TRIPLICATE COPY

(Statutory Rules and Territory Ordinances)

Administering Department: please include this copy in documents sent to Federal Executive Council Secretariat in connection with making of this legislation. Ex. Co. Secretariat: please complete this copy by insertion of signatures and date of making, and send to Legislative Drafting Division, Attorney-General's Department.

Statutory Rules 1981 No. 127

–––––––––

Securities Industry Regulations

TABLE OF PROVISIONS

Regulation

1.   Citation

2.   Interpretation

3.   Compliance with forms

4.   Directions and instructions to be followed

5.   General requirements for documents

6.   Prescribed percentages and offices under section 5 of the Act

7.   Evidence of authority under sub-section 8 (2) of the Act

8.   Notice under sub-section 12 (3d) of the Act

9.   Notice under sub-section 19 (1) of the Act

10.   Allowances and expenses payable to persons being examined

11.   Record of examination

12.   Application for approval as a stock exchange

13.   Application by a natural person for dealers or investment advisors licence

14.   Application by a corporation for dealers or investment advisers licence

15.   Application for dealer's representatives or investment representatives licence

16.   Applications for licence to be enclosed in sealed envelope

17.   Application to Commission to vary a representatives licence

18.   Conditions to which licence is subject

19.   Return of security in certain circumstances

20.   Particulars to be entered in Register of Licence Holders

21.   Notification of change in registered particulars

22.   Annual statement by a dealer or investment adviser who is a natural person

23.   Annual statement by a dealer or investment adviser that is a corporation

24.   Annual statement by a representative

25.   Time for lodging annual statement

26.   Exemptions from licensing, &c.

27.   Sale of forfeited shares exempt

28.   Exempt dealer

29.   Exemption of certain securities

30.   Transactions in prescribed circumstances

31.   Exempt transaction

32.   Form of document to be issued to client

33.   Exemption of sale of exchange traded options

34.   Exemption of short sale covered by exchange traded option

35.   Dealer's trust accounts-exempt

36.   Notice of resignation or removal of auditor

37.   Dealer, who is a natural person, to lodge accounts, &c.

38.   Dealer, that is a corporation, to lodge accounts, &c.

39.   Auditor's report

40.   Register of interests in securities

41.   Entry of particulars in Register

42.   Notice under sub-section 90 (2) or (3) of the Act

S.R. No. 37/80 Cat. No.                              —Recommended retail price $1.80                                               88/21.5.1981

TABLE OF PROVISIONS—continued

Regulation

43.   Notice of appeal

44.   Notice calling for claims against fund

45.   Notice of disallowance of claim

46.   Prohibition of dealings in securities by insiders

47.   Dealings by employees of holders of licences

48.   Period for which documents are to be retained

SCHEDULE 1

Forms

SCHEDULE 2

Witnesses' fees and travelling expenses

Statutory Rules 1981 No. 127¹

_________

Securities Industry Regulations

WHEREAS it is provided by sub-section (5) of section 150 of the Securities Industry Act 1980 that the power of the Governor-General to make regulations under that Act shall be exercised only in accordance with advice that is consistent with resolutions of the Ministerial Council for Companies and Securities established under the Agreement made on 22 December 1978 between the Commonwealth and the States:

AND WHEREAS it is provided by section 16a of the Acts Interpretation Act 1901 that a reference in an Act to the Governor-General is, unless the contrary intention appears, to be deemed to include the person for the time being administering the Government of the Commonwealth of Australia and is, unless the contrary intention appears, to be read as referring to that person acting with the advice of the Federal Executive Council:

AND WHEREAS the making of the following Regulations is in accordance with advice that is consistent with those resolutions:

NOW THEREFORE I, the Administrator of the Government of the Commonwealth of Australia, acting with the advice of the Federal Executive Council and in pursuance of section 4 of the Acts Interpretation Act 1901, hereby make the following Regulations under the Securities Industry Act 1980.

Dated 3 June 1981.

STANLEY BURBURY

Administrator

By His Excellency's Command,

(Sgd) John Moore

Minister of State for Business and Consumer Affairs

––––––––—

Citation

1.   These Regulations may be cited as the Securities Industry Regulations.

Interpretation

2.   In these Regulations, unless the contrary intention appears—

"bank" means a bank as defined in section 5 of the Banking Act 1959 of the Commonwealth, the Primary Industry Bank of Australia Limited or a bank constituted under a law of a State or Territory;

"corporation" means any body corporate, whether formed or incorporated within or outside the Territory;

"life office" means a body corporate registered under the Life Insurance Act 1945 of the Commonwealth;

"superannuation scheme" means a fund the income of which is for the time being exempt from income tax by reason of paragraph 23 (jaa) or 23 (ja) of the Income Tax Assessment Act 1936 of the Commonwealth or a fund to which section 23f of that Act applied in relation to its last year of income;

"the Act" means the Securities Industry Act 1980;

"trustee" in relation to a superannuation scheme includes a person responsible for the administration and management of the scheme.

Compliance with forms

3.   Strict compliance with the forms in Schedule 1 is not necessary and substantial compliance, or such compliance as the particular circumstances allow, is sufficient.

Directions and instructions to be followed

4. (1) A form in Schedule 1 shall be completed in accordance with such directions and instructions as are specified in the form.

(2) In these Regulations a reference to a form by number is a reference to the form in Schedule 1 which bears that number.

General requirements for documents

5.   The Commission may refuse to receive a document for filing or lodging under the Act or these Regulations unless—

(a) the document is legibly and clearly printed, typewritten or handwritten—

(i) in ink of a type to provide a satisfactory reproduction; and

(ii) on paper of medium weight, of good quality and of foolscap folio size or international sheet size A4;

(b) the document has margins of not less than 25 millimetres on the left hand side and not less than 13 millimetres on the right hand side;

(c) in the case of a document comprising two or more sheets—

(i) the sheets are bound together securely; and

(ii) each sheet has a margin of not less than 25 millimetres on the side on which it is bound in addition to any space required for binding; and

(d) the document has endorsed on it the name, address and telephone number of the person by whom or on whose behalf it is filed or lodged, or of the person acting on behalf of such a person.

Prescribed percentages and offices under section 5 of the Act

6. (1) For the purposes of paragraph 5 (4) (e) of the Act, the prescribed percentage is 20%.

(2) For the purposes of paragraph 5 (7) (c) of the Act, the prescribed percentage is 20%.

(3) For the purposes of paragraph 5 (8) (b) of the Act, each of the following offices is prescribed:

(a) the office of Treasurer of the Commonwealth;

(b) the office of the trustee under, or continued under, Parts IV, X and XI of the Bankruptcy Act 1966 of the Commonwealth;

(c) the office of Controller of Enemy Property under the National Security (Enemy Property) Regulations of the Commonwealth;

(d) the office of Treasurer of the State of Western Australia;

(e) the office of Commissioner for Corporate Affairs for the State of Western Australia;

(f) the office of Public Trustee under the Public Trustee Act 1941 of the State of Western Australia;

(g) the office of Master and the office of Registrar of the Supreme Court, within the meaning of the Supreme Court Act 1935 of the State of Western Australia;

(h) the office of Treasurer of the State of Victoria;

(i) the office of Commissioner for Corporate Affairs for the State of Victoria;

(j) the office of Public Trustee under the Public Trustee Act 1958 of the State of Victoria;

(k) the office of Master of the Supreme Court of Victoria within the meaning of the Supreme Court Act 1958 of the State of Victoria;

(l) the office of Treasurer of the State of New South Wales;

(m) the office of Public Trustee under the Public Trustee Act, 1913, of the State of New South Wales;

(n) the office of Master under Division 1 of Part VIII of the Supreme Court Act, 1970, of the State of New South Wales;

(o) the office of Supervisor of Loan Fund Companies under the Loan Fund Companies Act, 1976, of the State of New South Wales;

(p) the office of Protective Commissioner under the Mental Health Act, 1958, of the State of New South Wales;

(q) the office of Treasurer of the State of Queensland;

(r) the office of Commissioner for Corporate Affairs for the State of Queensland;

(s) the office of Public Trustee under the Public Trustee Act 1978 of the State of Queensland;

(t) the office of Registrar under the Supreme Court Acts 1861-1980 of the State of Queensland;

(u) the office of Treasurer of the State of South Australia;

(v) the office of Curator of Prisoners Property under the Criminal Law Consolidation Act 1935-1980 of the State of South Australia;

(w) the office of Public Trustee under the Administration and Probate Act 1919-1980 of the State of South Australia;

(x) the office of Master or accountant under the Supreme Court Act 1935-1980 of the State of South Australia;

(y) the office of administrator under Chapter XLIX of the Criminal Code of the State of Tasmania;

(z) the office of Treasurer of the State of Tasmania;

(za) the office of Commissioner for Corporate Affairs for the State of Tasmania;

(zb) the office of Public Trustee under the Public Trustee Office Act 1930 of the State of Tasmania;

(zc) the office of Registrar of the Supreme Court under the Supreme Court Act 1959 of the State of Tasmania;

(zd) the office of Curator of Estates of Deceased Persons under the Administration and Probate Ordinance 1929 of the Australian Capital Territory;

(ze) the office of Registrar of the Supreme Court under the Australian Capital Territory Supreme Court Act 1933 of the Commonwealth;

(zf) the office of Registrar of Companies for the Australian Capital Territory.

(4) In sub-regulation (3), a reference to a State Act shall be construed as a reference to that State Act as amended and in force for the time being.

Evidence of authority under sub-section 8 (2) of the Act

7.   Where a person produces a document that is issued by the Commission and that document states that the person may require the production of books in accordance with paragraph 8 (2) (a) or 8 (2) (b), as the case may be, of the Act, that document shall be evidence of the person's authority to require the production of books in accordance with the paragraph specified in that document.

Notice under sub-section 12 (3d) of the Act

8.   A notice under sub-section 12 (3d) of the Act shall be in accordance with Form 1.

Notice under sub-section 19 (1) of the Act

9. (1) A notice under sub-section 19 (1) of the Act shall be in accordance with Form 2.

(2) A notice under sub-section 19 (1) of the Act shall be given by—

(a) delivering a copy of the notice to the prescribed person personally;

(b) sending the notice by pre-paid post addressed to the prescribed person at his usual or last known place of residence or business; or

(c) leaving a copy of the notice at the last known place of residence or business of the prescribed person with a person apparently resident or employed at that place and apparently over the age of 16 years.

Allowances and expenses payable to persons being examined

10.   For the purposes of sub-section 19 (11) of the Act, the allowances and expenses to which a person who attends at an examination under section 19 of the Act is entitled are such allowances as the inspector allows in accordance with the scale in. Schedule 2 to these Regulations.

Record of examination

11.   Where a record of the questions asked or answers given at an examination under Division 2 of Part II of the Act is in writing the record may be authenticated—

(a) by the person or persons who prepared the record of examination, or under whose supervision the record was prepared, certifying in writing under that person's hand that the record is a true transcript of the record of examination; or

(b) by any person present at the examination, or any part of the examination, signing his name at the bottom of each page of the written record which records a part of the examination at which that person was present.

Application for approval as a stock exchange

12.   An application by a body corporate to the Ministerial Council for the approval of a body corporate as a stock exchange shall be in accordance with Form 3.

Application by a natural person for dealers or investment advisers licence

13.   An application to the Commission by a natural person for a dealers licence or an investment advisers licence shall be in accordance with Form 4.

Application by a corporation for dealers or investment advisers licence

14.   An application to the Commission by a corporation for a dealers licence or an investment advisers licence shall be in accordance with Form 5.

Application for dealer's representatives or investment representatives licence

15.   An application to the Commission for the grant of a dealer's representatives licence or an investment representatives licence shall be in accordance with Form 6.

Applications for licence to be enclosed in sealed envelope

16.   Where an applicant lodges with the Commission an application under regulation 12, 13, 14 or 15, the application shall be enclosed in a sealed envelope on which there are clearly marked—

(a) words indicating the nature of the application; and

(b) the name, address and telephone number of the applicant.

Application to Commission to vary a representatives licence

17.   An application to the Commission under sub-section 50 (1) of the Act for the variation of a representatives licence shall be in accordance with Form 7.

Conditions to which licence is subject

18. (1) For the purposes of section 51 of the Act, a licence is granted subject to a condition that the holder of the licence shall immediately notify the local authority in writing of any matter that may adversely affect the financial position of the holder of the licence.

(2) Where, in accordance with section 51 of the Act, a licence is subject to a condition that the holder of the licence lodges with the local authority a security approved by the Commission for an amount not exceeding $20,000, the whole or part of which is payable to the local authority in certain circumstances, the licence is also subject to a condition that that amount be applied in accordance with sub-regulation (5) for the purposes of compensating a person who has suffered pecuniary loss and whose claim is allowed in accordance with sub-regulation (4).

(3) A person referred to in sub-regulation (2) shall be deemed to have suffered pecuniary loss if the loss was suffered from defalcation or fraudulent misuse of securities or documents of title to securities or of other property committed after the commencement of these Regulations by the holder of the licence or by an employee or servant of the holder in relation to money or other property which, whether before or after the commencement of these Regulations, in the course of or in connection with the business of dealing in securities or advising other persons concerning securities carried on by the holder of the licence—

(a) was entrusted to or received by the holder for or on behalf of any person; or

(b) where the holder of the licence was the sole trustee or a trustee with another person in respect of the money or other property—was entrusted to, or received by, the holder, or an employee or servant of the holder, as trustee, or for or on behalf of the trustees, of the money or property,

whether or not the person who committed the defalcation or fraudulent misuse of securities or documents of title to securities or of other property has been convicted of an offence in respect of the defalcation or fraudulent misuse.

(4) For the purposes of sub-regulation (2), a claim shall be allowed where—

(a) the claim is made in writing given to the local authority not later than—

(i) a date specified by the local authority, being not earlier than 3 months after the local authority seeks claims, in respect of the defalcation or fraudulent misuse, by notice published in a newspaper circulating generally in the Territory and, if the local authority so requires, in a newspaper circulating generally in a State or Territory where the holder of the licence carried on business to which the licence relates;

(ii) where no such notice is published—6 months after the person became aware of the defalcation or fraudulent misuse; or

(iii) such later date as the local authority in a particular case allows; and

(b) the local authority is satisfied that the claim is a proper claim.

(5) For the purposes of sub-regulation (2), an amount that is paid to the local authority shall be applied by the local authority—

(a) where the amounts of the claims that are allowed do not in the aggregate exceed the amount paid to the local authority—in the payment of those claims in full; or

(b) where the amounts of the claims that are allowed exceed in the aggregate the amount paid to the local authority—in the payment of part of each of such claims being the part that bears to the total amount of the claim the same proportion as the amount paid to the local authority bears to the aggregate amount of those claims.

(6) In this regulation "pecuniary loss" in relation to a claim of a person for compensation means the amount of the pecuniary loss suffered by that person (together with the reasonable costs of and disbursements incidental to the making and proof of the claim) less the amount or value of all moneys or other benefits paid or payable to him by a person other than the local authority in reduction of that loss.

Return of security in certain circumstances

19. (1) Subject to sub-regulation (2), where, in accordance with a condition to which a licence is subject, a security has been lodged with the local authority by the person to whom the licence is issued or by or on behalf of that person and—

(a) the person by whom or on whose behalf the security was so lodged ceases to be the holder of the licence;

(b) the licence of which he is the holder ceases to be subject to the condition that a security be lodged; or

(c) the person who is the holder of a licence ceases to conduct a substantial part of the business to which the licence relates,

the local authority may, on the application of the holder of the licence or any person who is the obligor under the security or by whom or on whose behalf the security was given—

(d) discharge the security wholly or in part;

(e) release any security wholly or in part;

(f) return wholly or in part any money or other property lodged as security; or

(g) release any surety wholly or in part.

(2) The local authority shall not exercise any power pursuant to sub-regulation (1) until 3 months after the date on which a notice in accordance with Form 8 is published—

(a) in a newspaper circulating generally in the Territory; and

(b) if the local authority so requires, in a newspaper circulating generally in a State or Territory where the holder of the licence carried on business to which the licence relates,

asking for particulars in writing of any claim in respect of the security to which the application relates and specifying a date on or before which such claims are to be made.

(3) Publication of a notice referred to in sub-regulation (2) shall be arranged by, and effected at the expense of, the person making the application to the local authority.

Particulars to be entered in Register of Licence Holders

20.   For the purposes of sub-section 54 (5) of the Act, the following matters are prescribed:

(a) particulars of the type of licence;

(b) the name of the State or Territory in which the licence was granted;

(c) the address of the principal place of business of the licence holder; and

(d) the name or style under which the business is carried on.

Notification of change in registered particulars

21.   For the purposes of section 55 of the Act, a notice, giving particulars of an event referred to in that section, shall be in accordance with Form 9.

Annual statement by a dealer or investment adviser who is a natural person

22.   For the purposes of sub-section 56 (1) of the Act, the statement, required to be lodged with the Commission by a person (other than a corporation) who is or has been the holder of a dealers licence or investment advisers licence, shall be in accordance with Form 10.

Annual statement by a dealer or investment adviser that is a corporation

23.   For the purposes of sub-section 56 (1) of the Act, the statement, required to be lodged with the Commission by a corporation that is or has been the holder of a dealers licence or an investment advisers licence, shall be in accordance with Form 11.

Annual statement by a representative

24.   For the purposes of sub-section 56 (2) of the Act, the annual statement, required to be lodged with the Commission by a person who is the holder of a representatives licence, shall be in accordance with Form 12.

Time for lodging annual statement

25. (1) For the purposes of sub-section 56 (2) of the Act, the prescribed date in each year is 31 March.

(2) For the purposes of paragraph 57 (c) of the Act, the prescribed period is one month.

Exemptions from licensing, &c.

26. (1) Parts IV, VI and VII and section 64 of the Act do not have effect in relation to—

(a) the acquisition or disposal of, or an agreement to acquire or dispose of, securities or documents of title to securities; or

(b) a mortgage or charge in respect of securities or documents of title to securities,

effected or entered into by a person whose ordinary business includes the lending of money and effected or entered into principally by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money or the provision of credit.

(2) Parts IV, VI and VII and section 64 of the Act do not have effect in relation to a person with respect to a dealing in or with an interest within the meaning of Division 5 of Part IV of the Companies Ordinance 1962, being an interest in relation to which there was not, and was not required to be, in force an approved deed within the meaning of that Division of the Companies Ordinance 1962.

(3) Subject to sub-regulation (4), Parts IV, VI and VII and section 64 of the Act do not have effect in relation to—

(a) a dealing entered into between a person and a government, local government authority or a body corporate or unincorporate in securities of that government, authority or body; or

(b) a transaction entered into by a sub-underwriter of an issue of securities that relates only to the sub-underwriting of the issue.

(4) Paragraph (3) (a) does not have effect in relation to a dealing entered into between a person and an investment company in securities of that investment company.

(5) In sub-regulation (4) "investment company" means a body corporate or unincorporate that carries on a business of investment in securities or interests in land or both (whether by acquisition and disposal or otherwise), the funds invested being funds subscribed directly or indirectly following an offer to the public (within the meaning of sub-section 5 (6) of the Companies Ordinance 1962) on terms that the funds subscribed would be so invested.

(6) Part VII of the Act does not have effect in relation to a corporation in respect of interests made available by that corporation in accordance with the provisions of Division 5 of Part IV of the Companies Ordinance 1962.

(7) Parts IV, VI and VII of the Act do not have effect in relation to—

(a) a dealer who is a trustee for a superannuation scheme and deals in securities only in relation to the management and administration of the superannuation scheme; or

(b) a dealer that is a life office and deals in securities only in relation to the carrying on of the business of life insurance.

(8) Section 44 and Part VII of the Act do not have effect in relation to a person employed by, or acting for or by arrangement with, a dealer referred to in sub-regulation (7) by reason only that he is so employed or so acts in respect of any act to which, if done by that dealer, sub-regulation (7) would apply.

(9) Parts VI and VII and sections 43 and 64 of the Act do not have effect in relation to a bank by reason only that, in relation to the carrying on of the business of banking, the bank—

(a) deals in securities issued or proposed to be issued by a government, a local government authority or a public authority; or

(b) accepts appointment as, or acts as, banker in respect of an issue of securities.

(10) Section 44 and Part VII of the Act do not have effect in relation to a person employed by a bank that deals in securities only in relation to the carrying on the business of banking by reason only that the person does an act on behalf of the bank in relation to—

(a) a dealing by the bank in securities issued or proposed to be issued by a government, local government authority or public authority; or

(b) the appointment of the bank as a banker in respect of an issue of securities.

(11) Subject to sub-regulation (12), section 44 and Part VII of the Act do not have effect in relation to a person employed by a bank by reason only that he acts in relation to interests defined in section 76 of the Companies Ordinance 1962 where the management company as so defined in relation to those interests is the bank or a corporation that is a wholly-owned subsidiary of the bank.

(12) The exemption conferred on a person by sub-regulation (11) does not apply if the person receives an amount by way of commission or other remuneration in respect of his services in relation to interests defined in section 76 of the Companies Ordinance 1962, other than amounts of salary or wages payable by the bank in respect of his employment by the bank.

Sale of forfeited shares exempt

27.   Parts IV, VI, VII and section 64 of the Act do not have effect in relation to a transaction of sale or purchase of any share in a no liability company that is offered for sale by public auction under section 323 of the Companies Ordinance 1962 by a person who is the holder of a licence under a law relating to the licensing of auctioneers.

Exempt dealer

28.   Section 64 of the Act does not have effect in relation to a transaction of sale or purchase of securities effected by a dealer as agent for another person through a member of a stock exchange in Australia if the dealer forthwith gives to the other person the contract note, or a copy of the contract note, given by the member under that section or a corresponding provision of a law of a State or Territory.

Exemption of certain securities

29.   Sections 64, 66 and 67 of the Act do not have effect in relation to the sale or purchase of securities or interests by a corporation by which the securities or interests were made available in accordance with the provisions of Division 1 or Division 5, as the case may be, of Part IV of the Companies Ordinance 1962.

Transactions in prescribed circumstances

30.   For the purposes of sub-section 64 (5) of the Act, a transaction takes place in prescribed circumstances if the transaction takes place on the trading floor at an official meeting of a stock exchange in Australia between persons who are members of a stock exchange in Australia.

Exempt transaction

31. (1) Section 66 of the Act does not apply in relation to a transaction entered into by a dealer with a registered trader for the acquisition or disposal of an option, where—

(a) the registered trader is a person associated with the dealer by reason only that the dealer is that registered trader's clearing member and the transaction is cleared by the registered trader through the dealer in accordance with the provisions of the Stock Options Trading Regulations of The Sydney Stock Exchange Limited; and

(b) the registered trader is not employed by the dealer or by the firm in which the dealer is a partner.

(2) In sub-regulation (1), the terms "registered trader" and "clearing member" have the same meaning as in the Stock Options Trading Regulations of The Sydney Stock Exchange Limited, and the term "option" means an option taken or written in accordance with those Regulations.

Form of document to be issued to client

32.   For the purposes of paragraph 67 (b) of the Act, the document to be furnished to a client shall be in accordance with Form 13.

Exemption of sale of exchange traded options

33.   Section 68 of the Act does not have effect in relation to a sale of securities that is effected by the giving or writing of an option that is registered with Options Clearing House Proprietary Limited.

Exemption of short sale covered by exchange traded options

34. (1) In this regulation—

"exchange traded options" means options registered with Options Clearing House Proprietary Limited in accordance with the Stock Options Trading Regulations of the Sydney Stock Exchange Limited;

"vendor", where a sale is effected by an agent, means the principal.

(2) Subject to sub-regulations (3), (4) and (5), section 68 of the Act does not apply in relation to a sale of shares to which the vendor does not, at the time of the sale, have a presently exercisable and unconditional right to vest in the

purchaser, if the vendor is, at the time of the sale, able to obtain, by exercising exchange traded options, shares equal in number to, and of the same class as, the total number of shares of that class sold by the vendor—

(a) in that sale; and

(b) in previous sales that have not been completed by the transfer of shares to the purchaser, being sales of shares to which, at the time of the sale referred to in paragraph (a), the vendor does not have a presently exercisable and unconditional right to vest in the purchaser.

(3) For the purposes of sub-regulation (2), where the vendor is, at the time of the sale, able to exercise, and have exercised against him, exchange traded options, the number of shares of the same class as those sold by the vendor which he is able to obtain by the exercise of exchange traded options shall be determined by subtracting from the number of shares of that class over which he can exercise exchange traded options the number of shares of that class over which he has given or written exchange traded options that have not expired or been exercised at that time.

(4) Sub-regulation (2) does not apply to a sale of shares, that would otherwise satisfy the requirements of that sub-regulation, if, were the vendor to exercise at the time of the sale the exchange traded options required to yield shares of the same class as, and equal in number to, the shares the subject of that sale—

(a) the total price that would be payable by the vendor pursuant to the exercise of those options would be greater than the total price that would be payable to him under that sale; and

(b) the vendor has not deposited with Options Clearing House Proprietary Limited, before and in relation to that sale, an amount not less than the difference between the two prices referred to in paragraph (a).

(5) For the purposes of paragraph (4) (a) the total price that would be payable by a vendor pursuant to the exercise of the required options shall be calculated by referring first to the option with the lowest exercise price, then to the option with the second lowest exercise price, and so on in ascending order of price until the necessary number of options would have been exercised.

Dealer's trust accounts—exempt

35. (1) Sections 67 and 73 of the Act do not have effect in relation to a dealing in securities carried on by a corporation to which this regulation applies, being a dealing which is carried on in the course of performing the principal functions of the corporation or incidentally to the performance of those functions.

(2) This regulation applies to a corporation that is a public company as defined in sub-section 5 (1) of the Companies Ordinance 1962 or of a law of a State or of a Territory of the Commonwealth corresponding to the Companies Ordinance 1962 and has a paid-up capital of not less than $2,000,000, the principal functions of which include—

(a) underwriting issues of securities;

(b) advising and assisting corporations in relation to—

(i) the raising of capital;

(ii) corporate reconstructions and amalgamations; or

(iii) the acquisition of securities primarily for the purpose of controlling another corporation or other corporations; or

(c) doing anything incidental to the management and administration of investments of clients where the amount of the investments managed or administered for each client is not less than $100,000.

Notice of resignation or removal of auditor

36.   For the purposes of sub-section 76 (7) of the Act, the notice required to be lodged with the Commission shall be in accordance with Form 14.

Dealer, who is a natural person, to lodge accounts, &c.

37.   For the purposes of sub-section 78 (2) of the Act, a dealer who is a natural person shall prepare a true and fair profit and loss account and balance sheet in accordance with Form 15.

Dealer, that is a corporation, to lodge accounts, &c.

38.   For the purposes of sub-section 78 (2) of the Act, a dealer that is a corporation shall prepare a true and fair profit and loss account and balance sheet in accordance with Form 16.

Auditor's report

39. (1) For the purposes of sub-section 78 (2) of the Act, the auditor's report required to be lodged with the Commission in relation to a true and fair profit and loss account and balance sheet shall be in accordance with Form 17.

(2) For the purpose of preparing the auditor's report referred to in sub-regulation (1), the auditor shall conduct a check or test examination of—

(a) the internal procedures for recording transactions relating to securities;

(b) the internal procedures relating to securities held for sale and for safe custody;

(c) the balancing of scrip accounts; and

(d) the operation and control of trust account procedures, and, in relation to any dealer who does not act only as a principal—

(e) securities on hand and outstanding transactions, including confirmation from clients or other persons holding scrip;

(f) the clients' ledger, including the reconciliation of the trust account, the market value of security held for unpaid accounts and the incidence of doubtful debts; and

(g) broker's agents and such other ledgers or records as the auditor considers it necessary to examine.

Register of interests in securities

40. (1) A register required to be maintained under sub-section 89 (1) of the Act shall be maintained—

(a) in accordance with Form 18; or

(b) in a manner that enables the particulars required to be disclosed by Form 18 to be readily ascertained.

(2) Where the person who maintains the Register is the holder of a licence who carries on business in partnership with another person, the Register shall contain particulars of the securities in which the partnership has an interest.

Entry of particulars in Register

41.   For the purposes of sub-sections 89 (2) and (3) of the Act, particulars of securities shall be entered in the Register in handwriting in ink of a type to provide a satisfactory reproduction, or in typewriting of a type to provide a Satisfactory reproduction.

Notice under sub-section 90 (2) or (3) of the Act

42.   A notice under sub-section 90 (2) or (3) of the Act shall be in accordance with Form 19.

Notice of appeal

43.   A notice of appeal under sub-section 113 (2) of the Act shall be in accordance with Form 20.

Notice calling for claims against fund

44.   A notice under section 114 of the Act shall be in accordance with Form 21.

Notice of disallowance of claim

45.   A notice of disallowance under sub-section 115 (4) of the Act shall be in accordance with Form 22.

Prohibition of dealings in securities by insiders

46. (1) Sub-sections 128 (1), (3) and (6) of the Act do not have effect in relation to—

(a) the obtaining by a director of a share qualification in accordance with sub-section 116 (1) of the Companies Ordinance 1962;

(b) the subscription for and acquisition pursuant to that subscription of securities of a corporation by, or by a trustee for, employees of the corporation, or of a corporation that is deemed to be related to the first-mentioned corporation by reason of sub-section 6 (5) of the Companies Ordinance 1962, under a superannuation scheme, pension fund or other scheme established solely or primarily for the benefit of such employees; or

(c) a transaction entered into by a person in accordance with his obligations under an underwriting agreement.

(2) Sub-sections 128 (1), (2), (3) and (6) of the Act do not apply to or in relation to—

(a) a personal representative of a deceased person, a liquidator or a person holding the office of the trustee under Parts IV, X and XI of the Bankruptcy Act 1966 of the Commonwealth in respect of any transaction entered into by him in good faith in the performance of the functions of his office as such a representative, liquidator or trustee;

(b) a transaction by way of, or arising out of, a mortgage or charge of securities or a mortgage, charge, pledge or lien of documents of title to securities;

(c) the acquisition of securities by a person under a will or on the intestacy of another person; or

(d) a dealing in securities which consists only of the transfer of the legal estate in those securities from one trustee to another trustee.

Dealings by employees of holders of licences

47.   Sub-section 132 (4) of the Act does not have effect in relation to—

(a) a bank; or

(b) a corporation in so far as, in good faith, it gives credit to a person (not being a director of the corporation) in the employment of the corporation, or of another corporation that is deemed to be related to the first-mentioned corporation by reason of sub-section 6 (5) of the Companies Ordinance 1962, with a view to enabling that person to purchase fully paid shares in the corporation to be held by himself by way of beneficial ownership.

Period for which documents are to be retained

48.   For the purposes of sub-section 136 (4) of the Act, the prescribed period is 7 years.

___________

SCHEDULE 1

FORM 1                                                    Regulation 8

Securities Industry Act 1980

NOTICE UNDER SUB-SECTION 12 (3d)

TAKE NOTICE that the terms of sub-section 12 (3c) of the Securities Industry Act 1980 are as follows:

"(3c) A person is not excused from disclosing information to the Commission pursuant to a requirement made of him under sub-section (3a) on the ground that the disclosure of the information might tend to incriminate him but, where the person claims before disclosing the information that the information might tend to incriminate him, the information is not admissible in evidence against him in criminal proceedings other than proceedings under this section."

Dated this                        day of                                     19          .

Commission.

___________

SCHEDULE 1—continued

FORM 2                                                    Regulation 9

Securities Industry Act 1980

NOTICE BY A PERSON UNDERTAKING AN INVESTIGATION OF MATTERS CONCERNING DEALING IN SECURITIES

(¹) To:

In relation to an investigation of (*).............................................................................................

..................................................................................................................................................................

..................................................................................................................................................................

TAKE NOTICE that under sub-section 19 (1) of the Securities Industry Act 1980 you are hereby required—

(a) to appear on(*)...............................................................................................................................

................................ 19      , at (⁴)..................... before (⁵)...................................................................

at (⁶).....................................................................................................................................................

.............................................................................................................................................................

for examination on oath or affirmation and to answer questions put to you in relation to the abovementioned investigation;

(b) to produce to (⁵)............................................................................ on (³).......................................

........................ 19     , at (⁴)............................................. , at (⁶)..........................................................

.............................................................................................................................................................

the following books: and all such other books in your custody or under your control as relate to the abovementioned investigation; and

(c) to give to (⁵)................................................................................... all reasonable assistance in connection with the abovementioned investigation.

Dated this................................. day of........................... 19        .

Signature of person carrying out investigation................................................................

(1) Name and address of the person to whom the notice is given

(2) State nature of the matter to which the investigation relates

(3) Insert date

(4) Insert time

(5) Insert name of person carrying out investigation

(6) Insert full particulars of the place at which the requirement is to be satisfied

SCHEDULE 1—continued

DIRECTIONS

1.   In relation to sub-sections 19 (1) and 19 (2) of the Securities Industry Act 1980, your attention is drawn to sub-sections 19 (4), 19 (8) and 19 (9) which provide, respectively as follows:

"(4) A prescribed person shall not, without reasonable excuse, refuse or fail to comply with a requirement of sub-section (1).

Penalty: $10,000 or imprisonment for 2 years, or both."

"(8) A duly qualified legal practitioner acting for a prescribed person—

(a) may attend an examination of that person; and

(b) may, to the extent that the inspector permits—

(i) address the inspector; and

(ii) examine that person,

in relation to matters in respect of which the inspector has questioned that person.

"(9) A prescribed person is not excused from answering a question put to him by an inspector on the ground that the answer might tend to incriminate him but, where that person claims, before answering the question, that the answer might tend to incriminate him, the answer is not admissible in evidence against him in criminal proceedings other than proceedings under this section or other proceedings in respect of the falsity of the answer.".

2.   Under Division 2 of Part II of the Securities Industry Act 1980 a "prescribed person" means a person suspected or believed by an inspector, on reasonable grounds, to be capable of giving information concerning any matter being, or to be, investigated by the inspector pursuant to this Division.

3.   In relation to the reference to "books" in paragraph (b) of this form your attention is drawn to sub-section 4 (1) of the Securities Industry Act 1980 which defines "books" as follows:

"books" includes any register or other record of information and any accounts or accounting records, however compiled, recorded or stored, and also includes any document.

_________

FORM 3                                             Regulation 12

Securities Industry Act 1980

APPLICATION FOR APPROVAL OF A BODY CORPORATE AS A STOCK EXCHANGE

............................................................................................................................ Limited hereby applies

for approval as a stock exchange.

Principal place of business and telephone number of applicant.............................................................

................................................................................................................................................................

...............................................................................................

Proposed name of stock exchange...........................................................................................................

Place at which proposed stock exchange will meet

.................................................................................................................................................................

Dated this.............................................................. day of.................................................. 19..... .

Signature of *Director/*Secretary/*Manager..........................................................................................

* Strike out whichever is inapplicable

_____________

SCHEDULE 1—continued

FORM 4                                                    Regulation 13

Securities Industry Act 1980

APPLICATION BY A NATURAL PERSON FOR DEALER S

OR INVESTMENT ADVISERS LICENCE

Application is hereby made for:

*A dealers licence/*An investment advisers licence,

and the following statements are made in respect of the application:

SCHEDULE 1—continued

SCHEDULE 1—continued

SCHEDULE 1—continued

11.   Set out any additional information (including any formal qualifications or training and the name of the institution that conducted the relevant course) considered relevant to this application—

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

............................................................................................................................................................

Dated this.................................................................. day of........................................................ 19.....

Signature of applicant...............................................

*Strike out whichever is inapplicable

___________

DIRECTIONS

This application must be accompanied by a detailed statement, made up to a date not earlier than 14 days before the date of this application, signed by the applicant, disclosing his total liabilities together with details of his assets in accordance with the following provisions of these directions:

(1) Where the applicant's total tangible assets (excluding the value of any membership in a stock exchange)—

(a) exceed his total liabilities (including liabilities of a contingent nature) by $50,000 or more, the statement should disclose full particulars, including where appropriate the basis of valuation, of those assets up to an amount which exceeds those liabilities by not less than $50,000; or

(b) do not exceed his total liabilities (including liabilities of a contingent nature) by $50,000 or more, the statement should disclose full particulars, including where appropriate the basis of valuation, of all his assets.

(2) Where any of the disclosed assets are vested in the applicant and any other person(s), or are encumbered in any manner, full particulars in relation thereto must be given.

(3) The statement should disclose full particulars of the applicant's liabilities and should—

(a) in the case of liabilities (excluding liabilities of a contingent nature)—be expressed in terms of the time when they will fall due, as follows:

(i) due not later than in 1 year's time;

(ii) due later than in 1 year's time but not later than in 3 years' time;

(iii) due later than in 3 years' time; and

SCHEDULE 1—continued

(b) in the case of liabilities of a contingent nature—be expressed separately in terms of the time they would be most likely to fall due, as follows:

(i) due not later than in 1 year's time;

(ii) due later than in 1 year's time but not later than in 3 years' time;

(iii) due later than in 3 years* time.

(4) Where the applicant is a partner in a firm—

(a) a reference in these directions to the applicant's assets and liabilities includes a reference to such part of the assets and liabilities of the firm as does not exceed his proportional interest in the firm's business under the partnership agreement; and

(b) the applicant should disclose in the statement the precise extent of his interest under the partnership agreement in the assets and liabilities of the firm.

(5) Information as to the assets and liabilities of the applicant's business should take the form of—

(a) the last audited profit and loss account and balance sheet (including every document required by law or by the Committee of the stock exchange of which he is a member to be attached thereto); or

(b) in the case of an applicant who is unable to comply with paragraph (a), a profit and loss account and balance sheet, drawn up in accordance with generally accepted accounting principals and signed by all the partners of the business to which the accounts relate.

(6) If the profit and loss account and balance sheet of the applicant's business are made up to a date earlier than 14 days before the date of this application they should be accompanied by a report signed by the applicant, or, where the applicant is a partner in a firm, by all the partners of the firm, stating that due enquiry has been made by the person or persons signing the report in relation to the interval between the date to which the balance sheet has been made up and a date not earlier than 14 days before the date of this application and setting out whether or not in his or their opinion—

(a) there have arisen in relation to the business any circumstances adversely affecting trading or the value of its assets or its ability to meet liabilities as they fall due;

(b) the current assets appear in the balance sheet of the business at valuations which are believed to be realisable in the ordinary course of business; or

(c) there have arisen any liabilities of a contingent nature including those arising by reason of any guarantee by the applicant or any of his partners.

___________

SCHEDULE 1—continued

FORM 5                                                Regulation 14

Securities Industry Act 1980

APPLICATION BY A CORPORATION FOR DEALERS OR INVESTMENT ADVISERS LICENCE

Application is hereby made for:

*A dealers licence/*An investment advisers licence and the following statements are made in respect of the application:

SCHEDULE 1—continued

4.   Set out name and address of each person who directly or indirectly exercises or has power to exercise a controlling influence over the management and policies of the applicant other than those shown as directors—

....................................................................................................................................................

....................................................................................................................................................

....................................................................................................................................................

5.   Is any director or secretary of the applicant a director of any other corporation incorporated in the Territory or elsewhere?

Using an annexure answer "Yes" or "No" for each person; if "Yes", give details of—

(a) names of corporations;

(b) places of incorporation; and

(c) dates of appointment.

6.   Does the applicant or any director or secretary of the applicant have a relevant interest as determined in accordance with section 5 of the Securities Industry Act 1980 in one or more shares in any corporation incorporated in the Territory or elsewhere, amounting to not less than 10% of the aggregate of the nominal amount of all the issued shares of the corporation?

Using an annexure answer "Yes" or "No" for each of the persons; if "Yes", give details of—

(a) names of corporations;

(b) places of incorporation; and

(c) the relevant interests.

7.   (Answer questions "Yes" or "No" in space provided. If "Yes" attach annexures giving all relevant particulars.)

Has within the past 10 years the applicant or any director or secretary of the applicant—

Answer

8.   (Answer questions "Yes" or "No" in space provided. If "Yes" attach annexures giving all relevant particulars.)

Has within the past 10 years any director or secretary of the applicant—

Answer

SCHEDULE 1—continued

9.   Has any director or secretary of the applicant had any experience in performing the functions of a dealer or investment adviser as defined in sub-section 4 (1) of the Securities Industry Act 1980?

........................................

(Answer "Yes" or "No")

If "Yes" attach annexure giving all relevant particulars.

10. In relation to each director and secretary of the applicant, set out below details of the officer's employment and business activities, during the previous 5 years:

SCHEDULE 1—continued

11.   Set out any additional information (including any formal qualifications or training of the directors or secretary of the applicant and the name of the institution that conducted the relevant course) considered relevant to this application—

.....................................................................................................................................................

.....................................................................................................................................................

.....................................................................................................................................................

Dated this................................................................... day of.................................................. 19.......

Signature of *Director/*Secretary/*Manager..................................................................

* Strike out whichever is inapplicable

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

DIRECTIONS

(1) This application must be accompanied by—

(a) the last audited profit and loss account and balance sheet of the applicant (including every document required by law to be annexed or attached thereto, and in the case of a corporation not incorporated under the Companies Ordinance 1962 including every document which would be required to be annexed thereto if it were a public company within the meaning of the Companies Ordinance 1962; or

(b) in the case of an applicant unable to comply with paragraph (a), a profit and loss account and balance sheet drawn up in accordance with the provisions of the Companies Ordinance 1962, insofar as is applicable in the circumstances, and signed by not less than 2 directors of the applicant.

(2) If the profit and loss account and balance sheet of the applicant are made up to a date earlier than 14 days before the date of this application, they should be accompanied by a report signed by not less than 2 directors of the applicant stating whether after due enquiry by them in relation to the interval between the date to which the balance sheet has been made up and a date not earlier than 14 days before the date of this application—

(a) there has in their opinion arisen in relation to the business any circumstances adversely affecting trading or the value of the assets or the ability to meet liabilities as they fall due;

(b) the current assets appear in the balance sheet of the business at valuations which are believed to be realisable in the ordinary course of business; or

(c) there have arisen any liabilities of a contingent nature including those arising by cannon of any guarantee given by the applicant.

_____________

SCHEDULE 1—continued

FORM 6                                                    Regulation 15

Securities Industry Act 1980

APPLICATION FOR REPRESENTATIVES LICENCE

Application is hereby made for:

*A dealer's representatives licence/*An investment representatives licence and the following statements are made in respect of the application:

SCHEDULE 1—continued

2.   (Answer questions "Yes" or "No" in space provided. If "Yes" attach annexures giving all relevant particulars.)

Answer

Has the applicant within the past 10 years—

3.   Has the applicant had any experience in performing the functions of a dealer's representative or an investment representative as defined in sub-section 4 (1) of the Securities Industry Act 1980?

....................................

(Answer “yes” or “no”)

If "Yes" attach annexure giving all relevant particulars

4.   Set out below details of the applicant's employment and business activities during the previous 5 years:

SCHEDULE 1—continued

FORM 7                                                   Regulation 17

Securities Industry Act 1980

APPLICATION BY REPRESENTATIVE FOR VARIATION OF PARTICULARS RELATING TO PRINCIPAL

Application is hereby made for a variation of the name of the holder of *a dealers licence/*an investment advisers licence on whose behalf the applicant may act.

SCHEDULE 1—continued

SCHEDULE 1—continued

FORM 9                                                   Regulation 21

Securities Industry Act 1980

NOTICE OF PARTICULARS OF CESSATION OR CHANGE IN RELATION TO A LICENCE

SCHEDULE 1—continued

Has within the past 10 years any director or secretary so appointed—

Answer

SCHEDULE 1—continued

SCHEDULE 1—continued

FORM 10Regulation 22

Securities Industry Act 1980

ANNUAL STATEMENT BY A DEALER OR INVESTMENT ADVISER OTHER THAN A CORPORATION

SCHEDULE 1—continued

SCHEDULE 1—continued

DIRECTIONS

This statement must be accompanied by a detailed statement—

(a) where the licence is a dealer's licence, made up as at 30 June each year; or

(b) where the licence is an investment adviser's licence, made up as at a date not earlier than 14 days before the date of this annual statement,

signed by the licensee, disclosing his total liabilities together with details of his assets in accordance with the following provisions—

(1) Where the licensee's total tangible assets (excluding the value of any membership in a stock exchange)—

(a) exceed his total liabilities (including liabilities of a contingent nature) by $50,000 or more, the statement should disclose full particulars, including where appropriate the basis of valuation, of those assets up to an amount which exceeds those liabilities by not less than $50,000; or

(b) do not exceed his total liabilities (including liabilities of a contingent nature) by $50,000 or more, the statement should disclose full particulars, including where appropriate the basis of valuation, of all his assets.

(2) Where any of the disclosed assets are vested in the licensee and any other person, or are encumbered in any manner, full particulars in relation thereto must be given.

(3) The statement should disclose full particulars of the licensee's liabilities and should—

(a) in the case of liabilities (excluding liabilities of a contingent nature) be expressed in terms of the time when they will fall due, as follows:

(i) due not later than in 1 year's time;

(ii) due later than in 1 year's time but not later than in 3 years' time; and

(iii) due later than in 3 years' time;

(b) in the case of liabilities of a contingent nature be expressed separately in terms of the time when they would be most likely to fall due, as follows:

(i) due not later than in 1 year's time;

(ii) due later than in 1 year's time but not later than in 3 years' time; and

(iii) due later than in 3 years' time.

(4) Where the licensee is a partner in a firm—

(a) a reference in these directions to the licensee's assets and liabilities includes a reference to such part of the assets and liabilities of the firm as does not exceed his proportional interest in the firm's business under the partnership agreement; and

(b) the licensee should disclose in the statement the precise extent of his interest under the partnership agreement in the assets and liabilities of the firm.

SCHEDULE 1—continued

(5) In the case of an investment adviser only, the statement should include—

(a) information as to the assets and liabilities of the licensee's business which should take the form of the last audited profit and loss account and balance sheet (including every document required by law to be attached thereto); or

(b) in the case of a licensee who is unable to comply with paragraph (a), a profit and loss account and balance sheet, drawn up in accordance with generally accepted accounting principals and signed by all the partners of the business to which the accounts relate.

(6) In the case of an investment adviser only, if the profit and loss account and balance sheet of the licensee's business are made up to a date earlier than 14 days before the date of this statement they should be accompanied by a report signed by the licensee or, where the licensee is a partner in a firm, all the partners in the firm, stating that due enquiry has been made by the person or persons signing the report in relation to the interval between the date to which the balance sheet has been made up and a date not earlier than 14 days before the date of this statement and setting out whether, in his or their opinion—

(a) there has arisen in relation to the business any circumstances adversely affecting trading or the value of the assets or the ability to meet liabilities as they fall due;

(b) the current assets appear in the balance sheet of the business at valuations believed to be realisable in the ordinary course of business; or

(c) there have arisen any liabilities of a contingent nature, including those arising by reason of any guarantee given by the licensee or any of his partners.

(7) In the case of a dealer only—the statement should include a statement by the licensee as to whether after due inquiry by him in relation to the interval between 30 June and a date not

earlier than 14 days before the lodgment of this statement, there have arisen any circumstances that may adversely affect the financial position of the dealer and, if so, particulars of those circumstances.

____________

SCHEDULE 1—continued

FORM 11................................................. Regulation 23

Securities Industry Act 1980

ANNUAL STATEMENT BY A DEALER OR INVESTMENT ADVISER THAT IS A CORPORATION

SCHEDULE 1—continued

SCHEDULE 1—continued

DIRECTIONS

In the case of an investment adviser, this statement must be accompanied by—

1.   (a) the last audited profit and loss account and balance sheet of the licensee (including every document required by law to be annexed or attached thereto, and in the case of a corporation not incorporated under the Companies Ordinance 1962, including every document which would be required to be annexed thereto if it were a public company within the meaning of the Companies Ordinance 1962); or

(b) in the case of a licensee that is unable to comply with paragraph (a) above, a profit and loss account and balance sheet, drawn up in accordance with the provisions of the Companies Ordinance 1962, insofar as is applicable in the circumstances, and signed by not less than 2 directors of the licensee.

2.   If the profit and loss account and balance sheet of the licence are nude up to a date earlier than 14 days before the date of this statement, they should be accompanied by a report signed by not less than 2 directors of the licensee stating whether after due enquiry by them in relation to the interval between the date to which the balance sheet has been made up and a date not earlier than 14 days before the date of this statement—

(a) there has in their opinion arisen in relation to the business any circumstance adversely affecting trading or the value of the assets, or the ability to meet liabilities as they fall due;

(b) the current assets appear in the balance sheet of the business at valuations which are believed to be realisable in the ordinary course of business; or

(c) there have arisen any liabilities of a contingent nature including those arising by reason of any guarantee given by the licensee.

____________

SCHEDULE 1—continued

FORM 12                                                 Regulation 24

Securities Industry Act 1980

ANNUAL STATEMENT BY A REPRESENTATIVE

SCHEDULE 1—continued

FORM 13                                                     Regulation

Securities Industry Act 1980

DOCUMENT TO BE FURNISHED BY A DEALER

To..................................................................................................................................................... (1)

We confirm your arrangements with us concerning the moneys owing to you in the sum of $........................, or such other balance as shall be due in your favour from time to time, which you have agreed to lend to...............................................................................for the purpose of investing in .................................................. re-payable on ................................ at an interest rate of % per annum.

Interest payments to be made on.................................

In lending this money to............................................for use within its business it is acknowledged by you that your loan is not protected.

Upon receipt of the signed duplicate of this letter, we shall transfer the appropriate funds from our trust account pursuant to this arrangement.

Dated this.................................................................day of......................................................19..........

Signature of dealer.......................................................................

................................................................  (2)

I acknowledge receipt of your letter Dated...................................... and advise my agreement to the terms set out in your letter.

Dated this................................................................day of...........................................................19........

Signature of client............................................................................

(1) Name and address of client

(2) Address of dealer

______________

SCHEDULE 1—continued

FORM 14                                                 Regulation 36

Securities Industry Act 1980

NOTICE OF RESIGNATION OR REMOVAL OF AUDITOR

SCHEDULE 1—continued

FORM 15                                                 Regulation 37

Securities Industry Act 1980

ACCOUNTS TO BE PREPARED BY A DEALER WHO IS A NATURAL PERSON

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Name of dealer or name under which licence is held..............................................................................

Licence number........................................................................................................................................

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

DIRECTIONS

1.   In addition to the information specifically required such other information and explanations must be shown as is necessary to present a true and fair view of a person's financial position.

2.   Full disclosure is required under Notes 1 to 7 and where necessary a supporting schedule should be attached.

3.   The term "associated person" means a person who is deemed to be associated with the dealer by virtue of the provisions of section 6 of the Securities Industry Act 1980.

4.   The term "immediate family" means spouse and children.

5.   The term "current asset" is to be generally accorded the meaning of an asset expected to be realised within 12 months in the ordinary course of events.

6.   The term "current liability" means a liability that would, in the ordinary course of events, be payable within 12 months after the end of the financial year to which the accounts relate.

7.   The term "secured amounts" includes amounts secured by equitable charges and charges whether registered or unregistered.

SCHEDULE 1—continued

SCHEDULE 1—continued

SCHEDULE 1—continued

SCHEDULE 1—continued

* Strike out whichever is inapplicable

(¹) Attach list detailing gains and losses separately and any income tax involvements

SCHEDULE 1—continued

NOTES

1    List the name, number and value of all securities held which were acquired during the year as a result of an underwriting or sub-underwriting agreement.

3    Secured assets/liabilities—associated persons

(a) Current assets—

Secured amounts included in the following categories (state in each case the nature and extent of the security, and show the market value).

(b) Non-current assets—

Secured amounts included in the following categories (state in each case the nature and extent of the security, and show the market value).

(c) Current liabilities

Secured amounts included in the following categories (state in each case the nature and extent of the security, the market value, and whether or not the security asset is owned by the dealer or, where he carries on business in partnership, by the firm).

SCHEDULE 1—continued

(d) Non-current liabilities

Secured amounts included in the following categories (state in each case the nature and extent of the security, the market value, and whether or not the security asset is owned by the dealer or where he carries on business in partnership, by the firm).

4    Loans and deposits (full details to be given relating to whether each loan is secured or unsecured)

5    Secured Liabilities—general

The balance sheet includes liabilities in the following categories secured by assets (state in each case the nature and extent of the security, the market value, and whether or not the security asset is owned by the dealer or, where he carries on business in partnership, by the firm).

(a) Current liabilities—

SCHEDULE 1—continued

STATEMENT BY DEALER

The transactions conducted by *me/*us during the financial year—

*were without exception on *my/*our own account.

*included transactions on account of persons other than *me/*us.

The assets and liabilities of each company controlled by me/us or any one or more of us or any other venture in which I/we have a financial interest are/are not in my/our opinion such as to affect adversely my/our financial position. ⁽¹⁾

*I/*We certify that the above profit and loss account and balance sheet have, to the best of *my/*our knowledge and belief, been drawn up to comply with the requirements of sub-section 78 (2) of the Securities Industry Act 1980

(2)                                                                                                                                                

                                                                                                                                                      *Licensee/*Partners in the firm of ……………………………………………………………..                                                       

Dated this…………………….day of…………………………..19………..

AUDITOR'S REPORT (³)

In *my/*our opinion, the dealer's accounts referred to above *show/*do not show a true and fair view of the dealer's position at ………………….and of the profit or loss of the dealer for the year in accordance with statements of accounting standards issued by the Institute of Chartered Accountants in Australia or the Australian Society of Accountants, or both.

Dated this……………………………..day …………………………………… 19……….     

Signature(s) of Auditor(s)                                                                                      

(1) Strike out all the alternatives in paragraph which are inapplicable

(2) All partners to sign

(3) If an auditor is not satisfied as to any matter his reasons should be stated

* Strike out whichever alternative is inapplicable

SCHEDULE 1—continued

Regulation 38

FORM 16

Securities Industry Act 1980

STATEMENT RELATING TO ACCOUNTS OF A DEALER THAT IS A CORPORATION

_________________________________________________________________________________

Name of dealer:                                                                                                                             

Licence number:                                                                                                                           

_________________________________________________________________________________

1    The attached Balance Sheet, Profit and Loss Account and Notes are a true copy of the audited accounts of     

……………………  for the year ended………………………………………………….                                                                                  

and the attached Auditor's Report is a true copy of the Auditor's Report thereon.

2    The attached accounts referred to above have been drawn up in accordance with generally accepted accounting principles.

3      The following supplementary information is submitted in support of the attached Balance Sheet and Profit and Loss Account.

Balance Sheet

4      Assets—

(a) Bills of Exchange: show separately bills to mature within—

(b) Debtors—

Amounts owed by—

Dealers (less provision for doubtful debts this year

$........................, last year $...................... )

Clients (less provision for doubtful debts this year

$............................ , last year $......................)

Other Debtors (less provision for doubtful debts this year

$............................, last year $................)

(c) Loans and Deposits—

SCHEDULE 1—continued

Liabilities—

5      (a) Bills of Exchange—show separately bills to mature within—

30 days ....................................................................................

90 days ....................................................................................

180 days.....................................................................................

Bills of Exchange to mature over 180 days .............................

(b) Creditors—

Amounts owed to—

Dealers ..................................................................................

Clients ..................................................................................

Other creditors......................................................................

(c) Loans and Deposits—

At call.......................................................................................

Other (show current and non-current separately) .................

Profit and Loss Accounts—

6      (a) Revenue—

Profit (losses) from trading in securities..................................

Brokerage................................................................................

Underwriting Commission .....................................................

Profit (losses) from trading other than in securities ...............

Dividends................................................................................

Interest ...................................................................................

Other ......................................................................................

Total Revenue ....................................................................

(b) Less Expenses—

Bad debts written off...............................................................

Amount provided for doubtful debts ......................................

Interest .....................................................................................

Other Expenses ........................................................................

Total Expenses....................................................................

(c) Operating Profit before Income Tax ..........................................

less Income Tax *Expense/*Provision applicable thereto...........

Operating Profit..........................................................................

Extraordinary Items (net of Income Tax where applicable) (1) 

Operating Profit and Extraordinary Items for the year .............

7      Contingent Liabilities and Capital Commitments—

(a) Contingent liabilities—

Underwriting ........................................................................

Sub-underwriting...................................................................

SCHEDULE 1—continued

less Amounts covered by sub-underwriting with other

persons .........................................................................

Other (specify)                                                                                                             

(b) Capital Commitments (specify)                                                                                         

8    Standby credit facilities—show for each facility—

(i) amount ............................................................................

(ii) type .................................................................................

(iii) source...............................................................................

(iv) terms and availability.......................................................

9    Subordinated loans—show for each loan—

(i) amount.............................................................................

(ii) source...............................................................................

(iii) duration............................................................................

10    Foreign Exchange exposure—to the extent not disclosed in the attached accounts show the gain or loss that would be realised at prevailing rates of exchange.

11    The transactions conducted by the dealer during the financial year—

(a) were without exception on the dealer's own account; or

(b) included transactions on account of persons other than the dealer.

12    The assets and liabilities of each company controlled by the dealer or any other venture in which the dealer has a financial interest *are/*are not in our opinion such as to affect adversely to a material extent the dealer's financial position.

We certify that the above information is to the best of our knowledge and belief true and correct.

Dated this                                                       day of                                                                19    

Director                                                                    Director

AUDITOR'S REPORT (²)

*I/*We report that in *my/*our opinion the above statement relating to the accounts of.          

 has been properly drawn up so as to provide the information required by the Securities Industry Regulations.

In *my/*our opinion, the attached dealer's accounts referred to above *show/*do not show a true and fair view of the dealer's position                         at and of the profit or loss of the dealer for the year in accordance with statements of accounting standards issued by the Institute of Chartered Accountants in Australia or the Australian Society of Accountants, or both.

Dated this                                                                            day of                                                     19  

Signature (s) of Auditor(s)                                                                                               

_________________________________________________________________________________

(¹) Attach list detailing gains and losses separately and any income tax involvements.

(²) If an auditor is not satisfied as to any matters his reasons should be stated

* Strike out whichever is inapplicable

SCHEDULE 1—continued

Regulation 39

FORM 17

Securities Industry Act 1980

AUDITOR'S REPORT (¹)

Name of dealer or name under which licence is held                                                                             

Name(s) of Auditor(s)                                                                                                                              

Financial year ended                                                

PART A—FOR ALL DEALERS

1    *I/*We have inspected the dealers licence(s) and noted any conditions or restrictions thereon, and any applicable conditions or restrictions prescribed by regulations under the Securities Industry Act 1980.

2    After conducting, in accordance with regulation 39 of the Securities Industry Regulations, a check or test examination and making sufficient enquiries *I am/*we are of the opinion that (²)—

(a) the accounting and other records kept by the dealer comply/do not comply with sections 67 and 71 of the Securities Industry Act 1980;

(b) the internal control procedures of the dealer are adequate/inadequate having regard to the nature and size of the business of the dealer;

(c) client's securities have/have not been pledged by the dealer otherwise than in accordance with section 72 of the Securities Industry Act 1980;

(d) securities held for sale or for safe custody (or any other purpose) or purchased for clients and paid for by them have/have not been held unencumbered by the dealer;

(e) the trust account has/has not been maintained at all times during the year in accordance with sections 73 and 74 of the Securities Industry Act 1980 and the accounting therefor is adequate/inadequate;

(f) the dealer has/has not properly held or disposed of all securities received by him;

(g) the internal procedures designed to ensure compliance with all the conditions or restrictions applicable to the dealers licence are adequate/inadequate;

(h) no matter/other matter has arisen during the year which would have required me/us to report to the Commission pursuant to section 79 of the Securities Industry Act 1980 (reference should be made to any report made in accordance with section 79 of the Securities Industry Act 1980 identifying the date of the report and the provisions of the Securities Industry Act 1980 to which the report refers);

(i) all conditions or restrictions of a financial nature applicable to the dealers licence have/ have not been complied with;

(j) (For Stockbrokers)—

*the deposit required by section 95 of the Securities Industry Act 1980 has/has not been maintained by the dealer with the Stock Exchange of which he is a member.

*under the provisions of sub-section 96 (3) of the Securities Industry Act 1980 the dealer was not required to maintain a deposit under section 95 of the Securities Industry Act 1980.

3    The checks and test examinations referred to in this report, the audit of the accompanying Balance Sheet of the dealer as at  .............. (³), the Profit and Loss Account for the year ended on that date and Notes *have/*have not been carried out in accordance with generally accepted auditing standards and standard auditing practice promulgated by the Institute of Chartered Accountants in Australia or the Australian Society of Accountants or both and *included/*did not include such tests of the accounting records and such other auditing procedures as *I/*we considered necessary.

______________________________________________________________________________

(¹) Where any part of this report is qualified, attach a separate comprehensive report.

(²) Strike out whichever alternative in each of paragraphs (a) to (j) is not applicable.

(³) Insert date of balance sheet.

SCHEDULE 1—continued

4    *The client placed no restriction on the scope of the audit and all the information and explanations required were received./*The client restricted the scope of the audit and all the information and explanations required were not received.

PART B—FOR STOCKBROKERS

5    *I/*We have inspected a current indemnity Insurance Policy No                                          

 for $                                     issued by                                                          in favour of the dealer for a total cover determined by the Committee of the Stock Exchange of which he is a member.

_________________________________________________________________________________

Dated this                                                      day of                                                          19       

Signature(s) of Auditor(s)

_________________________________________________________________________________

* Strike out whichever is inapplicable.

___________________

SCHEDULE 1—continued

Regulation 42

FORM 19

Securities Industry Act 1980

NOTICE OF *PLACE/*CHANGE OF PLACE AT WHICH REGISTER TO BE KEPT

This notice is required to be lodged:

(1) by a financial journalist (as defined in section 87 of the Securities Industry Act 1980), within 14 days after he becomes a person to whom Part VII of the Securities Industry Act 1980 applies; and

(2) by the holder of a licence under the Securities Industry Act 1980, or a financial journalist, immediately, where there is a change in the place at which the Register required under Part VII of the Securities Industry Act 1980 is kept.

(b) Capacity in which Part VII of the Securities Industry Act 1980 applies. (State whether as financial journalist or as holder of licence)                                                                               

(To be completed by financial journalists)

4. Titles of newspapers or periodicals to

which advice concerning securities is………………………………………………………….

contributed or for which analyses or

 reports concerning securities arc………………………………………………………………

 prepared

……………………………………………………………….

________________________________________________________________________________

Dated this……………………………………day of……………………………………19 …………

Signature of *financial journalist/*licensee………………………………………………

__________________

* Strike out whichever is inapplicable

SCHEDULE 1—continued

Regulation 43

FORM 20

Securities Industry Act 1980

NOTICE OF APPEAL

In the Supreme Court of the

Australian Capital Territory

Applicant:                               (Here insert full name and address of the applicant)

Respondent:                            (Here insert full name and address of the respondent)

The applicant hereby appeals to the Supreme Court of the Australian Capital Territory in pursuance of sub-section 113 (2) of the Securities Industry Act 1980 against the determination of the fidelity fund committee of the           (Here insert name of stock exchange).

Dated this………………………………..day of……………………….19…….

Signature of the applicant………………………………………

______________

Regulation 44

FORM 21

Securities Industry Act 1980

NOTICE CALLING FOR CLAIMS AGAINST A STOCK EXCHANGE FIDELITY FUND

In the matter of …………………………………………………………………………………….....

…………………………………………………………………………………………………………

of………………………………………………………………………………………………………

 in the…………………………………………………………………………………………………...

Notice is hereby given that all persons claiming to have suffered pecuniary loss by reason of a defalcation or fraudulent misuse of securities or documents of title to securities by the above-named

…………………………………………………………………………………………………………..

or by any of his employees or servants, in relation to any money or other property entrusted to or received by him or by any of his employees or servants are required to deliver to the……………….

………………………………………..Stock Exchange particulars of their claims, in writing, on or before the…………………………day of…………………………………………………………….

 19…………

Subject to section 114 of the Securities Industry Act 1980, claims not received by the Committee of the…………………Stock Exchange on or before such date will not be admitted and no payment in respect thereof will be made from the fidelity fund.

For the……………………………………..

…………………………………………….

Stock Exchange

…………………………………………

Date

_____________

SCHEDULE 1—continued

Regulation 45

FORM 22

Securities Industry Act 1980

NOTICE OF DISALLOWANCE OF CLAIM AGAINST A STOCK EXCHANGE FIDELITY FUND

In the matter of………………………………………………………………………………………

………………………………………………………….. of…………………………………………

……………………………………………………………………………………Stock Exchange has considered your claim against the………………………………………………..Stock Exchange Fidelity Fund in respect of pecuniary loss alleged to have been suffered from a defalcation or fraudulent misuse of securities or documents of title to securities by the above-named* member/ *partner in a member firm of this Exchange or by any of his employees or servants.

The Committee has decided, that having regard to all available evidence, the claim should be *disallowed/*partly disallowed to the extent set out hereunder and you are hereby notified accordingly.

Dated this………………………………………...day of…………………………………19 ………

Signed ……………………………………………….

for the Stock Exchange

(Further details as appropriate)

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

…………………………………………………………………………………………………………..

………………………………………………………………………………………………………….

* Strike out whichever is inapplicable

SCHEDULE 2

Regulation 10

WITNESSES' FEES AND TRAVELLING EXPENSES

1.   A person who attends an examination before an inspector to give evidence because of his professional, scientific or other special skill or knowledge shall be paid a fee of not less than $45 and not more than $250 for each day on which he so attends.

2.   A person, other than a person referred to in clause 1 of this Schedule, who attends at an examination before an inspector to give evidence or to produce documents shall be paid—

(a) if he is remunerated by wages, salary or fees—

(i) a fee equal to the amount of wages, salary or fees lost by reason of his so attending; or

(ii) a fee of $50 for each day on which he so attends, whichever is the less; or

(b) if he is not so remunerated—a fee of $30 for each day on which he so attends.

3.   A person attending an examination before an inspector to give expert evidence shall be paid, in addition to any other fee payable to him under clause 1 or 2 of this Schedule, a reasonable amount for qualifying to give that evidence.

4.   A person attending an examination before an inspector to give evidence or to produce documents shall be paid a reasonable amount—

(a) in respect of his conveyance to and from the place at which he so attends; and

(b) if he is required to be absent overnight from his usual place of residence—for meals and accommodation.

_________________________________________________________________________________

NOTE

1.   Notified in the Commonwealth of Australia Gazette on 12 June 1981

Printed by Authority by the Commonwealth Government Printer