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This instrument ensures that transfers of foreign securities covered by paragraphs 1073A(1)(a)-(d) benefit from statutory warranties and indemnities; allows beneficial owners of Division 3 securities to give authority to designated brokers to sell or transfer those securities and execute an instrument of transfer on the transferor's behalf, even if no authority is given by the transferor; allows brokers to stamp a transfer document with a broker's stamp in certain circumstances; and ensures that, in relation to a transfer of unexercised company options, a transferee is not required to execute those options.
Administered by: Treasury
Registered 23 Sep 2016
Tabling HistoryDate
Tabled HR10-Oct-2016
Tabled Senate10-Oct-2016
Table of contents.

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ASIC Corporations (Transfers of Division 3 Securities) Instrument 2016/893

I, Grant Moodie, delegate of the Australian Securities and Investments Commission, make the following legislative instrument.

 

Date                19 September 2016

 

 

Grant Moodie

 



Part 1—Preliminary

1        Name of legislative instrument

This is the ASIC Corporations (Transfer of Division 3 Securities) Instrument 2016/893.

2        Commencement

This instrument commences on the day after it is registered on the Federal Register of Legislation.

Note:    The register may be accessed at www.legislation.gov.au.

3        Authority

This instrument is made under subsection 1073E(1) of the Corporations Act 2001.

4        Definitions

In this instrument:

Act means the Corporations Act 2001.

Division 3 rights has the meaning given by subregulation 1.0.02(1) of the Regulations.

Regulations means the Corporations Regulations 2001.


Part 2—Declaration

5        Quoted securities of a foreign company

Division 3 of Part 7.11 of the Act and regulations made for the purposes of section 1073D of the Act apply to shares in, or debentures of, a foreign company that are quoted on the financial market operated by ASX Limited.

6        Transfers of quoted securities of a foreign company

Regulations made for the purposes of section 1073D of the Act have effect in relation to the securities specified in section 5 as if the following provisions of the Regulations were modified:

(a)     in regulation 7.11.01 insert the following definitions in the appropriate alphabetical order:

absolute beneficial owner, in relation to Division 3 securities, means one or more beneficiaries of a trust to which a Division 3 security is subject, who has or who together have a presently enforceable and unconditional right to require the trustee of the trust to transfer the Division 3 security to them.”;

securities lending arrangement means an arrangement under which:

(a)     one entity (the lender) agrees that it will:

(i)      deliver Division 3 securities to another entity (the borrower) or to an entity nominated by the borrower; and

(ii)     vest title in those Division 3 securities in the entity to which they are delivered; and

(b)     the borrower agrees that it will, after the lender does the things mentioned in subparagraph (i):

(i)      deliver the Division 3 securities (or equivalent securities) to the lender or to an entity nominated by the lender; and

(ii)     vest title in those Division 3 securities (or those equivalent securities) in the entity to which they are delivered.”;

(b)     after paragraph 7.11.17(4)(a) insert:

“(ba)      if a designated broker is given authority by or on behalf of the absolute beneficial owner of Division 3 securities to sell or transfer those Division 3 securities, the designated broker is taken to have authority from the transferor to:

(i)      sell or transfer those Division 3 securities; and

(ii)     execute an instrument of transfer of those Division 3 securities;

on the transferor’s behalf, even if no authority is given by the transferor;”;

(c)     in paragraph 7.11.19(2)(f), omit “paragraph 7.11.17(4)(a),”, substitute “paragraph 7.11.17(4)(a) or (ba),”;

(d)     omit subregulation 7.11.40(1), substitute:

“(1)   A broker must not stamp with a broker’s stamp a document (a transfer document) that relates to Division 3 securities and may be used as a sufficient transfer under this Part, unless the transfer document relates to:

(a)   a sale or purchase of the Division 3 securities, in the ordinary course of the broker’s business, for a consideration of not less than their unencumbered market value at the time of the sale or purchase;

(b)   the performance of obligations under a securities lending arrangement; or

(c)   a transfer from or to a broker’s clearing account in accordance with the operating rules of the financial market in which the broker is a participant.”; and

(e)     in paragraph 7.11.40(2)(b), omit “paragraph 7.11.17(4)(a),”, substitute “paragraph 7.11.17(4)(a) or (ba),”.

7        Transfers of options over unissued securities

Regulations made for the purposes of section 1073D of the Act have effect in relation to Division 3 rights as if the following provisions of the Regulations were modified:

(a)     in regulation 7.11.01 insert in the appropriate alphabetical order the following definition:

company option means a Division 3 right that is an assignable option to acquire by way of issue shares or debentures in a company on payment of an exercise price.”.


(b)     after subregulation 7.11.10 insert:

7.11.10A            Company options

For the purposes of regulations 7.11.11 to 7.11.14, and of the forms in Schedule 2A, a Division 3 right that is a company option is taken to be a Division 3 asset and not to be a Division 3 right.”;

(c)     before paragraph 7.11.16(1)(a) insert:

“(aa)      to have agreed at the execution time to accept the rights subject to the terms and conditions on which the transferor held them immediately before that time, being the terms and conditions that are applicable as between the issuer in relation to, and the holder for the time being of, the rights;”;

(d)     at the beginning of paragraph 7.11.16(1)(a) insert:

          “at the time (the payment time) at which the transferee subsequently makes payment to the issuer in relation to the Division 3 assets of the application monies or, in the case of company options, the exercise price,”;

(e)     in paragraphs 7.11.16(1)(a) and (b) and subregulation 7.11.16(2), omit “at the execution time” (wherever occurring), substitute “at the payment time”.