Chapter 5A—Deregistration, and transfer of registration, of companies
Part 5A.1—Deregistration
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 sub‑funds of CCIVs, see Subdivision A of Division 9 of Part 8B.6.
601 Meaning of property
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.
(1C) ASIC may also decide to deregister a company if the company is liable to pay an instalment of levy (within the meaning of the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023) and the company has not paid in full at least 12 months after the due date for payment:
(a) the amount of the instalment of levy; and
(b) the amount of any late payment penalty payable in relation to the instalment of levy; and
(c) the amount of any shortfall penalty payable in relation to the instalment of 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 70‑35(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.
(1B) ASIC may reinstate the registration of a company deregistered under subsection 601AB(1C) if:
(a) ASIC receives an application in relation to the reinstatement of the company’s registration; and
(b) the instalments of levy (within the meaning of the Financial Services Compensation Scheme of Last Resort Levy (Collection) Act 2023) imposed on the company are paid in full; and
(c) the amount of any late payment penalty payable in relation to the instalments of levy is paid in full; and
(d) the amount of any shortfall penalty payable in relation to the instalments of 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.2—Transfer of registration
Note: This Part does not apply to a CCIV or a sub‑fund 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 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
(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 non‑employee 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 non‑cash 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 2—Operation 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 pre‑registration 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.2—Registrable bodies
Division 1A—Preliminary
601C Meaning of property
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 1—Registrable 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 a notice published in accordance with subsection 601CCA(1), 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).
601CCA Publishing notices relating to cessation of business etc.
(1) A notice mentioned in paragraph 601CC(14)(a) is published in accordance with this subsection if it is published:
(a) unless paragraph (b) of this subsection applies—in a manner that results in the notice being accessible to the public and reasonably prominent; or
(b) if a determination under subsection (2) is in force:
(i) if the determination specifies one or more manners of publication under paragraph (2)(a)—in a manner specified in the determination; or
(ii) if the determination specifies that such a notice may be published in the prescribed manner—in the prescribed manner.
Note: For publication in the prescribed manner, see section 1367A.
(2) For the purposes of paragraph (1)(b), ASIC may, by legislative instrument, make a determination specifying:
(a) unless the matter in paragraph (b) of this subsection is specified—one or more manners in which a notice mentioned in paragraph 601CC(14)(a) may be published; or
(b) that such a notice may be published in the prescribed manner.
(3) A manner of publication may be specified in the determination under paragraph (2)(a) only if ASIC considers that the manner of publication would result in such a notice being accessible to the public and reasonably prominent.
Division 2—Foreign 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 Balance‑sheets 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 balance‑sheet 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 balance‑sheet, profit and loss statement, cash flow statement or other document to be lodged.
(3) ASIC may, if it is of the opinion that the balance‑sheet, 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 balance‑sheet; or
(b) require the company to lodge an audited balance‑sheet; 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 balance‑sheet 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 balance‑sheet, the company must prepare and lodge a balance‑sheet, or, if ASIC so requires, an audited balance‑sheet, 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 a notice published in accordance with subsection 601CLA(1), 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).
601CLA Publishing notices relating to cessation of business etc.
(1) A notice mentioned in paragraph 601CL(15)(a) is published in accordance with this subsection if it is published:
(a) unless paragraph (b) of this subsection applies—in a manner that results in the notice being accessible to the public and reasonably prominent; or
(b) if a determination under subsection (2) is in force:
(i) if the determination specifies one or more manners of publication under paragraph (2)(a)—in a manner specified in the determination; or
(ii) if the determination specifies that such a notice may be published in the prescribed manner—in the prescribed manner.
Note: For publication in the prescribed manner, see section 1367A.
(2) For the purposes of paragraph (1)(b), ASIC may, by legislative instrument, make a determination specifying:
(a) unless the matter in paragraph (b) of this subsection is specified—one or more manners in which a notice mentioned in paragraph 601CL(15)(a) may be published; or
(b) that such a notice may be published in the prescribed manner.
(3) A manner of publication may be specified in the determination under paragraph (2)(a) only if ASIC considers that the manner of publication would result in such a notice being accessible to the public and reasonably prominent.
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 first‑mentioned 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 first‑mentioned 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 3—Bodies 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 last‑mentioned notice or the later or latest of those last‑mentioned 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 4—Register of debenture holders for non‑companies
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 non‑companies
(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.3—Names 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 5C—Managed investment schemes
Part 5C.1—Registration 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.2—The responsible entity
Division 1—Responsibilities 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 2—Changing 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 3—Consequences 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.3—The 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—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—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.4—The 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.5—The 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 non‑external 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.6—Members’ 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 Non‑liquid 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 Non‑liquid 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 Non‑liquid 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:
601KE Non‑liquid 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.7—Related 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.
(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.8—Effect 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.9—Winding 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.10—Deregistration
Division 1—Registered 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 2—Registered 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.11—Exemptions 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
(ba) section 253LA as that section applies in relation to the operation of:
(i) this Chapter; or
(ii) regulations made for the purposes of this Chapter; and
(c) the provisions of Division 11 of Part 11.2 of the old Corporations Law of each State or Territory in this jurisdiction, to the extent they continue to have effect because of section 1408 of this Act; and
(d) if regulations for the purposes of subsection 1408(3) deal with a matter or matters dealt with in those provisions—the regulations that so deal with the matter or matters.
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 5D—Licensed trustee companies
Part 5D.1—Preliminary
601RAA Meaning of fees and law—Chapter 5D
In this Chapter:
fees means fees in the nature of remuneration (including commission).
law means an Australian law and includes a rule of common law or equity.
601RAB Meaning of trustee company and client
(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 Governor‑General 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 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 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; 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.2—Powers etc. of licensed trustee companies
Division 1—General 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 2—Accounts
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.
(1A) An estate that is administered or managed by a trustee company, is 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.
(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 3—Common 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) For the purposes of this Chapter, 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:
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.3—Regulation of fees charged by licensed trustee companies
Division 1—Disclosure of fees
601TAA Schedule of fees to be published and available
A licensed trustee company must ensure that an up‑to‑date 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 2—General 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 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
(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 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
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
One‑off 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 part‑years.
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 part‑years.
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 part‑years.
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 B—Existing 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 part‑years.
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 5—Miscellaneous
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.4—Duties 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.5—Limit on control of and proposed licensed trustee companies
Division 1—15% voting power limit
601VAA Meaning of unacceptable control situation—licensed trustee company or a proposed licensed trustee company
An unacceptable control situation exists in relation to:
(a) a licensed trustee company and in relation to a particular person; or
(b) a proposed licensed trustee company and in relation to a particular person;
if the person’s voting power in the company is more than:
(c) 15%; or
(d) if an approval of a higher percentage is in force under Division 2 in relation to the 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 Orders to remedy unacceptable control situation
(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 2—Approval 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 or proposed 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 company; and
(b) specifies the percentage of voting power the person is seeking approval to have in the 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:
(a) in the case of a licensed trustee company—it would be in the interests of that company and its clients for the application to be granted; or
(b) in the case of a proposed licensed trustee company—it would be in the interests of that company and its clients for the application to be granted were that company a licensed trustee company.
(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 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 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:
(a) in the case of a licensed trustee company—it would be in the interests of that company and its clients for the application to be granted; or
(b) in the case of a proposed licensed trustee company—it would be in the interests of that company and its clients for the application to be granted were that company a licensed trustee company.
(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 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 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 or proposed licensed trustee company concerned; and
(b) specifies the percentage of the voting power the person is seeking approval to have in the 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:
(a) in the case of a licensed trustee company—it would be in the interests of that company and its clients for the application to be granted; or
(b) in the case of a proposed licensed trustee company—it would be in the interests of that company and its clients for the application to be granted were that company a licensed trustee company.
(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:
(a) in the case of a licensed trustee company—the variation would be in the interests of that company and its clients; or
(b) in the case of a proposed licensed trustee company—the variation would be in the interests of that company and its clients were that company a licensed trustee company.
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 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 or proposed licensed trustee company, revoke the approval if:
(a) the Minister is satisfied that:
(i) in the case of a licensed trustee company—it would be in the interests of that company and its clients for the approval to be revoked; or
(ii) in the case of a proposed licensed trustee company—it would be in the interests of that company and its clients for the approval to be revoked were that company a licensed trustee company.
(b) the Minister is satisfied that an unacceptable control situation exists in relation to the 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 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 the company concerned 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 company, the Minister may seek the views of the company concerned 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 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 company at any time before the Minister makes a decision.
Division 3—Other 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 company is a reference to the interests of the clients, when viewed as a group.
601VCC Anti‑avoidance
(1) If:
(a) one or more persons enter into, begin to carry out or carry out a scheme; and
(b) it would be concluded that the person, or any of the persons, who 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.6—ASIC‑approved transfers of estate assets and liabilities
Division 1—Preliminary
601WAA Meaning of estate assets and liabilities
A company’s estate assets and liabilities are 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 under Part 7.6 cancelled the company’s Australian financial services licence or varied the conditions of the company’s Australian financial services licence so that the licence ceases to cover traditional trustee company services—the cancellation or variation; 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.
Division 2—Transfer 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 under Part 7.6 cancelled the transferring company’s Australian financial services licence or varied the conditions of the transferring company’s Australian financial services licence so that the licence ceases to cover traditional trustee company services (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
(1) ASIC must:
(a) give a copy of the certificate of transfer to the transferring company and the receiving company; and
(b) make a notifiable instrument setting out notice of the issue of the certificate; and
(c) if regulations made for the purposes of this paragraph specify requirements for such notice to be published—publish the notice in accordance with those requirements.
(2) To avoid doubt, paragraph (1)(c) expresses a contrary intention for the purposes of subsection 11(4) of the Legislation Act 2003.
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 3—Other matters related to the transfer of estate assets and liabilities
601WCA Certificates evidencing operation of Act etc.
(1) A person authorised under section 601WCI, 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 a person authorised under section 601WCI; 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 a person authorised under section 601WCI; 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.
601WCI Authorisation to perform functions or exercise powers in this Part
ASIC may, in writing, authorise a person who is a member, or staff member, of ASIC to perform functions or exercise powers under section 601WCA, 601WCB or 601WCC.
Division 4—Miscellaneous
601WDA Transferring company required to contact certain persons
Notice of cancellation or variation of Australian financial services licence
(1) If ASIC has under Part 7.6 cancelled a trustee company’s Australian financial services licence, or varied the conditions of a trustee company’s Australian financial services licence so that the licence ceases to cover traditional trustee company services, the trustee company must, as soon as practicable:
(a) take all reasonable steps to contact the following persons and advise them of the cancellation or variation 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 on the trustee company’s website (if any), and in another manner that is in accordance with subsection (4).
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 on the transferring company’s website (if any), and in another manner that is in accordance with subsection (4).
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Publishing notices
(4) A manner of publishing notice under paragraph (1)(b) or subsection (3) is in accordance with this subsection if the manner:
(a) unless paragraph (b) applies—results in the notice being accessible to the public and reasonably prominent; or
(b) if a determination in force under subsection (5) specifies one or more manners in which such a notice may be published—is so specified.
(5) For the purposes of paragraph (4)(b), ASIC may, by legislative instrument, make a determination specifying one or more manners in which notice under paragraph (1)(b) or subsection (3) may be published.
(6) A manner of publication may be specified in the determination only if ASIC considers that the manner of publication would result in such a notice being accessible to the public and reasonably prominent.
Part 5D.7—Contraventions 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.8—Exemptions 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 6—Takeovers
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 Meaning of substantial interest
(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 buy‑out 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 fully‑paid and others are partly‑paid; 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 6.1—Prohibited 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 to 609B 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.
Fault‑based 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:
- A person exercises a right to convert a non‑voting preference share into an ordinary share that carries votes.
- A person pays up partly‑paid shares with limited votes and this leads to an increase in the number of votes attached to the shares.
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 or acquired by the person if:
(a) the security interest is taken or acquired:
(i) in the ordinary course of the person’s business of the provision of financial accommodation by any means and on ordinary commercial terms; or
(ii) for the benefit of one or more other persons in relation to financial accommodation provided by them in the ordinary course of their 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 any other person mentioned in this subsection.
In this subsection, a reference to a security interest includes a reference to a negative pledge.
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.
Disposal of securities by financial services licensees
(3A) A financial services licensee does not have a relevant interest in securities merely because, in the ordinary course of the licensee’s financial services business, a person specifically instructs the licensee to:
(a) dispose of the securities on behalf of the person; or
(b) enter into a position on behalf of the person under which the licensee has an obligation to make delivery of the securities by dealing in:
(i) a warrant within the meaning of the regulations; or
(ii) a financial product that, but for the product not being transferable, would be a warrant within the meaning of the regulations.
Shares covered by buy‑backs
(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.
Pre‑emptive 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 pre‑emptive rights on the transfer of the securities if all members have pre‑emptive 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 does not have a relevant interest in securities merely because of its provision of facilities for the settlement of transactions.
Securities escrowed under listing rules
(9B) A listed company does not have a relevant interest in securities merely because:
(a) those securities are restricted securities within the meaning of the listing rules of a prescribed financial market; and
(b) the company applies restrictions, in accordance with those rules, on the disposal of the securities by their holder.
(9C) The operator of a prescribed financial market does not have a relevant interest in securities merely because:
(a) those securities are restricted securities within the meaning of the listing rules of that market; and
(b) the operator has the power under those rules to control the exercise of a power to dispose of the securities.
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.
609A Another situation not giving rise to relevant interests—acceptance facility
Securities the subject of an acceptance facility
(1) A bidder for a takeover bid does not have a relevant interest in bid class securities merely because those securities are the subject of an acceptance, in relation to a facility, that is given to the operator of the facility if:
(a) the offer under the takeover bid for those securities has not been accepted; and
(b) the facility is covered by subsection (2); and
(c) in the case where bid class securities are quoted on a prescribed financial market—for every movement of at least 1% in the aggregate level of the bidder’s voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility, the bidder provides to the relevant market operator, by 9.30 am on the next trading day after the movement, a notice (whether accompanying a notice required to be given under section 671B or otherwise) that meets the requirements of subsection (4) of this section; and
(d) in the case where bid class securities are not quoted on a prescribed financial market—the bidder lodges with ASIC a notice that meets the requirements of subsection (4) of this section within 2 business days after the aggregate level of the bidder’s voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility rise or fall above or below a percentage listed in subsection 654C(1).
Facility requirements
(2) The facility is covered by this subsection if:
(a) it is the only facility established by the bidder in relation to bid class securities; and
(b) the operator of the facility is not the bidder or an associate of the bidder; and
(c) the operator holds an Australian financial services licence that covers the provision of financial services of the kind necessary to operate the facility; and
(d) a participant in the facility may give the operator acceptances in relation to the facility; and
(e) the terms of the facility permit the operator to maintain custody of an acceptance in relation the facility given to the operator by a participant in the facility until:
(i) the participant withdraws the acceptance; or
(ii) any condition of a kind specified in subsection (3) that is specified in the facility is satisfied; and
(f) the terms of the facility provide that the facility:
(i) if the bid is unconditional—must be made available to all holders of bid class securities or persons on whose behalf bid class securities are held; or
(ii) otherwise—must be made available to all or specified holders of bid class securities or persons on whose behalf bid class securities are held; and
(g) in the case where bid class securities are quoted on a prescribed financial market—the terms of the facility provide that the operator of the facility must provide information about acceptances in relation to the facility to the bidder sufficiently regularly to enable the bidder to determine and disclose to the market operator every movement of at least 1% in the aggregate level of the bidder’s voting power and the votes attached to securities the subject of acceptances in relation to the facility by 9.30 am on the next trading day after the movement; and
(h) in the case where bid class securities are not quoted on a prescribed financial market—the terms of the facility provide that the operator of the facility must provide information about acceptances in relation to the facility to the bidder sufficiently regularly to enable to the bidder to determine and disclose to the target any movement in the aggregate level of the bidder’s voting power and the votes attached to securities the subject of acceptances in relation to the facility above or below a percentage listed in subsection 654C(1) within 2 business days after the movement; and
(i) the terms of the facility provide that all participants in the facility participate in the facility on the same terms.
Triggering conditions
(3) The following conditions are specified for the purposes of subparagraph (2)(e)(ii):
(a) a condition that, no later than the time that all acceptances in relation to the facility are processed, the bidder has:
(i) declared the bid free of all conditions; or
(ii) stated that the bidder will declare the bid free of all conditions;
(b) a condition that the securities in which the bidder and its associates have a relevant interest together with the securities that are the subject of the facility have exceeded a specified percentage of securities in the bid class;
(c) a condition that the bidder has notified the operator of the facility in writing that a condition in paragraph (a) or (b) has been satisfied.
Notice requirements
(4) For the purposes of paragraphs (1)(c) and (d), a notice meets the requirements of this subsection if the notice:
(a) sets out the aggregate number and percentage of bid class securities:
(i) in which the bidder and its associates have a relevant interest; and
(ii) which are subject of acceptances in relation to the facility; and
(b) discloses the breakdown between the 2 categories in subparagraphs (a)(i) and (ii) of this subsection; and
(c) includes a statement setting out the preconditions for the operator of the facility releasing the acceptances and warning that the acceptances may be withdrawn by participants in the facility at any time until the preconditions are met.
Definitions
(5) In this section:
acceptance, in relation to a facility, means an instrument that comprises:
(a) a participant in the facility’s completed acceptance of a bidder’s offer for bid class securities; or
(b) a participant in the facility’s instructions to another person who holds bid class securities on behalf of the participant to accept a bidder’s offer for bid class securities.
participant, in a facility, means:
(a) a holder of bid class securities who is specified in the facility; or
(b) a person who is specified in the facility and on whose behalf bid class securities are held.
609B Another situation not giving rise to relevant interests—securities subject to escrow agreement in connection with initial public offer etc.
Bodies corporate
(1) A body corporate does not have a relevant interest in securities that are its own securities (the escrow securities) merely because, under an agreement entered into by the body corporate with the holder of the escrow securities (the escrow agreement), the body corporate applies restrictions on the disposal of the escrow securities by the holder.
(2) However, subsection (1) applies only if:
(a) all of the following apply:
(i) the body corporate enters into the escrow agreement in connection with an offer of securities in the body corporate that are in a class of securities that are to be quoted on a prescribed financial market (the initial public offer);
(ii) the escrow securities are in the same class of securities as those that are offered under the initial public offer;
(iii) the escrow agreement is covered by subsection (5); or
(b) both of the following apply:
(i) the escrow securities are issued as consideration for the acquisition of a business under a separate agreement between the body corporate and the vendor of the business;
(ii) the escrow agreement is covered by subsection (5).
Underwriters, lead managers and joint lead managers
(3) A person does not have a relevant interest in the escrow securities merely because, under an agreement entered into by the person with the holder of the escrow securities in the ordinary course of the person’s business as an underwriter, lead manager or joint lead manager, the person applies restrictions on the disposal of the escrow securities by the holder.
(4) However, subsection (3) applies only if:
(a) the person enters into the agreement mentioned in that subsection in connection with the initial public offer; and
(b) the escrow securities are in the same class of securities as those that are covered by the initial public offer; and
(c) the agreement mentioned in that subsection is covered by subsection (5).
Agreement requirements
(5) An agreement relating to the escrow securities is covered by this subsection if:
(a) the agreement does not restrict the exercise of voting rights attaching to the escrow securities; and
(b) in the case of a takeover bid (including a proportional takeover bid):
(i) the agreement allows each holder of the escrow securities to accept into the takeover bid where the holders of at least half of the bid class securities that are not subject to escrow have accepted into the bid; and
(ii) the agreement requires that the escrow securities be returned to escrow if the bid does not become unconditional; and
(c) the agreement allows the escrow securities to be transferred or cancelled as part of a merger by way of a compromise or arrangement under Part 5.1; and
(d) the agreement terminates no later than:
(i) if the person who entered into the agreement is the body corporate mentioned in subsection (1)—2 years after the agreement is entered into; or
(ii) otherwise—1 year after the agreement is entered into; and
(e) if the agreement permits the holder to create a security interest in some or all of the escrow securities in favour of a person who does not have a relevant interest in the escrow securities because of subsection 609(1)—the agreement requires that the holder must not create a security interest in favour of the person unless the person has agreed in writing to take or acquire the security interest in the escrow securities subject to the terms of the agreement; and
(f) if the agreement permits the holder to transfer the holder’s interests in the escrow securities to another person—requires that the holder must not do so if:
(i) the transfer would result in a change in the beneficial ownership of the escrow securities; or
(ii) the transfer would result in an extension in the period of the agreement; or
(iii) the transferee does not agree to be subject to the same restrictions on disposal of the escrow securities under the agreement.
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:
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).
(3A) However, subsection (3) does not apply in relation to a subsidiary acquiring an interest in securities from its holding company with the result that the subsidiary acquires a relevant interest in particular voting shares unless:
(a) the acquisition results in an increase of another person’s voting power in a designated body; and
(b) that other person is not a subsidiary of the ultimate holding company.
(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 6.2—Exceptions 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. |
| On‑market purchase during bid period |
2 | An acquisition in relation to bid class securities that results from an on‑market 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 unconditional or subject only to one or both of the following: (i) a condition that relates to the occurrence or non‑occurrence of an event referred to in subsection 652C(1) or (2); (ii) a condition that is required under subsection 625(3). See also sections 612 and 613. |
| On‑market 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 on‑market transaction during the bid period; and (c) the bid is for all the voting shares in the bid class; and (d) the bid is unconditional or subject only to one or both of the following: (i) a condition that relates to the occurrence or non‑occurrence of an event referred to in subsection 652C(1) or (2); (ii) a condition that is required under subsection 625(3). 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 the appointment of a receiver, or receiver and manager, under an instrument or agreement creating or giving rise to a security interest if: (a) both of the following apply: (i) the person’s ordinary business includes the provision of financial accommodation by any means; (ii) 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; or (b) all of the following apply: (i) the person took or acquired the security interest for the benefit of another person; (ii) the person’s ordinary business, or the other person’s ordinary business, includes the provision of financial accommodation by any means; (iii) the person took or acquired the security interest in relation to financial accommodation provided by the other person in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms. In this item, a reference to a security interest includes a reference to a negative pledge. |
| 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 sub‑underwriter. 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 sub‑underwriter; 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 as a primary listing 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 on‑market. |
| Compromise, arrangement, liquidation or buy‑back |
| 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. |
| Buy‑back |
19 | An acquisition that results from a buy‑back 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 non‑compliance 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 off‑market 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 off‑market acquisition—exception 2 or 3
If the exception in item 2 or 3 of the table in section 611 applies to an acquisition on‑market during a takeover bid, the bidder is not entitled to exercise the voting rights attached to the shares if:
(a) the bid is an off‑market 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
Terms of offers relating to all foreign holders of securities
(1) 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.
Terms of offers relating to specified foreign holders of securities
(2) 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 that are specified in the offers if, under the terms of the offers:
(a) the company must appoint a nominee for the specified foreign holders of the company’s securities who is approved by ASIC; and
(b) the company must issue to the nominee:
(i) the securities that would otherwise be issued to the specified 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 the specified foreign holders their proportion of the proceeds of the sale net of expenses.
Part 6.3—The different types of takeover bid
616 Off‑market bids and market bids
(1) There are 2 kinds of takeover bid:
(a) an off‑market 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 off‑market bids and market bids and the procedures to be followed:
Takeover bids | [signpost table] |
| Feature | Off‑market 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 626‑630 | 625(1) |
7 | procedure to be followed in making bid | 632 and 633 | 634 and 635 |
8 | acceptances | 650E and 653A‑653B | ‑ |
| | | | |
Part 6.4—Formulating the takeover offer
Division 1—General
617 Securities covered by the bid
Off‑market bid
(1) An off‑market 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
Off‑market bid
(1) An offer for securities under an off‑market 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.
Off‑market bid—non‑marketable parcels
(2) If accepting an offer under an off‑market 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
Off‑market bid
(1) All the offers made under an off‑market 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 Off‑market bid (offer formalities)
(1) Each offer under an off‑market 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 2—Consideration for the offer
621 Consideration offered
Off‑market bid—general
(1) A bidder making an off‑market 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 price 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 on‑market and the takeover bid is an off‑market 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 on‑market transaction; or
(c) simultaneous takeover bids for different classes of securities in the target.
Division 3—The 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 (off‑market 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 off‑market 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 4—Conditional offers
625 Conditional offers—general
Market bids
(1) Offers under a market bid must be unconditional.
Off‑market bids may generally be conditional
(2) Offers under an off‑market 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 off‑market bids
Maximum acceptance conditions not allowed
(1) Offers under an off‑market 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 off‑market 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 off‑market bids
Offers under an off‑market 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 off‑market bids
An offer to a person under an off‑market 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 off‑market bids
(1) Offers under an off‑market 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
Off‑market bid may include defeating conditions
(1) Offers under an off‑market 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 6.5—The takeover procedure
Division 1—The 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 off‑market bid
The following diagram gives an overview of the steps involved in an off‑market bid.
Overview of steps in an off‑market 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 on‑market during the bid period. |
| | | | | |
633 Detailed steps in an off‑market bid
(1) The following table provides for the steps that a bidder must take to make an effective off‑market bid and the steps that a target must take when an off‑market bid is made.
Steps in off‑market 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 14‑28 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 on‑market 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. |
