Prepared by the Office of Parliamentary Counsel, Canberra
Corporations Act 2001
No. 50, 2001
Compilation No. 79
Compilation date: 1 July 2017
Includes amendments up to: Act No. 75, 2017
Registered: 6 July 2017
This compilation is in 6 volumes
Volume 1: sections 1–260E
Volume 2: sections 283AA–601DJ
Volume 3: sections 601EA–742
Volume 4: sections 760A–993D
Volume 5: sections 1010A–1369A
Volume 6: sections 1370–1637
Schedules
Endnotes
Each volume has its own contents
This compilation includes commenced amendments made by Act No. 45,
2017
Authorised Version C2017C00210 registered 06/07/2017
About this compilation
This compilation
This is a compilation of the Corporations Act 2001 that shows the text of the
law as amended and in force on 1 July 2017 (the compilation date).
The notes at the end of this compilation (the endnotes) include information
about amending laws and the amendment history of provisions of the compiled
law.
Uncommenced amendments
The effect of uncommenced amendments is not shown in the text of the
compiled law. Any uncommenced amendments affecting the law are accessible
on the Legislation Register (www.legislation.gov.au). The details of
amendments made up to, but not commenced at, the compilation date are
underlined in the endnotes. For more information on any uncommenced
amendments, see the series page on the Legislation Register for the compiled
law.
Application, saving and transitional provisions for provisions and
amendments
If the operation of a provision or amendment of the compiled law is affected by
an application, saving or transitional provision that is not included in this
compilation, details are included in the endnotes.
Editorial changes
For more information about any editorial changes made in this compilation, see
the endnotes.
Modifications
If the compiled law is modified by another law, the compiled law operates as
modified but the modification does not amend the text of the law. Accordingly,
this compilation does not show the text of the compiled law as modified. For
more information on any modifications, see the series page on the Legislation
Register for the compiled law.
Self-repealing provisions
If a provision of the compiled law has been repealed in accordance with a
provision of the law, details are included in the endnotes.
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Contents
Chapter 5C—Managed investment schemes 1
Part 5C.1—Registration of managed investment schemes 1 601EA Applying for registration ...................................................1
601EB Registration of managed investment scheme.....................2
601EC All documents etc. lodged with ASIC to bear
ARSN or ABN ..................................................................2
601ED When a managed investment scheme must be
registered ...........................................................................3
601EE Unregistered schemes may be wound up...........................4
Part 5C.2—The responsible entity 5
Division 1—Responsibilities and powers 5
601FA Responsible entity to be public company and hold
Australian financial services licence .................................5
601FB Responsible entity to operate scheme................................5
601FC Duties of responsible entity ...............................................6
601FD Duties of officers of responsible entity..............................8
601FE Duties of employees of responsible entity.........................9
601FF Surveillance checks by ASIC ............................................9
601FG Acquisition of interest in scheme by responsible
entity................................................................................10
601FH Liquidator etc. of responsible entity entitled to
exercise indemnity rights.................................................10
Division 2—Changing the responsible entity 12
601FJ Changes only take effect when ASIC alters record
of registration ..................................................................12
601FK Requirements of section 601FA must be met ..................12
601FL Retirement of responsible entity......................................12
601FM Removal of responsible entity by members.....................13
601FN ASIC or scheme member may apply to Court for
appointment of temporary responsible entity ..................14
601FP Appointment of temporary responsible entity by
Court................................................................................14
601FQ Temporary responsible entity to take steps for
appointment of new responsible entity ............................15
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Division 3—Consequences of change of responsible entity 17
601FR Former responsible entity to hand over books and
provide reasonable assistance..........................................17
601FS Rights, obligations and liabilities of former
responsible entity.............................................................17
601FT Effect of change of responsible entity on
documents etc. to which former responsible entity
is party.............................................................................18
Part 5C.3—The constitution 19 601GA Contents of the constitution.............................................19
601GB Constitution must be legally enforceable.........................20
601GC Changing the constitution................................................20
Part 5C.4—The compliance plan 22 601HA Contents of the compliance plan .....................................22
601HB Compliance plan may incorporate provisions from
another scheme’s plan .....................................................23
601HC Directors must sign lodged copy of compliance
plan..................................................................................23
601HD ASIC may require further information about
compliance plan...............................................................23
601HE Changing the compliance plan ........................................24
601HF ASIC may require consolidation of compliance
plan to be lodged .............................................................24
601HG Audit of compliance plan ................................................24
601HH Removal and resignation of auditors ...............................30
601HI Action on change of auditor of compliance plan .............31
Part 5C.5—The compliance committee 32 601JA When is a compliance committee required? ....................32
601JB Membership of compliance committee ...........................33
601JC Functions of compliance committee ................................34
601JD Duties of members ..........................................................35
601JE Compliance committee members have qualified
privilege in certain cases .................................................36
601JF When can responsible entity indemnify
compliance committee members? ...................................36
601JG When can responsible entity pay insurance
premiums for compliance committee members? .............37
601JH Proceedings of compliance committee ............................37
601JJ Disclosure of interests .....................................................38
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Part 5C.6—Members’ rights to withdraw from a scheme 39 601KA Members’ rights to withdraw ..........................................39
601KB Non-liquid schemes—offers............................................40
601KC Non-liquid schemes—only one withdrawal offer to
be open at any time..........................................................41
601KD Non-liquid schemes—how payments are to be
made ................................................................................41
601KE Non-liquid schemes—responsible entity may
cancel withdrawal offer ...................................................41
Part 5C.7—Related party transactions 43 601LA Chapter 2E applies with modifications............................43
601LB Replacement section 207.................................................43
601LC Replacement section 208.................................................44
601LD Omission of sections 213, 214 and 224 ...........................45
601LE Modification of section 225.............................................45
Part 5C.8—Effect of contraventions (civil liability and voidable
contracts) 46 601MA Civil liability of responsible entity to members...............46
601MB Voidable contracts where subscription offers and
invitations contravene this Act ........................................46
Part 5C.9—Winding up 48 601NA Winding up required by scheme’s constitution ...............48
601NB Winding up at direction of members ...............................48
601NC Winding up if scheme’s purpose accomplished or
cannot be accomplished...................................................48
601ND Winding up ordered by Court..........................................49
601NE The winding up of the scheme.........................................50
601NF Other orders about winding up ........................................50
601NG Unclaimed money to be paid to ASIC.............................51
Part 5C.10—Deregistration 52 601PA Deregistration—voluntary...............................................52
601PB Deregistration by ASIC ...................................................52
601PC Reinstatement ..................................................................54
Part 5C.11—Exemptions and modifications 55 601QA ASIC’s power to make exemption and
modification orders..........................................................55
601QB Modification by regulations ............................................56
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Chapter 5D—Licensed trustee companies 57
Part 5D.1—Preliminary 57 601RAA Definitions.......................................................................57
601RAB Meaning of trustee company and client of trustee
company ..........................................................................58
601RAC Meaning of traditional trustee company services
and estate management functions ....................................59
601RAD Meaning of person with a proper interest .......................60
601RAE Interaction between trustee company provisions
and State and Territory laws............................................61
Part 5D.2—Powers etc. of licensed trustee companies 64
Division 1—General provisions 64
601SAA Jurisdiction of courts not affected etc. .............................64
601SAB Regulations may prescribe other powers etc. ..................64
601SAC Powers etc. conferred by or under this Chapter are
in addition to other powers etc. .......................................64
Division 2—Accounts 66
601SBA Licensed trustee company not required to file
accounts...........................................................................66
601SBB Licensed trustee company may be required to
provide account in relation to estate ................................66
601SBC Court may order audit......................................................67
Division 3—Common funds 69
601SCA Common funds of licensed trustee companies ................69
601SCAA Common funds that are also registered schemes .............69
601SCB Obligations relating to common funds ............................70
601SCC Regulations relating to establishment or operation
of common funds.............................................................70
601SCD Arm’s length transactions................................................70
Part 5D.3—Regulation of fees charged by licensed trustee
companies 72
Division 1—Disclosure of fees 72
601TAA Schedule of fees to be published and available ...............72
601TAB Disclosure to clients of changed fees...............................72
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Division 2—General provisions about charging fees 74
601TBA Charging of fees for the provision of traditional
trustee company services .................................................74
601TBB Part does not prevent charging of fees as agreed
etc. ...................................................................................74
601TBC Part does not prevent charging fee for provision of
account ............................................................................75
601TBD Part does not prevent reimbursement ..............................75
601TBE Estate management functions: payment of fees out
of estate ...........................................................................75
Division 3—Fees otherwise than for being trustee or manager of
a charitable trust 76
601TCA Fees otherwise than for being the trustee or
manager of a charitable trust ...........................................76
601TCB Additional amount for preparation of returns etc. ...........76
Division 4—Fees for being trustee or manager of a charitable
trust 77
Subdivision A—New client charitable trusts 77
601TDA Subdivision applies to new client charitable trusts ..........77
601TDB What the trustee company may charge ............................77
601TDC Option 1: capital commission and income
commission .....................................................................78
601TDD Option 2: annual management fee ...................................78
601TDE Additional amount if trust money is in a common
fund .................................................................................79
601TDF Additional amount for preparation of returns etc. ...........79
Subdivision B—Existing client charitable trusts 80
601TDG Subdivision applies to existing client charitable
trusts ................................................................................80
601TDH Trustee company not to charge more than was
being charged before section commenced .......................80
601TDI Additional amount if trust money is in a common
fund .................................................................................80
601TDJ Additional amount for preparation of returns etc. ...........81
Division 5—Miscellaneous 82
601TEA Power of the Court with respect to excessive fees...........82
601TEB Directors’ fees .................................................................83
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Part 5D.4—Duties of officers and employees of licensed trustee
companies 84 601UAA Duties of officers of licensed trustee company................84
601UAB Duties of employees of licensed trustee company...........85
Part 5D.5—Limit on control of licensed trustee companies 87
Division 1—15% voting power limit 87
601VAA Meaning of unacceptable control situation .....................87
601VAB Acquisitions of shares .....................................................87
601VAC Remedial orders...............................................................88
601VAD Injunctions.......................................................................89
Division 2—Approval to exceed 15% voting power limit 90
601VBA Application for approval to exceed 15% voting
power limit ......................................................................90
601VBB Approval of application...................................................90
601VBC Duration of approval .......................................................91
601VBD Conditions of approval ....................................................92
601VBE Varying percentage approved..........................................93
601VBF Revoking an approval......................................................94
601VBG Minister may require further information from
applicants.........................................................................95
601VBH Minister may seek views of licensed trustee
company and its clients ...................................................95
601VBI Time limit for Minister’s decision ...................................95
Division 3—Other matters 97
601VCA Acquisition of property ...................................................97
601VCB Interests of clients to be viewed as a group .....................97
601VCC Anti-avoidance ................................................................97
Part 5D.6—ASIC-approved transfers of estate assets and
liabilities 99
Division 1—Preliminary 99
601WAA Definitions.......................................................................99
Division 2—Transfer of estate assets and liabilities 102
601WBA Transfer determinations.................................................102
601WBB When consent of receiving company is in force ............104
601WBC Complementary State or Territory legislation ...............104
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601WBD Minister’s power to decide that his or her consent
is not required................................................................105
601WBE Determinations may impose conditions.........................105
601WBF Notice of determination.................................................106
601WBG Certificate of transfer.....................................................106
601WBH Notice of certificate .......................................................107
601WBI Time and effect of transfer ............................................108
601WBJ Substitution of trustee company ....................................109
601WBK Liabilities for breach of trust and other matters not
affected by this Part.......................................................109
Division 3—Other matters related to the transfer of estate assets
and liabilities 110
601WCA Certificates evidencing operation of Act etc..................110
601WCB Certificates in relation to land and interests in land.......110
601WCC Certificates in relation to other assets ............................110
601WCD Documents purporting to be certificates........................111
601WCE Construction of references to transferring company......111
601WCF Income or other distribution received by
transferring company.....................................................111
601WCG Access to books.............................................................112
601WCH Minister or ASIC may seek views of trustee
company and its clients .................................................112
Division 4—Miscellaneous 113
601WDA Transferring company required to contact certain
persons ..........................................................................113
Part 5D.7—Contraventions and holding out 115 601XAA Civil liability of licensed trustee companies..................115
601XAB Prohibition on holding out.............................................115
Part 5D.8—Exemptions and modifications 116 601YAA Exemptions and modifications by ASIC .......................116
601YAB Exemptions and modifications by regulations...............117
Chapter 6—Takeovers 119 602 Purposes of Chapter.......................................................119
602A Substantial interest concept ...........................................120
603 Chapter extends to some listed bodies that are not
companies......................................................................120
604 Chapter extends to listed managed investment
schemes .........................................................................121
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605 Classes of securities.......................................................121
Part 6.1—Prohibited acquisitions of relevant interests in voting
shares 122 606 Prohibition on certain acquisitions of relevant
interests in voting shares ...............................................122
607 Effect on transactions ....................................................125
608 Relevant interests in securities ......................................125
609 Situations not giving rise to relevant interests ...............128
610 Voting power in a body or managed investment
scheme...........................................................................131
Part 6.2—Exceptions to the prohibition 134 611 Exceptions to the prohibition.........................................134
612 Effect of non-compliance with takeover rules for
exceptions 1 to 4............................................................139
613 Bidder not to exercise voting rights if failure to
send bids for off-market acquisition—exception 2
or 3 ................................................................................139
615 Treatment of foreign holders under equal access
issue—exception 10 ......................................................140
Part 6.3—The different types of takeover bid 141 616 Off-market bids and market bids ...................................141
Part 6.4—Formulating the takeover offer 142
Division 1—General 142
617 Securities covered by the bid.........................................142
618 Offers must be for all or a proportion of securities
in the bid class ...............................................................143
619 General terms of the offer..............................................143
620 Off-market bid (offer formalities) .................................144
Division 2—Consideration for the offer 146
621 Consideration offered ....................................................146
622 Escalation agreements ...................................................147
623 Collateral benefits not allowed ......................................148
Division 3—The offer period 150
624 Offer period...................................................................150
Division 4—Conditional offers 151
625 Conditional offers—general ..........................................151
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626 Maximum acceptance conditions in off-market
bids................................................................................151
627 Discriminatory conditions not allowed for
off-market bids ..............................................................152
628 Conditions requiring payments to officers of target
not allowed in off-market bids.......................................153
629 Conditions turning on bidder’s or associate’s
opinion not allowed in off-market bids .........................153
630 Defeating conditions......................................................154
Part 6.5—The takeover procedure 156
Division 1—The overall procedure 156
631 Proposing or announcing a bid ......................................156
632 Overview of steps in an off-market bid .........................157
633 Detailed steps in an off-market bid................................158
634 Overview of steps in a market bid .................................162
635 Detailed steps in a market bid .......................................163
Division 2—The bidder’s statement 167
636 Bidder’s statement content ............................................167
637 Bidder’s statement formalities.......................................170
Division 3—The target’s response 172
638 Target’s statement content.............................................172
639 Target’s statement formalities .......................................173
640 Expert’s report to accompany target’s statement if
bidder connected with target .........................................174
641 Target must inform bidder about securities
holdings.........................................................................175
642 Expenses of directors of target companies ....................176
Division 4—Updating and correcting the bidder’s statement and
target’s statement 178
643 Supplementary bidder’s statement.................................178
644 Supplementary target’s statement..................................179
645 Form of supplementary statement .................................180
646 Consequences of lodging a supplementary
statement .......................................................................181
647 To whom supplementary statement must be sent ..........181
Division 5—General rules on takeover procedure 182
Subdivision A—Experts’ reports 182
648A Experts’ reports .............................................................182
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Subdivision B—Sending documents to holders of securities 183
648B Address at which bidder may send documents to
holders of securities.......................................................183
648C Manner of sending documents to holders of
securities........................................................................183
Subdivision C—Effect of proportional takeover approval
provisions 183
648D Constitution may contain proportional takeover
approval provisions .......................................................183
648E Resolution to be put if proportional bid made ...............185
648F Effect of rejection of approval resolution ......................186
648G Including proportional takeover provisions in
constitution....................................................................186
648H Effect of Subdivision.....................................................189
Part 6.6—Variation of offers 190
Division 1—Market bids 190
649A General ..........................................................................190
649B Market bids—raising bid price ......................................190
649C Market bids—extending the offer period.......................190
Division 2—Off-market bids (express variation by bidder) 192
650A General ..........................................................................192
650B Off-market bids—consideration offered........................192
650C Off-market bids—extension of offer period ..................194
650D Off-market bids—method of making variation .............195
650E Right to withdraw acceptance........................................196
650F Freeing off-market bids from defeating conditions .......197
650G Contracts and acceptances void if defeating
condition not fulfilled....................................................198
Division 3—Off-market bids (automatic variations) 199
651A Off-market bid—effect on bid consideration of
purchases made outside bid ...........................................199
651B How to make an election for new forms of
consideration .................................................................200
651C Returning securities as part of election..........................201
Part 6.7—Withdrawal and suspension of offers 202 652A Withdrawal of unaccepted offers under takeover
bid .................................................................................202
652B Withdrawal of takeover offers with ASIC consent........202
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652C Withdrawal of market bids ............................................202
Part 6.8—Acceptances 204 653A Acceptance of offers made under off-market bid ..........204
653B Acceptances by transferees and nominees of offers
made under off-market bid ............................................204
Part 6.9—Other activities during the bid period 207 654A Bidder not to dispose of securities during the bid
period ............................................................................207
654B Disclosures about substantial shareholdings in
listed companies ............................................................207
654C Disclosures about substantial shareholdings in
unlisted companies ........................................................207
Part 6.10—Review and intervention 209
Division 1—ASIC’s power to exempt and modify 209
655A ASIC’s power to exempt and modify ............................209
655B Notice of decision and review rights .............................210
Division 2—The Takeovers Panel 211
Subdivision A—Review of ASIC’s exercise of its exemption or
modification powers 211
656A Review of exercise of exemption or modification
powers ...........................................................................211
656B Operation and implementation of a decision that is
subject to review............................................................212
Subdivision B—Unacceptable circumstances 214
657A Declaration of unacceptable circumstances ...................214
657B When Panel may make declaration ...............................216
657C Applying for declarations and orders ............................216
657D Orders that Panel may make following declaration .......216
657E Interim orders ................................................................218
657EA Internal Panel reviews ...................................................219
657EB References by Courts.....................................................220
657F Offence to contravene Panel order ................................220
657G Orders by the Court where contravention or
proposed contravention of Panel order ..........................221
657H ASIC may publish report about application to
Panel or Court................................................................221
Subdivision C—General provisions 222
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658A Power of Panel where a proceeding is frivolous or
vexatious .......................................................................222
658B Evidentiary value of findings of fact by Panel ..............222
658C Panel’s power to make rules ..........................................223
658D Inconsistency between Panel rules and ASIC
exemption or declaration ...............................................224
Division 3—Court powers 225
659A Panel may refer questions of law to the Court ...............225
659AA Object of sections 659B and 659C ................................225
659B Court proceedings before end of bid period ..................225
659C Court proceedings after end of bid period .....................227
Chapter 6A—Compulsory acquisitions and buy-outs 229 660A Chapter extends to some listed bodies that are not
companies......................................................................229
660B Chapter extends to listed managed investment
schemes .........................................................................229
Part 6A.1—Compulsory acquisitions and buy-outs following
takeover bid 230
Division 1—Compulsory acquisition of bid class securities 230
661A Compulsory acquisition power following takeover
bid .................................................................................230
661B Compulsory acquisition notice ......................................232
661C Terms on which securities to be acquired......................234
661D Holder may obtain names and addresses of other
holders...........................................................................235
661E Holder may apply to Court to stop acquisition ..............235
661F Signpost—completing the acquisition of the
securities........................................................................236
Division 2—Compulsory buy-out of bid class securities 237
662A Bidder must offer to buy out remaining holders of
bid class securities .........................................................237
662B Bidder to tell remaining holders of their right to be
bought out......................................................................237
662C Right of remaining holder of securities in the bid
class to be bought out ....................................................239
Division 3—Compulsory buy-out of convertible securities 240
663A Bidder must offer to buy out holders of convertible
securities........................................................................240
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663B Bidder to tell holders of convertible securities of
their right to be bought out ............................................240
663C Right of holders of convertible securities to be
bought out......................................................................242
Part 6A.2—General compulsory acquisitions and buy-outs 243
Division 1—Compulsory acquisition of securities by 90% holder 243
664A Threshold for general compulsory acquisition
power.............................................................................243
664AA Time limit on exercising compulsory acquisition
power.............................................................................244
664B The terms for compulsory acquisition ...........................245
664C Compulsory acquisition notice ......................................245
664D Benefits outside compulsory acquisition procedure ......247
664E Holder’s right to object to the acquisition .....................248
664F The Court’s power to approve acquisition.....................249
664G Signpost—completing the acquisition of the
securities........................................................................250
Division 2—Compulsory buy-out of convertible securities by
100% holder 251
665A 100% holder must offer to buy out holders of
convertible securities.....................................................251
665B 100% holder to tell holders of convertible
securities of their right to be bought out ........................251
665C Right of holders of convertible securities to be
bought out......................................................................253
Part 6A.3—Completion of compulsory acquisition of securities 254 666A Completing the acquisition of securities........................254
666B Statutory procedure for completion ...............................255
Part 6A.4—Experts’ reports and valuations 257 667A Expert’s report...............................................................257
667AA Expert to be nominated..................................................257
667B Expert must not be an associate and must disclose
prior dealings and relationships.....................................258
667C Valuation of securities...................................................259
Part 6A.5—Records of unclaimed consideration 260 668A Company’s power to deal with unclaimed
consideration for compulsory acquisition......................260
668B Unclaimed consideration to be transferred to ASIC ......261
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Part 6A.6—ASIC powers 262 669 ASIC’s power to exempt and modify ............................262
Chapter 6B—Rights and liabilities in relation to
Chapter 6 and 6A matters 263 670A Misstatements in, or omissions from, takeover and
compulsory acquisition and buy-out documents............263
670B Right to recover for loss or damage resulting from
contravention.................................................................264
670C People liable on takeover or compulsory
acquisition statement to inform maker about
deficiencies in the statement..........................................267
670D Defences against prosecutions under
subsection 670A(3) and actions under
section 670B..................................................................268
670E Liability for proposing a bid or not carrying
through with bid ............................................................269
670F Defences........................................................................270
Chapter 6C—Information about ownership of listed
companies and managed investment
schemes 271 671A Chapter extends to some listed bodies that are not
companies......................................................................271
Part 6C.1—Substantial holding information 272 671B Information about substantial holdings must be
given to company, responsible entity and relevant
market operator .............................................................272
671C Civil liability .................................................................275
Part 6C.2—Tracing beneficial ownership of shares 276 672A Disclosure notices .........................................................276
672B Disclosure by member of relevant interests and
instructions ....................................................................276
672C ASIC may pass information on to person who
made request..................................................................277
672D Fee for complying with a direction given by a
company or scheme under this Part ...............................278
672DA Register of information about relevant interests in
listed company or listed managed investment
scheme...........................................................................278
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672E No notice of rights.........................................................282
672F Civil liability .................................................................282
Part 6C.3—ASIC powers 283 673 ASIC’s power to exempt and modify ............................283
Chapter 6CA—Continuous disclosure 285 674 Continuous disclosure—listed disclosing entity
bound by a disclosure requirement in market
listing rules ....................................................................285
675 Continuous disclosure—other disclosing entities..........287
676 Sections 674 and 675—when information is
generally available.........................................................288
677 Sections 674 and 675—material effect on price or
value ..............................................................................289
678 Application of Criminal Code to offences based on
subsection 674(2), 674(5) or 675(2) ..............................289
Chapter 6D—Fundraising 290
Part 6D.1—Application of the fundraising provisions 290 700 Coverage of the fundraising rules..................................290
702 Treatment of offers of options over securities ...............291
703 Chapter may not be contracted out of............................291
703A Operating a clearing and settlement facility is not
offering securities etc. ...................................................291
Part 6D.2—Disclosure to investors about securities 292
Division 1—Overview 292
704 When disclosure to investors is needed .........................292
705 Types of disclosure document .......................................292
Division 2—Offers that need disclosure to investors 294
706 Issue offers that need disclosure....................................294
707 Sale offers that need disclosure .....................................294
708 Offers that do not need disclosure .................................297
708AA Rights issues that do not need disclosure ......................304
708A Sale offers that do not need disclosure ..........................307
Division 3—Types of disclosure documents 313
709 Prospectuses, short-form prospectuses, profile
statements and offer information statements .................313
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Division 4—Disclosure requirements 316
710 Prospectus content—general disclosure test..................316
711 Prospectus content—specific disclosures ......................318
712 Prospectus content—short form prospectuses ...............321
713 Special prospectus content rules for continuously
quoted securities............................................................322
713A Offer of simple corporate bonds....................................324
713B Simple corporate bonds—2-part simple corporate
bonds prospectus ...........................................................330
713C Simple corporate bonds—base prospectus ....................331
713D Simple corporate bonds—offer-specific prospectus ......332
713E Simple corporate bonds—prospectus may refer to
other material lodged with ASIC...................................334
714 Contents of profile statement.........................................335
715 Contents of offer information statement ........................336
715A Presentation etc. of disclosure documents .....................337
716 Disclosure document date and consents ........................338
Division 5—Procedure for offering securities 339
717 Overview of procedure for offering securities...............339
718 Lodging of disclosure document ...................................341
719 Lodging supplementary or replacement
document—general .......................................................341
719A Lodging supplementary or replacement
document—2-part simple corporate bonds
prospectus......................................................................344
720 Consents needed for lodgment ......................................347
721 Offer must be made in, or accompanied by, the
disclosure document ......................................................349
722 Application money to be held on trust...........................351
723 Issuing or transferring the securities under a
disclosure document ......................................................351
724 Choices open to person making the offer if
disclosure document condition not met or
disclosure document defective.......................................353
725 Expiration of disclosure document ................................356
Part 6D.3—Prohibitions, liabilities and remedies 357
Division 1—Prohibitions and liabilities 357
726 Offering securities in a body that does not exist............357
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727 Offering securities without a current disclosure
document .......................................................................357
728 Misstatement in, or omission from, disclosure
document .......................................................................359
729 Right to recover for loss or damage resulting from
contravention.................................................................360
730 People liable on disclosure document to inform
person making the offer about deficiencies in the
disclosure document ......................................................362
731 Due diligence defence for prospectuses.........................363
732 Lack of knowledge defence for offer information
statements and profile statements ..................................363
733 General defences for all disclosure documents..............364
734 Restrictions on advertising and publicity.......................365
735 Obligation to keep consents and other documents.........370
736 Securities hawking prohibited .......................................370
Division 2—Remedies 372
737 Remedies for investors ..................................................372
738 Securities may be returned and refund obtained............372
Part 6D.4—ASIC’s powers 373 739 ASIC stop orders ...........................................................373
740 Anti-avoidance determinations......................................375
741 ASIC’s power to exempt and modify ............................376
Part 6D.5—Miscellaneous 377 742 Exemptions and modifications by regulations...............377
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Managed investment schemes Chapter 5C
Registration of managed investment schemes Part 5C.1
Section 601EA
Corporations Act 2001 1
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Chapter 5C—Managed investment schemes
Part 5C.1—Registration of managed investment
schemes
601EA Applying for registration
(1) To register a managed investment scheme, a person must lodge an
application with ASIC.
(2) The application must state:
(a) the name, and the address of the registered office, of the
proposed responsible entity; and
(b) the name and address of a person who has consented to be
the auditor of the compliance plan.
(3) The applicant must have the consent referred to in paragraph (2)(b)
when the application is lodged. After the scheme is registered, the
applicant must give the consent to the responsible entity. The
responsible entity must keep the consent.
(4) The following must be lodged with the application:
(a) a copy of the scheme’s constitution;
(b) a copy of the scheme’s compliance plan;
(c) a statement signed by the directors of the proposed
responsible entity that:
(i) the scheme’s constitution complies with
sections 601GA and 601GB; and
(ii) the scheme’s compliance plan complies with
section 601HA.
Note: Section 601HC requires that the copy of the compliance plan be
signed by the directors of the responsible entity.
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Chapter 5C Managed investment schemes
Part 5C.1 Registration of managed investment schemes
Section 601EB
2 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601EB Registration of managed investment scheme
(1) ASIC must register the scheme within 14 days of lodgment of the
application, unless it appears to ASIC that:
(c) the application does not comply with section 601EA; or
(d) the proposed responsible entity does not meet the
requirements of section 601FA; or
(e) the scheme’s constitution does not meet the requirements of
sections 601GA and 601GB; or
(f) the scheme’s compliance plan does not meet the
requirements of section 601HA; or
(g) the copy of the compliance plan lodged with the application
is not signed as required by section 601HC; or
(h) arrangements are not in place that will satisfy the
requirements of section 601HG in relation to audit of
compliance with the plan.
(2) If ASIC registers the scheme, ASIC must give it an ARSN.
(3) ASIC must keep a record of the registration of the scheme.
(4) For the purpose of determining whether subsection (1) is satisfied
in relation to the scheme:
(a) references in Parts 5C.3, 5C.4 and 5C.5 to a registered
scheme are taken to include a reference to the scheme; and
(b) references in those Parts to the responsible entity of a
registered scheme are taken to include a reference to the
proposed responsible entity of the scheme.
601EC All documents etc. lodged with ASIC to bear ARSN or ABN
After a managed investment scheme is registered, all documents
relating to the scheme that are lodged with ASIC must set out:
(a) the scheme’s ARSN; or
(b) if the last 9 digits of the scheme’s ARSN are the same, and in
the same order, as the last 9 digits of its ABN—the scheme’s
ABN.
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Managed investment schemes Chapter 5C
Registration of managed investment schemes Part 5C.1
Section 601ED
Corporations Act 2001 3
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Note: In any case where the scheme’s ARSN would be used, the scheme’s
ABN may be used instead if section 1344 is satisfied.
601ED When a managed investment scheme must be registered
(1) Subject to subsection (2), a managed investment scheme must be
registered under section 601EB if:
(a) it has more than 20 members; or
(b) it was promoted by a person, or an associate of a person, who
was, when the scheme was promoted, in the business of
promoting managed investment schemes; or
(c) a determination under subsection (3) is in force in relation to
the scheme and the total number of members of all of the
schemes to which the determination relates exceeds 20.
(2) A managed investment scheme does not have to be registered if all
the issues of interests in the scheme that have been made would not
have required the giving of a Product Disclosure Statement under
Division 2 of Part 7.9 if the scheme had been registered when the
issues were made.
(3) ASIC may, in writing, determine that a number of managed
investment schemes are closely related and that each of them has to
be registered at any time when the total number of members of all
of the schemes exceeds 20. ASIC must give written notice of the
determination to the operator of each of the schemes.
(4) For the purpose of this section, when working out how many
members a scheme has:
(a) joint holders of an interest in the scheme count as a single
member; and
(b) an interest in the scheme held on trust for a beneficiary is
taken to be held by the beneficiary (rather than the trustee) if:
(i) the beneficiary is presently entitled to a share of the
trust estate or of the income of the trust estate; or
(ii) the beneficiary is, individually or together with other
beneficiaries, in a position to control the trustee.
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Chapter 5C Managed investment schemes
Part 5C.1 Registration of managed investment schemes
Section 601EE
4 Corporations Act 2001
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(5) A person must not operate in this jurisdiction a managed
investment scheme that this section requires to be registered under
section 601EB unless the scheme is so registered.
(6) For the purpose of subsection (5), a person is not operating a
scheme merely because:
(a) they are acting as an agent or employee of another person; or
(b) they are taking steps to wind up the scheme or remedy a
defect that led to the scheme being deregistered.
(7) A person who would otherwise contravene subsection (5) because
an interest in a scheme is held in trust for 2 or more beneficiaries
(see paragraph (4)(b)) does not contravene that subsection if they
prove that they did not know, and had no reason to suspect, that the
interest was held in that way.
601EE Unregistered schemes may be wound up
(1) If a person operates a managed investment scheme in
contravention of subsection 601ED(5), the following may apply to
the Court to have the scheme wound up:
(a) ASIC;
(b) the person operating the scheme;
(c) a member of the scheme.
(2) The Court may make any orders it considers appropriate for the
winding up of the scheme.
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Managed investment schemes Chapter 5C
The responsible entity Part 5C.2
Responsibilities and powers Division 1
Section 601FA
Corporations Act 2001 5
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Part 5C.2—The responsible entity
Division 1—Responsibilities and powers
601FA Responsible entity to be public company and hold Australian
financial services licence
The responsible entity of a registered scheme must be a public
company that holds an Australian financial services licence
authorising it to operate a managed investment scheme.
601FB Responsible entity to operate scheme
(1) The responsible entity of a registered scheme is to operate the
scheme and perform the functions conferred on it by the scheme’s
constitution and this Act.
(2) The responsible entity has power to appoint an agent, or otherwise
engage a person, to do anything that it is authorised to do in
connection with the scheme. For the purpose of determining
whether:
(a) there is a liability to the members; or
(b) the responsible entity has properly performed its duties for
the purposes of subsection 601GA(2);
the responsible entity is taken to have done (or failed to do)
anything that the agent or person has done (or failed to do) because
of the appointment or engagement, even if they were acting
fraudulently or outside the scope of their authority or engagement.
Note: A scheme’s constitution may provide for the responsible entity to
be indemnified for liabilities—see subsection 601GA(2).
(3) An agent appointed, or a person otherwise engaged, by:
(a) the agent or person referred to in subsection (2); or
(b) a person who is taken under this subsection to be an agent of
the responsible entity;
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 1 Responsibilities and powers
Section 601FC
6 Corporations Act 2001
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to do anything that the responsible entity is authorised to do in
connection with the scheme is taken to be an agent appointed by
the responsible entity to do that thing for the purposes of
subsection (2).
(4) If:
(a) an agent holds scheme property on behalf of the responsible
entity; and
(b) the agent is liable to indemnify the responsible entity against
any loss or damage that:
(i) the responsible entity suffers as a result of a wrongful or
negligent act or omission of the agent; and
(ii) relates to a failure by the responsible entity to perform
its duties in relation to the scheme;
any amount recovered under the indemnity forms part of the
scheme property.
601FC Duties of responsible entity
(1) In exercising its powers and carrying out its duties, the responsible
entity of a registered scheme must:
(a) act honestly; and
(b) exercise the degree of care and diligence that a reasonable
person would exercise if they were in the responsible entity’s
position; and
(c) act in the best interests of the members and, if there is a
conflict between the members’ interests and its own interests,
give priority to the members’ interests; and
(d) treat the members who hold interests of the same class
equally and members who hold interests of different classes
fairly; and
(e) not make use of information acquired through being the
responsible entity in order to:
(i) gain an improper advantage for itself or another person;
or
(ii) cause detriment to the members of the scheme; and
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The responsible entity Part 5C.2
Responsibilities and powers Division 1
Section 601FC
Corporations Act 2001 7
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(f) ensure that the scheme’s constitution meets the requirements
of sections 601GA and 601GB; and
(g) ensure that the scheme’s compliance plan meets the
requirements of section 601HA; and
(h) comply with the scheme’s compliance plan; and
(i) ensure that scheme property is:
(i) clearly identified as scheme property; and
(ii) held separately from property of the responsible entity
and property of any other scheme; and
(j) ensure that the scheme property is valued at regular intervals
appropriate to the nature of the property; and
(k) ensure that all payments out of the scheme property are made
in accordance with the scheme’s constitution and this Act;
and
(l) report to ASIC any breach of this Act that:
(i) relates to the scheme; and
(ii) has had, or is likely to have, a materially adverse effect
on the interests of members;
as soon as practicable after it becomes aware of the breach;
and
(m) carry out or comply with any other duty, not inconsistent
with this Act, that is conferred on the responsible entity by
the scheme’s constitution.
(2) The responsible entity holds scheme property on trust for scheme
members.
Note: Under subsection 601FB(2), the responsible entity may appoint an
agent to hold scheme property separately from other property.
(3) A duty of the responsible entity under subsection (1) or (2)
overrides any conflicting duty an officer or employee of the
responsible entity has under Part 2D.1.
(5) A responsible entity who contravenes subsection (1), and any
person who is involved in a responsible entity’s contravention of
that subsection, contravenes this subsection.
Note 1: Section 79 defines involved.
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 1 Responsibilities and powers
Section 601FD
8 Corporations Act 2001
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Note 2: Subsection (5) is a civil penalty provision (see section 1317E).
601FD Duties of officers of responsible entity
(1) An officer of the responsible entity of a registered scheme must:
(a) act honestly; and
(b) exercise the degree of care and diligence that a reasonable
person would exercise if they were in the officer’s position;
and
(c) act in the best interests of the members and, if there is a
conflict between the members’ interests and the interests of
the responsible entity, give priority to the members’ interests;
and
(d) not make use of information acquired through being an
officer of the responsible entity in order to:
(i) gain an improper advantage for the officer or another
person; or
(ii) cause detriment to the members of the scheme; and
(e) not make improper use of their position as an officer to gain,
directly or indirectly, an advantage for themselves or for any
other person or to cause detriment to the members of the
scheme; and
(f) take all steps that a reasonable person would take, if they
were in the officer’s position, to ensure that the responsible
entity complies with:
(i) this Act; and
(ii) any conditions imposed on the responsible entity’s
Australian financial services licence; and
(iii) the scheme’s constitution; and
(iv) the scheme’s compliance plan.
(2) A duty of an officer of the responsible entity under subsection (1)
overrides any conflicting duty the officer has under Part 2D.1.
(3) A person who contravenes, or is involved in a contravention of,
subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
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The responsible entity Part 5C.2
Responsibilities and powers Division 1
Section 601FE
Corporations Act 2001 9
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Note 2: Subsection (3) is a civil penalty provision (see section 1317E).
(4) A person must not intentionally or recklessly contravene, or be
involved in a contravention of, subsection (1).
601FE Duties of employees of responsible entity
(1) An employee of the responsible entity of a registered scheme must
not:
(a) make use of information acquired through being an employee
of the responsible entity in order to:
(i) gain an improper advantage for the employee or another
person; or
(ii) cause detriment to members of the scheme; or
(b) make improper use of their position as an employee to gain,
directly or indirectly, an advantage for themselves or for any
other person or to cause detriment to the members of the
scheme.
(2) A duty of an employee of the responsible entity under
subsection (1) overrides any conflicting duty the employee has
under Part 2D.1.
(3) A person who contravenes, or is involved in a contravention of,
subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: Subsection (3) is a civil penalty provision (see section 1317E).
(4) A person must not intentionally contravene, or be involved in a
contravention of, subsection (1).
601FF Surveillance checks by ASIC
(1) ASIC may, from time to time, check whether the responsible entity
of a registered scheme is complying with the scheme’s constitution
and compliance plan and with this Act.
Note: For this purpose ASIC may exercise the powers set out in
Division 3 of Part 3 of the ASIC Act.
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 1 Responsibilities and powers
Section 601FG
10 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) The responsible entity and its officers must take all reasonable
steps to assist ASIC in carrying out a check under subsection (1).
(3) A person must not intentionally or recklessly fail to comply with
subsection (2).
601FG Acquisition of interest in scheme by responsible entity
(1) The responsible entity of a registered scheme may acquire and hold
an interest in the scheme, but it must only do so:
(a) for not less than the consideration that would be payable if
the interest were acquired by another person; and
(b) subject to terms and conditions that would not disadvantage
other members.
Note: If the responsible entity holds an interest in the scheme, it does so
subject to section 253E (certain members cannot vote or be
counted).
(2) A responsible entity who contravenes subsection (1), and any
person who is involved in a responsible entity’s contravention of
that subsection, contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: Subsection (2) is a civil penalty provision (see section 1317E).
(3) A person must not intentionally be involved in a responsible
entity’s contravention of subsection (1).
601FH Liquidator etc. of responsible entity entitled to exercise
indemnity rights
If the company that is a registered scheme’s responsible entity is
being wound up, is under administration or has executed a deed of
company arrangement that has not terminated:
(a) a provision of the scheme’s constitution, or of another
instrument, is void against the liquidator, or the administrator
of the company or the deed, if it purports to deny the
company a right to be indemnified out of the scheme
property that the company would have had if it were not
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Managed investment schemes Chapter 5C
The responsible entity Part 5C.2
Responsibilities and powers Division 1
Section 601FH
Corporations Act 2001 11
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being wound up, were not under administration, or had not
executed a deed of company arrangement; and
(b) a right of the company to be indemnified out of the scheme
property may only be exercised by the liquidator or the
administrator of the company or the deed.
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 2 Changing the responsible entity
Section 601FJ
12 Corporations Act 2001
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Division 2—Changing the responsible entity
601FJ Changes only take effect when ASIC alters record of
registration
(1) Despite anything in this Division, the company named in ASIC’s
record of registration as the responsible entity or temporary
responsible entity of a registered scheme remains the scheme’s
responsible entity until the record is altered to name another
company as the scheme’s responsible entity or temporary
responsible entity.
(2) A purported change of the scheme’s responsible entity is
ineffective unless it is in accordance with this Division.
601FK Requirements of section 601FA must be met
A company cannot be chosen or appointed as the responsible entity
or temporary responsible entity of a registered scheme unless it
meets the requirements of section 601FA.
601FL Retirement of responsible entity
(1) If the responsible entity of a registered scheme wants to retire, it
must call a members’ meeting to explain its reason for wanting to
retire and to enable the members to vote on a resolution to choose a
company to be the new responsible entity. The resolution must be
an extraordinary resolution if the scheme is not listed.
(2) If the members choose a company to be the new responsible entity
and that company has consented, in writing, to becoming the
scheme’s responsible entity:
(a) as soon as practicable and in any event within 2 business
days after the resolution is passed, the current responsible
entity must lodge a notice with ASIC asking it to alter the
record of the scheme’s registration to name the chosen
company as the scheme’s responsible entity; and
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The responsible entity Part 5C.2
Changing the responsible entity Division 2
Section 601FM
Corporations Act 2001 13
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(b) if the current responsible entity does not lodge the notice
required by paragraph (a), the company chosen by the
members to be the new responsible entity may lodge that
notice; and
(c) ASIC must comply with the notice when it is lodged.
(3) If the members do not choose a company to be the new responsible
entity, or the company they choose does not consent to becoming
the scheme’s responsible entity, the current responsible entity may
apply to the Court for appointment of a temporary responsible
entity under section 601FP.
(4) A person must not lodge a notice under subsection (2) unless the
consent referred to in that subsection has been given before the
notice is lodged.
601FM Removal of responsible entity by members
(1) If members of a registered scheme want to remove the responsible
entity, they may take action under Division 1 of Part 2G.4 for the
calling of a members’ meeting to consider and vote on a resolution
that the current responsible entity should be removed and a
resolution choosing a company to be the new responsible entity.
The resolutions must be extraordinary resolutions if the scheme is
not listed.
(2) If the members vote to remove the responsible entity and, at the
same meeting, choose a company to be the new responsible entity
that consents, in writing, to becoming the scheme’s responsible
entity:
(a) as soon as practicable and in any event within 2 business
days after the resolution is passed, the current responsible
entity must lodge a notice with ASIC asking it to alter the
record of the scheme’s registration to name the chosen
company as the scheme’s responsible entity; and
(b) if the current responsible entity does not lodge the notice
required by paragraph (a), the company chosen by the
members to be the new responsible entity may lodge that
notice; and
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 2 Changing the responsible entity
Section 601FN
14 Corporations Act 2001
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(c) ASIC must comply with the notice when it is lodged.
(3) A person must not lodge a notice under subsection (2) unless the
consent referred to in that subsection has been given before the
notice is lodged.
Note: If the members vote to remove the responsible entity but do not, at
the same meeting, choose a company to be the new responsible
entity, or the company they choose does not consent to becoming
the scheme’s responsible entity, the scheme must be wound up
(see section 601NE).
601FN ASIC or scheme member may apply to Court for
appointment of temporary responsible entity
ASIC or a member of the registered scheme may apply to the Court
for the appointment of a temporary responsible entity of the
scheme under section 601FP if the scheme does not have a
responsible entity that meets the requirements of section 601FA.
601FP Appointment of temporary responsible entity by Court
(1) On application under section 601FL or 601FN, the Court may, by
order, appoint a company as the temporary responsible entity of a
registered scheme if the Court is satisfied that the appointment is in
the interest of the members.
(2) The Court may make any further orders that it considers necessary.
(3) If the application was made by the current responsible entity, it
must, as soon as practicable after the Court’s order appointing the
temporary responsible entity, lodge a notice with ASIC informing
ASIC of the appointment made by the Court.
(4) As soon as practicable after the appointment, ASIC must alter the
record of the scheme’s registration to name the appointed company
as the scheme’s temporary responsible entity.
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Managed investment schemes Chapter 5C
The responsible entity Part 5C.2
Changing the responsible entity Division 2
Section 601FQ
Corporations Act 2001 15
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601FQ Temporary responsible entity to take steps for appointment
of new responsible entity
(1) The temporary responsible entity of a registered scheme must call a
members’ meeting for the purpose of the members, by resolution,
choosing a company to be the new responsible entity. The
resolution must be an extraordinary resolution if the scheme is not
listed. The temporary responsible entity must call the meeting as
soon as practicable and, in any event, within 3 months of becoming
the temporary responsible entity.
(2) Within that 3 months, the temporary responsible entity may call
further members’ meetings for the purpose of choosing a company
to be the new responsible entity. Before the end of the 3 months, it
may apply to the Court for an extension of that period. If the Court
grants the extension, the temporary responsible entity may, within
the extended period, call further members’ meetings for the
purpose of choosing a company to be the new responsible entity.
(3) Provided it still meets the requirements in section 601FA, nothing
prevents the company that is the temporary responsible entity from
being chosen as the new responsible entity.
(4) If the members choose a company to be the new responsible entity
and that company has consented, in writing, to becoming the
scheme’s responsible entity, the temporary responsible entity must,
as soon as practicable, lodge a notice with ASIC asking it to alter
the record of the scheme’s registration to name the chosen
company as the scheme’s responsible entity. ASIC must comply
with the notice when it is lodged.
(5) The temporary responsible entity must apply to the Court for an
order directing it to wind up the scheme, and the Court may make
the order, if:
(a) no meeting is called within the 3 months or extended period
for the purpose of choosing a new company to be the
responsible entity; or
(b) the meeting or meetings called within that period for that
purpose have not resulted in the members choosing a
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Chapter 5C Managed investment schemes
Part 5C.2 The responsible entity
Division 2 Changing the responsible entity
Section 601FQ
16 Corporations Act 2001
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company to be the new responsible entity that consents to
becoming the scheme’s responsible entity.
ASIC or a member of the scheme may apply for the order if the
temporary responsible entity does not do so.
(6) The temporary responsible entity must not lodge a notice under
subsection (4) unless the consent referred to in that subsection has
been given before the notice is lodged.
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The responsible entity Part 5C.2
Consequences of change of responsible entity Division 3
Section 601FR
Corporations Act 2001 17
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Division 3—Consequences of change of responsible entity
601FR Former responsible entity to hand over books and provide
reasonable assistance
If the responsible entity of a registered scheme changes, the former
responsible entity must:
(a) as soon as practicable give the new responsible entity any
books in the former responsible entity’s possession or control
that this Act requires to be kept in relation to the scheme; and
(b) give other reasonable assistance to the new responsible entity
to facilitate the change of responsible entity.
601FS Rights, obligations and liabilities of former responsible entity
(1) If the responsible entity of a registered scheme changes, the rights,
obligations and liabilities of the former responsible entity in
relation to the scheme become rights, obligations and liabilities of
the new responsible entity.
(2) Despite subsection (1), the following rights and liabilities remain
rights and liabilities of the former responsible entity:
(a) any right of the former responsible entity to be paid fees for
the performance of its functions before it ceased to be the
responsible entity; and
(b) any right of the former responsible entity to be indemnified
for expenses it incurred before it ceased to be the responsible
entity; and
(c) any right, obligation or liability that the former responsible
entity had as a member of the scheme; and
(d) any liability for which the former responsible entity could not
have been indemnified out of the scheme property if it had
remained the scheme’s responsible entity.
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Part 5C.2 The responsible entity
Division 3 Consequences of change of responsible entity
Section 601FT
18 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601FT Effect of change of responsible entity on documents etc. to
which former responsible entity is party
(1) If the responsible entity of a registered scheme changes, a
document:
(a) to which the former responsible entity is a party, in which a
reference is made to the former responsible entity, or under
which the former responsible entity has acquired or incurred
a right, obligation or liability, or might have acquired or
incurred a right, obligation or liability if it had remained the
responsible entity; and
(b) that is capable of having effect after the change;
has effect as if the new responsible entity (and not the former
responsible entity) were a party to it, were referred to in it or had or
might have acquired or incurred the right, obligation or liability
under it.
(2) Subsection (1) does not apply to a right, obligation or liability that
remains a right, obligation or liability of the former responsible
entity because of subsection 601FS(2).
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Section 601GA
Corporations Act 2001 19
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Part 5C.3—The constitution
601GA Contents of the constitution
(1) The constitution of a registered scheme must make adequate
provision for:
(a) the consideration that is to be paid to acquire an interest in
the scheme; and
(b) the powers of the responsible entity in relation to making
investments of, or otherwise dealing with, scheme property;
and
(c) the method by which complaints made by members in
relation to the scheme are to be dealt with; and
(d) winding up the scheme.
(2) If the responsible entity is to have any rights to be paid fees out of
scheme property, or to be indemnified out of scheme property for
liabilities or expenses incurred in relation to the performance of its
duties, those rights:
(a) must be specified in the scheme’s constitution; and
(b) must be available only in relation to the proper performance
of those duties;
and any other agreement or arrangement has no effect to the extent
that it purports to confer such a right.
(3) If the responsible entity is to have any powers to borrow or raise
money for the purposes of the scheme:
(a) those powers must be specified in the scheme’s constitution;
and
(b) any other agreement or arrangement has no effect to the
extent that it purports to confer such a power.
(4) If members are to have a right to withdraw from the scheme, the
scheme’s constitution must:
(a) specify the right; and
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(b) if the right may be exercised while the scheme is liquid (as
defined in section 601KA)—set out adequate procedures for
making and dealing with withdrawal requests; and
(c) if the right may be exercised while the scheme is not liquid
(as defined in section 601KA)—provide for the right to be
exercised in accordance with Part 5C.6 and set out any other
adequate procedures (consistent with that Part) that are to
apply to making and dealing with withdrawal requests.
The right to withdraw, and any provisions in the constitution
setting out procedures for making and dealing with withdrawal
requests, must be fair to all members.
601GB Constitution must be legally enforceable
The constitution of a registered scheme must be contained in a
document that is legally enforceable as between the members and
the responsible entity.
601GC Changing the constitution
(1) The constitution of a registered scheme may be modified, or
repealed and replaced with a new constitution:
(a) by special resolution of the members of the scheme; or
(b) by the responsible entity if the responsible entity reasonably
considers the change will not adversely affect members’
rights.
(2) The responsible entity must lodge with ASIC a copy of the
modification or the new constitution. The modification, or repeal
and replacement, cannot take effect until the copy has been lodged.
(3) The responsible entity must lodge with ASIC a consolidated copy
of the scheme’s constitution if ASIC directs it to do so.
(4) The responsible entity must send a copy of the scheme’s
constitution to a member of the scheme within 7 days if the
member:
(a) asks the responsible entity, in writing, for the copy; and
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(b) pays any fee (up to the prescribed amount) required by the
responsible entity.
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Chapter 5C Managed investment schemes
Part 5C.4 The compliance plan
Section 601HA
22 Corporations Act 2001
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Part 5C.4—The compliance plan
601HA Contents of the compliance plan
(1) The compliance plan of a registered scheme must set out adequate
measures that the responsible entity is to apply in operating the
scheme to ensure compliance with this Act and the scheme’s
constitution, including the arrangements for:
(a) ensuring that all scheme property is clearly identified as
scheme property and held separately from property of the
responsible entity and property of any other scheme (see
paragraph 601FC(1)(i)); and
(b) if the scheme is required to have a compliance committee
(see section 601JA)—ensuring that the compliance
committee functions properly, including adequate
arrangements relating to:
(i) the membership of the committee; and
(ii) how often committee meetings are to be held; and
(iii) the committee’s reports and recommendations to the
responsible entity; and
(iv) the committee’s access to the scheme’s accounting
records and to the auditor of the scheme’s financial
statements; and
(v) the committee’s access to information that is relevant to
the responsible entity’s compliance with this Act; and
(c) ensuring that the scheme property is valued at regular
intervals appropriate to the nature of the property; and
(d) ensuring that compliance with the plan is audited as required
by section 601HG; and
(e) ensuring adequate records of the scheme’s operations are
kept; and
(f) any other matter prescribed by the regulations.
(2) If:
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(a) a registration application is made as a result of a resolution
passed under subparagraph 1457(1)(a)(i); and
(b) the resolution included a direction under
subsection 1457(1A);
the compliance plan lodged with the application must provide for
scheme property to be held by a person other than the responsible
entity, or a person that is not related to the responsible entity, as the
responsible entity’s agent.
601HB Compliance plan may incorporate provisions from another
scheme’s plan
(1) The responsible entity of a registered scheme may lodge with
ASIC a compliance plan for the scheme that is expressed to
incorporate specified provisions, as in force at a specified time, of
a compliance plan of another registered scheme of which it is also
the responsible entity.
(2) The specified provisions, as in force at the specified time, are taken
to be included in the plan.
601HC Directors must sign lodged copy of compliance plan
The copy of a scheme’s compliance plan that is lodged with ASIC
must be signed by all the directors of the responsible entity.
601HD ASIC may require further information about compliance
plan
(1) ASIC may direct the responsible entity of a registered scheme to
give it information about the arrangements contained in the
compliance plan. The direction is to be given by notice in writing
to the responsible entity.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Section 601HE
24 Corporations Act 2001
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601HE Changing the compliance plan
Responsible entity’s powers
(1) The responsible entity of a registered scheme may modify the
scheme’s compliance plan or repeal it and replace it with a new
compliance plan.
ASIC may require modifications
(2) ASIC may direct the responsible entity of a registered scheme to
modify the scheme’s compliance plan, as set out in the direction, to
ensure that the plan is consistent with section 601HA. The
direction is to be given by notice in writing to the responsible
entity.
Lodgment of modification or new plan
(3) The responsible entity must lodge with ASIC a copy of a
modification of the scheme’s compliance plan or of a new
compliance plan within 14 days after the modification is made or
the old plan is repealed. The copy must be signed by all the
directors of the responsible entity.
601HF ASIC may require consolidation of compliance plan to be
lodged
(1) ASIC may direct the responsible entity of a registered scheme to
lodge a consolidated copy of the scheme’s compliance plan.
(2) The consolidation must set out:
(a) the plan as modified to the time of lodgment; and
(b) if required by ASIC’s direction—the full text of provisions
taken to be included in the plan by subsection 601HB(2).
601HG Audit of compliance plan
(1) The responsible entity of a registered scheme must ensure that at
all times a registered company auditor, an audit firm or an
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authorised audit company is engaged to audit compliance with the
scheme’s compliance plan in accordance with this section. This
auditor, firm or company is referred to as the auditor of the
compliance plan.
(2) A person is not eligible to act as the individual auditor, lead auditor
or review auditor of the compliance plan if the person is:
(a) an associate of the responsible entity; or
(b) an agent holding scheme property on behalf of the
responsible entity or an associate of an agent of that kind; or
(c) the auditor of the responsible entity’s financial statements.
(2A) However:
(a) the auditor of the compliance plan and the auditor of the
responsible entity’s financial statements may work for the
same firm of auditors or audit company; and
(b) the lead auditor or review auditor of the compliance plan (on
the one hand) and the lead auditor or review auditor of the
responsible entity’s financial statements (on the other hand)
may work for the same firm of auditors or audit company.
(3) Within 3 months after the end of a financial year of the scheme, the
auditor of the compliance plan must:
(a) examine the scheme’s compliance plan; and
(b) carry out:
(i) if the scheme has only had one responsible entity during
the financial year—an audit of the responsible entity’s
compliance with the compliance plan during the
financial year; or
(ii) if the scheme has had more than one responsible entity
during the financial year—an audit of each responsible
entity’s compliance with the compliance plan during
that part of the financial year when it was the scheme’s
responsible entity; and
(c) give to the scheme’s current responsible entity a report that
states whether, in the auditor’s opinion:
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(i) the responsible entity, or each responsible entity,
complied with the scheme’s compliance plan during the
financial year or that part of the financial year when it
was the scheme’s responsible entity; and
(ii) the plan continues to meet the requirements of this Part.
Contravention by individual auditor
(4) An individual auditor conducting an audit of a compliance plan
contravenes this subsection if:
(a) the auditor is aware of circumstances that:
(i) the auditor has reasonable grounds to suspect amount to
a contravention of this Act; or
(ii) amount to an attempt, in relation to the audit, by any
person to unduly influence, coerce, manipulate or
mislead a person involved in the conduct of the audit
(see subsection (12)); or
(iii) amount to an attempt, by any person, to otherwise
interfere with the proper conduct of the audit; and
(b) if subparagraph (a)(i) applies:
(i) the contravention is a significant one; or
(ii) the contravention is not a significant one and the auditor
believes that the contravention has not been or will not
be adequately dealt with by commenting on it in the
auditor’s report or bringing it to the attention of the
directors; and
(c) the auditor does not notify ASIC in writing of those
circumstances as soon as practicable, and in any case within
28 days, after the auditor becomes aware of those
circumstances.
Contravention by audit company
(4A) An audit company conducting an audit of a compliance plan
contravenes this subsection if:
(a) the lead auditor for the audit is aware of circumstances that:
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(i) the lead auditor has reasonable grounds to suspect
amount to a contravention of this Act; or
(ii) amount to an attempt, in relation to the audit, by any
person to unduly influence, coerce, manipulate or
mislead a person involved in the conduct of the audit
(see subsection (12)); or
(iii) amount to an attempt, by any person, to otherwise
interfere with the proper conduct of the audit; and
(b) if subparagraph (a)(i) applies:
(i) the contravention is a significant one; or
(ii) the contravention is not a significant one and the lead
auditor believes that the contravention has not been or
will not be adequately dealt with by commenting on it in
the auditor’s report or bringing it to the attention of the
directors; and
(c) the lead auditor does not notify ASIC in writing of those
circumstances as soon as practicable, and in any case within
28 days, after the lead auditor becomes aware of those
circumstances.
Contravention by lead auditor
(4B) A person contravenes this subsection if:
(a) the person is the lead auditor for an audit of a compliance
plan; and
(b) the person is aware of circumstances that:
(i) the person has reasonable grounds to suspect amount to
a contravention of this Act; or
(ii) amount to an attempt, in relation to the audit, by any
person to unduly influence, coerce, manipulate or
mislead a person involved in the conduct of the audit
(see subsection (12)); or
(iii) amount to an attempt, by any person, to otherwise
interfere with the proper conduct of the audit; and
(c) if subparagraph (b)(i) applies:
(i) the contravention is a significant one; or
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(ii) the contravention is not a significant one and the person
believes that the contravention has not been or will not
be adequately dealt with by commenting on it in the
auditor’s report or bringing it to the attention of the
directors; and
(d) the person does not notify ASIC in writing of those
circumstances as soon as practicable, and in any case within
28 days, after the person becomes aware of those
circumstances.
(5) The auditor of the compliance plan:
(a) has a right of access at all reasonable times to the books of
the scheme; and
(b) may require an officer of the responsible entity to give the
auditor information and explanations for the purposes of the
audit.
(6) An officer of the responsible entity must:
(a) allow the auditor of the compliance plan to have access to the
books of the scheme; and
(b) give the auditor information or an explanation required under
subsection (5); and
(c) otherwise assist the conduct of the audit.
(7) The responsible entity must lodge the auditor’s report under
subsection (3) with ASIC at the same time as the financial
statements and reports in respect of the scheme are to be lodged
with ASIC (see sections 292 and 321).
(7A) An offence based on subsection (1), (3), (6) or (7) is an offence of
strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(8) The auditor of the compliance plan has qualified privilege in
respect of:
(a) a statement made in a report under subsection (3); or
(b) a notification to ASIC under subsection (4).
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(9) This section does not prevent the responsible entity from arranging
for the auditor of the compliance plan to carry out audits in
addition to those required by this section.
Significant contraventions
(10) In determining for the purposes of this section whether a
contravention of this Act is a significant one, have regard to:
(a) the level of penalty provided for in relation to the
contravention; and
(b) the effect that the contravention has, or may have, on:
(i) the overall financial position of the company, registered
scheme or disclosing entity; or
(ii) the adequacy of the information available about the
overall financial position of the company, registered
scheme or disclosing entity; and
(c) any other relevant matter.
(11) Without limiting paragraph (10)(a), a penalty provided for in
relation to a contravention of a provision of Part 2M.2 or 2M.3, or
section 324DAA, 324DAB or 324DAC, includes a penalty
imposed on a director, because of the operation of section 344, for
failing to take reasonable steps to comply with, or to secure
compliance with, that provision.
Person involved in audit
(12) In this section:
person involved in the conduct of an audit means:
(a) the auditor; or
(b) the lead auditor for the audit; or
(c) the review auditor for the audit; or
(d) a professional member of the audit team for the audit; or
(e) any other person involved in the conduct of the audit.
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Section 601HH
30 Corporations Act 2001
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601HH Removal and resignation of auditors
Removal of auditor by responsible entity
(1) The responsible entity:
(a) must remove the auditor of the compliance plan if the auditor
becomes ineligible under subsection 601HG(2) to act as
auditor of the compliance plan; and
(b) may, with ASIC’s consent, remove the auditor of the
compliance plan.
Resignation of auditor
(2) The auditor of the compliance plan may resign by written notice to
the responsible entity if:
(a) the auditor:
(i) applies to ASIC in writing for its consent to the
resignation; and
(ii) gives the responsible entity written notice of the
application at or about the same time as applying to
ASIC; and
(b) ASIC consents to the resignation.
(3) As soon as practicable after receiving the application, ASIC must
notify the auditor and the responsible entity whether it consents to
the resignation.
(4) A statement by the auditor in the application or in answer to an
inquiry by ASIC relating to the reasons for the application:
(a) is not admissible in evidence in any civil or criminal
proceedings against the auditor (other than proceedings for a
contravention of section 1308); and
(b) may not be made the ground of a prosecution (other than a
prosecution for a contravention of section 1308), action or
suit against the auditor.
A certificate by ASIC that the statement was made in the
application, or in answer to an inquiry by ASIC, is conclusive
evidence that the statement was so made.
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(5) The auditor’s resignation takes effect on the later of:
(a) the day (if any) specified in the notice of resignation; or
(b) the day ASIC consents to the resignation; or
(c) the day (if any) fixed by ASIC for the purpose.
601HI Action on change of auditor of compliance plan
If the auditor of the compliance plan of a registered scheme
changes, the responsible entity must, as soon as practicable after
the change and in writing, ask ASIC to alter the record of the
scheme’s registration to show the name of the new auditor as the
auditor of the scheme’s compliance plan. ASIC must comply with
the request if the change complies with this Act.
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Part 5C.5 The compliance committee
Section 601JA
32 Corporations Act 2001
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Part 5C.5—The compliance committee
601JA When is a compliance committee required?
(1) The responsible entity of a registered scheme must establish a
compliance committee if less than half of the directors of the
responsible entity are external directors.
(2) A director of the responsible entity is an external director if they:
(a) are not, and have not been in the previous 2 years, an
employee of the responsible entity or a related body
corporate; and
(b) are not, and have not been in the previous 2 years, a senior
manager of a related body corporate; and
(c) are not, and have not been in the previous 2 years,
substantially involved in business dealings, or in a
professional capacity, with the responsible entity or a related
body corporate; and
(d) are not a member of a partnership that is, or has been in the
previous 2 years, substantially involved in business dealings,
or in a professional capacity, with the responsible entity or a
related body corporate; and
(e) do not have a material interest in the responsible entity or a
related body corporate; and
(f) are not a relative of a person who has a material interest in
the responsible entity or a related body corporate.
(3) The responsible entity must establish the compliance committee
within 14 days after it is required to do so by subsection (1) or
within any longer period that ASIC has agreed to in writing.
(3A) A person must not intentionally or recklessly fail to comply with
subsection (3).
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(4) In agreeing to a longer period under subsection (3), ASIC may
impose conditions to be complied with and the responsible entity
must comply with them.
(4A) An offence based on subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
601JB Membership of compliance committee
(1) A scheme’s compliance committee must have at least 3 members,
and a majority of them must be external members.
(2) A member of the compliance committee is an external member if
they:
(a) are not, and have not been in the previous 2 years, a
non-external director, a senior manager or an employee of the
responsible entity or a related body corporate; and
(b) are not, and have not been in the previous 2 years,
substantially involved in business dealings, or in a
professional capacity, with the responsible entity or a related
body corporate; and
(c) are not a member of a partnership that is, or has been in the
previous 2 years, substantially involved in business dealings,
or in a professional capacity, with the responsible entity or a
related body corporate; and
(d) do not have a material interest in the responsible entity or a
related body corporate; and
(e) are not a relative of a person who has a material interest in
the responsible entity or a related body corporate.
(3) For the purposes of paragraph (2)(a), a person who is a director of
a related body corporate, but not of the responsible entity itself, is
an external director of the related body corporate if they would
have been an external director of the responsible entity under
subsection 601JA(2) had they been a director of the responsible
entity.
(4) A person who is, or has been, either:
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(a) an external director of the responsible entity; or
(b) a member of a compliance committee for the scheme or
another registered managed investment scheme operated by
the responsible entity;
is not, merely because of that directorship or membership, taken to
be, or to have been, substantially involved in business dealings, or
in a professional capacity, with the responsible entity.
(5) If the membership of the scheme’s compliance committee ceases to
satisfy subsection (1), the responsible entity must make
appointments to the committee to satisfy that subsection within 14
days or within any longer period that ASIC has agreed to in
writing.
(6) In agreeing to a longer period under subsection (5), ASIC may
impose conditions to be complied with and the responsible entity
must comply with them.
(7) An offence based on subsection (5) or (6) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
601JC Functions of compliance committee
(1) The functions of a scheme’s compliance committee are:
(a) to monitor to what extent the responsible entity complies
with the scheme’s compliance plan and to report on its
findings to the responsible entity; and
(b) to report to the responsible entity:
(i) any breach of this Act involving the scheme; or
(ii) any breach of the provisions included in the scheme’s
constitution in accordance with section 601GA;
of which the committee becomes aware or that it suspects;
and
(c) to report to ASIC if the committee is of the view that the
responsible entity has not taken, or does not propose to take,
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appropriate action to deal with a matter reported under
paragraph (b); and
(d) to assess at regular intervals whether the compliance plan is
adequate, to report to the responsible entity on the assessment
and to make recommendations to the responsible entity about
any changes that it considers should be made to the plan.
(2) In carrying out its functions, the compliance committee may
commission independent legal, accounting or other professional
advice or assistance, at the reasonable expense of the responsible
entity.
601JD Duties of members
(1) A member of a scheme’s compliance committee must:
(a) act honestly; and
(b) exercise the degree of care and diligence that a reasonable
person would exercise if they were in the member’s position;
and
(c) not make use of information acquired through being a
member of the committee in order to:
(i) gain an improper advantage for the member or another
person; or
(ii) cause detriment to the members of the scheme; and
(d) not make improper use of their position as a member of the
committee to gain, directly or indirectly, an advantage for
themselves or for any other person or to cause detriment to
the members of the scheme.
(2) A member of the compliance committee is to take all reasonable
steps to assist ASIC in carrying out a check under
subsection 601FF(1).
(3) A person who contravenes, or is involved in a contravention of,
subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: Subsection (3) is a civil penalty provision (see section 1317E).
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(4) A person must not intentionally or recklessly contravene, or be
involved in a contravention of, subsection (1).
601JE Compliance committee members have qualified privilege in
certain cases
A member of a scheme’s compliance committee has qualified
privilege in respect of a statement concerning the operation of the
scheme made by or on behalf of the committee, or a member of the
committee, to the responsible entity or to ASIC.
601JF When can responsible entity indemnify compliance
committee members?
(1) A scheme’s responsible entity or a related body corporate must not:
(a) indemnify a person who is or has been a member of the
scheme’s compliance committee against a liability incurred
by the person as a member; or
(b) exempt the person from such a liability.
(2) A provision of the scheme’s constitution or a body corporate’s
constitution is void in so far as it provides for the responsible entity
or a related body corporate to do something that subsection (1)
prohibits.
(3) Subsection (1) does not prevent a person from being indemnified
against a liability to another person (other than the responsible
entity or a related body corporate) unless the liability arises out of
conduct involving a lack of good faith.
(4) Subsection (1) does not prevent a person from being indemnified
against a liability for costs and expenses incurred by them:
(a) in defending proceedings, whether civil or criminal, in which
judgment is given in favour of them or in which they are
acquitted; or
(b) in connection with an application, in relation to such
proceedings, in which the Court grants relief to them under
this Act.
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Section 601JG
Corporations Act 2001 37
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(5) In this section:
indemnify includes indemnify indirectly through one or more
interposed entities.
601JG When can responsible entity pay insurance premiums for
compliance committee members?
(1) A scheme’s responsible entity or a related body corporate must not
pay, or agree to pay, a premium in respect of a contract insuring a
person who is or has been a member of the scheme’s compliance
committee against a liability:
(a) incurred by the person as a member; and
(b) arising out of conduct involving a wilful breach of a duty
referred to in section 601JD.
(2) If subsection (1) is contravened, the contract is void in so far as it
insures the person against the liability.
(3) Subsections (1) and (2) do not apply to a liability for costs and
expenses incurred by a person in defending proceedings, whether
civil or criminal and whatever their outcome.
(4) In this section:
pay includes pay indirectly through one or more interposed entities.
601JH Proceedings of compliance committee
(1) Subject to the requirements of the compliance plan, a scheme’s
compliance committee may regulate its proceedings as it thinks
appropriate.
(2) The committee must keep:
(a) minutes of its meetings; and
(b) records of its reports and recommendations.
(3) A committee meeting may be held using any technology agreed to
by all the members.
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Part 5C.5 The compliance committee
Section 601JJ
38 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601JJ Disclosure of interests
(1) A member of a scheme’s compliance committee must disclose to
the committee a direct or indirect pecuniary interest that they have
in a matter being considered, or about to be considered, by the
committee if their interest could conflict with the proper
performance of their duties in relation to the consideration of the
matter.
(2) A disclosure under subsection (1) must occur at the first meeting of
the committee after the relevant facts have come to the member’s
knowledge and must be recorded in the minutes of the meeting.
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Members’ rights to withdraw from a scheme Part 5C.6
Section 601KA
Corporations Act 2001 39
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Part 5C.6—Members’ rights to withdraw from a
scheme
601KA Members’ rights to withdraw
Withdrawal from schemes that are liquid
(1) The constitution of a registered scheme may make provision for
members to withdraw from the scheme, wholly or partly, at any
time while the scheme is liquid (see subsection 601GA(4)).
Withdrawal from schemes that are not liquid
(2) The constitution of a registered scheme may make provision for
members to withdraw from the scheme, wholly or partly, in
accordance with this Part while the scheme is not liquid (see
subsection 601GA(4)).
Restrictions on withdrawal from schemes
(3) The responsible entity must not allow a member to withdraw from
the scheme:
(a) if the scheme is liquid—otherwise than in accordance with
the scheme’s constitution; or
(b) if the scheme is not liquid—otherwise than in accordance
with the scheme’s constitution and sections 601KB to
601KE.
(3A) An offence based on subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Liquid schemes
(4) A registered scheme is liquid if liquid assets account for at least
80% of the value of scheme property.
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Section 601KB
40 Corporations Act 2001
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Liquid assets
(5) The following are liquid assets unless it is proved that the
responsible entity cannot reasonably expect to realise them within
the period specified in the constitution for satisfying withdrawal
requests while the scheme is liquid:
(a) money in an account or on deposit with a bank;
(b) bank accepted bills;
(c) marketable securities (as defined in section 9);
(d) property of a prescribed kind.
(6) Any other property is a liquid asset if the responsible entity
reasonably expects that the property can be realised for its market
value within the period specified in the constitution for satisfying
withdrawal requests while the scheme is liquid.
601KB Non-liquid schemes—offers
(1) The responsible entity of a registered scheme that is not liquid may
offer members an opportunity to withdraw, wholly or partly, from
the scheme to the extent that particular assets are available and able
to be converted to money in time to satisfy withdrawal requests
that members may make in response to the offer.
(2) The withdrawal offer must be in writing and be made:
(a) if the constitution specifies procedures for making the
offer—in accordance with those procedures; or
(b) otherwise—by giving a copy of the offer to all members of
the scheme or to all members of a particular class.
(3) The withdrawal offer must specify:
(a) the period during which the offer will remain open (this
period must last for at least 21 days after the offer is made);
and
(b) the assets that will be used to satisfy withdrawal requests;
and
(c) the amount of money that is expected to be available when
those assets are converted to money; and
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Section 601KC
Corporations Act 2001 41
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(d) the method for dealing with withdrawal requests if the money
available is insufficient to satisfy all requests.
The method specified under paragraph (d) must comply with
section 601KD.
(4) For joint members, a copy of the withdrawal offer need only be
given to the joint member named first in the register of members.
(5) As soon as practicable after making the withdrawal offer, the
responsible entity must lodge a copy of the offer with ASIC.
601KC Non-liquid schemes—only one withdrawal offer to be open
at any time
Only one withdrawal offer may be open at any time in relation to a
particular interest in a registered scheme that is not liquid.
601KD Non-liquid schemes—how payments are to be made
The responsible entity of a registered scheme that is not liquid
must ensure that withdrawal requests made in response to a
withdrawal offer are satisfied within 21 days after the offer closes.
No request made under the withdrawal offer may be satisfied while
the offer is still open. If an insufficient amount of money is
available from the assets specified in the offer to satisfy all
requests, the requests are to be satisfied proportionately in
accordance with the formula:
601KE Non-liquid schemes—responsible entity may cancel
withdrawal offer
(1) The responsible entity of a registered scheme that is not liquid:
(a) may cancel a withdrawal offer before it closes if the offer
contains a material error; or
Amount member requested to withdraw
Amount of money available Total of all amounts members
request to withdraw
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Part 5C.6 Members’ rights to withdraw from a scheme
Section 601KE
42 Corporations Act 2001
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(b) must cancel a withdrawal offer before it closes if it is in the
best interests of members to do so.
(2) The cancellation must be made:
(a) if the constitution specifies procedures for cancelling the
withdrawal offer—in accordance with those procedures; or
(b) otherwise—by notice in writing to the members to whom the
withdrawal offer was made.
(3) The responsible entity must lodge written notice of the cancellation
with ASIC.
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Managed investment schemes Chapter 5C
Related party transactions Part 5C.7
Section 601LA
Corporations Act 2001 43
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Part 5C.7—Related party transactions
601LA Chapter 2E applies with modifications
Chapter 2E applies to a registered scheme with the modifications
set out in sections 601LB to 601LE and as if:
(a) references to a public company were instead references to the
responsible entity of the scheme; and
(b) references to a benefit being given to or received by a related
party of a public company were instead references to a
benefit being given to or received by the responsible entity or
a related party; and
(c) references to a resolution of a public company were instead
references to a resolution of the members of the scheme; and
(d) references to a general meeting were instead references to a
members’ meeting of the scheme; and
(e) references to members of a public company were instead
references to members of the scheme; and
(f) references to the company’s best interests were instead
references to the best interests of the scheme’s members.
601LB Replacement section 207
Chapter 2E applies as if section 207 were replaced by the
following section:
207 Purpose
The rules in this Chapter, as they apply to a registered scheme, are
designed to protect the interests of the scheme’s members as a
whole, by requiring member approval for giving financial benefits
to the responsible entity or its related parties that come out of
scheme property or that could endanger those interests.
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Section 601LC
44 Corporations Act 2001
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601LC Replacement section 208
Chapter 2E applies as if section 208 were replaced by the
following section:
208 Need for member approval for financial benefit
(1) If all the following conditions are satisfied in relation to a financial
benefit:
(a) the benefit is given by:
(i) the responsible entity of a registered scheme; or
(ii) an entity that the responsible entity controls; or
(iii) an agent of, or person engaged by, the responsible entity
(b) the benefit either:
(i) is given out of the scheme property; or
(ii) could endanger the scheme property
(c) the benefit is given to:
(i) the person or a related party; or
(ii) another person referred to in paragraph (a) or a related
party of that person;
then, for the person referred to in paragraph (a) to give the benefit,
either:
(d) the person referred to in paragraph (a) must:
(i) obtain the approval of the scheme’s members in the way
set out in sections 217 to 227; and
(ii) give the benefit within 15 months after the approval; or
(e) the giving of the benefit must fall within an exception set out
in sections 210 to 216.
Note: Section 228 defines related party, section 191 defines entity,
section 191 defines control and section 229 affects the meaning of
giving a financial benefit.
(2) If:
(a) the giving of the benefit is required by a contract; and
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Section 601LD
Corporations Act 2001 45
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(b) the making of the contract was approved in accordance with
subparagraph (1)(d)(i) as a financial benefit given to the
entity or related party; and
(c) the contract was made:
(i) within 15 months after that approval; or
(ii) before that approval, if the contract was conditional on
the approval being obtained;
member approval for the giving of the benefit is taken to have been
given and the benefit need not be given within the 15 months.
(3) Subsection (1) does not prevent the responsible entity from paying
itself fees, and exercising rights to an indemnity, as provided for in
the scheme’s constitution under subsection 601GA(2).
601LD Omission of sections 213, 214 and 224
Chapter 2E applies as if sections 213, 214 and 224 were omitted.
Note: Instead of section 224, the rule in section 253E will apply.
601LE Modification of section 225
Chapter 2E applies as if subsection 225(1) were amended by
omitting “subsection 224(1)” and substituting “section 253E”.
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Part 5C.8 Effect of contraventions (civil liability and voidable contracts)
Section 601MA
46 Corporations Act 2001
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Part 5C.8—Effect of contraventions (civil liability
and voidable contracts)
601MA Civil liability of responsible entity to members
(1) A member of a registered scheme who suffers loss or damage
because of conduct of the scheme’s responsible entity that
contravenes a provision of this Chapter may recover the amount of
the loss or damage by action against the responsible entity whether
or not the responsible entity has been convicted of an offence, or
has had a civil penalty order made against it, in respect of the
contravention.
(2) An action under subsection (1) must be begun within 6 years after
the cause of action arises.
(3) This section does not affect any liability that a person has under
other provisions of this Act or under other laws.
601MB Voidable contracts where subscription offers and invitations
contravene this Act
(1) If:
(a) a managed investment scheme is being operated in
contravention of subsection 601ED(5) and a person (the
offeror) offers an interest in the scheme for subscription, or
issues an invitation to subscribe for an interest in the scheme;
or
(b) a person (the offeror) fails to comply with Division 2 of
Part 7.9 when offering an interest in a registered scheme for
subscription or issuing an invitation to subscribe for an
interest in a registered scheme;
a contract entered into by a person (other than the offeror) to
subscribe for the interest as a result of the person accepting the
offer, or of the acceptance of an offer made by the person in
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Section 601MB
Corporations Act 2001 47
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response to the invitation, is voidable at the option of that person
by notice in writing to the offeror.
(2) If the person gives a notice under subsection (1), the obligations of
the parties to the contract are suspended:
(a) during the period of 21 days after the notice is given; and
(b) during the period beginning when an application is made
under subsection (4) in relation to the notice and ending
when the application, and any appeals arising out of it, have
been finally determined or otherwise disposed of.
(3) Subject to subsection (6), the notice takes effect to void the
contract:
(a) at the end of 21 days after the notice is given; or
(b) if, within that 21 days, the offeror applies under
subsection (4)—at the end of the period when the obligations
of the parties are suspended under paragraph (2)(b).
(4) Within 21 days after the notice is given, the offeror may apply to
the Court for an order declaring the notice to have had no effect.
(5) The Court may extend the period within which the offeror may
apply under subsection (4), even if the notice has taken effect.
(6) On application under subsection (4), the Court may declare the
notice to have had no effect if it is satisfied that, in all the
circumstances, it is just and equitable to make the declaration.
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Part 5C.9 Winding up
Section 601NA
48 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5C.9—Winding up
601NA Winding up required by scheme’s constitution
The constitution of a registered scheme may provide that the
scheme is to be wound up:
(a) at a specified time; or
(b) in specified circumstances or on the happening of a specified
event;
but a provision of the constitution that purports to provide that the
scheme is to be wound up if a particular company ceases to be its
responsible entity is of no effect (including for the purposes of
paragraph 601NE(1)(a)).
601NB Winding up at direction of members
If members of a registered scheme want the scheme to be wound
up, they may take action under Division 1 of Part 2G.4 for the
calling of a members’ meeting to consider and vote on an
extraordinary resolution directing the responsible entity to wind up
the scheme.
601NC Winding up if scheme’s purpose accomplished or cannot be
accomplished
(1) If the responsible entity of a registered scheme considers that the
purpose of the scheme:
(a) has been accomplished; or
(b) cannot be accomplished;
it may, in accordance with this section, take steps to wind up the
scheme.
(2) The responsible entity must give to the members of the scheme and
to ASIC a notice in writing:
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Section 601ND
Corporations Act 2001 49
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(a) explaining the proposal to wind up the scheme, including
explaining how the scheme’s purpose has been accomplished
or why that purpose cannot be accomplished; and
(b) informing the members of their rights to take action under
Division 1 of Part 2G.4 for the calling of a members’ meeting
to consider the proposed winding up of the scheme and to
vote on any extraordinary resolution members propose about
the winding up of the scheme; and
(c) informing the members that the responsible entity is
permitted to wind up the scheme unless a meeting is called to
consider the proposed winding up of the scheme within 28
days of the responsible entity giving the notice to the
members.
(3) If no meeting is called within that 28 days to consider the proposed
winding up, the responsible entity may wind up the scheme.
601ND Winding up ordered by Court
(1) The Court may, by order, direct the responsible entity of a
registered scheme to wind up the scheme if:
(a) the Court thinks it is just and equitable to make the order; or
(b) within 3 months before the application for the order was
made, execution or other process was issued on a judgment,
decree or order obtained in a court (whether an Australian
court or not) in favour of a creditor of, and against, the
responsible entity in its capacity as the scheme’s responsible
entity and the execution or process has been returned
unsatisfied.
(2) An order based on paragraph (1)(a) may be made on the
application of:
(a) the responsible entity; or
(b) a director of the responsible entity; or
(c) a member of the scheme; or
(d) ASIC.
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Part 5C.9 Winding up
Section 601NE
50 Corporations Act 2001
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(3) An order based on paragraph (1)(b) may be made on the
application of a creditor.
601NE The winding up of the scheme
(1) The responsible entity of a registered scheme must ensure that the
scheme is wound up in accordance with its constitution and any
orders under subsection 601NF(2) if:
(a) the scheme’s constitution provides that the scheme is to be
wound up at a specified time, in specified circumstances or
on the happening of a specified event and that time is
reached, those circumstances occur or that event occurs; or
(b) the members pass an extraordinary resolution directing the
responsible entity to wind up the scheme; or
(c) the Court makes an order directing the responsible entity to
wind up the scheme; or
(d) the members pass a resolution removing the responsible
entity but do not, at the same meeting, pass a resolution
choosing a company to be the new responsible entity that
consents to becoming the scheme’s responsible entity.
Note: For the Court’s power to order winding up, see
subsection 601FQ(5) and section 601ND.
(2) The responsible entity of a registered scheme may wind up the
scheme in accordance with its constitution and any orders under
subsection 601NF(2) if the responsible entity is permitted by
subsection 601NC(3) to wind up the scheme.
(3) Interests must not be issued in a registered scheme at a time after
the responsible entity has become obliged to ensure the scheme is
wound up, or after the scheme has started to be wound up.
601NF Other orders about winding up
(1) The Court may, by order, appoint a person to take responsibility
for ensuring a registered scheme is wound up in accordance with
its constitution and any orders under subsection (2) if the Court
thinks it necessary to do so (including for the reason that the
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Section 601NG
Corporations Act 2001 51
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responsible entity has ceased to exist or is not properly discharging
its obligations in relation to the winding up).
(2) The Court may, by order, give directions about how a registered
scheme is to be wound up if the Court thinks it necessary to do so
(including for the reason that the provisions in the scheme’s
constitution are inadequate or impracticable).
(3) An order under subsection (1) or (2) may be made on the
application of:
(a) the responsible entity; or
(b) a director of the responsible entity; or
(c) a member of the scheme; or
(d) ASIC.
601NG Unclaimed money to be paid to ASIC
If, on completion of the winding up of a registered scheme, the
person who has been winding up the scheme has in their
possession or under their control any unclaimed or undistributed
money or other property that was part of the scheme property, the
person must, as soon as practicable, pay the money or transfer the
property to ASIC to be dealt with under Part 9.7.
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Part 5C.10 Deregistration
Section 601PA
52 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5C.10—Deregistration
601PA Deregistration—voluntary
Responsible entity may apply for deregistration
(1) The responsible entity of a registered scheme may lodge an
application for deregistration of the scheme with ASIC.
(2) The responsible entity may only apply if:
(a) the scheme:
(i) has 20 or less members (calculated in accordance with
subsection 601ED(4)) and all the members agree that
the scheme should be deregistered; and
(ii) is not required to be registered by
paragraph 601ED(1)(b) or (c); or
(b) because of subsection 601ED(2) (exemption based on
Division 2 of Part 7.9 not applying), the scheme is not
required to be registered and all the members agree that the
scheme should be deregistered; or
(c) the scheme is not a managed investment scheme.
(3) If ASIC is satisfied that the application complies with
subsections (1) and (2), it must give notice of the proposed
deregistration:
(a) on the national database; and
(b) in the Gazette.
When 2 months have passed since the Gazette notice, ASIC may
deregister the scheme.
(4) ASIC must give notice of the deregistration to the applicant.
601PB Deregistration by ASIC
(1) ASIC may decide to deregister a registered scheme if:
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(a) the scheme does not have a responsible entity that meets the
requirements of section 601FA; or
(b) the scheme does not have a constitution that meets the
requirements of sections 601GA and 601GB; or
(c) the scheme does not have a compliance plan that meets the
requirements of section 601HA; or
(d) the scheme’s property is not being:
(i) clearly identified as the scheme’s property; and
(ii) held separately from property of the responsible entity
and property of any other scheme;
in accordance with the scheme’s compliance plan; or
(e) the following conditions are satisfied:
(i) the response to a return of particulars given to the
responsible entity of the scheme is at least 6 months
late; and
(ii) no other documents have been lodged by or on behalf of
the scheme in the last 18 months; and
(iii) ASIC has no reason to believe that the scheme is being
operated; or
(ea) the scheme’s review fee in respect of a review date has not
been paid in full at least 12 months after the due date for
payment; or
(f) the scheme has been wound up.
Deregistration procedure
(2) If ASIC decides to deregister a scheme under this section, it must
give notice of the proposed deregistration:
(a) to the scheme’s responsible entity; and
(b) to any other person who is winding up the scheme; and
(c) on the national database; and
(d) in the Gazette.
If the notice is given under paragraph (1)(a), (b), (c) or (d), the
notice must specify the period at the end of which ASIC proposes
to deregister the scheme.
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Section 601PC
54 Corporations Act 2001
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(3) ASIC may deregister the scheme:
(a) if paragraph (1)(a), (b), (c) or (d) applies—at the end of the
period set out in the Gazette notice; or
(b) if paragraph (1)(e) or (f) applies—when 2 months have
passed since the Gazette notice.
(4) ASIC does not have to give a person notice under subsection (2) if
ASIC does not have the necessary information about the person’s
address.
(5) ASIC must give notice of the deregistration to everyone who was
notified of the proposed deregistration under paragraph (2)(a) or
(b).
601PC Reinstatement
(1) ASIC may reinstate the registration of a managed investment
scheme if ASIC is satisfied that the scheme should not have been
deregistered or if the defect that led to the scheme being
deregistered has been remedied.
(2) The Court may make an order that ASIC reinstate the registration
of a managed investment scheme if:
(a) an application for reinstatement is made to the Court by:
(i) a person aggrieved by the deregistration; or
(ii) a person who was winding up the scheme; and
(b) the Court is satisfied that it is just that the scheme’s
registration be reinstated.
(3) The Court may give any directions it thinks just for putting the
scheme and other people in the same position, as far as possible, as
if the scheme had not been deregistered.
ASIC to give notice of reinstatement
(4) ASIC must give notice of a reinstatement in the Gazette. If ASIC
exercises its power under subsection (1) in response to an
application by a person, ASIC must also give notice of the
reinstatement to the applicant.
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Exemptions and modifications Part 5C.11
Section 601QA
Corporations Act 2001 55
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Part 5C.11—Exemptions and modifications
601QA ASIC’s power to make exemption and modification orders
(1) ASIC may:
(a) exempt a person from a provision of this Chapter; or
(b) declare that this Chapter applies to a person as if specified
provisions were omitted, modified or varied as specified in
the declaration.
Without limiting this, ASIC may declare that this Chapter applies
to a person as if section 601HA included a requirement for scheme
property to be held by a person other than the responsible entity as
the responsible entity’s agent.
(2) The exemption or declaration may:
(a) apply to all or specified provisions of this Chapter; and
(b) apply to all persons, specified persons, or a specified class of
persons; and
(c) relate to all securities, specified securities or a specified class
of securities; and
(d) relate to any other matter generally or as specified.
(3) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(4) The exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(5) For the purposes of this section, the provisions of this Chapter
include:
(a) regulations made for the purposes of this Chapter; and
(b) definitions in this Act or the regulations as they apply to
references in:
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Part 5C.11 Exemptions and modifications
Section 601QB
56 Corporations Act 2001
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(i) this Chapter; or
(ii) regulations made for the purposes of this Chapter; and
(c) the old Division 11 of Part 11.2 transitionals.
601QB Modification by regulations
The regulations may modify the operation of this Chapter or any
other provisions of this Act relating to securities in relation to:
(a) a managed investment scheme; or
(b) all managed investment schemes of a specified class.
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Licensed trustee companies Chapter 5D
Preliminary Part 5D.1
Section 601RAA
Corporations Act 2001 57
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Chapter 5D—Licensed trustee companies
Part 5D.1—Preliminary
601RAA Definitions
In this Chapter:
client, in relation to a trustee company, has the meaning given by
subsection 601RAB(3).
estate management functions has the meaning given by
subsection 601RAC(2).
estate that is administered or managed, in relation to a trustee
company, means all or any of the estate of a person (whether living
or dead) that is administered or managed by the trustee company in
the course of performing estate management functions.
fees means fees in the nature of remuneration (including
commission).
law means a law of the Commonwealth or of a State or Territory,
and includes a rule of common law or equity.
licensed trustee company means a trustee company that holds an
Australian financial services licence covering the provision of one
or more traditional trustee company services.
Note: Traditional trustee company services are financial services for the
purpose of Chapter 7: see subsection 766A(1A).
person with a proper interest, in relation to an estate, has the
meaning given by section 601RAD.
publish: if the regulations prescribe requirements to be complied
with in relation to an obligation in a provision of this Part to
publish something, publish (in that provision) means publish in
accordance with those requirements.
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Section 601RAB
58 Corporations Act 2001
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traditional trustee company services has the meaning given by
subsection 601RAC(1).
trustee company has the meaning given by section 601RAB.
will includes a codicil and any other testamentary writing.
601RAB Meaning of trustee company and client of trustee company
(1) A trustee company is a company:
(a) that is a corporation to which paragraph 51(xx) of the
Constitution applies; and
(b) that is prescribed by the regulations as a trustee company for
the purpose of this Act.
(2) For the purpose of paragraph (1)(b), companies may (for example)
be prescribed:
(a) by setting out a list of companies in the regulations; or
(b) by providing a mechanism in the regulations for the
determination of a list of companies.
(2A) Before the Governor-General makes a regulation that includes a
company in a list set out for the purposes of paragraph (2)(a), the
company must satisfy the Minister of the following:
(a) that it is a corporation to which paragraph 51(xx) of the
Constitution applies;
(b) that its purposes include:
(i) providing services of the kind referred to in
paragraph 601RAC(1)(c); and
(ii) performing functions of a kind referred to in
paragraph 601RAC(2)(b) and at least one other estate
management function;
(c) that it is, and will continue to be, capable of providing the
services, and performing the functions, referred to in
paragraph (b) of this subsection;
(d) that it is a fit and proper person;
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(e) that an unacceptable control situation (as defined in
section 601VAA) does not exist in relation to it in relation to
any person;
(f) any other matter the Minister specifies by written notice to
the company.
Note: Under Division 137 of the Criminal Code it may be an offence for a
company to provide false or misleading information or documents to
the Minister in purported compliance with this requirement.
(3) A client of a trustee company is a person to whom, within the
meaning of Chapter 7, a financial service (being a traditional
trustee company service) is provided by the trustee company.
Note: Regulations made for the purpose of subsection 766A(1B) may
prescribe the person or persons to whom a class of traditional trustee
company services is taken to be provided.
601RAC Meaning of traditional trustee company services and estate
management functions
(1) The following are traditional trustee company services:
(a) performing estate management functions (see subsection (2));
(b) preparing a will, a trust instrument, a power of attorney or an
agency arrangement;
(c) applying for probate of a will, applying for grant of letters of
administration, or electing to administer a deceased estate;
(d) establishing and operating common funds;
(e) any other services prescribed by the regulations for the
purpose of this paragraph.
(2) The following are estate management functions (whether
provided alone or jointly with another person or persons):
(a) acting as a trustee of any kind, or otherwise administering or
managing a trust;
(b) acting as executor or administrator of a deceased estate;
(c) acting as agent, attorney or nominee;
(d) acting as receiver, controller or custodian of property;
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Section 601RAD
60 Corporations Act 2001
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(e) otherwise acting as manager or administrator (including in
the capacity as guardian) of the estate of an individual;
(f) acting in any other capacity prescribed by the regulations for
the purpose of this paragraph.
(3) Subsections (1) and (2) do not apply to:
(a) operating a registered scheme; or
(b) providing a custodial or depository service (within the
meaning of section 766E); or
(c) acting as trustee for debenture holders under Chapter 2L; or
(d) acting as a receiver or other controller of property of a
corporation under Part 5.2; or
(e) acting as trustee of a superannuation fund, an approved
deposit fund or a pooled superannuation trust (within the
meaning of the Superannuation Industry (Supervision) Act
1993); or
(f) acting in any other capacity prescribed by the regulations for
the purpose of this paragraph.
601RAD Meaning of person with a proper interest
(1) A person with a proper interest, in relation to an estate, includes
(but is not limited to) the following:
(a) ASIC;
(b) in relation to a charitable trust:
(i) the settlor, or one of the settlors, of the trust; or
(ii) a person who, under the terms of the trust, has power to
appoint or remove a trustee of the trust or to vary (or
cause to be varied) any of the terms of the trust; or
(iii) a Minister of a State or Territory who has
responsibilities relating to charitable trusts; or
(iv) a person who is named in the instrument establishing
the trust as a person who may receive payments on
behalf of the trust; or
(v) a person who is named in the instrument establishing
the trust as a person who must, or may, be consulted by
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the trustee or trustees before distributing or applying
money or other property for the purposes of the trust; or
(vi) a person of a class that the trust is intended to benefit;
(c) in the case of the estate of a deceased person:
(i) if the person died testate—a beneficiary under the
person’s will; or
(ii) if the person died intestate—a person who, under a law
of a State or Territory, has, or is entitled to, an interest
in the deceased’s estate;
(d) in the case of any other trust:
(i) the settlor, or one of the settlors, of the trust; or
(ii) a person who, under the terms of the trust, has power to
appoint or remove a trustee of the trust or to vary (or
cause to be varied) any of the terms of the trust; or
(iii) a beneficiary of the trust;
(e) in relation to an application to a court relating to the estate—
a person that the court considers, in the circumstances of the
case, has a proper interest in the estate;
(f) a person prescribed by the regulations as having a proper
interest in the estate;
(g) if a person covered by any of the above paragraphs is under a
legal disability—an agent of the person.
(2) None of the paragraphs or subparagraphs of subsection (1) limits,
or is limited by, any of the other paragraphs or subparagraphs of
that subsection.
601RAE Interaction between trustee company provisions and State
and Territory laws
(1) The trustee company provisions are:
(a) the provisions of this Chapter, and regulations or other
instruments made for the purposes of this Chapter; and
(b) the provisions of Chapter 7, and regulations or other
instruments made for the purposes of Chapter 7, as they
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Section 601RAE
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apply in relation to financial services that are traditional
trustee company services.
(2) Subject to subsections (3) and (4), the trustee company provisions
are intended to apply to the exclusion of laws of a State or
Territory of the following kinds:
(a) laws that authorise or license companies to provide
traditional trustee company services generally (as opposed to
laws that authorise or license companies to provide a
particular traditional trustee company service);
(b) laws that regulate the fees that may be charged by companies
for the provision of traditional trustee company services, and
laws that require the disclosure of such fees;
(c) laws that deal with the provision of accounts by companies in
relation to traditional trustee company services that they
provide;
(d) laws that deal with the duties of officers or employees of
companies that provide traditional trustee company services;
(e) laws that regulate the voting power that people may hold in
companies that provide traditional trustee company services,
or that otherwise impose restrictions on the ownership or
control of companies that provide traditional trustee company
services;
(f) laws (other than laws referred to in section 601WBC) that
deal with what happens to assets and liabilities held by a
company, in connection with the provision by the company
of traditional trustee company services, if the company
ceases to be licensed or authorised to provide such services.
(3) Subject to subsection (4), the trustee company provisions are not
intended to apply to the exclusion of laws of a State or Territory
that require a company to have (or to have staff who have)
particular qualifications or experience if the company is to provide
traditional trustee company services of a particular kind.
(4) The regulations may provide:
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(a) that the trustee company provisions are intended to apply to
the exclusion of prescribed State or Territory laws, or
prescribed provisions of State or Territory laws; or
(b) that the trustee company provisions are intended not to apply
to the exclusion of prescribed State or Territory laws, or
prescribed provisions of State or Territory laws.
(5) The provisions of this Chapter have effect subject to this section.
Note: For example, section 601SAC (which provides that the powers etc.
conferred by or under this Chapter are in addition to other powers etc.)
is to be interpreted subject to this section.
(6) Part 1.1A does not apply in relation to the trustee company
provisions.
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Chapter 5D Licensed trustee companies
Part 5D.2 Powers etc. of licensed trustee companies
Division 1 General provisions
Section 601SAA
64 Corporations Act 2001
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Part 5D.2—Powers etc. of licensed trustee
companies
Division 1—General provisions
601SAA Jurisdiction of courts not affected etc.
(1) Any inherent power or jurisdiction of courts in respect of the
supervision of the performance of traditional trustee company
services is not affected by anything in this Chapter.
(2) A licensed trustee company that is performing traditional trustee
company services of a particular kind is subject in all respects to
the same control and to removal or restraint from acting, and
generally to the jurisdiction of courts, in the same manner as any
other person who performs traditional trustee company services of
that kind.
601SAB Regulations may prescribe other powers etc.
A licensed trustee company also has, in relation to the provision of
traditional trustee company services, such other powers, functions,
liabilities and obligations, and such privileges and immunities, as
are prescribed by the regulations.
601SAC Powers etc. conferred by or under this Chapter are in
addition to other powers etc.
The powers, functions, liabilities and obligations, and the
privileges and immunities, conferred or imposed on licensed
trustee companies by or under this Chapter are in addition to, and
not in derogation of, any powers, functions, liabilities and
obligations, and any privileges and immunities, conferred or
imposed by any other law:
(a) on trustee companies; or
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(b) on persons who perform estate management functions or who
provide other traditional trustee company services.
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Chapter 5D Licensed trustee companies
Part 5D.2 Powers etc. of licensed trustee companies
Division 2 Accounts
Section 601SBA
66 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Accounts
601SBA Licensed trustee company not required to file accounts
(1) A licensed trustee company, when acting alone in relation to any
estate of a deceased person, is not required to file, or file and pass,
accounts relating to the estate unless the Court, of its own motion
or on application by or on behalf of a person with a proper interest
in the estate, so orders.
(2) If a licensed trustee company is appointed and acts jointly with any
other person in relation to any estate of a deceased person, the
trustee company and that other person are not required to file, or
file and pass, accounts relating to the estate unless:
(a) that other person intends to charge fees for acting in relation
to the estate; or
(b) the Court, of its own motion or on application by or on behalf
of a person with a proper interest in the estate, so orders.
601SBB Licensed trustee company may be required to provide
account in relation to estate
(1) On application by a person with a proper interest in an estate that is
administered or managed by a licensed trustee company, the trustee
company must provide the person with an account of:
(a) the assets and liabilities of the estate; and
(b) the trustee company’s administration or management of the
estate; and
(c) any investment made from the estate; and
(d) any distribution made from the estate; and
(e) any other expenditure (including fees and commissions) from
the estate.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: Failure to comply with this subsection may also lead to the
consequences set out in subsection (4) of this section.
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Accounts Division 2
Section 601SBC
Corporations Act 2001 67
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(2) If:
(a) a licensed trustee company has provided an account to a
person under this section; and
(b) the person applies for a further account within 3 months from
the date on which the person was provided with the previous
account;
the trustee company need not provide a further account in response
to that application until the expiration of that period of 3 months.
Note: A defendant bears an evidential burden in relation to the matter in
subsection (2), see subsection 13.3(3) of the Criminal Code.
(3) A licensed trustee company may charge a reasonable fee for
providing an account under this section.
(4) If a licensed trustee company fails to provide a proper account
under this section, the Court may, on application by the person
who sought the account or any other person with a proper interest
in the estate, make any order that the Court considers appropriate,
including an order requiring the preparation and delivery of proper
accounts.
601SBC Court may order audit
(1) The Court may, on any application under section 601SBB, in
addition to or in substitution for any account to be provided by the
licensed trustee company under that section, order that a person
named in the order must examine the accounts of the trustee
company relating to the estate in respect of which the order is
made.
(2) On the making of any such order, the trustee company must:
(a) give to the person named in the order a list of all the accounts
kept by the company relating to the estate; and
(b) produce to the person, at an office of the trustee company at
all reasonable times when required, all books in the
company’s possession relating to the estate; and
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Division 2 Accounts
Section 601SBC
68 Corporations Act 2001
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(c) provide the person with all necessary information and all
other necessary facilities for enabling the person to make the
examination.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Common funds Division 3
Section 601SCA
Corporations Act 2001 69
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Division 3—Common funds
601SCA Common funds of licensed trustee companies
(1) A licensed trustee company may, for the purposes of investment,
pool together into a fund or funds money (estate money) from 2 or
more estates that are administered or managed by the trustee
company in the performance of estate management functions.
(2) A fund into which money is pooled as mentioned in subsection (1)
is a common fund.
Note: A common fund may also be regulated under Chapter 5C (if the fund
constitutes a managed investment scheme) but see also
section 601SCAA, which deals with any inconsistencies in regulation
between the Chapters.
(3) A common fund may also include other money.
(4) This section has effect subject to regulations made for the purpose
of section 601SCC.
Note: For example, the regulations may limit the circumstances in which
other money may be pooled together with estate money.
601SCAA Common funds that are also registered schemes
If, in relation to a common fund that is also a registered scheme, a
provision of this Chapter or a regulation or other instrument made
for the purposes of this Chapter is inconsistent with any of the
following (a registered scheme provision):
(a) a provision of Chapter 5C or a regulation or other instrument
made for the purposes of that Chapter;
(b) a provision of Part 7.9 of Chapter 7 or a regulation or other
instrument made for the purposes of that Part;
the registered scheme provision prevails to the extent of the
inconsistency.
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Chapter 5D Licensed trustee companies
Part 5D.2 Powers etc. of licensed trustee companies
Division 3 Common funds
Section 601SCB
70 Corporations Act 2001
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601SCB Obligations relating to common funds
(1) If a licensed trustee company establishes more than one common
fund, each must be allocated an appropriate distinguishing number.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) For each common fund, the licensed trustee company must keep
accounts showing at all times the current amount for the time being
at credit in the fund on account of each estate.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A licensed trustee company must not put estate money into a
common fund if doing so is contrary to an express provision of the
conditions subject to which the estate money is held by the trustee
company.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
601SCC Regulations relating to establishment or operation of
common funds
The regulations may include provisions relating to the
establishment or operation of common funds.
601SCD Arm’s length transactions
(1) A licensed trustee company that operates a common fund that is
not a registered scheme must not give a financial benefit in relation
to the common fund to a related party.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Subsection (1) does not apply if the financial benefit is given on
terms that:
(a) would be reasonable in the circumstances if the trustee
company and the related party were dealing at arm’s length;
or
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Common funds Division 3
Section 601SCD
Corporations Act 2001 71
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(b) are less favourable to the related party than the terms referred
to in paragraph (a).
(3) In this section:
financial benefit has a meaning that is affected by section 229.
related party has the meaning given by section 228, as if references
in that section to a public company were references to a licensed
trustee company.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 1 Disclosure of fees
Section 601TAA
72 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5D.3—Regulation of fees charged by licensed
trustee companies
Division 1—Disclosure of fees
601TAA Schedule of fees to be published and available
A licensed trustee company must ensure that an up-to-date
schedule of the fees that it generally charges for the provision of
traditional trustee company services:
(a) is made available to the public at all times on a website
maintained by or on behalf of the trustee company; and
(b) is made available to the public free of charge at offices of the
trustee company during the usual opening hours of those
offices.
Note 1: The schedule is of fees generally charged, and does not include fees
that are agreed to etc. as mentioned in section 601TBB.
Note 2: Failure to comply with this section is an offence (see
subsection 1311(1)).
601TAB Disclosure to clients of changed fees
(1) If, while a licensed trustee company continues to provide a
particular traditional trustee company service to a client or clients,
the trustee company changes the fees that it will charge for the
provision of the service, the trustee company must, within 21 days
of the change of fees taking effect, comply with paragraph (a) or
(b) in relation to the client or each client:
(a) if the client has requested to be sent copies of changed fees—
send the client a copy of the changed fees in accordance with
subsection (2); or
(b) in any other case—directly notify the client, in writing, that
the changed fees are available on the internet on a specified
website maintained by or on behalf of the trustee company.
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Disclosure of fees Division 1
Section 601TAB
Corporations Act 2001 73
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Note 1: Initial disclosure to a client of the fees that a trustee company will
charge for the provision of a trustee company service will generally
occur through the provision to the client of a Financial Services Guide
under Part 7.7. However, this section is not limited just to situations
where there has been an initial disclosure through a Financial Services
Guide.
Note 1A: Other provisions in this Part and in the regulations limit the ability of
licensed trustee companies to increase fees.
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A copy of changed fees that is sent to a client under
paragraph (1)(a) must be:
(a) an electronic copy, if that is what the client has requested; or
(b) a hard copy, in any other case.
(3) If a client to whom a traditional trustee company service is
provided is under a legal disability, the following provisions have
effect:
(a) a copy of changed fees required by paragraph (1)(a), or a
notice required by paragraph (1)(b), must instead be given to
an agent of the client;
(b) a request referred to in paragraph (1)(a) or (2)(a) may instead
be made by an agent of the client.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 2 General provisions about charging fees
Section 601TBA
74 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—General provisions about charging fees
601TBA Charging of fees for the provision of traditional trustee
company services
(1) Subject to this Part, a licensed trustee company may charge fees for
the provision of traditional trustee company services.
(2) If a provision of this Part limits the fees that a licensed trustee
company may charge for the provision of a particular traditional
trustee company service, the trustee company must not charge fees
for that service in excess of that limit.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: Excess fees may also be recovered under section 601XAA.
601TBB Part does not prevent charging of fees as agreed etc.
(1) Nothing in this Part prevents a licensed trustee company from
charging:
(a) any fees that a testator, in his or her will, has directed to be
paid; or
(b) any fees that have been agreed on in accordance with
subsection (2).
(2) An agreement referred to in paragraph (1)(b) that relates to the fees
that may be charged by a licensed trustee company for the
provision of a particular traditional trustee company service must
be between the trustee company and:
(a) subject to paragraph (b) of this subsection—a person or
persons who have authority to deal with the trustee company
on matters relating to the provision of the service; or
(b) if the regulations prescribe the person or persons with whom
the agreement must be made—that person or those persons.
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General provisions about charging fees Division 2
Section 601TBC
Corporations Act 2001 75
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601TBC Part does not prevent charging fee for provision of account
Nothing in the Part prevents a licensed trustee company from
charging a fee permitted by subsection 601SBB(3) for the
provision of an account.
601TBD Part does not prevent reimbursement
Nothing in this Part prevents the reimbursement to a licensed
trustee company of all disbursements properly made by the trustee
company in the provision of a traditional trustee company service.
601TBE Estate management functions: payment of fees out of estate
(1) This section applies to the performance by a licensed trustee
company of an estate management function relating to a particular
estate.
(2) Subject to subsection (3), fees charged by the trustee company, in
accordance with this Part, for the performance of the function are
payable to the trustee company out of the capital or income of the
relevant estate.
(3) Unless ASIC approves it under subsection (4):
(a) a management fee referred to in section 601TDD can only
come out of the income of the relevant estate; and
(b) a common fund administration fee referred to in
section 601TDE or 601TDI can only come out of the income
received by the common fund on the assets of the charitable
trust concerned that are included in the fund.
(4) ASIC may, on application in writing by a licensed trustee
company, approve payment of a proposed fee that, if paid without
the approval, would contravene subsection (3), if ASIC is satisfied
that:
(a) the payment of the fee will not significantly affect the capital
of the relevant estate or charitable trust concerned; and
(b) the fee is a fair reflection of the work and expertise required
to perform the estate management function.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 3 Fees otherwise than for being trustee or manager of a charitable trust
Section 601TCA
76 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Fees otherwise than for being trustee or
manager of a charitable trust
601TCA Fees otherwise than for being the trustee or manager of a
charitable trust
(1) This section applies to a particular provision of a traditional trustee
company service by a licensed trustee company, unless:
(a) the service consists of being the trustee or manager of a
charitable trust (see Division 4); or
(b) the provision of the service started before the commencement
of this section.
(2) The trustee company must not charge fees that are in excess of its
schedule of fees that was most recently published as required by
section 601TAA before the trustee company started to provide the
service.
(3) This section does not limit anything in Division 2.
601TCB Additional amount for preparation of returns etc.
A licensed trustee company may charge a reasonable fee for work
involved in the preparation and lodging of returns for the purpose
of, or in connection with, assessments of any duties or taxes (other
than probate, death, succession or estate duties) related to an estate
that is administered or managed by the trustee company.
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Regulation of fees charged by licensed trustee companies Part 5D.3
Fees for being trustee or manager of a charitable trust Division 4
Section 601TDA
Corporations Act 2001 77
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Division 4—Fees for being trustee or manager of a
charitable trust
Subdivision A—New client charitable trusts
601TDA Subdivision applies to new client charitable trusts
This Subdivision applies to a particular provision of a traditional
trustee company service by a licensed trustee company if:
(a) the service consists of being the trustee or manager of a
charitable trust; and
(b) the provision of the service started on or after the
commencement of this section.
601TDB What the trustee company may charge
(1) For the provision of the service, the trustee company must only
charge:
(a) either:
(i) a capital commission, and an income commission, as
provided for in section 601TDC; or
(ii) a management fee as provided for in section 601TDD;
and
(b) if applicable, common fund administration fees under
section 601TDE; and
(c) if applicable, fees permitted by section 601TDF in respect of
the preparation of returns etc.
(2) This section does not limit anything in Division 2.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 4 Fees for being trustee or manager of a charitable trust
Section 601TDC
78 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601TDC Option 1: capital commission and income commission
One-off capital commission
(1) The trustee company may charge a capital commission (GST
inclusive) at a rate not exceeding 5.5% of the gross value of the
charitable trust’s assets.
(2) The capital commission must be charged only once during the
period while the trustee company is trustee or manager of the
charitable trust.
(3) The regulations may make provision relating to the capital
commission, including (but not limited to):
(a) the calculation of the commission or of the gross value of the
charitable trust’s assets; and
(b) when, during the period referred to in subsection (2), the
commission may be charged.
Annual income commission
(4) The trustee company may charge an annual income commission
(GST inclusive) at a rate not exceeding 6.6% of the income
received on account of the charitable trust’s assets.
(5) The regulations may make provision relating to the income
commission, including (but not limited to):
(a) the calculation of the commission or of the income received
on the charitable trust’s assets; and
(b) when, during a year, the commission may be charged; and
(c) apportionment of the amount of the commission for
part-years.
601TDD Option 2: annual management fee
(1) Instead of a capital commission and income commission under
section 601TDC, the trustee company may charge an annual
management fee (GST inclusive) at a rate not exceeding 1.056% of
the gross value of the charitable trust’s assets.
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Regulation of fees charged by licensed trustee companies Part 5D.3
Fees for being trustee or manager of a charitable trust Division 4
Section 601TDE
Corporations Act 2001 79
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) The regulations may make provision relating to the management
fee, including (but not limited to):
(a) the calculation of the management fee or of the gross value of
the charitable trust’s assets; and
(b) when, during a year, the management fee may be charged;
and
(c) apportionment of the amount of the management fee for
part-years.
601TDE Additional amount if trust money is in a common fund
(1) If any of the charitable trust’s assets are included in a common
fund operated by the trustee company, the trustee company may
charge an annual common fund administration fee (GST inclusive)
not exceeding 1.1% of the gross value of the charitable trust’s
assets in the fund.
(2) The regulations may make provision relating to the common fund
administration fee, including (but not limited to):
(a) the calculation of the common fund administration fee or of
the gross value of the charitable trust’s assets in the fund; and
(b) when, during a year, the common fund administration fee
may be charged; and
(c) the apportionment of the common fund administration fee for
part-years.
601TDF Additional amount for preparation of returns etc.
The trustee company may charge a reasonable fee for work
involved in the preparation and lodging of returns for the purpose
of, or in connection with, assessments of any duties or taxes (other
than probate, death, succession or estate duties) related to the trust
estate of the charitable trust.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 4 Fees for being trustee or manager of a charitable trust
Section 601TDG
80 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Subdivision B—Existing client charitable trusts
601TDG Subdivision applies to existing client charitable trusts
This Subdivision applies to a particular provision of a traditional
trustee company service by a licensed trustee company if:
(a) the service consists of being the trustee or manager of a
charitable trust; and
(b) the provision of the service started before the commencement
of this section.
601TDH Trustee company not to charge more than was being
charged before section commenced
Subject to section 601TDI and 601TDJ, the trustee company must
not charge fees in excess of the fees than it could have charged in
relation to the charitable trust immediately before the
commencement of this section.
601TDI Additional amount if trust money is in a common fund
(1) If any of the charitable trust’s assets are included in a common
fund operated by the trustee company, the trustee company may
charge an annual common fund administration fee (GST inclusive)
not exceeding 1.1% of the gross value of the charitable trust’s
assets in the fund.
(2) The regulations may make provision relating to the common fund
administration fee, including (but not limited to):
(a) the calculation of the common fund administration fee or of
the gross value of the charitable trust’s assets in the fund; and
(b) when, during a year, the common fund administration fee
may be charged; and
(c) the apportionment of the common fund administration fee for
part-years.
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Regulation of fees charged by licensed trustee companies Part 5D.3
Fees for being trustee or manager of a charitable trust Division 4
Section 601TDJ
Corporations Act 2001 81
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601TDJ Additional amount for preparation of returns etc.
The trustee company may charge a reasonable fee for work
involved in the preparation and lodging of returns for the purpose
of, or in connection with, assessments of any duties or taxes (other
than probate, death, succession or estate duties) related to the trust
estate of the charitable trust.
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Chapter 5D Licensed trustee companies
Part 5D.3 Regulation of fees charged by licensed trustee companies
Division 5 Miscellaneous
Section 601TEA
82 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 5—Miscellaneous
601TEA Power of the Court with respect to excessive fees
(1) If the Court is of the opinion that fees charged by a licensed trustee
company in respect of any estate are excessive, the Court may
review the fees and may, on the review, reduce the fees.
(2) Subsection (1) does not apply to fees:
(a) that are charged as permitted by section 601TBB; or
(b) that relate to a charitable trust and that are charged as
permitted by Subdivision A of Division 4.
(3) In considering whether fees are excessive, the Court may consider
any or all of the following matters:
(a) the extent to which the work performed by the trustee
company was reasonably necessary;
(b) the extent to which the work likely to be performed by the
trustee company is likely to be reasonably necessary;
(c) the period during which the work was, or is likely to be,
performed by the trustee company;
(d) the quality of the work performed, or likely to be performed,
by the trustee company;
(e) the complexity (or otherwise) of the work performed, or
likely to be performed, by the trustee company;
(f) the extent (if any) to which the trustee company was, or is
likely to be, required to deal with extraordinary issues;
(g) the extent (if any) to which the trustee company was, or is
likely to be, required to accept a higher level of risk or
responsibility than is usually the case;
(h) the value and nature of any property dealt with, or likely to
be dealt with, by the trustee company;
(i) if the fees are ascertained, in whole or in part, on a time
basis—the time properly taken, or likely to be properly taken,
by the trustee company in performing the work;
(j) any other relevant matters.
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Regulation of fees charged by licensed trustee companies Part 5D.3
Miscellaneous Division 5
Section 601TEB
Corporations Act 2001 83
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(4) The Court may exercise its powers under subsection (1) either on
its own motion or on the application by or on behalf of a person
with a proper interest in the estate.
(5) If the fees are reduced by more than 10%, the trustee company
must, unless the Court in special circumstances otherwise orders,
pay the costs of the review.
(6) Subject to subsection (5), all questions of costs of the review are in
the discretion of the Court.
601TEB Directors’ fees
(1) This section applies if:
(a) an estate that is administered or managed by a licensed
trustee company has an interest in a corporation; and
(b) an officer of the trustee company, in his or her capacity as
such an officer, acts as a director of the corporation for
purposes connected with the administration or management
of the estate.
(2) The trustee company is entitled to receive from the corporation
(and to retain) any director’s fees that would be payable to the
officer had he or she so acted otherwise than in his or her capacity
as such an officer.
(3) Neither the officer nor the estate is entitled to receive the fees that
the trustee company is entitled to receive under subsection (2).
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Chapter 5D Licensed trustee companies
Part 5D.4 Duties of officers and employees of licensed trustee companies
Section 601UAA
84 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5D.4—Duties of officers and employees of
licensed trustee companies
601UAA Duties of officers of licensed trustee company
(1) An officer of a licensed trustee company must:
(a) act honestly; and
(b) exercise the degree of care and diligence that a reasonable
person would exercise if they were in the officer’s position;
and
(c) not make use of information acquired through being an
officer of the trustee company for the purpose (or for
purposes including the purpose) of:
(i) gaining an improper advantage for the officer or another
person; or
(ii) causing detriment to the clients of the trustee company;
and
(d) not make improper use of their position as an officer for the
purpose (or for purposes including the purpose) of:
(i) gaining, directly or indirectly, an advantage for the
officer or for any other person; or
(ii) causing detriment to the clients of the trustee company;
and
(e) take all steps that a reasonable person would take, if they
were in the officer’s position, to ensure that the trustee
company complies, in relation to the provision of traditional
trustee company services, with:
(i) this Act; and
(ii) any conditions imposed on the trustee company’s
Australian financial services licence.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Duties of officers and employees of licensed trustee companies Part 5D.4
Section 601UAB
Corporations Act 2001 85
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) A person who contravenes, or is involved in a contravention of,
subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: This subsection is a civil penalty provision (see section 1317E).
(3) A duty of an officer of the trustee company under subsection (1)
overrides any conflicting duty the officer has under Part 2D.1, but
is subject to any conflicting duty the officer has under Part 5C.2.
(4) A reference in this section to the clients of a licensed trustee
company is a reference to the clients, when viewed as a group.
601UAB Duties of employees of licensed trustee company
(1) An employee of a licensed trustee company must not:
(a) make use of information acquired through being an employee
of the trustee company for the purpose (or for purposes
including the purpose) of:
(i) gaining an improper advantage for the employee or
another person; or
(ii) causing detriment to the clients of the trustee company;
or
(b) make improper use of their position as an employee for the
purpose (or for purposes including the purpose) of:
(i) gaining, directly or indirectly, an advantage for the
employee or for any other person; or
(ii) causing detriment to the clients of the trustee company.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A person who contravenes, or is involved in a contravention of,
subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: This subsection is a civil penalty provision (see section 1317E).
(3) A duty of an employee of the trustee company under subsection (1)
overrides any conflicting duty the employee has under Part 2D.1,
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Part 5D.4 Duties of officers and employees of licensed trustee companies
Section 601UAB
86 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
but is subject to any conflicting duty the employee has under
Part 5C.2.
(4) A reference in this section to the clients of a licensed trustee
company is a reference to the clients, when viewed as a group.
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Licensed trustee companies Chapter 5D
Limit on control of licensed trustee companies Part 5D.5
15% voting power limit Division 1
Section 601VAA
Corporations Act 2001 87
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5D.5—Limit on control of licensed trustee
companies
Division 1—15% voting power limit
601VAA Meaning of unacceptable control situation
For the purposes of this Part, an unacceptable control situation
exists in relation to a licensed trustee company and in relation to a
particular person if the person’s voting power in the trustee
company is more than:
(a) 15%; or
(b) if an approval of a higher percentage is in force under
Division 2 in relation to the trustee company and in relation
to the person—that higher percentage.
601VAB Acquisitions of shares
If:
(a) a person, or 2 or more persons under an arrangement, acquire
shares in a body corporate; and
(b) the acquisition has the result, in relation to a licensed trustee
company, that:
(i) an unacceptable control situation comes into existence
in relation to the trustee company and in relation to a
person; or
(ii) if an unacceptable control situation already exists in
relation to the trustee company and in relation to a
person—there is an increase in the voting power of the
person in the trustee company;
the person or persons mentioned in paragraph (a) contravene this
section.
Note: A contravention of this section is an offence (see subsection 1311(1)).
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Chapter 5D Licensed trustee companies
Part 5D.5 Limit on control of licensed trustee companies
Division 1 15% voting power limit
Section 601VAC
88 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
601VAC Remedial orders
(1) If an unacceptable control situation exists in relation to a licensed
trustee company, the Court may make such orders as the Court
considers appropriate for the purpose of ensuring that the
unacceptable control situation ceases to exist.
(2) However, the Court may only make orders under this section on
application by:
(a) the Minister; or
(b) ASIC; or
(c) the trustee company; or
(d) a person who has any voting power in the trustee company;
or
(e) a client of the trustee company.
(3) The Court’s orders may include:
(a) an order directing the disposal of shares; or
(b) an order restraining the exercise of any rights attached to
shares; or
(c) an order prohibiting or deferring the payment of any sums
due to a person in respect of shares held by the person; or
(d) an order that any exercise of rights attached to shares be
disregarded; or
(e) an order directing any person to do or refrain from doing a
specified act, for the purpose of securing compliance with
any other order made under this section; or
(f) an order containing such ancillary or consequential
provisions as the Court thinks just.
(4) Subsection (3) does not, by implication, limit subsection (1).
(5) Before making an order under this section, the Court may direct
that notice of the application be given to such persons as the Court
thinks fit or be published in such manner as the Court thinks fit, or
both.
(6) The Court may, by order:
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Limit on control of licensed trustee companies Part 5D.5
15% voting power limit Division 1
Section 601VAD
Corporations Act 2001 89
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) rescind, vary or discharge an order made by the Court under
this section; or
(b) suspend the operation of such an order.
601VAD Injunctions
(1) If any conduct (including a refusal or failure to act) amounts or
would amount to a contravention of this Part in relation to a
particular licensed trustee company, the trustee company is taken,
for the purposes of section 1324, to be a person whose interests are
affected by the conduct.
(2) Subsection (1) does not, by implication, limit the class of persons
whose interests are affected by the conduct.
(3) The Minister has the same powers as ASIC to apply for an
injunction under section 1324 in relation to a contravention of this
Part.
(4) The powers in sections 601VAC and 1324 do not, by implication,
limit each other.
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Chapter 5D Licensed trustee companies
Part 5D.5 Limit on control of licensed trustee companies
Division 2 Approval to exceed 15% voting power limit
Section 601VBA
90 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Approval to exceed 15% voting power limit
601VBA Application for approval to exceed 15% voting power limit
(1) A person may apply for approval to have voting power of more
than 15% in a particular licensed trustee company by lodging with
ASIC an application that:
(a) specifies the percentage of voting power (if any) the person
currently has in the trustee company; and
(b) specifies the percentage of voting power the person is
seeking approval to have in the trustee company; and
(c) sets out the person’s reasons for making the application.
Note: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must give the application to the Minister as soon as possible.
601VBB Approval of application
(1) The Minister may grant the application if the Minister is satisfied
that it would be in the interests of the licensed trustee company and
its clients for the application to be granted.
(2) If the Minister grants the application, the Minister must:
(a) give written notice of the approval to the applicant; and
(b) specify the percentage of the voting power the Minister
approves the applicant having in the licensed trustee
company (which may or may not be the percentage the
applicant applied for); and
(c) either:
(i) specify the period during which the approval remains in
force; or
(ii) specify that the approval remains in force indefinitely.
(3) If the Minister refuses the application, the Minister must give
written notice of the refusal to the applicant.
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Limit on control of licensed trustee companies Part 5D.5
Approval to exceed 15% voting power limit Division 2
Section 601VBC
Corporations Act 2001 91
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(4) As soon as practicable, the Minister must arrange for a copy of a
notice of approval under this section to be:
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
601VBC Duration of approval
(1) An approval under section 601VBB remains in force:
(a) if the notice of approval specifies a period during which the
approval remains in force—until the end of that period, or if
the Minister extends that period, until the end of that
extended period; or
(b) otherwise—indefinitely.
Extension of approval
(2) A person who holds an approval under section 601VBB that is in
force for a specified period may apply to extend that period by
lodging with ASIC an application that sets out the person’s reasons
for making the application.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) ASIC must give the application to the Minister as soon as possible.
(4) The Minister may grant the application if the Minister is satisfied
that it would be in the interests of the licensed trustee company and
its clients for the application to be granted.
(5) If the Minister grants the application, the Minister must:
(a) give written notice of the extension to the applicant; and
(b) specify the extended period during which the approval
remains in force (which may or may not be the period the
applicant applied for).
(6) If the Minister refuses the application, the Minister must give
written notice of the refusal to the applicant.
(7) As soon as practicable, the Minister must arrange for a copy of a
notice of extension under this section to be:
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Part 5D.5 Limit on control of licensed trustee companies
Division 2 Approval to exceed 15% voting power limit
Section 601VBD
92 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
601VBD Conditions of approval
(1) An approval under section 601VBB is subject to such conditions
(if any) as are specified in the notice of approval.
(2) The Minister may, by written notice given to a person who holds
an approval under section 601VBB:
(a) impose one or more conditions or further conditions to which
the approval is subject; or
(b) revoke or vary any condition:
(i) imposed under paragraph (a); or
(ii) specified in the notice of approval.
(3) The Minister’s power under subsection (2) may be exercised:
(a) on the Minister’s own initiative; or
(b) on application by the person who holds the approval.
(4) An application made by a person under paragraph (3)(b) must be
lodged with ASIC and must set out the person’s reasons for
making the application.
Note: For fees in respect of lodging applications, see Part 9.10.
(5) ASIC must give the application to the Minister as soon as possible.
(6) If the Minister refuses an application under paragraph (3)(b), the
Minister must give written notice of the refusal to the applicant.
(7) As soon as practicable, the Minister must arrange for a copy of a
notice under subsection (2) to be:
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
(8) A person who holds an approval under section 601VBB must give
written notice to ASIC as soon as practicable after they become
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Approval to exceed 15% voting power limit Division 2
Section 601VBE
Corporations Act 2001 93
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
aware that they have breached a condition to which the approval is
subject.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
601VBE Varying percentage approved
Application by holder of approval
(1) A person who holds an approval under section 601VBB may apply
to vary the percentage specified in the approval by lodging with
ASIC an application that:
(a) specifies the percentage of the voting power the person
currently has in the licensed trustee company concerned; and
(b) specifies the percentage of the voting power the person is
seeking approval to have in the trustee company; and
(c) sets out the person’s reasons for making the application.
Note: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must give the application to the Minister as soon as possible.
(3) The Minister may grant the application if the Minister is satisfied
that it would be in the interests of the licensed trustee company and
its clients for the application to be granted.
(4) If the Minister grants the application, the Minister must:
(a) give written notice of the variation to the applicant; and
(b) specify the variation granted (which may or may not be the
variation the applicant applied for).
(5) If the Minister refuses an application, the Minister must give
written notice of the refusal to the applicant.
Minister’s own initiative
(6) The Minister may, by written notice given to a person who holds
an approval under section 601VBB, vary the percentage specified
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Chapter 5D Licensed trustee companies
Part 5D.5 Limit on control of licensed trustee companies
Division 2 Approval to exceed 15% voting power limit
Section 601VBF
94 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
in the approval if the Minister is satisfied that the variation would
be in the interests of the licensed trustee company and its clients.
Percentage varied upwards
(7) If the Minister varies a percentage upwards, the variation takes
effect on the day the notice of variation is given.
Percentage varied downwards
(8) If the Minister varies a percentage downwards, the variation takes
effect on the day specified in the notice of variation. The specified
day must be a day at least 90 days after the day on which the notice
is given.
Notification of variation
(9) As soon as practicable, the Minister must arrange for a copy of a
notice of variation under this section to be:
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
601VBF Revoking an approval
(1) The Minister may, by written notice given to a person who holds
an approval under section 601VBB in relation to a licensed trustee
company, revoke the approval if:
(a) the Minister is satisfied that it would be in the interests of the
trustee company and its clients for the approval to be
revoked; or
(b) the Minister is satisfied that an unacceptable control situation
exists in relation to the trustee company and in relation to the
person; or
(c) the Minister is satisfied that there has been a contravention of
a condition to which the approval is subject.
(2) The revocation takes effect on the day specified in the notice of
revocation. The specified day must be a day at least 90 days after
the day on which the notice is given.
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Limit on control of licensed trustee companies Part 5D.5
Approval to exceed 15% voting power limit Division 2
Section 601VBG
Corporations Act 2001 95
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(3) If a person who holds an approval under section 601VBB applies
to the Minister for revocation of the approval, the Minister must,
by written notice given to the person, revoke the approval. The
revocation takes effect on the day specified in the notice of
revocation.
(4) As soon as practicable, the Minister must arrange for a copy of a
notice of revocation under this section to be:
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
601VBG Minister may require further information from applicants
(1) If a person has made an application under this Division, the
Minister may, by written notice given to the person, require the
person to give the Minister, within a specified period, further
information about the application.
(2) The Minister may refuse to consider the application until the
person gives the Minister the information.
601VBH Minister may seek views of licensed trustee company and
its clients
For the purpose of making a decision under this Division (whether
or not in response to an application) in relation to a licensed trustee
company, the Minister may seek the views of the trustee company
and its clients.
601VBI Time limit for Minister’s decision
(1) The Minister must make a decision on an application under this
Division within 30 days after receiving the application.
(2) However, before the end of the 30 days, the Minister may decide to
extend the period for considering the application until the end of 60
days after the application was received.
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Part 5D.5 Limit on control of licensed trustee companies
Division 2 Approval to exceed 15% voting power limit
Section 601VBI
96 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(3) If the Minister has not made a decision within the 30 days (or the
60 days, if subsection (2) applies), the Minister is taken to have
granted whatever was applied for. As soon as practicable after that
happens, the Minister must arrange for a notice to that effect to be:
(a) published in the Gazette; and
(b) given to the licensed trustee company concerned.
(4) The time for making the decision stops running if the Minister
gives a notice under subsection 601VBG(1) in relation to the
application, and does not start again until the notice is complied
with.
(5) The time limit in this section does not apply to an application under
section 601VBB or 601VBE if an unacceptable control situation
exists in relation to the applicant and in relation to the relevant
licensed trustee company at any time before the Minister makes a
decision.
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Limit on control of licensed trustee companies Part 5D.5
Other matters Division 3
Section 601VCA
Corporations Act 2001 97
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Other matters
601VCA Acquisition of property
(1) The Court must not make an order under section 601VAC if:
(a) the order would result in the acquisition of property from a
person otherwise than on just terms; and
(b) the order would be invalid because of paragraph 51(xxxi) of
the Constitution.
(2) Section 1350 does not apply in relation to the making of an order
under section 601VAC.
(3) In this section:
acquisition of property has the same meaning as in
paragraph 51(xxxi) of the Constitution.
just terms has the same meaning as in paragraph 51(xxxi) of the
Constitution.
601VCB Interests of clients to be viewed as a group
A reference in this Part to the interests of the clients of a licensed
trustee company is a reference to the interests of the clients, when
viewed as a group.
601VCC Anti-avoidance
(1) If:
(a) one or more persons enter into, begin to carry out or carry out
a scheme; and
(b) it would be concluded that the person, or any of the persons,
who entered into, began to carry out or carried out the
scheme or any part of the scheme did so for the sole or
dominant purpose of avoiding the application of any
provision of Division 1 in relation to any person or persons
(whether or not mentioned in paragraph (a)); and
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Section 601VCC
98 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(c) as a result of the scheme or a part of the scheme, a person
(the controller) increases the controller’s voting power in a
licensed trustee company;
the Minister may give the controller a written direction to cease
having that voting power within a specified time.
(2) A person who is subject to a direction under subsection (1) must
comply with the direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A direction under subsection (1) is not a legislative instrument.
(4) In this section:
increase voting power includes increasing it from a starting point
of nil.
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Preliminary Division 1
Section 601WAA
Corporations Act 2001 99
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Part 5D.6—ASIC-approved transfers of estate
assets and liabilities
Division 1—Preliminary
601WAA Definitions
(1) In this Part:
asset means property, or a right, of any kind, and includes:
(a) any legal or equitable estate or interest (whether present or
future, vested or contingent, tangible or intangible, in real or
personal property) of any kind; and
(b) any chose in action; and
(c) any right, interest or claim of any kind including rights,
interests or claims in or in relation to property (whether
arising under an instrument or otherwise, and whether
liquidated or unliquidated, certain or contingent, accrued or
accruing); and
(d) any CGT asset within the meaning of the Income Tax
Assessment Act 1997.
authorised ASIC officer, when used in a particular provision of
this Part, means a person authorised under subsection (2) to
perform or exercise the functions or powers of an authorised ASIC
officer under that provision.
cancel, in relation to a licence, means:
(a) cancel the licence under Part 7.6; or
(b) vary the conditions of the licence under Part 7.6 so that the
licence ceases to cover traditional trustee company services.
certificate of transfer has the meaning given by
subsection 601WBG(1).
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Section 601WAA
100 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
compulsory transfer determination has the meaning given by
subsection 601WBA(1).
estate assets and liabilities, of a company, means assets (including
assets in common funds) and liabilities of an estate, or incurred in
relation to an estate, in relation to which the company was
performing estate management functions, if the assets and
liabilities were vested in or otherwise belonged to the company:
(a) because of its performance of those functions; and
(b) immediately before:
(i) if ASIC has cancelled the company’s licence—the
cancellation; or
(ii) otherwise—a relevant certificate of transfer comes into
force.
Note: This Part does not apply to liabilities for breach of trust etc.: see
section 601WBK.
interest, in relation to land, includes:
(a) a legal or equitable estate or interest in the land; or
(b) a right, power or privilege over, or in relation to, the land.
liability includes a duty or obligation of any kind (whether arising
under an instrument or otherwise, and whether actual, contingent
or prospective).
licence means an Australian financial services licence that is held
by a trustee company and that covers the provision of one or more
traditional trustee company services.
receiving company has the meaning given by
subsection 601WBA(1).
transfer determination has the meaning given by
subsection 601WBA(1).
transferring company has the meaning given by
subsection 601WBA(1).
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Section 601WAA
Corporations Act 2001 101
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
voluntary transfer determination has the meaning given by
subsection 601WBA(1).
(2) ASIC may, in writing, authorise a person who is a member of
ASIC, or of its staff, to perform or exercise the functions or powers
of an authorised ASIC officer under a particular provision of this
Part.
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Division 2 Transfer of estate assets and liabilities
Section 601WBA
102 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Transfer of estate assets and liabilities
601WBA Transfer determinations
(1) ASIC may, in writing, make a determination (a transfer
determination) that there is to be a transfer of estate assets and
liabilities from a specified company (the transferring company) to
another specified company (the receiving company) if:
(a) ASIC has cancelled the licence of the transferring company
(the determination is a compulsory transfer determination);
or
(b) the transferring company has applied in the prescribed form
for a determination (the determination is a voluntary transfer
determination).
(2) ASIC may make a transfer determination only if:
(aa) for a compulsory transfer determination—the receiving
company is a licensed trustee company or the Public Trustee
of a State or Territory; and
(ab) for a voluntary transfer determination:
(i) the transferring company is a licensed trustee company
or a company that was previously authorised as a trustee
company under a law of a State or Territory; and
(ii) the receiving company is a licensed trustee company;
and
(a) either:
(i) the Minister has consented to the transfer; or
(ii) the Minister’s consent to the transfer is not required (see
section 601WBD); and
(b) ASIC is satisfied that:
(i) the transfer is in the interests of clients of the
transferring company (when viewed as a group); and
(ii) unless the receiving company is a Public Trustee—the
transfer is in the interests of clients of the receiving
company (when viewed as a group); and
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Section 601WBA
Corporations Act 2001 103
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(iii) the board of the receiving company has consented to the
transfer; and
(iv) legislation to facilitate the transfer that satisfies the
requirements of section 601WBC has been enacted in
the State or Territory in which the transferring company
is registered and the State or Territory in which the
receiving company is registered or of which it is the
Public Trustee.
(2A) Even if the Public Trustee of a State or Territory is not a company:
(a) the Public Trustee may still be specified as a receiving
company for the purposes of a compulsory transfer
determination; and
(b) references in this Part (however expressed) to:
(i) a company; or
(ii) the board of a company;
are taken to be references to that Public Trustee.
(3) The determination must include particulars of the transfer,
including:
(a) the names of the transferring company and the receiving
company; and
(b) for a compulsory transfer determination—whether it will be a
total transfer or a partial transfer of the transferring
company’s estate assets and liabilities; and
(c) if it will be a partial transfer—an indication of the part of the
transferring company’s estate assets and liabilities that is to
be transferred; and
(d) for a voluntary transfer determination—that it will be a total
transfer of the transferring company’s estate assets and
liabilities.
(4) The determination must include a statement of the reasons why the
determination has been made.
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Division 2 Transfer of estate assets and liabilities
Section 601WBB
104 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(5) The determination is not a legislative instrument.
601WBB When consent of receiving company is in force
(1) The consent referred to in subparagraph 601WBA(2)(b)(iii)
remains in force until it is withdrawn by the receiving company’s
board with the agreement of ASIC.
(2) ASIC may agree to the consent being withdrawn if ASIC considers
it appropriate to allow the consent to be withdrawn having regard
to any of the following:
(a) circumstances that have arisen since the consent was given;
(b) circumstances that were in existence at or before the time
when the consent was given but that were not known to the
receiving company’s board when it gave its consent;
(c) any other relevant matter.
601WBC Complementary State or Territory legislation
State or Territory legislation referred to in
subparagraph 601WBA(2)(b)(iv) must include provision to ensure
that, when a certificate of transfer comes into force under this
Division, the receiving company is taken to be the successor in law
in relation to estate assets and liabilities of the transferring
company, to the extent of the transfer. In particular, the legislation
must provide that:
(a) assets of the transferring company become assets of the
receiving company, to the extent of the transfer; and
(b) liabilities of the transferring company become liabilities of
the receiving company, to the extent of the transfer; and
(c) the duties, obligations, immunities, rights and privileges
applying to the transferring company apply to the receiving
company, to the extent of the transfer; and
(d) if the certificate of transfer includes provisions of a kind
referred to in subsection 601WBG(3) specifying:
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Section 601WBD
Corporations Act 2001 105
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(i) that particular things are to happen or are taken to be the
case—those things are taken to happen, or to be the
case, in accordance with those provisions; or
(ii) a mechanism for determining things that are to happen
or are taken to be the case—things determined in
accordance with that mechanism are taken to happen, or
to be the case, as determined in accordance with that
mechanism.
601WBD Minister’s power to decide that his or her consent is not
required
(1) The Minister’s consent to the transfer of estate assets and liabilities
is not required if the Minister has, in writing, determined that his or
her consent is not required in relation to:
(a) the transfer; or
(b) a class of transfers that includes the transfer.
(2) The regulations may prescribe criteria to be taken into account by
the Minister in deciding whether to make a determination.
(3) A determination is a legislative instrument if it is expressed to
apply in relation to a class of transfers (whether or not it is also
expressed to apply in relation to one or more transfers identified
otherwise than by reference to membership of a class).
(4) If subsection (3) does not apply to a determination, the
determination is not a legislative instrument.
601WBE Determinations may impose conditions
(1) The transfer determination may impose conditions of either or both
of the following kinds:
(a) conditions to be complied with by the transferring company
or the receiving company before a certificate of transfer is
issued in relation to the transfer of estate assets and
liabilities;
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Section 601WBF
106 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) conditions to be complied with by the transferring company
or the receiving company after a certificate of transfer has
been issued or has come into force in relation to the transfer
of estate assets and liabilities.
(2) ASIC may, by notice in writing given to the transferring company
or the receiving company, vary or revoke any condition of a
determination if ASIC is satisfied that the variation or revocation is
appropriate.
(3) The transferring company or the receiving company may apply in
writing to ASIC to have a condition of a kind referred in
paragraph (1)(b) that applies to it varied or revoked.
(4) ASIC may, by notice in writing given to the company that made
the application, approve the variation or revocation if ASIC is
satisfied that the variation or revocation is appropriate. A variation
or revocation that is approved by ASIC has effect accordingly.
(5) The transferring company or the receiving company must comply
with any conditions that are imposed under subsection (1) as
conditions to be complied with by that company.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(6) The transferring company or the receiving company does not
commit an offence against this Act merely because the company is
complying with a condition imposed under subsection (1).
Note: A defendant bears an evidential burden in relation to the matter in
subsection (6), see subsection 13.3(3) of the Criminal Code.
601WBF Notice of determination
ASIC must give a copy of the transfer determination to the
transferring company and the receiving company.
601WBG Certificate of transfer
(1) If:
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Section 601WBH
Corporations Act 2001 107
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) ASIC has made a transfer determination; and
(b) ASIC considers that the transfer should go ahead; and
(c) the consent referred to in subparagraph 601WBA(2)(b)(iii)
has not been withdrawn under section 601WBB;
ASIC must, in writing, issue a certificate (a certificate of transfer)
stating that the transfer is to take effect.
(2) The certificate of transfer must:
(a) include the names of the transferring company and the
receiving company; and
(b) for a compulsory transfer determination—state whether the
transfer is a total transfer or a partial transfer; and
(c) if the transfer is a partial transfer—include, or have attached
to it, a list of the estate assets and liabilities that are being
transferred to the receiving company; and
(ca) for a voluntary transfer determination—state that the transfer
is a total transfer; and
(d) state when the certificate is to come into force (either by
specifying a date as the date it comes into force, or by
specifying that the date it comes into force is a date worked
out in accordance with provisions of the certificate).
(3) The certificate may include provisions specifying, or specifying a
mechanism for determining, other things that are to happen, or that
are taken to be the case, in relation to assets and liabilities that are
to be transferred, or in relation to the transfer of estate assets and
liabilities that is to be effected, whether the transfer is total or
partial.
(4) The certificate comes into force in accordance with the statement
included in the certificate as required by paragraph (2)(d).
(5) The certificate is not a legislative instrument.
601WBH Notice of certificate
ASIC must:
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Section 601WBI
108 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) give a copy of the certificate of transfer to the transferring
company and the receiving company; and
(b) publish notice of the issue of the certificate.
601WBI Time and effect of transfer
(1) When a certificate of transfer comes into force, the receiving
company becomes the successor in law of the transferring
company in relation to estate assets and liabilities of the
transferring company, to the extent of the transfer. In particular:
(a) if the transfer is a total transfer—all the estate assets and
liabilities of the transferring company, wherever those assets
and liabilities are located, become assets and liabilities of the
receiving company (in the same capacity as they were assets
and liabilities of the transferring company) without any
transfer, conveyance or assignment; and
(b) if the transfer is a partial transfer—all the estate assets and
liabilities included in the list referred to in
paragraph 601WBG(2)(c), wherever those assets and
liabilities are located, become assets and liabilities of the
receiving company (in the same capacity as they were assets
and liabilities of the transferring company) without any
transfer, conveyance or assignment; and
(c) to the extent of the transfer, the duties, obligations,
immunities, rights and privileges applying to the transferring
company apply to the receiving company.
(2) If the certificate includes provisions of a kind referred to in
subsection 601WBG(3):
(a) if the provisions specify that particular things are to happen
or are taken to be the case—those things are, by force of this
section, taken to happen, or to be the case, in accordance with
those provisions; and
(b) if the provisions specify a mechanism for determining things
that are to happen or are taken to be the case—things
determined in accordance with the mechanism are, by force
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Section 601WBJ
Corporations Act 2001 109
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
of this section, taken to happen, or to be the case, as
determined in accordance with that mechanism.
601WBJ Substitution of trustee company
When a certificate of transfer comes into force, any appointment or
nomination of the transferring company to a particular capacity
(for example, as trustee, executor or administrator) in relation to
the transferred estate assets and liabilities is taken to be an
appointment or nomination of the receiving company to that
capacity in relation to those assets and liabilities.
601WBK Liabilities for breach of trust and other matters not
affected by this Part
(1) Nothing in this Part applies to or affects liabilities of the
transferring company, or of an officer or employee of the
transferring company, for:
(a) any breach of trust; or
(b) any other misfeasance or nonfeasance; or
(c) any exercise of, or failure to exercise, any discretion.
(2) Nothing in this Part affects any rights of the transferring company,
or of an officer or employee of the transferring company, to
indemnity in respect of such liabilities.
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Division 3 Other matters related to the transfer of estate assets and liabilities
Section 601WCA
110 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Other matters related to the transfer of estate
assets and liabilities
601WCA Certificates evidencing operation of Act etc.
(1) An authorised ASIC officer, by signed writing, may certify that a
specified asset or liability has become an asset or liability of the
receiving company under this Part.
(2) For all purposes and in all proceedings, a certificate under
subsection (1) is prima facie evidence of the matters certified.
601WCB Certificates in relation to land and interests in land
If:
(a) the receiving company becomes, under this Part, the owner
of land, or of an interest in land, that is situated in a State or
Territory; and
(b) there is lodged with the Registrar of Titles or other
appropriate officer of the State or Territory in which the land
is situated a certificate that:
(i) is signed by an authorised ASIC officer; and
(ii) identifies the land or interest; and
(iii) states that the receiving company has, under this Part,
become the owner of that land or interest;
the officer with whom the certificate is lodged may:
(c) register the matter in the same manner as dealings in land or
interests in land of that kind are registered; and
(d) deal with, and give effect to, the certificate.
601WCC Certificates in relation to other assets
(1) If:
(a) an asset (other than land or an interest in land) becomes,
under this Part, an asset of the receiving company; and
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Section 601WCD
Corporations Act 2001 111
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(b) there is lodged with the person or authority who has, under a
law of the Commonwealth, a State or a Territory,
responsibility for keeping a register in respect of assets of
that kind a certificate that:
(i) is signed by an authorised ASIC officer; and
(ii) identifies the asset; and
(iii) states that the asset has, under this Part, become an asset
of the receiving company;
that person or authority may:
(c) register the matter in the same manner as transactions in
relation to assets of that kind are registered; and
(d) deal with, and give effect to, the certificate.
(2) This section does not affect the operation of:
(a) other provisions of this Act; or
(b) if the regulations prescribe provisions of one or more other
Acts—those provisions of those Acts.
601WCD Documents purporting to be certificates
A document purporting to be a certificate given under this Division
is, unless the contrary is established, taken to be such a certificate
and to have been properly given.
601WCE Construction of references to transferring company
From when a certificate of transfer comes into force, in any
instrument of any kind, a reference to the transferring company, in
relation to assets or liabilities transferred under this Part, is taken to
be a reference to the receiving company.
601WCF Income or other distribution received by transferring
company
The transferring company must promptly account to the receiving
company for any income or other distribution received by the
transferring company after a certificate of transfer comes into
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Section 601WCG
112 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
force, if the income or distribution arises from assets transferred to
the receiving company under this Part.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
601WCG Access to books
The transferring company must, at the request of the receiving
company, give the receiving company access to all books in its
possession that relate to assets or liabilities transferred under this
Part.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
601WCH Minister or ASIC may seek views of trustee company and
its clients
For the purpose of deciding whether to exercise powers under this
Part, the Minister or ASIC may seek the views of a trustee
company or its clients in relation to the possible exercise of the
powers.
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Miscellaneous Division 4
Section 601WDA
Corporations Act 2001 113
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Division 4—Miscellaneous
601WDA Transferring company required to contact certain persons
Notice of cancellation of licence
(1) If the licence of a trustee company is cancelled, the trustee
company must, as soon as practicable:
(a) take all reasonable steps to contact the following persons and
advise them of the cancellation of the licence:
(i) all persons who the trustee company is aware have
executed and lodged instruments, such as wills, that
have not yet come into effect, but will potentially lead
to estate assets and liabilities being held by the trustee
company;
(ii) all persons who the trustee company is aware have
appointed the trustee company as trustee or to some
other capacity; and
(b) publish notice of the cancellation of the licence.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Notice of compulsory transfer determination
(2) If a certificate of transfer for a compulsory transfer determination
comes into force, the transferring company must, as soon as
practicable, take all reasonable steps to contact the persons referred
to in subsection (1) and advise them of the transfer of estate assets
and liabilities.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Notice of voluntary transfer determination
(3) If a certificate of transfer for a voluntary transfer determination
comes into force, the transferring company must, as soon as
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Section 601WDA
114 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
practicable, publish notice of the transfer of estate assets and
liabilities.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Contraventions and holding out Part 5D.7
Section 601XAA
Corporations Act 2001 115
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5D.7—Contraventions and holding out
601XAA Civil liability of licensed trustee companies
(1) A person who suffers loss or damage because of conduct of a
licensed trustee company that contravenes a provision of this
Chapter may recover the amount of the loss or damage by action
against the trustee company, whether or not the trustee company
has been convicted of an offence, or has had a civil penalty order
made against it, in respect of the contravention.
(2) Without limiting subsection (1), if:
(a) a licensed trustee company charges a person a fee in excess
of fees permitted to be charged by this Chapter; and
(b) the person pays the fee;
the amount of the excess is a loss that is recoverable by the person
under subsection (1).
(3) An action under subsection (1) must be begun within 6 years after
the cause of action arises.
(4) This section does not affect any liability that a person has under
other provisions of this Act or under other laws.
601XAB Prohibition on holding out
A person must not hold out that the person is a licensed trustee
company if that is not the case.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
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Part 5D.8 Exemptions and modifications
Section 601YAA
116 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 5D.8—Exemptions and modifications
601YAA Exemptions and modifications by ASIC
(1) ASIC may:
(a) exempt a person or class of persons, or an estate or class of
estates, from all or specified provisions of this Chapter; or
(b) declare that this Chapter applies to a person or class of
persons, or an estate or class of estates, as if specified
provisions were omitted, modified or varied as specified in
the declaration.
(2) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(3) An exemption or declaration is a legislative instrument if it is
expressed to apply in relation to a class of persons or a class of
estates (whether or not it is also expressed to apply in relation to
one or more persons or estates identified otherwise than by
reference to membership of a class).
(4) If subsection (3) does not apply to an exemption or declaration, the
exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette. The exemption or determination
is not a legislative instrument.
(5) If conduct (including an omission) of a person would not have
constituted an offence if a particular declaration under
paragraph (1)(b) had not been made, that conduct does not
constitute an offence unless, before the conduct occurred (in
addition to complying with the requirements of the Legislative
Instruments Act 2003 (if the declaration is of a kind referred to in
subsection (3)), or with the gazettal requirement of subsection (4),
as the case may be):
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Section 601YAB
Corporations Act 2001 117
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) the text of the declaration was made available by ASIC on
the internet; or
(b) ASIC gave written notice setting out the text of the
declaration to the person.
In a prosecution for an offence to which this subsection applies, the
prosecution must prove that paragraph (a) or (b) was complied with
before the conduct occurred.
(6) For the purpose of this section, the provisions of this Chapter
include:
(a) regulations or other instruments made for the purposes of this
Chapter; and
(b) definitions in this Act or the regulations, as they apply to
references in:
(i) this Chapter; or
(ii) regulations or other instruments made for the purposes
of this Chapter; and
(c) any provisions of Division 2 of Part 10.12 that relate to this
Chapter.
601YAB Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons, or an estate or class of
estates, from all or specified provisions of this Chapter; or
(b) provide that this Chapter applies to a person or class of
persons, or an estate or class of estates, as if specified
provisions were omitted, modified or varied as specified in
the declaration.
(2) For the purpose of this section, the provisions of this Chapter
include:
(a) regulations or other instruments made for the purposes of this
Chapter; and
(b) definitions in this Act or the regulations, as they apply to
references in:
(i) this Chapter; or
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Part 5D.8 Exemptions and modifications
Section 601YAB
118 Corporations Act 2001
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(ii) regulations or other instruments made for the purposes
of this Chapter; and
(c) any provisions of Division 2 of Part 10.12 that relate to this
Chapter.
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Section 602
Corporations Act 2001 119
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Chapter 6—Takeovers
602 Purposes of Chapter
The purposes of this Chapter are to ensure that:
(a) the acquisition of control over:
(i) the voting shares in a listed company, or an unlisted
company with more than 50 members; or
(ii) the voting shares in a listed body; or
(iii) the voting interests in a listed managed investment
scheme;
takes place in an efficient, competitive and informed market;
and
(b) the holders of the shares or interests, and the directors of the
company or body or the responsible entity for the scheme:
(i) know the identity of any person who proposes to
acquire a substantial interest in the company, body or
scheme; and
(ii) have a reasonable time to consider the proposal; and
(iii) are given enough information to enable them to assess
the merits of the proposal; and
(c) as far as practicable, the holders of the relevant class of
voting shares or interests all have a reasonable and equal
opportunity to participate in any benefits accruing to the
holders through any proposal under which a person would
acquire a substantial interest in the company, body or
scheme; and
(d) an appropriate procedure is followed as a preliminary to
compulsory acquisition of voting shares or interests or any
other kind of securities under Part 6A.1.
Note 1: To achieve the objectives referred to in paragraphs (a), (b) and (c), the
prohibition in section 606 and the exceptions to it refer to interests in
“voting shares”. To achieve the objective in paragraph (d), the
provisions that deal with the takeover procedure refer more broadly to
interests in “securities”.
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Section 602A
120 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 2: Subsection 92(3) defines securities for the purposes of this Chapter.
602A Substantial interest concept
(1) A reference in this Chapter to a substantial interest in a company,
listed body or listed managed investment scheme is not to be read
as being limited to an interest that is constituted by one or more of
the following:
(a) a relevant interest in securities in the company, body or
scheme;
(b) a legal or equitable interest in securities in the company,
body or scheme;
(c) a power or right in relation to:
(i) the company, body or scheme; or
(ii) securities in the company, body or scheme.
(2) A person does not have a substantial interest in the company, body
or scheme for the purposes of this Chapter merely because the
person has an interest in, or a relationship with, the company, body
or scheme of a kind prescribed by the regulations for the purposes
of this subsection.
(3) The regulations may provide that an interest of a particular kind is
an interest that may constitute a substantial interest in a company,
listed body or listed managed investment scheme for the purposes
of this Chapter.
603 Chapter extends to some listed bodies that are not companies
This Chapter applies to the acquisition of relevant interests in the
securities of listed bodies that are not companies but are
incorporated or formed in Australia in the same way as it applies to
the acquisition of relevant interests in the securities of companies.
Note: Section 9 defines company and listed.
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Section 604
Corporations Act 2001 121
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604 Chapter extends to listed managed investment schemes
(1) This Chapter applies to the acquisition of relevant interests in the
interests in a registered scheme that is also listed as if:
(a) the scheme were a listed company; and
(b) interests in the scheme were shares in the company; and
(c) voting interests in the scheme were voting shares in the
company; and
(d) a meeting of the members of the scheme were a general
meeting of the company; and
(e) the obligations and powers that are imposed or conferred on
the company were imposed or conferred on the responsible
entity; and
(f) the directors of the responsible entity were the directors of
the company; and
(g) the appointment of a responsible entity for the scheme were
the election of a director of the company; and
(h) the scheme’s constitution were the company’s constitution.
Note 1: Paragraph (g): See subsection 610(2).
Note 2: Section 9 defines voting interest in a managed investment scheme.
(2) The regulations may modify the operation of this Chapter as it
applies in relation to the acquisition of interests in listed managed
investment schemes.
605 Classes of securities
(1) Takeover bids are made for securities within a particular class.
Similarly, compulsory acquisition and buy-out rights operate on
securities within a particular class.
(2) For the purposes of this Chapter and Chapters 6A and 6C,
securities are not taken to be different classes merely because:
(a) some of the securities are fully-paid and others are
partly-paid; or
(b) different amounts are paid up or remain unpaid on the
securities.
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Part 6.1 Prohibited acquisitions of relevant interests in voting shares
Section 606
122 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.1—Prohibited acquisitions of relevant
interests in voting shares
606 Prohibition on certain acquisitions of relevant interests in voting
shares
Acquisition of relevant interests in voting shares through
transaction entered into by or on behalf of person acquiring
relevant interest
(1) A person must not acquire a relevant interest in issued voting
shares in a company if:
(a) the company is:
(i) a listed company; or
(ii) an unlisted company with more than 50 members; and
(b) the person acquiring the interest does so through a
transaction in relation to securities entered into by or on
behalf of the person; and
(c) because of the transaction, that person’s or someone else’s
voting power in the company increases:
(i) from 20% or below to more than 20%; or
(ii) from a starting point that is above 20% and below 90%.
Note 1: Section 9 defines company as meaning a company registered under
this Act.
Note 2: Section 607 deals with the effect of a contravention of this section on
transactions. Sections 608 and 609 deal with the meaning of relevant
interest. Section 610 deals with the calculation of a person’s voting
power in a company.
Note 3: If the acquisition of relevant interests in an unlisted company with 50
or fewer members leads to the acquisition of a relevant interest in
another company that is an unlisted company with more than 50
members, or a listed company, the acquisition is caught by this section
because of its effect on that other company.
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Prohibited acquisitions of relevant interests in voting shares Part 6.1
Section 606
Corporations Act 2001 123
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(1A) However, the person may acquire the relevant interest under one of
the exceptions set out in section 611 without contravening
subsection (1).
Note: A defendant bears an evidential burden in relation to the matter in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
Acquisition of legal or equitable interest giving rise to relevant
interest for someone else
(2) A person must not acquire a legal or equitable interest in securities
of a body corporate if, because of the acquisition:
(a) another person acquires a relevant interest in issued voting
shares in a company that is:
(i) a listed company; or
(ii) an unlisted company with more than 50 members; and
(b) someone’s voting power in the company increases:
(i) from 20% or below to more than 20%; or
(ii) from a starting point that is above 20% and below 90%.
(2A) However, if the acquisition of the relevant interest is covered by
one of the exceptions set out in section 611, the person may
acquire the legal or equitable interest without contravening
subsection (2).
Note: A defendant bears an evidential burden in relation to the matter in
subsection (2A), see subsection 13.3(3) of the Criminal Code.
50 member threshold
(3) In determining whether the company has more than 50 members
for the purposes of subsection (1) or (2), count joint holders of a
particular parcel of shares as 1 person.
Offers and invitations
(4) A person must not:
(a) make an offer, or cause an offer to be made on their behalf, if
the person would contravene subsection (1) or (2) if the offer
were accepted; or
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Part 6.1 Prohibited acquisitions of relevant interests in voting shares
Section 606
124 Corporations Act 2001
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(b) issue an invitation, or cause an invitation to be issued on their
behalf, if the person would contravene subsection (1) or (2)
if:
(i) an offer were made in response to the invitation; and
(ii) the offer were accepted.
Absolute liability offences
(4A) An offence based on subsection (1), (2) or (4) is an offence of
absolute liability.
Note: For absolute liability, see section 6.2 of the Criminal Code.
Defences
(5) It is a defence to the prosecution of a person for contravening
subsection (1), (2) or (4) if the person proves that they contravened
the subsection:
(a) because of inadvertence or mistake; or
(b) because the person was not aware of a relevant fact or
occurrence.
In determining whether the defence is available, disregard the
person’s ignorance of, or a mistake on the person’s part
concerning, a matter of law.
Note: A defendant bears a legal burden in relation to a matter mentioned in
subsection (5), see section 13.4 of the Criminal Code.
Extended meaning of acquiring relevant interests—conversions
and increases in voting rights
(6) A person is taken for the purposes of subsection (1) or (2) to
acquire a relevant interest in voting shares in a company if:
(a) securities in which the person already had a relevant interest
become voting shares in the company; or
(b) there is an increase in the number of votes that may be cast
on a poll attached to voting shares that the person already had
a relevant interest in.
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Prohibited acquisitions of relevant interests in voting shares Part 6.1
Section 607
Corporations Act 2001 125
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
The acquisition occurs when the securities become voting shares or
the number of votes increases.
Note: Some examples of cases to which this subsection applies are:
A person exercises a right to convert a non-voting preference share into an ordinary share that carries votes.
A person pays up partly-paid shares with limited votes and this leads to an increase in the number of votes attached to the shares.
607 Effect on transactions
A transaction is not invalid merely because it involves a
contravention of section 606.
608 Relevant interests in securities
Basic rule—relevant interest is holding, or controlling voting or
disposal of, securities
(1) A person has a relevant interest in securities if they:
(a) are the holder of the securities; or
(b) have power to exercise, or control the exercise of, a right to
vote attached to the securities; or
(c) have power to dispose of, or control the exercise of a power
to dispose of, the securities.
It does not matter how remote the relevant interest is or how it
arises. If 2 or more people can jointly exercise one of these powers,
each of them is taken to have that power.
Extension to control exercisable through a trust, agreement or
practice
(2) In this section, power or control includes:
(a) power or control that is indirect; and
(b) power or control that is, or can be, exercised as a result of, by
means of or by the revocation or breach of:
(i) a trust; or
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126 Corporations Act 2001
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(ii) an agreement; or
(iii) a practice; or
(iv) any combination of them;
whether or not they are enforceable; and
(c) power or control that is, or can be made, subject to restraint
or restriction.
It does not matter whether the power or control is express or
implied, formal or informal, exercisable alone or jointly with
someone else. It does not matter that the power or control cannot
be related to a particular security.
Extension to relevant interests held through bodies corporate
(3) A person has the relevant interests in any securities that any of the
following has:
(a) a body corporate, or managed investment scheme, in which
the person’s voting power is above 20%;
(b) a body corporate, or managed investment scheme, that the
person controls.
Paragraph (a) does not apply to a relevant interest that the body
corporate or scheme itself has in the securities merely because of
the operation of that paragraph in relation to another body
corporate or managed investment scheme.
(4) For the purposes of paragraph (3)(b), a person controls a body
corporate if the person has the capacity to determine the outcome
of decisions about the body corporate’s financial and operating
policies.
(5) In determining whether a person has this capacity:
(a) the practical influence the person can exert (rather than the
rights they can enforce) is the issue to be addressed; and
(b) any practice or pattern of behaviour affecting the body
corporate’s financial or operating policies is to be taken into
account (even if it involves a breach of an agreement or a
breach of trust).
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Section 608
Corporations Act 2001 127
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(6) The person does not control the body corporate merely because the
person and an entity that is not an associate jointly have the
capacity to determine the outcome of decisions about the body
corporate’s financial and operating policies.
(7) A person is not taken to control a body corporate merely because
of a capacity they have if they are under a legal obligation to
exercise that capacity for the benefit of:
(a) if the person is an individual—someone else; or
(b) if the person is a body corporate—someone other than its
members.
Extension to control in anticipation of performance of agreements
etc.
(8) If at a particular time all the following conditions are satisfied:
(a) a person has a relevant interest in issued securities;
(b) the person (whether before or after acquiring the relevant
interest):
(i) has entered or enters into an agreement with another
person with respect to the securities; or
(ii) has given or gives another person an enforceable right,
or has been or is given an enforceable right by another
person, in relation to the securities (whether the right is
enforceable presently or in the future and whether or not
on the fulfilment of a condition); or
(iii) has granted or grants an option to, or has been or is
granted an option by, another person with respect to the
securities;
(c) the other person would have a relevant interest in the
securities if the agreement were performed, the right enforced
or the option exercised;
the other person is taken to already have a relevant interest in the
securities.
Note: Subsections 609(6) and (7) deal with specific situations in which the
agreement will not give rise to a relevant interest.
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Part 6.1 Prohibited acquisitions of relevant interests in voting shares
Section 609
128 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Body corporate may have relevant interest in its own securities
(9) This section may result in a body corporate having a relevant
interest in its own securities.
609 Situations not giving rise to relevant interests
Money lending and financial accommodation
(1) A person does not have a relevant interest in securities merely
because of a security interest taken for the purpose of a transaction
entered into by the person if:
(a) the security interest is taken or acquired in the ordinary
course of the person’s business of the provision of financial
accommodation by any means and on ordinary commercial
terms; and
(b) the person whose property is subject to the security interest is
not an associate of the person.
Note: Sections 11 to 17 define associate.
Nominees and other trustees
(2) A person who would otherwise have a relevant interest in securities
as a bare trustee does not have a relevant interest in the securities if
a beneficiary under the trust has a relevant interest in the securities
because of a presently enforceable and unconditional right of the
kind referred to in subsection 608(8).
Note: This subsection will often apply to a person who holds securities as a
nominee.
Holding of securities by financial services licensee
(3) A financial services licensee does not have a relevant interest in
securities merely because they hold securities on behalf of
someone else in the ordinary course of their financial services
business.
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Section 609
Corporations Act 2001 129
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Shares covered by buy-backs
(4) A person does not have a relevant interest in a company’s shares if
the relevant interest would arise merely because the company has
entered into an agreement to buy back the shares.
Proxies
(5) A person does not have a relevant interest in securities merely
because the person has been appointed to vote as a proxy or
representative at a meeting of members, or of a class of members,
of the company, body or managed investment scheme if:
(a) the appointment is for one meeting only; and
(b) neither the person nor any associate gives valuable
consideration for the appointment.
Market traded options and derivatives
(6) A person does not have a relevant interest in securities merely
because of:
(a) an market traded option over the securities; or
(b) a right to acquire the securities given by a derivative.
This subsection stops applying to the relevant interest when the
obligation to make or take delivery of the securities arises.
Note: Without this subsection, subsection 608(8) would create a relevant
interest from the option or contract.
Conditional agreements
(7) A person does not have a relevant interest in securities merely
because of an agreement if the agreement:
(a) is conditional on:
(i) a resolution under item 7 in the table in section 611
being passed; or
(ii) ASIC exempting the acquisition under the agreement
from the provisions of this Chapter under section 655A;
and
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Part 6.1 Prohibited acquisitions of relevant interests in voting shares
Section 609
130 Corporations Act 2001
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(b) does not confer any control over, or power to substantially
influence, the exercise of a voting right attached to the
securities; and
(c) does not restrict disposal of the securities for more than 3
months from the date when the agreement is entered into.
The person acquires a relevant interest in the securities when the
condition referred to in paragraph (a) is satisfied.
Pre-emptive rights
(8) A member of a company, body or managed investment scheme
does not have a relevant interest in securities of the company, body
or scheme merely because the company’s, body’s or scheme’s
constitution gives members pre-emptive rights on the transfer of
the securities if all members have pre-emptive rights on the same
terms.
Director of body corporate holding securities
(9) A person does not have a relevant interest in securities merely
because:
(a) the person is a director of a body corporate; and
(b) the body corporate has a relevant interest in those securities.
Clearing and settlement facilities
(9A) The operator of a clearing and settlement facility (within the
meaning of Chapter 7) does not have a relevant interest in
securities merely because of its provision of facilities for the
settlement of transactions.
Prescribed exclusions
(10) A person does not have a relevant interest in securities in the
circumstances specified in the regulations. The regulations may
provide that interests in securities are not relevant interests subject
to specified conditions.
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Prohibited acquisitions of relevant interests in voting shares Part 6.1
Section 610
Corporations Act 2001 131
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610 Voting power in a body or managed investment scheme
Person’s voting power in a body or managed investment scheme
(1) A person’s voting power in a designated body is:
where:
person’s and associates’ votes is the total number of votes attached
to all the voting shares in the designated body (if any) that the
person or an associate has a relevant interest in.
total votes in designated body is the total number of votes attached
to all voting shares in the designated body.
Note: Even if a person’s relevant interest in voting shares is based on control
over disposal of the shares (rather than control over voting rights
attached to the shares), their voting power in the designated body is
calculated on the basis of the number of votes attached to those shares.
Counting votes
(2) For the purposes of this section, the number of votes attached to a
voting share in a designated body is the maximum number of votes
that can be cast in respect of the share on a poll:
(a) if the election of directors is determined by the casting of
votes attached to voting shares—on the election of a director
of the designated body; or
(b) if the election of directors is not determined by the casting of
votes attached to voting shares—on the adoption of a
constitution for the designated body or the amendment of the
body corporate’s constitution.
Note: The Takeovers Panel may decide that the setting or varying of voting
rights in a way that affects control of a designated body is
unacceptable circumstances under section 657A.
(3) If:
Person’s and associates’ votes 100
Total votes in designated body
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Part 6.1 Prohibited acquisitions of relevant interests in voting shares
Section 610
132 Corporations Act 2001
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(a) a transaction in relation to, or an acquisition of an interest in,
securities occurs; and
(b) before the transaction or acquisition, a person did not have a
relevant interest in particular voting shares but an associate
of the person did have a relevant interest in those shares; and
(c) because of the transaction or acquisition, the person acquires
a relevant interest in those shares;
then, for the purposes of applying section 606 to the transaction or
acquisition, the person’s voting power is taken to have increased
because of the transaction or acquisition from what it would have
been before the transaction or acquisition if the votes attached to
those shares were disregarded to what it was after the transaction
or acquisition (taking the votes attached to those shares into
account).
(4) Disregard the operation of section 613 in working out a person’s
voting power in a designated body.
When a designated body is a managed investment scheme
(5) For the purposes of the application of this section in relation to a
designated body that is a managed investment scheme:
(a) a reference to voting shares in the designated body is taken to
be a reference to voting interests in the scheme; and
(b) a reference to the election of directors of the designated body
is taken to be a reference to:
(i) if the scheme is a registered scheme—the appointment
of a responsible entity for the scheme; or
(ii) if the scheme is not a registered scheme—the
appointment of a person to the office (by whatever
name it is known) in relation to the scheme that
corresponds most closely to the office of responsible
entity of a registered scheme; and
(c) a reference to the designated body’s constitution is taken to
be a reference to the scheme’s constitution.
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Prohibited acquisitions of relevant interests in voting shares Part 6.1
Section 610
Corporations Act 2001 133
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Meaning of designated body
(6) In this section:
designated body means:
(a) a body; or
(b) a managed investment scheme.
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Part 6.2 Exceptions to the prohibition
Section 611
134 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.2—Exceptions to the prohibition
611 Exceptions to the prohibition
The following table sets out:
(a) acquisitions of relevant interests in a company’s voting
shares that are exempt from the prohibition in
subsection 606(1); and
(b) acquisitions of relevant interests in a company’s voting
shares resulting from acquisitions of legal or equitable
interests in securities of a body corporate that are exempt
from the prohibition in subsection 606(2).
Note: Some of the items in the table cover only activities in relation to the
company itself (items 7, 8, 12 and 13) while the other items cover
acquisitions in that company that may occur through activities in
relation to other companies.
Acquisitions that are exempt [operative]
Takeover bids
Acceptance of takeover offer
1 An acquisition that results from the acceptance of an offer under a
takeover bid.
See also section 612.
On-market purchase during bid period
2 An acquisition in relation to bid class securities that results from an
on-market transaction if:
(a) the acquisition is by or on behalf of the bidder under a takeover
bid; and
(b) the acquisition occurs during the bid period; and
(c) the bid is for all the voting shares in the bid class; and
(d) the bid is:
(i) unconditional; or
(ii) conditional only on the happening of an event referred to
in subsection 652C(1) or (2).
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Exceptions to the prohibition Part 6.2
Section 611
Corporations Act 2001 135
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Acquisitions that are exempt [operative]
See also sections 612 and 613.
On-market purchase of convertible securities during bid period
3 An acquisition of bid class securities that results directly from the
exercise of rights attached to convertible securities if:
(a) the acquisition is by or on behalf of the bidder under a takeover
bid; and
(b) the bidder acquired a relevant interest in the convertible securities
through an on-market transaction during the bid period; and
(c) the bid is for all the voting shares in the bid class; and
(d) the bid is:
(i) unconditional; or
(ii) conditional only on the happening of an event referred to
in subsection 652C(1) or (2).
See sections 612 and 613.
Acceptance of scrip offered as takeover consideration
4 An acquisition that results from the acceptance of:
(a) an offer under a takeover bid if the voting shares are included in
the consideration for offers under the bid; or
(b) an offer that results in an acquisition to which item 5 applies.
See also section 612.
Nature of acquirer
6 An acquisition that results from the exercise by a person of a power,
or appointment as a receiver, or receiver and manager, under an
instrument or agreement creating or giving rise to a security interest
if:
(a) the person’s ordinary business includes the provision of financial
accommodation by any means; and
(b) the person took or acquired the security interest in the ordinary
course of their business of the provision of financial
accommodation by any means and on ordinary commercial terms.
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Part 6.2 Exceptions to the prohibition
Section 611
136 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Acquisitions that are exempt [operative]
Approval by resolution of target
7 An acquisition approved previously by a resolution passed at a general meeting of the company in which the acquisition is made, if:
(a) no votes are cast in favour of the resolution by:
(i) the person proposing to make the acquisition and their
associates; or
(ii) the persons (if any) from whom the acquisition is to be
made and their associates; and
(b) the members of the company were given all information known to
the person proposing to make the acquisition or their associates,
or known to the company, that was material to the decision on
how to vote on the resolution, including:
(i) the identity of the person proposing to make the acquisition
and their associates; and
(ii) the maximum extent of the increase in that person’s voting
power in the company that would result from the
acquisition; and
(iii) the voting power that person would have as a result of the
acquisition; and
(iv) the maximum extent of the increase in the voting power of
each of that person’s associates that would result from the
acquisition; and
(v) the voting power that each of that person’s associates
would have as a result of the acquisition.
Target newly formed
8 An acquisition that results from an issue of securities of the company
in which the acquisition is made if the company has not started to
carry on any business and has not borrowed any money.
Manner of acquisition
3% creep in 6 months
9 An acquisition by a person if:
(a) throughout the 6 months before the acquisition that person, or any
other person, has had voting power in the company of at least
19%; and
(b) as a result of the acquisition, none of the persons referred to in
paragraph (a) would have voting power in the company more than
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Takeovers Chapter 6
Exceptions to the prohibition Part 6.2
Section 611
Corporations Act 2001 137
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Acquisitions that are exempt [operative]
3 percentage points higher than they had 6 months before the
acquisition.
Rights issues
10 An acquisition that results from an issue of securities that satisfies all
of the following conditions:
(a) a company offers to issue securities in a particular class;
(b) offers are made to every person who holds securities in that class
to issue them with the percentage of the securities to be issued
that is the same as the percentage of the securities in that class
that they hold before the issue;
(c) all of those persons have a reasonable opportunity to accept the
offers made to them;
(d) agreements to issue are not entered into until a specified time for
acceptances of offers has closed;
(e) the terms of all the offers are the same.
This extends to an acquisition by a person as underwriter to the issue
or sub-underwriter.
See section 615.
Dividend reinvestment etc.
11 An acquisition that results from an issue of:
(a) shares in a company to existing holders of shares in the company
under a dividend reinvestment plan or bonus share plan; or
(b) interests in a managed investment scheme to existing holders of
interests in the scheme under a distribution reinvestment plan or
switching facility;
if the plan or facility is available to all members.
Disregard any unavailability to foreign holders in determining
whether the plan or facility is available to all members.
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Chapter 6 Takeovers
Part 6.2 Exceptions to the prohibition
Section 611
138 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Acquisitions that are exempt [operative]
Initial public offering (IPO) fundraising
12 An acquisition that results from an issue under a disclosure document
of securities in the company in which the acquisition is made if:
(a) the issue is to a promoter; and
(b) the disclosure document is the first issued by the company; and
(c) the disclosure document disclosed the effect that the acquisition
would have on the promoter’s voting power in the company.
Underwriting of fundraising
13 An acquisition that results from an issue under a disclosure document
of securities in the company in which the acquisition is made if:
(a) the issue is to a person as underwriter to the issue or
sub-underwriter; and
(b) the disclosure document disclosed the effect that the acquisition
would have on the person’s voting power in the company.
Acquisition through listed company
14 An acquisition that results from another acquisition of relevant
interests in voting shares in a body corporate included in the official
list of:
(a) a prescribed financial market; or
(b) a foreign body conducting a financial market that is a body
approved in writing by ASIC for the purposes of this item.
Wills etc.
15 An acquisition through a will or through operation of law.
Forfeiture of shares
16 An acquisition that results from an auction of forfeited shares
conducted on-market.
Compromise, arrangement, liquidation or buy-back
Part 5.1 compromise or arrangement
17 An acquisition that results from a compromise or arrangement
approved by the Court under Part 5.1.
Section 507 arrangement
18 An acquisition that results from an arrangement entered into by a
liquidator under section 507.
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Takeovers Chapter 6
Exceptions to the prohibition Part 6.2
Section 612
Corporations Act 2001 139
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Acquisitions that are exempt [operative]
Buy-back
19 An acquisition that results from a buy-back authorised by
section 257A.
Regulations
20 An acquisition made in a manner or in circumstances prescribed by
the regulations. The circumstances may include acquisitions of
relevant interests in voting shares in a specified body or class of
bodies.
612 Effect of non-compliance with takeover rules for exceptions
1 to 4
The exceptions in items 1 to 4 of the table in section 611 do not
apply to a takeover bid if the bid is carried out in contravention of:
(a) section 618 (full or proportionate bid); or
(b) section 619 (offers to be the same); or
(c) subsection 621(3) (minimum price); or
(d) subsection 624(1) (minimum offer period); or
(e) sections 625 to 630 (conditional offers); or
(f) items 2, 3 and 6 in the table in subsection 633(1) (procedural
steps for off-market bid); or
(g) items 3, 4 and 6 in the table in section 635 (procedural steps
for market bid).
613 Bidder not to exercise voting rights if failure to send bids for
off-market acquisition—exception 2 or 3
If the exception in item 2 or 3 of the table in section 611 applies to
an acquisition on-market during a takeover bid, the bidder is not
entitled to exercise the voting rights attached to the shares if:
(a) the bid is an off-market bid; and
(b) the bidder fails to send offers under the bid within 28 days
after giving the bidder’s statement to the target.
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Chapter 6 Takeovers
Part 6.2 Exceptions to the prohibition
Section 615
140 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
615 Treatment of foreign holders under equal access issue—
exception 10
The exception in item 10 of the table in section 611 applies even
though the conditions set out in the item are not satisfied in respect
of foreign holders of the company’s securities if, under the terms of
the offers:
(a) the company must appoint a nominee for foreign holders of
the company’s securities who is approved by ASIC; and
(b) the company must transfer to the nominee:
(i) the securities that would otherwise be issued to the
foreign holders who accept the offer; or
(ii) the right to acquire those securities; and
(c) the nominee must sell the securities, or those rights, and
distribute to each of those foreign holders their proportion of
the proceeds of the sale net of expenses.
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Takeovers Chapter 6
The different types of takeover bid Part 6.3
Section 616
Corporations Act 2001 141
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.3—The different types of takeover bid
616 Off-market bids and market bids
(1) There are 2 kinds of takeover bid:
(a) an off-market bid (for quoted or unquoted securities); or
(b) a market bid (only available for quoted securities).
Note: Although the prohibition in section 606 is against acquiring relevant
interests in voting shares, a takeover bid may be made for any
securities (for example, as a preliminary to compulsorily acquiring
securities in that class under Part 6A.1).
(2) The following table shows where to find the provisions dealing
with the main features of the offers that may be made under
off-market bids and market bids and the procedures to be followed:
Takeover bids [signpost table]
Feature Off-market bid Market bid
1 people to whom offers made 617(1)-(2) 617(3)
2 securities covered 618(1)-(2) 618(3)
3 consideration offered for the securities 621(1), (3)-(5)
and 651A
621(2), (3)-(5)
4 escalation agreements and collateral
benefits not allowed
622 and 623 622 and 623
5 offer period 624(1)-(2) and
650C
624(1)-(2) and
649C
6 conditional offers 625(2)-(3) and
626-630
625(1)
7 procedure to be followed in making bid 632 and 633 634 and 635
8 acceptances 650E and
653A-653B
-
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 1 General
Section 617
142 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.4—Formulating the takeover offer
Division 1—General
617 Securities covered by the bid
Off-market bid
(1) An off-market bid must relate to securities:
(a) in a class of securities (the bid class); and
(b) that exist or will exist as at the date set by the bidder under
subsection 633(2).
Note: Subsection 92(3) defines securities for the purposes of this Chapter.
(2) If other securities exist or will exist at that date that:
(a) will convert, or may be converted, to securities in the bid
class; or
(b) confer rights to be issued securities in the bid class;
the bid may extend to securities that come to be in the bid class
during the offer period due to a conversion or exercise of the
rights.
Note: The bidder’s statement must say if the bid is extended in this way (see
paragraph 636(1)(j)).
Market bid
(3) A market bid must relate to securities:
(a) in a class of quoted securities (the bid class); and
(b) that exist or will exist at any time during the offer period.
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
General Division 1
Section 618
Corporations Act 2001 143
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
618 Offers must be for all or a proportion of securities in the bid
class
Off-market bid
(1) An offer for securities under an off-market bid must be an offer to
buy:
(a) all the securities in the bid class; or
(b) a specified proportion of the securities in the bid class.
The proportion specified under paragraph (b) must be the same for
all holders of securities in the bid class.
Off-market bid—non-marketable parcels
(2) If accepting an offer under an off-market bid for quoted securities
would leave a person with a parcel of the securities that is less than
a marketable parcel (within the meaning of the rules of the relevant
financial market), the offer extends to that parcel.
Market bid
(3) An offer for securities under a market bid must be an offer to buy
all the securities in the bid class.
619 General terms of the offer
Off-market bid
(1) All the offers made under an off-market bid must be the same.
Note: The offers may include alternative forms of consideration (see
section 621).
(2) In applying subsection (1), disregard the following:
(a) any differences in the offers attributable to the fact that the
number of securities that may be acquired under each offer is
limited by the number of securities held by the holder;
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 1 General
Section 620
144 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) any differences in the offers attributable to the fact that the
offers relate to securities having different accrued dividend or
distribution entitlements;
(c) any differences in the offers attributable to the fact that the
offers relate to securities on which different amounts are paid
up or remain unpaid;
(d) any differences in the offers attributable to the fact that the
bidder may issue or transfer only whole numbers of securities
as consideration for the acquisition;
(e) any additional cash amount offered to holders instead of the
fraction of a security that they would otherwise be offered.
Foreign holders
(3) If the consideration for the bid includes an offer of securities, the
securities do not need to be offered to foreign holders of the
target’s securities if under the terms of the bid:
(a) the bidder must appoint a nominee for foreign holders of the
target’s securities who is approved by ASIC; and
(b) the bidder must transfer to the nominee:
(i) the securities that would otherwise be transferred to the
foreign holders who accept the bid for that
consideration; or
(ii) the right to acquire those securities; and
(c) the nominee must sell the securities, or those rights, and
distribute to each of those foreign holders their proportion of
the proceeds of the sale net of expenses.
620 Off-market bid (offer formalities)
(1) Each offer under an off-market bid must:
(a) be in writing; and
(b) have the same date; and
(c) provide that, unless withdrawn, it will remain open until the
end of the offer period (see section 624); and
(d) state how, and when, the bidder is to satisfy their obligations.
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
General Division 1
Section 620
Corporations Act 2001 145
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) Each offer must provide that the bidder is to pay or provide the
consideration for the offer:
(a) if the bidder is given the necessary transfer documents with
the acceptance—by the end of whichever of the following
periods ends earlier:
(i) 1 month after the offer is accepted or, if the offer is
subject to a defeating condition, within 1 month after
the takeover contract becomes unconditional
(ii) 21 days after the end of the offer period; or
(b) if the bidder is given the necessary transfer documents after
the acceptance and before the end of the bid period—within 1
month after the bidder is given the necessary transfer
documents; or
(c) if the bidder is given the necessary transfer documents after
the acceptance and after the end of the bid period—within 21
days after the bidder is given the necessary transfer
documents.
Note: Subsection 630(1) requires an offer that is subject to a defeating
condition to specify a date for declaring whether the condition has
been fulfilled or not.
(3) The offer may provide that the bidder may avoid the takeover
contract if the bidder is not given the necessary transfer documents
within 1 month after the end of the offer period.
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 2 Consideration for the offer
Section 621
146 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Consideration for the offer
621 Consideration offered
Off-market bid—general
(1) A bidder making an off-market bid for securities may offer any
form of consideration for the securities, including:
(a) a cash sum; or
(b) securities (including shares, debentures, interests in a
managed investment scheme or options); or
(c) a combination of a cash sum and securities.
Note: Sections 650B and 651A deal with variations of the consideration
offered under the bid.
Market bid—cash only
(2) As the offers under a market bid for securities are made through a
prescribed financial market, the bidder must offer to acquire the
securities for a cash sum only for each security.
Note: Section 649B deals with variations of the consideration offered under
the bid.
All bids—minimum consideration if bidder purchased securities in
the 4 months before the bid
(3) The consideration offered for securities in the bid class under a
takeover bid must equal or exceed the maximum consideration that
the bidder or an associate provided, or agreed to provide, for a
security in the bid class under any purchase or agreement during
the 4 months before the date of the bid.
(4) For the purposes of subsection (3), the consideration offered or
provided for a security is:
(a) if the consideration offered or provided is a cash sum only—
the amount of that cash sum; or
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Formulating the takeover offer Part 6.4
Consideration for the offer Division 2
Section 622
Corporations Act 2001 147
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) if the consideration offered or provided does not include a
cash sum—the value of that consideration; or
(c) if the consideration offered or provided is a cash sum and
other consideration—the sum of the amount of the cash sum
and the value of the other consideration.
The value of consideration that is not a cash sum is to be
ascertained as at the time the relevant offer, purchase or agreement
is made.
(5) If:
(a) a person agrees to buy a security in a company; and
(b) the agreement provides that the price payable for the security
is a price specified in the agreement but may be varied in
accordance with the terms of the agreement;
any variation in price under the agreement is to be disregarded in
working out, for the purposes of subsection (3), the price agreed to
be paid for the security under the agreement.
622 Escalation agreements
Benefits linked to bids and proposed bids not allowed
(1) A person who makes or proposes to make a takeover bid for
securities, or their associate, contravenes this section if:
(a) a person acquires a relevant interest in securities in the bid
class within the 6 months before the bid is made or proposed;
and
(b) at any time whatever, the bidder, proposed bidder or
associate gives or agrees to give a benefit to, or receives or
agrees to receive a benefit from:
(i) a person who had a relevant interest in any of the
paragraph (a) securities immediately before the
acquisition; or
(ii) an associate of a person who had a relevant interest in
any of those securities at that time; and
(c) the benefit is attributable to the acquisition or matters that
include the acquisition; and
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 2 Consideration for the offer
Section 623
148 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(d) the amount or value of the benefit is, or is to be, determined
by reference to or to matters that include either of the
following:
(i) the amount or value of the consideration for the
securities under the bid or proposed bid;
(ii) the amount or value of the consideration for which the
bidder or proposed bidder acquires, offers or proposes
to offer to acquire, securities in the bid class during the
offer period (whether or not under the bid) or under
Chapter 6A.
Strict liability offences
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Contravening agreements void
(2) An agreement is void to the extent that it purports to provide for:
(a) a person to give a benefit to a person; or
(b) a person to receive a benefit from a person;
in contravention of subsection (1).
623 Collateral benefits not allowed
(1) A bidder, or an associate, must not, during the offer period for a
takeover bid, give, offer to give or agree to give a benefit to a
person if:
(a) the benefit is likely to induce the person or an associate to:
(i) accept an offer under the bid; or
(ii) dispose of securities in the bid class; and
(b) the benefit is not offered to all holders of securities in the bid
class under the bid.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
Consideration for the offer Division 2
Section 623
Corporations Act 2001 149
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) For the purpose of this section, a person does not receive a benefit
that is not offered under a takeover bid merely because the person
sells bid class securities on-market and the takeover bid is an
off-market bid or a conditional bid.
(3) This section does not prohibit:
(a) the variation of a takeover offer as provided by
sections 649A to 650D; or
(b) an acquisition of securities through an on-market transaction;
or
(c) simultaneous takeover bids for different classes of securities
in the target.
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 3 The offer period
Section 624
150 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—The offer period
624 Offer period
Offer period set in offer
(1) The offers under a takeover bid must remain open for the period
stated in the offer. The period must:
(a) start on the date the first offer under the bid is made; and
(b) last for at least 1 month, and not more than 12 months.
However, the offer may be withdrawn during that period under
section 652B.
Note: Sections 649C (market bids) and 650C (off-market bids) deal with
variation of the offer period.
Automatic extension of offer period if bidder reaches 50% or
consideration increased in last week
(2) If, within the last 7 days of the offer period:
(a) for an off-market bid—the offers under the bid are varied to
improve the consideration offered; or
(b) in any case—the bidder’s voting power in the target increases
to more than 50%;
the offer period is extended so that it ends 14 days after the event
referred to in paragraph (a) or (b). The bidder must give the target
and everyone who has not accepted an offer under the bid written
notice that the extension has occurred within 3 days after that
event.
Note: The consideration for a market bid cannot be increased in the last 5
trading days of the offer period (see section 649B).
Strict liability offences
(3) An offence based on subsection (2) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
Conditional offers Division 4
Section 625
Corporations Act 2001 151
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 4—Conditional offers
625 Conditional offers—general
Market bids
(1) Offers under a market bid must be unconditional.
Off-market bids may generally be conditional
(2) Offers under an off-market bid may be subject to conditions that
are not prohibited by sections 626 to 629.
(3) If:
(a) the consideration offered is or includes securities; and
(b) the offer or the bidder’s statement states or implies that the
securities are to be quoted on a financial market (whether in
Australia or elsewhere);
the following rules apply:
(c) the offer is subject to a condition that:
(i) an application for admission to quotation will be made
within 7 days after the start of the bid period; and
(ii) permission for admission to quotation will be granted no
later than 7 days after the end of the bid period;
(d) the offer may not be freed from this condition.
Note: Section 1325A provides that a Court may make a remedial order if the
condition is not satisfied.
626 Maximum acceptance conditions in off-market bids
Maximum acceptance conditions not allowed
(1) Offers under an off-market bid must not be subject to a maximum
acceptance condition. A maximum acceptance condition is one that
provides that the offers will terminate, or the maximum
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 4 Conditional offers
Section 627
152 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
consideration offered under the bid will be reduced, if one or more
of the following occur:
(a) the number of securities for which the bidder receives
acceptances reaches or exceeds a particular number; or
(b) the bidder’s voting power in the company reaches or exceeds
a particular percentage; or
(c) the percentage of securities the bidder has relevant interests
in reaches or exceeds a particular percentage of securities in
that class.
(2) For the purposes of subsection (1), it does not matter:
(a) how the condition is expressed; or
(b) how a particular number or percentage was, or is to be,
determined; or
(c) whether or not a particular number or percentage is specified
in the condition and, if it is so specified, how it is expressed.
(3) For the purposes of subsection (1), an offer under an off-market bid
terminates if:
(a) the offer lapses, is withdrawn or otherwise ceases to have
effect; or
(b) a binding takeover contract will not result from an acceptance
of the offer; or
(c) an obligation of the bidder will not arise under the takeover
contract; or
(d) the takeover contract is rescinded; or
(e) the bidder is entitled to rescind the takeover contract; or
(f) the bidder is relieved of an obligation arising under the
takeover contract.
627 Discriminatory conditions not allowed for off-market bids
Offers under an off-market bid must not be subject to a condition
that allows the bidder to acquire, or may result in the bidder
acquiring, securities from some but not all of the people who
accept the offers. It does not matter how the condition is expressed.
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
Conditional offers Division 4
Section 628
Corporations Act 2001 153
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
628 Conditions requiring payments to officers of target not allowed
in off-market bids
An offer to a person under an off-market bid must not be made
subject to a condition that requires the person to approve or
consent to a payment or other benefit to an officer or employee of
the target or a related body corporate:
(a) as compensation for loss of; or
(b) as consideration in connection with retirement from;
any office or employment in connection with the management of
the target or of a related body corporate. A purported requirement
of this kind is void.
629 Conditions turning on bidder’s or associate’s opinion not
allowed in off-market bids
(1) Offers under an off-market bid must not be subject to a defeating
condition if the fulfilment of the condition depends on:
(a) the bidder’s, or an associate’s, opinion, belief or other state
of mind; or
(b) the happening of an event that is within the sole control of, or
is a direct result of action by, any of the following:
(i) the bidder (acting alone or together with an associate or
associates);
(ii) an associate (acting alone or together with the bidder or
another associate or associates of the bidder).
A purported condition of this kind is void.
Note: Section 9 defines defeating condition. Sections 630, 650F and 650G
deal with defeating conditions.
(2) For the purposes of paragraph (1)(b):
(a) the target; and
(b) a subsidiary of the target;
are taken not to be associates of the bidder if they would otherwise
be an associate merely because of paragraph 12(2)(a).
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Chapter 6 Takeovers
Part 6.4 Formulating the takeover offer
Division 4 Conditional offers
Section 630
154 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
630 Defeating conditions
Off-market bid may include defeating conditions
(1) Offers under an off-market bid may be made subject to a defeating
condition only if the offers specify a date (not more than 14 days
and not less than 7 days before the end of the offer period) for
giving a notice on the status of the condition.
(2) If the offer period is extended by a period:
(a) the date for giving the notice is taken to be postponed for the
same period; and
(b) as soon as practicable after the extension, the bidder must
give a notice that states:
(i) the new date for giving the notice of the status of the
condition; and
(ii) whether the offers have been freed from the condition
and whether, so far as the bidder knows, the condition
has been fulfilled on the date the notice under this
subsection is given.
Bidder to give notice of status of defeating condition near end of
offer period
(3) On the date determined under subsection (1) or (2), the bidder must
give a notice that states:
(a) whether the offers are free of the condition; and
(b) whether, so far as the bidder knows, the condition was
fulfilled on the date the notice is given; and
(c) the bidder’s voting power in the target.
The bidder must comply with this subsection whether or not the
bidder has given a notice under subsection (4) or 650F(1).
Note: The offers may be freed of the condition by a declaration by the
bidder under subsection 650F(1).
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Takeovers Chapter 6
Formulating the takeover offer Part 6.4
Conditional offers Division 4
Section 630
Corporations Act 2001 155
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Bidder to give notice if defeating condition fulfilled
(4) If the condition is fulfilled (so that the offers become free of the
condition) during the bid period but before the date for publishing
the notice on the status of the condition, the bidder must publish as
soon as practicable a notice that states that the condition has been
fulfilled.
(5) A notice under this section is given by:
(a) giving the notice to the target; and
(b) for quoted bid class securities—giving the notice to the
relevant market operator; and
(c) for unquoted bid class securities—lodging the notice with
ASIC.
Strict liability offences
(6) An offence based on subsection (2), (3) or (4) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 1 The overall procedure
Section 631
156 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.5—The takeover procedure
Division 1—The overall procedure
631 Proposing or announcing a bid
(1) A person contravenes this subsection if:
(a) either alone or with other persons, the person publicly
proposes to make a takeover bid for securities in a company;
and
(b) the person does not make offers for the securities under a
takeover bid within 2 months after the proposal.
The terms and conditions of the bid must be the same as or not
substantially less favourable than those in the public proposal.
Note: The Court has power under section 1325B to order a person to
proceed with a bid.
(1A) For the purposes of an offence based on subsection (1), strict
liability applies to paragraph (1)(b) and to the requirement that the
terms and conditions of the bid must be the same as or not
substantially less favourable than those in the public proposal.
Note: For strict liability, see section 6.1 of the Criminal Code.
Proposals if takeover bid not intended
(2) A person must not publicly propose, either alone or with other
persons, to make a takeover bid if:
(a) the person knows the proposed bid will not be made, or is
reckless as to whether the proposed bid is made; or
(b) the person is reckless as to whether they will be able to
perform their obligations relating to the takeover bid if a
substantial proportion of the offers under the bid are
accepted.
(3) Section 1314 (continuing offences) and subsection 1324(2)
(injunctions) do not apply in relation to a failure to make a
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takeover bid in accordance with a public proposal under
subsection (1).
Note: For liability and defences for contraventions of this section, see
sections 670E and 670F.
632 Overview of steps in an off-market bid
The following diagram gives an overview of the steps involved in
an off-market bid.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 1 The overall procedure
Section 633
158 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Overview of steps in an off-market bid
Bidder
Step 1 bidder’s statement (together with offer
document) —— * ASIC
* target
* [market]
Step 2 notice that Step 1 done —— * ASIC
Step 3 bidder’s statement and offers —— * holders of bid
class securities
Step 4 notice that Step 3 done ——
* target
* ASIC
* [market]
Target
Step 5
target’s statement ——
* bidder
* holders of bid
class securities
* ASIC
* [market]
The holders then consider the terms of the offer, and the statements provided by the
bidder and the target, and decide whether to accept the offer under section 653A
before the end of the bid period. A holder may also decide to sell on-market during
the bid period.
633 Detailed steps in an off-market bid
(1) The following table provides for the steps that a bidder must take
to make an effective off-market bid and the steps that a target must
take when an off-market bid is made.
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Steps in off-market bid [operative table]
Steps Timing and relevant provisions
1 The bidder must prepare:
a bidder’s statement; and
if the bidder’s statement does not
set out all the terms of the offer—
an offer document that sets out
the other terms of the offer.
See section 636 for content of
statement.
2 The bidder must lodge a copy of the
bidder’s statement and offer
document with ASIC.
3 The bidder must send a copy of the
bidder’s statement and offer
document to the target.
To be done on the day the bidder’s
statement is lodged or within 21 days
afterwards
4 The bidder must lodge with ASIC a
notice stating that the bidder’s
statement and offer document have
been sent to the target.
To be done on the day the bidder’s
statement is sent to the target
5 The bidder must send a copy of the
bidder’s statement and offer
document to the operator of each
prescribed financial market on which
the target’s securities are quoted.
To be done on the day the bidder’s
statement is sent to the target
See also subsection (5).
6 The bidder must send the bidder’s
statement and offers to each person
(other than the bidder) who holds:
securities in the bid class; or
if the bid extends to securities that
come to be in the bid class due to
the conversion of or exercise of
rights attached to other securities
(see subsection 617(2))—the
other securities;
as at the date set by the bidder under
subsection (2).
The offers must be made on the terms
To be done:
within a 3 day period; and
within 14-28 days after the bidder’s
statement is sent to the target
The directors of the target may agree
that the offers and accompanying
documents be sent earlier.
See also subsections (5) and (6).
Item 2 of the table in section 611
covers offers made by the bidder
on-market during the period between
the lodgment of the bidder’s statement
and the making of the offers under the
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 1 The overall procedure
Section 633
160 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Steps in off-market bid [operative table]
Steps Timing and relevant provisions
set out in the bidder’s statement and
the offer document lodged with ASIC
under item 2.
bid.
Sections 648B and 648C provide for
the manner in which documents may be
sent to holders.
7 The bidder must send a notice to the
target that the bidder’s statement and
offers have been sent as required by
item 6.
The notice must state the date of the
offers.
To be done on the day all offers have
been sent as required by item 6
See subsection 620(1) on date of offer.
8 The bidder must send a notice that
offers have been sent as required by
item 6 to the operator of each
prescribed financial market on which
the target’s securities are quoted.
To be done on the day all offers have
been sent as required by item 6
9 The bidder must lodge with ASIC a
notice that offers have been sent as
required by item 6.
To be done on the day all offers have
been sent as required by item 6
10 The target must prepare a target’s
statement.
See section 638 for content of
statement.
11 The target must send the target’s
statement (and any accompanying
report) to the bidder.
To be done no later than 15 days after
the target receives a notice that all
offers have been sent as required by
item 6
12 The target must send a copy of the
target’s statement (and any
accompanying report) to each person
who holds:
securities in the bid class; or
if the bid extends to securities that
come to be in the bid class due to
the conversion of or exercise of
rights attached to other securities
(see subsection 617(2))—the
other securities;
To be done:
no earlier than the day on which the
target sends the target’s statement
to the bidder; and
no later than 15 days after the target
receives a notice that all offers have
been sent as required by item 6
Sections 648B and 648C provide for
the manner in which documents may be
sent to holders.
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Section 633
Corporations Act 2001 161
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Steps in off-market bid [operative table]
Steps Timing and relevant provisions
as at the date set by the bidder under
subsection (2).
13 The target must lodge a copy of the
target’s statement (and any
accompanying report) with ASIC.
To be done on the day the target’s
statement is sent to the bidder
See also subsection (7).
14 The target must send a copy of the
target’s statement (and any
accompanying report) to the operator
of each prescribed financial market
on which the target’s securities are
quoted.
To be done on the day the target’s
statement is sent to the bidder
See also subsection (7)
Date for determining holders of securities
(2) The people to whom information is to be sent under items 6 and 12
of the table in subsection (1) are the holders of the securities
referred to in those items as at the date set by the bidder in:
(a) the bidder’s statement; or
(b) a separate written notice given to the target on or before the
date set by the bidder.
Note: The bidder may set the date when the bidder asks the target for a list
of members under section 641.
(3) The date set by the bidder must be:
(a) on or after the date on which the bidder gives the bidder’s
statement, or the separate written notice, to the target; and
(b) on or before the date on which the first offers under the bid
are made to holders of the securities.
(4) As soon as practicable after setting the day, the bidder must give
notice of it by:
(a) if the securities in the bid class are quoted—giving the notice
to the relevant market operator; or
(b) otherwise—lodging the notice with ASIC.
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Part 6.5 The takeover procedure
Division 1 The overall procedure
Section 634
162 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Information to be sent with bidder’s statement
(5) A bidder’s statement required to be sent under item 5 or 6 in the
table in subsection (1) must be sent together with any other
information sent by the bidder to the target with the statement.
Information to be sent with notices that offers have been sent
(6) If the bidder sends the people to whom the bidder’s statement is
sent under item 6 of the table in subsection (1) additional
information together with the bidder’s statement and the offer, the
bidder must also include that information in any notice under
item 7, 8 or 9 of the table.
Information to be sent with target’s statement
(7) If the target sends the people to whom the target’s statement is sent
under item 12 of the table in subsection (1) additional information
together with the target’s statement, the target must also include
that information in any notice under item 13 or 14 of the table.
Strict liability offences
(8) An offence based on this section is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
634 Overview of steps in a market bid
The following diagram gives an overview of the steps involved in a
market bid.
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Overview of steps in a market bid
Bidder
Step 1 announcement of bid to the market
Step 2 bidder’s statement
—— * market * target
* ASIC
Step 3 bidder’s statement and any other documents sent with it to the market
—— * holders of bid class securities
Step 4 copy of documents sent to holders —— * market
* ASIC
Target
Step 5 target’s statement ——
* market
* bidder
* ASIC
* holders of bid
class securities
Bidder
Step 6 make offers on the market
The holders then consider the terms of the offer, and the statements provided by the
bidder and the target, and decide whether to accept the offer on-market before the
end of the bid period.
635 Detailed steps in a market bid
(1) The following table provides for the steps that a bidder must take
to make an effective market bid and the steps that a target must
take when a market bid is made.
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Part 6.5 The takeover procedure
Division 1 The overall procedure
Section 635
164 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Steps in market bid [operative]
Steps Timing and relevant provisions
1 The bidder must prepare a bidder’s
statement.
See section 636 for content of
statement
2 The bidder must have the bid
announced to the relevant financial
market.
3 The bidder must send a copy of the
bidder’s statement to the relevant
market operator
To be done on the day the
announcement is made
4 The bidder must send to the target:
a copy of the bidder’s statement;
and
a copy of any other document that
was sent with the bidder’s
statement to the relevant market
operator.
To be done on the day the
announcement is made
5 The bidder must lodge with ASIC:
a copy of the bidder’s statement;
and
a copy of any other document that
was sent with the bidder’s
statement to the relevant market
operator.
To be done on the day the
announcement is made
6 The bidder must send to each holder
of bid class securities (other than the
bidder):
a copy of the bidder’s statement;
and
a copy of any other document that
was sent with the bidder’s
statement to the relevant market
operator.
Within 14 days after the
announcement is made.
Sections 648B and 648C provide for
the manner in which documents may
be sent to holders.
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Steps in market bid [operative]
Steps Timing and relevant provisions
7 The bidder must lodge with ASIC a
copy of every other document sent to
holders of bid class securities with
the bidder’s statement.
To be done no later than the day
copies of the bidder’s statement have
been sent to all holders of bid class
securities
8 The bidder must give the relevant
market operator a copy of every other
document sent to holders of bid class
securities with the bidder’s statement.
To be done no later than the day
copies of the bidder’s statement have
been sent to all holders of bid class
securities
9 The target must prepare a target’s
statement.
See section 638 for content of
statement
10 The target must send a copy of the
target’s statement to the relevant
market operator.
Within 14 days after the
announcement is made
11 The target must send to the bidder:
a copy of the target’s statement;
and
a copy of any other document that
was sent with the target’s
statement to the relevant market
operator.
To be done on the day the target
sends a copy of the target’s statement
to the relevant market operator
12 The target must lodge with ASIC:
a copy of the target’s statement;
and
a copy of any other document that
was sent with the target’s
statement to the relevant market
operator.
To be done on the day the target
sends a copy of the target’s statement
to the relevant market operator
13 The target must send each holder of
bid class securities:
a copy of the target’s statement;
and
a copy of any other document that
was sent with the target’s
statement to the relevant market
operator.
Within 14 days after the
announcement is made.
Sections 648B and 648C provide for
the manner in which documents may
be sent to holders.
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Division 1 The overall procedure
Section 635
166 Corporations Act 2001
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Steps in market bid [operative]
Steps Timing and relevant provisions
14 The bidder must make offers for the
securities under the bid through the
relevant financial market.
To be done on the next day after the
end of the 14 day period referred to in
item 13.
If the bidder does not make the offers
at that time, the bidder contravenes
this section.
Item 2 of the table in section 611
covers offers made by the bidder on
market during the 14 day period
between the announcement and the
making of the offers under the bid
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Section 636
Corporations Act 2001 167
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Division 2—The bidder’s statement
636 Bidder’s statement content
(1) A bidder’s statement must include the following:
(a) the identity of the bidder;
(b) the date of the statement;
(c) if the target is a company or body—details of the bidder’s
intentions regarding:
(i) the continuation of the business of the target; and
(ii) any major changes to be made to the business of the
target, including any redeployment of the fixed assets of
the target; and
(iii) the future employment of the present employees of the
target;
(d) if the target is a managed investment scheme—details of the
bidder’s intentions regarding:
(i) the continued operation of the scheme; and
(ii) any major changes to be made to the operation of the
scheme, including any redeployment of scheme
property; and
(iii) any plans to remove the current responsible entity and
appoint a new responsible entity;
(e) for an off-market bid—a statement that the bidder’s
statement has been lodged with ASIC but that ASIC takes no
responsibility for the content of the statement;
(f) in relation to the cash consideration (if any) offered under the
bid—details of:
(i) the cash amounts (if any) held by the bidder for
payment of the consideration; and
(ii) the identity of any other person who is to provide,
directly or indirectly, cash consideration from that
person’s own funds; and
(iii) any arrangements under which cash will be provided by
a person referred to in subparagraph (ii);
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Part 6.5 The takeover procedure
Division 2 The bidder’s statement
Section 636
168 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(g) if any securities (other than managed investment products)
are offered as consideration under the bid and the bidder is:
(i) the body that has issued or will issue the securities; or
(ii) a person who controls that body;
all material that would be required for a prospectus for an
offer of those securities by the bidder under whichever of the
following is applicable:
(iii) sections 710 to 713;
(iv) sections 713C to 713E;
(ga) if any managed investment products are offered as
consideration under the bid and the bidder is:
(i) the responsible entity of the managed investment
scheme; or
(ii) a person who controls the responsible entity of the
managed investment scheme;
all material that would be required by section 1013C to be
included in a Product Disclosure Statement given to a person
in an issue situation (within the meaning of section 1012B) in
relation to those managed investment products;
(h) if the bidder or an associate provided, or agreed to provide,
consideration for a security in the bid class under a purchase
or agreement during the 4 months before the date of the
bid—the following information about the consideration:
(i) to the extent to which the consideration is a cash sum—
the amount per security of the cash sum;
(ii) to the extent to which the consideration is quoted
securities—the market price per security of those
securities;
(iii) to the extent to which the consideration is neither a cash
sum nor a quoted security—the value per security of
that consideration;
(i) if, during the period of 4 months before the date of the bid,
the bidder or an associate gave, or offered to give or agreed
to give a benefit to another person and the benefit was likely
to induce the other person, or an associate, to:
(i) accept an offer under the bid; or
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Section 636
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(ii) dispose of securities in the bid class;
and the benefit is not offered to all holders of securities in the
bid class under the bid—details of the benefit;
(j) if the bid is to extend to securities that come to be in the bid
class during the offer period due to the conversion of or
exercise of rights attached to other securities (see
subsection 617(2))—a statement to that effect;
(k) for an off-market bid—the following details in relation to
each class of securities in the target:
(i) the total number of securities in the class;
(ii) the number of securities in the class that the bidder had
a relevant interest in immediately before the first offer is
sent (expressed as a number of securities or as a
percentage of the total number of securities in the class);
(l) for an off-market bid—the bidder’s voting power in the
company;
(m) any other information that:
(i) is material to the making of the decision by a holder of
bid class securities whether to accept an offer under the
bid; and
(ii) is known to the bidder; and
(iii) does not relate to the value of securities offered as
consideration under the bid.
The information that the bidder must disclose under
subparagraph (k)(i) and paragraph (l) must be only as up-to-date as
it is reasonable to expect in the circumstances. The bidder does not
have to disclose information under paragraph (m) if it would be
unreasonable to require the bidder to do so because the information
had previously been disclosed to the holders of bid class securities.
Note: Paragraph (b)—See subsection 637(2) for the date of the statement.
Expert’s report on non-cash consideration provided for bid class
securities in last 4 months
(2) If the bidder’s statement includes details of the value per share of
consideration under subparagraph (1)(h)(iii), the statement must
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Part 6.5 The takeover procedure
Division 2 The bidder’s statement
Section 637
170 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
include, or be accompanied by, a report by an expert that states
whether, in the expert’s opinion, the value stated is fair and
reasonable and gives the reasons for forming that opinion.
Note: Subsections 648A(2) and (3) provide for the independence of the
expert and disclosure of any association between the bidder and the
expert or the target and the expert. A contravention of one of those
subsections results in the bidder’s statement not complying with this
subsection.
Consent of person to whom statement attributed
(3) The bidder’s statement may only include, or be accompanied by, a
statement by a person, or a statement said in the bidder’s statement
to be based on a statement by a person, if:
(a) the person has consented to the statement being included in
the bidder’s statement, or accompanying it, in the form and
context in which it is included; and
(b) the bidder’s statement states that the person has given this
consent; and
(c) the person has not withdrawn this consent before the bidder’s
statement is lodged with ASIC.
(4) The bidder must keep the consent.
Strict liability offences
(5) An offence based on subsection (3) or (4) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
637 Bidder’s statement formalities
Approval
(1) The copy of the bidder’s statement that is lodged with ASIC must
be approved by:
(a) for a bidder that is a body corporate:
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(i) if the consideration offered under the bid is a cash sum
only—a resolution passed by the directors of the bidder;
or
(ii) otherwise—a unanimous resolution passed by all the
directors of the bidder; or
(b) for a bidder who is an individual—the bidder.
(2) The bidder’s statement must be dated. The date is the date on
which it is lodged with ASIC.
Strict liability offences
(3) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 3 The target’s response
Section 638
172 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—The target’s response
638 Target’s statement content
General requirement
(1) A target’s statement must include all the information that holders
of bid class securities and their professional advisers would
reasonably require to make an informed assessment whether to
accept the offer under the bid.
(1A) However, the statement must contain this information:
(a) only to the extent to which it is reasonable for investors and
their professional advisers to expect to find the information
in the statement; and
(b) only if the information is known to any of the directors of the
target.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
(2) In deciding what information should be included under
subsection (1), have regard to:
(a) the nature of the bid class securities; and
(b) if the bid class securities are interests in a managed
investment scheme—the nature of the scheme; and
(c) the matters that the holders of bid class securities may
reasonably be expected to know; and
(d) the fact that certain matters may reasonably be expected to be
known to their professional advisers; and
(e) the time available to the target to prepare the statement.
Director’s recommendations
(3) A target’s statement must contain a statement by each director of
the target:
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(a) recommending that offers under the bid be accepted or not
accepted, and giving reasons for the recommendation; or
(b) giving reasons why a recommendation is not made.
(4) The statement under subsection (3) must be made by:
(a) if the target is under administration—the liquidator or
administrator; or
(b) if the target has executed a deed of company arrangement
that has not yet terminated—the deed’s administrator.
Consent of person to whom statement attributed
(5) The target’s statement may only include, or be accompanied by, a
statement by a person, or a statement said in the target’s statement
to be based on a statement by a person, if:
(a) the person has consented to the statement being included in
the target’s statement, or accompanying it, in the form and
context in which it is included; and
(b) the target’s statement states that the person has given this
consent; and
(c) the person has not withdrawn this consent before the target’s
statement is lodged with ASIC.
(6) The target must keep the consent.
Strict liability offences
(7) An offence based on subsection (1), (3), (5) or (6) is an offence of
strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
639 Target’s statement formalities
Approval
(1) The copy of the target’s statement that is lodged with ASIC must
be approved by:
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Part 6.5 The takeover procedure
Division 3 The target’s response
Section 640
174 Corporations Act 2001
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(a) if paragraphs (b) and (c) do not apply—a resolution passed
by the directors of the target; or
(b) for a target that is under administration—the liquidator or
administrator; or
(c) for a target that has executed a deed of company arrangement
that has not yet terminated—the deed’s administrator.
Date
(2) The target’s statement must be dated. The date is the date on which
it is lodged with ASIC.
Strict liability offences
(3) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
640 Expert’s report to accompany target’s statement if bidder
connected with target
(1) If:
(a) the bidder’s voting power in the target is 30% or more; or
(b) for a bidder who is, or includes, an individual—the bidder is
a director of the target; or
(c) for a bidder who is, or includes, a body corporate—a director
of the bidder is a director of the target;
a target’s statement given in accordance with section 638 must
include, or be accompanied by, a report by an expert that states
whether, in the expert’s opinion, the takeover offers are fair and
reasonable and gives the reasons for forming that opinion.
Note: Subsections 648A(2) and (3) provide for the independence of the
expert and disclosure of any association between the target and the
expert or the bidder and the expert. A contravention of one of those
subsections results in the target’s statement not complying with this
subsection.
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Section 641
Corporations Act 2001 175
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) In determining whether the bidder’s voting power in the target is
30% or more, calculate the bidder’s voting power at the time the
bidder’s statement is sent to the target.
(3) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
641 Target must inform bidder about securities holdings
Requirement to inform bidder and information that must be given
(1) If the bidder has given a bidder’s statement to the target and
requested the target to give the bidder information in accordance
with this section, the target must inform the bidder of:
(a) the name and address of each person who, at a time specified
by the bidder under subsection (2), held securities:
(i) in the bid class; or
(ii) convertible into securities in the bid class; and
(b) the type, and number of each type, of those securities held by
the person at the specified time.
(1A) However, the target does not need to give information to the bidder
about a person or their holding of securities unless the target knows
the person’s name.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
(1B) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Time at which target’s information must be correct
(2) The bidder’s request must specify a day as at which the
information must be correct. The day must be one that occurs after
the day on which the bidder makes the request unless the target
agrees to it being the day on which the bidder makes the request.
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Part 6.5 The takeover procedure
Division 3 The target’s response
Section 642
176 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Form in which target must provide information
(3) The target must give the information to the bidder:
(a) in the form that the bidder requests; or
(b) if the target is unable to comply with the request—in writing.
(4) If the target must give the information to the bidder in electronic
form, the information must be readable but the information need
not be formatted for the bidder’s preferred operating system.
Fee for provision of information
(5) The target may require the bidder to pay an amount, not exceeding
the prescribed amount, for the provision of the information to the
bidder.
Time by which target must provide information
(6) The target must give the information to the bidder no later than the
latest of the following times:
(a) the end of the second day after the day on which the bidder
requested the information; or
(b) the end of the next day after the day as at which the
information must be correct; or
(c) the time when the target receives the amount mentioned in
subsection (5).
642 Expenses of directors of target companies
(1) If the target is a company or body, the directors of the target have a
right to recover from the target any expenses they reasonably incur
in the interest of members of the target and in relation to the
takeover bid. The directors have this right regardless of anything
contained in the target’s constitution (if any).
(2) If the target is a managed investment scheme, the responsible
entity for the scheme has a right to recover from scheme property
any expenses it reasonably incurs in the interest of members of the
scheme and in relation to the takeover bid. The responsible entity
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The target’s response Division 3
Section 642
Corporations Act 2001 177
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
has this right regardless of anything contained in the scheme’s
constitution.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 4 Updating and correcting the bidder’s statement and target’s statement
Section 643
178 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 4—Updating and correcting the bidder’s
statement and target’s statement
643 Supplementary bidder’s statement
(1) If a bidder becomes aware of:
(a) a misleading or deceptive statement in the bidder’s statement;
or
(b) an omission from the bidder’s statement of information
required by section 636; or
(c) a new circumstance that:
(i) has arisen since the bidder’s statement was lodged; and
(ii) would have been required by section 636 to be included
in the bidder’s statement if it had arisen before the
bidder’s statement was lodged;
that is material from the point of view of a holder of bid class
securities, the bidder must prepare a supplementary bidder’s
statement that remedies this defect.
Note 1: The bidder must then send and lodge the supplementary bidder’s
statement in accordance with section 647.
Note 2: Section 670A makes it an offence to give a bidder’s statement after
the bidder has become aware of a misleading or deceptive statement,
omission or new circumstance that is material from the point of view
of a holder of securities to whom the statement is given (unless the
deficiency is corrected).
Note 3: The power to issue a supplementary bidder’s statement is not limited
to the situations dealt with in this section.
Note 4: This section applies to a bidder’s statement that has already been
previously supplemented.
(2) For an offence based on subsection (1), strict liability applies to the
conduct, that the bidder must prepare a supplementary bidder’s
statement that remedies the defect.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Updating and correcting the bidder’s statement and target’s statement Division 4
Section 644
Corporations Act 2001 179
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
644 Supplementary target’s statement
(1) If a target becomes aware of:
(a) a misleading or deceptive statement in the target’s statement;
or
(b) an omission from the target’s statement of information
required by section 638; or
(c) a new circumstance that:
(i) has arisen since the target’s statement was lodged; and
(ii) would have been required by section 638 to be included
in the target’s statement if it had arisen before the
target’s statement was lodged;
that is material from the point of view of a holder of bid class
securities, the target must prepare a supplementary target’s
statement that remedies this defect.
Note 1: The target must then send and lodge the supplementary target’s
statement in accordance with section 647.
Note 2: Section 670A makes it an offence to give a target’s statement after the
target has become aware of a misleading or deceptive statement,
omission or new circumstance that is material from the point of view
of a holder of securities to whom the statement is given (unless the
deficiency is corrected).
Note 3: The power to issue a supplementary target’s statement is not limited to
the situations dealt with in this section.
Note 4: This section applies to a target’s statement that has already been
previously supplemented.
(2) For an offence based on subsection (1), strict liability applies to the
conduct, that the target must prepare a supplementary target’s
statement that remedies the defect.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 4 Updating and correcting the bidder’s statement and target’s statement
Section 645
180 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
645 Form of supplementary statement
Identity as a supplementary statement
(1) At the beginning of a supplementary bidder’s or target’s statement
there must be:
(a) a statement that it is a supplementary statement; and
(b) an identification of the statement it supplements; and
(c) an identification of any previous supplementary statements
lodged with ASIC in relation to the bid; and
(d) a statement that it is to be read together with the statement it
supplements and any previous supplementary statements.
Approval of supplementary bidder’s statement
(2) The copy of the supplementary bidder’s statement that is lodged
with ASIC must be approved by:
(a) for a bidder that is a body corporate:
(i) if the consideration offered under the bid is a cash sum
only—a resolution passed by the directors of the bidder;
or
(ii) otherwise—a unanimous resolution passed by all the
directors of the bidder; or
(b) for a bidder who is an individual—the bidder.
Approval of supplementary target’s statement
(3) The copy of a supplementary target’s statement that is lodged with
ASIC must be approved by:
(a) if paragraphs (b) and (c) do not apply—a resolution passed
by the directors of the target; or
(b) for a target that is under administration—the liquidator or
administrator; or
(c) for a target that has executed a deed of company arrangement
that has not yet terminated—the deed’s administrator.
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Updating and correcting the bidder’s statement and target’s statement Division 4
Section 646
Corporations Act 2001 181
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Date
(4) A supplementary statement must be dated. The date is the date on
which it is lodged with ASIC.
646 Consequences of lodging a supplementary statement
If a supplementary statement is lodged with ASIC, for the purposes
of the application of this Chapter and Chapter 6B to events that
occur after the lodgment, the bidder’s or target’s statement is taken
to be the original statement together with the supplementary
statement.
647 To whom supplementary statement must be sent
(1) A supplementary bidder’s statement must be sent to the target as
soon as practicable.
(2) A supplementary target’s statement must be sent to the bidder as
soon as practicable.
(3) Either kind of supplementary statement must as soon as practicable
be:
(a) lodged with ASIC; and
(b) if the bid class securities are quoted and the target is listed—
sent to the operator of each prescribed financial market on
which the target’s securities are quoted; and
(c) if the bid is an off-market bid and the bid class securities are
not quoted—sent to all holders of bid class securities who
have not accepted an offer under the bid.
Note: Sections 648B and 648C provide for the manner in which documents
may be sent to holders.
(4) An offence based on subsection (1), (2) or (3) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.5 The takeover procedure
Division 5 General rules on takeover procedure
Section 648A
182 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 5—General rules on takeover procedure
Subdivision A—Experts’ reports
648A Experts’ reports
(1) If the bidder or target obtains 2 or more reports each of which
could be used for the purposes of subparagraph 636(1)(h)(iii) or
subsection 640(1), the bidder’s or target’s statement must be
accompanied by a copy of each report.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) The expert must be someone other than an associate of the bidder
or target.
(3) The report must set out details of:
(a) any relationship between the expert and:
(i) the bidder or an associate of the bidder; or
(ii) the target or an associate of the target;
including any circumstances in which the expert gives them
advice, or acts on their behalf, in the proper performance of
the functions attaching to the expert’s professional capacity
or business relationship with them; and
(b) any financial or other interest of the expert that could
reasonably be regarded as being capable of affecting the
expert’s ability to give an unbiased opinion in relation to the
matter being reported on; and
(c) any fee, payment or other benefit (whether direct or indirect)
that the expert has received or will or may receive in
connection with making the report.
Note: If the statement includes, or is accompanied by, the report, it must
state that the expert has consented to this being done (see
subsections 636(3) and 638(5)).
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General rules on takeover procedure Division 5
Section 648B
Corporations Act 2001 183
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Subdivision B—Sending documents to holders of securities
648B Address at which bidder may send documents to holders of
securities
The bidder may send a document to a holder of securities for the
purposes of this Chapter at the address shown for the holder in the
information given to the bidder by the target under section 641.
This section does not limit the address to which the document may
be sent to the holder.
Note: Section 109X makes general provision for service of documents.
648C Manner of sending documents to holders of securities
If a document must be sent to the holder of securities under this
Chapter, the document must be sent:
(a) if the document is to be sent to the holder outside Australia—
by pre-paid airmail post or by courier; or
(b) if the document is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
Subdivision C—Effect of proportional takeover approval
provisions
648D Constitution may contain proportional takeover approval
provisions
(1) Subject to this Subdivision, the constitution of a company may
contain provisions to the effect that, if offers are made under a
proportional takeover bid for securities of the company:
(a) the registration of a transfer giving effect to a takeover
contract for the bid is prohibited unless and until a resolution
(an approving resolution) to approve the bid is passed in
accordance with the provisions; and
(b) a person (other than the bidder or an associate of the bidder)
who, as at the end of the day on which the first offer under
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Part 6.5 The takeover procedure
Division 5 General rules on takeover procedure
Section 648D
184 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
the bid was made, held bid class securities is entitled to vote
on an approving resolution; and
(c) an approving resolution is to be voted on in whichever of the
following ways is specified in the provisions:
(i) at a meeting, convened and conducted by the company,
of the persons entitled to vote on the resolution;
(ii) by means of a postal ballot conducted by the company
in accordance with a procedure set out in the provisions;
or, if the provisions so provide, in whichever of those ways is
determined by the directors of the company; and
(d) an approving resolution that has been voted on is taken to
have been passed if the proportion that the number of votes
in favour of the resolution bears to the total number of votes
on the resolution is greater than the proportion specified in
the provisions, and otherwise is taken to have been rejected.
The proportion specified under paragraph (d) must not exceed
50%.
Note: Section 9 defines proportional takeover bid. See paragraph 618(1)(b).
(2) To be effective, an approving resolution in relation to a
proportional takeover bid must be passed before the approving
resolution deadline. The deadline is the 14th day before the last
day of the bid period.
Note: In certain circumstances, an approving resolution will be taken to have
been passed (see subsection 648E(3)).
(3) Except to the extent to which a company’s constitution provides
otherwise:
(a) the provisions that apply to a general meeting of the company
apply, with such modifications as the circumstances require,
to a meeting convened under the company’s proportional
takeover approval provisions; and
(b) those provisions apply as if the meeting convened under the
proportional takeover provisions were a general meeting of
the company.
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Section 648E
Corporations Act 2001 185
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
The provisions referred to in paragraph (a) may be the provisions
of a law, provisions of the company’s constitution or any other
provisions.
648E Resolution to be put if proportional bid made
(1) If:
(a) a company’s constitution contains proportional takeover
approval provisions; and
(b) offers are made under a proportional bid for a class of the
company’s securities;
then:
(c) the company’s directors must ensure that a resolution to
approve the bid is voted on in accordance with those
provisions before the approving resolution deadline; and
(d) if the directors fail to ensure that a resolution of that kind is
voted on before the deadline, each of the directors
contravenes this subsection.
Note: Subsection 648D(2) sets the approving resolution deadline.
(2) If a resolution to approve the bid is voted on in accordance with the
proportional takeover approval provisions before the approving
resolution deadline, the company must, on or before the deadline,
give:
(a) the bidder; and
(b) if the company is listed—each relevant financial market;
a written notice stating that a resolution to approve the bid has been
voted on and whether the resolution was passed or rejected.
(2A) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) If no resolution to approve the bid has been voted on in accordance
with the proportional takeover approval provisions as at the end of
the day before the approving resolution deadline, a resolution to
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Part 6.5 The takeover procedure
Division 5 General rules on takeover procedure
Section 648F
186 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
approve the bid is taken, for the purposes of those provisions, to
have been passed in accordance with those provisions.
648F Effect of rejection of approval resolution
If a resolution to approve the bid is voted on, in accordance with
the proportional takeover approval provisions, before the
approving resolution deadline and is rejected:
(a) despite section 652A:
(i) all offers under the bid that have not been accepted as at
the end of deadline; and
(ii) all offers under the bid that have been accepted, and
from whose acceptance binding contracts have not
resulted, as at the end of the deadline;
are taken to be withdrawn at the end of the deadline; and
(b) as soon as practicable after the deadline, the bidder must
return to each person who has accepted an offer referred to in
subparagraph (a)(ii) any documents that the person sent the
bidder with the acceptance of the offer; and
(c) the bidder:
(i) is entitled to rescind; and
(ii) must rescind as soon as practicable after the deadline;
each binding takeover contract for the bid; and
(d) a person who has accepted an offer made under the bid is
entitled to rescind their takeover contract.
648G Including proportional takeover provisions in constitution
(1) A company’s proportional takeover approval provisions, unless
sooner omitted from the constitution of the company, cease to
apply at the end of:
(a) unless paragraph (b) or (c) applies—3 years;
(b) if the constitution provides that the provisions apply for a
specified period of less than 3 years and the provisions have
not been renewed—the specified period; or
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Section 648G
Corporations Act 2001 187
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(c) if the provisions have been renewed on at least one occasion
and the resolution, or the most recent resolution, renewing
the provisions states that the provisions are renewed for a
specified period of less than 3 years—the specified period.
(2) The period referred to in subsection (1) starts:
(a) if the provisions were contained in the company’s
constitution when it was incorporated or formed and have not
been renewed—at that time; or
(b) if the provisions were inserted in the company’s constitution
and have not been renewed—when the provisions were
inserted; or
(c) if the provisions have been renewed on at least one
occasion—when the provisions were renewed, or last
renewed.
(3) When the provisions cease to apply, the company’s constitution is,
by force of this subsection, altered by omitting the provisions.
(4) A company may renew its proportional takeover approval
provisions. The provisions are to be renewed in the same manner
as that in which the company could alter its constitution to insert
proportional takeover approval provisions.
(5) With every notice that:
(a) specifies the intention to propose:
(i) a resolution to alter a company’s constitution by
inserting proportional takeover approval provisions; or
(ii) a resolution to renew a company’s proportional takeover
approval provisions; and
(b) is sent to a person who is entitled to vote on the proposed
resolution;
the company must send a statement that:
(c) explains the effect of the proposed provisions, or of the
provisions proposed to be renewed; and
(d) explains the reasons for proposing the resolution and sets out
the factual matters and principles underlying those reasons;
and
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Part 6.5 The takeover procedure
Division 5 General rules on takeover procedure
Section 648G
188 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(e) states whether, as at the day on which the statement is
prepared, any of the directors of the company is aware of a
proposal by a person to acquire, or to increase the extent of, a
substantial interest in the company and, if so, explains the
extent (if any) to which the proposal has influenced the
decision to propose the resolution; and
(f) for a proposed resolution to renew proportional takeover
approval provisions—reviews both the advantages, and
disadvantages, of the provisions proposed to be renewed for:
(i) the directors; and
(ii) the company’s members;
during the period during which the provisions have been in
effect; and
(g) discusses both the potential advantages, and the potential
disadvantages, of the proposed provisions, or of the
provisions proposed to be renewed, for:
(i) the directors; and
(ii) the company’s members.
(6) If, on a particular day, a company purports to:
(a) alter its constitution by inserting proportional takeover
approval provisions; or
(b) renew its proportional takeover approval provisions;
then:
(c) holders who together hold not less than 10% (by number) of
the issued securities in a class of securities in the company to
which the provisions apply may, within 21 days after that
day, apply to the Court to have the purported alteration or
renewal set aside to the extent to which it relates to that class;
and
(d) unless and until an application made under paragraph (c) is
finally determined by the making of an order setting aside the
purported alteration or renewal to that extent, the company is
taken for all purposes (other than the purposes of an
application of that kind):
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Section 648H
Corporations Act 2001 189
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(i) to have validly altered its constitution by inserting the
provisions referred to in paragraph (a) applying to that
class; or
(ii) to have validly renewed the provisions referred to in
paragraph (b) applying to that class.
(7) An application under paragraph (6)(c) may be made, on behalf of
the holders entitled to make the application, by a holder or holders
appointed by them in writing.
(8) On an application under paragraph (6)(c), the Court may make an
order setting aside the purported alteration or renewal to the extent
to which it applies to that class if it is satisfied that it is appropriate
in all the circumstances to do so. Otherwise the Court must dismiss
the application.
(9) Within 14 days after the day on which the Court makes an order of
the kind referred to in subsection (8) in relation to a company, the
company must lodge a copy of the order with ASIC.
(10) An offence based on subsection (5) or (9) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
648H Effect of Subdivision
This Subdivision applies notwithstanding anything contained in:
(a) the operating rules of a financial market; or
(b) the constitution of a company; or
(c) any agreement.
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 1 Market bids
Section 649A
190 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.6—Variation of offers
Division 1—Market bids
649A General
A bidder may only vary the offers under a market bid in
accordance with section 649B or 649C.
Note: ASIC may allow other variations under section 655A.
649B Market bids—raising bid price
The bidder may increase the current market bid price. They may
not do so, however, during the last 5 trading days of the relevant
financial market in the offer period.
649C Market bids—extending the offer period
(1) The bidder may extend the offer period. The extension must be
announced to the relevant financial market at least 5 trading days
of the market before the end of the offer period. However, the
announcement may be made up to the end of the offer period if
during those 5 trading days:
(a) another person lodges with ASIC a bidder’s statement for a
takeover bid for securities in the bid class; or
(b) another person announces a takeover bid for securities in the
bid class; or
(c) another person makes offers under a takeover bid for
securities in the bid class; or
(d) the consideration for offers under another takeover bid for
securities in the bid class is improved.
The offer period is extended by having the extension announced to
the relevant financial market.
Note: Section 624 provides for an automatic extension of the bid period in
certain circumstances.
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Variation of offers Part 6.6
Market bids Division 1
Section 649C
Corporations Act 2001 191
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) On the day on which the announcement is made, the bidder must:
(a) give the target and the relevant market operator a notice
setting out the terms of the announcement; and
(b) lodge a notice setting out the terms of the announcement with
ASIC.
(3) An offence based on subsection (2) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 2 Off-market bids (express variation by bidder)
Section 650A
192 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Off-market bids (express variation by bidder)
650A General
(1) A bidder may only vary the offers under an off-market bid in
accordance with section 650B, 650C or 650D.
Note: ASIC may allow other variations under section 655A.
(2) If the bidder varies the offer under an off-market bid in accordance
with section 650B, 650C or 650D, the bidder must vary all
unaccepted offers under the bid in the same way.
Note: Subsections 650B(2) and (3) deal with the effect of a variation on
takeover contracts that have already resulted from acceptances of
offers under the bid when the variation is made.
650B Off-market bids—consideration offered
Improving the consideration offered
(1) The bidder may vary the offers made under the bid to improve the
consideration offered:
(a) by increasing a cash sum offered; or
(b) by increasing the number of securities offered; or
(c) by increasing the rate of interest payable under debentures
offered; or
(d) by increasing the amount or value of debentures offered; or
(e) by increasing the number of unissued securities that may be
acquired under options offered; or
(f) by offering a cash sum in addition to securities; or
(g) if the securities being acquired include shares to which rights
to accrued dividends are attached—by giving the holders the
right to:
(i) retain the whole or a part of the dividend; or
(ii) be paid an amount equal to the amount of the dividend;
in addition to the consideration already offered; or
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Variation of offers Part 6.6
Off-market bids (express variation by bidder) Division 2
Section 650B
Corporations Act 2001 193
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(h) offering an additional alternative form of consideration.
Note: If the bidder increases the consideration during the last 7 days of the
offer period, subsection 624(2) extends the offer period by a further 14
days.
Effect of increase in consideration on offers already accepted
(2) Improving the consideration has the effects set out in the following
table on the rights of a person who has already accepted an offer
when the variation is made.
Effect of improving consideration [operative]
Improvement Effect on person who has already
accepted bid offer
1 improvement of the only form of
consideration being offered
entitled to the improved consideration
2 2 or more forms of consideration
offered and all forms improved by the
same factor or percentage
entitled to the improvement in the
form of consideration accepted
3 2 or more forms of consideration
offered and improvement in the
consideration is identical for all forms
entitled to the improvement in the
form of consideration accepted
4 addition of a new form of
consideration
entitled to make a fresh election as to
the form of consideration to be taken
5 any other improvement entitled to make a fresh election as to
the form of consideration to be taken
(2A) The person is entitled to receive the improved consideration
immediately, subject to the following paragraphs:
(a) if the time for payment of the consideration in accordance
with subsection 620(2) has not yet occurred, the person is not
entitled to receive the improved consideration until that time;
(b) if the person has to make an election before being entitled to
the improved consideration, the person is not entitled to
receive the improved consideration until the later of:
(i) the time when the election is made; and
(ii) the time applicable under paragraph (a).
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 2 Off-market bids (express variation by bidder)
Section 650C
194 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Fresh election as to the form of consideration
(3) If a person who has already accepted an offer has the right to make
a fresh election as to the form of consideration to be taken, the
bidder must send the person as soon as practicable after the
variation a written notice informing them about their right to make
the election.
Note 1: Section 651B says how the election is to be exercised.
Note 2: Sections 648B and 648C provide for the manner in which documents
may be sent to holders.
Strict liability offences
(4) An offence based on subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
650C Off-market bids—extension of offer period
(1) A bidder making an off-market bid may extend the offer period at
any time before the end of the offer period.
(2) If the bid is subject to a defeating condition, the bidder may extend
the offer period after the publication of the notice under
subsection 630(3) only if one of the following happens after the
publication:
(a) another person lodges with ASIC a bidder’s statement for a
takeover bid for securities in the bid class;
(b) another person announces a takeover bid for securities in the
bid class;
(c) another person makes offers under a takeover bid for
securities in the bid class;
(d) the consideration for offers under another takeover bid for
securities in the bid class is improved.
Note: Section 624 says how long the total offer period can be.
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Takeovers Chapter 6
Variation of offers Part 6.6
Off-market bids (express variation by bidder) Division 2
Section 650D
Corporations Act 2001 195
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
650D Off-market bids—method of making variation
Variation to be made by notice to the target and holders
(1) To vary offers under an off-market bid, the bidder must:
(a) prepare a notice that:
(i) sets out the terms of the proposed variation; and
(ii) if the bid is subject to a defeating condition and the
proposed variation postpones for more than 1 month the
time by which the bidder must satisfy their obligations
under the bid—informs people about the right to
withdraw acceptances under section 650E; and
(b) lodge the notice with ASIC; and
(c) after the notice is lodged, give the notice to:
(i) the target; and
(ii) everyone to whom offers were made under the bid.
Note: Sections 648B and 648C provide for the manner in which documents
may be sent to holders.
(2) A person must be sent a copy of the notice under
subparagraph (1)(c)(ii) even if they have already accepted the
offer. However, they need not be sent a copy if:
(a) the variation merely extends the offer period; and
(b) the bid is not subject to a defeating condition at the time the
notice is given to the target.
(3) A notice under subsection (1) must be signed by:
(a) if the bidder is, or includes, an individual—the individual;
and
(b) if the bidder is, or includes, a body corporate with 2 or more
directors—not fewer than 2 of the directors who are
authorised to sign the notice by a resolution passed at a
directors’ meeting; and
(c) if the bidder is, or includes, a body corporate that has only
one director—that director.
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 2 Off-market bids (express variation by bidder)
Section 650E
196 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(4) A copy of a notice given to a person under subparagraph (1)(c)(ii)
must include a statement that:
(a) a copy of the notice was lodged with ASIC on a specified
date; and
(b) ASIC takes no responsibility for the contents of the notice.
650E Right to withdraw acceptance
(1) A person who accepts an offer made under an off-market bid may
withdraw their acceptance of the offer if:
(a) the bid is subject to a defeating condition; and
(b) the bidder varies the offers under the bid in a way that
postpones for more than 1 month the time when the bidder
has to meet their obligations under the bid; and
(c) the person is entitled to be given a notice of the variation
under subsection 650D(1).
(2) To withdraw their acceptance, the person must:
(a) give the bidder notice within 1 month beginning on the day
after the day on which the copy of the notice of the variation
was received; and
(b) return any consideration received by the person for accepting
the offer.
(3) A notice under paragraph (2)(a) must:
(a) comply with the conditions specified in regulations made for
the purposes of this paragraph; or
(b) if no such regulations are made—be in writing.
(4) To return consideration that includes securities, the person must:
(a) take any actions that are specified in regulations made for the
purposes of this paragraph in relation to the return of those
securities; or
(b) if no such regulations are made—give the bidder any transfer
documents needed to effect the return of the securities.
(5) If the person withdraws their acceptance, the bidder must:
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Variation of offers Part 6.6
Off-market bids (express variation by bidder) Division 2
Section 650F
Corporations Act 2001 197
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) take any actions that are specified in regulations made for the
purposes of this paragraph in relation to the withdrawal of
acceptance; and
(b) return any documents that the person sent the bidder with the
acceptance of the offer;
within 14 days after:
(c) if the person does the things referred to in subsection (2) on
the same day—that day; or
(d) if the person does those things on different days—the last of
those days.
(6) If under this section a person returns to a company any certificates
(together with any necessary transfer documents) in respect of the
securities issued by the company, the company must cancel those
securities as soon as possible. Any reduction in share capital is
authorised by this subsection.
(7) An offence based on subsection (5) or (6) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
650F Freeing off-market bids from defeating conditions
(1) If the offers under an off-market bid are subject to a defeating
condition, the bidder may free the offers, and the takeover
contracts, from the condition only by giving the target a notice
declaring the offers to be free from the condition in accordance
with this section:
(a) if the condition is that the bidder may withdraw unaccepted
offers if an event or circumstance referred to in
subsection 652C(1) or (2) occurs in relation to the target—
not later than 3 business days after the end of the offer
period; or
(b) in any other case—not less than 7 days before the end of the
offer period.
(2) The notice must:
(a) state that the offers are free from the condition; and
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 2 Off-market bids (express variation by bidder)
Section 650G
198 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) specify the bidder’s voting power in the company.
(3) The notice must be:
(a) if the securities in the bid class are quoted—given to the
relevant market operator; and
(b) if those securities are not quoted—lodged with ASIC.
(4) An offence based on subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
650G Contracts and acceptances void if defeating condition not
fulfilled
All takeover contracts, and all acceptances that have not resulted in
binding takeover contracts, for an off-market bid are void if:
(a) offers made under the bid have at any time been subject to a
defeating condition; and
(b) the bidder has not declared the offers to be free from the
condition within the period before the date applicable under
subsection 630(1) or (2); and
(c) the condition has not been fulfilled at the end of the offer
period.
A transfer of securities based on an acceptance or contract that is
void under this section must not be registered.
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Takeovers Chapter 6
Variation of offers Part 6.6
Off-market bids (automatic variations) Division 3
Section 651A
Corporations Act 2001 199
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Off-market bids (automatic variations)
651A Off-market bid—effect on bid consideration of purchases
made outside bid
Effect of purchases outside bid on offers made under the bid
(1) The offers made under an off-market bid, and the takeover
contracts, are varied under this section if:
(a) the bidder purchases securities in the bid class outside the bid
during the bid period; and:
(b) the consideration for that purchase consists solely of a cash
sum; and
(c) either:
(i) the consideration, or 1 of the forms of consideration,
payable under the bid consists of a cash sum only and
the consideration referred to in paragraph (b) is higher
than the cash sum payable for the securities under the
bid; or
(ii) a cash sum only is not the consideration, or 1 of the
forms of consideration, payable under the bid.
Note 1: Section 9 defines takeover contract.
Note 2: The effect of section 623 is that the purchase outside the bid has to be
made through an on-market transaction (see subsection 623(1) and
paragraph 623(3)(b)).
Effect on unaccepted cash offers
(2) If:
(a) one of the forms of consideration offered to a person under
an off-market bid is a cash sum only; and
(b) the person has not accepted the offer before the purchase
outside the bid occurs;
the cash sum is taken to be increased to the highest outside
purchase price before the offer is accepted.
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Chapter 6 Takeovers
Part 6.6 Variation of offers
Division 3 Off-market bids (automatic variations)
Section 651B
200 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Effect on cash offers already accepted
(3) The consideration payable for each security covered by a takeover
contract arising from the acceptance of an offer for a cash sum only
is increased to the highest outside purchase price. If the person who
accepted the offer has already received the whole or any part of the
consideration under the contract, they are entitled to receive the
increase in consideration immediately.
Effect on non-cash offers accepted at any time during bid period
(4) If:
(a) a person accepts an offer under a bid at any time during the
bid period; and
(b) the consideration paid or provided, or to be paid or provided,
under the takeover contract arising from the acceptance of the
offer does not consist of a cash sum only;
then:
(c) the person may elect to take as consideration for each
security covered by the takeover contract a cash sum equal to
the highest outside purchase price instead of the
consideration they originally accepted; and
(d) the bidder must give the person a written notice of their right
to make the election within 14 days after the end of the offer
period.
Note: Section 651B says how the election is to be exercised.
(5) An offence based on subsection (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
651B How to make an election for new forms of consideration
(1) An election under section 650B or 651A to take a new form of
consideration must be made:
(a) by written notice to the bidder; and
(b) within 1 month after the person receives the notice from the
bidder of their right to make the election.
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Variation of offers Part 6.6
Off-market bids (automatic variations) Division 3
Section 651C
Corporations Act 2001 201
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) The person becomes entitled to the new form of consideration if
they:
(a) make the election; and
(b) return to the bidder:
(i) any consideration they have already received; and
(ii) any necessary transfer documents.
651C Returning securities as part of election
(1) If under section 651B a person returns to a company any
certificates (together with any necessary transfer documents) in
respect of the securities issued by a company, the company must
cancel those securities as soon as possible.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.7 Withdrawal and suspension of offers
Section 652A
202 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.7—Withdrawal and suspension of offers
652A Withdrawal of unaccepted offers under takeover bid
Unaccepted offers under a takeover bid may only be withdrawn
under section 652B or 652C.
652B Withdrawal of takeover offers with ASIC consent
Unaccepted offers under a takeover bid may be withdrawn with the
written consent of ASIC. ASIC may consent subject to conditions.
652C Withdrawal of market bids
Bidder entitled to withdraw if certain events happen during the
offer period
(1) The bidder may withdraw unaccepted offers made under a market
bid if 1 of the following happens during the bid period, but only if
the bidder’s voting power in the target is at or below 50% when the
event happens:
(a) the target converts all or any of its shares into a larger or
smaller number of shares (see section 254H);
(b) the target or a subsidiary resolves to reduce its share capital
in any way;
(c) the target or a subsidiary:
(i) enters into a buy-back agreement; or
(ii) resolves to approve the terms of a buy-back agreement
under subsection 257C(1) or 257D(1);
(d) the target or a subsidiary issues shares, or grants an option
over its shares, or agrees to make such an issue or grant such
an option;
(e) the target or a subsidiary issues, or agrees to issue,
convertible notes;
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Withdrawal and suspension of offers Part 6.7
Section 652C
Corporations Act 2001 203
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(f) the target or a subsidiary disposes, or agrees to dispose, of
the whole, or a substantial part, of its business or property;
(g) the target or a subsidiary grants, or agrees to grant, a security
interest in the whole, or a substantial part, of its business or
property;
(h) the target or a subsidiary resolves to be wound up.
(2) The bidder may also withdraw unaccepted offers made under a
market bid if 1 of the following happens during the bid period:
(a) a liquidator or provisional liquidator of the target or of a
subsidiary is appointed;
(b) a court makes an order for the winding up of the target or of a
subsidiary;
(c) an administrator of the target, or of a subsidiary, is appointed
under section 436A, 436B or 436C;
(d) the target or a subsidiary executes a deed of company
arrangement;
(e) a receiver, or a receiver and manager, is appointed in relation
to the whole, or a substantial part, of the property of the
target or of a subsidiary.
This is so regardless of the bidder’s voting power at the time.
(3) Notice of the withdrawal must be given to each relevant market
operator.
(4) An offence based on subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Chapter 6 Takeovers
Part 6.8 Acceptances
Section 653A
204 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.8—Acceptances
653A Acceptance of offers made under off-market bid
If:
(a) an offer is made under an off-market bid for quoted
securities; and
(b) regulations made for the purposes of this paragraph set out
any requirements for the manner in which the acceptance of
the offer, so far as it relates to those securities, must be
complied with;
an acceptance of the offer for those securities is effective only if it
is made in that way.
653B Acceptances by transferees and nominees of offers made under
off-market bid
(1) If an off-market bid is made for securities:
(a) a person who:
(i) is able during the offer period to give good title to a
parcel of those securities; and
(ii) has not already accepted an offer under the bid for those
securities;
may accept as if an offer on terms identical with the other
offers made under the bid had been made to that person in
relation to those securities; and
(b) a person who holds 1 or more parcels of those securities as
trustee or nominee for, or otherwise on account of, another
person may accept as if a separate offer had been made in
relation to:
(i) each of those parcels; and
(ii) any parcel they hold in their own right.
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Acceptances Part 6.8
Section 653B
Corporations Act 2001 205
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
If a person accepts an offer under a proportional takeover bid for
securities, no-one else may accept an offer under the bid in respect
of those securities.
Note: Section 9 defines proportional takeover bid. See paragraph 618(1)(b).
(2) For the purposes of this section:
(a) a person is taken to hold securities if the person is, or is
entitled to be registered as, the holder of the securities; and
(b) a person is taken to hold the securities on trust for, as
nominee for or on account of another person if they:
(i) are entitled to be registered as the holder of particular
securities; and
(ii) hold their interest in the securities on trust for, as
nominee for or on account of that other person; and
(c) in determining under subsection (1) whether a person has
accepted an offer for particular securities under a takeover
bid, a person who accepts an offer under a proportional
takeover bid is taken to have accepted the offer for all the
securities in the bid class that they hold at the time they
accept the offer.
(3) If under paragraph (1)(b) a person may accept as if a separate offer
is taken to be made to a person for a parcel of securities within a
holding, an acceptance of that offer is ineffective unless:
(a) the person gives the bidder a notice stating that the securities
consist of a separate parcel; and
(b) the acceptance specifies the number of securities in the
parcel.
(4) A notice under subsection (3) must:
(a) comply with the conditions specified in regulations made for
the purposes of this paragraph that provide for the manner of
giving the notice; or
(b) if no such regulations are made—be in writing.
(5) A person contravenes this subsection if:
(a) they purport to accept an offer under this section; and
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Chapter 6 Takeovers
Part 6.8 Acceptances
Section 653B
206 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) the acceptance is not made in accordance with this section.
The acceptance is, however, as valid as it would have been if it had
been made in accordance with this section.
(6) A person may, at the one time, accept for 2 or more parcels under
this section as if there had been a single offer for a separate parcel
consisting of those parcels.
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Takeovers Chapter 6
Other activities during the bid period Part 6.9
Section 654A
Corporations Act 2001 207
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.9—Other activities during the bid period
654A Bidder not to dispose of securities during the bid period
(1) The bidder must not dispose of any securities in the bid class
during the bid period.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) Subsection (1) does not apply to a disposal of securities by the
bidder if:
(a) someone else who is not an associate of the bidder makes an
offer, or improves the consideration offered, under a takeover
bid for securities in the bid class after the bidder’s statement
is given to the target; and
(b) the bidder disposes of the securities after the offer is made or
the consideration is improved.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (2), see subsection 13.3(3) of the Criminal Code.
654B Disclosures about substantial shareholdings in listed
companies
During the bid period, substantial shareholding notices that need to
be lodged under section 671B must be lodged by 9.30 am the next
business day (rather than the usual 2 business days).
654C Disclosures about substantial shareholdings in unlisted
companies
(1) A bidder making a bid for securities of an unlisted company must
give the target a notice stating the bidder’s voting power in the
target if, at a particular time during the bid period, the bidder’s
voting power in the target rises from below a percentage in the
following list to that percentage or higher:
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Chapter 6 Takeovers
Part 6.9 Other activities during the bid period
Section 654C
208 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) 25%;
(b) 50%;
(c) 75%;
(d) 90%.
(2) The notice must be given as soon as practicable, and in any event
within 2 business days, after the rise in voting power occurred.
(3) The target must:
(a) make the notice available at its registered office for
inspection without charge by any holder of bid class
securities during the bid period; and
(b) lodge the notice with ASIC.
(4) An offence based on subsection (1) or (3) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Takeovers Chapter 6
Review and intervention Part 6.10
ASIC’s power to exempt and modify Division 1
Section 655A
Corporations Act 2001 209
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6.10—Review and intervention
Division 1—ASIC’s power to exempt and modify
655A ASIC’s power to exempt and modify
(1) ASIC may:
(a) exempt a person from a provision of this Chapter; or
(b) declare that this Chapter applies to a person as if specified
provisions were omitted, modified or varied as specified in
the declaration.
Note: Under section 656A, the Panel has power to review the exercise by
ASIC of its powers under this section.
(2) In deciding whether to give the exemption or declaration, ASIC
must consider the purposes of this Chapter set out in section 602.
(3) The exemption or declaration may:
(a) apply to all or specified provisions of this Chapter; and
(b) apply to all persons, specified persons, or a specified class of
persons; and
(c) relate to all securities, specified securities or a specified class
of securities; and
(d) relate to any other matter generally or as specified.
(4) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(5) The exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(6) For the purposes of this section, the provisions of this Chapter
include:
(a) regulations made for the purposes of this Chapter; and
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Chapter 6 Takeovers
Part 6.10 Review and intervention
Division 1 ASIC’s power to exempt and modify
Section 655B
210 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) definitions in this Act or the regulations as they apply to
references in:
(i) this Chapter; or
(ii) regulations made for the purposes of this Chapter; and
(c) the old Division 12 of Part 11.2 transitionals.
655B Notice of decision and review rights
(1) Subject to subsection (2), ASIC must take such steps as are
reasonable in the circumstances to give to each person whose
interests are affected by a decision under section 655A a notice, in
writing or otherwise:
(a) of the making of the decision; and
(b) of the person’s right to have the decision reviewed by the
Panel under section 656A.
(2) Subsection (1) does not require ASIC to give notice to a person
affected by the decision or to the persons in a class of persons
affected by the decision, if ASIC determines that giving notice to
the person or persons is not warranted, having regard to:
(a) the cost of giving notice to the person or persons; and
(b) the way in which the interests of the person or persons are
affected by the decision.
(3) A failure to comply with this section does not affect the validity of
the decision.
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Takeovers Chapter 6
Review and intervention Part 6.10
The Takeovers Panel Division 2
Section 656A
Corporations Act 2001 211
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—The Takeovers Panel
Subdivision A—Review of ASIC’s exercise of its exemption or
modification powers
656A Review of exercise of exemption or modification powers
(1) The Panel may review:
(a) a decision of ASIC under section 655A; or
(b) a decision of ASIC under section 673 in relation to securities
of the target of a takeover bid during the bid period.
For these purposes, decision has the same meaning as in the
Administrative Appeals Tribunal Act 1975.
(2) An application to the Panel for review of the decision may be made
by any person whose interests are affected by the decision.
(3) For the purpose of reviewing the decision, the Panel may exercise
all the powers and discretions conferred on ASIC by this Chapter
or Chapter 6C. The Panel must make a decision:
(a) affirming the decision; or
(b) varying the decision; or
(c) setting aside the decision and:
(i) making a decision in substitution for the decision under
review; or
(ii) remitting the matter for reconsideration by ASIC in
accordance with any directions or recommendations of
the Panel.
(4) The decision must be in writing and published in the Gazette.
(5) If the Panel varies an ASIC decision, or makes a decision in
substitution for an ASIC decision:
(a) the ASIC decision as varied, or the substituted decision, is
taken for all purposes (other than the purposes of applications
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Chapter 6 Takeovers
Part 6.10 Review and intervention
Division 2 The Takeovers Panel
Section 656B
212 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
to the Panel for review in accordance with this section) to be
a decision of ASIC under section 655A; and
(b) when the Panel’s determination on the review comes into
operation, the ASIC decision as varied, or the substituted
decision, has effect, or is taken to have had effect, on and
from the day on which the ASIC decision has or had effect.
Paragraph (b) applies unless the Panel otherwise orders.
656B Operation and implementation of a decision that is subject to
review
(1) Subject to this section, applying to the Panel under section 656A
for review of an ASIC decision does not:
(a) affect the operation of the decision; or
(b) prevent the taking of action to implement the decision.
(2) On application by a party to the proceedings before the Panel, the
Panel may:
(a) make an order staying, or otherwise affecting the operation or
implementation of, the whole or a part of the decision if the
Panel considers that:
(i) it is desirable to make the order after taking into account
the interests of any person who may be affected by the
review; and
(ii) the order is appropriate for the purpose of securing the
effectiveness of the hearing and determination of the
application for review; or
(b) make an order varying or revoking an order made under
paragraph (a) (including an order that has previously been
varied on one or more occasions under this paragraph).
(3) Subject to subsection (4), the Panel must not:
(a) make an order under paragraph (2)(a) unless ASIC has been
given a reasonable opportunity to make a submission to the
Panel in relation to the matter; or
(b) make an order under paragraph (2)(b) unless:
(i) ASIC; and
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(ii) the person who requested the making of the order under
paragraph (2)(a); and
(iii) if the order under paragraph (2)(a) has previously been
varied by an order or orders under paragraph (2)(b)—
the person or persons who applied for the
last-mentioned order or orders;
have been given a reasonable opportunity to make
submissions to the Panel in relation to the matter.
(4) Subsection (3) does not prohibit the Panel from making an order
without giving to a person referred to in that subsection a
reasonable opportunity to make a submission to the Panel in
relation to a matter if the Panel is satisfied that, by reason of the
urgency of the case or otherwise, it is not practicable to give that
person such an opportunity. If an order is so made without giving
such an opportunity to ASIC, the order does not come into
operation until a notice setting out the terms of the order is served
on ASIC.
(5) An order in force under paragraph (2)(a) (including an order that
has previously been varied on one or more occasions under
paragraph (2)(b)):
(a) is subject to the conditions that are specified in the order; and
(b) has effect until:
(i) if a period for the operation of the order is specified in
the order—the end of that period or, if the application
for review is decided by the Panel before the end of that
period, the decision of the Panel on the application for
review comes into operation; or
(ii) if a period for the operation of the order is not specified
in the order—the decision of the Panel on the
application for review comes into operation.
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Section 657A
214 Corporations Act 2001
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Subdivision B—Unacceptable circumstances
657A Declaration of unacceptable circumstances
(1) The Panel may declare circumstances in relation to the affairs of a
company to be unacceptable circumstances. Without limiting this,
the Panel may declare circumstances to be unacceptable
circumstances whether or not the circumstances constitute a
contravention of a provision of this Act.
Note: Sections 659B and 659C deal with court proceedings during and after
a takeover bid.
(2) The Panel may only declare circumstances to be unacceptable
circumstances if it appears to the Panel that the circumstances:
(a) are unacceptable having regard to the effect that the Panel is
satisfied the circumstances have had, are having, will have or
are likely to have on:
(i) the control, or potential control, of the company or
another company; or
(ii) the acquisition, or proposed acquisition, by a person of a
substantial interest in the company or another company;
or
(b) are otherwise unacceptable (whether in relation to the effect
that the Panel is satisfied the circumstances have had, are
having, will have or are likely to have in relation to the
company or another company or in relation to securities of
the company or another company) having regard to the
purposes of this Chapter set out in section 602; or
(c) are unacceptable because they:
(i) constituted, constitute, will constitute or are likely to
constitute a contravention of a provision of this Chapter
or of Chapter 6A, 6B or 6C; or
(ii) gave or give rise to, or will or are likely to give rise to, a
contravention of a provision of this Chapter or of
Chapter 6A, 6B or 6C.
The Panel may only make a declaration under this subsection, or
only decline to make a declaration under this subsection, if it
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considers that doing so is not against the public interest after taking
into account any policy considerations that the Panel considers
relevant.
(3) In exercising its powers under this section, the Panel:
(a) must have regard to:
(i) the purposes of this Chapter set out in section 602; and
(ii) the other provisions of this Chapter; and
(iii) the rules made under section 658C; and
(iv) the matters specified in regulations made for the
purposes of paragraph 195(3)(c) of the ASIC Act; and
(b) may have regard to any other matters it considers relevant.
In having regard to the purpose set out in paragraph 602(c) in
relation to an acquisition, or proposed acquisition, of a substantial
interest in a company, body or scheme, the Panel must take into
account the actions of the directors of the company or body or the
responsible entity for a scheme (including actions that caused the
acquisition or proposed acquisition not to proceed or contributed to
it not proceeding).
(4) The Panel must give an opportunity to make submissions in
relation to the matter to:
(a) each person to whom a proposed declaration relates; and
(b) each party to the proceedings; and
(c) ASIC.
(5) The declaration must be in writing and published in the Gazette.
(6) As soon as practicable, the Panel must give each person to whom
the declaration relates:
(a) a copy of the declaration; and
(b) a written statement of the Panel’s reasons for making the
declaration.
(7) This section does not require the Panel to perform a function, or
exercise a power, in a particular way in a particular case.
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Section 657B
216 Corporations Act 2001
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657B When Panel may make declaration
The Panel can only make a declaration under section 657A within:
(a) 3 months after the circumstances occur; or
(b) 1 month after the application under section 657C for the
declaration was made;
whichever ends last. The Court may extend the period on
application by the Panel.
657C Applying for declarations and orders
(1) The Panel may make a declaration under section 657A, or an order
under section 657D or 657E, only on an application made under
this section.
(2) An application for a declaration under section 657A or an order
under section 657D or 657E may be made by:
(a) the bidder; or
(b) the target; or
(c) ASIC; or
(d) any other person whose interests are affected by the relevant
circumstances.
Note: The Administrative Appeals Tribunal cannot review ASIC’s decision
whether to apply to the Panel (see paragraph 1317C(gc)).
(3) An application for a declaration under section 657A can be made
only within:
(a) 2 months after the circumstances have occurred; or
(b) a longer period determined by the Panel.
657D Orders that Panel may make following declaration
(1) The Panel may make an order under subsection (2) if it has
declared circumstances to be unacceptable under section 657A. It
must not make an order if it is satisfied that the order would
unfairly prejudice any person. Before making the order, the Panel
must give:
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(a) each person to whom the proposed order would be directed;
and
(b) each party to the proceedings; and
(c) ASIC;
an opportunity to make submissions to the Panel about the matter
(2) The Panel may make any order (including a remedial order but not
including an order directing a person to comply with a requirement
of Chapter 6, 6A, 6B or 6C) that it thinks appropriate to:
(a) if the Panel is satisfied that the rights or interests of any
person, or group of persons, have been or are being affected,
or will be or are likely to be affected, by the circumstances—
protect those rights or interests, or any other rights or
interests, of that person or group of persons; or
(b) ensure that a takeover bid or proposed takeover bid in
relation to securities proceeds (as far as possible) in a way
that it would have proceeded if the circumstances had not
occurred; or
(c) specify in greater detail the requirements of an order made
under this subsection; or
(d) determine who is to bear the costs of the parties to the
proceedings before the Panel;
regardless of whether it has previously made an order under this
subsection or section 657E in relation to the declaration. The Panel
may also make any ancillary or consequential orders that it thinks
appropriate.
Note: Section 9 defines remedial order.
(3) The Panel may vary, revoke or suspend an order made under this
section. Before doing so, it must give an opportunity to make
submissions in relation to the matter to:
(a) each person to whom the order is directed; and
(b) each party to the proceedings in which the order was made;
and
(c) ASIC.
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Section 657E
218 Corporations Act 2001
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(4) If the Panel makes an order under this section, the Panel must give
a copy of the order, and a written statement of its reasons for
making the order, to:
(a) each party to the proceedings before the Panel; and
(b) each person to whom the order is directed if they are not a
party to the proceedings; and
(c) for an order relating to specified securities of a company—
the company; and
(d) ASIC.
The Panel must also publish the order in the Gazette. The order
takes effect as soon as it is made and not when all the requirements
of this subsection are met.
(5) If the Panel makes an order of the kind referred to in paragraph (j)
of the definition of remedial order, the exercise of rights attached
to shares is to be disregarded as provided in the order.
(6) If the Panel makes an order of the kind referred to in paragraph (k)
of the definition of remedial order, then, by force of this
subsection, the agreement or offer specified in the order is
cancelled, or becomes voidable, as from the making of the order or
any later time that is specified in the order.
657E Interim orders
(1) The Panel, or the President of the Panel, may make an interim
order of a kind referred to in subsection 657D(2) in relation to
circumstances even if:
(a) there is no declaration under section 657A that the
circumstances are unacceptable; or
(b) no application to the Panel for a declaration of that kind has
been made.
The order must specify the period (not exceeding 2 months) for
which it is to have effect.
(2) The order ceases to have effect:
(a) at the end of the period specified in the order; or
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(b) if, before the end of that period, proceedings for a declaration
under section 657A in relation to the circumstances (and all
related proceedings for an order under section 657D) are
determined—when those proceedings are determined.
657EA Internal Panel reviews
(1) The following may apply under this section for review by the Panel
of a decision of the Panel made on an application under
section 657C:
(a) a party to the proceedings in which the decision was made; or
(b) ASIC.
For these purposes, decision has the same meaning as in the
Administrative Appeals Tribunal Act 1975.
(2) If the decision is not:
(a) a decision to make a declaration under section 657A; or
(b) a decision to make an order under section 657D or 657E;
the person may apply for review only with the consent of the
President of the Panel.
(3) The regulations may provide for the time limits within which an
application may be made for review of a decision.
Note: Regulations made under the ASIC Act deal with the constitution of
the Panel for the purposes of conducting a review under this section
and the procedures to be followed in conducting the review.
(4) After conducting a review under this section, the Panel may:
(a) vary the decision reviewed; or
(b) set aside the decision reviewed; or
(c) set aside the decision reviewed and substitute a new decision.
In conducting the review, the Panel has the same power to make a
declaration under section 657A, or an order under section 657D or
657E, as it has when it is considering an application under
section 657C.
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Section 657EB
220 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(5) Despite section 657B, the Panel can only make a declaration under
section 657A after conducting a review under this section if the
declaration is made within:
(a) 3 months after the circumstances in relation to which the
declaration is made occur; or
(b) 1 month after the application for review was made;
whichever ends last. The Court may extend the period on
application by the Panel.
657EB References by Courts
(1) A Court hearing proceedings in relation to a decision of the Panel
made on an application under section 657C may refer the decision
to the Panel for review.
Note: Regulations made under the ASIC Act deal with the constitution of
the Panel for the purposes of conducting a review under this section
and the procedures to be followed in conducting the review.
(2) After conducting a review under this section, the Panel may:
(a) vary the decision reviewed; or
(b) set aside the decision reviewed; or
(c) set aside the decision reviewed and substitute a new decision.
In conducting the review, the Panel has the same powers to make a
declaration under section 657A, or an order under section 657D or
657E, as it has when it is considering an application under
section 657C.
657F Offence to contravene Panel order
(1) A person who contravenes an order made under section 657D or
657E commits an offence.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Corporations Act 2001 221
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657G Orders by the Court where contravention or proposed
contravention of Panel order
(1) If a person contravenes, or proposes to engage in conduct that
would contravene, an order made by the Panel under section 657D
or 657E, the Court may make any orders it considers appropriate to
secure compliance with the Panel’s order, including:
(a) 1 or more remedial orders; and
(b) an order directing a person to do, or to refrain from doing, a
specified act.
Note: Section 9 defines remedial order.
(2) An application for an order under this section may only be made
by:
(a) ASIC; or
(b) the President of the Panel; or
(c) a person to whom the Panel’s order relates; or
(d) a person who was a party to the proceedings in which the
Panel’s order was made.
657H ASIC may publish report about application to Panel or Court
(1) ASIC may publish a report, statement or notice in relation to an
application it has made for:
(a) a declaration of unacceptable circumstances under
section 657A; or
(b) an order under subsection 657D(2); or
(c) an order under section 657E; or
(d) review under section 657EA of a decision of the Panel; or
(e) an order under section 657G to secure compliance with an
order made under subsection 657D(2) or section 657E.
(2) The report, statement or notice must:
(a) state that the application has been made; and
(b) name the company; and
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Section 658A
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(c) if ASIC considers that the report, statement or notice should
name any other person to whom the declaration would relate
or the order would be directed—name that other person.
(3) The report, statement or notice may be published in any way that
ASIC thinks appropriate. It need not be in writing.
(4) This section does not limit a function or power of ASIC, the Panel
or any other person or body.
Subdivision C—General provisions
658A Power of Panel where a proceeding is frivolous or vexatious
(1) If an application is made to the Panel under this Division, the Panel
may, at any stage of the proceeding, if it is satisfied that the
application is frivolous or vexatious:
(a) dismiss the application; or
(b) if the Panel considers it appropriate, on the application of a
party to the proceedings, direct that the person who made the
application must not, without leave of the Panel, make a
subsequent application to the Panel of a kind or kinds
specified in the direction.
(2) A direction given by the Panel under paragraph (1)(b) has effect
despite any other provision of this Act or a provision of any other
Act.
(3) The Panel may revoke or vary the direction.
658B Evidentiary value of findings of fact by Panel
(1) A finding of fact recorded in an order by the Panel, or a written
statement of the reasons for an order of the Panel, is proof of the
fact in the absence of evidence to the contrary.
(2) A certificate signed by the President of the Panel that states a
finding of fact made in proceedings before the Panel is proof of the
fact in the absence of evidence to the contrary.
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658C Panel’s power to make rules
(1) The President of the Panel may, after consultation with members of
the Panel, make rules, not inconsistent with this Act or the
Regulations, to clarify or supplement the operation of the
provisions of this Chapter.
(2) In making rules under this section, the President of the Panel must
consider the purposes of this Chapter set out in section 602.
(3) A rule under this section must be in writing and the President of
the Panel must:
(a) publish notice of it in the Gazette; and
(b) give the Minister, and ASIC, a copy of the rule as soon as
practicable after it is published in the Gazette.
(4) Within 28 days after receiving the copy, the Minister may disallow
the whole or a specified part of the rule.
(5) If a person contravenes a rule made under this section, the Court
may give directions for compliance with the rule to:
(a) that person; or
(b) if that person is a body corporate—the directors of the body
corporate.
The Court must give the person against whom the order is sought,
and any person aggrieved by the contravention, an opportunity to
be heard before giving directions under this subsection.
(6) The Court may give a direction under subsection (5) only on
application by:
(a) ASIC; or
(b) the President of the Panel; or
(c) a person aggrieved by the contravention.
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Section 658D
224 Corporations Act 2001
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658D Inconsistency between Panel rules and ASIC exemption or
declaration
If there is an inconsistency between a rule made under
section 658C and an exemption given, or declaration made, by
ASIC under section 655A, the rule made under section 658C
prevails to the extent of the inconsistency.
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Section 659A
Corporations Act 2001 225
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Division 3—Court powers
659A Panel may refer questions of law to the Court
The Panel may, of its own motion, refer a question of law arising
in a proceeding before the Panel to the Court for decision.
659AA Object of sections 659B and 659C
The object of sections 659B and 659C is to make the Panel the
main forum for resolving disputes about a takeover bid until the
bid period has ended.
659B Court proceedings before end of bid period
Delay in commencing court proceedings until after end of bid
period
(1) Only the following may commence court proceedings in relation to
a takeover bid, or proposed takeover bid, before the end of the bid
period:
(a) ASIC;
(b) a Minister of the Commonwealth;
(c) a Minister of a State or Territory in this jurisdiction;
(d) the holder of an office established by a law of:
(i) the Commonwealth; or
(ii) a State or Territory in this jurisdiction;
(e) a body corporate incorporated for a public purpose by a law
of:
(i) the Commonwealth; or
(ii) a State or Territory in this jurisdiction;
to the extent to which it is exercising a power conferred by a
law of the Commonwealth or a State or Territory in this
jurisdiction.
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Section 659B
226 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: This restriction starts to apply as soon as there is a takeover bid, or a
proposed takeover bid; it does not start to apply only when the bid
period commences.
Court power to stay proceedings that have already commenced
(2) A court may stay:
(a) court proceedings in relation to a takeover bid or proposed
takeover bid; or
(b) court proceedings that would have a significant effect on the
progress of a takeover bid;
until the end of the bid period.
(3) In deciding whether to exercise its powers under subsection (2), the
court is to have regard to:
(a) the purposes of this Chapter; and
(b) the availability of review by the Panel under Division 2.
(4) For the purposes of this section:
court proceedings in relation to a takeover bid or proposed
takeover bid:
(a) means any proceedings before a court in relation to:
(i) an action taken or to be taken as part of, or for the
purposes of, the bid or the target’s response to the bid;
or
(ii) a document prepared or to be prepared, or a notice given
or to be given, under this Chapter; and
(b) includes:
(i) proceedings to enforce an obligation imposed by this
Chapter; or
(ii) proceedings for the review of a decision, or the exercise
of a power or discretion, under this Chapter; or
(iii) proceedings for the review of a decision, or the exercise
of a power or discretion, under Chapter 6C in relation to
securities of the target of a takeover bid during the bid
period; and
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Section 659C
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(iv) proceedings under Part 2F.1A for leave to bring, or to
intervene in, proceedings referred to in paragraph (a) or
subparagraph (b)(i), (ii) or (iii).
This is not limited to proceedings brought under this Chapter or
this Act but includes proceedings under other Commonwealth and
State or Territory laws (including the general law).
(5) Nothing in this section is intended to affect the jurisdiction of the
High Court under section 75 of the Constitution.
659C Court proceedings after end of bid period
(1) If:
(a) an application is made to the Panel for a declaration under
section 657A that particular conduct amounts to, or leads to,
circumstances that are unacceptable; and
(b) the Panel refuses to make the declaration; and
(c) a Court finds after the end of the bid period that the conduct
contravenes this Act;
the Court’s powers under this Act in relation to the conduct are
limited to the following:
(d) the Court may:
(i) determine whether a person is guilty of an offence
against this Act because they engaged in or were
involved in the conduct; and
(ii) impose a penalty if the person is found guilty;
(e) the Court may:
(i) determine whether a person who engaged in, or was
involved in, the conduct contravened a provision of this
Act; and
(ii) order the person to pay an amount of money to another
person (whether by way of damages, account of profits,
pecuniary penalty or otherwise);
(f) the Court may make an order under section 1318 or 1322 in
relation to the conduct.
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Section 659C
228 Corporations Act 2001
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This subsection does not confer power or jurisdiction on a court
that it does not have apart from this subsection.
(2) Without limiting subsection (1), the only kind of remedial order
that the Court may make is one that requires the person to pay
money to another person.
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Section 660A
Corporations Act 2001 229
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Chapter 6A—Compulsory acquisitions and
buy-outs
660A Chapter extends to some listed bodies that are not companies
This Chapter extends to the acquisition of securities of listed
bodies that are not companies but are incorporated or formed in
Australia in the same way as it applies to the acquisition of
securities of companies.
Note: Section 9 defines company and listed.
660B Chapter extends to listed managed investment schemes
(1) This Chapter extends to the acquisition of interests in a registered
scheme that is also listed as if:
(a) the scheme were a company; and
(b) interests in the scheme were shares in the company; and
(c) voting interests in the scheme were voting shares in the
company.
(2) If Part 6A.1 applies to a scheme at the end of the bid period for a
takeover, that Part continues to apply to the scheme in relation to
the takeover bid even if the scheme ceases to be listed.
(3) If Part 6A.2 applies to a scheme when a compulsory acquisition
notice under section 664C is lodged, that Part (including Division 2
of that Part) continues to apply to the scheme in relation to the
notice even if the scheme ceases to be listed.
(4) The regulations may modify the operation of this Chapter as it
applies in relation to the acquisition of interests in listed managed
investment schemes.
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Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 1 Compulsory acquisition of bid class securities
Section 661A
230 Corporations Act 2001
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Part 6A.1—Compulsory acquisitions and buy-outs
following takeover bid
Division 1—Compulsory acquisition of bid class securities
661A Compulsory acquisition power following takeover bid
Threshold for compulsory acquisition power
(1) Under this subsection, the bidder under a takeover bid may
compulsorily acquire any securities in the bid class if:
(a) the bid is:
(i) an off-market bid to acquire all the securities in the bid
class; or
(ii) a market bid; and
(b) during, or at the end of, the offer period:
(i) the bidder and their associates have relevant interests in
at least 90% (by number) of the securities in the bid
class; and
(ii) the bidder and their associates have acquired at least
75% (by number) of the securities that the bidder
offered to acquire under the bid (whether the
acquisitions happened under the bid or otherwise).
This is so even if the bidder subsequently ceases to satisfy
subparagraph (b)(i) because of the issue of further securities in the
bid class.
Note: Subsection 92(3) defines securities for the purposes of this Chapter.
(2) For the purposes of subsection (1), disregard any relevant interests
that the bidder has merely because of the operation of
subsection 608(3) (relevant interest by 20% interest in body
corporate).
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Compulsory acquisitions and buy-outs following takeover bid Part 6A.1
Compulsory acquisition of bid class securities Division 1
Section 661A
Corporations Act 2001 231
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Court may allow compulsory acquisition even if threshold not
reached
(3) Under this subsection, the bidder under a takeover bid may
compulsorily acquire securities in the bid class with the approval of
the Court.
Securities to be acquired
(4) If the bidder compulsorily acquires securities in the bid class under
subsection (1) or (3), the bidder:
(a) must acquire all the securities in the bid class:
(i) which were issued or granted before the end of the offer
period; and
(ii) in which the bidder does not have a relevant interest;
and
(b) may elect to acquire all securities in the bid class:
(i) that were issued or granted after the end of the offer
period and before the notice under section 661B is
issued; and
(ii) in which the bidder does not have a relevant interest;
but only if the bidder and their associates have relevant
interests in at least 90% (by number) of the securities in the
bid class when the bidder gives notice under section 661B;
and
(c) if securities exist when the bidder gives the notice under
section 661B that:
(i) will convert, or may be converted, to securities in the
bid class; or
(ii) confer rights to be issued securities in the bid class that
may be exercised;
within the period of 6 weeks after the notice is given—may
elect to acquire securities that come to be in the bid class
during that period due to a conversion or exercise of the
rights but only if the bidder and their associates have relevant
interests in at least 90% of the securities (by number) in the
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Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 1 Compulsory acquisition of bid class securities
Section 661B
232 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
bid class when the bidder gives notice under section 661B;
and
(d) may elect to acquire any securities in the bid class in which
the bidder has a relevant interest (no matter when they were
issued or granted).
(5) This section has effect despite anything in the constitution of the
company whose securities are to be acquired.
661B Compulsory acquisition notice
Compulsory acquisition notice
(1) To compulsorily acquire securities under subsection 661A(1) or
(3), the bidder must:
(a) prepare a notice in the prescribed form that:
(i) informs the holders of the securities that the bidder is
entitled to acquire their securities under that subsection;
and
(ii) informs the holders about the compulsory acquisition
procedure under this Part, including:
(A) their right under section 661D to obtain the
names and addresses of everyone else the
bidder has given the notice to; and
(B) their right under section 661E to apply to the
Court for an order that the securities not be
compulsorily acquired; and
(b) lodge the notice with ASIC; and
(c) give the notice to each other person who is:
(i) a holder of securities in the bid class; or
(ii) if the bidder elects under paragraph 661A(4)(c) to
acquire securities that come to be in the bid class after
the notice is given—a holder of the convertible
securities referred to in that paragraph; and
(d) give a copy to each relevant market operator on the same day
as it is lodged with ASIC if the target is listed.
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Compulsory acquisition of bid class securities Division 1
Section 661B
Corporations Act 2001 233
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If alternative forms of consideration were offered under the
takeover bid, the notice must specify which of those forms of
consideration will apply to the acquisition of the holder’s securities
if the holder does not elect one of the forms under
paragraph 661C(2)(a).
Note: Everyone who holds bid class securities on the day on which the
notice is lodged with ASIC is entitled notice. Under section 661E,
anyone who holds the securities after that day may apply to the Court
to stop the acquisition.
Time for dispatching notices to holders
(2) The bidder must dispatch the notices under paragraph (1)(c):
(a) during the offer period, or within 1 month after:
(i) the end of offer period if the acquisition is under
subsection 661A(1); or
(ii) the court approval if the acquisition is under
subsection 661A(3); and
(b) on the day the bidder lodges the notice with ASIC or on the
next business day.
The notices cannot be withdrawn.
Strict liability offences
(2A) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Manner of giving notice to holders
(3) The bidder may give the notice to a holder:
(a) personally; or
(b) by sending it by post to the address for the holder in the
register of members, debenture holders or option holders.
A notice sent by post is taken to be given 3 days after it is posted.
(4) The notice may be sent:
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Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 1 Compulsory acquisition of bid class securities
Section 661C
234 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) if the notice is to be sent to the holder outside Australia—by
pre-paid airmail post or by courier; or
(b) if the notice is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
This section does not limit the manner in which the notice may be
sent to the holder.
Note: Section 109X makes general provision for service of documents.
661C Terms on which securities to be acquired
Same terms as takeover bid
(1) The bidder may acquire the securities only on the terms that
applied to the acquisition of securities under the takeover bid
immediately before:
(a) the notice under section 661B is given if it is given before the
end of the offer period; or
(b) the end of the offer period if it is not.
Alternative forms of consideration under takeover bid
(2) If alternative forms of consideration were offered under the
takeover bid, the form of consideration that applies to the
acquisition of the holder’s securities is:
(a) the form that the holder elects; or
(b) the form set out in the compulsory acquisition notice under
subsection 661B(1).
(3) The holder makes an election under subsection (2) by giving the
bidder a notice of the election by the later of:
(a) 1 month after the compulsory acquisition notice is given
under section 661B; or
(b) 14 days after the holder is given a statement under
section 661D if the holder asks for it.
(4) The election must:
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Compulsory acquisition of bid class securities Division 1
Section 661D
Corporations Act 2001 235
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(a) comply with the conditions specified in regulations made for
the purposes of this paragraph that provide for the manner of
making the election; or
(b) if no such regulations are made—be in writing.
661D Holder may obtain names and addresses of other holders
(1) Within 1 month after a compulsory acquisition notice in relation to
securities in the bid class is lodged with ASIC under section 661B,
the holder of the securities may ask the bidder in writing for a
written statement of the names and addresses of everyone else the
bidder has given the notice to. The bidder must give the holder the
statement within 7 days after the request.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
661E Holder may apply to Court to stop acquisition
(1) The holder of securities covered by a compulsory acquisition
notice under section 661B may apply to the Court for an order that
the securities not be compulsorily acquired under
subsection 661A(1). The application must be made before the later
of:
(a) the end of 1 month after the holder is given notice under
section 661B; or
(b) the end of 14 days after the holder is given a statement under
section 661D if the holder asks for it.
(2) The Court may order that the securities not be compulsorily
acquired under subsection 661A(1) only if the Court is satisfied
that the consideration is not fair value for the securities.
Note: See section 667C on valuation.
(3) If the Court makes an order under this section in relation to an
acquisition of securities, the order applies to all holders who have
applications to the Court pending for an order under this section in
relation to the acquisition.
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Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 1 Compulsory acquisition of bid class securities
Section 661F
236 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
661F Signpost—completing the acquisition of the securities
See section 666A to find out how to complete the acquisition.
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Compulsory acquisitions and buy-outs following takeover bid Part 6A.1
Compulsory buy-out of bid class securities Division 2
Section 662A
Corporations Act 2001 237
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Division 2—Compulsory buy-out of bid class securities
662A Bidder must offer to buy out remaining holders of bid class
securities
(1) If the bidder and their associates have relevant interests in at least
90% of the securities (by number) in the bid class at the end of the
offer period, the bidder must offer to buy out the remaining holders
of bid class securities in accordance with sections 662B and 662C.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) This section does not apply to securities that are issued:
(a) if the takeover bid was not subject to a defeating condition—
after the end of the offer period; or
(b) if the takeover bid was subject to a defeating condition—
after the notice whether the bid is free from a defeating
condition or not is given under subsection 630(3).
662B Bidder to tell remaining holders of their right to be bought out
Notice to remaining holders of bid class securities
(1) The bidder must:
(a) prepare a notice in the prescribed form that:
(i) states that the bidder and their associates have relevant
interests in at least 90% (by number) of the securities in
the bid class; and
(ii) informs the holder of bid class securities about their
right to be bought out under this Part; and
(iii) sets out the terms on which the holder may be bought
out; and
(b) lodge the notice with ASIC; and
(c) give the notice to each other person who:
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Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 2 Compulsory buy-out of bid class securities
Section 662B
238 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(i) is a holder of securities in the bid class on the day on
which the notice is lodged with ASIC; and
(ii) has not been given a compulsory acquisition notice
under section 661B when the notice under
subsection (2) is given; and
(d) give the notice to each relevant market operator on the same
day as it is lodged with ASIC if the target is listed.
If alternative forms of consideration were offered under the
takeover bid, the notice must specify which of those forms will
apply to the acquisition of the holder’s securities if the holder does
not give the bidder an election notice under subsection 662C(1).
Note: The notice is be given to everyone who holds bid class securities on
the day on which the notice is lodged with ASIC. Under section 662C,
anyone who acquires the securities after that day may require the
bidder to acquire the securities.
Time for dispatching notice to holders
(2) The bidder must dispatch the notices under paragraph (1)(c):
(a) during, or within 1 month after the end of, the offer period;
and
(b) on the day the bidder lodges the notice with ASIC or on the
next business day.
The notices cannot be withdrawn.
Manner of giving notice to holders
(3) The bidder may give the notice to a holder:
(a) personally; or
(b) by sending it by post to the address for the holder in the
register of members, debenture holders or option holders.
A notice sent by post is taken to be given 3 days after it is posted.
(4) The notice may be sent:
(a) if the notice is to be sent to the holder outside Australia—by
pre-paid airmail post or by courier; or
(b) if the notice is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
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Compulsory buy-out of bid class securities Division 2
Section 662C
Corporations Act 2001 239
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
This subsection does not limit the manner in which the document
may be sent to the holder.
Note: Section 109X makes general provision for service of documents.
662C Right of remaining holder of securities in the bid class to be
bought out
(1) Within 1 month after notice is given in relation to securities under
section 662B, the holder of the securities may give the bidder
written notice requiring the bidder to acquire the securities. If
alternative forms of consideration were offered under the takeover
bid, the holder may elect in the notice which of those forms will
apply to the acquisition of the holder’s securities.
(2) The notice by the holder gives rise to a contract between the holder
and the bidder for the sale of the securities on:
(a) the terms that applied to the acquisition of securities under
the bid immediately before the end of the offer period; or
(b) if alternative forms of consideration applied at that time—on
the terms that the bidder will provide:
(i) the alternative specified by the holder in the notice
under subsection (1); or
(ii) if the holder has not made an election under that
subsection—the alternative set out in the bidder’s notice
under section 662B; or
(c) if the holder and the bidder agree on other terms—those
terms.
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Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 3 Compulsory buy-out of convertible securities
Section 663A
240 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Compulsory buy-out of convertible securities
663A Bidder must offer to buy out holders of convertible securities
(1) If the bidder and their associates have relevant interests in at least
90% of the securities (by number) in the bid class at the end of the
offer period, the bidder must offer to buy out the holders of
securities that are convertible into bid class securities in
accordance with sections 663B and 663C. This section does not
apply to securities if a takeover bid has been made for the
convertible securities and a notice has been given under
section 661B or 662B in relation to the convertible securities.
Note: For when securities are convertible into bid class securities, see the
definition of convertible securities in section 9.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
663B Bidder to tell holders of convertible securities of their right to
be bought out
Notice to holders of convertible securities
(1) The bidder must:
(a) prepare a notice in the prescribed form that:
(i) states that the bidder and their associates have relevant
interests in at least 90% of the securities (by number) in
the bid class; and
(ii) informs the holder of convertible securities about their
right to be bought out under this Part; and
(iii) sets out the terms on which the holder may be bought
out; and
(b) lodge the notice with ASIC; and
(c) give each other person who is a holder of convertible
securities:
(i) the notice; and
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Compulsory acquisitions and buy-outs following takeover bid Part 6A.1
Compulsory buy-out of convertible securities Division 3
Section 663B
Corporations Act 2001 241
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(ii) a copy of the expert’s report, or of all the experts’
reports, under section 667A; and
(d) give a copy of those documents to each relevant market
operator on the same day as it is lodged with ASIC if the
target is listed.
Note 1: Subparagraph (a)(iii)—Section 667A deals with the contents of an
expert’s report.
Note 2: The notice is to be given to everyone who holds convertible securities
on the day on which the notice is lodged with ASIC. Under
section 663C, anyone who acquires the securities after that day may
require the bidder to acquire the securities.
Time for dispatching notice to holders
(2) The bidder must dispatch the notices and reports under
paragraph (1)(c):
(a) during, or within 1 month after the end of, the offer period;
and
(b) on the day the bidder lodges the notice with ASIC or on the
next business day.
The notices cannot be withdrawn.
Manner of giving notice to holders
(3) The bidder may give the notice or report to a holder:
(a) personally; or
(b) by sending it by post to the address for the holder in the
register of members, debenture holders or option holders.
A notice or report sent by post is taken to be given 3 days after it is
posted.
(4) The notice may be sent:
(a) if the notice is to be sent to the holder outside Australia—by
pre-paid airmail post or by courier; or
(b) if the notice is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
This subsection does not limit the manner in which the document
may be sent to the holder.
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Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.1 Compulsory acquisitions and buy-outs following takeover bid
Division 3 Compulsory buy-out of convertible securities
Section 663C
242 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: Section 109X makes general provision for service of documents.
663C Right of holders of convertible securities to be bought out
(1) Within 1 month after notice under section 663B is given in relation
to convertible securities, the holder of the convertible securities
may give the bidder a notice requiring the bidder to acquire the
securities.
(2) The holder’s notice gives rise to a contract between the holder and
the bidder for the sale of the securities on:
(a) the terms agreed to by the bidder and the holder; or
(b) the terms determined by the Court on application by the
holder.
(3) If the Court makes a determination under paragraph (2)(b) in
relation to the terms of sale for a holder’s securities of a particular
class, the determination applies to all holders of securities in that
class who have applications to the Court pending for a
determination under that paragraph in relation to the terms of sale
of their securities.
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General compulsory acquisitions and buy-outs Part 6A.2
Compulsory acquisition of securities by 90% holder Division 1
Section 664A
Corporations Act 2001 243
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Part 6A.2—General compulsory acquisitions and
buy-outs
Division 1—Compulsory acquisition of securities by 90%
holder
664A Threshold for general compulsory acquisition power
90% holder—holder of 90% of securities in particular class
(1) A person is a 90% holder in relation to a class of securities of a
company if the person holds, either alone or with a related body
corporate, full beneficial interests in at least 90% of the securities
(by number) in that class.
90% holder—holder with 90% voting power and 90% of whole
company or scheme
(2) A person is also a 90% holder in relation to a class of securities of
a company if:
(a) the securities in the class are shares or convertible into
shares; and
(b) the person’s voting power in the company is at least 90%;
and
(c) the person holds, either alone or with a related body
corporate, full beneficial interests in at least 90% by value of
all the securities of the company that are either shares or
convertible into shares.
Note: Subsection 667A(2) provides that the expert’s report that accompanies
the compulsory acquisition notice must support the paragraph (c)
condition.
90% holder may acquire remainder of securities in class
(3) Under this section, a 90% holder in relation to a class of securities
of a company may compulsorily acquire all the securities in that
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Part 6A.2 General compulsory acquisitions and buy-outs
Division 1 Compulsory acquisition of securities by 90% holder
Section 664AA
244 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
class in which neither the person nor any related bodies corporate
has full beneficial interests if either:
(a) the holders of securities in that class (if any) who have
objected to the acquisition between them hold less than 10%
by value of those remaining securities at the end of the
objection period set out in the notice under
paragraph 664C(1)(b); or
(b) the Court approves the acquisition under section 664F.
If subsection (2) applies to the 90% holder, the holder may
compulsorily acquire securities in a class only if the holder gives
compulsory acquisition notices in relation to all classes of shares
and securities convertible into shares of which they do not already
have full beneficial ownership.
Note: Subsection 92(3) defines securities for the purposes of this Chapter.
(4) This section has effect despite anything in the constitution of the
company whose securities are to be acquired.
(5) This Part does not apply to shares that give the shareholder, as a
shareholder, a right to occupy or use real property that the
company owns or holds under lease, whether the right is a lease or
licence or a contractual right.
(6) The 90% holder’s power to compulsorily acquire securities under a
notice given under section 664C ends if the 90% holder
contravenes section 664D by offering benefits outside the terms
proposed in the compulsory acquisition notice under section 664C.
664AA Time limit on exercising compulsory acquisition power
The 90% holder in relation to a class of securities of a company
may compulsorily acquire securities in that class under
section 664A only if the holder lodges the compulsory acquisition
notice for the acquisition with ASIC under paragraph 664C(2)(a)
within whichever of the following periods ends last:
(a) the period of 12 months that started on 13 March 2000; or
(b) the period of 6 months after the 90% holder becomes the
90% holder in relation to that class.
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General compulsory acquisitions and buy-outs Part 6A.2
Compulsory acquisition of securities by 90% holder Division 1
Section 664B
Corporations Act 2001 245
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
664B The terms for compulsory acquisition
(1) The 90% holder may acquire the securities in the class for a cash
sum only and, subject to subsection (2), must pay the same amount
for each security in the class acquired.
(2) The 90% holder may pay different amounts for the securities in the
class acquired if the differences are attributable to either or both of
the following:
(a) the fact that there are differences in the accrued dividend or
distribution entitlements of the securities;
(b) the fact that there are differences in the amounts paid up, or
that remain unpaid, on the securities.
664C Compulsory acquisition notice
Compulsory acquisition notice
(1) To compulsorily acquire securities under section 664A, the 90%
holder must prepare a notice in the prescribed form that:
(a) sets out the cash sum for which the 90% holder proposes to
acquire the securities; and
(b) specifies a period of at least 1 month during which the
holders may return the objection forms; and
(c) informs the holders about the compulsory acquisition
procedure under this Part, including:
(i) their right to obtain the names and addresses of the other
holders of securities in that class from the company
register; and
(ii) their right to object to the acquisition by returning the
objection form that accompanies the notice within the
period specified in the notice; and
(d) gives details of the consideration given for any securities in
that class that the 90% holder or an associate has purchased
within the last 12 months; and
(e) discloses any other information that is:
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Part 6A.2 General compulsory acquisitions and buy-outs
Division 1 Compulsory acquisition of securities by 90% holder
Section 664C
246 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(i) known to the 90% holder or any related bodies
corporate; and
(ii) material to deciding whether to object to the acquisition;
and
(iii) not disclosed in an expert’s report under section 667A.
(2) The 90% holder must then:
(a) lodge the notice with ASIC; and
(b) give each other person (other than a related body corporate)
who is a holder of securities in the class on the day on which
the notice is lodged with ASIC:
(i) the notice; and
(ii) a copy of the expert’s report, or of all experts’ reports,
under section 667A; and
(iii) an objection form; and
(c) give the company copies of those documents; and
(d) give copies of those documents to the relevant market
operator if the company is listed.
Note: Everyone who holds the securities on the day on which the notice is
lodged with ASIC is entitled to notice. Under subsection 664E(1),
anyone who acquires the securities during the objection period may
object to the acquisition.
Time for dispatching notice to holders
(3) The 90% holder must dispatch the notices under paragraph (2)(b)
on the day the 90% holder lodges the notice with ASIC or on the
next business day.
Manner of giving notice to holders
(4) The 90% holder may give the notice to a holder:
(a) personally; or
(b) by sending it by post to the address for the holder in the
register of members, debenture holders or option holders.
A notice sent by post is taken to be given 3 days after it is posted.
(5) The notice may be sent:
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General compulsory acquisitions and buy-outs Part 6A.2
Compulsory acquisition of securities by 90% holder Division 1
Section 664D
Corporations Act 2001 247
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(a) if the notice is to be sent to the holder outside Australia—by
pre-paid airmail post or by courier; or
(b) if the notice is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
This subsection does not limit the manner in which the document
may be sent to the holder.
Note: Section 109X makes general provision for service of documents.
Notice not to be withdrawn
(6) The 90% holder may not:
(a) withdraw a notice under this section; or
(b) if the 90% holder has given a notice under this section in
relation to those securities and the objection period for that
notice has not ended—give another notice under this section
in relation to securities.
664D Benefits outside compulsory acquisition procedure
(1) If the 90% holder gives a notice under section 664C to
compulsorily acquire securities, the 90% holder or an associate
must not offer, give or agree to give a benefit to a person during
the objection period if:
(a) the benefit is likely to induce the person, or an associate of
the person, to:
(i) dispose of securities in that class; or
(ii) not object to the acquisition of those securities under the
notice; and
(b) the benefit is not provided for in the notice.
(2) If the 90% holder proposes to give a notice under section 664C to
acquire securities within the next 4 months, the 90% holder or an
associate must not offer, give or agree to give a benefit to a person
if:
(a) the benefit is likely to induce the person, or an associate of
the person, to:
(i) dispose of securities in that class; or
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Part 6A.2 General compulsory acquisitions and buy-outs
Division 1 Compulsory acquisition of securities by 90% holder
Section 664E
248 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(ii) not object to the acquisition of those securities under the
notice; and
(b) the benefit is not proposed to be provided for in the notice.
(3) If the 90% holder gives a notice under section 664C to
compulsorily acquire securities, the 90% holder or an associate
must not give a benefit to a person:
(a) within 1 month after the end of the objection period (see
subsection 664F(2)); or
(b) during any proceedings by the Court to determine an
application under subsection 664F(1) by the 90% holder;
if:
(c) the benefit is likely to induce the person, or an associate of
the person, to:
(i) not object, or pursue an objection, to the acquisition of
those securities under the notice; or
(ii) dispose of securities in that class; and
(d) the benefit is not offered to all holders of securities in that
class under the notice.
(3A) An offence based on subsection (1), (2) or (3) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(4) This section does not prohibit simultaneous notices under
section 664C to compulsorily acquire different classes of securities
in the company.
664E Holder’s right to object to the acquisition
(1) A person who holds securities covered by the compulsory
acquisition notice may object to the acquisition of the securities by
signing an objection form and returning it to the 90% holder. The
objection:
(a) relates to all securities that are covered by the notice and are
held by the person at the end of the objection period; and
(b) cannot be withdrawn.
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Compulsory acquisition of securities by 90% holder Division 1
Section 664F
Corporations Act 2001 249
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) The 90% holder must lodge with ASIC a copy of any objection
form returned under subsection (1) as soon as practicable after it is
returned.
(3) As soon as practicable after the end of the objection period, the
90% holder must:
(a) prepare a list that sets out:
(i) the names of people who hold securities covered by the
compulsory acquisition notice and have objected to the
acquisition; and
(ii) details of the securities they hold; and
(b) lodge the list with ASIC; and
(c) give a copy of the list to the company; and
(d) if the company is listed—give a copy to the relevant market
operator.
(4) If people who hold at least 10% of the securities covered by the
compulsory acquisition notice object to the acquisition before the
end of the objection period, the 90% holder must give everyone to
whom the compulsory acquisition notice was sent under
section 664C:
(a) a notice that the proposed acquisition will not occur; or
(b) a notice that the 90% holder has applied to the Court for
approval of the acquisition under section 664F;
within 1 month after the end of the objection period.
(5) An offence based on subsection (2), (3) or (4) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
664F The Court’s power to approve acquisition
(1) If people who hold at least 10% of the securities covered by the
compulsory acquisition notice object to the acquisition before the
end of the objection period, the 90% holder may apply to the Court
for approval of the acquisition of the securities covered by the
notice.
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Part 6A.2 General compulsory acquisitions and buy-outs
Division 1 Compulsory acquisition of securities by 90% holder
Section 664G
250 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) The 90% holder must apply within 1 month after the end of the
objection period.
(3) If the 90% holder establishes that the terms set out in the
compulsory acquisition notice give a fair value for the securities,
the Court must approve the acquisition of the securities on those
terms. Otherwise it must confirm that the acquisition will not take
place.
Note: See section 667C on valuation.
(4) The 90% holder must bear the costs that a person incurs on legal
proceedings in relation to the application unless the Court is
satisfied that the person acted improperly, vexatiously or otherwise
unreasonably. The 90% holder must bear their own costs.
664G Signpost—completing the acquisition of the securities
See section 666A for how to complete the acquisition.
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General compulsory acquisitions and buy-outs Part 6A.2
Compulsory buy-out of convertible securities by 100% holder Division 2
Section 665A
Corporations Act 2001 251
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Compulsory buy-out of convertible securities
by 100% holder
665A 100% holder must offer to buy out holders of convertible
securities
(1) A person is a 100% holder of securities in a class if the person,
either alone or with a related body corporate, holds full beneficial
interests in all the securities in the class.
(2) A 100% holder in relation to a class of securities (the main class)
who becomes a 100% holder through compulsory acquisitions
under this Part must offer to buy out the holders of securities in
another class that are convertible into main class securities in
accordance with sections 665B and 665C. This subsection does not
apply to securities if a notice is given in relation to the securities
under section 661B, 662B or 664C.
Note: For when securities are convertible into main class securities, see the
definition of convertible securities in section 9.
(3) An offence based on subsection (2) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
665B 100% holder to tell holders of convertible securities of their
right to be bought out
Notice to holders of convertible securities
(1) The 100% holder must:
(a) prepare a notice in the prescribed form that:
(i) states that the person giving the notice has acquired all
the securities in the main class; and
(ii) sets out the information that was included in the
compulsory acquisition notice given in relation to
securities in the main class under paragraphs 664C(1)(d)
and (e); and
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Part 6A.2 General compulsory acquisitions and buy-outs
Division 2 Compulsory buy-out of convertible securities by 100% holder
Section 665B
252 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(iii) sets out the cash sum for which they are willing to
acquire the convertible securities; and
(iv) informs the holder of convertible securities about their
right to be bought out under this Part; and
(b) lodge the notice with ASIC; and
(c) give each other person who is a holder of convertible
securities on the day on which the notice is lodged with
ASIC:
(i) the notice; and
(ii) a copy of the expert’s report, or all experts’ reports,
under section 667A; and
(d) give a copy of the documents to the company that issued the
securities; and
(e) give a copy of the documents to each relevant market
operator on the same day as it is lodged with ASIC if the
company is listed.
Note 1: Subparagraph (a)(iv)—Section 667A deals with the contents of an
expert’s report.
Note 2: The notice is to be given to everyone who holds convertible securities
on the day on which the notice is lodged with ASIC. Under
section 665C, anyone who holds the securities after that day may
require the 100% holder to acquire the securities.
Time for dispatching notice to holders
(2) The 100% holder must dispatch the notices and reports under
paragraph (1)(c):
(a) within 1 month after they become the 100% holder; and
(b) on the day the 100% holder lodges the notice with ASIC or
on the next business day.
The notices cannot be withdrawn.
Manner of giving notice to holders
(3) The 100% holder may give the notice or report to a holder:
(a) personally; or
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Compulsory buy-out of convertible securities by 100% holder Division 2
Section 665C
Corporations Act 2001 253
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) by sending it by post to the address for the holder in the
register of members, debenture holders or option holders.
A notice or report sent by post is taken to be given 3 days after it is
posted.
(4) The notice may be sent:
(a) if the notice is to be sent to the holder outside Australia—by
pre-paid airmail post or by courier; or
(b) if the notice is to be sent to the holder in Australia—by
pre-paid ordinary post or by courier.
This subsection does not limit the manner in which the document
may be sent to the holder.
Note: Section 109X makes general provision for service of documents.
665C Right of holders of convertible securities to be bought out
(1) Within 1 month after notice under section 665B is given in relation
to convertible securities, the holder of the convertible securities
may give the 100% holder a notice requiring the 100% holder to
acquire the securities.
(2) The notice by the holder of convertible securities gives rise to a
contract between the holder and the 100% holder for the sale of the
securities on:
(a) terms agreed to by the 100% holder and the holder of the
convertible securities; or
(b) the terms determined by the Court on application by the
holder of the convertible securities.
(3) If the Court makes a determination under paragraph (2)(b) in
relation to the terms of sale for a holder’s convertible securities of
a particular class, the determination applies to all holders of
convertible securities in that class who have applications to the
Court pending for a determination under that paragraph in relation
to the terms of sale of their convertible securities.
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Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.3 Completion of compulsory acquisition of securities
Section 666A
254 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6A.3—Completion of compulsory acquisition
of securities
666A Completing the acquisition of securities
Completion to be by private treaty or statutory procedure
(1) A person entitled to acquire securities under section 661A or 664A
must either:
(a) pay, issue or transfer the consideration to the holder, take a
transfer of the securities from the holder and have the
company that issued the securities register the transfer; or
(b) complete the procedure laid down in section 666B;
by the end of the period referred to in subsection (2) or (3).
Strict liability offences
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Time for completing compulsory acquisition following takeover
(2) For an acquisition under section 661A, the period ends 14 days
after the later of:
(a) the end of 1 month after the compulsory acquisition notice
was lodged with ASIC under section 661B; or
(b) the end of 14 days after the last statement under section 661D
was given if a request is made under that section; or
(c) if an application to stop the acquisition is made to the Court
under section 661E—the application is finally determined.
Time for completing compulsory acquisition under Part 6A.2
(3) For an acquisition under section 664A or 664F, the period ends 14
days after the later of:
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Section 666B
Corporations Act 2001 255
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(a) the end of the objection period; or
(b) if an application for approval of the acquisition is made to the
Court under section 664F in relation to the securities—the
application is finally determined.
666B Statutory procedure for completion
(1) Under this section, the person acquiring the securities must:
(a) give the company that issued the securities a copy of the
compulsory acquisition notice under section 661B or 664C
together with a transfer of the securities:
(i) signed as transferor by someone appointed by the
person acquiring the securities; and
(ii) signed as transferee by the person acquiring the
securities; and
(b) pay, issue or transfer the consideration for the transfer to the
company that issued the securities.
The person appointed under subparagraph (a)(i) has authority to
sign the transfer on behalf of the holder of the securities.
(2) If the person acquiring the securities complies with subsection (1),
the company that issued the securities must:
(a) register the person as the holder of the securities; and
(b) hold the consideration received under subsection (1) in trust
for the person who held the securities immediately before
registration; and
(c) give written notice to the person referred to in paragraph (b)
as soon as practicable that the consideration has been
received and is being held by the company pending their
instructions as to how it is to be dealt with.
(3) If the consideration held under subsection (2) consists of, or
includes, money, that money must be paid into a bank account
opened and maintained for that purpose only.
(4) An offence based on subsection (2) or (3) is an offence of strict
liability.
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Part 6A.3 Completion of compulsory acquisition of securities
Section 666B
256 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: For strict liability, see section 6.1 of the Criminal Code.
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Experts’ reports and valuations Part 6A.4
Section 667A
Corporations Act 2001 257
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6A.4—Experts’ reports and valuations
667A Expert’s report
(1) An expert’s report under section 663B, 664C or 665B must:
(a) be prepared by a person nominated by ASIC under
section 667AA; and
(b) state whether, in the expert’s opinion, the terms proposed in
the notice give a fair value for the securities concerned; and
(c) set out the reasons for forming that opinion.
Note: See section 667C on valuation.
(2) If the person giving the compulsory acquisition notice is relying on
paragraph 664A(2)(c) to give the notice, the expert’s report under
section 664C must also:
(a) state whether, in the expert’s opinion, the person (either
alone or together with a related body corporate) has full
beneficial ownership in at least 90% by value of all the
securities of the company that are shares or convertible into
shares; and
(b) set out the reasons for forming that opinion.
(3) If the person giving the compulsory acquisition notice obtains 2 or
more reports, each of which were obtained for the purposes of that
notice, a copy of each report must be given to the holder of the
securities.
(4) An offence based on subsection (3) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
667AA Expert to be nominated
(1) A person who proposes to obtain an expert’s report for the
purposes of section 663B, 664C or 665B must request ASIC in
writing to nominate a person to prepare the expert’s report.
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Part 6A.4 Experts’ reports and valuations
Section 667B
258 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) Within 14 days after receiving a request under subsection (1),
ASIC must nominate:
(a) an appropriate person to prepare the report; or
(b) up to 5 appropriate persons, one of whom the person making
the request may choose to prepare the report.
(3) In determining whether a person is an appropriate person to
prepare an expert’s report, and without limiting the matters that
ASIC may consider, ASIC must consider the nature of the
company to be valued.
667B Expert must not be an associate and must disclose prior
dealings and relationships
(1) The expert who provides the report must not be an associate of:
(a) the person giving the notice; or
(b) the company that issued the securities.
(2) The report must set out details of:
(a) any relationship between the expert and:
(i) the person giving the notice or an associate of the
person giving the notice; or
(ii) the company that issued the securities or an associate of
the company;
including any circumstances in which the expert gives them
advice, or acts on their behalf, in the proper performance of
the functions attaching to the expert’s professional capacity
or business relationship with them; and
(b) any financial or other interest of the expert that could
reasonably be regarded as being capable of affecting the
expert’s ability to give an unbiased opinion in relation to the
matter being reported on; and
(c) any fee, payment or other benefit (whether direct or indirect)
that the expert has received or will or may receive in
connection with the report.
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Experts’ reports and valuations Part 6A.4
Section 667C
Corporations Act 2001 259
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
667C Valuation of securities
(1) To determine what is fair value for securities for the purposes of
this Chapter:
(a) first, assess the value of the company as a whole; and
(b) then allocate that value among the classes of issued securities
in the company (taking into account the relative financial
risk, and voting and distribution rights, of the classes); and
(c) then allocate the value of each class pro rata among the
securities in that class (without allowing a premium or
applying a discount for particular securities in that class).
(2) Without limiting subsection (1), in determining what is fair value
for securities for the purposes of this Chapter, the consideration (if
any) paid for securities in that class within the previous 6 months
must be taken into account.
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Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.5 Records of unclaimed consideration
Section 668A
260 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6A.5—Records of unclaimed consideration
668A Company’s power to deal with unclaimed consideration for
compulsory acquisition
Records of unclaimed compulsory acquisition consideration
(1) If a company is paid consideration in respect of securities that are
compulsorily acquired under Part 6A.1 or 6A.3, the company must
maintain records of:
(a) the consideration paid (including any benefit accruing from
the consideration and any property substituted for the whole
or any part of that consideration); and
(b) the people who are entitled to that consideration; and
(c) any transfers of the consideration to the people entitled to it.
(2) The company must keep the records at:
(a) its registered office; or
(b) its principal place of business in this jurisdiction; or
(c) another place in this jurisdiction approved by ASIC.
(3) A person may ask the company to let the person inspect all or any
of the records kept by the company under this section. The
company must let the person inspect the records:
(a) if the company requires payment of an amount not exceeding
the prescribed amount—within 7 days after the day on which
the company receives that amount; or
(b) in any other case—within 7 days after the day on which the
request is made.
(4) By the end of February each year, the company must publish in the
Gazette a copy of the records kept under subsection (1) as at the
end of the previous December.
(5) An offence based on subsection (1), (2), (3) or (4) is an offence of
strict liability.
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Records of unclaimed consideration Part 6A.5
Section 668B
Corporations Act 2001 261
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: For strict liability, see section 6.1 of the Criminal Code.
668B Unclaimed consideration to be transferred to ASIC
(1) If the company has not transferred the unclaimed consideration to
the person entitled to it within 12 months after the publication of a
copy of the records in the Gazette, the company must transfer the
consideration to ASIC within 1 month after the end of that 12
month period.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) The company is then discharged from liability to any person in
respect of the consideration.
(3) ASIC must deal with the consideration under Part 9.7.
(4) Except as provided by subsection (2), this Part does not deprive a
person of any right or remedy to which the person is entitled
against a liquidator or company.
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Chapter 6A Compulsory acquisitions and buy-outs
Part 6A.6 ASIC powers
Section 669
262 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6A.6—ASIC powers
669 ASIC’s power to exempt and modify
(1) ASIC may:
(a) exempt a person from a provision of this Chapter; or
(b) declare that this Chapter applies to a person as if specified
provisions were omitted, modified or varied as specified in
the declaration.
(2) The exemption or declaration may:
(a) apply to all or specified provisions of this Chapter; and
(b) apply to all persons, specified persons, or a specified class of
persons; and
(c) relate to all securities, specified securities or a specified class
of securities; and
(d) relate to any other matter generally or as specified.
(3) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(4) The exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(5) For the purposes of this section, the provisions of this Chapter
include:
(a) regulations made for the purposes of this Chapter; and
(b) definitions in this Act or the regulations as they apply to
references in:
(i) this Chapter; or
(ii) regulations made for the purposes of this Chapter; and
(c) the old Division 12 of Part 11.2 transitionals.
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Rights and liabilities in relation to Chapter 6 and 6A matters Chapter 6B
Section 670A
Corporations Act 2001 263
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Chapter 6B—Rights and liabilities in relation
to Chapter 6 and 6A matters
670A Misstatements in, or omissions from, takeover and compulsory
acquisition and buy-out documents
(1) A person must not give:
(a) a bidder’s statement;
(b) a takeover offer document;
(c) a notice of variation of a takeover offer;
(d) a target’s statement;
(e) a compulsory acquisition notice under section 661B or 664C;
(f) a compulsory buy-out notice under section 662B, 663B or
665B;
(g) a report that is included in, or accompanies, a statement or
notice referred to in paragraphs (a) to (f);
if there is:
(h) for all documents—a misleading or deceptive statement in
the document; or
(i) for a bidder’s statement or target’s statement—an omission
from the document of material required by section 636 or
638; or
(j) for a bidder’s statement or a target’s statement—a new
circumstance that:
(i) has arisen since the document was lodged; and
(ii) would have been required by section 636 or 638 to be
included in the document if it had arisen before the
document was lodged; or
(k) for an expert’s report under subsection 636(2) or section 640,
663B, 664C or 665B—an omission from the report of
material required by subsection 648A(3) or 667B(2).
Note 1: See section 670D for defences.
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Section 670B
264 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 2: Section 1041H imposes liabilities in respect of other conduct related
to the dealings in securities.
Forecasts and other forward-looking statement
(2) A person is taken to make a misleading statement about a future
matter (including the doing of, or refusing to do, an act) if they do
not have reasonable grounds for making the statement. This
subsection does not limit the meaning of a reference to a
misleading statement or a statement that is misleading in a material
particular.
Offence if statement, omission or new matter materially adverse
(3) A person commits an offence if they contravene subsection (1)
and:
(a) the misleading or deceptive statement; or
(b) the omission or new circumstance;
is materially adverse from the point of view of the holder of
securities to whom the document is given.
670B Right to recover for loss or damage resulting from
contravention
(1) A person who suffers loss or damage that results from a
contravention of subsection 670A(1) may recover the amount of
the loss or damage from a person referred to in the following table
if the loss or damage is one that the table makes the person liable
for. This is so even if the person did not commit, and was not
involved in, the contravention.
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Section 670B
Corporations Act 2001 265
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
People liable on the document [operative table]
For these documents
these people… ...are liable for loss or damages
caused by
bidder’s statement or takeover offer document
1 the bidder any contravention of
subsection 670A(1) in relation to the
document
2 each director of a bidder that is a
body if the consideration offered
under the bid is not a cash sum only
any contravention of
subsection 670A(1) in relation to the
document
3 a director of a bidder that is a body
unless the director proves that they:
(a) were not present when the
directors resolved to adopt the
statement or offer document; or
(b) voted against the resolution;
if the consideration offered under
the bid is a cash sum only
any contravention of
subsection 670A(1) in relation to the
document
See also items 10 and 11.
notice of variation of a takeover offer
4 the bidder any contravention of
subsection 670A(1) in relation to the
document
5 a director of a bidder that is a body any contravention of
subsection 670A(1) in relation to the
document
See also items 10 and 11.
a target’s statement
6 the target any contravention of
subsection 670A(1) in relation to the
document
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Section 670B
266 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
People liable on the document [operative table]
For these documents
these people… ...are liable for loss or damages
caused by
7 a director of the target unless the
director proves that they:
(a) were not present when the
directors resolved to adopt the
statement; or
(b) voted against the resolution
any contravention of
subsection 670A(1) in relation to the
document
See also items 10 and 11.
a compulsory acquisition or compulsory buy-out notice
8 the person giving the notice any contravention of
subsection 670A(1) in relation to the
document
9 a director of a body corporate
giving the notice unless the director
proves that they:
(a) were not present when the
directors resolved to give the
notice; or
(b) voted against the resolution
any contravention of
subsection 670A(1) in relation to the
document
See also items 10 and 11.
10 all documents
a person named in the document,
with their consent, as having made
a statement:
(a) that is included in the document;
or
(b) on which a statement made in
the document is based
the inclusion of the statement in the
document
11 a person who contravenes, or is
involved in a contravention of,
subsection 670A(1)
that contravention
(2) An action under subsection (1) may begin at any time within 6
years after the day on which the cause of action arose.
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Section 670C
Corporations Act 2001 267
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(3) This Chapter does not affect any liability that a person has under
any other law.
Note: Conduct that contravenes subsection 670A(1) is expressly excluded
from the operation of section 1041H.
670C People liable on takeover or compulsory acquisition statement
to inform maker about deficiencies in the statement
(1) A person referred to in the table in subsection 670B(1) in relation
to a document must notify the issuer of the document in writing as
soon as practicable if they become aware during the bid period or
objection period that:
(a) a material statement in the document is misleading or
deceptive; or
(b) there is a material omission from the document of
information required by section 636, 638 or 640; or
(c) a material new circumstance that:
(i) has arisen since the document was lodged; and
(ii) would have been required by section 636, 638 or 640 to
be included in the document if it had arisen before the
document was lodged.
(2) An expert whose report accompanies, or is included in, a target’s
statement under section 640 must notify the target in writing as
soon as practicable if they become aware during the bid period or
objection period that:
(a) a material statement in the report is misleading or deceptive;
or
(b) there has been a significant change affecting information
included in the report.
(3) An expert whose report accompanies, or is included in, a bidder’s
statement under subsection 636(2) must notify the bidder in writing
as soon as practicable if they become aware during the bid period
or objection period that:
(a) a material statement in the report is misleading or deceptive;
or
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(b) there has been a significant change affecting information
included in the report.
(4) An offence based on subsection (1), (2) or (3) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
670D Defences against prosecutions under subsection 670A(3) and
actions under section 670B
Not knowing statement misleading or deceptive
(1) A person does not commit an offence against subsection 670A(3),
and is not liable under section 670B for a contravention of
subsection 670A(1), because of a misleading or deceptive
statement in a document if the person proves that they did not
know that the statement was misleading or deceptive.
Not knowing there was an omission
(2) A person does not commit an offence against subsection 670A(3),
and is not liable under section 670B for a contravention of
subsection 670A(1), because of an omission from a document in
relation to a particular matter if the person proves that they did not
know that there was an omission from the document in relation to
that matter.
Reasonable reliance on information given by someone else—
statements and omissions
(3) A person does not commit an offence against subsection 670A(3),
and is not liable under section 670B for a contravention against
subsection 670A(1), because of a misleading or deceptive
statement in, or an omission from, a document if the person proves
that they placed reasonable reliance on information given to them
by:
(a) if the person is a body—someone other than a director,
employee or agent of the body; or
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(b) if the person is an individual—someone other than an
employee or agent of the individual.
(4) For the purposes of subsection (3), a person is not the agent of a
body or individual merely because they perform a particular
professional or advisory function for the body or individual.
Withdrawal of consent—statements and omissions
(5) A person who is named in a document as:
(a) making a statement included in the document; or
(b) making a statement on the basis of which a statement is
included in the document;
does not commit an offence against subsection 670A(3), and is not
liable under section 670B for a contravention against
subsection 670A(1), because of a misleading or deceptive
statement in, or an omission from, a document if the person proves
that they publicly withdrew their consent to being named in the
document in that way.
Unawareness of new matter
(6) A person does not commit an offence against subsection 670A(3),
and is not liable under section 670B for a contravention of
subsection 670A(1), because of a new circumstance that has arisen
since the document was lodged if the person proves that they were
not aware of the matter.
670E Liability for proposing a bid or not carrying through with bid
(1) A person who:
(a) enters into a transaction relating to securities in reliance on:
(i) a public proposal for a takeover bid; or
(ii) an announcement of a market bid; and
(b) suffers loss or damage that results from a contravention of
section 631:
may recover the amount of the loss or damage from:
(c) the person who contravened the section; or
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(d) any person involved in the contravention.
(2) To determine the amount of compensation payable under
subsection (1), deduct the price of the securities at which the
transaction was entered into from the price of the securities at
which the transaction would have been likely to be entered into if
the proposal or announcement had not been made.
670F Defences
A person does not commit an offence under subsection 631(1) or
(2), and is not liable under section 670E for a contravention of
those subsections if the person proves that they could not
reasonably have been expected to comply with those subsections
because:
(a) at the time of the proposal or announcement, circumstances
existed that the person did not know of and could not
reasonably have been expected to know of; or
(b) after the proposal or announcement, a change in
circumstances occurred that was not caused, directly or
indirectly, by the person.
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Chapter 6C—Information about ownership
of listed companies and managed
investment schemes
671A Chapter extends to some listed bodies that are not companies
This Chapter applies to the acquisition of relevant interests in the
securities of listed bodies that are not companies but are
incorporated or formed in Australia in the same way as it applies to
the acquisition of relevant interests in the securities of companies.
Note: Section 9 defines company and listed.
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Section 671B
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Part 6C.1—Substantial holding information
671B Information about substantial holdings must be given to
company, responsible entity and relevant market
operator
Requirement to give information
(1) A person must give the information referred to in subsection (3) to
a listed company, or the responsible entity for a listed registered
managed investment scheme, if:
(a) the person begins to have, or ceases to have, a substantial
holding in the company or scheme; or
(b) the person has a substantial holding in the company or
scheme and there is a movement of at least 1% in their
holding; or
(c) the person makes a takeover bid for securities of the
company or scheme.
The person must also give the information to each relevant market
operator.
Note 1: Section 9 defines substantial holding and associate.
Note 2: The information must be given even if the situation changes by the
time the information is to be given.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) For the purposes of this section, there is a movement of at least 1%
in a person’s holding if the percentage worked out using the
following formula increases or decreases by 1 or more percentage
points from the percentage they last disclosed under this Part in
relation to the company or scheme:
Person’s and associates’ votes 100
Total votes in company or scheme
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where:
person’s and associates’ votes is the total number of votes attached
to all the voting shares in the company or interests in the scheme
(if any) that the person or an associate has a relevant interest in.
total votes in company or scheme is the total number of votes
attached to all voting shares in the company or interests in the
scheme.
Note: Subsection (7) expands the normal concept of relevant interest to take
account of market traded options and conditional agreements.
Information that must be given
(3) The information to be given is:
(a) the person’s name and address; and
(b) details of their relevant interest in:
(i) voting shares in the company; or
(ii) interests in the scheme; and
(c) details of any relevant agreement through which they would
have a relevant interest in:
(i) voting shares in the company; or
(ii) interests in the scheme; and
(d) the name of each associate who has a relevant interest in
voting shares in the company or interests in the scheme,
together with details of:
(i) the nature of their association with the associate; and
(ii) the relevant interest of the associate; and
(iii) any relevant agreement through which the associate has
the relevant interest; and
(e) if the information is being given because of a movement in
their holding—the size and date of that movement; and
(f) if the information is being given because a person has ceased
to be an associate—the name of the person; and
(g) any other particulars that are prescribed.
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Note: Subsection (7) expands the normal concept of relevant interest to take
account of market traded options and conditional agreements.
Information to be in prescribed form and accompanied by certain
documents
(4) The information must be given in the prescribed form and must be
accompanied by:
(a) a copy of any document setting out the terms of any relevant
agreement that:
(i) contributed to the situation giving rise to the person
needing to provide the information; and
(ii) is in writing and readily available to the person; and
(b) a statement by the person giving full and accurate details of
any contract, scheme or arrangement that:
(i) contributed to the situation giving rise to the person
needing to provide the information; and
(ii) is not both in writing and readily available to the person.
If the person is required to give a copy of a contract, scheme or
arrangement, the copy must be endorsed with a statement that the
copy is a true copy.
(5) The information does not need to be accompanied by the
documents referred to in subsection (4) if the transaction that gives
rise to the person needing to provide the information takes place on
a prescribed financial market.
Deadline for giving information
(6) The person must give the information:
(a) within 2 business days after they become aware of the
information; or
(b) by 9.30 am on the next trading day of the relevant financial
market after they become aware of the information if:
(i) a takeover bid is made for voting shares in the company
or voting interests in the scheme; and
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(ii) the person becomes aware of the information during the
bid period.
Relevant interests—exchange traded options and conditional
agreements
(7) For the purposes of this section, a person has a relevant interest in
securities if the person would have a relevant interest in the
securities but for subsection 609(6) (market traded options) or
609(7) (conditional agreements).
671C Civil liability
(1) A person who contravenes section 671B is liable to compensate a
person for any loss or damage the person suffers because of the
contravention.
(2) It is a defence in proceedings brought under this section if the
person who contravenes section 671B proves that they contravened
that section:
(a) because of inadvertence or mistake; or
(b) because they were not aware of a relevant fact or occurrence.
In determining whether the defence is available, disregard the
person’s ignorance of, or a mistake on the person’s part
concerning, a matter of law.
(3) If 2 or more persons each contravene section 671B because of the
same act or omission, their liability under this section for the
contravention is joint and individual.
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Section 672A
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Part 6C.2—Tracing beneficial ownership of shares
672A Disclosure notices
(1) ASIC, a listed company or the responsible entity for a listed
managed investment scheme, may direct:
(a) a member of the company or scheme; or
(b) a person named in a previous disclosure under section 672B
as having a relevant interest in, or having given instructions
about, voting shares in the company or interests in the
scheme;
to make the disclosure required by section 672B.
(2) ASIC must exercise its powers under this section if requested to do
so by a member of the company or scheme unless it considers that
it would be unreasonable to do so in all the circumstances.
672B Disclosure by member of relevant interests and instructions
(1) A person given a direction under section 672A must disclose to the
person giving the direction:
(a) full details of their own relevant interest in the shares or
interests in the scheme and of the circumstances that give rise
to that interest; and
(b) the name and address of each other person who has a relevant
interest in any of the shares or interests together with full
details of:
(i) the nature and extent of the interest; and
(ii) the circumstances that give rise to the other person’s
interest; and
(c) the name and address of each person who has given the
person instructions about:
(i) the acquisition or disposal of the shares or interests; or
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(ii) the exercise of any voting or other rights attached to the
shares or interests; or
(iii) any other matter relating to the shares or interests;
together with full details of those instructions (including the
date or dates on which they were given).
(1A) However, a matter referred to in paragraph (1)(b) or (c) need only
be disclosed to the extent to which it is known to the person
required to make the disclosure.
Note: A defendant bears an evidential burden in relation to the matter in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
(1B) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) The disclosure must be made within 2 business days after:
(a) the person is given the direction; or
(b) if the person applies for an exemption under section 673 from
the obligation to make the disclosure and ASIC refuses to
grant the exemption—ASIC notifies the person of its
decision on the application; or
(c) if the direction is given by a company or responsible entity—
the company or responsible entity pays any fee payable under
the regulations made for the purposes of section 672D.
(3) The person does not have to comply with a direction given by the
company or the responsible entity if the person proves that the
giving of the direction is vexatious.
672C ASIC may pass information on to person who made request
If ASIC receives information in response to a direction under
section 672A about shares in a company or interests in a listed
managed investment scheme, ASIC:
(a) may pass the information on to the company or the
responsible entity for the scheme; and
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(b) if ASIC gave the direction in response to a request under
subsection 672A(2)—must pass the information on to the
person who made the request unless ASIC considers it would
be unreasonable in all the circumstances to do so.
672D Fee for complying with a direction given by a company or
scheme under this Part
(1) The regulations may prescribe fees that companies and responsible
entities are to pay to persons for complying with directions given
under this Part.
(2) A person is liable to repay a fee paid to the person for complying
with a direction under section 672A if the person does not comply
with the direction on time even if the person does so later. The fee
may be recovered as a debt due to the company or responsible
entity that paid it to the person.
672DA Register of information about relevant interests in listed
company or listed managed investment scheme
(1) A listed company, or the responsible entity for a listed managed
investment scheme, must keep a register of the following
information that it receives under this Part on or after 1 January
2005 (whether the information is received pursuant to a direction
the company, or responsible entity, itself gives under section 672A
or is received from ASIC under section 672C):
(a) details of the nature and extent of a person’s relevant interest
in shares in the company or interests in the scheme;
(b) details of the circumstances that give rise to a person’s
relevant interest in shares in the company or interests in the
scheme;
(c) the name and address of a person who has a relevant interest
in shares in the company or interests in the scheme;
(d) details of instructions that a person has given about:
(i) the acquisition or disposal of shares in the company or
interests in the scheme; or
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(ii) the exercise of any voting or other rights attached to
shares in the company or interests in the scheme; or
(iii) any other matter relating to shares in the company or
interests in the scheme;
(e) the name and address of a person who has given instructions
of the kind referred to in paragraph (d).
The register must be kept in accordance with this section.
(2) A register kept under this section by a listed company must be kept
at:
(a) the company’s registered office; or
(b) the company’s principal place of business in this jurisdiction;
or
(c) a place in this jurisdiction (whether or not an office of the
company) where the work involved in maintaining the
register is done; or
(d) another place in this jurisdiction approved by ASIC.
(3) A register kept under this section by the responsible entity of a
listed managed investment scheme must be kept at:
(a) the responsible entity’s registered office; or
(b) the responsible entity’s principal place of business in this
jurisdiction; or
(c) a place in this jurisdiction (whether or not an office of the
responsible entity) where the work involved in maintaining
the register is done; or
(d) another place in this jurisdiction approved by ASIC.
(4) The company, or the responsible entity, must lodge with ASIC a
notice of the address at which the register is kept within 7 days
after the register is:
(a) established at a place that:
(i) is not the registered office of the company or
responsible entity; and
(ii) is not at the principal place of business of the company
or responsible entity in this jurisdiction; or
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(b) moved from one place to another.
Notice is not required for moving the register between the
registered office and the principal place of business in this
jurisdiction.
Note: The obligation to notify ASIC under this subsection is a continuing
obligation and the company or responsible entity is guilty of an
offence for each day, after the 7 day period, until ASIC is notified (see
section 4K of the Crimes Act 1914).
(5) An offence based on subsection (2), (3) or (4) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(6) The register must either contain:
(a) the name of each holder of shares in the company, or
interests in the scheme, to whom the information relates; and
(b) against the name of each such holder:
(i) the name and address of each other person (if any) who,
according to information the company, or the
responsible entity, has received under this Part on or
after 1 January 2005, has a relevant interest in any of the
shares or interests (together with details of the relevant
interest and of the circumstances because of which the
other person has the relevant interest); and
(ii) the name and address of each person who, according to
information received by the company, or the responsible
entity, under this Part on or after 1 January 2005, has
given relevant instructions in relation to any of the
shares or interests (together with details of those
relevant instructions); and
(c) in relation to each item of information entered in the register,
the date on which the item was entered in the register;
or be in such other form as ASIC approves in writing.
(7) The register must be open for inspection:
(a) by any member of the company or scheme—without charge;
and
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(b) by any other person:
(i) if the company, or the responsible entity, requires the
payment of a fee for the inspection—on payment of the
fee; or
(ii) if the company, or the responsible entity, does not
require the payment of a fee for the inspection—without
charge.
The amount of the fee required by the company, or the responsible
entity, under subparagraph (b)(i) must not exceed the amount
prescribed by the regulations for the purposes of this subsection.
(8) A person may request the company, or the responsible entity, to
give to the person a copy of the register (or any part of the register)
and, if such a request is made, the company, or the responsible
entity, must give the person the copy:
(a) if the company, or the responsible entity, requires payment of
a fee for the copy:
(i) before the end of 21 days after the day on which the
payment of the fee is received by the company or the
responsible entity; or
(ii) within such longer period as ASIC approves in writing;
or
(b) if the company, or the responsible entity, does not require
payment of a fee for the copy:
(i) before the end of 21 days after the day on which the
request is made; or
(ii) within such longer period as ASIC approves in writing.
The amount of the fee required by the company, or the responsible
entity, under paragraph (a) must not exceed the amount prescribed
by the regulations for the purposes of this subsection.
Note: The obligation to give the copy under this subsection is a continuing
obligation and the company or responsible entity is guilty of an
offence for each day, after the period referred to in paragraph (a) or
(b), until the copy is given (see section 4K of the Crimes Act 1914).
(9) The information that subsection (6) requires to be entered in the
register must be entered in the register by the company, or the
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responsible entity, before the end of 2 business days after the day
on which the company, or the responsible entity, receives the
information.
Note: The obligation to enter the details in the register under this subsection
is a continuing obligation and the company or responsible entity is
guilty of an offence for each day, after the 2 business day period, until
the details are entered in the register (see section 4K of the Crimes Act
1914).
672E No notice of rights
A company or responsible entity is not, because of anything done
under this Part:
(a) taken for any purpose to have notice of; or
(b) put on inquiry as to;
a person’s right in relation to a share in the company or an interest
in the listed managed investment scheme.
672F Civil liability
(1) A person who contravenes section 672B is liable to compensate a
person for any loss or damage the person suffers because of the
contravention.
(2) It is a defence in proceedings brought under this section if the
person who contravenes section 672B proves that they contravened
that section:
(a) because of inadvertence or mistake; or
(b) because they were not aware of a relevant fact or occurrence.
In determining whether the defence is available, disregard the
person’s ignorance of, or a mistake on the person’s part
concerning, a matter of law.
(3) If 2 or more persons each contravene section 672B because of the
same act or omission, their liability under this section for the
contravention is joint and individual.
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Part 6C.3—ASIC powers
673 ASIC’s power to exempt and modify
(1) ASIC may:
(a) exempt a person from a provision of this Chapter; or
(b) declare that this Chapter applies to a person as if specified
provisions were omitted, modified or varied as specified in
the declaration.
(2) In deciding whether to give the exemption or declaration, ASIC
must consider the purposes of Chapter 6 set out in section 602.
(3) The exemption or declaration may:
(a) apply to all or specified provisions of this Chapter; and
(b) apply to all persons, specified persons, or a specified class of
persons; and
(c) relate to all securities, specified securities or a specified class
of securities; and
(d) relate to any other matter generally or as specified.
(4) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(5) The exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(6) For the purposes of this section, the provisions of this Chapter
include:
(a) regulations made for the purposes of this Chapter; and
(b) definitions in this Act or the regulations as they apply to
references in:
(i) this Chapter; or
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(ii) regulations made for the purposes of this Chapter; and
(c) the old Division 12 of Part 11.2 transitionals.
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Chapter 6CA—Continuous disclosure
674 Continuous disclosure—listed disclosing entity bound by a
disclosure requirement in market listing rules
Obligation to disclose in accordance with listing rules
(1) Subsection (2) applies to a listed disclosing entity if provisions of
the listing rules of a listing market in relation to that entity require
the entity to notify the market operator of information about
specified events or matters as they arise for the purpose of the
operator making that information available to participants in the
market.
(2) If:
(a) this subsection applies to a listed disclosing entity; and
(b) the entity has information that those provisions require the
entity to notify to the market operator; and
(c) that information:
(i) is not generally available; and
(ii) is information that a reasonable person would expect, if
it were generally available, to have a material effect on
the price or value of ED securities of the entity;
the entity must notify the market operator of that information in
accordance with those provisions.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: This subsection is also a civil penalty provision (see section 1317E).
For relief from liability to a civil penalty relating to this subsection,
see section 1317S.
Note 3: An infringement notice may be issued for an alleged contravention of
this subsection, see section 1317DAC.
(2A) A person who is involved in a listed disclosing entity’s
contravention of subsection (2) contravenes this subsection.
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Note 1: This subsection is a civil penalty provision (see section 1317E). For
relief from liability to a civil penalty relating to this subsection, see
section 1317S.
Note 2: Section 79 defines involved.
(2B) A person does not contravene subsection (2A) if the person proves
that they:
(a) took all steps (if any) that were reasonable in the
circumstances to ensure that the listed disclosing entity
complied with its obligations under subsection (2); and
(b) after doing so, believed on reasonable grounds that the listed
disclosing entity was complying with its obligations under
that subsection.
(3) For the purposes of the application of subsection (2) to a listed
disclosing entity that is an undertaking to which interests in a
registered scheme relate, the obligation of the entity to notify the
market operator of information is an obligation of the responsible
entity.
(4) Nothing in subsection (2) is intended to affect or limit the
situations in which action can be taken (otherwise than by way of a
prosecution for an offence based on subsection (2)) in respect of a
failure to comply with provisions referred to in subsection (1).
Obligation to make provisions of listing rules available
(5) If the listing rules of a listing market in relation to a listed
disclosing entity contain provisions of a kind referred to in
subsection (1), the market operator must ensure that those
provisions are available, on reasonable terms, to:
(a) the entity; or
(b) if the entity is an undertaking to which interests in a
registered scheme relate—the undertaking’s responsible
entity.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 675
Corporations Act 2001 287
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675 Continuous disclosure—other disclosing entities
(1) This section applies to:
(a) a listed disclosing entity if:
(i) there is only one listing market in relation to the entity
and the listing rules of that market do not contain
provisions of a kind referred to in subsection 674(1); or
(ii) there is more than one listing market in relation to the
entity and none of those markets have listing rules that
contain provisions of a kind referred to in
subsection 674(1); or
(b) an unlisted disclosing entity.
(2) If the disclosing entity becomes aware of information:
(a) that is not generally available; and
(b) that a reasonable person would expect, if it were generally
available, to have a material effect on the price or value of
ED securities of the entity; and
(c) either:
(i) if those securities are not managed investment
products—the information is not required to be included
in a supplementary disclosure document or a
replacement disclosure document in relation to the
entity; or
(ii) if those securities are managed investment products—
the information has not been included in a Product
Disclosure Statement, a Supplementary Product
Disclosure Statement, or a Replacement Product
Disclosure Statement, a copy of which has been lodged
with ASIC; and
(d) regulations made for the purposes of this paragraph do not
provide that disclosure under this section is not required in
the circumstances;
the disclosing entity must, as soon as practicable, lodge a document
with ASIC containing the information.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 676
288 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 2: This subsection is also a civil penalty provision (see section 1317E).
For relief from liability to a civil penalty relating to this subsection,
see section 1317S.
Note 3: An infringement notice may be issued for an alleged contravention of
this subsection, see section 1317DAC.
Note 4: Subsection (2) has an extended operation in relation to disclosing
entities that have made recognised offers of securities under Chapter 8
(see section 1200K).
(2A) A person who is involved in a disclosing entity’s contravention of
subsection (2) contravenes this subsection.
Note 1: This subsection is a civil penalty provision (see section 1317E). For
relief from liability to a civil penalty relating to this subsection, see
section 1317S.
Note 2: Section 79 defines involved.
(2B) A person does not contravene subsection (2A) if the person proves
that they:
(a) took all steps (if any) that were reasonable in the
circumstances to ensure that the disclosing entity complied
with its obligations under subsection (2); and
(b) after doing so, believed on reasonable grounds that the
disclosing entity was complying with its obligations under
that subsection.
(3) For the purposes of the application of this section to a disclosing
entity that is an undertaking to which interests in a registered
scheme relate:
(a) the entity is aware of information if, and only if, the
responsible entity is aware of the information; and
(b) the obligation of the entity to lodge a document under
subsection (2) is an obligation of the responsible entity.
676 Sections 674 and 675—when information is generally available
(1) This section has effect for the purposes of sections 674 and 675.
(2) Information is generally available if:
(a) it consists of readily observable matter; or
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Section 677
Corporations Act 2001 289
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(b) without limiting the generality of paragraph (a), both of the
following subparagraphs apply:
(i) it has been made known in a manner that would, or
would be likely to, bring it to the attention of persons
who commonly invest in securities of a kind whose
price or value might be affected by the information; and
(ii) since it was so made known, a reasonable period for it
to be disseminated among such persons has elapsed.
(3) Information is also generally available if it consists of deductions,
conclusions or inferences made or drawn from either or both of the
following:
(a) information referred to in paragraph (2)(a);
(b) information made known as mentioned in
subparagraph (2)(b)(i).
677 Sections 674 and 675—material effect on price or value
For the purposes of sections 674 and 675, a reasonable person
would be taken to expect information to have a material effect on
the price or value of ED securities of a disclosing entity if the
information would, or would be likely to, influence persons who
commonly invest in securities in deciding whether to acquire or
dispose of the ED securities.
678 Application of Criminal Code to offences based on
subsection 674(2), 674(5) or 675(2)
The Criminal Code applies to an offence based on
subsection 674(2), 674(5) or 675(2).
Note 1: Chapter 2 of the Criminal Code sets out the general principles of
criminal responsibility.
Note 2: For the meaning of offence based on a provision, see the definition in
section 9.
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Chapter 6D Fundraising
Part 6D.1 Application of the fundraising provisions
Section 700
290 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Chapter 6D—Fundraising
Part 6D.1—Application of the fundraising
provisions
700 Coverage of the fundraising rules
(1) In this Chapter, securities has the same meaning as it has in
Chapter 7, but does not include:
(a) a security referred to in paragraph (e) or (f) of the definition
of security in section 761A; or
(b) a simple corporate bonds depository interest in simple
corporate bonds, where the simple corporate bonds were
issued under a 2-part simple corporate bonds prospectus.
Offers and invitations both covered
(2) For the purposes of this Chapter:
(a) offering securities for issue includes inviting applications for
the issue of the securities; and
(b) offering securities for sale includes inviting offers to
purchase the securities.
Person offering securities
(3) For the purposes of this Chapter, the person who offers securities is
the person who has the capacity, or who agrees, to issue or transfer
the securities if the offer is accepted.
Geographical coverage of Chapter
(4) This Chapter applies to offers of securities that are received in this
jurisdiction, regardless of where any resulting issue, sale or transfer
occurs.
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Section 702
Corporations Act 2001 291
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
702 Treatment of offers of options over securities
For the purposes of this Chapter:
(a) an offer of an option over securities is not taken to be an
offer of the underlying securities; and
(b) the grant of an option without an offer of the option is taken
to be an offer of the option; and
(c) an offer to grant an option is taken to be an offer to issue the
security constituted by the option.
Note 1: If a disclosure document is needed for the option and there is no
further offer involved in exercising the option, the issue or sale of the
underlying securities on the exercise of the option does not need a
disclosure document.
Note 2: Paragraph (b)—the grant of the option will not require a disclosure
document if no consideration is payable on the grant or the exercise of
the option (see subsections 708(15) and (16)).
703 Chapter may not be contracted out of
A condition of a contract for the sale or issue of securities is void if
it provides that a party to the contract is:
(a) required or bound to waive compliance with any requirement
of this Chapter; or
(b) taken to have notice of any contract, document or matter not
specifically referred to in the disclosure document for the
offer.
703A Operating a clearing and settlement facility is not offering
securities etc.
Nothing that the operator of a clearing and settlement facility
(within the meaning of Chapter 7) does in the course of, or in
connection with, providing facilities for the settlement of
transactions constitutes, for the purposes of this Chapter:
(a) an offer of securities for subscription or purchase; or
(b) an invitation to subscribe for or buy securities.
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Chapter 6D Fundraising
Part 6D.2 Disclosure to investors about securities
Division 1 Overview
Section 704
292 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6D.2—Disclosure to investors about securities
Division 1—Overview
704 When disclosure to investors is needed
Sections 706, 707, 708, 708AA and 708A say when an offer of
securities needs disclosure to investors under this Part.
Note 1: Section 727 prohibits offering securities without disclosure.
Note 2: If the offer needs disclosure, section 734 applies advertising
restrictions. These continue throughout the whole offer process.
Different restrictions apply before and after the disclosure document is
lodged.
Note 3: The way the offers are made to people must not breach the securities
hawking prohibition in section 736.
705 Types of disclosure document
The following table shows what disclosure documents to use if an
offer of securities needs disclosure to investors under this Part.
Disclosure document
Type Sections
1 prospectus
The standard full-disclosure
document.
content [710, 711, 713]
procedure [717]
liability [728 and 729]
defences [731, 733]
2 short form prospectus
May be used for any offer.
Section 712 allows a prospectus
to refer to material lodged with
ASIC instead of setting it out.
Investors are entitled to a copy
content [712]
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Overview Division 1
Section 705
Corporations Act 2001 293
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Disclosure document
Type Sections
of this material if they ask for it.
2A 2-part simple corporate bonds
prospectus
Must be used for any offer of
simple corporate bonds.
content [713C, 713D, 713E]
procedure [717]
liability [728 and 729]
defences [731 and 733]
3 profile statement
Section 721 allows a brief
profile statement (rather than
the prospectus) to be sent out
with offers with ASIC approval.
The prospectus must still be
prepared and lodged with ASIC.
Investors are entitled to a copy
of the prospectus if they ask for
it.
content [714]
procedure [717]
liability [728 and 729]
defences [732, 733]
4 offer information statement
Section 709 allows an offer
information statement to be
used instead of a prospectus for
an offer to issue securities if the
amount raised from issues of
securities is $10 million or less.
content [715]
procedure [717]
liability [728 and 729]
defences [732, 733]
Note: Subsection 709(1A) provides that if the offer period for an offer of
simple corporate bonds begins during the 2-year period beginning at
the commencement of that subsection, a prospectus (other than a
2-part simple corporate bonds prospectus) may be prepared.
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Chapter 6D Fundraising
Part 6D.2 Disclosure to investors about securities
Division 2 Offers that need disclosure to investors
Section 706
294 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Offers that need disclosure to investors
706 Issue offers that need disclosure
An offer of securities for issue needs disclosure to investors under
this Part unless section 708 or 708AA says otherwise.
707 Sale offers that need disclosure
Only some sales need disclosure
(1) An offer of securities for sale needs disclosure to investors under
this Part only if disclosure is required by subsection (2), (3) or (5).
Off-market sale by controller
(2) An offer of a body’s securities for sale needs disclosure to
investors under this Part if:
(a) the person making the offer controls the body; and
(b) either:
(i) the securities are not quoted; or
(ii) although the securities are quoted, they are not offered
for sale in the ordinary course of trading on a relevant
financial market;
and section 708 does not say otherwise.
Note: See section 50AA for when a person controls a body.
Sale amounting to indirect issue
(3) An offer of a body’s securities for sale within 12 months after their
issue needs disclosure to investors under this Part if:
(a) the body issued the securities without disclosure to investors
under this Part; and
(b) either:
(i) the body issued the securities with the purpose of the
person to whom they were issued selling or transferring
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Offers that need disclosure to investors Division 2
Section 707
Corporations Act 2001 295
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
the securities, or granting, issuing or transferring
interests in, or options over, them; or
(ii) the person to whom the securities were issued acquired
them with the purpose of selling or transferring the
securities, or granting, issuing or transferring interests
in, or options over, them;
and section 708 or 708A does not say otherwise.
Note 1: Section 706 normally requires disclosure for the issue of securities.
This subsection is intended to prevent avoidance of section 706.
However, to establish a contravention of this subsection, the only
purpose that needs to be shown is that referred to in paragraph (b).
Note 2: The issuer and the seller must both consent to the disclosure document
(see section 720).
The purpose test in subsection (3)
(4) For the purposes of subsection (3):
(a) securities are taken to be:
(i) issued with the purpose referred to in
subparagraph (3)(b)(i); or
(ii) acquired with the purpose referred to in
subparagraph (3)(b)(ii);
if there are reasonable grounds for concluding that the
securities were issued or acquired with that purpose (whether
or not there may have been other purposes for the issue or
acquisition); and
(b) without limiting paragraph (a), securities are taken to be:
(i) issued with the purpose referred to in
subparagraph (3)(b)(i); or
(ii) acquired with the purpose referred to in
subparagraph (3)(b)(ii);
if any of the securities are subsequently sold, or offered for
sale, within 12 months after issue, unless it is proved that the
circumstances of the issue and the subsequent sale or offer
are not such as to give rise to reasonable grounds for
concluding that the securities were issued or acquired with
that purpose.
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Chapter 6D Fundraising
Part 6D.2 Disclosure to investors about securities
Division 2 Offers that need disclosure to investors
Section 707
296 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Sale amounting to indirect off-market sale by controller
(5) An offer of a body’s securities for sale within 12 months after their
sale by a person who controlled the body at the time of the sale
needs disclosure to investors under this Part if:
(a) at the time of the sale by the controller either:
(i) the securities were not quoted; or
(ii) although the securities were quoted, they were not
offered for sale in the ordinary course of trading on a
relevant financial market on which they were quoted;
and
(b) the controller sold the securities without disclosure to
investors under this Part; and
(c) either:
(i) the controller sold the securities with the purpose of the
person to whom they were sold selling or transferring
the securities, or granting, issuing or transferring
interests in, or options over, them; or
(ii) the person to whom the securities were sold acquired
them with the purpose of selling or transferring the
securities, or granting, issuing or transferring interests
in, or options over, them;
and section 708 does not say otherwise.
Note 1: Subsection (2) normally requires disclosure for a sale by a controller.
This subsection is intended to prevent avoidance of subsection (2).
However, to establish a contravention of this subsection, the only
purpose that needs to be shown is that referred to in paragraph (c).
Note 2: See section 50AA for when a person controls a body.
Note 3: The controller and the seller must both consent to the disclosure
document (see section 720).
The purpose test in subsection (5)
(6) For the purposes of subsection (5):
(a) securities are taken to be:
(i) sold with the purpose referred to in
subparagraph (5)(c)(i); or
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(ii) acquired with the purpose referred to in
subparagraph (5)(c)(ii);
if there are reasonable grounds for concluding that the
securities were sold or acquired with that purpose (whether
or not there may have been other purposes for the sale or
acquisition); and
(b) without limiting paragraph (a), securities are taken to be:
(i) sold with the purpose referred to in
subparagraph (5)(c)(i); or
(ii) acquired with the purpose referred to in
subparagraph (5)(c)(ii);
if any of the securities are subsequently sold, or offered for
sale, within 12 months after their sale by the controller,
unless it is proved that the circumstances of the initial sale
and the subsequent sale or offer are not such as to give rise to
reasonable grounds for concluding that the securities were
sold or acquired (in the initial sale) with that purpose.
708 Offers that do not need disclosure
Small scale offerings (20 issues or sales in 12 months)
(1) Personal offers of a body’s securities by a person do not need
disclosure to investors under this Part if:
(a) none of the offers results in a breach of the 20 investors
ceiling (see subsections (3) and (4)); and
(b) none of the offers results in a breach of the $2 million ceiling
(see subsections (3) and (4)).
This subsection does not apply to an offer for sale to which
subsection 707(3) (sale amounting to indirect issue) or (5) (sale
amounting to indirect sale by controller) applies.
Note 1: Subsection 727(4) makes it an offence to issue or transfer securities
without disclosure to investors once 20 issues or transfers have
occurred or $2 million has been raised.
Note 2: Under section 740 ASIC may make a determination aggregating the
transactions of bodies that ASIC considers to be closely related.
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Chapter 6D Fundraising
Part 6D.2 Disclosure to investors about securities
Division 2 Offers that need disclosure to investors
Section 708
298 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(2) For the purposes of subsection (1), a personal offer is one that:
(a) may only be accepted by the person to whom it is made; and
(b) is made to a person who is likely to be interested in the offer,
having regard to:
(i) previous contact between the person making the offer
and that person; or
(ii) some professional or other connection between the
person making the offer and that person; or
(iii) statements or actions by that person that indicate that
they are interested in offers of that kind.
(3) An offer by a body to issue securities:
(a) results in a breach of the 20 investors ceiling if it results in
the number of people to whom securities of the body have
been issued exceeding 20 in any 12 month period; and
(b) results in a breach of the $2 million ceiling if it results in the
amount raised by the body by issuing securities exceeding $2
million in any 12 month period.
(4) An offer by a person to transfer a body’s securities:
(a) results in a breach of the 20 investors ceiling if it results in
the number of people to whom the person sells securities of
the body exceeding 20 in any 12 month period; and
(b) results in a breach of the $2 million ceiling if it results in the
amount raised by the person from selling the body’s
securities exceeding $2 million in any 12 month period.
(5) In counting issues and sales of the body’s securities, and the
amount raised from issues and sales, for the purposes of
subsection (1), disregard issues and sales that result from offers
that:
(a) do not need a disclosure document because of any other
subsection of this section; or
(b) are not received in Australia; or
(c) are made under a disclosure document.
Note: Also see provisions on restrictions on advertising (section 734) and
securities hawking provisions (Part 6D.3).
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Offers that need disclosure to investors Division 2
Section 708
Corporations Act 2001 299
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(7) In working out the amount of money raised by the body by issuing
securities, include the following:
(a) the amount payable for the securities at the time when they
are issued;
(b) if the securities are shares issued partly-paid—any amount
payable at a future time if a call is made;
(c) if the security is an option—any amount payable on the
exercise of the option;
(d) if the securities carry a right to convert the securities into
other securities—any amount payable on the exercise of that
right.
Sophisticated investors
(8) An offer of a body’s securities does not need disclosure to
investors under this Part if:
(a) the minimum amount payable for the securities on
acceptance of the offer by the person to whom the offer is
made is at least $500,000; or
(b) the amount payable for the securities on acceptance by the
person to whom the offer is made and the amounts previously
paid by the person for the body’s securities of the same class
that are held by the person add up to at least $500,000; or
(c) it appears from a certificate given by a qualified accountant
no more than 6 months before the offer is made that the
person to whom the offer is made:
(i) has net assets of at least the amount specified in
regulations made for the purposes of this subparagraph;
or
(ii) has a gross income for each of the last 2 financial years
of at least the amount specified in regulations made for
the purposes of this subparagraph a year; or
(d) the offer is made to a company or trust controlled by a person
who meets the requirements of subparagraph (c)(i) or (ii).
Note 1: Section 9 defines qualified accountant.
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Chapter 6D Fundraising
Part 6D.2 Disclosure to investors about securities
Division 2 Offers that need disclosure to investors
Section 708
300 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 2: A financial services licensee has obligations under Division 3 of
Part 7.7 when providing financial advice. ASIC has a power under
section 915C to suspend or cancel a licensee’s licence.
(9) In calculating the amount payable, or paid, for securities for the
purposes of paragraph (8)(a) or (b), disregard any amount payable,
or paid, to the extent to which it is to be paid, or was paid, out of
money lent by the person offering the securities or an associate.
(9A) In addition to specifying amounts for the purposes of
subparagraphs (8)(c)(i) and (ii), the regulations may do either or
both of the following:
(a) deal with how net assets referred to in subparagraph (8)(c)(i)
are to be determined and valued, either generally or in
specified circumstances;
(b) deal with how gross income referred to in
subparagraph (8)(c)(ii) is to be calculated, either generally or
in specified circumstances.
(9B) In determining the net assets of a person under
subparagraph (8)(c)(i), the net assets of a company or trust
controlled by the person may be included.
Note: Control is defined in section 50AA.
(9C) In determining the gross income of a person under
subparagraph (8)(c)(ii), the gross income of a company or trust
controlled by the person may be included.
Note: Control is defined in section 50AA.
(10) An offer of a body’s securities does not need disclosure to
investors under this Part if:
(a) the offer is made through a financial services licensee; and
(b) the licensee is satisfied on reasonable grounds that the person
to whom the offer is made has previous experience in
investing in securities that allows them to assess:
(i) the merits of the offer; and
(ii) the value of the securities; and
(iii) the risks involved in accepting the offer; and
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Corporations Act 2001 301
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(iv) their own information needs; and
(v) the adequacy of the information given by the person
making the offer; and
(c) the licensee gives the person before, or at the time when, the
offer is made a written statement of the licensee’s reasons for
being satisfied as to those matters; and
(d) the person to whom the offer is made signs a written
acknowledgment before, or at the time when, the offer is
made that the licensee has not given the person a disclosure
document under this Part in relation to the offer.
Professional investors
(11) An offer of securities does not need disclosure to investors under
this Part if it is made to:
(a) a person covered by the definition of professional investor in
section 9 (except a person mentioned in paragraph (e) of the
definition); or
(b) a person who has or controls gross assets of at least $10
million (including any assets held by an associate or under a
trust that the person manages).
Offers of securities to people associated with the body
(12) An offer of a body’s securities does not need disclosure to
investors under this Part if it is made to:
(a) a senior manager of the body or a related body or their
spouse, parent, child, brother or sister; or
(b) a body corporate controlled by a person referred to in
paragraph (a).
Certain offers to present holder of securities
(13) An offer of securities for issue does not need disclosure to
investors under this Part if it is:
(a) an offer of fully-paid shares in a body to 1 or more existing
holders of shares in the body under a dividend reinvestment
plan or bonus share plan; or
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Part 6D.2 Disclosure to investors about securities
Division 2 Offers that need disclosure to investors
Section 708
302 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) an offer of interests in a managed investment scheme to 1 or
more existing holders of interests in the scheme if:
(i) the offer is made under a distribution reinvestment plan
or switching facility; or
(ii) the scheme is of a kind commonly known as a cash
common fund or cash management trust.
(14) An offer of a disclosing entity’s debentures for issue does not need
disclosure to investors under this Part if the offer is made to 1 or
more existing debenture holders.
(14A) Subsection (14) does not apply to:
(a) an offer of simple corporate bonds; or
(b) an offer of debentures (other than simple corporate bonds), if
the offer is made to holders of simple corporate bonds.
Issues or sales for no consideration
(15) An offer of securities (other than options) does not need disclosure
to investors under this Part if no consideration is to be provided for
the issue or transfer of the securities.
(16) An offer of options does not need disclosure to investors under this
Part if:
(a) no consideration is to be provided for the issue or transfer of
the options; and
(b) no consideration is to be provided for the underlying
securities on the exercise of the option.
Compromise or arrangement under Part 5.1
(17) An offer of securities does not need disclosure to investors under
this Part if it is made under a compromise or arrangement under
Part 5.1 approved at a meeting held as a result of an order under
subsection 411(1) or (1A).
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Offers that need disclosure to investors Division 2
Section 708
Corporations Act 2001 303
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Deed of company arrangement
(17A) An offer of securities does not need disclosure to investors under
this Part if:
(a) it is made to any or all of the company’s creditors under a
deed of company arrangement; and
(b) it does not require the provision of consideration other than
the release of the company from a debt or debts; and
(c) before the offer was specified in the deed, the administrator
gave as many creditors as reasonably practicable a statement:
(i) that set out all relevant information about the offer that
was within the knowledge of the administrator of the
deed; and
(ii) that stated that the statement is not a prospectus and
may contain less information than a prospectus.
Takeovers
(18) An offer of securities does not need disclosure to investors under
this Part if it is:
(a) made as consideration for an offer to acquire securities under
a takeover bid under Chapter 6; and
(b) accompanied by a bidder’s statement.
Note: Although this offer does not need a disclosure document, similar
disclosures must be made about the securities in the bidder’s statement
under section 636.
Debentures of certain bodies
(19) An offer of a body’s debentures for issue or sale does not need
disclosure to investors under this Part if the body is:
(a) an Australian ADI; or
(b) registered under section 21 of the Life Insurance Act 1995.
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Division 2 Offers that need disclosure to investors
Section 708AA
304 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Offers by exempt bodies
(20) An offer of a body’s securities in a State or Territory in this
jurisdiction does not need disclosure to investors under this Part if
the body is an exempt body of that State or Territory.
Note: Section 66A defines exempt body.
(21) An offer of a body’s securities for issue does not need disclosure to
investors under this Part if the body is an exempt public authority
of a State or Territory.
Note: Debentures, stock or bonds issued by a government are not securities
for the purposes of this Chapter (see subsection 92(3)).
708AA Rights issues that do not need disclosure
(1) This section applies to an offer of a body’s securities (the relevant
securities) for issue if:
(a) but for subsection (2), disclosure to investors under this Part
would be required by section 706; and
(b) a determination under subsection (3) is not in force in
relation to the body at the time when the relevant securities
are offered.
Conditions required for rights issue
(2) The offer does not need disclosure to investors under this Part if:
(a) the relevant securities are being offered under a rights issue;
and
(b) the class of the relevant securities are quoted securities at the
time at which the offer is made; and
(c) trading in that class of securities on a prescribed financial
market on which they are quoted was not suspended for more
than a total of 5 days during the shorter of the following
periods:
(i) the period during which the class of securities is quoted;
(ii) the period of 12 months before the day on which the
offer is made; and
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Section 708AA
Corporations Act 2001 305
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(d) no exemption under section 111AS or 111AT covered the
body, or any person as director or auditor of the body, at any
time during the relevant period referred to in paragraph (c);
and
(e) no order under section 340 or 341 covered the body, or any
person as director or auditor of the body, at any time during
the relevant period referred to in paragraph (c); and
(f) the body gives the relevant market operator for the body a
notice that complies with subsection (7) within the 24 hour
period before the offer is made.
Determination by ASIC
(3) ASIC may make a determination under this subsection if ASIC is
satisfied that in the previous 12 months the body contravened any
of the following provisions:
(a) subsection 283AA(1), 283AB(1) or 283AC(1);
(b) the provisions of Chapter 2M as they apply to the body;
(c) section 674 or 675;
(d) section 724 or 728;
(e) subsection (10) of this section;
(f) section 1308 as that section applies to a notice under
subsection (2) of this section.
(4) The determination must be made in writing and a copy must be
published in the Gazette as soon as practicable after the
determination is made.
(5) The determination made under subsection (3) is not a legislative
instrument.
(6) A failure to publish a copy of the determination does not affect the
validity of the determination.
Requirements for notice
(7) A notice complies with this subsection if the notice:
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Section 708AA
306 Corporations Act 2001
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(a) states that the body will offer the relevant securities for issue
without disclosure to investors under this Part; and
(b) states that the notice is being given under paragraph (2)(f);
and
(c) states that, as at the date of the notice, the body has complied
with:
(i) the provisions of Chapter 2M as they apply to the body;
and
(ii) section 674; and
(d) sets out any information that is excluded information as at the
date of the notice (see subsections (8) and (9)); and
(e) states:
(i) the potential effect the issue of the relevant securities
will have on the control of the body; and
(ii) the consequences of that effect.
Note 1: A person is taken not to contravene section 727 if a notice purports to
comply with this subsection but does not actually comply with this
subsection: see subsection 727(5).
Note 2: A notice must not be false or misleading in a material particular, or
omit anything that would render it misleading in a material respect:
see sections 1308 and 1309. The body has an obligation to correct a
defective notice: see subsection (10) of this section.
(8) For the purposes of subsection (7), excluded information is
information:
(a) that has been excluded from a continuous disclosure notice in
accordance with the listing rules of the relevant market
operator to whom that notice is required to be given; and
(b) that investors and their professional advisers would
reasonably require for the purpose of making an informed
assessment of:
(i) the assets and liabilities, financial position and
performance, profits and losses and prospects of the
body; or
(ii) the rights and liabilities attaching to the relevant
securities.
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Section 708A
Corporations Act 2001 307
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(9) The notice given under subsection (2) must contain any excluded
information only to the extent to which it is reasonable for
investors and their professional advisers to expect to find the
information in a disclosure document.
Obligation to correct defective notice
(10) The body contravenes this subsection if:
(a) the notice given under subsection (2) is defective; and
(b) the body becomes aware of the defect in the notice within 12
months after the relevant securities are issued; and
(c) the body does not, within a reasonable time after becoming
aware of the defect, give the relevant market operator a
notice that sets out the information necessary to correct the
defect.
(11) For the purposes of subsection (10), the notice under subsection (2)
is defective if the notice:
(a) does not comply with paragraph (2)(f); or
(b) is false or misleading in a material particular; or
(c) has omitted from it a matter or thing, the omission of which
renders the notice misleading in a material respect.
708A Sale offers that do not need disclosure
Sale offers to which this section applies
(1) This section applies to an offer (the sale offer) of a body’s
securities (the relevant securities) for sale by a person if:
(a) but for subsection (5), (11) or (12), disclosure to investors
under this Part would be required by subsection 707(3) for
the sale offer; and
(b) the securities were not issued by the body with the purpose
referred to in subparagraph 707(3)(b)(i); and
(c) a determination under subsection (2) was not in force in
relation to the body at the time when the relevant securities
were issued.
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Division 2 Offers that need disclosure to investors
Section 708A
308 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(1A) This section also applies to an offer (the sale offer) of a body’s
securities (the relevant securities) for sale by a person if:
(a) but for subsection (5), disclosure to investors under this Part
would be required by subsection 707(5) for the sale offer;
and
(b) the securities were not sold by the controller with the purpose
referred to in subparagraph 707(5)(c)(i); and
(c) a determination under subsection (2) was not in force in
relation to the body at the time when the relevant securities
were issued.
Determination by ASIC
(2) ASIC may make a determination under this subsection if ASIC is
satisfied that in the previous 12 months the body contravened any
of the following provisions:
(a) subsection 283AA(1), 283AB(1) or 283AC(1);
(b) the provisions of Chapter 2M as they apply to the body;
(c) section 674 or 675;
(d) section 724 or 728;
(e) subsection (9) of this section; or
(f) section 1308 as that section applies to a notice under
subsection (5) of this section.
(3) The determination must be made in writing and a copy must be
published in the Gazette as soon as practicable after the
determination is made.
(4) A failure to publish a copy of the determination does not affect the
validity of the determination.
Sale offer of quoted securities—case 1
(5) The sale offer does not need disclosure to investors under this Part
if:
(a) the relevant securities are in a class of securities that were
quoted securities at all times in the 3 months before the day
on which the relevant securities were issued; and
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Section 708A
Corporations Act 2001 309
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(b) trading in that class of securities on a prescribed financial
market on which they were quoted was not suspended for
more than a total of 5 days during the shorter of the period
during which the class of securities were quoted, and the
period of 12 months before the day on which the relevant
securities were issued; and
(c) no exemption under section 111AS or 111AT covered the
body, or any person as director or auditor of the body, at any
time during the relevant period referred to in paragraph (b);
and
(d) no order under section 340 or 341 covered the body, or any
person as director or auditor of the body, at any time during
the relevant period referred to in paragraph (b); and
(e) either:
(i) if this section applies because of subsection (1)—the
body gives the relevant market operator for the body a
notice that complies with subsection (6) before the sale
offer is made; or
(ii) if this section applies because of subsection (1A)—both
the body, and the controller, give the relevant market
operator for the body a notice that complies with
subsection (6) before the sale offer is made.
(6) A notice complies with this subsection if the notice:
(a) is given within 5 business days after the day on which the
relevant securities were issued by the body; and
(b) states that the body issued the relevant securities without
disclosure to investors under this Part; and
(c) states that the notice is being given under paragraph (5)(e);
and
(d) states that, as at the date of the notice, the body has complied
with:
(i) the provisions of Chapter 2M as they apply to the body;
and
(ii) section 674; and
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Division 2 Offers that need disclosure to investors
Section 708A
310 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(e) sets out any information that is excluded information as at the
date of the notice (see subsections (7) and (8)).
Note 1: A person is taken not to contravene section 727 if a notice purports to
comply with this subsection but does not actually comply with this
subsection: see subsection 727(5).
Note 2: A notice must not be false or misleading in a material particular, or
omit anything that would render it misleading in a material respect:
see sections 1308 and 1309. The body has an obligation to correct a
defective notice: see subsection (9) of this section.
(7) For the purposes of subsection (6), excluded information is
information:
(a) that has been excluded from a continuous disclosure notice in
accordance with the listing rules of the relevant market
operator to whom that notice is required to be given; and
(b) that investors and their professional advisers would
reasonably require for the purpose of making an informed
assessment of:
(i) the assets and liabilities, financial position and
performance, profits and losses and prospects of the
body; or
(ii) the rights and liabilities attaching to the relevant
securities.
(8) The notice given under subsection (5) must contain any excluded
information only to the extent to which it is reasonable for
investors and their professional advisers to expect to find the
information in a disclosure document.
Obligation to correct defective notice
(9) The body contravenes this subsection if:
(a) the notice given under subsection (5) is defective; and
(b) the body becomes aware of the defect in the notice within 12
months after the relevant securities are issued; and
(c) the body does not, within a reasonable time after becoming
aware of the defect, give the relevant market operator a
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Section 708A
Corporations Act 2001 311
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notice that sets out the information necessary to correct the
defect.
(10) For the purposes of subsection (9), the notice under subsection (5)
is defective if the notice:
(a) does not comply with paragraph (6)(e); or
(b) is false or misleading in a material particular; or
(c) has omitted from it a matter or thing the omission of which
renders the notice misleading in a material respect.
Sale offer of quoted securities—case 2
(11) The sale offer does not need disclosure to investors under this Part
if:
(a) the relevant securities are in a class of securities that are
quoted securities of the body; and
(b) either:
(i) a prospectus is lodged with ASIC on or after the day on
which the relevant securities were issued but before the
day on which the sale offer is made; or
(ii) a prospectus is lodged with ASIC before the day on
which the relevant securities are issued and offers of
securities that have been made under the prospectus are
still open for acceptance on the day on which the
relevant securities were issued; and
(c) the prospectus is for an offer of securities issued by the body
that are in the same class of securities as the relevant
securities.
Sale offer of quoted securities—case 3
(12) This subsection is satisfied if:
(a) the body offered to issue securities under a prospectus; and
(b) the body issued the relevant securities to:
(i) a person (the underwriter) named in that prospectus as
an underwriter of the issue; or
(ii) a person nominated by the underwriter; and
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Section 708A
312 Corporations Act 2001
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(c) the relevant securities were issued to the underwriter, or the
person nominated by the underwriter, at or about the time
that persons who applied for securities under the prospectus
were issued with those securities; and
(d) the relevant securities are in a class of securities that were
quoted securities of the body.
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Types of disclosure documents Division 3
Section 709
Corporations Act 2001 313
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 3—Types of disclosure documents
709 Prospectuses, short-form prospectuses, profile statements and
offer information statements
Prospectus or short-form prospectus
(1) If an offer of securities (other than an offer of simple corporate
bonds) needs disclosure to investors under this Part, a prospectus
must be prepared for the offer unless subsection (4) allows an offer
information statement to be used instead. Under section 712, the
prospectus may simply refer to material already lodged with ASIC
instead of including it.
Note: See sections 710 to 713 for the contents of a prospectus.
(1A) If:
(a) an offer of simple corporate bonds needs disclosure to
investors under this Part; and
(b) the offer period begins during the 2-year period beginning at
the commencement of this subsection;
either of the following must be prepared for the offer:
(c) a prospectus (other than a 2-part simple corporate bonds
prospectus) unless subsection (4) allows an offer information
statement to be used instead;
(d) a 2-part simple corporate bonds prospectus.
Note: See sections 713B to 713E for the contents of a 2-part simple
corporate bonds prospectus.
(1B) If a prospectus is prepared under paragraph (1A)(c), then, under
section 712, the prospectus may simply refer to material already
lodged with ASIC instead of including it.
(1C) If:
(a) an offer of simple corporate bonds needs disclosure to
investors under this Part; and
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Section 709
314 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(b) the offer period begins after the 2-year period beginning at
the commencement of this subsection;
a 2-part simple corporate bonds prospectus must be prepared for
the offer.
Note: See sections 713B to 713E for the contents of a 2-part simple
corporate bonds prospectus.
Profile statement
(2) A profile statement for an offer may be prepared in addition to the
prospectus if ASIC has approved the making of offers of that kind
with a profile statement instead of a disclosure document.
Note 1: See section 714 for the contents of a profile statement.
Note 2: Subsection 729(2) provides that there is still liability to investors on
the prospectus when a profile statement is used.
(2A) Subsection (2) does not apply to an offer of simple corporate
bonds.
(3) ASIC may approve the use of profile statements for offers of
securities of a particular kind. The approval may specify
information to be included in the profile statement (including
information about a matter referred to in paragraphs 714(1)(a) to
(d)).
Offer information statement
(4) A body offering to issue securities may use an offer information
statement for the offer instead of a prospectus (other than a 2-part
simple corporate bonds prospectus) if the amount of money to be
raised by the body by issuing the securities, when added to all
amounts previously raised by:
(a) the body; or
(b) a related body corporate; or
(c) an entity controlled by:
(i) a person who controls the body; or
(ii) an associate of that person;
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Section 709
Corporations Act 2001 315
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by issuing securities under an offer information statement is
$10 million or less.
Note 1: See section 715 for the contents of an offer information statement. The
statement must include financial statements that are less than 6 months
old.
Note 2: Under section 740, ASIC may make a determination aggregating the
transactions of bodies that ASIC considers to be closely related.
(5) In working out the amount of money to be raised by a body or
entity by issuing securities, include the following:
(a) the amount payable for the securities at the time when they
are issued;
(b) if the securities are issued partly-paid—any amount payable
at a future time if a call is made;
(c) if the securities are options—any amount payable on the
exercise of the options;
(d) if the securities carry a right to convert the securities into
other securities—any amount payable on the exercise of that
right.
However, do not include an amount payable for securities, or
payable on the exercise of options, if the securities or options are
issued under an eligible employee share scheme.
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Division 4 Disclosure requirements
Section 710
316 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 4—Disclosure requirements
710 Prospectus content—general disclosure test
(1) A prospectus for a body’s securities must contain all the
information that investors and their professional advisers would
reasonably require to make an informed assessment of the matters
set out in the table below. The prospectus must contain this
information:
(a) only to the extent to which it is reasonable for investors and
their professional advisers to expect to find the information
in the prospectus; and
(b) only if a person whose knowledge is relevant (see
subsection (3)):
(i) actually knows the information; or
(ii) in the circumstances ought reasonably to have obtained
the information by making enquiries.
Disclosures [operative]
Offer Matters
1 offer to issue (or transfer)
shares, debentures or
interests in a managed
investment scheme
the rights and liabilities attaching to the
securities offered
the assets and liabilities, financial
position and performance, profits and
losses and prospects of the body that is
to issue (or issued) the shares,
debentures or interests
2 offer to grant (or transfer) a
legal or equitable interest in
securities or grant (or
transfer) an option over
securities
the rights and liabilities attaching to:
- the interest or option
- the underlying securities
for an option—the capacity of the
person making the offer to issue or
deliver the underlying securities
if the person making the offer is:
- the body that issued or is to issue the
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Section 710
Corporations Act 2001 317
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Disclosures [operative]
Offer Matters
underlying securities; or
- a person who controls that body; the assets and liabilities, financial
position and performance, profits and
losses and prospects of that body
if subsection 707(3) or (5) applies to the
offer—the assets and liabilities,
financial position and performance,
profits and losses and prospects of the
body whose securities are offered
Note: Section 713 makes special provision for prospectuses for continuously
quoted securities.
(2) In deciding what information should be included under
subsection (1), have regard to:
(a) the nature of the securities and of the body; and
(b) if the securities are investments in a managed investment
scheme—the nature of the scheme; and
(c) the matters that likely investors may reasonably be expected
to know; and
(d) the fact that certain matters may reasonably be expected to be
known to their professional advisers.
(3) For the purposes of this section, a person’s knowledge is relevant
only if they are one of the following:
(a) the person offering the securities;
(b) if the person offering the securities is a body—a director of
the body;
(c) a proposed director of the body whose securities will be
issued under the offer;
(d) a person named in the prospectus as an underwriter of the
issue or sale;
(e) a person named in the prospectus as a a person named in the
prospectus as a financial services licensee involved in the
issue or sale;
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Section 711
318 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(f) a person named in the prospectus with their consent as
having made a statement:
(i) that is included in the prospectus; or
(ii) on which a statement made in the prospectus is based;
(g) a person named in the prospectus with their consent as
having performed a particular professional or advisory
function.
Note: Section 729 says who is liable for misstatements in, and omissions
from, a disclosure document.
(4) This section does not apply to a 2-part simple corporate bonds
prospectus.
711 Prospectus content—specific disclosures
Terms and conditions of offer
(1) The prospectus must set out the terms and conditions of the offer.
Disclosure of interests and fees of certain people involved in the
offer
(2) The prospectus must set out the nature and extent of the interests
(if any) that each person referred to in subsection (4) holds, or held
at any time during the last 2 years, in:
(a) the formation or promotion of the body; or
(b) property acquired or proposed to be acquired by the body in
connection with:
(i) its formation or promotion; or
(ii) the offer of the securities; or
(c) the offer of the securities.
(3) The prospectus must set out the amount that anyone has paid or
agreed to pay, or the nature and value of any benefit anyone has
given or agreed to give:
(a) to a director, or proposed director, to induce them to become,
or to qualify as, a director of the body; and
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Section 711
Corporations Act 2001 319
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(b) for services provided by a person referred to in subsection (4)
in connection with:
(i) the formation or promotion of the body; or
(ii) the offer of the securities; and
(c) if the prospectus is for interests in a managed investment
scheme—to the responsible entity:
(i) to procure acquisitions of interests in the scheme; or
(ii) for services provided under the constitution of the
scheme.
To comply with this subsection it is not sufficient merely to state in
the prospectus that a person has been paid or will be paid normal,
usual or standard fees.
(4) Disclosures need to be made under subsections (2) and (3) in
relation to:
(a) any directors and proposed directors of the body;
(b) a person named in the prospectus as performing a function in
a professional, advisory or other capacity in connection with
the preparation or distribution of the prospectus;
(d) a promoter of the body;
(e) an underwriter (but not a sub-underwriter) to the issue or sale
or a financial services licensee named in the prospectus as a
financial services licensee involved in the issue or sale.
Quotation of securities
(5) If the prospectus for an offer of securities states or implies that the
securities will be able to be traded on a financial market (whether
in Australia or elsewhere), the prospectus must state that:
(a) the securities have been admitted to quotation on that
financial market; or
(b) an application for admission of the securities to quotation on
that financial market has been made to the operator of that
market; or
(c) an application for admission of the securities to quotation on
that financial market will be made to the operator of that
market within 7 days after the date of the prospectus.
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Section 711
320 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 1: Paragraph 724(1)(b) gives times within which the person should seek
and obtain admission to quotation.
Note 2: Subsection 716(1) requires the prospectus to be dated.
Expiry date
(6) The prospectus must state that no securities will be issued on the
basis of the prospectus after the expiry date specified in the
prospectus. The expiry date must not be later than 13 months after
the date of the prospectus. The expiry date of a replacement
prospectus must be the same as that of the original prospectus it
replaces.
Note 1: Subsection 716(1) requires the prospectus to be dated.
Note 2: Section 719 deals with replacement prospectuses.
Lodgment with ASIC
(7) The prospectus must state that:
(a) a copy of the prospectus has been lodged with ASIC; and
(b) ASIC takes no responsibility for the content of the
prospectus.
Prescribed information
(8) The prospectus must set out the information required by the
regulations.
Section does not apply to 2-part simple corporate bonds
prospectus
(9) This section does not apply to a 2-part simple corporate bonds
prospectus.
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Section 712
Corporations Act 2001 321
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
712 Prospectus content—short form prospectuses
Prospectus may simply refer to material lodged with ASIC
(1) Instead of setting out information that is contained in a document
that has been lodged with ASIC, a prospectus may simply refer to
the document. The reference must:
(a) identify the document or the part of the document that
contains the information; and
(b) inform people of their right to obtain a copy of the document
(or part) under subsection (5).
(2) The reference must also include:
(a) if the information is primarily of interest to professional
analysts or advisers or investors with similar specialist
information needs:
(i) a description of the contents of the document (or part);
and
(ii) a statement to the effect that the information in the
document (or part) is primarily of interest to those
people; or
(b) in any other case—sufficient information about the contents
of the document to allow a person to whom the offer is made
to decide whether to obtain a copy of the document (or part).
(3) The document (or part) referred to under subsection (1) is taken to
be included in the prospectus.
(4) A person who wishes to take advantage of subsection (1) may
lodge a document with ASIC even if this Act does not require the
document to be lodged.
(5) If the prospectus is taken to include a document, or part of a
document, under subsection (1), the person making the offer must
give a copy of the document (or part) free of charge to anyone who
asks for it during the application period of the prospectus.
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Section does not apply to 2-part simple corporate bonds
prospectus
(6) This section does not apply to a 2-part simple corporate bonds
prospectus.
713 Special prospectus content rules for continuously quoted
securities
Alternative general disclosure test
(1) A prospectus for an offer of:
(a) continuously quoted securities of a body; or
(b) options to acquire continuously quoted securities of a body;
satisfies section 710 if it complies with subsections (2), (3) and (4)
of this section.
(2) The prospectus must contain all the information investors and their
professional advisers would reasonably require to make an
informed assessment of:
(a) the effect of the offer on the body; and
(c) the rights and liabilities attaching to the securities offered;
and
(d) if the securities are options—the rights and liabilities
attaching to:
(i) the options themselves; and
(ii) the underlying securities.
The prospectus must contain this information only to the extent to
which it is reasonable for investors and their professional advisers
to expect to find the information in the prospectus.
(3) The prospectus must state that:
(a) as a disclosing entity, the body is subject to regular reporting
and disclosure obligations; and
(b) copies of documents lodged with ASIC in relation to the
body may be obtained from, or inspected at, an ASIC office.
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(4) The prospectus must either:
(a) inform people of their right to obtain a copy of any of the
following documents:
(i) the annual financial report most recently lodged with
ASIC by the body;
(ii) any half-year financial report lodged with ASIC by the
body after the lodgment of that annual financial report
and before the lodgment of the copy of the prospectus
with ASIC;
(iii) any continuous disclosure notices given by the body
after the lodgment of that annual financial report and
before the lodgment of the copy of the prospectus with
ASIC; or
(b) include, or be accompanied by, a copy of the document.
If the prospectus informs people of their right to obtain a copy of
the document, the person making the offer must give a copy of the
document free of charge to anyone who asks for it during the
application period for the prospectus.
Information excluded from continuous disclosure notice
(5) Information about the offer must also be set out in the prospectus if
the information:
(a) has been excluded from a continuous disclosure notice in
accordance with the listing rules of the prescribed financial
market whose operator was given the notice; and
(b) is information that investors and their professional advisers
would reasonably require for the purpose of making an
informed assessment of:
(i) the assets and liabilities, financial position and
performance, profits and losses and prospects of the
body; and
(ii) the rights and liabilities attaching to the securities being
offered.
The prospectus must contain this information only to the extent to
which it is reasonable for investors and their professional advisers
to expect to find the information in the prospectus.
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324 Corporations Act 2001
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ASIC power to exclude entity from this section
(6) ASIC may determine in writing that a body may not rely on this
section if it is satisfied that, in the previous 12 months, any of the
following provisions were contravened in relation to the body:
(a) the provisions of Chapter 2M;
(aa) subsection 674(2) or 675(2);
(ab) subsection 708AA(10) or 708A(9);
(b) section 724;
(c) section 728;
(d) section 1308 as it applies to a notice under
subsection 708AA(2) or 708A(5);
ASIC must publish a copy of the determination in the Gazette.
While the determination is in force, section 710 and not this section
applies to securities of the body.
Section does not apply to 2-part simple corporate bonds
prospectus
(7) This section does not apply to a 2-part simple corporate bonds
prospectus.
713A Offer of simple corporate bonds
Simple corporate bonds
(1) If the conditions set out in this section are satisfied in relation to an
offer of securities for issue by a body:
(a) the offer is an offer of simple corporate bonds; and
(b) the securities are simple corporate bonds.
Securities must be debentures
(2) The securities must be debentures.
Securities must be quoted on a prescribed financial market
(3) The securities must be offered on the basis that:
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(a) the securities have been admitted to quotation on a prescribed
financial market; or
(b) an application for admission of the securities to quotation on
a prescribed financial market has been made to the operator
of that market; or
(c) an application for admission of the securities to quotation on
a prescribed financial market will be made to the operator of
that market within 7 days after the date of the prospectus.
(4) If, at a particular time, there is no prospectus, then, for the purposes
of paragraph (3)(c), assume that:
(a) there is a prospectus; and
(b) the date of the prospectus is the first day of the offer period.
Securities must be in Australian currency
(5) The securities must be denominated in Australian currency.
Securities for fixed term
(6) The securities must be for a fixed term of not more than 15 years.
Principal payable at end of fixed term
(7) The principal in respect of the securities must be repaid by the
issuing body to the holder at the end of the fixed term.
Interest rate must be fixed or floating
(8) The rate at which interest is payable on the securities must be:
(a) a fixed rate; or
(b) a floating rate that is comprised of a reference rate and a
fixed margin.
Fixed rate etc. must not be decreased
(9) If a fixed rate of interest is payable on the securities, the rate must
not be decreased during the term of the securities.
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(10) If a floating rate of interest is payable on the securities, the fixed
margin of the rate must not be decreased during the term of the
securities.
Interest to be paid periodically etc.
(11) Interest payments on the securities:
(a) must be paid periodically; and
(b) must be paid no later than the end of the fixed term; and
(c) cannot be deferred or capitalised by the issuing body.
Security must not exceed $1,000
(12) The price payable for each security must not exceed $1,000.
Securities may only be redeemed before fixed term in specified
circumstances
(13) The securities must not be redeemable (other than at the end of the
fixed term) except in one or more of the following circumstances:
(a) at the option of the holders of the securities;
(b) as a result of the acceptance of offers made to the holders by
the issuing body to buy back the securities;
(c) a change in a law, or in the application or interpretation of a
law, with the effect that interest payable on the securities is
not, or may not be, deductible by the issuing body for the
purposes of calculating its taxation liability;
(d) a change in a law, or in the application or interpretation of a
law, with the effect that:
(i) the issuing body, or any guarantor for the body, would
be required to deduct or withhold an amount in respect
of taxes from a payment to the holders; and
(ii) under the terms of the securities, that deduction or
withholding would result in the body, or any guarantor,
being required to pay an additional amount to the
holders in relation to the amount deducted or withheld;
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(e) there is a change of control of the issuing body (as defined in
the terms of the securities) and the redemption does not take
effect unless all securities issued under the offer are
redeemed;
(f) fewer than 10% of the securities issued under the offer
remain on issue and the redemption does not take effect
unless all securities issued under the offer are redeemed.
Debt to security holders is not subordinated to debts to unsecured
creditors
(14) The issuing body’s debts to holders of the securities must not be
subordinated to any of the issuing body’s debts to unsecured
creditors.
Securities not convertible
(15) The securities must not be convertible into another class of
securities.
Securities are offered at single price
(16) The price payable for the securities must be the same for all
persons who accept the offer.
Continuously quoted securities
(17) The issuing body must be a body that:
(a) has continuously quoted securities; or
(b) is a wholly-owned subsidiary of a body corporate that:
(i) has continuously quoted securities; and
(ii) has guaranteed, or agreed to guarantee, the repayment of
any money deposited or lent to the borrower under the
securities; and
(iii) has guaranteed, or agreed to guarantee, the payment of
any interest payable on the securities;
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where trading in the securities on a prescribed financial market on
which the securities are quoted was not suspended for more than a
total of 5 days during the shorter of the following periods:
(c) the period during which the class of securities is quoted;
(d) the period of 12 months before the day on which the offer is
made.
(18) If, at a particular time, there is no prospectus, then, in determining,
for the purposes of subsection (17), whether a body has
continuously quoted securities at that time, assume that:
(a) there is a prospectus; and
(b) the date of the prospectus is the first day of the offer period.
Auditor’s reports have not been modified
(19) If the condition in subsection (17) is satisfied because of the
application of paragraph (17)(a) to the issuing body, the auditor’s
report on:
(a) the issuing body’s financial report for the most recent
financial year; or
(b) if a half-year financial report was prepared by the issuing
body after the issuing body’s financial report for the most
recent financial year—the half-year financial report;
must not include:
(c) a statement to the effect that the auditor is of the opinion that
the financial report, or the half-year financial report, as the
case may be, is not in accordance with this Act; or
(d) a description of a defect or an irregularity in the financial
report or the half-year financial report, as the case may be; or
(e) a description of a deficiency, failure or shortcoming in
respect of the matters referred to in paragraph 307(b), (c) or
(d); or
(f) an emphasis of matter paragraph related to going concern.
(20) If:
(a) the issuing body is a wholly-owned subsidiary of a body
corporate; and
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(b) the condition in subsection (17) is satisfied because of the
application of paragraph (17)(b) to the body corporate;
the auditor’s report on:
(c) the body corporate’s financial report for the most recent
financial year; or
(d) if a half-year financial report was prepared by the body
corporate after the body corporate’s financial report for the
most recent financial year—the half-year financial report;
must not include:
(e) a statement to the effect that the auditor is of the opinion that
the financial report, or the half-year financial report, as the
case may be, is not in accordance with this Act; or
(f) a description of a defect or an irregularity in the financial
report or the half-year financial report, as the case may be; or
(g) a description of a deficiency, failure or shortcoming in
respect of the matters referred to in paragraph 307(b), (c) or
(d); or
(h) an emphasis of matter paragraph related to going concern.
ASIC power to exclude body from this section
(21) The issuing body must not be a body in relation to which a
determination is in force under subsection (23).
(22) If the issuing body is a wholly-owned subsidiary of a body
corporate, the body corporate must not be a body in relation to
which a determination is in force under subsection (23).
(23) ASIC may determine that a body is a body to which this subsection
applies if ASIC is satisfied that, in the previous 12 months, any of
the following provisions were contravened in relation to the body:
(a) subsection 283AA(1), 283AB(1) or 283AC(1);
(b) the provisions of Chapter 2M as they apply to the issuing
body;
(c) section 674 or 675;
(d) section 724 or 728.
ASIC must publish a copy of the determination in the Gazette.
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330 Corporations Act 2001
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Regulations
(24) The securities must comply with such other conditions (if any) as
are specified in the regulations.
(25) The offer must comply with such other conditions (if any) as are
specified in the regulations.
(26) The issuing body must comply with such other conditions (if any)
as are specified in the regulations.
(27) If the issuing body is a wholly-owned subsidiary of a body
corporate, the body corporate must comply with such other
conditions (if any) as are specified in the regulations.
713B Simple corporate bonds—2-part simple corporate bonds
prospectus
(1) A 2-part simple corporate bonds prospectus for an offer of simple
corporate bonds for issue by a body is the combination of the
following documents prepared by the issuing body:
(a) the base prospectus that covers the period during which the
offer is made;
(b) the offer-specific prospectus for the offer.
Prospectus
(2) A 2-part simple corporate bonds prospectus is taken to be a
prospectus for the purposes of this Act.
Base prospectus is not taken to be a prospectus in its own right
(3) For the purposes of this Act, a base prospectus is taken not to be a
prospectus in its own right.
Offer-specific prospectus is not taken to be a prospectus in its own
right
(4) For the purposes of this Act, an offer-specific prospectus is taken
not to be a prospectus in its own right.
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Lodgement of prospectus
(5) For the purposes of this Act, a 2-part simple corporate bonds
prospectus for an offer of simple corporate bonds is taken to have
been lodged with ASIC on the day the offer-specific prospectus for
the offer is lodged with ASIC.
Expiry date of prospectus
(6) For the purposes of this Act, the expiry date of a 2-part simple
corporate bonds prospectus for an offer of simple corporate bonds
is taken to be the expiry date for the offer-specific prospectus for
the offer.
Prospectus must be published on body’s website
(7) A base prospectus must be available on the issuing body’s website
throughout the covered period for the base prospectus (within the
meaning of section 713C).
(8) An offer-specific prospectus must be available on the issuing
body’s website throughout the application period for the
offer-specific prospectus.
713C Simple corporate bonds—base prospectus
Base prospectus
(1) If a body prepares and lodges with ASIC a document that satisfies
the conditions set out in subsections (2) and (3), the document is a
base prospectus for simple corporate bonds offered by the body
during the 3-year period (the covered period) beginning on the date
on which the document is lodged with ASIC.
Document must be expressed to be the base prospectus
(2) The document must state that it is the base prospectus for all offers
of simple corporate bonds made by the body during the covered
period.
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332 Corporations Act 2001
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Document to be read with offer-specific prospectus
(3) The document must state that:
(a) there will be an offer-specific prospectus for each offer of
simple corporate bonds during the covered period; and
(b) the disclosure document for each such offer will consist of:
(i) a base prospectus; and
(ii) the offer-specific prospectus for the offer.
Note: See also section 713B (2-part simple corporate bonds prospectus).
Replacement document
(4) If the document is a replacement document, the covered period is
the period:
(a) beginning on the date on which the replacement document is
lodged with ASIC; and
(b) ending at the end of the covered period for the original base
prospectus.
Content of base prospectus
(5) A base prospectus must contain the information specified in the
regulations.
(6) A base prospectus must set out the statements specified in the
regulations.
713D Simple corporate bonds—offer-specific prospectus
Offer-specific prospectus
(1) If:
(a) a body proposes to make a particular offer of simple
corporate bonds; and
(b) the body prepares and lodges with ASIC a document that
satisfies:
(i) the conditions set out in subsections (2), (3) and (4); and
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(ii) if the condition set out in subsection (5) is applicable—
that condition;
the document is an offer-specific prospectus for the offer.
Document must be expressed to be the offer-specific prospectus
(2) The document must state that it is the offer-specific prospectus for
the offer.
Expiry date
(3) The document must state that no simple corporate bonds will be
issued under the offer after the expiry date specified in the
document. The expiry date must not be later than 13 months after
the date the document is lodged with ASIC. The expiry date of a
replacement document must be the same as that of the original
document it replaces.
Note: Section 719A deals with replacement documents.
Document to be read with base prospectus
(4) The document must state that:
(a) there is a base prospectus that is applicable to the offer; and
(b) the disclosure document for each such offer will consist of:
(i) the offer-specific prospectus for the offer; and
(ii) the base prospectus.
Note: See also section 713B (2-part simple corporate bonds prospectus).
Minimum subscription—first offer
(5) If the offer is the first offer of simple corporate bonds made by the
issuing body during:
(a) if the base prospectus that is applicable to the offer is not a
replacement document—the covered period (within the
meaning of subsection 713C(1)) for the base prospectus; or
(b) if the base prospectus that is applicable to the offer is a
replacement document for the original base prospectus—the
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covered period (within the meaning of subsection 713C(1))
for the original base prospectus;
the document must state that the simple corporate bonds will not be
issued under the offer unless a minimum amount of $50 million is
raised under the offer. For the purpose of working out whether this
condition has been satisfied, a person who has agreed to take
simple corporate bonds as an underwriter is taken to have applied
for those simple corporate bonds.
Content of offer-specific prospectus
(6) An offer-specific prospectus must contain the information
specified in the regulations.
(7) An offer-specific prospectus must set out the statements specified
in the regulations.
Offer-specific prospectus may amend applicable base prospectus
(8) An offer-specific prospectus may include material that modifies or
supplements the applicable base prospectus.
713E Simple corporate bonds—prospectus may refer to other
material lodged with ASIC
(1) Instead of setting out information that is contained in a document
(the lodged document) that has been lodged with ASIC, a base
prospectus or an offer-specific prospectus may simply refer to the
lodged document. The reference must:
(a) identify the lodged document or the part of the lodged
document that contains the information; and
(b) inform people of their right to obtain a copy of the lodged
document (or part) under subsection (5).
(2) The reference must also include:
(a) if the information is primarily of interest to professional
analysts or advisers or investors with similar specialist
information needs:
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(i) a description of the contents of the lodged document (or
part); and
(ii) a statement to the effect that the information in the
lodged document (or part) is primarily of interest to
those people; or
(b) in any other case—sufficient information about the contents
of the lodged document to allow a person to whom the offer
is made to decide whether to obtain a copy of the lodged
document (or part).
(3) The lodged document (or part) referred to under subsection (1) is
taken to be included in the base prospectus, or the offer-specific
prospectus, as the case may be.
(4) A person who wishes to take advantage of subsection (1) may
lodge a document with ASIC even if this Act does not require the
document to be lodged.
(5) If the base prospectus, or the offer-specific prospectus, as the case
may be, is taken to include a lodged document, or part of a lodged
document, under subsection (1), the person making the offer must
give a copy of the lodged document (or part) free of charge to
anyone who asks for it during:
(a) in the case of a base prospectus—the covered period for the
base prospectus (within the meaning of section 713C); or
(b) in the case of an offer-specific prospectus—the application
period for the offer-specific prospectus.
714 Contents of profile statement
(1) A profile statement must:
(a) identify the body and the nature of the securities; and
(b) state the nature of the risks involved in investing in the
securities; and
(c) give details of all amounts payable in respect of the securities
(including any amounts by way of fee, commission or
charge); and
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(d) state that the person given the profile statement is entitled to
a copy of the prospectus free of charge; and
(e) state that:
(i) a copy of the statement has been lodged with ASIC; and
(ii) ASIC takes no responsibility for the content of the
statement; and
(f) give any other information required by the regulations or by
ASIC approval under subsection 709(3).
(2) The profile statement must state that no securities will be issued on
the basis of the statement after the expiry date specified in the
statement. The expiry date must not be later than 13 months after
the date of the prospectus. The expiry date of a replacement
statement must be the same as that of the original statement it
replaces.
Note 1: Subsection 716(1) requires the profile statement to be dated.
Note 2: Section 719 deals with supplementary and replacement profile
statements.
715 Contents of offer information statement
(1) An offer information statement for the issue of a body’s securities
must:
(a) identify the body and the nature of the securities; and
(b) describe the body’s business; and
(c) describe what the funds raised by the offers are to be used
for; and
(d) state the nature of the risks involved in investing in the
securities; and
(e) give details of all amounts payable in respect of the securities
(including any amounts by way of fee, commission or
charge); and
(f) state that:
(i) a copy of the statement has been lodged with ASIC; and
(ii) ASIC takes no responsibility for the content of the
statement; and
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(g) state that the statement is not a prospectus and that it has a
lower level of disclosure requirements than a prospectus; and
(h) state that investors should obtain professional investment
advice before accepting the offer; and
(i) include a copy of a financial report for the body; and
(j) include any other information that the regulations require to
be included in the statement.
(2) The financial report included under paragraph (1)(i) must:
(a) be a report for a 12 month period and have a balance date that
occurs within the last 6 months before the securities are first
offered under the statement; and
(b) be prepared in accordance with the accounting standards; and
(c) be audited.
(3) The statement must state that no securities will be issued on the
basis of the statement after the expiry date specified in the
statement. The expiry date must not be later than 13 months after
the date of the statement. The expiry date of a replacement
statement must be the same as that of the original statement it
replaces.
Note 1: Subsection 716(1) requires the statement to be dated.
Note 2: Section 719 deals with replacement statements.
715A Presentation etc. of disclosure documents
(1) The information in a disclosure document must be worded and
presented in a clear, concise and effective manner.
Note: If this subsection is contravened, ASIC may make a stop order under
section 739.
(2) A contravention of subsection (1) is not an offence.
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716 Disclosure document date and consents
Date of disclosure document
(1) A disclosure document must be dated. The date is the date on
which it is lodged with ASIC.
Date for 2-part simple corporate bonds prospectus
(1A) Subsection (1) does not apply to a 2-part simple corporate bonds
prospectus.
(1B) For the purposes of this Act, the date of a 2-part simple corporate
bonds prospectus for an offer of simple corporate bonds is taken to
be the date on which the offer-specific prospectus for the offer is
lodged with ASIC.
Consent of person to whom statement attributed
(2) A disclosure document may only include a statement by a person,
or a statement said in the document to be based on a statement by a
person, if:
(a) the person has consented to the statement being included in
the document in the form and context in which it is included;
and
(b) the document states that the person has given this consent;
and
(c) the person has not withdrawn this consent before the
document is lodged with ASIC.
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Section 717
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Division 5—Procedure for offering securities
717 Overview of procedure for offering securities
The following table summarises what a person who wants to offer
securities must do to make an offer of securities that needs
disclosure to investors under this Part and gives signposts to
relevant sections:
Offering securities (disclosure documents and procedure)
Action required Sections Comments and related sections
1 Prepare disclosure
document, making sure that
it:
sets out all the
information required
does not contain any
misleading or deceptive
statements
is dated
and that the directors
consent to the disclosure
document.
710
711
712
713
713C
713D
713E
714
715
716
Section 728 prohibits offering
securities under a disclosure
document that is materially
deficient.
Section 729 deals with the
liability for breaches of this
prohibition.
Sections 731, 732 and 733 set out
defences.
2 Lodge the disclosure
document with ASIC
718 Subsection 727(3) prohibits
processing applications for
non-quoted securities for 7 days
after the disclosure document is
lodged.
3 Offer the securities, making
sure that the offer and any
application form is either
included in or
accompanies:
the disclosure
document; or
a profile statement if
721 Sections 727 and 728 make it an
offence to:
offer securities without a
disclosure document
offer securities if the
disclosure document is
materially deficient.
Subsection 729(3) deals with
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Part 6D.2 Disclosure to investors about securities
Division 5 Procedure for offering securities
Section 717
340 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Offering securities (disclosure documents and procedure)
Action required Sections Comments and related sections
ASIC has approved the
use of a profile
statement for offers of
that kind.
liability on the prospectus if a
profile statement is used.
The securities hawking provisions
(section 736) restrict the way in
which the securities can be
offered.
4 If it is found that the
disclosure document
lodged was deficient or a
significant new matter
arises, either:
lodge a supplementary
or replacement
document under
section 719 or 719A; or
return money to
applicants under
section 724.
719
719A
724
Section 728 prohibits making
offers after becoming aware of a
material deficiency in the
disclosure document or a
significant new matter.
Section 730 requires people liable
on the disclosure document to
inform the person making the
offer about material deficiencies
and new matters.
5 Hold application money
received on trust until the
securities are issued or
transferred or the money
returned.
722 Investors may have a right to have
their money returned if certain
events occur (see sections 724,
737 and 738).
6 Issue or transfer the
securities, making sure
that:
the investor used an
application form
distributed with the
disclosure document;
and
the disclosure document
is current and not
materially deficient;
and
any minimum
723 Section 721 says which disclosure
document must be distributed
with the application form.
Section 729 identifies the people
who may be liable if:
securities are issued in
response to an improper
application form; or
the disclosure document is not
current or is materially
deficient.
Sections 731, 732 and 733
provide defences for the
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Section 718
Corporations Act 2001 341
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Offering securities (disclosure documents and procedure)
Action required Sections Comments and related sections
subscription condition
has been satisfied.
contraventions.
Section 737 provides remedies for
an investor.
718 Lodging of disclosure document
(1) A disclosure document to be used for an offer of securities must be
lodged with ASIC.
Note 1: Subsection 727(3) makes it an offence to process applications for
non-quoted securities under an offer that needs a disclosure document
until 7 days after the disclosure document is lodged.
Note 2: See section 720 for the consents that need to be obtained before
lodgment.
Note 3: Section 351 says what signatures are necessary for documents that are
to be lodged with ASIC.
(2) This section does not apply to a 2-part simple corporate bonds
prospectus.
Note: See section 713B (2-part simple corporate bonds prospectus).
719 Lodging supplementary or replacement document—general
Need for a supplementary or replacement document
(1) If the person making the offer becomes aware of:
(a) a misleading or deceptive statement in the disclosure
document; or
(b) an omission from the disclosure document of information
required by section 710, 711, 712, 713, 714 or 715; or
(c) a new circumstance that:
(i) has arisen since the disclosure document was lodged;
and
(ii) would have been required by section 710, 711, 712,
713, 714 or 715 to be included in the disclosure
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Section 719
342 Corporations Act 2001
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document if it had arisen before the disclosure
document was lodged;
that is materially adverse from the point of view of an investor, the
person may lodge a supplementary or replacement document with
ASIC.
Note 1: Section 728 makes it an offence to continue making offers after the
person has become aware of a misleading or deceptive statement,
omission or new circumstance that is materially adverse from the
point of view of an investor unless the deficiency is corrected.
Note 2: Because of section 712, a prospectus may be taken to include
information in another document. This should be taken into account
when considering whether the prospectus is deficient.
Note 3: The power to issue a supplementary or replacement document is not
limited to the situations dealt with in this section.
Note 4: This section applies to a document that has already been previously
supplemented or replaced.
Note 5: See section 720 for the consents that need to be obtained before
lodgment.
(1A) If the person making the offer becomes aware that information in
the disclosure document is not worded and presented in a clear,
concise and effective manner, the person may lodge a
supplementary or replacement document with ASIC.
Form of supplementary document
(2) At the beginning of a supplementary document, there must be:
(a) a statement that it is a supplementary document; and
(b) an identification of the disclosure document it supplements;
and
(c) an identification of any previous supplementary documents
lodged with ASIC in relation to the offer; and
(d) a statement that it is to be read together with the disclosure
document it supplements and any previous supplementary
documents.
The supplementary document must be dated. The date is the date
on which it is lodged with ASIC.
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Section 719
Corporations Act 2001 343
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Form of replacement document
(3) At the beginning of a replacement document, there must be:
(a) a statement that it is a replacement document; and
(b) an identification of the disclosure document it replaces.
The replacement document must be dated. The date is the date on
which it is lodged with ASIC.
Consequences of lodging a supplementary document
(4) If a supplementary document is lodged with ASIC, the disclosure
document is taken to be the disclosure document together with the
supplementary document for the purposes of the application of this
Chapter to events that occur after the lodgment.
Note: This subsection means, for example, that offers made after lodgment
of the supplementary document must be accompanied by copies of
both the original disclosure document and the supplementary
document.
Consequences of lodging a replacement document
(5) If a replacement document is lodged with ASIC, the disclosure
document is taken to be the replacement document for the purposes
of the application of this Chapter to events that occur after the
lodgment.
Note: This subsection means, for example, that offers made after lodgment
of the replacement document must be accompanied by copies of the
replacement document and not the original disclosure document.
Section does not apply to 2-part simple corporate bonds
prospectus
(6) This section does not apply to a 2-part simple corporate bonds
prospectus.
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Division 5 Procedure for offering securities
Section 719A
344 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
719A Lodging supplementary or replacement document—2-part
simple corporate bonds prospectus
Need for a supplementary or replacement document
(1) If the person making an offer of simple corporate bonds under a
2-part simple corporate bonds prospectus becomes aware of:
(a) a misleading or deceptive statement in the 2-part simple
corporate bonds prospectus; or
(b) an omission from the 2-part simple corporate bonds
prospectus of information required by section 713C, 713D or
713E; or
(c) a new circumstance that:
(i) has arisen since the 2-part simple corporate bonds
prospectus was lodged with ASIC; and
(ii) would have been required by section 713C, 713D or
713E to be included in the 2-part simple corporate
bonds prospectus if it had arisen before the 2-part
simple corporate bonds prospectus was lodged;
that is materially adverse from the point of view of an investor, the
person may:
(d) if the statement, omission or circumstance relates to the base
prospectus component of the 2-part simple corporate bonds
prospectus:
(i) include material in an offer-specific prospectus that
supplements or modifies the base prospectus; or
(ii) lodge a replacement document with ASIC; or
(e) if the statement, omission or circumstance relates to the
offer-specific prospectus component of the 2-part simple
corporate bonds prospectus—lodge a supplementary or
replacement document with ASIC.
Note 1: Section 728 makes it an offence to continue making offers after the
person has become aware of a misleading or deceptive statement,
omission or new circumstance that is materially adverse from the
point of view of an investor unless the deficiency is corrected.
Note 2: Because of section 713E, a 2-part simple corporate bonds prospectus
may be taken to include information in another document. This should
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Section 719A
Corporations Act 2001 345
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be taken into account when considering whether the prospectus is
deficient.
Note 3: A base prospectus may be supplemented or modified by the
offer-specific prospectus for a particular offer, see
subsection 713D(7).
Note 4: The power to issue a supplementary or replacement document is not
limited to the situations dealt with in this section.
Note 5: This section applies to a document that has already been previously
supplemented or replaced.
Note 6: See section 720 for the consents that need to be obtained before
lodgement.
(2) If the person making the offer becomes aware that information in
the base prospectus component of the 2-part simple corporate
bonds prospectus is not worded and presented in a clear, concise
and effective manner, the person may lodge a replacement
document with ASIC.
Note: A base prospectus may be supplemented or modified by the
offer-specific prospectus for a particular offer, see
subsection 713D(7).
(3) If the person making the offer becomes aware that information in
the offer-specific prospectus component of the 2-part simple
corporate bonds prospectus is not worded and presented in a clear,
concise and effective manner, the person may lodge a
supplementary or replacement document with ASIC.
Form of supplementary document for offer-specific prospectus
(4) At the beginning of a supplementary document for an
offer-specific prospectus, there must be:
(a) a statement that it is a supplementary document; and
(b) an identification of the offer-specific prospectus it
supplements; and
(c) an identification of any previous supplementary documents
lodged with ASIC in relation to the offer; and
(d) a statement that it is to be read together with:
(i) the offer-specific prospectus it supplements; and
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Section 719A
346 Corporations Act 2001
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(ii) any previous supplementary documents; and
(iii) the base prospectus that covers the period during which
the offer is made.
The supplementary document must be dated. The date is the date
on which the document is lodged with ASIC.
Form of replacement document for a base prospectus
(5) At the beginning of a replacement document for a base prospectus,
there must be:
(a) a statement that it is a replacement document; and
(b) an identification of the base prospectus it replaces.
The replacement document must be dated. The date is the date on
which the document is lodged with ASIC.
Form of replacement document for an offer-specific prospectus
(6) At the beginning of a replacement document for an offer-specific
prospectus, there must be:
(a) a statement that it is a replacement document; and
(b) an identification of the offer-specific prospectus it replaces.
The replacement document must be dated. The date is the date on
which the document is lodged with ASIC.
Consequences of lodging a supplementary document for an
offer-specific prospectus
(7) If a supplementary document is lodged with ASIC in relation to an
offer-specific prospectus, the offer-specific prospectus is taken to
be the offer-specific prospectus together with the supplementary
document for the purposes of the application of this Chapter to
events that occur after the lodgement.
Note: This subsection means, for example, that offers made after lodgement
of the supplementary document must be accompanied by copies of
both the original offer-specific prospectus and the supplementary
document.
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Section 720
Corporations Act 2001 347
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Consequences of lodging a replacement document for a base
prospectus
(8) If a replacement document is lodged with ASIC in relation to a
base prospectus, the base prospectus is taken to be the replacement
document for the purposes of the application of this Chapter to
events that occur after the lodgement.
Note: This subsection means, for example, that offers made after lodgement
of the replacement document must be accompanied by copies of the
replacement document and not the original base prospectus.
Consequences of lodging a replacement document for an
offer-specific prospectus
(9) If a replacement document is lodged with ASIC in relation to an
offer-specific prospectus, the offer-specific prospectus is taken to
be the replacement document for the purposes of the application of
this Chapter to events that occur after the lodgement.
Note: This subsection means, for example, that offers made after lodgement
of the replacement document must be accompanied by copies of the
replacement document and not the original offer-specific prospectus.
720 Consents needed for lodgment
The lodgment of a disclosure document, or a supplementary or
replacement document, for the offer of a body’s securities requires
the consent of:
Consents required for lodgment [operative]
Type of offer People whose consent is
required
1
Issue offers
offer of securities for issue
(other than an offer of simple
corporate bonds under a 2-part
simple corporate bonds
prospectus)
every director of the body
every person named in the
document as a proposed
director of the body
if securities interests in a
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Section 720
348 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Consents required for lodgment [operative]
Type of offer People whose consent is
required
managed investment scheme
made available by a body—
every director of that body
if securities interests in a
managed investment scheme
made available by an
individual—that individual
1A
Simple corporate bonds issue
offers
offer of simple corporate bonds
under a 2-part simple corporate
bonds prospectus
every director of the body
every person named in the
document as a proposed
director of the body
if simple corporate bonds in a
managed investment scheme
made available by a body—
every director of that body
if simple corporate bonds in a
managed investment scheme
made available by an
individual—that individual
2
sale offers (sale by controller)
offer of securities for sale that
needs a disclosure document
because of subsection 707(2)
if seller an individual—that
individual
if seller a body—every
director of the body
3
sale offers (sale amounting to
indirect issue)
offer of securities for sale that
needs a disclosure document
because of subsection 707(3)
every director of the body
whose securities are offered
for sale
if seller an individual—that
individual
if seller a body—every
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Section 721
Corporations Act 2001 349
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Consents required for lodgment [operative]
Type of offer People whose consent is
required
director of the body
4
sale offers (sale amounting to
indirect sale by controller)
offer of securities for sale that
needs a disclosure document
because of subsection 707(5)
if seller an individual—that
individual
if seller a body—every
director of the body
if individual controls the body
whose securities are offered
for sale—that individual
if body controls the body
whose securities are offered
for sale—every director of the
controlling body
721 Offer must be made in, or accompanied by, the disclosure
document
Offers using prospectus alone
(1) Offers of securities for which a prospectus is being used must be
made in, or accompanied by, the prospectus.
Note 1: Subsection 727(1) makes it an offence to make an offer of securities
unless the offer is made in or accompanied by the disclosure
document and subsection 723(1) makes it an offence to issue
securities unless they are applied for on a form that was issued in or
together with the disclosure document.
Note 2: Section 736 makes it an offence to make unsolicited offers in a way
that amounts to securities hawking.
Note 3: Section 728 makes it an offence for a person to offer securities if the
disclosure document is deficient in a way that is material from the
point of view of an investor.
(1A) Subsection (1) does not apply to the extent that subsection (2)
allows a profile statement to be used instead of a prospectus.
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Section 721
350 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: A defendant bears an evidential burden in relation to the matter in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
Offers using prospectus and profile statement
(2) An offer of securities may be made in, or accompanied by, a
profile statement if:
(a) under subsection 709(3), ASIC has approved the making of
offers of that kind with a profile statement instead of a
prospectus; and
(b) the profile statement complies with the requirements
specified in ASIC approval.
(3) If the offer that is made to a person is made in or accompanied by a
profile statement, the person making the offer must give the person
a copy of the prospectus free of charge if the person asks for it.
Offers using offer information statement
(4) Offers for which an offer information statement is being used must
be made in, or accompanied by, the offer information statement.
Note 1: Subsection 727(1) makes it an offence to make an offer of securities
unless the offer is made in or accompanied by the disclosure
document and subsection 723(1) makes it an offence to issue
securities unless they are applied for on a form that was issued in or
together with the disclosure document.
Note 2: Section 736 makes it an offence to make unsolicited offers in a way
that amounts to securities hawking.
Note 3: Section 728 makes it an offence for a person to offer securities if the
disclosure document is deficient in a way that is material from the
point of view of an investor.
Offence
(5) A person commits an offence if the person intentionally or
recklessly contravenes subsection (1) or (4).
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Section 722
Corporations Act 2001 351
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722 Application money to be held on trust
(1) If a person offers securities for issue or sale under a disclosure
document, the person must hold:
(a) all application money received from people applying for
securities under the disclosure document; and
(b) all other money paid by them on account of the securities
before they are issued or transferred;
in trust under this section for the applicants until:
(c) the securities are issued or transferred; or
(d) the money is returned to the applicants.
(2) If the application money needs to be returned to an applicant, the
person must return the money as soon as practicable.
(3) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
723 Issuing or transferring the securities under a disclosure
document
Applications must be made on form included in, or accompanied
by, disclosure document
(1) If an offer of securities needs a disclosure document, the securities
may only be issued or transferred in response to an application
form. The securities may only be issued or transferred if the person
issuing or transferring them has reasonable grounds to believe that:
(a) the form was included in, or accompanied by:
(i) the disclosure document; or
(ii) if subsection 721(2) allows a profile statement to be
used—the prospectus or the profile statement;
when the form was distributed by the person issuing or
transferring the securities; or
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Section 723
352 Corporations Act 2001
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(b) the form was copied, or directly derived, by the person
making the application from a form referred to in
paragraph (a).
Minimum subscription condition must be fulfilled before issue or
transfer
(2) If a disclosure document for an offer of securities states that the
securities will not be issued or transferred unless:
(a) applications for a minimum number of the securities are
received; or
(b) a minimum amount is raised;
the person making the offer must not issue or transfer any of the
securities until that condition is satisfied. For the purpose of
working out whether the condition has been satisfied, a person who
has agreed to take securities as underwriter is taken to have applied
for those securities.
Note 1: Under section 722, the application money must be held in trust until
the issue or transfer of the securities.
Note 2: This subsection prevents the issue or transfer of the securities not only
to those who apply for them in response to the disclosure document
but also to those who do not need to apply for them (for example,
because they are to take the securities under an underwriting
agreement).
Issue or transfer void if quotation condition not fulfilled
(3) If a disclosure document for an offer of securities states or implies
that the securities are to be quoted on a financial market (whether
in Australia or elsewhere) and:
(a) an application for the admission of the securities to quotation
is not made within 7 days after the date of the disclosure
document; or
(b) the securities are not admitted to quotation within 3 months
after the date of the disclosure document;
then:
(c) an issue or transfer of securities in response to an application
made under the disclosure document is void; and
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Section 724
Corporations Act 2001 353
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(d) the person offering the securities must return the money
received by the person from the applicants as soon as
practicable.
Strict liability offences
(4) An offence based on subsection (1), (2) or (3) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
724 Choices open to person making the offer if disclosure document
condition not met or disclosure document defective
(1) If a person offers securities under a disclosure document and:
(a) the disclosure document states that the securities will not be
issued or transferred unless:
(i) applications for a minimum number of the securities are
received; or
(ii) a minimum amount raised;
and that condition is not satisfied within 4 months after the
date of the disclosure document; or
(b) the disclosure document states or implies that the securities
are to be quoted on a financial market (whether in Australia
or elsewhere) and:
(i) an application for the admission to quotation is not
made within 7 days after the date of the disclosure
document; or
(ii) the securities are not admitted to quotation within 3
months after the date of the disclosure document; or
(c) the person becomes aware that:
(i) the disclosure document contains a misleading or
deceptive statement; or
(ii) there is an omission from the disclosure document of
information required by section 710, 711, 712, 713,
713C, 713D, 713E, 714 or 715;
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Section 724
354 Corporations Act 2001
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that is materially adverse from the point of view of an
investor; or
(d) the person becomes aware of a new circumstance that:
(i) has arisen since the disclosure document was lodged;
and
(ii) would have been required by section 710, 711, 712,
713, 713C, 713D, 713E, 714 or 715 to be included in
the disclosure document if it had arisen before the
disclosure document was lodged; and
(iii) is materially adverse from the point of view of an
investor;
the person must deal under subsection (2) with any applications for
the securities made under the disclosure document that have not
resulted in an issue or transfer of the securities. For the purpose of
working out whether a condition referred to in paragraph (a) has
been satisfied, a person who has agreed to take securities as
underwriter is taken to have applied for those securities.
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) The person must either:
(a) repay the money received by the person from the applicants;
or
(b) give the applicants:
(i) the documents required by subsection (3); and
(ii) 1 month to withdraw their application and be repaid; or
(c) issue or transfer the securities to the applicants and give
them:
(i) the documents required by subsection (3); and
(ii) 1 month to withdraw their application and be repaid.
Note: Sections 719 and 719A deal with lodging supplementary and
replacement documents. Section 728 makes it an offence for a person
to offer securities if the disclosure document is deficient in a way that
is material from the point of view of an investor.
(3) The documents to be given are set out in the following table:
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Section 724
Corporations Act 2001 355
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Documents to be given [operative]
Circumstances Documents
1 the sole disclosure document is a
prospectus (other than a 2-part simple
corporate bonds prospectus)
a supplementary or
replacement prospectus
that corrects the
deficiency or changes
the terms of the offer
1A the disclosure document is a 2-part
simple corporate bonds prospectus
a supplementary or
replacement document
that corrects the
deficiencies or changes
the terms of the offer
2 the disclosure documents are a
prospectus and a profile statement
and subsection (1) applies to the
prospectus
a statement that sets
out the changes needed
to the prospectus to
correct the deficiency
or change the terms of
offer; and
a statement that the
person is entitled to a
copy of the prospectus
free of charge
3 the disclosure documents are a
prospectus and a profile statement
and subsection (1) applies to the
profile statement
Note that item 2 and this item may
both apply to the offer.
a supplementary or
replacement profile
statement that corrects
the deficiency or
changes the terms of
the offer
4 the disclosure document is an offer
information statement
a supplementary or
replacement offer
information statement
that corrects the
deficiency or changes
the terms of the offer
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Section 725
356 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
725 Expiration of disclosure document
(1) If a person offers securities under a disclosure document and the
disclosure document passes its expiry date, the person must deal
with applications for the securities under the document in
accordance with subsections (2) and (3).
(1A) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) If an application is received on or before the expiry date, the
person may issue or transfer securities to the applicant.
Note: Subsection 723(1) (when read with subsections 719(4) and (5))
requires the person issuing or transferring the securities to have
reasonable grounds to believe that the application form was included
in, or accompanied by, a disclosure document that was current at the
time.
(3) If an application is received after the expiry date, the person must
either:
(a) return any money received by the person from the applicant;
or
(b) give the applicant:
(i) a new disclosure document; and
(ii) 1 month to withdraw their application and be repaid; or
(c) issue or transfer the securities to the applicant and give them:
(i) a new disclosure document; and
(ii) 1 month to withdraw their application and be repaid.
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Fundraising Chapter 6D
Prohibitions, liabilities and remedies Part 6D.3
Prohibitions and liabilities Division 1
Section 726
Corporations Act 2001 357
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6D.3—Prohibitions, liabilities and remedies
Division 1—Prohibitions and liabilities
726 Offering securities in a body that does not exist
A person must not offer securities of a body that has not been
formed or does not exist if the offer would need disclosure to
investors under Part 6D.2 if the body did exist. This is so even if it
is proposed to form or incorporate the body.
727 Offering securities without a current disclosure document
Offer of securities needs lodged disclosure document
(1) A person must not make an offer of securities, or distribute an
application form for an offer of securities, that needs disclosure to
investors under Part 6D.2 unless a disclosure document for the
offer has been lodged with ASIC.
Offer form to be included in or accompanied by disclosure
document
(2) A person must not make an offer of securities, or distribute an
application form for an offer of securities, that needs disclosure to
investors under Part 6D.2 unless:
(a) if a prospectus is used for the offer—the offer or form is:
(i) included in the prospectus; or
(ii) accompanied by a copy of the prospectus; or
(b) if both a prospectus and a profile statement are used for the
offer—the offer or form is:
(i) included in the prospectus or profile statement; or
(ii) accompanied by a copy of the prospectus or profile
statement; or
(c) if an offer information statement is used for the offer—the
offer or form is:
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Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 727
358 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(i) included in the statement; or
(ii) accompanied by a copy of the statement.
Note: Sections 706, 707, 708, 708AA and 708A say when the offer needs
disclosure to investors under Part 6D.2.
Non-quoted securities—waiting period after lodgment before
processing applications for securities
(3) A person must not accept an application for, or issue or transfer,
non-quoted securities offered under a disclosure document until the
period of 7 days after lodgment of the disclosure document has
ended. ASIC may extend the period by notice in writing to the
person offering the securities. The period as extended must end no
more than 14 days after lodgment.
Simple corporate bonds
(3A) Subsection (3) does not apply in relation to an offer of securities
under a 2-part simple corporate bonds prospectus if the securities
are in the same class as existing securities that are quoted on a
prescribed financial market immediately before the application
period for the prospectus but for differences as to:
(a) the fixed term of the securities (if any); or
(b) the rate at which interest is payable under the securities; or
(c) the dates on which the holders are to be paid interest under
the securities.
Issue or transfer not to breach section 708 ceiling
(4) If a person relies on subsection 708(1) to make offers of securities
without disclosure to investors under Part 6D.2, the person must
not issue or transfer securities without disclosure to investors under
that Part if the issue or transfer would result in a breach of the 20
investors ceiling or the $2 million ceiling (see subsections 708(3),
(4), (5), (6) and (7)).
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Fundraising Chapter 6D
Prohibitions, liabilities and remedies Part 6D.3
Prohibitions and liabilities Division 1
Section 728
Corporations Act 2001 359
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Circumstances in which a person is taken not to contravene this
section
(5) If:
(a) a person relies on subsection 708AA(2) or 708A(5) to make
offers of securities for issue or sale without disclosure to
investors under Part 6D.2; and
(b) the notice given under that subsection purported to comply
with subsection 708AA(7) or 708A(6) but did not actually
comply with subsection 708AA(7) or 708A(6);
the person is taken not to contravene this section.
728 Misstatement in, or omission from, disclosure document
Misleading or deceptive statements, omissions and new matters
(1) A person must not offer securities under a disclosure document if
there is:
(a) a misleading or deceptive statement in:
(i) the disclosure document; or
(ii) any application form that accompanies the disclosure
document; or
(iii) any document that contains the offer if the offer is not in
the disclosure document or the application form; or
(b) an omission from the disclosure document of material
required by section 710, 711, 712, 713, 713C, 713D, 713E,
714 or 715; or
(c) a new circumstance that:
(i) has arisen since the disclosure document was lodged;
and
(ii) would have been required by section 710, 711, 712,
713, 713C, 713D, 713E, 714 or 715 to be included in
the disclosure document if it had arisen before the
disclosure document was lodged.
Note 1: The person may make further offers after making up the deficiency in
the current disclosure document by lodging a supplementary or
replacement document.
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Chapter 6D Fundraising
Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 729
360 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note 2: See sections 731, 732 and 733 for defences.
Note 3: Section 1041H imposes liabilities in respect of other conduct related
to the offering of the securities.
Forecasts and other forward-looking statements
(2) A person is taken to make a misleading statement about a future
matter (including the doing of, or refusing to do, an act) if they do
not have reasonable grounds for making the statement. This
subsection does not limit the meaning of a reference to a
misleading statement or a statement that is misleading in a material
particular.
Offence if statement, omission or new matter materially adverse
(3) A person commits an offence if they contravene subsection (1)
and:
(a) the misleading or deceptive statement; or
(b) the omission or new circumstance;
is materially adverse from the point of view of an investor.
729 Right to recover for loss or damage resulting from
contravention
Right to compensation
(1) A person who suffers loss or damage because an offer of securities
under a disclosure document contravenes subsection 728(1) may
recover the amount of the loss or damage from a person referred to
in the following table if the loss or damage is one that the table
makes the person liable for. This is so even if the person did not
commit, and was not involved in, the contravention.
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Fundraising Chapter 6D
Prohibitions, liabilities and remedies Part 6D.3
Prohibitions and liabilities Division 1
Section 729
Corporations Act 2001 361
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
People liable on disclosure document [operative]
These people... are liable for loss or damage caused
by...
1 the person making the offer any contravention of subsection 728(1)
in relation to the disclosure document
2 each director of the body making
the offer if the offer is made by a
body
any contravention of subsection 728(1)
in relation to the disclosure document
3 a person named in the disclosure
document with their consent as a
proposed director of the body
whose securities are being offered
any contravention of subsection 728(1)
in relation to the disclosure document
4 an underwriter (but not a
sub-underwriter) to the issue or
sale named in the disclosure
document with their consent
any contravention of subsection 728(1)
in relation to the disclosure document
5 a person named in the disclosure
document with their consent as
having made a statement:
(a) that is included in the
disclosure document; or
(b) on which a statement made in
the disclosure document is
based
the inclusion of the statement in the
disclosure document
6 a person who contravenes, or is
involved in the contravention of,
subsection 728(1)
that contravention
Note: Item 2—director includes a shadow director (see section 9).
(1A) Table items 2 and 3 in subsection (1) do not apply to an offer of
simple corporate bonds under a 2-part simple corporate bonds
prospectus.
(2) A person who acquires securities as a result of an offer that was
accompanied by a profile statement is taken to have acquired the
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Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 730
362 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
securities in reliance on both the profile statement and the
prospectus for the offer.
(3) An action under subsection (1) may begin at any time within 6
years after the day on which the cause of action arose.
(4) This Part does not affect any liability that a person has under any
other law.
Note: Conduct that contravenes subsection 728(1) is expressly excluded
from the operation of section 1041H.
730 People liable on disclosure document to inform person making
the offer about deficiencies in the disclosure document
(1) A person referred to in the table in section 729 must notify the
person making the offer in writing as soon as practicable if they
become aware during the application period that:
(a) a material statement in the disclosure document is misleading
or deceptive; or
(b) there is a material omission from the disclosure document of
material required by section 710, 711, 712, 713, 713C, 713D,
713E, 714 or 715; or
(c) a material new circumstance that:
(i) has arisen since the disclosure document was lodged;
and
(ii) would have been required by section 710, 711, 712,
713, 713C, 713D, 713E, 714 or 715 to be included in
the disclosure document if it had arisen before the
disclosure document was lodged.
(1A) For the purposes of subsection (1) of this section, disregard
subsection 729(1A).
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
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Prohibitions, liabilities and remedies Part 6D.3
Prohibitions and liabilities Division 1
Section 731
Corporations Act 2001 363
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
731 Due diligence defence for prospectuses
Reasonable inquiries and reasonable belief—statements
(1) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention of
subsection 728(1), because of a misleading or deceptive statement
in a prospectus if the person proves that they:
(a) made all inquiries (if any) that were reasonable in the
circumstances; and
(b) after doing so, believed on reasonable grounds that the
statement was not misleading or deceptive.
Reasonable inquiries and reasonable belief—omissions
(2) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention of
subsection 728(1), because of an omission from a prospectus in
relation to a particular matter if the person proves that they:
(a) made all inquiries (if any) that were reasonable in the
circumstances; and
(b) after doing so, believed on reasonable grounds that there was
no omission from the prospectus in relation to that matter.
732 Lack of knowledge defence for offer information statements and
profile statements
Not knowing statement misleading or deceptive
(1) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention of
subsection 728(1), because of a misleading or deceptive statement
in an offer information statement or profile statement if the person
proves that they did not know that the statement was misleading or
deceptive.
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Chapter 6D Fundraising
Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 733
364 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Not knowing there was an omission
(2) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention of
subsection 728(1), because of an omission from an offer
information statement or profile statement in relation to a particular
matter if the person proves that they did not know that there was an
omission from the statement in relation to that matter.
733 General defences for all disclosure documents
Reasonable reliance on information given by someone else—
statements and omissions
(1) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention against
subsection 728(1), because of a misleading or deceptive statement
in, or an omission from, a disclosure document if the person proves
that they placed reasonable reliance on information given to them
by:
(a) if the person is a body—someone other than a director,
employee or agent of the body; or
(b) if the person is an individual—someone other than an
employee or agent of the individual.
(2) For the purposes of subsection (1), a person is not the agent of a
body or individual merely because they perform a particular
professional or advisory function for the body or individual.
Withdrawal of consent—statements and omissions
(3) A person who is named in a disclosure document as:
(a) being a proposed director or underwriter; or
(b) making a statement included in the document; or
(c) making a statement on the basis of which a statement is
included in the document;
does not commit an offence against subsection 728(3), and is not
liable under section 729 for a contravention against
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Prohibitions and liabilities Division 1
Section 734
Corporations Act 2001 365
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
subsection 728(1), because of a misleading or deceptive statement
in, or an omission from, a disclosure document if the person proves
that they publicly withdrew their consent to being named in the
document in that way.
Unawareness of new matter
(4) A person does not commit an offence against subsection 728(3),
and is not liable under section 729 for a contravention of
subsection 728(1), because of a new circumstance that has arisen
since the disclosure document was lodged if the person proves that
they were not aware of the matter.
734 Restrictions on advertising and publicity
No advertising or publicity for offers covered by the exception for
20 issues in 12 months
(1) A person must not:
(a) advertise; or
(b) publish a statement that directly or indirectly refers to;
an offer, or intended offer, of securities that would need a
disclosure document but for subsection 708(1) (exception for 20
issues in 12 months).
Advertising or publicity for offers that need a disclosure document
(2) If an offer, or intended offer, of securities needs a disclosure
document, a person must not:
(a) advertise the offer or intended offer; or
(b) publish a statement that:
(i) directly or indirectly refers to the offer or intended
offer; or
(ii) is reasonably likely to induce people to apply for the
securities.
(2A) Subsection (2) does not apply if the advertisement or publication is
authorised by subsection (4), (5), (6) or (7).
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Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 734
366 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Note: A defendant bears an evidential burden in relation to the matter in
subsection (2A), see subsection 13.3(3) of the Criminal Code.
Strict liability offences
(2B) An offence based on subsection (1) or (2) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
Image advertising
(3) In deciding whether a statement:
(a) indirectly refers to an offer, or intended offer, of securities; or
(b) is reasonably likely to induce people to apply for securities;
have regard to whether the statement:
(c) forms part of the normal advertising of a body’s products or
services and is genuinely directed at maintaining its existing
customers, or attracting new customers, for those products or
services; and
(d) communicates information that materially deals with the
affairs of the body; and
(e) is likely to encourage investment decisions being made on
the basis of the statement rather than on the basis of
information contained in a disclosure document.
Dissemination of disclosure document
(4) A person may disseminate a disclosure document that has been
lodged with ASIC without contravening subsection (2). This does
not apply if an order under section 739 is in force in relation to the
offer.
Note: Subsection (4) has an extended operation in relation to recognised
offers under Chapter 8 (see subsection 1200L(1)).
Advertising and publicity before the disclosure document is lodged
(5) Before the disclosure document is lodged, an advertisement or
publication does not contravene subsection (2) if it:
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Prohibitions and liabilities Division 1
Section 734
Corporations Act 2001 367
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(a) if the offer is of securities in a class already quoted—includes
a statement that:
(i) if the securities are likely to be offered by way of
issue—identifies the issuer of the securities; and
(ii) if the securities are likely to be offered pursuant to sale
offers to which section 707 will apply—identifies the
issuer of the securities and the seller of the securities;
and
(iii) in any case—a disclosure document for the offer will be
made available when the securities are offered; and
(iv) indicates when and where the disclosure document is
expected to be made available; and
(v) a person should consider the disclosure document in
deciding whether to acquire the securities; and
(vi) anyone who wants to acquire the securities will need to
complete the application form that will be in or will
accompany the disclosure document; and
(b) in any other case—contains the following but nothing more:
(i) a statement that identifies the offeror and the securities;
(ii) a statement that a disclosure document for the offer will
be made available when the securities are offered;
(iii) a statement that anyone who wants to acquire the
securities will need to complete the application form
that will be in or will accompany the disclosure
document;
(iv) a statement of how to arrange to receive a copy of the
disclosure document.
To satisfy paragraph (b), the advertisement or publication must
include all of the statements referred to in subparagraphs (i), (ii)
and (iii). It may include the statement referred to in
subparagraph (iv).
Note: Subsection (5) has an extended operation in relation to recognised
offers under Chapter 8 (see subsection 1200L(2)).
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Chapter 6D Fundraising
Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 734
368 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Advertising and publicity after the disclosure document is lodged
(6) After the disclosure document is lodged, an advertisement or
publication does not contravene subsection (2) if it includes a
statement that:
(a) identifies:
(i) if the securities are offered by way of issue—the issuer
of the securities; or
(ii) if the securities are offered pursuant to sale offers to
which section 707 applies or will apply—the issuer of
the securities and the seller of the securities; and
(b) indicates that the disclosure document for the offer is
available and where it can be obtained; and
(c) the offers of the securities will be made in, or accompanied
by, a copy of the disclosure document; and
(d) a person should consider the disclosure document in deciding
whether to acquire the securities; and
(e) anyone who wants to acquire the securities will need to
complete the application form that will be in or will
accompany the disclosure document.
Note: Subsection (6) has an extended operation in relation to recognised
offers under Chapter 8 (see subsection 1200L(3)).
General exceptions
(7) An advertisement or publication does not contravene subsection (2)
if it:
(a) relates to an offer of securities of a listed body and consists
of a notice or report by the body, or one of its officers, about
its affairs to the relevant market operator; or
(b) consists solely of a notice or report of a general meeting of
the body; or
(c) consists solely of a report about the body that is published by
the body and:
(i) does not contain information that materially affects
affairs of the body other than information previously
made available in a disclosure document that has been
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Prohibitions, liabilities and remedies Part 6D.3
Prohibitions and liabilities Division 1
Section 734
Corporations Act 2001 369
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
lodged, an annual report or a report referred to in
paragraph (a) or (b); and
(ii) does not refer (whether directly or indirectly) to the
offer; or
(d) is a news report or is genuine comment, in a newspaper or
periodical or on radio or television relating to:
(i) a disclosure document that has been lodged or
information contained in such a disclosure document; or
(ii) a notice or report covered by paragraph (a), (b) or (c); or
(e) is a report about the securities of a body or proposed body
published by someone who is not:
(i) the body; or
(ii) acting at the instigation of, or by arrangement with, the
body; or
(iii) a director of the body; or
(iv) a person who has an interest in the success of the issue
or sale of the securities.
Paragraphs (d) and (e) do not apply if anyone gives consideration
or another benefit for publishing the report.
Liability of publishers
(8) A person does not contravene subsection (1) or (2) by publishing
an advertisement or statement if they publish it in the ordinary
course of a business of:
(a) publishing a newspaper or magazine; or
(b) broadcasting by radio or television;
and the person did not know and had no reason to suspect that its
publication would amount to a contravention of a provision of this
Chapter.
Note: Depending on the circumstances of the publication, the person may,
however, commit an offence by being involved in someone else’s
contravention of subsection (1) or (2).
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Chapter 6D Fundraising
Part 6D.3 Prohibitions, liabilities and remedies
Division 1 Prohibitions and liabilities
Section 735
370 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Pathfinder documents
(9) A person does not contravene subsection (1) or (2) by sending a
draft disclosure document for securities to a person if an offer of
the securities to the person would not require a disclosure
document because of subsection 708(8) or (10) (sophisticated
investors) or 708(11) (professional investors).
735 Obligation to keep consents and other documents
(1) A person who offers securities under a disclosure document must
keep a consent required in respect of the document by
subsection 716(2) or section 720.
(2) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
736 Securities hawking prohibited
(1) A person must not offer securities for issue or sale in the course of,
or because of, an unsolicited:
(a) meeting with another person; or
(b) telephone call to another person.
(1A) Subsection (1) does not apply if the offer is exempted under
subsection (2).
Note: A defendant bears an evidential burden in relation to the matter in
subsection (1A), see subsection 13.3(3) of the Criminal Code.
(1B) An offence based on subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
(2) Subsection (1) does not prohibit an offer of securities if:
(a) the offer does not need a disclosure document because of
subsection 708(8) or (10) (sophisticated investors); or
(b) the offer does not need a disclosure document because of
subsection 708(11) (professional investors); or
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Prohibitions and liabilities Division 1
Section 736
Corporations Act 2001 371
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(c) the offer is an offer of listed securities made by telephone by
a licensed securities dealer; or
(d) the offer is made to a client by a licensed securities dealer
through whom the client has bought or sold securities in the
last 12 months; or
(e) the offer is made under an eligible employee share scheme.
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Chapter 6D Fundraising
Part 6D.3 Prohibitions, liabilities and remedies
Division 2 Remedies
Section 737
372 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Division 2—Remedies
737 Remedies for investors
Right to withdraw and have money returned
(1) If securities are issued to a person in contravention of section 724
(situation calling for a supplementary or replacement document),
the person has the right to return the securities and to have their
application money repaid. This is so even if the company that
issued the securities is being wound up.
(2) A right referred to in subsection (1) is exercisable by written notice
given to the company within 1 month after the date of the issue.
(3) If the body or the seller does not repay the money as required by
subsection (1), the directors of the body or seller are personally
liable to repay the money.
738 Securities may be returned and refund obtained
If securities are issued or transferred to a person as a result of an
offer that contravenes section 736, the person may return the
securities within 1 month after the issue or transfer. If they do so,
they are entitled to be repaid the amount they paid for the
securities.
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Fundraising Chapter 6D
ASIC’s powers Part 6D.4
Section 739
Corporations Act 2001 373
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6D.4—ASIC’s powers
739 ASIC stop orders
Power to make orders
(1) This section applies if ASIC is satisfied that:
(a) information in a disclosure document lodged with ASIC is
not worded and presented in a clear, concise and effective
manner (see section 715A); or
(b) an offer of securities under a disclosure document lodged
with ASIC would contravene section 728; or
(c) an advertisement or publication of a kind referred to in
subsection 734(5) or (6) that relates to securities is defective
(see subsection (6) of this section).
(1A) ASIC may order that:
(a) if paragraph (1)(a) or (b) applies—no offers, issues, sales or
transfers of the securities be made while the order is in force;
or
(b) if paragraph (1)(c) applies—specified conduct in respect of
the securities to which the advertisement or publication
relates must not be engaged in.
(1B) An order under paragraph (1A)(b) may include a statement that
specified conduct engaged in contrary to the order will be regarded
as not complying with the requirements of a specified provision of
this Chapter.
(2) Before making an order under subsection (1A), ASIC must:
(a) hold a hearing; and
(b) give a reasonable opportunity to any interested people to
make oral or written submissions to ASIC on whether an
order should be made.
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Part 6D.4 ASIC’s powers
Section 739
374 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
(3) If ASIC considers that any delay in making an order under
subsection (1A) pending the holding of a hearing would be
prejudicial to the public interest, ASIC may make an interim order
that no offers, issues, sales or transfers of the securities be made
while the interim order is in force. The interim order may be made
without holding a hearing and lasts for 21 days after the day on
which it is made unless revoked before then.
(4) At any time during the hearing, ASIC may make an interim order
that no offers, issues, sales or transfers of the securities be made
while the interim order is in force. The interim order lasts until:
(a) ASIC makes an order under subsection (1A) after the
conclusion of the hearing; or
(b) the interim order is revoked;
whichever happens first.
(5) An order under subsection (1A), (3) or (4) must be in writing and
must be served on the person who is ordered not to offer, issue, sell
or transfer securities under the disclosure document.
Defective advertisements or statements
(6) For the purposes of this section, an advertisement or publication of
a kind referred to in subsection 734(5) or (6) is defective if:
(a) there is a misleading or deceptive statement in the
advertisement or publication; or
(b) there is an omission from the advertisement or publication of
material required by the relevant subsection to be included in
the advertisement or publication; or
(c) if the advertisement or publication relates to an offer of
securities in a class that is not already quoted, and is
published before a disclosure document in relation to the
offer is lodged—the advertisement or publication includes
material that is not referred to in paragraph 734(5)(b).
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Fundraising Chapter 6D
ASIC’s powers Part 6D.4
Section 740
Corporations Act 2001 375
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Forecasts and other forward-looking statements
(7) For the purposes of the definition of defective in subsection (6), a
person is taken to make a misleading statement about a future
matter (including the doing of, or refusing to do, an act) if they do
not have reasonable grounds for making the statement.
(8) Subsection (7) does not limit the circumstances in which a
statement may be misleading.
740 Anti-avoidance determinations
(1) ASIC may determine in writing that a number of different bodies
are closely related and that their transactions should be aggregated
for the purposes of this Chapter. If ASIC does so:
(a) an issue, sale or transfer of securities in any other bodies is
taken to also be an issue, sale or transfer of the securities of
each of the other bodies by those bodies; and
(b) any money received from an issue, sale or transfer of
securities in any of the bodies is taken to also be received by
each of the other bodies from an issue, sale or transfer of its
own securities.
ASIC must give written notice of the determination to each of the
bodies.
(2) ASIC may determine in writing that the transactions of a body and
of a person who controls the body should be aggregated for the
purposes of this Chapter. If ASIC does so:
(a) an issue of securities in the body is taken to also be the
transfer of the securities by the controller; and
(b) any money received from an issue of securities in the body is
taken to also be received by the controller from a transfer of
the securities; and
(c) a sale or transfer of securities in the body by the controller is
taken to also be the issue of the securities by the body; and
(d) any money received from a sale or transfer of securities in the
body by the controller is taken to also be received by the
body from an issue of the securities.
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Chapter 6D Fundraising
Part 6D.4 ASIC’s powers
Section 741
376 Corporations Act 2001
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
ASIC must give written notice of the determination to the body and
the controller.
741 ASIC’s power to exempt and modify
(1) ASIC may:
(a) exempt a person from a provision of this Chapter; or
(b) declare that this Chapter applies to a person as if specified
provisions were omitted, modified or varied as specified in
the declaration.
(2) The exemption or declaration may do all or any of the following:
(a) apply to all or specified provisions of this Chapter;
(b) apply to all persons, specified persons, or a specified class of
persons;
(c) relate to all securities, specified securities or a specified class
of securities;
(d) relate to any other matter generally or as specified.
(3) An exemption may apply unconditionally or subject to specified
conditions. A person to whom a condition specified in an
exemption applies must comply with the condition. The Court may
order the person to comply with the condition in a specified way.
Only ASIC may apply to the Court for the order.
(4) The exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(5) For the purposes of this section, the provisions of this Chapter
include:
(a) regulations made for the purposes of this Chapter; and
(b) definitions in this Act or the regulations as they apply to
references in:
(i) this Chapter; or
(ii) regulations made for the purposes of this Chapter; and
(c) the old Division 12 of Part 11.2 transitionals.
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Fundraising Chapter 6D
Miscellaneous Part 6D.5
Section 742
Corporations Act 2001 377
Compilation No. 79 Compilation date: 1/7/17 Registered: 6/7/17
Part 6D.5—Miscellaneous
742 Exemptions and modifications by regulations
(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.
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