Commonwealth Consolidated Acts

CORPORATIONS ACT 2001 - SECT 742

             (1)  The regulations may:

                     (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.

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

88