Corporations Act 2001 Act No. 50 of 2001 as amended This compilation was prepared on 16 July 2008 taking into account amendments up to Act No. 73 of 2008 Volume 4 includes: Table of Contents Chapters 7 and 8 (ss. 760A - 1200U) The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Contents Chapter 7-Financial services and markets 1 Part 7.1-Preliminary 1 Division 1-Object of Chapter and outline of Chapter 1 760A Object of Chapter 1 760B Outline of Chapter 1 Division 2-Definitions 3 761A Definitions 3 761B Meaning of arrangement-2 or more arrangements that together form a derivative or other financial product 13 761C Meaning of carry on a financial services business 13 761CA Meaning of class and kind of financial products and financial services 13 761D Meaning of derivative 13 761E Meaning of issued, issuer, acquire and provide in relation to financial products 15 761F Meaning of person-generally includes a partnership 18 761FA Meaning of person-generally includes multiple trustees 18 761G Meaning of retail client and wholesale client 20 761GA Meaning of retail client-sophisticated investors 25 761H References to this Chapter include references to regulations or other instruments made for the purposes of this Chapter 26 Division 3-What is a financial product? 27 Subdivision A-Preliminary 27 762A Overview of approach to defining what a financial product is 27 762B What if a financial product is part of a broader facility? 27 762C Meaning of facility 28 Subdivision B-The general definition 28 763A General definition of financial product 28 763B When a person makes a financial investment 29 763C When a person manages financial risk 30 763D When a person makes non-cash payments 30 763E What if a financial product is only incidental? 31 Subdivision C-Specific inclusions 32 764A Specific things that are financial products (subject to Subdivision D) 32 Subdivision D-Specific exclusions 34 765A Specific things that are not financial products 34 Division 4-When does a person provide a financial service? 38 766A When does a person provide a financial service? 38 766B Meaning of financial product advice 38 766C Meaning of dealing 41 766D Meaning of makes a market for a financial product 42 766E Meaning of provide a custodial or depository service 43 Division 5-What is a financial market? 45 767A What is a financial market? 45 Division 6-What is a clearing and settlement facility? 46 768A What is a clearing and settlement facility? 46 Division 7-General provisions relating to civil and criminal liability 48 769A Part 2.5 of Criminal Code does not apply 48 769B People are generally responsible for the conduct of their agents, employees etc. 48 769C Representations about future matters taken to be misleading if made without reasonable grounds 51 Part 7.2-Licensing of financial markets 52 Division 1-Preliminary 52 790A Definition 52 Division 2-Requirement to be licensed 53 791A Need for a licence 53 791B Other prohibitions on holding out 53 791C Exemptions 53 791D When a market is taken to be operated in this jurisdiction 54 Division 3-Regulation of market licensees 55 Subdivision A-Licensee's obligations 55 792A General obligations 55 792B Obligation to notify ASIC of certain matters 56 792C Giving ASIC information about a listed disclosing entity 58 792D Obligation to assist ASIC 58 792E Obligation to give ASIC access to market facilities 58 792F Annual report 59 792G Obligations to notify people about clearing and settlement arrangements in certain circumstances 59 792H Change of country by foreign licensee 60 792I Making information about compensation arrangements publicly available 61 Subdivision B-The market's operating rules and procedures 61 793A Content of the operating rules and procedures 61 793B Legal effect of operating rules 62 793C Enforcement of operating rules 62 793D Changing the operating rules 63 793E Disallowance of changes to operating rules 64 Subdivision C-Powers of the Minister and ASIC 64 794A Minister's power to give directions 64 794B Minister's power to require special report 65 794C ASIC to assess licensee's compliance 65 794D ASIC's power to give directions 66 794E Additional directions to clearing and settlement facilities 68 Division 4-The Australian market licence 69 Subdivision A-How to get a licence 69 795A How to apply for a licence 69 795B When a licence may be granted 69 795C Publication of notice of licence grant 71 795D More than one licence in the same document 71 795E More than one market covered by the same licence 72 Subdivision B-The conditions on the licence 72 796A The conditions on the licence 72 Subdivision C-When a licence can be varied, suspended or cancelled 73 797A Varying licences 73 797B Immediate suspension or cancellation 74 797C Suspension or cancellation following hearing and report 74 797D Effect of suspension 75 797E Variation or revocation of suspension 75 797F Publication of notice of licence suspension or cancellation 75 797G Suspension and cancellation only in accordance with this Subdivision 76 Division 5-Other matters 77 798A Matters to be taken into account by the Minister 77 798B ASIC may give advice to Minister 78 798C Market licensee or related body corporate etc. listing on market 78 798D Exemptions and modifications for self-listing licensees or related bodies corporate etc. 80 798DA Market licensee, related body corporate etc. or competitor participating in market 81 798E Other potential conflict situations 82 Part 7.3-Licensing of clearing and settlement facilities 84 Division 1-Requirement to be licensed 84 820A Need for a licence 84 820B Other prohibitions on holding out 84 820C Exemptions 85 820D When a clearing and settlement facility is taken to be operated in this jurisdiction 85 Division 2-Regulation of CS facility licensees 86 Subdivision A-Licensee's obligations 86 821A General obligations 86 821B Obligation to notify ASIC of certain matters 87 821BA Obligation to notify Reserve Bank of certain matters 88 821C Obligation to assist 89 821D Obligation to give ASIC access to the facility 89 821E Annual report 90 821F Change of country by foreign licensee 90 Subdivision B-The facility's operating rules and procedures 91 822A Content of the operating rules and procedures 91 822B Legal effect of operating rules 92 822C Enforcement of operating rules 92 822D Changing the operating rules 93 822E Disallowance of changes to operating rules 93 Subdivision C-Powers of the Minister, ASIC and the Reserve Bank in relation to licensees 94 823A Minister's power to give directions 94 823B Minister's power to require special report 94 823C ASIC to assess licensee's compliance 95 823CA Reserve Bank to assess licensee's compliance 96 823D Directions power-protecting dealings in financial products and ensuring fair and effective provision of services by CS facilities 96 823E Directions power-reduction of systemic risk 98 Division 3-The Australian CS facility licence 100 Subdivision A-How to get a licence 100 824A How to apply for a licence 100 824B When a licence may be granted 100 824C Publication of notice of licence grant 102 824D More than one licence in the same document 102 824E More than one CS facility covered by the same licence 102 Subdivision B-The conditions on the licence 103 825A The conditions on the licence 103 Subdivision C-When a licence can be varied, suspended or cancelled 104 826A Varying licences 104 826B Immediate suspension or cancellation 105 826C Suspension or cancellation following hearing and report 105 826D Effect of suspension 106 826E Variation or revocation of suspension 106 826F Publication of notice of licence suspension or cancellation 106 826G Suspension and cancellation only in accordance with this Subdivision 106 Division 4-Other matters 107 827A Matters to be taken into account by the Minister 107 827B ASIC may give advice to Minister 108 827C Reserve Bank may give advice to Minister 108 827D Reserve Bank may determine financial stability standards 108 Part 7.4-Limits on involvement with licensees 111 Division 1-Limit on control of certain licensees 111 Subdivision A-15% voting power limit 111 850A Scope of Division 111 850B Meaning of unacceptable control situation 111 850C Acquisitions of shares 112 850D Remedial orders 112 850E Injunctions 113 Subdivision B-Approval to exceed 15% voting power limit 113 851A Application for approval to exceed 15% voting power limit 113 851B Approval of application 114 851C Duration of approval 114 851D Conditions of approval 115 851E Varying percentage approved 116 851F Revoking an approval 117 851G Further information about applications 118 851H Time limit for Minister's decision 118 851I Preservation of voting power in relation to bodies specified in regulations made for section 850A 119 Subdivision C-Other matters 120 852A Acquisition of property 120 852B Anti-avoidance 120 Division 2-Individuals who are not fit and proper are disqualified 122 853A Who is disqualified 122 853B When an individual is involved in an operator 122 853C Declaration by ASIC 122 853D Procedure for declaration 123 853E Revoking a declaration 124 853F Obligations on disqualified individuals 124 853G Notification by ASIC 124 Division 3-Miscellaneous 125 854A Record-keeping and giving of information 125 854B Exemptions and modifications by regulations 126 Part 7.5-Compensation regimes for financial markets 127 Division 1-Preliminary 127 880A Part does not apply to markets licensed under special provisions about overseas markets 127 880B Definitions 127 Division 2-When there must be a compensation regime 129 881A Licensed markets through which participants provide services for retail clients must generally have a compensation regime 129 881B Additional requirements for the licence application 129 881C What happens if an application contains information in accordance with paragraph 881B(2)(c) 130 881D What happens if an application contains a statement in accordance with paragraph 881B(2)(d) 130 Division 3-Approved compensation arrangements 131 Subdivision A-Approval of compensation arrangements 131 882A How to get compensation arrangements approved with grant of licence 131 882B How to get compensation arrangements approved after licence is granted 131 882C Revocation of approval 132 882D Minister's power to give directions 132 Subdivision B-Effect of compensation rules forming part of Division 3 arrangements 133 883A Legal effect of compensation rules 133 883B Enforcement of compensation rules 133 883C Other sources of funds for compensation 134 883D Payment of levies 134 Subdivision C-Changing Division 3 arrangements 135 884A Division 3 arrangements must generally only be changed in accordance with this Subdivision 135 884B Changing Division 3 arrangements-matters required to be dealt with in the compensation rules 136 884C Changing Division 3 arrangements-matters not required to be dealt with in the compensation rules 137 Subdivision D-Are compensation arrangements adequate? 138 885A Purpose of this Subdivision 138 885B Requirements to be complied with for arrangements to be adequate 138 885C The losses to be covered 139 885D Certain losses that are not Division 3 losses 140 885E The amount of compensation 141 885F Method of payment of compensation 142 885G Making and determination of claims 142 885H The source of funds-general 143 885I Administration and monitoring 143 885J The losses to be covered-other matters to be taken into account 144 Subdivision E-Other provisions about Division 3 arrangements 144 886A Only one claim in respect of the same loss 144 886B Regulations relating to fidelity funds 144 Division 4-NGF Compensation regime 145 Subdivision A-Application of Division 145 887A Markets to which this Division applies 145 Subdivision B-Claims for and payment of compensation 145 888A The situations in which compensation may be claimed 145 888B Kinds of compensation available 145 888C Amount of compensation payable 145 888D Payment of compensation 146 888E Making and determination of claims 146 888F The SEGC has power to determine claims 147 888G Allowing a claim does not constitute an admission of any other liability 147 888H Claimant may apply to Court if claim disallowed 147 888I Non-NGF property of the SEGC not available to meet claims 148 888J The SEGC may enter into contracts of insurance or indemnity 148 888K NGF may be used to acquire financial products to be transferred as compensation 149 Subdivision C-The NGF 149 889A Continuation of the National Guarantee Fund 149 889B Compensation to be provided out of the NGF 149 889C The SEGC to keep the NGF 149 889D What the NGF consists of 149 889E Power to borrow etc. for purposes of the NGF 150 889F Money borrowed and paid to the SEGC 151 889G Money borrowed and not paid to the SEGC 151 889H Payments out of the NGF 151 889I Minimum amount of the NGF 152 889J Levy by the SEGC 152 889K Levy by market operator 154 Subdivision D-The SEGC 156 890A Minister to nominate the SEGC 156 890B The SEGC's functions and powers 157 890C Delegation 157 890D Operating rules of the SEGC 158 890E Legal effect of the SEGC's operating rules 158 890F Enforcement of the SEGC's operating rules 158 890G Changing the SEGC's operating rules 158 890H Disallowance of changes to the SEGC's operating rules 159 Subdivision E-Other provisions relating to compensation under this Division 159 891A Payment out of the NGF to prescribed body with arrangements covering clearing and settlement facility support 159 891B Markets operated by bodies corporate that become members of the SEGC-regulations may deal with transitional provisions and other matters 160 891C Regulations may make different provision in respect of different markets etc. 160 Division 5-Provisions common to both kinds of compensation arrangements 161 892A Definitions 161 892B How regulated funds are to be kept 161 892C Money in regulated funds may be invested 162 892D Powers of relevant authority to require production or delivery of documents or statements 163 892E Power to require assistance for purpose of dealing with a claim 164 892F Relevant authority's right of subrogation if compensation is paid 165 892G Excess money in compensation funds 165 892H Accounting and reporting for regulated funds 165 892I Division 3 arrangements-reporting in situations where compensation does not come out of a regulated fund 167 892J Regulations may provide for qualified privilege in respect of certain matters 167 892K Risk assessment report 167 Division 6-Miscellaneous 169 893A Exemptions and modifications by regulations 169 Part 7.6-Licensing of providers of financial services 170 Division 1-Preliminary 170 910A Definitions 170 Division 2-Requirement to be licensed or authorised 171 911A Need for an Australian financial services licence 171 911B Providing financial services on behalf of a person who carries on a financial services business 176 911C Prohibition on holding out 177 911D When a financial services business is taken to be carried on in this jurisdiction 178 Division 3-Obligations of financial services licensees 179 912A General obligations 179 912B Compensation arrangements if financial services provided to persons as retail clients 180 912C Direction to provide a statement 181 912CA Regulations may require information to be provided 182 912D Obligation to notify ASIC of certain matters 182 912E Surveillance checks by ASIC 184 912F Obligation to cite licence number in documents 184 Division 4-Australian financial services licences 185 Subdivision A-How to get a licence 185 913A Applying for a licence 185 913B When a licence may be granted 185 913C Licence numbers 187 Subdivision B-The conditions on the licence 187 914A The conditions on the licence 187 Subdivision C-When a licence can be varied, suspended or cancelled 189 915A Varying licences 189 915B Immediate suspension or cancellation 189 915C Suspension or cancellation after offering a hearing 191 915D Effect of suspension 192 915E Revocation of suspension 192 915F Date of effect and publication of cancellation or suspension 192 915G Statement of reasons 193 915H ASIC may allow licence to continue in effect 193 915I Special procedures for APRA-regulated bodies 193 915J Variation, suspension and cancellation only under this Subdivision 194 Division 5-Authorised representatives 195 916A How representatives are authorised 195 916B Sub-authorisations 195 916C Authorised representative of 2 or more licensees 196 916D Licensees cannot authorise other licensees 197 916E Licensees acting under a binder 197 916F Obligation to notify ASIC etc. about authorised representatives 198 916G ASIC may give licensee information about representatives 199 Division 6-Liability of financial services licensees for representatives 202 917A Application of Division 202 917B Responsibility if representative of only one licensee 203 917C Representatives of multiple licensees 203 917D Exception if lack of authority is disclosed to client 204 917E Responsibility extends to loss or damage suffered by client 204 917F Effect of Division 205 Division 8-Banning or disqualification of persons from providing financial services 206 Subdivision A-Banning orders 206 920A ASIC's power to make a banning order 206 920B What is a banning order? 206 920C Effect of banning orders 207 920D Variation or cancellation of banning orders 207 920E Date of effect and publication of banning order, variation or cancellation 208 920F Statement of reasons 208 Subdivision B-Disqualification by the Court 209 921A Disqualification by the Court 209 Division 9-Registers relating to financial services 210 922A Registers relating to financial services 210 922B Inspection of Registers 210 Division 10-Restrictions on use of terminology 211 923A Restriction on use of certain words or expressions 211 923B Restriction on use of certain words or expressions unless authorised in licence conditions 213 Division 11-Agreements with unlicensed persons relating to the provision of financial services 216 Subdivision A-Agreements affected 216 924A Agreements with certain unlicensed persons 216 Subdivision B-Effect on agreements 216 925A Client may give notice of rescission 216 925B Effect of notice under section 925A 217 925C Client may apply to Court for partial rescission 217 925D Court may make consequential orders 218 925E Agreement unenforceable against client 218 925F Non-licensee not entitled to recover commission 219 925G Onus of establishing non-application of section 925E or 925F 219 925H Client may recover commission paid to non-licensee 219 925I Remedies under this Division additional to other remedies 220 Division 12-Miscellaneous 221 926A Exemptions and modifications by ASIC 221 926B Exemptions and modifications by regulations 222 Part 7.7-Financial services disclosure 223 Division 1-Preliminary 223 940A How Part applies if a financial services licensee is acting as authorised representative 223 940B What if there is no reasonable opportunity to give a document, information or statement required by this Part? 223 940C How documents, information and statements are to be given 224 940D General approach to offence provisions 226 Division 2-Person provided with financial service as retail client to be given a Financial Services Guide 227 Subdivision A-Requirement for a Financial Services Guide to be given 227 941A Obligation on financial services licensee to give a Financial Services Guide if financial service provided to person as a retail client 227 941B Obligation on authorised representative to give a Financial Services Guide if financial service provided to person as a retail client 227 941C Situations in which a Financial Services Guide is not required 228 941D Timing of giving Financial Services Guide 229 941E Information must be up to date 230 941F Obligation to give updated Financial Services Guide 230 Subdivision B-Content and authorisation of Financial Services Guide 231 942A Title of Financial Services Guide 231 942B Financial Services Guide given by financial services licensee-main requirements 231 942C Financial Services Guide given by authorised representative-main requirements 234 942D Financial Services Guide may consist of 2 or more separate documents given at same time 237 942DA Combining a Financial Services Guide and a Product Disclosure Statement in a single document 239 942E Altering a Financial Services Guide after its preparation and before giving it to a person 239 Subdivision C-Supplementary Financial Services Guides 240 943A What a Supplementary Financial Services Guide is 240 943B Title of Supplementary Financial Services Guide 240 943C Form of Supplementary Financial Services Guide 240 943D Effect of giving a person a Supplementary Financial Services Guide 241 943E Situation in which only a Supplementary Financial Services Guide need be given 241 943F Altering a Supplementary Financial Services Guide after its preparation and before giving it to a person 241 Division 3-Additional requirements for personal advice provided to a retail client 243 Subdivision A-When this Division applies 243 944A Situation in which Division applies 243 Subdivision B-Requirements relating to basis of advice 243 945A Requirement to have a reasonable basis for the advice 243 945B Obligation to warn client if advice based on incomplete or inaccurate information 244 Subdivision C-Requirement for a Statement of Advice to be given 245 946A Obligation to give client a Statement of Advice 245 946AA Small investments-Statement of Advice not required 245 946B Other situations in which a Statement of Advice is not required 247 946C Timing of giving Statement of Advice 251 Subdivision D-Content of Statement of Advice 252 947A Title of Statement of Advice 252 947B Statement of Advice given by financial services licensee- main requirements 252 947C Statement of Advice given by authorised representative- main requirements 254 947D Additional requirements when advice recommends replacement of one product with another 256 947E Statement of Advice not to be combined with Financial Services Guide or Product Disclosure Statement 257 Subdivision E-Other matters 257 948A Qualified privilege if providing entity complies with this Division 257 Division 4-Other disclosure requirements 259 949A General advice provided to retail client-obligation to warn client that advice does not take account of client's objectives, financial situation or needs 259 949B Regulations may impose disclosure requirements in certain situations 260 Division 6-Miscellaneous 262 951A Part cannot be contracted out of 262 951B Exemptions and modifications by ASIC 262 951C Exemptions and modifications by regulations 263 Division 7-Enforcement 264 Subdivision A-Offences 264 952A Overview 264 952B Definitions 264 952C Offence of failing to give a disclosure document or statement 266 952D Offence of giving a disclosure document or statement knowing it to be defective 267 952E Offence of giving a defective disclosure document or statement (whether or not known to be defective) 268 952F Offences of financial services licensee knowingly providing defective disclosure material to an authorised representative 270 952G Offences of financial services licensee providing disclosure material to an authorised representative (whether or not known to be defective) 271 952H Offence of financial services licensee failing to ensure authorised representative gives disclosure documents or statements as required 274 952I Offences if a Financial Services Guide (or Supplementary FSG) does not comply with certain requirements 274 952J Offence if a Statement of Advice does not comply with certain requirements 276 952K Offence if authorised representative gives out unauthorised Financial Services Guide (or Supplementary FSG) 276 952L Offences if financial services licensee or authorised representative becomes aware that a Financial Services Guide (or Supplementary FSG) is defective 277 952M Offence of unauthorised alteration of Financial Services Guide or Supplementary Financial Services Guide 278 Subdivision B-Civil liability 278 953A Definitions 278 953B Civil action for loss or damage 280 953C Additional powers of court to make orders 282 Part 7.8-Other provisions relating to conduct etc. connected with financial products and financial services, other than financial product disclosure 284 Division 1-Preliminary 284 980A Matters covered by this Part 284 980B General approach to offence provisions 284 Division 2-Dealing with clients' money 285 Subdivision A-Money other than loans 285 981A Money to which Subdivision applies 285 981B Obligation to pay money into an account 286 981C Regulations may deal with various matters relating to accounts maintained for the purposes of section 981B 287 981D Money related to derivatives may be used for general margining etc. purposes 287 981E Protection of money from attachment etc. 288 981F Regulations may deal with how money to be dealt with if licensee ceases to be licensed etc. 288 981G Account provider not liable merely because of licensee's contravention 289 981H Money to which Subdivision applies taken to be held in trust 289 Subdivision B-Loan money 289 982A Money to which this Subdivision applies 289 982B Obligation to pay money into an account 290 982C Licensee to give client statement setting out terms of loan etc. 290 982D Permitted use of loan 291 Subdivision C-Powers of Court 291 983A Court may freeze certain accounts 291 983B Interim order freezing accounts 292 983C Duty of person to whom order directed to make full disclosure 292 983D Further orders and directions 293 983E Power of Court to make order relating to payment of money 293 Division 3-Dealing with other property of clients 295 984A Property to which Division applies 295 984B How property to which this Division applies is to be dealt with 295 Division 4-Special provisions relating to insurance 297 985A Definitions etc. 297 985B Status of amounts paid to financial services licensees in respect of contracts of insurance 297 985C Regulations may impose other requirements etc. if financial services licensee is not the insurer 298 985D Financial services licensees etc. not to deal in general insurance products from unauthorised insurers etc. 299 Division 5-Obligations to report 300 986A Reporting in relation to money to which Subdivision A or B of Division 2 applies or property to which Division 3 applies 300 986B Reporting in relation to dealings in derivatives 300 Division 6-Financial records, statements and audit 301 Subdivision A-Preliminary 301 987A Application of Division 301 Subdivision B-Financial records of financial services licensees 301 988A Obligation to keep financial records 301 988B Records to be kept so that profit and loss statements and balance sheet can be prepared and audited 302 988C Language of records 302 988D Location of records 302 988E Particular categories of information to be shown in records 302 988F Regulations may impose additional requirements 303 988G Records taken to be made with licensee's authority 303 Subdivision C-Financial statements of financial services licensees 304 989A Meaning of financial year 304 989B Financial services licensee to prepare and lodge annual profit and loss statement and balance sheet 304 989C Requirements as to contents and applicable accounting principles 304 989CA Audit to be conducted in accordance with auditing standards 305 989D Time of lodgment 305 Subdivision D-Appointment etc. of auditors 306 990A Sections 990B to 990H not to apply to public companies 306 990B Appointment of auditor by licensee 306 990C When a person or firm is ineligible to act as auditor 308 990D Ineligible person or firm must not consent to act or disqualify themselves etc. 308 990E Duration of appointment of auditors 308 990F Removal of auditors 309 990G Resignation of auditors-requirements for resignation 309 990H Resignation of auditors-when resignation takes effect 310 990I Auditor's right of access to records, information etc. 310 990J Auditor's fees and expenses 311 990K Auditor to report on certain matters 311 990L Qualified privilege for auditor etc. 312 Division 7-Other rules about conduct 314 991A Financial services licensee not to engage in unconscionable conduct 314 991B Financial services licensee to give priority to clients' orders 314 991C Regulations may deal with various matters relating to instructions to deal through licensed markets 315 991D Regulations may require records to be kept in relation to instructions to deal on licensed markets and foreign markets 315 991E Obligations of financial services licensee in relation to dealings with non-licensees 316 991F Dealings involving employees of financial services licensees 317 Division 8-Miscellaneous 319 992A Prohibition on hawking of certain financial products 319 992AA Prohibition of hawking of managed investment products 321 992B Exemptions and modifications by ASIC 322 992C Exemptions and modifications by regulations 323 Division 9-Enforcement 324 993A Overview 324 993B Offence of failing to pay client money into an account as required 324 993C Offence of failing to comply with requirements relating to client money account 325 993D Offence of failing to pay loan money into an account as required 325 Part 7.9-Financial product disclosure and other provisions relating to issue, sale and purchase of financial products 326 Division 1-Preliminary 326 1010A Part generally does not apply to securities 326 1010B Part does not apply to financial products not issued in the course of a business 326 1010BA Part does not apply to contribution plans 326 1010C Special provisions about meaning of sale and offer 327 1010D General approach to offence provisions 327 Division 2-Product Disclosure Statements 328 Subdivision A-Preliminary 328 1011A Jurisidictional scope of Division 328 1011B Definitions 328 1011C Treatment of offers of options over financial products 329 Subdivision B-Requirement for a Product Disclosure Statement to be given 329 1012A Obligation to give Product Disclosure Statement-personal advice recommending particular financial product 329 1012B Obligation to give Product Disclosure Statement-situations related to issue of financial products 330 1012C Obligation to give Product Disclosure Statement-offers related to sale of financial products 332 1012D Situations in which Product Disclosure Statement is not required 336 1012DAARights issues for which Product Disclosure Statement is not required 341 1012DA Product Disclosure Statement not required for sale amounting to indirect issue 344 1012E Small scale offerings of managed investment and other prescribed financial products (20 issues or sales in 12 months) 349 1012F Product Disclosure Statement for certain superannuation products may be provided later 351 1012G Product Disclosure Statement may sometimes be provided later 352 1012H Obligation to take reasonable steps to ensure that Product Disclosure Statement is given to person electing to be covered by group financial product 354 1012I Obligation to give employer a Product Disclosure Statement in relation to certain superannuation products and RSA products 354 1012IA Treatment of arrangements under which a person can instruct another person to acquire a financial product 356 1012J Information must be up to date 360 1012K Anti-avoidance determinations 360 Subdivision C-Preparation and content of Product Disclosure Statements 361 1013A Who must prepare Product Disclosure Statement 361 1013B Title of Product Disclosure Statement 362 1013C Product Disclosure Statement content requirements 362 1013D Product Disclosure Statement content-main requirements 364 1013DA Information about ethical considerations etc. 366 1013E General obligation to include other information that might influence a decision to acquire 366 1013F General limitations on extent to which information is required to be included 366 1013FA Information not required to be included in PDS for continuously quoted securities 367 1013G Product Disclosure Statement must be dated 368 1013H Requirements if Product Disclosure Statement states or implies that financial product will be able to be traded 369 1013I Extra requirements if Product Disclosure Statement relates to managed investment products that are ED securities 369 1013J Requirements if Statement has been lodged with ASIC 370 1013K Requirements relating to consents to certain statements 370 1013L Product Disclosure Statement may consist of 2 or more separate documents given at same time 371 1013M Combining a Product Disclosure Statement and a Financial Services Guide in a single document 372 Subdivision D-Supplementary Product Disclosure Statements 372 1014A What a Supplementary Product Disclosure Statement is 372 1014B Title of Supplementary Product Disclosure Statement 373 1014C Form of Supplementary Product Disclosure Statement 373 1014D Effect of giving person a Supplementary Product Disclosure Statement 373 1014E Situation in which only a Supplementary Product Disclosure Statement need be given 373 1014F Application of other provisions in relation to Supplementary Product Disclosure Statements 374 Subdivision DA-Replacement Product Disclosure Statements 374 1014G Application of this Subdivision-stapled securities 374 1014H What a Replacement Product Disclosure Statement is 374 1014J Consequences of lodging a Replacement Product Disclosure Statement 375 1014K Form, content and preparation of Replacement Product Disclosure Statements 375 1014L Giving, lodgment and notice of Replacement Product Disclosure Statements 376 Subdivision E-Other requirements relating to Product Disclosure Statements and Supplementary Product Disclosure Statements 376 1015A Subdivision applies to Product Disclosure Statements and Supplementary Product Disclosure Statements 376 1015B Some Statements must be lodged with ASIC 376 1015C How a Statement is to be given 377 1015D Notice, retention and access requirements for Statement that does not need to be lodged 378 1015E Altering a Statement after its preparation and before giving it to a person 379 Subdivision F-Other rights and obligations related to Product Disclosure Statements 380 1016A Provisions relating to use of application forms 380 1016B If Statement lodged with ASIC, financial product is not to be issued or sold before specified period 384 1016C Minimum subscription condition must be fulfilled before issue or sale 384 1016D Condition about ability to trade on a market must be fulfilled before issue or sale 385 1016E Choices open to person making the offer if disclosure condition not met or Product Disclosure Statement defective 386 1016F Remedies for person acquiring financial product under defective Product Disclosure Document 391 Division 3-Other disclosure obligations of the issuer of a financial product 393 1017A Obligation to give additional information on request 393 1017B Ongoing disclosure of material changes and significant events 395 1017C Information for existing holders of superannuation products and RSA products 397 1017D Periodic statements for retail clients for financial products that have an investment component 401 1017DA Trustees of superannuation entities-regulations may specify additional obligations to provide information 404 1017E Dealing with money received for financial product before the product is issued 405 1017F Confirming transactions 407 1017G Certain product issuers and regulated persons must meet appropriate dispute resolution requirements 413 Division 4-Advertising for financial products 415 1018A Advertising or other promotional material for financial product must refer to Product Disclosure Statement 415 1018B Prohibition on advertising personal offers covered by section 1012E 418 Division 5-Cooling-off periods 419 1019A Situations in which this Division applies 419 1019B Cooling-off period for return of financial product 419 Division 5A-Unsolicited offers to purchase financial products off-market 422 1019C Definitions 422 1019D Offers to which this Division applies 422 1019E How offers are to be made 423 1019F Prohibition on inviting offers to sell 424 1019G Duration and withdrawal of offers 424 1019H Terms of offer cannot be varied 424 1019I Contents of offer document 425 1019J Obligation to update market value 425 1019K Rights if requirements of Division not complied with 427 Division 6-Miscellaneous 430 1020A Offers etc. relating to certain managed investment schemes not to be made in certain circumstances 430 1020B Short selling of securities, managed investment products and certain other financial products 430 1020C ASIC's power to prohibit short selling in certain cases 434 1020D Part cannot be contracted out of 435 1020E Stop orders by ASIC 435 1020F Exemptions and modifications by ASIC 437 1020G Exemptions and modifications by regulations 438 Division 7-Enforcement 440 Subdivision A-Offences 440 1021A Overview 440 1021B Definitions 440 1021C Offence of failing to give etc. a disclosure document or statement 442 1021D Offence of preparer of defective disclosure document or statement giving the document or statement knowing it to be defective 444 1021E Offence of preparer of defective disclosure document or statement giving the document or statement (whether or not known to be defective) 445 1021F Offence of regulated person (other than preparer) giving disclosure document or statement knowing it to be defective 446 1021FA Paragraph 1012G(3)(a) obligation-offences relating to communication of information 446 1021FB Paragraph 1012G(3)(a) obligation-offences relating to information provided by product issuer for communication by another person 447 1021G Offence of financial services licensee failing to ensure authorised representative gives etc. disclosure documents or statements as required 450 1021H Offences if a Product Disclosure Statement (or Supplementary PDS) does not comply with certain requirements 450 1021I Offence of giving disclosure document or statement that has not been prepared by the appropriate person 451 1021J Offences if preparer etc. of disclosure document or statement becomes aware that it is defective 452 1021K Offence of unauthorised alteration of Product Disclosure Statement (or Supplementary PDS) 453 1021L Offences of giving, or failing to withdraw, consent to inclusion of defective statement 454 1021M Offences relating to keeping and providing copies of Product Disclosure Statements (or Supplementary PDSs) 455 1021N Offence of failing to provide additional information requested under section 1017A 456 1021O Offences of issuer or seller of financial product failing to pay money into an account as required 456 1021P Offences relating to offers to which Division 5A applies 457 Subdivision B-Civil liability 459 1022A Definitions 459 1022B Civil action for loss or damage 461 1022C Additional powers of court to make orders 466 Part 7.10-Market misconduct and other prohibited conduct relating to financial products and financial services 467 Division 1-Preliminary 467 1040A Content of Part 467 Division 2-The prohibited conduct (other than insider trading prohibitions) 468 1041A Market manipulation 468 1041B False trading and market rigging-creating a false or misleading appearance of active trading etc. 468 1041C False trading and market rigging-artificially maintaining etc. trading price 470 1041D Dissemination of information about illegal transactions 470 1041E False or misleading statements 471 1041F Inducing persons to deal 472 1041G Dishonest conduct 473 1041H Misleading or deceptive conduct (civil liability only) 473 1041I Civil action for loss or damage for contravention of sections 1041E to 1041H 475 1041J Sections of this Division have effect independently of each other 476 1041K Division applies to certain conduct to the exclusion of State Fair Trading Acts provisions 477 Division 2A-Proportionate liability for misleading and deceptive conduct 478 1041L Application of Division 478 1041M Certain concurrent wrongdoers not to have benefit of apportionment 478 1041N Proportionate liability for apportionable claims 479 1041O Defendant to notify plaintiff of concurrent wrongdoer of whom defendant aware 480 1041P Contribution not recoverable from defendant 480 1041Q Subsequent actions 481 1041R Joining non-party concurrent wrongdoer in the action 481 1041S Application of Division 481 Division 3-The insider trading prohibitions 482 Subdivision A-Preliminary 482 1042A Definitions 482 1042B Application of Division 483 1042C When information is generally available 483 1042D When a reasonable person would take information to have a material effect on price or value of Division 3 financial products 484 1042E Division 3 financial products taken to be able to be traded despite suspensions or section 794D directions 484 1042F Inciting, inducing or encouraging an act or omission constitutes procuring the omission 484 1042G Information in possession of officer of body corporate 485 1042H Information in possession of partner or employee of partnership 485 Subdivision B-The prohibited conduct 486 1043A Prohibited conduct by person in possession of inside information 486 1043B Exception for withdrawal from registered scheme 487 1043C Exception for underwriters 488 1043D Exception for acquisition pursuant to legal requirement 488 1043E Exception for information communicated pursuant to a legal requirement 488 1043F Chinese wall arrangements by bodies corporate 489 1043G Chinese wall arrangements by partnerships etc. 489 1043H Exception for knowledge of person's own intentions or activities 490 1043I Exception for bodies corporate 490 1043J Exception for officers or agents of body corporate 491 1043K Transactions by holder of financial services licence or a representative of the holder of such a licence 491 1043L A specific situation in which a compensation order under section 1317HA may be made 492 1043M Defences to prosecution for an offence 496 1043N Relief from civil liability 497 1043O Powers of Court 498 Division 4-Defences, relief and limits on liability 499 1044A General defence or relief for publishers 499 1044B Limit on liability for misleading or deceptive conduct 499 Division 5-Miscellaneous 501 1045A Exemptions and modifications by regulations 501 Part 7.11-Title and transfer 502 Division 1-Title to certain securities 502 1070A Nature of shares and certain other interests in a company or registered scheme 502 1070B Numbering of shares 503 1070C Matters to be specified in share certificate 504 1070D Loss or destruction of title documents for certain securities 504 Division 2-Transfer of certain securities 507 Subdivision A-General provisions 507 1071A Application of the Subdivision to certain securities 507 1071B Instrument of transfer 507 1071C Occupation need not appear in transfer document, register etc. 509 1071D Registration of transfer at request of transferor 510 1071E Notice of refusal to register transfer 511 1071F Remedy for refusal to register transfer or transmission 511 1071G Certification of transfers 512 1071H Duties of company with respect to issue of certificates 513 Subdivision B-Special provisions for shares 515 1072A Transmission of shares on death (replaceable rule-see section 135) 515 1072B Transmission of shares on bankruptcy (replaceable rule-see section 135) 516 1072C Rights of trustee of estate of bankrupt shareholder 516 1072D Transmission of shares on mental incapacity (replaceable rule-see section 135) 518 1072E Trustee etc. may be registered as owner of shares 519 1072F Registration of transfers (replaceable rule-see section 135) 521 1072G Additional general discretion for directors of proprietary companies to refuse to register transfers (replaceable rule- see section 135) 521 1072H Notices relating to non-beneficial and beneficial ownership of shares 522 Division 3-Transfer of certain securities effected otherwise than through a prescribed CS facility 526 1073A Application of the Division to certain securities 526 1073B Definitions 526 1073C Application of Division to certain bodies as if they were companies 527 1073D Regulations may govern transfer of certain securities 527 1073E ASIC may extend regulations to securities not otherwise covered 529 1073F Operation of this Division and regulations made for its purposes 530 Division 4-Transfer of financial products effected through prescribed CS facility 532 1074A Financial products to which this Division applies 532 1074B Definitions 532 1074C Operating rules of prescribed CS facility may deal with transfer of title 532 1074D Valid and effective transfer if operating rules complied with 533 1074E Regulations may govern transfer of financial products in accordance with operating rules of prescribed CS facility 533 1074F Issuer protected from civil liability for person's contravention of prescribed CS facility's certificate cancellation rules 536 1074G Operation of this Division and regulations made for its purposes 536 Division 5-Exemptions and modifications 538 1075A ASIC's power to exempt and modify 538 Part 7.12-Miscellaneous 540 Division 1-Qualified privilege 540 1100A Qualified privilege for information given to ASIC 540 1100B Qualified privilege for the conduct of market licensees and CS facility licensees 540 1100C Qualified privilege for information given to market licensees and CS facility licensees etc. 542 1100D Extension of protections given by this Division 542 Division 2-Other matters 543 1101A Approved codes of conduct 543 1101B Power of Court to make certain orders 544 1101C Preservation and disposal of records etc. 548 1101D Destruction of records by ASIC 549 1101E Concealing etc. of books 549 1101F Falsification of records 550 1101G Precautions against falsification of records 551 1101GA How Part 9.3 applies to books required to be kept by this Chapter etc. 551 1101H Contravention of Chapter does not generally affect validity of transactions etc. 552 1101I Gaming and wagering laws do not affect validity of contracts relating to financial products 552 1101J Delegation 552 Chapter 8-Mutual recognition of securities offers 554 Part 8.1-Preliminary 554 1200A Definitions 554 Part 8.2-Foreign offers that are recognised in this jurisdiction 556 Division 1-Recognised offers 556 1200B When an offer is a recognised offer 556 1200C Conditions that must be met to be a recognised offer 556 1200D Required documents and information 557 1200E Warning statement 558 Division 2-Effect of a recognised offer 560 1200F Effect of a recognised offer 560 Division 3-Ongoing conditions for recognised offers 562 1200G Offering conditions 562 1200H Address for service condition 565 1200J Dispute resolution condition 566 Division 4-Modification of provisions of this Act 568 1200K Additional operation of section 675 (continuous disclosure) 568 1200L Pre-offer advertising 568 1200M Modification by the regulations 569 Division 5-ASIC's powers in relation to recognised offers 570 1200N Stop orders 570 1200P Ban on making subsequent recognised offers 574 1200Q Offence of breaching an ongoing condition 575 Division 6-Miscellaneous 576 1200R Service of documents 576 Part 8.3-Offers made under foreign recognition schemes 577 1200S Notice to ASIC 577 1200T Extension of this Act to recognised jurisdictions 577 1200U ASIC stop order for advertising in a recognised jurisdiction 578 Chapter 7-Financial services and markets Part 7.1-Preliminary Division 1-Object of Chapter and outline of Chapter 760A Object of Chapter The main object of this Chapter is to promote: (a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and (b) fairness, honesty and professionalism by those who provide financial services; and (c) fair, orderly and transparent markets for financial products; and (d) the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities. 760B Outline of Chapter An outline of this Chapter is set out in the table below. |Part-by-Part outline of Chapter 7 | | |Part..|Covers... | | |. | | |1 |7.1 |definitions of key concepts and of commonly| | | |occurring expressions | |2 |7.2 |licensing of financial markets | | | |other matters relating to financial markets| |3 |7.3 |licensing of clearing and settlement | | | |facilities | | | |other matters relating to clearing and | | | |settlement facilities | |4 |7.4 |limitation on ownership of certain | | | |licensees | | | |individuals who are disqualified from being| | | |involved in certain licensees | |5 |7.5 |compensation regimes for financial markets | |6 |7.6 |licensing of providers of financial | | | |services | | | |other related matters (e.g. restrictions on| | | |use of terminology; agreements with | | | |unlicensed persons relating to provision of| | | |financial services) | |7 |7.7 |disclosure requirements for financial | | | |services licensees and their authorised | | | |representatives | | | |disclosure requirements for certain people | | | |who are not required to be licensed | |8 |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 | |9 |7.9 |financial product disclosure requirements | | | |other requirements relating to issue, sale | | | |and purchase of financial products | |10 |7.10 |market misconduct and other prohibited | | | |conduct relating to financial products and | | | |services | |11 |7.11 |title to, and transfer of, certain | | | |securities and other financial products | |12 |7.12 |qualified privilege in certain situations | | | |other miscellaneous matters | Division 2-Definitions 761A Definitions In this Chapter: able to be traded, in relation to a market, includes (but is not limited to) admitted to quotation on the market. acquire, in relation to a financial product, has a meaning affected by section 761E. arrangement means, subject to section 761B, a contract, agreement, understanding, scheme or other arrangement (as existing from time to time): (a) whether formal or informal, or partly formal and partly informal; and (b) whether written or oral, or partly written and partly oral; and (c) whether or not enforceable, or intended to be enforceable, by legal proceedings and whether or not based on legal or equitable rights. Australian CS facility licence means a licence under section 824B that authorises a person to operate a clearing and settlement facility. Australian financial services licence means a licence under section 913B that authorises a person who carries on a financial services business to provide financial services. Australian market licence means a licence under section 795B that authorises a person to operate a financial market. authorised representative of a financial services licensee means a person authorised in accordance with section 916A or 916B to provide a financial service or financial services on behalf of the licensee. basic deposit product means a deposit product that is a facility in relation to which the following conditions are satisfied: (a) the terms applicable to the facility (the governing terms) do not permit the amount from time to time standing to the credit of the facility to be reduced otherwise than in consequence of one or more of the following: (i) a withdrawal, transfer or debit on the instruction of, or by authority of, the depositor, not being on account of entry fees, exit fees or charges for the management of the funds (but this does not exclude charges for the maintenance of the facility itself); (ii) a payment of charges or duties on deposits into, or withdrawals from, the facility that are payable under a law of the Commonwealth or of a State or Territory; (iii) a payment that a law of the Commonwealth, or of a State or Territory, requires to be made out of the facility; (iv) a payment that an order of a court requires to be made out of the facility; (v) the exercise of a right to combine accounts; (vi) the correction of an error; (vii) any other circumstances specified in regulations made for the purposes of this subparagraph; and (b) any return to be generated for the depositor on the amount from time to time standing to the credit of the facility is an amount that is set out in, or that is calculated by reference to a rate or rates that are set out in, the governing terms; and (c) either: (i) there is no minimum period before which funds cannot be withdrawn or transferred from the facility without a reduction in the return generated for the depositor; or (ii) if there is such a period, it expires on or before the end of the period of 5 years starting on the day on which funds were first deposited in the facility; and (d) unless subparagraph (c)(ii) applies and the period referred to in that subparagraph expires on or before the end of the period of 2 years starting on the day on which funds were first deposited in the facility-funds are able to be withdrawn or transferred from the facility on the instruction of, or by authority of, the depositor: (i) without any prior notice to the ADI that makes the facility available; or (ii) if the ADI that makes the facility available is included in a class of ADIs specified in regulations made for the purposes of this subparagraph-subject to a prior notice requirement that does not exceed the period specified in those regulations in relation to that class of ADIs; whether or not the withdrawal or transfer will attract a reduction in the return generated for the depositor as mentioned in subparagraph (c)(i); and (da) the facility is not an FHSA product; and (e) any other conditions specified in regulations made for the purposes of this paragraph. binder means an authorisation given to a person by a financial services licensee who is an insurer to do either or both of the following: (a) enter into contracts that are risk insurance products on behalf of the insurer as insurer; or (b) deal with and settle, on behalf of the insurer, claims relating to risk insurance products against the insurer as insurer; but does not include an authorisation of a kind referred to in paragraph (a) that is limited to effecting contracts of insurance by way of interim cover unless there is also in existence an authority given by the insurer to the person to enter into, on behalf of the insurer and otherwise than by way of interim cover, contracts of insurance. carried on in this jurisdiction, in relation to a financial services business, has a meaning affected by section 911D. certificate cancellation provisions, in relation to a prescribed CS facility, means the provisions of the facility's operating rules that deal with: (a) the cancellation of documents of title to financial products transferred through the facility; and (b) matters incidental to the cancellation of those documents. class, in relation to financial products or financial services, has a meaning affected by regulations made for the purposes of section 761CA. clearing and settlement facility has the meaning given by Division 6. CS facility licensee means a person who holds an Australian CS facility licence. custodial or depository service that a person provides has the meaning given by section 766E. dealing in a financial product has the meaning given by section 766C (and deal has a corresponding meaning). deposit product means a financial product described in paragraph 764A(1)(i). derivative has the meaning given by section 761D. dispose, in relation to a financial product, includes terminate or close out the legal relationship that constitutes the financial product. disqualified individual means an individual who is disqualified within the meaning given by section 853A. employer-sponsor has the same meaning as in the Superannuation Industry (Supervision) Act 1993. FHSA product means an FHSA (within the meaning of the First Home Saver Accounts Act 2008). financial market has the meaning given by Division 5. financial product has the meaning given by Division 3. Note: References in this Chapter to financial products have effect subject to particular express exclusions for particular purposes-see e.g. sections 1010A and 1074A. financial product advice has the meaning given by section 766B. financial product advice law means: (a) a provision of Chapter 7 that covers conduct relating to the provision of financial product advice (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial product advice; or (b) a provision of Chapter 9 as it applies in relation to a provision referred to in paragraph (a); or (c) a provision of Division 2 of Part 2 of the ASIC Act that covers conduct relating to the provision of financial product advice (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial product advice; or (d) any other Commonwealth, State or Territory legislation that covers conduct relating to the provision of financial product advice (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial product advice. financial service has the meaning given by Division 4. financial services business means a business of providing financial services. Note: The meaning of carry on a financial services business is affected by section 761C. Financial Services Guide means a Financial Services Guide required by section 941A or 941B to be given in accordance with Division 2 of Part 7.7. financial services law means: (a) a provision of this Chapter or of Chapter 5C, 6, 6A, 6B, 6C or 6D; or (b) a provision of Chapter 9 as it applies in relation to a provision referred to in paragraph (a); or (c) a provision of Division 2 of Part 2 of the ASIC Act; or (d) any other Commonwealth, State or Territory legislation that covers conduct relating to the provision of financial services (whether or not it also covers other conduct), but only in so far as it covers conduct relating to the provision of financial services. financial services licensee means a person who holds an Australian financial services licence. foreign exchange contract means a contract: (a) to buy or sell currency (whether Australian or not); or (b) to exchange one currency (whether Australian or not) for another (whether Australian or not). funeral benefit means a benefit that consists of the provision of funeral, burial or cremation services, with or without the supply of goods connected with such services. further market-related advice means advice to which subsection 946B(1) applies. general advice has the meaning given by subsection 766B(4). general insurance product means a financial product described in paragraph 764A(1)(d). holder, in relation to a financial product, means the person to whom the financial product was issued, or if it has (since issue) been disposed of to another person who has not themselves disposed of it, that other person (and hold has a corresponding meaning). insurance product means a financial product described in paragraph 764A(1)(d), (e) or (f). investment life insurance product means a financial product described in paragraph 764A(1)(f). involved in a market licensee or CS facility licensee, or in an applicant for such a licence, has the meaning given by section 853B. issue, in relation to a financial product, has a meaning affected by section 761E. issuer, in relation to a financial product, has a meaning affected by section 761E. kind, in relation to financial products or financial services, has a meaning affected by regulations made for the purposes of section 761CA. licensed CS facility means a clearing and settlement facility the operation of which is authorised by an Australian CS facility licence. licensed market means a financial market the operation of which is authorised by an Australian market licence. life risk insurance product means a financial product described in paragraph 764A(1)(e). listing rules of a financial market, or proposed financial market, means any rules (however described) that are made by the operator of the market, or contained in the operator's constitution, and that deal with: (a) admitting entities to, or removing entities from, the market's official list, whether for the purpose of enabling financial products of those entities to be traded on the market or for other purposes; or (b) the activities or conduct of entities that are included on that list. lodge with ASIC, when used in a provision of this Chapter in relation to which regulations made for the purposes of this definition state that the lodgment is to be in a prescribed form, means lodge with ASIC in a prescribed form. Note: See section 350 for the meaning of lodge in a prescribed form. makes a market for a financial product has the meaning given by section 766D. managed investment product means a financial product described in paragraph 764A(1)(b). market licensee means a person who holds an Australian market licence. operated in this jurisdiction: (a) in relation to a financial market, has a meaning affected by section 791D; and (b) in relation to a clearing and settlement facility, has a meaning affected by section 820D. operating rules: (a) of a clearing and settlement facility, or proposed clearing and settlement facility, means any rules (however described) made by the operator of the facility, or contained in the operator's constitution, that deal with: (i) the activities or conduct of the facility; or (ii) the activities or conduct of persons in relation to the facility; but does not include any such rules that deal with matters in respect of which licensed CS facilities must have written procedures under regulations made for the purposes of subsection 822A(2); or (b) of a financial market, or proposed financial market, means any rules (however described), including the market's listing rules (if any), that are made by the operator of the market, or contained in the operator's constitution, and that deal with: (i) the activities or conduct of the market; or (ii) the activities or conduct of persons in relation to the market; but does not include: (iii) any such rules that deal with matters in respect of which licensed markets must have written procedures under regulations made for the purposes of subsection 793A(2); or (iv) compensation rules within the meaning of Part 7.5. participant: (a) in relation to a clearing and settlement facility, means a person who is allowed to directly participate in the facility under the facility's operating rules and, when used in any of the following provisions, also includes a recognised affiliate in relation to the facility: (i) paragraph 821B(2)(b); (ii) section 822B; (iii) subsection 915F(2); (iv) any other provisions prescribed by regulations made for the purposes of this subparagraph; and (b) in relation to a financial market, means a person who is allowed to directly participate in the market under the market's operating rules and, when used in any of the following provisions, also includes a recognised affiliate in relation to the market: (i) paragraph 792B(2)(b); (ii) section 793B; (iii) section 883A; (iv) subsection 915F(2); (v) paragraphs 923B(3)(a) and (b); (vi) any other provisions prescribed by regulations made for the purposes of this subparagraph. person has a meaning affected by section 761F (which deals with partnerships) and section 761FA (which deals with multiple trustees). personal advice has the meaning given by subsection 766B(3). prescribed CS facility means a licensed CS facility that is prescribed by regulations made for the purposes of this definition. Product Disclosure Statement means a Product Disclosure Statement: (a) required by section 1012A, 1012B, 1012C or 1012I to be given in accordance with Division 2 of Part 7.9; or (b) that section 1012H requires an issuer of a financial product to take reasonable steps to ensure is given to a new group member in accordance with Division 2 of Part 7.9. Note: For the effect of the lodgment of a Replacement Product Disclosure Statement, see section 1014J. provide, in relation to a financial product, has a meaning affected by section 761E. recognised affiliate, in relation to a clearing and settlement facility or a financial market, means a person who is: (a) recognised by the operating rules of the facility or market as a suitably qualified affiliate of the facility or market; and (b) involved in the carrying on of a financial services business (including as an employee, director or in some other capacity). relevant personal circumstances, in relation to advice provided or to be provided to a person in relation to a matter, are such of the person's objectives, financial situation and needs as would reasonably be considered to be relevant to the advice. Replacement Product Disclosure Statement has the meaning given by section 1014H. retail client has the meaning given by sections 761G and 761GA. risk insurance product means a financial product described in paragraph 764A(1)(d) or (e). RSA product means a financial product described in paragraph 764A(1)(h). security means: (a) a share in a body; or (b) a debenture of a body; or (c) a legal or equitable right or interest in a security covered by paragraph (a) or (b); or (d) an option to acquire, by way of issue, a security covered by paragraph (a), (b) or (c); or (e) a right (whether existing or future and whether contingent or not) to acquire, by way of issue, the following under a rights issue: (i) a security covered by paragraph (a), (b), (c) or (d); (ii) an interest or right covered by paragraph 764A(1)(b) or (ba); but does not include an excluded security. In Part 7.11, it also includes a managed investment product. self-managed superannuation fund has the same meaning as in the Superannuation Industry (Supervision) Act 1993. Statement of Advice means a Statement of Advice required by section 946A to be given in accordance with Subdivisions C and D of Division 3 of Part 7.7. superannuation entity has the same meaning as in the Superannuation Industry (Supervision) Act 1993. superannuation product means a financial product described in paragraph 764A(1)(g). Supplementary Financial Services Guide has the meaning given by section 943A. Supplementary Product Disclosure Statement has the meaning given by section 1014A. title document, for a financial product, means a certificate or other document evidencing ownership of the financial product. wholesale client has the meaning given by section 761G. 761B Meaning of arrangement-2 or more arrangements that together form a derivative or other financial product If: (a) an arrangement, when considered by itself, does not constitute a derivative, or some other kind of financial product; and (b) that arrangement, and one or more other arrangements, if they had instead been a single arrangement, would have constituted a derivative or other financial product; and (c) it is reasonable to assume that the parties to the arrangements regard them as constituting a single scheme; the arrangements are, for the purposes of this Part, to be treated as if they together constituted a single arrangement. 761C Meaning of carry on a financial services business In working out whether someone carries on a financial services business, Division 3 of Part 1.2 needs to be taken into account. However, paragraph 21(3)(e) does not apply for the purposes of this Chapter. 761CA Meaning of class and kind of financial products and financial services The regulations may include provisions identifying, or providing for the identification of, what constitutes a class or kind of financial products or financial services for the purposes of a provision or provisions of this Chapter. 761D Meaning of derivative (1) For the purposes of this Chapter, subject to subsections (2), (3) and (4), a derivative is an arrangement in relation to which the following conditions are satisfied: (a) under the arrangement, a party to the arrangement must, or may be required to, provide at some future time consideration of a particular kind or kinds to someone; and (b) that future time is not less than the number of days, prescribed by regulations made for the purposes of this paragraph, after the day on which the arrangement is entered into; and (c) the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following: (i) an asset; (ii) a rate (including an interest rate or exchange rate); (iii) an index; (iv) a commodity. (2) Without limiting subsection (1), anything declared by the regulations to be a derivative for the purposes of this section is a derivative for the purposes of this Chapter. A thing so declared is a derivative despite anything in subsections (3) and (4). (3) Subject to subsection (2), the following are not derivatives for the purposes of this Chapter even if they are covered by the definition in subsection (1): (a) an arrangement in relation to which subparagraphs (i), (ii) and (iii) are satisfied: (i) a party has, or may have, an obligation to buy, and another party has, or may have, an obligation to sell, tangible property (other than Australian or foreign currency) at a price and on a date in the future; and (ii) the arrangement does not permit the seller's obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and (iii) neither usual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller's obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy; but only to the extent that the arrangement deals with that purchase and sale; (b) a contract for the future provision of services; (c) anything that is covered by a paragraph of subsection 764A(1), other than paragraph (c) of that subsection; (d) anything declared by the regulations not to be a derivative for the purposes of this Chapter. (4) Subject to subsection (2), an arrangement under which one party has an obligation to buy, and the other has an obligation to sell, property is not a derivative for the purposes of this Chapter merely because the arrangement provides for the consideration to be varied by reference to a general inflation index such as the Consumer Price Index. 761E Meaning of issued, issuer, acquire and provide in relation to financial products General (1) This section defines when a financial product is issued to a person. It also defines who the issuer of a financial product is. If a financial product is issued to a person: (a) the person acquires the product from the issuer; and (b) the issuer provides the product to the person. Note: Some financial products can also be acquired from, or provided by, someone other than the issuer (e.g. on secondary trading in financial products). Issuing a financial product (2) Subject to this section, a financial product is issued to a person when it is first issued, granted or otherwise made available to a person. (3) Subject to this section, a financial product specified in the table is issued to a person when the event specified for that product occurs: |When particular financial products are | |issued | |Item |Financial |Event | | |product | | |1 |superannuatio|the person becomes a | | |n product |member of the fund | | | |concerned | |2 |RSA product |the account concerned is| | | |opened in the person's | | | |name | |2A |FHSA product |the person becomes the | | | |holder (within the | | | |meaning of the First | | | |Home Saver Accounts Act | | | |2008) of the FHSA | | | |product | |3 |derivative |the person enters into | | | |the legal relationship | | | |that constitutes the | | | |financial product | (3A) For the avoidance of doubt, none of the following are taken to give rise to the issue of a financial product to a person (the client): (a) the client making a further contribution to a superannuation fund of which the client is already a member; (aa) an employer of the client making a further contribution, for the benefit of the client, to a superannuation fund of which the client is already a member; (b) the client making a further deposit into an RSA maintained in the client's name; (ba) the client making a further contribution (within the meaning of the First Home Saver Accounts Act 2008) into an FHSA product maintained in the client's name; (c) the client making a further payment under a life insurance investment product; (d) the client making a further deposit into a deposit product; (e) the client engaging in conduct specified in regulations made for the purposes of this paragraph in relation to a financial product already held by the client. Issuer of a financial product (4) Subject to this section, the issuer, in relation to a financial product issued to a person (the client), is the person responsible for the obligations owed, under the terms of the facility that is the product: (a) to, or to a person nominated by, the client; or (b) if the product has been transferred from the client to another person and is now held by that person or another person to whom it has subsequently been transferred-to, or to a person nominated by, that person or that other person. Note: For example, the issuer of a direct debit facility is the financial institution with which the account to be debited is held, rather than the persons to whom payments can be made using the facility. (5) Subject to subsection (7), each person who is a party to a financial product that: (a) is a derivative; and (b) is not entered into, or acquired, on a financial market; is taken to be an issuer of the product. Note 1: Under paragraph (1)(a), each person who is a party to the derivative will also acquire the financial product at the time of its issue as specified in subsection (3). Note 2: Although each party to the derivative is an issuer, whether any particular party has disclosure or other obligations under this Chapter will depend on the circumstances (e.g. whether the issue occurs in the course of a business of issuing financial products and whether any of the other parties is a retail client). (6) Subject to subsection (7), the issuer of a financial product that: (a) is a derivative; and (b) is entered into, or acquired, on a financial market; is taken to be: (c) if the product is entered into, or acquired, on the market through an arrangement made by a financial services licensee acting on behalf of another person-the financial services licensee; or (d) if the product is entered into, or acquired, on the market through an arrangement made by an authorised representative of a financial services licensee acting on behalf of another person (not being the licensee)-the financial services licensee; or (e) if neither paragraph (c) nor (d) applies-the market operator. (7) The regulations may make provision determining all or any of the following for the purposes of this Chapter: (a) the meaning of issue (and/or related parts of speech, including issuer) in relation to a class of financial products; (b) the meaning of acquire (and/or related parts of speech) in relation to a class of financial products; (c) the meaning of provide (and/or related parts of speech) in relation to a class of financial products. Regulations made for the purposes of this subsection have effect despite anything else in this section. 761F Meaning of person-generally includes a partnership (1) This Chapter applies to a partnership as if the partnership were a person, but it applies with the following changes: (a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners; (b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who: (i) aided, abetted, counselled or procured the relevant act or omission; or (ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner). (2) For the purposes of this Chapter, a change in the composition of a partnership does not affect the continuity of the partnership. (3) Subsections (1) and (2) have effect subject to: (a) an express or implied contrary intention in a provision or provisions of this Chapter; and (b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions. 761FA Meaning of person-generally includes multiple trustees (1) This section applies in relation to a trust while the trust continues to have: (a) 2 or more trustees; or (b) a single trustee who was a trustee of the trust at a time when it had 2 or more trustees. (2) Subject to subsections (3) and (4), during a period while this section applies to a trust, this Chapter applies to the trust as if the trustee or trustees of the trust from time to time during the period constituted a single legal entity (the notional entity) that remained the same for the duration of that period. Note: So, for example, while this section applies to a trust, a licence granted under this Chapter to the trustees of the trust will continue in force, despite a change in the persons who are the trustees. (3) During any period or part of a period while this section applies to a trust and the trust has 2 or more trustees, this Chapter applies to the trustees as mentioned in subsection (2), but it applies with the following changes: (a) obligations that would be imposed on the notional entity are imposed instead on each trustee, but may be discharged by any of the trustees; (b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each trustee who: (i) aided, abetted, counselled or procured the relevant act or omission; or (ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the trustee). (4) During any period or part of a period while this section applies to a trust and the trust has only one trustee, this Chapter applies to the trustee as mentioned in subsection (2), but it applies with the following changes: (a) obligations that would be imposed on the notional entity are imposed instead on that single trustee; (b) any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the notional entity is taken (whether for the purposes of criminal or civil liability) to have been a contravention by that single trustee. (5) Subsections (2), (3) and (4) have effect subject to: (a) an express or implied contrary intention in a provision or provisions of this Chapter; and (b) the regulations, which may exclude or modify the effect of those subsections in relation to specified provisions. 761G Meaning of retail client and wholesale client Providing a financial product or financial service to a person as a retail client (1) For the purposes of this Chapter, a financial product or a financial service is provided to a person as a retail client unless subsection (5), (6) or (7), or section 761GA, provides otherwise. Note: The references in this section to providing a financial product to a person are not to be taken to imply that the provision of a financial product is not also the provision of a financial service (see the meaning of dealing in section 766C). Acquiring a financial product or financial service as a retail client (2) For the purposes of this Chapter, a person to whom a financial product or financial service is provided as a retail client is taken to acquire the product or service as a retail client. Disposing of a financial product as a retail client (3) If a financial product is provided to a person as a retail client, any subsequent disposal of all or part of that product by the person is, for the purposes of this Chapter, a disposal by the person as a retail client. Wholesale clients (4) For the purposes of this Chapter, a financial product or a financial service is provided to, or acquired by, a person as a wholesale client if it is not provided to, or acquired by, the person as a retail client. General insurance products (5) For the purposes of this Chapter, if a financial product is, or a financial service provided to a person relates to, a general insurance product, the product or service is provided to the person as a retail client if: (a) either: (i) the person is an individual; or (ii) the insurance product is or would be for use in connection with a small business (see subsection (12)); and (b) the general insurance product is: (i) a motor vehicle insurance product (as defined in the regulations); or (ii) a home building insurance product (as defined in the regulations); or (iii) a home contents insurance product (as defined in the regulations); or (iv) a sickness and accident insurance product (as defined in the regulations); or (v) a consumer credit insurance product (as defined in the regulations); or (vi) a travel insurance product (as defined in the regulations); or (vii) a personal and domestic property insurance product (as defined in the regulations); or (viii) a kind of general insurance product prescribed by regulations made for the purposes of this subparagraph. In any other cases, the provision to a person of a financial product that is, or a financial service that relates to, a general insurance product does not constitute the provision of a financial product or financial service to the person as a retail client. Superannuation products and RSA products (6) For the purposes of this Chapter: (a) if a financial product provided to a person is a superannuation product or an RSA product, the product is provided to the person as a retail client; and (aa) however, if a trustee of a pooled superannuation trust (within the meaning of the Superannuation Industry (Supervision) Act 1993) provides a financial product that is an interest in the trust to a person covered by subparagraph (c)(i), the product is not provided to the person as a retail client; and (b) if a financial service (other than the provision of a financial product) provided to a person who is not covered by subparagraph (c)(i) or (ii) relates to a superannuation product or an RSA product, the service is provided to the person as a retail client; and (c) if a financial service (other than the provision of a financial product) provided to a person who is: (i) the trustee of a superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme (within the meaning of the Superannuation Industry (Supervision) Act 1993) that has net assets of at least $10 million; or (ii) an RSA provider (within the meaning of the Retirement Savings Accounts Act 1997); relates to a superannuation product or an RSA product, that does not constitute the provision of a financial service to the person as a retail client. Other kinds of financial product (7) For the purposes of this Chapter, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the product or service is provided to the person as a retail client unless one or more of the following paragraphs apply: (a) the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of this paragraph as being applicable in the circumstances (but see also subsection (10)); or (b) the financial product, or the financial service, is provided for use in connection with a business that is not a small business (see subsection (12)); (c) the financial product, or the financial service, is not provided for use in connection with a business, and the person who acquires the product or service gives the provider of the product or service, before the provision of the product or service, a copy of a certificate given within the preceding 6 months by a qualified accountant (as defined in section 9) that states that the person: (i) has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or (ii) has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year; (d) the person is a professional investor. Offence proceedings-defendant bears evidential burden in relation to matters referred to in paragraphs (7)(a) to (d) (8) In a prosecution for an offence based on a provision of this Chapter, a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) as if those matters were exceptions for the purposes of subsection 13.3(3) of the Criminal Code. Other proceedings relating to subsection (7) products-presumption in non-criminal proceedings of retail client unless contrary established (9) If: (a) it is alleged in a proceeding under this Chapter (not being a prosecution for an offence), or in any other proceeding (not being a prosecution for an offence) in respect of a matter arising under this Chapter, that a particular financial product or financial service was provided to a person as a retail client; and (b) the product or the service is one to which subsection (7) applies; it is presumed that the product or service was provided to the person as a retail client unless the contrary is established. Note 1: There is no such presumption in relation to the provision of a product or service that is or relates to a general insurance product, a superannuation product or an RSA product. Whether or not such a product, or a service relating to such a product, was provided to a person as a retail client is to be resolved as provided in subsection (5) or (6), as the case requires. Note 2: In criminal proceedings, a defendant bears an evidential burden in relation to the matters in paragraphs (7)(a) to (d) (see subsection (8)). Regulations and paragraph (7)(a) (10) In addition to specifying an amount or amounts for the purposes of paragraph (7)(a), the regulations may do either or both of the following: (a) deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products; (b) modify the way in which that paragraph applies in particular circumstances. Regulations and paragraph (7)(c) (10A) In addition to specifying amounts for the purposes of subparagraphs (7)(c)(i) and (ii), the regulations may do either or both of the following: (a) deal with how net assets referred to in subparagraph (7)(c)(i) are to be determined and valued, either generally or in specified circumstances; (b) deal with how gross income referred to in subparagraph (7)(c)(ii) is to be calculated, either generally or in specified circumstances. What happens if a package of general insurance products and other kinds of financial products is provided? (11) If: (a) either: (i) in a single transaction, 2 or more financial products are provided to a person; or (ii) a single financial service provided to a person relates to 2 or more financial products; and (b) one or more, but not all, of the financial products are general insurance products; subsection (5) applies to the transaction or service so far as it relates to the general insurance products, and subsection (6) or (7), as the case requires, applies to the transaction or service so far as it relates to other financial products. Definition (12) In this section: small business means a business employing less than: (a) if the business is or includes the manufacture of goods-100 people; or (b) otherwise-20 people. 761GA Meaning of retail client-sophisticated investors For the purposes of this Chapter, a financial product, or a financial service in relation to a financial product, is not provided by one person to another person as a retail client if: (a) the first person (the licensee) is a financial services licensee; and (b) the financial product is not a general insurance product, a superannuation product or an RSA product; and (c) the financial product or service is not provided for use in connection with a business; and (d) the licensee is satisfied on reasonable grounds that the other person (the client) has previous experience in using financial services and investing in financial products that allows the client to assess: (i) the merits of the product or service; and (ii) the value of the product or service; and (iii) the risks associated with holding the product; and (iv) the client's own information needs; and (v) the adequacy of the information given by the licensee and the product issuer; and (e) the licensee gives the client before, or at the time when, the product or advice is provided a written statement of the licensee's reasons for being satisfied as to those matters; and (f) the client signs a written acknowledgment before, or at the time when, the product or service is provided that: (i) the licensee has not given the client a Product Disclosure Statement; and (ii) the licensee has not given the client any other document that would be required to be given to the client under this Chapter if the product or service were provided to the client as a retail client; and (iii) the licensee does not have any other obligation to the client under this Chapter that the licensee would have if the product or service were provided to the client as a retail client. 761H References to this Chapter include references to regulations or other instruments made for the purposes of this Chapter (1) A reference in a provision of this Chapter to this Chapter, or to a particular provision or group of provisions of this Chapter, includes (unless a contrary intention appears) a reference to regulations, or other instruments, made for the purposes of this Chapter, or for the purposes of that provision or any of those provisions, as the case requires. (2) Subsection (1) has effect as if provisions in Part 10.2 (transitional provisions) that relate to matters dealt with in this Chapter were part of this Chapter. Division 3-What is a financial product? Subdivision A-Preliminary 762A Overview of approach to defining what a financial product is General definition (1) Subdivision B sets out a general definition of financial product. Subject to subsections (2) and (3), a facility is a financial product if it falls within that definition. Specific inclusions (2) Subdivision C identifies, or provides for the identification of, kinds of facilities that, subject to subsection (3), are financial products (whether or not they are within the general definition). Overriding exclusions (3) Subdivision D identifies, or provides for the identification of, kinds of facilities that are not financial products. These facilities are not financial products: (a) even if they are within the general definition; and (b) even if they are within a class of facilities identified as mentioned in subsection (2). 762B What if a financial product is part of a broader facility? If a financial product is a component of a facility that also has other components, this Chapter, in applying to the financial product, only applies in relation to the facility to the extent it consists of the component that is the financial product. Note: So, e.g., Part 7.9 does not require disclosures to be made in relation to those other components. 762C Meaning of facility In this Division: facility includes: (a) intangible property; or (b) an arrangement or a term of an arrangement (including a term that is implied by law or that is required by law to be included); or (c) a combination of intangible property and an arrangement or term of an arrangement. Note: 2 or more arrangements may be taken to constitute a single arrangement-see section 761B. Subdivision B-The general definition 763A General definition of financial product (1) For the purposes of this Chapter, a financial product is a facility through which, or through the acquisition of which, a person does one or more of the following: (a) makes a financial investment (see section 763B); (b) manages financial risk (see section 763C); (c) makes non-cash payments (see section 763D). This has effect subject to section 763E. (2) For the purposes of this Chapter, a particular facility that is of a kind through which people commonly make financial investments, manage financial risks or make non-cash payments is a financial product even if that facility is acquired by a particular person for some other purpose. (3) A facility does not cease to be a financial product merely because: (a) the facility has been acquired by a person other than the person to whom it was originally issued; and (b) that person, in acquiring the product, was not making a financial investment or managing a financial risk. 763B When a person makes a financial investment For the purposes of this Chapter, a person (the investor) makes a financial investment if: (a) the investor gives money or money's worth (the contribution) to another person and any of the following apply: (i) the other person uses the contribution to generate a financial return, or other benefit, for the investor; (ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); (iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit. Note 1: Examples of actions that constitute making a financial investment under this subsection are: (a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or (b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme). Note 2: Examples of actions that do not constitute making a financial investment under this subsection are: (a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or (b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment). 763C When a person manages financial risk For the purposes of this Chapter, a person manages financial risk if they: (a) manage the financial consequences to them of particular circumstances happening; or (b) avoid or limit the financial consequences of fluctuations in, or in the value of, receipts or costs (including prices and interest rates). Note 1: Examples of actions that constitute managing a financial risk are: (a) taking out insurance; or (b) hedging a liability by acquiring a futures contract or entering into a currency swap. Note 2: An example of an action that does not constitute managing a financial risk is employing a security firm (while that is a way of managing the risk that thefts will happen, it is not a way of managing the financial consequences if thefts do occur). 763D When a person makes non-cash payments (1) For the purposes of this Chapter, a person makes non-cash payments if they make payments, or cause payments to be made, otherwise than by the physical delivery of Australian or foreign currency in the form of notes and/or coins. Note: Examples of actions that constitute making non-cash payments are: (a) making payments by means of a facility for direct debit of a deposit account; or (b) making payments by means of a facility for the use of cheques; or (c) making payments by means of a purchased payment facility within the meaning of the Payment Systems (Regulation) Act 1998, such as a smart card; or (d) making payments by means of traveller's cheques (whether denominated in Australian or foreign currency). (2) For the purposes of this Chapter, the following are not making non-cash payments, even if they might otherwise be covered by subsection (1): (a) making payments by means of a facility in relation to which one of the following applies: (i) there is only one person to whom payments can be made by means of the facility; (ii) the facility is, or is of a kind, specified in the regulations as being a facility that is not to be covered by this section because of restrictions relating to the number of people to whom payments can be made by means of the facility, or relating to the number of persons who can use the facility to make payments; (b) making payments by means of: (i) a letter of credit from a financial institution; or (ii) a cheque drawn by a financial institution on itself; or (iii) a guarantee given by a financial institution. 763E What if a financial product is only incidental? (1) If: (a) something (the incidental product) that, but for this section, would be a financial product because of this Subdivision is: (i) an incidental component of a facility that also has other components; or (ii) a facility that is incidental to one or more other facilities; and (b) it is reasonable to assume that the main purpose of: (i) if subparagraph (a)(i) applies-the facility referred to in that subparagraph, when considered as a whole; or (ii) if subparagraph (a)(ii) applies-the incidental product, and the other facilities referred to in that subparagraph, when considered as a whole; is not a financial product purpose; the incidental product is not a financial product because of this Subdivision (however, it may still be a financial product because of Subdivision C). (2) In this section: financial product purpose means a purpose of: (a) making a financial investment; or (b) managing financial risk; or (c) making non-cash payments. Subdivision C-Specific inclusions 764A Specific things that are financial products (subject to Subdivision D) (1) Subject to Subdivision D, the following are financial products for the purposes of this Chapter: (a) a security; (b) any of the following in relation to a registered scheme: (i) an interest in the scheme; (ii) a legal or equitable right or interest in an interest covered by subparagraph (i); (iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii); (ba) any of the following in relation to a managed investment scheme that is not a registered scheme, other than a scheme (whether or not operated in this jurisdiction) in relation to which none of paragraphs 601ED(1)(a), (b) and (c) are satisfied: (i) an interest in the scheme; (ii) a legal or equitable right or interest in an interest covered by subparagraph (i); (iii) an option to acquire, by way of issue, an interest or right covered by subparagraph (i) or (ii); (c) a derivative; (d) a contract of insurance that is not a life policy, or a sinking fund policy, within the meaning of the Life Insurance Act 1995, but not including such a contract of insurance: (i) to the extent that it provides for a benefit to be provided by an association of employees that is an organisation within the meaning of the Workplace Relations Act 1996 for a member of the organisation or a dependant of a member; or (ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995; or (iii) to the extent that it provides for the provision of a funeral benefit; or (iv) issued by an employer to an employee of the employer; (e) a life policy, or a sinking fund policy, within the meaning of the Life Insurance Act 1995, that is a contract of insurance, but not including such a policy: (i) to the extent that it provides for a benefit to be provided by an association of employees that is an organisation within the meaning of the Workplace Relations Act 1996 for a member of the organisation or a dependant of a member; or (ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995; or (iii) to the extent that it provides for the provision of a funeral benefit; or (iv) issued by an employer to an employee of the employer; (f) a life policy, or a sinking fund policy, within the meaning of the Life Insurance Act 1995, that is not a contract of insurance, but not including such a policy: (i) to the extent that it provides for a benefit to be provided by an association of employees that is an organisation within the meaning of the Workplace Relations Act 1996 for a member of the organisation or a dependant of a member; or (ii) to the extent that it provides for benefits, pensions or payments described in paragraph 11(3)(c) of the Life Insurance Act 1995; or (iii) to the extent that it provides for the provision of a funeral benefit; or (iv) issued by an employer to an employee of the employer; (g) a superannuation interest within the meaning of the Superannuation Industry (Supervision) Act 1993; (h) an RSA (retirement savings account) within the meaning of the Retirement Savings Accounts Act 1997; (ha) an FHSA (short for first home saver account) within the meaning of the First Home Saver Accounts Act 2008; (i) any deposit-taking facility made available by an ADI (within the meaning of the Banking Act 1959) in the course of its banking business (within the meaning of that Act), other than an RSA (RSAs are covered by paragraph (h)); (j) a debenture, stock or bond issued or proposed to be issued by a government; (k) a foreign exchange contract that is