CORPORATIONS ACT 2001 - SECT 742 Exemptions and modifications by regulations

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CORPORATIONS ACT 2001 - SECT 742

Exemptions and modifications by regulations

(a) exempt a person or class of persons from all or specified provisions of this Chapter; or

(b) exempt a security or class of securities from all or specified provisions of this Chapter; or

(c) provide that this Chapter applies as if specified provisions were omitted, modified or varied as specified in the regulations.

(2) Without limiting subsection (1), regulations made for the purposes of this section may:

(a) declare that provisions of this Chapter are modified so that they apply (with or without further modifications) in relation to persons, securities, financial products or situations to which they would not otherwise apply; or

(b) declare that provisions of this Chapter are modified so that they apply (whether with or without further modifications) in a way that changes the person by whom or to whom a document or information is required to be given by a provision of this Chapter.

(3) For the purpose of this section, the provisions of this Chapter include:

(a) definitions in this Act, or in the regulations, as they apply to references in this Chapter; and

(b) any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Chapter.

Corporations Act 2001

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 .............................................................. 150

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 ......................................................................... 153

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 ............................................. 159

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. 161

Division 5--Provisions common to both kinds of compensation arrangements 162

892A..... Definitions ...................................................................................... 162

892B..... How regulated funds are to be kept ................................................ 162

892C..... Money in regulated funds may be invested .................................... 163

892D..... Powers of relevant authority to require production or delivery of documents or statements 164

892E...... Power to require assistance for purpose of dealing with a claim .... 165

892F...... Relevant authority's right of subrogation if compensation is paid 166

892G..... Excess money in compensation funds ............................................ 166

892H..... Accounting and reporting for regulated funds ................................ 166

892I....... Division 3 arrangements--reporting in situations where compensation does not come out of a regulated fund 168

892J...... Regulations may provide for qualified privilege in respect of certain matters 168

892K..... Risk assessment report ................................................................... 168

Division 6--Miscellaneous 170

893A..... Exemptions and modifications by regulations ................................ 170

Part 7.6--Licensing of providers of financial services 171

Division 1--Preliminary 171

910A..... Definitions ...................................................................................... 171

Division 2--Requirement to be licensed or authorised 172

911A..... Need for an Australian financial services licence ............................ 172

911B..... Providing financial services on behalf of a person who carries on a financial services business 177

911C..... Prohibition on holding out .............................................................. 178

911D..... When a financial services business is taken to be carried on in this jurisdiction 179

Division 3--Obligations of financial services licensees 180

912A..... General obligations ......................................................................... 180

912B..... Compensation arrangements if financial services provided to persons as retail clients 181

912C..... Direction to provide a statement .................................................... 182

912CA.. Regulations may require information to be provided ..................... 183

912D..... Obligation to notify ASIC of certain matters ................................. 183

912E...... Surveillance checks by ASIC .......................................................... 185

912F...... Obligation to cite licence number in documents ............................. 185

Division 4--Australian financial services licences 186

Subdivision A--How to get a licence 186

913A..... Applying for a licence .................................................................... 186

913B..... When a licence may be granted ....................................................... 186

913C..... Licence numbers ............................................................................. 188

Subdivision B--The conditions on the licence 188

914A..... The conditions on the licence ......................................................... 188

Subdivision C--When a licence can be varied, suspended or cancelled 190

915A..... Varying licences .............................................................................. 190

915B..... Immediate suspension or cancellation ............................................ 190

915C..... Suspension or cancellation after offering a hearing ......................... 192

915D..... Effect of suspension ....................................................................... 193

915E...... Revocation of suspension ............................................................... 193

915F...... Date of effect and publication of cancellation or suspension ......... 193

915G..... Statement of reasons ....................................................................... 194

915H..... ASIC may allow licence to continue in effect ................................. 194

915I....... Special procedures for APRA‑regulated bodies ............................. 194

915J...... Variation, suspension and cancellation only under this Subdivision 195

Division 5--Authorised representatives 196

916A..... How representatives are authorised ............................................... 196

916B..... Sub‑authorisations .......................................................................... 196

916C..... Authorised representative of 2 or more licensees ........................... 197

916D..... Licensees cannot authorise other licensees ..................................... 198

916E...... Licensees acting under a binder ....................................................... 198

916F...... Obligation to notify ASIC etc. about authorised representatives .. 199

916G..... ASIC may give licensee information about representatives ........... 200

Division 6--Liability of financial services licensees for representatives 203

917A..... Application of Division .................................................................. 203

917B..... Responsibility if representative of only one licensee ..................... 204

917C..... Representatives of multiple licensees ............................................. 204

917D..... Exception if lack of authority is disclosed to client ........................ 205

917E...... Responsibility extends to loss or damage suffered by client .......... 205

917F...... Effect of Division ........................................................................... 206

Division 8--Banning or disqualification of persons from providing financial services 207

Subdivision A--Banning orders 207

920A..... ASIC's power to make a banning order .......................................... 207

920B..... What is a banning order ? ............................................................... 207

920C..... Effect of banning orders .................................................................. 208

920D..... Variation or cancellation of banning orders ..................................... 208

920E...... Date of effect and publication of banning order, variation or cancellation 209

920F...... Statement of reasons ....................................................................... 209

Subdivision B--Disqualification by the Court 210

921A..... Disqualification by the Court ......................................................... 210

Division 9--Registers relating to financial services 211

922A..... Registers relating to financial services ............................................ 211

922B..... Inspection of Registers ................................................................... 211

Division 10--Restrictions on use of terminology 212

923A..... Restriction on use of certain words or expressions ........................ 212

923B..... Restriction on use of certain words or expressions unless authorised in licence conditions 214

Division 11--Agreements with unlicensed persons relating to the provision of financial services 217

Subdivision A--Agreements affected 217

924A..... Agreements with certain unlicensed persons .................................. 217

Subdivision B--Effect on agreements 217

925A..... Client may give notice of rescission ............................................... 217

925B..... Effect of notice under section 925A ............................................... 218

925C..... Client may apply to Court for partial rescission ........................... 218

925D..... Court may make consequential orders ............................................ 219

925E...... Agreement unenforceable against client .......................................... 219

925F...... Non‑licensee not entitled to recover commission ........................... 220

925G..... Onus of establishing non‑application of section 925E or 925F ..... 220

925H..... Client may recover commission paid to non‑licensee ..................... 220

925I....... Remedies under this Division additional to other remedies ............ 221

Division 12--Miscellaneous 222

926A..... Exemptions and modifications by ASIC ........................................ 222

926B..... Exemptions and modifications by regulations ................................ 223

Part 7.7--Financial services disclosure 224

Division 1--Preliminary 224

940A..... How Part applies if a financial services licensee is acting as authorised representative 224

940B..... What if there is no reasonable opportunity to give a document, information or statement required by this Part? 224

940C..... How documents, information and statements are to be given ........ 225

940D..... General approach to offence provisions ......................................... 227

Division 2--Person provided with financial service as retail client to be given a Financial Services Guide 228

Subdivision A--Requirement for a Financial Services Guide to be given 228

941A..... Obligation on financial services licensee to give a Financial Services Guide if financial service provided to person as a retail client ...................................................................................... 228

941B..... Obligation on authorised representative to give a Financial Services Guide if financial service provided to person as a retail client ...................................................................................... 228

941C..... Situations in which a Financial Services Guide is not required ....... 229

941D..... Timing of giving Financial Services Guide ...................................... 230

941E...... Information must be up to date ...................................................... 231

941F...... Obligation to give updated Financial Services Guide ...................... 231

Subdivision B--Content and authorisation of Financial Services Guide 232

942A..... Title of Financial Services Guide .................................................... 232

942B..... Financial Services Guide given by financial services licensee--main requirements 232

942C..... Financial Services Guide given by authorised representative--main requirements 235

942D..... Financial Services Guide may consist of 2 or more separate documents given at same time 238

942DA.. Combining a Financial Services Guide and a Product Disclosure Statement in a single document 240

942E...... Altering a Financial Services Guide after its preparation and before giving it to a person 240

Subdivision C--Supplementary Financial Services Guides 241

943A..... What a Supplementary Financial Services Guide is ....................... 241

943B..... Title of Supplementary Financial Services Guide .......................... 241

943C..... Form of Supplementary Financial Services Guide ......................... 241

943D..... Effect of giving a person a Supplementary Financial Services Guide 242

943E...... Situation in which only a Supplementary Financial Services Guide need be given 242

943F...... Altering a Supplementary Financial Services Guide after its preparation and before giving it to a person 242

Division 3--Additional requirements for personal advice provided to a retail client 244

Subdivision A--When this Division applies 244

944A..... Situation in which Division applies ................................................ 244

Subdivision B--Requirements relating to basis of advice 244

945A..... Requirement to have a reasonable basis for the advice ................... 244

945B..... Obligation to warn client if advice based on incomplete or inaccurate information 245

Subdivision C--Requirement for a Statement of Advice to be given 246

946A..... Obligation to give client a Statement of Advice .............................. 246

946AA.. Small investments--Statement of Advice not required .................. 246

946B..... Other situations in which a Statement of Advice is not required ... 248

946C..... Timing of giving Statement of Advice ............................................ 252

Subdivision D--Content of Statement of Advice 253

947A..... Title of Statement of Advice .......................................................... 253

947B..... Statement of Advice given by financial services licensee--main requirements 253

947C..... Statement of Advice given by authorised representative--main requirements 255

947D..... Additional requirements when advice recommends replacement of one product with another 257

947E...... Statement of Advice not to be combined with Financial Services Guide or Product Disclosure Statement 258

Subdivision E--Other matters 258

948A..... Qualified privilege if providing entity complies with this Division 258

Division 4--Other disclosure requirements 260

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 ........................................... 260

949B..... Regulations may impose disclosure requirements in certain situations 261

Division 6--Miscellaneous 263

951A..... Part cannot be contracted out of ..................................................... 263

951B..... Exemptions and modifications by ASIC ........................................ 263

951C..... Exemptions and modifications by regulations ................................ 264

Division 7--Enforcement 265

Subdivision A--Offences 265

952A..... Overview ........................................................................................ 265

952B..... Definitions ...................................................................................... 265

952C..... Offence of failing to give a disclosure document or statement ....... 267

952D..... Offence of giving a disclosure document or statement knowing it to be defective 268

952E...... Offence of giving a defective disclosure document or statement (whether or not known to be defective) 269

952F...... Offences of financial services licensee knowingly providing defective disclosure material to an authorised representative ................................................................................. 271

952G..... Offences of financial services licensee providing disclosure material to an authorised representative (whether or not known to be defective) ................................................................... 272

952H..... Offence of financial services licensee failing to ensure authorised representative gives disclosure documents or statements as required .................................................................... 275

952I....... Offences if a Financial Services Guide (or Supplementary FSG) does not comply with certain requirements 275

952J...... Offence if a Statement of Advice does not comply with certain requirements 277

952K..... Offence if authorised representative gives out unauthorised Financial Services Guide (or Supplementary FSG) 277

952L...... Offences if financial services licensee or authorised representative becomes aware that a Financial Services Guide (or Supplementary FSG) is defective ................................................... 278

952M.... Offence of unauthorised alteration of Financial Services Guide or Supplementary Financial Services Guide 279

Subdivision B--Civil liability 279

953A..... Definitions ...................................................................................... 279

953B..... Civil action for loss or damage ........................................................ 281

953C..... Additional powers of court to make orders .................................... 283

Part 7.8--Other provisions relating to conduct etc. connected with financial products and financial services, other than financial product disclosure 285

Division 1--Preliminary 285

980A..... Matters covered by this Part .......................................................... 285

980B..... General approach to offence provisions ......................................... 285

Division 2--Dealing with clients' money 286

Subdivision A--Money other than loans 286

981A..... Money to which Subdivision applies ............................................. 286

981B..... Obligation to pay money into an account ...................................... 287

981C..... Regulations may deal with various matters relating to accounts maintained for the purposes of section 981B 288

981D..... Money related to derivatives may be used for general margining etc. purposes 288

981E...... Protection of money from attachment etc. ..................................... 289

981F...... Regulations may deal with how money to be dealt with if licensee ceases to be licensed etc. 289

981G..... Account provider not liable merely because of licensee's contravention 290

981H..... Money to which Subdivision applies taken to be held in trust ...... 290

Subdivision B--Loan money 290

982A..... Money to which this Subdivision applies ...................................... 290

982B..... Obligation to pay money into an account ...................................... 291

982C..... Licensee to give client statement setting out terms of loan etc. ...... 291

982D..... Permitted use of loan ...................................................................... 292

Subdivision C--Powers of Court 292

983A..... Court may freeze certain accounts ................................................. 292

983B..... Interim order freezing accounts ...................................................... 293

983C..... Duty of person to whom order directed to make full disclosure .... 293

983D..... Further orders and directions .......................................................... 294

983E...... Power of Court to make order relating to payment of money ....... 294

Division 3--Dealing with other property of clients 296

984A..... Property to which Division applies ............................................... 296

984B..... How property to which this Division applies is to be dealt with . 296

Division 4--Special provisions relating to insurance 298

985A..... Definitions etc. ............................................................................... 298

985B..... Status of amounts paid to financial services licensees in respect of contracts of insurance 298

985C..... Regulations may impose other requirements etc. if financial services licensee is not the insurer 299

985D..... Financial services licensees etc. not to deal in general insurance products from unauthorised insurers etc. 300

Division 5--Obligations to report 301

986A..... Reporting in relation to money to which Subdivision A or B of Division 2 applies or property to which Division 3 applies ............................................................................................ 301

986B..... Reporting in relation to dealings in derivatives ............................... 301

Division 6--Financial records, statements and audit 302

Subdivision A--Preliminary 302

987A..... Application of Division .................................................................. 302

Subdivision B--Financial records of financial services licensees 302

988A..... Obligation to keep financial records ............................................... 302

988B..... Records to be kept so that profit and loss statements and balance sheet can be prepared and audited 303

988C..... Language of records ........................................................................ 303

988D..... Location of records ......................................................................... 303

988E...... Particular categories of information to be shown in records ........... 303

988F...... Regulations may impose additional requirements .......................... 304

988G..... Records taken to be made with licensee's authority ...................... 304

Subdivision C--Financial statements of financial services licensees 305

989A..... Meaning of financial year ............................................................... 305

989B..... Financial services licensee to prepare and lodge annual profit and loss statement and balance sheet 305

989C..... Requirements as to contents and applicable accounting principles 305

989CA.. Audit to be conducted in accordance with auditing standards ........ 306

989D..... Time of lodgment ............................................................................ 306

Subdivision D--Appointment etc. of auditors 307

990A..... Sections 990B to 990H not to apply to public companies ............ 307

990B..... Appointment of auditor by licensee ............................................... 307

990C..... When a person or firm is ineligible to act as auditor ....................... 309

990D..... Ineligible person or firm must not consent to act or disqualify themselves etc. 309

990E...... Duration of appointment of auditors ............................................. 309

990F...... Removal of auditors ........................................................................ 310

990G..... Resignation of auditors--requirements for resignation .................. 310

990H..... Resignation of auditors--when resignation takes effect ................. 311

990I....... Auditor's right of access to records, information etc. .................... 311

990J...... Auditor's fees and expenses ........................................................... 312

990K..... Auditor to report on certain matters .............................................. 312

990L...... Qualified privilege for auditor etc. .................................................. 312

Division 7--Other rules about conduct 315

991A..... Financial services licensee not to engage in unconscionable conduct 315

991B..... Financial services licensee to give priority to clients' orders ......... 315

991C..... Regulations may deal with various matters relating to instructions to deal through licensed markets 316

991D..... Regulations may require records to be kept in relation to instructions to deal on licensed markets and foreign markets ........................................................................................................ 316

991E...... Obligations of financial services licensee in relation to dealings with non‑licensees 317

991F...... Dealings involving employees of financial services licensees ......... 318

Division 8--Miscellaneous 320

992A..... Prohibition on hawking of certain financial products ..................... 320

992AA.. Prohibition of hawking of managed investment products .............. 322

992B..... Exemptions and modifications by ASIC ........................................ 323

992C..... Exemptions and modifications by regulations ................................ 324

Division 9--Enforcement 325

993A..... Overview ........................................................................................ 325

993B..... Offence of failing to pay client money into an account as required 325

993C..... Offence of failing to comply with requirements relating to client money account 326

993D..... Offence of failing to pay loan money into an account as required . 326

Part 7.9--Financial product disclosure and other provisions relating to issue, sale and purchase of financial products 327

Division 1--Preliminary 327

1010A... Part generally does not apply to securities .................................... 327

1010B... Part does not apply to financial products not issued in the course of a business 327

1010BA Part does not apply to contribution plans ..................................... 327

1010C... Special provisions about meaning of sale and offer ........................ 328

1010D... General approach to offence provisions ......................................... 328

Division 2--Product Disclosure Statements 329

Subdivision A--Preliminary 329

1011A... Jurisidictional scope of Division .................................................... 329

1011B... Definitions ...................................................................................... 329

1011C... Treatment of offers of options over financial products ................. 330

Subdivision B--Requirement for a Product Disclosure Statement to be given 330

1012A... Obligation to give Product Disclosure Statement--personal advice recommending particular financial product 330

1012B... Obligation to give Product Disclosure Statement--situations related to issue of financial products 331

1012C... Obligation to give Product Disclosure Statement--offers related to sale of financial products 333

1012D... Situations in which Product Disclosure Statement is not required . 337

1012DAARights issues for which Product Disclosure Statement is not
required ........................................................................................... 342

1012DA Product Disclosure Statement not required for sale amounting to indirect issue 345

1012E.... Small scale offerings of managed investment and other prescribed financial products (20 issues or sales in 12 months) ........................................................................................................ 350

1012F.... Product Disclosure Statement for certain superannuation products may be provided later 352

1012G... Product Disclosure Statement may sometimes be provided later .. 353

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 .......................................................................................... 355

1012IA.. Treatment of arrangements under which a person can instruct another person to acquire a financial product 357

1012J.... Information must be up to date ...................................................... 360

1012K... Anti‑avoidance determinations ....................................................... 361

Subdivision C--Preparation and content of Product Disclosure Statements 362

1013A... Who must prepare Product Disclosure Statement ......................... 362

1013B... Title of Product Disclosure Statement ........................................... 362

1013C... Product Disclosure Statement content requirements ...................... 363

1013D... Product Disclosure Statement content--main requirements .......... 364

1013DA Information about ethical considerations etc. ................................. 367

1013E.... General obligation to include other information that might influence a decision to acquire 367

1013F.... General limitations on extent to which information is required to be included 367

1013FA. Information not required to be included in PDS for continuously quoted securities 368

1013G... Product Disclosure Statement must be dated ................................. 369

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 ........................................................................................................ 370

1013J.... Requirements if Statement has been lodged with ASIC ................. 371

1013K... Requirements relating to consents to certain statements ................ 371

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 373

Subdivision D--Supplementary Product Disclosure Statements 373

1014A... What a Supplementary Product Disclosure Statement is ............... 373

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 374

1014E.... Situation in which only a Supplementary Product Disclosure Statement need be given 374

1014F.... Application of other provisions in relation to Supplementary Product Disclosure Statements 374

Subdivision DA--Replacement Product Disclosure Statements 375

1014G... Application of this Subdivision--stapled securities ...................... 375

1014H... What a Replacement Product Disclosure Statement is ................... 375

1014J.... Consequences of lodging a Replacement Product Disclosure Statement 375

1014K... Form, content and preparation of Replacement Product Disclosure Statements 376

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 377

1015A... Subdivision applies to Product Disclosure Statements and Supplementary Product Disclosure Statements 377

1015B... Some Statements must be lodged with ASIC ................................. 377

1015C... How a Statement is to be given ...................................................... 378

1015D... Notice, retention and access requirements for Statement that does not need to be lodged 379

1015E.... Altering a Statement after its preparation and before giving it to a person 380

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 385

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 ........................................................................................................ 387

1016F.... Remedies for person acquiring financial product under defective Product Disclosure Document 392

Division 3--Other disclosure obligations of the issuer of a financial product 394

1017A... Obligation to give additional information on request ...................... 394

1017B... Ongoing disclosure of material changes and significant events ....... 396

1017C... Information for existing holders of superannuation products and RSA products 398

1017D... Periodic statements for retail clients for financial products that have an investment component 402

1017DA Trustees of superannuation entities--regulations may specify additional obligations to provide information 405

1017E.... Dealing with money received for financial product before the product is issued 406

1017F.... Confirming transactions .................................................................. 408

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 ............................................... 423

1019G... Duration and withdrawal of offers ................................................. 424

1019H... Terms of offer cannot be varied ...................................................... 424

1019I..... Contents of offer document ............................................................ 424

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 Prohibition of certain short sales of securities, managed investment products and certain other financial products 430

1020D... Part cannot be contracted out of ..................................................... 432

1020E.... Stop orders by ASIC ...................................................................... 432

1020F.... Exemptions and modifications by ASIC ........................................ 434

1020G... Exemptions and modifications by regulations ................................ 436

Division 7--Enforcement 437

Subdivision A--Offences 437

1021A... Overview ........................................................................................ 437

1021B... Definitions ...................................................................................... 437

1021C... Offence of failing to give etc. a disclosure document or statement . 439

1021D... Offence of preparer of defective disclosure document or statement giving the document or statement knowing it to be defective .......................................................................................... 441

1021E.... Offence of preparer of defective disclosure document or statement giving the document or statement (whether or not known to be defective) ................................................................... 442

1021F.... Offence of regulated person (other than preparer) giving disclosure document or statement knowing it to be defective ........................................................................................................ 443

1021FA. Paragraph 1012G(3)(a) obligation--offences relating to communication of information 443

1021FB. Paragraph 1012G(3)(a) obligation--offences relating to information provided by product issuer for communication by another person ................................................................................ 444

1021G... Offence of financial services licensee failing to ensure authorised representative gives etc. disclosure documents or statements as required .................................................................... 447

1021H... Offences if a Product Disclosure Statement (or Supplementary PDS) does not comply with certain requirements ........................................................................................................ 447

1021I..... Offence of giving disclosure document or statement that has not been prepared by the appropriate person 448

1021J.... Offences if preparer etc. of disclosure document or statement becomes aware that it is defective 449

1021K... Offence of unauthorised alteration of Product Disclosure Statement (or Supplementary PDS) 450

1021L.... Offences of giving, or failing to withdraw, consent to inclusion of defective statement 451

1021M.. Offences relating to keeping and providing copies of Product Disclosure Statements (or Supplementary PDSs) 452

1021N... Offence of failing to provide additional information requested under section 1017A 453

5>102 1O... Offences of issuer or seller of financial product failing to pay money into an account as required 453

1021P.... Offences relating to offers to which Division 5A applies .............. 454

Subdivision B--Civil liability 456

1022A... Definitions ...................................................................................... 456

1022B... Civil action for loss or damage ........................................................ 458

1022C... Additional powers of court to make orders .................................... 463

Part 7.10--Market misconduct and other prohibited conduct relating to financial products and financial services 464

Division 1--Preliminary 464

1040A... Content of Part ............................................................................... 464

Division 2--The prohibited conduct (other than insider trading prohibitions) 465

1041A... Market manipulation ...................................................................... 465

1041B... False trading and market rigging--creating a false or misleading appearance of active trading etc. 465

1041C... False trading and market rigging--artificially maintaining etc. trading price 467

1041D... Dissemination of information about illegal transactions ................. 467

1041E.... False or misleading statements ....................................................... 468

1041F.... Inducing persons to deal ................................................................. 469

1041G... Dishonest conduct .......................................................................... 470

1041H... Misleading or deceptive conduct (civil liability only) .................... 470

1041I..... Civil action for loss or damage for contravention of sections 1041E to 1041H 472

5>104 1J.... Sections of this Division have effect independently of each other . 473

1041K... Division applies to certain conduct to the exclusion of State Fair Trading Acts provisions 474

Division 2A--Proportionate liability for misleading and deceptive conduct 475

1041L.... Application of Division .................................................................. 475

1041M.. Certain concurrent wrongdoers not to have benefit of apportionment 475

1041N... Proportionate liability for apportionable claims ............................ 476

1041O... Defendant to notify plaintiff of concurrent wrongdoer of whom defendant aware 477

1041P.... Contribution not recoverable from defendant ................................. 477

1041Q... Subsequent actions ......................................................................... 478

1041R... Joining non‑party concurrent wrongdoer in the action ................... 478

1041S.... Application of Division .................................................................. 478

Division 3--The insider trading prohibitions 479

Subdivision A--Preliminary 479

1042A... Definitions ...................................................................................... 479

1042B... Application of Division .................................................................. 480

1042C... When information is generally available ........................................ 480

1042D... When a reasonable person would take information to have a material effect on price or value of Division 3 financial products .......................................................................................... 481

1042E.... Division 3 financial products taken to be able to be traded despite suspensions or section 794D directions 481

1042F.... Inciting, inducing or encouraging an act or omission constitutes procuring the omission 481

1042G... Information in possession of officer of body corporate ................. 482

1042H... Information in possession of partner or employee of partnership 482

Subdivision B--The prohibited conduct 483

1043A... Prohibited conduct by person in possession of inside information 483

1043B... Exception for withdrawal from registered scheme .......................... 484

1043C... Exception for underwriters ............................................................. 485

1043D... Exception for acquisition pursuant to legal requirement ................ 485

1043E.... Exception for information communicated pursuant to a legal requirement 485

1043F.... Chinese wall arrangements by bodies corporate ............................. 486

1043G... Chinese wall arrangements by partnerships etc. ............................ 486

1043H... Exception for knowledge of person's own intentions or activities 487

1043I..... Exception for bodies corporate ....................................................... 487

1043J.... Exception for officers or agents of body corporate ........................ 488

1043K... Transactions by holder of financial services licence or a representative of the holder of such a licence 488

1043L.... A specific situation in which a compensation order under section 1317HA may be made 489

1043M.. Defences to prosecution for an offence .......................................... 493

1043N... Relief from civil liability ................................................................. 494

1043O... Powers of Court ............................................................................. 495

Division 4--Defences, relief and limits on liability 496

1044A... General defence or relief for publishers .......................................... 496

1044B... Limit on liability for misleading or deceptive conduct ................... 496

Division 5--Miscellaneous 498

1045A... Exemptions and modifications by regulations ................................ 498

Part 7.11--Title and transfer 499

Division 1--Title to certain securities 499

1070A... Nature of shares and certain other interests in a company or registered scheme 499

1070B... Numbering of shares ....................................................................... 500

1070C... Matters to be specified in share certificate ..................................... 501

1070D... Loss or destruction of title documents for certain securities .......... 501

Division 2--Transfer of certain securities 504

Subdivision A--General provisions 504

1071A... Application of the Subdivision to certain securities ....................... 504

1071B... Instrument of transfer ..................................................................... 504

1071C... Occupation need not appear in transfer document, register etc. .... 506

1071D... Registration of transfer at request of transferor ............................. 507

1071E.... Notice of refusal to register transfer ............................................... 508

1071F.... Remedy for refusal to register transfer or transmission ................. 508

1071G... Certification of transfers ................................................................. 509

1071H... Duties of company with respect to issue of certificates ................ 510

Subdivision B--Special provisions for shares 512

1072A... Transmission of shares on death (replaceable rule--see section 135) 512

5>107 2B... Transmission of shares on bankruptcy (replaceable rule--see section 135) 513

5>107 2C... Rights of trustee of estate of bankrupt shareholder ....................... 513

1072D... Transmission of shares on mental incapacity (replaceable rule--see section 135) 515

5>107 2E.... Trustee etc. may be registered as owner of shares ......................... 516

1072F.... Registration of transfers (replaceable rule--see section 135) ........ 518

1072G... Additional general discretion for directors of proprietary companies to refuse to register transfers (replaceable rule--see section 135) ............................................................................... 518

1072H... Notices relating to non‑beneficial and beneficial ownership of shares 519

Division 3--Transfer of certain securities effected otherwise than through a prescribed CS facility 523

1073A... Application of the Division to certain securities ............................ 523

1073B... Definitions ...................................................................................... 523

1073C... Application of Division to certain bodies as if they were companies 524

1073D... Regulations may govern transfer of certain securities .................... 524

1073E.... ASIC may extend regulations to securities not otherwise covered . 526

1073F.... Operation of this Division and regulations made for its purposes . 527

Division 4--Transfer of financial products effected through prescribed CS facility 529

1074A... Financial products to which this Division applies ......................... 529

1074B... Definitions ...................................................................................... 529

1074C... Operating rules of prescribed CS facility may deal with transfer of title 529

1074D... Valid and effective transfer if operating rules complied with ......... 530

1074E.... Regulations may govern transfer of financial products in accordance with operating rules of prescribed CS facility ........................................................................................................ 530

1074F.... Issuer protected from civil liability for person's contravention of prescribed CS facility's certificate cancellation rules ........................................................................................................ 533

1074G... Operation of this Division and regulations made for its purposes . 533

Division 5--Exemptions and modifications 535

1075A... ASIC's power to exempt and modify ............................................ 535

Part 7.12--Miscellaneous 537

Division 1--Qualified privilege 537

1100A... Qualified privilege for information given to ASIC .......................... 537

1100B... Qualified privilege for the conduct of market licensees and CS facility licensees 537

1100C... Qualified privilege for information given to market licensees and CS facility licensees etc. 539

1100D... Extension of protections given by this Division ............................ 539

Division 2--Other matters 540

1101A... Approved codes of conduct ........................................................... 540

1101B... Power of Court to make certain orders ........................................... 541

1101C... Preservation and disposal of records etc. ....................................... 545

1101D... Destruction of records by ASIC ..................................................... 546

1101E.... Concealing etc. of books ................................................................. 546

1101F.... Falsification of records ................................................................... 547

1101G... Precautions against falsification of records ..................................... 548

1101GA How Part 9.3 applies to books required to be kept by this Chapter etc. 548

1101H... Contravention of Chapter does not generally affect validity of transactions etc. 549

1101I..... Gaming and wagering laws do not affect validity of contracts relating to financial products 549

1101J.... Delegation ....................................................................................... 549

Chapter 8--Mutual recognition of securities offers 551

Part 8.1--Preliminary 551

1200A... Definitions ...................................................................................... 551

Part 8.2--Foreign offers that are recognised in this jurisdiction 553

Division 1--Recognised offers 553

1200B... When an offer is a recognised offer ................................................. 553

1200C... Conditions that must be met to be a recognised offer .................... 553

1200D... Required documents and information ............................................. 554

1200E.... Warning statement .......................................................................... 556

Division 2--Effect of a recognised offer 557

1200F.... Effect of a recognised offer ............................................................. 557

Division 3--Ongoing conditions for recognised offers 559

1200G... Offering conditions ......................................................................... 559

1200H... Address for service condition ......................................................... 562

1200J.... Dispute resolution condition .......................................................... 563

Division 4--Modification of provisions of this Act 565

1200K... Additional operation of section 675 (continuous disclosure) ......... 565

1200L.... Pre‑offer advertising ....................................................................... 565

1200M.. Modification by the regulations ..................................................... 566

Division 5--ASIC's powers in relation to recognised offers 567

1200N... Stop orders ..................................................................................... 567

1200P.... Ban on making subsequent recognised offers ................................. 571

1200Q... Offence of breaching an ongoing condition ..................................... 572

Division 6--Miscellaneous 573

1200R... Service of documents ...................................................................... 573

Part 8.3--Offers made under foreign recognition schemes 574

1200S.... Notice to ASIC ............................................................................... 574

1200T... Extension of this Act to recognised jurisdictions ........................... 574

1200U... ASIC stop order for advertising in a recognised jurisdiction .......... 575

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