Federal Register of Legislation - Australian Government

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Corporations Law

Act No. of as amended, taking into account amendments up to Act No. 91 of 2000
Registered 24 Nov 2009
Start Date 24 Nov 2000
End Date 27 Apr 2001
Date of repeal 15 Jul 2001
Repealed by Corporations (Repeals, Consequentials and Transitionals) Act 2001
Table of contents.

Corporations Law

Volume 3

As set out in section 82 of the Corporations Act 1989

  

  

  


Contents

Chapter 6—Takeovers                                                                                                    926

602........ Purposes of Chapter....................................................................... 926

603........ Chapter extends to some listed bodies that are not companies...... 927

604........ Chapter extends to listed managed investment schemes................ 927

605........ Classes of securities........................................................................ 927

Part 6.1—Prohibited acquisitions of relevant interests in voting shares 929

606........ Prohibition on certain acquisitions of relevant interests in voting shares                929

607........ Effect on transactions..................................................................... 931

608........ Relevant interests in securities....................................................... 931

609........ Situations not giving rise to relevant interests................................ 934

610........ Voting power in a body corporate.................................................. 936

Part 6.2—Exceptions to the prohibition                                                                  938

611........ Exceptions to the prohibition......................................................... 938

612........ Effect of non‑compliance with takeover rules for exceptions 1 to 4 942

613........ Bidder not to exercise voting rights if failure to send bids for off‑market acquisition—exception 2 or 3               943

615........ Treatment of foreign holders under equal access issue—exception 10 943

Part 6.3—The different types of takeover bid                                                    944

616........ Off‑market bids and market bids.................................................... 944

Part 6.4—Formulating the takeover offer                                                             945

Division 1—General                                                                                                  945

617........ Securities covered by the bid.......................................................... 945

618........ Offers must be for all or a proportion of securities in the bid class 945

619........ General terms of the offer............................................................... 946

620........ Off‑market bid (offer formalities)................................................... 947

Division 2—Consideration for the offer                                                          949

621........ Consideration offered..................................................................... 949

622........ Escalation agreements..................................................................... 950

623........ Collateral benefits not allowed....................................................... 951

Division 3—The offer period                                                                                952

624........ Offer period.................................................................................... 952

Division 4—Conditional offers                                                                             953

625........ Conditional offers—general............................................................ 953

626........ Maximum acceptance conditions in off‑market bids...................... 953

627........ Discriminatory conditions not allowed for off‑market bids........... 954

628........ Conditions requiring payments to officers of target not allowed in off‑market bids               954

629........ Conditions turning on bidder’s or associate’s opinion not allowed in off‑market bids           955

630........ Defeating conditions....................................................................... 955

Part 6.5—The takeover procedure                                                                           957

Division 1—The overall procedure                                                                   957

631........ Proposing or announcing a bid........................................................ 957

632........ Overview of steps in an off‑market bid.......................................... 957

633........ Detailed steps in an off‑market bid................................................ 959

634........ Overview of steps in a market bid.................................................. 962

635........ Detailed steps in a market bid........................................................ 963

Division 2—The bidder’s statement                                                                966

636........ Bidder’s statement content............................................................. 966

637........ Bidder’s statement formalities........................................................ 969

Division 3—The target’s response                                                                   970

638........ Target’s statement content............................................................. 970

639........ Target’s statement formalities........................................................ 971

640........ Expert’s report to accompany target’s statement if bidder connected with target  971

641........ Target must inform bidder about securities holdings...................... 972

642........ Expenses of directors of target companies..................................... 973

Division 4—Updating and correcting the bidder’s statement and target’s statement  974

643........ Supplementary bidder’s statement................................................. 974

644........ Supplementary target’s statement.................................................. 974

645........ Form of supplementary statement................................................. 975

646........ Consequences of lodging a supplementary statement.................... 976

647........ To whom supplementary statement must be sent......................... 976

Division 5—General rules on takeover procedure                                  978

Subdivision A—Experts’ reports                                                                          978

648A..... Experts’ reports.............................................................................. 978

Subdivision B—Sending documents to holders of securities                         978

648B..... Address at which bidder may send documents to holders of securities  978

648C..... Manner of sending documents to holders of securities.................. 979

Subdivision C—Effect of proportional takeover approval provisions             979

648D..... Constitution may contain proportional takeover approval provisions 979

648E...... Resolution to be put if proportional bid made............................... 980

648F...... Effect of rejection of approval resolution....................................... 981

648G..... Including proportional takeover provisions in constitution........... 982

648H..... Effect of Subdivision...................................................................... 984

Part 6.6—Variation of offers                                                                                        985

Division 1—Market bids                                                                                        985

649A..... General............................................................................................ 985

649B..... Market bids—raising bid price....................................................... 985

649C..... Market bids—extending the offer period....................................... 985

Division 2—Off‑market bids (express variation by bidder)                 987

650A..... General............................................................................................ 987

650B..... Off‑market bids—consideration offered......................................... 987

650C..... Off‑market bids—extension of offer period................................... 988

650D..... Off‑market bids—method of making variation............................... 989

650E...... Right to withdraw acceptance........................................................ 990

650F...... Freeing off‑market bids from defeating conditions......................... 991

650G..... Contracts and acceptances void if defeating condition not fulfilled 992

Division 3—Off‑market bids (automatic variations)                                 993

651A..... Off‑market bid—effect on bid consideration of purchases made outside bid          993

651B..... How to make an election for new forms of consideration.............. 994

651C..... Returning securities as part of election........................................... 995

Part 6.7—Withdrawal and suspension of offers                                                 996

652A..... Withdrawal of unaccepted offers under takeover bid..................... 996

652B..... Withdrawal of takeover offers with ASIC consent........................ 996

652C..... Withdrawal of market bids............................................................. 996

Part 6.8—Acceptances                                                                                                     998

653A..... Acceptance of offers made under off‑market bid........................... 998

653B..... Acceptances by transferees and nominees of offers made under off‑market bid     998

Part 6.9—Other activities during the bid period                                              1000

654A..... Bidder not to dispose of securities during the bid period............. 1000

654B..... Disclosures about substantial shareholdings in listed companies. 1000

654C..... Disclosures about substantial shareholdings in unlisted companies 1000

Part 6.10—Review and intervention                                                                      1002

Division 1—ASIC’s power to exempt and modify                                   1002

655A..... ASIC’s power to exempt and modify.......................................... 1002

655B..... Notice of decision and review rights............................................. 1003

Division 2—The Corporations and Securities Panel                             1004

Subdivision A—Review of ASIC’s exercise of its exemption or modification powers         1004

656A..... Review of exercise of exemption or modification powers............ 1004

656B..... Operation and implementation of a decision that is subject to review 1005

Subdivision B—Unacceptable circumstances                                                  1006

657A..... Declaration of unacceptable circumstances.................................. 1006

657B..... When Panel may make declaration............................................... 1008

657C..... Applying for declarations and orders........................................... 1008

657D..... Orders that Panel may make following declaration...................... 1009

657E...... Interim orders............................................................................... 1010

657EA... Internal Panel reviews................................................................... 1011

657EB... References by Courts................................................................... 1011

657F...... Offence to contravene Panel order................................................ 1012

657G..... Orders by the Court where contravention or proposed contravention of Panel order            1012

657H..... ASIC may publish report about application to Panel or Court... 1013

Subdivision C—General provisions                                                                   1013

658A..... Power of Panel where a proceeding is frivolous or vexatious....... 1013

658B..... Evidentiary value of findings of fact by Panel.............................. 1014

658C..... Panel’s power to make rules......................................................... 1014

658D..... Inconsistency between Panel and ASIC exemptions or modifications 1015

Division 3—Court powers                                                                                    1016

659A..... Panel may refer questions of law to the Court............................. 1016

659AA.. Object of sections 659B and 659C............................................... 1016

659B..... Court proceedings before end of bid period................................. 1016

659C..... Court proceedings after end of bid period.................................... 1017

Chapter 6A—Compulsory acquisitions and buy‑outs                                   1019

660A..... Chapter extends to some listed bodies that are not companies.... 1019

660B..... Chapter extends to listed managed investment schemes.............. 1019

Part 6A.1—Compulsory acquisitions and buy‑outs following takeover bid                1020

Division 1—Compulsory acquisition of bid class securities              1020

661A..... Compulsory acquisition power following takeover bid............... 1020

661B..... Compulsory acquisition notice..................................................... 1022

661C..... Terms on which securities to be acquired..................................... 1023

661D..... Holder may obtain names and addresses of other holders............ 1024

661E...... Holder may apply to Court to stop acquisition........................... 1024

661F...... Signpost—completing the acquisition of the securities................ 1025

Division 2—Compulsory buy‑out of bid class securities                     1026

662A..... Bidder must offer to buy out remaining holders of bid class securities 1026

662B..... Bidder to tell remaining holders of their right to be bought out.... 1026

662C..... Right of remaining holder of securities in the bid class to be bought out 1027

Division 3—Compulsory buy‑out of convertible securities               1029

663A..... Bidder must offer to buy out holders of convertible securities.... 1029

663B..... Bidder to tell holders of convertible securities of their right to be bought out        1029

663C..... Right of holders of convertible securities to be bought out.......... 1030

Part 6A.2—General compulsory acquisitions and buy‑outs                      1032

Division 1—Compulsory acquisition of securities by 90% holder 1032

664A..... Threshold for general compulsory acquisition power.................. 1032

664AA.. Time limit on exercising compulsory acquisition power.............. 1033

664B..... The terms for compulsory acquisition......................................... 1034

664C..... Compulsory acquisition notice..................................................... 1034

664D..... Benefits outside compulsory acquisition procedure.................... 1036

664E...... Holder’s right to object to the acquisition.................................... 1037

664F...... The Court’s power to approve acquisition.................................. 1038

664G..... Signpost—completing the acquisition of the securities................ 1038

Division 2—Compulsory buy‑out of convertible securities by 100% holder      1039

665A..... 100% holder must offer to buy out holders of convertible securities 1039

665B..... 100% holder to tell holders of convertible securities of their right to be bought out               1039

665C..... Right of holders of convertible securities to be bought out.......... 1041

Division 3—Notice that person has become 85% holder of a class of securities            1042

665D..... Notice by 85% holder to company.............................................. 1042

665E...... Notice by company to other members......................................... 1043

Part 6A.3—Completion of compulsory acquisition of securities            1044

666A..... Completing the acquisition of securities....................................... 1044

666B..... Statutory procedure for completion............................................. 1044

Part 6A.4—Experts’ reports and valuations                                                      1046

667A..... Expert’s report............................................................................. 1046

667AA.. Expert to be nominated................................................................. 1046

667B..... Expert must not be an associate and must disclose prior dealings and relationships              1047

667C..... Valuation of securities.................................................................. 1047

Part 6A.5—Records of unclaimed consideration                                            1049

668A..... Company’s power to deal with unclaimed consideration for compulsory acquisition           1049

668B..... Unclaimed consideration to be transferred to ASIC..................... 1049

Part 6A.6—ASIC powers                                                                                              1051

669........ ASIC’s power to exempt and modify.......................................... 1051

Chapter 6B—Rights and liabilities in relation to Chapter 6 and 6A matters            1052

670A..... Misstatements in, or omissions from, takeover and compulsory acquisition and buy‑out documents  1052

670B..... Right to recover for loss or damage resulting from contravention 1053

670C..... People liable on takeover or compulsory acquisition statement to inform maker about deficiencies in the statement...................................................................................................... 1055

670D..... Defences against prosecutions under subsection 670A(3) and actions under section 670B   1056

670E...... Liability for proposing a bid or not carrying through with bid.... 1057

670F...... Defences....................................................................................... 1058

Chapter 6C—Information about ownership of listed companies and managed investment schemes         1059

671A..... Chapter extends to some listed bodies that are not companies.... 1059

Part 6C.1—Substantial holding information                                                       1059

671B..... Information about substantial holdings must be given to company, responsible entity and relevant securities exchange...................................................................................................... 1059

671C..... Civil liability................................................................................. 1062

Part 6C.2—Tracing beneficial ownership of shares                                      1063

672A..... Disclosure notices......................................................................... 1063

672B..... Disclosure by member of relevant interests and instructions....... 1063

672C..... ASIC may pass information on to person who made request...... 1064

672D..... Fee for complying with a direction given by a company or scheme under this Part               1064

672E...... No notice of rights........................................................................ 1065

672F...... Civil liability................................................................................. 1065

Part 6C.3—ASIC powers                                                                                              1066

673........ ASIC’s power to exempt and modify.......................................... 1066

Chapter 6D—Fundraising                                                                                            1067

Part 6D.1—Application of the fundraising provisions                                  1067

700........ Coverage of the fundraising rules.................................................. 1067

701........ Treatment of offers of interests in managed investment scheme.. 1067

702........ Treatment of offers of options over securities............................. 1068

703........ Chapter may not be contracted out of.......................................... 1068

Part 6D.2—Disclosure to investors about securities                                    1069

Division 1—Overview                                                                                            1069

704........ When disclosure to investors is needed........................................ 1069

705........ Types of disclosure document..................................................... 1069

Division 2—Offers that need disclosure to investors                           1071

706........ Issue offers that need disclosure................................................... 1071

707........ Sale offers that need disclosure..................................................... 1071

708........ Offers that do not need disclosure................................................ 1073

Division 3—Types of disclosure documents                                              1080

709........ Prospectuses, short‑form prospectuses, profile statements and offer information statements              1080

Division 4—Disclosure requirements                                                           1082

710........ Prospectus content—general disclosure test................................ 1082

711........ Prospectus content—specific disclosures.................................... 1084

712........ Prospectus content—short form prospectuses............................ 1086

713........ Special prospectus content rules for continuously quoted securities 1087

714........ Contents of profile statement....................................................... 1089

715........ Contents of offer information statement...................................... 1090

716........ Disclosure document date and consents....................................... 1091

Division 5—Procedure for offering securities                                           1093

717........ Overview of procedure for offering securities.............................. 1093

718........ Lodging of disclosure document................................................... 1095

719........ Lodging supplementary or replacement document....................... 1095

720........ Consents needed for lodgment...................................................... 1097

721........ Offer must be made in, or accompanied by, the disclosure document 1099

722........ Application money to be held on trust........................................ 1100

723........ Issuing or transferring the securities under a disclosure document 1101

724........ Choices open to person making the offer if disclosure document condition not met or disclosure document defective...................................................................................................... 1102

725........ Expiration of disclosure document............................................... 1104

Part 6D.3—Prohibitions, liabilities and remedies                                           1106

Division 1—Prohibitions and liabilities                                                         1106

726........ Offering securities in a body that does not exist.......................... 1106

727........ Offering securities without a current disclosure document.......... 1106

728........ Misstatement in, or omission from, disclosure document............ 1107

729........ Right to recover for loss or damage resulting from contravention 1108

730........ People liable on disclosure document to inform person making the offer about deficiencies in the disclosure document...................................................................................................... 1110

731........ Due diligence defence for prospectuses........................................ 1110

732........ Lack of knowledge defence for offer information statements and profile statements             1111

733........ General defences for all disclosure documents............................. 1111

734........ Restrictions on advertising and publicity..................................... 1112

735........ Obligation to keep consents and other documents....................... 1116

736........ Securities hawking prohibited....................................................... 1116

Division 2—Remedies                                                                                           1117

737........ Remedies for investors................................................................. 1117

738........ Securities may be returned and refund obtained........................... 1117

Part 6D.4—ASIC’s powers                                                                                          1118

739........ ASIC stop orders.......................................................................... 1118

740........ Anti‑avoidance determinations..................................................... 1119

741........ ASIC’s power to exempt and modify.......................................... 1119

Chapter 7—Securities                                                                                                    1121

Part 7.1—Interpretation                                                                                                1121

760........ Effect of this Part......................................................................... 1121

761........ Definitions.................................................................................... 1121

762........ Conduct........................................................................................ 1123

763........ Odd lot.......................................................................................... 1124

764........ References to doing acts............................................................... 1124

765........ Misleading representation............................................................ 1124

766........ Trading in securities...................................................................... 1125

Part 7.1A—The Australian Stock Exchange Limited                                   1126

Division 1—Change of company type                                                            1126

766A..... Exchange may change its type under this Division...................... 1126

766B..... Applying for change of type........................................................ 1126

766C..... Change of type............................................................................. 1127

766D..... Effect of change of type............................................................... 1127

Division 2—Limitations on holding shares in the Exchange             1129

766E...... Unacceptable ownership situation............................................... 1129

766F...... Causing an unacceptable ownership situation.............................. 1129

766G..... Exchange’s obligation to avoid unacceptable ownership situation 1129

766H..... Remedial orders............................................................................ 1130

766I....... This Division extends to things outside Australia etc.................. 1130

Part 7.2—Securities exchanges and stock markets                                      1132

767........ Conducting unauthorised stock markets....................................... 1132

769........ Approval of stock exchange......................................................... 1132

769A..... Ongoing requirements to be observed by securities exchange...... 1133

769B..... Minister’s directions to comply with ongoing requirements....... 1134

769C..... Annual report by securities exchange about compliance with ongoing requirements              1134

769D..... Special report by securities exchange about compliance with ongoing requirements              1135

770........ Approval of approved securities organisation............................. 1135

770A..... Approval of special stock markets for unquoted prescribed interests 1137

770B..... Section 770A stock markets—separate markets exist in relation to different kinds of prescribed interests           1138

770C..... Section 770A stock markets—regulations may make additional provision             1139

771........ Exempt stock market.................................................................... 1139

772........ Publication of instruments executed under section 769, 770, 770A or 771             1139

772A..... Business rules bind securities exchange and its members............. 1140

772B..... Self‑listing by securities exchanges............................................... 1140

773........ Auction, by licensed auctioneer, of forfeited shares..................... 1142

774........ Commission to be notified of amendments to rules..................... 1142

775........ Power of Commission to prohibit trading in particular securities 1143

776........ Securities exchanges to provide assistance to Commission.......... 1145

777........ Power of Court to order compliance with or enforcement of business rules or listing rules of securities exchange...................................................................................................... 1146

778........ Gaming and wagering laws not applicable to certain contracts and relevant agreements         1147

779........ Qualified privilege......................................................................... 1148

Part 7.2A—The Securities Clearing House                                                       1151

779A..... Interpretation................................................................................ 1151

779B..... Approval of securities clearing house........................................... 1151

779C..... Commission to be notified of amendments of business rules....... 1152

779D..... Securities clearing house to assist Commission............................ 1153

779E...... Securities clearing house to notify Commission of disciplinary action 1153

779F...... SCH business rules have effect as contract.................................. 1153

779G..... Power of Court to order compliance with provisions of SCH business rules         1153

779H..... Qualified privilege in respect of disciplinary proceedings............ 1154

779J...... Provision of settlement facilities not a securities business etc..... 1154

Part 7.3—Participants in the securities industry                                             1155

Division 1—Dealers, investment advisers and operators of managed investment schemes     1155

780........ Dealers.......................................................................................... 1155

781........ Investment advisers...................................................................... 1155

782........ Application for a licence............................................................... 1155

783........ Grant of licence to natural person................................................ 1156

784........ Grant of licence to body corporate............................................... 1156

785........ Effect of certain provisions.......................................................... 1158

786........ Conditions of licence.................................................................... 1158

786A..... Security given under previous law................................................ 1160

787........ Licensee to notify breach of licence condition.............................. 1161

788........ Giving information and statements to Commission..................... 1161

789........ Register of Licence Holders.......................................................... 1162

790........ Notifying change in particulars..................................................... 1163

791........ Annual statement of licensee........................................................ 1163

792........ Time for lodging annual statement................................................ 1163

793........ Commission may extend period for lodging statement................. 1164

Division 2—Agreements with unlicensed persons                                 1165

Subdivision A—Agreements affected                                                                1165

794........ Certain persons not clients........................................................... 1165

795........ Agreements with unlicensed persons........................................... 1165

Subdivision B—Effect on agreements                                                               1166

798........ Client may give notice of rescission............................................. 1166

799........ Effect of notice under section 798................................................ 1167

799A..... Client may apply to Court for partial rescission......................... 1167

800........ Court may make consequential orders.......................................... 1168

801........ Agreement unenforceable against client........................................ 1168

802........ Non-licensee not entitled to recover commission......................... 1168

803........ Onus of establishing non-application of section 801 or 802........ 1169

804........ Client may recover commission paid to non-licensee................... 1169

805........ Remedies under this Division additional to other remedies.......... 1169

Division 3—Representatives                                                                             1170

806........ Representatives of dealers............................................................ 1170

807........ Representatives of investment advisers....................................... 1170

808........ Defence......................................................................................... 1170

809........ Body corporate not to act as representative................................ 1171

810........ Licensee to keep register of holders of proper authorities........... 1171

811........ Licensee to notify Commission of location and contents of register 1172

812........ Inspection and copying of register............................................... 1173

813........ Disclosure to non-dealer............................................................... 1174

814........ Commission may require production of authority....................... 1174

815........ Commission may give licensee information about representative 1174

816........ Holder of authority may be required to return it.......................... 1176

Division 4—Liability of principals for representatives’ conduct     1178

817........ Conduct engaged in as a representative........................................ 1178

818........ Liability where identity of principal unknown............................ 1178

819........ Liability of principals where act done in reliance on representative’s conduct       1178

820........ Presumptions about certain matters............................................. 1180

821........ No contracting out of liability for representative’s conduct........ 1181

822........ Effect of Division......................................................................... 1182

Division 5—Excluding persons from the securities industry            1183

824........ Power to revoke, without a hearing, licence held by natural person 1183

825........ Power to revoke, without a hearing, licence held by body corporate 1183

825A..... Power to revoke responsible entity’s licence without a hearing.. 1183

826........ Power to revoke licence after a hearing......................................... 1183

827........ Power to suspend licence instead of revoking it........................... 1185

828........ Power to make banning order where licence revoked or suspended 1186

829........ Power to make banning order against unlicensed person.............. 1186

830........ Nature of banning order................................................................ 1186

831........ Exceptions to banning order......................................................... 1187

832........ Variation or revocation of banning order on application.............. 1187

833........ Revocation of banning order in certain cases................................ 1188

834........ Effect and publication of orders under this Division.................... 1188

835........ Contravention of banning order.................................................... 1189

836........ Banned person ineligible for licence.............................................. 1189

837........ Opportunity for hearing............................................................... 1189

838........ Disqualification by the Court....................................................... 1190

839........ Effect of orders under section 838................................................ 1191

840........ Effect of previous orders under laws corresponding to section 838 1191

Part 7.4—Conduct of securities business                                                            1193

Division 1—Regulation of certain activities                                               1193

841........ Certain representations prohibited............................................... 1193

842........ Issue of contract notes.................................................................. 1193

843........ Dealings and transactions on a dealer’s own account................... 1195

844........ Dealer to give priority to clients’ orders...................................... 1196

845........ Dealings by employees of holders of licences.............................. 1197

Division 2—Short selling of securities                                                          1198

846........ Short selling.................................................................................. 1198

847........ Power of Commission to prohibit short selling in certain cases... 1200

Division 3—Recommendations about securities                                     1202

848........ Recommendation made by partner or officer............................... 1202

849........ Client to be told if adviser’s interests may influence recommendation 1202

850........ Defences to alleged breach of subsection 849(2).......................... 1203

851........ Adviser must have reasonable basis for recommendation............ 1204

852........ Adviser who breaches this Division liable to compensate client.. 1205

853........ Qualified privilege for adviser when complying with this Division 1206

Part 7.5—Dealers’ financial statements and audit                                        1207

854........ Interpretation................................................................................ 1207

855........ Application of Part....................................................................... 1207

856........ Dealers’ financial records.............................................................. 1207

857........ Appointment of auditor by dealer................................................ 1210

858........ Removal and resignation of auditors............................................. 1214

859........ Fees and expenses of auditors...................................................... 1215

860........ Dealer’s accounts.......................................................................... 1216

861........ Auditor to report to Commission on certain matters................... 1217

862........ Securities exchange to report to Commission on certain matters. 1217

863........ Qualified privilege for auditor....................................................... 1218

864........ Securities exchange may impose additional obligations on members 1218

Part 7.6—Money and scrip of dealers’ clients                                                 1219

865........ Interpretation................................................................................ 1219

865A..... Application of Part....................................................................... 1219

866........ Dealer to keep trust account......................................................... 1219

867........ What is to be paid into dealer’s trust account.............................. 1220

868........ When money to be paid into trust account.................................. 1220

869........ Withdrawals from trust account................................................... 1221

870........ Withdrawal against uncleared cheque........................................... 1221

871........ Trust money not available in respect of dealer’s own debts........ 1222

872........ Money lent to dealer.................................................................... 1222

873........ Scrip in dealer’s custody.............................................................. 1223

874........ Court may freeze certain bank accounts of dealers and former dealers 1224

875........ Interim order freezing bank accounts............................................ 1225

876........ Duty of banker to make full disclosure........................................ 1225

877........ Further orders and directions........................................................ 1225

878........ Power of Court to make order relating to payment of money..... 1226

Part 7.7—Registers of interests in securities                                                   1227

879........ Interpretation................................................................................ 1227

880........ Application of Part....................................................................... 1228

881........ Register to be maintained.............................................................. 1228

882........ Commission to be notified of certain matters on establishment of Register            1229

883........ Commission to be notified of changes in certain matters............. 1230

884........ Defences....................................................................................... 1231

885........ Power of Commission to require production of Register............. 1231

886........ Power of Commission to require certain information................... 1232

887........ Power of Commission to supply copy of Register...................... 1232

Part 7.8—Deposits with stock exchanges                                                           1233

888........ Interpretation................................................................................ 1233

889........ Deposits to be lodged by member organisations.......................... 1233

890........ Deposit to be proportion of trust account balance...................... 1234

891........ Deposits to be invested by stock exchange.................................. 1235

892........ Accounts in respect of deposits................................................... 1235

893........ Claims not affected by this Part................................................... 1236

Part 7.9—Fidelity funds                                                                                                 1237

894........ Interpretation................................................................................ 1237

895........ Fidelity funds............................................................................... 1237

896........ Money constituting fidelity fund................................................. 1237

897........ Fund to be kept in separate ADI account.................................... 1238

898........ Payments out of fund................................................................... 1238

899........ Payment to the credit of the fidelity fund of a futures exchange or futures association          1239

900........ Accounts of fund.......................................................................... 1239

901........ Management sub-committee......................................................... 1240

902........ Contributions to fund................................................................... 1241

903........ Provisions where fund exceeds $2,000,000.................................. 1241

904........ Levy in addition to annual contributions...................................... 1243

905........ Power of securities exchange to make advances to fund............... 1243

906........ Investment of fund....................................................................... 1244

907........ Application of fund...................................................................... 1244

908........ Claims against the fund................................................................. 1247

909........ Rights of innocent partner in relation to fund.............................. 1248

910........ Notice calling for claims against fund........................................... 1249

911........ Power of board to settle claims.................................................... 1250

912........ Form of order of Court establishing claim.................................... 1251

913........ Power of securities exchange to require production of securities. 1252

914........ Subrogation of securities exchange to rights etc. of claimant on payment from fund              1252

915........ Payment of claims only from fund............................................... 1252

916........ Provision where fund insufficient to meet claims or where claims exceed total amount payable            1253

917........ Power of securities exchange to enter into contracts of insurance or indemnity     1253

918........ Application of insurance money.................................................. 1254

919........ Contribution or levy not payable unless imposed by an Act...... 1254

Part 7.10—The National Guarantee Fund                                                          1255

Division 1—Interpretation                                                                                   1255

920........ Interpretation................................................................................ 1255

921........ Excluded persons.......................................................................... 1258

922........ Becoming insolvent....................................................................... 1260

923........ Permitted investments.................................................................. 1261

924........ Transfer of securities etc. and payment of money....................... 1261

924A..... Novation of agreements................................................................ 1262

924B..... Attributing securities and payments to transactions.................... 1262

926........ Functions and powers.................................................................. 1263

927........ Management sub-committee......................................................... 1263

927A..... Sub-delegation by management sub-committee............................ 1264

928........ Commission to be notified of amendments to business rules....... 1265

Division 3—The National Guarantee Fund                                                 1267

928A..... Interpretation—borrowing........................................................... 1267

929........ SEGC to keep Fund...................................................................... 1267

930........ Property constituting Fund.......................................................... 1267

930A..... Power to borrow etc. for purposes of the Fund........................... 1268

930B..... Money borrowed and paid to SEGC............................................ 1268

930C..... Money borrowed and not paid to SEGC..................................... 1269

931........ Fund to be kept in separate ADI account.................................... 1269

932........ Payments out of Fund.................................................................. 1269

933........ Accounts of Fund......................................................................... 1270

934........ Investment of Fund...................................................................... 1271

935........ Interest and profits from investment of Fund.............................. 1272

936........ Minimum amount of Fund........................................................... 1272

Division 4—Levies where Fund less than minimum amount            1273

937........ Definition...................................................................................... 1273

938........ Levy on transactions.................................................................... 1273

939........ Revocation of levy on transactions.............................................. 1275

940........ Levy on participating exchanges................................................... 1275

941........ Levy by participating exchange on members or member organisations 1276

942........ Levy not payable unless imposed by an Act............................... 1277

Division 5—Securities industry development accounts                       1278

943........ Interpretation................................................................................ 1278

944........ Payments where Fund exceeds minimum amount........................ 1278

945........ Payments into and out of development account.......................... 1279

946........ Investment.................................................................................... 1280

947........ Accounts....................................................................................... 1280

Division 6—Contract guarantees                                                                     1281

948........ Definitions.................................................................................... 1281

948A..... Effect of using a transfer delivery service..................................... 1282

949........ Claim by selling dealer in respect of default by buying dealer..... 1282

950........ Claim by buying dealer in respect of default by selling dealer..... 1285

950A..... Effect of novation, under business rules, of agreement for purchase 1286

951........ Claim by selling client in respect of default by selling dealer....... 1287

952........ Claim by buying client in respect of default by buying dealer..... 1289

952A..... Cash settlement of claims—SCH-regulated transfers................... 1291

953........ Cash settlement of claims—transfers other than SCH-regulated transfers              1292

954........ Making of claims.......................................................................... 1293

Division 6A—Securities loans guarantees                                                  1295

954A..... Interpretation—general definitions............................................... 1295

954B..... Interpretation—guaranteed securities loan and related concepts. 1296

954C..... Effect of using a transfer delivery service..................................... 1297

954D..... Claim by lender in respect of borrower’s failure to discharge obligation 1297

954E...... Effect of novation, under business rules, of guaranteed securities loan 1298

954F...... How and when claim to be made.................................................. 1299

954G..... How claim in respect of securities or non-money security benefits is to be satisfied             1299

954H..... How claim in respect of an amount of money is to be satisfied... 1300

954J...... Nexus with this jurisdiction.......................................................... 1300

954K..... Preventing double recovery.......................................................... 1301

Division 6B—Claims in respect of net obligations                                 1302

954L...... Interpretation................................................................................ 1302

954M.... Effect of using a transfer delivery service..................................... 1302

954N..... Claim in respect of failure to pay net amount in respect of transactions                1302

954P...... Claim in respect of failure to transfer net number of securities in respect of transactions      1303

954Q..... How and when claim to be made.................................................. 1305

954R..... How claim under subsection 954N(1) is to be satisfied............... 1305

954S...... How claim under subsection 954P(2) is to be satisfied................ 1305

954T..... How claim under subsection 954P(3) is to be satisfied................ 1306

954U..... Nexus with this jurisdiction.......................................................... 1307

954V..... Preventing double recovery.......................................................... 1307

Division 6C—Transfer delivery service guarantees                             1308

954W.... Interpretation................................................................................ 1308

954X..... Claims in respect of default by TDS nominee.............................. 1308

954Y..... How and when claim to be made.................................................. 1310

954Z..... How claim under subsection 954X(2) is to be satisfied............... 1310

954ZA.. How claim under subsection 954X(3) is to be satisfied............... 1311

954ZB... Nexus with this jurisdiction.......................................................... 1312

954ZC... Preventing double recovery.......................................................... 1312

Division 7—Unauthorised transfer                                                                  1313

955........ Interpretation................................................................................ 1313

955A..... Extended application of Division to non-marketable securities... 1313

956........ Situations to which Division applies............................................ 1314

957........ Claim by transferor....................................................................... 1314

958........ Claim by transferee or sub-transferee........................................... 1315

959........ How and when claim may be made.............................................. 1315

960........ How claim is to be satisfied.......................................................... 1316

961........ Discretionary further compensation to transferor........................ 1317

961A..... Nexus between dealer and this jurisdiction................................... 1318

961B..... Preventing double recovery.......................................................... 1318

Division 7A—Contraventions of SCH certificate cancellation provisions           1319

961C..... Interpretation................................................................................ 1319

961D..... Claim in respect of contravention of SCH certificate cancellation provisions         1319

961E...... How and when claim may be made.............................................. 1319

961F...... How claim is to be satisfied.......................................................... 1321

961G..... Discretionary further compensation............................................. 1321

961H..... Preventing double recovery.......................................................... 1321

Division 8—Claims in respect of insolvent members                           1323

962........ Interpretation................................................................................ 1323

963........ Claim in respect of property entrusted to, or received by, dealer before dealer became insolvent         1323

964........ Cash settlement of claims where property unobtainable............. 1325

965........ Ordering of alternative claims and prevention of double recovery 1326

966........ No claim in respect of money lent to dealer................................. 1328

966A..... No claim unless nexus between dealer and this jurisdiction......... 1328

967........ No claim in certain other cases..................................................... 1328

968........ Limits of compensation................................................................ 1329

969........ Making of claims.......................................................................... 1330

Division 9—General provisions relating to claims                                 1332

970........ Power of SEGC to allow and settle claim..................................... 1332

970A..... Claimant may be required to exercise right of set-off................... 1332

970B..... Effect of set-off on claim.............................................................. 1332

971........ Successful claimant entitled to costs and disbursements.............. 1334

972........ Interest.......................................................................................... 1334

972A..... Discretion to pay amounts not received etc. because of failure to transfer securities             1335

973........ Application of Fund in respect of certain claims......................... 1336

974........ Allowing of claim not to constitute admission............................. 1337

975........ SEGC to notify claimant where claim disallowed........................ 1337

976........ Proceedings in the Court............................................................... 1337

977........ Arbitration of amount of cash settlement of certain claims.......... 1338

978........ Form of order of Court establishing claim.................................... 1339

979........ Power of Board to require production of securities etc................ 1339

980........ Subrogation of SEGC to claimant’s rights etc.............................. 1340

981........ Payment of claims only from Fund.............................................. 1342

982........ SEGC may enter into contracts of insurance or indemnity.......... 1342

983........ Instalment payments.................................................................... 1343

983A..... Power of Commission to modify effect of claims Divisions........ 1343

Division 10—Transitional                                                                                     1345

984........ Definitions.................................................................................... 1345

985........ Assets and liabilities of joining exchange’s fidelity fund.............. 1345

986........ Final accounts in respect of joining exchange’s fidelity fund....... 1347

987........ Application of liability provisions in relation to transferred claims 1348

988........ Claims under corresponding previous law.................................... 1348

989........ Expenses incurred under corresponding previous law.................. 1349

990........ Money payable under corresponding previous law..................... 1349

991........ Contracts made under corresponding previous law...................... 1350

992........ Periods prescribed by business rules of exchange for purposes of corresponding previous law            1350

993........ Court proceedings and orders....................................................... 1350

Part 7.11—Conduct in relation to securities                                                      1352

Division 2—Prohibited conduct                                                                        1352

995........ Misleading or deceptive conduct.................................................. 1352

995A..... Application of State Fair Trading Act provisions........................ 1353

997........ Stock market manipulation........................................................... 1353

998........ False trading and market rigging transactions............................... 1353

999........ False or misleading statements in relation to securities................ 1355

1000...... Fraudulently inducing persons to deal in securities...................... 1355

1001...... Dissemination of information about illegal transactions............... 1356

1001A... Continuous disclosure—listed disclosing entities........................ 1356

1001B... Continuous disclosure—unlisted disclosing entities.................... 1357

1001C... Sections 1001A and 1001B—when information is generally available 1358

1001D... Sections 1001A and 1001B—material effect on price or value.... 1358

Division 2A—Insider trading                                                                             1359

1002...... Application of Division................................................................ 1359

1002A... Securities....................................................................................... 1359

1002B... Information generally available..................................................... 1360

1002C... Material effect on price or value of securities.............................. 1361

1002D... Trading, and procuring trading, in securities................................. 1361

1002E.... Information in possession of officer of body corporate............... 1361

1002F.... Information in possession of partner or employee of partnership 1362

1002G... Prohibited conduct by person in possession of inside information 1362

1002H... Exception for withdrawal from registered scheme........................ 1363

1002J.... Exception for underwriters........................................................... 1363

1002K... Exception for purchase pursuant to legal requirement................. 1364

1002L.... Exception for information communicated pursuant to a legal requirement              1364

1002M.. Chinese wall arrangements by bodies corporate........................... 1364

1002N... Chinese wall arrangements by partnerships etc........................... 1365

1002P.... Exception for knowledge of person’s own intentions or activities 1366

1002Q... Exception for bodies corporate..................................................... 1366

1002R... Exception for officers or agents of body corporate...................... 1366

1002S.... Transactions by holder of dealers licence or a representative of the holder of such a licence 1367

1002T... Prosecutions and defences............................................................ 1368

1002U... Powers of court............................................................................ 1368

Division 4—Civil liability                                                                                      1370

Subdivision A—General                                                                                       1370

1005...... Civil liability for contravention of this Part................................. 1370

Subdivision C—Liability in respect of unlawful market activity                  1370

1013...... Liability for insider trading........................................................... 1370

1014...... Liability for other unlawful market activity................................. 1374

1015...... Amount recoverable...................................................................... 1374


Chapter 6Takeovers

  

  

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; or

                            (iii)  the voting interests in a listed managed investment 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.

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 this jurisdiction in the same way as it applies to the acquisition of relevant interests in the securities of companies.

Note:          Section 9 defines company, jurisdiction and listed.

604  Chapter extends to listed managed investment schemes

             (1)  This Chapter applies to the acquisition of relevant interests in the interests in a listed managed investment scheme registered in this jurisdiction 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 managed investment 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 to be 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.


 

Part 6.1Prohibited acquisitions of relevant interests in voting shares

  

606  Prohibition on certain acquisitions of relevant interests in voting shares

Acquisition of relevant interests in voting shares through transaction entered into by or on behalf of person acquiring relevant interest

             (1)  A person must not acquire a relevant interest in issued voting shares in a company if:

                     (a)  the company is:

                              (i)  a listed company; or

                             (ii)  an unlisted company with more than 50 members; and

                     (b)  the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person; and

                     (c)  because of the transaction, that person’s or someone else’s voting power in the company increases:

                              (i)  from 20% or below to more than 20%; or

                             (ii)  from a starting point that is above 20% and below 90%.

However, the person may acquire the relevant interest under one of the exceptions set out in section 611 without contravening this subsection.

Note 1:       Section 9 defines company as meaning a company incorporated, or taken to have been incorporated, in this jurisdiction.

Note 2:       Section 607 deals with the effect of a contravention of this section on transactions. Sections 608 and 609 deal with the meaning of relevant interest. Section 610 deals with the calculation of a person’s voting power in a company.

Note 3:       If the acquisition of relevant interests in an unlisted company with 50 or fewer members leads to the acquisition of a relevant interest in another company that is an unlisted company with more than 50 members, or a listed company, the acquisition is caught by this section because of its effect on that other company.

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%.

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 this subsection.

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.

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.

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 to be 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.

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 mortgage, charge or other security taken for the purpose of a transaction entered into by the person if:

                     (a)  the mortgage, charge or security is taken or acquired in the ordinary course of the person’s business of providing financial services and on ordinary commercial terms; and

                     (b)  the person whose property is subject to the mortgage, charge or security is not an associate of the person.

Note:          Sections 11 to 17 define associate.

Nominees and other trustees

             (2)  A person who would otherwise have a relevant interest in securities as a bare trustee does not have a relevant interest in the securities if a beneficiary under the trust has a relevant interest in the securities because of a presently enforceable and unconditional right of the kind referred to in subsection 608(8).

Note:          This subsection will often apply to a person who holds securities as a nominee.

Holding of securities by securities dealer

             (3)  A securities dealer does not have a relevant interest in securities merely because they hold securities on behalf of someone else in the ordinary course of their securities business.

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.

Exchange traded options and futures contracts

             (6)  A person does not have a relevant interest in securities merely because of:

                     (a)  an exchange traded option over the securities; or

                     (b)  a right to acquire the securities given by a futures contract.

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.

Prescribed exclusions

           (10)  A person does not have a relevant interest in securities in the circumstances specified in the regulations. The regulations may provide that interests in securities are not relevant interests subject to specified conditions.

610  Voting power in a body corporate

Person’s voting power in a body corporate

             (1)  A person’s voting power in a body corporate is:

where:

person’s and associates’ votes is the total number of votes attached to all the voting shares in the body corporate (if any) that the person or an associate has a relevant interest in.

total votes in body corporate is the total number of votes attached to all voting shares in the body corporate.

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 body corporate 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 body corporate 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 body corporate; 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 body corporate or the amendment of the body corporate’s constitution.

Note:          The Corporations and Securities Panel may decide that the setting or varying of voting rights in a way that affects control of a body corporate is unacceptable circumstances under section 657A.

             (3)  If:

                     (a)  a transaction in relation to, or an acquisition of an interest in, securities occurs; and

                     (b)  before the transaction or acquisition, a person did not have a relevant interest in particular voting shares but an associate of the person did have a relevant interest in those shares; and

                     (c)  because of the transaction or acquisition, the person acquires a relevant interest in those shares;

then, for the purposes of applying section 606 to the transaction or acquisition, the person’s voting power is taken to have increased because of the transaction or acquisition from what it would have been before the transaction or acquisition if the votes attached to those shares were disregarded to what it was after the transaction or acquisition (taking the votes attached to those shares into account).

             (4)  Disregard the operation of section 613 in working out a person’s voting power in a body corporate.


 

Part 6.2Exceptions to the prohibition

  

611  Exceptions to the prohibition

                   The following table sets out:

                     (a)  acquisitions of relevant interests in a company’s voting shares that are exempt from the prohibition in subsection 606(1); and

                     (b)  acquisitions of relevant interests in a company’s voting shares resulting from acquisitions of legal or equitable interests in securities of a body corporate that are exempt from the prohibition in subsection 606(2).

Note:          Some of the items in the table cover only activities in relation to the company itself (items 7, 8, 12 and 13) while the other items cover acquisitions in that company that may occur through activities in relation to other companies.

 

Acquisitions that are exempt

[operative]

 

Takeover bids

 

Acceptance of takeover offer

1

An acquisition that results from the acceptance of an offer under a takeover bid.

See also section 612.

 

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:

(i) unconditional; or

(ii) conditional only on the happening of an event referred to in subsection 652C(1) or (2).

See also sections 612 and 613.

 

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:

(i) unconditional; or

(ii) conditional only on the happening of an event referred to in subsection 652C(1) or (2).

See sections 612 and 613.

 

Acceptance of scrip offered as takeover consideration

4

An acquisition that results from the acceptance of:

(a) an offer under a takeover bid if the voting shares are included in the consideration for offers under the bid; or

(b) an offer that results in an acquisition to which item 5 applies.

See also section 612.

 

Nature of acquirer

6

An acquisition that results from the exercise by a person of a power, or appointment as a receiver, or receiver and manager, under a mortgage, charge or other security if:

(a) the person’s ordinary business includes providing financial services; and

(b) the person took or acquired the security in the ordinary course of their business of providing financial services and on ordinary commercial terms.

 

Approval by resolution of target

7

An acquisition approved previously by a resolution passed at a general meeting of the company in which the acquisition is made, if:

(a) no votes are cast in favour of the resolution by:

(i) the person proposing to make the acquisition and their associates; or

(ii) the persons (if any) from whom the acquisition is to be made and their associates; and

(b) the members of the company were given all information known to the person proposing to make the acquisition or their associates, or known to the company, that was material to the decision on how to vote on the resolution, including:

(i) the identity of the person proposing to make the acquisition and their associates; and

(ii) the maximum extent of the increase in that person’s voting power in the company that would result from the acquisition; and

 

(iii) the voting power that person would have as a result of the acquisition; and

(iv) the maximum extent of the increase in the voting power of each of that person’s associates that would result from the acquisition; and

(v) the voting power that each of that person’s associates would have as a result of the acquisition.

 

Target newly formed

8

An acquisition that results from an issue of securities of the company in which the acquisition is made if the company has not started to carry on any business and has not borrowed any money.

 

Manner of acquisition

 

3% creep in 6 months

9

An acquisition by a person if:

(a) throughout the 6 months before the acquisition that person, or any other person, has had voting power in the company of at least 19%; and

(b) as a result of the acquisition, none of the persons referred to in paragraph (a) would have voting power in the company more than 3 percentage points higher than they had 6 months before the acquisition.

 

Rights issues

10

An acquisition that results from an issue of securities that satisfies all of the following conditions:

(a) a company offers to issue securities in a particular class

(b) offers are made to every person who holds securities in that class to issue them with the percentage of the securities to be issued that is the same as the percentage of the securities in that class that they hold before the issue

(c) all of those persons have a reasonable opportunity to accept the offers made to them

 

(d) agreements to issue are not entered into until a specified time for acceptances of offers has closed

(e) the terms of all the offers are the same.

This extends to an acquisition by a person as underwriter to the issue or 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 of securities in the company in which the acquisition is made if:

(a) the issue is to a promoter; and

(b) the disclosure document is the first issued by the company; and

(c) the disclosure document disclosed the effect that the acquisition would have on the promoter’s voting power in the company.

 

Underwriting of fundraising

13

An acquisition that results from an issue under a disclosure 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 disclosure document disclosed the effect that the acquisition would have on the person’s voting power in the company.

 

Acquisition through listed company

14

An acquisition that results from another acquisition of relevant interests in voting shares in a body corporate included in the official list of:

(a) a stock exchange; or

(b) a foreign body conducting a stock 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.

 

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

                   The exception in item 10 of the table in section 611 applies even though the conditions set out in the item are not satisfied in respect of foreign holders of the company’s securities if, under the terms of the offers:

                     (a)  the company must appoint a nominee for foreign holders of the company’s securities who is approved by ASIC; and

                     (b)  the company must transfer to the nominee:

                              (i)  the securities that would otherwise be issued to the foreign holders who accept the offer; or

                             (ii)  the right to acquire those securities; and

                     (c)  the nominee must sell the securities, or those rights, and distribute to each of those foreign holders their proportion of the proceeds of the sale net of expenses.


 

Part 6.3The different types of takeover bid

  

616  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 6.4Formulating the takeover offer

Division 1General

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 securities exchange), 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 2Consideration 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 the stock market of a securities exchange, the bidder must offer to acquire the securities for a cash sum only for each security.

Note:          Section 649B deals with variations of the consideration offered under the bid.

All bids—minimum consideration if bidder purchased securities in the 4 months before the bid

             (3)  The consideration offered for securities in the bid class under a takeover bid must equal or exceed the maximum consideration that the bidder or an associate provided, or agreed to provide, for a security in the bid class under any purchase or agreement during the 4 months before the date of the bid.

             (4)  For the purposes of subsection (3), the consideration offered or provided for a security is:

                     (a)  if the consideration offered or provided is a cash sum only—the amount of that cash sum; or

                     (b)  if the consideration offered or provided does not include a cash sum—the value of that consideration; or

                     (c)  if the consideration offered or provided is a cash sum and other consideration—the sum of the amount of the cash sum and the value of the other consideration.

The value of consideration that is not a cash sum is to be ascertained as at the time the relevant offer, purchase or agreement is made.

             (5)  If:

                     (a)  a person agrees to buy a security in a company; and

                     (b)  the agreement provides that the price payable for the security is a price specified in the agreement but may be varied in accordance with the terms of the agreement;

any variation in price under the agreement is to be disregarded in working out, for the purposes of subsection (3), the price agreed to be paid for the security under the agreement.

622  Escalation agreements

Benefits linked to bids and proposed bids not allowed

             (1)  A person who makes or proposes to make a takeover bid for securities, or their associate, contravenes this section if:

                     (a)  a person acquires a relevant interest in securities in the bid class within the 6 months before the bid is made or proposed; and

                     (b)  at any time whatever, the bidder, proposed bidder or associate gives or agrees to give a benefit to, or receives or agrees to receive a benefit from:

                              (i)  a person who had a relevant interest in any of the paragraph (a) securities immediately before the acquisition; or

                             (ii)  an associate of a person who had a relevant interest in any of those securities at that time; and

                     (c)  the benefit is attributable to the acquisition or matters that include the acquisition; and

                     (d)  the amount or value of the benefit is, or is to be, determined by reference to or to matters that include either of the following:

                              (i)  the amount or value of the consideration for the securities under the bid or proposed bid

                             (ii)  the amount or value of the consideration for which the bidder or proposed bidder acquires, offers or proposes to offer to acquire, securities in the bid class during the offer period (whether or not under the bid) or under Chapter 6A.

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.

             (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 3The offer period

624  Offer period

Offer period set in offer

             (1)  The offers under a takeover bid must remain open for the period stated in the offer. The period must:

                     (a)  start on the date the first offer under the bid is made; and

                     (b)  last for at least 1 month, and not more than 12 months.

However, the offer may be withdrawn during that period under section 652B.

Note:          Sections 649C (market bids) and 650C (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).


 

Division 4Conditional 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 stock market of a securities exchange (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 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 they are a related body corporate.

Note:          Paragraph 11(b) makes related bodies corporate associates of each other.

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 securities exchange; and

                     (c)  for unquoted bid class securities—lodging the notice with ASIC.


 

Part 6.5The takeover procedure

Division 1The overall procedure

631  Proposing or announcing a bid

Bid must proceed within 2 months after proposal

             (1)  If a person publicly proposes to make a takeover bid for securities in a company, either alone or with other persons, the person contravenes this subsection unless they 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.

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
* [exchange]

 

 

 

 

 

 

 

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
* [exchange]

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

 

——®

* bidder
* holders of bid class securities
* ASIC
* [exchange]

 

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 each securities exchange that has a stock 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 each securities exchange that has a stock market on which the target’s securities are quoted.

To be done on the day all offers have been sent as required by item 6

9

The bidder must lodge with ASIC a notice that offers have been sent as required by item 6.

To be done on the day all offers have been sent as required by item 6

10

The target must prepare a target’s statement.

See section 638 for content of statement.

11

The target must send the target’s statement (and any accompanying report) to the bidder.

To be done no later than 15 days after the target receives a notice that all offers have been sent as required by item 6

12

The target must send a copy of the target’s statement (and any accompanying report) to each person who holds:

·    securities in the bid class; or

·    if the bid extends to securities that come to be in the bid class due to the conversion of or exercise of rights attached to other securities (see subsection 617(2))—the other securities;

as at the date set by the bidder under subsection (2).

To be done:

·    no earlier than the day on which the target sends the target’s statement to the bidder; and

·    no later than 15 days after the target receives a notice that all offers have been sent as required by item 6

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

13

The target must lodge a copy of the target’s statement (and any accompanying report) with ASIC.

To be done on the day the target’s statement is sent to the bidder

See also subsection (7).

14

The target must send a copy of the target’s statement (and any accompanying report) to each securities exchange that has a stock market on which the target’s securities are quoted.

To be done on the day the target’s statement is sent to the bidder

See also subsection (7).

Date for determining holders of securities

             (2)  The people to whom information is to be sent under items 6 and 12 of the table in subsection (1) are the holders of the securities referred to in those items as at the date set by the bidder in:

                     (a)  the bidder’s statement; or

                     (b)  a separate written notice given to the target on or before the date set by the bidder.

Note:          The bidder may set the date when the bidder asks the target for a list of members under section 641.

             (3)  The date set by the bidder must be:

                     (a)  on or after the date on which the bidder gives the bidder’s statement, or the separate written notice, to the target; and

                     (b)  on or before the date on which the first offers under the bid are made to holders of the securities.

             (4)  As soon as practicable after setting the day, the bidder must give notice of it by:

                     (a)  if the securities in the bid class are quoted—giving the notice to the relevant securities exchange; or

                     (b)  otherwise—lodging the notice with ASIC.

Information to be sent with bidder’s statement

             (5)  A bidder’s statement required to be sent under item 5 or 6 in the table in subsection (1) must be sent together with any other information sent by the bidder to the target with the statement.

Information to be sent with notices that offers have been sent

             (6)  If the bidder sends the people to whom the bidder’s statement is sent under item 6 of the table in subsection (1) additional information together with the bidder’s statement and the offer, the bidder must also include that information in any notice under item 7, 8 or 9 of the table.

Information to be sent with target’s statement

             (7)  If the target sends the people to whom the target’s statement is sent under item 12 of the table in subsection (1) additional information together with the target’s statement, the target must also include that information in any notice under item 13 or 14 of the table.

634  Overview of steps in a market bid

                   The following diagram gives an overview of the steps involved in a market bid.

 

Overview of steps in a market bid

 

Bidder

 

 

 

Step 1

announcement of bid to the exchange

 

 

 

 

 

 

 

 

 

Step 2

bidder’s statement

——®

* exchange
* target
* ASIC

 

 

 

 

 

 

Step 3

bidder’s statement and any other documents sent with it to the exchange

——®

* holders of bid class securities

 

 

 

 

 

 

Step 4

copy of documents sent to holders

——®

* exchange
* ASIC

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

——®

* exchange
* bidder
* ASIC
* holders of bid class securities

 

 

 

 

 

 

 

Bidder

 

 

 

Step 6

make offers on the exchange

 

 

 

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 on‑market before the end of the bid period.

635  Detailed steps in a market bid

                   The following table provides for the steps that a bidder must take to make an effective market bid and the steps that a target must take when a market bid is made.

 

Steps in market bid

[operative]

 

Steps

Timing and relevant provisions

1

The bidder must prepare a bidder’s statement.

See section 636 for content of statement

2

The bidder must have the bid announced to the relevant securities exchange.

 

3

The bidder must send a copy of the bidder’s statement to the relevant securities exchange.

To be done on the day the announcement is made

4

The bidder must send to the target:

·    a copy of the bidder’s statement; and

·    a copy of any other document that was sent with the bidder’s statement to the relevant securities exchange.

To be done on the day the announcement is made

5

The bidder must lodge with ASIC:

·    a copy of the bidder’s statement; and

·    a copy of any other document that was sent with the bidder’s statement to the relevant securities exchange.

To be done on the day the announcement is made

6

The bidder must send to each holder of bid class securities (other than the bidder):

·    a copy of the bidder’s statement; and

·    a copy of any other document that was sent with the bidder’s statement to the relevant securities exchange.

Within 14 days after the announcement is made

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

7

The bidder must lodge with ASIC a copy of every other document sent to holders of bid class securities with the bidder’s statement.

To be done no later than the day copies of the bidder’s statement have been sent to all holders of bid class securities

8

The bidder must give the relevant securities exchange a copy of every other document sent to holders of bid class securities with the bidder’s statement.

To be done no later than the day copies of the bidder’s statement have been sent to all holders of bid class securities

9

The target must prepare a target’s statement.

See section 638 for content of statement

10

The target must send a copy of the target’s statement to the relevant securities exchange.

Within 14 days after the announcement is made

11

The target must send to the bidder:

·    a copy of the target’s statement; and

·    a copy of any other document that was sent with the target’s statement to the relevant securities exchange.

To be done on the day the target sends a copy of the target’s statement to the securities exchange

12

The target must lodge with ASIC:

·    a copy of the target’s statement; and

·    a copy of any other document that was sent with the target’s statement to the relevant securities exchange.

To be done on the day the target sends a copy of the target’s statement to the securities exchange

13

The target must send each holder of bid class securities:

·    a copy of the target’s statement; and

·    a copy of any other document that was sent with the target’s statement to the relevant securities exchange.

Within 14 days after the announcement is made

Sections 648B and 648C provide for the manner in which documents may be sent to holders.

14

The bidder must make offers for the securities under the bid through the relevant securities exchange.

To be done on the next day after the end of the 14 day period referred to in item 13.

If the bidder does not make the offers at that time, the bidder contravenes this section.

Item 2 of the table in section 611 covers offers made by the bidder on market during the 14 day period between the announcement and the making of the offers under the bid


 

Division 2The bidder’s statement

636  Bidder’s statement content

             (1)  A bidder’s statement must include the following:

                     (a)  the identity of the bidder

                     (b)  the date of the statement

                     (c)  if the target is a company or body—details of the bidder’s intentions regarding:

                              (i)  the continuation of the business of the target; and

                             (ii)  any major changes to be made to the business of the target, including any redeployment of the fixed assets of the target; and

                            (iii)  the future employment of the present employees of the target

                     (d)  if the target is a managed investment scheme—details of the bidder’s intentions regarding:

                              (i)  the continued operation of the scheme; and

                             (ii)  any major changes to be made to the operation of the scheme, including any redeployment of scheme property; and

                            (iii)  any plans to remove the current responsible entity and appoint a new responsible entity

                     (e)  for an off‑market bid—a statement that the bidder’s statement has been lodged with ASIC but that ASIC takes no responsibility for the content of the statement

                      (f)  in relation to the cash consideration (if any) offered under the bid—details of:

                              (i)  the cash amounts (if any) held by the bidder for payment of the consideration; and

                             (ii)  the identity of any other person who is to provide, directly or indirectly, cash consideration from that person’s own funds; and

                            (iii)  any arrangements under which cash will be provided by a person referred to in subparagraph (ii)

                     (g)  if any securities are offered as consideration under the bid and the bidder is:

                              (i)  the body that has issued or will issue the securities; or

                             (ii)  a person who controls that body;

                            all material that would be required for a prospectus for an offer of those securities by the bidder under section 710 to 713

                     (h)  if the bidder or an associate provided, or agreed to provide, consideration for a security in the bid class under a purchase or agreement during the 4 months before the date of the bid—the following information about the consideration:

                              (i)  to the extent to which the consideration is a cash sum—the amount per security of the cash sum

                             (ii)  to the extent to which the consideration is quoted securities—the market price per security of those securities

                            (iii)  to the extent to which the consideration is neither a cash sum nor a quoted security—the value per security of that consideration

                      (i)  if, during the period of 4 months before the date of the bid, the bidder or an associate gave, or offered to give or agreed to give a benefit to another person and the benefit was likely to induce the other person, or an associate, to:

                              (i)  accept an offer under the bid; or

                             (ii)  dispose of securities in the bid class;

                            and the benefit is not offered to all holders of securities in the bid class under the bid—details of the benefit

                      (j)  if the bid is to extend to securities that come to be in the bid class during the offer period due to the conversion of or exercise of rights attached to other securities (see subsection 617(2))—a statement to that effect

                     (k)  for an off‑market bid—the following details in relation to each class of securities in the target:

                              (i)  the total number of securities in the class

                             (ii)  the number of securities in the class that the bidder had a relevant interest in immediately before the first offer is sent (expressed as a number of securities or as a percentage of the total number of securities in the class)

                      (l)  for an off‑market bid—the bidder’s voting power in the company

                    (m)  any other information that:

                              (i)  is material to the making of the decision by a holder of bid class securities whether to accept an offer under the bid; and

                             (ii)  is known to the bidder; and

                            (iii)  does not relate to the value of securities offered as consideration under the bid.

The information that the bidder must disclose under subparagraph (k)(i) and paragraph (l) must be only as up‑to‑date as it is reasonable to expect in the circumstances. The bidder does not have to disclose information under paragraph (m) if it would be unreasonable to require the bidder to do so because the information had previously been disclosed to the holders of bid class securities.

Note:          Paragraph (b)—See subsection 637(2) for the date of the statement.

Expert’s report on non‑cash consideration provided for bid class securities in last 4 months

             (2)  If the bidder’s statement includes details of the value per share of consideration under subparagraph (1)(h)(iii), the statement must include, or be accompanied by, a report by an expert that states whether, in the expert’s opinion, the value stated is fair and reasonable and gives the reasons for forming that opinion.

Note:          Subsections 648A(2) and (3) provide for the independence of the expert and disclosure of any association between the bidder and the expert or the target and the expert. A contravention of one of those subsections results in the bidder’s statement not complying with this subsection.

Consent of person to whom statement attributed

             (3)  The bidder’s statement may only include, or be accompanied by, a statement by a person, or a statement said in the bidder’s statement to be based on a statement by a person, if:

                     (a)  the person has consented to the statement being included in the bidder’s statement, or accompanying it, in the form and context in which it is included; and

                     (b)  the bidder’s statement states that the person has given this consent; and

                     (c)  the person has not withdrawn this consent before the bidder’s statement is lodged with ASIC.

             (4)  The bidder must keep the consent.

637  Bidder’s statement formalities

                   Approval

             (1)  The copy of the bidder’s statement that is lodged with ASIC must be approved by:

                     (a)  for a bidder that is a body corporate:

                              (i)  if the consideration offered under the bid is a cash sum only—a resolution passed by the directors of the bidder; or

                             (ii)  otherwise—a unanimous resolution passed by all the directors of the bidder; or

                     (b)  for a bidder who is an individual—the bidder.

             (2)  The bidder’s statement must be dated. The date is the date on which it is lodged with ASIC.


 

Division 3The target’s response

638  Target’s statement content

General requirement

             (1)  A target’s statement must include all the information that holders of bid class securities and their professional advisers would reasonably require to make an informed assessment whether to accept the offer under the bid. The statement must contain this information:

                     (a)  only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in the statement; and

                     (b)  only if the information is known to any of the directors of the target.

             (2)  In deciding what information should be included under subsection (1), have regard to:

                     (a)  the nature of the bid class securities; and

                     (b)  if the bid class securities are interests in a managed investment scheme—the nature of the scheme; and

                     (c)  the matters that the holders of bid class securities may reasonably be expected to know; and

                     (d)  the fact that certain matters may reasonably be expected to be known to their professional advisers; and

                     (e)  the time available to the target to prepare the statement.

Director’s recommendations

             (3)  A target’s statement must contain a statement by each director of the target:

                     (a)  recommending that offers under the bid be accepted or not accepted, and giving reasons for the recommendation; or

                     (b)  giving reasons why a recommendation is not made.

             (4)  The statement under subsection (3) must be made by:

                     (a)  if the target is under administration—the liquidator or administrator; or

                     (b)  if the target has executed a deed of company arrangement that has not yet terminated—the deed’s administrator.

Consent of person to whom statement attributed

             (5)  The target’s statement may only include, or be accompanied by, a statement by a person, or a statement said in the target’s statement to be based on a statement by a person, if:

                     (a)  the person has consented to the statement being included in the target’s statement, or accompanying it, in the form and context in which it is included; and

                     (b)  the target’s statement states that the person has given this consent; and

                     (c)  the person has not withdrawn this consent before the target’s statement is lodged with ASIC.

             (6)  The target must keep the consent.

639  Target’s statement formalities

                   Approval

             (1)  The copy of the target’s statement that is lodged with ASIC must be approved by:

                     (a)  if paragraphs (b) and (c) do not apply—a resolution passed by the directors of the target; or

                     (b)  for a target that is under administration—the liquidator or administrator; or

                     (c)  for a target that has executed a deed of company arrangement that has not yet terminated—the deed’s administrator.

Date

             (2)  The target’s statement must be dated. The date is the date on which it is lodged with ASIC.

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

             (1)  If:

                     (a)  the bidder’s voting power in the target is 30% or more; or

                     (b)  for a bidder who is, or includes, an individual—the bidder is a director of the target; or

                     (c)  for a bidder who is, or includes, a body corporate—a director of the bidder is a director of the target;

a target’s statement given in accordance with section 638 must include, or be accompanied by, a report by an expert that states whether, in the expert’s opinion, the takeover offers are fair and reasonable and gives the reasons for forming that opinion.

Note:          Subsections 648A(2) and (3) provide for the independence of the expert and disclosure of any association between the target and the expert or the bidder and the expert. A contravention of one of those subsections results in the target’s statement not complying with this subsection.

             (2)  In determining whether the bidder’s voting power in the target is 30% or more, calculate the bidder’s voting power at the time the bidder’s statement is sent to the target.

641  Target must inform bidder about securities holdings

Requirement to inform bidder and information that must be given

             (1)  If the bidder has given a bidder’s statement to the target and requested the target to give the bidder information in accordance with this section, the target must inform the bidder of:

                     (a)  the name and address of each person who, at a time specified by the bidder under subsection (2), held securities:

                              (i)  in the bid class; or

                             (ii)  convertible into securities in the bid class; and

                     (b)  the type, and number of each type, of those securities held by the person at the specified time.

However, the target does not need to give information to the bidder about a person or their holding of securities unless the target knows the person’s name.

Time at which target’s information must be correct

             (2)  The bidder’s request must specify a day as at which the information must be correct. The day must be one that occurs after the day on which the bidder makes the request unless the target agrees to it being the day on which the bidder makes the request.

Form in which target must provide information

             (3)  The target must give the information to the bidder:

                     (a)  in the form that the bidder requests; or

                     (b)  if the target is unable to comply with the request—in writing.

             (4)  If the target must give the information to the bidder in electronic form, the information must be readable but the information need not be formatted for the bidder’s preferred operating system.

Fee for provision of information

             (5)  The target may require the bidder to pay an amount, not exceeding the prescribed amount, for the provision of the information to the bidder.

Time by which target must provide information

             (6)  The target must give the information to the bidder no later than the latest of the following times:

                     (a)  the end of the second day after the day on which the bidder requested the information; or

                     (b)  the end of the next day after the day as at which the information must be correct; or

                     (c)  the time when the target receives the amount mentioned in subsection (5).

642  Expenses of directors of target companies

             (1)  If the target is a company or body, the directors of the target have a right to recover from the target any expenses they reasonably incur in the interest of members of the target and in relation to the takeover bid. The directors have this right regardless of anything contained in the target’s constitution (if any).

             (2)  If the target is a managed investment scheme, the responsible entity for the scheme has a right to recover from scheme property any expenses it reasonably incurs in the interest of members of the scheme and in relation to the takeover bid. The responsible entity has this right regardless of anything contained in the scheme’s constitution.


 

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

643  Supplementary bidder’s statement

                   If a bidder becomes aware of:

                     (a)  a misleading or deceptive statement in the bidder’s statement; or

                     (b)  an omission from the bidder’s statement of information required by section 636; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the bidder’s statement was lodged; and

                             (ii)  would have been required by section 636 to be included in the bidder’s statement if it had arisen before the bidder’s statement was lodged;

that is material from the point of view of a holder of bid class securities, the bidder must prepare a supplementary bidder’s statement that remedies this defect.

Note 1:       The bidder must then send and lodge the supplementary bidder’s statement in accordance with section 647.

Note 2:       Section 670A makes it an offence to give a bidder’s statement after the bidder has become aware of a misleading or deceptive statement, omission or new circumstance that is material from the point of view of a holder of securities to whom the statement is given (unless the deficiency is corrected).

Note 3:       The power to issue a supplementary bidder’s statement is not limited to the situations dealt with in this section.

Note 4:       This section applies to a bidder’s statement that has already been previously supplemented.

644  Supplementary target’s statement

                   If a target becomes aware of:

                     (a)  a misleading or deceptive statement in the target’s statement; or

                     (b)  an omission from the target’s statement of information required by section 638; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the target’s statement was lodged; and

                             (ii)  would have been required by section 638 to be included in the target’s statement if it had arisen before the target’s statement was lodged;

that is material from the point of view of a holder of bid class securities, the target must prepare a supplementary target’s statement that remedies this defect.

Note 1:       The target must then send and lodge the supplementary target’s statement in accordance with section 647.

Note 2:       Section 670A makes it an offence to give a target’s statement after the target has become aware of a misleading or deceptive statement, omission or new circumstance that is material from the point of view of a holder of securities to whom the statement is given (unless the deficiency is corrected).

Note 3:       The power to issue a supplementary target’s statement is not limited to the situations dealt with in this section.

Note 4:       This section applies to a target’s statement that has already been previously supplemented.

645  Form of supplementary statement

Identity as a supplementary statement

             (1)  At the beginning of a supplementary bidder’s or target’s statement there must be:

                     (a)  a statement that it is a supplementary statement; and

                     (b)  an identification of the statement it supplements; and

                     (c)  an identification of any previous supplementary statements lodged with ASIC in relation to the bid; and

                     (d)  a statement that it is to be read together with the statement it supplements and any previous supplementary statements.

Approval of supplementary bidder’s statement

             (2)  The copy of the supplementary bidder’s statement that is lodged with ASIC must be approved by:

                     (a)  for a bidder that is a body corporate:

                              (i)  if the consideration offered under the bid is a cash sum only—a resolution passed by the directors of the bidder; or

                             (ii)  otherwise—a unanimous resolution passed by all the directors of the bidder; or

                     (b)  for a bidder who is an individual—the bidder.

Approval of supplementary target’s statement

             (3)  The copy of a supplementary target’s statement that is lodged with ASIC must be approved by:

                     (a)  if paragraphs (b) and (c) do not apply—a resolution passed by the directors of the target; or

                     (b)  for a target that is under administration—the liquidator or administrator; or

                     (c)  for a target that has executed a deed of company arrangement that has not yet terminated—the deed’s administrator.

Date

             (4)  A supplementary statement must be dated. The date is the date on which it is lodged with ASIC.

646  Consequences of lodging a supplementary statement

                   If a supplementary statement is lodged with ASIC, for the purposes of the application of this Chapter and Chapter 6B to events that occur after the lodgment, the bidder’s or target’s statement is taken to be the original statement together with the supplementary statement.

647  To whom supplementary statement must be sent

             (1)  A supplementary bidder’s statement must be sent to the target as soon as practicable.

             (2)  A supplementary target’s statement must be sent to the bidder as soon as practicable.

             (3)  Either kind of supplementary statement must as soon as practicable be:

                     (a)  lodged with ASIC; and

                     (b)  if the bid class securities are quoted and the target is listed—sent to each relevant securities exchange that has a stock market on which the target’s securities are quoted; and

                     (c)  if the bid is an off‑market bid and the bid class securities are not quoted—sent to all holders of bid class securities who have not accepted an offer under the bid.

Note:          Sections 648B and 648C provide for the manner in which documents may be sent to holders.


 

Division 5General rules on takeover procedure

Subdivision AExperts’ reports

648A  Experts’ reports

             (1)  If the bidder or target obtains 2 or more reports each of which could be used for the purposes of subparagraph 636(1)(h)(iii) or subsection 640(1), the bidder’s or target’s statement must be accompanied by a copy of each report.

             (2)  The expert must be someone other than an associate of the bidder or target.

             (3)  The report must set out details of:

                     (a)  any relationship between the expert and:

                              (i)  the bidder or an associate of the bidder; or

                             (ii)  the target or an associate of the target;

                            including any circumstances in which the expert gives them advice, or acts on their behalf, in the proper performance of the functions attaching to the expert’s professional capacity or business relationship with them; and

                     (b)  any financial or other interest of the expert that could reasonably be regarded as being capable of affecting the expert’s ability to give an unbiased opinion in relation to the matter being reported on; and

                     (c)  any fee, payment or other benefit (whether direct or indirect) that the expert has received or will or may receive in connection with making the report.

Note:          If the statement includes, or is accompanied by, the report, it must state that the expert has consented to this being done (see subsections 636(3) and 638(5)).

Subdivision BSending documents to holders of securities

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

                   The bidder may send a document to a holder of securities for the purposes of this Chapter at the address shown for the holder in the information given to the bidder by the target under section 641. This section does not limit the address to which the document may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

648C  Manner of sending documents to holders of securities

                   If a document must be sent to the holder of securities under this Chapter, the document must be sent:

                     (a)  if the document is to be sent to the holder in an external territory or outside Australia—by pre‑paid airmail post or by courier; or

                     (b)  if the document is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

Subdivision CEffect of proportional takeover approval provisions

648D  Constitution may contain proportional takeover approval provisions

             (1)  Subject to this Subdivision, the constitution of a company may contain provisions to the effect that, if offers are made under a proportional takeover bid for securities of the company:

                     (a)  the registration of a transfer giving effect to a takeover contract for the bid is prohibited unless and until a resolution (an approving resolution) to approve the bid is passed in accordance with the provisions; and

                     (b)  a person (other than the bidder or an associate of the bidder) who, as at the end of the day on which the first offer under the bid was made, held bid class securities is entitled to vote on an approving resolution; and

                     (c)  an approving resolution is to be voted on in whichever of the following ways is specified in the provisions:

                              (i)  at a meeting, convened and conducted by the company, of the persons entitled to vote on the resolution;

                             (ii)  by means of a postal ballot conducted by the company in accordance with a procedure set out in the provisions;

                            or, if the provisions so provide, in whichever of those ways is determined by the directors of the company; and

                     (d)  an approving resolution that has been voted on is taken to have been passed if the proportion that the number of votes in favour of the resolution bears to the total number of votes on the resolution is greater than the proportion specified in the provisions, and otherwise is taken to have been rejected.

The proportion specified under paragraph (d) must not exceed 50%.

Note:          Section 9 defines proportional takeover bid. See paragraph 618(1)(b).

             (2)  To be effective, an approving resolution in relation to a proportional takeover bid must be passed before the approving resolution deadline. The deadline is the 14th day before the last day of the bid period.

Note:          In certain circumstances, an approving resolution will be taken to have been passed (see subsection 648E(3)).

             (3)  Except to the extent to which a company’s constitution provides otherwise:

                     (a)  the provisions that apply to a general meeting of the company apply, with such modifications as the circumstances require, to a meeting convened under the company’s proportional takeover approval provisions; and

                     (b)  those provisions apply as if the meeting convened under the proportional takeover provisions were a general meeting of the company.

The provisions referred to in paragraph (a) may be the provisions of a law, provisions of the company’s constitution or any other provisions.

648E  Resolution to be put if proportional bid made

             (1)  If:

                     (a)  a company’s constitution contains proportional takeover approval provisions; and

                     (b)  offers are made under a proportional bid for a class of the company’s securities;

then:

                     (c)  the company’s directors must ensure that a resolution to approve the bid is voted on in accordance with those provisions before the approving resolution deadline; and

                     (d)  if the directors fail to ensure that a resolution of that kind is voted on before the deadline, each of the directors contravenes this subsection.

Note:          Subsection 648D(2) sets the approving resolution deadline.

             (2)  If a resolution to approve the bid is voted on in accordance with the proportional takeover approval provisions before the approving resolution deadline, the company must, on or before the deadline, give:

                     (a)  the bidder; and

                     (b)  if the company is listed—each relevant securities exchange;

a written notice stating that a resolution to approve the bid has been voted on and whether the resolution was passed or rejected.

             (3)  If no resolution to approve the bid has been voted on in accordance with the proportional takeover approval provisions as at the end of the day before the approving resolution deadline, a resolution to approve the bid is taken, for the purposes of those provisions, to have been passed in accordance with those provisions.

648F  Effect of rejection of approval resolution

                   If a resolution to approve the bid is voted on, in accordance with the proportional takeover approval provisions, before the approving resolution deadline and is rejected:

                     (a)  despite section 652A:

                              (i)  all offers under the bid that have not been accepted as at the end of deadline; and

                             (ii)  all offers under the bid that have been accepted, and from whose acceptance binding contracts have not resulted, as at the end of the deadline;

                            are taken to be withdrawn at the end of the deadline; and

                     (b)  as soon as practicable after the deadline, the bidder must return to each person who has accepted an offer referred to in subparagraph (a)(ii) any documents that the person sent the bidder with the acceptance of the offer; and

                     (c)  the bidder:

                              (i)  is entitled to rescind; and

                             (ii)  must rescind as soon as practicable after the deadline;

                            each binding takeover contract for the bid; and

                     (d)  a person who has accepted an offer made under the bid is entitled to rescind their takeover contract.

648G  Including proportional takeover provisions in constitution

             (1)  A company’s proportional takeover approval provisions, unless sooner omitted from the constitution of the company, cease to apply at the end of:

                     (a)  unless paragraph (b) or (c) applies—3 years;

                     (b)  if the constitution provides that the provisions apply for a specified period of less than 3 years and the provisions have not been renewed—the specified period; or

                     (c)  if the provisions have been renewed on at least one occasion and the resolution, or the most recent resolution, renewing the provisions states that the provisions are renewed for a specified period of less than 3 years—the specified period.

             (2)  The period referred to in subsection (1) starts:

                     (a)  if the provisions were contained in the company’s constitution when it was incorporated or formed and have not been renewed—at that time; or

                     (b)  if the provisions were inserted in the company’s constitution and have not been renewed—when the provisions were inserted; or

                     (c)  if the provisions have been renewed on at least one occasion—when the provisions were renewed, or last renewed.

             (3)  When the provisions cease to apply, the company’s constitution is, by force of this subsection, altered by omitting the provisions.

             (4)  A company may renew its proportional takeover approval provisions. The provisions are to be renewed in the same manner as that in which the company could alter its constitution to insert proportional takeover approval provisions.

             (5)  With every notice that:

                     (a)  specifies the intention to propose:

                              (i)  a resolution to alter a company’s constitution by inserting proportional takeover approval provisions; or

                             (ii)  a resolution to renew a company’s proportional takeover approval provisions; and

                     (b)  is sent to a person who is entitled to vote on the proposed resolution;

the company must send a statement that:

                     (c)  explains the effect of the proposed provisions, or of the provisions proposed to be renewed; and

                     (d)  explains the reasons for proposing the resolution and sets out the factual matters and principles underlying those reasons; and

                     (e)  states whether, as at the day on which the statement is prepared, any of the directors of the company is aware of a proposal by a person to acquire, or to increase the extent of, a substantial interest in the company and, if so, explains the extent (if any) to which the proposal has influenced the decision to propose the resolution; and

                      (f)  for a proposed resolution to renew proportional takeover approval provisions—reviews both the advantages, and disadvantages, of the provisions proposed to be renewed for:

                              (i)  the directors; and

                             (ii)  the company’s members;

                            during the period during which the provisions have been in effect; and

                     (g)  discusses both the potential advantages, and the potential disadvantages, of the proposed provisions, or of the provisions proposed to be renewed, for:

                              (i)  the directors; and

                             (ii)  the company’s members.

             (6)  If, on a particular day, a company purports to:

                     (a)  alter its constitution by inserting proportional takeover approval provisions; or

                     (b)  renew its proportional takeover approval provisions;

then:

                     (c)  holders who together hold not less than 10% (by number) of the issued securities in a class of securities in the company to which the provisions apply may, within 21 days after that day, apply to the Court to have the purported alteration or renewal set aside to the extent to which it relates to that class; and

                     (d)  unless and until an application made under paragraph (c) is finally determined by the making of an order setting aside the purported alteration or renewal to that extent, the company is taken for all purposes (other than the purposes of an application of that kind):

                              (i)  to have validly altered its constitution by inserting the provisions referred to in paragraph (a) applying to that class; or

                             (ii)  to have validly renewed the provisions referred to in paragraph (b) applying to that class.

             (7)  An application under paragraph (6)(c) may be made, on behalf of the holders entitled to make the application, by a holder or holders appointed by them in writing.

             (8)  On an application under paragraph (6)(c), the Court may make an order setting aside the purported alteration or renewal to the extent to which it applies to that class if it is satisfied that it is appropriate in all the circumstances to do so. Otherwise the Court must dismiss the application.

             (9)  Within 14 days after the day on which the Court makes an order of the kind referred to in subsection (8) in relation to a company, the company must lodge a copy of the order with ASIC.

648H  Effect of Subdivision

                   This Subdivision applies notwithstanding anything contained in:

                     (a)  the business rules or listing rules of a securities exchange; or

                     (b)  the constitution of a company; or

                     (c)  any agreement.


 

Part 6.6Variation of offers

Division 1Market bids

649A  General

                   A bidder may only vary the offers under a market bid in accordance with section 649B or 649C.

Note:          ASIC may allow other variations under section 655A.

649B  Market bids—raising bid price

                   The bidder may increase the current market bid price. They may not do so, however, during the last 5 trading days of the relevant securities exchange in the offer period.

649C  Market bids—extending the offer period

             (1)  The bidder may extend the offer period. The extension must be announced to the relevant securities exchange at least 5 trading days of the exchange before the end of the offer period. However, the announcement may be made up to the end of the offer period if during those 5 trading days:

                     (a)  another person lodges with ASIC a bidder’s statement for a takeover bid for securities in the bid class; or

                     (b)  another person announces a takeover bid for securities in the bid class; or

                     (c)  another person makes offers under a takeover bid for securities in the bid class; or

                     (d)  the consideration for offers under another takeover bid for securities in the bid class is improved.

The offer period is extended by having the extension announced to the relevant securities exchange.

Note:          Section 624 provides for an automatic extension of the bid period in certain circumstances.

             (2)  On the day on which the announcement is made, the bidder must:

                     (a)  give the target and the relevant securities exchange a notice setting out the terms of the announcement; and

                     (b)  lodge a notice setting out the terms of the announcement with ASIC.


 

Division 2Off‑market bids (express variation by bidder)

650A  General

             (1)  A bidder may only vary the offers under an off‑market bid in accordance with section 650B, 650C or 650D.

Note:          ASIC may allow other variations under section 655A.

             (2)  If the bidder varies the offer under an off‑market bid in accordance with section 650B, 650C or 650D, the bidder must vary all unaccepted offers under the bid in the same way.

Note:          Subsections 650B(2) and (3) deal with the effect of a variation on takeover contracts that have already resulted from acceptances of offers under the bid when the variation is made.

650B  Off‑market bids—consideration offered

Improving the consideration offered

             (1)  The bidder may vary the offers made under the bid to improve the consideration offered:

                     (a)  by increasing a cash sum offered; or

                     (b)  by increasing the number of securities offered; or

                     (c)  by increasing the rate of interest payable under debentures offered; or

                     (d)  by increasing the amount or value of debentures offered; or

                     (e)  by increasing the number of unissued securities that may be acquired under options offered; or

                      (f)  by offering a cash sum in addition to securities; or

                     (g)  if the securities being acquired include shares to which rights to accrued dividends are attached—by giving the holders the right to:

                              (i)  retain the whole or a part of the dividend; or

                             (ii)  be paid an amount equal to the amount of the dividend;

                            in addition to the consideration already offered; or

                     (h)  offering an additional alternative form of consideration.

Note:          If the bidder increases the consideration during the last 7 days of the offer period, subsection 624(2) extends the offer period by a further 14 days.

Effect of increase in consideration on offers already accepted

             (2)  Improving the consideration has the effects set out in the following table on the rights of a person who has already accepted an offer when the variation is made.

 

Effect of improving consideration

[operative]

 

Improvement

Effect on person who has already accepted bid offer

1

improvement of the only form of consideration being offered

entitled to the improved consideration

2

2 or more forms of consideration offered and all forms improved by the same factor or percentage

entitled to the improvement in the form of consideration accepted

3

2 or more forms of consideration offered and improvement in the consideration is identical for all forms

entitled to the improvement in the form of consideration accepted

4

addition of a new form of consideration

entitled to make a fresh election as to the form of consideration to be taken

5

any other improvement

entitled to make a fresh election as to the form of consideration to be taken

 

The person is entitled to receive the improved consideration immediately, or immediately after the exercise of the election.

Fresh election as to the form of consideration

             (3)  If a person who has already accepted an offer has the right to make a fresh election as to the form of consideration to be taken, the bidder must send the person as soon as practicable after the variation a written notice informing them about their right to make the election.

Note 1:       Section 651B says how the election is to be exercised.

Note 2:       Sections 648B and 648C provide for the manner in which documents may be sent to holders.

650C  Off‑market bids—extension of offer period

             (1)  A bidder making an off‑market bid may extend the offer period at any time before the end of the offer period.

             (2)  If the bid is subject to a defeating condition, the bidder may extend the offer period after the publication of the notice under subsection 630(3) only if one of the following happens after the publication:

                     (a)  another person lodges with ASIC a bidder’s statement for a takeover bid for securities in the bid class

                     (b)  another person announces a takeover bid for securities in the bid class

                     (c)  another person makes offers under a takeover bid for securities in the bid class

                     (d)  the consideration for offers under another takeover bid for securities in the bid class is improved.

Note:          Section 624 says how long the total offer period can be.

650D  Off‑market bids—method of making variation

Variation to be made by notice to the target and holders

             (1)  To vary offers under an off‑market bid, the bidder must:

                     (a)  prepare a notice that:

                              (i)  sets out the terms of the proposed variation; and

                             (ii)  if the bid is subject to a defeating condition and the proposed variation postpones for more than 1 month the time by which the bidder must satisfy their obligations under the bid—informs people about the right to withdraw acceptances under section 650E; and

                     (b)  lodge the notice with ASIC; and

                     (c)  after the notice is lodged, give the notice to:

                              (i)  the target; and

                             (ii)  everyone to whom offers were made under the bid.

Note:          Sections 648B and 648C provide for the manner in which documents may be sent to holders.

             (2)  A person must be sent a copy of the notice under subparagraph (1)(c)(ii) even if they have already accepted the offer. However, they need not be sent a copy if:

                     (a)  the variation merely extends the offer period; and

                     (b)  the bid is not subject to a defeating condition at the time the notice is given to the target.

             (3)  A notice under subsection (1) must be signed by:

                     (a)  if the bidder is, or includes, an individual—the individual; and

                     (b)  if the bidder is, or includes, a body corporate with 2 or more directors—not fewer than 2 of the directors who are authorised to sign the notice by a resolution passed at a directors’ meeting; and

                     (c)  if the bidder is, or includes, a body corporate that has only one director—that director.

             (4)  A copy of a notice given to a person under subparagraph (1)(c)(ii) must include a statement that:

                     (a)  a copy of the notice was lodged with ASIC on a specified date; and

                     (b)  ASIC takes no responsibility for the contents of the notice.

650E  Right to withdraw acceptance

             (1)  A person who accepts an offer made under an off‑market bid may withdraw their acceptance of the offer if:

                     (a)  the bid is subject to a defeating condition; and

                     (b)  the bidder varies the offers under the bid in a way that postpones for more than 1 month the time when the bidder has to meet their obligations under the bid; and

                     (c)  the person is entitled to be given a notice of the variation under subsection 650D(1).

             (2)  To withdraw their acceptance, the person must:

                     (a)  give the bidder notice within 1 month beginning on the day after the day on which the copy of the notice of the variation was received; and

                     (b)  return any consideration received by the person for accepting the offer.

             (3)  A notice under paragraph (2)(a):

                     (a)  if it relates to securities that are entered on an SCH subregister—must be in an electronic form approved by the SCH business rules for the purposes of this Part; or

                     (b)  if it relates to shares that are not entered on an SCH subregister—must be in writing.

             (4)  To return consideration that includes securities, the person must:

                     (a)  if the securities are entered on an SCH subregister—take the action that the SCH business rules require in relation to the return of the securities; or

                     (b)  otherwise—give the bidder any transfer documents needed to effect the return of securities.

             (5)  If the person withdraws their acceptance, the bidder must:

                     (a)  take any action that the SCH business rules require in relation to any of the securities to which the acceptance relates that are entered on an SCH subregister; and

                     (b)  return any documents that the person sent the bidder with the acceptance of the offer;

within 14 days after:

.                    (c)  if the person does the things referred to in subsection (2) on the same day—that day; or

                     (d)  if the person does those things on different days—the last of those days.

             (6)  If under this section a person returns to a company any certificates (together with any necessary transfer documents) in respect of the securities issued by the company, the company must cancel those securities as soon as possible. Any reduction in share capital is authorised by this subsection.

650F  Freeing off‑market bids from defeating conditions

             (1)  If the offers under an off‑market bid are subject to a defeating condition, the bidder may free the offers, and the takeover contracts, from the condition only by giving the target a notice declaring the offers to be free from the condition in accordance with this section:

                     (a)  if the condition is that the bidder may withdraw unaccepted offers if an event or circumstance referred to in subsection 652C(1) or (2) occurs in relation to the target—not later than 3 business days after the end of the offer period; or

                     (b)  in any other case—not less than 7 days before the end of the offer period.

             (2)  The notice must:

                     (a)  state that the offers are free from the condition; and

                     (b)  specify the bidder’s voting power in the company.

             (3)  The notice must be:

                     (a)  if the securities in the bid class are quoted—given to the relevant securities exchange; and

                     (b)  if those securities are not quoted—lodged with ASIC.

650G  Contracts and acceptances void if defeating condition not fulfilled

                   All takeover contracts, and all acceptances that have not resulted in binding takeover contracts, for an off‑market bid are void if:

                     (a)  offers made under the bid have at any time been subject to a defeating condition; and

                     (b)  the bidder has not declared the offers to be free from the condition within the period before the date applicable under subsection 630(1) or (2); and

                     (c)  the condition has not been fulfilled at the end of the offer period.

A transfer of securities based on an acceptance or contract that is void under this section must not be registered.


 

Division 3Off‑market bids (automatic variations)

651A  Off‑market bid—effect on bid consideration of purchases made outside bid

Effect of purchases outside bid on offers made under the bid

             (1)  The offers made under an off‑market bid, and the takeover contracts, are varied under this section if:

                     (a)  the bidder purchases securities in the bid class outside the bid during the bid period; and:

                     (b)  the consideration for that purchase consists solely of a cash sum; and

                     (c)  either:

                              (i)  the consideration, or 1 of the forms of consideration, payable under the bid consists of a cash sum only and the consideration referred to in paragraph (b) is higher than the cash sum payable for the securities under the bid; or

                             (ii)  a cash sum only is not the consideration, or 1 of the forms of consideration, payable under the bid.

Note 1:       Section 9 defines takeover contract.

Note 2:       The effect of section 623 is that the purchase outside the bid has to be made through an on-market transaction (see subsection 623(1) and paragraph 623(3)(b)).

Effect on unaccepted cash offers

             (2)  If:

                     (a)  one of the forms of consideration offered to a person under an off‑market bid is a cash sum only; and

                     (b)  the person has not accepted the offer before the purchase outside the bid occurs;

the cash sum is taken to be increased to the highest outside purchase price before the offer is accepted.

Effect on cash offers already accepted

             (3)  The consideration payable for each security covered by a takeover contract arising from the acceptance of an offer for a cash sum only is increased to the highest outside purchase price. If the person who accepted the offer has already received the whole or any part of the consideration under the contract, they are entitled to receive the increase in consideration immediately.

Effect on non-cash offers accepted at any time during bid period

             (4)  If:

                     (a)  a person accepts an offer under a bid at any time during the bid period; and

                     (b)  the consideration paid or provided, or to be paid or provided, under the takeover contract arising from the acceptance of the offer does not consist of a cash sum only;

then:

                     (c)  the person may elect to take as consideration for each security covered by the takeover contract a cash sum equal to the highest outside purchase price instead of the consideration they originally accepted; and

                     (d)  the bidder must give the person a written notice of their right to make the election within 14 days after the end of the offer period.

Note:          Section 651B says how the election is to be exercised.

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

             (1)  An election under section 650B or 651A to take a new form of consideration must be made:

                     (a)  by written notice to the bidder; and

                     (b)  within 1 month after the person receives the notice from the bidder of their right to make the election.

             (2)  The person becomes entitled to the new form of consideration if they:

                     (a)  make the election; and

                     (b)  return to the bidder:

                              (i)  any consideration they have already received; and

                             (ii)  any necessary transfer documents.

651C  Returning securities as part of election

                   If under section 651B a person returns to a company any certificates (together with any necessary transfer documents) in respect of the securities issued by a company, the company must cancel those securities as soon as possible.


 

Part 6.7Withdrawal and suspension of offers

  

652A  Withdrawal of unaccepted offers under takeover bid

                   Unaccepted offers under a takeover bid may only be withdrawn under section 652B or 652C.

652B  Withdrawal of takeover offers with ASIC consent

                   Unaccepted offers under a takeover bid may be withdrawn with the written consent of ASIC. ASIC may consent subject to conditions.

652C  Withdrawal of market bids

Bidder entitled to withdraw if certain events happen during the offer period

             (1)  The bidder may withdraw unaccepted offers made under a market bid if 1 of the following happens during the bid period, but only if the bidder’s voting power in the target is at or below 50% when the event happens:

                     (a)  the target converts all or any of its shares into a larger or smaller number of shares (see section 254H)

                     (b)  the target or a subsidiary resolves to reduce its share capital in any way

                     (c)  the target or a subsidiary:

                              (i)  enters into a buy‑back agreement; or

                             (ii)  resolves to approve the terms of a buy‑back agreement under subsection 257C(1) or 257D(1)

                     (d)  the target or a subsidiary issues shares, or grants an option over its shares, or agrees to make such an issue or grant such an option

                     (e)  the target or a subsidiary issues, or agrees to issue, convertible notes

                      (f)  the target or a subsidiary disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property

                     (g)  the target or a subsidiary charges, or agrees to charge, the whole, or a substantial part, of its business or property

                     (h)  the target or a subsidiary resolves to be wound up.

             (2)  The bidder may also withdraw unaccepted offers made under a market bid if 1 of the following happens during the bid period:

                     (a)  a liquidator or provisional liquidator of the target or of a subsidiary is appointed

                     (b)  a court makes an order for the winding up of the target or of a subsidiary

                     (c)  an administrator of the target, or of a subsidiary, is appointed under section 436A, 436B or 436C

                     (d)  the target or a subsidiary executes a deed of company arrangement

                     (e)  a receiver, or a receiver and manager, is appointed in relation to the whole, or a substantial part, of the property of the target or of a subsidiary.

This is so regardless of the bidder’s voting power at the time.

             (3)  Notice of the withdrawal must be given to each relevant securities exchange.


 

Part 6.8Acceptances

  

653A  Acceptance of offers made under off‑market bid

                   If:

                     (a)  an offer is made under an off‑market bid for quoted securities; and

                     (b)  the SCH business rules require that an acceptance of the offer, so far as it relates to those securities, must be made in a particular way;

an acceptance of the offer for those securities is effective only if it is made in that way.

653B  Acceptances by transferees and nominees of offers made under off‑market bid

             (1)  If an off‑market bid is made for securities:

                     (a)  a person who:

                              (i)  is able during the offer period to give good title to a parcel of those securities; and

                             (ii)  has not already accepted an offer under the bid for those securities;

                            may accept as if an offer on terms identical with the other offers made under the bid had been made to that person in relation to those securities; and

                     (b)  a person who holds 1 or more parcels of those securities as trustee or nominee for, or otherwise on account of, another person may accept as if a separate offer had been made in relation to:

                              (i)  each of those parcels; and

                             (ii)  any parcel they hold in their own right.

If a person accepts an offer under a proportional takeover bid for securities, no‑one else may accept an offer under the bid in respect of those securities.

Note:          Section 9 defines proportional takeover bid. See paragraph 618(1)(b).

             (2)  For the purposes of this section:

                     (a)  a person is taken to hold securities if the person is, or is entitled to be registered as, the holder of the securities; and

                     (b)  a person is taken to hold the securities on trust for, as nominee for or on account of another person if they:

                              (i)  are entitled to be registered as the holder of particular securities; and

                             (ii)  hold their interest in the securities on trust for, as nominee for or on account of that other person; and

                     (c)  in determining under subsection (1) whether a person has accepted an offer for particular securities under a takeover bid, a person who accepts an offer under a proportional takeover bid is taken to have accepted the offer for all the securities in the bid class that they hold at the time they accept the offer.

             (3)  If under paragraph (1)(b) a person may accept as if a separate offer is taken to be made to a person for a parcel of securities within a holding, an acceptance of that offer is ineffective unless:

                     (a)  the person gives the bidder a notice stating that the securities consist of a separate parcel; and

                     (b)  the acceptance specifies the number of securities in the parcel.

             (4)  A notice under subsection (3) must be made:

                     (a)  if it relates to securities that are entered on an SCH subregister—in an electronic form approved by the SCH business rules for the purposes of this Part; or

                     (b)  if it relates to shares that are not entered on an SCH subregister—in writing.

             (5)  A person contravenes this subsection if:

                     (a)  they purport to accept an offer under this section; and

                     (b)  the acceptance is not made in accordance with this section.

The acceptance is, however, as valid as it would have been if it had been made in accordance with this section.

             (6)  A person may, at the one time, accept for 2 or more parcels under this section as if there had been a single offer for a separate parcel consisting of those parcels.


 

Part 6.9Other activities during the bid period

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

             (1)  The bidder must not dispose of any securities in the bid class during the bid period.

             (2)  Subsection (1) does not apply to a disposal of securities by the bidder if:

                     (a)  someone else who is not an associate of the bidder makes an offer, or improves the consideration offered, under a takeover bid for securities in the bid class after the bidder’s statement is given to the target; and

                     (b)  the bidder disposes of the securities after the offer is made or the consideration is improved.

654B  Disclosures about substantial shareholdings in listed companies

                   During the bid period, substantial shareholding notices that need to be lodged under section 671B must be lodged by 9.30 am the next business day (rather than the usual 2 days).

654C  Disclosures about substantial shareholdings in unlisted companies

             (1)  A bidder making a bid for securities of an unlisted company must give the target a notice stating the bidder’s voting power in the target if, at a particular time during the bid period, the bidder’s voting power in the target rises from below a percentage in the following list to that percentage or higher:

                     (a)  25%

                     (b)  50%

                     (c)  75%

                     (d)  90%.

             (2)  The notice must be given as soon as practicable, and in any event within 2 business days, after the rise in voting power occurred.

             (3)  The target must:

                     (a)  make the notice available at its registered office for inspection without charge by any holder of bid class securities during the bid period; and

                     (b)  lodge the notice with ASIC.


 

Part 6.10Review and intervention

Division 1ASIC’s power to exempt and modify

655A  ASIC’s power to exempt and modify

             (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.

Note:          Under section 656A, the Panel has power to review the exercise by ASIC of its powers under this section.

             (2)  In deciding whether to give the exemption or declaration, ASIC must consider the purposes of this Chapter set out in section 602.

             (3)  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.

             (4)  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.

             (5)  The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette.

             (6)  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 Law or the regulations as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations made for the purposes of this Chapter; and

                     (c)  Division 12 of Part 11.2.

655B  Notice of decision and review rights

             (1)  Subject to subsection (3), ASIC must take such steps as are reasonable in the circumstances to give to each person whose interests are affected by a decision under a section 655A notice, in writing or otherwise:

                     (a)  of the making of the decision; and

                     (b)  of the person’s right to have the decision reviewed by the Panel under section 656A.

             (2)  Subsection (1) does not require ASIC to give notice to a person affected by the decision or to the persons in a class of persons affected by the decision, if ASIC determines that giving notice to the person or persons is not warranted, having regard to:

                     (a)  the cost of giving notice to the person or persons; and

                     (b)  the way in which the interests of the person or persons are affected by the decision.

             (3)  A failure to comply with this section does not affect the validity of the decision.


 

Division 2The Corporations and Securities Panel

Subdivision AReview of ASIC’s exercise of its exemption or modification powers

656A  Review of exercise of exemption or modification powers

             (1)  The Panel may review:

                     (a)  a decision of ASIC under section 655A; or

                     (b)  a decision of ASIC under section 673 in relation to securities of the target of a takeover bid during the bid period.

For these purposes, decision has the same meaning as in the Administrative Appeals Tribunal Act 1975.

             (2)  An application to the Panel for review of the decision may be made by any person whose interests are affected by the decision.

             (3)  For the purpose of reviewing the decision, the Panel may exercise all the powers and discretions conferred on ASIC by this Chapter or Chapter 6C. The Panel must make a decision:

                     (a)  affirming the decision; or

                     (b)  varying the decision; or

                     (c)  setting aside the decision and:

                              (i)  making a decision in substitution for the decision under review; or

                             (ii)  remitting the matter for reconsideration by ASIC in accordance with any directions or recommendations of the Panel.

             (4)  The decision must be in writing and published in the Gazette.

             (5)  If the Panel varies an ASIC decision, or makes a decision in substitution for an ASIC decision:

                     (a)  the ASIC decision as varied, or the substituted decision, is taken for all purposes (other than the purposes of applications to the Panel for review in accordance with this section) to be a decision of ASIC under section 655A; and

                     (b)  when the Panel’s determination on the review comes into operation, the ASIC decision as varied, or the substituted decision, has effect, or is taken to have had effect, on and from the day on which the ASIC decision has or had effect.

Paragraph (b) applies unless the Panel otherwise orders.

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

             (1)  Subject to this section, applying to the Panel under section 656A for review of an ASIC decision does not:

                     (a)  affect the operation of the decision; or

                     (b)  prevent the taking of action to implement the decision.

             (2)  On application by a party to the proceedings before the Panel, the Panel may:

                     (a)  make an order staying, or otherwise affecting the operation or implementation of, the whole or a part of the decision if the Panel considers that:

                              (i)  it is desirable to make the order after taking into account the interests of any person who may be affected by the review; and

                             (ii)  the order is appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review; or

                     (b)  make an order varying or revoking an order made under paragraph (a) (including an order that has previously been varied on one or more occasions under this paragraph).

             (3)  Subject to subsection (4), the Panel must not:

                     (a)  make an order under paragraph (2)(a) unless ASIC has been given a reasonable opportunity to make a submission to the Panel in relation to the matter; or

                     (b)  make an order under paragraph (2)(b) unless:

                              (i)  ASIC; and

                             (ii)  the person who requested the making of the order under paragraph (2)(a); and

                            (iii)  if the order under paragraph (2)(a) has previously been varied by an order or orders under paragraph (2)(b)—the person or persons who applied for the last‑mentioned order or orders;

                            have been given a reasonable opportunity to make submissions to the Panel in relation to the matter.

             (4)  Subsection (3) does not prohibit the Panel from making an order without giving to a person referred to in that subsection a reasonable opportunity to make a submission to the Panel in relation to a matter if the Panel is satisfied that, by reason of the urgency of the case or otherwise, it is not practicable to give that person such an opportunity. If an order is so made without giving such an opportunity to ASIC, the order does not come into operation until a notice setting out the terms of the order is served on ASIC.

             (5)  An order in force under paragraph (2)(a) (including an order that has previously been varied on one or more occasions under paragraph (2)(b)):

                     (a)  is subject to the conditions that are specified in the order; and

                     (b)  has effect until:

                              (i)  if a period for the operation of the order is specified in the order—the end of that period or, if the application for review is decided by the Panel before the end of that period, the decision of the Panel on the application for review comes into operation; or

                             (ii)  if a period for the operation of the order is not specified in the order—the decision of the Panel on the application for review comes into operation.

Subdivision BUnacceptable circumstances

657A  Declaration of unacceptable circumstances

             (1)  The Panel may declare circumstances in relation to the affairs of a company to be unacceptable circumstances. Without limiting this, the Panel may declare circumstances to be unacceptable circumstances whether or not the circumstances constitute a contravention of a provision of this Law.

Note:          Sections 659B and 659C deal with court proceedings during and after a takeover bid.

             (2)  The Panel may only declare circumstances to be unacceptable circumstances if it appears to the Panel that the circumstances:

                     (a)  are unacceptable having regard to the effect of the circumstances on:

                              (i)  the control, or potential control, of the company or another company; or

                             (ii)  the acquisition, or proposed acquisition, by a person of a substantial interest in the company or another company; or

                     (b)  are unacceptable because they constitute, or give rise to, a contravention of a provision of this Chapter or of Chapter 6A, 6B or 6C.

The Panel may only make a declaration under this subsection, or only decline to make a declaration under this subsection, if it considers that doing so is not against the public interest after taking into account any policy considerations that the Panel considers relevant.

             (3)  In exercising its powers under this section, the Panel:

                     (a)  must have regard to:

                              (i)  the purposes of this Chapter set out in section 602; and

                             (ii)  the other provisions of this Chapter; and

                            (iii)  the rules made under section 658C; and

                            (iv)  the matters specified in regulations made for the purposes of paragraph 195(3)(c) of the Australian Securities and Investments Commission Act 1989; and

                     (b)  may have regard to any other matters it considers relevant.

In having regard to the purpose set out in paragraph 602(1)(c) in relation to an acquisition, or proposed acquisition, of a substantial interest in a company, body or scheme, the Panel must take into account the actions of the directors of the company or body or the responsible entity for a scheme (including actions that caused the acquisition or proposed acquisition not to proceed or contributed to it not proceeding).

             (4)  The Panel must give an opportunity to make submissions in relation to the matter to:

                     (a)  each person to whom a proposed declaration relates; and

                     (b)  each party to the proceedings; and

                     (c)  ASIC.

             (5)  The declaration must be in writing and published in the Gazette.

             (6)  As soon as practicable, the Panel must give each person to whom the declaration relates:

                     (a)  a copy of the declaration; and

                     (b)  a written statement of the Panel’s reasons for making the declaration.

             (7)  This section does not require the Panel to perform a function, or exercise a power, in a particular way in a particular case.

657B  When Panel may make declaration

                   The Panel can only make a declaration under section 657A within:

                     (a)  3 months after the circumstances occur; or

                     (b)  1 month after the application under section 657C for the declaration was made;

whichever ends last. The Court may extend the period on application by the Panel.

657C  Applying for declarations and orders

             (1)  The Panel may make a declaration under section 657A, or an order under section 657D or 657E, only on an application made under this section.

             (2)  An application for a declaration under section 657A or an order under section 657D or 657E may be made by:

                     (a)  the bidder; or

                     (b)  the target; or

                     (c)  ASIC; or

                     (d)  any other person whose interests are affected by the relevant circumstances.

Note:          The Administrative Appeals Tribunal cannot review ASIC’s decision whether to apply to the Panel (see paragraph 1317C(gc)).

             (3)  An application for a declaration under section 657A can be made only within:

                     (a)  2 months after the circumstances have occurred; or

                     (b)  a longer period determined by the Panel.

657D  Orders that Panel may make following declaration

             (1)  The Panel may make an order under subsection (2) if it has declared circumstances to be unacceptable under section 657A. It must not make an order if it is satisfied that the order would unfairly prejudice any person. Before making the order, the Panel must give:

                     (a)  each person to whom a proposed order relates; and

                     (b)  each party to the proceedings; and

                     (c)  ASIC;

an opportunity to make submissions to the Panel about the matter

             (2)  The Panel may make any order (including a remedial order but not including an order directing a person to comply with a requirement of Chapter 6, 6A, 6B or 6C) that it thinks appropriate to:

                     (a)  protect the rights or interests of any person affected by the circumstances; or

                     (b)  ensure that a takeover bid or proposed takeover bid in relation to securities proceeds (as far as possible) in a way that it would have proceeded if the circumstances had not occurred; or

                     (c)  specify in greater detail the requirements of an order made under this subsection; or

                     (d)  determine who is to bear the costs of the parties to the proceedings before the Panel;

regardless of whether it has previously made an order under this subsection or section 657E in relation to the declaration. The Panel may also make any ancillary or consequential orders that it thinks appropriate.

Note:          Section 9 defines remedial order.

             (3)  The Panel may vary, revoke or suspend an order made under this section. Before doing so, it must give an opportunity to make submissions in relation to the matter to:

                     (a)  each person to whom the order is directed; and

                     (b)  each party to the proceedings in which the order was made; and

                     (c)  ASIC.

             (4)  If the Panel makes an order under this section, the Panel must give a copy of the order, and a written statement of its reasons for making the order, to:

                     (a)  each party to the proceedings before the Panel; and

                     (b)  each person to whom the order is directed if they are not a party to the proceedings; and

                     (c)  for an order relating to specified securities of a company—the company; and

                     (d)  ASIC.

The Panel must also publish the order in the Gazette. The order takes effect as soon as it is made and not when all the requirements of this subsection are met.

             (5)  If the Panel makes an order of the kind referred to in paragraph (j) of the definition of remedial order, the exercise of rights attached to shares is to be disregarded as provided in the order.

             (6)  If the Panel makes an order of the kind referred to in paragraph (k) of the definition of remedial order, then, by force of this subsection, the agreement or offer specified in the order is cancelled, or becomes voidable, as from the making of the order or any later time that is specified in the order.

657E  Interim orders

             (1)  The Panel, or the President of the Panel, may make an interim order of a kind referred to in subsection 657D(2) in relation to circumstances even if:

                     (a)  there is no declaration under section 657A that the circumstances are unacceptable; or

                     (b)  no application to the Panel for a declaration of that kind has been made.

The order must specify the period (not exceeding 2 months) for which it is to have effect.

             (2)  The order ceases to have effect:

                     (a)  at the end of the period specified in the order; or

                     (b)  if, before the end of that period, proceedings for a declaration under section 657A in relation to the circumstances (and all related proceedings for an order under section 657D) are determined—when those proceedings are determined.

657EA  Internal Panel reviews

             (1)  The following may apply under this section for review by the Panel of a decision of the Panel made on an application under section 657C:

                     (a)  a party to the proceedings in which the decision was made; or

                     (b)  ASIC.

For these purposes, decision has the same meaning as in the Administrative Appeals Tribunal Act 1975.

             (2)  If the decision is not:

                     (a)  a decision to make a declaration under section 657A; or

                     (b)  a decision to make an order under section 657D or 657E;

the person may apply for review only with the consent of the President of the Panel.

             (3)  The regulations may provide for the time limits within which an application may be made for review of a decision.

Note:          Regulations made under the Australian Securities and Investments Commission Act 1989 deal with the constitution of the Panel for the purposes of conducting a review under this section and the procedures to be followed in conducting the review.

             (4)  After conducting a review under this section, the Panel may:

                     (a)  vary the decision reviewed; or

                     (b)  set aside the decision reviewed; or

                     (c)  set aside the decision reviewed and substitute a new decision.

In conducting the review, the Panel has the same power to make a declaration under section 657A, or an order under section 657D or 657E, as it has when it is considering an application under section 657C.

657EB  References by Courts

             (1)  A Court hearing proceedings in relation to a decision of the Panel made on an application under section 657C may refer the decision to the Panel for review.

Note:          Regulations made under the Australian Securities and Investments Commission Act 1989 deal with the constitution of the Panel for the purposes of conducting a review under this section and the procedures to be followed in conducting the review.

             (2)  After conducting a review under this section, the Panel may:

                     (a)  vary the decision reviewed; or

                     (b)  set aside the decision reviewed; or

                     (c)  set aside the decision reviewed and substitute a new decision.

                     In conducting the review, the Panel has the same powers to make a declaration under section 657A, or an order under section 657D or 657E, as it has when it is considering an application under section 657C.

657F  Offence to contravene Panel order

                   A person who contravenes an order made under section 657D or 657E commits an offence.

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

             (1)  If a person contravenes, or proposes to engage in conduct that would contravene, an order made by the Panel under section 657D or 657E, the Court may make any orders it considers appropriate to secure compliance with the Panel’s order, including:

                     (a)  1 or more remedial orders; and

                     (b)  an order directing a person to do, or to refrain from doing, a specified act.

Note:          Section 9 defines remedial order.

             (2)  An application for an order under this section may only be made by:

                     (a)  ASIC; or

                     (b)  the President of the Panel; or

                     (c)  a person to whom the Panel’s order relates; or

                     (d)  a person who was a party to the proceedings in which the Panel’s order was made.

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

             (1)  ASIC may publish a report, statement or notice in relation to an application it has made for:

                     (a)  a declaration of unacceptable circumstances under section 657A; or

                     (b)  an order under subsection 657D(2); or

                     (c)  an order under section 657E; or

                     (d)  review under section 657EA of a decision of the Panel; or

                     (e)  an order under section 657G to secure compliance with an order made under subsection 657D(2) or section 657E.

             (2)  The report, statement or notice must:

                     (a)  state that the application has been made; and

                     (b)  name the company; and

                     (c)  if ASIC considers that the report, statement or notice should name any other person to whom the declaration would relate or the order would be directed—name that other person.

             (3)  The report, statement or notice may be published in any way that ASIC thinks appropriate. It need not be in writing.

             (4)  This section does not limit a function or power of ASIC, the Panel or any other person or body.

Subdivision CGeneral provisions

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

             (1)  If an application is made to the Panel under this Division, the Panel may, at any stage of the proceeding, if it is satisfied that the application is frivolous or vexatious:

                     (a)  dismiss the application; or

                     (b)  if the Panel considers it appropriate, on the application of a party to the proceedings, direct that the person who made the application must not, without leave of the Panel, make a subsequent application to the Panel of a kind or kinds specified in the direction.

             (2)  A direction given by the Panel under paragraph (1)(b) has effect despite any other provision of this Act or a provision of any other Act.

             (3)  The Panel may revoke or vary the direction.

658B  Evidentiary value of findings of fact by Panel

             (1)  A finding of fact recorded in an order by the Panel, or a written statement of the reasons for an order of the Panel, is proof of the fact in the absence of evidence to the contrary.

             (2)  A certificate signed by the President of the Panel that states a finding of fact made in proceedings before the Panel is proof of the fact in the absence of evidence to the contrary.

658C  Panel’s power to make rules

             (1)  The President of the Panel may, after consultation with members of the Panel, make rules, not inconsistent with the Law or the Regulations, to clarify or supplement the operation of the provisions of this Chapter.

             (2)  In making rules under this section, the President of the Panel must consider the purposes of this Chapter set out in section 602.

             (3)  A rule under this section must be in writing and the President of the Panel must:

                     (a)  publish notice of it in the Gazette; and

                     (b)  give the Minister, and ASIC, a copy of the rule as soon as practicable after it is published in the Gazette.

             (4)  Within 28 days after receiving the copy, the Minister may disallow the whole or a specified part of the rule.

             (5)  If a person contravenes a rule made under this section, the Court may give directions for compliance with the rule to:

                     (a)  that person; or

                     (b)  if that person is a body corporate—the directors of the body corporate.

The Court must give the person against whom the order is sought, and any person aggrieved by the contravention, an opportunity to be heard before giving directions under this subsection.

             (6)  The Court may give a direction under subsection (5) only on application by:

                     (a)  ASIC; or

                     (b)  the President of the Panel; or

                     (c)  a person aggrieved by the contravention.

658D  Inconsistency between Panel and ASIC exemptions or modifications

                   If there is an inconsistency between a rule made under section 658C and an exemption or modification given by ASIC under section 655A, the rule made under section 658C prevails to the extent of the inconsistency.


 

Division 3Court powers

659A  Panel may refer questions of law to the Court

                   The Panel may, of its own motion, refer a question of law arising in a proceeding before the Panel to the Court for decision.

659AA  Object of sections 659B and 659C

                   The object of sections 659B and 659C is to make the Panel the main forum for resolving disputes about a takeover bid until the bid period has ended.

659B  Court proceedings before end of bid period

Delay in commencing court proceedings until after end of bid period

             (1)  Only:

                     (a)  ASIC; or

                     (b)  another public authority of the Commonwealth or a State;

may commence court proceedings in relation to a takeover bid, or proposed takeover bid, before the end of the bid period.

Note:          This restriction starts to apply as soon as there is a takeover bid, or a proposed takeover bid; it does not start to apply only when the bid period commences.

Court power to stay proceedings that have already commenced

             (2)  A court may stay:

                     (a)  court proceedings in relation to a takeover bid or proposed takeover bid; or

                     (b)  court proceedings that would have a significant effect on the progress of a takeover bid;

until the end of the bid period.

             (3)  In deciding whether to exercise its powers under subsection (2), the court is to have regard to:

                     (a)  the purposes of this Chapter; and

                     (b)  the availability of review by the Panel under Division 2.

             (4)  For the purposes of this section:

court proceedings in relation to a takeover bid or proposed takeover bid:

                     (a)  means any proceedings before a court in relation to:

                              (i)  an action taken or to be taken as part of, or for the purposes of, the bid or the target’s response to the bid; or

                             (ii)  a document prepared or to be prepared, or a notice given or to be given, under this Chapter; and

                     (b)  includes:

                              (i)  proceedings to enforce an obligation imposed by this Chapter; or

                             (ii)  proceedings for the review of a decision, or the exercise of a power or discretion, under this Chapter; or

                            (iii)  proceedings for the review of a decision, or the exercise of a power or discretion, under Chapter 6C in relation to securities of the target of a takeover bid during the bid period; and

                            (iv)  proceedings under Part 2F.1A for leave to bring, or to intervene in, proceedings referred to in paragraph (a) or subparagraph (b)(i), (ii) or (iii).

This is not limited to proceedings brought under this Chapter or this Law but includes proceedings under other Commonwealth and State laws (including the general law).

659C  Court proceedings after end of bid period

             (1)  If:

                     (a)  an application is made to the Panel for a declaration under section 657A that particular conduct amounts to, or leads to, circumstances that are unacceptable; and

                     (b)  the Panel refuses to make the declaration; and

                     (c)  a Court finds after the end of the bid period that the conduct contravenes this Law;

the Court’s powers under this Law in relation to the conduct are limited to the following:

                     (d)  the Court may:

                              (i)  determine whether a person is guilty of an offence against this Law because they engaged in or were involved in the conduct; and

                             (ii)  impose a penalty if the person is found guilty

                     (e)  the Court may:

                              (i)  determine whether a person who engaged in, or was involved in, the conduct contravened a provision of the Law; and

                             (ii)  order the person to pay an amount of money to another person (whether by way of damages, account of profits, pecuniary penalty or otherwise)

                      (f)  the Court may make an order under section 1318 or 1322 in relation to the conduct.

This subsection does not confer power or jurisdiction on a court that it does not have apart from this subsection.

             (2)  Without limiting subsection (1), the only kind of remedial order that the Court may make is one that requires the person to pay money to another person.


 

Chapter 6ACompulsory acquisitions and buy‑outs

  

  

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

                   This Chapter extends to the acquisition of securities of listed bodies that are not companies but are incorporated or formed in this jurisdiction in the same way as it applies to the acquisition of securities of companies.

Note:          Section 9 defines company, jurisdiction and listed.

660B  Chapter extends to listed managed investment schemes

             (1)  This Chapter extends to the acquisition of interests in a listed managed investment scheme registered in this jurisdiction as if:

                     (a)  the scheme were a 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.

             (2)  If Part 6A.1 applies to a scheme at the end of the bid period for a takeover, that Part continues to apply to the scheme in relation to the takeover bid even if the scheme ceases to be listed.

             (3)  If Part 6A.2 applies to a scheme when a compulsory acquisition notice under section 664C is lodged, that Part (including Division 2 of that Part) continues to apply to apply to the scheme in relation to the notice even if the scheme ceases to be listed.

             (4)  The regulations may modify the operation of this Chapter as it applies in relation to the acquisition of interests in listed managed investment schemes.

Part 6A.1Compulsory acquisitions and buy‑outs following takeover bid

Division 1Compulsory acquisition of bid class securities

661A  Compulsory acquisition power following takeover bid

Threshold for compulsory acquisition power

             (1)  Under this subsection, the bidder under a takeover bid may compulsorily acquire any securities in the bid class if:

                     (a)  the bid is:

                              (i)  an off‑market bid to acquire all the securities in the bid class; or

                             (ii)  a market bid; and

                     (b)  during, or at the end of, the offer period:

                              (i)  the bidder and their associates have relevant interests in at least 90% (by number) of the securities in the bid class; and

                             (ii)  the bidder and their associates have acquired at least 75% (by number) of the securities that the bidder offered to acquire under the bid (whether the acquisitions happened under the bid or otherwise).

This is so even if the bidder subsequently ceases to satisfy subparagraph (b)(i) because of the issue of further securities in the bid class.

Note:          Subsection 92(3) defines securities for the purposes of this Chapter.

             (2)  For the purposes of subsection (1), disregard any relevant interests that the bidder has merely because of the operation of subsection 608(3) (relevant interest by 20% interest in body corporate).

Court may allow compulsory acquisition even if threshold not reached

             (3)  Under this subsection, the bidder under a takeover bid may compulsorily acquire securities in the bid class with the approval of the Court.

Securities to be acquired

             (4)  If the bidder compulsorily acquires securities in the bid class under subsection (1) or (3), the bidder:

                     (a)  must acquire all the securities in the bid class:

                              (i)  which were issued or granted before the end of the offer period; and

                             (ii)  in which the bidder does not have a relevant interest; and

                     (b)  may elect to acquire all securities in the bid class:

                              (i)  that were issued or granted after the end of the offer period and before the notice under section 661B is issued; and

                             (ii)  in which the bidder does not have a relevant interest;

                            but only if the bidder and their associates have relevant interests in at least 90% (by number) of the securities in the bid class when the bidder gives notice under section 661B; and

                     (c)  if securities exist when the bidder gives the notice under section 661B that:

                              (i)  will convert, or may be converted, to securities in the bid class; or

                             (ii)  confer rights to be issued securities in the bid class that may be exercised;

                            within the period of 6 weeks after the notice is given—may elect to acquire securities that come to be in the bid class during that period due to a conversion or exercise of the rights but only if the bidder and their associates have relevant interests in at least 90% of the securities (by number) in the bid class when the bidder gives notice under section 661B; and

                     (d)  may elect to acquire any securities in the bid class in which the bidder has a relevant interest (no matter when they were issued or granted).

             (5)  This section has effect despite anything in the constitution of the company whose securities are to be acquired.

661B  Compulsory acquisition notice

Compulsory acquisition notice

             (1)  To compulsorily acquire securities under subsection 661A(1) or (3), the bidder must:

                     (a)  prepare a notice in the prescribed form that:

                              (i)  informs the holders of the securities that the bidder is entitled to acquire their securities under that subsection; and

                             (ii)  informs the holders about the compulsory acquisition procedure under this Part, including:

                                        (A)  their right under section 661D to obtain the names and addresses of everyone else the bidder has given the notice to; and

                                        (B)  their right under section 661E to apply to the Court for an order that the securities not be compulsorily acquired; and

                     (b)  lodge the notice with ASIC; and

                     (c)  give the notice to each other person who is:

                              (i)  a holder of securities in the bid class; or

                             (ii)  if the bidder elects under paragraph 661A(4)(c) to acquire securities that come to be in the bid class after the notice is given—a holder of the convertible securities referred to in that paragraph; and

                     (d)  give a copy to each relevant securities exchange on the same day as it is lodged with ASIC if the target is listed.

If alternative forms of consideration were offered under the takeover bid, the notice must specify which of those forms of consideration will apply to the acquisition of the holder’s securities if the holder does not elect one of the forms under paragraph 661C(2)(a).

Note:          Everyone who holds bid class securities on the day on which the notice is lodged with ASIC is entitled notice. Under section 661E, anyone who holds the securities after that day may apply to the Court to stop the acquisition.

Time for dispatching notices to holders

             (2)  The bidder must dispatch the notices under paragraph (1)(c):

                     (a)  during the offer period, or within 1 month after:

                              (i)  the end of offer period if the acquisition is under subsection 661A(1); or

                             (ii)  the court approval if the acquisition is under subsection 661A(3); and

                     (b)  on the day the bidder lodges the notice with ASIC or on the next business day.

The notices cannot be withdrawn.

Manner of giving notice to holders

             (3)  The bidder may give the notice to a holder:

                     (a)  personally; or

                     (b)  by sending it by post to the address for the holder in the register of members, debenture holders or option holders.

A notice sent by post is taken to be given 3 days after it is posted.

             (4)  The notice may be sent:

                     (a)  if the notice is to be sent to the holder in an external territory or outside Australia—by pre‑paid airmail post or by courier; or

                     (b)  if the notice is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

This section does not limit the manner in which the notice may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

661C  Terms on which securities to be acquired

Same terms as takeover bid

             (1)  The bidder may acquire the securities only on the terms that applied to the acquisition of securities under the takeover bid immediately before:

                     (a)  the notice under section 661B is given if it is given before the end of the offer period; or

                     (b)  the end of the offer period if it is not.

Alternative forms of consideration under takeover bid

             (2)  If alternative forms of consideration were offered under the takeover bid, the form of consideration that applies to the acquisition of the holder’s securities is:

                     (a)  the form that the holder elects; or

                     (b)  the form set out in the compulsory acquisition notice under subsection 661B(1).

             (3)  The holder makes an election under subsection (2) by giving the bidder a notice of the election by the later of:

                     (a)  1 month after the compulsory acquisition notice is given under section 661B; or

                     (b)  14 days after the holder is given a statement under section 661D if the holder asks for it.

             (4)  The election must be:

                     (a)  in an electronic form approved by the SCH business rules for the purposes of this Part if it relates to shares that are entered on an SCH subregister; or

                     (b)  in writing if it relates to shares that are not entered on an SCH subregister.

661D  Holder may obtain names and addresses of other holders

                   Within 1 month after a compulsory acquisition notice in relation to securities in the bid class is lodged with ASIC under section 661B, the holder of the securities may ask the bidder in writing for a written statement of the names and addresses of everyone else the bidder has given the notice to. The bidder must give the holder the statement within 7 days after the request.

661E  Holder may apply to Court to stop acquisition

             (1)  The holder of securities covered by a compulsory acquisition notice under section 661B may apply to the Court for an order that the securities not be compulsorily acquired under subsection 661A(1). The application must be made before the later of:

                     (a)  the end of 1 month after the holder is given notice under section 661B; or

                     (b)  the end of 14 days after the holder is given a statement under section 661D if the holder asks for it.

             (2)  The Court may order that the securities not be compulsorily acquired under subsection 661A(1) only if the Court is satisfied that the consideration is not fair value for the securities.

Note:          See section 667C on valuation.

             (3)  If the Court makes an order under this section in relation to an acquisition of securities, the order applies to all holders who have applications to the Court pending for an order under this section in relation to the acquisition.

661F  Signpost—completing the acquisition of the securities

                   See section 666A to find out how to complete the acquisition.


 

Division 2Compulsory buy‑out of bid class securities

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

             (1)  If the bidder and their associates have relevant interests in at least 90% of the securities (by number) in the bid class at the end of the offer period, the bidder must offer to buy out the remaining holders of bid class securities in accordance with sections 662B and 662C.

             (2)  This section does not apply to securities that are issued:

                     (a)  if the takeover bid was not subject to a defeating condition—after the end of the offer period; or

                     (b)  if the takeover bid was subject to a defeating condition—after the notice whether the bid is free from a defeating condition or not is given under subsection 630(3).

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

Notice to remaining holders of bid class securities

             (1)  The bidder must:

                     (a)  prepare a notice in the prescribed form that:

                              (i)  states that the bidder and their associates have relevant interests in at least 90% (by number) of the securities in the bid class; and

                             (ii)  informs the holder of bid class securities about their right to be bought out under this Part; and

                            (iii)  sets out the terms on which the holder may be bought out; and

                     (b)  lodge the notice with ASIC; and

                     (c)  give the notice to each other person who:

                              (i)  is a holder of securities in the bid class on the day on which the notice is lodged with ASIC; and

                             (ii)  has not been given a compulsory acquisition notice under section 661B when the notice under subsection (2) is given; and

                     (d)  give the notice to each relevant securities exchange on the same day as it is lodged with ASIC if the target is listed.

If alternative forms of consideration were offered under the takeover bid, the notice must specify which of those forms will apply to the acquisition of the holder’s securities if the holder does not give the bidder an election notice under subsection 662C(1).

Note:          The notice is be given to everyone who holds bid class securities on the day on which the notice is lodged with ASIC. Under section 662C, anyone who acquires the securities after that day may require the bidder to acquire the securities.

Time for dispatching notice to holders

             (2)  The bidder must dispatch the notices under paragraph (1)(c):

                     (a)  during, or within 1 month after the end of, the offer period; and

                     (b)  on the day the bidder lodges the notice with ASIC or on the next business day.

The notices cannot be withdrawn.

Manner of giving notice to holders

             (3)  The bidder may give the notice to a holder:

                     (a)  personally; or

                     (b)  by sending it by post to the address for the holder in the register of members, debenture holders or option holders.

A notice sent by post is taken to be given 3 days after it is posted.

             (4)  The notice may be sent:

                     (a)  if the notice is to be sent to the holder in an external territory or outside Australia—by pre‑paid airmail post or by courier.

                     (b)  if the notice is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

This subsection does not limit the manner in which the document may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

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

             (1)  Within 1 month after notice is given in relation to securities under section 662B, the holder of the securities may give the bidder written notice requiring the bidder to acquire the securities. If alternative forms of consideration were offered under the takeover bid, the holder may elect in the notice which of those forms will apply to the acquisition of the holder’s securities.

             (2)  The notice by the holder gives rise to a contract between the holder and the bidder for the sale of the securities on:

                     (a)  the terms that applied to the acquisition of securities under the bid immediately before the end of the offer period; or

                     (b)  if alternative forms of consideration applied at that time—on the terms that the bidder will provide:

                              (i)  the alternative specified by the holder in the notice under subsection (1); or

                             (ii)  if the holder has not made an election under that subsection—the alternative set out in the bidder’s notice under section 662B; or

                     (c)  if the holder and the bidder agree on other terms—those terms.


 

Division 3Compulsory buy‑out of convertible securities

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

                   If the bidder and their associates have relevant interests in at least 90% of the securities (by number) in the bid class at the end of the offer period, the bidder must offer to buy out the holders of securities that are convertible into bid class securities in accordance with sections 663B and 663C. This section does not apply to securities if a takeover bid has been made for the convertible securities and a notice has been given under section 661B or 662B in relation to the convertible securities.

Note:          For when securities are convertible into bid class securities, see the definition of convertible securities in section 9.

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

Notice to holders of convertible securities

             (1)  The bidder must:

                     (a)  prepare a notice in the prescribed form that:

                              (i)  states that the bidder and their associates have relevant interests in at least 90% of the securities (by number) in the bid class; and

                             (ii)  informs the holder of convertible securities about their right to be bought out under this Part; and

                            (iii)  sets out the terms on which the holder may be bought out; and

                     (b)  lodge the notice with ASIC; and

                     (c)  give each other person who is a holder of convertible securities:

                              (i)  the notice; and

                             (ii)  a copy of the expert’s report, or of all the experts’ reports, under section 667A; and

                     (d)  give a copy of those documents to each relevant securities exchange on the same day as it is lodged with ASIC if the target is listed.

Note 1:       Subparagraph (a)(iii)—Section 667A deals with the contents of an expert’s report.

Note 2:       The notice is to be given to everyone who holds convertible securities on the day on which the notice is lodged with ASIC. Under section 663C, anyone who acquires the securities after that day may require the bidder to acquire the securities.

Time for dispatching notice to holders

             (2)  The bidder must dispatch the notices and reports under paragraph (1)(c):

                     (a)  during, or within 1 month after the end of, the offer period; and

                     (b)  on the day the bidder lodges the notice with ASIC or on the next business day.

The notices cannot be withdrawn.

Manner of giving notice to holders

             (3)  The bidder may give the notice or report to a holder:

                     (a)  personally; or

                     (b)  by sending it by post to the address for the holder in the register of members, debenture holders or option holders.

A notice or report sent by post is taken to be given 3 days after it is posted.

             (4)  The notice may be sent:

                     (a)  if the notice is to be sent to the holder in an external Territory or outside Australia—by pre‑paid airmail post or by courier; or

                     (b)  if the notice is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

This subsection does not limit the manner in which the document may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

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

             (1)  Within 1 month after notice under section 663B is given in relation to convertible securities, the holder of the convertible securities may give the bidder a notice requiring the bidder to acquire the securities.

             (2)  The holder’s notice gives rise to a contract between the holder and the bidder for the sale of the securities on:

                     (a)  the terms agreed to by the bidder and the holder; or

                     (b)  the terms determined by the Court on application by the holder.

             (3)  If the Court makes a determination under paragraph (2)(b) in relation to the terms of sale for a holder’s securities of a particular class, the determination applies to all holders of securities in that class who have applications to the Court pending for a determination under that paragraph in relation to the terms of sale of their securities.


 

Part 6A.2General compulsory acquisitions and buy‑outs

Division 1Compulsory acquisition of securities by 90% holder

664A  Threshold for general compulsory acquisition power

90% holder—holder of 90% of securities in particular class

             (1)  A person is a 90% holder in relation to a class of securities of a company if the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% of the securities (by number) in that class.

90% holder—holder with 90% voting power and 90% of whole company or scheme

             (2)  A person is also a 90% holder in relation to a class of securities of a company if:

                     (a)  the securities in the class are shares or convertible into shares; and

                     (b)  the person’s voting power in the company is at least 90%; and

                     (c)  the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% by value of all the securities of the company that are either shares or convertible into shares.

Note:          Subsection 667A(2) provides that the expert’s report that accompanies the compulsory acquisition notice must support the paragraph (c) condition.

90% holder may acquire remainder of securities in class

             (3)  Under this section, a 90% holder in relation to a class of securities of a company may compulsorily acquire all the securities in that class in which neither the person nor any related bodies corporate has full beneficial interests if either:

                     (a)  the holders of securities in that class (if any) who have objected to the acquisition between them hold less than 10% by value of those remaining securities at the end of the objection period set out in the notice under paragraph 664C(1)(b); or

                     (b)  the Court approves the acquisition under section 664F.

If subsection (2) applies to the 90% holder, the holder may compulsorily acquire securities in a class only if the holder gives compulsory acquisition notices in relation to all classes of shares and securities convertible into shares of which they do not already have full beneficial ownership.

Note:          Subsection 92(3) defines securities for the purposes of this Chapter.

             (4)  This section has effect despite anything in the constitution of the company whose securities are to be acquired.

             (5)  This Part does not apply to shares that give the shareholder, as a shareholder, a right to occupy or use real property that the company owns or holds under lease, whether the right is a lease or licence or a contractual right.

             (6)  The 90% holder’s power to compulsorily acquire securities under a notice given under section 664C ends if the 90% holder contravenes section 664D by offering benefits outside the terms proposed in the compulsory acquisition notice under section 664C.

664AA  Time limit on exercising compulsory acquisition power

                   The 90% holder in relation to a class of securities of a company may compulsorily acquire securities in that class under section 664A only if the holder lodges the compulsory acquisition notice for the acquisition with ASIC under paragraph 664C(2)(a) within whichever of the following periods ends last:

                     (a)  the period of 12 months after the commencement of this section; or

                     (b)  the period of 6 months after the 90% holder becomes the 90% holder in relation to that class.

664B  The terms for compulsory acquisition

                   The 90% holder may acquire the securities in the class for a cash sum only and must pay the same amount for each security in the class acquired.

664C  Compulsory acquisition notice

Compulsory acquisition notice

             (1)  To compulsorily acquire securities under section 664A, the 90% holder must prepare a notice in the prescribed form that:

                     (a)  sets out the cash sum for which the 90% holder proposes to acquire the securities; and

                     (b)  specifies a period of at least 1 month during which the holders may return the objection forms; and

                     (c)  informs the holders about the compulsory acquisition procedure under this Part, including:

                              (i)  their right to obtain the names and addresses of the other holders of securities in that class from the company register; and

                             (ii)  their right to object to the acquisition by returning the objection form that accompanies the notice within the period specified in the notice; and

                     (d)  gives details of the consideration given for any securities in that class that the 90% holder or an associate has purchased within the last 12 months; and

                     (e)  discloses any other information that is:

                              (i)  known to the 90% holder or any related bodies corporate; and

                             (ii)  material to deciding whether to object to the acquisition; and

                            (iii)  not disclosed in an expert’s report under section 667A.

             (2)  The 90% holder must then:

                     (a)  lodge the notice with ASIC; and

                     (b)  give each other person (other than a related body corporate) who is a holder of securities in the class on the day on which the notice is lodged with ASIC:

                              (i)  the notice; and

                             (ii)  a copy of the expert’s report, or of all experts’ reports, under section 667A; and

                            (iii)  an objection form; and

                     (c)  give the company copies of those documents; and

                     (d)  give copies of those documents to the relevant securities exchange if the company is listed.

Note:          Everyone who holds the securities on the day on which the notice is lodged with ASIC is entitled to notice. Under subsection 664E(1), anyone who acquires the securities during the objection period may object to the acquisition.

Time for dispatching notice to holders

             (3)  The 90% holder must dispatch the notices under paragraph (2)(b) on the day the 90% holder lodges the notice with ASIC or on the next business day.

Manner of giving notice to holders

             (4)  The 90% holder may give the notice to a holder:

                     (a)  personally; or

                     (b)  by sending it by post to the address for the holder in the register of members, debenture holders or option holders.

A notice sent by post is taken to be given 3 days after it is posted.

             (5)  The notice may be sent:

                     (a)  if the notice is to be sent to the holder in an external territory or outside Australia—by pre‑paid airmail post or by courier; or

                     (b)  if the notice is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

This subsection does not limit the manner in which the document may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

Notice not to be withdrawn

             (6)  The 90% holder may not:

                     (a)  withdraw a notice under this section; or

                     (b)  if the 90% holder has given a notice under this section in relation to those securities and the objection period for that notice has not ended—give another notice under this section in relation to securities.

664D  Benefits outside compulsory acquisition procedure

             (1)  If the 90% holder gives a notice under section 664C to compulsorily acquire securities, the 90% holder or an associate must not offer, give or agree to give a benefit to a person during the objection period if:

                     (a)  the benefit is likely to induce the person, or an associate of the person, to:

                              (i)  dispose of securities in that class; or

                             (ii)  not object to the acquisition of those securities under the notice; and

                     (b)  the benefit is not provided for in the notice.

             (2)  If the 90% holder proposes to give a notice under section 664C to acquire securities within the next 4 months, the 90% holder or an associate must not offer, give or agree to give a benefit to a person if:

                     (a)  the benefit is likely to induce the person, or an associate of the person, to:

                              (i)  dispose of securities in that class; or

                             (ii)  not object to the acquisition of those securities under the notice; and

                     (b)  the benefit is not proposed to be provided for in the notice.

             (3)  If the 90% holder gives a notice under section 664C to compulsorily acquire securities, the 90% holder or an associate must not give a benefit to a person:

                     (a)  within 1 month after the end of the objection period (see subsection 664F(2)); or

                     (b)  during any proceedings by the Court to determine an application under subsection 664F(1) by the 90% holder;

if:

                     (c)  the benefit is likely to induce the person, or an associate of the person, to:

                              (i)  not object, or pursue an objection, to the acquisition of those securities under the notice; or

                             (ii)  dispose of securities in that class; and

                     (d)  the benefit is not offered to all holders of securities in that class under the notice.

             (4)  This section does not prohibit simultaneous notices under section 664C to compulsorily acquire different classes of securities in the company.

664E  Holder’s right to object to the acquisition

             (1)  A person who holds securities covered by the compulsory acquisition notice may object to the acquisition of the securities by signing an objection form and returning it to the 90% holder. The objection:

                     (a)  relates to all securities that are covered by the notice and are held by the person at the end of the objection period; and

                     (b)  cannot be withdrawn.

             (2)  The 90% holder must lodge with ASIC a copy of any objection form returned under subsection (1) as soon as practicable after it is returned.

             (3)  As soon as practicable after the end of the objection period, the 90% holder must:

                     (a)  prepare a list that sets out:

                              (i)  the names of people who hold securities covered by the compulsory acquisition notice and have objected to the acquisition; and

                             (ii)  details of the securities they hold; and

                     (b)  lodge the list with ASIC; and

                     (c)  give a copy of the list to the company; and

                     (d)  if the company is listed—give a copy to the relevant securities exchange.

             (4)  If people who hold at least 10% of the securities covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, the 90% holder must give everyone to whom the compulsory acquisition notice was sent under section 664C:

                     (a)  a notice that the proposed acquisition will not occur; or

                     (b)  a notice that the 90% holder has applied to the Court for approval of the acquisition under section 664F;

within 1 month after the end of the objection period.

664F  The Court’s power to approve acquisition

             (1)  If people who hold at least 10% of the securities covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, the 90% holder may apply to the Court for approval of the acquisition of the securities covered by the notice.

             (2)  The 90% holder must apply within 1 month after the end of the objection period.

             (3)  If the 90% holder establishes that the terms set out in the compulsory acquisition notice give a fair value for the securities, the Court must approve the acquisition of the securities on those terms. Otherwise it must confirm that the acquisition will not take place.

Note:          See section 667C on valuation.

             (4)  The 90% holder must bear the costs that a person incurs on legal proceedings in relation to the application unless the Court is satisfied that the person acted improperly, vexatiously or otherwise unreasonably. The 90% holder must bear their own costs.

664G  Signpost—completing the acquisition of the securities

                   See section 666A for how to complete the acquisition.


 

Division 2Compulsory buy‑out of convertible securities by 100% holder

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

             (1)  A person is a 100% holder of securities in a class if the person, either alone or with a related body corporate, holds full beneficial interests in all the securities in the class.

             (2)  A 100% holder in relation to a class of securities (the main class) who becomes a 100% holder through compulsory acquisitions under this Part must offer to buy out the holders of securities in another class that are convertible into main class securities in accordance with sections 665B and 665C. This subsection does not apply to securities if a notice is given in relation to the securities under section 661B, 662B or 664C.

Note:          For when securities are convertible into main class securities, see the definition of convertible securities in section 9.

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

Notice to holders of convertible securities

             (1)  The 100% holder must:

                     (a)  prepare a notice in the prescribed form that:

                              (i)  states that the person giving the notice has acquired all the securities in the main class; and

                             (ii)  sets out the information that was included in the compulsory acquisition notice given in relation to securities in the main class under paragraphs 664C(1)(d) and (e); and

                            (iii)  sets out the cash sum for which they are willing to acquire the convertible securities; and

                            (iv)  informs the holder of convertible securities about their right to be bought out under this Part; and

                     (b)  lodge the notice with ASIC; and

                     (c)  give each other person who is a holder of convertible securities on the day on which the notice is lodged with ASIC:

                              (i)  the notice; and

                             (ii)  a copy of the expert’s report, or all experts’ reports, under section 667A; and

                     (d)  give a copy of the documents to the company that issued the securities; and

                     (e)  give a copy of the documents to each relevant securities exchange on the same day as it is lodged with ASIC if the company is listed.

Note 1:       Subparagraph (a)(iv)—Section 667A deals with the contents of an expert’s report.

Note 2:       The notice is to be given to everyone who holds convertible securities on the day on which the notice is lodged with ASIC. Under section 665C, anyone who holds the securities after that day may require the 100% holder to acquire the securities.

Time for dispatching notice to holders

             (2)  The 100% holder must dispatch the notices and reports under paragraph (1)(c):

                     (a)  within 1 month after they become the 100% holder; and

                     (b)  on the day the 100% holder lodges the notice with ASIC or on the next business day.

The notices cannot be withdrawn.

Manner of giving notice to holders

             (3)  The 100% holder may give the notice or report to a holder:

                     (a)  personally; or

                     (b)  by sending it by post to the address for the holder in the register of members, debenture holders or option holders.

A notice or report sent by post is taken to be given 3 days after it is posted.

             (4)  The notice may be sent:

                     (a)  if the notice is to be sent to the holder in an external Territory or outside Australia—by pre‑paid airmail post or by courier; or

                     (b)  if the notice is to be sent to the holder in Australia—by pre‑paid ordinary post or by courier.

This subsection does not limit the manner in which the document may be sent to the holder.

Note:          Section 109X makes general provision for service of documents.

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

             (1)  Within 1 month after notice under section 665B is given in relation to convertible securities, the holder of the convertible securities may give the 100% holder a notice requiring the 100% holder to acquire the securities.

             (2)  The notice by the holder of convertible securities gives rise to a contract between the holder and the 100% holder for the sale of the securities on:

                     (a)  terms agreed to by the 100% holder and the holder of the convertible securities; or

                     (b)  the terms determined by the Court on application by the holder of the convertible securities.

             (3)  If the Court makes a determination under paragraph (2)(b) in relation to the terms of sale for a holder’s convertible securities of a particular class, the determination applies to all holders of convertible securities in that class who have applications to the Court pending for a determination under that paragraph in relation to the terms of sale of their convertible securities.


 

Division 3Notice that person has become 85% holder of a class of securities

665D  Notice by 85% holder to company

85% holder—holder of 85% of securities in particular class

             (1)  A person is an 85% holder in relation to a class of securities of a company if the person holds, either alone or with a related body corporate, full beneficial interests in at least 85% of the securities (by number) in that class.

85% holder—holder with 85% voting power and 85% of whole company

             (2)  A person is also an 85% holder in relation to a class of securities of a company if:

                     (a)  the securities in the class are shares or convertible into shares; and

                     (b)  the person’s voting power in the company is at least 85%; and

                     (c)  the person holds, either alone or with a related body corporate, full beneficial interests in at least 85% by value of all the securities of the company that are either shares or convertible into shares.

Person becoming 85% holder to give notice to company

             (3)  A person who becomes an 85% holder in relation to a class of securities of a company must notify the company in writing that they have become an 85% holder in relation to that class. The person must give the notice within 14 days after the person becomes aware of the information.

Person continuing to be 85% holder to give notice to company

             (4)  A person who:

                     (a)  gives a company a notice under subsection (3) in relation to a class of securities; and

                     (b)  is an 85% holder in relation to the class on any anniversary of becoming an 85% holder in relation to the class;

must notify the company in writing that they continue to be an 85% holder in relation to the class. The person must give the notice within 14 days after the anniversary.

665E  Notice by company to other members

Company to notify members

             (1)  A company that is given a notice by a person under section 665D in relation to a class of securities must notify its members in writing that:

                     (a)  the person:

                              (i)  has become an 85% holder in relation to the class; or

                             (ii)  continues to be an 85% holder in relation to the class; and

                     (b)  the person will be able to acquire the securities in that class under this Part if the person becomes a 90% holder in relation to that class.

Time for notifying members

             (2)  The company must notify its members before, or at the same time as, whichever of the following it first gives to its members after the company is given the notice under section 665D:

                     (a)  a notice under another provision of this Law

                     (b)  a report under a provision of this Law.

Information about 85% holder to be prominent if included in other material given to members

             (3)  If a company notifies its members under this section by including the information referred to in paragraphs (1)(a) and (b) in:

                     (a)  a notice given to members under another provision of this Law; or

                     (b)  a report given to members under a provision of this Law;

the information must appear prominently in the notice or report.


 

Part 6A.3Completion of compulsory acquisition of securities

666A  Completing the acquisition of securities

Completion to be by private treaty or statutory procedure

             (1)  A person entitled to acquire securities under section 661A or 664A must either:

                     (a)  pay, issue or transfer the consideration to the holder, take a transfer of the securities from the holder and have the company that issued the securities register the transfer; or

                     (b)  complete the procedure laid down in section 666B;

by the end of the period referred to in subsection (2) or (3).

Time for completing compulsory acquisition following takeover

             (2)  For an acquisition under section 661A, the period ends 14 days after the later of:

                     (a)  the end of 1 month after the compulsory acquisition notice was lodged with ASIC under section 661B; or

                     (b)  the end of 14 days after the last statement under section 661D was given if a request is made under that section; or

                     (c)  if an application to stop the acquisition is made to the Court under section 661E—the application is finally determined.

Time for completing compulsory acquisition under Part 6A.2

             (3)  For an acquisition under section 664A or 664F, the period ends 14 days after the later of:

                     (a)  the end of the objection period; or

                     (b)  if an application for approval of the acquisition is made to the Court under section 664F in relation to the securities—the application is finally determined.

666B  Statutory procedure for completion

             (1)  Under this section, the person acquiring the securities must:

                     (a)  give the company that issued the securities a copy of the compulsory acquisition notice under section 661B or 664C together with a transfer of the securities:

                              (i)  signed as transferor by someone appointed by the person acquiring the securities; and

                             (ii)  signed as transferee by the person acquiring the securities; and

                     (b)  pay, issue or transfer the consideration for the transfer to the company that issued the securities.

The person appointed under subparagraph (a)(i) has authority to sign the transfer on behalf of the holder of the securities.

             (2)  If the person acquiring the securities complies with subsection (1), the company that issued the securities must:

                     (a)  register the person as the holder of the securities; and

                     (b)  hold the consideration received under subsection (1) in trust for the person who held the securities immediately before registration; and

                     (c)  give written notice to the person referred to in paragraph (b) as soon as practicable that the consideration has been received and is being held by the company pending their instructions as to how it is to be dealt with.

             (3)  If the consideration held under subsection (2) consists of, or includes, money, that money must be paid into a bank account opened and maintained for that purpose only.


 

Part 6A.4Experts’ reports and valuations

667A  Expert’s report

             (1)  An expert’s report under section 663B, 664C or 665B must:

                     (a)  be prepared by a person nominated by ASIC under section 667AA; and

                     (b)  state whether, in the expert’s opinion, the terms proposed in the notice give a fair value for the securities concerned; and

                     (c)  set out the reasons for forming that opinion.

Note:          See section 667C on valuation.

             (2)  If the person giving the compulsory acquisition notice is relying on paragraph 664A(2)(c) to give the notice, the expert’s report under section 664C must also:

                     (a)  state whether, in the expert’s opinion, the person (either alone or together with a related body corporate) has full beneficial ownership in at least 90% by value of all the securities of the company that are shares or convertible into shares; and

                     (b)  set out the reasons for forming that opinion.

             (3)  If the person giving the compulsory acquisition notice obtains 2 or more reports, each of which were obtained for the purposes of that notice, a copy of each report must be given to the holder of the securities.

667AA  Expert to be nominated

             (1)  A person who proposes to obtain an expert’s report for the purposes of section 663B, 664C or 665B must request ASIC in writing to nominate a person to prepare the expert’s report.

             (2)  Within 14 days after receiving a request under subsection (1), ASIC must nominate:

(a)    an appropriate person to prepare the report; or

(b)    up to 5 appropriate persons, one of whom the person making the request may choose to prepare the report.

(3)In determining whether a person is an appropriate person to prepare an expert’s report, and without limiting the matters that ASIC may consider, ASIC must consider the nature of the company to be valued.

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

             (1)  The expert who provides the report must not be an associate of:

                     (a)  the person giving the notice; or

                     (b)  the company that issued the securities.

             (2)  The report must set out details of:

                     (a)  any relationship between the expert and:

                              (i)  the person giving the notice or an associate of the person giving the notice; or

                             (ii)  the company that issued the securities or an associate of the company;

                            including any circumstances in which the expert gives them advice, or acts on their behalf, in the proper performance of the functions attaching to the expert’s professional capacity or business relationship with them; and

                     (b)  any financial or other interest of the expert that could reasonably be regarded as being capable of affecting the expert’s ability to give an unbiased opinion in relation to the matter being reported on; and

                     (c)  any fee, payment or other benefit (whether direct or indirect) that the expert has received or will or may receive in connection with the report.

667C  Valuation of securities

             (1)  To determine what is fair value for securities for the purposes of this Chapter:

                     (a)  first, assess the value of the company as a whole; and

                     (b)  then allocate that value among the classes of issued securities in the company (taking into account the relative financial risk, and voting and distribution rights, of the classes); and

                     (c)  then allocate the value of each class pro rata among the securities in that class (without allowing a premium or applying a discount for particular securities in that class).

             (2)  Without limiting subsection (1), in determining what is fair value for securities for the purposes of this Chapter, the consideration (if any) paid for securities in that class within the previous 6 months must be taken into account.


 

Part 6A.5Records of unclaimed consideration

  

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

Records of unclaimed compulsory acquisition consideration

             (1)  If a company is paid consideration in respect of securities that are compulsorily acquired under Part 6A.1 or 6A.3, the company must maintain records of:

                     (a)  the consideration paid (including any benefit accruing from the consideration and any property substituted for the whole or any part of that consideration); and

                     (b)  the people who are entitled to that consideration; and

                     (c)  any transfers of the consideration to the people entitled to it.

             (2)  The company must keep the records at:

                     (a)  its registered office; or

                     (b)  its principal place of business in Australia; or

                     (c)  another place in Australia approved by ASIC.

             (3)  A person may ask the company to let the person inspect all or any of the records kept by the company under this section. The company must let the person inspect the records:

                     (a)  if the company requires payment of an amount not exceeding the prescribed amount—within 7 days after the day on which the company receives that amount; or

                     (b)  in any other case—within 7 days after the day on which the request is made.

             (4)  By the end of February each year, the company must publish in the Gazette a copy of the records kept under subsection (1) as at the end of the previous December.

668B  Unclaimed consideration to be transferred to ASIC

             (1)  If the company has not transferred the unclaimed consideration to the person entitled to it within 12 months after the publication of a copy of the records in the Gazette, the company must transfer the consideration to ASIC within 1 month after the end of that 12 month period.

             (2)  The company is then discharged from liability to any person in respect of the consideration.

             (3)  ASIC must deal with the consideration under Part 9.7.

             (4)  Except as provided by subsection (2), this Part does not deprive a person of any right or remedy to which the person is entitled against a liquidator or company.


 

Part 6A.6ASIC powers

  

669  ASIC’s power to exempt and modify

             (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.

             (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 Law or the regulations as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations made for the purposes of this Chapter; and

                     (c)  Division 12 of Part 11.2.


 

Chapter 6BRights and liabilities in relation to Chapter 6 and 6A matters

  

  

670A  Misstatements in, or omissions from, takeover and compulsory acquisition and buy‑out documents

             (1)  A person must not give:

                     (a)  a bidder’s statement

                     (b)  a takeover offer document

                     (c)  a notice of variation of a takeover offer

                     (d)  a target’s statement

                     (e)  a compulsory acquisition notice under section 661B or 664C

                      (f)  a compulsory buy‑out notice under section 662B, 663B or 665B

                     (g)  a report that is included in, or accompanies, a statement or notice referred to in paragraphs (a) to (f)

if there is:

                     (h)  for all documents—a misleading or deceptive statement in the document; or

                      (i)  for a bidder’s statement or target’s statement—an omission from the document of material required by section 636 or 638; or

                      (j)  for a bidder’s statement or a target’s statement—a new circumstance that:

                              (i)  has arisen since the document was lodged; and

                             (ii)  would have been required by section 636 or 638 to be included in the document if it had arisen before the document was lodged; or

                     (k)  for an expert’s report under subsection 636(2) or section 640, 663B, 664C or 665B—an omission from the report of material required by subsection 648A(3) or 667B(2).

Note 1:       See section 670D for defences.

Note 2:       Section 995 imposes liabilities in respect of other conduct related to the dealings in securities.

Forecasts and other forward‑looking statement

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

Offence if statement, omission or new matter materially adverse

             (3)  A person commits an offence if they contravene subsection (1) and:

                     (a)  the misleading or deceptive statement; or

                     (b)  the omission or new circumstance;

is materially adverse from the point of view of the holder of securities to whom the document is given.

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

             (1)  A person who suffers loss or damage that results from a contravention of subsection 670A(1) may recover the amount of the loss or damage from a person referred to in the following table if the loss or damage is one that the table makes the person liable for. This is so even if the person did not commit, and was not involved in, the contravention.

 

People liable on the document

[operative table]

 

For these documents

these people…

 

...are liable for loss or damages caused by

 

bidder’s statement or takeover offer document

1

the bidder

any contravention of subsection 670A(1) in relation to the document

2

each director of a bidder that is a body if the consideration offered under the bid is not a cash sum only

any contravention of subsection 670A(1) in relation to the document

3

a director of a bidder that is a body unless the director proves that they:

(a) were not present when the directors resolved to adopt the statement or offer document; or

(b) voted against the resolution;

if the consideration offered under the bid is a cash sum only

any contravention of subsection 670A(1) in relation to the document

 

See also items 10 and 11.

 

notice of variation of a takeover offer

4

the bidder

any contravention of subsection 670A(1) in relation to the document

5

a director of a bidder that is a body

any contravention of subsection 670A(1) in relation to the document

See also items 10 and 11.

 

a target’s statement

6

the target

any contravention of subsection 670A(1) in relation to the document

7

a director of the target unless the director proves that they:

(a) were not present when the directors resolved to adopt the statement; or

(b) voted against the resolution

any contravention of subsection 670A(1) in relation to the document

 

See also items 10 and 11.

 

a compulsory acquisition or compulsory buy‑out notice

8

the person giving the notice

any contravention of subsection 670A(1) in relation to the document

9

a director of a body corporate giving the notice unless the director proves that they:

(a) were not present when the directors resolved to give the notice; or

(b) voted against the resolution

any contravention of subsection 670A(1) in relation to the document

 

See also items 10 and 11.

 

all documents

10

a person named in the document, with their consent, as having made a statement:

(a) that is included in the document; or

(b) on which a statement made in the document is based

the inclusion of the statement in the document

11

a person who contravenes, or is involved in a contravention of, subsection 670A(1)

that contravention

             (2)  An action under subsection (1) may begin at any time within 6 years after the day on which the cause of action arose.

             (3)  This Part does not affect any liability that a person has under any other law.

Note:          Conduct that contravenes subsection 670A(1) is expressly excluded from the operation of section 995.

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

             (1)  A person referred to in the table in subsection 670B(1) in relation to a document must notify the issuer of the document in writing as soon as practicable if they become aware during the bid period or objection period that:

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

                     (b)  there is a material omission from the document of information required by section 636, 638 or 640; or

                     (c)  a material new circumstance that:

                              (i)  has arisen since the document was lodged; and

                             (ii)  would have been required by section 636, 638 or 640 to be included in the document if it had arisen before the document was lodged.

             (2)  An expert whose report accompanies, or is included in, a target’s statement under section 640 must notify the target in writing as soon as practicable if they become aware during the takeover period that:

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

                     (b)  there has been a significant change affecting information included in the report.

             (3)  An expert whose report accompanies, or is included in, a bidder’s statement under subsection 636(2) must notify the bidder in writing as soon as practicable if they become aware during the takeover period that:

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

                     (b)  there has been a significant change affecting information included in the report.

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

Not knowing statement misleading or deceptive

             (1)  A person does not commit an offence against subsection 670A(3), and is not liable under section 670B for a contravention of subsection 670A(1), because of a misleading or deceptive statement in a document if the person proves that they did not know that the statement was misleading or deceptive.

Not knowing there was an omission

             (2)  A person does not commit an offence against subsection 670A(3), and is not liable under section 670B for a contravention of subsection 670A(1), because of an omission from a document in relation to a particular matter if the person proves that they did not know that there was an omission from the document in relation to that matter.

Reasonable reliance on information given by someone else—statements and omissions

             (3)  A person does not commit an offence against subsection 670A(3), and is not liable under section 670B for a contravention against subsection 670A(1), because of a misleading or deceptive statement in, or an omission from, a document if the person proves that they placed reasonable reliance on information given to them by:

                     (a)  if the person is a body—someone other than a director, employee or agent of the body; or

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

             (4)  For the purposes of subsection (3), a person is not the agent of a body or individual merely because they perform a particular professional or advisory function for the body or individual.

Withdrawal of consent—statements and omissions

             (5)  A person who is named in a document as:

                     (a)  making a statement included in the document; or

                     (b)  making a statement on the basis of which a statement is included in the document;

does not commit an offence against subsection 670A(3), and is not liable under section 670B for a contravention against subsection 670A(1), because of a misleading or deceptive statement in, or an omission from, a document if the person proves that they publicly withdrew their consent to being named in the document in that way.

Unawareness of new matter

             (6)  A person does not commit an offence against subsection 670A(3), and is not liable under section 670B for a contravention of subsection 670A(1), because of a new circumstance that has arisen since the document was lodged if the person proves that they were not aware of the matter.

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

             (1)  A person who:

                     (a)  enters into a transaction relating to securities in reliance on:

                              (i)  a public proposal for a takeover bid; or

                             (ii)  an announcement of a market bid; and

                     (b)  suffers loss or damage that results from a contravention of section 631:

may recover the amount of the loss or damage from:

                     (c)  the person who contravened the section; or

                     (d)  any person involved in the contravention.

             (2)  To determine the amount of compensation payable under subsection (1), deduct the price of the securities at which the transaction was entered into from the price of the securities at which the transaction would have been likely to be entered into if the proposal or announcement had not been made.

670F  Defences

                   A person does not commit an offence under subsection 631(1) or (2), and is not liable under section 670E for a contravention of those subsections if the person proves that they could not reasonably have been expected to comply with those subsections because:

                     (a)  at the time of the proposal or announcement, circumstances existed that the person did not know of and could not reasonably have been expected to know of; or

                     (b)  after the proposal or announcement, a change in circumstances occurred that was not caused, directly or indirectly, by the person.


 

Chapter 6CInformation about ownership of listed companies and managed investment schemes

  

  

671A  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 this jurisdiction in the same way as it applies to the acquisition of relevant interests in the securities of companies.

Note:          Section 9 defines company, jurisdiction and listed.

Part 6C.1Substantial holding information

  

671B  Information about substantial holdings must be given to company, responsible entity and relevant securities exchange

Requirement to give information

             (1)  A person must give the information referred to in subsection (3) to a listed company, or the responsible entity for a listed registered managed investment scheme, if:

                     (a)  the person begins to have, or ceases to have, a substantial holding in the company or scheme; or

                     (b)  the person has a substantial holding in the company or scheme and there is a movement of at least 1% in their holding; or

                     (c)  the person makes a takeover bid for securities of the company or scheme.

The person must also give the information to each relevant securities exchange.

Note 1:       Section 9 defines substantial holding and associate.

Note 2:       The information must be given even if the situation changes by the time the information is to be given.

             (2)  For the purposes of this section, there is a movement of at least 1% in a person’s holding if the percentage worked out using the following formula increases or decreases by 1 or more percentage points from the percentage they last disclosed under this Part in relation to the company or scheme:

where:

person’s and associates’ votes is the total number of votes attached to all the voting shares in the company or interests in the scheme (if any) that the person or an associate has a relevant interest in.

total votes in company or scheme is the total number of votes attached to all voting shares in the company or interests in the scheme.

Note:          Subsection (7) expands the normal concept of relevant interest to take account of exchange traded options and conditional agreements.

Information that must be given

             (3)  The information to be given is:

                     (a)  the person’s name and address; and

                     (b)  details of their relevant interest in:

                              (i)  voting shares in the company; or

                             (ii)  interests in the scheme; and

                     (c)  details of any relevant agreement through which they would have a relevant interest in:

                              (i)  voting shares in the company; or

                             (ii)  interests in the scheme; and

                     (d)  the name of each associate who has a relevant interest in voting shares in the company or interests in the scheme, together with details of:

                              (i)  the nature of their association with the associate; and

                             (ii)  the relevant interest of the associate; and

                            (iii)  any relevant agreement through which the associate has the relevant interest; and

                     (e)  if the information is being given because of a movement in their holding—the size and date of that movement; and

                      (f)  if the information is being given because a person has ceased to be an associate—the name of the person; and

                     (g)  any other particulars that are prescribed.

Note:          Subsection (7) expands the normal concept of relevant interest to take account of exchange traded options and conditional agreements.

Information to be in prescribed form and accompanied by certain documents

             (4)  The information must be given in the prescribed form and must be accompanied by:

                     (a)  a copy of any document setting out the terms of any relevant agreement that:

                              (i)  contributed to the situation giving rise to the person needing to provide the information; and

                             (ii)  is in writing and readily available to the person; and

                     (b)  a statement by the person giving full and accurate details of any contract, scheme or arrangement that:

                              (i)  contributed to the situation giving rise to the person needing to provide the information; and

                             (ii)  is not both in writing and readily available to the person.

If the person is required to give a copy of a contract, scheme or arrangement, the copy must be endorsed with a statement that the copy is a true copy.

             (5)  The information does not need to be accompanied by the documents referred to in subsection (4) if the transaction that gives rise to the person needing to provide the information takes place on a stock exchange approved under section 769.

Deadline for giving information

             (6)  The person must give the information:

                     (a)  within 2 business days after they become aware of the information; or

                     (b)  by 9.30 am on the next trading day of the relevant securities exchange after they become aware of the information if:

                              (i)  a takeover bid is made for voting shares in the company or voting interests in the scheme; and

                             (ii)  the person becomes aware of the information during the bid period.

Relevant interests—exchange traded options and conditional agreements

             (7)  For the purposes of this section, a person has a relevant interest in securities if the person would have a relevant interest in the securities but for subsection 609(6) (exchange traded options) or 609(7) (conditional agreements).

671C  Civil liability

             (1)  A person who contravenes section 671B is liable to compensate a person for any loss or damage the person suffers because of the contravention.

             (2)  It is a defence in proceedings brought under this section if the person who contravenes section 671B proves that they contravened that section:

                     (a)  because of inadvertence or mistake; or

                     (b)  because they were 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.

             (3)  If 2 or more persons each contravene section 671B because of the same act or omission, their liability under this section for the contravention is joint and individual.


 

Part 6C.2Tracing beneficial ownership of shares

  

672A  Disclosure notices

             (1)  ASIC, a listed company or the responsible entity for a listed managed investment scheme, may direct:

                     (a)  a member of the company or scheme; or

                     (b)  a person named in a previous disclosure under section 672B as having a relevant interest in, or having given instructions about, voting shares in the company or interests in the scheme;

to make the disclosure required by section 672B.

             (2)  ASIC must exercise its powers under this section if requested to do so by a member of the company or scheme unless it considers that it would be unreasonable to do so in all the circumstances.

672B  Disclosure by member of relevant interests and instructions

             (1)  A person given a direction under section 672A must disclose to the person giving the direction:

                     (a)  full details of their own relevant interest in the shares or interests in the scheme and of the circumstances that give rise to that interest; and

                     (b)  the name and address of each other person who has a relevant interest in any of the shares or interests together with full details of:

                              (i)  the nature and extent of the interest; and

                             (ii)  the circumstances that give rise to the other person’s interest; and

                     (c)  the name and address of each person who has given the person instructions about:

                              (i)  the acquisition or disposal of the shares or interests; or

                             (ii)  the exercise of any voting or other rights attached to the shares or interests; or

                            (iii)  any other matter relating to the shares or interests;

                            together with full details of those instructions (including the date or dates on which they were given).

A matter referred to in paragraph (b) or (c) need only be disclosed to the extent to which it is known to the person required to make the disclosure.

             (2)  The disclosure must be made within 2 business days after:

                     (a)  the person is given the direction; or

                     (b)  if the person applies for an exemption under section 673 from the obligation to make the disclosure and ASIC refuses to grant the exemption—ASIC notifies the person of its decision on the application; or

                     (c)  if the direction is given by a company or responsible entity—the company or responsible entity pays any fee payable under the regulations made for the purposes of section 672D.

             (3)  The person does not have to comply with a direction given by the company or the responsible entity if the person proves that the giving of the direction is vexatious.

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

                   If ASIC receives information in response to a direction under section 672A about shares in a company or interests in a listed managed investment scheme, ASIC:

                     (a)  may pass the information on to the company or the responsible entity for the scheme; and

                     (b)  if ASIC gave the direction in response to a request under subsection 672A(2)—must pass the information on to the person who made the request unless ASIC considers it would be unreasonable in all the circumstances to do so.

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

             (1)  The regulations may prescribe fees that companies and responsible entities are to pay to persons for complying with directions given under this Part.

             (2)  A person is liable to repay a fee paid to the person for complying with a direction under section 672A if the person does not comply with the direction on time even if the person does so later. The fee may be recovered as a debt due to the company or responsible entity that paid it to the person.

672E  No notice of rights

                   A company or responsible entity is not, because of anything done under this Part:

                     (a)  to be taken for any purpose to have notice of; or

                     (b)  put on inquiry as to;

a person’s right in relation to a share in the company or an interest in the listed managed investment scheme.

672F  Civil liability

             (1)  A person who contravenes section 672B is liable to compensate a person for any loss or damage the person suffers because of the contravention.

             (2)  It is a defence in proceedings brought under this section if the person who contravenes section 672B proves that they contravened that section:

                     (a)  because of inadvertence or mistake; or

                     (b)  because they were 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.

             (3)  If 2 or more persons each contravene section 672B because of the same act or omission, their liability under this section for the contravention is joint and individual.


 

Part 6C.3ASIC powers

  

673  ASIC’s power to exempt and modify

             (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.

             (2)  In deciding whether to give the exemption or declaration, ASIC must consider the purposes of this Chapter set out in section 602.

             (3)  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.

             (4)  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.

             (5)  The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette.

             (6)  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 Law or the regulations as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations made for the purposes of this Chapter; and

                     (c)  Division 12 of Part 11.2.


 

Chapter 6DFundraising

Part 6D.1Application of the fundraising provisions

  

700  Coverage of the fundraising rules

Securities covered

             (1)  Subsection 92(3) defines securities for the purposes of this Chapter.

Offers and invitations both covered

             (2)  For the purposes of this Chapter:

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

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

Person offering securities

             (3)  For the purposes of this Chapter, the person who offers securities is the person who has the capacity, or who agrees, to issue or transfer the securities if the offer is accepted.

Geographical coverage of Chapter

             (4)  This Chapter applies to offers of securities that are received in this jurisdiction, regardless of where any resulting issue, sale or transfer occurs.

Note:          This Chapter in effect applies to all offers received anywhere in Australia because the Corporations Law operates as a national law.

701  Treatment of offers of interests in managed investment scheme

                   This Chapter applies to offers of interests in managed investment schemes as if:

                     (a)  making the interests available were issuing the interests; and

                     (b)  the person making the interests available were the body whose securities were issued; and

                     (c)  the assets and liabilities, financial position and performance, profits and losses and prospects of the scheme were those of the body; and

                     (d)  a person who has the capacity to determine the outcome of decisions about the financial and operating policies governing the operation of the scheme were able to control the body.

702  Treatment of offers of options over securities

                   For the purposes of this Chapter:

                     (a)  an offer of an option over securities is not to be taken to be an offer of the underlying securities; and

                     (b)  the grant of an option without an offer of the option is taken to be an offer of the option; and

                     (c)  an offer to grant an option is taken to be an offer to issue the security constituted by the option.

Note 1:       If a disclosure document is needed for the option and there is no further offer involved in exercising the option, the issue or sale of the underlying securities on the exercise of the option does not need a disclosure document.

Note 2:       Paragraph (b)—the grant of the option will not require a disclosure document if no consideration is payable on the grant or the exercise of the option (see subsections 708(15) and (16)).

703  Chapter may not be contracted out of

                   A condition of a contract for the sale or issue of securities is void if it provides that a party to the contract is:

                     (a)  required or bound to waive compliance with any requirement of this Chapter; or

                     (b)  taken to have notice of any contract, document or matter not specifically referred to in the disclosure document for the offer.


 

Part 6D.2Disclosure to investors about securities

Division 1Overview

704  When disclosure to investors is needed

                   Sections 706, 707 and 708 say when an offer of securities needs disclosure to investors under this Part.

Note 1:       Section 727 prohibits offering securities without disclosure.

Note 2:       If the offer needs disclosure, section 734 applies advertising restrictions. These continue throughout the whole offer process. Different restrictions apply before and after the disclosure document is lodged.

Note 3:       The way the offers are made to people must not breach the securities hawking prohibition in section 736.

705  Types of disclosure document

                   The following table shows what disclosure documents to use if an offer of securities needs disclosure to investors under this Part.

 

 

Disclosure document

 

 

Type

Sections

1

prospectus

The standard full‑disclosure document.

 

content [710, 711, 713]

procedure [717]

liability [728 and 729]

defences [731, 733]

2

short form prospectus

May be used for any offer.

Section 712 allows a prospectus to refer to material lodged with ASIC instead of setting it out. Investors are entitled to a copy of this material if they ask for it.

 

content [712]

3

profile statement

Section 721 allows a brief profile statement (rather than the prospectus) to be sent out with offers with ASIC approval. The prospectus must still be prepared and lodged with ASIC. Investors are entitled to a copy of the prospectus if they ask for it.

 

content [714]

procedure [717]

liability [728 and 729]

defences [732, 733]

4

offer information statement

Section 709 allows an offer information statement to be used instead of a prospectus for an offer to issue securities if the amount raised from issues of securities is $5 million or less.

 

content [715]

procedure [717]

liability [728 and 729]

defences [732, 733]


 

Division 2Offers that need disclosure to investors

706  Issue offers that need disclosure

                   An offer of securities for issue needs disclosure to investors under this Part unless section 708 says otherwise.

707  Sale offers that need disclosure

Only some sales need disclosure

             (1)  An offer of securities for sale needs disclosure to investors under this Part only if disclosure is required by subsection (2), (3) or (5).

Off‑market sale by controller

             (2)  An offer of a body’s securities for sale needs disclosure to investors under this Part if:

                     (a)  the person making the offer controls the body; and

                     (b)  either:

                              (i)  the securities are not quoted; or

                             (ii)  although the securities are quoted, they are not offered for sale in the ordinary course of trading on a stock market of a securities exchange;

and section 708 does not say otherwise.

Note:          See section 50AA for when a person controls a body.

Sale amounting to indirect issue

             (3)  An offer of a body’s securities for sale within 12 months after their issue needs disclosure to investors under this Part if the body issued the securities:

                     (a)  without disclosure to investors under this Part; and

                     (b)  with the purpose of the person to whom they were issued:

                              (i)  selling or transferring them; or

                             (ii)  granting, issuing or transferring interests in, or options or warrants over, them;

and section 708 does not say otherwise.

Note 1:       Section 706 normally requires disclosure for the issue of securities. This subsection is intended to prevent avoidance of section 706. However, to establish a contravention of this subsection, the only purpose that needs to be shown is that referred to in paragraph (b).

Note 2:       The issuer and the seller must both consent to the disclosure document (see section 720).

Evidence of intention—indirect issue

             (4)  Unless the contrary is proved, a body is taken to issue securities with the purpose referred to in paragraph (3)(b) if any of the securities are subsequently sold, or offered for sale, within 12 months after their issue.

Sale amounting to indirect off‑market sale by controller

             (5)  An offer of a body’s securities for sale within 12 months after their sale by a person who controlled the body at the time of the sale needs disclosure to investors under this Part if:

                     (a)  at the time of the sale by the controller either:

                              (i)  the securities were not quoted; or

                             (ii)  although the securities were quoted, they were not offered for sale in the ordinary course of trading on a stock market of a securities exchange; and

                     (b)  the controller sold the securities without disclosure to investors under this Part; and

                     (c)  the controller sold the securities with the purpose of the person to whom they were sold:

                              (i)  selling or transferring them; or

                             (ii)  granting, issuing or transferring interests in, or options or warrants over, them;

and section 708 does not say otherwise.

Note 1:       Subsection (2) normally requires disclosure for a sale by a controller. This subsection is intended to prevent avoidance of subsection (2). However, to establish a contravention of this subsection, the only purpose that needs to be shown is that referred to in paragraph (c).

Note 2:       See section 50AA for when a person controls a body.

Note 3:       The controller and the seller must both consent to the disclosure document (see section 720).

Evidence of intention—indirect sale by controller

             (6)  Unless the contrary is proved, a person who controls a body is taken to sell securities with the purpose referred to in paragraph (5)(c) if any of the securities are subsequently sold, or offered for sale, within 12 months after their sale by the controller.

708  Offers that do not need disclosure

Small scale offerings (20 issues or sales in 12 months)

             (1)  Personal offers of a body’s securities by a person do not need disclosure to investors under this Part if:

                     (a)  none of the offers results in a breach of the 20 investors ceiling (see subsections (3) and (4)); and

                     (b)  none of the offers results in a breach of the $2 million ceiling (see subsections (3) and (4)).

This subsection does not apply to an offer for sale to which subsection 707(3) (sale amounting to indirect issue) or (5) (sale amounting to indirect sale by controller) applies.

Note 1:       Subsection 727(4) makes it an offence to issue or transfer securities without disclosure to investors once 20 issues or transfers have occurred or $2 million has been raised.

Note 2:       Under section 740 ASIC may make a determination aggregating the transactions of bodies that ASIC considers to be closely related.

             (2)  For the purposes of subsection (1), a personal offer is one that:

                     (a)  may only be accepted by the person to whom it is made; and

                     (b)  is made to a person who is likely to be interested in the offer, having regard to:

                              (i)  previous contact between the person making the offer and that person; or

                             (ii)  some professional or other connection between the person making the offer and that person; or

                            (iii)  statements or actions by that person that indicate that they are interested in offers of that kind.

             (3)  An offer by a body to issue securities:

                     (a)  results in a breach of the 20 investors ceiling if it results in the number of people to whom securities of the body have been issued exceeding 20 in any 12 month period; and

                     (b)  results in a breach of the $2 million ceiling if it results in the amount raised by the body by issuing securities exceeding $2 million in any 12 month period.

             (4)  An offer by a person to transfer a body’s securities:

                     (a)  results in a breach of the 20 investors ceiling if it results in the number of people to whom the person sells securities of the body exceeding 20 in any 12 month period; and

                     (b)  results in a breach of the $2 million ceiling if it results in the amount raised by the person from selling the body’s securities exceeding $2 million in any 12 month period.

             (5)  In counting issues and sales of the body’s securities, and the amount raised from issues and sales, for the purposes of subsection (1), disregard issues and sales that result from offers that:

                     (a)  do not need a disclosure document because of any other subsection of this section; or

                     (b)  are not received in Australia; or

                     (c)  are made under a disclosure document.

Note:          Also see provisions on restrictions on advertising (section 734) and securities hawking provisions (Part 6D.3).

             (6)  In counting issues and sales of the body’s securities, and the amount raised from issues and sales, for the purposes of subsection (1), disregard any issues and sales made by a body if:

                     (a)  the body was a managed investment scheme (but not a registered managed investment scheme) at the time that the offer of interests in the scheme that resulted in the issues or sales was made; and

                     (b)  the body became a registered managed investment scheme within 12 months after that offer was made; and

                     (c)  the offer would have been exempted under any other subsection of this section if the managed investment scheme had been a registered managed investment scheme at the time that the offer was made.

             (7)  In working out the amount of money raised by the body by issuing securities, include the following:

                     (a)  the amount payable for the securities at the time when they are issued

                     (b)  if the securities are shares issued partly‑paid—any amount payable at a future time if a call is made

                     (c)  if the security is an option—any amount payable on the exercise of the option

                     (d)  if the securities carry a right to convert the securities into other securities—any amount payable on the exercise of that right.

Sophisticated investors

             (8)  An offer of a body’s securities does not need disclosure to investors under this Part if:

                     (a)  the minimum amount payable for the securities on acceptance of the offer by the person to whom the offer is made is at least $500,000; or

                     (b)  the amount payable for the securities on acceptance by the person to whom the offer is made and the amounts previously paid by the person for the body’s securities of the same class that are held by the person add up to at least $500,000; or

                     (c)  it appears from a certificate given by a qualified accountant no more than 6 months before the offer is made that the person to whom the offer is made:

                              (i)  has net assets of at least $2.5 million; or

                             (ii)  has a gross income for each of the last 2 financial years of at least $250,000 a year.

Note 1:       Section 9 defines qualified accountant.

Note 2:       Paragraph (c)—A dealer has obligations under Division 3 of Part 7.4 when making recommendations about securities and ASIC has power under section 826 to revoke a dealer’s licence if the dealer contravenes paragraph 708(8)(c).

             (9)  In calculating the amount payable, or paid, for securities for the purposes of paragraph (8)(a) or (b), disregard any amount payable, or paid, to the extent to which it is to be paid, or was paid, out of money lent by the person offering the securities or an associate.

           (10)  An offer of a body’s securities does not need disclosure to investors under this Part if:

                     (a)  the offer is made through a licensed dealer; and

                     (b)  the dealer is satisfied on reasonable grounds that the person to whom the offer is made has previous experience in investing in securities that allows them to assess:

                              (i)  the merits of the offer; and

                             (ii)  the value of the securities; and

                            (iii)  the risks involved in accepting the offer; and

                            (iv)  their own information needs; and

                             (v)  the adequacy of the information given by the person making the offer; and

                     (c)  the dealer gives the person before, or at the time when, the offer is made a written statement of the dealer’s reasons for being satisfied as to those matters; and

                     (d)  the person to whom the offer is made signs a written acknowledgment before, or at the time when, the offer is made that the dealer has not given the person a disclosure document under this Part in relation to the offer.

Professional investors

           (11)  An offer of securities does not need disclosure to investors under this Part if it is made to:

                     (a)  a person who is a licensed or exempt dealer and is acting as principal; or

                     (b)  a person who is a licensed or exempt investment adviser and is acting as principal; or

                     (c)  a body registered under the Life Insurance Act 1995; or

                     (d)  a body registered under the Financial Corporations Act 1974; or

                     (e)  a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust, or a public sector superannuation scheme within the meaning of the Superannuation Industry (Supervision) Act 1993 if the fund, trust or scheme has net assets of at least $10 million; or

                      (f)  a terminating building society within the meaning of the Financial Corporations Act 1974; or

                     (g)  a friendly society within the meaning of the Life Insurance Act 1995; or

                     (h)  a person who controls at least $10 million (including any amount held by an associate or under a trust that the person manages) for the purpose of investment in securities.

Note 1:       Section 68 defines exempt dealer and exempt investment adviser.

Note 2:       An underwriter to a securities issue or sale will generally be a licensed dealer.

Offers of securities to people associated with the body

           (12)  An offer of a body’s securities does not need disclosure to investors under this Part if it is made to:

                     (a)  an executive officer of the body or a related body or their spouse, parent, child, brother or sister; or

                     (b)  a body corporate controlled by a person referred to in paragraph (a).

Certain offers to present holder of securities

           (13)  An offer of securities for issue does not need disclosure to investors under this Part if it is:

                     (a)  an offer of fully‑paid shares in a company to 1 or more existing holders of shares in the company under a dividend reinvestment plan or bonus share plan; or

                     (b)  an offer of interests in a managed investment scheme to 1 or more existing holders of interests in the scheme if:

                              (i)  the offer is made under a distribution reinvestment plan or switching facility; or

                             (ii)  the scheme is of a kind commonly known as a cash common fund or cash management trust.

           (14)  An offer of a disclosing entity’s debentures for issue does not need disclosure to investors under this Part if the offer is made to 1 or more existing debenture holders.

Issues or sales for no consideration

           (15)  An offer of securities (other than options) does not need disclosure to investors under this Part if no consideration is to be provided for the issue or transfer of the securities.

           (16)  An offer of options does not need disclosure to investors under this Part if:

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

                     (b)  no consideration is to be provided for the underlying securities on the exercise of the option.

Compromise or arrangement under Part 5.1

           (17)  An offer of securities does not need disclosure to investors under this Part if it is made under a compromise or arrangement under Part 5.1 approved at a meeting held as a result of an order under subsection 411(1) or (1A).

Takeovers

           (18)  An offer of securities does not need disclosure to investors under this Part if it is:

                     (a)  made as consideration for an offer to acquire securities under a takeover bid under Chapter 6; and

                     (b)  accompanied by a bidder’s statement.

Note:          Although this offer does not need a disclosure document, similar disclosures must be made about the securities in the bidder’s statement under section 636.

Debentures of certain bodies

           (19)  An offer of a body’s debentures for issue or sale does not need disclosure to investors under this Part if the body is:

                     (a)  an Australian ADI; or

                     (b)  registered under the Life Insurance Act 1995.

Offers by exempt bodies

           (20)  An offer of a body’s securities does not need disclosure to investors under this Part if the body is an exempt body of this jurisdiction.

Note:          Section 66A defines exempt body.

           (21)  An offer of a body’s securities for issue does not need disclosure to investors under this Part if the body is an exempt public authority of a State or Territory.

Note:          Debentures, stock or bonds issued by a government are not securities for the purposes of this Chapter (see subsection 92(3)).


 

Division 3Types of disclosure documents

709  Prospectuses, short‑form prospectuses, profile statements and offer information statements

Prospectus or short‑form prospectus

             (1)  If an offer of securities needs disclosure to investors under this Part, a prospectus must be prepared for the offer unless subsection (4) allows an offer information statement to be used instead. Under section 712, the prospectus may simply refer to material already lodged with ASIC instead of including it.

Note:          See sections 710 to 713 for the contents of a prospectus.

Profile statement

             (2)  A profile statement for an offer may be prepared in addition to the prospectus if ASIC has approved the making of offers of that kind with a profile statement instead of a disclosure document.

Note 1:       See section 714 for the contents of a profile statement.

Note 2:       Subsection 729(2) provides that there is still liability to investors on the prospectus when a profile statement is used.

             (3)  ASIC may approve the use of profile statements for offers of securities of a particular kind. The approval may specify information to be included in the profile statement (including information about a matter referred to in paragraphs 714(1)(a) to (d)).

Offer information statement

             (4)  A body offering to issue securities may use an offer information statement for the offer instead of a prospectus if the amount of money to be raised by the body by issuing the securities, when added to all amounts previously raised by:

                     (a)  the body; or

                     (b)  a related body corporate; or

                     (c)  an entity controlled by:

                              (i)  a person who controls the body; or

                             (ii)  an associate of that person;

by issuing securities under an offer information statement is $5 million or less.

Note 1:       See section 715 for the contents of an offer information statement. The statement must include financial statements that are less that 6 months old.

Note 2:       Under section 740, ASIC may make a determination aggregating the transactions of bodies that ASIC considers to be closely related.

             (5)  In working out the amount of money to be raised by a body or entity by issuing securities, include the following:

                     (a)  the amount payable for the securities at the time when they are issued

                     (b)  if the securities are issued partly‑paid—any amount payable at a future time if a call is made

                     (c)  if the securities are options—any amount payable on the exercise of the options

                     (d)  if the securities carry a right to convert the securities into other securities—any amount payable on the exercise of that right.


 

Division 4Disclosure requirements

710  Prospectus content—general disclosure test

             (1)  A prospectus for a body’s securities must contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of the matters set out in the table below. The prospectus must contain this information:

                     (a)  only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in the prospectus; and

                     (b)  only if a person whose knowledge is relevant (see subsection (3)):

                              (i)  actually knows the information; or

                             (ii)  in the circumstances ought reasonably to have obtained the information by making enquiries.

 

Disclosures

[operative]

 

Offer

Matters

1

offer to issue (or transfer) shares, debentures or interests in a managed investment scheme

·           the rights and liabilities attaching to the securities offered

·           the assets and liabilities, financial position and performance, profits and losses and prospects of the body that is to issue (or issued) the shares, debentures or interests

2

offer to grant (or transfer) a legal or equitable interest in securities or grant (or transfer) an option over securities

·           the rights and liabilities attaching to:

‑ the interest or option

‑ the underlying securities

·           for an option—the capacity of the person making the offer to issue or deliver the underlying securities

·           if the person making the offer is:

the body that issued or is to issue the underlying securities; or

a person who controls that body;

             the assets and liabilities, financial position and performance, profits and losses and prospects of that body

·           if subsection 707(3) or (5) applies to the offer—the assets and liabilities, financial position and performance, profits and losses and prospects of the body whose securities are offered

Note:          Section 713 makes special provision for prospectuses for continuously quoted securities.

             (2)  In deciding what information should be included under subsection (1), have regard to:

                     (a)  the nature of the securities and of the body; and

                     (b)  if the securities are investments in a managed investment scheme—the nature of the scheme; and

                     (c)  the matters that likely investors may reasonably be expected to know; and

                     (d)  the fact that certain matters may reasonably be expected to be known to their professional advisers.

             (3)  For the purposes of this section, a person’s knowledge is relevant only if they are one of the following:

                     (a)  the person offering the securities

                     (b)  if the person offering the securities is a body—a director of the body

                     (c)  a proposed director of the body whose securities will be issued under the offer

                     (d)  a person named in the prospectus as an underwriter of the issue or sale

                     (e)  a person named in the prospectus as a stockbroker to the issue or sale if they participate in any way in the preparation of the prospectus

                      (f)  a person named in the prospectus with their consent as having made a statement:

                              (i)  that is included in the prospectus; or

                             (ii)  on which a statement made in the prospectus is based

                     (g)  a person named in the prospectus with their consent as having performed a particular professional or advisory function.

Note:          Section 729 says who is liable for misstatements in, and omissions from, a disclosure document.

711  Prospectus content—specific disclosures

Terms and conditions of offer

             (1)  The prospectus must set out the terms and conditions of the offer.

Disclosure of interests and fees of certain people involved in the offer

             (2)  The prospectus must set out the nature and extent of the interests (if any) that each person referred to in subsection (4) holds, or held at any time during the last 2 years, in:

                     (a)  the formation or promotion of the body; or

                     (b)  property acquired or proposed to be acquired by the body in connection with:

                              (i)  its formation or promotion; or

                             (ii)  the offer of the securities; or

                     (c)  the offer of the securities.

             (3)  The prospectus must set out the amount that anyone has paid or agreed to pay, or the nature and value of any benefit anyone has given or agreed to give:

                     (a)  to a director, or proposed director, to induce them to become, or to qualify as, a director of the body; and

                     (b)  for services provided by a person referred to in subsection (4) in connection with:

                              (i)  the formation or promotion of the body; or

                             (ii)  the offer of the securities; and

                     (c)  if the prospectus is for interests in a managed investment scheme—to the responsible entity:

                              (i)  to procure acquisitions of interests in the scheme; or

                             (ii)  for services provided under the constitution of the scheme.

To comply with this subsection it is not sufficient merely to state in the prospectus that a person has been paid or will be paid normal, usual or standard fees.

             (4)  Disclosures need to be made under subsections (2) and (3) in relation to:

                     (a)  any directors and proposed directors of the body

                     (b)  a person named in the prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the prospectus

                     (c)  if the securities are interests in a managed investment scheme—the person making the interests available and, if the person is a body, its directors

                     (d)  a promoter of the body

                     (e)  a stockbroker or underwriter (but not a sub‑underwriter) to the issue or sale.

Quotation of securities

             (5)  If the prospectus for an offer of securities states or implies that the securities are to be quoted on a stock market of a securities exchange (whether in Australia or elsewhere), the prospectus must state that:

                     (a)  the securities have been admitted to quotation on that stock market; or

                     (b)  an application for admission of the securities to quotation on that stock market has been made to that securities exchange; or

                     (c)  an application for admission of the securities to quotation on that stock market will be made to that securities exchange within 7 days after the date of the prospectus.

Note 1:       Paragraph 724(1)(b) gives times within which the person should seek and obtain admission to quotation.

Note 2:       Subsection 716(1) requires the prospectus to be dated.

Expiry date

             (6)  The prospectus must state that no securities will be issued on the basis of the prospectus after the expiry date specified in the prospectus. The expiry date must not be later than 13 months after the date of the prospectus. The expiry date of a replacement prospectus must be the same as that of the original prospectus it replaces.

Note 1:       Subsection 716(1) requires the prospectus to be dated.

Note 2:       Section 719 deals with replacement prospectuses.

Lodgment with ASIC

             (7)  The prospectus must state that:

                     (a)  a copy of the prospectus has been lodged with ASIC; and

                     (b)  ASIC takes no responsibility for the content of the prospectus.

Prescribed information

             (8)  The prospectus must set out the information required by the regulations.

712  Prospectus content—short form prospectuses

Prospectus may simply refer to material lodged with ASIC

             (1)  Instead of setting out information that is contained in a document that has been lodged with ASIC, a prospectus may simply refer to the document. The reference must:

                     (a)  identify the document or the part of the document that contains the information; and

                     (b)  inform people of their right to obtain a copy of the document (or part) under subsection (5).

             (2)  The reference must also include:

                     (a)  if the information is primarily of interest to professional analysts or advisers or investors with similar specialist information needs:

                              (i)  a description of the contents of the document (or part); and

                             (ii)  a statement to the effect that the information in the document (or part) is primarily of interest to those people; or

                     (b)  in any other case—sufficient information about the contents of the document to allow a person to whom the offer is made to decide whether to obtain a copy of the document (or part).

             (3)  The document (or part) referred to under subsection (1) is taken to be included in the prospectus.

             (4)  A person who wishes to take advantage of subsection (1) may lodge a document with ASIC even if this Law does not require the document to be lodged.

             (5)  If the prospectus is taken to include a document, or part of a document, under subsection (1), the person making the offer must give a copy of the document (or part) free of charge to anyone who asks for it during the application period of the prospectus.

713  Special prospectus content rules for continuously quoted securities

Alternative general disclosure test

             (1)  A prospectus for an offer of:

                     (a)  continuously quoted securities of a body; or

                     (b)  options to acquire continuously quoted securities of a body;

satisfies section 710 if it complies with subsections (2), (3) and (4) of this section.

             (2)  The prospectus must contain all the information investors and their professional advisers would reasonably require to make an informed assessment of:

                     (a)  the effect of the offer on the body; and

                     (b)  if the securities are interests in a managed investment scheme—the effect of the offer on the scheme; and

                     (c)  the rights and liabilities attaching to the securities offered; and

                     (d)  if the securities are options—the rights and liabilities attaching to:

                              (i)  the options themselves; and

                             (ii)  the underlying securities.

The prospectus must contain this information only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in the prospectus.

             (3)  The prospectus must state that:

                     (a)  as a disclosing entity, the body or scheme is subject to regular reporting and disclosure obligations; and

                     (b)  copies of documents lodged with ASIC in relation to the body may be obtained from, or inspected at, an ASIC office.

             (4)  The prospectus must either:

                     (a)  inform people of their right to obtain a copy of any of the following documents:

                              (i)  the annual financial report most recently lodged with ASIC by the body or scheme

                             (ii)  any half‑year financial report lodged with ASIC by the body or scheme after the lodgment of that annual financial report and before the lodgment of the copy of the prospectus with ASIC

                            (iii)  any continuous disclosure notices given by the body or scheme after the lodgment of that annual financial report and before the lodgment of the copy of the prospectus with ASIC; or

                     (b)  include, or be accompanied by, a copy of the document.

If the prospectus informs people of their right to obtain a copy of the document, the person making the offer must give a copy of the document free of charge to anyone who asks for it during the application period for the prospectus.

Information excluded from continuous disclosure notice

             (5)  Information about the offer must also be set out in the prospectus if the information:

                     (a)  has been excluded from a continuous disclosure notice in accordance with the listing rules of the securities exchange to which the notice was given; and

                     (b)  is information that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of:

                              (i)  the assets and liabilities, financial position and performance, profits and losses and prospects of the body; and

                             (ii)  the rights and liabilities attaching to the securities being offered.

The prospectus must contain this information only to the extent to which it is reasonable for investors and their professional advisers to expect to find the information in the prospectus.

ASIC power to exclude entity from this section

             (6)  ASIC may determine in writing that a body or scheme may not rely on this section if it is satisfied that, in the previous 12 months, any of the following provisions were contravened in relation to the body or scheme:

                     (a)  the provisions of Chapter 2M

                     (b)  section 1001A

                     (c)  section 724

                     (d)  section 728.

ASIC must publish a copy of the determination in the Gazette. While the determination is in force, section 710 and not this section applies to securities of the body or scheme.

714  Contents of profile statement

             (1)  A profile statement must:

                     (a)  identify the body and the nature of the securities; and

                     (b)  state the nature of the risks involved in investing in the securities; and

                     (c)  give details of all amounts payable in respect of the securities (including any amounts by way of fee, commission or charge); and

                     (d)  state that the person given the profile statement is entitled to a copy of the prospectus free of charge; and

                     (e)  state that:

                              (i)  a copy of the statement has been lodged with ASIC; and

                             (ii)  ASIC takes no responsibility for the content of the statement; and

                      (f)  give any other information required by the regulations or by ASIC approval under subsection 709(3).

             (2)  The profile statement must state that no securities will be issued on the basis of the statement after the expiry date specified in the statement. The expiry date must not be later than 13 months after the date of the prospectus. The expiry date of a replacement statement must be the same as that of the original statement it replaces.

Note 1:       Subsection 716(1) requires the profile statement to be dated.

Note 2:       Section 719 deals with supplementary and replacement profile statements.

715  Contents of offer information statement

             (1)  An offer information statement for the issue of a body’s securities must:

                     (a)  identify the body and the nature of the securities; and

                     (b)  describe the body’s business; and

                     (c)  describe what the funds raised by the offers are to be used for; and

                     (d)  state the nature of the risks involved in investing in the securities; and

                     (e)  give details of all amounts payable in respect of the securities (including any amounts by way of fee, commission or charge); and

                      (f)  state that:

                              (i)  a copy of the statement has been lodged with ASIC; and

                             (ii)  ASIC takes no responsibility for the content of the statement; and

                     (g)  state that the statement is not a prospectus and that it has a lower level of disclosure requirements than a prospectus; and

                     (h)  state that investors should obtain professional investment advice before accepting the offer; and

                      (i)  include a copy of a financial report for the body; and

                      (j)  include any other information that the regulations require to be included in the statement.

             (2)  The financial report included under paragraph (1)(i) must:

                     (a)  be a report for a 12 month period and have a balance date that occurs within the last 6 months before the securities are first offered under the statement; and

                     (b)  be prepared in accordance with the accounting standards; and

                     (c)  be audited.

             (3)  The statement must state that no securities will be issued on the basis of the statement after the expiry date specified in the statement. The expiry date must not be later than 13 months after the date of the statement. The expiry date of a replacement statement must be the same as that of the original statement it replaces.

Note 1:       Subsection 716(1) requires the statement to be dated.

Note 2:       Section 719 deals with replacement statements.

716  Disclosure document date and consents

Date of disclosure document

             (1)  A disclosure document must be dated. The date is the date on which it is lodged with ASIC.

Consent of person to whom statement attributed

             (2)  A disclosure document may only include a statement by a person, or a statement said in the document to be based on a statement by a person, if:

                     (a)  the person has consented to the statement being included in the document in the form and context in which it is included; and

                     (b)  the document states that the person has given this consent; and

                     (c)  the person has not withdrawn this consent before the document is lodged with ASIC.


 

Division 5Procedure for offering securities

717  Overview of procedure for offering securities

                   The following table summarises what a person who wants to offer securities must do to make an offer of securities that needs disclosure to investors under this Part and gives signposts to relevant sections:

 

Offering securities (disclosure documents and procedure)

 

Action required

Sections

Comments and related sections

1

Prepare disclosure document, making sure that it:

·    sets out all the information required

·    does not contain any misleading or deceptive statements

·    is dated

and that the directors consent to the disclosure document.

710

711

712

713

714

715

716

Section 728 prohibits offering securities under a disclosure document that is materially deficient.

Section 729 deals with the liability for breaches of this prohibition.

Sections 731, 732 and 733 set out defences.

2

Lodge the disclosure document with ASIC

718

Subsection 727(3) prohibits processing applications for non‑quoted securities for 7 days after the disclosure document is lodged.

3

Offer the securities, making sure that the offer and any application form is either included in or accompanies:

·    the disclosure document; or

·    a profile statement if ASIC has approved the use of a profile statement for offers of that kind.

721

Sections 727 and 728 make it an offence to:

·    offer securities without a disclosure document

·    offer securities if the disclosure document is materially deficient.

Subsection 729(3) deals with liability on the prospectus if a profile statement is used.

The securities hawking provisions (section 736) restrict the way in which the securities can be offered.

4

If it is found that the disclosure document lodged was deficient or a significant new matter arises, either:

·    lodge a supplementary or replacement document under section 719; or

·    return money to applicants under section 724.

719

724

Section 728 prohibits making offers after becoming aware of a material deficiency in the disclosure document or a significant new matter.

Section 730 requires people liable on the disclosure document to inform the person making the offer about material deficiencies and new matters.

5

Hold application money received on trust until the securities are issued or transferred or the money returned.

722

 

Investors may have a right to have their money returned if certain events occur (see sections 724, 737 and 738).

6

Issue or transfer the securities, making sure that:

·    the investor used an application form distributed with the disclosure document; and

·    the disclosure document is current and not materially deficient; and

·    any minimum subscription condition has been satisfied.

723

Section 721 says which disclosure document must be distributed with the application form.

Section 729 identifies the people who may be liable if:

·    securities are issued in response to an improper application form; or

·    the disclosure document is not current or is materially deficient.

Sections 731, 732 and 733 provide defences for the contraventions.

Section 737 provides remedies for an investor.

718  Lodging of disclosure document

                   A disclosure document to be used for an offer of securities must be lodged with ASIC.

Note 1:       Subsection 727(3) makes it an offence to process applications for non‑quoted securities under an offer that needs a disclosure document until 7 days after the disclosure document is lodged.

Note 2:       See section 720 for the consents that need to be obtained before lodgment.

Note 3:       Section 351 says what signatures are necessary for documents that are to be lodged with ASIC.

719  Lodging supplementary or replacement document

Need for a supplementary or replacement document

             (1)  If the person making the offer becomes aware of:

                     (a)  a misleading or deceptive statement in the disclosure document; or

                     (b)  an omission from the disclosure document of information required by section 710, 711, 712, 713, 714 or 715; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the disclosure document was lodged; and

                             (ii)  would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged;

that is materially adverse from the point of view of an investor, the person may lodge a supplementary or replacement document with ASIC.

Note 1:       Section 728 makes it an offence to continue making offers after the person has become aware of a misleading or deceptive statement, omission or new circumstance that is materially adverse from the point of view of an investor unless the deficiency is corrected.

Note 2:       Because of section 712, a prospectus may be taken to include information in another document. This should be taken into account when considering whether the prospectus is deficient.

Note 3:       The power to issue a supplementary or replacement document is not limited to the situations dealt with in this section.

Note 4:       This section applies to a document that has already been previously supplemented or replaced.

Note 5:       See section 720 for the consents that need to be obtained before lodgment.

Form of supplementary document

             (2)  At the beginning of a supplementary document, there must be:

                     (a)  a statement that it is a supplementary document; and

                     (b)  an identification of the disclosure document it supplements; and

                     (c)  an identification of any previous supplementary documents lodged with ASIC in relation to the offer; and

                     (d)  a statement that it is to be read together with the disclosure document it supplements and any previous supplementary documents.

The supplementary document must be dated. The date is the date on which it is lodged with ASIC.

Form of replacement document

             (3)  At the beginning of a replacement document, there must be:

                     (a)  a statement that it is a replacement document; and

                     (b)  an identification of the disclosure document it replaces.

The replacement document must be dated. The date is the date on which it is lodged with ASIC.

Consequences of lodging a supplementary document

             (4)  If a supplementary document is lodged with ASIC, the disclosure document is taken to be the disclosure document together with the supplementary document for the purposes of the application of this Chapter to events that occur after the lodgment.

Note:          This subsection means, for example, that offers made after lodgment of the supplementary document must be accompanied by copies of both the original disclosure document and the supplementary document.

Consequences of lodging a replacement document

             (5)  If a replacement document is lodged with ASIC, the disclosure document is taken to be the replacement document for the purposes of the application of this Chapter to events that occur after the lodgment.

Note:          This subsection means, for example, that offers made after lodgment of the replacement document must be accompanied by copies of the replacement document and not the original disclosure document.

720  Consents needed for lodgment

Consents for issue offers

                   The lodgment of a disclosure document, or a supplementary or replacement document, for the offer of a body’s securities requires the consent of:

 

Consents required for lodgment

[operative]

 

Type of offer

People whose consent is required

 

1

Issue offers

offer of securities for issue

 

every director of the body

every person named in the document as a proposed director of the body

if securities interests in a managed investment scheme made available by a body—every director of that body

if securities interests in a managed investment scheme made available by an individual—that individual

 

2

sale offers (sale by controller)

offer of securities for sale that needs a disclosure document because of subsection 707(2)

 

if seller an individual—that individual

if seller a body—every director of the body



3

sale offers (sale amounting to indirect issue)

offer of securities for sale that needs a disclosure document because of subsection 707(3)



every director of the body whose securities are offered for sale

if seller an individual—that individual

if seller a body—every director of the body



4

 

sale offers (sale amounting to indirect sale by controller)

offer of securities for sale that needs a disclosure document because of subsection 707(5)



if seller an individual—that individual

if seller a body—every director of the body

if individual controls the body whose securities are offered for sale—that individual

if body controls the body whose securities are offered for sale—every director of the controlling body

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

Offers using prospectus alone

             (1)  Offers of securities for which a prospectus is being used must be made in, or accompanied by, the prospectus unless subsection (2) allows a profile statement to be used instead.

Note 1:       Subsection 727(1) makes it an offence to make an offer of securities unless the offer is made in or accompanied by the disclosure document and subsection 723(1) makes it an offence to issue securities unless they are applied for on a form that was issued in or together with the disclosure document.

Note 2:       Section 736 makes it an offence to make unsolicited offers in a way that amounts to securities hawking.

Note 3:       Section 728 makes it an offence for a person to offer securities if the disclosure document is deficient in a way that is material from the point of view of an investor.

Offers using prospectus and profile statement

             (2)  An offer of securities may be made in, or accompanied by, a profile statement if:

                     (a)  under subsection 709(3), ASIC has approved the making of offers of that kind with a profile statement instead of a prospectus; and

                     (b)  the profile statement complies with the requirements specified in ASIC approval.

             (3)  If the offer that is made to a person is made in or accompanied by a profile statement, the person making the offer must give the person a copy of the prospectus free of charge if the person asks for it.

Offers using offer information statement

             (4)  Offers for which an offer information statement is being used must be made in, or accompanied by, the offer information statement.

Note 1:       Subsection 727(1) makes it an offence to make an offer of securities unless the offer is made in or accompanied by the disclosure document and subsection 723(1) makes it an offence to issue securities unless they are applied for on a form that was issued in or together with the disclosure document.

Note 2:       Section 736 makes it an offence to make unsolicited offers in a way that amounts to securities hawking.

Note 3:       Section 728 makes it an offence for a person to offer securities if the disclosure document is deficient in a way that is material from the point of view of an investor.

722  Application money to be held on trust

             (1)  If a person offers securities for issue or sale under a disclosure document, the person must hold:

                     (a)  all application money received from people applying for securities under the disclosure document; and

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

in trust under this section for the applicants until:

                     (c)  the securities are issued or transferred; or

                     (d)  the money is returned to the applicants.

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

723  Issuing or transferring the securities under a disclosure document

Applications must be made on form included in, or accompanied by, disclosure document

             (1)  If an offer of securities needs a disclosure document, the securities may only be issued or transferred in response to an application form. The securities may only be issued or transferred if the person issuing or transferring them has reasonable grounds to believe that:

                     (a)  the form was included in, or accompanied by:

                              (i)  the disclosure document; or

                             (ii)  if subsection 721(2) allows a profile statement to be used—the prospectus or the profile statement;

                            when the form was distributed by the person issuing or transferring the securities; or

                     (b)  the form was copied, or directly derived, by the person making the application from a form referred to in paragraph (a).

Minimum subscription condition must be fulfilled before issue or transfer

             (2)  If a disclosure document for an offer of securities states that the securities will not be issued or transferred unless:

                     (a)  applications for a minimum number of the securities are received; or

                     (b)  a minimum amount is raised;

the person making the offer must not issue or transfer any of the securities until that condition is satisfied. For the purpose of working out whether the condition has been satisfied, a person who has agreed to take securities as underwriter is taken to have applied for those securities.

Note 1:       Under section 722, the application money must be held in trust until the issue or transfer of the securities.

Note 2:       This subsection prevents the issue or transfer of the securities not only to those who apply for them in response to the disclosure document but also to those who do not need to apply for them (for example, because they are to take the securities under an underwriting agreement).

Issue or transfer void if quotation condition not fulfilled

             (3)  If a disclosure document for an offer of securities states or implies that the securities are to be quoted on a stock market of a securities exchange (whether in Australia or elsewhere) and:

                     (a)  an application for the admission of the securities to quotation is not made within 7 days after the date of the disclosure document; or

                     (b)  the securities are not admitted to quotation within 3 months after the date of the disclosure document;

then:

                     (c)  an issue or transfer of securities in response to an application made under the disclosure document is void; and

                     (d)  the person offering the securities must return the money received by the person from the applicants as soon as practicable.

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

             (1)  If a person offers securities under a disclosure document and:

                     (a)  the disclosure document states that the securities will not be issued or transferred unless:

                              (i)  applications for a minimum number of the securities are received; or

                             (ii)  a minimum amount raised;

                            and that condition is not satisfied within 4 months after the date of the disclosure document; or

                     (b)  the disclosure document states or implies that the securities are to be quoted on a stock market of a securities exchange (whether in Australia or elsewhere) and:

                              (i)  an application for the admission to quotation is not made within 7 days after the date of the disclosure document; or

                             (ii)  the securities are not admitted to quotation within 3 months after the date of the disclosure document; or

                     (c)  the person becomes aware that:

                              (i)  the disclosure document contains a misleading or deceptive statement; or

                             (ii)  there is an omission from the disclosure document of information required by section 710, 711, 712, 713, 714 or 715;

                            that is materially adverse from the point of view of an investor; or

                     (d)  the person becomes aware of a new circumstance that:

                              (i)  has arisen since the disclosure document was lodged; and

                             (ii)  would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged; and

                            (iii)  is materially adverse from the point of view of an investor;

the person must deal under subsection (2) with any applications for the securities made under the disclosure document that have not resulted in an issue or transfer of the securities. For the purpose of working out whether a condition referred to in paragraph (a) has been satisfied, a person who has agreed to take securities as underwriter is taken to have applied for those securities.

             (2)  The person must either:

                     (a)  repay the money received by the person from the applicants; or

                     (b)  give the applicants:

                              (i)  the documents required by subsection (3); and

                             (ii)  1 month to withdraw their application and be repaid; or

                     (c)  issue or transfer the securities to the applicants and give them:

                              (i)  the documents required by subsection (3); and

                             (ii)  1 month to withdraw their application and be repaid.

Note:          Section 719 deals with lodging supplementary and replacement documents. Section 728 makes it an offence for a person to offer securities if the disclosure document is deficient in a way that is material from the point of view of an investor.

             (3)  The documents to be given are set out in the following table:

 

Documents to be given

[operative]

 

Circumstances

Documents

1

the sole disclosure document is a prospectus

a supplementary or replacement prospectus that corrects the deficiency or changes the terms of the offer

2

the disclosure documents are a prospectus and a profile statement and subsection (1) applies to the prospectus

a statement that sets out the changes needed to the prospectus to correct the deficiency or change the terms of offer; and

a statement that the person is entitled to a copy of the prospectus free of charge

3

the disclosure documents are a prospectus and a profile statement and subsection (1) applies to the profile statement

Note that item 2 and this item may both apply to the offer.

a supplementary or replacement profile statement that corrects the deficiency or changes the terms of the offer

4

the disclosure document is an offer information statement

a supplementary or replacement offer information statement that corrects the deficiency or changes the terms of the offer

725  Expiration of disclosure document

             (1)  If a person offers securities under a disclosure document and the disclosure document passes its expiry date, the person must deal with applications for the securities under the document in accordance with subsections (2) and (3).

             (2)  If an application is received on or before the expiry date, the person may issue or transfer securities to the applicant.

Note:          Subsection 723(1) (when read with subsections 719(4) and (5)) requires the person issuing or transferring the securities to have reasonable grounds to believe that the application form was included in, or accompanied by, a disclosure document that was current at the time.

             (3)  If an application is received after the expiry date, the person must either:

                     (a)  return any money received by the person from the applicant; or

                     (b)  give the applicant:

                              (i)  a new disclosure document; and

                             (ii)  1 month to withdraw their application and be repaid; or

                     (c)  issue or transfer the securities to the applicant and give them:

                              (i)  a new disclosure document; and

                             (ii)  1 month to withdraw their application and be repaid.


 

Part 6D.3Prohibitions, liabilities and remedies

Division 1Prohibitions and liabilities

726  Offering securities in a body that does not exist

                   A person must not offer securities of:

                     (a)  a body that has not been formed or does not exist; or

                     (b)  a managed investment scheme that needs to be, or will need to be, registered and that has not been registered;

if the offer would need disclosure to investors under Part 6D.2 if the body or scheme did exist or had been registered. This is so even if it is proposed to form, incorporate or register the body or scheme.

727  Offering securities without a current disclosure document

Offer of securities needs lodged disclosure document

             (1)  A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless a disclosure document for the offer has been lodged with ASIC.

Offer form to be included in or accompanied by disclosure document

             (2)  A person must not make an offer of securities, or distribute an application form for an offer of securities, that needs disclosure to investors under Part 6D.2 unless:

                     (a)  if a prospectus is used for the offer—the offer or form is:

                              (i)  included in the prospectus; or

                             (ii)  accompanied by a copy of the prospectus; or

                     (b)  if both a prospectus and a profile statement are used for the offer—the offer or form is:

                              (i)  included in the prospectus or profile statement; or

                             (ii)  accompanied by a copy of the prospectus or profile statement; or

                     (c)  if an offer information statement is used for the offer—the offer or form is:

                              (i)  included in the statement; or

                             (ii)  accompanied by a copy of the statement.

Note:          Sections 706, 707 and 708 say when the offer needs disclosure to investors under Part 6D.2.

Non‑quoted securities—waiting period after lodgment before processing applications for securities

             (3)  A person must not accept an application for, or issue or transfer, non‑quoted securities offered under a disclosure document until the period of 7 days after lodgment of the disclosure document has ended. ASIC may extend the period by notice in writing to the person offering the securities. The period as extended must end no more than 14 days after lodgment.

Issue or transfer not to breach section 708 ceiling

             (4)  If a person relies on subsection 708(1) to make offers of securities without disclosure to investors under Part 6D.2, the person must not issue or transfer securities without disclosure to investors under that Part if the issue or transfer would result in a breach of the 20 investors ceiling or the $2 million ceiling (see subsections 708(3), (4), (5), (6) and (7)).

728  Misstatement in, or omission from, disclosure document

Misleading or deceptive statements, omissions and new matters

             (1)  A person must not offer securities under a disclosure document if there is:

                     (a)  a misleading or deceptive statement in:

                              (i)  the disclosure document; or

                             (ii)  any application form that accompanies the disclosure document; or

                            (iii)  any document that contains the offer if the offer is not in the disclosure document or the application form; or

                     (b)  an omission from the disclosure document of material required by section 710, 711, 712, 713, 714 or 715; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the disclosure document was lodged; and

                             (ii)  would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged.

Note 1:       The person may make further offers after making up the deficiency in the current disclosure document by lodging a supplementary or replacement document.

Note 2:       See sections 731, 732 and 733 for defences.

Note 3:       Section 995 imposes liabilities in respect of other conduct related to the offering of the securities.

Forecasts and other forward‑looking statements

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

Offence if statement, omission or new matter materially adverse

             (3)  A person commits an offence if they contravene subsection (1) and:

                     (a)  the misleading or deceptive statement; or

                     (b)  the omission or new circumstance;

is materially adverse from the point of view of an investor.

729  Right to recover for loss or damage resulting from contravention

Right to compensation

             (1)  A person who suffers loss or damage because an offer of securities under a disclosure document contravenes subsection 728(1) may recover the amount of the loss or damage from a person referred to in the following table if the loss or damage is one that the table makes the person liable for. This is so even if the person did not commit, and was not involved in, the contravention.

 

People liable on disclosure document

[operative]

 

These people...

are liable for loss or damage caused by...

1

the person making the offer

any contravention of subsection 728(1) in relation to the disclosure document

2

each director of the body making the offer if the offer is made by a body

any contravention of subsection 728(1) in relation to the disclosure document

3

a person named in the disclosure document with their consent as a proposed director of the body whose securities are being offered

any contravention of subsection 728(1) in relation to the disclosure document

4

an underwriter (but not a sub‑underwriter) to the issue or sale named in the disclosure document with their consent

any contravention of subsection 728(1) in relation to the disclosure document

5

a person named in the disclosure document with their consent as having made a statement:

(a) that is included in the disclosure document; or

(b) on which a statement made in the disclosure document is based

the inclusion of the statement in the disclosure document

6

a person who contravenes, or is involved in the contravention of, subsection 728(1)

that contravention

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

             (2)  A person who acquires securities as a result of an offer that was accompanied by a profile statement is taken to have acquired the securities in reliance on both the profile statement and the prospectus for the offer.

             (3)  An action under subsection (1) may begin at any time within 6 years after the day on which the cause of action arose.

             (4)  This Part does not affect any liability that a person has under any other law.

Note:          Conduct that contravenes subsection 728(1) is expressly excluded from the operation of section 995.

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

                   A person referred to in the table in section 729 must notify the person making the offer in writing as soon as practicable if they become aware during the application period that:

                     (a)  a material statement in the disclosure document is misleading or deceptive; or

                     (b)  there is a material omission from the disclosure document of material required by section 710, 711, 712, 713, 714 or 715; or

                     (c)  a material new circumstance that:

                              (i)  has arisen since the disclosure document was lodged; and

                             (ii)  would have been required by section 710, 711, 712, 713, 714 or 715 to be included in the disclosure document if it had arisen before the disclosure document was lodged.

731  Due diligence defence for prospectuses

Reasonable inquiries and reasonable belief—statements

             (1)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention of subsection 728(1), because of a misleading or deceptive statement in a prospectus if the person proves that they:

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

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

Reasonable inquiries and reasonable belief—omissions

             (2)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention of subsection 728(1), because of an omission from a prospectus in relation to a particular matter if the person proves that they:

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

                     (b)  after doing so, believed on reasonable grounds that there was no omission from the prospectus in relation to that matter.

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

Not knowing statement misleading or deceptive

             (1)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention of subsection 728(1), because of a misleading or deceptive statement in an offer information statement or profile statement if the person proves that they did not know that the statement was misleading or deceptive.

Not knowing there was an omission

             (2)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention of subsection 728(1), because of an omission from an offer information statement or profile statement in relation to a particular matter if the person proves that they did not know that there was an omission from the statement in relation to that matter.

733  General defences for all disclosure documents

Reasonable reliance on information given by someone else—statements and omissions

             (1)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention against subsection 728(1), because of a misleading or deceptive statement in, or an omission from, a disclosure document if the person proves that they placed reasonable reliance on information given to them by:

                     (a)  if the person is a body—someone other than a director, employee or agent of the body; or

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

             (2)  For the purposes of subsection (1), a person is not the agent of a body or individual merely because they perform a particular professional or advisory function for the body or individual.

Withdrawal of consent—statements and omissions

             (3)  A person who is named in a disclosure document as:

                     (a)  being a proposed director or underwriter; or

                     (b)  making a statement included in the document; or

                     (c)  making a statement on the basis of which a statement is included in the document;

does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention against subsection 728(1), because of a misleading or deceptive statement in, or an omission from, a disclosure document if the person proves that they publicly withdrew their consent to being named in the document in that way.

Unawareness of new matter

             (4)  A person does not commit an offence against subsection 728(3), and is not liable under section 729 for a contravention of subsection 728(1), because of a new circumstance that has arisen since the disclosure document was lodged if the person proves that they were not aware of the matter.

734  Restrictions on advertising and publicity

No advertising or publicity for offers covered by the exception for 20 issues in 12 months

             (1)  A person must not:

                     (a)  advertise; or

                     (b)  publish a statement that directly or indirectly refers to;

an offer, or intended offer, of securities that would need a disclosure document but for subsection 708(1) (exception for 20 issues in 12 months).

Advertising or publicity for offers that need a disclosure document

             (2)  If an offer, or intended offer, of securities needs a disclosure document, a person must not:

                     (a)  advertise the offer or intended offer; or

                     (b)  publish a statement that:

                              (i)  directly or indirectly refers to the offer or intended offer; or

                             (ii)  is reasonably likely to induce people to apply for the securities;

unless the advertisement or publication is authorised by subsection (4), (5), (6) or (7).

Image advertising

             (3)  In deciding whether a statement:

                     (a)  indirectly refers to an offer, or intended offer, of securities; or

                     (b)  is reasonably likely to induce people to apply for securities;

have regard to whether the statement:

                     (c)  forms part of the normal advertising of a body’s products or services and is genuinely directed at maintaining its existing customers, or attracting new customers, for those products or services; and

                     (d)  communicates information that materially deals with the affairs of the body; and

                     (e)  is likely to encourage investment decisions being made on the basis of the statement rather than on the basis of information contained in a disclosure document.

Dissemination of disclosure document

             (4)  A person may disseminate a disclosure document that has been lodged with ASIC without contravening subsection (2). This does not apply if an order under section 739 is in force in relation to the offer.

Advertising and publicity before the disclosure document is lodged

             (5)  Before the disclosure document is lodged, an advertisement or publication does not contravene subsection (2) if it:

                     (a)  if the offer is of securities in a class already quoted—includes a statement that:

                              (i)  a disclosure document for the offer will be made available when the securities are offered; and

                             (ii)  anyone who wishes to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document; and

                     (b)  in any other case—contains the following but nothing more:

                              (i)  a statement that identifies the offeror and the securities

                             (ii)  a statement that a disclosure document for the offer will be made available when the securities are offered

                            (iii)  a statement that anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document

                            (iv)  a statement of how to arrange to receive a copy of the disclosure document.

To satisfy paragraph (b), the advertisement or publication must include all of the statements referred to in subparagraphs (i), (ii) and (iii). It may include the statement referred to in subparagraph (iv).

Advertising and publicity after the disclosure document is lodged

             (6)  After the disclosure document is lodged, an advertisement or publication does not contravene subsection (2) if it includes a statement that:

                     (a)  the offers of the securities will be made in, or accompanied by, a copy of the disclosure document; and

                     (b)  anyone wishing to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document.

General exceptions

             (7)  An advertisement or publication does not contravene subsection (2) if it:

                     (a)  relates to an offer of securities of a listed body and consists of a notice or report by the body, or one of its officers, about its affairs to the relevant securities exchange; or

                     (b)  consists solely of a notice or report of a general meeting of the body; or

                     (c)  consists solely of a report about the body that is published by the body and:

                              (i)  does not contain information that materially affects affairs of the body other than information previously made available in a disclosure document that has been lodged, an annual report or a report referred to in paragraph (a) or (b); and

                             (ii)  does not refer (whether directly or indirectly) to the offer; or

                     (d)  is a news report or is genuine comment, in a newspaper or periodical or on radio or television relating to:

                              (i)  a disclosure document that has been lodged or information contained in such a disclosure document; or

                             (ii)  a notice or report covered by paragraph (a), (b) or (c); or

                     (e)  is a report about the securities of a body or proposed body published by someone who is not:

                              (i)  the body; or

                             (ii)  acting at the instigation of, or by arrangement with, the body; or

                            (iii)  a director of the body; or

                            (iv)  a person who has an interest in the success of the issue or sale of the securities.

Paragraphs (d) and (e) do not apply if anyone gives consideration or another benefit for publishing the report.

Liability of publishers

             (8)  A person does not contravene subsection (1) or (2) by publishing an advertisement or statement if they publish it in the ordinary course of a business of:

                     (a)  publishing a newspaper or magazine; or

                     (b)  broadcasting by radio or television;

and the person did not know and had no reason to suspect that its publication would amount to a contravention of a provision of this Chapter.

Note:          Depending on the circumstances of the publication, the person may, however, commit an offence by being involved in someone else’s contravention of subsection (1) or (2).

Pathfinder documents

             (9)  A person does not contravene subsection (1) or (2) by sending a draft disclosure document for securities to a person if an offer of the securities to the person would not require a disclosure document because of subsection 708(8) or (10) (sophisticated investors) or 708(11) (professional investors).

735  Obligation to keep consents and other documents

                   A person who offers securities under a disclosure document must keep a consent required in respect of the document by subsection 716(2) or section 720.

736  Securities hawking prohibited

             (1)  A person must not offer securities for issue or sale in the course of, or because of, an unsolicited:

                     (a)  meeting with another person; or

                     (b)  telephone call to another person;

unless the offer is exempted under subsection (2).

Note:          Section 700 extends offers to include invitations and distributing application forms.

             (2)  Subsection (1) does not prohibit an offer of securities if:

                     (a)  the offer does not need a disclosure document because of subsection 708(8) or (10) (sophisticated investors); or

                     (b)  the offer does not need a disclosure document because of subsection 708(11) (professional investors); or

                     (c)  the offer is an offer of listed securities made by telephone by a licensed securities dealer; or

                     (d)  the offer is made to a client by a licensed securities dealer through whom the client has bought or sold securities in the last 12 months.


 

Division 2Remedies

737  Remedies for investors

Right to withdraw and have money returned

             (1)  If securities are issued to a person in contravention of section 724 (situation calling for a supplementary or replacement document), the person has the right to return the securities and to have their application money repaid. This is so even if the company that issued the securities is being wound up.

             (2)  A right referred to in subsection (1) is exercisable by written notice given to the company within 1 month after the date of the issue.

             (3)  If the body or the seller does not repay the money as required by subsection (1), the directors of the body or seller are personally liable to repay the money.

738  Securities may be returned and refund obtained

                   If securities are issued or transferred to a person as a result of an offer that contravenes section 736, the person may return the securities within 1 month after the issue or transfer. If they do so, they are entitled to be repaid the amount they paid for the securities.


 

Part 6D.4ASIC’s powers

  

739  ASIC stop orders

             (1)  If ASIC is satisfied that an offer of securities under a disclosure document lodged with ASIC would contravene section 728, ASIC may order that no offers, issues, sales or transfers of the securities be made while the order is in force.

             (2)  Before making an order under subsection (1), ASIC must:

                     (a)  hold a hearing; and

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

             (3)  If ASIC considers that any delay in making an order under subsection (1) pending the holding of a hearing would be prejudicial to the public interest, ASIC may make an interim order that no offers, issues, sales or transfers of the securities be made while the interim order is in force. The interim order may be made without holding a hearing and lasts for 21 days after the day on which it is made unless revoked before then.

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

                     (a)  ASIC makes an order under subsection (1) after the conclusion of the hearing; or

                     (b)  the interim order is revoked;

whichever happens first.

             (5)  An order under subsection (1), (3) or (4) must be in writing and must be served on the person who is ordered not to offer, issue, sell or transfer securities under the disclosure document.

740  Anti‑avoidance determinations

             (1)  ASIC may determine in writing that a number of different bodies are closely related and that their transactions should be aggregated for the purposes of this Chapter. If ASIC does so:

                     (a)  an issue, sale or transfer of securities in any other bodies is taken to also be an issue, sale or transfer of the securities of each of the other bodies by those bodies; and

                     (b)  any money received from an issue, sale or transfer of securities in any of the bodies is taken to also be received by each of the other bodies from an issue, sale or transfer of its own securities.

ASIC must give written notice of the determination to each of the bodies.

             (2)  ASIC may determine in writing that the transactions of a body and of a person who controls the body should be aggregated for the purposes of this Chapter. If ASIC does so:

                     (a)  an issue of securities in the body is taken to also be the transfer of the securities by the controller; and

                     (b)  any money received from an issue of securities in the body is taken to also be received by the controller from a transfer of the securities; and

                     (c)  a sale or transfer of securities in the body by the controller is taken to also be the issue of the securities by the body; and

                     (d)  any money received from a sale or transfer of securities in the body by the controller is taken to also be received by the body from an issue of the securities.

ASIC must give written notice of the determination to the body and the controller.

741  ASIC’s power to exempt and modify

             (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.

             (2)  The exemption or declaration may do all or any of the following:

                     (a)  apply to all or specified provisions of this Chapter

                     (b)  apply to all persons, specified persons, or a specified class of persons

                     (c)  relate to all securities, specified securities or a specified class of securities

                     (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 Law or the regulations as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations made for the purposes of this Chapter; and

                     (c)  Division 12 of Part 11.2.


Chapter 7Securities

Part 7.1Interpretation

  

760  Effect of this Part

                   The provisions of this Part have effect for the purposes of this Chapter, except so far as the contrary intention appears in this Chapter.

761  Definitions

                   Unless the contrary intention appears:

authority, in relation to a government, includes an instrumentality or agency.

business rules, in relation to a body corporate, means:

                     (a)  in the case of a body corporate that conducts, or proposes to conduct, a stock market—any rules, regulations or by‑laws that are made by the body corporate, or that are contained in its constitution, and that govern:

                              (i)  the activities or conduct of that stock market; or

                             (ii)  the activities or conduct of persons in relation to that stock market;

                            other than rules, regulations or by‑laws that are listing rules of the body corporate; and

                     (b)  otherwise—the provisions of the constitution of the body corporate and any other rules, regulations or by-laws made by the body corporate.

comply with, in relation to the business rules or listing rules of a securities exchange, includes give effect to those rules.

eligible exchange means:

                     (a)  the Exchange; or

                     (b)  a securities exchange that is neither the Exchange nor an Exchange subsidiary.

listing rules, in relation to a body corporate that conducts, or proposes to conduct, a stock market, means rules, regulations or by-laws governing or relating to:

                     (a)  the admission to, or removal from, the official list of the body corporate of bodies corporate, governments, unincorporate bodies or other persons for the purpose of the quotation on the stock market of the body corporate of securities of bodies corporate, governments, unincorporate bodies or other persons and for other purposes; or

                     (b)  the activities or conduct of bodies corporate, governments, unincorporate bodies and other persons who are admitted to that list;

whether those rules, regulations or by-laws:

                     (c)  are made by the body corporate or are contained in the constitution of the body corporate; or

                     (d)  are made by another person and adopted by the body corporate.

marketable parcel, in relation to securities that are listed for quotation on the stock market of a securities exchange, means a marketable parcel of those securities within the meaning of the relevant business rules or listing rules of that securities exchange.

odd lot has the meaning given by section 763.

participating exchange means an eligible exchange that is a member of SEGC.

shares, in relation to a body corporate, includes units in shares in the body.

trading day, in relation to a stock exchange, means:

                     (a)  in the case of the Exchange—a day on which a stock market of an Exchange subsidiary; or

                     (b)  in any case—a day on which a stock market of the stock exchange;

is open for trading in securities.

trust account, in relation to a person, means, in the case of a person who holds, or has at any time held, a dealers licence, an account that a condition existing by virtue of section 866 provides or provided for the person to maintain.

762  Conduct

             (1)  A reference to engaging in conduct is a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, an agreement.

             (2)  A reference to conduct, when that expression is used as a noun otherwise than as mentioned in subsection (1), is a reference to the doing of, or the refusing to do, any act, including the making of, or the giving effect to a provision of, an agreement.

             (3)  Where, in a proceeding under this Chapter in respect of conduct engaged in by a body corporate, it is necessary to establish the state of mind of the body, it is sufficient to show that a director, servant or agent of the body, being a director, servant or agent by whom the conduct was engaged in within the scope of the person’s actual or apparent authority, had that state of mind.

             (4)  Conduct engaged in on behalf of a body corporate:

                     (a)  by a director, servant or agent of the body within the scope of the person’s actual or apparent authority; or

                     (b)  by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;

shall be deemed to have been engaged in also by the body corporate.

             (5)  Where, in a proceeding under this Chapter in respect of conduct engaged in by a person other than a body corporate, it is necessary to establish the state of mind of the person, it is sufficient to show that a servant or agent of the person, being a servant or agent by whom the conduct was engaged in within the scope of the servant’s or agent’s actual or apparent authority, had that state of mind.

             (6)  Conduct engaged in on behalf of a person other than a body corporate:

                     (a)  by a servant or agent of the person within the scope of the actual or apparent authority of the servant or agent; or

                     (b)  by any other person at the direction or with the consent or agreement (whether express or implied) of a servant or agent of the first-mentioned person, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the servant or agent;

shall be deemed to have been engaged in also by the first-mentioned person.

             (7)  A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person’s reasons for the person’s intention, opinion, belief or purpose.

763  Odd lot

             (1)  A parcel of securities constitutes an odd lot if the number of securities in that parcel is less than one marketable parcel of those securities.

             (2)  When the number of securities in a parcel of securities is greater than one marketable parcel of those securities and, after excluding so many of the securities in that parcel as constitute a marketable parcel or marketable parcels of those securities, a number of securities remains, that remaining number of securities constitutes an odd lot.

764  References to doing acts

                   In this Chapter, unless the contrary intention appears, a reference to doing any act or thing includes a reference to causing, permitting or authorising the act or thing to be done.

765  Misleading representation

             (1)  When a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the person does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

             (3)  Subsection (1) shall be deemed not to limit by implication the meaning of a reference to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.

766  Trading in securities

                   A reference to a securities exchange permitting trading in securities on a stock market of the securities exchange includes a reference to the securities exchange listing the securities for quotation, or otherwise permitting the securities to be quoted, on a stock market of the securities exchange.


 

Part 7.1AThe Australian Stock Exchange Limited

Division 1Change of company type

766A  Exchange may change its type under this Division

                   Under this Division, the Exchange may change its type to a public company limited by shares.

Note:          A change of type under this Division will override subsection 36B(2) of the Securities Industry Act 1980, so far as that subsection deems the Exchange to be a company limited by guarantee.

766B  Applying for change of type

Lodging application

             (1)  To change its type, the Exchange must lodge an application with the Commission under the Corporations Law of the Capital Territory.

Contents of the application

             (2)  The application must be accompanied by the following:

                     (a)  a copy of the 18 October 1996 special resolutions dealing with the change of type;

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

                     (c)  the following information:

                              (i)  the total number of shares to be issued upon the change of type;

                             (ii)  the amount of capital to be applied in paying up each share;

                            (iii)  the amount per share remaining unpaid;

                     (d)  a copy of proposed amendments of the constitution, business rules and listing rules of the Exchange;

                     (e)  a copy of the Minister’s written approval of the proposed amendments.

             (3)  The following provisions do not apply to the proposed amendments referred to in paragraph (2)(d):

                     (a)  section 774;

                     (b)  any requirement in the constitution, business rules or listing rules of the Exchange that would normally apply to the making of amendments of the constitution, business rules or listing rules.

766C  Change of type

             (1)  As soon as practicable after it receives an application in accordance with section 766B, the Commission must publish a notice in the Gazette, notifying a date as the date on which the change of type will take effect.

             (2)  The change of type takes effect at the beginning of the day notified in the Gazette.

             (3)  The Commission must appropriately alter the details of the Exchange’s registration and give the Exchange a new certificate of registration.

             (4)  A court is not to make an order reversing the alteration of the details of the Exchange’s registration made by the Commission under subsection (3).

766D  Effect of change of type

             (1)  The change of type does not:

                     (a)  create a new legal entity; or

                     (b)  affect the Exchange’s existing property, rights or obligations (except as provided by subsection (2)); or

                     (c)  render defective any legal proceedings.

             (2)  On the change of type, the following things happen:

                     (a)  the liability of each member and past member as a guarantor on the winding up of the Exchange is extinguished;

                     (b)  the members cease to be members of the Exchange;

                     (c)  shares are taken to be issued equally among all persons who satisfy the criteria set out in Articles 83 and 84 of the Exchange that were added by the 18 October 1996 special resolutions dealing with the change of type, and each of those persons becomes a member of the Exchange and is taken to have consented to be a member of the Exchange;

Note:       The Exchange must maintain a register of members that complies with subsection 169(3).

                     (d)  the proposed amendments of the constitution, business rules and listing rules of the Exchange take effect.

             (3)  If shares are issued according to this section, a court is not to make an order reversing the issue of the shares.

             (4)  This Division does not, by implication:

                     (a)  prevent the Exchange from changing its constitution, business rules or listing rules in accordance with this Law; or

                     (b)  prevent the Exchange from later changing its type in accordance with this Law; or

                     (c)  prevent the Exchange from being registered as a company under the Corporations Law of another jurisdiction, and ceasing to be incorporated under the Corporations Law of this jurisdiction, as provided by sections 147 and 147A.


 

Division 2Limitations on holding shares in the Exchange

766E  Unacceptable ownership situation

                   For the purposes of this Division, an unacceptable ownership situation exists if any one person’s voting power in the Exchange exceeds 5%.

766F  Causing an unacceptable ownership situation

                   A person or persons (the acquirers) are guilty of an offence if:

                     (a)  the acquirers acquire any shares in the Exchange, or enter into a relevant agreement to acquire shares in the Exchange; and

                     (b)  the acquisition has the result that:

                              (i)  a person who was not previously entitled to more than 5% of the voting shares in the Exchange becomes entitled to more than 5% of the voting shares in the Exchange; or

                             (ii)  a person who was previously entitled to more than 5% of the voting shares in the Exchange becomes entitled to a greater percentage of the voting shares in the Exchange; and

                     (c)  the acquirers knew the acquisition would have that result, or were reckless as to whether the acquisition would have that result.

766G  Exchange’s obligation to avoid unacceptable ownership situation

             (1)  The Exchange must take all reasonable steps to ensure that an unacceptable ownership situation does not exist in relation to the Exchange.

             (2)  If the Exchange knowingly or recklessly contravenes subsection (1), the Exchange is guilty of an offence.

766H  Remedial orders

             (1)  If an unacceptable ownership situation exists in relation to the Exchange, the Court may, on application by an eligible applicant, make such orders as the Court considers appropriate for the purpose of ensuring that the unacceptable ownership situation ceases to exist. For this purpose, eligible applicant means:

                     (a)  the Minister; or

                     (b)  the Commission; or

                     (c)  the Exchange; or

                     (d)  a shareholder of the Exchange.

             (2)  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.

             (3)  Subsection (2) does not, by implication, limit subsection (1).

             (4)  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.

             (5)  The Court may, by order:

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

                     (b)  suspend the operation of such an order.

766I  This Division extends to things outside Australia etc.

                   This Division applies, according to its tenor, in relation to:

                     (a)  natural persons, whether resident in this jurisdiction or in Australia or not and whether Australian citizens or not; and

                     (b)  all bodies corporate and unincorporated bodies, whether formed or carrying on business in this jurisdiction or in Australia or not; and

                     (c)  acts and omissions outside this jurisdiction, whether in Australia or not.


 

Part 7.2Securities exchanges and stock markets

  

767  Conducting unauthorised stock markets

                   A person must not:

                     (a)  establish or conduct; or

                     (b)  assist in establishing or conducting; or

                     (c)  hold out that the person conducts;

an unauthorised stock market.

769  Approval of stock exchange

             (1)  A body corporate may apply to the Commission in writing for approval by the Minister as a stock exchange.

             (2)  Subject to section 102A, the Minister may by writing approve the body as a stock exchange if, and only if, he or she is satisfied that:

                     (b)  the body’s business rules make satisfactory provision:

                              (i)  for the standards of training and experience, and other qualifications, for membership;

                             (ii)  for the exclusion from membership of:

                                        (A)  any person who is not of good character and high business integrity; and

                                        (B)  any body corporate where a director of the body corporate, a person concerned in the management of the body corporate or a person who has control, or substantial control, of the body corporate is not of good character and high integrity;

                            (iii)  for the expulsion, suspension or disciplining of a member for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of the body’s business rules, of this Chapter or of the conditions of a licence held by the member;

                            (iv)  for the monitoring of compliance with, and for enforcement of, the body’s business rules;

                             (v)  with respect to the conditions under which securities may be listed for trading on the stock market of the proposed stock exchange;

                            (vi)  with respect to the conditions governing dealings in securities by members;

                           (vii)  with respect to the class or classes of securities that may be dealt with by members; and

                           (viii)  generally for the carrying on of the business of the proposed stock exchange with due regard to the interests of the public;

                     (c)  the body has made or adopted listing rules and, where the listing rules are adopted, has made provision to the effect that an amendment to the rules so adopted made by another person is of no effect until the body adopts the amendment;

                     (d)  the listing rules made or adopted by the body make satisfactory provision:

                              (i)  with respect to conditions under which securities may be traded on the stock market of the proposed stock exchange; and

                             (ii)  generally for the protection of the interests of the public;

                     (e)  either the body will be a participating exchange or there will be enough money in the body’s fidelity fund to make the payments out of the fund that may reasonably be expected to be necessary for the purposes of Part 7.9; and

                      (f)  the interests of the public will be served by the granting of its approval.

             (3)  An approval by the Ministerial Council, under a previous law corresponding to subsection (2), of a body corporate as a stock exchange that was in force immediately before the commencement of this Part has effect as if it were an approval by the Minister under that subsection.

769A  Ongoing requirements to be observed by securities exchange

             (1)  A securities exchange must:

                     (a)  to the extent reasonably practicable, do all things that are necessary to ensure that each stock market of the exchange is an orderly and fair market; and

                     (b)  have adequate arrangements for monitoring and enforcing compliance with its business rules and listing rules; and

                     (c)  have adequate arrangements for the expulsion, suspension or disciplining of a member for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of:

                              (i)  the exchange’s business rules; or

                             (ii)  this Chapter; or

                            (iii)  the conditions of a licence held by the member; and

                     (d)  have adequate arrangements for the settlement of transactions that result from trading in securities on a stock market of the exchange; and

                     (e)  have adequate arrangements for investigating complaints by investors relating to the transaction of the business of investors on a stock market of the exchange.

             (2)  A contravention of subsection (1) is not an offence.

769B  Minister’s directions to comply with ongoing requirements

             (1)  If the Minister is of the opinion that a securities exchange is not complying with the requirements of section 769A, the Minister may publish a notice in the Gazette, directing the exchange to do specified things that the Minister believes will promote compliance by the exchange with those requirements.

             (2)  A securities exchange must comply with a direction under subsection (1).

             (3)  If a securities exchange contravenes a direction under subsection (1), the Court, on application by the Commission, may order the exchange to comply with the direction.

769C  Annual report by securities exchange about compliance with ongoing requirements

             (1)  Within 3 months after the end of each of its financial years, a securities exchange must prepare and give the Commission a report on the extent to which the exchange complied with the requirements of section 769A during the financial year. The Commission must give the report to the Minister.

             (2)  The report must be accompanied by:

                     (a)  any other information and statements prescribed by the regulations; and

                     (b)  any audit report required by the Minister under subsection (3).

             (3)  The Minister may require a securities exchange to obtain an audit report on the annual report and on any information or statements required under paragraph (2)(a). The audit report must be prepared, as the Minister requires, either by the Commission or by some other person or body nominated by the Minister.

769D  Special report by securities exchange about compliance with ongoing requirements

             (1)  The Minister may, at any time, require a securities exchange to prepare and give the Commission a special report on the extent to which the exchange is complying with the requirements of section 769A. The Commission must give the report to the Minister.

             (2)  The special report must be accompanied by any audit report required by the Minister under subsection (3).

             (3)  The Minister may require a securities exchange to obtain an audit report on the special report. The audit report must be prepared, as the Minister requires, either by the Commission or by some other person or body nominated by the Minister.

             (4)  A securities exchange must give the reports to the Commission, within the time required by the Minister.

770  Approval of approved securities organisation

             (1)  A body corporate may apply to the Commission in writing for approval by the Minister as an approved securities organisation.

             (2)  Subject to section 102A, the Minister may by writing approve the body as an approved securities organisation if, and only if, he or she is satisfied that:

                     (b)  the body’s business rules make satisfactory provision:

                              (i)  for efficient, honest, fair, competitive and informed trading in securities on the stock market or stock markets of the proposed approved securities organisation;

                             (ii)  for the expulsion, suspension or disciplining of a member for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of the body’s business rules, of this Chapter or of the conditions of a licence held by the member;

                            (iii)  for the monitoring of compliance with, and for enforcement of, the body’s business rules; and

                            (iv)  generally for the carrying on of the business of the organisation with due regard to the interests of the public;

                            and, without limiting the generality of the foregoing, make satisfactory provision in relation to such of the following matters as appear to the Minister to be relevant in relation to the application:

                             (v)  the admission of members;

                            (vi)  dealings in securities by members;

                           (vii)  the listing of securities for trading on the stock market or stock markets of the organisation;

                           (viii)  trading in securities on that stock market or those stock markets;

                            (ix)  the clearing and settlement of dealings in securities that result from trading in securities on that stock market or those stock markets;

                             (x)  the quotation of securities on, and the reporting of trading in securities on, that stock market or those stock markets;

                     (c)  the body has made or adopted listing rules and, where the listing rules are adopted, has made provision to the effect that an amendment of the rules so adopted made by another person is of no effect until the body adopts the amendment;

                     (d)  the listing rules made or adopted by the body make satisfactory provision:

                              (i)  with respect to conditions under which securities may be traded on the stock market or stock markets of the organisation; and

                             (ii)  generally for the protection of the interests of the public;

                     (e)  either the body will be a participating exchange or there will be enough money in the body’s fidelity fund to make the payments out of the fund that may reasonably be expected to be necessary for the purposes of Part 7.9; and

                      (f)  the interests of the public will be served by the granting of its approval.

             (3)  An approval by the Ministerial Council, under a previous law corresponding to subsection (2), of a body corporate as an approved securities organisation that was in force immediately before the commencement of this Part has effect as if it were an approval by the Minister under that subsection.

770A  Approval of special stock markets for unquoted prescribed interests

             (1)  The responsible entity in relation to unquoted interests in a registered scheme may apply to the Commission in writing for approval by the Minister of a stock market on which the interests (whether or not they remain unquoted) may be traded by means of an electronic trading facility.

             (2)  Subject to section 102A, the Minister may, by writing, approve the stock market if, and only if, the Minister is satisfied that:

                     (a)  the responsible entity’s business rules make satisfactory provision for the fair and orderly conduct of the stock market; and

                     (b)  those business rules make satisfactory provision for a person or partnership (the supervisor) who or that, having regard to the regulations, is independent and appropriately qualified, to monitor compliance, in relation to the stock market, with the business rules; and

                     (c)  the responsible entity has made or will make, and will maintain, satisfactory arrangements (including, for example, insurance) for meeting liabilities of the responsible entity that arise in the course of conducting the stock market; and

                     (d)  the stock market will not be used except for trading the interests in the scheme (whether or not they remain unquoted) by means of the electronic trading facility.

             (3)  The approval is subject to:

                     (a)  the conditions (if any) specified in the instrument of approval; and

                     (b)  a condition that the responsible entity will comply with the requirements (if any) of the regulations for the lodging of documents containing information relating to the interests in the scheme; and

                     (c)  a condition that the supervisor must, if the supervisor becomes aware of a contravention of the responsible entity’s business rules, notify the Commission of the contravention within 7 days of becoming aware of it; and

                     (d)  a condition that the supervisor must properly perform the duties that the supervisor has under the responsible entity’s business rules.

             (4)  The Minister may, by writing, revoke the approval if:

                     (a)  the Minister is no longer satisfied as mentioned in subsection (2); or

                     (b)  the Minister is satisfied that a condition mentioned in subsection (3) has been contravened; or

                     (c)  the Minister is otherwise satisfied that the approval should be revoked.

             (5)  In this section:

unquoted, in relation to interests in a registered scheme, means the interests are not included in any class of securities that are quoted on a stock market of a securities exchange.

770B  Section 770A stock markets—separate markets exist in relation to different kinds of prescribed interests

             (1)  For the purposes of subsections 770A(1) and (2), separate stock markets exist in relation to different kinds of interests in a registered scheme even though:

                     (a)  the stock markets are conducted by the same body corporate; and

                     (b)  the same business rules of the body corporate apply to the conduct of the stock markets.

             (2)  For the purposes of subsection (1):

                     (a)  unless paragraph (b) applies, the interests in a registered scheme constitute a kind of interest in the scheme; and

                     (b)  if a particular scheme relates to a number of different undertakings in relation to interests—the interests in the scheme are taken to be divided into a number of kinds, with each kind consisting of the interests to which a particular one of those undertakings relates.

770C  Section 770A stock markets—regulations may make additional provision

                   The regulations may make provision, in relation to section 770A stock markets, for matters of a kind dealt with in sections 774 to 779 (inclusive) and section 1114.

771  Exempt stock market

             (1)  The Minister may by writing declare a specified stock market to be, subject to any specified conditions, an exempt stock market.

             (2)  Without limiting the matters to which the Minister may have regard in considering whether or not to vary or revoke a declaration in force under subsection (1), he or she may, in so considering, have regard to a breach of a condition specified in the declaration.

             (3)  A declaration by the Ministerial Council, under a previous law corresponding to subsection (1), of a stock market as an exempt stock market that was in force immediately before the commencement of this Part has effect as if it were a declaration by the Minister under that subsection.

772  Publication of instruments executed under section 769, 770, 770A or 771

                   The Commission shall cause a copy of an instrument executed under subsection 769(2), 770(2), 770A(2) or 771(1) to be published in the Gazette.

772A  Business rules bind securities exchange and its members

                   The business rules of a securities exchange have effect, by force of this section, as a contract under seal:

                     (a)  between the exchange and each member; and

                     (b)  between a member and each other member;

under which each of those persons agrees to observe and perform the provisions of the business rules as in force for the time being, so far as those provisions are applicable to that person.

772B  Self‑listing by securities exchanges

Self‑listing allowed

             (1)  A body corporate that is a securities exchange may be included in its own official list.

Quotation of securities of securities exchange on its own stock market

             (2)  Securities of a securities exchange may be granted quotation on a stock market of the exchange if the exchange has entered into such arrangements as the Commission requires:

                     (a)  for dealing with possible conflicts of interest that might arise from the quotation of securities of the exchange on a stock market of the exchange; and

                     (b)  for the purpose of ensuring the integrity of trading in securities of the exchange.

The exchange must comply with the arrangements.

             (3)  An arrangement under subsection (2) may provide for the exchange to pay fees to the Commission (on behalf of the Commonwealth) for services provided by the Commission under the arrangement, or otherwise provided under, or for the purposes of, this section. The fees may be recovered by the Commission as a debt due to the Commonwealth.

             (4)  The listing rules of a self‑listing exchange must provide for the Commission, instead of the exchange, to make decisions and to take action (or require the exchange to take action on the Commission’s behalf) on the following matters:

                     (a)  the admission of the exchange to its own official list;

                     (b)  the removal of the exchange from its own official list;

                     (c)  granting, stopping or suspending the quotation of securities of the exchange on a stock market of the exchange.

Powers and functions of Commission

             (5)  The Commission has such powers and functions as are provided for it in arrangements made for the purposes of subsection (2) or in listing rules made for the purposes of subsection (4).

Note:          Under section 776, the Commission may require a securities exchange to provide assistance to the Commission for the performance of the Commission’s functions.

Exemptions and modifications for self‑listing exchanges

             (6)  The Commission may:

                     (a)  exempt a self‑listing exchange from a modifiable provision; or

                     (b)  declare that a modifiable provision applies to a self‑listing exchange as if specified provisions were omitted, modified or varied as specified in the declaration.

             (7)  An exemption or declaration under subsection (6) must be in writing and the Commission must publish notice of it in the Gazette.

             (8)  An exemption under subsection (6) may apply unconditionally or subject to specified conditions.

             (9)  If a self‑listing exchange is subject to conditions under subsection (8), it must comply with those conditions.

           (10)  The Court, on application by the Commission, may order a self‑listing exchange to comply with a condition in a specified way.

Definitions

           (11)  In this section:

modifiable provision means:

                     (a)  section 235 and any of the provisions of Chapters 6 and 7; or

                     (b)  regulations made for the purposes of any provision covered by paragraph (a).

self‑listing exchange means a securities exchange whose securities have been granted quotation on a stock market of the exchange.

773  Auction, by licensed auctioneer, of forfeited shares

                   For the purposes of this Part, a holder of a licence under an Australian law relating to the licensing of auctioneers does not conduct a stock market merely by conducting, on a stock market of a securities exchange, an auction of forfeited shares.

774  Commission to be notified of amendments to rules

             (1)  As soon as practicable after:

                     (a)  an amendment is made, by way of rescission, alteration or addition, to the business rules of a securities exchange; or

                     (b)  a securities exchange makes or adopts an amendment, by way of rescission, alteration or addition, to its listing rules;

the securities exchange shall lodge written notice of the amendment.

             (2)  The notice shall:

                     (a)  set out the text of the amendment;

                     (b)  specify the date on which the amendment was made or adopted; and

                     (c)  contain an explanation of the purpose of the amendment.

             (3)  If no notice is lodged under subsection (1) within 21 days after the amendment is made or adopted, the amendment ceases to have effect.

             (4)  As soon as practicable after receiving a notice, the Commission shall send a copy to the Minister.

             (5)  Within 28 days after the receipt of a notice by the Commission under subsection (4), the Minister may disallow the whole or a specified part of the amendment to which the notice relates.

             (6)  As soon as practicable after the whole or a part of an amendment is disallowed under subsection (5), the Commission shall give notice of the disallowance to the securities exchange and, upon receipt by the securities exchange of the notice, the amendment, to the extent of the disallowance, ceases to have effect.

             (7)  If:

                     (a)  a notice was duly given by a securities exchange to the NCSC before the commencement of this Part under a previous law corresponding to this section;

                     (b)  a period of 28 days after the receipt of the notice by the NCSC had not elapsed before that commencement; and

                     (c)  the Ministerial Council had not before that commencement disallowed the whole or a part of the amendment to which the notice related;

this section (other than paragraph (2)(b)) applies as if the amendment had been made or adopted, as the case may be on the date of commencement of this Part.

775  Power of Commission to prohibit trading in particular securities

          (1A)  A reference in this section to trading in securities on a stock market is a reference to trading in securities on a stock market, whether in this jurisdiction or elsewhere.

             (1)  Where the Commission forms the opinion that it is necessary to prohibit trading in particular securities of a body corporate on a stock market of a securities exchange in order to protect persons buying or selling the securities or in the interests of the public, the Commission may give written notice to the securities exchange stating that it has formed that opinion and setting out the reasons for that opinion.

             (2)  If, after receiving the notice, the securities exchange does not take action to prevent trading in the securities on a stock market of the securities exchange and the Commission is still of the opinion that it is necessary to prohibit trading in the securities on such a stock market, the Commission may, by written notice to the securities exchange, prohibit trading in the securities on such a stock market during a period of not more than 21 days.

             (3)  Where the Commission gives a notice to a securities exchange under subsection (2), the Commission shall:

                     (a)  at the same time send a copy of the notice to the body corporate together with a statement setting out the reasons for the giving of the notice; and

                     (b)  as soon as practicable give to the Minister a written report setting out the reasons for the giving of the notice and send a copy of the report to the securities exchange.

             (4)  The body corporate may request the Commission in writing to refer the matter to the Minister.

             (5)  Where a request is made under subsection (4), the Commission shall immediately refer the matter to the Minister, who may, if he or she thinks fit, direct the Commission to revoke the notice and, if such a direction is given, the Commission shall immediately revoke the notice.

             (6)  A securities exchange shall not permit trading in securities on a stock market of the securities exchange in contravention of a notice under subsection (2).

             (7)  Where a notice duly given to a securities exchange by the NCSC under a previous law corresponding to subsection (2) was in force immediately before the commencement of this Part and the period for which trading in the securities to which the notice relates on the stock market specified in the notice was prohibited by the notice had not ended before that commencement:

                     (a)  the notice shall be deemed to be a notice duly given to that securities exchange on that commencement by the Commission under that subsection and prohibiting trading in those securities on that stock market for the unexpired portion of that period;

                     (b)  a copy of the notice and a statement sent to the corporation before that commencement under a previous law corresponding to paragraph (3)(a) shall be deemed to have been duly sent by the Commission under that paragraph;

                     (c)  a written report given to the Ministerial Council before that commencement under a previous law corresponding to paragraph (3)(b) shall be deemed to have been duly given by the Commission under that paragraph to the Minister and a copy of that report sent to the securities exchange under that corresponding previous law shall be deemed to have been sent by the Commission under that paragraph;

                     (d)  any request made by the corporation before that commencement under a previous law corresponding to subsection (4) to refer the matter to the Ministerial Council shall be deemed to have been a request duly made under that subsection to refer the matter to the Minister; and

                     (e)  if the matter had been referred by the NCSC to the Ministerial Council before that commencement under a previous law corresponding to subsection (5) the matter shall be deemed to have been referred by the Commission to the Minister under that subsection.

776  Securities exchanges to provide assistance to Commission

             (1)  A securities exchange shall provide such assistance to the Commission, or to a person acting on behalf of, or with the authority of, the Commission, as the Commission reasonably requires for the performance of its functions.

             (2)  Where a securities exchange reprimands, fines, suspends, expels or otherwise takes disciplinary action against a member of the securities exchange, it shall as soon as practicable lodge written particulars of the name of the member, the reason for and nature of the action taken, the amount of the fine (if any) and the period of the suspension (if any).

          (2A)  A securities exchange that believes a person has committed, is committing or is about to commit, a serious contravention of the securities exchange’s business rules or listing rules, or the Corporations Law of this or any other jurisdiction, must, as soon as practicable, lodge a statement setting out:

                     (a)  particulars of the contravention that it believes the person has committed, is committing or is about to commit; and

                     (b)  its reasons for that belief.

          (2B)  Subject to subsection (2C), a securities exchange that makes information about a listed disclosing entity available to a stock market conducted by the securities exchange must, as soon as practicable, give the Commission a document that contains the information.

          (2C)  The regulations may provide that subsection (2B) does not apply to information of a specified kind.

             (3)  A person authorised by the Commission is entitled at all reasonable times to full and free access for any of the purposes of this Chapter to the trading floor or trading floors of a securities exchange.

             (4)  A person shall not refuse or fail, without lawful excuse, to allow a person authorised by the Commission access in accordance with subsection (3) to a trading floor of a securities exchange.

             (5)  In this section:

trading floor, in relation to a securities exchange, means a place or facility maintained or provided by the securities exchange for:

                     (a)  the making or acceptance, by members of the securities exchange, or by such members and other persons, of offers to sell, buy or exchange securities;

                     (b)  the making, by members of the securities exchange, or by such members and other persons, of offers or invitations that are intended, or may reasonably be expected, to result, whether directly or indirectly, in the making or acceptance of offers to sell, buy or exchange securities; or

                     (c)  the provision of information concerning the prices at which, or the consideration for which, particular persons, or particular classes of persons, propose, or may reasonably be expected, to sell, buy or exchange securities.

777  Power of Court to order compliance with or enforcement of business rules or listing rules of securities exchange

             (1)  Where a person who is under an obligation to comply with or enforce the business rules or listing rules of a securities exchange fails to comply with or enforce any of those business rules or listing rules, as the case may be, the Court may, on the application of the Commission, the securities exchange or a person aggrieved by the failure and after giving to the person aggrieved by the failure and the person against whom the order is sought an opportunity of being heard, make an order giving directions concerning compliance with, or enforcement of, those business rules or listing rules to:

                     (a)  that last-mentioned person; and

                     (b)  if that person is a body corporate—the directors of that body corporate.

             (2)  For the purposes of subsection (1), a body corporate that is, with its agreement, consent or acquiescence, included in the official list of a securities exchange, or an associate of such a body corporate, shall be deemed to be under an obligation to comply with the listing rules of that securities exchange to the extent to which those rules purport to apply in relation to the body corporate or associate, as the case may be.

             (3)  For the purposes of subsection (1), if a disclosing entity that is an undertaking to which interests in a registered scheme relate is, with the responsible entity’s agreement, consent or acquiescence, included in the official list of a securities exchange, the responsible entity, or an associate of the responsible entity, is taken to be under an obligation to comply with the listing rules of that securities exchange to the extent to which those rules apply to the responsible entity or associate.

             (4)  For the purposes of subsection (1), if a body corporate fails to comply with or enforce provisions of the business rules or listing rules of a securities exchange, a person who holds securities of the body corporate that are quoted on a stock market of the securities exchange is taken to be a person aggrieved by the failure.

             (5)  Subsection (4) does not limit the circumstances in which a person may be aggrieved by a failure for the purposes of subsection (1).

778  Gaming and wagering laws not applicable to certain contracts and relevant agreements

             (1)  Nothing in a law of this jurisdiction about gaming or wagering prevents the entering into of, or affects the validity or enforceability of, an option contract entered into on:

                     (a)  a stock market of a securities exchange; or

                     (b)  an exempt stock market.

             (2)  Nothing in a law of this jurisdiction about gaming or wagering prevents the entering into, or affects the validity or enforceability, of a relevant agreement of a kind prescribed for the purposes of paragraph 92A(1)(b).

779  Qualified privilege

             (1)  In this section:

delisting or suspension decision means a decision by a securities exchange:

                     (a)  whether or not to remove an entity from an official list of the exchange; or

                     (b)  whether or not to stop or suspend quotation of securities on a stock market of the exchange.

disciplinary proceeding, in relation to a securities exchange, means:

                     (a)  a proceeding under the business rules of the securities exchange that may result in the disciplining of a member of the securities exchange; or

                     (b)  an appeal under the business rules of the securities exchange from a proceeding of a kind referred to in paragraph (a).

disciplining, in relation to a member of a securities exchange, includes expulsion from, or suspension of, membership of the securities exchange.

information means information given orally, in a document or otherwise.

listed entity, in relation to a securities exchange, means an entity included in an official list of the exchange.

member, in relation to a securities exchange, includes a person who is under an obligation to comply with or enforce the business rules of the securities exchange.

rules, in relation to a securities exchange, means the exchange’s business rules or listing rules.

             (2)  A securities exchange, or a member, officer or employee of a securities exchange, has qualified privilege in respect of a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with, a disciplinary proceeding of the securities exchange.

             (3)  Where:

                     (a)  an Exchange subsidiary is acting on behalf of the Exchange; or

                     (b)  an officer or employee of an Exchange subsidiary is acting on behalf of the Exchange or of a member, officer or employee of the Exchange;

in connection with a disciplinary proceeding of the Exchange, the Exchange subsidiary and an officer or employee of the Exchange subsidiary have qualified privilege in respect of a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with, the disciplinary proceeding.

             (4)  A person has qualified privilege in respect of the publication of:

                     (a)  a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with; or

                     (b)  a document prepared, given or produced by a person, in the course of, or otherwise for the purposes of or in connection with;

a disciplinary proceeding of a securities exchange.

             (5)  A securities exchange has qualified privilege in respect of the publication of information, or a document, given to the exchange by a listed entity under a provision of this Law or of the exchange’s rules.

             (6)  Subsection (5) does not apply if:

                     (a)  this Law, or the exchange’s rules, as the case may be, expressly or impliedly authorised the entity to limit the purposes for which it gave the information or document to the exchange; and

                     (b)  when giving the information or document, the entity limited those purposes as so authorised; and

                     (c)  the publication is not solely for one or more of the limited purposes.

             (7)  A securities exchange has qualified privilege in respect of the publication of:

                     (a)  information about a request by the exchange to a listed entity for information in relation to compliance by the entity with, or a contravention by the entity of, this Law or the exchange’s rules; or

                     (b)  information, or a document, given to the exchange by a listed entity in response to such a request.

             (8)  A securities exchange has qualified privilege in respect of the publication of:

                     (a)  an oral or written statement describing a delisting or suspension decision or the reasons for, or action taken because of, such a decision; or

                     (b)  an oral or written statement to the effect that the exchange is considering whether to make such a decision; or

                     (c)  information given, or a document prepared, given or produced, by a person (whether an officer of the exchange or not) in the course of, for the purposes of, or otherwise in connection with, the exchange making such a decision.

             (9)  An officer of a securities exchange has qualified privilege in respect of an act:

                     (a)  that is done in the course of performing functions or exercising powers as an officer of the exchange; and

                     (b)  in respect of which the exchange would have qualified privilege under subsection (5), (7) or (8) if it had done the act.

           (10)  Nothing in this section limits the generality of anything else in it.


 

Part 7.2AThe Securities Clearing House

  

779A  Interpretation

                   In this Part, unless the contrary intention appears:

disciplinary proceeding, in relation to the securities clearing house, means:

                     (a)  a proceeding under the SCH business rules that may result in the disciplining of an SCH participant; or

                     (b)  an appeal under the SCH business rules from such a proceeding.

disciplining, in relation to a person in the person’s capacity as an SCH participant, includes, but is not limited to, taking action that has the effect of revoking or suspending the person’s status as an SCH participant.

779B  Approval of securities clearing house

             (1)  A body corporate may apply to the Commission in writing for approval by the Minister as the securities clearing house.

             (2)  Subject to section 102A, if a body so applies, the Minister may by writing approve the body as the securities clearing house if, and only if, he or she is satisfied that:

                     (a)  the body’s business rules:

                              (i)  include satisfactory provisions about:

                                        (A)  the facilities that the body proposes to provide for the settlement of transactions involving quoted securities or quoted rights; and

                                        (B)  the facilities that the body proposes to provide for the registration of transfers (within the meaning of Division 3 of Part 7.13) of quoted securities or quoted rights; and

                                        (C)  any other facilities that the body proposes to provide (such as facilities in relation to dealings in quoted securities or quoted rights); and

                             (ii)  include satisfactory provisions about the disciplining of persons (being persons who will be SCH participants if the approval is given) who contravene the business rules or this Chapter; and

                            (iii)  are otherwise satisfactory; and

                     (b)  the interests of the public will be served by granting the application.

             (3)  An approval comes into force on the day specified in the instrument giving the approval, being the day on which the approval is given or a later day.

             (4)  In exercising his or her powers under subsection (2), the Minister must ensure that no more than one approval is in force at any particular time.

             (5)  The Commission must cause a copy of an instrument under this section to be published in the Gazette.

779C  Commission to be notified of amendments of business rules

             (1)  As soon as practicable after the SCH business rules are amended (whether by way of rescission, alteration or addition), the securities clearing house must give written notice of the amendment to the Commission.

             (2)  A notice must:

                     (a)  set out the text of the amendment; and

                     (b)  specify the day on which the amendment was made; and

                     (c)  explain the purpose of the amendment.

             (3)  If a notice is not given as required within 21 days after an amendment is made, the amendment ceases to have effect.

             (4)  The Commission must send a copy of a notice to the Minister as soon as practicable after receiving it.

             (5)  The Minister may, within 28 days after the Commission receives a notice, disallow the whole or a specified part of the amendment to which the notice relates.

             (6)  If the Minister disallows the whole or a part of an amendment, the Commission must, as soon as practicable, give notice of the disallowance to the securities clearing house and, when the securities clearing house receives the notice, the amendment ceases to have effect to the extent of the disallowance.

779D  Securities clearing house to assist Commission

                   The securities clearing house must provide such assistance to the Commission, or to a person acting on behalf of, or with the authority of, the Commission, as the Commission reasonably requires for the performance of its functions.

779E  Securities clearing house to notify Commission of disciplinary action

                   If the securities clearing house decides to discipline an SCH participant, it must, as soon as practicable, lodge written particulars of the participant’s name and of the reason for, and nature of, the disciplinary action taken or to be taken.

779F  SCH business rules have effect as contract

             (1)  The SCH business rules have effect, by force of this section, as a contract under seal:

                     (a)  between the SCH and each issuer; and

                     (b)  between the SCH and each SCH participant; and

                     (c)  between each issuer and each SCH participant; and

                     (d)  between an SCH participant and each other SCH participant;

under which each of the persons mentioned in paragraphs (a) to (d) agrees to observe and perform the provisions of the SCH business rules as in force for the time being to the extent, and in the manner, provided by the SCH business rules.

             (2)  In this section:

issuer means an issuing body, within the meaning of Division 3 of Part 7.13, in relation to quoted securities or quoted rights.

779G  Power of Court to order compliance with provisions of SCH business rules

             (1)  If:

                     (a)  a person is bound to comply with a provision of the SCH business rules; and

                     (b)  the person contravenes the provision;

then, subject to subsection (2), the Court may, on the application of the securities clearing house, of the Commission, or of a person aggrieved by the contravention, make an order giving directions to the first-mentioned person about complying with the provision.

             (2)  The Court may not make an order giving directions to a person unless the person has been given an opportunity of being heard.

779H  Qualified privilege in respect of disciplinary proceedings

             (1)  The securities clearing house, or a member, officer or employee of the securities clearing house, or an SCH participant, has qualified privilege in respect of a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with, a disciplinary proceeding of the securities clearing house.

             (2)  A person has qualified privilege in respect of the publication of:

                     (a)  a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with; or

                     (b)  a document prepared, given or produced by a person, in the course of, or otherwise for the purposes of or in connection with;

a disciplinary proceeding of the securities clearing house.

779J  Provision of settlement facilities not a securities business etc.

             (1)  Nothing that the securities clearing house does in the course of, or in connection with, providing facilities for the settlement of transactions constitutes, for the purposes of this Law:

                     (a)  a securities business; or

                     (b)  an offer of securities for subscription or purchase; or

                     (c)  an invitation to subscribe for or buy securities.

             (2)  The securities clearing house does not, for the purposes of this Law, have a relevant interest in a security merely because of its provision of facilities for the settlement of transactions.


 

Part 7.3Participants in the securities industry

Division 1Dealers, investment advisers and operators of managed investment schemes

780  Dealers

             (1)  A person must not:

                     (a)  carry on a securities business; or

                     (b)  hold out that the person carries on a securities business;

unless the person holds a dealers licence or is an exempt dealer.

             (2)  A dealers licence may authorise a person to do either or both of the following:

                     (a)  to carry on a securities business

                     (b)  to operate:

                              (i)  a managed investment scheme; or

                             (ii)  managed investment schemes of a particular kind.

Note:          Only public companies that hold a dealers licence can be responsible entities for registered managed investment schemes (see section 601FA).

781  Investment advisers

                   A person must not:

                     (a)  carry on an investment advice business; or

                     (b)  hold out that the person is an investment adviser;

unless the person is a licensee or an exempt investment adviser.

782  Application for a licence

             (1)  A person may apply to the Commission, in the prescribed form and manner, for a dealers licence or an investment advisers licence.

             (2)  The Commission may require an applicant for a licence to give the Commission such further information in relation to the application as the Commission thinks necessary.

             (3)  An application duly made to the NCSC before the commencement of this Part under a previous law of this jurisdiction corresponding to subsection (1) that had not been dealt with by the NCSC before that commencement shall be deemed to be an application duly made to the Commission under that subsection.

783  Grant of licence to natural person

             (1)  This section has effect where a natural person applies for a licence.

             (2)  The Commission shall grant the licence if:

                     (a)  the application was made in accordance with section 782;

                     (b)  the person is not an insolvent under administration;

                     (c)  it is satisfied that the person’s educational qualifications and experience are adequate having regard to the nature of the duties of a holder of a licence of the kind applied for;

                     (d)  it has no reason to believe that the person is not of good fame and character; and

                     (e)  it has no reason to believe that the person will not perform those duties efficiently, honestly and fairly.

             (3)  Otherwise, the Commission shall refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(d) or (e), the Commission shall have regard to any conviction of the person, during the 10 years ending on the day of the application, of serious fraud.

             (5)  A licence granted under a previous law of this jurisdiction corresponding to this section and in force at the commencement of this Part shall be deemed to have been granted under this section.

784  Grant of licence to body corporate

             (1)  This section has effect where a body corporate applies for a licence.

             (2)  The Commission shall grant the licence if:

                     (a)  the application was made in accordance with section 782;

                     (b)  the applicant is not an externally-administered body corporate;

                     (c)  the Commission is satisfied that the educational qualifications and experience of each responsible officer of the applicant are adequate having regard to the duties that the officer would perform in connection with the holding of the licence; and

                     (d)  the Commission has no reason to believe that the applicant will not perform efficiently, honestly and fairly the duties of a holder of a licence of the kind applied for; and

                     (e)  if the licence applied for is a licence to operate a managed investment scheme or schemes, the applicant meets the requirements of subsection (2A), and any additional requirements determined by the ASIC under subsection (2B).

          (2A)  For the purpose of paragraph (2)(e), the ASIC must be satisfied that the value of the net tangible assets of the applicant is and will be maintained at a minimum of $50,000 or, where the value of all scheme property is greater than $10,000,000, an amount equal to 0.5% of those assets shown in the latest accounts of the scheme lodged with the ASIC, up to a maximum of $5,000,000.

          (2B)  The ASIC may determine additional requirements for the purpose of paragraph (2)(e), including, but not limited to, a requirement that scheme property be held by an agent in particular circumstances.

          (2C)  In this section:

net tangible assets means the total tangible assets of the applicant, including any guarantee approved by the ASIC, less any adjusted liabilities as shown in the latest accounts of the applicant lodged with the ASIC.

          (2D)  The ASIC, or a member of the ASIC, may exempt an applicant from the requirements of subsection (2A). This power may not be delegated. The ASIC is to provide details of any exemptions granted under this section in its annual report.

             (3)  Otherwise, the Commission shall refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(d), the Commission shall have regard, in relation to each responsible officer of the applicant, to:

                     (a)  whether or not the officer is an insolvent under administration;

                     (b)  any conviction of the officer, during the 10 years ending on the day of the application, of serious fraud;

                     (c)  any reason the Commission has to believe that the officer is not of good fame and character; and

                     (d)  any reason the Commission has to believe that the officer will not perform efficiently, honestly and fairly the duties that the officer would perform in connection with the holding of the licence.

             (5)  A licence granted under a previous law of this jurisdiction corresponding to this section and in force at the commencement of this Part shall be deemed to have been granted under this section.

785  Effect of certain provisions

             (1)  Sections 783 and 784 apply subject to sections 102A, 836, 837 and 839 and the regulations.

             (2)  Nothing in subsection 783(4) or 784(4) limits the matters to which the Commission may have regard:

                     (a)  in deciding on an application for a licence; or

                     (b)  in connection with performing or exercising any other function or power under this Part.

786  Conditions of licence

             (1)  A licence is subject to:

                     (a)  such conditions and restrictions as are prescribed; and

                     (b)  subject to section 837, such conditions and restrictions as the Commission imposes when granting the licence or at any time when the licence is in force.

             (2)  Without limiting the generality of subsection (1), conditions and restrictions referred to in paragraph (1)(a) or (b) may include:

                     (a)  conditions and restrictions relating to the limitation of the liability that may be incurred by the holder of a dealers licence in connection with a business of dealing in securities;

                     (b)  conditions and restrictions relating to the incurring and disclosure of liabilities arising otherwise than in connection with a business of dealing in securities;

                     (c)  conditions and restrictions relating to the financial position of the holder of a dealers licence, whether in relation to the business of dealing in securities carried on by the holder or otherwise;

                     (d)  a condition requiring the holder of a dealers licence or of an investment advisers licence to lodge and maintain with the Commission a security approved by the Commission for such amount not exceeding the prescribed amount as is, from time to time, determined by the Commission in relation to the holder of that licence;

                     (e)  conditions about what the holder of a licence is to do, by way of supervision and otherwise, in order to prevent the holder’s representatives from contravening:

                              (i)  a securities law; or

                             (ii)  another condition of the licence; and

                      (f)  conditions about what the holder of a licence is to do to ensure that each representative of the holder has adequate qualifications and experience having regard to what the representative will do on the holder’s behalf in connection with a securities business or investment advice business carried on by the holder.

             (3)  Without limiting the generality of paragraph (2)(c), the conditions referred to in that paragraph may include:

                     (a)  a condition that the assets of the holder of a dealers licence include, or do not include, assets of a particular kind or kinds; and

                     (b)  a condition that the sum of the values of the assets of a particular kind or kinds included in the assets of the holder of a dealers licence be not less than, or not more than, an amount ascertained in accordance with the condition.

             (4)  A condition referred to in paragraph (3)(b) may provide for the values of assets of a dealer for the purposes of the application of that condition to be ascertained in a manner specified in, or determined in accordance with, the condition.

             (5)  The provision that may be made in a condition referred to in paragraph (3)(b) for ascertaining the amount referred to in that paragraph may be, but is not limited to, a provision that the amount shall be:

                     (a)  a specified percentage of the sum of the values of all the assets of the holder of a dealers licence;

                     (b)  a specified percentage of the sum of the values of all the assets of the holder of the dealers licence that are included in a specified class or classes of those assets;

                     (c)  a specified percentage of the sum of the amounts of all the liabilities of the holder of the dealers licence; or

                     (d)  a specified percentage of the sum of the amounts of all the liabilities of the holder of the dealers licence that are included in a specified class or classes of those liabilities.

             (6)  A reference in this section to the assets of the holder of a dealers licence is a reference to all the assets of the holder of the licence, whether or not the assets are used in, or in connection with, the business of dealing in securities carried on by the holder.

             (7)  Subject to section 837, the Commission may, at any time, revoke or vary conditions or restrictions imposed under paragraph (1)(b).

             (8)  Where the Commission imposes, or varies or revokes, conditions or restrictions under this section in relation to a licence granted to a member of a securities exchange, the Commission shall inform the securities exchange and, if the member is a partner in a member firm, the member firm.

             (9)  Where a security is lodged with the Commission pursuant to a condition to which a licence is subject in accordance with paragraph (2)(d), the security may be applied by the Commission in such circumstances, for such purposes and in such manner as is prescribed.

786A  Security given under previous law

             (1)  This section applies where, immediately before the commencement of this Part:

                     (a)  a licence granted under a previous law of this jurisdiction corresponding to section 783 or 784 was in force; and

                     (b)  the licence maintained a security, under a condition to which the licence was subject in accordance with a previous law of this jurisdiction corresponding to paragraph 786(2)(d), with the local authority within the meaning of that previous law.

             (2)  After that commencement, the security has effect, with such modifications as are prescribed or the circumstances require, as if:

                     (a)  it were a security lodged and maintained under a condition to which the licence is subject in accordance with paragraph 786(2)(d); and

                     (b)  the Commission were substituted for the local authority as a party to the security; and

                     (c)  a reference in the security to the local authority were a reference to the Commission.

             (3)  Without limiting subsection 786(9), regulations for the purposes of that subsection may provide for the security to be applied in connection with an act done, an omission or event occurring, or a matter arising, before that commencement.

787  Licensee to notify breach of licence condition

             (1)  Within 1 day after the happening of an event constituting a contravention of a condition of a licence, the licensee must lodge a written notice setting out particulars of the event.

             (2)  It is a defence to a charge arising under subsection (1) if it is proved that:

                     (a)  when the licensee was required to lodge the notice, the licensee was unaware of a fact or occurrence that gave rise to the requirement; and

                     (b)  in a case where the licensee has since become aware of that fact or occurrence—the licensee lodged the notice as soon as practicable after becoming so aware.

788  Giving information and statements to Commission

             (1)  The holder of a dealers licence must lodge such written information or statements in relation to the securities business carried on, or the managed investment scheme operated, by the licensee as the Commission from time to time directs.

             (2)  If the Commission requires the holder of a dealers licence to cause a statement specified in a direction given under subsection (1) to be audited by a registered company auditor before it is lodged, the licensee must comply with the requirement.

             (3)  The Commission may extend the period for compliance with a direction given under subsection (1).

789  Register of Licence Holders

             (1)  The Commission shall keep a Register of Licence Holders for the purposes of this Chapter.

             (2)  The Commission shall include in the Register, in relation to each licence, a copy of:

                     (a)  the licence; and

                     (b)  each instrument that imposes conditions on the licence, or revokes or varies conditions of the licence, after the licence is granted.

             (3)  The Commission shall enter in the Register, in relation to each licence:

                     (a)  the name of the licensee;

                     (b)  if the licensee is a body corporate—the name of each director, and of each secretary, of the body;

                     (c)  the day on which the licence was granted;

                     (d)  in relation to each business to which the licence relates:

                              (i)  the address of the principal place at which the business is carried on;

                             (ii)  the addresses of the other places (if any) at which the business is carried on; and

                            (iii)  if the business is carried on under a name or style other than the name of the holder of the licence—that name or style;

                     (e)  particulars of any suspension of the licence; and

                      (f)  any other prescribed matters.

             (4)  Where a person no longer holds a particular licence, the Commission shall remove from the Register the documents included in it, and the particulars entered in it, in relation to that licence.

             (5)  A person may inspect and make copies of, or take extracts from, the Register.

790  Notifying change in particulars

                   The holder of a licence must, within 21 days after:

                     (a)  in the case of a dealers licence—the licensee ceases to carry on the business to which the licence relates;

                     (b)  in the case of an investment advisers licence—the licensee ceases to act as, or to hold himself, herself or itself out to be, an investment adviser; or

                     (c)  there is a change in a matter particulars of which are required by virtue of paragraph 789(3)(a), (b), (d) or (f) to be entered, in relation to the licence, in the Register of Licence Holders;

lodge written particulars, in the prescribed form, of that fact, or of that change, as the case may be.

791  Annual statement of licensee

             (1)  The holder of a licence must lodge, in respect of each year or part of a year during which the licence is in force, a statement in the prescribed form that:

                     (a)  sets out the number of persons who, when the statement is lodged, hold proper authorities from the licensee; and

                     (b)  contains any other prescribed information.

             (2)  A person who has been, but is no longer, a licensee shall lodge, in respect of each year or part of a year during which the licence was in force, a statement in the prescribed form that:

                     (a)  sets out the number of persons who, when the person last ceased to be a licensee, held proper authorities from the licensee; and

                     (b)  contains any other prescribed information.

792  Time for lodging annual statement

             (1)  A person required by subsection 791(1) to lodge a statement must lodge the statement:

                     (a)  if the licence is a dealers licence—during the period within which a profit and loss statement and balance sheet referred to in section 860 are required to be lodged; or

                     (b)  otherwise—within 1 month immediately before the anniversary of the date on which the licence was granted.

             (2)  A person required by subsection 791(2) to lodge a statement must lodge the statement within 1 month after ceasing to be a licensee.

             (3)  A person who fails to lodge a statement required by section 791 within the period specified in subsection (1) or (2), as the case requires, contravenes this section.

793  Commission may extend period for lodging statement

             (1)  The Commission may extend the period for lodging a statement under section 791.

             (2)  Where an extension was granted by the NCSC before the commencement of this Part under a previous law corresponding to this section for the purposes of a previous law corresponding to section 791 and the period as extended ends after the commencement of this Part, the extension shall be deemed to have been granted by the Commission under this section.


 

Division 2Agreements with unlicensed persons

Subdivision AAgreements affected

794  Certain persons not clients

                   A reference in this Division to a client does not include a reference to a person who is:

                     (a)  a dealer;

                     (b)  an investment adviser; or

                     (c)  one of 2 or more persons who together constitute a dealer or investment adviser.

795  Agreements with unlicensed persons

             (1)  Subdivision B applies where, during a period when a person (in this section and Subdivision B called the non-licensee) is unlicensed, the non-licensee and a client of the non-licensee enter into an agreement that:

                     (a)  constitutes, or relates to, a dealing or proposed dealing in securities; or

                     (b)  relates to advising the client about securities, or giving the client securities reports.

             (2)  Subdivision B applies to an agreement mentioned in subsection (1) whether or not anyone else is a party to the agreement.

             (3)  A person is unlicensed during a period when the person:

                     (a)  in contravention of section 780, carries on, or holds out that the person carries on, a securities business; or

                     (b)  in contravention of section 781, carries on an investment advice business or holds out that the person is an investment adviser.

Subdivision BEffect on agreements

798  Client may give notice of rescission

             (1)  Subject to this section, the client may, whether before or after completion of the agreement, give to the non-licensee a written notice stating that the client wishes to rescind the agreement.

             (2)  The client may only give a notice under this section within a reasonable period after becoming aware of the facts entitling the client to give the notice.

             (3)  The client is not entitled to give a notice under this section if the client engages in conduct by engaging in which the client would, if the entitlement so to give a notice were a right to rescind the agreement for misrepresentation by the non-licensee, be taken to have affirmed the agreement.

             (4)  The client is not entitled to give a notice under this section if, within a reasonable period before the agreement was entered into, the non-licensee informed the client (whether or not in writing) that:

                     (a)  the non-licensee did not hold a dealers licence; or

                     (b)  the non-licensee did not hold a dealers licence and did not hold an investment advisers licence;

as the case requires.

             (5)  If, at a time when a dealers licence or investment advisers licence held by the non-licensee was suspended, the non-licensee informed the client that the licence was suspended, the non-licensee is to be taken for the purposes of subsection (4) to have informed the client at that time that the non-licensee did not hold a dealers licence or investment advisers licence, as the case may be.

             (6)  None of subsections (2), (3) and (4) limits the generality of either of the others.

             (7)  Subject to this section, the client may give a notice under this section whether or not:

                     (a)  the notice will result under section 799 in rescission of the agreement; or

                     (b)  the Court will, if the notice so results, be empowered to make a particular order, or any order at all, under section 800.

799  Effect of notice under section 798

                   A notice given under section 798 rescinds the agreement unless rescission of the agreement would prejudice a right, or an estate in property, acquired by a person (other than the non-licensee) in good faith, for valuable consideration and without notice of the facts entitling the client to give the notice.

799A  Client may apply to Court for partial rescission

             (1)  If the client gives a notice under section 798 but the notice does not rescind the agreement because rescission of it would prejudice a right or estate of the kind referred to in section 799, the client may, within a reasonable period after giving the notice, apply to the Court for an order under subsection (4) of this section.

             (2)  The Court may extend the period for making an application under subsection (1).

             (3)  If an application is made under subsection (1), the Court may make such orders expressed to have effect until the determination of the application as it would have power to make if the notice had rescinded the agreement under section 799 and the application were for orders under section 800.

             (4)  On an application under subsection (1), the Court may make an order:

                     (a)  varying the agreement in such a way as to put the client in the same position, as nearly as can be done without prejudicing such a right or estate acquired before the order is made, as if the agreement had not been entered into; and

                     (b)  declaring the agreement to have had effect as so varied at and after the time when it was originally made.

             (5)  If the Court makes an order under subsection (4), the agreement shall be taken for the purposes of section 800 to have been rescinded under section 799.

             (6)  An order under subsection (4) does not affect the application of section 802 or 804 in relation to the agreement as originally made or as varied by the order.

800  Court may make consequential orders

             (1)  Subject to subsection (2), on rescission of the agreement under section 799, the Court, on the application of the client or the non-licensee, may make such orders as it would have power to make if the client had duly rescinded the agreement for misrepresentation by the non-licensee.

             (2)  The Court is not empowered to make a particular order under subsection (1) if the order would prejudice a right, or an estate in property, acquired by a person (other than the non-licensee) in good faith, for valuable consideration and without notice of the facts entitling the client to give the notice.

801  Agreement unenforceable against client

             (1)  This section:

                     (a)  applies while both of the following are the case:

                              (i)  the client is entitled to give a notice under section 798;

                             (ii)  a notice so given will result under section 799 in rescission of the agreement; and

                     (b)  applies after the agreement is rescinded under section 799;

but does not otherwise apply.

             (2)  The non-licensee is not entitled, as against the client:

                     (a)  to enforce the agreement, whether directly or indirectly; or

                     (b)  to rely on the agreement, whether directly or indirectly and whether by way of defence or otherwise.

802  Non-licensee not entitled to recover commission

             (1)  Without limiting the generality of section 801, this section:

                     (a)  applies while the client is entitled to give a notice under section 798; and

                     (b)  applies after the client so gives a notice, even if the notice does not result under section 799 in rescission of the agreement;

but does not otherwise apply.

             (2)  The non-licensee is not entitled to recover by any means (including, for example, set-off or a claim on a quantum meruit) any brokerage, commission or other fee for which the client would, but for this section, have been liable to the non-licensee under or in connection with the agreement.

803  Onus of establishing non-application of section 801 or 802

                   For the purposes of determining, in a proceeding in a court, whether or not the non-licensee is, or was at a particular time, entitled as mentioned in subsection 801(2) or 802(2), it shall be presumed, unless the contrary is proved, that section 801 or 802, as the case may be, applies, or applied at that time, as the case may be.

804  Client may recover commission paid to non-licensee

             (1)  Without limiting the generality of section 800, if the client gives a notice under section 798, the client may, even if the notice does not result under section 799 in rescission of the agreement, recover from the non-licensee as a debt the amount of any brokerage, commission or other fee that the client has paid to the non-licensee under or in connection with the agreement.

             (2)  The Commission may, if it considers that it is in the public interest to do so, bring an action under subsection (1) in the name of, and for the benefit of, the client.

805  Remedies under this Division additional to other remedies

                   The client’s rights and remedies under this Division are additional to, and do not prejudice, any other right or remedy of the client.


 

Division 3Representatives

806  Representatives of dealers

                   A natural person shall not do an act as a representative of a dealer (other than an exempt dealer) unless:

                     (a)  the dealer holds a dealers licence; and

                     (b)  the person holds a proper authority from the dealer.

807  Representatives of investment advisers

                   A natural person shall not do an act as a representative of an investment adviser (other than an exempt investment adviser) unless:

                     (a)  the investment adviser:

                              (i)  is also a dealer and holds a dealers licence; or

                             (ii)  holds an investment advisers licence; and

                     (b)  the person holds a proper authority from the investment adviser.

808  Defence

                   It is a defence to a prosecution for a contravention of section 806 or 807 constituted by an act done by a person as a representative of another person if it is proved that:

                     (a)  but for the revocation or suspension of a licence held by the other person, the act would not have been such a contravention;

                     (b)  when he or she did the act, the first-mentioned person:

                              (i)  believed in good faith that the other person held the licence; and

                             (ii)  was unaware of the revocation or suspension; and

                     (c)  in all the circumstances it was reasonable for the first-mentioned person so to believe and to be unaware of the revocation or suspension.

809  Body corporate not to act as representative

                   A body corporate shall not do an act as a representative of a dealer or of an investment adviser.

810  Licensee to keep register of holders of proper authorities

             (1)  A licensee must establish a register of the persons who hold proper authorities from the licensee and must keep it in accordance with this section.

             (2)  The register shall be in writing or in such other form as the Commission approves.

             (3)  The register shall contain, in relation to each person (if any) who holds a proper authority from the licensee:

                     (a)  a copy of the proper authority;

                     (b)  the person’s name;

                     (c)  the person’s current residential address;

                     (d)  unless the person’s current business address is the same as the licensee’s—the person’s current business address; and

                     (e)  any other prescribed information.

             (4)  A copy of a proper authority of a person from the licensee that subsection (3) provides for the register to contain shall be included in the register within 2 business days after the person begins to hold that proper authority.

             (5)  Information that subsection (3) provides for the register to contain in relation to a person shall be entered in the register within 2 business days after:

                     (a)  the person begins to hold a proper authority from the licensee; or

                     (b)  the licensee receives the information;

whichever happens later.

             (6)  Within 2 business days after a person ceases to hold a proper authority from the licensee, the licensee shall:

                     (a)  in any case:

                              (i)  include, in a part of the register separate from the part in which copies of proper authorities are included under subsection (4); and

                             (ii)  remove from the last-mentioned part;

                            the copy of the proper authority that was included in the last-mentioned part; and

                     (b)  unless, at the end of those 2 business days, the person again holds a proper authority from the licensee:

                              (i)  enter, in a part of the register separate from the part in which information is entered under subsection (5); and

                             (ii)  remove from the last-mentioned part;

                            the information that has been entered in the last-mentioned part in relation to the person.

             (7)  Information that has been entered under paragraph (6)(b) in a separate part of the register shall be deemed for the purposes of subsections (3) and (5) not to be contained or entered in the register.

             (8)  Where a licensee whom subsection (1) requires to establish a register already keeps one under this section or a corresponding previous law, the licensee need not establish a new register but must keep the existing one in accordance with this section.

811  Licensee to notify Commission of location and contents of register

             (1)  In this section:

register, in relation to a licensee, means a register that the licensee keeps for the purposes of section 810.

             (2)  Within 14 days after establishing a register, the licensee must lodge written notice of where the register is kept.

             (3)  As soon as practicable after changing the place where a register is kept, the licensee must lodge written notice of the new place where the register is kept.

             (4)  Within 2 business days after the day on which a person begins to hold a particular proper authority from a licensee, the licensee must, whether or not the person has previously held a proper authority from the licensee, lodge:

                     (a)  a copy of the first-mentioned proper authority; and

                     (b)  a written notice stating that the person began to hold that proper authority on that day.

             (5)  The licensee must lodge a written notice, within the period provided by subsection (6):

                     (a)  setting out the information that the register is required to contain by paragraph 810(3)(b), (c), (d) or (e); and

                     (b)  stating that the information has been, or is to be, entered in the register.

             (6)  A notice under subsection (5) must be lodged within the period within which subsection 810(5) requires the information to be entered in the register.

             (7)  Within 2 business days after a person ceases to hold a proper authority from a licensee, the licensee must, unless at the end of those 2 business days the person again holds a proper authority from the licensee, lodge a written notice stating that the person has ceased to hold such a proper authority.

812  Inspection and copying of register

             (1)  In this section:

register in relation to a licensee, means a register that the licensee keeps for the purposes of section 810.

             (2)  A licensee must ensure that a register is open for inspection without charge.

             (3)  Where a person requests a licensee in writing to give to the person a copy of the whole, or of a specified part, of a register, the licensee must comply with the request within 2 business days after:

                     (a)  if the licensee requires the person to pay for the copy an amount of not more than the prescribed amount—receiving the amount from the person; or

                     (b)  in any other case—receiving the request.

813  Disclosure to non-dealer

                   A person (in this section called the representative) shall not do as a representative of another person (in this section called the principal) an act by virtue of which the principal deals in securities with a non-dealer on the principal’s own account unless the representative has informed the non-dealer that the principal is acting in the transaction as principal and not as agent.

814  Commission may require production of authority

             (1)  Where the Commission has reason to believe that a person:

                     (a)  holds a proper authority from a licensee; or

                     (b)  has done an act as a representative of another person;

then, whether or not the Commission knows who the licensee or other person is, it may require the first-mentioned person to produce:

                     (c)  any proper authority from a licensee; or

                     (d)  any invalid securities authority from a person;

that the first-mentioned person holds.

             (2)  A person shall not, without reasonable excuse, refuse or fail to comply with a requirement under this section.

815  Commission may give licensee information about representative

             (1)  Where the Commission believes on reasonable grounds that:

                     (a)  a person (in this section called the holder) holds, or will hold, a proper authority from a licensee;

                     (b)  having regard to that fact, the Commission should give to the licensee particular information that the Commission has about the person; and

                     (c)  the information is true;

the Commission may give the information to the licensee.

             (2)  Where the Commission gives information under subsection (1), the licensee or an officer of the licensee may, for a purpose connected with:

                     (a)  the licensee making a decision about what action (if any) to take in relation to the holder, having regard to, or to matters including, the information; or

                     (b)  the licensee taking action pursuant to such a decision;

or for 2 or more such purposes, and for no other purpose, give to another person, make use of, or make a record of, some or all of the information.

             (3)  A person to whom information has been given, in accordance with subsection (2) or this subsection, for a purpose or purposes may, for that purpose or one or more of those purposes, and for no other purpose, give to another person, make use of, or make a record of, that information.

             (4)  Subject to subsections (2) and (3), a person shall not give to another person, make use of, or make a record of, information given by the Commission under subsection (1).

          (4A)  Subsection 8(3) does not apply in relation to a reference in subsection (2), (3) or (4) of this section to a provision of this section.

             (5)  A person has qualified privilege in respect of an act done by the person as permitted by subsection (2) or (3).

             (6)  A person to whom information is given in accordance with this section shall not:

                     (a)  give any of the information to a court; or

                     (b)  produce in a court a document that sets out some or all of the information;

except:

                     (c)  for a purpose connected with:

                              (i)  the licensee making a decision about what action (if any) to take in relation to the holder, having regard to, or to matters including, some or all of the information;

                             (ii)  the licensee taking action pursuant to such a decision; or

                            (iii)  proving in a proceeding in that court that particular action taken by the licensee in relation to the holder was so taken pursuant to such a decision;

                            or for 2 or more such purposes, and for no other purpose;

                     (d)  in a proceeding in that court, in so far as the proceeding relates to an alleged contravention of this section;

                     (e)  in a proceeding in respect of an ancillary offence relating to an offence against this section; or

                      (f)  in a proceeding in respect of the giving to a court of false information being or including some or all of the first-mentioned information.

             (7)  A reference in this section to a person taking action in relation to another person is a reference to the first-mentioned person:

                     (a)  taking action by way of making, terminating or varying the terms and conditions of a relevant agreement; or

                     (b)  otherwise taking action in relation to a relevant agreement;

in so far as the relevant agreement relates to the other person being employed by, or acting for or by arrangement with, the first-mentioned person in connection with a securities business or investment advice business carried on by the first-mentioned person.

             (8)  In addition, and without prejudice, to the effect it has of its own force, subsection (6) has by force of this subsection the effect it would have if:

                     (a)  the reference in it to information being given in accordance with this section were a reference to information being given in accordance with section 815 of the Corporations Law of this jurisdiction; and

                     (b)  a reference in it to a court were a reference to a court of an external Territory or of a country outside Australia and the external Territories; and

                     (c)  paragraphs (6)(d) and (e) were omitted.

816  Holder of authority may be required to return it

             (1)  Where a person holds a proper authority from a licensee but is neither employed by, nor authorised to act for or by arrangement with, the licensee, the licensee may, by writing given to the person, require the person to give the proper authority to the licensee within a specified period of not less than 2 business days.

             (2)  Where a person holds an invalid securities authority from another person, the other person may, by writing given to the first-mentioned person, require the first-mentioned person to give the invalid securities authority to the other person within a specified period of not less than 2 business days.

             (3)  A person shall not, without reasonable excuse, refuse or fail to comply with a requirement made of the person in accordance with subsection (1) or (2).


 

Division 4Liability of principals for representatives’ conduct

817  Conduct engaged in as a representative

                   Where a person engages in conduct as a representative of another person (in this section called the principal), then, as between the principal and a third person (other than the Commission), the principal is liable in respect of that conduct in the same manner, and to the same extent, as if the principal had engaged in it.

818  Liability where identity of principal unknown

             (1)  This section applies for the purposes of a proceeding in a court where:

                     (a)  whether within or outside this jurisdiction, a person (in this section called the representative) engages in particular conduct while the person is a representative of 2 or more persons (in this section called the indemnifying principals); and

                     (b)  it is proved for the purposes of the proceeding that the representative engaged in the conduct as a representative of some person (in this section called the unknown principal) but it is not proved for those purposes who the unknown principal is.

             (2)  If only one of the indemnifying principals is a party to the proceeding, he, she or it is liable in respect of that conduct as if he, she or it were the unknown principal.

             (3)  If 2 or more of the indemnifying principals are parties to the proceeding, each of those 2 or more is liable in respect of that conduct as if he, she or it were the unknown principal.

819  Liability of principals where act done in reliance on representative’s conduct

             (1)  This section applies where:

                     (a)  at a time when a person (in this section called the representative) is a representative of only one person (in this section called the indemnifying principal) or of 2 or more persons (in this section called the indemnifying principals), the representative, whether within or outside this jurisdiction:

                              (i)  engages in particular conduct; or

                             (ii)  proposes, or represents that the representative proposes, to engage in particular conduct;

                     (b)  another person (in this section called the client) does, or omits to do, a particular act, whether within or outside this jurisdiction, because the client believes at a particular time in good faith that the representative engaged in, or proposes to engage in, as the case may be, that conduct:

                              (i)  on behalf of some person (in this section called the assumed principal) whether or not identified, or identifiable, at that time by the client; and

                             (ii)  in connection with a securities business or investment advice business carried on by the assumed principal; and

                     (c)  it is reasonable to expect that a person in the client’s circumstances would so believe and would do, or omit to do, as the case may be, that act because of that belief;

whether or not that conduct is or would be within the scope of the representative’s employment by, or authority from, any person.

             (2)  If:

                     (a)  subparagraph (1)(a)(i) applies; or

                     (b)  subparagraph (1)(a)(ii) applies and the representative engages in that conduct;

then, for the purposes of a proceeding in a court:

                     (c)  as between the indemnifying principal and the client or a person claiming through the client, the indemnifying principal is liable; or

                     (d)  as between any of the indemnifying principals and the client or a person claiming through the client, each of the indemnifying principals is liable;

as the case may be, in respect of that conduct in the same manner, and to the same extent, as if he, she or it had engaged in it.

             (3)  Without limiting the generality of subsection (2), the indemnifying principal, or each of the indemnifying principals, as the case may be, is liable to pay damages to the client in respect of any loss or damage that the client suffers as a result of doing, or omitting to do, as the case may be, the act referred to in paragraph (1)(b).

          (3A)  Subsection (3) does not apply unless:

                     (a)  the conduct was engaged in, the proposed conduct would have been engaged in, or the representation was made, in this jurisdiction; or

                     (b)  the act referred to in paragraph (1)(b) was done, or would have been done, as the case may be, in this jurisdiction; or

                     (c)  some or all of the loss or damage was suffered in this jurisdiction.

             (4)  If:

                     (a)  there are 2 or more indemnifying principals;

                     (b)  2 or more of them are parties (in this subsection called the indemnifying parties) to a proceeding in a court;

                     (c)  it is proved for the purposes of the proceeding:

                              (i)  that the representative engaged in that conduct as a representative of some person; and

                             (ii)  who that person is; and

                     (d)  that person is among the indemnifying parties;

subsections (2) and (3) do not apply, for the purposes of the proceeding, in relation to the indemnifying parties other than that person.

820  Presumptions about certain matters

             (1)  Where it is proved, for the purposes of a proceeding in a court, that a person (in this subsection called the representative) engaged in particular conduct, whether within or outside this jurisdiction, while the person was a representative of:

                     (a)  only one person (in this subsection called the indemnifying principal); or

                     (b)  2 or more persons (in this subsection called the indemnifying principals);

then, unless the contrary is proved for the purposes of the proceeding, it shall be presumed for those purposes that the representative engaged in the conduct as a representative of:

                     (c)  the indemnifying principal; or

                     (d)  as a representative of some person among the indemnifying principals;

as the case may be.

             (2)  Where, for the purposes of establishing in a proceeding in a court that section 819 applies, it is proved that a person did, or omitted to do, a particular act because the person believed at a particular time in good faith that certain matters were the case, then, unless the contrary is proved for those purposes, it shall be presumed for those purposes that it is reasonable to expect that a person in the first-mentioned person’s circumstances would so believe and would do, or omit to do, as the case may be, that act because of that belief.

821  No contracting out of liability for representative’s conduct

             (1)  For the purposes of this section, a liability of a person:

                     (a)  in respect of conduct engaged in by another person as a representative of the first-mentioned person; or

                     (b)  arising under section 819 because another person has engaged in, proposed to engage in, or represented that the other person proposed to engage in, particular conduct;

is a liability of the first-mentioned person in respect of the other person.

             (2)  Subject to this section, an agreement is void in so far as it purports to exclude, restrict or otherwise affect a liability of a person in respect of another person, or to provide for a person to be indemnified in respect of a liability of the person in respect of another person.

             (3)  Subsection (2) does not apply in relation to an agreement in so far as it:

                     (a)  is a contract of insurance;

                     (b)  provides for a representative of a person to indemnify the person in respect of a liability of the person in respect of the representative; or

                     (c)  provides for a licensee from whom a person holds a proper authority to indemnify another such licensee in respect of a liability of the other licensee in respect of the person.

             (4)  A person shall not make, offer to make, or invite another person to offer to make, in relation to a liability of the first-mentioned person in respect of a person, an agreement that is or would be void, in whole or in part, by virtue of subsection (2).

822  Effect of Division

             (1)  Where 2 or more persons are liable under this Division in respect of the same conduct or the same loss or damage, they are so liable jointly and severally.

             (2)  Nothing in section 817, 818, or 819:

                     (a)  affects a liability arising otherwise than by virtue of this Division;

                     (b)  notwithstanding paragraph (a) of this subsection, entitles a person to be compensated twice in respect of the same loss or damage; or

                     (c)  makes a person guilty of an offence.


 

Division 5Excluding persons from the securities industry

824  Power to revoke, without a hearing, licence held by natural person

                   The Commission may, by written order, revoke a licence held by a natural person if the person:

                     (a)  becomes an insolvent under administration;

                     (b)  is convicted of serious fraud;

                     (c)  becomes incapable, through mental or physical incapacity, of managing his or her affairs; or

                     (d)  asks the Commission to revoke the licence.

825  Power to revoke, without a hearing, licence held by body corporate

                   The Commission may, by written order, revoke a licence held by a body corporate if:

                     (a)  the body ceases to carry on business;

                     (b)  the body becomes an externally-administered body corporate;

                     (c)  the body asks the Commission to revoke the licence; or

                     (d)  a director, secretary or executive officer of the body contravenes this Chapter because:

                              (i)  he or she does not hold a licence; or

                             (ii)  a licence held by him or her is suspended.

825A  Power to revoke responsible entity’s licence without a hearing

                   ASIC may, by written order, revoke a licence held by the responsible entity of a registered scheme if it is satisfied that the members of the scheme have suffered, or are likely to suffer, loss or damage because the responsible entity has contravened this Law.

826  Power to revoke licence after a hearing

             (1)  Subject to section 837, the Commission may, by written order, revoke a licence if:

                     (a)  the application for the licence contained matter that was false in a material particular or materially misleading;

                     (b)  there was an omission of material matter from the application for the licence;

                     (c)  the licensee contravenes a securities law;

                     (d)  the licensee contravenes a condition of the licence;

                     (e)  the licensee is a natural person and the Commission has reason to believe that he or she is not of good fame and character;

                      (f)  the licensee is a body corporate and the Commission is satisfied that the educational qualifications or experience of a person who:

                              (i)  is an officer of the body; and

                             (ii)  was not an officer of the body when the licence was granted;

                            are or is inadequate having regard to the duties that the officer performs, or will perform, in connection with the holding of the licence;

                     (g)  the licensee is a body corporate and the Commission is satisfied that:

                              (i)  an officer of the body performs, or will perform, in connection with the holding of the licence, duties that are or include duties (in this paragraph called the different duties) other than those having regard to which the Commission was satisfied, before granting the licence, that the officer’s educational qualifications and experience were adequate; and

                             (ii)  the officer’s educational qualifications or experience are or is inadequate having regard to the different duties;

                     (h)  the licensee is a body corporate and:

                              (i)  a licence held by a director, secretary or executive officer of the body is suspended or revoked; or

                             (ii)  an order is made under section 830 against such a director, secretary or executive officer;

                      (j)  the Commission has reason to believe that the licensee has not performed efficiently, honestly and fairly the duties of a holder of a dealers licence or an investment advisers licence, as the case requires; or

                     (k)  the Commission has reason to believe that the licensee will not perform those duties efficiently, honestly and fairly.

             (2)  In determining whether or not it has reason to believe as mentioned in paragraph (1)(e) or (k) in relation to a licensee, the Commission is not precluded from having regard to a matter that arose before the time when the licence was granted unless the Commission was aware of the matter at that time.

827  Power to suspend licence instead of revoking it

             (1)  Subject to section 837, where:

                     (a)  section 824, 825 or 825A empowers the Commission to revoke a licence otherwise than because the licensee has asked for the revocation; or

                     (b)  the Commission is empowered by virtue of paragraph 826(1)(c), (d), (f), (g), (h), (j) or (k) to revoke a licence;

the Commission may, if it considers it desirable to do so, instead:

                     (c)  by written order, suspend the licence for a specified period; or

                     (d)  by written order, prohibit the licensee, either permanently or for a specified period, from doing specified acts, being acts that section 780 or 781 would prohibit the licensee from doing if he, she or it did not hold the licence.

             (2)  The Commission may at any time, by written order, vary or revoke an order in force under this section.

             (3)  For the purposes of sections 780, 781, 806 and 807, a licensee shall be deemed not to hold the licence at any time during a period for which the licence is suspended.

             (4)  Where an order in force under this section prohibits the licensee as mentioned in paragraph (1)(d):

                     (a)  the licensee shall not contravene the order; and

                     (b)  in relation to the doing by a person, as a representative of the licensee, of an act specified in the order, sections 806 and 807 apply, or apply during the period specified in the order, as the case requires, as if the licensee did not hold the licence.

828  Power to make banning order where licence revoked or suspended

                   Subject to section 837, where the Commission:

                     (a)  revokes under section 824;

                     (b)  revokes by virtue of paragraph 826(1)(a), (b), (c), (d), (j) or (k);

                     (c)  revokes by virtue of paragraph 826(1)(e);

                     (d)  suspends by virtue of paragraph 827(1)(a); or

                     (e)  suspends by virtue of paragraph 827(1)(b);

a licence held by a natural person, it may also make a banning order against the person.

829  Power to make banning order against unlicensed person

                   Subject to section 837, the Commission may make a banning order against a natural person (other than a licensee) if:

                     (a)  he or she becomes an insolvent under administration;

                     (b)  he or she is convicted of serious fraud;

                     (c)  he or she becomes incapable, through mental or physical incapacity, of managing his or her affairs;

                     (d)  he or she contravenes a securities law;

                     (e)  the Commission has reason to believe that he or she is not of good fame and character;

                      (f)  the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser; or

                     (g)  the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser.

830  Nature of banning order

             (1)  Where this Division empowers the Commission to make a banning order against a person, the Commission may, by written order, prohibit the person:

                     (a)  in any case—permanently; or

                     (b)  except where the Commission is empowered by virtue of paragraph 828(c) or 829(e) to make the order—for a specified period;

from doing an act as:

                     (c)  a representative of a dealer;

                     (d)  a representative of an investment adviser; or

                     (e)  a representative of a dealer or of an investment adviser;

whichever the order specifies.

             (2)  The Commission shall not vary or revoke a banning order except under section 831, 832, or 833.

831  Exceptions to banning order

             (1)  An order made against a person under subsection 830(1) may include a provision that permits the person, subject to such conditions (if any) as are specified, to do, or to do in specified circumstances, specified acts that the order would otherwise prohibit the person from doing.

             (2)  Subject to section 837, the Commission may, at any time, by written order, vary a banning order against a person:

                     (a)  by adding a provision that permits the person as mentioned in subsection (1);

                     (b)  by varying such a provision in relation to conditions, circumstances or acts specified in the provision;

                     (c)  by omitting such a provision and substituting another such provision; or

                     (d)  by omitting such a provision.

832  Variation or revocation of banning order on application

             (1)  Subject to sections 833 and 837, this section has effect where a person applies to the Commission to vary or revoke a banning order relating to the person.

             (2)  If:

                     (a)  the person is not an insolvent under administration;

                     (b)  the Commission has no reason to believe that the person is not of good fame and character; and

                     (c)  the Commission has no reason to believe that the person will not perform efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser;

the Commission shall, by written order:

                     (d)  if only one of subparagraphs (c)(i) and (ii) applies—vary the banning order so that it no longer prohibits the person from doing an act as a representative of a dealer, or of an investment adviser, as the case may be; or

                     (e)  in any other case—revoke the banning order.

             (3)  Otherwise, the Commission shall refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(b) or (c), the Commission shall have regard to any conviction of the person, during the 10 years ending on the day of the application, of serious fraud.

             (5)  Nothing in subsection (4) limits the matters to which the Commission may have regard:

                     (a)  in deciding on the application; or

                     (b)  in connection with performing or exercising any other function or power under this Part.

833  Revocation of banning order in certain cases

                   Where:

                     (a)  section 832 requires the Commission to vary a banning order so that it no longer has a particular operation; and

                     (b)  the order has no other operation;

the Commission shall, by written order, instead revoke the banning order.

834  Effect and publication of orders under this Division

             (1)  An order by the Commission under this Division takes effect when served on the person to whom the order relates.

             (2)  As soon as practicable on or after the day on which an order by the Commission under this Division takes effect, the Commission shall publish in the Gazette a notice that sets out a copy of:

                     (a)  if the order is made under section 824, 825, 826, 827 or 830 or revokes a banning order—the first-mentioned order; or

                     (b)  if the order varies a banning order—the banning order as in force immediately after the first-mentioned order takes effect;

and states that the first-mentioned order, or the banning order as so in force, as the case may be, took effect on that day.

             (3)  Where:

                     (a)  but for this subsection, subsection (2) would require publication of a notice setting out a copy of a banning order as in force at a particular time;

                     (b)  the banning order as so in force includes a provision that permits a person as mentioned in subsection 831(1); and

                     (c)  in the Commission’s opinion, the notice would be unreasonably long if it set out a copy of the whole of that provision;

the notice may, instead of setting out a copy of that provision, set out a summary of the provision’s effect.

835  Contravention of banning order

                   A person shall not contravene a banning order relating to the person.

836  Banned person ineligible for licence

                   The Commission shall not grant a dealers licence or an investment advisers licence to a person if a banning order prohibits the person (except as permitted by the order) from doing an act as a representative of a dealer, or of an investment adviser, as the case may be.

837  Opportunity for hearing

             (1)  The Commission shall not:

                     (a)  refuse, otherwise than by virtue of section 836 or subsection 839(1), an application for a licence;

                     (b)  impose conditions on a licence;

                     (c)  vary the conditions of a licence;

                     (d)  revoke or suspend a licence otherwise than by virtue of section 824, 825 or 825A or paragraph 827(1)(a);

                     (e)  make, otherwise than by virtue of paragraph 828(a) or (d) or 829(a), (b) or (c), an order under section 830 against a person;

                      (f)  make under subsection 831(2) an order varying a banning order against a person; or

                     (g)  refuse an application by a person under section 832;

unless the Commission complies with subsection (2) of this section.

             (2)  The Commission shall give the applicant, licensee or person, as the case may be, an opportunity:

                     (a)  to appear at a hearing before the Commission that takes place in private; and

                     (b)  to make submissions and give evidence to the Commission in relation to the matter.

838  Disqualification by the Court

             (1)  Where the Commission:

                     (a)  revokes under section 824, 825 or 825A or subsection 826(1) a licence held by a person; or

                     (b)  makes under section 830 against a person an order that is to operate otherwise than only for a specified period;

the Commission may apply to the Court for an order or orders under this section in relation to the person.

             (2)  On an application under subsection (1), the Court may make one or more of the following:

                     (a)  an order disqualifying the person, permanently or for a specified period, from holding:

                              (i)  a dealers licence;

                             (ii)  an investment advisers licence; or

                            (iii)  a dealers licence or an investment advisers licence;

                             whichever the order specifies;

                     (b)  an order prohibiting the person, permanently or for a specified period, from doing an act as:

                              (i)  a representative of a dealer;

                             (ii)  a representative of an investment adviser; or

                            (iii)  a representative of a dealer or of an investment adviser;

                             whichever the order specifies;

                     (c)  such other order as it thinks fit;

or may refuse the application.

             (3)  The Court may revoke or vary an order in force under subsection (2).

839  Effect of orders under section 838

             (1)  The Commission shall not grant a dealers licence or an investment advisers licence to a person whom an order in force under section 838 disqualifies from holding a dealers licence or an investment advisers licence, as the case may be.

             (2)  A person shall not contravene an order that:

                     (a)  is of a kind referred to in paragraph 838(2)(b);

                     (b)  is in force under section 838; and

                     (c)  relates to the person.

840  Effect of previous orders under laws corresponding to section 838

             (1)  This section applies where, immediately before the commencement of section 838, a person was, for the purposes of subsection 60(5) of the Securities Industry Act 1980 or a corresponding previous law of this or any other jurisdiction, disqualified, or deemed to be disqualified, either permanently or for a period, because of an order of an Australian court, from holding a licence under that Act or a corresponding previous law.

             (2)  As from that commencement, the order has effect for the purposes of this Law as if it were:

                     (a)  in force under subsection 838(2);

                     (b)  an order disqualifying the person, permanently or for that period, as the case may be, from holding a dealers licence or an investment advisers licence; and

                     (c)  an order prohibiting the person, permanently or for that period, as the case may be, from doing an act as a representative of a dealer or of an investment adviser.

             (3)  The effect that the order has by force of subsection (2) is in addition to, and does not prejudice, its effect otherwise than by force of that subsection.


 

Part 7.4Conduct of securities business

Division 1Regulation of certain activities

841  Certain representations prohibited

             (1)  A person who is the holder of a licence shall not represent or imply, or knowingly permit to be represented or implied, in any way to a person that the abilities or qualifications of the holder of the licence have in any respect been approved by the Commission.

             (2)  A statement that a person is the holder of a licence is not a contravention of this section.

842  Issue of contract notes

             (1)  This section applies:

                     (a)  in relation to a dealer (other than an exempt dealer) in relation to a transaction of sale or purchase of securities; or

                     (b)  in relation to an exempt dealer, in relation to a transaction of sale or purchase of securities that is entered into in the course of a securities business that the exempt dealer carries on in the capacity of personal representative of a dead dealer.

             (2)  A dealer shall, in respect of a transaction of sale or purchase of securities, immediately give a contract note that complies with subsection (3) to:

                     (a)  where the transaction took place in the ordinary course of business on a stock market and the dealer entered into the transaction otherwise than as principal—the person for whom the dealer entered into the transaction;

                     (b)  where the transaction did not take place in the ordinary course of business on a stock market and the dealer entered into the transaction otherwise than as principal—the person for whom the dealer entered into the transaction and the person with whom the dealer entered into the transaction; and

                     (c)  where the transaction did not take place in the ordinary course of business on a stock market and the dealer entered into the transaction as principal—the person with whom the dealer entered into the transaction.

             (3)  A contract note given by a dealer under subsection (2) shall specify:

                     (a)  the name or style under which the dealer carries on business as a dealer and the address of the principal place at which the dealer so carries on business;

                     (b)  each securities exchange (if any) of which the dealer is a member;

                     (c)  if the dealer is dealing as principal with a person who is not the holder of a dealers licence—that the dealer is so dealing;

                     (d)  the name of the person to whom the dealer gives the contract note;

                     (e)  the day on which the transaction took place and, if the transaction did not take place in the ordinary course of business on a stock market, a statement to that effect;

                      (f)  the number, or amount and description, of the securities that are the subject of the contract;

                     (g)  the price per unit of the securities;

                     (h)  the amount of the consideration;

                      (j)  the amount of commission charged;

                     (k)  the amounts of all stamp duties or other duties and taxes payable in connection with the contract; and

                    (m)  if an amount is to be added to, or deducted from, the settlement amount in respect of the right to a benefit bought or sold together with the securities—the first-mentioned amount and the nature of the benefit.

             (4)  A dealer shall not include in a contract note given under subsection (2), as the name of the person with or for whom the dealer has entered into the transaction, a name that the dealer knows, or could reasonably be expected to know, is not the name by which that person is ordinarily known.

             (5)  A reference in this section to a dealer dealing, or entering into a transaction, as principal includes a reference to a person:

                     (a)  dealing or entering into a transaction on behalf of an associate of the dealer;

                     (b)  dealing in securities on behalf of a body corporate in which the dealer has a controlling interest; or

                     (c)  where the dealer carries on business as a dealer in partnership—dealing in securities on behalf of a body corporate in which the dealer’s interest and the interests of the dealer’s partners together constitute a controlling interest.

             (6)  For the purposes of this section:

                     (a)  a dealer who is a member of a securities exchange shall not be taken to have entered into a transaction as principal merely because the transaction was entered into with another dealer who is a member of a securities exchange; and

                     (b)  a transaction takes place in the ordinary course of business on a stock market if it takes place in prescribed circumstances or is a transaction that is a prescribed transaction for the purposes of this section.

             (7)  Despite Division 2 of Part 1.2, a person is not an associate of another person for the purposes of this section merely because the first-mentioned person is:

                     (a)  a partner of the other person otherwise than because the first-mentioned person carries on a business of dealing in securities in partnership with the other person; or

                     (b)  a director of a body corporate of which the other person is also a director, whether or not the body corporate carries on a business of dealing in securities.

843  Dealings and transactions on a dealer’s own account

             (2)  Subject to subsection (5), a dealer shall not, on the dealer’s own account, deal in securities with a non-dealer without first informing the non-dealer that the dealer is acting in the transaction as principal and not as agent.

             (3)  A dealer who, on the dealer’s own account, enters into a transaction of sale or purchase of securities with a non-dealer shall state in the contract note that the dealer is acting in the transaction as principal and not as agent.

             (4)  Subject to subsections (5) and (6), a dealer who, on the dealer’s own account (otherwise than merely because the dealer enters into a transaction on behalf of an associate of the dealer), enters into a transaction of sale or purchase of securities with a non-dealer shall not charge the non-dealer brokerage, commission or any other fee in respect of the transaction.

             (5)  Subsections (2) and (4) do not apply in relation to a transaction of sale or purchase of an odd lot of securities that is entered into by a dealer who is a member of a securities exchange and specialises in transactions relating to odd lots of securities.

             (7)  Where a dealer contravenes subsection (2), (3) or (4) in relation to a contract, then:

                     (a)  if the contract is for the sale of securities by the dealer to a person—the person may, if the person has not disposed of them; or

                     (b)  if the contract is for the purchase of securities by the dealer from a person—the person may;

rescind the contract by written notice given to the dealer within 14 days after the person receives the contract note.

             (8)  Nothing in subsection (7) affects any right that a person has apart from that subsection.

844  Dealer to give priority to clients’ orders

             (2)  A dealer shall not, except as permitted by subsection (3), enter into, as principal or on behalf of an associate of the dealer, a transaction of purchase or sale of securities that are permitted to be traded on a stock market of a securities exchange if a client of the dealer who is not an associate of the dealer has instructed the dealer to buy or sell, as the case may be, securities of the same class and the dealer has not complied with the instruction.

             (3)  Subsection (2) does not apply in relation to the entering into of a transaction by a dealer as principal or on behalf of an associate of the dealer if:

                     (a)  the instructions from the client concerned required the purchase or sale of securities on behalf of the client to be effected only on specified conditions relating to the price at which the securities were to be bought or sold and the dealer has been unable to buy or sell the securities because of those conditions; or

                     (b)  the transaction is entered into in prescribed circumstances.

845  Dealings by employees of holders of licences

             (1)  A person who is a dealer or an investment adviser and an employee of that person shall not, as principals, jointly buy or subscribe for, or agree to buy or subscribe for, securities.

             (2)  A person who is a partner in a partnership that carries on a securities business or an investment advice business and an employee of the partnership shall not, as principals, jointly buy or subscribe for, or agree to buy or subscribe for, securities.

             (3)  A person who is a dealer or investment adviser, or who is a partner in a partnership that carries on a securities business or an investment advice business, shall not give credit to an employee of the person or partnership, as the case may be, or to a person who the first-mentioned person knows is an associate of such an employee if:

                     (a)  the credit is given for the purpose of enabling or assisting the person to whom the credit is given to buy or subscribe for securities; or

                     (b)  the person giving the credit knows or has reason to believe that the credit will be used for the purpose of buying or subscribing for securities.

             (4)  A person who is an employee of a sole trader or member firm in connection with a business of dealing in securities carried on by the sole trader or member firm shall not, as principal, buy or agree to buy securities or rights or interests in securities unless the sole trader or member firm acts as the agent of the person in respect of the transaction.

             (5)  A reference in subsection (1) or (3) to an employee of a person who is a dealer or investment adviser includes, in the case of a body corporate that is a dealer or investment adviser, a reference to an officer of the body.

             (6)  The reference in subsection (4) to an employee of a sole trader or member firm includes, in the case of a sole trader that is a body corporate or a member firm a partner in which is a body corporate, a reference to an officer of the body.


 

Division 2Short selling of securities

846  Short selling

             (1)  Subject to this section and the regulations, a person shall not sell securities to a buyer unless, at the time of the sale:

                     (a)  the person has or, where the person is selling as agent, the person’s principal has; or

                     (b)  the person believes on reasonable grounds that the person has, or where the person is selling as agent, the person’s principal has;

a presently exercisable and unconditional right to vest the securities in the buyer.

             (2)  For the purposes of subsection (1):

                     (a)  a person who, at a particular time, has a presently exercisable and unconditional right to have securities vested in the person or in accordance with the directions of the person has at that time a presently exercisable and unconditional right to vest the securities in another person; and

                     (b)  a right of a person to vest securities in another person is not conditional merely because the securities are charged or pledged in favour of another person to secure the repayment of money.

             (3)  Subsection (1) does not apply in relation to:

                     (a)  a sale of securities by the holder of a dealers licence who is a member of a securities exchange and specialises in transactions relating to odd lots of securities, being a sale made by the holder as principal solely for the purpose of:

                              (i)  accepting an offer to buy an odd lot of securities; or

                             (ii)  disposing of a parcel of securities that is less than one marketable parcel of securities by means of a sale of one marketable parcel of those securities;

                     (b)  a sale of securities as part of an arbitrage transaction;

                     (c)  a sale of securities by a person who before the time of sale has entered into a contract to buy those securities and who has a right to have those securities vested in the person that is conditional only upon all or any of the following:

                              (i)  payment of the consideration in respect of the purchase;

                             (ii)  the receipt by the person of a proper instrument of transfer in respect of the securities;

                            (iii)  the receipt by the person of the documents that are, or are documents of title to, the securities;

                     (d)  a sale of securities where:

                              (i)  the person who sold the securities is not an associate of the body corporate that issued or made available the securities;

                             (ii)  arrangements are made before the time of the sale that will enable delivery of securities of the class sold to be made to the buyer within 3 business days after the date of the transaction effecting the sale; and

                            (iii)  if the sale is made on the stock market of a securities exchange:

                                        (A)  the price per unit in respect of the sale is not below the price at which the immediately preceding ordinary sale was effected; and

                                        (B)  the price per unit is above the price at which the immediately preceding ordinary sale was made unless the price at which the immediately preceding ordinary sale was made was higher than the next preceding different price at which an ordinary sale had been made;

                                   and the securities exchange is informed as soon as practicable that the sale has been made short in accordance with this subparagraph; or

                     (e)  a sale of securities where:

                              (i)  the securities are included in a class of securities in relation to which there is in force a declaration, made by the board of a securities exchange as provided by the business rules of the securities exchange, to the effect that the class is a class of securities to which this paragraph applies;

                             (ii)  the sale is made as provided by the business rules of the securities exchange; and

                            (iii)  at the time of the sale, neither the person who sold the securities, nor any person on behalf of whom the first-mentioned person sold the securities, was an associate, in relation to the sale, of the body corporate that issued or made available the securities.

             (4)  A person who requests a holder of a dealers licence to make a sale of securities that would contravene subsection (1) but for paragraph (3)(b), (d) or (e) shall, when making the request, inform the holder of the licence that the sale is a short sale.

             (5)  A person who, on a stock market of a securities exchange, makes, whether as principal or agent, a sale of securities that would contravene subsection (1) but for paragraph (3)(d) shall endorse on any document evidencing the sale that is given to the person who, whether as principal or agent, buys the securities a statement that the sale was a short sale.

             (6)  For the purposes of this section, a person who:

                     (a)  purports to sell securities;

                     (b)  offers to sell securities;

                     (c)  holds himself, herself or itself out as entitled to sell securities; or

                     (d)  instructs a dealer to sell securities;

shall be deemed to sell the securities.

847  Power of Commission to prohibit short selling in certain cases

             (1)  Where the Commission forms the opinion that it is necessary to prohibit securities, or a particular class of securities, from being sold on a stock market of a securities exchange in a manner that, but for paragraph 846(3)(e), would contravene subsection 846(1), in order to protect persons who might suffer financial loss if they were to buy or sell those securities in that manner or in order to protect the public interest, the Commission may give written notice to the securities exchange stating that it has formed that opinion and setting out the reasons for that opinion.

             (2)  If, after receiving such a notice:

                     (a)  the securities exchange does not take action to prevent the selling on a stock market of the securities exchange of the securities, or class of securities, specified in the notice in the manner referred to in subsection (1); and

                     (b)  the Commission is still of the opinion that it is necessary to prohibit the selling on that stock market of the securities, or class of securities, in that manner;

the Commission may, by a further written notice given to the securities exchange, prohibit the selling on that stock market of the securities, or class of securities, in that manner during a period of not more than 21 days.

             (3)  As soon as practicable after giving a notice to a securities exchange under subsection (2), the Commission shall give to the Minister a written report setting out the reasons for the giving of the notice and send a copy of the report to the securities exchange.

             (4)  On receiving the report, the Minister may direct the Commission to revoke the notice given under subsection (2), and, if such a direction is given, the Commission shall immediately revoke the notice.

             (5)  A securities exchange shall not permit the selling of securities on a stock market of the securities exchange in a way that contravenes a notice given under subsection (2).

             (6)  Where a notice duly given to a securities exchange by the NCSC under a previous law corresponding to subsection (2) in relation to securities or a class of securities was in force immediately before the commencement of this Part and the period for which selling of the securities or class of securities on the stock market specified in the notice in the manner so specified was prohibited by the notice had not ended before that commencement:

                     (a)  the notice shall be deemed to be a notice duly given to that securities exchange on that commencement by the Commission under that subsection and prohibiting selling on that stock market of those securities or that class of securities in that manner for the unexpired portion of that period; and

                     (b)  a written report given to the Ministerial Council before that commencement under a previous law corresponding to subsection (3) shall be deemed to have been duly given by the Commission under that subsection to the Minister and a copy of the report sent to the securities exchange under that corresponding previous law shall be deemed to have been sent by the Commission under that subsection.


 

Division 3Recommendations about securities

848  Recommendation made by partner or officer

                   For the purposes of this Division (other than section 851):

                     (a)  a recommendation made by a partner shall be deemed to have been made by each partner in the partnership; and

                     (b)  a recommendation made by a director, executive officer or secretary of a body corporate shall be deemed to have also been made by the body corporate.

849  Client to be told if adviser’s interests may influence recommendation

             (1)  This section applies where a securities adviser makes a securities recommendation to a person (in this section called the client) who may reasonably be expected to rely on it.

             (2)  The securities adviser shall:

                     (a)  if the recommendation is made orally—when making the recommendation, disclose to the client orally; or

                     (b)  if the recommendation is made in writing—set out in that writing, in such a way as to be no less legible than the other material in that writing;

particulars of:

                     (c)  any commission or fee, or any other benefit or advantage, whether pecuniary or not and whether direct or indirect, that the securities adviser or an associate has received, or will or may receive, in connection with the making of the recommendation or a dealing by the client in securities as a result of the recommendation; and

                     (d)  any other pecuniary or other interest, whether direct or indirect, of the securities adviser or an associate, that may reasonably be expected to be capable of influencing the securities adviser in making the recommendation.

             (3)  Subsection (2) does not apply in relation to a commission or fee that the securities adviser has received, or will or may receive, from the client.

             (4)  If by making the recommendation the securities adviser does an act as a representative of another person, then:

                     (a)  without limiting the generality of Division 2 of Part 1.2, the other person is an associate for the purposes of subsection (2); and

                     (b)  subsection (2) does not apply in relation to a commission or fee that the other person has received, or will or may receive, from the client.

             (5)  For the purposes of Division 2 of Part 1.2, the making of securities recommendations is the matter to which a reference to an associate in subsection (2) relates.

             (6)  Despite Division 2 of Part 1.2 and subsection (5), a person (in this subsection called the alleged associate) is not an associate for the purposes of subsection (2) merely because of being:

                     (a)  a partner of the securities adviser otherwise than because of carrying on a securities business in partnership with the securities adviser; or

                     (b)  a director of a body corporate of which the securities adviser is also a director, whether or not the body carries on a securities business;

unless the securities adviser and the alleged associate act jointly, or otherwise act together, or under an arrangement between them, in relation to making securities recommendations.

850  Defences to alleged breach of subsection 849(2)

             (1)  Where:

                     (a)  a person:

                              (i)  when making a recommendation orally, fails to disclose; or

                             (ii)  when making a recommendation in writing, fails to set out in that writing;

                            as required by subsection 849(2), particulars of a matter; and

                     (b)  it is proved that the person was not, and could not reasonably be expected to have been, aware of that matter when making the recommendation;

the failure is not a contravention of that subsection.

             (2)  Where:

                     (a)  a dealer or investment adviser, or a representative of a dealer or investment adviser:

                              (i)  when making a recommendation orally, fails to disclose; or

                             (ii)  when making a recommendation in writing, fails to set out in that writing;

                             as required by subsection 849(2), particulars of a matter;

                     (b)  in the case of a representative of a dealer or investment adviser—by making the recommendation, the representative does an act as a representative of the dealer or investment adviser;

                     (c)  it is proved that the dealer or investment adviser had in operation, throughout a period beginning before the decision to make the recommendation was made and ending after the recommendation was made, arrangements to ensure that:

                              (i)  the natural person who made the decision knew nothing about that matter before the end of that period; and

                             (ii)  no advice with respect to the making of the recommendation was given to the person by anyone who knew anything about that matter; and

                     (d)  it is also proved that:

                              (i)  the person in fact knew nothing about that matter before the end of that period; and

                             (ii)  no such advice was so given;

the failure is not a contravention of that subsection.

             (3)  Neither of subsections (1) and (2) limits the generality of the other.

851  Adviser must have reasonable basis for recommendation

             (1)  A securities adviser who:

                     (a)  makes a securities recommendation to a person who may reasonably be expected to rely on it; and

                     (b)  does not have a reasonable basis for making the recommendation to the person;

contravenes this section.

             (2)  For the purposes of subsection (1), a securities adviser does not have a reasonable basis for making a securities recommendation to a person unless:

                     (a)  in order to ascertain that the recommendation is appropriate having regard to the information the securities adviser has about the person’s investment objectives, financial situation and particular needs, the securities adviser has given such consideration to, and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances; and

                     (b)  the recommendation is based on that consideration and investigation.

             (3)  A person who contravenes subsection (1) is not guilty of an offence.

852  Adviser who breaches this Division liable to compensate client

                   This section applies where:

                     (a)  a securities adviser contravenes section 849 or 851 in relation to a securities recommendation to a person (in this section called the client);

                     (b)  the client, in reliance on the recommendation, does, or omits to do, a particular act;

                     (c)  it is reasonable, having regard to the recommendation and all other relevant circumstances, for the client to do, or omit to do, as the case may be, that act in reliance on the recommendation; and

                     (d)  the client suffers loss or damage as a result of that act or omission.

             (2)  Subject to subsections (3) and (4), the securities adviser is liable to pay damages to the client in respect of that loss or damage.

             (3)  In the case of a contravention of section 849, the securities adviser is not so liable if it is proved that a reasonable person in the client’s circumstances could be expected to have done, or omitted to do, as the case may be, that act in reliance on the recommendation even if the securities adviser had complied with that section in relation to the recommendation.

             (4)  In the case of a contravention of section 851, the securities adviser is not so liable if it is proved that the recommendation was, in all the circumstances, appropriate having regard to the information that, when making the recommendation, the securities adviser had about the client’s investment objectives, financial situation and particular needs.

853  Qualified privilege for adviser when complying with this Division

                   A securities adviser who:

                     (a)  makes a securities recommendation in relation to securities to a person who may reasonably be expected to rely on it; and

                     (b)  in so making the recommendation, contravenes neither of subsections 849(2) and 851(1);

has qualified privilege in respect of a statement the securities adviser makes to the person, whether orally or in writing, in the course of, or in connection with, so making the recommendation.


 

Part 7.5Dealers’ financial statements and audit

  

854  Interpretation

                   In this Part, unless the contrary intention appears:

                     (a)  a reference to a licence is a reference to a dealers licence; and

                    (ba)  a reference to a licensee is a reference to a person who holds a dealers licence; and

                     (b)  a reference to a book, security, trust account or business of or in relation to a dealer who carries on business in partnership is a reference to such a book, security, trust account or business of or in relation to the partnership.

855  Application of Part

             (1)  This Part applies in relation to a licensee in relation to his, her or its securities business, whether carried on in this jurisdiction or elsewhere.

             (2)  This Part does not affect, and shall be deemed never to have affected, the operation of Chapter 2M in relation to a company that is the holder of a dealers licence or in relation to a securities business that is carried on by such a company.

856  Dealers’ financial records

             (1)  This section applies where a person (in this section called the dealer) holds a licence.

             (2)  The dealer must:

                     (a)  keep such financial records as correctly record and explain the transactions and financial position of the securities business carried on by the dealer; and

                     (b)  keep those records (in this section called the records) as provided by this section.

             (3)  The records shall be kept in such a way as will enable true and fair profit and loss statements and balance sheets to be prepared from time to time.

             (4)  The records shall be kept in such a way as will enable profit and loss statements and balance sheets of the securities business carried on by the dealer to be conveniently and properly audited.

             (5)  The records shall be kept in writing in the English language or in such a manner as will enable them to be readily accessible and readily converted into writing in the English language.

             (6)  The records shall be kept in sufficient detail to show particulars of:

                     (a)  all money received or paid by the dealer, including money paid to, or disbursed from, a trust account;

                     (b)  all purchases and sales of securities made by the dealer, the charges and credits arising from them, and the names of the buyer and seller of each of those securities;

                     (c)  all income received from commissions, interest, and other sources, and all expenses, commissions, and interest paid, by the dealer;

                     (d)  all the assets and liabilities (including contingent liabilities) of the dealer;

                     (e)  all securities that are the property of the dealer, showing by whom the securities, or the documents of title to the securities, are held and, where they are held by some other person, whether or not they are held as security against loans or advances;

                      (f)  all securities that are not the property of the dealer and for which the dealer or a nominee controlled by the dealer is accountable, showing by whom, and for whom, the securities or the documents of title to the securities are held and the extent to which they are either held for safe custody or deposited with a third party as security for loans or advances made to the dealer;

                     (g)  all purchases and sales of options made by the dealer and all fees (being option money) arising from them;

                     (h)  all arbitrage transactions entered into by the dealer; and

                      (j)  all underwriting transactions entered into by the dealer.

             (7)  The records shall be kept in sufficient detail to show separately particulars of every transaction by the dealer.

             (8)  The records shall specify the day on which, or the period during which, each transaction by the dealer took place.

             (9)  The records shall contain copies of acknowledgments of the receipt of securities or of documents of title to securities received by the dealer from clients for sale or safe custody clearly showing the name or names in which the particular securities are registered.

           (10)  The records shall be kept in sufficient detail to show separately particulars of all transactions by the dealer with, or for the account of:

                     (a)  clients of the dealer, excluding, where the dealer carries on business in partnership, the partners of the firm;

                     (b)  the dealer or, where the dealer carries on business in partnership, the partners of the firm;

                     (c)  other dealers; and

                     (d)  employees of the dealer.

           (11)  An entry in the records shall, unless the contrary is proved, be deemed to have been made by, or with the authority of, the dealer.

           (12)  Where any of the records is not kept in writing in the English language, the dealer shall, if required to convert the financial records concerned into writing in the English language by a person who is entitled to examine the record, comply with the requirement within a reasonable time.

           (13)  The dealer does not contravene this section merely because some or all of the records are kept as a part of, or in conjunction with, the records relating to any other business that is carried on by the dealer.

           (14)  Where any of the records are kept outside Australia, the dealer shall:

                     (a)  cause to be sent to and kept at a place in Australia such particulars with respect to the business dealt with in those records as will enable true and fair profit and loss statements and balance sheets to be prepared; and

                     (b)  if required by the Commission to produce those records at a place in Australia, comply with the requirement not later than 28 days after the requirement is made.

           (15)  Nothing in this section limits the generality of anything else in it.

857  Appointment of auditor by dealer

             (1)  A licensee must, within 1 month after beginning to hold the licence, appoint as auditor or auditors to audit the licensee’s financial statements:

                     (a)  a person or persons; or

                     (b)  a firm or firms; or

                     (c)  a person or persons and a firm or firms;

other than a person who, or a firm that, is ineligible by virtue of this section to act as auditor of the licensee.

             (2)  Subject to this section, a person is ineligible to act as auditor of the holder of a licence if:

                     (a)  the person is not a registered company auditor;

                     (b)  the person, or a body corporate in which the person has a substantial holding, is indebted in an amount exceeding $5,000 to the holder or, if the holder is a body corporate, to a related body corporate; or

                     (c)  the person is:

                              (i)  in the case of a holder who is a natural person—a partner or employee of the holder; or

                             (ii)  in the case of a holder that is a body corporate:

                                        (A)  an officer of the body corporate;

                                        (B)  a partner, employer or employee of an officer of the body corporate; or

                                        (C)  a partner or employee of an employee of an officer of the body corporate.

             (3)  Subject to this section, a firm is ineligible at a particular time to act as auditor of the holder of a licence, unless:

                     (a)  at least one member of the firm is a registered company auditor who is ordinarily resident in a State or Territory;

                     (b)  where the business name under which the firm is carrying on business is not registered under a prescribed law of a State or Territory—there has been lodged a return in the prescribed form showing, in relation to each member of the firm, the member’s full name and the member’s address as at that time;

                     (c)  no member of the firm, and no body corporate in which any member of the firm is a substantial shareholder for the purposes of Part 6.7, is indebted in an amount exceeding $5,000 to the holder or, where the holder is a body corporate, to a related body corporate;

                     (d)  no member of the firm is:

                              (i)  in the case of a holder who is a natural person—a partner or employee of the holder; or

                             (ii)  in the case of a holder that is a body corporate:

                                        (A)  an officer of the body corporate;

                                        (B)  a partner, employer or employee of an officer of the body corporate; or

                                        (C)  a partner or employee of an employee of an officer of the body corporate; and

                     (e)  in the case of a holder that is a body corporate, no officer of the body corporate receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters.

             (4)  For the purposes of paragraphs (2)(b) and (3)(c), disregard a debt owed by a natural person to a body corporate if:

                     (a)  the body corporate is:

                              (i)  an Australian ADI; or

                             (ii)  a body corporate registered under the Life Insurance Act 1995; and

                     (b)  the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and

                     (c)  the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence.

             (5)  For the purposes of subsections (2) and (3), a person shall be deemed to be an officer of a body corporate if:

                     (a)  in any case—the person is an officer of a related body corporate; or

                     (b)  except where the Commission, if it thinks fit in the circumstances of the case, directs that this paragraph shall not apply in relation to the person in relation to the body corporate—the person has, at any time within the immediately preceding 12 months, been an officer or promoter of the body corporate or of a related body corporate.

             (6)  For the purposes of this section, a person is not an officer of a body corporate merely because of being or having been the liquidator of that body corporate or of a related body corporate.

             (7)  For the purposes of this section, a person is not an officer of a body corporate merely because of having been appointed as auditor of that body corporate or of a related body corporate or, for any purpose relating to taxation, a public officer of a body corporate or merely because of being or having been authorised to accept on behalf of the body corporate or a related body corporate service of process or any notices required to be served on the body corporate or related body corporate.

             (8)  Subject to this section, a person or firm shall not, while ineligible by virtue of this section to act as auditor of the holder of a licence:

                     (a)  consent to be appointed as auditor of the holder;

                     (b)  act as auditor of the holder; or

                     (c)  prepare a report that an auditor of the holder is to prepare under this Chapter.

             (9)  The appointment of a firm as auditor of the holder of a licence shall be deemed to be an appointment of all persons who are members of the firm and are registered company auditors, whether resident in Australia or not, at the date of the appointment.

           (10)  Where a firm that has been appointed as auditor of the holder of a licence is re-constituted because of the death, retirement or withdrawal of a member or members or because of the admission of a new member or new members, or both:

                     (a)  a person who was deemed under subsection (9) to be an auditor of the holder and has so retired or withdrawn from the firm as previously constituted shall be deemed to have resigned as auditor of the holder as from the day of the person’s retirement or withdrawal but, unless that person was the only member of the firm who was a registered company auditor and, after the retirement or withdrawal of that person, there is no member of the firm who is a registered company auditor, section 858 does not apply to that resignation;

                     (b)  a person who is a registered company auditor and is so admitted to the firm shall be deemed to have been appointed as an auditor of the holder as from the date of the admission; and

                     (c)  the reconstitution of the firm does not affect the appointment of the continuing members of the firm who are registered company auditors as auditors of the holders;

but nothing in this subsection affects the operation of subsection (3).

           (11)  Except as provided by subsection (10), the appointment of the members of a firm as auditors of the holder of a licence that is deemed by subsection (9) to have been made because of the appointment of the firm as auditor of the holder is not affected by the dissolution of the firm.

           (12)  A report or notice that purports to be made or given by a firm appointed as auditor of the holder of a licence is not duly made or given unless it is signed in the firm name and in his or her own name by a member of the firm who is a registered company auditor.

           (13)  Where a person or firm is appointed as an auditor of the licensee under subsection (1) (other than an appointment that is deemed to be made by virtue of subsection (10)) or under subsection (16), the licensee shall within 14 days after the appointment lodge a written notice stating that the licensee has made the appointment and specifying the name of the person or firm.

           (14)  A person shall not:

                     (a)  if the person has been appointed auditor of the holder of a licence—knowingly disqualify himself or herself while the appointment continues from acting as auditor of the holder; or

                     (b)  if the person is a member of a firm that has been appointed auditor of the holder of a licence—knowingly disqualify the firm while the appointment continues from acting as auditor of the holder.

           (15)  An auditor of the holder of a licence holds office until death, until removal or resignation from office in accordance with section 858 or until becoming prohibited by subsection (8) from acting as auditor of the holder.

           (16)  Within 14 days after a vacancy occurs in the office of an auditor of a licensee, if there is no surviving or continuing auditor of the licensee, the licensee shall appoint a person or persons, a firm or firms or a person or persons and a firm or firms to fill the vacancy, other than a person who, or a firm that, is ineligible by virtue of this section to act as auditor of the licensee.

           (17)  While a vacancy in the office of an auditor continues, the surviving or continuing auditor or auditors (if any) may act.

           (18)  A licensee must not appoint a person or firm as auditor of the licensee unless that person or firm has, before the appointment, consented by written notice given to the licensee to act as auditor and has not withdrawn the consent by written notice given to the licensee.

           (19)  This section does not apply in relation to a body corporate (except a proprietary company) in relation to which section 327 applies.

858  Removal and resignation of auditors

             (1)  A licensee:

                     (a)  shall remove an auditor of the licensee from office if the auditor becomes ineligible by virtue of section 857 to act as auditor of the licensee; and

                     (b)  may, with the Commission’s consent, remove an auditor of the licensee from office.

             (2)  An auditor of the holder of a licence may, by written notice given to the holder, resign as auditor of the holder if:

                     (a)  the auditor has, by written notice given to the Commission, applied for consent to the resignation and, at or about the same time as the auditor gave notice to the Commission, gave written notice to the holder of the application; and

                     (b)  the auditor has received the consent of the Commission.

             (3)  The Commission shall, as soon as practicable after receiving an application from an auditor under subsection (2), notify the auditor and the holder whether it consents to the resignation.

             (4)  A statement by an auditor in an application under subsection (2) or in answer to an inquiry by the Commission relating to the reasons for the application:

                     (a)  is not admissible in evidence in any civil or criminal proceedings in a court of this jurisdiction 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;

and a certificate by the Commission that the statement was made in the application or in answer to an inquiry by the Commission is conclusive evidence that the statement was so made.

             (5)  Subject to subsection (6), the resignation of an auditor takes effect on:

                     (a)  the date (if any) specified for the purpose in the notice of resignation;

                     (b)  the date on which the Commission gives its consent to the resignation; or

                     (c)  the date (if any) fixed by the Commission for the purpose;

whichever last occurs.

             (6)  Where, on the retirement or withdrawal from a firm of a member, the firm will no longer be capable, because of paragraph 857(3)(a), of acting as auditor of the holder of a licence, the member so retiring or withdrawing shall, if not disqualified from acting as auditor of the holder, be deemed to be the auditor of the holder until the member obtains the consent of the Commission to the retirement or withdrawal.

             (7)  This section does not apply in relation to a body corporate (except a proprietary company) in relation to which section 329 applies.

859  Fees and expenses of auditors

The reasonable fees and expenses of an auditor of the holder of a licence are payable by the holder.

860  Dealer’s accounts

             (1)  In this section:

financial year, in relation to a licensee, means:

                     (a)  where the licensee is not a body corporate—the year ending on 30 June; and

                     (b)  where the licensee is a body corporate—the financial year of the body corporate.

prescribed day, in relation to a financial year of a licensee, means:

                     (a)  where the licensee is not a body corporate—the day that is 2 months after the end of that financial year; or

                     (b)  where the licensee is a body corporate—the day that is 3 months after the end of that financial year;

or where, in either case, an extension of time is approved under subsection (3), the day on which the period of the extension ends.

             (2)  A licensee must, in respect of each financial year, other than a financial year that ended before the date of commencement of this section or ended on or after that date but before the date on which the licensee started to carry on business as a dealer, prepare a true and fair profit and loss statement and balance sheet on the basis of such accounting principles (if any) and containing such information and matters as are prescribed and lodge them before the prescribed day for that financial year, together with an auditor’s report containing the prescribed information and matters.

             (3)  The Commission may, on application made by the holder of a licence and the holder’s auditor before the end of the period of 2 months or, as the case requires, the period of 3  months referred to in the definition of prescribed day in subsection (1) or, if that period has been extended by an approval or approvals previously given under this subsection, before the end of the period as so extended, approve an extension of the period.

             (4)  An approval under subsection (3) may be given subject to such conditions (if any) as the Commission imposes.

             (5)  Where an approval under subsection (3) in relation to a licensee is given subject to conditions, the licensee must comply with those conditions.

861  Auditor to report to Commission on certain matters

             (1)  Where an auditor, in the performance of duties as auditor of the holder of a licence, becomes aware of a prescribed matter, the auditor shall, within 7 days after becoming aware of the matter, lodge a written report on the matter and send a copy of the report to the holder and to each securities exchange of which the holder is a member.

             (2)  In this section:

prescribed matter means a matter that, in the opinion of the auditor:

                     (a)  has adversely affected, is adversely affecting or may adversely affect the ability of the holder to meet the holder’s obligations as a dealer; or

                     (b)  constitutes or may constitute a contravention of section 856, 866, 867, 868, 869, 870, 871, 872 or 873, or Part 7.7 or of a condition of the licence.

862  Securities exchange to report to Commission on certain matters

             (1)  Where, in relation to a dealer who is a member of a securities exchange, the securities exchange becomes aware of a prescribed matter, the securities exchange shall, as soon as practicable after becoming aware of the matter, lodge a written report on the matter and send a copy of the report to the dealer.

             (2)  In this section:

prescribed matter, in relation to a dealer, means a matter that, in the opinion of the securities exchange concerned:

                     (a)  has adversely affected, is adversely affecting or may adversely affect the ability of the dealer to meet the dealer’s obligations as a dealer; or

                     (b)  constitutes or may constitute a contravention of section 856, 866, 867, 868, 869, 870, 871, 872 or 873, or Part 7.7 or of a condition of a licence held by the dealer.

863  Qualified privilege for auditor

             (1)  An auditor of the holder of a licence has qualified privilege in respect of:

                     (a)  a statement that the auditor makes, orally or in writing, in the course of his or her duties as auditor; or

                     (b)  the lodging of a report, or the sending of a report to the holder, or to a securities exchange, under section 861.

             (2)  A person has qualified privilege:

                     (a)  in respect of the publishing of a document prepared by an auditor of the holder of a licence in the course of the auditor’s duties or required by or under this Chapter to be lodged, whether or not the document has been lodged; or

                     (b)  in respect of the publishing of a statement made by such an auditor as mentioned in subsection (1).

864  Securities exchange may impose additional obligations on members

                   Nothing in this Part or in Part 7.6 prevents a securities exchange from imposing on a member of that securities exchange any obligations or requirements (other than obligations or requirements inconsistent with this Chapter or with a condition of a licence held by the member) that the securities exchange thinks fit with respect to:

                     (a)  the audit of books (including the audit of books by an auditor appointed by the securities exchange);

                     (b)  the information to be furnished in reports from auditors; or

                     (c)  the keeping of books.


 

Part 7.6Money and scrip of dealers’ clients

  

865  Interpretation

                   In this Part, unless the contrary intention appears:

                     (a)  a reference to a licence is a reference to a dealers licence; and

                     (b)  a reference to a licensee is a reference to a person who holds a dealers licence; and

                     (c)  a reference to a book, security, trust account or business of or in relation to a dealer who carries on business in partnership is a reference to such a book, security, trust account or business of or in relation to the partnership.

865A  Application of Part

                   This Part (other than section 872) applies in relation to a licensee in relation to his, her or its securities business, whether carried on in this jurisdiction or elsewhere.

866  Dealer to keep trust account

             (1)  A licensee must open and maintain:

                     (a)  an account, designated as a trust account, with an Australian ADI; or

                     (b)  2 or more such accounts.

             (2)  Where a condition of a licence prohibits the licensee from holding money in trust for the licensee’s clients, subsection (1) does not apply in relation to the licensee unless and until the licensee receives money that section 867 requires the licensee to pay into a trust account.

             (3)  A person who contravenes subsection (1) is guilty of an offence.

             (4)  A person who, with intent to defraud, contravenes subsection (1) is guilty of an offence.

867  What is to be paid into dealer’s trust account

             (1)  A licensee must pay into a trust account:

                     (a)  money held by the licensee in trust for a client; and

                     (b)  without limiting the generality of paragraph (a), money received by the licensee from a client, other than:

                              (i)  money received in respect of brokerage or any other proper charge;

                             (ii)  money received in payment or part payment for securities delivered to the licensee before the money is received; or

                            (iii)  money in relation to which the licensee is required to comply with section 872.

             (2)  Subsection (1) does not apply in relation to a payment order that:

                     (a)  is payable to, or to the order of, a specified person or bearer; and

                     (b)  the licensee receives from, or on behalf of, a client with express or implied instructions that it is to be delivered to the person to whom it is payable;

unless the payee in the payment order is the licensee, a partner of the licensee or a firm in which the licensee is a partner.

             (3)  A person who contravenes subsection (1) is guilty of an offence.

             (4)  A person who, with intent to defraud, contravenes subsection (1) is guilty of an offence.

868  When money to be paid into trust account

             (1)  Where section 867 requires a licensee to pay money into a trust account, the licensee must pay the money into a trust account on or before the next day after the licensee receives it on which it can be so paid.

             (2)  A person who contravenes subsection (1) is guilty of an offence.

             (3)  A person who, with intent to defraud, contravenes subsection (1) is guilty of an offence.

869  Withdrawals from trust account

             (1)  A licensee must not withdraw money from a trust account except:

                     (a)  to make a payment to, or in accordance with the written directions of, a person entitled to the money;

                     (b)  to make a payment under section 889 to a stock exchange;

                     (c)  to defray brokerage or any other proper charge;

                     (d)  to pay to the licensee money to which the licensee is entitled, being money that was paid into the trust account but need not have been so paid; or

                     (e)  to make a payment that is otherwise authorised by any law of the Commonwealth or of this or any other jurisdiction.

             (2)  Nothing in this Part affects a lawful claim or lien that a person:

                     (a)  has against or on money held in a trust account of a person; or

                     (b)  has, before money received for the purchase of securities or from the sale of securities is paid into a trust account of a person, against or on that money.

             (3)  A person who contravenes subsection (1) is guilty of an offence.

             (4)  A person who, with intent to defraud, contravenes subsection (1) is guilty of an offence.

870  Withdrawal against uncleared cheque

             (1)  This section applies where the holder of a licence withdraws from a trust account of the holder some or all of the amount of a cheque:

                     (a)  that has been paid into the account; and

                     (b)  that has not been paid, and payment of which has not been refused, by the banker on which it is drawn.

             (2)  The holder does not, merely because of the withdrawal, contravene section 869.

             (3)  If the banker later refuses payment of the cheque, the holder shall, within one business day after being notified of the refusal, pay into the trust account by cash, or by cheque that a bank or other institution draws on itself, an amount equal to the amount of the withdrawal.

871  Trust money not available in respect of dealer’s own debts

             (1)  Subject to this Part, money in a trust account of the holder of a licence is not available for the payment of a debt or liability of the licensee.

             (2)  Subject to this Part, money in a trust account of the holder of a licence (including a licence within the meaning of a law corresponding to this section) is not liable to be attached, or taken in execution, under the order or process of a court at the instance of a person suing in respect of such a debt or liability.

872  Money lent to dealer

             (1)  This section applies where a person (in this section called the client) lends money to a dealer in connection with a securities business carried on by the dealer.

             (2)  The dealer shall pay the money into an account that:

                     (a)  the dealer maintains with an Australian ADI; and

                     (b)  contains no money other than money lent to the dealer;

and shall so pay the money on or before the next day after the dealer receives it on which it can be paid into that account.

             (3)  The dealer shall give to the client a document (in this section called the disclosure document), in the prescribed form, setting out:

                     (a)  the terms and conditions on which the loan is made and accepted; and

                     (b)  the purpose for which, and the manner in which, the dealer is to use the money.

             (4)  The dealer shall keep the money in the account until the client gives the dealer a written acknowledgment that the client has received the disclosure document.

             (5)  The dealer shall not use the money except:

                     (a)  for the purpose, and in the manner, set out in the disclosure document; or

                     (b)  for any other purpose, or in any other manner, agreed on in writing by the dealer and the client after the dealer gives the disclosure document to the client.

873  Scrip in dealer’s custody

             (1)  This section applies where the holder of a licence (in this section called the dealer) receives for safe custody scrip that is the property of another person (in this section called the client) and for which the dealer, or a nominee controlled by the dealer, is accountable.

             (2)  If the client requests that the body corporate that issued or made available the securities underlying the scrip register the scrip in the name of such a nominee, the dealer must cause the body corporate so to register them.

             (3)  If the client requests that the scrip be deposited in safe custody with an Australian ADI with which the dealer maintains an account, the dealer must cause the scrip to be so deposited.

             (4)  If:

                     (a)  neither of subsections (2) and (3) applies; and

                     (b)  the scrip is not registered in the client’s name by the body corporate that issued or made available the securities underlying the scrip;

the dealer must cause the scrip to be so registered.

             (5)  A dealer must not deposit the scrip as security for a loan or advance to the dealer unless:

                     (a)  the client owes the dealer an amount in connection with a transaction entered into by the dealer on the client’s behalf;

                     (b)  the dealer gives the client a written notice that identifies the scrip and states that the dealer proposes