company must, as soon as practicable:

 (a) take all reasonable steps to contact the following persons and advise them of the cancellation of the licence:

 (i) all persons who the trustee company is aware have executed and lodged instruments, such as wills, that have not yet come into effect, but will potentially lead to estate assets and liabilities being held by the trustee company;

 (ii) all persons who the trustee company is aware have appointed the trustee company as trustee or to some other capacity; and

 (b) publish notice of the cancellation of the licence.

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

Notice of compulsory transfer determination

 (2) If a certificate of transfer for a compulsory transfer determination comes into force, the transferring company must, as soon as practicable, take all reasonable steps to contact the persons referred to in subsection (1) and advise them of the transfer of estate assets and liabilities.

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

Notice of voluntary transfer determination

 (3) If a certificate of transfer for a voluntary transfer determination comes into force, the transferring company must, as soon as practicable, publish notice of the transfer of estate assets and liabilities.

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

Part 5D.7Contraventions and holding out

 

601XAA  Civil liability of licensed trustee companies

 (1) A person who suffers loss or damage because of conduct of a licensed trustee company that contravenes a provision of this Chapter may recover the amount of the loss or damage by action against the trustee company, whether or not the trustee company has been convicted of an offence, or has had a civil penalty order made against it, in respect of the contravention.

 (2) Without limiting subsection (1), if:

 (a) a licensed trustee company charges a person a fee in excess of fees permitted to be charged by this Chapter; and

 (b) the person pays the fee;

the amount of the excess is a loss that is recoverable by the person under subsection (1).

 (3) An action under subsection (1) must be begun within 6 years after the cause of action arises.

 (4) This section does not affect any liability that a person has under other provisions of this Act or under other laws.

601XAB  Prohibition on holding out

  A person must not hold out that the person is a licensed trustee company if that is not the case.

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

Part 5D.8Exemptions and modifications

 

601YAA  Exemptions and modifications by ASIC

 (1) ASIC may:

 (a) exempt a person or class of persons, or an estate or class of estates, from all or specified provisions of this Chapter; or

 (b) declare that this Chapter applies to a person or class of persons, or an estate or class of estates, as if specified provisions were omitted, modified or varied as specified in the declaration.

 (2) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

 (3) An exemption or declaration is a legislative instrument if it is expressed to apply in relation to a class of persons or a class of estates (whether or not it is also expressed to apply in relation to one or more persons or estates identified otherwise than by reference to membership of a class).

 (4) If subsection (3) does not apply to an exemption or declaration, the exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette. The exemption or determination is not a legislative instrument.

 (5) If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(b) had not been made, that conduct does not constitute an offence unless, before the conduct occurred (in addition to complying with the requirements of the Legislation Act 2003 (if the declaration is of a kind referred to in subsection (3)), or with the gazettal requirement of subsection (4), as the case may be):

 (a) the text of the declaration was made available by ASIC on the internet; or

 (b) ASIC gave written notice setting out the text of the declaration to the person.

In a prosecution for an offence to which this subsection applies, the prosecution must prove that paragraph (a) or (b) was complied with before the conduct occurred.

 (6) For the purpose of this section, the provisions of this Chapter include:

 (a) regulations or other instruments made for the purposes of this Chapter; and

 (b) definitions in this Act or the regulations, as they apply to references in:

 (i) this Chapter; or

 (ii) regulations or other instruments made for the purposes of this Chapter; and

 (c) any provisions of Division 2 of Part 10.12 that relate to this Chapter.

601YAB  Exemptions and modifications by regulations

 (1) The regulations may:

 (a) exempt a person or class of persons, or an estate or class of estates, from all or specified provisions of this Chapter; or

 (b) provide that this Chapter applies to a person or class of persons, or an estate or class of estates, as if specified provisions were omitted, modified or varied as specified in the declaration.

 (2) For the purpose of this section, the provisions of this Chapter include:

 (a) regulations or other instruments made for the purposes of this Chapter; and

 (b) definitions in this Act or the regulations, as they apply to references in:

 (i) this Chapter; or

 (ii) regulations or other instruments made for the purposes of this Chapter; and

 (c) any provisions of Division 2 of Part 10.12 that relate to this Chapter.

Chapter 6Takeovers

Note: This Chapter only applies to acquisitions of interests in a CCIV if the CCIV is a listed company: see Division 1 of Part 8B.7.

 

 

602  Purposes of Chapter

  The purposes of this Chapter are to ensure that:

 (a) the acquisition of control over:

 (i) the voting shares in a listed company, or an unlisted company with more than 50 members; or

 (ii) the voting shares in a listed body (other than a notified foreign passport fund); or

 (iii) the voting interests in a listed registered scheme;

  takes place in an efficient, competitive and informed market; and

 (b) the holders of the shares or interests, and the directors of the company or body or the responsible entity for the scheme:

 (i) know the identity of any person who proposes to acquire a substantial interest in the company, body or scheme; and

 (ii) have a reasonable time to consider the proposal; and

 (iii) are given enough information to enable them to assess the merits of the proposal; and

 (c) as far as practicable, the holders of the relevant class of voting shares or interests all have a reasonable and equal opportunity to participate in any benefits accruing to the holders through any proposal under which a person would acquire a substantial interest in the company, body or scheme; and

 (d) an appropriate procedure is followed as a preliminary to compulsory acquisition of voting shares or interests or any other kind of securities under Part 6A.1.

Note 1: To achieve the objectives referred to in paragraphs (a), (b) and (c), the prohibition in section 606 and the exceptions to it refer to interests in “voting shares”. To achieve the objective in paragraph (d), the provisions that deal with the takeover procedure refer more broadly to interests in “securities”.

Note 2: Subsection 92(3) defines securities for the purposes of this Chapter.

602A  Substantial interest concept

 (1) A reference in this Chapter to a substantial interest in a company, listed body (other than a notified foreign passport fund) or listed registered scheme is not to be read as being limited to an interest that is constituted by one or more of the following:

 (a) a relevant interest in securities in the company, body or scheme;

 (b) a legal or equitable interest in securities in the company, body or scheme;

 (c) a power or right in relation to:

 (i) the company, body or scheme; or

 (ii) securities in the company, body or scheme.

 (2) A person does not have a substantial interest in the company, body or scheme for the purposes of this Chapter merely because the person has an interest in, or a relationship with, the company, body or scheme of a kind prescribed by the regulations for the purposes of this subsection.

 (3) The regulations may provide that an interest of a particular kind is an interest that may constitute a substantial interest in a company, listed body (other than a notified foreign passport fund) or listed registered scheme for the purposes of this Chapter.

603  Chapter extends to some listed bodies that are not companies

  This Chapter applies to the acquisition of relevant interests in the securities of listed bodies that are not companies but are incorporated or formed in Australia in the same way as it applies to the acquisition of relevant interests in the securities of companies.

Note: Section 9 defines company and listed.

604  Chapter extends to listed registered schemes

 (1) This Chapter applies to the acquisition of relevant interests in the interests in a registered scheme that is also listed as if:

 (a) the scheme were a listed company; and

 (b) interests in the scheme were shares in the company; and

 (c) voting interests in the scheme were voting shares in the company; and

 (d) a meeting of the members of the scheme were a general meeting of the company; and

 (e) the obligations and powers that are imposed or conferred on the company were imposed or conferred on the responsible entity; and

 (f) the directors of the responsible entity were the directors of the company; and

 (g) the appointment of a responsible entity for the scheme were the election of a director of the company; and

 (h) the scheme’s constitution were the company’s constitution.

Note 1: Paragraph (g): See subsection 610(2).

Note 2: Section 9 defines voting interest in a managed investment scheme.

 (2) The regulations may modify the operation of this Chapter as it applies in relation to the acquisition of interests in listed registered schemes.

605  Classes of securities

 (1) Takeover bids are made for securities within a particular class. Similarly, compulsory acquisition and buyout rights operate on securities within a particular class.

 (2) For the purposes of this Chapter and Chapters 6A and 6C, securities are not taken to be different classes merely because:

 (a) some of the securities are fullypaid and others are partlypaid; or

 (b) different amounts are paid up or remain unpaid on the securities.

605A  Chapter does not apply to MCIs

  This Chapter does not apply to MCIs.

Part 6.1Prohibited acquisitions of relevant interests in voting shares

 

606  Prohibition on certain acquisitions of relevant interests in voting shares

Acquisition of relevant interests in voting shares through transaction entered into by or on behalf of person acquiring relevant interest

 (1) A person must not acquire a relevant interest in issued voting shares in a company if:

 (a) the company is:

 (i) a listed company; or

 (ii) an unlisted company with more than 50 members; and

 (b) the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person; and

 (c) because of the transaction, that person’s or someone else’s voting power in the company increases:

 (i) from 20% or below to more than 20%; or

 (ii) from a starting point that is above 20% and below 90%.

Note 1: Section 9 defines company as meaning a company registered under this Act.

Note 2: Section 607 deals with the effect of a contravention of this section on transactions. Sections 608 and 609 deal with the meaning of relevant interest. Section 610 deals with the calculation of a person’s voting power in a company.

Note 3: If the acquisition of relevant interests in an unlisted company with 50 or fewer members leads to the acquisition of a relevant interest in another company that is an unlisted company with more than 50 members, or a listed company, the acquisition is caught by this section because of its effect on that other company.

 (1A) However, the person may acquire the relevant interest under one of the exceptions set out in section 611 without contravening subsection (1).

Note: A defendant bears an evidential burden in relation to the matter in subsection (1A), see subsection 13.3(3) of the Criminal Code.

Acquisition of legal or equitable interest giving rise to relevant interest for someone else

 (2) A person must not acquire a legal or equitable interest in securities of a body corporate if, because of the acquisition:

 (a) another person acquires a relevant interest in issued voting shares in a company that is:

 (i) a listed company; or

 (ii) an unlisted company with more than 50 members; and

 (b) someone’s voting power in the company increases:

 (i) from 20% or below to more than 20%; or

 (ii) from a starting point that is above 20% and below 90%.

 (2A) However, if the acquisition of the relevant interest is covered by one of the exceptions set out in section 611, the person may acquire the legal or equitable interest without contravening subsection (2).

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

50 member threshold

 (3) In determining whether the company has more than 50 members for the purposes of subsection (1) or (2), count joint holders of a particular parcel of shares as 1 person.

Offers and invitations

 (4) A person must not:

 (a) make an offer, or cause an offer to be made on their behalf, if the person would contravene subsection (1) or (2) if the offer were accepted; or

 (b) issue an invitation, or cause an invitation to be issued on their behalf, if the person would contravene subsection (1) or (2) if:

 (i) an offer were made in response to the invitation; and

 (ii) the offer were accepted.

Faultbased offence

 (4A) A person commits an offence if the person contravenes subsection (1), (2) or (4).

Absolute liability offence

 (4B) A person commits an offence of absolute liability if the person contravenes subsection (1), (2) or (4).

Defences

 (5) It is a defence to the prosecution of a person for contravening subsection (1), (2) or (4) if the person proves that they contravened the subsection:

 (a) because of inadvertence or mistake; or

 (b) because the person was not aware of a relevant fact or occurrence.

In determining whether the defence is available, disregard the person’s ignorance of, or a mistake on the person’s part concerning, a matter of law.

Note: A defendant bears a legal burden in relation to a matter mentioned in subsection (5), see section 13.4 of the Criminal Code.

Extended meaning of acquiring relevant interests—conversions and increases in voting rights

 (6) A person is taken for the purposes of subsection (1) or (2) to acquire a relevant interest in voting shares in a company if:

 (a) securities in which the person already had a relevant interest become voting shares in the company; or

 (b) there is an increase in the number of votes that may be cast on a poll attached to voting shares that the person already had a relevant interest in.

The acquisition occurs when the securities become voting shares or the number of votes increases.

Note: Some examples of cases to which this subsection applies are:

607  Effect on transactions

  A transaction is not invalid merely because it involves a contravention of section 606.

608  Relevant interests in securities

Basic rule—relevant interest is holding, or controlling voting or disposal of, securities

 (1) A person has a relevant interest in securities if they:

 (a) are the holder of the securities; or

 (b) have power to exercise, or control the exercise of, a right to vote attached to the securities; or

 (c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If 2 or more people can jointly exercise one of these powers, each of them is taken to have that power.

Extension to control exercisable through a trust, agreement or practice

 (2) In this section, power or control includes:

 (a) power or control that is indirect; and

 (b) power or control that is, or can be, exercised as a result of, by means of or by the revocation or breach of:

 (i) a trust; or

 (ii) an agreement; or

 (iii) a practice; or

 (iv) any combination of them;

  whether or not they are enforceable; and

 (c) power or control that is, or can be made, subject to restraint or restriction.

It does not matter whether the power or control is express or implied, formal or informal, exercisable alone or jointly with someone else. It does not matter that the power or control cannot be related to a particular security.

Extension to relevant interests held through bodies corporate

 (3) A person has the relevant interests in any securities that any of the following has:

 (a) a body corporate, or managed investment scheme, in which the person’s voting power is above 20%;

 (b) a body corporate, or managed investment scheme, that the person controls.

Paragraph (a) does not apply to a relevant interest that the body corporate or scheme itself has in the securities merely because of the operation of that paragraph in relation to another body corporate or managed investment scheme.

 (4) For the purposes of paragraph (3)(b), a person controls a body corporate if the person has the capacity to determine the outcome of decisions about the body corporate’s financial and operating policies.

 (5) In determining whether a person has this capacity:

 (a) the practical influence the person can exert (rather than the rights they can enforce) is the issue to be addressed; and

 (b) any practice or pattern of behaviour affecting the body corporate’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

 (6) The person does not control the body corporate merely because the person and an entity that is not an associate jointly have the capacity to determine the outcome of decisions about the body corporate’s financial and operating policies.

 (7) A person is not taken to control a body corporate merely because of a capacity they have if they are under a legal obligation to exercise that capacity for the benefit of:

 (a) if the person is an individual—someone else; or

 (b) if the person is a body corporate—someone other than its members.

Extension to control in anticipation of performance of agreements etc.

 (8) If at a particular time all the following conditions are satisfied:

 (a) a person has a relevant interest in issued securities;

 (b) the person (whether before or after acquiring the relevant interest):

 (i) has entered or enters into an agreement with another person with respect to the securities; or

 (ii) has given or gives another person an enforceable right, or has been or is given an enforceable right by another person, in relation to the securities (whether the right is enforceable presently or in the future and whether or not on the fulfilment of a condition); or

 (iii) has granted or grants an option to, or has been or is granted an option by, another person with respect to the securities;

 (c) the other person would have a relevant interest in the securities if the agreement were performed, the right enforced or the option exercised;

the other person is taken to already have a relevant interest in the securities.

Note: Subsections 609(6) and (7) deal with specific situations in which the agreement will not give rise to a relevant interest.

Body corporate may have relevant interest in its own securities

 (9) This section may result in a body corporate having a relevant interest in its own securities.

Extension to interests in listed notified foreign passport funds

 (10) To avoid doubt, for the purposes of Chapter 6C, a person has a relevant interest in securities if the person would have a relevant interest in the securities if securities had the same meaning in this Chapter as it has in Chapter 6C.

609  Situations not giving rise to relevant interests

Money lending and financial accommodation

 (1) A person does not have a relevant interest in securities merely because of a security interest taken for the purpose of a transaction entered into by the person if:

 (a) the security interest is taken or acquired in the ordinary course of the person’s business of the provision of financial accommodation by any means and on ordinary commercial terms; and

 (b) the person whose property is subject to the security interest is not an associate of the person.

Note: Sections 11 to 17 define associate.

Nominees and other trustees

 (2) A person who would otherwise have a relevant interest in securities as a bare trustee does not have a relevant interest in the securities if a beneficiary under the trust has a relevant interest in the securities because of a presently enforceable and unconditional right of the kind referred to in subsection 608(8).

Note: This subsection will often apply to a person who holds securities as a nominee.

Holding of securities by financial services licensee

 (3) A financial services licensee does not have a relevant interest in securities merely because they hold securities on behalf of someone else in the ordinary course of their financial services business.

Shares covered by buybacks

 (4) A person does not have a relevant interest in a company’s shares if the relevant interest would arise merely because the company has entered into an agreement to buy back the shares.

Proxies

 (5) A person does not have a relevant interest in securities merely because the person has been appointed to vote as a proxy or representative at a meeting of members, or of a class of members, of the company, body or managed investment scheme if:

 (a) the appointment is for one meeting only; and

 (b) neither the person nor any associate gives valuable consideration for the appointment.

Market traded options and derivatives

 (6) A person does not have a relevant interest in securities merely because of:

 (a) an market traded option over the securities; or

 (b) a right to acquire the securities given by a derivative.

This subsection stops applying to the relevant interest when the obligation to make or take delivery of the securities arises.

Note: Without this subsection, subsection 608(8) would create a relevant interest from the option or contract.

Conditional agreements

 (7) A person does not have a relevant interest in securities merely because of an agreement if the agreement:

 (a) is conditional on:

 (i) a resolution under item 7 in the table in section 611 being passed; or

 (ii) ASIC exempting the acquisition under the agreement from the provisions of this Chapter under section 655A; and

 (b) does not confer any control over, or power to substantially influence, the exercise of a voting right attached to the securities; and

 (c) does not restrict disposal of the securities for more than 3 months from the date when the agreement is entered into.

The person acquires a relevant interest in the securities when the condition referred to in paragraph (a) is satisfied.

Preemptive rights

 (8) A member of a company, body or managed investment scheme does not have a relevant interest in securities of the company, body or scheme merely because the company’s, body’s or scheme’s constitution gives members preemptive rights on the transfer of the securities if all members have preemptive rights on the same terms.

Director of body corporate holding securities

 (9) A person does not have a relevant interest in securities merely because:

 (a) the person is a director of a body corporate; and

 (b) the body corporate has a relevant interest in those securities.

Clearing and settlement facilities

 (9A) The operator of a clearing and settlement facility (within the meaning of Chapter 7) does not have a relevant interest in securities merely because of its provision of facilities for the settlement of transactions.

Prescribed exclusions

 (10) A person does not have a relevant interest in securities in the circumstances specified in the regulations. The regulations may provide that interests in securities are not relevant interests subject to specified conditions.

610  Voting power in a body or managed investment scheme

Person’s voting power in a body or managed investment scheme

 (1) A person’s voting power in a designated body is:

Start formula start fraction Person's and associates' votes over Total votes in designated body end fraction times 100 end formula

where:

person’s and associates’ votes is the total number of votes attached to all the voting shares in the designated body (if any) that the person or an associate has a relevant interest in.

total votes in designated body is the total number of votes attached to all voting shares in the designated body.

Note: Even if a person’s relevant interest in voting shares is based on control over disposal of the shares (rather than control over voting rights attached to the shares), their voting power in the designated body is calculated on the basis of the number of votes attached to those shares.

Counting votes

 (2) For the purposes of this section, the number of votes attached to a voting share in a designated body is the maximum number of votes that can be cast in respect of the share on a poll:

 (a) if the election of directors is determined by the casting of votes attached to voting shares—on the election of a director of the designated body; or

 (b) if the election of directors is not determined by the casting of votes attached to voting shares—on the adoption of a constitution for the designated body or the amendment of the body corporate’s constitution.

Note: The Takeovers Panel may decide that the setting or varying of voting rights in a way that affects control of a designated body is unacceptable circumstances under section 657A.

 (3) If:

 (a) a transaction in relation to, or an acquisition of an interest in, securities occurs; and

 (b) before the transaction or acquisition, a person did not have a relevant interest in particular voting shares but an associate of the person did have a relevant interest in those shares; and

 (c) because of the transaction or acquisition, the person acquires a relevant interest in those shares;

then, for the purposes of applying section 606 to the transaction or acquisition, the person’s voting power is taken to have increased because of the transaction or acquisition from what it would have been before the transaction or acquisition if the votes attached to those shares were disregarded to what it was after the transaction or acquisition (taking the votes attached to those shares into account).

 (4) Disregard the operation of section 613 in working out a person’s voting power in a designated body.

When a designated body is a managed investment scheme

 (5) For the purposes of the application of this section in relation to a designated body that is a managed investment scheme:

 (a) a reference to voting shares in the designated body is taken to be a reference to voting interests in the scheme; and

 (b) a reference to the election of directors of the designated body is taken to be a reference to:

 (i) if the scheme is a registered scheme—the appointment of a responsible entity for the scheme; or

 (ii) if the scheme is not a registered scheme—the appointment of a person to the office (by whatever name it is known) in relation to the scheme that corresponds most closely to the office of responsible entity of a registered scheme; and

 (c) a reference to the designated body’s constitution is taken to be a reference to the scheme’s constitution.

Meaning of designated body

 (6) In this section:

designated body means:

 (a) a body; or

 (b) a managed investment scheme.

Part 6.2Exceptions to the prohibition

 

611  Exceptions to the prohibition

  The following table sets out:

 (a) acquisitions of relevant interests in a company’s voting shares that are exempt from the prohibition in subsection 606(1); and

 (b) acquisitions of relevant interests in a company’s voting shares resulting from acquisitions of legal or equitable interests in securities of a body corporate that are exempt from the prohibition in subsection 606(2).

Note: Some of the items in the table cover only activities in relation to the company itself (items 7, 8, 12 and 13) while the other items cover acquisitions in that company that may occur through activities in relation to other companies.

 

Acquisitions that are exempt

[operative]

 

Takeover bids

 

Acceptance of takeover offer

1

An acquisition that results from the acceptance of an offer under a takeover bid.

See also section 612.

 

Onmarket purchase during bid period

2

An acquisition in relation to bid class securities that results from an onmarket transaction if:

(a) the acquisition is by or on behalf of the bidder under a takeover bid; and

(b) the acquisition occurs during the bid period; and

(c) the bid is for all the voting shares in the bid class; and

 

(d) the bid is:

(i) unconditional; or

(ii) conditional only on the happening of an event referred to in subsection 652C(1) or (2).

See also sections 612 and 613.

 

Onmarket purchase of convertible securities during bid period

3

An acquisition of bid class securities that results directly from the exercise of rights attached to convertible securities if:

(a) the acquisition is by or on behalf of the bidder under a takeover bid; and

(b) the bidder acquired a relevant interest in the convertible securities through an onmarket transaction during the bid period; and

(c) the bid is for all the voting shares in the bid class; and

(d) the bid is:

(i) unconditional; or

(ii) conditional only on the happening of an event referred to in subsection 652C(1) or (2).

See sections 612 and 613.

 

Acceptance of scrip offered as takeover consideration

4

An acquisition that results from the acceptance of:

(a) an offer under a takeover bid if the voting shares are included in the consideration for offers under the bid; or

(b) an offer that results in an acquisition to which item 5 applies.

See also section 612.

 

Nature of acquirer

6

An acquisition that results from the exercise by a person of a power, or appointment as a receiver, or receiver and manager, under an instrument or agreement creating or giving rise to a security interest if:

(a) the person’s ordinary business includes the provision of financial accommodation by any means; and

(b) the person took or acquired the security interest in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms.

 

Approval by resolution of target

7

An acquisition approved previously by a resolution passed at a general meeting of the company in which the acquisition is made, if:

(a) no votes are cast in favour of the resolution by:

(i) the person proposing to make the acquisition and their associates; or

(ii) the persons (if any) from whom the acquisition is to be made and their associates; and

(b) the members of the company were given all information known to the person proposing to make the acquisition or their associates, or known to the company, that was material to the decision on how to vote on the resolution, including:

(i) the identity of the person proposing to make the acquisition and their associates; and

(ii) the maximum extent of the increase in that person’s voting power in the company that would result from the acquisition; and

 

(iii) the voting power that person would have as a result of the acquisition; and

(iv) the maximum extent of the increase in the voting power of each of that person’s associates that would result from the acquisition; and

(v) the voting power that each of that person’s associates would have as a result of the acquisition.

 

Target newly formed

8

An acquisition that results from an issue of securities of the company in which the acquisition is made if the company has not started to carry on any business and has not borrowed any money.

 

Manner of acquisition

 

3% creep in 6 months

9

An acquisition by a person if:

(a) throughout the 6 months before the acquisition that person, or any other person, has had voting power in the company of at least 19%; and

(b) as a result of the acquisition, none of the persons referred to in paragraph (a) would have voting power in the company more than 3 percentage points higher than they had 6 months before the acquisition.

 

Rights issues

10

An acquisition that results from an issue of securities that satisfies all of the following conditions:

(a) a company offers to issue securities in a particular class;

(b) offers are made to every person who holds securities in that class to issue them with the percentage of the securities to be issued that is the same as the percentage of the securities in that class that they hold before the issue;

(c) all of those persons have a reasonable opportunity to accept the offers made to them;

 

(d) agreements to issue are not entered into until a specified time for acceptances of offers has closed;

(e) the terms of all the offers are the same.

This extends to an acquisition by a person as underwriter to the issue or subunderwriter.

See section 615.

 

Dividend reinvestment etc.

11

An acquisition that results from an issue of:

(a) shares in a company to existing holders of shares in the company under a dividend reinvestment plan or bonus share plan; or

(b) interests in a managed investment scheme to existing holders of interests in the scheme under a distribution reinvestment plan or switching facility;

if the plan or facility is available to all members.

Disregard any unavailability to foreign holders in determining whether the plan or facility is available to all members.

 

Initial public offering (IPO) fundraising

12

An acquisition that results from an issue, under a disclosure document or a CSF offer document, of securities in the company in which the acquisition is made if:

(a) the issue is to a promoter; and

(b) the document disclosed the effect that the acquisition would have on the promoter’s voting power in the company; and

(c) no other disclosure document or CSF offer document has previously been issued or published by or on behalf of the company.

 

Underwriting of fundraising

13

An acquisition that results from an issue, under a disclosure document or a CSF offer document, of securities in the company in which the acquisition is made if:

(a) the issue is to a person as underwriter to the issue or subunderwriter; and

(b) the document disclosed the effect that the acquisition would have on the person’s voting power in the company.

 

Acquisition through listed company

14

An acquisition that results from another acquisition of relevant interests in voting shares in a body corporate included in the official list of:

(a) a prescribed financial market; or

(b) a foreign body conducting a financial market that is a body approved in writing by ASIC for the purposes of this item.

 

Wills etc.

15

An acquisition through a will or through operation of law.

 

Forfeiture of shares

16

An acquisition that results from an auction of forfeited shares conducted onmarket.

 

Compromise, arrangement, liquidation or buyback

 

Part 5.1 compromise or arrangement

17

An acquisition that results from a compromise or arrangement approved by the Court under Part 5.1.

 

Section 507 arrangement

18

An acquisition that results from an arrangement entered into by a liquidator under section 507.

 

Buyback

19

An acquisition that results from a buyback authorised by section 257A.

 

Proprietary companies that have CSF shareholders

19A

An acquisition of a relevant interest in issued voting shares in a proprietary company if:

(a) the company has one or more CSF shareholders; and

(b) all the other requirements (if any) prescribed by the regulations for the purposes of this paragraph are met.

 

Regulations

20

An acquisition made in a manner or in circumstances prescribed by the regulations. The circumstances may include acquisitions of relevant interests in voting shares in a specified body or class of bodies.

612  Effect of noncompliance with takeover rules for exceptions 1 to 4

  The exceptions in items 1 to 4 of the table in section 611 do not apply to a takeover bid if the bid is carried out in contravention of:

 (a) section 618 (full or proportionate bid); or

 (b) section 619 (offers to be the same); or

 (c) subsection 621(3) (minimum price); or

 (d) subsection 624(1) (minimum offer period); or

 (e) sections 625 to 630 (conditional offers); or

 (f) items 2, 3 and 6 in the table in subsection 633(1) (procedural steps for offmarket bid); or

 (g) items 3, 4 and 6 in the table in section 635 (procedural steps for market bid).

613  Bidder not to exercise voting rights if failure to send bids for offmarket acquisition—exception 2 or 3

  If the exception in item 2 or 3 of the table in section 611 applies to an acquisition onmarket during a takeover bid, the bidder is not entitled to exercise the voting rights attached to the shares if:

 (a) the bid is an offmarket bid; and

 (b) the bidder fails to send offers under the bid within 28 days after giving the bidder’s statement to the target.

615  Treatment of foreign holders under equal access issue—exception 10

  The exception in item 10 of the table in section 611 applies even though the conditions set out in the item are not satisfied in respect of foreign holders of the company’s securities if, under the terms of the offers:

 (a) the company must appoint a nominee for foreign holders of the company’s securities who is approved by ASIC; and

 (b) the company must transfer to the nominee:

 (i) the securities that would otherwise be issued to the foreign holders who accept the offer; or

 (ii) the right to acquire those securities; and

 (c) the nominee must sell the securities, or those rights, and distribute to each of those foreign holders their proportion of the proceeds of the sale net of expenses.

Part 6.3The different types of takeover bid

 

616  Offmarket bids and market bids

 (1) There are 2 kinds of takeover bid:

 (a) an offmarket bid (for quoted or unquoted securities); or

 (b) a market bid (only available for quoted securities).

Note: Although the prohibition in section 606 is against acquiring relevant interests in voting shares, a takeover bid may be made for any securities (for example, as a preliminary to compulsorily acquiring securities in that class under Part 6A.1).

 (2) The following table shows where to find the provisions dealing with the main features of the offers that may be made under offmarket bids and market bids and the procedures to be followed:

 

Takeover bids

[signpost table]

 

Feature

Offmarket bid

Market bid

1

people to whom offers made

617(1)(2)

617(3)

2

securities covered

618(1)(2)

618(3)

3

consideration offered for the securities

621(1), (3)(5) and 651A

621(2), (3)(5)

4

escalation agreements and collateral benefits not allowed

622 and 623

622 and 623

5

offer period

624(1)(2) and 650C

624(1)(2) and 649C

6

conditional offers

625(2)(3) and 626630

625(1)

7

procedure to be followed in making bid

632 and 633

634 and 635

8

acceptances

650E and 653A653B

 

Part 6.4Formulating the takeover offer

Division 1General

617  Securities covered by the bid

Offmarket bid

 (1) An offmarket bid must relate to securities:

 (a) in a class of securities (the bid class); and

 (b) that exist or will exist as at the date set by the bidder under subsection 633(2).

Note: Subsection 92(3) defines securities for the purposes of this Chapter.

 (2) If other securities exist or will exist at that date that:

 (a) will convert, or may be converted, to securities in the bid class; or

 (b) confer rights to be issued securities in the bid class;

the bid may extend to securities that come to be in the bid class during the offer period due to a conversion or exercise of the rights.

Note: The bidder’s statement must say if the bid is extended in this way (see paragraph 636(1)(j)).

Market bid

 (3) A market bid must relate to securities:

 (a) in a class of quoted securities (the bid class); and

 (b) that exist or will exist at any time during the offer period.

618  Offers must be for all or a proportion of securities in the bid class

Offmarket bid

 (1) An offer for securities under an offmarket bid must be an offer to buy:

 (a) all the securities in the bid class; or

 (b) a specified proportion of the securities in the bid class.

The proportion specified under paragraph (b) must be the same for all holders of securities in the bid class.

Offmarket bid—nonmarketable parcels

 (2) If accepting an offer under an offmarket bid for quoted securities would leave a person with a parcel of the securities that is less than a marketable parcel (within the meaning of the rules of the relevant financial market), the offer extends to that parcel.

Market bid

 (3) An offer for securities under a market bid must be an offer to buy all the securities in the bid class.

619  General terms of the offer

Offmarket bid

 (1) All the offers made under an offmarket bid must be the same.

Note: The offers may include alternative forms of consideration (see section 621).

 (2) In applying subsection (1), disregard the following:

 (a) any differences in the offers attributable to the fact that the number of securities that may be acquired under each offer is limited by the number of securities held by the holder;

 (b) any differences in the offers attributable to the fact that the offers relate to securities having different accrued dividend or distribution entitlements;

 (c) any differences in the offers attributable to the fact that the offers relate to securities on which different amounts are paid up or remain unpaid;

 (d) any differences in the offers attributable to the fact that the bidder may issue or transfer only whole numbers of securities as consideration for the acquisition;

 (e) any additional cash amount offered to holders instead of the fraction of a security that they would otherwise be offered.

Foreign holders

 (3) If the consideration for the bid includes an offer of securities, the securities do not need to be offered to foreign holders of the target’s securities if under the terms of the bid:

 (a) the bidder must appoint a nominee for foreign holders of the target’s securities who is approved by ASIC; and

 (b) the bidder must transfer to the nominee:

 (i) the securities that would otherwise be transferred to the foreign holders who accept the bid for that consideration; or

 (ii) the right to acquire those securities; and

 (c) the nominee must sell the securities, or those rights, and distribute to each of those foreign holders their proportion of the proceeds of the sale net of expenses.

620  Offmarket bid (offer formalities)

 (1) Each offer under an offmarket bid must:

 (a) be in writing; and

 (b) have the same date; and

 (c) provide that, unless withdrawn, it will remain open until the end of the offer period (see section 624); and

 (d) state how, and when, the bidder is to satisfy their obligations.

 (2) Each offer must provide that the bidder is to pay or provide the consideration for the offer:

 (a) if the bidder is given the necessary transfer documents with the acceptance—by the end of whichever of the following periods ends earlier:

 (i) 1 month after the offer is accepted or, if the offer is subject to a defeating condition, within 1 month after the takeover contract becomes unconditional

 (ii) 21 days after the end of the offer period; or

 (b) if the bidder is given the necessary transfer documents after the acceptance and before the end of the bid period—within 1 month after the bidder is given the necessary transfer documents; or

 (c) if the bidder is given the necessary transfer documents after the acceptance and after the end of the bid period—within 21 days after the bidder is given the necessary transfer documents.

Note: Subsection 630(1) requires an offer that is subject to a defeating condition to specify a date for declaring whether the condition has been fulfilled or not.

 (3) The offer may provide that the bidder may avoid the takeover contract if the bidder is not given the necessary transfer documents within 1 month after the end of the offer period.

Division 2Consideration for the offer

621  Consideration offered

Offmarket bid—general

 (1) A bidder making an offmarket bid for securities may offer any form of consideration for the securities, including:

 (a) a cash sum; or

 (b) securities (including shares, debentures, interests in a managed investment scheme or options); or

 (c) a combination of a cash sum and securities.

Note: Sections 650B and 651A deal with variations of the consideration offered under the bid.

Market bid—cash only

 (2) As the offers under a market bid for securities are made through a prescribed financial market, the bidder must offer to acquire the securities for a cash sum only for each security.

Note: Section 649B deals with variations of the consideration offered under the bid.

All bids—minimum consideration if bidder purchased securities in the 4 months before the bid

 (3) The consideration offered for securities in the bid class under a takeover bid must equal or exceed the maximum consideration that the bidder or an associate provided, or agreed to provide, for a security in the bid class under any purchase or agreement during the 4 months before the date of the bid.

 (4) For the purposes of subsection (3), the consideration offered or provided for a security is:

 (a) if the consideration offered or provided is a cash sum only—the amount of that cash sum; or

 (b) if the consideration offered or provided does not include a cash sum—the value of that consideration; or

 (c) if the consideration offered or provided is a cash sum and other consideration—the sum of the amount of the cash sum and the value of the other consideration.

The value of consideration that is not a cash sum is to be ascertained as at the time the relevant offer, purchase or agreement is made.

 (5) If:

 (a) a person agrees to buy a security in a company; and

 (b) the agreement provides that the price payable for the security is a price specified in the agreement but may be varied in accordance with the terms of the agreement;

any variation in price under the agreement is to be disregarded in working out, for the purposes of subsection (3), the price agreed to be paid for the security under the agreement.

622  Escalation agreements

Benefits linked to bids and proposed bids not allowed

 (1) A person who makes or proposes to make a takeover bid for securities, or their associate, contravenes this section if:

 (a) a person acquires a relevant interest in securities in the bid class within the 6 months before the bid is made or proposed; and

 (b) at any time whatever, the bidder, proposed bidder or associate gives or agrees to give a benefit to, or receives or agrees to receive a benefit from:

 (i) a person who had a relevant interest in any of the paragraph (a) securities immediately before the acquisition; or

 (ii) an associate of a person who had a relevant interest in any of those securities at that time; and

 (c) the benefit is attributable to the acquisition or matters that include the acquisition; and

 (d) the amount or value of the benefit is, or is to be, determined by reference to or to matters that include either of the following:

 (i) the amount or value of the consideration for the securities under the bid or proposed bid;

 (ii) the amount or value of the consideration for which the bidder or proposed bidder acquires, offers or proposes to offer to acquire, securities in the bid class during the offer period (whether or not under the bid) or under Chapter 6A.

Strict liability offences

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Contravening agreements void

 (2) An agreement is void to the extent that it purports to provide for:

 (a) a person to give a benefit to a person; or

 (b) a person to receive a benefit from a person;

in contravention of subsection (1).

623  Collateral benefits not allowed

 (1) A bidder, or an associate, must not, during the offer period for a takeover bid, give, offer to give or agree to give a benefit to a person if:

 (a) the benefit is likely to induce the person or an associate to:

 (i) accept an offer under the bid; or

 (ii) dispose of securities in the bid class; and

 (b) the benefit is not offered to all holders of securities in the bid class under the bid.

 (1A) An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

 (2) For the purpose of this section, a person does not receive a benefit that is not offered under a takeover bid merely because the person sells bid class securities onmarket and the takeover bid is an offmarket bid or a conditional bid.

 (3) This section does not prohibit:

 (a) the variation of a takeover offer as provided by sections 649A to 650D; or

 (b) an acquisition of securities through an onmarket transaction; or

 (c) simultaneous takeover bids for different classes of securities in the target.

Division 3The offer period

624  Offer period

Offer period set in offer

 (1) The offers under a takeover bid must remain open for the period stated in the offer. The period must:

 (a) start on the date the first offer under the bid is made; and

 (b) last for at least 1 month, and not more than 12 months.

However, the offer may be withdrawn during that period under section 652B.

Note: Sections 649C (market bids) and 650C (offmarket bids) deal with variation of the offer period.

Automatic extension of offer period if bidder reaches 50% or consideration increased in last week

 (2) If, within the last 7 days of the offer period:

 (a) for an offmarket bid—the offers under the bid are varied to improve the consideration offered; or

 (b) in any case—the bidder’s voting power in the target increases to more than 50%;

the offer period is extended so that it ends 14 days after the event referred to in paragraph (a) or (b). The bidder must give the target and everyone who has not accepted an offer under the bid written notice that the extension has occurred within 3 days after that event.

Note: The consideration for a market bid cannot be increased in the last 5 trading days of the offer period (see section 649B).

Strict liability offences

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

Note: For strict liability, see section 6.1 of the Criminal Code.

Division 4Conditional offers

625  Conditional offers—general

Market bids

 (1) Offers under a market bid must be unconditional.

Offmarket bids may generally be conditional

 (2) Offers under an offmarket bid may be subject to conditions that are not prohibited by sections 626 to 629.

 (3) If:

 (a) the consideration offered is or includes securities; and

 (b) the offer or the bidder’s statement states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere);

the following rules apply:

 (c) the offer is subject to a condition that:

 (i) an application for admission to quotation will be made within 7 days after the start of the bid period; and

 (ii) permission for admission to quotation will be granted no later than 7 days after the end of the bid period;

 (d) the offer may not be freed from this condition.

Note: Section 1325A provides that a Court may make a remedial order if the condition is not satisfied.

626  Maximum acceptance conditions in offmarket bids

Maximum acceptance conditions not allowed

 (1) Offers under an offmarket bid must not be subject to a maximum acceptance condition. A maximum acceptance condition is one that provides that the offers will terminate, or the maximum consideration offered under the bid will be reduced, if one or more of the following occur:

 (a) the number of securities for which the bidder receives acceptances reaches or exceeds a particular number; or

 (b) the bidder’s voting power in the company reaches or exceeds a particular percentage; or

 (c) the percentage of securities the bidder has relevant interests in reaches or exceeds a particular percentage of securities in that class.

 (2) For the purposes of subsection (1), it does not matter:

 (a) how the condition is expressed; or

 (b) how a particular number or percentage was, or is to be, determined; or

 (c) whether or not a particular number or percentage is specified in the condition and, if it is so specified, how it is expressed.

 (3) For the purposes of subsection (1), an offer under an offmarket bid terminates if:

 (a) the offer lapses, is withdrawn or otherwise ceases to have effect; or

 (b) a binding takeover contract will not result from an acceptance of the offer; or

 (c) an obligation of the bidder will not arise under the takeover contract; or

 (d) the takeover contract is rescinded; or

 (e) the bidder is entitled to rescind the takeover contract; or

 (f) the bidder is relieved of an obligation arising under the takeover contract.

627  Discriminatory conditions not allowed for offmarket bids

  Offers under an offmarket bid must not be subject to a condition that allows the bidder to acquire, or may result in the bidder acquiring, securities from some but not all of the people who accept the offers. It does not matter how the condition is expressed.

628  Conditions requiring payments to officers of target not allowed in offmarket bids

  An offer to a person under an offmarket bid must not be made subject to a condition that requires the person to approve or consent to a payment or other benefit to an officer or employee of the target or a related body corporate:

 (a) as compensation for loss of; or

 (b) as consideration in connection with retirement from;

any office or employment in connection with the management of the target or of a related body corporate. A purported requirement of this kind is void.

629  Conditions turning on bidder’s or associate’s opinion not allowed in offmarket bids

 (1) Offers under an offmarket bid must not be subject to a defeating condition if the fulfilment of the condition depends on:

 (a) the bidder’s, or an associate’s, opinion, belief or other state of mind; or

 (b) the happening of an event that is within the sole control of, or is a direct result of action by, any of the following:

 (i) the bidder (acting alone or together with an associate or associates);

 (ii) an associate (acting alone or together with the bidder or another associate or associates of the bidder).

A purported condition of this kind is void.

Note: Section 9 defines defeating condition. Sections 630, 650F and 650G deal with defeating conditions.

 (2) For the purposes of paragraph (1)(b):

 (a) the target; and

 (b) a subsidiary of the target;

are taken not to be associates of the bidder if they would otherwise be an associate merely because of paragraph 12(2)(a).

630  Defeating conditions

Offmarket bid may include defeating conditions

 (1) Offers under an offmarket bid may be made subject to a defeating condition only if the offers specify a date (not more than 14 days and not less than 7 days before the end of the offer period) for giving a notice on the status of the condition.

 (2) If the offer period is extended by a period:

 (a) the date for giving the notice is taken to be postponed for the same period; and

 (b) as soon as practicable after the extension, the bidder must give a notice that states:

 (i) the new date for giving the notice of the status of the condition; and

 (ii) whether the offers have been freed from the condition and whether, so far as the bidder knows, the condition has been fulfilled on the date the notice under this subsection is given.

Bidder to give notice of status of defeating condition near end of offer period

 (3) On the date determined under subsection (1) or (2), the bidder must give a notice that states:

 (a) whether the offers are free of the condition; and

 (b) whether, so far as the bidder knows, the condition was fulfilled on the date the notice is given; and

 (c) the bidder’s voting power in the target.

The bidder must comply with this subsection whether or not the bidder has given a notice under subsection (4) or 650F(1).

Note: The offers may be freed of the condition by a declaration by the bidder under subsection 650F(1).

Bidder to give notice if defeating condition fulfilled

 (4) If the condition is fulfilled (so that the offers become free of the condition) during the bid period but before the date for publishing the notice on the status of the condition, the bidder must publish as soon as practicable a notice that states that the condition has been fulfilled.

 (5) A notice under this section is given by:

 (a) giving the notice to the target; and

 (b) for quoted bid class securities—giving the notice to the relevant market operator; and

 (c) for unquoted bid class securities—lodging the notice with ASIC.

Strict liability offences

 (6) An offence based on subsection (2), (3) or (4) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

Part 6.5The takeover procedure

Division 1The overall procedure

631  Proposing or announcing a bid

 (1) A person contravenes this subsection if:

 (a) either alone or with other persons, the person publicly proposes to make a takeover bid for securities in a company; and

 (b) the person does not make offers for the securities under a takeover bid within 2 months after the proposal.

The terms and conditions of the bid must be the same as or not substantially less favourable than those in the public proposal.

Note: The Court has power under section 1325B to order a person to proceed with a bid.

 (1A) For the purposes of an offence based on subsection (1), strict liability applies to paragraph (1)(b) and to the requirement that the terms and conditions of the bid must be the same as or not substantially less favourable than those in the public proposal.

Note: For strict liability, see section 6.1 of the Criminal Code.

Proposals if takeover bid not intended

 (2) A person must not publicly propose, either alone or with other persons, to make a takeover bid if:

 (a) the person knows the proposed bid will not be made, or is reckless as to whether the proposed bid is made; or

 (b) the person is reckless as to whether they will be able to perform their obligations relating to the takeover bid if a substantial proportion of the offers under the bid are accepted.

 (3) Section 1314 (continuing offences) and subsection 1324(2) (injunctions) do not apply in relation to a failure to make a takeover bid in accordance with a public proposal under subsection (1).

Note: For liability and defences for contraventions of this section, see sections 670E and 670F.

632  Overview of steps in an offmarket bid

  The following diagram gives an overview of the steps involved in an offmarket bid.

 

Overview of steps in an offmarket bid

 

Bidder

 

 

 

Step 1

bidder’s statement (together with offer document)

 

——

* ASIC
* target
* [market]

 

 

 

 

 

 

Step 2

notice that Step 1 done

——

* ASIC

 

 

 

 

 

 

Step 3

bidder’s statement and offers

——

* holders of bid class securities

 

 

 

 

 

 

Step 4

notice that Step 3 done

 

——

* target
* ASIC
* [market]

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

 

——

* bidder
* holders of bid class securities
* ASIC
* [market]

 

The holders then consider the terms of the offer, and the statements provided by the bidder and the target, and decide whether to accept the offer under section 653A before the end of the bid period. A holder may also decide to sell onmarket during the bid period.

 

633  Detailed steps in an offmarket bid

 (1) The following table provides for the steps that a bidder must take to make an effective offmarket bid and the steps that a target must take when an offmarket bid is made.

 

Steps in offmarket bid

[operative table]

 

Steps

Timing and relevant provisions

1

The bidder must prepare:

 a bidder’s statement; and

 if the bidder’s statement does not set out all the terms of the offer—an offer document that sets out the other terms of the offer.

See section 636 for content of statement.

2

The bidder must lodge a copy of the bidder’s statement and offer document with ASIC.

 

3

The bidder must send a copy of the bidder’s statement and offer document to the target.

To be done on the day the bidder’s statement is lodged or within 21 days afterwards

4

The bidder must lodge with ASIC a notice stating that the bidder’s statement and offer document have been sent to the target.

To be done on the day the bidder’s statement is sent to the target

5

The bidder must send a copy of the bidder’s statement and offer document to the operator of each prescribed financial market on which the target’s securities are quoted.

To be done on the day the bidder’s statement is sent to the target

See also subsection (5).

6

The bidder must send the bidder’s statement and offers to each person (other than the bidder) who holds:

 securities in the bid class; or

 if the bid extends to securities that come to be in the bid class due to the conversion of or exercise of rights attached to other securities (see subsection 617(2))—the other securities;

as at the date set by the bidder under subsection (2).

The offers must be made on the terms set out in the bidder’s statement and the offer document lodged with ASIC under item 2.

To be done:

 within a 3 day period; and

 within 1428 days after the bidder’s statement is sent to the target

The directors of the target may agree that the offers and accompanying documents be sent earlier.

See also subsections (5) and (6).

Item 2 of the table in section 611 covers offers made by the bidder onmarket during the period between the lodgment of the bidder’s statement and the making of the offers under the bid.

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

7

The bidder must send a notice to the target that the bidder’s statement and offers have been sent as required by item 6.

The notice must state the date of the offers.

To be done on the day all offers have been sent as required by item 6

See subsection 620(1) on date of offer.

8

The bidder must send a notice that offers have been sent as required by item 6 to the operator of each prescribed financial market on which the target’s securities are quoted.

To be done on the day all offers have been sent as required by item 6

9

The bidder must lodge with ASIC a notice that offers have been sent as required by item 6.

To be done on the day all offers have been sent as required by item 6

10

The target must prepare a target’s statement.

See section 638 for content of statement.

11

The target must send the target’s statement (and any accompanying report) to the bidder.

To be done no later than 15 days after the target receives a notice that all offers have been sent as required by item 6

12

The target must send a copy of the target’s statement (and any accompanying report) to each person who holds:

 securities in the bid class; or

 if the bid extends to securities that come to be in the bid class due to the conversion of or exercise of rights attached to other securities (see subsection 617(2))—the other securities;

as at the date set by the bidder under subsection (2).

To be done:

 no earlier than the day on which the target sends the target’s statement to the bidder; and

 no later than 15 days after the target receives a notice that all offers have been sent as required by item 6

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

13

The target must lodge a copy of the target’s statement (and any accompanying report) with ASIC.

To be done on the day the target’s statement is sent to the bidder

See also subsection (7).

14

The target must send a copy of the target’s statement (and any accompanying report) to the operator of each prescribed financial market on which the target’s securities are quoted.

To be done on the day the target’s statement is sent to the bidder

See also subsection (7)

Date for determining holders of securities

 (2) The people to whom information is to be sent under items 6 and 12 of the table in subsection (1) are the holders of the securities referred to in those items as at the date set by the bidder in:

 (a) the bidder’s statement; or

 (b) a separate written notice given to the target on or before the date set by the bidder.

Note: The bidder may set the date when the bidder asks the target for a list of members under section 641.

 (3) The date set by the bidder must be:

 (a) on or after the date on which the bidder gives the bidder’s statement, or the separate written notice, to the target; and

 (b) on or before the date on which the first offers under the bid are made to holders of the securities.

 (4) As soon as practicable after setting the day, the bidder must give notice of it by:

 (a) if the securities in the bid class are quoted—giving the notice to the relevant market operator; or

 (b) otherwise—lodging the notice with ASIC.

Information to be sent with bidder’s statement

 (5) A bidder’s statement required to be sent under item 5 or 6 in the table in subsection (1) must be sent together with any other information sent by the bidder to the target with the statement.

Information to be sent with notices that offers have been sent

 (6) If the bidder sends the people to whom the bidder’s statement is sent under item 6 of the table in subsection (1) additional information together with the bidder’s statement and the offer, the bidder must also include that information in any notice under item 7, 8 or 9 of the table.

Information to be sent with target’s statement

 (7) If the target sends the people to whom the target’s statement is sent under item 12 of the table in subsection (1) additional information together with the target’s statement, the target must also include that information in any notice under item 13 or 14 of the table.

Strict liability offences

 (8) An offence based on this section is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

634  Overview of steps in a market bid

  The following diagram gives an overview of the steps involved in a market bid.

 

Overview of steps in a market bid

 

Bidder

 

 

 

Step 1

announcement of bid to the market

 

 

 

 

 

 

 

 

Step 2

bidder’s statement

——

* market
* target
* ASIC

 

 

 

 

 

 

Step 3

bidder’s statement and any other documents sent with it to the market

——

* holders of bid class securities

 

 

 

 

 

 

Step 4

copy of documents sent to holders

——

* market
* ASIC

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

——

* market
* bidder
* ASIC
* holders of bid class securities

 

 

 

 

 

 

 

Bidder

 

 

 

Step 6

make offers on the market

 

 

 

The holders then consider the terms of the offer, and the statements provided by the bidder and the target, and decide whether to accept the offer onmarket before the end of the bid period.

635  Detailed steps in a market bid

 (1) The following table provides for the steps that a bidder must take to make an effective market bid and the steps that a target must take when a market bid is made.

 

Steps in market bid

[operative]

 

Steps

Timing and relevant provisions

1

The bidder must prepare a bidder’s statement.

See section 636 for content of statement

2

The bidder must have the bid announced to the relevant financial market.

 

3

The bidder must send a copy of the bidder’s statement to the relevant market operator

To be done on the day the announcement is made

4

The bidder must send to the target:

 a copy of the bidder’s statement; and

 a copy of any other document that was sent with the bidder’s statement to the relevant market operator.

To be done on the day the announcement is made

5

The bidder must lodge with ASIC:

 a copy of the bidder’s statement; and

 a copy of any other document that was sent with the bidder’s statement to the relevant market operator.

To be done on the day the announcement is made

6

The bidder must send to each holder of bid class securities (other than the bidder):

 a copy of the bidder’s statement; and

 a copy of any other document that was sent with the bidder’s statement to the relevant market operator.

Within 14 days after the announcement is made.

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

7

The bidder must lodge with ASIC a copy of every other document sent to holders of bid class securities with the bidder’s statement.

To be done no later than the day copies of the bidder’s statement have been sent to all holders of bid class securities

8

The bidder must give the relevant market operator a copy of every other document sent to holders of bid class securities with the bidder’s statement.

To be done no later than the day copies of the bidder’s statement have been sent to all holders of bid class securities

9

The target must prepare a target’s statement.

See section 638 for content of statement

10

The target must send a copy of the target’s statement to the relevant market operator.

Within 14 days after the announcement is made

11

The target must send to the bidder:

 a copy of the target’s statement; and

 a copy of any other document that was sent with the target’s statement to the relevant market operator.

To be done on the day the target sends a copy of the target’s statement to the relevant market operator

12

The target must lodge with ASIC:

 a copy of the target’s statement; and

 a copy of any other document that was sent with the target’s statement to the relevant market operator.

To be done on the day the target sends a copy of the target’s statement to the relevant market operator

13

The target must send each holder of bid class securities:

 a copy of the target’s statement; and

 a copy of any other document that was sent with the target’s statement to the relevant market operator.