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Corporations Act 2001

Authoritative Version
  • - C2017C00210
  • In force - Superseded Version
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Act No. 50 of 2001 as amended, taking into account amendments up to Treasury Laws Amendment (2017 Measures No. 3) Act 2017
An Act to make provision in relation to corporations and financial products and services, and for other purposes
Administered by: Attorney-General's; Treasury
Registered 06 Jul 2017
Start Date 01 Jul 2017
End Date 18 Sep 2017
Table of contents.

Corporations Act 2001

No. 50, 2001

Compilation No. 79

Compilation date:                              1 July 2017

Includes amendments up to:            Act No. 75, 2017

Registered:                                         6 July 2017

This compilation is in 6 volumes

Volume 1:       sections 1–260E

Volume 2:       sections 283AA–601DJ

Volume 3:       sections 601EA–742

Volume 4:       sections 760A–993D

Volume 5:       sections 1010A–1369A

Volume 6:       sections 1370–1637

                        Schedules

                        Endnotes

Each volume has its own contents

 

 

This compilation includes commenced amendments made by Act No. 45, 2017

About this compilation

This compilation

This is a compilation of the Corporations Act 2001 that shows the text of the law as amended and in force on 1 July 2017 (the compilation date).

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

Uncommenced amendments

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

Application, saving and transitional provisions for provisions and amendments

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

Editorial changes

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

Modifications

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

Self‑repealing provisions

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

  

  

  


Contents

Chapter 5C—Managed investment schemes                                     1

Part 5C.1—Registration of managed investment schemes                           1

601EA................... Applying for registration.................................................... 1

601EB................... Registration of managed investment scheme....................... 2

601EC................... All documents etc. lodged with ASIC to bear ARSN or ABN                2

601ED................... When a managed investment scheme must be registered.... 3

601EE.................... Unregistered schemes may be wound up............................ 4

Part 5C.2—The responsible entity                                                                               5

Division 1—Responsibilities and powers                                                            5

601FA................... Responsible entity to be public company and hold Australian financial services licence          5

601FB................... Responsible entity to operate scheme.................................. 5

601FC................... Duties of responsible entity................................................ 6

601FD................... Duties of officers of responsible entity............................... 8

601FE.................... Duties of employees of responsible entity.......................... 9

601FF.................... Surveillance checks by ASIC............................................. 9

601FG................... Acquisition of interest in scheme by responsible entity.... 10

601FH................... Liquidator etc. of responsible entity entitled to exercise indemnity rights 10

Division 2—Changing the responsible entity                                                 12

601FJ.................... Changes only take effect when ASIC alters record of registration           12

601FK................... Requirements of section 601FA must be met................... 12

601FL.................... Retirement of responsible entity........................................ 12

601FM.................. Removal of responsible entity by members...................... 13

601FN................... ASIC or scheme member may apply to Court for appointment of temporary responsible entity              14

601FP.................... Appointment of temporary responsible entity by Court.... 14

601FQ................... Temporary responsible entity to take steps for appointment of new responsible entity            15

Division 3—Consequences of change of responsible entity                    17

601FR................... Former responsible entity to hand over books and provide reasonable assistance   17

601FS.................... Rights, obligations and liabilities of former responsible entity 17

601FT.................... Effect of change of responsible entity on documents etc. to which former responsible entity is party     18

Part 5C.3—The constitution                                                                                          19

601GA.................. Contents of the constitution.............................................. 19

601GB................... Constitution must be legally enforceable........................... 20

601GC................... Changing the constitution................................................. 20

Part 5C.4—The compliance plan                                                                               22

601HA.................. Contents of the compliance plan....................................... 22

601HB................... Compliance plan may incorporate provisions from another scheme’s plan              23

601HC................... Directors must sign lodged copy of compliance plan........ 23

601HD.................. ASIC may require further information about compliance plan 23

601HE................... Changing the compliance plan.......................................... 24

601HF................... ASIC may require consolidation of compliance plan to be lodged           24

601HG.................. Audit of compliance plan.................................................. 24

601HH.................. Removal and resignation of auditors................................. 30

601HI.................... Action on change of auditor of compliance plan............... 31

Part 5C.5—The compliance committee                                                                  32

601JA.................... When is a compliance committee required?....................... 32

601JB.................... Membership of compliance committee.............................. 33

601JC.................... Functions of compliance committee.................................. 34

601JD.................... Duties of members............................................................ 35

601JE.................... Compliance committee members have qualified privilege in certain cases                36

601JF.................... When can responsible entity indemnify compliance committee members?               36

601JG.................... When can responsible entity pay insurance premiums for compliance committee members?   37

601JH.................... Proceedings of compliance committee.............................. 37

601JJ..................... Disclosure of interests...................................................... 38

Part 5C.6—Members’ rights to withdraw from a scheme                          39

601KA................... Members’ rights to withdraw........................................... 39

601KB................... Non‑liquid schemes—offers............................................. 40

601KC................... Non‑liquid schemes—only one withdrawal offer to be open at any time 41

601KD................... Non‑liquid schemes—how payments are to be made....... 41

601KE................... Non‑liquid schemes—responsible entity may cancel withdrawal offer    41

Part 5C.7—Related party transactions                                                                   43

601LA................... Chapter 2E applies with modifications.............................. 43

601LB................... Replacement section 207................................................... 43

601LC................... Replacement section 208................................................... 44

601LD................... Omission of sections 213, 214 and 224............................ 45

601LE.................... Modification of section 225.............................................. 45

Part 5C.8—Effect of contraventions (civil liability and voidable contracts)          46

601MA.................. Civil liability of responsible entity to members................. 46

601MB.................. Voidable contracts where subscription offers and invitations contravene this Act   46

Part 5C.9—Winding up                                                                                                   48

601NA.................. Winding up required by scheme’s constitution................. 48

601NB................... Winding up at direction of members................................. 48

601NC................... Winding up if scheme’s purpose accomplished or cannot be accomplished             48

601ND.................. Winding up ordered by Court........................................... 49

601NE................... The winding up of the scheme.......................................... 50

601NF................... Other orders about winding up......................................... 50

601NG.................. Unclaimed money to be paid to ASIC.............................. 51

Part 5C.10—Deregistration                                                                                           52

601PA................... Deregistration—voluntary................................................ 52

601PB................... Deregistration by ASIC.................................................... 52

601PC................... Reinstatement.................................................................... 54

Part 5C.11—Exemptions and modifications                                                       55

601QA.................. ASIC’s power to make exemption and modification orders 55

601QB................... Modification by regulations.............................................. 56

Chapter 5D—Licensed trustee companies                                         57

Part 5D.1—Preliminary                                                                                                   57

601RAA................ Definitions........................................................................ 57

601RAB................ Meaning of trustee company and client of trustee company 58

601RAC................ Meaning of traditional trustee company services and estate management functions               59

601RAD................ Meaning of person with a proper interest........................ 60

601RAE................ Interaction between trustee company provisions and State and Territory laws         61

Part 5D.2—Powers etc. of licensed trustee companies                                  64

Division 1—General provisions                                                                            64

601SAA................ Jurisdiction of courts not affected etc................................ 64

601SAB................ Regulations may prescribe other powers etc..................... 64

601SAC................ Powers etc. conferred by or under this Chapter are in addition to other powers etc.                64

Division 2—Accounts                                                                                                  66

601SBA................ Licensed trustee company not required to file accounts.... 66

601SBB................. Licensed trustee company may be required to provide account in relation to estate  66

601SBC................. Court may order audit....................................................... 67

Division 3—Common funds                                                                                     69

601SCA................ Common funds of licensed trustee companies.................. 69

601SCAA............. Common funds that are also registered schemes............... 69

601SCB................. Obligations relating to common funds.............................. 70

601SCC................. Regulations relating to establishment or operation of common funds      70

601SCD................ Arm’s length transactions................................................. 70

Part 5D.3—Regulation of fees charged by licensed trustee companies 72

Division 1—Disclosure of fees                                                                                72

601TAA................ Schedule of fees to be published and available................. 72

601TAB................ Disclosure to clients of changed fees................................ 72

Division 2—General provisions about charging fees                                74

601TBA................ Charging of fees for the provision of traditional trustee company services              74

601TBB................. Part does not prevent charging of fees as agreed etc......... 74

601TBC................. Part does not prevent charging fee for provision of account 75

601TBD................ Part does not prevent reimbursement................................ 75

601TBE................. Estate management functions: payment of fees out of estate 75

Division 3—Fees otherwise than for being trustee or manager of a charitable trust    76

601TCA................ Fees otherwise than for being the trustee or manager of a charitable trust                76

601TCB................. Additional amount for preparation of returns etc.............. 76

Division 4—Fees for being trustee or manager of a charitable trust 77

Subdivision A—New client charitable trusts                                                     77

601TDA................ Subdivision applies to new client charitable trusts............ 77

601TDB................ What the trustee company may charge.............................. 77

601TDC................ Option 1: capital commission and income commission..... 78

601TDD................ Option 2: annual management fee..................................... 78

601TDE................. Additional amount if trust money is in a common fund.... 79

601TDF................. Additional amount for preparation of returns etc.............. 79

Subdivision B—Existing client charitable trusts                                              80

601TDG................ Subdivision applies to existing client charitable trusts...... 80

601TDH................ Trustee company not to charge more than was being charged before section commenced       80

601TDI.................. Additional amount if trust money is in a common fund.... 80

601TDJ................. Additional amount for preparation of returns etc.............. 81

Division 5—Miscellaneous                                                                                       82

601TEA................. Power of the Court with respect to excessive fees............ 82

601TEB................. Directors’ fees.................................................................. 83

Part 5D.4—Duties of officers and employees of licensed trustee companies         84

601UAA............... Duties of officers of licensed trustee company................. 84

601UAB................ Duties of employees of licensed trustee company............. 85

Part 5D.5—Limit on control of licensed trustee companies                       87

Division 1—15% voting power limit                                                                  87

601VAA............... Meaning of unacceptable control situation....................... 87

601VAB................ Acquisitions of shares...................................................... 87

601VAC................ Remedial orders................................................................ 88

601VAD............... Injunctions........................................................................ 89

Division 2—Approval to exceed 15% voting power limit                       90

601VBA................ Application for approval to exceed 15% voting power limit 90

601VBB................ Approval of application.................................................... 90

601VBC................ Duration of approval......................................................... 91

601VBD................ Conditions of approval..................................................... 92

601VBE................ Varying percentage approved........................................... 93

601VBF................ Revoking an approval....................................................... 94

601VBG................ Minister may require further information from applicants 95

601VBH................ Minister may seek views of licensed trustee company and its clients       95

601VBI................. Time limit for Minister’s decision..................................... 95

Division 3—Other matters                                                                                       97

601VCA................ Acquisition of property..................................................... 97

601VCB................ Interests of clients to be viewed as a group....................... 97

601VCC................ Anti‑avoidance.................................................................. 97

Part 5D.6—ASIC‑approved transfers of estate assets and liabilities   99

Division 1—Preliminary                                                                                            99

601WAA............... Definitions........................................................................ 99

Division 2—Transfer of estate assets and liabilities                                 102

601WBA............... Transfer determinations.................................................. 102

601WBB............... When consent of receiving company is in force.............. 104

601WBC............... Complementary State or Territory legislation.................. 104

601WBD............... Minister’s power to decide that his or her consent is not required           105

601WBE................ Determinations may impose conditions.......................... 105

601WBF................ Notice of determination................................................... 106

601WBG............... Certificate of transfer...................................................... 106

601WBH............... Notice of certificate......................................................... 107

601WBI................. Time and effect of transfer.............................................. 108

601WBJ................ Substitution of trustee company...................................... 109

601WBK............... Liabilities for breach of trust and other matters not affected by this Part  109

Division 3—Other matters related to the transfer of estate assets and liabilities            110

601WCA............... Certificates evidencing operation of Act etc.................... 110

601WCB............... Certificates in relation to land and interests in land......... 110

601WCC............... Certificates in relation to other assets.............................. 110

601WCD............... Documents purporting to be certificates.......................... 111

601WCE................ Construction of references to transferring company....... 111

601WCF................ Income or other distribution received by transferring company               111

601WCG............... Access to books.............................................................. 112

601WCH............... Minister or ASIC may seek views of trustee company and its clients      112

Division 4—Miscellaneous                                                                                     113

601WDA............... Transferring company required to contact certain persons 113

Part 5D.7—Contraventions and holding out                                                    115

601XAA............... Civil liability of licensed trustee companies.................... 115

601XAB................ Prohibition on holding out.............................................. 115

Part 5D.8—Exemptions and modifications                                                        116

601YAA............... Exemptions and modifications by ASIC......................... 116

601YAB................ Exemptions and modifications by regulations................. 117

Chapter 6—Takeovers                                                                                          119

602........................ Purposes of Chapter....................................................... 119

602A..................... Substantial interest concept............................................. 120

603........................ Chapter extends to some listed bodies that are not companies  120

604........................ Chapter extends to listed managed investment schemes.. 121

605........................ Classes of securities........................................................ 121

Part 6.1—Prohibited acquisitions of relevant interests in voting shares   122

606........................ Prohibition on certain acquisitions of relevant interests in voting shares  122

607........................ Effect on transactions...................................................... 125

608........................ Relevant interests in securities........................................ 125

609........................ Situations not giving rise to relevant interests................. 128

610........................ Voting power in a body or managed investment scheme 131

Part 6.2—Exceptions to the prohibition                                                               134

611........................ Exceptions to the prohibition.......................................... 134

612........................ Effect of non‑compliance with takeover rules for exceptions 1 to 4         139

613........................ Bidder not to exercise voting rights if failure to send bids for off‑market acquisition—exception 2 or 3 139

615........................ Treatment of foreign holders under equal access issue—exception 10     140

Part 6.3—The different types of takeover bid                                                 141

616........................ Off‑market bids and market bids.................................... 141

Part 6.4—Formulating the takeover offer                                                          142

Division 1—General                                                                                                  142

617........................ Securities covered by the bid.......................................... 142

618........................ Offers must be for all or a proportion of securities in the bid class          143

619........................ General terms of the offer............................................... 143

620........................ Off‑market bid (offer formalities)................................... 144

Division 2—Consideration for the offer                                                         146

621........................ Consideration offered..................................................... 146

622........................ Escalation agreements..................................................... 147

623........................ Collateral benefits not allowed........................................ 148

Division 3—The offer period                                                                                150

624........................ Offer period.................................................................... 150

Division 4—Conditional offers                                                                            151

625........................ Conditional offers—general............................................ 151

626........................ Maximum acceptance conditions in off‑market bids....... 151

627........................ Discriminatory conditions not allowed for off‑market bids 152

628........................ Conditions requiring payments to officers of target not allowed in off‑market bids 153

629........................ Conditions turning on bidder’s or associate’s opinion not allowed in off‑market bids            153

630........................ Defeating conditions....................................................... 154

Part 6.5—The takeover procedure                                                                          156

Division 1—The overall procedure                                                                   156

631........................ Proposing or announcing a bid....................................... 156

632........................ Overview of steps in an off‑market bid.......................... 157

633........................ Detailed steps in an off‑market bid................................. 158

634........................ Overview of steps in a market bid.................................. 162

635........................ Detailed steps in a market bid......................................... 163

Division 2—The bidder’s statement                                                                  167

636........................ Bidder’s statement content.............................................. 167

637........................ Bidder’s statement formalities......................................... 170

Division 3—The target’s response                                                                     172

638........................ Target’s statement content............................................... 172

639........................ Target’s statement formalities......................................... 173

640........................ Expert’s report to accompany target’s statement if bidder connected with target      174

641........................ Target must inform bidder about securities holdings...... 175

642........................ Expenses of directors of target companies...................... 176

Division 4—Updating and correcting the bidder’s statement and target’s statement   178

643........................ Supplementary bidder’s statement.................................. 178

644........................ Supplementary target’s statement.................................... 179

645........................ Form of supplementary statement................................... 180

646........................ Consequences of lodging a supplementary statement..... 181

647........................ To whom supplementary statement must be sent............ 181

Division 5—General rules on takeover procedure                                   182

Subdivision A—Experts’ reports                                                                        182

648A..................... Experts’ reports.............................................................. 182

Subdivision B—Sending documents to holders of securities                       183

648B...................... Address at which bidder may send documents to holders of securities    183

648C...................... Manner of sending documents to holders of securities... 183

Subdivision C—Effect of proportional takeover approval provisions    183

648D..................... Constitution may contain proportional takeover approval provisions       183

648E...................... Resolution to be put if proportional bid made................. 185

648F...................... Effect of rejection of approval resolution........................ 186

648G..................... Including proportional takeover provisions in constitution 186

648H..................... Effect of Subdivision...................................................... 189

Part 6.6—Variation of offers                                                                                      190

Division 1—Market bids                                                                                         190

649A..................... General........................................................................... 190

649B...................... Market bids—raising bid price....................................... 190

649C...................... Market bids—extending the offer period........................ 190

Division 2—Off‑market bids (express variation by bidder)                 192

650A..................... General........................................................................... 192

650B...................... Off‑market bids—consideration offered......................... 192

650C...................... Off‑market bids—extension of offer period................... 194

650D..................... Off‑market bids—method of making variation............... 195

650E...................... Right to withdraw acceptance......................................... 196

650F...................... Freeing off‑market bids from defeating conditions......... 197

650G..................... Contracts and acceptances void if defeating condition not fulfilled          198

Division 3—Off‑market bids (automatic variations)                               199

651A..................... Off‑market bid—effect on bid consideration of purchases made outside bid           199

651B...................... How to make an election for new forms of consideration 200

651C...................... Returning securities as part of election............................ 201

Part 6.7—Withdrawal and suspension of offers                                             202

652A..................... Withdrawal of unaccepted offers under takeover bid...... 202

652B...................... Withdrawal of takeover offers with ASIC consent......... 202

652C...................... Withdrawal of market bids.............................................. 202

Part 6.8—Acceptances                                                                                                    204

653A..................... Acceptance of offers made under off‑market bid............ 204

653B...................... Acceptances by transferees and nominees of offers made under off‑market bid      204

Part 6.9—Other activities during the bid period                                             207

654A..................... Bidder not to dispose of securities during the bid period 207

654B...................... Disclosures about substantial shareholdings in listed companies             207

654C...................... Disclosures about substantial shareholdings in unlisted companies         207

Part 6.10—Review and intervention                                                                      209

Division 1—ASIC’s power to exempt and modify                                     209

655A..................... ASIC’s power to exempt and modify............................. 209

655B...................... Notice of decision and review rights............................... 210

Division 2—The Takeovers Panel                                                                      211

Subdivision A—Review of ASIC’s exercise of its exemption or modification powers  211

656A..................... Review of exercise of exemption or modification powers 211

656B...................... Operation and implementation of a decision that is subject to review       212

Subdivision B—Unacceptable circumstances                                                 214

657A..................... Declaration of unacceptable circumstances..................... 214

657B...................... When Panel may make declaration.................................. 216

657C...................... Applying for declarations and orders.............................. 216

657D..................... Orders that Panel may make following declaration......... 216

657E...................... Interim orders................................................................. 218

657EA................... Internal Panel reviews..................................................... 219

657EB................... References by Courts...................................................... 220

657F...................... Offence to contravene Panel order.................................. 220

657G..................... Orders by the Court where contravention or proposed contravention of Panel order               221

657H..................... ASIC may publish report about application to Panel or Court 221

Subdivision C—General provisions                                                                  222

658A..................... Power of Panel where a proceeding is frivolous or vexatious  222

658B...................... Evidentiary value of findings of fact by Panel................ 222

658C...................... Panel’s power to make rules........................................... 223

658D..................... Inconsistency between Panel rules and ASIC exemption or declaration  224

Division 3—Court powers                                                                                      225

659A..................... Panel may refer questions of law to the Court................ 225

659AA.................. Object of sections 659B and 659C................................. 225

659B...................... Court proceedings before end of bid period.................... 225

659C...................... Court proceedings after end of bid period....................... 227

Chapter 6A—Compulsory acquisitions and buy‑outs       229

660A..................... Chapter extends to some listed bodies that are not companies  229

660B...................... Chapter extends to listed managed investment schemes.. 229

Part 6A.1—Compulsory acquisitions and buy‑outs following takeover bid          230

Division 1—Compulsory acquisition of bid class securities                 230

661A..................... Compulsory acquisition power following takeover bid.. 230

661B...................... Compulsory acquisition notice........................................ 232

661C...................... Terms on which securities to be acquired....................... 234

661D..................... Holder may obtain names and addresses of other holders 235

661E...................... Holder may apply to Court to stop acquisition................ 235

661F...................... Signpost—completing the acquisition of the securities... 236

Division 2—Compulsory buy‑out of bid class securities                        237

662A..................... Bidder must offer to buy out remaining holders of bid class securities    237

662B...................... Bidder to tell remaining holders of their right to be bought out                237

662C...................... Right of remaining holder of securities in the bid class to be bought out 239

Division 3—Compulsory buy‑out of convertible securities                  240

663A..................... Bidder must offer to buy out holders of convertible securities 240

663B...................... Bidder to tell holders of convertible securities of their right to be bought out          240

663C...................... Right of holders of convertible securities to be bought out 242

Part 6A.2—General compulsory acquisitions and buy‑outs                    243

Division 1—Compulsory acquisition of securities by 90% holder   243

664A..................... Threshold for general compulsory acquisition power..... 243

664AA.................. Time limit on exercising compulsory acquisition power. 244

664B...................... The terms for compulsory acquisition............................. 245

664C...................... Compulsory acquisition notice........................................ 245

664D..................... Benefits outside compulsory acquisition procedure........ 247

664E...................... Holder’s right to object to the acquisition....................... 248

664F...................... The Court’s power to approve acquisition...................... 249

664G..................... Signpost—completing the acquisition of the securities... 250

Division 2—Compulsory buy‑out of convertible securities by 100% holder      251

665A..................... 100% holder must offer to buy out holders of convertible securities       251

665B...................... 100% holder to tell holders of convertible securities of their right to be bought out 251

665C...................... Right of holders of convertible securities to be bought out 253

Part 6A.3—Completion of compulsory acquisition of securities           254

666A..................... Completing the acquisition of securities.......................... 254

666B...................... Statutory procedure for completion................................. 255

Part 6A.4—Experts’ reports and valuations                                                     257

667A..................... Expert’s report................................................................ 257

667AA.................. Expert to be nominated................................................... 257

667B...................... Expert must not be an associate and must disclose prior dealings and relationships                258

667C...................... Valuation of securities.................................................... 259

Part 6A.5—Records of unclaimed consideration                                           260

668A..................... Company’s power to deal with unclaimed consideration for compulsory acquisition              260

668B...................... Unclaimed consideration to be transferred to ASIC........ 261

Part 6A.6—ASIC powers                                                                                              262

669........................ ASIC’s power to exempt and modify............................. 262

Chapter 6B—Rights and liabilities in relation to Chapter 6 and 6A matters    263

670A..................... Misstatements in, or omissions from, takeover and compulsory acquisition and buy‑out documents      263

670B...................... Right to recover for loss or damage resulting from contravention            264

670C...................... People liable on takeover or compulsory acquisition statement to inform maker about deficiencies in the statement......................................................................... 267

670D..................... Defences against prosecutions under subsection 670A(3) and actions under section 670B     268

670E...................... Liability for proposing a bid or not carrying through with bid 269

670F...................... Defences......................................................................... 270

Chapter 6C—Information about ownership of listed companies and managed investment schemes                                                                  271

671A..................... Chapter extends to some listed bodies that are not companies  271

Part 6C.1—Substantial holding information                                                    272

671B...................... Information about substantial holdings must be given to company, responsible entity and relevant market operator........................................................................... 272

671C...................... Civil liability................................................................... 275

Part 6C.2—Tracing beneficial ownership of shares                                     276

672A..................... Disclosure notices........................................................... 276

672B...................... Disclosure by member of relevant interests and instructions 276

672C...................... ASIC may pass information on to person who made request  277

672D..................... Fee for complying with a direction given by a company or scheme under this Part 278

672DA.................. Register of information about relevant interests in listed company or listed managed investment scheme........................................................................................ 278

672E...................... No notice of rights.......................................................... 282

672F...................... Civil liability................................................................... 282

Part 6C.3—ASIC powers                                                                                              283

673........................ ASIC’s power to exempt and modify............................. 283

Chapter 6CA—Continuous disclosure                                                285

674........................ Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rules........................................................................................ 285

675........................ Continuous disclosure—other disclosing entities........... 287

676........................ Sections 674 and 675—when information is generally available             288

677........................ Sections 674 and 675—material effect on price or value 289

678........................ Application of Criminal Code to offences based on subsection 674(2), 674(5) or 675(2)      289

Chapter 6D—Fundraising                                                                                290

Part 6D.1—Application of the fundraising provisions                                290

700........................ Coverage of the fundraising rules................................... 290

702........................ Treatment of offers of options over securities................. 291

703........................ Chapter may not be contracted out of.............................. 291

703A..................... Operating a clearing and settlement facility is not offering securities etc. 291

Part 6D.2—Disclosure to investors about securities                                      292

Division 1—Overview                                                                                              292

704........................ When disclosure to investors is needed.......................... 292

705........................ Types of disclosure document........................................ 292

Division 2—Offers that need disclosure to investors                               294

706........................ Issue offers that need disclosure..................................... 294

707........................ Sale offers that need disclosure....................................... 294

708........................ Offers that do not need disclosure.................................. 297

708AA.................. Rights issues that do not need disclosure........................ 304

708A..................... Sale offers that do not need disclosure............................ 307

Division 3—Types of disclosure documents                                                  313

709........................ Prospectuses, short‑form prospectuses, profile statements and offer information statements  313

Division 4—Disclosure requirements                                                               316

710........................ Prospectus content—general disclosure test................... 316

711........................ Prospectus content—specific disclosures....................... 318

712........................ Prospectus content—short form prospectuses................ 321

713........................ Special prospectus content rules for continuously quoted securities        322

713A..................... Offer of simple corporate bonds..................................... 324

713B...................... Simple corporate bonds—2‑part simple corporate bonds prospectus       330

713C...................... Simple corporate bonds—base prospectus..................... 331

713D..................... Simple corporate bonds—offer‑specific prospectus....... 332

713E...................... Simple corporate bonds—prospectus may refer to other material lodged with ASIC              334

714........................ Contents of profile statement.......................................... 335

715........................ Contents of offer information statement.......................... 336

715A..................... Presentation etc. of disclosure documents....................... 337

716........................ Disclosure document date and consents.......................... 338

Division 5—Procedure for offering securities                                             339

717........................ Overview of procedure for offering securities................ 339

718........................ Lodging of disclosure document..................................... 341

719........................ Lodging supplementary or replacement document—general 341

719A..................... Lodging supplementary or replacement document—2‑part simple corporate bonds prospectus              344

720........................ Consents needed for lodgment........................................ 347

721........................ Offer must be made in, or accompanied by, the disclosure document      349

722........................ Application money to be held on trust............................ 351

723........................ Issuing or transferring the securities under a disclosure document          351

724........................ Choices open to person making the offer if disclosure document condition not met or disclosure document defective.......................................................................... 353

725........................ Expiration of disclosure document.................................. 356

Part 6D.3—Prohibitions, liabilities and remedies                                           357

Division 1—Prohibitions and liabilities                                                           357

726........................ Offering securities in a body that does not exist............. 357

727........................ Offering securities without a current disclosure document 357

728........................ Misstatement in, or omission from, disclosure document 359

729........................ Right to recover for loss or damage resulting from contravention            360

730........................ People liable on disclosure document to inform person making the offer about deficiencies in the disclosure document........................................................................ 362

731........................ Due diligence defence for prospectuses.......................... 363

732........................ Lack of knowledge defence for offer information statements and profile statements               363

733........................ General defences for all disclosure documents............... 364

734........................ Restrictions on advertising and publicity........................ 365

735........................ Obligation to keep consents and other documents.......... 370

736........................ Securities hawking prohibited......................................... 370

Division 2—Remedies                                                                                               372

737........................ Remedies for investors................................................... 372

738........................ Securities may be returned and refund obtained.............. 372

Part 6D.4—ASIC’s powers                                                                                          373

739........................ ASIC stop orders............................................................ 373

740........................ Anti‑avoidance determinations........................................ 375

741........................ ASIC’s power to exempt and modify............................. 376

Part 6D.5—Miscellaneous                                                                                             377

742........................ Exemptions and modifications by regulations................. 377


Chapter 5CManaged investment schemes

Part 5C.1Registration of managed investment schemes

  

601EA  Applying for registration

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

             (2)  The application must state:

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

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

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

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

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

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

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

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

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

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

601EB  Registration of managed investment scheme

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                     (a)  the scheme’s ARSN; or

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

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

601ED  When a managed investment scheme must be registered

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

                     (a)  it has more than 20 members; or

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

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

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

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

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

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

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

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

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

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

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

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

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

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

601EE  Unregistered schemes may be wound up

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

                     (a)  ASIC;

                     (b)  the person operating the scheme;

                     (c)  a member of the scheme.

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

Part 5C.2The responsible entity

Division 1Responsibilities and powers

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

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

601FB  Responsible entity to operate scheme

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

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

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

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

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

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

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

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

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

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

             (4)  If:

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

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

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

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

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

601FC  Duties of responsible entity

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

                     (a)  act honestly; and

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

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

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

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

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

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

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

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

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

                      (i)  ensure that scheme property is:

                              (i)  clearly identified as scheme property; and

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

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

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

                      (l)  report to ASIC any breach of this Act that:

                              (i)  relates to the scheme; and

                             (ii)  has had, or is likely to have, a materially adverse effect on the interests of members;

                            as soon as practicable after it becomes aware of the breach; and

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

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

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

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

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

Note 1:       Section 79 defines involved.

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

601FD  Duties of officers of responsible entity

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

                     (a)  act honestly; and

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

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

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

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

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

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

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

                              (i)  this Act; and

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

                            (iii)  the scheme’s constitution; and

                            (iv)  the scheme’s compliance plan.

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

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

Note 1:       Section 79 defines involved.

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

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

601FE  Duties of employees of responsible entity

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

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

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

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

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

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

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

Note 1:       Section 79 defines involved.

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

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

601FF  Surveillance checks by ASIC

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

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

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

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

601FG  Acquisition of interest in scheme by responsible entity

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

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

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

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

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

Note 1:       Section 79 defines involved.

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

             (3)  A person must not intentionally be involved in a responsible entity’s contravention of subsection (1).

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

                   If the company that is a registered scheme’s responsible entity is being wound up, is under administration or has executed a deed of company arrangement that has not terminated:

                     (a)  a provision of the scheme’s constitution, or of another instrument, is void against the liquidator, or the administrator of the company or the deed, if it purports to deny the company a right to be indemnified out of the scheme property that the company would have had if it were not being wound up, were not under administration, or had not executed a deed of company arrangement; and

                     (b)  a right of the company to be indemnified out of the scheme property may only be exercised by the liquidator or the administrator of the company or the deed.

Division 2Changing the responsible entity

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

             (1)  Despite anything in this Division, the company named in ASIC’s record of registration as the responsible entity or temporary responsible entity of a registered scheme remains the scheme’s responsible entity until the record is altered to name another company as the scheme’s responsible entity or temporary responsible entity.

             (2)  A purported change of the scheme’s responsible entity is ineffective unless it is in accordance with this Division.

601FK  Requirements of section 601FA must be met

                   A company cannot be chosen or appointed as the responsible entity or temporary responsible entity of a registered scheme unless it meets the requirements of section 601FA.

601FL  Retirement of responsible entity

             (1)  If the responsible entity of a registered scheme wants to retire, it must call a members’ meeting to explain its reason for wanting to retire and to enable the members to vote on a resolution to choose a company to be the new responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed.

             (2)  If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity:

                     (a)  as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

                     (b)  if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

                     (c)  ASIC must comply with the notice when it is lodged.

             (3)  If the members do not choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the current responsible entity may apply to the Court for appointment of a temporary responsible entity under section 601FP.

             (4)  A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

601FM  Removal of responsible entity by members

             (1)  If members of a registered scheme want to remove the responsible entity, they may take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider and vote on a resolution that the current responsible entity should be removed and a resolution choosing a company to be the new responsible entity. The resolutions must be extraordinary resolutions if the scheme is not listed.

             (2)  If the members vote to remove the responsible entity and, at the same meeting, choose a company to be the new responsible entity that consents, in writing, to becoming the scheme’s responsible entity:

                     (a)  as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

                     (b)  if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

                     (c)  ASIC must comply with the notice when it is lodged.

             (3)  A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

Note:         If the members vote to remove the responsible entity but do not, at the same meeting, choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the scheme must be wound up (see section 601NE).

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

                   ASIC or a member of the registered scheme may apply to the Court for the appointment of a temporary responsible entity of the scheme under section 601FP if the scheme does not have a responsible entity that meets the requirements of section 601FA.

601FP  Appointment of temporary responsible entity by Court

             (1)  On application under section 601FL or 601FN, the Court may, by order, appoint a company as the temporary responsible entity of a registered scheme if the Court is satisfied that the appointment is in the interest of the members.

             (2)  The Court may make any further orders that it considers necessary.

             (3)  If the application was made by the current responsible entity, it must, as soon as practicable after the Court’s order appointing the temporary responsible entity, lodge a notice with ASIC informing ASIC of the appointment made by the Court.

             (4)  As soon as practicable after the appointment, ASIC must alter the record of the scheme’s registration to name the appointed company as the scheme’s temporary responsible entity.

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

             (1)  The temporary responsible entity of a registered scheme must call a members’ meeting for the purpose of the members, by resolution, choosing a company to be the new responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed. The temporary responsible entity must call the meeting as soon as practicable and, in any event, within 3 months of becoming the temporary responsible entity.

             (2)  Within that 3 months, the temporary responsible entity may call further members’ meetings for the purpose of choosing a company to be the new responsible entity. Before the end of the 3 months, it may apply to the Court for an extension of that period. If the Court grants the extension, the temporary responsible entity may, within the extended period, call further members’ meetings for the purpose of choosing a company to be the new responsible entity.

             (3)  Provided it still meets the requirements in section 601FA, nothing prevents the company that is the temporary responsible entity from being chosen as the new responsible entity.

             (4)  If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity, the temporary responsible entity must, as soon as practicable, lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity. ASIC must comply with the notice when it is lodged.

             (5)  The temporary responsible entity must apply to the Court for an order directing it to wind up the scheme, and the Court may make the order, if:

                     (a)  no meeting is called within the 3 months or extended period for the purpose of choosing a new company to be the responsible entity; or

                     (b)  the meeting or meetings called within that period for that purpose have not resulted in the members choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

ASIC or a member of the scheme may apply for the order if the temporary responsible entity does not do so.

             (6)  The temporary responsible entity must not lodge a notice under subsection (4) unless the consent referred to in that subsection has been given before the notice is lodged.

Division 3Consequences of change of responsible entity

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

                   If the responsible entity of a registered scheme changes, the former responsible entity must:

                     (a)  as soon as practicable give the new responsible entity any books in the former responsible entity’s possession or control that this Act requires to be kept in relation to the scheme; and

                     (b)  give other reasonable assistance to the new responsible entity to facilitate the change of responsible entity.

601FS  Rights, obligations and liabilities of former responsible entity

             (1)  If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity.

             (2)  Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity:

                     (a)  any right of the former responsible entity to be paid fees for the performance of its functions before it ceased to be the responsible entity; and

                     (b)  any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and

                     (c)  any right, obligation or liability that the former responsible entity had as a member of the scheme; and

                     (d)  any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme’s responsible entity.

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

             (1)  If the responsible entity of a registered scheme changes, a document:

                     (a)  to which the former responsible entity is a party, in which a reference is made to the former responsible entity, or under which the former responsible entity has acquired or incurred a right, obligation or liability, or might have acquired or incurred a right, obligation or liability if it had remained the responsible entity; and

                     (b)  that is capable of having effect after the change;

has effect as if the new responsible entity (and not the former responsible entity) were a party to it, were referred to in it or had or might have acquired or incurred the right, obligation or liability under it.

             (2)  Subsection (1) does not apply to a right, obligation or liability that remains a right, obligation or liability of the former responsible entity because of subsection 601FS(2).

Part 5C.3The constitution

  

601GA  Contents of the constitution

             (1)  The constitution of a registered scheme must make adequate provision for:

                     (a)  the consideration that is to be paid to acquire an interest in the scheme; and

                     (b)  the powers of the responsible entity in relation to making investments of, or otherwise dealing with, scheme property; and

                     (c)  the method by which complaints made by members in relation to the scheme are to be dealt with; and

                     (d)  winding up the scheme.

             (2)  If the responsible entity is to have any rights to be paid fees out of scheme property, or to be indemnified out of scheme property for liabilities or expenses incurred in relation to the performance of its duties, those rights:

                     (a)  must be specified in the scheme’s constitution; and

                     (b)  must be available only in relation to the proper performance of those duties;

and any other agreement or arrangement has no effect to the extent that it purports to confer such a right.

             (3)  If the responsible entity is to have any powers to borrow or raise money for the purposes of the scheme:

                     (a)  those powers must be specified in the scheme’s constitution; and

                     (b)  any other agreement or arrangement has no effect to the extent that it purports to confer such a power.

             (4)  If members are to have a right to withdraw from the scheme, the scheme’s constitution must:

                     (a)  specify the right; and

                     (b)  if the right may be exercised while the scheme is liquid (as defined in section 601KA)—set out adequate procedures for making and dealing with withdrawal requests; and

                     (c)  if the right may be exercised while the scheme is not liquid (as defined in section 601KA)—provide for the right to be exercised in accordance with Part 5C.6 and set out any other adequate procedures (consistent with that Part) that are to apply to making and dealing with withdrawal requests.

The right to withdraw, and any provisions in the constitution setting out procedures for making and dealing with withdrawal requests, must be fair to all members.

601GB  Constitution must be legally enforceable

                   The constitution of a registered scheme must be contained in a document that is legally enforceable as between the members and the responsible entity.

601GC  Changing the constitution

             (1)  The constitution of a registered scheme may be modified, or repealed and replaced with a new constitution:

                     (a)  by special resolution of the members of the scheme; or

                     (b)  by the responsible entity if the responsible entity reasonably considers the change will not adversely affect members’ rights.

             (2)  The responsible entity must lodge with ASIC a copy of the modification or the new constitution. The modification, or repeal and replacement, cannot take effect until the copy has been lodged.

             (3)  The responsible entity must lodge with ASIC a consolidated copy of the scheme’s constitution if ASIC directs it to do so.

             (4)  The responsible entity must send a copy of the scheme’s constitution to a member of the scheme within 7 days if the member:

                     (a)  asks the responsible entity, in writing, for the copy; and

                     (b)  pays any fee (up to the prescribed amount) required by the responsible entity.

Part 5C.4The compliance plan

  

601HA  Contents of the compliance plan

             (1)  The compliance plan of a registered scheme must set out adequate measures that the responsible entity is to apply in operating the scheme to ensure compliance with this Act and the scheme’s constitution, including the arrangements for:

                     (a)  ensuring that all scheme property is clearly identified as scheme property and held separately from property of the responsible entity and property of any other scheme (see paragraph 601FC(1)(i)); and

                     (b)  if the scheme is required to have a compliance committee (see section 601JA)—ensuring that the compliance committee functions properly, including adequate arrangements relating to:

                              (i)  the membership of the committee; and

                             (ii)  how often committee meetings are to be held; and

                            (iii)  the committee’s reports and recommendations to the responsible entity; and

                            (iv)  the committee’s access to the scheme’s accounting records and to the auditor of the scheme’s financial statements; and

                             (v)  the committee’s access to information that is relevant to the responsible entity’s compliance with this Act; and

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

                     (d)  ensuring that compliance with the plan is audited as required by section 601HG; and

                     (e)  ensuring adequate records of the scheme’s operations are kept; and

                      (f)  any other matter prescribed by the regulations.

             (2)  If:

                     (a)  a registration application is made as a result of a resolution passed under subparagraph 1457(1)(a)(i); and

                     (b)  the resolution included a direction under subsection 1457(1A);

the compliance plan lodged with the application must provide for scheme property to be held by a person other than the responsible entity, or a person that is not related to the responsible entity, as the responsible entity’s agent.

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

             (1)  The responsible entity of a registered scheme may lodge with ASIC a compliance plan for the scheme that is expressed to incorporate specified provisions, as in force at a specified time, of a compliance plan of another registered scheme of which it is also the responsible entity.

             (2)  The specified provisions, as in force at the specified time, are taken to be included in the plan.

601HC  Directors must sign lodged copy of compliance plan

                   The copy of a scheme’s compliance plan that is lodged with ASIC must be signed by all the directors of the responsible entity.

601HD  ASIC may require further information about compliance plan

             (1)  ASIC may direct the responsible entity of a registered scheme to give it information about the arrangements contained in the compliance plan. The direction is to be given by notice in writing to the responsible entity.

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

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

601HE  Changing the compliance plan

Responsible entity’s powers

             (1)  The responsible entity of a registered scheme may modify the scheme’s compliance plan or repeal it and replace it with a new compliance plan.

ASIC may require modifications

             (2)  ASIC may direct the responsible entity of a registered scheme to modify the scheme’s compliance plan, as set out in the direction, to ensure that the plan is consistent with section 601HA. The direction is to be given by notice in writing to the responsible entity.

Lodgment of modification or new plan

             (3)  The responsible entity must lodge with ASIC a copy of a modification of the scheme’s compliance plan or of a new compliance plan within 14 days after the modification is made or the old plan is repealed. The copy must be signed by all the directors of the responsible entity.

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

             (1)  ASIC may direct the responsible entity of a registered scheme to lodge a consolidated copy of the scheme’s compliance plan.

             (2)  The consolidation must set out:

                     (a)  the plan as modified to the time of lodgment; and

                     (b)  if required by ASIC’s direction—the full text of provisions taken to be included in the plan by subsection 601HB(2).

601HG  Audit of compliance plan

             (1)  The responsible entity of a registered scheme must ensure that at all times a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the scheme’s compliance plan in accordance with this section. This auditor, firm or company is referred to as the auditor of the compliance plan.

             (2)  A person is not eligible to act as the individual auditor, lead auditor or review auditor of the compliance plan if the person is:

                     (a)  an associate of the responsible entity; or

                     (b)  an agent holding scheme property on behalf of the responsible entity or an associate of an agent of that kind; or

                     (c)  the auditor of the responsible entity’s financial statements.

          (2A)  However:

                     (a)  the auditor of the compliance plan and the auditor of the responsible entity’s financial statements may work for the same firm of auditors or audit company; and

                     (b)  the lead auditor or review auditor of the compliance plan (on the one hand) and the lead auditor or review auditor of the responsible entity’s financial statements (on the other hand) may work for the same firm of auditors or audit company.

             (3)  Within 3 months after the end of a financial year of the scheme, the auditor of the compliance plan must:

                     (a)  examine the scheme’s compliance plan; and

                     (b)  carry out:

                              (i)  if the scheme has only had one responsible entity during the financial year—an audit of the responsible entity’s compliance with the compliance plan during the financial year; or

                             (ii)  if the scheme has had more than one responsible entity during the financial year—an audit of each responsible entity’s compliance with the compliance plan during that part of the financial year when it was the scheme’s responsible entity; and

                     (c)  give to the scheme’s current responsible entity a report that states whether, in the auditor’s opinion:

                              (i)  the responsible entity, or each responsible entity, complied with the scheme’s compliance plan during the financial year or that part of the financial year when it was the scheme’s responsible entity; and

                             (ii)  the plan continues to meet the requirements of this Part.

Contravention by individual auditor

             (4)  An individual auditor conducting an audit of a compliance plan contravenes this subsection if:

                     (a)  the auditor is aware of circumstances that:

                              (i)  the auditor has reasonable grounds to suspect amount to a contravention of this Act; or

                             (ii)  amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

                            (iii)  amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

                     (b)  if subparagraph (a)(i) applies:

                              (i)  the contravention is a significant one; or

                             (ii)  the contravention is not a significant one and the auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

                     (c)  the auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the auditor becomes aware of those circumstances.

Contravention by audit company

          (4A)  An audit company conducting an audit of a compliance plan contravenes this subsection if:

                     (a)  the lead auditor for the audit is aware of circumstances that:

                              (i)  the lead auditor has reasonable grounds to suspect amount to a contravention of this Act; or

                             (ii)  amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

                            (iii)  amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

                     (b)  if subparagraph (a)(i) applies:

                              (i)  the contravention is a significant one; or

                             (ii)  the contravention is not a significant one and the lead auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

                     (c)  the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor becomes aware of those circumstances.

Contravention by lead auditor

          (4B)  A person contravenes this subsection if:

                     (a)  the person is the lead auditor for an audit of a compliance plan; and

                     (b)  the person is aware of circumstances that:

                              (i)  the person has reasonable grounds to suspect amount to a contravention of this Act; or

                             (ii)  amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (12)); or

                            (iii)  amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

                     (c)  if subparagraph (b)(i) applies:

                              (i)  the contravention is a significant one; or

                             (ii)  the contravention is not a significant one and the person believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor’s report or bringing it to the attention of the directors; and

                     (d)  the person does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the person becomes aware of those circumstances.

             (5)  The auditor of the compliance plan:

                     (a)  has a right of access at all reasonable times to the books of the scheme; and

                     (b)  may require an officer of the responsible entity to give the auditor information and explanations for the purposes of the audit.

             (6)  An officer of the responsible entity must:

                     (a)  allow the auditor of the compliance plan to have access to the books of the scheme; and

                     (b)  give the auditor information or an explanation required under subsection (5); and

                     (c)  otherwise assist the conduct of the audit.

             (7)  The responsible entity must lodge the auditor’s report under subsection (3) with ASIC at the same time as the financial statements and reports in respect of the scheme are to be lodged with ASIC (see sections 292 and 321).

          (7A)  An offence based on subsection (1), (3), (6) or (7) is an offence of strict liability.

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

             (8)  The auditor of the compliance plan has qualified privilege in respect of:

                     (a)  a statement made in a report under subsection (3); or

                     (b)  a notification to ASIC under subsection (4).

             (9)  This section does not prevent the responsible entity from arranging for the auditor of the compliance plan to carry out audits in addition to those required by this section.

Significant contraventions

           (10)  In determining for the purposes of this section whether a contravention of this Act is a significant one, have regard to:

                     (a)  the level of penalty provided for in relation to the contravention; and

                     (b)  the effect that the contravention has, or may have, on:

                              (i)  the overall financial position of the company, registered scheme or disclosing entity; or

                             (ii)  the adequacy of the information available about the overall financial position of the company, registered scheme or disclosing entity; and

                     (c)  any other relevant matter.

           (11)  Without limiting paragraph (10)(a), a penalty provided for in relation to a contravention of a provision of Part 2M.2 or 2M.3, or section 324DAA, 324DAB or 324DAC, includes a penalty imposed on a director, because of the operation of section 344, for failing to take reasonable steps to comply with, or to secure compliance with, that provision.

Person involved in audit

           (12)  In this section:

person involved in the conduct of an audit means:

                     (a)  the auditor; or

                     (b)  the lead auditor for the audit; or

                     (c)  the review auditor for the audit; or

                     (d)  a professional member of the audit team for the audit; or

                     (e)  any other person involved in the conduct of the audit.

601HH  Removal and resignation of auditors

Removal of auditor by responsible entity

             (1)  The responsible entity:

                     (a)  must remove the auditor of the compliance plan if the auditor becomes ineligible under subsection 601HG(2) to act as auditor of the compliance plan; and

                     (b)  may, with ASIC’s consent, remove the auditor of the compliance plan.

Resignation of auditor

             (2)  The auditor of the compliance plan may resign by written notice to the responsible entity if:

                     (a)  the auditor:

                              (i)  applies to ASIC in writing for its consent to the resignation; and

                             (ii)  gives the responsible entity written notice of the application at or about the same time as applying to ASIC; and

                     (b)  ASIC consents to the resignation.

             (3)  As soon as practicable after receiving the application, ASIC must notify the auditor and the responsible entity whether it consents to the resignation.

             (4)  A statement by the auditor in the application or in answer to an inquiry by ASIC relating to the reasons for the application:

                     (a)  is not admissible in evidence in any civil or criminal proceedings against the auditor (other than proceedings for a contravention of section 1308); and

                     (b)  may not be made the ground of a prosecution (other than a prosecution for a contravention of section 1308), action or suit against the auditor.

A certificate by ASIC that the statement was made in the application, or in answer to an inquiry by ASIC, is conclusive evidence that the statement was so made.

             (5)  The auditor’s resignation takes effect on the later of:

                     (a)  the day (if any) specified in the notice of resignation; or

                     (b)  the day ASIC consents to the resignation; or

                     (c)  the day (if any) fixed by ASIC for the purpose.

601HI  Action on change of auditor of compliance plan

                   If the auditor of the compliance plan of a registered scheme changes, the responsible entity must, as soon as practicable after the change and in writing, ask ASIC to alter the record of the scheme’s registration to show the name of the new auditor as the auditor of the scheme’s compliance plan. ASIC must comply with the request if the change complies with this Act.

Part 5C.5The compliance committee

  

601JA  When is a compliance committee required?

             (1)  The responsible entity of a registered scheme must establish a compliance committee if less than half of the directors of the responsible entity are external directors.

             (2)  A director of the responsible entity is an external director if they:

                     (a)  are not, and have not been in the previous 2 years, an employee of the responsible entity or a related body corporate; and

                     (b)  are not, and have not been in the previous 2 years, a senior manager of a related body corporate; and

                     (c)  are not, and have not been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

                     (d)  are not a member of a partnership that is, or has been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

                     (e)  do not have a material interest in the responsible entity or a related body corporate; and

                      (f)  are not a relative of a person who has a material interest in the responsible entity or a related body corporate.

             (3)  The responsible entity must establish the compliance committee within 14 days after it is required to do so by subsection (1) or within any longer period that ASIC has agreed to in writing.

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

             (4)  In agreeing to a longer period under subsection (3), ASIC may impose conditions to be complied with and the responsible entity must comply with them.

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

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

601JB  Membership of compliance committee

             (1)  A scheme’s compliance committee must have at least 3 members, and a majority of them must be external members.

             (2)  A member of the compliance committee is an external member if they:

                     (a)  are not, and have not been in the previous 2 years, a non‑external director, a senior manager or an employee of the responsible entity or a related body corporate; and

                     (b)  are not, and have not been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

                     (c)  are not a member of a partnership that is, or has been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate; and

                     (d)  do not have a material interest in the responsible entity or a related body corporate; and

                     (e)  are not a relative of a person who has a material interest in the responsible entity or a related body corporate.

             (3)  For the purposes of paragraph (2)(a), a person who is a director of a related body corporate, but not of the responsible entity itself, is an external director of the related body corporate if they would have been an external director of the responsible entity under subsection 601JA(2) had they been a director of the responsible entity.

             (4)  A person who is, or has been, either:

                     (a)  an external director of the responsible entity; or

                     (b)  a member of a compliance committee for the scheme or another registered managed investment scheme operated by the responsible entity;

is not, merely because of that directorship or membership, taken to be, or to have been, substantially involved in business dealings, or in a professional capacity, with the responsible entity.

             (5)  If the membership of the scheme’s compliance committee ceases to satisfy subsection (1), the responsible entity must make appointments to the committee to satisfy that subsection within 14 days or within any longer period that ASIC has agreed to in writing.

             (6)  In agreeing to a longer period under subsection (5), ASIC may impose conditions to be complied with and the responsible entity must comply with them.

             (7)  An offence based on subsection (5) or (6) is an offence of strict liability.

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

601JC  Functions of compliance committee

             (1)  The functions of a scheme’s compliance committee are:

                     (a)  to monitor to what extent the responsible entity complies with the scheme’s compliance plan and to report on its findings to the responsible entity; and

                     (b)  to report to the responsible entity:

                              (i)  any breach of this Act involving the scheme; or

                             (ii)  any breach of the provisions included in the scheme’s constitution in accordance with section 601GA;

                            of which the committee becomes aware or that it suspects; and

                     (c)  to report to ASIC if the committee is of the view that the responsible entity has not taken, or does not propose to take, appropriate action to deal with a matter reported under paragraph (b); and

                     (d)  to assess at regular intervals whether the compliance plan is adequate, to report to the responsible entity on the assessment and to make recommendations to the responsible entity about any changes that it considers should be made to the plan.

             (2)  In carrying out its functions, the compliance committee may commission independent legal, accounting or other professional advice or assistance, at the reasonable expense of the responsible entity.

601JD  Duties of members

             (1)  A member of a scheme’s compliance committee must:

                     (a)  act honestly; and

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

                     (c)  not make use of information acquired through being a member of the committee in order to:

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

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

                     (d)  not make improper use of their position as a member of the committee to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the scheme.

             (2)  A member of the compliance committee is to take all reasonable steps to assist ASIC in carrying out a check under subsection 601FF(1).

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

Note 1:       Section 79 defines involved.

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

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

601JE  Compliance committee members have qualified privilege in certain cases

                   A member of a scheme’s compliance committee has qualified privilege in respect of a statement concerning the operation of the scheme made by or on behalf of the committee, or a member of the committee, to the responsible entity or to ASIC.

601JF  When can responsible entity indemnify compliance committee members?

             (1)  A scheme’s responsible entity or a related body corporate must not:

                     (a)  indemnify a person who is or has been a member of the scheme’s compliance committee against a liability incurred by the person as a member; or

                     (b)  exempt the person from such a liability.

             (2)  A provision of the scheme’s constitution or a body corporate’s constitution is void in so far as it provides for the responsible entity or a related body corporate to do something that subsection (1) prohibits.

             (3)  Subsection (1) does not prevent a person from being indemnified against a liability to another person (other than the responsible entity or a related body corporate) unless the liability arises out of conduct involving a lack of good faith.

             (4)  Subsection (1) does not prevent a person from being indemnified against a liability for costs and expenses incurred by them:

                     (a)  in defending proceedings, whether civil or criminal, in which judgment is given in favour of them or in which they are acquitted; or

                     (b)  in connection with an application, in relation to such proceedings, in which the Court grants relief to them under this Act.

             (5)  In this section:

indemnify includes indemnify indirectly through one or more interposed entities.

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

             (1)  A scheme’s responsible entity or a related body corporate must not pay, or agree to pay, a premium in respect of a contract insuring a person who is or has been a member of the scheme’s compliance committee against a liability:

                     (a)  incurred by the person as a member; and

                     (b)  arising out of conduct involving a wilful breach of a duty referred to in section 601JD.

             (2)  If subsection (1) is contravened, the contract is void in so far as it insures the person against the liability.

             (3)  Subsections (1) and (2) do not apply to a liability for costs and expenses incurred by a person in defending proceedings, whether civil or criminal and whatever their outcome.

             (4)  In this section:

pay includes pay indirectly through one or more interposed entities.

601JH  Proceedings of compliance committee

             (1)  Subject to the requirements of the compliance plan, a scheme’s compliance committee may regulate its proceedings as it thinks appropriate.

             (2)  The committee must keep:

                     (a)  minutes of its meetings; and

                     (b)  records of its reports and recommendations.

             (3)  A committee meeting may be held using any technology agreed to by all the members.

601JJ  Disclosure of interests

             (1)  A member of a scheme’s compliance committee must disclose to the committee a direct or indirect pecuniary interest that they have in a matter being considered, or about to be considered, by the committee if their interest could conflict with the proper performance of their duties in relation to the consideration of the matter.

             (2)  A disclosure under subsection (1) must occur at the first meeting of the committee after the relevant facts have come to the member’s knowledge and must be recorded in the minutes of the meeting.

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

  

601KA  Members’ rights to withdraw

Withdrawal from schemes that are liquid

             (1)  The constitution of a registered scheme may make provision for members to withdraw from the scheme, wholly or partly, at any time while the scheme is liquid (see subsection 601GA(4)).

Withdrawal from schemes that are not liquid

             (2)  The constitution of a registered scheme may make provision for members to withdraw from the scheme, wholly or partly, in accordance with this Part while the scheme is not liquid (see subsection 601GA(4)).

Restrictions on withdrawal from schemes

             (3)  The responsible entity must not allow a member to withdraw from the scheme:

                     (a)  if the scheme is liquid—otherwise than in accordance with the scheme’s constitution; or

                     (b)  if the scheme is not liquid—otherwise than in accordance with the scheme’s constitution and sections 601KB to 601KE.

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

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

Liquid schemes

             (4)  A registered scheme is liquid if liquid assets account for at least 80% of the value of scheme property.

Liquid assets

             (5)  The following are liquid assets unless it is proved that the responsible entity cannot reasonably expect to realise them within the period specified in the constitution for satisfying withdrawal requests while the scheme is liquid:

                     (a)  money in an account or on deposit with a bank;

                     (b)  bank accepted bills;

                     (c)  marketable securities (as defined in section 9);

                     (d)  property of a prescribed kind.

             (6)  Any other property is a liquid asset if the responsible entity reasonably expects that the property can be realised for its market value within the period specified in the constitution for satisfying withdrawal requests while the scheme is liquid.

601KB  Non‑liquid schemes—offers

             (1)  The responsible entity of a registered scheme that is not liquid may offer members an opportunity to withdraw, wholly or partly, from the scheme to the extent that particular assets are available and able to be converted to money in time to satisfy withdrawal requests that members may make in response to the offer.

             (2)  The withdrawal offer must be in writing and be made:

                     (a)  if the constitution specifies procedures for making the offer—in accordance with those procedures; or

                     (b)  otherwise—by giving a copy of the offer to all members of the scheme or to all members of a particular class.

             (3)  The withdrawal offer must specify:

                     (a)  the period during which the offer will remain open (this period must last for at least 21 days after the offer is made); and

                     (b)  the assets that will be used to satisfy withdrawal requests; and

                     (c)  the amount of money that is expected to be available when those assets are converted to money; and

                     (d)  the method for dealing with withdrawal requests if the money available is insufficient to satisfy all requests.

The method specified under paragraph (d) must comply with section 601KD.

             (4)  For joint members, a copy of the withdrawal offer need only be given to the joint member named first in the register of members.

             (5)  As soon as practicable after making the withdrawal offer, the responsible entity must lodge a copy of the offer with ASIC.

601KC  Non‑liquid schemes—only one withdrawal offer to be open at any time

                   Only one withdrawal offer may be open at any time in relation to a particular interest in a registered scheme that is not liquid.

601KD  Non‑liquid schemes—how payments are to be made

                   The responsible entity of a registered scheme that is not liquid must ensure that withdrawal requests made in response to a withdrawal offer are satisfied within 21 days after the offer closes. No request made under the withdrawal offer may be satisfied while the offer is still open. If an insufficient amount of money is available from the assets specified in the offer to satisfy all requests, the requests are to be satisfied proportionately in accordance with the formula:

601KE  Non‑liquid schemes—responsible entity may cancel withdrawal offer

             (1)  The responsible entity of a registered scheme that is not liquid:

                     (a)  may cancel a withdrawal offer before it closes if the offer contains a material error; or

                     (b)  must cancel a withdrawal offer before it closes if it is in the best interests of members to do so.

             (2)  The cancellation must be made:

                     (a)  if the constitution specifies procedures for cancelling the withdrawal offer—in accordance with those procedures; or

                     (b)  otherwise—by notice in writing to the members to whom the withdrawal offer was made.

             (3)  The responsible entity must lodge written notice of the cancellation with ASIC.

Part 5C.7Related party transactions

  

601LA  Chapter 2E applies with modifications

                   Chapter 2E applies to a registered scheme with the modifications set out in sections 601LB to 601LE and as if:

                     (a)  references to a public company were instead references to the responsible entity of the scheme; and

                     (b)  references to a benefit being given to or received by a related party of a public company were instead references to a benefit being given to or received by the responsible entity or a related party; and

                     (c)  references to a resolution of a public company were instead references to a resolution of the members of the scheme; and

                     (d)  references to a general meeting were instead references to a members’ meeting of the scheme; and

                     (e)  references to members of a public company were instead references to members of the scheme; and

                      (f)  references to the company’s best interests were instead references to the best interests of the scheme’s members.

601LB  Replacement section 207

                   Chapter 2E applies as if section 207 were replaced by the following section:

207  Purpose

                   The rules in this Chapter, as they apply to a registered scheme, are designed to protect the interests of the scheme’s members as a whole, by requiring member approval for giving financial benefits to the responsible entity or its related parties that come out of scheme property or that could endanger those interests.

601LC  Replacement section 208

                   Chapter 2E applies as if section 208 were replaced by the following section:

208  Need for member approval for financial benefit

             (1)  If all the following conditions are satisfied in relation to a financial benefit:

                     (a)  the benefit is given by:

                              (i)  the responsible entity of a registered scheme; or

                             (ii)  an entity that the responsible entity controls; or

                            (iii)  an agent of, or person engaged by, the responsible entity

                     (b)  the benefit either:

                              (i)  is given out of the scheme property; or

                             (ii)  could endanger the scheme property

                     (c)  the benefit is given to:

                              (i)  the person or a related party; or

                             (ii)  another person referred to in paragraph (a) or a related party of that person;

then, for the person referred to in paragraph (a) to give the benefit, either:

                     (d)  the person referred to in paragraph (a) must:

                              (i)  obtain the approval of the scheme’s members in the way set out in sections 217 to 227; and

                             (ii)  give the benefit within 15 months after the approval; or

                     (e)  the giving of the benefit must fall within an exception set out in sections 210 to 216.

Note:          Section 228 defines related party, section 191 defines entity, section 191 defines control and section 229 affects the meaning of giving a financial benefit.

             (2)  If:

                     (a)  the giving of the benefit is required by a contract; and

                     (b)  the making of the contract was approved in accordance with subparagraph (1)(d)(i) as a financial benefit given to the entity or related party; and

                     (c)  the contract was made:

                              (i)  within 15 months after that approval; or

                             (ii)  before that approval, if the contract was conditional on the approval being obtained;

member approval for the giving of the benefit is taken to have been given and the benefit need not be given within the 15 months.

             (3)  Subsection (1) does not prevent the responsible entity from paying itself fees, and exercising rights to an indemnity, as provided for in the scheme’s constitution under subsection 601GA(2).

601LD  Omission of sections 213, 214 and 224

                   Chapter 2E applies as if sections 213, 214 and 224 were omitted.

Note:          Instead of section 224, the rule in section 253E will apply.

601LE  Modification of section 225

                   Chapter 2E applies as if subsection 225(1) were amended by omitting “subsection 224(1)” and substituting “section 253E”.

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

  

601MA  Civil liability of responsible entity to members

             (1)  A member of a registered scheme who suffers loss or damage because of conduct of the scheme’s responsible entity that contravenes a provision of this Chapter may recover the amount of the loss or damage by action against the responsible entity whether or not the responsible entity has been convicted of an offence, or has had a civil penalty order made against it, in respect of the contravention.

             (2)  An action under subsection (1) must be begun within 6 years after the cause of action arises.

             (3)  This section does not affect any liability that a person has under other provisions of this Act or under other laws.

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

             (1)  If:

                     (a)  a managed investment scheme is being operated in contravention of subsection 601ED(5) and a person (the offeror) offers an interest in the scheme for subscription, or issues an invitation to subscribe for an interest in the scheme; or

                     (b)  a person (the offeror) fails to comply with Division 2 of Part 7.9 when offering an interest in a registered scheme for subscription or issuing an invitation to subscribe for an interest in a registered scheme;

a contract entered into by a person (other than the offeror) to subscribe for the interest as a result of the person accepting the offer, or of the acceptance of an offer made by the person in response to the invitation, is voidable at the option of that person by notice in writing to the offeror.

             (2)  If the person gives a notice under subsection (1), the obligations of the parties to the contract are suspended:

                     (a)  during the period of 21 days after the notice is given; and

                     (b)  during the period beginning when an application is made under subsection (4) in relation to the notice and ending when the application, and any appeals arising out of it, have been finally determined or otherwise disposed of.

             (3)  Subject to subsection (6), the notice takes effect to void the contract:

                     (a)  at the end of 21 days after the notice is given; or

                     (b)  if, within that 21 days, the offeror applies under subsection (4)—at the end of the period when the obligations of the parties are suspended under paragraph (2)(b).

             (4)  Within 21 days after the notice is given, the offeror may apply to the Court for an order declaring the notice to have had no effect.

             (5)  The Court may extend the period within which the offeror may apply under subsection (4), even if the notice has taken effect.

             (6)  On application under subsection (4), the Court may declare the notice to have had no effect if it is satisfied that, in all the circumstances, it is just and equitable to make the declaration.

Part 5C.9Winding up

  

601NA  Winding up required by scheme’s constitution

                   The constitution of a registered scheme may provide that the scheme is to be wound up:

                     (a)  at a specified time; or

                     (b)  in specified circumstances or on the happening of a specified event;

but a provision of the constitution that purports to provide that the scheme is to be wound up if a particular company ceases to be its responsible entity is of no effect (including for the purposes of paragraph 601NE(1)(a)).

601NB  Winding up at direction of members

                   If members of a registered scheme want the scheme to be wound up, they may take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider and vote on an extraordinary resolution directing the responsible entity to wind up the scheme.

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

             (1)  If the responsible entity of a registered scheme considers that the purpose of the scheme:

                     (a)  has been accomplished; or

                     (b)  cannot be accomplished;

it may, in accordance with this section, take steps to wind up the scheme.

             (2)  The responsible entity must give to the members of the scheme and to ASIC a notice in writing:

                     (a)  explaining the proposal to wind up the scheme, including explaining how the scheme’s purpose has been accomplished or why that purpose cannot be accomplished; and

                     (b)  informing the members of their rights to take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider the proposed winding up of the scheme and to vote on any extraordinary resolution members propose about the winding up of the scheme; and

                     (c)  informing the members that the responsible entity is permitted to wind up the scheme unless a meeting is called to consider the proposed winding up of the scheme within 28 days of the responsible entity giving the notice to the members.

             (3)  If no meeting is called within that 28 days to consider the proposed winding up, the responsible entity may wind up the scheme.

601ND  Winding up ordered by Court

             (1)  The Court may, by order, direct the responsible entity of a registered scheme to wind up the scheme if:

                     (a)  the Court thinks it is just and equitable to make the order; or

                     (b)  within 3 months before the application for the order was made, execution or other process was issued on a judgment, decree or order obtained in a court (whether an Australian court or not) in favour of a creditor of, and against, the responsible entity in its capacity as the scheme’s responsible entity and the execution or process has been returned unsatisfied.

             (2)  An order based on paragraph (1)(a) may be made on the application of:

                     (a)  the responsible entity; or

                     (b)  a director of the responsible entity; or

                     (c)  a member of the scheme; or

                     (d)  ASIC.

             (3)  An order based on paragraph (1)(b) may be made on the application of a creditor.

601NE  The winding up of the scheme

             (1)  The responsible entity of a registered scheme must ensure that the scheme is wound up in accordance with its constitution and any orders under subsection 601NF(2) if:

                     (a)  the scheme’s constitution provides that the scheme is to be wound up at a specified time, in specified circumstances or on the happening of a specified event and that time is reached, those circumstances occur or that event occurs; or

                     (b)  the members pass an extraordinary resolution directing the responsible entity to wind up the scheme; or

                     (c)  the Court makes an order directing the responsible entity to wind up the scheme; or

                     (d)  the members pass a resolution removing the responsible entity but do not, at the same meeting, pass a resolution choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

Note:         For the Court’s power to order winding up, see subsection 601FQ(5) and section 601ND.

             (2)  The responsible entity of a registered scheme may wind up the scheme in accordance with its constitution and any orders under subsection 601NF(2) if the responsible entity is permitted by subsection 601NC(3) to wind up the scheme.

             (3)  Interests must not be issued in a registered scheme at a time after the responsible entity has become obliged to ensure the scheme is wound up, or after the scheme has started to be wound up.

601NF  Other orders about winding up

             (1)  The Court may, by order, appoint a person to take responsibility for ensuring a registered scheme is wound up in accordance with its constitution and any orders under subsection (2) if the Court thinks it necessary to do so (including for the reason that the responsible entity has ceased to exist or is not properly discharging its obligations in relation to the winding up).

             (2)  The Court may, by order, give directions about how a registered scheme is to be wound up if the Court thinks it necessary to do so (including for the reason that the provisions in the scheme’s constitution are inadequate or impracticable).

             (3)  An order under subsection (1) or (2) may be made on the application of:

                     (a)  the responsible entity; or

                     (b)  a director of the responsible entity; or

                     (c)  a member of the scheme; or

                     (d)  ASIC.

601NG  Unclaimed money to be paid to ASIC

                   If, on completion of the winding up of a registered scheme, the person who has been winding up the scheme has in their possession or under their control any unclaimed or undistributed money or other property that was part of the scheme property, the person must, as soon as practicable, pay the money or transfer the property to ASIC to be dealt with under Part 9.7.

Part 5C.10Deregistration

  

601PA  Deregistration—voluntary

Responsible entity may apply for deregistration

             (1)  The responsible entity of a registered scheme may lodge an application for deregistration of the scheme with ASIC.

             (2)  The responsible entity may only apply if:

                     (a)  the scheme:

                              (i)  has 20 or less members (calculated in accordance with subsection 601ED(4)) and all the members agree that the scheme should be deregistered; and

                             (ii)  is not required to be registered by paragraph 601ED(1)(b) or (c); or

                     (b)  because of subsection 601ED(2) (exemption based on Division 2 of Part 7.9 not applying), the scheme is not required to be registered and all the members agree that the scheme should be deregistered; or

                     (c)  the scheme is not a managed investment scheme.

             (3)  If ASIC is satisfied that the application complies with subsections (1) and (2), it must give notice of the proposed deregistration:

                     (a)  on the national database; and

                     (b)  in the Gazette.

When 2 months have passed since the Gazette notice, ASIC may deregister the scheme.

             (4)  ASIC must give notice of the deregistration to the applicant.

601PB  Deregistration by ASIC

             (1)  ASIC may decide to deregister a registered scheme if:

                     (a)  the scheme does not have a responsible entity that meets the requirements of section 601FA; or

                     (b)  the scheme does not have a constitution that meets the requirements of sections 601GA and 601GB; or

                     (c)  the scheme does not have a compliance plan that meets the requirements of section 601HA; or

                     (d)  the scheme’s property is not being:

                              (i)  clearly identified as the scheme’s property; and

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

                            in accordance with the scheme’s compliance plan; or

                     (e)  the following conditions are satisfied:

                              (i)  the response to a return of particulars given to the responsible entity of the scheme is at least 6 months late; and

                             (ii)  no other documents have been lodged by or on behalf of the scheme in the last 18 months; and

                            (iii)  ASIC has no reason to believe that the scheme is being operated; or

                    (ea)  the scheme’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment; or

                      (f)  the scheme has been wound up.

Deregistration procedure

             (2)  If ASIC decides to deregister a scheme under this section, it must give notice of the proposed deregistration:

                     (a)  to the scheme’s responsible entity; and

                     (b)  to any other person who is winding up the scheme; and

                     (c)  on the national database; and

                     (d)  in the Gazette.

If the notice is given under paragraph (1)(a), (b), (c) or (d), the notice must specify the period at the end of which ASIC proposes to deregister the scheme.

             (3)  ASIC may deregister the scheme:

                     (a)  if paragraph (1)(a), (b), (c) or (d) applies—at the end of the period set out in the Gazette notice; or

                     (b)  if paragraph (1)(e) or (f) applies—when 2 months have passed since the Gazette notice.

             (4)  ASIC does not have to give a person notice under subsection (2) if ASIC does not have the necessary information about the person’s address.

             (5)  ASIC must give notice of the deregistration to everyone who was notified of the proposed deregistration under paragraph (2)(a) or (b).

601PC  Reinstatement

             (1)  ASIC may reinstate the registration of a managed investment scheme if ASIC is satisfied that the scheme should not have been deregistered or if the defect that led to the scheme being deregistered has been remedied.

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

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

                              (i)  a person aggrieved by the deregistration; or

                             (ii)  a person who was winding up the scheme; and

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

             (3)  The Court may give any directions it thinks just for putting the scheme and other people in the same position, as far as possible, as if the scheme had not been deregistered.

ASIC to give notice of reinstatement

             (4)  ASIC must give notice of a reinstatement in the Gazette. If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant.

Part 5C.11Exemptions and modifications

  

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

             (1)  ASIC may:

                     (a)  exempt a person from a provision of this Chapter; or

                     (b)  declare that this Chapter applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.

Without limiting this, ASIC may declare that this Chapter applies to a person as if section 601HA included a requirement for scheme property to be held by a person other than the responsible entity as the responsible entity’s agent.

             (2)  The exemption or declaration may:

                     (a)  apply to all or specified provisions of this Chapter; and

                     (b)  apply to all persons, specified persons, or a specified class of persons; and

                     (c)  relate to all securities, specified securities or a specified class of securities; and

                     (d)  relate to any other matter generally or as specified.

             (3)  An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

             (4)  The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette.

             (5)  For the purposes of this section, the provisions of this Chapter include:

                     (a)  regulations made for the purposes of this Chapter; and

                     (b)  definitions in this Act or the regulations as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations made for the purposes of this Chapter; and

                     (c)  the old Division 11 of Part 11.2 transitionals.

601QB  Modification by regulations

                   The regulations may modify the operation of this Chapter or any other provisions of this Act relating to securities in relation to:

                     (a)  a managed investment scheme; or

                     (b)  all managed investment schemes of a specified class.

Chapter 5DLicensed trustee companies

Part 5D.1Preliminary

  

601RAA  Definitions

                   In this Chapter:

client, in relation to a trustee company, has the meaning given by subsection 601RAB(3).

estate management functions has the meaning given by subsection 601RAC(2).

estate that is administered or managed, in relation to a trustee company, means all or any of the estate of a person (whether living or dead) that is administered or managed by the trustee company in the course of performing estate management functions.

fees means fees in the nature of remuneration (including commission).

law means a law of the Commonwealth or of a State or Territory, and includes a rule of common law or equity.

licensed trustee company means a trustee company that holds an Australian financial services licence covering the provision of one or more traditional trustee company services.

Note:          Traditional trustee company services are financial services for the purpose of Chapter 7: see subsection 766A(1A).

person with a proper interest, in relation to an estate, has the meaning given by section 601RAD.

publish: if the regulations prescribe requirements to be complied with in relation to an obligation in a provision of this Part to publish something, publish (in that provision) means publish in accordance with those requirements.

traditional trustee company services has the meaning given by subsection 601RAC(1).

trustee company has the meaning given by section 601RAB.

will includes a codicil and any other testamentary writing.

601RAB  Meaning of trustee company and client of trustee company

             (1)  A trustee company is a company:

                     (a)  that is a corporation to which paragraph 51(xx) of the Constitution applies; and

                     (b)  that is prescribed by the regulations as a trustee company for the purpose of this Act.

             (2)  For the purpose of paragraph (1)(b), companies may (for example) be prescribed:

                     (a)  by setting out a list of companies in the regulations; or

                     (b)  by providing a mechanism in the regulations for the determination of a list of companies.

          (2A)  Before the Governor‑General makes a regulation that includes a company in a list set out for the purposes of paragraph (2)(a), the company must satisfy the Minister of the following:

                     (a)  that it is a corporation to which paragraph 51(xx) of the Constitution applies;

                     (b)  that its purposes include:

                              (i)  providing services of the kind referred to in paragraph 601RAC(1)(c); and

                             (ii)  performing functions of a kind referred to in paragraph 601RAC(2)(b) and at least one other estate management function;

                     (c)  that it is, and will continue to be, capable of providing the services, and performing the functions, referred to in paragraph (b) of this subsection;

                     (d)  that it is a fit and proper person;

                     (e)  that an unacceptable control situation (as defined in section 601VAA) does not exist in relation to it in relation to any person;

                      (f)  any other matter the Minister specifies by written notice to the company.

Note:          Under Division 137 of the Criminal Code it may be an offence for a company to provide false or misleading information or documents to the Minister in purported compliance with this requirement.

             (3)  A client of a trustee company is a person to whom, within the meaning of Chapter 7, a financial service (being a traditional trustee company service) is provided by the trustee company.

Note:          Regulations made for the purpose of subsection 766A(1B) may prescribe the person or persons to whom a class of traditional trustee company services is taken to be provided.

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

             (1)  The following are traditional trustee company services:

                     (a)  performing estate management functions (see subsection (2));

                     (b)  preparing a will, a trust instrument, a power of attorney or an agency arrangement;

                     (c)  applying for probate of a will, applying for grant of letters of administration, or electing to administer a deceased estate;

                     (d)  establishing and operating common funds;

                     (e)  any other services prescribed by the regulations for the purpose of this paragraph.

             (2)  The following are estate management functions (whether provided alone or jointly with another person or persons):

                     (a)  acting as a trustee of any kind, or otherwise administering or managing a trust;

                     (b)  acting as executor or administrator of a deceased estate;

                     (c)  acting as agent, attorney or nominee;

                     (d)  acting as receiver, controller or custodian of property;

                     (e)  otherwise acting as manager or administrator (including in the capacity as guardian) of the estate of an individual;

                      (f)  acting in any other capacity prescribed by the regulations for the purpose of this paragraph.

             (3)  Subsections (1) and (2) do not apply to:

                     (a)  operating a registered scheme; or

                     (b)  providing a custodial or depository service (within the meaning of section 766E); or

                     (c)  acting as trustee for debenture holders under Chapter 2L; or

                     (d)  acting as a receiver or other controller of property of a corporation under Part 5.2; or

                     (e)  acting as trustee of a superannuation fund, an approved deposit fund or a pooled superannuation trust (within the meaning of the Superannuation Industry (Supervision) Act 1993); or

                      (f)  acting in any other capacity prescribed by the regulations for the purpose of this paragraph.

601RAD  Meaning of person with a proper interest

             (1)  A person with a proper interest, in relation to an estate, includes (but is not limited to) the following:

                     (a)  ASIC;

                     (b)  in relation to a charitable trust:

                              (i)  the settlor, or one of the settlors, of the trust; or

                             (ii)  a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or

                            (iii)  a Minister of a State or Territory who has responsibilities relating to charitable trusts; or

                            (iv)  a person who is named in the instrument establishing the trust as a person who may receive payments on behalf of the trust; or

                             (v)  a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustee or trustees before distributing or applying money or other property for the purposes of the trust; or

                            (vi)  a person of a class that the trust is intended to benefit;

                     (c)  in the case of the estate of a deceased person:

                              (i)  if the person died testate—a beneficiary under the person’s will; or

                             (ii)  if the person died intestate—a person who, under a law of a State or Territory, has, or is entitled to, an interest in the deceased’s estate;

                     (d)  in the case of any other trust:

                              (i)  the settlor, or one of the settlors, of the trust; or

                             (ii)  a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or

                            (iii)  a beneficiary of the trust;

                     (e)  in relation to an application to a court relating to the estate—a person that the court considers, in the circumstances of the case, has a proper interest in the estate;

                      (f)  a person prescribed by the regulations as having a proper interest in the estate;

                     (g)  if a person covered by any of the above paragraphs is under a legal disability—an agent of the person.

             (2)  None of the paragraphs or subparagraphs of subsection (1) limits, or is limited by, any of the other paragraphs or subparagraphs of that subsection.

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

             (1)  The trustee company provisions are:

                     (a)  the provisions of this Chapter, and regulations or other instruments made for the purposes of this Chapter; and

                     (b)  the provisions of Chapter 7, and regulations or other instruments made for the purposes of Chapter 7, as they apply in relation to financial services that are traditional trustee company services.

             (2)  Subject to subsections (3) and (4), the trustee company provisions are intended to apply to the exclusion of laws of a State or Territory of the following kinds:

                     (a)  laws that authorise or license companies to provide traditional trustee company services generally (as opposed to laws that authorise or license companies to provide a particular traditional trustee company service);

                     (b)  laws that regulate the fees that may be charged by companies for the provision of traditional trustee company services, and laws that require the disclosure of such fees;

                     (c)  laws that deal with the provision of accounts by companies in relation to traditional trustee company services that they provide;

                     (d)  laws that deal with the duties of officers or employees of companies that provide traditional trustee company services;

                     (e)  laws that regulate the voting power that people may hold in companies that provide traditional trustee company services, or that otherwise impose restrictions on the ownership or control of companies that provide traditional trustee company services;

                      (f)  laws (other than laws referred to in section 601WBC) that deal with what happens to assets and liabilities held by a company, in connection with the provision by the company of traditional trustee company services, if the company ceases to be licensed or authorised to provide such services.

             (3)  Subject to subsection (4), the trustee company provisions are not intended to apply to the exclusion of laws of a State or Territory that require a company to have (or to have staff who have) particular qualifications or experience if the company is to provide traditional trustee company services of a particular kind.

             (4)  The regulations may provide:

                     (a)  that the trustee company provisions are intended to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws; or

                     (b)  that the trustee company provisions are intended not to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws.

             (5)  The provisions of this Chapter have effect subject to this section.

Note:          For example, section 601SAC (which provides that the powers etc. conferred by or under this Chapter are in addition to other powers etc.) is to be interpreted subject to this section.

             (6)  Part 1.1A does not apply in relation to the trustee company provisions.

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

Division 1General provisions

601SAA  Jurisdiction of courts not affected etc.

             (1)  Any inherent power or jurisdiction of courts in respect of the supervision of the performance of traditional trustee company services is not affected by anything in this Chapter.

             (2)  A licensed trustee company that is performing traditional trustee company services of a particular kind is subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of courts, in the same manner as any other person who performs traditional trustee company services of that kind.

601SAB  Regulations may prescribe other powers etc.

                   A licensed trustee company also has, in relation to the provision of traditional trustee company services, such other powers, functions, liabilities and obligations, and such privileges and immunities, as are prescribed by the regulations.

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

                   The powers, functions, liabilities and obligations, and the privileges and immunities, conferred or imposed on licensed trustee companies by or under this Chapter are in addition to, and not in derogation of, any powers, functions, liabilities and obligations, and any privileges and immunities, conferred or imposed by any other law:

                     (a)  on trustee companies; or

                     (b)  on persons who perform estate management functions or who provide other traditional trustee company services.

Division 2Accounts

601SBA  Licensed trustee company not required to file accounts

             (1)  A licensed trustee company, when acting alone in relation to any estate of a deceased person, is not required to file, or file and pass, accounts relating to the estate unless the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders.

             (2)  If a licensed trustee company is appointed and acts jointly with any other person in relation to any estate of a deceased person, the trustee company and that other person are not required to file, or file and pass, accounts relating to the estate unless:

                     (a)  that other person intends to charge fees for acting in relation to the estate; or

                     (b)  the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders.

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

             (1)  On application by a person with a proper interest in an estate that is administered or managed by a licensed trustee company, the trustee company must provide the person with an account of:

                     (a)  the assets and liabilities of the estate; and

                     (b)  the trustee company’s administration or management of the estate; and

                     (c)  any investment made from the estate; and

                     (d)  any distribution made from the estate; and

                     (e)  any other expenditure (including fees and commissions) from the estate.

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

Note 2:       Failure to comply with this subsection may also lead to the consequences set out in subsection (4) of this section.

             (2)  If:

                     (a)  a licensed trustee company has provided an account to a person under this section; and

                     (b)  the person applies for a further account within 3 months from the date on which the person was provided with the previous account;

the trustee company need not provide a further account in response to that application until the expiration of that period of 3 months.

Note:          A defendant bears an evidential burden in relation to the matter in subsection (2), see subsection 13.3(3) of the Criminal Code.

             (3)  A licensed trustee company may charge a reasonable fee for providing an account under this section.

             (4)  If a licensed trustee company fails to provide a proper account under this section, the Court may, on application by the person who sought the account or any other person with a proper interest in the estate, make any order that the Court considers appropriate, including an order requiring the preparation and delivery of proper accounts.

601SBC  Court may order audit

             (1)  The Court may, on any application under section 601SBB, in addition to or in substitution for any account to be provided by the licensed trustee company under that section, order that a person named in the order must examine the accounts of the trustee company relating to the estate in respect of which the order is made.

             (2)  On the making of any such order, the trustee company must:

                     (a)  give to the person named in the order a list of all the accounts kept by the company relating to the estate; and

                     (b)  produce to the person, at an office of the trustee company at all reasonable times when required, all books in the company’s possession relating to the estate; and

                     (c)  provide the person with all necessary information and all other necessary facilities for enabling the person to make the examination.

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

Division 3Common funds

601SCA  Common funds of licensed trustee companies

             (1)  A licensed trustee company may, for the purposes of investment, pool together into a fund or funds money (estate money) from 2 or more estates that are administered or managed by the trustee company in the performance of estate management functions.

             (2)  A fund into which money is pooled as mentioned in subsection (1) is a common fund.

Note:          A common fund may also be regulated under Chapter 5C (if the fund constitutes a managed investment scheme) but see also section 601SCAA, which deals with any inconsistencies in regulation between the Chapters.

             (3)  A common fund may also include other money.

             (4)  This section has effect subject to regulations made for the purpose of section 601SCC.

Note:          For example, the regulations may limit the circumstances in which other money may be pooled together with estate money.

601SCAA  Common funds that are also registered schemes

                   If, in relation to a common fund that is also a registered scheme, a provision of this Chapter or a regulation or other instrument made for the purposes of this Chapter is inconsistent with any of the following (a registered scheme provision):

                     (a)  a provision of Chapter 5C or a regulation or other instrument made for the purposes of that Chapter;

                     (b)  a provision of Part 7.9 of Chapter 7 or a regulation or other instrument made for the purposes of that Part;

the registered scheme provision prevails to the extent of the inconsistency.

601SCB  Obligations relating to common funds

             (1)  If a licensed trustee company establishes more than one common fund, each must be allocated an appropriate distinguishing number.

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

             (2)  For each common fund, the licensed trustee company must keep accounts showing at all times the current amount for the time being at credit in the fund on account of each estate.

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

             (3)  A licensed trustee company must not put estate money into a common fund if doing so is contrary to an express provision of the conditions subject to which the estate money is held by the trustee company.

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

601SCC  Regulations relating to establishment or operation of common funds

                   The regulations may include provisions relating to the establishment or operation of common funds.

601SCD  Arm’s length transactions

             (1)  A licensed trustee company that operates a common fund that is not a registered scheme must not give a financial benefit in relation to the common fund to a related party.

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

             (2)  Subsection (1) does not apply if the financial benefit is given on terms that:

                     (a)  would be reasonable in the circumstances if the trustee company and the related party were dealing at arm’s length; or

                     (b)  are less favourable to the related party than the terms referred to in paragraph (a).

             (3)  In this section:

financial benefit has a meaning that is affected by section 229.

related party has the meaning given by section 228, as if references in that section to a public company were references to a licensed trustee company.

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

Division 1Disclosure of fees

601TAA  Schedule of fees to be published and available

                   A licensed trustee company must ensure that an up‑to‑date schedule of the fees that it generally charges for the provision of traditional trustee company services:

                     (a)  is made available to the public at all times on a website maintained by or on behalf of the trustee company; and

                     (b)  is made available to the public free of charge at offices of the trustee company during the usual opening hours of those offices.

Note 1:       The schedule is of fees generally charged, and does not include fees that are agreed to etc. as mentioned in section 601TBB.

Note 2:       Failure to comply with this section is an offence (see subsection 1311(1)).

601TAB  Disclosure to clients of changed fees

             (1)  If, while a licensed trustee company continues to provide a particular traditional trustee company service to a client or clients, the trustee company changes the fees that it will charge for the provision of the service, the trustee company must, within 21 days of the change of fees taking effect, comply with paragraph (a) or (b) in relation to the client or each client:

                     (a)  if the client has requested to be sent copies of changed fees—send the client a copy of the changed fees in accordance with subsection (2); or

                     (b)  in any other case—directly notify the client, in writing, that the changed fees are available on the internet on a specified website maintained by or on behalf of the trustee company.

Note 1:       Initial disclosure to a client of the fees that a trustee company will charge for the provision of a trustee company service will generally occur through the provision to the client of a Financial Services Guide under Part 7.7. However, this section is not limited just to situations where there has been an initial disclosure through a Financial Services Guide.

Note 1A:    Other provisions in this Part and in the regulations limit the ability of licensed trustee companies to increase fees.

Note 2:       Failure to comply with this subsection is an offence (see subsection 1311(1)).

             (2)  A copy of changed fees that is sent to a client under paragraph (1)(a) must be:

                     (a)  an electronic copy, if that is what the client has requested; or

                     (b)  a hard copy, in any other case.

             (3)  If a client to whom a traditional trustee company service is provided is under a legal disability, the following provisions have effect:

                     (a)  a copy of changed fees required by paragraph (1)(a), or a notice required by paragraph (1)(b), must instead be given to an agent of the client;

                     (b)  a request referred to in paragraph (1)(a) or (2)(a) may instead be made by an agent of the client.

Division 2General provisions about charging fees

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

             (1)  Subject to this Part, a licensed trustee company may charge fees for the provision of traditional trustee company services.

             (2)  If a provision of this Part limits the fees that a licensed trustee company may charge for the provision of a particular traditional trustee company service, the trustee company must not charge fees for that service in excess of that limit.

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

Note 2:       Excess fees may also be recovered under section 601XAA.

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

             (1)  Nothing in this Part prevents a licensed trustee company from charging:

                     (a)  any fees that a testator, in his or her will, has directed to be paid; or

                     (b)  any fees that have been agreed on in accordance with subsection (2).

             (2)  An agreement referred to in paragraph (1)(b) that relates to the fees that may be charged by a licensed trustee company for the provision of a particular traditional trustee company service must be between the trustee company and:

                     (a)  subject to paragraph (b) of this subsection—a person or persons who have authority to deal with the trustee company on matters relating to the provision of the service; or

                     (b)  if the regulations prescribe the person or persons with whom the agreement must be made—that person or those persons.

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

                   Nothing in the Part prevents a licensed trustee company from charging a fee permitted by subsection 601SBB(3) for the provision of an account.

601TBD  Part does not prevent reimbursement

                   Nothing in this Part prevents the reimbursement to a licensed trustee company of all disbursements properly made by the trustee company in the provision of a traditional trustee company service.

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

             (1)  This section applies to the performance by a licensed trustee company of an estate management function relating to a particular estate.

             (2)  Subject to subsection (3), fees charged by the trustee company, in accordance with this Part, for the performance of the function are payable to the trustee company out of the capital or income of the relevant estate.

             (3)  Unless ASIC approves it under subsection (4):

                     (a)  a management fee referred to in section 601TDD can only come out of the income of the relevant estate; and

                     (b)  a common fund administration fee referred to in section 601TDE or 601TDI can only come out of the income received by the common fund on the assets of the charitable trust concerned that are included in the fund.

             (4)  ASIC may, on application in writing by a licensed trustee company, approve payment of a proposed fee that, if paid without the approval, would contravene subsection (3), if ASIC is satisfied that:

                     (a)  the payment of the fee will not significantly affect the capital of the relevant estate or charitable trust concerned; and

                     (b)  the fee is a fair reflection of the work and expertise required to perform the estate management function.

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

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

             (1)  This section applies to a particular provision of a traditional trustee company service by a licensed trustee company, unless:

                     (a)  the service consists of being the trustee or manager of a charitable trust (see Division 4); or

                     (b)  the provision of the service started before the commencement of this section.

             (2)  The trustee company must not charge fees that are in excess of its schedule of fees that was most recently published as required by section 601TAA before the trustee company started to provide the service.

             (3)  This section does not limit anything in Division 2.

601TCB  Additional amount for preparation of returns etc.

                   A licensed trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to an estate that is administered or managed by the trustee company.

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

Subdivision ANew client charitable trusts

601TDA  Subdivision applies to new client charitable trusts

                   This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if:

                     (a)  the service consists of being the trustee or manager of a charitable trust; and

                     (b)  the provision of the service started on or after the commencement of this section.

601TDB  What the trustee company may charge

             (1)  For the provision of the service, the trustee company must only charge:

                     (a)  either:

                              (i)  a capital commission, and an income commission, as provided for in section 601TDC; or

                             (ii)  a management fee as provided for in section 601TDD; and

                     (b)  if applicable, common fund administration fees under section 601TDE; and

                     (c)  if applicable, fees permitted by section 601TDF in respect of the preparation of returns etc.

             (2)  This section does not limit anything in Division 2.

601TDC  Option 1: capital commission and income commission

One‑off capital commission

             (1)  The trustee company may charge a capital commission (GST inclusive) at a rate not exceeding 5.5% of the gross value of the charitable trust’s assets.

             (2)  The capital commission must be charged only once during the period while the trustee company is trustee or manager of the charitable trust.

             (3)  The regulations may make provision relating to the capital commission, including (but not limited to):

                     (a)  the calculation of the commission or of the gross value of the charitable trust’s assets; and

                     (b)  when, during the period referred to in subsection (2), the commission may be charged.

Annual income commission

             (4)  The trustee company may charge an annual income commission (GST inclusive) at a rate not exceeding 6.6% of the income received on account of the charitable trust’s assets.

             (5)  The regulations may make provision relating to the income commission, including (but not limited to):

                     (a)  the calculation of the commission or of the income received on the charitable trust’s assets; and

                     (b)  when, during a year, the commission may be charged; and

                     (c)  apportionment of the amount of the commission for part‑years.

601TDD  Option 2: annual management fee

             (1)  Instead of a capital commission and income commission under section 601TDC, the trustee company may charge an annual management fee (GST inclusive) at a rate not exceeding 1.056% of the gross value of the charitable trust’s assets.

             (2)  The regulations may make provision relating to the management fee, including (but not limited to):

                     (a)  the calculation of the management fee or of the gross value of the charitable trust’s assets; and

                     (b)  when, during a year, the management fee may be charged; and

                     (c)  apportionment of the amount of the management fee for part‑years.

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

             (1)  If any of the charitable trust’s assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust’s assets in the fund.

             (2)  The regulations may make provision relating to the common fund administration fee, including (but not limited to):

                     (a)  the calculation of the common fund administration fee or of the gross value of the charitable trust’s assets in the fund; and

                     (b)  when, during a year, the common fund administration fee may be charged; and

                     (c)  the apportionment of the common fund administration fee for part‑years.

601TDF  Additional amount for preparation of returns etc.

                   The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust.

Subdivision BExisting client charitable trusts

601TDG  Subdivision applies to existing client charitable trusts

                   This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if:

                     (a)  the service consists of being the trustee or manager of a charitable trust; and

                     (b)  the provision of the service started before the commencement of this section.

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

                   Subject to section 601TDI and 601TDJ, the trustee company must not charge fees in excess of the fees than it could have charged in relation to the charitable trust immediately before the commencement of this section.

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

             (1)  If any of the charitable trust’s assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust’s assets in the fund.

             (2)  The regulations may make provision relating to the common fund administration fee, including (but not limited to):

                     (a)  the calculation of the common fund administration fee or of the gross value of the charitable trust’s assets in the fund; and

                     (b)  when, during a year, the common fund administration fee may be charged; and

                     (c)  the apportionment of the common fund administration fee for part‑years.

601TDJ  Additional amount for preparation of returns etc.

                   The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust.

Division 5Miscellaneous

601TEA  Power of the Court with respect to excessive fees

             (1)  If the Court is of the opinion that fees charged by a licensed trustee company in respect of any estate are excessive, the Court may review the fees and may, on the review, reduce the fees.

             (2)  Subsection (1) does not apply to fees:

                     (a)  that are charged as permitted by section 601TBB; or

                     (b)  that relate to a charitable trust and that are charged as permitted by Subdivision A of Division 4.

             (3)  In considering whether fees are excessive, the Court may consider any or all of the following matters:

                     (a)  the extent to which the work performed by the trustee company was reasonably necessary;

                     (b)  the extent to which the work likely to be performed by the trustee company is likely to be reasonably necessary;

                     (c)  the period during which the work was, or is likely to be, performed by the trustee company;

                     (d)  the quality of the work performed, or likely to be performed, by the trustee company;

                     (e)  the complexity (or otherwise) of the work performed, or likely to be performed, by the trustee company;

                      (f)  the extent (if any) to which the trustee company was, or is likely to be, required to deal with extraordinary issues;

                     (g)  the extent (if any) to which the trustee company was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;

                     (h)  the value and nature of any property dealt with, or likely to be dealt with, by the trustee company;

                      (i)  if the fees are ascertained, in whole or in part, on a time basis—the time properly taken, or likely to be properly taken, by the trustee company in performing the work;

                      (j)  any other relevant matters.

             (4)  The Court may exercise its powers under subsection (1) either on its own motion or on the application by or on behalf of a person with a proper interest in the estate.

             (5)  If the fees are reduced by more than 10%, the trustee company must, unless the Court in special circumstances otherwise orders, pay the costs of the review.

             (6)  Subject to subsection (5), all questions of costs of the review are in the discretion of the Court.

601TEB  Directors’ fees

             (1)  This section applies if:

                     (a)  an estate that is administered or managed by a licensed trustee company has an interest in a corporation; and

                     (b)  an officer of the trustee company, in his or her capacity as such an officer, acts as a director of the corporation for purposes connected with the administration or management of the estate.

             (2)  The trustee company is entitled to receive from the corporation (and to retain) any director’s fees that would be payable to the officer had he or she so acted otherwise than in his or her capacity as such an officer.

             (3)  Neither the officer nor the estate is entitled to receive the fees that the trustee company is entitled to receive under subsection (2).

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

  

601UAA  Duties of officers of licensed trustee company

             (1)  An officer of a licensed trustee company must:

                     (a)  act honestly; and

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

                     (c)  not make use of information acquired through being an officer of the trustee company for the purpose (or for purposes including the purpose) of:

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

                             (ii)  causing detriment to the clients of the trustee company; and

                     (d)  not make improper use of their position as an officer for the purpose (or for purposes including the purpose) of:

                              (i)  gaining, directly or indirectly, an advantage for the officer or for any other person; or

                             (ii)  causing detriment to the clients of the trustee company; and

                     (e)  take all steps that a reasonable person would take, if they were in the officer’s position, to ensure that the trustee company complies, in relation to the provision of traditional trustee company services, with:

                              (i)  this Act; and

                             (ii)  any conditions imposed on the trustee company’s Australian financial services licence.

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

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

Note 1:       Section 79 defines involved.

Note 2:       This subsection is a civil penalty provision (see section 1317E).

             (3)  A duty of an officer of the trustee company under subsection (1) overrides any conflicting duty the officer has under Part 2D.1, but is subject to any conflicting duty the officer has under Part 5C.2.

             (4)  A reference in this section to the clients of a licensed trustee company is a reference to the clients, when viewed as a group.

601UAB  Duties of employees of licensed trustee company

             (1)  An employee of a licensed trustee company must not:

                     (a)  make use of information acquired through being an employee of the trustee company for the purpose (or for purposes including the purpose) of:

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

                             (ii)  causing detriment to the clients of the trustee company; or

                     (b)  make improper use of their position as an employee for the purpose (or for purposes including the purpose) of:

                              (i)  gaining, directly or indirectly, an advantage for the employee or for any other person; or

                             (ii)  causing detriment to the clients of the trustee company.

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

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

Note 1:       Section 79 defines involved.

Note 2:       This subsection is a civil penalty provision (see section 1317E).

             (3)  A duty of an employee of the trustee company under subsection (1) overrides any conflicting duty the employee has under Part 2D.1, but is subject to any conflicting duty the employee has under Part 5C.2.

             (4)  A reference in this section to the clients of a licensed trustee company is a reference to the clients, when viewed as a group.

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

Division 115% voting power limit

601VAA  Meaning of unacceptable control situation

                   For the purposes of this Part, an unacceptable control situation exists in relation to a licensed trustee company and in relation to a particular person if the person’s voting power in the trustee company is more than:

                     (a)  15%; or

                     (b)  if an approval of a higher percentage is in force under Division 2 in relation to the trustee company and in relation to the person—that higher percentage.

601VAB  Acquisitions of shares

                   If:

                     (a)  a person, or 2 or more persons under an arrangement, acquire shares in a body corporate; and

                     (b)  the acquisition has the result, in relation to a licensed trustee company, that:

                              (i)  an unacceptable control situation comes into existence in relation to the trustee company and in relation to a person; or

                             (ii)  if an unacceptable control situation already exists in relation to the trustee company and in relation to a person—there is an increase in the voting power of the person in the trustee company;

the person or persons mentioned in paragraph (a) contravene this section.

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

601VAC  Remedial orders

             (1)  If an unacceptable control situation exists in relation to a licensed trustee company, the Court may make such orders as the Court considers appropriate for the purpose of ensuring that the unacceptable control situation ceases to exist.

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

                     (a)  the Minister; or

                     (b)  ASIC; or

                     (c)  the trustee company; or

                     (d)  a person who has any voting power in the trustee company; or

                     (e)  a client of the trustee company.

             (3)  The Court’s orders may include:

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

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

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

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

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

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

             (4)  Subsection (3) does not, by implication, limit subsection (1).

             (5)  Before making an order under this section, the Court may direct that notice of the application be given to such persons as the Court thinks fit or be published in such manner as the Court thinks fit, or both.

             (6)  The Court may, by order:

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

                     (b)  suspend the operation of such an order.

601VAD  Injunctions

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

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

             (3)  The Minister has the same powers as ASIC to apply for an injunction under section 1324 in relation to a contravention of this Part.

             (4)  The powers in sections 601VAC and 1324 do not, by implication, limit each other.

Division 2Approval to exceed 15% voting power limit

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

             (1)  A person may apply for approval to have voting power of more than 15% in a particular licensed trustee company by lodging with ASIC an application that:

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

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

                     (c)  sets out the person’s reasons for making the application.

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

             (2)  ASIC must give the application to the Minister as soon as possible.

601VBB  Approval of application

             (1)  The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

             (2)  If the Minister grants the application, the Minister must:

                     (a)  give written notice of the approval to the applicant; and

                     (b)  specify the percentage of the voting power the Minister approves the applicant having in the licensed trustee company (which may or may not be the percentage the applicant applied for); and

                     (c)  either:

                              (i)  specify the period during which the approval remains in force; or

                             (ii)  specify that the approval remains in force indefinitely.

             (3)  If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

             (4)  As soon as practicable, the Minister must arrange for a copy of a notice of approval under this section to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

601VBC  Duration of approval

             (1)  An approval under section 601VBB remains in force:

                     (a)  if the notice of approval specifies a period during which the approval remains in force—until the end of that period, or if the Minister extends that period, until the end of that extended period; or

                     (b)  otherwise—indefinitely.

Extension of approval

             (2)  A person who holds an approval under section 601VBB that is in force for a specified period may apply to extend that period by lodging with ASIC an application that sets out the person’s reasons for making the application.

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

             (3)  ASIC must give the application to the Minister as soon as possible.

             (4)  The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

             (5)  If the Minister grants the application, the Minister must:

                     (a)  give written notice of the extension to the applicant; and

                     (b)  specify the extended period during which the approval remains in force (which may or may not be the period the applicant applied for).

             (6)  If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

             (7)  As soon as practicable, the Minister must arrange for a copy of a notice of extension under this section to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

601VBD  Conditions of approval

             (1)  An approval under section 601VBB is subject to such conditions (if any) as are specified in the notice of approval.

             (2)  The Minister may, by written notice given to a person who holds an approval under section 601VBB:

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

                     (b)  revoke or vary any condition:

                              (i)  imposed under paragraph (a); or

                             (ii)  specified in the notice of approval.

             (3)  The Minister’s power under subsection (2) may be exercised:

                     (a)  on the Minister’s own initiative; or

                     (b)  on application by the person who holds the approval.

             (4)  An application made by a person under paragraph (3)(b) must be lodged with ASIC and must set out the person’s reasons for making the application.

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

             (5)  ASIC must give the application to the Minister as soon as possible.

             (6)  If the Minister refuses an application under paragraph (3)(b), the Minister must give written notice of the refusal to the applicant.

             (7)  As soon as practicable, the Minister must arrange for a copy of a notice under subsection (2) to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

             (8)  A person who holds an approval under section 601VBB must give written notice to ASIC as soon as practicable after they become aware that they have breached a condition to which the approval is subject.

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

601VBE  Varying percentage approved

Application by holder of approval

             (1)  A person who holds an approval under section 601VBB may apply to vary the percentage specified in the approval by lodging with ASIC an application that:

                     (a)  specifies the percentage of the voting power the person currently has in the licensed trustee company concerned; and

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

                     (c)  sets out the person’s reasons for making the application.

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

             (2)  ASIC must give the application to the Minister as soon as possible.

             (3)  The Minister may grant the application if the Minister is satisfied that it would be in the interests of the licensed trustee company and its clients for the application to be granted.

             (4)  If the Minister grants the application, the Minister must:

                     (a)  give written notice of the variation to the applicant; and

                     (b)  specify the variation granted (which may or may not be the variation the applicant applied for).

             (5)  If the Minister refuses an application, the Minister must give written notice of the refusal to the applicant.

Minister’s own initiative

             (6)  The Minister may, by written notice given to a person who holds an approval under section 601VBB, vary the percentage specified in the approval if the Minister is satisfied that the variation would be in the interests of the licensed trustee company and its clients.

Percentage varied upwards

             (7)  If the Minister varies a percentage upwards, the variation takes effect on the day the notice of variation is given.

Percentage varied downwards

             (8)  If the Minister varies a percentage downwards, the variation takes effect on the day specified in the notice of variation. The specified day must be a day at least 90 days after the day on which the notice is given.

Notification of variation

             (9)  As soon as practicable, the Minister must arrange for a copy of a notice of variation under this section to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

601VBF  Revoking an approval

             (1)  The Minister may, by written notice given to a person who holds an approval under section 601VBB in relation to a licensed trustee company, revoke the approval if:

                     (a)  the Minister is satisfied that it would be in the interests of the trustee company and its clients for the approval to be revoked; or

                     (b)  the Minister is satisfied that an unacceptable control situation exists in relation to the trustee company and in relation to the person; or

                     (c)  the Minister is satisfied that there has been a contravention of a condition to which the approval is subject.

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

             (3)  If a person who holds an approval under section 601VBB applies to the Minister for revocation of the approval, the Minister must, by written notice given to the person, revoke the approval. The revocation takes effect on the day specified in the notice of revocation.

             (4)  As soon as practicable, the Minister must arrange for a copy of a notice of revocation under this section to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

601VBG  Minister may require further information from applicants

             (1)  If a person has made an application under this Division, the Minister may, by written notice given to the person, require the person to give the Minister, within a specified period, further information about the application.

             (2)  The Minister may refuse to consider the application until the person gives the Minister the information.

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

                   For the purpose of making a decision under this Division (whether or not in response to an application) in relation to a licensed trustee company, the Minister may seek the views of the trustee company and its clients.

601VBI  Time limit for Minister’s decision

             (1)  The Minister must make a decision on an application under this Division within 30 days after receiving the application.

             (2)  However, before the end of the 30 days, the Minister may decide to extend the period for considering the application until the end of 60 days after the application was received.

             (3)  If the Minister has not made a decision within the 30 days (or the 60 days, if subsection (2) applies), the Minister is taken to have granted whatever was applied for. As soon as practicable after that happens, the Minister must arrange for a notice to that effect to be:

                     (a)  published in the Gazette; and

                     (b)  given to the licensed trustee company concerned.

             (4)  The time for making the decision stops running if the Minister gives a notice under subsection 601VBG(1) in relation to the application, and does not start again until the notice is complied with.

             (5)  The time limit in this section does not apply to an application under section 601VBB or 601VBE if an unacceptable control situation exists in relation to the applicant and in relation to the relevant licensed trustee company at any time before the Minister makes a decision.

Division 3Other matters

601VCA  Acquisition of property

             (1)  The Court must not make an order under section 601VAC if:

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

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

             (2)  Section 1350 does not apply in relation to the making of an order under section 601VAC.

             (3)  In this section:

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

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

601VCB  Interests of clients to be viewed as a group

                   A reference in this Part to the interests of the clients of a licensed trustee company is a reference to the interests of the clients, when viewed as a group.

601VCC  Anti‑avoidance

             (1)  If:

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

                     (b)  it would be concluded that the person, or any of the persons, who entered into, began to carry out or carried out the scheme or any part of the scheme did so for the sole or dominant purpose of avoiding the application of any provision of Division 1 in relation to any person or persons (whether or not mentioned in paragraph (a)); and

                     (c)  as a result of the scheme or a part of the scheme, a person (the controller) increases the controller’s voting power in a licensed trustee company;

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

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

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

             (3)  A direction under subsection (1) is not a legislative instrument.

             (4)  In this section:

increase voting power includes increasing it from a starting point of nil.

Part 5D.6ASIC‑approved transfers of estate assets and liabilities

Division 1Preliminary

601WAA  Definitions

             (1)  In this Part:

asset means property, or a right, of any kind, and includes:

                     (a)  any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and

                     (b)  any chose in action; and

                     (c)  any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and

                     (d)  any CGT asset within the meaning of the Income Tax Assessment Act 1997.

authorised ASIC officer, when used in a particular provision of this Part, means a person authorised under subsection (2) to perform or exercise the functions or powers of an authorised ASIC officer under that provision.

cancel, in relation to a licence, means:

                     (a)  cancel the licence under Part 7.6; or

                     (b)  vary the conditions of the licence under Part 7.6 so that the licence ceases to cover traditional trustee company services.

certificate of transfer has the meaning given by subsection 601WBG(1).

compulsory transfer determination has the meaning given by subsection 601WBA(1).

estate assets and liabilities, of a company, means assets (including assets in common funds) and liabilities of an estate, or incurred in relation to an estate, in relation to which the company was performing estate management functions, if the assets and liabilities were vested in or otherwise belonged to the company:

                     (a)  because of its performance of those functions; and

                     (b)  immediately before:

                              (i)  if ASIC has cancelled the company’s licence—the cancellation; or

                             (ii)  otherwise—a relevant certificate of transfer comes into force.

Note:          This Part does not apply to liabilities for breach of trust etc.: see section 601WBK.

interest, in relation to land, includes:

                     (a)  a legal or equitable estate or interest in the land; or

                     (b)  a right, power or privilege over, or in relation to, the land.

liability includes a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective).

licence means an Australian financial services licence that is held by a trustee company and that covers the provision of one or more traditional trustee company services.

receiving company has the meaning given by subsection 601WBA(1).

transfer determination has the meaning given by subsection 601WBA(1).

transferring company has the meaning given by subsection 601WBA(1).

voluntary transfer determination has the meaning given by subsection 601WBA(1).

             (2)  ASIC may, in writing, authorise a person who is a member of ASIC, or of its staff, to perform or exercise the functions or powers of an authorised ASIC officer under a particular provision of this Part.

Division 2Transfer of estate assets and liabilities

601WBA  Transfer determinations

             (1)  ASIC may, in writing, make a determination (a transfer determination) that there is to be a transfer of estate assets and liabilities from a specified company (the transferring company) to another specified company (the receiving company) if:

                     (a)  ASIC has cancelled the licence of the transferring company (the determination is a compulsory transfer determination); or

                     (b)  the transferring company has applied in the prescribed form for a determination (the determination is a voluntary transfer determination).

             (2)  ASIC may make a transfer determination only if:

                    (aa)  for a compulsory transfer determination—the receiving company is a licensed trustee company or the Public Trustee of a State or Territory; and

                   (ab)  for a voluntary transfer determination:

                              (i)  the transferring company is a licensed trustee company or a company that was previously authorised as a trustee company under a law of a State or Territory; and

                             (ii)  the receiving company is a licensed trustee company; and

                     (a)  either:

                              (i)  the Minister has consented to the transfer; or

                             (ii)  the Minister’s consent to the transfer is not required (see section 601WBD); and

                     (b)  ASIC is satisfied that:

                              (i)  the transfer is in the interests of clients of the transferring company (when viewed as a group); and

                             (ii)  unless the receiving company is a Public Trustee—the transfer is in the interests of clients of the receiving company (when viewed as a group); and

                            (iii)  the board of the receiving company has consented to the transfer; and

                            (iv)  legislation to facilitate the transfer that satisfies the requirements of section 601WBC has been enacted in the State or Territory in which the transferring company is registered and the State or Territory in which the receiving company is registered or of which it is the Public Trustee.

          (2A)  Even if the Public Trustee of a State or Territory is not a company:

                     (a)  the Public Trustee may still be specified as a receiving company for the purposes of a compulsory transfer determination; and

                     (b)  references in this Part (however expressed) to:

                              (i)  a company; or

                             (ii)  the board of a company;

                            are taken to be references to that Public Trustee.

             (3)  The determination must include particulars of the transfer, including:

                     (a)  the names of the transferring company and the receiving company; and

                     (b)  for a compulsory transfer determination—whether it will be a total transfer or a partial transfer of the transferring company’s estate assets and liabilities; and

                     (c)  if it will be a partial transfer—an indication of the part of the transferring company’s estate assets and liabilities that is to be transferred; and

                     (d)  for a voluntary transfer determination—that it will be a total transfer of the transferring company’s estate assets and liabilities.

             (4)  The determination must include a statement of the reasons why the determination has been made.

             (5)  The determination is not a legislative instrument.

601WBB  When consent of receiving company is in force

             (1)  The consent referred to in subparagraph 601WBA(2)(b)(iii) remains in force until it is withdrawn by the receiving company’s board with the agreement of ASIC.

             (2)  ASIC may agree to the consent being withdrawn if ASIC considers it appropriate to allow the consent to be withdrawn having regard to any of the following:

                     (a)  circumstances that have arisen since the consent was given;

                     (b)  circumstances that were in existence at or before the time when the consent was given but that were not known to the receiving company’s board when it gave its consent;

                     (c)  any other relevant matter.

601WBC  Complementary State or Territory legislation

                   State or Territory legislation referred to in subparagraph 601WBA(2)(b)(iv) must include provision to ensure that, when a certificate of transfer comes into force under this Division, the receiving company is taken to be the successor in law in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular, the legislation must provide that:

                     (a)  assets of the transferring company become assets of the receiving company, to the extent of the transfer; and

                     (b)  liabilities of the transferring company become liabilities of the receiving company, to the extent of the transfer; and

                     (c)  the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company, to the extent of the transfer; and

                     (d)  if the certificate of transfer includes provisions of a kind referred to in subsection 601WBG(3) specifying:

                              (i)  that particular things are to happen or are taken to be the case—those things are taken to happen, or to be the case, in accordance with those provisions; or

                             (ii)  a mechanism for determining things that are to happen or are taken to be the case—things determined in accordance with that mechanism are taken to happen, or to be the case, as determined in accordance with that mechanism.

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

             (1)  The Minister’s consent to the transfer of estate assets and liabilities is not required if the Minister has, in writing, determined that his or her consent is not required in relation to:

                     (a)  the transfer; or

                     (b)  a class of transfers that includes the transfer.

             (2)  The regulations may prescribe criteria to be taken into account by the Minister in deciding whether to make a determination.

             (3)  A determination is a legislative instrument if it is expressed to apply in relation to a class of transfers (whether or not it is also expressed to apply in relation to one or more transfers identified otherwise than by reference to membership of a class).

             (4)  If subsection (3) does not apply to a determination, the determination is not a legislative instrument.

601WBE  Determinations may impose conditions

             (1)  The transfer determination may impose conditions of either or both of the following kinds:

                     (a)  conditions to be complied with by the transferring company or the receiving company before a certificate of transfer is issued in relation to the transfer of estate assets and liabilities;

                     (b)  conditions to be complied with by the transferring company or the receiving company after a certificate of transfer has been issued or has come into force in relation to the transfer of estate assets and liabilities.

             (2)  ASIC may, by notice in writing given to the transferring company or the receiving company, vary or revoke any condition of a determination if ASIC is satisfied that the variation or revocation is appropriate.

             (3)  The transferring company or the receiving company may apply in writing to ASIC to have a condition of a kind referred in paragraph (1)(b) that applies to it varied or revoked.

             (4)  ASIC may, by notice in writing given to the company that made the application, approve the variation or revocation if ASIC is satisfied that the variation or revocation is appropriate. A variation or revocation that is approved by ASIC has effect accordingly.

             (5)  The transferring company or the receiving company must comply with any conditions that are imposed under subsection (1) as conditions to be complied with by that company.

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

             (6)  The transferring company or the receiving company does not commit an offence against this Act merely because the company is complying with a condition imposed under subsection (1).

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

601WBF  Notice of determination

                   ASIC must give a copy of the transfer determination to the transferring company and the receiving company.

601WBG  Certificate of transfer

             (1)  If:

                     (a)  ASIC has made a transfer determination; and

                     (b)  ASIC considers that the transfer should go ahead; and

                     (c)  the consent referred to in subparagraph 601WBA(2)(b)(iii) has not been withdrawn under section 601WBB;

ASIC must, in writing, issue a certificate (a certificate of transfer) stating that the transfer is to take effect.

             (2)  The certificate of transfer must:

                     (a)  include the names of the transferring company and the receiving company; and

                     (b)  for a compulsory transfer determination—state whether the transfer is a total transfer or a partial transfer; and

                     (c)  if the transfer is a partial transfer—include, or have attached to it, a list of the estate assets and liabilities that are being transferred to the receiving company; and

                    (ca)  for a voluntary transfer determination—state that the transfer is a total transfer; and

                     (d)  state when the certificate is to come into force (either by specifying a date as the date it comes into force, or by specifying that the date it comes into force is a date worked out in accordance with provisions of the certificate).

             (3)  The certificate may include provisions specifying, or specifying a mechanism for determining, other things that are to happen, or that are taken to be the case, in relation to assets and liabilities that are to be transferred, or in relation to the transfer of estate assets and liabilities that is to be effected, whether the transfer is total or partial.

             (4)  The certificate comes into force in accordance with the statement included in the certificate as required by paragraph (2)(d).

             (5)  The certificate is not a legislative instrument.

601WBH  Notice of certificate

                   ASIC must:

                     (a)  give a copy of the certificate of transfer to the transferring company and the receiving company; and

                     (b)  publish notice of the issue of the certificate.

601WBI  Time and effect of transfer

             (1)  When a certificate of transfer comes into force, the receiving company becomes the successor in law of the transferring company in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular:

                     (a)  if the transfer is a total transfer—all the estate assets and liabilities of the transferring company, wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

                     (b)  if the transfer is a partial transfer—all the estate assets and liabilities included in the list referred to in paragraph 601WBG(2)(c), wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

                     (c)  to the extent of the transfer, the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company.

             (2)  If the certificate includes provisions of a kind referred to in subsection 601WBG(3):

                     (a)  if the provisions specify that particular things are to happen or are taken to be the case—those things are, by force of this section, taken to happen, or to be the case, in accordance with those provisions; and

                     (b)  if the provisions specify a mechanism for determining things that are to happen or are taken to be the case—things determined in accordance with the mechanism are, by force of this section, taken to happen, or to be the case, as determined in accordance with that mechanism.

601WBJ  Substitution of trustee company

                   When a certificate of transfer comes into force, any appointment or nomination of the transferring company to a particular capacity (for example, as trustee, executor or administrator) in relation to the transferred estate assets and liabilities is taken to be an appointment or nomination of the receiving company to that capacity in relation to those assets and liabilities.

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

             (1)  Nothing in this Part applies to or affects liabilities of the transferring company, or of an officer or employee of the transferring company, for:

                     (a)  any breach of trust; or

                     (b)  any other misfeasance or nonfeasance; or

                     (c)  any exercise of, or failure to exercise, any discretion.

             (2)  Nothing in this Part affects any rights of the transferring company, or of an officer or employee of the transferring company, to indemnity in respect of such liabilities.

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

601WCA  Certificates evidencing operation of Act etc.

             (1)  An authorised ASIC officer, by signed writing, may certify that a specified asset or liability has become an asset or liability of the receiving company under this Part.

             (2)  For all purposes and in all proceedings, a certificate under subsection (1) is prima facie evidence of the matters certified.

601WCB  Certificates in relation to land and interests in land

                   If:

                     (a)  the receiving company becomes, under this Part, the owner of land, or of an interest in land, that is situated in a State or Territory; and

                     (b)  there is lodged with the Registrar of Titles or other appropriate officer of the State or Territory in which the land is situated a certificate that:

                              (i)  is signed by an authorised ASIC officer; and

                             (ii)  identifies the land or interest; and

                            (iii)  states that the receiving company has, under this Part, become the owner of that land or interest;

the officer with whom the certificate is lodged may:

                     (c)  register the matter in the same manner as dealings in land or interests in land of that kind are registered; and

                     (d)  deal with, and give effect to, the certificate.

601WCC  Certificates in relation to other assets

             (1)  If:

                     (a)  an asset (other than land or an interest in land) becomes, under this Part, an asset of the receiving company; and

                     (b)  there is lodged with the person or authority who has, under a law of the Commonwealth, a State or a Territory, responsibility for keeping a register in respect of assets of that kind a certificate that:

                              (i)  is signed by an authorised ASIC officer; and

                             (ii)  identifies the asset; and

                            (iii)  states that the asset has, under this Part, become an asset of the receiving company;

that person or authority may:

                     (c)  register the matter in the same manner as transactions in relation to assets of that kind are registered; and

                     (d)  deal with, and give effect to, the certificate.

             (2)  This section does not affect the operation of:

                     (a)  other provisions of this Act; or

                     (b)  if the regulations prescribe provisions of one or more other Acts—those provisions of those Acts.

601WCD  Documents purporting to be certificates

                   A document purporting to be a certificate given under this Division is, unless the contrary is established, taken to be such a certificate and to have been properly given.

601WCE  Construction of references to transferring company

                   From when a certificate of transfer comes into force, in any instrument of any kind, a reference to the transferring company, in relation to assets or liabilities transferred under this Part, is taken to be a reference to the receiving company.

601WCF  Income or other distribution received by transferring company

                   The transferring company must promptly account to the receiving company for any income or other distribution received by the transferring company after a certificate of transfer comes into force, if the income or distribution arises from assets transferred to the receiving company under this Part.

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

601WCG  Access to books

                   The transferring company must, at the request of the receiving company, give the receiving company access to all books in its possession that relate to assets or liabilities transferred under this Part.

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

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

                   For the purpose of deciding whether to exercise powers under this Part, the Minister or ASIC may seek the views of a trustee company or its clients in relation to the possible exercise of the powers.

Division 4Miscellaneous

601WDA  Transferring company required to contact certain persons

Notice of cancellation of licence

             (1)  If the licence of a trustee company is cancelled, the trustee company must, as soon as practicable:

                     (a)  take all reasonable steps to contact the following persons and advise them of the cancellation of the licence:

                              (i)  all persons who the trustee company is aware have executed and lodged instruments, such as wills, that have not yet come into effect, but will potentially lead to estate assets and liabilities being held by the trustee company;

                             (ii)  all persons who the trustee company is aware have appointed the trustee company as trustee or to some other capacity; and

                     (b)  publish notice of the cancellation of the licence.

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

Notice of compulsory transfer determination

             (2)  If a certificate of transfer for a compulsory transfer determination comes into force, the transferring company must, as soon as practicable, take all reasonable steps to contact the persons referred to in subsection (1) and advise them of the transfer of estate assets and liabilities.

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

Notice of voluntary transfer determination

             (3)  If a certificate of transfer for a voluntary transfer determination comes into force, the transferring company must, as soon as practicable, publish notice of the transfer of estate assets and liabilities.

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

Part 5D.7Contraventions and holding out

  

601XAA  Civil liability of licensed trustee companies

             (1)  A person who suffers loss or damage because of conduct of a licensed trustee company that contravenes a provision of this Chapter may recover the amount of the loss or damage by action against the trustee company, whether or not the trustee company has been convicted of an offence, or has had a civil penalty order made against it, in respect of the contravention.

             (2)  Without limiting subsection (1), if:

                     (a)  a licensed trustee company charges a person a fee in excess of fees permitted to be charged by this Chapter; and

                     (b)  the person pays the fee;

the amount of the excess is a loss that is recoverable by the person under subsection (1).

             (3)  An action under subsection (1) must be begun within 6 years after the cause of action arises.

             (4)  This section does not affect any liability that a person has under other provisions of this Act or under other laws.

601XAB  Prohibition on holding out

                   A person must not hold out that the person is a licensed trustee company if that is not the case.

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

Part 5D.8Exemptions and modifications

  

601YAA  Exemptions and modifications by ASIC

             (1)  ASIC may:

                     (a)  exempt a person or class of persons, or an estate or class of estates, from all or specified provisions of this Chapter; or

                     (b)  declare that this Chapter applies to a person or class of persons, or an estate or class of estates, as if specified provisions were omitted, modified or varied as specified in the declaration.

             (2)  An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

             (3)  An exemption or declaration is a legislative instrument if it is expressed to apply in relation to a class of persons or a class of estates (whether or not it is also expressed to apply in relation to one or more persons or estates identified otherwise than by reference to membership of a class).

             (4)  If subsection (3) does not apply to an exemption or declaration, the exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette. The exemption or determination is not a legislative instrument.

             (5)  If conduct (including an omission) of a person would not have constituted an offence if a particular declaration under paragraph (1)(b) had not been made, that conduct does not constitute an offence unless, before the conduct occurred (in addition to complying with the requirements of the Legislative Instruments Act 2003 (if the declaration is of a kind referred to in subsection (3)), or with the gazettal requirement of subsection (4), as the case may be):

                     (a)  the text of the declaration was made available by ASIC on the internet; or

                     (b)  ASIC gave written notice setting out the text of the declaration to the person.

In a prosecution for an offence to which this subsection applies, the prosecution must prove that paragraph (a) or (b) was complied with before the conduct occurred.

             (6)  For the purpose of this section, the provisions of this Chapter include:

                     (a)  regulations or other instruments made for the purposes of this Chapter; and

                     (b)  definitions in this Act or the regulations, as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations or other instruments made for the purposes of this Chapter; and

                     (c)  any provisions of Division 2 of Part 10.12 that relate to this Chapter.

601YAB  Exemptions and modifications by regulations

             (1)  The regulations may:

                     (a)  exempt a person or class of persons, or an estate or class of estates, from all or specified provisions of this Chapter; or

                     (b)  provide that this Chapter applies to a person or class of persons, or an estate or class of estates, as if specified provisions were omitted, modified or varied as specified in the declaration.

             (2)  For the purpose of this section, the provisions of this Chapter include:

                     (a)  regulations or other instruments made for the purposes of this Chapter; and

                     (b)  definitions in this Act or the regulations, as they apply to references in:

                              (i)  this Chapter; or

                             (ii)  regulations or other instruments made for the purposes of this Chapter; and

                     (c)  any provisions of Division 2 of Part 10.12 that relate to this Chapter.

Chapter 6Takeovers

  

  

602  Purposes of Chapter

                   The purposes of this Chapter are to ensure that:

                     (a)  the acquisition of control over:

                              (i)  the voting shares in a listed company, or an unlisted company with more than 50 members; or

                             (ii)  the voting shares in a listed body; or

                            (iii)  the voting interests in a listed managed investment scheme;

                            takes place in an efficient, competitive and informed market; and

                     (b)  the holders of the shares or interests, and the directors of the company or body or the responsible entity for the scheme:

                              (i)  know the identity of any person who proposes to acquire a substantial interest in the company, body or scheme; and

                             (ii)  have a reasonable time to consider the proposal; and

                            (iii)  are given enough information to enable them to assess the merits of the proposal; and

                     (c)  as far as practicable, the holders of the relevant class of voting shares or interests all have a reasonable and equal opportunity to participate in any benefits accruing to the holders through any proposal under which a person would acquire a substantial interest in the company, body or scheme; and

                     (d)  an appropriate procedure is followed as a preliminary to compulsory acquisition of voting shares or interests or any other kind of securities under Part 6A.1.

Note 1:       To achieve the objectives referred to in paragraphs (a), (b) and (c), the prohibition in section 606 and the exceptions to it refer to interests in “voting shares”. To achieve the objective in paragraph (d), the provisions that deal with the takeover procedure refer more broadly to interests in “securities”.

Note 2:       Subsection 92(3) defines securities for the purposes of this Chapter.

602A  Substantial interest concept

             (1)  A reference in this Chapter to a substantial interest in a company, listed body or listed managed investment scheme is not to be read as being limited to an interest that is constituted by one or more of the following:

                     (a)  a relevant interest in securities in the company, body or scheme;

                     (b)  a legal or equitable interest in securities in the company, body or scheme;

                     (c)  a power or right in relation to:

                              (i)  the company, body or scheme; or

                             (ii)  securities in the company, body or scheme.

             (2)  A person does not have a substantial interest in the company, body or scheme for the purposes of this Chapter merely because the person has an interest in, or a relationship with, the company, body or scheme of a kind prescribed by the regulations for the purposes of this subsection.

             (3)  The regulations may provide that an interest of a particular kind is an interest that may constitute a substantial interest in a company, listed body or listed managed investment scheme for the purposes of this Chapter.

603  Chapter extends to some listed bodies that are not companies

                   This Chapter applies to the acquisition of relevant interests in the securities of listed bodies that are not companies but are incorporated or formed in Australia in the same way as it applies to the acquisition of relevant interests in the securities of companies.

Note:          Section 9 defines company and listed.

604  Chapter extends to listed managed investment schemes

             (1)  This Chapter applies to the acquisition of relevant interests in the interests in a registered scheme that is also listed as if:

                     (a)  the scheme were a listed company; and

                     (b)  interests in the scheme were shares in the company; and

                     (c)  voting interests in the scheme were voting shares in the company; and

                     (d)  a meeting of the members of the scheme were a general meeting of the company; and

                     (e)  the obligations and powers that are imposed or conferred on the company were imposed or conferred on the responsible entity; and

                      (f)  the directors of the responsible entity were the directors of the company; and

                     (g)  the appointment of a responsible entity for the scheme were the election of a director of the company; and

                     (h)  the scheme’s constitution were the company’s constitution.

Note 1:       Paragraph (g): See subsection 610(2).

Note 2:       Section 9 defines voting interest in a managed investment scheme.

             (2)  The regulations may modify the operation of this Chapter as it applies in relation to the acquisition of interests in listed managed investment schemes.

605  Classes of securities

             (1)  Takeover bids are made for securities within a particular class. Similarly, compulsory acquisition and buy‑out rights operate on securities within a particular class.

             (2)  For the purposes of this Chapter and Chapters 6A and 6C, securities are not taken to be different classes merely because:

                     (a)  some of the securities are fully‑paid and others are partly‑paid; or

                     (b)  different amounts are paid up or remain unpaid on the securities.

Part 6.1Prohibited acquisitions of relevant interests in voting shares

  

606  Prohibition on certain acquisitions of relevant interests in voting shares

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

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

                     (a)  the company is:

                              (i)  a listed company; or

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

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

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

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

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

Note 1:       Section 9 defines company as meaning a company registered under this Act.

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

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

          (1A)  However, the person may acquire the relevant interest under one of the exceptions set out in section 611 without contravening subsection (1).

Note:          A defendant bears an evidential burden in relation to the matter in subsection (1A), see subsection 13.3(3) of the Criminal Code.

Acquisition of legal or equitable interest giving rise to relevant interest for someone else

             (2)  A person must not acquire a legal or equitable interest in securities of a body corporate if, because of the acquisition:

                     (a)  another person acquires a relevant interest in issued voting shares in a company that is:

                              (i)  a listed company; or

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

                     (b)  someone’s voting power in the company increases:

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

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

          (2A)  However, if the acquisition of the relevant interest is covered by one of the exceptions set out in section 611, the person may acquire the legal or equitable interest without contravening subsection (2).

Note:          A defendant bears an evidential burden in relation to the matter in subsection (2A), see subsection 13.3(3) of the Criminal Code.

50 member threshold

             (3)  In determining whether the company has more than 50 members for the purposes of subsection (1) or (2), count joint holders of a particular parcel of shares as 1 person.

Offers and invitations

             (4)  A person must not:

                     (a)  make an offer, or cause an offer to be made on their behalf, if the person would contravene subsection (1) or (2) if the offer were accepted; or

                     (b)  issue an invitation, or cause an invitation to be issued on their behalf, if the person would contravene subsection (1) or (2) if:

                              (i)  an offer were made in response to the invitation; and

                             (ii)  the offer were accepted.

Absolute liability offences

          (4A)  An offence based on subsection (1), (2) or (4) is an offence of absolute liability.

Note:          For absolute liability, see section 6.2 of the Criminal Code.

Defences

             (5)  It is a defence to the prosecution of a person for contravening subsection (1), (2) or (4) if the person proves that they contravened the subsection:

                     (a)  because of inadvertence or mistake; or

                     (b)  because the person was not aware of a relevant fact or occurrence.

In determining whether the defence is available, disregard the person’s ignorance of, or a mistake on the person’s part concerning, a matter of law.

Note:          A defendant bears a legal burden in relation to a matter mentioned in subsection (5), see section 13.4 of the Criminal Code.

Extended meaning of acquiring relevant interests—conversions and increases in voting rights

             (6)  A person is taken for the purposes of subsection (1) or (2) to acquire a relevant interest in voting shares in a company if:

                     (a)  securities in which the person already had a relevant interest become voting shares in the company; or

                     (b)  there is an increase in the number of votes that may be cast on a poll attached to voting shares that the person already had a relevant interest in.

The acquisition occurs when the securities become voting shares or the number of votes increases.

Note:          Some examples of cases to which this subsection applies are:

·       A person exercises a right to convert a non‑voting preference share into an ordinary share that carries votes.

·       A person pays up partly‑paid shares with limited votes and this leads to an increase in the number of votes attached to the shares.

607  Effect on transactions

                   A transaction is not invalid merely because it involves a contravention of section 606.

608  Relevant interests in securities

Basic rule—relevant interest is holding, or controlling voting or disposal of, securities

             (1)  A person has a relevant interest in securities if they:

                     (a)  are the holder of the securities; or

                     (b)  have power to exercise, or control the exercise of, a right to vote attached to the securities; or

                     (c)  have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If 2 or more people can jointly exercise one of these powers, each of them is taken to have that power.

Extension to control exercisable through a trust, agreement or practice

             (2)  In this section, power or control includes:

                     (a)  power or control that is indirect; and

                     (b)  power or control that is, or can be, exercised as a result of, by means of or by the revocation or breach of:

                              (i)  a trust; or

                             (ii)  an agreement; or

                            (iii)  a practice; or

                            (iv)  any combination of them;

                            whether or not they are enforceable; and

                     (c)  power or control that is, or can be made, subject to restraint or restriction.

It does not matter whether the power or control is express or implied, formal or informal, exercisable alone or jointly with someone else. It does not matter that the power or control cannot be related to a particular security.

Extension to relevant interests held through bodies corporate

             (3)  A person has the relevant interests in any securities that any of the following has:

                     (a)  a body corporate, or managed investment scheme, in which the person’s voting power is above 20%;

                     (b)  a body corporate, or managed investment scheme, that the person controls.

Paragraph (a) does not apply to a relevant interest that the body corporate or scheme itself has in the securities merely because of the operation of that paragraph in relation to another body corporate or managed investment scheme.

             (4)  For the purposes of paragraph (3)(b), a person controls a body corporate if the person has the capacity to determine the outcome of decisions about the body corporate’s financial and operating policies.

             (5)  In determining whether a person has this capacity:

                     (a)  the practical influence the person can exert (rather than the rights they can enforce) is the issue to be addressed; and

                     (b)  any practice or pattern of behaviour affecting the body corporate’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

             (6)  The person does not control the body corporate merely because the person and an entity that is not an associate jointly have the capacity to determine the outcome of decisions about the body corporate’s financial and operating policies.

             (7)  A person is not taken to control a body corporate merely because of a capacity they have if they are under a legal obligation to exercise that capacity for the benefit of:

                     (a)  if the person is an individual—someone else; or

                     (b)  if the person is a body corporate—someone other than its members.

Extension to control in anticipation of performance of agreements etc.

             (8)  If at a particular time all the following conditions are satisfied:

                     (a)  a person has a relevant interest in issued securities;

                     (b)  the person (whether before or after acquiring the relevant interest):

                              (i)  has entered or enters into an agreement with another person with respect to the securities; or

                             (ii)  has given or gives another person an enforceable right, or has been or is given an enforceable right by another person, in relation to the securities (whether the right is enforceable presently or in the future and whether or not on the fulfilment of a condition); or

                            (iii)  has granted or grants an option to, or has been or is granted an option by, another person with respect to the securities;

                     (c)  the other person would have a relevant interest in the securities if the agreement were performed, the right enforced or the option exercised;

the other person is taken to already have a relevant interest in the securities.

Note:          Subsections 609(6) and (7) deal with specific situations in which the agreement will not give rise to a relevant interest.

Body corporate may have relevant interest in its own securities

             (9)  This section may result in a body corporate having a relevant interest in its own securities.

609  Situations not giving rise to relevant interests

Money lending and financial accommodation

             (1)  A person does not have a relevant interest in securities merely because of a security interest taken for the purpose of a transaction entered into by the person if:

                     (a)  the security interest is taken or acquired in the ordinary course of the person’s business of the provision of financial accommodation by any means and on ordinary commercial terms; and

                     (b)  the person whose property is subject to the security interest is not an associate of the person.

Note:          Sections 11 to 17 define associate.

Nominees and other trustees

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

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

Holding of securities by financial services licensee

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

Shares covered by buy‑backs

             (4)  A person does not have a relevant interest in a company’s shares if the relevant interest would arise merely because the company has entered into an agreement to buy back the shares.

Proxies

             (5)  A person does not have a relevant interest in securities merely because the person has been appointed to vote as a proxy or representative at a meeting of members, or of a class of members, of the company, body or managed investment scheme if:

                     (a)  the appointment is for one meeting only; and

                     (b)  neither the person nor any associate gives valuable consideration for the appointment.

Market traded options and derivatives

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

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

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

This subsection stops applying to the relevant interest when the obligation to make or take delivery of the securities arises.

Note:          Without this subsection, subsection 608(8) would create a relevant interest from the option or contract.

Conditional agreements

             (7)  A person does not have a relevant interest in securities merely because of an agreement if the agreement:

                     (a)  is conditional on:

                              (i)  a resolution under item 7 in the table in section 611 being passed; or

                             (ii)  ASIC exempting the acquisition under the agreement from the provisions of this Chapter under section 655A; and

                     (b)  does not confer any control over, or power to substantially influence, the exercise of a voting right attached to the securities; and

                     (c)  does not restrict disposal of the securities for more than 3 months from the date when the agreement is entered into.

The person acquires a relevant interest in the securities when the condition referred to in paragraph (a) is satisfied.

Pre‑emptive rights

             (8)  A member of a company, body or managed investment scheme does not have a relevant interest in securities of the company, body or scheme merely because the company’s, body’s or scheme’s constitution gives members pre‑emptive rights on the transfer of the securities if all members have pre‑emptive rights on the same terms.

Director of body corporate holding securities

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

                     (a)  the person is a director of a body corporate; and

                     (b)  the body corporate has a relevant interest in those securities.

Clearing and settlement facilities

          (9A)  The operator of a clearing and settlement facility (within the meaning of Chapter 7) does not have a relevant interest in securities merely because of its provision of facilities for the settlement of transactions.

Prescribed exclusions

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

610  Voting power in a body or managed investment scheme

Person’s voting power in a body or managed investment scheme

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

where:

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

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

Note:          Even if a person’s relevant interest in voting shares is based on control over disposal of the shares (rather than control over voting rights attached to the shares), their voting power in the designated body is calculated on the basis of the number of votes attached to those shares.

Counting votes

             (2)  For the purposes of this section, the number of votes attached to a voting share in a designated body is the maximum number of votes that can be cast in respect of the share on a poll:

                     (a)  if the election of directors is determined by the casting of votes attached to voting shares—on the election of a director of the designated body; or

                     (b)  if the election of directors is not determined by the casting of votes attached to voting shares—on the adoption of a constitution for the designated body or the amendment of the body corporate’s constitution.

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

             (3)  If:

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

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

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

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

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

When a designated body is a managed investment scheme

             (5)  For the purposes of the application of this section in relation to a designated body that is a managed investment scheme:

                     (a)  a reference to voting shares in the designated body is taken to be a reference to voting interests in the scheme; and

                     (b)  a reference to the election of directors of the designated body is taken to be a reference to:

                              (i)  if the scheme is a registered scheme—the appointment of a responsible entity for the scheme; or

                             (ii)  if the scheme is not a registered scheme—the appointment of a person to the office (by whatever name it is known) in relation to the scheme that corresponds most closely to the office of responsible entity of a registered scheme; and

                     (c)  a reference to the designated body’s constitution is taken to be a reference to the scheme’s constitution.

Meaning of designated body

             (6)  In this section:

designated body means:

                     (a)  a body; or

                     (b)  a managed investment scheme.

Part 6.2Exceptions to the prohibition

  

611  Exceptions to the prohibition

                   The following table sets out:

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

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

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

 

Acquisitions that are exempt

[operative]

 

Takeover bids

 

Acceptance of takeover offer

1

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

See also section 612.

 

On‑market purchase during bid period

2

An acquisition in relation to bid class securities that results from an on‑market transaction if:

(a) the acquisition is by or on behalf of the bidder under a takeover bid; and

(b) the acquisition occurs during the bid period; and

(c) the bid is for all the voting shares in the bid class; and

 

(d) the bid is:

(i) unconditional; or

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

See also sections 612 and 613.

 

On‑market purchase of convertible securities during bid period

3

An acquisition of bid class securities that results directly from the exercise of rights attached to convertible securities if:

(a) the acquisition is by or on behalf of the bidder under a takeover bid; and

(b) the bidder acquired a relevant interest in the convertible securities through an on‑market transaction during the bid period; and

(c) the bid is for all the voting shares in the bid class; and

(d) the bid is:

(i) unconditional; or

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

See sections 612 and 613.

 

Acceptance of scrip offered as takeover consideration

4

An acquisition that results from the acceptance of:

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

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

See also section 612.

 

Nature of acquirer

6

An acquisition that results from the exercise by a person of a power, or appointment as a receiver, or receiver and manager, under an instrument or agreement creating or giving rise to a security interest if:

(a) the person’s ordinary business includes the provision of financial accommodation by any means; and

(b) the person took or acquired the security interest in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms.

 

Approval by resolution of target

7

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

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

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

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

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

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

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

 

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

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

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

 

Target newly formed

8

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

 

Manner of acquisition

 

3% creep in 6 months

9

An acquisition by a person if:

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

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

 

Rights issues

10

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

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

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

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

 

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

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

This extends to an acquisition by a person as underwriter to the issue or sub‑underwriter.

See section 615.

 

Dividend reinvestment etc.

11

An acquisition that results from an issue of:

(a) shares in a company to existing holders of shares in the company under a dividend reinvestment plan or bonus share plan; or

(b) interests in a managed investment scheme to existing holders of interests in the scheme under a distribution reinvestment plan or switching facility;

if the plan or facility is available to all members.

Disregard any unavailability to foreign holders in determining whether the plan or facility is available to all members.

 

Initial public offering (IPO) fundraising

12

An acquisition that results from an issue under a disclosure document of securities in the company in which the acquisition is made if:

(a) the issue is to a promoter; and

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

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

 

Underwriting of fundraising

13

An acquisition that results from an issue under a disclosure document of securities in the company in which the acquisition is made if:

(a) the issue is to a person as underwriter to the issue or sub‑underwriter; and

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

 

Acquisition through listed company

14

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

(a) a prescribed financial market; or

(b) a foreign body conducting a financial market that is a body approved in writing by ASIC for the purposes of this item.

 

Wills etc.

15

An acquisition through a will or through operation of law.

 

Forfeiture of shares

16

An acquisition that results from an auction of forfeited shares conducted on‑market.

 

Compromise, arrangement, liquidation or buy‑back

 

Part 5.1 compromise or arrangement

17

An acquisition that results from a compromise or arrangement approved by the Court under Part 5.1.

 

Section 507 arrangement

18

An acquisition that results from an arrangement entered into by a liquidator under section 507.

 

Buy‑back

19

An acquisition that results from a buy‑back authorised by section 257A.

 

Regulations

20

An acquisition made in a manner or in circumstances prescribed by the regulations. The circumstances may include acquisitions of relevant interests in voting shares in a specified body or class of bodies.

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

                   The exceptions in items 1 to 4 of the table in section 611 do not apply to a takeover bid if the bid is carried out in contravention of:

                     (a)  section 618 (full or proportionate bid); or

                     (b)  section 619 (offers to be the same); or

                     (c)  subsection 621(3) (minimum price); or

                     (d)  subsection 624(1) (minimum offer period); or

                     (e)  sections 625 to 630 (conditional offers); or

                      (f)  items 2, 3 and 6 in the table in subsection 633(1) (procedural steps for off‑market bid); or

                     (g)  items 3, 4 and 6 in the table in section 635 (procedural steps for market bid).

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

                   If the exception in item 2 or 3 of the table in section 611 applies to an acquisition on‑market during a takeover bid, the bidder is not entitled to exercise the voting rights attached to the shares if:

                     (a)  the bid is an off‑market bid; and

                     (b)  the bidder fails to send offers under the bid within 28 days after giving the bidder’s statement to the target.

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

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

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

                     (b)  the company must transfer to the nominee:

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

                             (ii)  the right to acquire those securities; and

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

Part 6.3The different types of takeover bid

  

616  Off‑market bids and market bids

             (1)  There are 2 kinds of takeover bid:

                     (a)  an off‑market bid (for quoted or unquoted securities); or

                     (b)  a market bid (only available for quoted securities).

Note:          Although the prohibition in section 606 is against acquiring relevant interests in voting shares, a takeover bid may be made for any securities (for example, as a preliminary to compulsorily acquiring securities in that class under Part 6A.1).

             (2)  The following table shows where to find the provisions dealing with the main features of the offers that may be made under off‑market bids and market bids and the procedures to be followed:

 

Takeover bids

[signpost table]

 

Feature

Off‑market bid

Market bid

1

people to whom offers made

617(1)‑(2)

617(3)

2

securities covered

618(1)‑(2)

618(3)

3

consideration offered for the securities

621(1), (3)‑(5) and 651A

621(2), (3)‑(5)

4

escalation agreements and collateral benefits not allowed

622 and 623

622 and 623

5

offer period

624(1)‑(2) and 650C

624(1)‑(2) and 649C

6

conditional offers

625(2)‑(3) and 626‑630

625(1)

7

procedure to be followed in making bid

632 and 633

634 and 635

8

acceptances

650E and 653A‑653B

 ‑

Part 6.4Formulating the takeover offer

Division 1General

617  Securities covered by the bid

Off‑market bid

             (1)  An off‑market bid must relate to securities:

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

                     (b)  that exist or will exist as at the date set by the bidder under subsection 633(2).

Note:          Subsection 92(3) defines securities for the purposes of this Chapter.

             (2)  If other securities exist or will exist at that date that:

                     (a)  will convert, or may be converted, to securities in the bid class; or

                     (b)  confer rights to be issued securities in the bid class;

the bid may extend to securities that come to be in the bid class during the offer period due to a conversion or exercise of the rights.

Note:          The bidder’s statement must say if the bid is extended in this way (see paragraph 636(1)(j)).

Market bid

             (3)  A market bid must relate to securities:

                     (a)  in a class of quoted securities (the bid class); and

                     (b)  that exist or will exist at any time during the offer period.

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

Off‑market bid

             (1)  An offer for securities under an off‑market bid must be an offer to buy:

                     (a)  all the securities in the bid class; or

                     (b)  a specified proportion of the securities in the bid class.

The proportion specified under paragraph (b) must be the same for all holders of securities in the bid class.

Off‑market bid—non‑marketable parcels

             (2)  If accepting an offer under an off‑market bid for quoted securities would leave a person with a parcel of the securities that is less than a marketable parcel (within the meaning of the rules of the relevant financial market), the offer extends to that parcel.

Market bid

             (3)  An offer for securities under a market bid must be an offer to buy all the securities in the bid class.

619  General terms of the offer

Off‑market bid

             (1)  All the offers made under an off‑market bid must be the same.

Note:          The offers may include alternative forms of consideration (see section 621).

             (2)  In applying subsection (1), disregard the following:

                     (a)  any differences in the offers attributable to the fact that the number of securities that may be acquired under each offer is limited by the number of securities held by the holder;

                     (b)  any differences in the offers attributable to the fact that the offers relate to securities having different accrued dividend or distribution entitlements;

                     (c)  any differences in the offers attributable to the fact that the offers relate to securities on which different amounts are paid up or remain unpaid;

                     (d)  any differences in the offers attributable to the fact that the bidder may issue or transfer only whole numbers of securities as consideration for the acquisition;

                     (e)  any additional cash amount offered to holders instead of the fraction of a security that they would otherwise be offered.

Foreign holders

             (3)  If the consideration for the bid includes an offer of securities, the securities do not need to be offered to foreign holders of the target’s securities if under the terms of the bid:

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

                     (b)  the bidder must transfer to the nominee:

                              (i)  the securities that would otherwise be transferred to the foreign holders who accept the bid for that consideration; or

                             (ii)  the right to acquire those securities; and

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

620  Off‑market bid (offer formalities)

             (1)  Each offer under an off‑market bid must:

                     (a)  be in writing; and

                     (b)  have the same date; and

                     (c)  provide that, unless withdrawn, it will remain open until the end of the offer period (see section 624); and

                     (d)  state how, and when, the bidder is to satisfy their obligations.

             (2)  Each offer must provide that the bidder is to pay or provide the consideration for the offer:

                     (a)  if the bidder is given the necessary transfer documents with the acceptance—by the end of whichever of the following periods ends earlier:

                              (i)  1 month after the offer is accepted or, if the offer is subject to a defeating condition, within 1 month after the takeover contract becomes unconditional

                             (ii)  21 days after the end of the offer period; or

                     (b)  if the bidder is given the necessary transfer documents after the acceptance and before the end of the bid period—within 1 month after the bidder is given the necessary transfer documents; or

                     (c)  if the bidder is given the necessary transfer documents after the acceptance and after the end of the bid period—within 21 days after the bidder is given the necessary transfer documents.

Note:          Subsection 630(1) requires an offer that is subject to a defeating condition to specify a date for declaring whether the condition has been fulfilled or not.

             (3)  The offer may provide that the bidder may avoid the takeover contract if the bidder is not given the necessary transfer documents within 1 month after the end of the offer period.

Division 2Consideration for the offer

621  Consideration offered

Off‑market bid—general

             (1)  A bidder making an off‑market bid for securities may offer any form of consideration for the securities, including:

                     (a)  a cash sum; or

                     (b)  securities (including shares, debentures, interests in a managed investment scheme or options); or

                     (c)  a combination of a cash sum and securities.

Note:          Sections 650B and 651A deal with variations of the consideration offered under the bid.

Market bid—cash only

             (2)  As the offers under a market bid for securities are made through a prescribed financial market, the bidder must offer to acquire the securities for a cash sum only for each security.

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

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

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

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

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

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

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

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

             (5)  If:

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

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

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

622  Escalation agreements

Benefits linked to bids and proposed bids not allowed

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

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

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

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

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

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

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

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

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

Strict liability offences

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

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

Contravening agreements void

             (2)  An agreement is void to the extent that it purports to provide for:

                     (a)  a person to give a benefit to a person; or

                     (b)  a person to receive a benefit from a person;

in contravention of subsection (1).

623  Collateral benefits not allowed

             (1)  A bidder, or an associate, must not, during the offer period for a takeover bid, give, offer to give or agree to give a benefit to a person if:

                     (a)  the benefit is likely to induce the person or an associate to:

                              (i)  accept an offer under the bid; or

                             (ii)  dispose of securities in the bid class; and

                     (b)  the benefit is not offered to all holders of securities in the bid class under the bid.

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

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

             (2)  For the purpose of this section, a person does not receive a benefit that is not offered under a takeover bid merely because the person sells bid class securities on‑market and the takeover bid is an off‑market bid or a conditional bid.

             (3)  This section does not prohibit:

                     (a)  the variation of a takeover offer as provided by sections 649A to 650D; or

                     (b)  an acquisition of securities through an on‑market transaction; or

                     (c)  simultaneous takeover bids for different classes of securities in the target.

Division 3The offer period

624  Offer period

Offer period set in offer

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

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

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

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

Note:          Sections 649C (market bids) and 650C (off‑market bids) deal with variation of the offer period.

Automatic extension of offer period if bidder reaches 50% or consideration increased in last week

             (2)  If, within the last 7 days of the offer period:

                     (a)  for an off‑market bid—the offers under the bid are varied to improve the consideration offered; or

                     (b)  in any case—the bidder’s voting power in the target increases to more than 50%;

the offer period is extended so that it ends 14 days after the event referred to in paragraph (a) or (b). The bidder must give the target and everyone who has not accepted an offer under the bid written notice that the extension has occurred within 3 days after that event.

Note:          The consideration for a market bid cannot be increased in the last 5 trading days of the offer period (see section 649B).

Strict liability offences

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

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

Division 4Conditional offers

625  Conditional offers—general

Market bids

             (1)  Offers under a market bid must be unconditional.

Off‑market bids may generally be conditional

             (2)  Offers under an off‑market bid may be subject to conditions that are not prohibited by sections 626 to 629.

             (3)  If:

                     (a)  the consideration offered is or includes securities; and

                     (b)  the offer or the bidder’s statement states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere);

the following rules apply:

                     (c)  the offer is subject to a condition that:

                              (i)  an application for admission to quotation will be made within 7 days after the start of the bid period; and

                             (ii)  permission for admission to quotation will be granted no later than 7 days after the end of the bid period;

                     (d)  the offer may not be freed from this condition.

Note:          Section 1325A provides that a Court may make a remedial order if the condition is not satisfied.

626  Maximum acceptance conditions in off‑market bids

Maximum acceptance conditions not allowed

             (1)  Offers under an off‑market bid must not be subject to a maximum acceptance condition. A maximum acceptance condition is one that provides that the offers will terminate, or the maximum consideration offered under the bid will be reduced, if one or more of the following occur:

                     (a)  the number of securities for which the bidder receives acceptances reaches or exceeds a particular number; or

                     (b)  the bidder’s voting power in the company reaches or exceeds a particular percentage; or

                     (c)  the percentage of securities the bidder has relevant interests in reaches or exceeds a particular percentage of securities in that class.

             (2)  For the purposes of subsection (1), it does not matter:

                     (a)  how the condition is expressed; or

                     (b)  how a particular number or percentage was, or is to be, determined; or

                     (c)  whether or not a particular number or percentage is specified in the condition and, if it is so specified, how it is expressed.

             (3)  For the purposes of subsection (1), an offer under an off‑market bid terminates if:

                     (a)  the offer lapses, is withdrawn or otherwise ceases to have effect; or

                     (b)  a binding takeover contract will not result from an acceptance of the offer; or

                     (c)  an obligation of the bidder will not arise under the takeover contract; or

                     (d)  the takeover contract is rescinded; or

                     (e)  the bidder is entitled to rescind the takeover contract; or

                      (f)  the bidder is relieved of an obligation arising under the takeover contract.

627  Discriminatory conditions not allowed for off‑market bids

                   Offers under an off‑market bid must not be subject to a condition that allows the bidder to acquire, or may result in the bidder acquiring, securities from some but not all of the people who accept the offers. It does not matter how the condition is expressed.

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

                   An offer to a person under an off‑market bid must not be made subject to a condition that requires the person to approve or consent to a payment or other benefit to an officer or employee of the target or a related body corporate:

                     (a)  as compensation for loss of; or

                     (b)  as consideration in connection with retirement from;

any office or employment in connection with the management of the target or of a related body corporate. A purported requirement of this kind is void.

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

             (1)  Offers under an off‑market bid must not be subject to a defeating condition if the fulfilment of the condition depends on:

                     (a)  the bidder’s, or an associate’s, opinion, belief or other state of mind; or

                     (b)  the happening of an event that is within the sole control of, or is a direct result of action by, any of the following:

                              (i)  the bidder (acting alone or together with an associate or associates);

                             (ii)  an associate (acting alone or together with the bidder or another associate or associates of the bidder).

A purported condition of this kind is void.

Note:          Section 9 defines defeating condition. Sections 630, 650F and 650G deal with defeating conditions.

             (2)  For the purposes of paragraph (1)(b):

                     (a)  the target; and

                     (b)  a subsidiary of the target;

are taken not to be associates of the bidder if they would otherwise be an associate merely because of paragraph 12(2)(a).

630  Defeating conditions

Off‑market bid may include defeating conditions

             (1)  Offers under an off‑market bid may be made subject to a defeating condition only if the offers specify a date (not more than 14 days and not less than 7 days before the end of the offer period) for giving a notice on the status of the condition.

             (2)  If the offer period is extended by a period:

                     (a)  the date for giving the notice is taken to be postponed for the same period; and

                     (b)  as soon as practicable after the extension, the bidder must give a notice that states:

                              (i)  the new date for giving the notice of the status of the condition; and

                             (ii)  whether the offers have been freed from the condition and whether, so far as the bidder knows, the condition has been fulfilled on the date the notice under this subsection is given.

Bidder to give notice of status of defeating condition near end of offer period

             (3)  On the date determined under subsection (1) or (2), the bidder must give a notice that states:

                     (a)  whether the offers are free of the condition; and

                     (b)  whether, so far as the bidder knows, the condition was fulfilled on the date the notice is given; and

                     (c)  the bidder’s voting power in the target.

The bidder must comply with this subsection whether or not the bidder has given a notice under subsection (4) or 650F(1).

Note:          The offers may be freed of the condition by a declaration by the bidder under subsection 650F(1).

Bidder to give notice if defeating condition fulfilled

             (4)  If the condition is fulfilled (so that the offers become free of the condition) during the bid period but before the date for publishing the notice on the status of the condition, the bidder must publish as soon as practicable a notice that states that the condition has been fulfilled.

             (5)  A notice under this section is given by:

                     (a)  giving the notice to the target; and

                     (b)  for quoted bid class securities—giving the notice to the relevant market operator; and

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

Strict liability offences

             (6)  An offence based on subsection (2), (3) or (4) is an offence of strict liability.

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

Part 6.5The takeover procedure

Division 1The overall procedure

631  Proposing or announcing a bid

             (1)  A person contravenes this subsection if:

                     (a)  either alone or with other persons, the person publicly proposes to make a takeover bid for securities in a company; and

                     (b)  the person does not make offers for the securities under a takeover bid within 2 months after the proposal.

The terms and conditions of the bid must be the same as or not substantially less favourable than those in the public proposal.

Note:          The Court has power under section 1325B to order a person to proceed with a bid.

          (1A)  For the purposes of an offence based on subsection (1), strict liability applies to paragraph (1)(b) and to the requirement that the terms and conditions of the bid must be the same as or not substantially less favourable than those in the public proposal.

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

Proposals if takeover bid not intended

             (2)  A person must not publicly propose, either alone or with other persons, to make a takeover bid if:

                     (a)  the person knows the proposed bid will not be made, or is reckless as to whether the proposed bid is made; or

                     (b)  the person is reckless as to whether they will be able to perform their obligations relating to the takeover bid if a substantial proportion of the offers under the bid are accepted.

             (3)  Section 1314 (continuing offences) and subsection 1324(2) (injunctions) do not apply in relation to a failure to make a takeover bid in accordance with a public proposal under subsection (1).

Note:          For liability and defences for contraventions of this section, see sections 670E and 670F.

632  Overview of steps in an off‑market bid

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

 

Overview of steps in an off‑market bid

 

Bidder

 

 

 

Step 1

bidder’s statement (together with offer document)

 

——®

* ASIC
* target
* [market]

 

 

 

 

 

 

 

Step 2

notice that Step 1 done

——®

* ASIC

 

 

 

 

 

 

Step 3

bidder’s statement and offers

——®

* holders of bid class securities

 

 

 

 

 

 

Step 4

notice that Step 3 done

 

——®

* target
* ASIC
* [market]

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

 

——®

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

 

The holders then consider the terms of the offer, and the statements provided by the bidder and the target, and decide whether to accept the offer under section 653A before the end of the bid period. A holder may also decide to sell on‑market during the bid period.

 

633  Detailed steps in an off‑market bid

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

 

Steps in off‑market bid

[operative table]

 

Steps

Timing and relevant provisions

1

The bidder must prepare:

·    a bidder’s statement; and

·    if the bidder’s statement does not set out all the terms of the offer—an offer document that sets out the other terms of the offer.

See section 636 for content of statement.

2

The bidder must lodge a copy of the bidder’s statement and offer document with ASIC.

 

3

The bidder must send a copy of the bidder’s statement and offer document to the target.

To be done on the day the bidder’s statement is lodged or within 21 days afterwards

4

The bidder must lodge with ASIC a notice stating that the bidder’s statement and offer document have been sent to the target.

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

5

The bidder must send a copy of the bidder’s statement and offer document to the operator of each prescribed financial market on which the target’s securities are quoted.

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

See also subsection (5).

6

The bidder must send the bidder’s statement and offers to each person (other than the bidder) who holds:

·    securities in the bid class; or

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

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

The offers must be made on the terms set out in the bidder’s statement and the offer document lodged with ASIC under item 2.

To be done:

·    within a 3 day period; and

·    within 14‑28 days after the bidder’s statement is sent to the target

The directors of the target may agree that the offers and accompanying documents be sent earlier.

See also subsections (5) and (6).

Item 2 of the table in section 611 covers offers made by the bidder on‑market during the period between the lodgment of the bidder’s statement and the making of the offers under the bid.

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

7

The bidder must send a notice to the target that the bidder’s statement and offers have been sent as required by item 6.

The notice must state the date of the offers.

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

See subsection 620(1) on date of offer.

8

The bidder must send a notice that offers have been sent as required by item 6 to the operator of each prescribed financial market on which the target’s securities are quoted.

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

9

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

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

10

The target must prepare a target’s statement.

See section 638 for content of statement.

11

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

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

12

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

·    securities in the bid class; or

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

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

To be done:

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

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

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

13

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

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

See also subsection (7).

14

The target must send a copy of the target’s statement (and any accompanying report) to the operator of each prescribed financial market on which the target’s securities are quoted.

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

See also subsection (7)

Date for determining holders of securities

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

                     (a)  the bidder’s statement; or

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

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

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

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

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

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

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

                     (b)  otherwise—lodging the notice with ASIC.

Information to be sent with bidder’s statement

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

Information to be sent with notices that offers have been sent

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

Information to be sent with target’s statement

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

Strict liability offences

             (8)  An offence based on this section is an offence of strict liability.

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

634  Overview of steps in a market bid

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

 

Overview of steps in a market bid

 

Bidder

 

 

 

Step 1

announcement of bid to the market

 

 

 

 

 

 

 

 

 

Step 2

bidder’s statement

——®

* market
* target
* ASIC

 

 

 

 

 

 

Step 3

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

——®

* holders of bid class securities

 

 

 

 

 

 

Step 4

copy of documents sent to holders

——®

* market
* ASIC

 

 

 

 

 

 

 

Target

 

 

 

Step 5

target’s statement

 

——®

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

 

 

 

 

 

 

 

Bidder

 

 

 

Step 6

make offers on the market

 

 

 

The holders then consider the terms of the offer, and the statements provided by the bidder and the target, and decide whether to accept the offer on‑market before the end of the bid period.

635  Detailed steps in a market bid

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

 

Steps in market bid

[operative]

 

Steps

Timing and relevant provisions

1

The bidder must prepare a bidder’s statement.

See section 636 for content of statement

2

The bidder must have the bid announced to the relevant financial market.

 

3

The bidder must send a copy of the bidder’s statement to the relevant market operator

To be done on the day the announcement is made

4

The bidder must send to the target:

·   a copy of the bidder’s statement; and

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

To be done on the day the announcement is made

5

The bidder must lodge with ASIC:

·   a copy of the bidder’s statement; and

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

To be done on the day the announcement is made

6

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

·   a copy of the bidder’s statement; and

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

Within 14 days after the announcement is made.

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

7

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

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

8

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

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

9

The target must prepare a target’s statement.

See section 638 for content of statement

10

The target must send a copy of the target’s statement to the relevant market operator.

Within 14 days after the announcement is made

11

The target must send to the bidder:

·    a copy of the target’s statement; and

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

To be done on the day the target sends a copy of the target’s statement to the relevant market operator

12

The target must lodge with ASIC:

·    a copy of the target’s statement; and

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

To be done on the day the target sends a copy of the target’s statement to the relevant market operator

13

The target must send each holder of bid class securities:

·    a copy of the target’s statement; and

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

Within 14 days after the announcement is made.

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

14

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

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

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

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

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

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

Division 2The bidder’s statement

636  Bidder’s statement content

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

                     (a)  the identity of the bidder;

                     (b)  the date of the statement;

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

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

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

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

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

                              (i)  the continued operation of the scheme; and

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

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

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

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

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

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

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

                     (g)  if any securities (other than managed investment products) are offered as consideration under the bid and the bidder is:

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

                             (ii)  a person who controls that body;

                            all material that would be required for a prospectus for an offer of those securities by the bidder under whichever of the following is applicable:

                            (iii)  sections 710 to 713;

                            (iv)  sections 713C to 713E;

                    (ga)  if any managed investment products are offered as consideration under the bid and the bidder is:

                              (i)  the responsible entity of the managed investment scheme; or

                             (ii)  a person who controls the responsible entity of the managed investment scheme;

                            all material that would be required by section 1013C to be included in a Product Disclosure Statement given to a person in an issue situation (within the meaning of section 1012B) in relation to those managed investment products;

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

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

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

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

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

                              (i)  accept an offer under the bid; or

                             (ii)  dispose of securities in the bid class;

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

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

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

                              (i)  the total number of securities in the class;

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

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

                    (m)  any other information that:

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

                             (ii)  is known to the bidder; and

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

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

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

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

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

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

Consent of person to whom statement attributed

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

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

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

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

             (4)  The bidder must keep the consent.

Strict liability offences

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

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

637  Bidder’s statement formalities

Approval

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

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

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

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

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

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

Strict liability offences

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

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

Division 3The target’s response

638  Target’s statement content

General requirement

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

          (1A)  However, the statement must contain this information:

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

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

Note:          A defendant bears an evidential burden in relation to the matters in subsection (1A), see subsection 13.3(3) of the Criminal Code.

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

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

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

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

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

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

Director’s recommendations

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

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

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

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

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

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

Consent of person to whom statement attributed

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

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

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

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

             (6)  The target must keep the consent.

Strict liability offences

             (7)  An offence based on subsection (1), (3), (5) or (6) is an offence of strict liability.

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

639  Target’s statement formalities

Approval

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

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

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

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

Date

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

Strict liability offences

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

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

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

             (1)  If:

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

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

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

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

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

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

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

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

641  Target must inform bidder about securities holdings

Requirement to inform bidder and information that must be given

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

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

                              (i)  in the bid class; or

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

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

          (1A)  However, the target does not need to give information to the bidder about a person or their holding of securities unless the target knows the person’s name.

Note:          A defendant bears an evidential burden in relation to the matters in subsection (1A), see subsection 13.3(3) of the Criminal Code.

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

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

Time at which target’s information must be correct

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

Form in which target must provide information

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

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

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

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

Fee for provision of information

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

Time by which target must provide information

             (6)  The target must give the information to the bidder no later than the latest of the following times:

                     (a)  the end of the second day after the day on which the bidder requested the information; or

                     (b)  the end of the next day after the day as at which the information must be correct; or

                     (c)  the time when the target receives the amount mentioned in subsection (5).

642  Expenses of directors of target companies

             (1)  If the target is a company or body, the directors of the target have a right to recover from the target any expenses they reasonably incur in the interest of members of the target and in relation to the takeover bid. The directors have this right regardless of anything contained in the target’s constitution (if any).

             (2)  If the target is a managed investment scheme, the responsible entity for the scheme has a right to recover from scheme property any expenses it reasonably incurs in the interest of members of the scheme and in relation to the takeover bid. The responsible entity has this right regardless of anything contained in the scheme’s constitution.

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

643  Supplementary bidder’s statement

             (1)  If a bidder becomes aware of:

                     (a)  a misleading or deceptive statement in the bidder’s statement; or

                     (b)  an omission from the bidder’s statement of information required by section 636; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the bidder’s statement was lodged; and

                             (ii)  would have been required by section 636 to be included in the bidder’s statement if it had arisen before the bidder’s statement was lodged;

that is material from the point of view of a holder of bid class securities, the bidder must prepare a supplementary bidder’s statement that remedies this defect.

Note 1:       The bidder must then send and lodge the supplementary bidder’s statement in accordance with section 647.

Note 2:       Section 670A makes it an offence to give a bidder’s statement after the bidder has become aware of a misleading or deceptive statement, omission or new circumstance that is material from the point of view of a holder of securities to whom the statement is given (unless the deficiency is corrected).

Note 3:       The power to issue a supplementary bidder’s statement is not limited to the situations dealt with in this section.

Note 4:       This section applies to a bidder’s statement that has already been previously supplemented.

             (2)  For an offence based on subsection (1), strict liability applies to the conduct, that the bidder must prepare a supplementary bidder’s statement that remedies the defect.

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

644  Supplementary target’s statement

             (1)  If a target becomes aware of:

                     (a)  a misleading or deceptive statement in the target’s statement; or

                     (b)  an omission from the target’s statement of information required by section 638; or

                     (c)  a new circumstance that:

                              (i)  has arisen since the target’s statement was lodged; and

                             (ii)  would have been required by section 638 to be included in the target’s statement if it had arisen before the target’s statement was lodged;

that is material from the point of view of a holder of bid class securities, the target must prepare a supplementary target’s statement that remedies this defect.

Note 1:       The target must then send and lodge the supplementary target’s statement in accordance with section 647.

Note 2:       Section 670A makes it an offence to give a target’s statement after the target has become aware of a misleading or deceptive statement, omission or new circumstance that is material from the point of view of a holder of securities to whom the statement is given (unless the deficiency is corrected).

Note 3:       The power to issue a supplementary target’s statement is not limited to the situations dealt with in this section.

Note 4:       This section applies to a target’s statement that has already been previously supplemented.

             (2)  For an offence based on subsection (1), strict liability applies to the conduct, that the target must prepare a supplementary target’s statement that remedies the defect.

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

645  Form of supplementary statement

Identity as a supplementary statement

             (1)  At the beginning of a supplementary bidder’s or target’s statement there must be:

                     (a)  a statement that it is a supplementary statement; and

                     (b)  an iden