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CORPORATIONS ACT 2001 - SECT 1020B Prohibition of certain short sales of securities, managed investment products, foreign passport fund products and certain other financial products

CORPORATIONS ACT 2001 - SECT 1020B

Prohibition of certain short sales of securities, managed investment products, foreign passport fund products and certain other financial products

  (1)   In this Act:

" section 1020B products" means:

  (a)   securities; or

  (b)   managed investment products; or

  (ba)   foreign passport fund products; or

  (c)   financial products referred to in paragraph   764A(1)(j); or

  (d)   financial products of any other kind prescribed by regulations made for the purposes of this definition.

  (2)   Subject to this section and the regulations, a person must only, in this jurisdiction, sell section   1020B products to a buyer if, at the time of the sale:

  (a)   the person has or, if the person is selling on behalf of another person, that other person has; or

  (b)   the person believes on reasonable grounds that the person has, or if the person is selling on behalf of another person, that other person has;

a presently exercisable and unconditional right to vest the products in the buyer.

Note:   Failure to comply with this subsection is an offence (see subsection   1311(1)).

  (3)   For the purposes of subsection   (2):

  (a)   a person who, at a particular time, has a presently exercisable and unconditional right to have section   1020B products vested in the person, or in accordance with the directions of the person, has at that time a presently exercisable and unconditional right to vest the products in another person; and

  (b)   a right of a person to vest section   1020B products in another person is not conditional merely because the products are subject to a security interest in favour of another person to secure the repayment of money.

  (4)   Subsection   (2) does not apply in relation to a sale of section   1020B products by a person who, before the time of sale, has entered into a contract to buy those products and who has a right to have those products vested in the person that is conditional only upon all or any of the following:

  (a)   payment of the consideration in respect of the purchase;

  (b)   the receipt by the person of a proper instrument of transfer in respect of the products;

  (c)   the receipt by the person of the documents that are, or are documents of title to, the products.

  (7)   For the purposes of this section, a person who:

  (a)   purports to sell section   1020B products; or

  (b)   offers to sell section   1020B products; or

  (c)   holds himself, herself or itself out as entitled to sell section   1020B products; or

  (d)   instructs a financial services licensee to sell section   1020B products;

is taken to sell the products.

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