CORPORATIONS LEGISLATION AMENDMENT (FINANCIAL SERVICES MODERNISATION) BILL 2009

i Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No.

, 2009

Contents

Short title ............................................................................................ 1

Commencement .................................................................................. 1

Schedule(s) ......................................................................................... 3

Schedule 1--Margin lending facilities

Corporations Act 2001

Schedule 2--Trustee companies

Australian Securities and Investments Commission Act 2001

Corporations Act 2001

Schedule 3--Debentures

Corporations Act 2001

Schedule 4--Technical amendme nt

Corporations Act 2001

Schedule 5--Application and transitional provisions

Corporations Act 2001

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 1

A Bill for an Act to amend the Corporations Act

2001 and the Australian Securities and Investments

Commission Act 2001, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Corporations Legislation Amendment

(Financial Services Modernisation) Act 2009.

2 Commence ment

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

2 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day on which this Act receives the

Royal Assent.

2. Schedule 1

A single day to be fixed by Proclamation.

However, if any of the provision(s) do not

commence with in the period of 6 months

beginning on the day on which this Act

receives the Royal Assent, they commence

on the first day after the end of that period.

3. Schedule 2

A single day to be fixed by Proclamation.

However, if any of the provision(s) do not

commence with in the period of 6 months

beginning on the day on which this Act

receives the Royal Assent, they commence

on the first day after the end of that period.

4. Schedule 3,

item 1

The day on which this Act receives the

Royal Assent.

5. Schedule 3,

items 2 and 3

A single day to be fixed by Proclamation.

However, if any of the provision(s) do not

commence with in the period of 6 months

beginning on the day on which this Act

receives the Royal Assent, they commence

on the first day after the end of that period.

6. Schedule 4

The day on which this Act receives the

Royal Assent.

7. Schedule 5

The day on which this Act receives the

Royal Assent.

Note:

This table relates only to the provisions of this Act as originally

passed by both Houses of the Parliament and assented to. It will not be

expanded to deal with provisions inserted in this Act after assent.

(2) Column 3 of the table contains additional information that is not

part of this Act. Information in this column may be added to or

edited in any published version of this Act.

Schedule 1 Margin lending facilities

4 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

Schedule 1

Margin lending facilities

Corporations Act 2001

1 Section 760B (table item 8)

Repeal the item, substitute:

7.8

other conduct requirements for financial services licensees (e.g.

dealing with client money and property; financial records,

statements and audit)

special provisions relating to insurance

special provisions relating to margin lending facilities

2 Section 761A

Insert:

current LVR:

(a) in relation to a standard margin lending facility--has the

meaning given by subsection 761EA(3); and

(b) in relation to a non-standard margin lending facility--has the

meaning given by subsection 761EA(6).

3 Section 761A

Insert:

limit, in relation to a margin lending facility, has the meaning

given by subsection 761EA(11).

4 Section 761A

Insert:

margin call:

(a) in relation to a standard margin lending facility--has the

meaning given by subsection 761EA(4); and

(b) in relation to a non-standard margin lending facility--has the

meaning given by subsection 761EA(7); and

lending facility under subsection 761EA(8)--has the

meaning given in the declaration.

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 5

5 Section 761A

Insert:

margin lending facility has the meaning given by subsection

761EA(1).

6 Section 761A

Insert:

non-standard margin lending facility has the meaning given by

subsection 761EA(5).

7 Section 761A

Insert:

standard margin lending facility has the meaning given by

subsection 761EA(2).

8 Subsection 761E(3) (at the end of the table)

Add:

margin lending

facility

the person enters into the legal

relationship that constitutes the

margin lending facility, as the client

under the facility

9 After section 761E

Insert:

761EA Meaning of margin lending facility, margin call and

associated expressions

(1) A margin lending facility is:

(a) a standard margin lending facility; or

(b) a non-standard margin lending facility; or

margin lending facility under subsection (8);

unless the facility is of a kind that has been declared by ASIC not

to be a margin lending facility under subsection (9).

Schedule 1 Margin lending facilities

6 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

Standard margin lending facilities

(2) A standard margin lending facility is a facility under the terms of

which:

(a) credit is, or may be, provided by a person (the provider) to a

natural person (the client); and

(b) the credit provided is, or must be, applied wholly or partly:

(i) to acquire one or more financial products, or a

beneficial interest in one or more financial products; or

(ii) to repay, wholly or partly, another credit facility (within

the meaning of subparagraph 765A(1)(h)(i)), the credit

provided under which was applied, wholly or partly, to

acquire one or more financial products, or a beneficial

interest in one or more financial products; and

secured property); and

(d) the secured property consists, or must consist, wholly or

partly of one or more marketable securities, or a beneficial

interest in one or more marketable securities; and

(e) if the current LVR of the facility exceeds a ratio, percentage,

proportion or level (however described) determined under the

terms of the facility, then:

(i) the client becomes required to take action; or

(ii) the provider becomes entitled to take action; or

(iii) another person becomes required or entitled to take

action;

in accordance with the terms of the facility to reduce the

current LVR of the facility.

(3) The current LVR of a standard margin lending facility at a

particular time is the ratio, percentage, proportion or level

(however described) that:

(a) is determined under the terms of the facility; and

(b) under the terms of the facility, represents a particular

relationship between:

(i) the amount of the debt owing by the client, or credit

provided by the provider, or both, under the facility at

that time; and

(ii) the value of the secured property determined at that time

under the terms of the facility.

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 7

(4) A standard margin lending facility is in margin call when

paragraph (2)(e) applies in relation to the facility.

Non-standard margin lending facilities

(5) A non-standard margin lending facility is a facility under the

terms of which:

(a) a natural person (the client) transfers one or more marketable

securities, or a beneficial interest in one or more marketable

securities (the transferred securities) to another person (the

provider); and

(b) the provider transfers property to the client (the transferred

property) as consideration or security for the transferred

securities; and

partly to acquire one or more financial products, or a

beneficial interest in one or more financial products; and

(d) the client has a right, in the circumstances determined under

the terms of the facility, to be given marketable securities

equivalent to the transferred securities; and

(e) if the current LVR of the facility exceeds a ratio, percentage,

proportion or level (however described) determined under the

terms of the facility, then:

(i) the client becomes required to take action; or

(ii) the provider becomes entitled to take action; or

(iii) another person becomes required or entitled to take

action;

in accordance with the terms of the facility to reduce the

current LVR of the facility.

(6) The current LVR of a non-standard margin lending facility at a

particular time is the ratio, percentage, proportion or level

(however described) that:

(a) is determined under the terms of the facility; and

(b) under the terms of the facility, represents a particular

relationship between:

(i) an amount determined at that time under the terms of

the facility by reference to the value of the transferred

property and any amount owing by the client to the

provider; and

Schedule 1 Margin lending facilities

8 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

(ii) the value of the transferred securities determined at that

time under the terms of the facility.

(7) A non-standard margin lending facility is in margin call when

paragraph (5)(e) applies in relation to the facility.

ASIC declarations in relation to margin lending facilities

(8) ASIC may declare that a particular kind of facility is a margin

lending facility. The declaration must give the meanings of margin

call and limit in relation to that kind of facility.

(9) ASIC may declare that a particular kind of facility is not a margin

lending facility.

(10) A declaration made under subsection (8) or (9):

(a) must be in writing; and

(b) is a legislative instrument for the purposes of the Legislative

Instruments Act 2003.

Meaning of limit of a margin lending facility

(11) The limit of a margin lending facility:

(a) in relation to a standard margin lending facility--means the

maximum amount of credit that may be provided by the

provider to the client under the facility; and

(b) in relation to a non-standard margin lending facility--means

the maximum amount of property that may be transferred by

the provider to the client under the facility; and

a margin lending facility under subsection (8)--has the

meaning given in the declaration.

10 After paragraph 764A(1)(k)

Insert:

(l) a margin lending facility;

11 At the end of subparagraph 765A(1)(h)(i)

Add "(other than a margin lending facility)".

12 After Division 4 of Part 7.8

Insert:

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 9

Division 4A--Special provisions relating to margin lending

facilities

Subdivision A--Responsible lending conduct for margin

lending facilities

985E Requirements before issuing etc. margin lending facility

Requirement to make assessment of unsuitability

(1) A financial services licensee (the provider) must not:

(a) issue a margin lending facility to a retail client; or

(b) increase the limit of a margin lending facility that was issued

to a retail client;

on a day (the critical day) unless the provider has, within 90 days

(or other period prescribed by the regulations) before the critical

day:

(i) is in accordance with section 985F; and

(ii) covers a period in which the critical day occurs; and

(d) made the inquiries and verification in accordance with

section 985G.

Note:

This subsection is a civil penalty provision (see section 1317E).

Increase in limit of standard margin lending facility

(2) For the purposes of paragraph (1)(b), the limit of a standard margin

lending facility is taken not to be increased if:

(a) apart from this subsection, there would be an increase in the

limit; and

(b) the increase in the limit would result from an increase in the

value, determined under the terms of the facility, of the

secured property under the facility (as referred to in

paragraph 761EA(2)(c)); and

result from the client contributing additional property to the

secured property.

Schedule 1 Margin lending facilities

10 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

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Regulations

(3) For the purposes of paragraph (1)(b), the regulations may prescribe

particular situations in which the limit of a margin lending facility

is taken:

(a) to be increased, despite subsection (2); or

(b) not to be increased.

985F Assessment of unsuitability of margin lending facility

For the purposes of paragraph 985E(1)(c), the provider must make

an assessment that:

(a) specifies the period the assessment covers; and

(b) assesses whether the margin lending facility will be

unsuitable for the retail client if the facility is issued or the

limit is increased in that period.

Note:

The provider is not required to make the assessment if the margin

lending facility is not issued or the limit is not increased.

985G Reasonable inquiries etc. about the retail client

Requirement to make inquiries and take steps to verify

(1) For the purposes of paragraph 985E(1)(d), the provider must,

before making the assessment:

(a) make reasonable inquiries about the retail client's financial

situation; and

(b) take reasonable steps to verify the retail client's financial

situation; and

matter prescribed by the regulations; and

(d) take any steps prescribed by the regulations to verify any

matter prescribed by the regulations.

(2) The regulations may prescribe particular inquiries or steps that

must be made or taken, or do not need to be made or taken, for the

purposes of paragraph (1)(a) or (b).

When not required to take steps to verify

(3) Despite subsection (1), if:

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

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(a) a financial services licensee that is authorised to provide

financial product advice in relation to margin lending

facilities has prepared a statement of advice for the retail

client; and

(b) the statement of advice was prepared no more than 90 days

before the critical day; and

(i) the retail client acquire the particular margin lending

facility; or

(ii) the limit of the particular margin lending facility be

increased; and

(d) the limit of the facility, or the increase in the limit of the

facility, is not greater than the limit, or the increase in the

limit, recommended in the statement of advice; and

(e) the statement of advice includes the information that was

used for the purposes of preparing the statement of advice;

then the provider is not required, for the purposes of

paragraph (1)(b) or (d), to verify that information.

985H When margin lending facility must be assessed as unsuitable

Requirement to assess the margin lending facility as unsuitable

(1) The provider must assess that the margin lending facility will be

unsuitable for the retail client if the margin lending facility will be

unsuitable for the retail client under subsection (2).

Note 1:

This subsection is a civil penalty provision (see section 1317E).

Note 2:

Even if the margin lending facility will not be unsuitable for the retail

client under subsection (2), the provider may still assess that the

margin lending facility will be unsuitable for the retail client for other

reasons.

(2) The margin lending facility will be unsuitable for the retail client

if, at the time of the assessment, it is likely that:

(a) if the facility is issued or the limit increased in the period

covered by the assessment, and the facility were to go into

margin call, the retail client:

(i) would be unable to comply with the retail client's

financial obligations under the terms of the facility; or

(ii) could only comply with substantial hardship; or

Schedule 1 Margin lending facilities

12 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

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(b) if the regulations prescribe circumstances in which a margin

lending facility is unsuitable--those circumstances will apply

to the margin lending facility if the facility is issued or the

limit increased in the period covered by the assessment.

Information to be used to make the assessment

(3) For the purposes of determining under subsection (2) whether the

margin lending facility will be unsuitable, only information that

satisfies both of the following paragraphs is to be taken into

account:

(a) the information is about the retail client's financial situation,

or any other matter prescribed by regulations under

paragraph 985G(1)(c) or (d);

(b) at the time of the assessment:

(i) the provider had reason to believe that the information

was true; or

(ii) the provider would have had reason to believe that the

information was true if it had made the inquiries or

verification under section 985G.

985J Giving the retail client the assessment

Requirement to give assessment if requested

(1) If, before the margin lending facility is issued or the limit is

increased, the retail client requests a copy of the assessment from

the provider, the provider must give the retail client a written copy

of the assessment before issuing the facility or increasing the limit.

Note 1:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

Note 2:

This subsection is a civil penalty provision (see section 1317E).

Note 3:

The provider is not required to give the retail client a copy of the

assessment if the margin lending facility is not issued or the limit is

not increased.

(2) If, during the period that:

(a) starts on the critical day; and

(b) ends 7 years after that day;

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 13

the retail client requests a copy of the assessment from the

provider, the provider must give the retail client a written copy of

the assessment:

before the end of 7 business days after the day the provider

receives the request; and

(d) otherwise--before the end of 21 business days after the day

the provider receives the request.

Note 1:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

Note 2:

This subsection is a civil penalty provision (see section 1317E).

Manner of giving assessment

(3) The provider must give the retail client the copy of the assessment

in the manner (if any) prescribed by the regulations.

No payment for assessment

(4) The provider must not request or demand payment of an amount

for giving the retail client a copy of the assessment.

Note 1:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

Note 2:

This subsection is a civil penalty provision (see section 1317E).

Strict liability

(5) An offence based on subsection (1), (2) or (4) is an offence of strict

liability.

Note:

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

985K Unsuitable margin lending facilities

Requirement not to issue unsuitable margin lending facilities etc.

(1) The provider must not:

(a) issue the margin lending facility to the retail client; or

(b) increase the limit of the margin lending facility that was

issued to the retail client;

if the facility is unsuitable for the retail client under subsection (2).

Schedule 1 Margin lending facilities

14 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

Note 1:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

Note 2:

This subsection is a civil penalty provision (see section 1317E).

When a margin lending facility will be unsuitable

(2) The margin lending facility is unsuitable for the retail client if, at

the time it is issued or the limit is increased:

(a) it is likely that, if the facility were to go into margin call, the

retail client:

(i) would be unable to comply with the retail client's

financial obligations under the terms of the facility; or

(ii) could only comply with substantial hardship; or

(b) if the regulations prescribe circumstances in which a margin

lending facility is unsuitable--those circumstances apply to

the margin lending facility.

Information to be used for the purposes of subsection (2)

(3) For the purposes of determining under subsection (2) whether the

margin lending facility will be unsuitable, only information that

satisfies both of the following paragraphs is to be taken into

account:

(a) the information is about the retail client's financial situation,

or any other matter prescribed by regulations under

paragraph 985G(1)(c) or (d);

(b) at the time the margin lending facility is issued or the limit is

increased:

(i) the provider had reason to believe that the information

was true; or

(ii) the provider would have had reason to believe that the

information was true if it had made the inquiries or

verification under section 985G.

Regulations in relation to unsuitability of margin lending facility

(4) The regulations may prescribe particular situations in which a

margin lending facility is taken not to be unsuitable for a retail

client, despite subsection (2).

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 15

Increase in limit of standard margin lending facility

(5) For the purposes of paragraph (1)(b), the limit of a standard margin

lending facility is taken not to be increased if:

(a) apart from this subsection, there would be an increase in the

limit; and

(b) the increase in the limit would result from an increase in the

value, determined under the terms of the facility, of the

secured property under the facility (as referred to in

paragraph 761EA(2)(c)); and

result from the client contributing additional property to the

secured property.

Regulations in relation to increase in limit

(6) For the purposes of paragraph (1)(b), the regulations may prescribe

particular situations in which the limit of a margin lending facility

is taken:

(a) to be increased, despite subsection (5); or

(b) not to be increased.

Subdivision B--Notice of margin calls under margin lending

facilities

985L Issue of margin lending facility must not be conditional on

agreement to receive communications through agent

A financial services licensee must not require, as a condition of

issuing a margin lending facility to a retail client, that the retail

client enter into an agreement of the kind referred to in subsection

985M(2) (which deals with agreements about communications in

relation to margin lending facilities).

Note:

This section is a civil penalty provision (see section 1317E).

985M Notification of margin calls

Provider must notify retail client of margin call

(1) A financial services licensee (the provider) that has issued a

margin lending facility to a retail client must, when the facility

Schedule 1 Margin lending facilities

16 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

goes into margin call, take reasonable steps to notify the retail

client under the facility of the margin call in accordance with this

section.

Note:

This subsection is a civil penalty provision (see section 1317E).

When provider must notify retail client's agent, and agent must

notify retail client, of margin call

(2) However, if there is an agreement between the provider, the retail

client, and another financial services licensee (the agent) that the

agent will receive communications from the provider in relation to

the margin lending facility on behalf of the retail client, then:

(a) the provider must take reasonable steps to notify the agent

(instead of the retail client) of the margin call in accordance

with this section; and

(b) the agent must take reasonable steps to notify the retail client

of the margin call in accordance with this section.

Note:

This subsection is a civil penalty provision (see section 1317E).

When and how notice must be given

(3) A notice under this section must be given:

(a) at a time determined by ASIC; or

(b) if no time is determined by ASIC--as soon as practicable.

(4) A notice under this section must be given:

(a) if a manner in which the notice is to be given has been agreed

between the person who is required to give the notice and the

person to whom the notice is required to be given--in that

manner; or

(b) if there is no agreement and ASIC has determined the manner

in which the notice is to be given--in that manner; or

ASIC may determine when and how notice must be given

(5) ASIC may determine:

(a) the time by which, and manner in which, a provider must

notify a client or agent of a margin call under this section;

and

Margin lending facilities Schedule 1

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 17

(b) the time by which, and manner in which, an agent must

notify a client of a margin call under this section.

(6) A determination made under subsection (5):

(a) must be in writing; and

(b) is a legislative instrument for the purposes of the Legislative

Instruments Act 2003.

13 Subsection 1016A(1) (after paragraph (da) of the definition

of relevant financial product)

Insert:

(db) a margin lending facility; or

14 After subparagraph 1017D(1)(b)(v)

Insert:

(va) a margin lending facility; or

15 After paragraph 1317E(1)(ja)

Insert:

(jaa) subsection 985E(1) (issuing or increasing limit of margin

lending facility without having made assessment etc.);

(jab) subsection 985H(1) (failure to assess a margin lending

facility as unsuitable);

(jac) subsection 985J(1) (failure to give assessment to retail client

if requested before issue of facility or increase in limit);

(jad) subsection 985J(2) (failure to give assessment to retail client

if requested after issue of facility or increase in limit);

(jae) subsection 985J(4) (demanding payment to give assessment

to retail client);

(jaf) subsection 985K(1) (issuing or increasing limit of margin

lending facility if unsuitable);

(jag) section 985L (making issue of margin lending facility

conditional on retail client agreeing to receive

communications through agent);

(jah) subsection 985M(1) (failure to notify of margin call where

there is no agent);

(jai) subsection 985M(2) (failure to notify of margin call where

there is an agent);

Trustee companies Schedule 2

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 19

Schedule 2

Trustee companies

Australian Securities and Investments Commission Act 2001

1 Subsection 12BA(1)

Insert:

traditional trustee company services has the same meaning as in

Chapter 5D of the Corporations Act.

2 Subsection 12BA(1)

Insert:

trustee company has the same meaning as in Chapter 5D of the

Corporations Act.

3 After subsection 12BAB(1)

Insert:

(1A) Subject to paragraph (2)(b), the provision by a trustee company of

a traditional trustee company service constitutes the provision, by

the company, of a financial service for the purposes of this

Division.

Note:

Trustee companies may also provide other kinds of financial service

mentioned in subsection (1).

(1B) The regulations may, in relation to a traditional trustee company

service of a particular class, prescribe the person or persons to

whom a service of that class is taken to be provided or supplied for

the purposes of this Division. This subsection does not limit (and is

not limited by) subsection (2).

Corporations Act 2001

4 Subsection 5A(4)

After "Chapter", insert "5D,".

5 At the end of subsection 5D(2)

Add:

Schedule 2 Trustee companies

20 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

Note:

This Part does not apply in relation to the trustee company provisions:

see section 601RAE.

6 After paragraph 283AC(1)(a)

Insert:

(aa) a licensed trustee company (within the meaning of

Chapter 5D); or

7 Section 490

Before "Except", insert "(1)".

8 At the end of section 490

Add:

; or (c) the company is a trustee company (within the meaning of

Chapter 5D) that is in the course of administering or

managing one or more estates.

(2) A person with a proper interest (within the meaning of Chapter 5D)

in the estate referred to in paragraph (1)(c), or who has any claim

in respect of the estate, is entitled to be heard in a proceeding

before the Court for leave under subsection (1).

9 After Chapter 5C

Insert:

Chapter 5D--Licensed trustee companies

Part 5D.1--Preliminary

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).

Trustee companies Schedule 2

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 No. ,

2009 21

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

Schedule 2 Trustee companies

22 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

No. , 2009

(b) by providing a mechanism in the regulations for the

determination of a list of companies.

(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;

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;

(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

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(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;

(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

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(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 Te rritory 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;

relation to traditional trustee company services that they

provide;

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(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.

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Part 5D.2--Powers etc. of licensed trustee

companies

Division 1--General provisions

601SAA Jurisdiction of courts not affected etc.

(1) Any inherent power or jurisdiction of courts in respect of the

supervision of the performance of traditional trustee company

services is not affected by anything in this Chapter.

(2) A licensed trustee company that is performing traditional trustee

company services of a particular kind is subject in all respects to

the same control and to removal or restraint from acting, and

generally to the jurisdiction of courts, in the same manner as any

other person who performs traditional trustee company services of

that kind.

601SAB Regulations may prescribe other powe rs 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 Powe rs 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.

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Division 2--Accounts

601SBA Licensed trustee company not required to file accounts

(1) A licensed trustee company, when acting alone in relation to any

estate of a deceased person, is not required to file, or file and pass,

accounts relating to the estate unless the Court, of its own motion

or on application by or on behalf of a person with a proper interest

in the estate, so orders.

(2) If a licensed trustee company is appointed and acts jointly with any

other person in relation to any estate of a deceased person, the

trustee company and that other person are not required to file, or

file and pass, accounts relating to the estate unless:

(a) that other person intends to charge fees for acting in relation

to the estate; or

(b) the Court, of its own motion or on application by or on behalf

of a person with a proper interest in the estate, so orders.

601SBB Licensed trustee company may be required to provide

account in relation to estate

(1) On application by a person with a proper interest in an estate that is

administered or managed by a licensed trustee company, the trustee

company must provide the person with an account of:

(a) the assets and liabilities of the estate; and

(b) the trustee company's administration or management of the

estate; and

(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

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(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 orde r 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

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)).

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Division 3--Common funds

601SCA Common funds of licensed trustee companies

(1) A licensed trustee company may, for the purposes of investment,

pool together into a fund or funds money (estate money) from 2 or

more estates that are administered or managed by the trustee

company in the performance of estate management functions.

(2) 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).

(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.

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)).

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601SCC Regulations relating to establishme nt or operation of

common funds

The regulations may include provisions relating to the

establishment or operation of common funds.

Part 5D.3--Regulation of fees charged by licensed

trustee companies

Division 1--Disclosure of fees

601TAA Schedule of fees to be published and available

A licensed trustee company must ensure that an up-to-date

schedule of the fees that it generally charges for the provision of

traditional trustee company services:

(a) is published at all times on a website maintained by or on

behalf of the trustee company; and

(b) is available 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.

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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 2:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

(2) A copy of changed fees that is sent to a client under

paragraph (1)(a) must be:

(a) an electronic copy, if that is what the client has requested; or

(b) a hard copy, in any other case.

(3) If a client to whom a traditional trustee company service is

provided is under a legal disability, the following provisions have

effect:

(a) a copy of changed fees required by paragraph (1)(a), or a

notice required by paragraph (1)(b), must instead be given to

an agent of the client;

(b) a request referred to in paragraph (1)(a) or (2)(a) may instead

be made by an agent of the client.

Division 2--General provisions about charging fees

601TBA Charging of fees for the provision of traditional trustee

company services

(1) Subject to this Part, a licensed trustee company may charge fees for

the provision of traditional trustee company services.

(2) If a provision of this Part limits the fees that a licensed trustee

company may charge for the provision of a particular traditional

trustee company service, the trustee company must not charge fees

for that service in excess of that limit.

Note 1:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

Note 2:

Excess fees may also be recovered under section 601XAA.

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

(1) Nothing in this Part prevents a licensed trustee company from

charging:

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(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) However:

(a) a management fee referred to in section 601TDD can only

come out of the income of the relevant estate; and

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(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.

Division 3--Fees otherwise than for being trustee or

manager of a charitable trust

601TCA Fees otherwise than for being the trustee or manager of a

charitable trust

(1) This section applies to a particular provision of a traditional trustee

company service by a licensed trustee company, unless:

(a) the service consists of being the trustee or manager of a

charitable trust (see Division 4); or

(b) the provision of the service started before the commencement

of this section.

(2) The trustee company must not charge fees that are in excess of its

schedule of fees that was most recently published as required by

section 601TAA before the trustee company started to provide the

service.

(3) This section does not limit anything in Division 2.

Division 4--Fees for being trustee or manager of a

charitable trust

Subdivision A--New client charitable trusts

601TDA Subdivision applies to new client charitable trusts

This Subdivision applies to a particular provision of a traditional

trustee company service by a licensed trustee company if:

(a) the service consists of being the trustee or manager of a

charitable trust; and

(b) the provision of the service started on or after the

commencement of this section.

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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

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):

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(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

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

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

part-years.

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601TDF Additional amount for preparation of returns etc.

The trustee company may charge a reasonable fee for work

involved in the preparation and lodging of returns for the purpose

of, or in connection with, assessments of any duties or taxes (other

than probate, death, succession or estate duties) related to the trust

estate of the charitable trust.

Subdivision B--Existing client charitable trusts

601TDG Subdivision applies to existing client charitable trusts

This Subdivision applies to a particular provision of a traditional

trustee company service by a licensed trustee company if:

(a) the service consists of being the trustee or manager of a

charitable trust; and

(b) the provision of the service started before the commencement

of this section.

601TDH Trustee company not to charge more than was being

charged before section comme nced

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

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part-years.

601TDJ Additional amount for preparation of returns etc.

The trustee company may charge a reasonable fee for work

involved in the preparation and lodging of returns for the purpose

of, or in connection with, assessments of any duties or taxes (other

than probate, death, succession or estate duties) related to the trust

estate of the charitable trust.

Division 5--Miscellaneous

601TEA Power of the Court with respect to excessive fees

(1) If the Court is of the opinion that fees charged by a licensed trustee

company in respect of any estate are excessive, the Court may

review the fees and may, on the review, reduce the fees.

(2) Subsection (1) does not apply to fees:

(a) that are charged as permitted by section 601TBB; or

(b) that relate to a charitable trust and that are charged as

permitted by Subdivision A of Division 4.

(3) In considering whether fees are excessive, the Court may consider

any or all of the following matters:

(a) the extent to which the work performed by the trustee

company was reasonably necessary;

(b) the extent to which the work likely to be performed by the

trustee company is likely to be reasonably necessary;

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;

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(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).

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Part 5D.4--Duties of officers and employees of

licensed trustee companies

601UAA Duties of officers of licensed trustee company

(1) An officer of a licensed trustee company must:

(a) act honestly; and

(b) exercise the degree of care and diligence that a reasonable

person would exercise if they were in the officer's position;

and

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).

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(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;

(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.

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Part 5D.5--Limit on control of licensed trustee

companies

Division 1--15% 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.

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(2) However, the Court may only make orders under this section on

application by:

(a) the Minister; or

(b) ASIC; or

(d) a person who has any voting power in the trustee company;

(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

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,

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for the purposes of section 1324, to be a person whose interests are

affected by the conduct.

(2) Subsection (1) does not, by implication, limit the class of persons

whose interests are affected by the conduct.

(3) The Minister has the same powers as ASIC to apply for an

injunction under section 1324 in relation to a contravention of this

Part.

(4) The powers in sections 601VAC and 1324 do not, by implication,

limit each other.

Division 2--Approval to exceed 15% voting power limit

601VBA Application for approval to exceed 15% voting powe r 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

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

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44 Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009

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(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.

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(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.

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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

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.

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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

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.

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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

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licensed trustee company at any time before the Minister makes a

decision.

Division 3--Other matters

601VCA Acquisition of property

(1) The Court must not make an order under section 601VAC if:

(a) the order would result in the acquisition of property from a

person otherwise than on just terms; and

(b) the order would be invalid because of paragraph 51(xxxi) of

the Constitution.

(2) Section 1350 does not apply in relation to the making of an order

under section 601VAC.

(3) In this section:

acquisition of property has the same meaning as in paragraph

51(xxxi) of the Constitution.

just terms has the same meaning as in paragraph 51(xxxi) of the

Constitution.

601VCB Interests of clients to be viewed as a group

A reference in this Part to the interests of the clients of a 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

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(the controller) increases the controller's voting power in a

licensed trustee company;

the Minister may give the controller a written direction to cease

having that voting power within a specified time.

(2) A person who is subject to a direction under subsection (1) must

comply with the direction.

Note:

Failure to comply with this subsection is an offence (see subsection

1311(1)).

(3) A direction under subsection (1) is not a legislative instrument.

(4) In this section:

increase voting power includes increasing it from a starting point

of nil.

Part 5D.6--Consequences of cancellation of

Australian financial services licence

Division 1--Preliminary

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

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

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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, in relation to a trustee company that

has had its licence cancelled, means assets (including assets in

common funds) and liabilities:

(a) of an estate, or incurred in relation to an estate, in relation to

which the trustee company was (before cancellation of its

licence) performing estate management functions; and

(b) that, immediately before the cancellation:

(i) were vested in the trustee company because it was

performing those functions; or

(ii) were otherwise assets and liabilities of the trustee

company because of its performance of those functions.

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).

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transferring company 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 2--Transfer of estate assets and liabilities

601WBA Compulsory transfer determinations

(1) If ASIC cancels the licence of a trustee company (the transferring

company), ASIC may, in writing, make a determination (a

compulsory transfer determination) that there is to be a transfer of

estate assets and liabilities from the transferring company to

another licensed trustee company (the receiving company).

(2) ASIC may make a compulsory transfer determination only if:

(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) 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.

(3) The determination must include particulars of the transfer,

including:

(a) the names of the transferring company and the receiving

company; and

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(b) whether it will be a total transfer or a partial transfer of the

transferring company's estate assets and liabilities; and

transferring company's estate assets and liabilities that is to

be transferred.

(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;

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

applying to the transferring company apply to the receiving

company, to the extent of the transfer; and

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(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 powe r to decide that his or her consent is not

require d

(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 compulsory 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

Commonwealth of Australia Bills

CORPORATIONS LEGISLATION AMENDMENT (FINANCIAL SERVICES MODERNISATION) BILL 2009