Prepared by the Office of Parliamentary Counsel, Canberra
Corporations Act 2001
No. 50, 2001
Compilation No. 94
Compilation date: 6 April 2019
Includes amendments up to: Act No. 50, 2019
Registered: 14 May 2019
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 1370–1662
Schedules
Endnotes
Each volume has its own contents
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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 6 April 2019 (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If a provision of the compiled law has been repealed in accordance with a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 7—Financial services and markets 1
Part 7.1—Preliminary 1
Division 1—Object of Chapter and outline of Chapter 1
760A Object of Chapter ..............................................................................1
760B Outline of Chapter .............................................................................1
Division 2—Definitions 3
761A Definitions.........................................................................................3
761B Meaning of arrangement—2 or more arrangements that
together form a derivative or other financial product ......................20
761C Meaning of carry on a financial services business ..........................21
761CA Meaning of class and kind of financial products and financial
services ............................................................................................21
761D Meaning of derivative......................................................................21
761E Meaning of issued, issuer, acquire and provide in relation to
financial products ............................................................................23
761EA Meaning of margin lending facility, margin call and
associated expressions .....................................................................26
761F Meaning of person—generally includes a partnership ....................29
761FA Meaning of person—generally includes multiple trustees...............30
761G Meaning of retail client and wholesale client ..................................31
761GA Meaning of retail client—sophisticated investors ...........................37
761H References to this Chapter include references to regulations
or other instruments made for the purposes of this Chapter ............38
Division 3—What is a financial product? 39
Subdivision A—Preliminary 39
762A Overview of approach to defining what a financial product is ........39
762B What if a financial product is part of a broader facility? .................39
762C Meaning of facility ..........................................................................40
Subdivision B—The general definition 40
763A General definition of financial product ...........................................40
763B When a person makes a financial investment ..................................41
763C When a person manages financial risk ............................................42
763D When a person makes non-cash payments.......................................42
763E What if a financial product is only incidental? ................................43
Subdivision C—Specific inclusions 44
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764A Specific things that are financial products (subject to
Subdivision D).................................................................................44
Subdivision D—Specific exclusions 48
765A Specific things that are not financial products .................................48
Division 4—When does a person provide a financial service? 52
766A When does a person provide a financial service? ............................52
766B Meaning of financial product advice ...............................................53
766C Meaning of dealing..........................................................................56
766D Meaning of makes a market for a financial product ........................58
766E Meaning of provide a custodial or depository service .....................58
766F Meaning of provides a crowd-funding service.................................60
Division 5—What is a financial market? 61
767A What is a financial market? .............................................................61
Division 6—What is a clearing and settlement facility? 62
768A What is a clearing and settlement facility? ......................................62
Division 7—General provisions relating to civil and criminal
liability 64
769A Part 2.5 of Criminal Code does not apply........................................64
769B People are generally responsible for the conduct of their
agents, employees etc. .....................................................................64
769C Representations about future matters taken to be misleading
if made without reasonable grounds ................................................67
Part 7.2—Licensing of financial markets 69
Division 1—Preliminary 69
790A Definition ........................................................................................69
Division 2—Requirement to be licensed 70
791A Need for a licence............................................................................70
791B Other prohibitions on holding out....................................................70
791C Exemptions by Minister...................................................................71
791D When a market is taken to be operated in this jurisdiction ..............72
Division 3—Regulation of market licensees 73
Subdivision A—Licensee’s obligations 73
792A General obligations..........................................................................73
792B Obligation to notify ASIC of certain matters...................................74
792C Giving ASIC information about a listed disclosing entity ...............76
792D Obligation to assist ASIC ................................................................77
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792E Obligation to give ASIC access to market facilities ........................77
792F Annual report...................................................................................77
792G Obligations to notify people about clearing and settlement
arrangements in certain circumstances ............................................78
792H Change of country by foreign licensee ............................................79
792I Making information about compensation arrangements
publicly available.............................................................................80
Subdivision B—The market’s operating rules and procedures 80
793A Content of the operating rules and procedures.................................80
793B Legal effect of operating rules .........................................................81
793C Enforcement of operating rules .......................................................82
793D Changing the operating rules ...........................................................83
793E Disallowance of changes to operating rules.....................................84
Subdivision C—Powers of the Minister and ASIC 84
794A Minister’s power to give directions .................................................84
794B Minister’s power to require special report .......................................85
794C ASIC assessment of licensee’s compliance .....................................85
794D ASIC’s power to give directions......................................................86
794E Additional directions to clearing and settlement facilities ...............88
Division 4—The Australian market licence 89
Subdivision A—How to get a licence 89
795A How to apply for a licence...............................................................89
795B When a licence may be granted .......................................................89
795C Publication of notice of licence grant ..............................................91
795D More than one licence in the same document ..................................92
795E More than one market covered by the same licence ........................92
Subdivision B—The conditions on the licence 92
796A The conditions on the licence ..........................................................92
Subdivision C—When a licence can be varied, suspended or
cancelled 94
797A Varying licences ..............................................................................94
797B Immediate suspension or cancellation .............................................94
797C Suspension or cancellation following hearing and report ................95
797D Effect of suspension ........................................................................96
797E Variation or revocation of suspension .............................................96
797F Publication of notice of licence suspension or cancellation.............96
797G Suspension and cancellation only in accordance with this
Subdivision......................................................................................97
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Division 5—Other matters 98
798A Matters to be taken into account by the Minister.............................98
798B ASIC may give advice to Minister ..................................................99
798C Market licensee or related body corporate etc. listing on
market..............................................................................................99
798D Exemptions and modifications for self-listing licensees or
related bodies corporate etc. ..........................................................101
798DA Market licensee, related body corporate etc. or competitor
participating in market...................................................................102
798E Other potential conflict situations..................................................104
Part 7.2A—Supervision of financial markets 105 798F ASIC to supervise financial markets .............................................105
798G Market integrity rules ....................................................................105
798H Complying with market integrity rules ..........................................106
798J Directions by ASIC .......................................................................106
798K Alternatives to civil proceedings ...................................................108
798L Exemptions and modifications by regulations ...............................108
798M Exemptions by Minister.................................................................109
Part 7.3—Licensing of clearing and settlement facilities 111
Division 1—Requirement to be licensed 111
820A Need for a licence..........................................................................111
820B Other prohibitions on holding out..................................................111
820C Exemptions by Minister.................................................................112
820D When a clearing and settlement facility is taken to be
operated in this jurisdiction ...........................................................113
Division 2—Regulation of CS facility licensees 114
Subdivision A—Licensee’s obligations 114
821A General obligations........................................................................114
821B Obligation to notify ASIC of certain matters.................................115
821BA Obligation to notify Reserve Bank of certain matters....................117
821C Obligation to assist ........................................................................117
821D Obligation to give ASIC access to the facility...............................118
821E Annual report.................................................................................118
821F Change of country by foreign licensee ..........................................119
Subdivision B—The facility’s operating rules and procedures 120
822A Content of the operating rules and procedures...............................120
822B Legal effect of operating rules .......................................................120
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822C Enforcement of operating rules .....................................................121
822D Changing the operating rules .........................................................122
822E Disallowance of changes to operating rules...................................123
Subdivision C—Powers of the Minister, ASIC and the Reserve
Bank in relation to licensees 123
823A Minister’s power to give directions ...............................................123
823B Minister’s power to require special report .....................................124
823C ASIC assessment of licensee’s compliance ...................................124
823CA Reserve Bank assessment of licensee’s compliance ......................125
823D Directions power—protecting dealings in financial products
and ensuring fair and effective provision of services by CS
facilities .........................................................................................126
823E Directions power—reduction of systemic risk...............................128
Division 3—The Australian CS facility licence 130
Subdivision A—How to get a licence 130
824A How to apply for a licence.............................................................130
824B When a licence may be granted .....................................................130
824C Publication of notice of licence grant ............................................132
824D More than one licence in the same document ................................133
824E More than one CS facility covered by the same licence ................133
Subdivision B—The conditions on the licence 133
825A The conditions on the licence ........................................................133
Subdivision C—When a licence can be varied, suspended or
cancelled 135
826A Varying licences ............................................................................135
826B Immediate suspension or cancellation ...........................................135
826C Suspension or cancellation following hearing and report ..............136
826D Effect of suspension ......................................................................137
826E Variation or revocation of suspension ...........................................137
826F Publication of notice of licence suspension or cancellation...........137
826G Suspension and cancellation only in accordance with this
Subdivision....................................................................................137
Division 4—Other matters 139
827A Matters to be taken into account by the Minister...........................139
827B ASIC may give advice to Minister ................................................140
827C Reserve Bank may give advice to Minister ...................................140
827D Reserve Bank may determine financial stability standards............141
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Part 7.4—Limits on involvement with licensees 143
Division 1—Limit on control of certain licensees 143
Subdivision A—15% voting power limit 143
850A Scope of Division ..........................................................................143
850B Meaning of unacceptable control situation ....................................143
850C Acquisitions of shares....................................................................144
850D Remedial orders.............................................................................144
850E Injunctions.....................................................................................145
Subdivision B—Approval to exceed 15% voting power limit 146
851A Application for approval to exceed 15% voting power limit .........146
851B Approval of application .................................................................146
851C Duration of approval......................................................................147
851D Conditions of approval ..................................................................148
851E Varying percentage approved ........................................................149
851F Revoking an approval....................................................................150
851G Further information about applications..........................................151
851H Time limit for Minister’s decision .................................................151
851I Preservation of voting power in relation to bodies specified
in regulations made for section 850A............................................152
Subdivision C—Other matters 153
852A Acquisition of property..................................................................153
852B Anti-avoidance ..............................................................................153
Division 2—Individuals who are not fit and proper are
disqualified 155
853A Who is disqualified........................................................................155
853B When an individual is involved in an operator...............................155
853C Declaration by ASIC .....................................................................155
853D Procedure for declaration...............................................................156
853E Revoking a declaration ..................................................................157
853F Obligations on disqualified individuals .........................................158
853G Notification by ASIC.....................................................................158
Division 3—Miscellaneous 159
854A Record-keeping and giving of information....................................159
854B Exemptions and modifications by regulations ...............................160
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Part 7.5—Compensation regimes for financial markets 161
Division 1—Preliminary 161
880A Part does not apply to markets licensed under special
provisions about overseas markets ................................................161
880B Definitions.....................................................................................161
Division 2—When there must be a compensation regime 163
881A Licensed markets through which participants provide
services for retail clients must generally have a
compensation regime.....................................................................163
881B Additional requirements for the licence application ......................163
881C What happens if an application contains information in
accordance with paragraph 881B(2)(c)..........................................164
881D What happens if an application contains a statement in
accordance with paragraph 881B(2)(d) .........................................164
Division 3—Approved compensation arrangements 165
Subdivision A—Approval of compensation arrangements 165
882A How to get compensation arrangements approved with grant
of licence .......................................................................................165
882B How to get compensation arrangements approved after
licence is granted ...........................................................................166
882C Revocation of approval..................................................................167
882D Minister’s power to give directions ...............................................167
Subdivision B—Effect of compensation rules forming part of
Division 3 arrangements 167
883A Legal effect of compensation rules ................................................167
883B Enforcement of compensation rules ..............................................167
883C Other sources of funds for compensation ......................................168
883D Payment of levies ..........................................................................169
Subdivision C—Changing Division 3 arrangements 170
884A Division 3 arrangements must generally only be changed in
accordance with this Subdivision ..................................................170
884B Changing Division 3 arrangements—matters required to be
dealt with in the compensation rules..............................................170
884C Changing Division 3 arrangements—matters not required to
be dealt with in the compensation rules.........................................171
Subdivision D—Are compensation arrangements adequate? 173
885A Purpose of this Subdivision ...........................................................173
885B Requirements to be complied with for arrangements to be
adequate.........................................................................................173
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885C The losses to be covered................................................................174
885D Certain losses that are not Division 3 losses ..................................175
885E The amount of compensation.........................................................176
885F Method of payment of compensation ............................................177
885G Making and determination of claims .............................................178
885H The source of funds—general........................................................178
885I Administration and monitoring......................................................178
885J The losses to be covered—other matters to be taken into
account ..........................................................................................179
Subdivision E—Other provisions about Division 3 arrangements 179
886A Only one claim in respect of the same loss....................................179
886B Regulations relating to fidelity funds.............................................180
Division 4—NGF Compensation regime 181
Subdivision A—Application of Division 181
887A Markets to which this Division applies..........................................181
Subdivision B—Claims for and payment of compensation 181
888A The situations in which compensation may be claimed.................181
888B Kinds of compensation available...................................................181
888C Amount of compensation payable .................................................181
888D Payment of compensation..............................................................182
888E Making and determination of claims .............................................183
888F The SEGC has power to determine claims ....................................183
888G Allowing a claim does not constitute an admission of any
other liability .................................................................................183
888H Claimant may apply to Court if claim disallowed .........................184
888I Non-NGF property of the SEGC not available to meet claims ......184
888J The SEGC may enter into contracts of insurance or
indemnity.......................................................................................184
888K NGF may be used to acquire financial products to be
transferred as compensation ..........................................................185
Subdivision C—The NGF 185
889A Continuation of the National Guarantee Fund ...............................185
889B Compensation to be provided out of the NGF ...............................186
889C The SEGC to keep the NGF ..........................................................186
889D What the NGF consists of..............................................................186
889E Power to borrow etc. for purposes of the NGF ..............................187
889F Money borrowed and paid to the SEGC ........................................187
889G Money borrowed and not paid to the SEGC ..................................188
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889H Payments out of the NGF ..............................................................188
889I Minimum amount of the NGF .......................................................189
889J Levy by the SEGC.........................................................................189
889K Levy by market operator................................................................191
Subdivision D—The SEGC 193
890A Minister to nominate the SEGC.....................................................193
890B The SEGC’s functions and powers ................................................194
890C Delegation .....................................................................................194
890D Operating rules of the SEGC .........................................................195
890E Legal effect of the SEGC’s operating rules ...................................195
890F Enforcement of the SEGC’s operating rules..................................195
890G Changing the SEGC’s operating rules ...........................................196
890H Disallowance of changes to the SEGC’s operating rules ...............196
Subdivision E—Other provisions relating to compensation under
this Division 197
891A Payment out of the NGF to prescribed body with
arrangements covering clearing and settlement facility
support...........................................................................................197
891B Markets operated by bodies corporate that become members
of the SEGC—regulations may deal with transitional
provisions and other matters ..........................................................197
891C Regulations may make different provision in respect of
different markets etc. .....................................................................198
Division 5—Provisions common to both kinds of compensation
arrangements 199
892A Definitions.....................................................................................199
892B How regulated funds are to be kept ...............................................199
892C Money in regulated funds may be invested ...................................200
892D Powers of relevant authority to require production or
delivery of documents or statements .............................................201
892E Power to require assistance for purpose of dealing with a
claim..............................................................................................202
892F Relevant authority’s right of subrogation if compensation is
paid................................................................................................203
892G Excess money in compensation funds ...........................................203
892H Accounting and reporting for regulated funds ...............................204
892I Division 3 arrangements—reporting in situations where
compensation does not come out of a regulated fund ....................206
892J Regulations may provide for qualified privilege in respect of
certain matters ...............................................................................206
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892K Risk assessment report...................................................................206
Division 6—Miscellaneous 208
893A Exemptions and modifications by regulations ...............................208
893B Exemptions by Minister.................................................................208
Part 7.5A—Regulation of derivative transactions and
derivative trade repositories 210
Division 1—Application of Part 210
900A Derivatives and transactions etc. to which this Part applies...........210
Division 2—Regulation of derivative transactions: derivative
transaction rules 211
Subdivision A—Power to make derivative transaction rules 211
901A ASIC may make derivative transaction rules.................................211
901B Derivatives in relation to which rules may impose
requirements ..................................................................................214
901C Regulations may limit the transactions in relation to which
rules may impose requirements .....................................................217
901D Regulations may limit the persons on whom requirements
may be imposed.............................................................................217
Subdivision B—Compliance with derivative transaction rules 218
901E Obligation to comply with derivative transaction rules .................218
901F Alternatives to civil proceedings ...................................................218
901G Failure to comply with derivative transaction rules does not
invalidate transaction etc. ..............................................................219
Subdivision C—The process of making derivative transaction
rules 219
901H Matters to which ASIC must have regard when making rules.......219
901J ASIC to consult before making rules.............................................220
901K Ministerial consent to rules required .............................................220
901L Emergency rules: consultation and consent not required...............221
901M Amendment and revocation of derivative transaction rules...........221
Division 3—Regulation of licensed derivative trade repositories:
supervision by ASIC 222
902A ASIC to supervise licensed derivative trade repositories...............222
Division 4—Regulation of licensed derivative trade repositories:
derivative trade repository rules 223
Subdivision A—Power to make derivative trade repository rules 223
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903A ASIC may make derivative trade repository rules .........................223
903B Rules may only impose requirements on operators and
officers of licensed derivative trade repositories ...........................225
903C Regulations may limit how rules may deal with matters
related to derivative trade data.......................................................226
Subdivision B—Compliance with derivative trade repository rules 226
903D Obligation to comply with derivative trade repository rules..........226
903E Alternatives to civil proceedings ...................................................227
Subdivision C—The process of making derivative trade repository
rules 227
903F Matters to which ASIC has regard when making rules..................227
903G ASIC to consult before making rules.............................................228
903H Ministerial consent to rules required .............................................228
903J Emergency rules: consultation and consent not required...............229
903K Amendment and revocation of derivative trade repository
rules ...............................................................................................229
Division 5—Regulation of licensed derivative trade repositories:
other obligations and powers 230
Subdivision A—Obligations 230
904A General obligations........................................................................230
904B Obligations relating to derivative trade data ..................................230
904C Obligation to notify ASIC of certain matters.................................232
904D Obligation to assist ASIC, APRA and the Reserve Bank ..............233
904E Obligation to give ASIC access to derivative trade repository
facilities .........................................................................................234
Subdivision B—Powers of Minister and ASIC to give directions
etc. 234
904F Minister’s power to give directions to licensee not
complying with obligations ...........................................................234
904G ASIC’s power to give directions to licensee not complying
with obligations .............................................................................235
904H ASIC’s power to give directions requiring special reports ............236
904J ASIC may assess licensee’s compliance........................................236
904K Directions relating to derivative trade data if repository
ceases to be licensed......................................................................237
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Division 6—Regulation of licensed derivative trade repositories:
licensing 239
Subdivision A—Requirement for some trade repositories to be
licensed 239
905A Regulations may identify derivative trade repositories as
being required to be licensed .........................................................239
Subdivision B—Granting of licences 239
905B How to apply for a licence.............................................................239
905C When a licence may be granted .....................................................240
905D Publication of notice of licence grant ............................................240
905E More than one derivative trade repository covered by the
same licence ..................................................................................241
Subdivision C—The conditions on a licence 241
905F The conditions on the licence ........................................................241
Subdivision D—When a licence can be varied, suspended or
cancelled 243
905G Varying licences ............................................................................243
905H Immediate suspension or cancellation ...........................................243
905J Suspension or cancellation following hearing and report ..............244
905K Effect of suspension ......................................................................245
905L Variation or revocation of suspension ...........................................245
905M Publication of notice of licence suspension or cancellation...........245
905N Suspension and cancellation only in accordance with this
Subdivision....................................................................................245
Subdivision E—Other matters 245
905P Matters to be taken into account by ASIC .....................................245
Division 7—Regulation of prescribed derivative trade
repositories 247
906A Regulations may impose obligations and confer powers ...............247
Division 8—Other matters 248
907A Other prohibitions on holding out..................................................248
907B Making provision by reference to instruments as in force
from time to time ...........................................................................248
907C Compliance with requirements to provide derivative trade
data or other information: protection from liability .......................249
907D Exemptions by ASIC.....................................................................249
907E Exemptions and modifications by regulations ...............................250
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Part 7.5B—Regulation of financial benchmarks 252
Division 1—Preliminary 252
908AA Simplified outline of this Part........................................................252
908AB Meaning of financial benchmark ...................................................252
908AC Meaning of significant financial benchmark .................................253
908AD Emergency declarations: consultation and consent not
required..........................................................................................254
908AE Notifying administrator about declarations ...................................255
908AF ASIC to supervise financial benchmarks that are specified in
benchmark administrator licences .................................................255
908AG Extraterritorial application.............................................................255
Division 2—Licensing of financial benchmarks 256
Subdivision A—Requirement to be licensed 256
908BA Administrators of significant financial benchmarks must be
licensed..........................................................................................256
908BB Other prohibitions on holding out..................................................257
Subdivision B—Granting licences 257
908BC When a licence may be granted .....................................................257
908BD Applying for a licence ...................................................................258
908BE More than one financial benchmark may be specified in the
same licence ..................................................................................259
908BF Publishing details of licences.........................................................259
Subdivision C—Conditions on licences 259
908BG Conditions, including varying and revoking conditions ................259
Subdivision D—When a licence can be varied, suspended or
cancelled 261
908BH Varying licences ............................................................................261
908BI Immediate suspension or cancellation ...........................................261
908BJ Suspension or cancellation following hearing and report ..............262
908BK Effect of suspension ......................................................................263
908BL Varying or revoking a suspension .................................................263
908BM Publishing details of suspensions or cancellations of licences.......263
908BN Variations, suspensions or cancellations only in accordance
with this Subdivision .....................................................................263
Subdivision E—Matters to which ASIC must have regard 264
908BO Matters to which ASIC must have regard......................................264
Subdivision F—Other obligations of licensees 265
908BP General obligations........................................................................265
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908BQ Obligation to notify ASIC of certain matters.................................265
908BR Obligation to assist ASIC, APRA and the Reserve Bank ..............266
908BS Obligation to give ASIC access to licensee’s facilities..................266
Subdivision G—Directions to licensees 267
908BT ASIC’s power to give directions to licensee not complying
with obligations .............................................................................267
908BU Minister may disallow all or part of an ASIC direction etc. ..........267
908BV ASIC’s power to give directions requiring reports ........................268
Subdivision H—Other matters 269
908BW ASIC may assess licensee’s compliance........................................269
908BX Basis of licences ............................................................................270
Division 3—Financial benchmark rules and compelled financial
benchmark rules 271
Subdivision A—Power to make financial benchmark rules 271
908CA ASIC may make financial benchmark rules ..................................271
908CB Main permitted matters that may be dealt with in the rules ...........271
908CC Other permitted matters that may be dealt with in the rules ..........273
Subdivision B—Power to make compelled financial benchmark
rules 273
908CD ASIC may make compelled financial benchmark rules .................273
908CE Permitted powers and matters that may be dealt with in the
rules ...............................................................................................274
Subdivision C—Compliance with each set of rules etc. 275
908CF Obligation to comply with each set of rules ..................................275
908CG Alternatives to civil proceedings ...................................................275
908CH Infringement notices ......................................................................276
908CI Enforceable undertakings ..............................................................276
908CJ Protection from liability for compliance in good faith...................277
Subdivision D—Matters relating to the making of each set of rules 278
908CK Matters to which ASIC has regard when making rules..................278
908CL ASIC to consult before making rules.............................................278
908CM Ministerial consent to rules required .............................................279
908CN Emergency rules: consultation and consent not required...............279
908CO Requirements.................................................................................280
908CP Regulations may limit how rules may deal with certain
matters ...........................................................................................280
908CQ Varying or revoking the rules ........................................................280
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Division 4—Offences and civil penalties relating to manipulation
of financial benchmarks 281
908DA Manipulation of financial benchmarks ..........................................281
908DB False or misleading statements or information that could
affect financial benchmarks...........................................................282
908DC Penalties for offences against this Division ...................................283
908DD Geographical scope of offences and civil penalty provisions ........283
Division 5—Other provisions 287
908EA Making provision by referring to instruments as in force
from time to time ...........................................................................287
908EB Exemptions by the regulations or by ASIC ...................................287
Part 7.6—Licensing of providers of financial services 289
Division 1—Preliminary 289
910A Definitions.....................................................................................289
Division 2—Requirement to be licensed or authorised 293
911A Need for an Australian financial services licence ..........................293
911B Providing financial services on behalf of a person who
carries on a financial services business..........................................299
911C Prohibition on holding out .............................................................301
911D When a financial services business is taken to be carried on
in this jurisdiction ..........................................................................302
Division 3—Obligations of financial services licensees 303
912A General obligations........................................................................303
912B Compensation arrangements if financial services provided to
persons as retail clients ..................................................................305
912C Direction to provide a statement....................................................306
912CA Regulations may require information to be provided ....................307
912D Obligation to notify ASIC of certain matters.................................307
912E Surveillance checks by ASIC ........................................................309
912F Obligation to cite licence number in documents............................310
Division 4—Australian financial services licences 311
Subdivision A—How to get a licence 311
913A Applying for a licence ...................................................................311
913B When a licence may be granted .....................................................311
913C Licence numbers............................................................................313
Subdivision B—The conditions on the licence 313
914A The conditions on the licence ........................................................313
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Subdivision C—When a licence can be varied, suspended or
cancelled 316
915A Varying licences ............................................................................316
915B Immediate suspension or cancellation ...........................................316
915C Suspension or cancellation after offering a hearing .......................320
915D Effect of suspension ......................................................................321
915E Revocation of suspension ..............................................................321
915F Date of effect and publication of cancellation or suspension.........322
915G Statement of reasons......................................................................322
915H ASIC may allow licence to continue in effect ...............................322
915I Special procedures for APRA-regulated bodies ............................322
915J Variation, suspension and cancellation only under this
Subdivision....................................................................................324
Division 5—Authorised representatives 325
916A How representatives are authorised ...............................................325
916B Sub-authorisations .........................................................................325
916C Authorised representative of 2 or more licensees ..........................327
916D Licensees cannot authorise other licensees....................................327
916E Licensees acting under a binder.....................................................328
916F Obligation to notify ASIC etc. about authorised
representatives ...............................................................................328
916G ASIC may give licensee information about representatives ..........330
Division 6—Liability of financial services licensees for
representatives 333
917A Application of Division .................................................................333
917B Responsibility if representative of only one licensee.....................334
917C Representatives of multiple licensees ............................................334
917D Exception if lack of authority is disclosed to client .......................335
917E Responsibility extends to loss or damage suffered by client .........336
917F Effect of Division ..........................................................................336
Division 8—Banning or disqualification of persons from
providing financial services 338
Subdivision A—Banning orders 338
920A ASIC’s power to make a banning order.........................................338
920B What is a banning order? ..............................................................340
920C Effect of banning orders ................................................................341
920D Variation or cancellation of banning orders...................................341
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920E Date of effect and publication of banning order, variation or
cancellation....................................................................................342
920F Statement of reasons......................................................................343
Subdivision B—Disqualification by the Court 343
921A Disqualification by the Court.........................................................343
Division 8A—Professional standards for relevant providers 344
Subdivision A—Education and training standards 344
921B Meaning of education and training standards...............................344
921C Limitation on authorisation to provide personal advice unless
conditions met ...............................................................................345
921D Relevant providers to meet continuing professional
development standard ....................................................................346
Subdivision B—Ethical standards 347
921E Relevant providers to comply with the Code of Ethics..................347
Subdivision C—Provisional relevant providers 347
921F Requirements relating to provisional relevant providers ...............347
Division 8B—Compliance schemes 350
Subdivision A—Compliance schemes to cover relevant providers 350
921G Meaning of compliance scheme.....................................................350
921H Financial services licensees to ensure compliance scheme
covers relevant providers...............................................................351
921J When a compliance scheme covers a relevant provider ................351
Subdivision B—Approval of compliance schemes 352
921K Approval of compliance schemes ..................................................352
Subdivision C—Investigations by monitoring body 355
921L Investigations by monitoring body ................................................355
921M Offences relating to investigations by monitoring body ................357
921N Obligation to notify licensee of failure to comply with Code
of Ethics.........................................................................................358
Subdivision D—Other provisions 359
921P Obligation to ensure that compliance scheme is publicly
available ........................................................................................359
921Q Obligation to provide ASIC with information ...............................359
921R Modification of compliance scheme..............................................359
921S Obligation to review compliance scheme ......................................360
921T Obligation to notify ASIC of changes to monitoring body............361
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Division 8C—The standards body 362
Subdivision A—Functions of the standards body 362
921U Functions of the standards body ....................................................362
921V Approval of foreign qualifications.................................................364
921W Commencement of Code of Ethics and amendments of Code
of Ethics.........................................................................................366
Subdivision B—Declaration of the standards body 366
921X Minister to declare a body corporate to be the standards body ......366
921Y Minister may revoke declaration under section 921X ...................367
Subdivision C—Other provisions relating to the standards body 369
921Z Modification of the standards body’s constitution.........................369
921ZA Disallowance of modifications of the standards body’s
constitution ....................................................................................369
921ZB Minister may direct the standards body to do certain things..........369
921ZC Annual report.................................................................................370
Division 9—Registers relating to financial services 371
Subdivision A—Registers generally 371
922A Registers relating to financial services ..........................................371
922B Fees for searching registers ...........................................................371
Subdivision B—Notice requirements relating to the Register of
Relevant Providers 372
922D Obligation to notify ASIC about a person who becomes a
relevant provider............................................................................372
922E Information about a relevant provider who is a financial
services licensee ............................................................................372
922F Information about a relevant provider who is not a financial
services licensee ............................................................................373
922G Meaning of recent advising history ...............................................376
922H Ongoing obligation to notify ASIC when there is a change in
a matter for a relevant provider .....................................................376
922HA Obligation to notify ASIC of financial services licensee’s
CPD year .......................................................................................377
922HB Obligation to notify ASIC of non-compliance with
continuing professional development standard..............................378
922HC Requirement to retain information.................................................378
922HD Obligation to notify ASIC in relation to failures to comply
with the Code of Ethics .................................................................379
922J Obligation to notify ASIC about a person who starts to have
control of a body corporate licensee ..............................................380
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922K Obligation to notify ASIC about a person who ceases to have
control of a body corporate licensee ..............................................380
922L Requirement for notice to be lodged..............................................381
922M Failing to comply with obligation to notify ASIC .........................382
922N Obligation for relevant providers to provide information to
financial services licensees ............................................................384
922P Change in matter within 30 business days .....................................384
Subdivision C—Register of Relevant Providers 385
922Q Register of Relevant Providers ......................................................385
922R Relevant provider number .............................................................388
922S Correcting the Register..................................................................388
Division 10—Restrictions on use of terminology 389
923A Restriction on use of certain words or expressions........................389
923B Restriction on use of certain words or expressions unless
authorised in licence conditions.....................................................391
923C Restriction on use of terms “financial adviser” and “financial
planner” .........................................................................................394
Division 11—Agreements with unlicensed persons relating to the
provision of financial services 398
Subdivision A—Agreements affected 398
924A Agreements with certain unlicensed persons .................................398
Subdivision B—Effect on agreements 398
925A Client may give notice of rescission ..............................................398
925B Effect of notice under section 925A ..............................................399
925C Client may apply to Court for partial rescission ............................400
925D Court may make consequential orders...........................................400
925E Agreement unenforceable against client ........................................401
925F Non-licensee not entitled to recover commission ..........................401
925G Onus of establishing non-application of section 925E or
925F...............................................................................................402
925H Client may recover commission paid to non-licensee....................402
925I Remedies under this Division additional to other remedies...........402
Division 12—Miscellaneous 403
926A Exemptions and modifications by ASIC........................................403
926B Exemptions and modifications by regulations ...............................404
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Part 7.7—Financial services disclosure 405
Division 1—Preliminary 405
940A How Part applies if a financial services licensee is acting as
authorised representative ...............................................................405
940B What if there is no reasonable opportunity to give a
document, information or statement required by this Part? ...........405
940C How documents, information and statements are to be given........406
940D General approach to offence provisions ........................................408
Division 2—Person provided with financial service as retail
client to be given a Financial Services Guide 409
Subdivision A—Requirement for a Financial Services Guide to be
given 409
941A Obligation on financial services licensee to give a Financial
Services Guide if financial service provided to person as a
retail client.....................................................................................409
941B Obligation on authorised representative to give a Financial
Services Guide if financial service provided to person as a
retail client.....................................................................................409
941C Situations in which a Financial Services Guide is not
required..........................................................................................410
941D Timing of giving Financial Services Guide ...................................412
941E Information must be up to date......................................................413
941F Obligation to give updated Financial Services Guide....................413
Subdivision B—Content and authorisation of Financial Services
Guide 414
942A Title of Financial Services Guide ..................................................414
942B Financial Services Guide given by financial services
licensee—main requirements.........................................................414
942C Financial Services Guide given by authorised
representative—main requirements ...............................................417
942D Financial Services Guide may consist of 2 or more separate
documents given at same time .......................................................421
942DA Combining a Financial Services Guide and a Product
Disclosure Statement in a single document ...................................423
942E Altering a Financial Services Guide after its preparation and
before giving it to a person ............................................................423
Subdivision C—Supplementary Financial Services Guides 424
943A What a Supplementary Financial Services Guide is ......................424
943B Title of Supplementary Financial Services Guide .........................424
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943C Form of Supplementary Financial Services Guide ........................424
943D Effect of giving a person a Supplementary Financial Services
Guide .............................................................................................425
943E Situation in which only a Supplementary Financial Services
Guide need be given ......................................................................425
943F Altering a Supplementary Financial Services Guide after its
preparation and before giving it to a person ..................................426
Division 3—Additional requirements for personal advice
provided to a retail client 427
Subdivision A—When this Division applies 427
944A Situation in which Division applies ...............................................427
Subdivision C—Requirement for a Statement of Advice to be
given 427
946A Obligation to give client a Statement of Advice ............................427
946AA Small investments—Statement of Advice not required .................428
946B Other situations in which a Statement of Advice is not
required..........................................................................................430
946C Timing of giving Statement of Advice ..........................................434
Subdivision D—Content of Statement of Advice 435
947A Title of Statement of Advice..........................................................435
947B Statement of Advice given by financial services licensee—
main requirements .........................................................................436
947C Statement of Advice given by authorised representative—
main requirements .........................................................................437
947D Additional requirements when advice recommends
replacement of one product with another.......................................440
947E Statement of Advice not to be combined with Financial
Services Guide or Product Disclosure Statement ..........................441
Subdivision E—Other matters 442
948A Qualified privilege if providing entity complies with this
Division .........................................................................................442
Division 4—Other disclosure requirements 443
949A General advice provided to retail client—obligation to warn
client that advice does not take account of client’s objectives,
financial situation or needs ............................................................443
949B Regulations may impose disclosure requirements in certain
situations........................................................................................444
Division 6—Miscellaneous 447
951A Part cannot be contracted out of ....................................................447
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951B Exemptions and modifications by ASIC........................................447
951C Exemptions and modifications by regulations ...............................448
Division 7—Enforcement 449
Subdivision A—Offences 449
952A Overview .......................................................................................449
952B Definitions.....................................................................................449
952C Offence of failing to give a disclosure document or statement ......451
952D Offence of giving a disclosure document or statement
knowing it to be defective .............................................................453
952E Giving a defective disclosure document or statement
(whether or not known to be defective) .........................................454
952F Offences of financial services licensee knowingly providing
defective disclosure material to an authorised representative ........456
952G Offences of financial services licensee providing disclosure
material to an authorised representative (whether or not
known to be defective) ..................................................................458
952H Financial services licensee failing to ensure authorised
representative gives disclosure documents or statements as
required..........................................................................................460
952I Offences if a Financial Services Guide (or Supplementary
FSG) does not comply with certain requirements..........................461
952J Offence if a Statement of Advice does not comply with
certain requirements ......................................................................463
952K Offence if authorised representative gives out unauthorised
Financial Services Guide (or Supplementary FSG) .......................463
952L Offences if financial services licensee or authorised
representative becomes aware that a Financial Services
Guide (or Supplementary FSG) is defective ..................................464
952M Offence of unauthorised alteration of Financial Services
Guide or Supplementary Financial Services Guide .......................465
Subdivision B—Civil liability 466
953A Definitions.....................................................................................466
953B Civil action for loss or damage ......................................................468
953C Additional powers of court to make orders....................................470
Part 7.7A—Best interests obligations and remuneration 471
Division 1—Preliminary 471
960 Definitions.....................................................................................471
960A No contracting out .........................................................................473
960B Obligations under this Part in addition to other obligations...........473
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Division 2—Best interests obligations 474
Subdivision A—Preliminary 474
961 Application of this Division ..........................................................474
961A Application to a financial services licensee acting as an
authorised representative ...............................................................474
Subdivision B—Provider must act in the best interests of the client 475
961B Provider must act in the best interests of the client........................475
961C When is something reasonably apparent?.....................................477
961D What is a reasonable investigation? ..............................................477
961E What would reasonably be regarded as in the best interests of
the client? ......................................................................................478
961F What is a basic banking product?..................................................478
Subdivision C—Resulting advice must be appropriate to the client 478
961G Resulting advice must be appropriate to the client ........................478
Subdivision D—Where resulting advice still based on incomplete
or inaccurate information 479
961H Resulting advice still based on incomplete or inaccurate
information ....................................................................................479
Subdivision E—Provider to give priority to the client’s interests 480
961J Conflict between client’s interests and those of provider,
licensee, authorised representative or associates ...........................480
Subdivision F—Responsibilities of licensees under this Division 481
961K Civil penalty provision—sections 961B, 961G, 961H and
961J ...............................................................................................481
961L Licensees must ensure compliance ................................................481
961M Civil action for loss or damage ......................................................481
961N Additional powers of Court to make orders...................................483
961P Responsible licensee ......................................................................483
Subdivision G—Responsibilities of authorised representatives
under this Division 484
961Q Civil penalty provision—sections 961B, 961G, 961H and
961J ...............................................................................................484
Division 3—Charging ongoing fees to clients 485
Subdivision A—Preliminary 485
962 Application of this Division ..........................................................485
962A Ongoing fee arrangements.............................................................485
962B Ongoing fees..................................................................................487
962C Fee recipients.................................................................................487
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962CA Exemption from application of opt-in requirement .......................487
Subdivision B—Termination, disclosure and renewal 488
962D Application of this Subdivision .....................................................488
962E Client may terminate arrangement at any time ..............................489
962F Arrangement terminates if this Subdivision not complied
with................................................................................................489
962G Fee recipient must give fee disclosure statement...........................490
962H Fee disclosure statements ..............................................................490
962J Disclosure day ...............................................................................491
962K Fee recipient must give renewal notice..........................................491
962L Renewal notice day and renewal period ........................................492
962M If client notifies fee recipient that client does not wish to
renew .............................................................................................492
962N If client does not notify fee recipient that client wishes to
renew .............................................................................................493
962P Civil penalty provision—charging ongoing fees after
arrangement terminated .................................................................493
962Q Effect of termination......................................................................493
Subdivision C—Disclosure for arrangements to which Subdivision
B does not apply 493
962R Application of this Subdivision .....................................................493
962S Fee recipient must give fee disclosure statement ...........................494
Division 4—Conflicted remuneration 496
Subdivision A—Preliminary 496
963 Application to a financial services licensee acting as an
authorised representative ...............................................................496
Subdivision B—What is conflicted remuneration? 496
963A Conflicted remuneration................................................................496
963AA Benefits given in relation to life risk insurance products...............496
963B Monetary benefit given in certain circumstances not
conflicted remuneration.................................................................497
963BA Benefit ratio and clawback requirements.......................................500
963C Non-monetary benefit given in certain circumstances not
conflicted remuneration.................................................................501
963D Benefits for employees etc. of ADIs..............................................502
Subdivision C—Ban on conflicted remuneration 503
963E Licensee must not accept conflicted remuneration ........................503
963F Licensee must ensure compliance..................................................504
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963G Authorised representative must not accept conflicted
remuneration..................................................................................504
963H Other representatives must not accept conflicted
remuneration..................................................................................504
963J Employer must not give employees conflicted remuneration ........505
963K Product issuer or seller must not give conflicted
remuneration..................................................................................505
963L Volume-based benefits presumed to be conflicted
remuneration..................................................................................505
Division 5—Other banned remuneration 507
Subdivision A—Volume-based shelf-space fees 507
964 Application ....................................................................................507
964A Platform operator must not accept volume-based shelf-space
fees ................................................................................................508
Subdivision B—Asset-based fees on borrowed amounts 509
964B Application ....................................................................................509
964C Application to a financial services licensee acting as an
authorised representative ...............................................................509
964D Financial services licensees must not charge asset-based fees
on borrowed amounts ....................................................................509
964E Authorised representatives must not charge asset-based fees
on borrowed amounts ....................................................................510
964F What is an asset-based fee? ...........................................................511
964G Meaning of borrowed ....................................................................511
964H When is something reasonably apparent?.....................................511
Division 6—Anti-avoidance 512
965 Anti-avoidance ..............................................................................512
Division 7—Transition 513
966 Transition period ...........................................................................513
967 Best interests obligations and remuneration provisions to
apply during transition period........................................................513
968 Notice to clients in transition period..............................................514
Part 7.8—Other provisions relating to conduct etc. connected
with financial products and financial services, other
than financial product disclosure 516
Division 1—Preliminary 516
980A Matters covered by this Part ..........................................................516
980B General approach to offence provisions ........................................516
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Division 2—Dealing with clients’ money 517
Subdivision A—Money other than loans 517
981A Money to which Subdivision applies.............................................517
981B Obligation to pay money into an account ......................................518
981C Regulations may deal with various matters relating to
accounts maintained for the purposes of section 981B..................519
981D Money related to derivatives may be used for general
margining etc. purposes.................................................................520
981E Protection of money from attachment etc. .....................................520
981F Regulations may deal with how money to be dealt with if
licensee ceases to be licensed etc...................................................521
981G Account provider not liable merely because of licensee’s
contravention .................................................................................521
981H Money to which Subdivision applies taken to be held in trust.......522
Subdivision AA—Client money reporting rules 522
981J Client money reporting rules .........................................................522
981K Matters that may be dealt with in client money reporting
rules ...............................................................................................523
981L ASIC to consult before making rules.............................................524
981M Complying with client money reporting rules ...............................524
981N Alternatives to civil proceedings ...................................................525
981P Compliance with requirements to provide data or other
information to ASIC: protection from liability ..............................526
Subdivision B—Loan money 526
982A Money to which this Subdivision applies ......................................526
982B Obligation to pay money into an account ......................................527
982C Licensee to give client statement setting out terms of loan
etc. .................................................................................................527
982D Permitted use of loan .....................................................................528
Subdivision C—Powers of Court 528
983A Court may freeze certain accounts.................................................528
983B Interim order freezing accounts .....................................................529
983C Duty of person to whom order directed to make full
disclosure.......................................................................................529
983D Further orders and directions .........................................................530
983E Power of Court to make order relating to payment of money........530
Division 3—Dealing with other property of clients 532
984A Property to which Division applies................................................532
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984B How property to which this Division applies is to be dealt
with................................................................................................533
Division 4—Special provisions relating to insurance 534
985A Definitions etc. ..............................................................................534
985B Status of amounts paid to financial services licensees in
respect of contracts of insurance....................................................534
985C Regulations may impose other requirements etc. if financial
services licensee is not the insurer.................................................535
985D Financial services licensees etc. not to deal in general
insurance products from unauthorised insurers etc. .......................536
Division 4A—Special provisions relating to margin lending
facilities 538
Subdivision A—Responsible lending conduct for margin lending
facilities 538
985EA Application of this Subdivision .....................................................538
985E Requirements before issuing etc. margin lending facility..............538
985F Assessment of unsuitability of margin lending facility..................539
985G Reasonable inquiries etc. about the retail client.............................540
985H When margin lending facility must be assessed as unsuitable .......541
985J Giving the retail client the assessment...........................................542
985K Unsuitable margin lending facilities ..............................................543
Subdivision B—Notice of margin calls under margin lending
facilities 545
985L Issue of margin lending facility must not be conditional on
agreement to receive communications through agent ....................545
985M Notification of margin calls ...........................................................546
Division 5—Obligations to report 548
986A Reporting in relation to money to which Subdivision A or B
of Division 2 applies or property to which Division 3 applies.......548
986B Reporting in relation to dealings in derivatives .............................548
Division 6—Financial records, statements and audit 549
Subdivision A—Preliminary 549
987A Application of Division .................................................................549
Subdivision B—Financial records of financial services licensees 549
988A Obligation to keep financial records ..............................................549
988B Records to be kept so that profit and loss statements and
balance sheet can be prepared and audited ....................................550
988C Language of records ......................................................................550
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988D Location of records........................................................................550
988E Particular categories of information to be shown in records..........551
988F Regulations may impose additional requirements .........................552
988G Records taken to be made with licensee’s authority ......................552
Subdivision C—Financial statements of financial services licensees 552
989A Meaning of financial year .............................................................552
989B Financial services licensee to prepare and lodge annual profit
and loss statement and balance sheet .............................................552
989C Requirements as to contents and applicable accounting
principles .......................................................................................553
989CA Audit to be conducted in accordance with auditing standards .......553
989D Time of lodgment ..........................................................................554
Subdivision D—Appointment etc. of auditors 555
990A Sections 990B to 990H not to apply to public companies .............555
990B Appointment of auditor by licensee...............................................555
990C When a person or firm is ineligible to act as auditor .....................557
990D Ineligible person or firm must not consent to act or
disqualify themselves etc. ..............................................................557
990E Duration of appointment of auditors..............................................557
990F Removal of auditors ......................................................................558
990G Resignation of auditors—requirements for resignation .................558
990H Resignation of auditors—when resignation takes effect ................559
990I Auditor’s right of access to records, information etc. ....................559
990J Auditor’s fees and expenses ..........................................................560
990K Auditor to report on certain matters...............................................560
990L Qualified privilege for auditor etc. ................................................561
Division 7—Other rules about conduct 563
991A Financial services licensee not to engage in unconscionable
conduct ..........................................................................................563
991B Financial services licensee to give priority to clients’ orders ........563
991C Regulations may deal with various matters relating to
instructions to deal through licensed markets ................................564
991D Regulations may require records to be kept in relation to
instructions to deal on licensed markets and foreign markets........565
991E Obligations of financial services licensee in relation to
dealings with non-licensees ...........................................................565
991F Dealings involving employees of financial services licensees.......567
Division 8—Miscellaneous 569
992A Prohibition on hawking of certain financial products ....................569
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992AA Prohibition on hawking of interests in managed investment
schemes .........................................................................................571
992B Exemptions and modifications by ASIC........................................572
992C Exemptions and modifications by regulations ...............................573
Division 9—Enforcement 574
993A Overview .......................................................................................574
993B Offence of failing to pay client money into an account as
required..........................................................................................574
993C Offence of failing to comply with requirements relating to
client money account .....................................................................575
993D Failing to pay loan money into an account as required..................575
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Object of Chapter and outline of Chapter Division 1
Section 760A
Corporations Act 2001 1
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Chapter 7—Financial services and markets
Part 7.1—Preliminary
Division 1—Object of Chapter and outline of Chapter
760A Object of Chapter
The main object of this Chapter is to promote:
(a) confident and informed decision making by consumers of
financial products and services while facilitating efficiency,
flexibility and innovation in the provision of those products
and services; and
(b) fairness, honesty and professionalism by those who provide
financial services; and
(c) fair, orderly and transparent markets for financial products;
and
(d) the reduction of systemic risk and the provision of fair and
effective services by clearing and settlement facilities.
760B Outline of Chapter
An outline of this Chapter is set out in the table below.
Part-by-Part outline of Chapter 7
Part... Covers...
1 7.1 definitions of key concepts and of commonly occurring expressions
2 7.2 licensing of financial markets
other matters relating to financial markets
2A 7.2A supervision of financial markets
3 7.3 licensing of clearing and settlement facilities
other matters relating to clearing and settlement facilities
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Part-by-Part outline of Chapter 7
Part... Covers...
4 7.4 limitation on ownership of certain licensees
individuals who are disqualified from being involved in certain
licensees
5 7.5 compensation regimes for financial markets
5A 7.5A regulation of derivative transactions and derivative trade
repositories
6 7.6 licensing of providers of financial services
other related matters (e.g. restrictions on use of terminology;
agreements with unlicensed persons relating to provision of
financial services)
7 7.7 disclosure requirements for financial services licensees and their
authorised representatives
disclosure requirements for certain people who are not required to
be licensed
7A 7.7A best interests obligations
charging ongoing fees to clients
ban on conflicted remuneration and other remuneration
8 7.8 other conduct requirements for financial services licensees (e.g.
dealing with client money and property; financial records,
statements and audit)
special provisions relating to insurance
special provisions relating to margin lending facilities
9 7.9 financial product disclosure requirements
other requirements relating to issue, sale and purchase of financial
products
9A 7.9A intervention powers in relation to financial products
10 7.10 market misconduct and other prohibited conduct relating to
financial products and services
11 7.11 title to, and transfer of, certain securities and other financial
products
12 7.12 qualified privilege in certain situations
other miscellaneous matters
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Division 2—Definitions
761A Definitions
In this Chapter:
able to be traded, in relation to a market, includes (but is not
limited to) admitted to quotation on the market.
acquire, in relation to a financial product, has a meaning affected
by section 761E.
AFCA (short for the Australian Financial Complaints Authority)
means the operator of the AFCA scheme.
AFCA scheme means the external dispute resolution scheme for
which an authorisation under Part 7.10A is in force.
AFCA staff member means:
(a) a director, officer or employee of AFCA; or
(b) a person engaged as a consultant to, or to perform services
for, AFCA for the purposes of the AFCA scheme.
annual turnover, of a body corporate during a 12-month period,
means the sum of the values of all the supplies that the body
corporate, and any body corporate related to the body corporate,
have made, or are likely to make, during the 12-month period,
other than:
(a) supplies made from any of those bodies corporate to any
other of those bodies corporate; or
(b) supplies that are input taxed; or
(c) supplies that are not for consideration (and are not taxable
supplies under section 72-5 of the A New Tax System (Goods
and Services Tax) Act 1999); or
(d) supplies that are not made in connection with an enterprise
that the body corporate carries on; or
(e) supplies that are not connected with Australia.
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Expressions used in this definition that are also used in the A New
Tax System (Goods and Services Tax) Act 1999 have the same
meaning as in that Act.
annuity policy means a life policy in relation to an annuity that is
declared to be a superannuation policy under regulations made for
the purposes of paragraph (b) of the definition of superannuation
policy in the Dictionary in the Life Insurance Act 1995.
approved deposit fund has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
arrangement means, subject to section 761B, a contract,
agreement, understanding, scheme or other arrangement (as
existing from time to time):
(a) whether formal or informal, or partly formal and partly
informal; and
(b) whether written or oral, or partly written and partly oral; and
(c) whether or not enforceable, or intended to be enforceable, by
legal proceedings and whether or not based on legal or
equitable rights.
Australian CS facility licence means a licence under section 824B
that authorises a person to operate a clearing and settlement
facility.
Australian derivative trade repository licence: see section 905B.
Australian entity means:
(a) an Australian citizen; or
(b) a resident of Australia (within the meaning of the Criminal
Code); or
(c) a body corporate incorporated by or under a law of the
Commonwealth or of a State or Territory.
Australian financial services licence means a licence under
section 913B that authorises a person who carries on a financial
services business to provide financial services.
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Australian market licence means a licence under section 795B that
authorises a person to operate a financial market.
authorised clearing and settlement facility means:
(a) a licensed CS facility; or
(b) a clearing and settlement facility that satisfies the following
requirements:
(i) the operator of the facility is authorised to operate the
facility in the foreign country in which the operator’s
principal place of business is located;
(ii) any requirements specified in regulations made for the
purposes of this subparagraph.
authorised representative of a financial services licensee means a
person authorised in accordance with section 916A or 916B to
provide a financial service or financial services on behalf of the
licensee.
basic deposit product means a deposit product that is a facility in
relation to which the following conditions are satisfied:
(a) the terms applicable to the facility (the governing terms) do
not permit the amount from time to time standing to the
credit of the facility to be reduced otherwise than in
consequence of one or more of the following:
(i) a withdrawal, transfer or debit on the instruction of, or
by authority of, the depositor, not being on account of
entry fees, exit fees or charges for the management of
the funds (but this does not exclude charges for the
maintenance of the facility itself);
(ii) a payment of charges or duties on deposits into, or
withdrawals from, the facility that are payable under a
law of the Commonwealth or of a State or Territory;
(iii) a payment that a law of the Commonwealth, or of a
State or Territory, requires to be made out of the
facility;
(iv) a payment that an order of a court requires to be made
out of the facility;
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(v) the exercise of a right to combine accounts;
(vi) the correction of an error;
(vii) any other circumstances specified in regulations made
for the purposes of this subparagraph; and
(b) any return to be generated for the depositor on the amount
from time to time standing to the credit of the facility is an
amount that is set out in, or that is calculated by reference to
a rate or rates that are set out in, the governing terms; and
(c) either:
(i) there is no minimum period before which funds cannot
be withdrawn or transferred from the facility without a
reduction in the return generated for the depositor; or
(ii) if there is such a period, it expires on or before the end
of the period of 5 years starting on the day on which
funds were first deposited in the facility; and
(d) unless subparagraph (c)(ii) applies and the period referred to
in that subparagraph expires on or before the end of the
period of 2 years starting on the day on which funds were
first deposited in the facility—funds are able to be withdrawn
or transferred from the facility on the instruction of, or by
authority of, the depositor:
(i) without any prior notice to the ADI that makes the
facility available; or
(ii) if the ADI that makes the facility available is included
in a class of ADIs specified in regulations made for the
purposes of this subparagraph—subject to a prior notice
requirement that does not exceed the period specified in
those regulations in relation to that class of ADIs;
whether or not the withdrawal or transfer will attract a
reduction in the return generated for the depositor as
mentioned in subparagraph (c)(i); and
(e) any other conditions specified in regulations made for the
purposes of this paragraph.
binder means an authorisation given to a person by a financial
services licensee who is an insurer to do either or both of the
following:
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(a) enter into contracts that are risk insurance products on behalf
of the insurer as insurer; or
(b) deal with and settle, on behalf of the insurer, claims relating
to risk insurance products against the insurer as insurer;
but does not include an authorisation of a kind referred to in
paragraph (a) that is limited to effecting contracts of insurance by
way of interim cover unless there is also in existence an authority
given by the insurer to the person to enter into, on behalf of the
insurer and otherwise than by way of interim cover, contracts of
insurance.
carried on in this jurisdiction, in relation to a financial services
business, has a meaning affected by section 911D.
certificate cancellation provisions, in relation to a prescribed CS
facility, means the provisions of the facility’s operating rules that
deal with:
(a) the cancellation of documents of title to financial products
transferred through the facility; and
(b) matters incidental to the cancellation of those documents.
CGS depository interest means a depository interest, as defined in
the Commonwealth Inscribed Stock Act 1911, that can be
transferred through a licensed CS facility.
class, in relation to financial products or financial services, has a
meaning affected by regulations made for the purposes of
section 761CA.
clearing and settlement facility has the meaning given by
Division 6.
clearing requirements (in relation to derivative transactions): see
subsection 901A(7).
client money reporting rules has the meaning given by
section 981J.
crowd-funding service that a person provides has the meaning
given by section 766F.
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CS facility licensee means a person who holds an Australian CS
facility licence.
current LVR:
(a) in relation to a standard margin lending facility—has the
meaning given by subsection 761EA(3); and
(b) in relation to a non-standard margin lending facility—has the
meaning given by subsection 761EA(6).
dealing in a financial product has the meaning given by
section 766C (and deal has a corresponding meaning).
death benefit decision-maker means any of the following persons:
(a) the trustee of a regulated superannuation fund or approved
deposit fund;
(b) an insurer in relation to a superannuation complaint;
(c) an RSA provider.
deposit product means a financial product described in
paragraph 764A(1)(i).
derivative has the meaning given by section 761D.
derivative retail client money: money paid as mentioned in
subsection 981A(1) is derivative retail client money if:
(a) either:
(i) the financial service referred to in
subparagraph 981A(1)(a)(i) is or relates to a dealing in a
derivative; or
(ii) the financial product referred to in
subparagraph 981A(1)(a)(ii) is a derivative; and
(b) the financial service or product would be provided to the
client as a retail client if:
(i) the service or product were provided to the client when
the money is paid; and
(ii) section 761GA (about sophisticated investors) did not
apply.
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derivative retail client property: property given as mentioned in
subsection 984A(1) is derivative retail client property if:
(a) either:
(i) the financial service referred to in
subparagraph 984A(1)(a)(i) is or relates to a dealing in a
derivative; or
(ii) the financial product referred to in
subparagraph 984A(1)(a)(ii) is a derivative; and
(b) the financial service or product would be provided to the
client as a retail client if:
(i) the service or product were provided to the client when
the property is given; and
(ii) section 761GA (about sophisticated investors) did not
apply.
derivative trade data means:
(a) information about derivative transactions, or about positions
relating to derivative transactions; or
(b) information (including statistical data) that is created or
derived from information referred to in paragraph (a).
derivative trade repository means a facility to which information
about derivative transactions, or about positions relating to
derivative transactions, can be reported (whether or not other
information or data can also be reported to the facility).
derivative trade repository licensee means a person who holds an
Australian derivative trade repository licence.
derivative trade repository rules: see subsection 903A(1).
derivative transaction means:
(a) the entry into of an arrangement that is a derivative; or
(b) the modification or termination of such an arrangement; or
(c) the assignment, by a party to such an arrangement, of some
or all of the party’s rights and obligations under the
arrangement; or
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(d) any other transaction that relates to a derivative and that is in
a class of transactions prescribed by the regulations for the
purpose of this paragraph.
derivative transaction rules: see subsection 901A(1).
dispose, in relation to a financial product, includes terminate or
close out the legal relationship that constitutes the financial
product.
disqualified individual means an individual who is disqualified
within the meaning given by section 853A.
employer-sponsor has the same meaning as in the Superannuation
Industry (Supervision) Act 1993.
execution requirements (in relation to derivative transactions): see
subsection 901A(5).
exempt public sector superannuation scheme has the same
meaning as in the Superannuation Industry (Supervision) Act 1993.
financial market has the meaning given by Division 5.
financial product has the meaning given by Division 3.
Note: Some references in this Chapter to financial products have effect
subject to particular express exclusions (for example, see
sections 1010A and 1074A) or inclusions (see section 1040B).
financial product advice has the meaning given by section 766B.
financial product advice law means:
(a) a provision of Chapter 7 that covers conduct relating to the
provision of financial product advice (whether or not it also
covers other conduct), but only in so far as it covers conduct
relating to the provision of financial product advice; or
(b) a provision of Chapter 9 as it applies in relation to a
provision referred to in paragraph (a); or
(c) a provision of Division 2 of Part 2 of the ASIC Act that
covers conduct relating to the provision of financial product
advice (whether or not it also covers other conduct), but only
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in so far as it covers conduct relating to the provision of
financial product advice; or
(d) any other Commonwealth, State or Territory legislation that
covers conduct relating to the provision of financial product
advice (whether or not it also covers other conduct), but only
in so far as it covers conduct relating to the provision of
financial product advice.
financial service has the meaning given by Division 4.
financial services business means a business of providing financial
services.
Note: The meaning of carry on a financial services business is affected by
section 761C.
Financial Services Guide means a Financial Services Guide
required by section 941A or 941B to be given in accordance with
Division 2 of Part 7.7.
financial services law means:
(a) a provision of this Chapter or of Chapter 5C, 5D, 6, 6A, 6B,
6C, 6D or 8A; or
(b) a provision of Chapter 9 as it applies in relation to a
provision referred to in paragraph (a); or
(ba) a provision of the Passport Rules for this jurisdiction; or
(c) a provision of Division 2 of Part 2 of the ASIC Act; or
(d) any other Commonwealth, State or Territory legislation that
covers conduct relating to the provision of financial services
(whether or not it also covers other conduct), but only in so
far as it covers conduct relating to the provision of financial
services; or
(e) in relation to a financial services licensee that is a licensed
trustee company (in addition to paragraphs (a) to (d))—any
rule of common law or equity that covers conduct relating to
the provision of financial services that are traditional trustee
company services (whether or not it also covers other
conduct), but only in so far as it covers conduct relating to
the provision of such services.
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financial services licensee means a person who holds an
Australian financial services licence.
foreign exchange contract means a contract:
(a) to buy or sell currency (whether Australian or not); or
(b) to exchange one currency (whether Australian or not) for
another (whether Australian or not).
foreign passport fund product means a financial product described
in paragraph 764A(1)(bb).
funeral benefit means a benefit that consists of the provision of
funeral, burial or cremation services, with or without the supply of
goods connected with such services.
further market-related advice means advice to which
subsection 946B(1) applies.
general advice has the meaning given by subsection 766B(4).
general insurance product means a financial product described in
paragraph 764A(1)(d).
holder, in relation to a financial product, means the person to
whom the financial product was issued, or if it has (since issue)
been disposed of to another person who has not themselves
disposed of it, that other person (and hold has a corresponding
meaning).
holder, in relation to an RSA, has the same meaning as in the
Retirement Savings Accounts Act 1997.
insurance product means a financial product described in
paragraph 764A(1)(d), (e) or (f).
insurer, in relation to a superannuation complaint, means the life
company (within the meaning of the Life Insurance Act 1995) that
is a party to the policy to which the complaint relates.
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investigating authority means a tribunal, authority or person
having power to require the production of documents or the
answering of questions.
investment life insurance product means a financial product
described in paragraph 764A(1)(f).
involved in a market licensee, CS facility licensee or derivative
trade repository licensee, or in an applicant for such a licence, has
the meaning given by section 853B.
issue, in relation to a financial product, has a meaning affected by
section 761E.
issuer, in relation to a financial product, has a meaning affected by
section 761E.
kind, in relation to financial products or financial services, has a
meaning affected by regulations made for the purposes of
section 761CA.
licensed CS facility means a clearing and settlement facility the
operation of which is authorised by an Australian CS facility
licence.
licensed derivative trade repository means a derivative trade
repository the operation of which is authorised by an Australian
derivative trade repository licence.
licensed market means a financial market the operation of which is
authorised by an Australian market licence.
life policy has the same meaning as in the Life Insurance Act 1995.
life policy fund means a regulated superannuation fund for the
purpose of which the trustee maintains, in relation to at least some
of the members of the fund:
(a) individual life policies covering each of those members; or
(b) a single life policy covering all of those members.
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life risk insurance product means a financial product described in
paragraph 764A(1)(e).
limit, in relation to a margin lending facility, has the meaning
given by subsection 761EA(11).
listing rules of a financial market, or proposed financial market,
means any rules (however described) that are made by the operator
of the market, or contained in the operator’s constitution, and that
deal with:
(a) admitting entities to, or removing entities from, the market’s
official list, whether for the purpose of enabling financial
products of those entities to be traded on the market or for
other purposes; or
(b) the activities or conduct of entities that are included on that
list.
lodge with ASIC, when used in a provision of this Chapter in
relation to which regulations made for the purposes of this
definition state that the lodgment is to be in a prescribed form,
means lodge with ASIC in a prescribed form.
Note: See section 350 for the meaning of lodge in a prescribed form.
makes a market for a financial product has the meaning given by
section 766D.
managed investment product means a financial product described
in paragraph 764A(1)(b).
margin call:
(a) in relation to a standard margin lending facility—has the
meaning given by subsection 761EA(4); and
(b) in relation to a non-standard margin lending facility—has the
meaning given by subsection 761EA(7); and
(c) in relation to a facility that ASIC has declared to be a margin
lending facility under subsection 761EA(8)—has the
meaning given in the declaration.
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margin lending facility has the meaning given by
subsection 761EA(1).
market integrity rules means the rules made by ASIC under
section 798G.
market licensee means a person who holds an Australian market
licence.
non-standard margin lending facility has the meaning given by
subsection 761EA(5).
operated in this jurisdiction:
(a) in relation to a financial market, has a meaning affected by
section 791D; and
(b) in relation to a clearing and settlement facility, has a meaning
affected by section 820D.
operating rules:
(a) of a clearing and settlement facility, or proposed clearing and
settlement facility, means any rules (however described)
made by the operator of the facility, or contained in the
operator’s constitution, that deal with:
(i) the activities or conduct of the facility; or
(ii) the activities or conduct of persons in relation to the
facility;
but does not include any such rules that deal with matters in
respect of which licensed CS facilities must have written
procedures under regulations made for the purposes of
subsection 822A(2); or
(b) of a financial market, or proposed financial market, means
any rules (however described), including the market’s listing
rules (if any), that are made by the operator of the market, or
contained in the operator’s constitution, and that deal with:
(i) the activities or conduct of the market; or
(ii) the activities or conduct of persons in relation to the
market;
but does not include:
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(iii) any such rules that deal with matters in respect of which
licensed markets must have written procedures under
regulations made for the purposes of
subsection 793A(2); or
(iv) compensation rules within the meaning of Part 7.5.
participant:
(a) in relation to a clearing and settlement facility, means a
person who is allowed to directly participate in the facility
under the facility’s operating rules and, when used in any of
the following provisions, also includes a recognised affiliate
in relation to the facility:
(i) paragraph 821B(2)(b);
(ii) section 822B;
(iii) subsection 915F(2);
(iv) any other provisions prescribed by regulations made for
the purposes of this subparagraph; and
(b) in relation to a financial market, means a person who is
allowed to directly participate in the market under the
market’s operating rules and, when used in any of the
following provisions, also includes a recognised affiliate in
relation to the market:
(i) paragraph 792B(2)(b);
(ii) section 793B;
(iii) section 883A;
(iv) subsection 915F(2);
(v) paragraphs 923B(3)(a) and (b);
(vi) any other provisions prescribed by regulations made for
the purposes of this subparagraph.
person has a meaning affected by section 761F (which deals with
partnerships) and section 761FA (which deals with multiple
trustees).
personal advice has the meaning given by subsection 766B(3).
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prescribed CS facility means a licensed CS facility that is
prescribed by regulations made for the purposes of this definition.
prescribed derivative trade repository means a facility that is (or
that is in a class that is) prescribed by the regulations for the
purpose of paragraph 901A(6)(b).
Product Disclosure Statement means a Product Disclosure
Statement:
(a) required by section 1012A, 1012B, 1012C or 1012I to be
given in accordance with Division 2 of Part 7.9; or
(b) that section 1012H requires an issuer of a financial product to
take reasonable steps to ensure is given to a new group
member in accordance with Division 2 of Part 7.9.
Note: For the effect of the lodgment of a Replacement Product Disclosure
Statement, see section 1014J.
provide, in relation to a financial product, has a meaning affected
by section 761E.
recognised affiliate, in relation to a clearing and settlement facility
or a financial market, means a person who is:
(a) recognised by the operating rules of the facility or market as
a suitably qualified affiliate of the facility or market; and
(b) involved in the carrying on of a financial services business
(including as an employee, director or in some other
capacity).
registrable superannuation entity has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
regulated superannuation fund:
(a) has the same meaning as in the Superannuation Industry
(Supervision) Act 1993; and
(b) includes the scheme provided for by the Australian Defence
Force Cover Act 2015; and
(c) if, under the AFCA scheme, an exempt public sector
superannuation scheme may elect to join the AFCA scheme,
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and such a superannuation scheme so elects—includes that
superannuation scheme.
relevant personal circumstances, in relation to advice provided or
to be provided to a person in relation to a matter, are such of the
person’s objectives, financial situation and needs as would
reasonably be considered to be relevant to the advice.
Replacement Product Disclosure Statement has the meaning
given by section 1014H.
reporting requirements (in relation to derivative transactions): see
subsection 901A(6).
retail client has the meaning given by sections 761G and 761GA.
risk insurance product means a financial product described in
paragraph 764A(1)(d) or (e).
RSA has the same meaning as in the Retirement Savings Accounts
Act 1997.
RSA product means a financial product described in
paragraph 764A(1)(h).
RSA provider has the same meaning as in the Retirement Savings
Accounts Act 1997.
sale, in relation to an annuity policy, includes any activity
undertaken, or representation made:
(a) at the time of, or preliminary to, the entry into the policy, so
that the policy as so entered into extends to a particular
person; and
(b) at the time of, or preliminary to, the variation of the policy,
so that the policy as so varied affects a particular person.
security means:
(a) a share in a body; or
(b) a debenture of a body; or
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(c) a legal or equitable right or interest in a security covered by
paragraph (a) or (b); or
(d) an option to acquire, by way of issue, a security covered by
paragraph (a), (b) or (c); or
(e) a right (whether existing or future and whether contingent or
not) to acquire, by way of issue, the following under a rights
issue:
(i) a security covered by paragraph (a), (b), (c) or (d);
(ii) an interest or right covered by paragraph 764A(1)(b),
(ba) or (bb); or
(f) a CGS depository interest; or
(g) a simple corporate bonds depository interest;
but does not include an excluded security or a foreign passport
fund product. In Part 7.11, it also includes a managed investment
product and a foreign passport fund product.
self managed superannuation fund has the same meaning as in
the Superannuation Industry (Supervision) Act 1993.
standard margin lending facility has the meaning given by
subsection 761EA(2).
Statement of Advice means a Statement of Advice required by
section 946A to be given in accordance with Subdivisions C and D
of Division 3 of Part 7.7.
superannuation complaint has the meaning given by
subsection 1053(3).
superannuation entity has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
superannuation product means a financial product described in
paragraph 764A(1)(g).
superannuation provider means a person who is a superannuation
provider within the meaning of the Superannuation Contributions
Tax (Assessment and Collection) Act 1997 or the Superannuation
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Contributions Tax (Members of Constitutionally Protected
Superannuation Funds) Assessment and Collection Act 1997.
Supplementary Financial Services Guide has the meaning given
by section 943A.
Supplementary Product Disclosure Statement has the meaning
given by section 1014A.
title document, for a financial product, means a certificate or other
document evidencing ownership of the financial product.
traditional trustee company services has the same meaning as in
Chapter 5D.
trustee, of a regulated superannuation fund that is the scheme
provided for by the Australian Defence Force Cover Act 2015,
means CSC (within the meaning of the Governance of Australian
Government Superannuation Schemes Act 2011).
trustee company has the same meaning as in Chapter 5D.
wholesale client has the meaning given by section 761G.
761B Meaning of arrangement—2 or more arrangements that
together form a derivative or other financial product
If:
(a) an arrangement, when considered by itself, does not
constitute a derivative, or some other kind of financial
product; and
(b) that arrangement, and one or more other arrangements, if
they had instead been a single arrangement, would have
constituted a derivative or other financial product; and
(c) it is reasonable to assume that the parties to the arrangements
regard them as constituting a single scheme;
the arrangements are, for the purposes of this Part, to be treated as
if they together constituted a single arrangement.
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761C Meaning of carry on a financial services business
In working out whether someone carries on a financial services
business, Division 3 of Part 1.2 needs to be taken into account.
However, paragraph 21(3)(e) does not apply for the purposes of
this Chapter.
761CA Meaning of class and kind of financial products and financial
services
The regulations may include provisions identifying, or providing
for the identification of, what constitutes a class or kind of
financial products or financial services for the purposes of a
provision or provisions of this Chapter.
761D Meaning of derivative
(1) For the purposes of this Chapter, subject to subsections (2), (3) and
(4), a derivative is an arrangement in relation to which the
following conditions are satisfied:
(a) under the arrangement, a party to the arrangement must, or
may be required to, provide at some future time consideration
of a particular kind or kinds to someone; and
(b) that future time is not less than the number of days,
prescribed by regulations made for the purposes of this
paragraph, after the day on which the arrangement is entered
into; and
(c) the amount of the consideration, or the value of the
arrangement, is ultimately determined, derived from or varies
by reference to (wholly or in part) the value or amount of
something else (of any nature whatsoever and whether or not
deliverable), including, for example, one or more of the
following:
(i) an asset;
(ii) a rate (including an interest rate or exchange rate);
(iii) an index;
(iv) a commodity.
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(2) Without limiting subsection (1), anything declared by the
regulations to be a derivative for the purposes of this section is a
derivative for the purposes of this Chapter. A thing so declared is a
derivative despite anything in subsections (3) and (4).
(3) Subject to subsection (2), the following are not derivatives for the
purposes of this Chapter even if they are covered by the definition
in subsection (1):
(a) an arrangement in relation to which subparagraphs (i), (ii)
and (iii) are satisfied:
(i) a party has, or may have, an obligation to buy, and
another party has, or may have, an obligation to sell,
tangible property (other than Australian or foreign
currency) at a price and on a date in the future; and
(ii) the arrangement does not permit the seller’s obligations
to be wholly settled by cash, or by set-off between the
parties, rather than by delivery of the property; and
(iii) neither usual market practice, nor the rules of a licensed
market or a licensed CS facility, permits the seller’s
obligations to be closed out by the matching up of the
arrangement with another arrangement of the same kind
under which the seller has offsetting obligations to buy;
but only to the extent that the arrangement deals with that
purchase and sale;
(b) a contract for the future provision of services;
(c) anything that is covered by a paragraph of
subsection 764A(1), other than paragraph (c) of that
subsection;
(d) anything declared by the regulations not to be a derivative for
the purposes of this Chapter.
(4) Subject to subsection (2), an arrangement under which one party
has an obligation to buy, and the other has an obligation to sell,
property is not a derivative for the purposes of this Chapter merely
because the arrangement provides for the consideration to be
varied by reference to a general inflation index such as the
Consumer Price Index.
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761E Meaning of issued, issuer, acquire and provide in relation to
financial products
General
(1) This section defines when a financial product is issued to a person.
It also defines who the issuer of a financial product is. If a
financial product is issued to a person:
(a) the person acquires the product from the issuer; and
(b) the issuer provides the product to the person.
Note: Some financial products can also be acquired from, or provided by,
someone other than the issuer (e.g. on secondary trading in financial
products).
Issuing a financial product
(2) Subject to this section, a financial product is issued to a person
when it is first issued, granted or otherwise made available to a
person.
(3) Subject to this section, a financial product specified in the table is
issued to a person when the event specified for that product occurs:
When particular financial products are issued
Item Financial product Event
1 superannuation
product
the person becomes a member of the
fund concerned
2 RSA product the account concerned is opened in
the person’s name
3 derivative the person enters into the legal
relationship that constitutes the
financial product
4 margin lending
facility
the person enters into the legal
relationship that constitutes the
margin lending facility, as the client
under the facility
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(3A) For the avoidance of doubt, none of the following are taken to give
rise to the issue of a financial product to a person (the client):
(a) the client making a further contribution to a superannuation
fund of which the client is already a member;
(aa) an employer of the client making a further contribution, for
the benefit of the client, to a superannuation fund of which
the client is already a member;
(b) the client making a further deposit into an RSA maintained in
the client’s name;
(c) the client making a further payment under a life insurance
investment product;
(d) the client making a further deposit into a deposit product;
(e) the client engaging in conduct specified in regulations made
for the purposes of this paragraph in relation to a financial
product already held by the client.
Issuer of a financial product
(4) Subject to this section, the issuer, in relation to a financial product
issued to a person (the client), is the person responsible for the
obligations owed, under the terms of the facility that is the product:
(a) to, or to a person nominated by, the client; or
(b) if the product has been transferred from the client to another
person and is now held by that person or another person to
whom it has subsequently been transferred—to, or to a
person nominated by, that person or that other person.
Note: For example, the issuer of a direct debit facility is the financial
institution with which the account to be debited is held, rather than the
persons to whom payments can be made using the facility.
(4A) For the purposes of subsection (4), if the financial product issued to
the client is an interest in a notified foreign passport fund, the
operator of the fund is the person responsible for the obligations
mentioned in that subsection that are owed under the terms of the
facility that is the product.
(5) Subject to subsection (7), each person who is a party to a financial
product that:
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(a) is a derivative; and
(b) is not entered into, or acquired, on a financial market;
is taken to be an issuer of the product.
Note 1: Under paragraph (1)(a), each person who is a party to the derivative
will also acquire the financial product at the time of its issue as
specified in subsection (3).
Note 2: Although each party to the derivative is an issuer, whether any
particular party has disclosure or other obligations under this Chapter
will depend on the circumstances (e.g. whether the issue occurs in the
course of a business of issuing financial products and whether any of
the other parties is a retail client).
(6) Subject to subsection (7), the issuer of a financial product that:
(a) is a derivative; and
(b) is entered into, or acquired, on a financial market;
is taken to be:
(c) if the product is entered into, or acquired, on the market
through an arrangement made by a financial services licensee
acting on behalf of another person—the financial services
licensee; or
(d) if the product is entered into, or acquired, on the market
through an arrangement made by an authorised representative
of a financial services licensee acting on behalf of another
person (not being the licensee)—the financial services
licensee; or
(e) if neither paragraph (c) nor (d) applies—the market operator.
(7) The regulations may make provision determining all or any of the
following for the purposes of this Chapter:
(a) the meaning of issue (and/or related parts of speech,
including issuer) in relation to a class of financial products;
(b) the meaning of acquire (and/or related parts of speech) in
relation to a class of financial products;
(c) the meaning of provide (and/or related parts of speech) in
relation to a class of financial products.
Regulations made for the purposes of this subsection have effect
despite anything else in this section.
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761EA Meaning of margin lending facility, margin call and
associated expressions
(1) A margin lending facility is:
(a) a standard margin lending facility; or
(b) a non-standard margin lending facility; or
(c) a facility of a kind that has been declared by ASIC to be a
margin lending facility under subsection (8);
unless the facility is of a kind that has been declared by ASIC not
to be a margin lending facility under subsection (9).
Standard margin lending facilities
(2) A standard margin lending facility is a facility under the terms of
which:
(a) credit is, or may be, provided by a person (the provider) to a
natural person (the client); and
(b) the credit provided is, or must be, applied wholly or partly:
(i) to acquire one or more financial products, or a
beneficial interest in one or more financial products; or
(ii) to repay, wholly or partly, another credit facility (within
the meaning of subparagraph 765A(1)(h)(i)), the credit
provided under which was applied, wholly or partly, to
acquire one or more financial products, or a beneficial
interest in one or more financial products; and
(c) the credit provided is, or must be, secured by property (the
secured property); and
(d) the secured property consists, or must consist, wholly or
partly of one or more marketable securities, or a beneficial
interest in one or more marketable securities; and
(e) if the current LVR of the facility exceeds a ratio, percentage,
proportion or level (however described) determined under the
terms of the facility, then:
(i) the client becomes required to take action; or
(ii) the provider becomes entitled to take action; or
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(iii) another person becomes required or entitled to take
action;
in accordance with the terms of the facility to reduce the
current LVR of the facility.
(3) The current LVR of a standard margin lending facility at a
particular time is the ratio, percentage, proportion or level
(however described) that:
(a) is determined under the terms of the facility; and
(b) under the terms of the facility, represents a particular
relationship between:
(i) the amount of the debt owing by the client, or credit
provided by the provider, or both, under the facility at
that time; and
(ii) the value of the secured property determined at that time
under the terms of the facility.
(4) A standard margin lending facility is in margin call when
paragraph (2)(e) applies in relation to the facility.
Non-standard margin lending facilities
(5) A non-standard margin lending facility is a facility under the
terms of which:
(a) a natural person (the client) transfers one or more marketable
securities, or a beneficial interest in one or more marketable
securities (the transferred securities) to another person (the
provider); and
(b) the provider transfers property to the client (the transferred
property) as consideration or security for the transferred
securities; and
(c) the transferred property is, or must be, applied wholly or
partly to acquire one or more financial products, or a
beneficial interest in one or more financial products; and
(d) the client has a right, in the circumstances determined under
the terms of the facility, to be given marketable securities
equivalent to the transferred securities; and
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(e) if the current LVR of the facility exceeds a ratio, percentage,
proportion or level (however described) determined under the
terms of the facility, then:
(i) the client becomes required to take action; or
(ii) the provider becomes entitled to take action; or
(iii) another person becomes required or entitled to take
action;
in accordance with the terms of the facility to reduce the
current LVR of the facility.
(6) The current LVR of a non-standard margin lending facility at a
particular time is the ratio, percentage, proportion or level
(however described) that:
(a) is determined under the terms of the facility; and
(b) under the terms of the facility, represents a particular
relationship between:
(i) an amount determined at that time under the terms of
the facility by reference to the value of the transferred
property and any amount owing by the client to the
provider; and
(ii) the value of the transferred securities determined at that
time under the terms of the facility.
(7) A non-standard margin lending facility is in margin call when
paragraph (5)(e) applies in relation to the facility.
ASIC declarations in relation to margin lending facilities
(8) ASIC may declare that a particular kind of facility is a margin
lending facility. The declaration must give the meanings of margin
call and limit in relation to that kind of facility.
(9) ASIC may declare that a particular kind of facility is not a margin
lending facility.
(10) A declaration made under subsection (8) or (9):
(a) must be in writing; and
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(b) is a legislative instrument for the purposes of the Legislative
Instruments Act 2003.
Meaning of limit of a margin lending facility
(11) The limit of a margin lending facility:
(a) in relation to a standard margin lending facility—means the
maximum amount of credit that may be provided by the
provider to the client under the facility; and
(b) in relation to a non-standard margin lending facility—means
the maximum amount of property that may be transferred by
the provider to the client under the facility; and
(c) in relation to a facility of a kind that ASIC has declared to be
a margin lending facility under subsection (8)—has the
meaning given in the declaration.
761F Meaning of person—generally includes a partnership
(1) This Chapter applies to a partnership as if the partnership were a
person, but it applies with the following changes:
(a) obligations that would be imposed on the partnership are
imposed instead on each partner, but may be discharged by
any of the partners;
(b) any contravention of a provision of this Chapter, or a
provision of this Act that relates to a requirement in a
provision of this Chapter, that would otherwise be a
contravention by the partnership is taken (whether for the
purposes of criminal or civil liability) to have been a
contravention by each partner who:
(i) aided, abetted, counselled or procured the relevant act or
omission; or
(ii) was in any way knowingly concerned in, or party to, the
relevant act or omission (whether directly or indirectly
and whether by any act or omission of the partner).
(2) For the purposes of this Chapter, a change in the composition of a
partnership does not affect the continuity of the partnership.
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(3) Subsections (1) and (2) have effect subject to:
(a) an express or implied contrary intention in a provision or
provisions of this Chapter; and
(b) the regulations, which may exclude or modify the effect of
those subsections in relation to specified provisions.
761FA Meaning of person—generally includes multiple trustees
(1) This section applies in relation to a trust while the trust continues
to have:
(a) 2 or more trustees; or
(b) a single trustee who was a trustee of the trust at a time when
it had 2 or more trustees.
(2) Subject to subsections (3) and (4), during a period while this
section applies to a trust, this Chapter applies to the trust as if the
trustee or trustees of the trust from time to time during the period
constituted a single legal entity (the notional entity) that remained
the same for the duration of that period.
Note: So, for example, while this section applies to a trust, a licence granted
under this Chapter to the trustees of the trust will continue in force,
despite a change in the persons who are the trustees.
(3) During any period or part of a period while this section applies to a
trust and the trust has 2 or more trustees, this Chapter applies to the
trustees as mentioned in subsection (2), but it applies with the
following changes:
(a) obligations that would be imposed on the notional entity are
imposed instead on each trustee, but may be discharged by
any of the trustees;
(b) any contravention of a provision of this Chapter, or a
provision of this Act that relates to a requirement in a
provision of this Chapter, that would otherwise be a
contravention by the notional entity is taken (whether for the
purposes of criminal or civil liability) to have been a
contravention by each trustee who:
(i) aided, abetted, counselled or procured the relevant act or
omission; or
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(ii) was in any way knowingly concerned in, or party to, the
relevant act or omission (whether directly or indirectly
and whether by any act or omission of the trustee).
(4) During any period or part of a period while this section applies to a
trust and the trust has only one trustee, this Chapter applies to the
trustee as mentioned in subsection (2), but it applies with the
following changes:
(a) obligations that would be imposed on the notional entity are
imposed instead on that single trustee;
(b) any contravention of a provision of this Chapter, or a
provision of this Act that relates to a requirement in a
provision of this Chapter, that would otherwise be a
contravention by the notional entity is taken (whether for the
purposes of criminal or civil liability) to have been a
contravention by that single trustee.
(5) Subsections (2), (3) and (4) have effect subject to:
(a) an express or implied contrary intention in a provision or
provisions of this Chapter; and
(b) the regulations, which may exclude or modify the effect of
those subsections in relation to specified provisions.
761G Meaning of retail client and wholesale client
Providing a financial product or financial service to a person as a
retail client
(1) For the purposes of this Chapter, a financial product or a financial
service is provided to a person as a retail client unless
subsection (5), (6), (6A) or (7), or section 761GA, provides
otherwise.
Note: The references in this section to providing a financial product to a
person are not to be taken to imply that the provision of a financial
product is not also the provision of a financial service (see the
meaning of dealing in section 766C).
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Acquiring a financial product or financial service as a retail client
(2) For the purposes of this Chapter, a person to whom a financial
product or financial service is provided as a retail client is taken to
acquire the product or service as a retail client.
Disposing of a financial product as a retail client
(3) If a financial product is provided to a person as a retail client, any
subsequent disposal of all or part of that product by the person is,
for the purposes of this Chapter, a disposal by the person as a retail
client.
Wholesale clients
(4) For the purposes of this Chapter, a financial product or a financial
service is provided to, or acquired by, a person as a wholesale
client if it is not provided to, or acquired by, the person as a retail
client.
General insurance products
(5) For the purposes of this Chapter, if a financial product is, or a
financial service provided to a person relates to, a general
insurance product, the product or service is provided to the person
as a retail client if:
(a) either:
(i) the person is an individual; or
(ii) the insurance product is or would be for use in
connection with a small business (see subsection (12));
and
(b) the general insurance product is:
(i) a motor vehicle insurance product (as defined in the
regulations); or
(ii) a home building insurance product (as defined in the
regulations); or
(iii) a home contents insurance product (as defined in the
regulations); or
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(iv) a sickness and accident insurance product (as defined in
the regulations); or
(v) a consumer credit insurance product (as defined in the
regulations); or
(vi) a travel insurance product (as defined in the
regulations); or
(vii) a personal and domestic property insurance product (as
defined in the regulations); or
(viii) a kind of general insurance product prescribed by
regulations made for the purposes of this subparagraph.
In any other cases, the provision to a person of a financial product
that is, or a financial service that relates to, a general insurance
product does not constitute the provision of a financial product or
financial service to the person as a retail client.
Superannuation products and RSA products
(6) For the purposes of this Chapter:
(a) if a financial product provided to a person is a
superannuation product or an RSA product, the product is
provided to the person as a retail client; and
(aa) however, if a trustee of a pooled superannuation trust (within
the meaning of the Superannuation Industry (Supervision)
Act 1993) provides a financial product that is an interest in
the trust to a person covered by subparagraph (c)(i), the
product is not provided to the person as a retail client; and
(b) if a financial service (other than the provision of a financial
product) provided to a person who is not covered by
subparagraph (c)(i) or (ii) relates to a superannuation product
or an RSA product, the service is provided to the person as a
retail client; and
(c) if a financial service (other than the provision of a financial
product) provided to a person who is:
(i) the trustee of a superannuation fund, an approved
deposit fund, a pooled superannuation trust or a public
sector superannuation scheme (within the meaning of
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the Superannuation Industry (Supervision) Act 1993)
that has net assets of at least $10 million; or
(ii) an RSA provider (within the meaning of the Retirement
Savings Accounts Act 1997);
relates to a superannuation product or an RSA product, that
does not constitute the provision of a financial service to the
person as a retail client.
Traditional trustee company services
(6A) For the purpose of this Chapter, if a financial service provided to a
person is a traditional trustee company service, the service is
provided to the person as a retail client unless regulations made for
the purpose of this subsection provide otherwise.
Other kinds of financial product
(7) For the purposes of this Chapter, if a financial product is not, or a
financial service (other than a traditional trustee company service)
provided to a person does not relate to, a general insurance
product, a superannuation product or an RSA product, the product
or service is provided to the person as a retail client unless one or
more of the following paragraphs apply:
(a) the price for the provision of the financial product, or the
value of the financial product to which the financial service
relates, equals or exceeds the amount specified in regulations
made for the purposes of this paragraph as being applicable
in the circumstances (but see also subsection (10)); or
(b) the financial product, or the financial service, is provided for
use in connection with a business that is not a small business
(see subsection (12));
(c) the financial product, or the financial service, is not provided
for use in connection with a business, and the person who
acquires the product or service gives the provider of the
product or service, before the provision of the product or
service, a copy of a certificate given within the preceding 6
months by a qualified accountant (as defined in section 9)
that states that the person:
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(i) has net assets of at least the amount specified in
regulations made for the purposes of this subparagraph;
or
(ii) has a gross income for each of the last 2 financial years
of at least the amount specified in regulations made for
the purposes of this subparagraph a year;
(d) the person is a professional investor.
Offence proceedings—defendant bears evidential burden in
relation to matters referred to in paragraphs (7)(a) to (d)
(8) In a prosecution for an offence based on a provision of this Chapter
or Part 6D.3A, a defendant bears an evidential burden in relation to
the matters in paragraphs (7)(a) to (d) as if those matters were
exceptions for the purposes of subsection 13.3(3) of the Criminal
Code.
Other proceedings relating to subsection (7) products—
presumption in non-criminal proceedings of retail client unless
contrary established
(9) If:
(a) it is alleged in a proceeding under this Chapter (not being a
prosecution for an offence), or in any other proceeding (not
being a prosecution for an offence) in respect of a matter
arising under this Chapter, that a particular financial product
or financial service was provided to a person as a retail client;
and
(b) the product or the service is one to which subsection (7)
applies;
it is presumed that the product or service was provided to the
person as a retail client unless the contrary is established.
Note 1: There is no such presumption in relation to the provision of a product
or service that is or relates to a general insurance product, a
superannuation product or an RSA product. Whether or not such a
product, or a service relating to such a product, was provided to a
person as a retail client is to be resolved as provided in subsection (5)
or (6), as the case requires.
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Note 2: In criminal proceedings, a defendant bears an evidential burden in
relation to the matters in paragraphs (7)(a) to (d) (see subsection (8)).
Regulations and paragraph (7)(a)
(10) In addition to specifying an amount or amounts for the purposes of
paragraph (7)(a), the regulations may do either or both of the
following:
(a) deal with how a price or value referred to in that paragraph is
to be calculated, either generally or in relation to a specified
class of financial products;
(b) modify the way in which that paragraph applies in particular
circumstances.
Regulations and paragraph (7)(c)
(10A) In addition to specifying amounts for the purposes of
subparagraphs (7)(c)(i) and (ii), the regulations may do either or
both of the following:
(a) deal with how net assets referred to in subparagraph (7)(c)(i)
are to be determined and valued, either generally or in
specified circumstances;
(b) deal with how gross income referred to in
subparagraph (7)(c)(ii) is to be calculated, either generally or
in specified circumstances.
What happens if a package of general insurance products and
other kinds of financial products is provided?
(11) If:
(a) either:
(i) in a single transaction, 2 or more financial products are
provided to a person; or
(ii) a single financial service provided to a person relates to
2 or more financial products; and
(b) one or more, but not all, of the financial products are general
insurance products;
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subsection (5) applies to the transaction or service so far as it
relates to the general insurance products, and subsection (6) or (7),
as the case requires, applies to the transaction or service so far as it
relates to other financial products.
Definition
(12) In this section:
small business means a business employing less than:
(a) if the business is or includes the manufacture of goods—100
people; or
(b) otherwise—20 people.
761GA Meaning of retail client—sophisticated investors
For the purposes of this Chapter, a financial product, or a financial
service (other than a traditional trustee company service or a
crowd-funding service) in relation to a financial product, is not
provided by one person to another person as a retail client if:
(a) the first person (the licensee) is a financial services licensee;
and
(b) the financial product is not a general insurance product, a
superannuation product or an RSA product; and
(c) the financial product or service is not provided for use in
connection with a business; and
(d) the licensee is satisfied on reasonable grounds that the other
person (the client) has previous experience in using financial
services and investing in financial products that allows the
client to assess:
(i) the merits of the product or service; and
(ii) the value of the product or service; and
(iii) the risks associated with holding the product; and
(iv) the client’s own information needs; and
(v) the adequacy of the information given by the licensee
and the product issuer; and
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(e) the licensee gives the client before, or at the time when, the
product or advice is provided a written statement of the
licensee’s reasons for being satisfied as to those matters; and
(f) the client signs a written acknowledgment before, or at the
time when, the product or service is provided that:
(i) the licensee has not given the client a Product
Disclosure Statement; and
(ii) the licensee has not given the client any other document
that would be required to be given to the client under
this Chapter if the product or service were provided to
the client as a retail client; and
(iii) the licensee does not have any other obligation to the
client under this Chapter that the licensee would have if
the product or service were provided to the client as a
retail client.
761H References to this Chapter include references to regulations or
other instruments made for the purposes of this Chapter
(1) A reference in a provision of this Chapter to this Chapter, or to a
particular provision or group of provisions of this Chapter, includes
(unless a contrary intention appears) a reference to regulations, or
other instruments, made for the purposes of this Chapter, or for the
purposes of that provision or any of those provisions, as the case
requires.
(2) Subsection (1) has effect as if provisions in Part 10.2 (transitional
provisions) that relate to matters dealt with in this Chapter were
part of this Chapter.
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Division 3—What is a financial product?
Subdivision A—Preliminary
762A Overview of approach to defining what a financial product is
General definition
(1) Subdivision B sets out a general definition of financial product.
Subject to subsections (2) and (3), a facility is a financial product if
it falls within that definition.
Specific inclusions
(2) Subdivision C identifies, or provides for the identification of, kinds
of facilities that, subject to subsection (3), are financial products
(whether or not they are within the general definition).
Overriding exclusions
(3) Subdivision D identifies, or provides for the identification of, kinds
of facilities that are not financial products. These facilities are not
financial products:
(a) even if they are within the general definition; and
(b) even if they are within a class of facilities identified as
mentioned in subsection (2).
762B What if a financial product is part of a broader facility?
If a financial product is a component of a facility that also has
other components, this Chapter, in applying to the financial
product, only applies in relation to the facility to the extent it
consists of the component that is the financial product.
Note: So, e.g., Part 7.9 does not require disclosures to be made in relation to
those other components.
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762C Meaning of facility
In this Division:
facility includes:
(a) intangible property; or
(b) an arrangement or a term of an arrangement (including a term
that is implied by law or that is required by law to be
included); or
(c) a combination of intangible property and an arrangement or
term of an arrangement.
Note: 2 or more arrangements may be taken to constitute a single
arrangement—see section 761B.
Subdivision B—The general definition
763A General definition of financial product
(1) For the purposes of this Chapter, a financial product is a facility
through which, or through the acquisition of which, a person does
one or more of the following:
(a) makes a financial investment (see section 763B);
(b) manages financial risk (see section 763C);
(c) makes non-cash payments (see section 763D).
This has effect subject to section 763E.
(2) For the purposes of this Chapter, a particular facility that is of a
kind through which people commonly make financial investments,
manage financial risks or make non-cash payments is a financial
product even if that facility is acquired by a particular person for
some other purpose.
(3) A facility does not cease to be a financial product merely because:
(a) the facility has been acquired by a person other than the
person to whom it was originally issued; and
(b) that person, in acquiring the product, was not making a
financial investment or managing a financial risk.
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763B When a person makes a financial investment
For the purposes of this Chapter, a person (the investor) makes a
financial investment if:
(a) the investor gives money or money’s worth (the
contribution) to another person and any of the following
apply:
(i) the other person uses the contribution to generate a
financial return, or other benefit, for the investor;
(ii) the investor intends that the other person will use the
contribution to generate a financial return, or other
benefit, for the investor (even if no return or benefit is in
fact generated);
(iii) the other person intends that the contribution will be
used to generate a financial return, or other benefit, for
the investor (even if no return or benefit is in fact
generated); and
(b) the investor has no day-to-day control over the use of the
contribution to generate the return or benefit.
Note 1: Examples of actions that constitute making a financial investment
under this subsection are:
(a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or
(b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme).
Note 2: Examples of actions that do not constitute making a financial
investment under this subsection are:
(a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or
(b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the
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mere act of giving the money to the licensee will not of itself constitute making a financial investment).
763C When a person manages financial risk
For the purposes of this Chapter, a person manages financial risk
if they:
(a) manage the financial consequences to them of particular
circumstances happening; or
(b) avoid or limit the financial consequences of fluctuations in,
or in the value of, receipts or costs (including prices and
interest rates).
Note 1: Examples of actions that constitute managing a financial risk are:
(a) taking out insurance; or
(b) hedging a liability by acquiring a futures contract or entering into a currency swap.
Note 2: An example of an action that does not constitute managing a financial
risk is employing a security firm (while that is a way of managing the
risk that thefts will happen, it is not a way of managing the financial
consequences if thefts do occur).
763D When a person makes non-cash payments
(1) For the purposes of this Chapter, a person makes non-cash
payments if they make payments, or cause payments to be made,
otherwise than by the physical delivery of Australian or foreign
currency in the form of notes and/or coins.
Note: Examples of actions that constitute making non-cash payments are:
(a) making payments by means of a facility for direct debit of a deposit account; or
(b) making payments by means of a facility for the use of cheques; or
(c) making payments by means of a purchased payment facility within the meaning of the Payment Systems (Regulation) Act 1998, such as a smart card; or
(d) making payments by means of traveller’s cheques (whether denominated in Australian or foreign currency).
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(2) For the purposes of this Chapter, the following are not making
non-cash payments, even if they might otherwise be covered by
subsection (1):
(a) making payments by means of a facility in relation to which
one of the following applies:
(i) there is only one person to whom payments can be made
by means of the facility;
(ii) the facility is, or is of a kind, specified in the regulations
as being a facility that is not to be covered by this
section because of restrictions relating to the number of
people to whom payments can be made by means of the
facility, or relating to the number of persons who can
use the facility to make payments;
(b) making payments by means of:
(i) a letter of credit from a financial institution; or
(ii) a cheque drawn by a financial institution on itself; or
(iii) a guarantee given by a financial institution.
763E What if a financial product is only incidental?
(1) If:
(a) something (the incidental product) that, but for this section,
would be a financial product because of this Subdivision is:
(i) an incidental component of a facility that also has other
components; or
(ii) a facility that is incidental to one or more other
facilities; and
(b) it is reasonable to assume that the main purpose of:
(i) if subparagraph (a)(i) applies—the facility referred to in
that subparagraph, when considered as a whole; or
(ii) if subparagraph (a)(ii) applies—the incidental product,
and the other facilities referred to in that subparagraph,
when considered as a whole;
is not a financial product purpose;
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the incidental product is not a financial product because of this
Subdivision (however, it may still be a financial product because of
Subdivision C).
(2) In this section:
financial product purpose means a purpose of:
(a) making a financial investment; or
(b) managing financial risk; or
(c) making non-cash payments.
Subdivision C—Specific inclusions
764A Specific things that are financial products (subject to
Subdivision D)
(1) Subject to Subdivision D, the following are financial products for
the purposes of this Chapter:
(a) a security;
(b) any of the following in relation to a registered scheme:
(i) an interest in the scheme;
(ii) a legal or equitable right or interest in an interest
covered by subparagraph (i);
(iii) an option to acquire, by way of issue, an interest or right
covered by subparagraph (i) or (ii);
(ba) any of the following in relation to a managed investment
scheme that is not a registered scheme, other than a scheme
(whether or not operated in this jurisdiction) in relation to
which none of paragraphs 601ED(1)(a), (b) and (c) are
satisfied:
(i) an interest in the scheme;
(ii) a legal or equitable right or interest in an interest
covered by subparagraph (i);
(iii) an option to acquire, by way of issue, an interest or right
covered by subparagraph (i) or (ii);
(bb) any of the following in relation to a notified foreign passport
fund:
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(i) an interest in the fund;
(ii) a legal or equitable right or interest in an interest
covered by subparagraph (i);
(iii) an option to acquire, by way of issue, an interest or right
covered by subparagraph (i) or (ii);
(c) a derivative;
(d) a contract of insurance that is not a life policy, or a sinking
fund policy, within the meaning of the Life Insurance Act
1995, but not including such a contract of insurance:
(i) to the extent that it provides for a benefit to be provided
by an association of employees that is registered as an
organisation, or recognised, under the Fair Work
(Registered Organisations) Act 2009 for a member of
the association or a dependant of a member; or
(ii) to the extent that it provides for benefits, pensions or
payments described in paragraph 11(3)(c) of the Life
Insurance Act 1995; or
(iii) to the extent that it provides for the provision of a
funeral benefit; or
(iv) issued by an employer to an employee of the employer;
(e) a life policy, or a sinking fund policy, within the meaning of
the Life Insurance Act 1995, that is a contract of insurance,
but not including such a policy:
(i) to the extent that it provides for a benefit to be provided
by an association of employees that is registered as an
organisation, or recognised, under the Fair Work
(Registered Organisations) Act 2009 for a member of
the association or a dependant of a member; or
(ii) to the extent that it provides for benefits, pensions or
payments described in paragraph 11(3)(c) of the Life
Insurance Act 1995; or
(iii) to the extent that it provides for the provision of a
funeral benefit; or
(iv) issued by an employer to an employee of the employer;
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(f) a life policy, or a sinking fund policy, within the meaning of
the Life Insurance Act 1995, that is not a contract of
insurance, but not including such a policy:
(i) to the extent that it provides for a benefit to be provided
by an association of employees that is registered as an
organisation, or recognised, under the Fair Work
(Registered Organisations) Act 2009 for a member of
the association or a dependant of a member; or
(ii) to the extent that it provides for benefits, pensions or
payments described in paragraph 11(3)(c) of the Life
Insurance Act 1995; or
(iii) to the extent that it provides for the provision of a
funeral benefit; or
(iv) issued by an employer to an employee of the employer;
(g) a superannuation interest within the meaning of the
Superannuation Industry (Supervision) Act 1993;
(h) an RSA (retirement savings account) within the meaning of
the Retirement Savings Accounts Act 1997;
(i) any deposit-taking facility made available by an ADI (within
the meaning of the Banking Act 1959) in the course of its
banking business (within the meaning of that Act), other than
an RSA (RSAs are covered by paragraph (h));
(j) a debenture, stock or bond issued or proposed to be issued by
a government;
(k) a foreign exchange contract that is not:
(i) a derivative (derivatives are covered by paragraph (c));
or
(ii) a contract to exchange one currency (whether Australian
or not) for another that is to be settled immediately;
(ka) an Australian carbon credit unit;
(kb) an eligible international emissions unit;
(l) a margin lending facility;
(m) anything declared by the regulations to be a financial product
for the purposes of this Chapter.
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Note: Even though something is expressly excluded from one of these
paragraphs, it may still be a financial product (subject to Subdivision
D) either because:
(a) it is covered by another of these paragraphs; or
(b) it is covered by the general definition in Subdivision B.
Contracts of insurance
(1A) If a single contract of insurance provides 2 or more kinds of cover,
paragraph (1)(d) applies separately in relation to that contract, in
relation to each of those kinds of cover, as if the contract only
provided that kind of cover.
Note: Because of this subsection (including as it is affected by
subsection (1B)), a single contract of insurance may constitute 2 or
more separate general insurance products.
(1B) If a contract of insurance provides a kind of cover in relation to 2
or more kinds of asset, subsection (1A) applies to the contract, in
relation to each of those kinds of asset, as if the cover provided by
the contract in relation to that kind of asset constituted a separate
kind of cover.
(2) For the purpose of paragraphs (1)(d), (e) and (f) and
subsections (1A) and (1B), contract of insurance includes:
(a) a contract that would ordinarily be regarded as a contract of
insurance even if some of its provisions are not by way of
insurance; and
(b) a contract that includes provisions of insurance in so far as
those provisions are concerned, even if the contract would
not ordinarily be regarded as a contract of insurance.
Declaring additional things to be financial products for specified
provisions of this Chapter
(3) Subject to Subdivision D, a thing declared by regulations to be a
financial product for a specified provision of this Chapter is a
financial product for that provision.
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Subdivision D—Specific exclusions
765A Specific things that are not financial products
(1) Despite anything in Subdivision B or Subdivision C, the following
are not financial products for the purposes of this Chapter:
(a) an excluded security;
(b) an undertaking by a body corporate to pay money to a related
body corporate;
(c) health insurance provided as part of a health insurance
business (as defined in Division 121 of the Private Health
Insurance Act 2007);
(ca) insurance provided as part of a health-related business (as
defined by section 131-15 of that Act) that is conducted
through a health benefits fund (as defined by section 131-10
of that Act);
(d) insurance provided by the Commonwealth;
(e) State insurance or Northern Territory insurance, including
insurance entered into by:
(i) a State or the Northern Territory; and
(ii) some other insurer;
as joint insurers;
(f) insurance entered into by the Export Finance and Insurance
Corporation, other than a short-term insurance contract
within the meaning of the Export Finance and Insurance
Corporation Act 1991;
(g) reinsurance;
(h) any of the following:
(i) a credit facility within the meaning of the regulations
(other than a margin lending facility);
(ii) a facility for making non-cash payments (see
section 763D), if payments made using the facility will
all be debited to a credit facility covered by
subparagraph (i);
(i) a facility:
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(i) that is an approved RTGS system within the meaning of
the Payment Systems and Netting Act 1998; or
(ii) for the transmission and reconciliation of non-cash
payments (see section 763D), and the establishment of
final positions, for settlement through an approved
RTGS system within the meaning of the Payment
Systems and Netting Act 1998;
(j) a facility that is a designated payment system for the
purposes of the Payment Systems (Regulation) Act 1998;
(k) a facility for the exchange and settlement of non-cash
payments (see section 763D) between providers of non-cash
payment facilities;
(l) a facility that is:
(i) a financial market; or
(ii) a clearing and settlement facility; or
(iii) a payment system operated as part of a clearing and
settlement facility; or
(iv) a derivative trade repository;
(m) a contract to exchange one currency (whether Australian or
not) for another that is to be settled immediately;
(n) so much of an arrangement as is not a derivative because of
paragraph 761D(3)(a);
(p) an arrangement that is not a derivative because of
subsection 761D(4);
(q) an interest in a superannuation fund of a kind prescribed by
regulations made for the purposes of this paragraph;
(r) any of the following:
(i) an interest in something that is not a managed
investment scheme because of paragraph (c), (e), (f),
(k), (l) or (m) of the definition of managed investment
scheme in section 9;
(ii) a legal or equitable right or interest in an interest
covered by subparagraph (i);
(iii) an option to acquire, by way of issue, an interest or right
covered by subparagraph (i) or (ii);
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(s) any of the following in relation to a managed investment
scheme (whether or not operated in this jurisdiction) in
relation to which none of paragraphs 601ED(1)(a), (b) and
(c) are satisfied and that is not a registered scheme or a
notified foreign passport fund:
(i) an interest in the scheme;
(ii) a legal or equitable right or interest in an interest
covered by subparagraph (i);
(iii) an option to acquire, by way of issue, an interest or right
covered by subparagraph (i) or (ii);
(t) a deposit-taking facility that is, or is used for, State banking;
(u) a benefit provided by an association of employees that is
registered as an organisation, or recognised, under the Fair
Work (Registered Organisations) Act 2009 for a member of
the association or a dependant of a member;
(v) either of the following:
(i) a contract of insurance; or
(ii) a life policy or a sinking fund policy, within the
meaning of the Life Insurance Act 1995, that is not a
contract of insurance;
issued by an employer to an employee of the employer;
(w) a funeral benefit;
(x) physical equipment or physical infrastructure by which
something else that is a financial product is provided;
(y) a facility, interest or other thing declared by regulations made
for the purposes of this subsection not to be a financial
product;
(z) a facility, interest or other thing declared by ASIC under
subsection (2) not to be a financial product.
ASIC declarations
(2) ASIC may declare that a specified facility, interest or other thing is
not a financial product for the purposes of this Chapter. The
declaration must be in writing and ASIC must publish notice of it
in the Gazette.
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Regulations
(3) Despite anything in Subdivision B or C, the regulations may
declare that a specified facility, interest or other thing is not a
financial product for the purposes of specified provisions of this
Chapter.
(4) A declaration under subsection (2) that is inconsistent with
regulations made for the purposes of subsection (3) has no effect to
the extent of the inconsistency, but a declaration is taken to be
consistent with the regulations to the extent that the declaration is
capable of operating concurrently with the regulations.
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Part 7.1 Preliminary
Division 4 When does a person provide a financial service?
Section 766A
52 Corporations Act 2001
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Division 4—When does a person provide a financial
service?
766A When does a person provide a financial service?
General
(1) For the purposes of this Chapter, subject to paragraph (2)(b), a
person provides a financial service if they:
(a) provide financial product advice (see section 766B); or
(b) deal in a financial product (see section 766C); or
(c) make a market for a financial product (see section 766D); or
(d) operate a registered scheme; or
(e) provide a custodial or depository service (see section 766E);
or
(ea) provide a crowd-funding service (see section 766F); or
(f) engage in conduct of a kind prescribed by regulations made
for the purposes of this paragraph.
Provision of traditional trustee company services by trustee
company
(1A) Subject to paragraph (2)(b), the provision by a trustee company of
a traditional trustee company service constitutes the provision, by
the company, of a financial service.
Note: Trustee companies may also provide other kinds of financial service
mentioned in subsection (1).
(1B) The regulations may, in relation to a traditional trustee company
service of a particular class, prescribe the person or persons to
whom a service of that class is taken to be provided. This
subsection does not limit (and is not limited by) subsection (2).
Note: A traditional trustee company service is provided to a person as a
retail client unless regulations provide otherwise (see
subsection 761G(6A)).
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Section 766B
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Regulations may deal with various matters
(2) The regulations may set out:
(a) the circumstances in which persons facilitating the provision
of a financial service (for example, by publishing
information) are taken also to provide that service; or
(b) the circumstances in which persons are taken to provide, or
are taken not to provide, a financial service.
Exception for work ordinarily done by clerks or cashiers
(3) To avoid doubt, a person’s conduct is not the provision of a
financial service if it is done in the course of work of a kind
ordinarily done by clerks or cashiers.
Meaning of operating a registered scheme
(4) For the purposes of this section, a person is not operating a
registered 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.
766B Meaning of financial product advice
(1) For the purposes of this Chapter, financial product advice means a
recommendation or a statement of opinion, or a report of either of
those things, that:
(a) is intended to influence a person or persons in making a
decision in relation to a particular financial product or class
of financial products, or an interest in a particular financial
product or class of financial products; or
(b) could reasonably be regarded as being intended to have such
an influence.
(1A) However, subject to subsection (1B), the provision or giving of an
exempt document or statement does not constitute the provision of
financial product advice.
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Division 4 When does a person provide a financial service?
Section 766B
54 Corporations Act 2001
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(1B) Subsection (1A) does not apply for the purpose of determining
whether a recommendation or statement of opinion made by an
outside expert, or a report of such a recommendation or statement
of opinion, that is included in an exempt document or statement is
financial product advice provided by the outside expert.
(2) There are 2 types of financial product advice: personal advice and
general advice.
(3) For the purposes of this Chapter, personal advice is financial
product advice that is given or directed to a person (including by
electronic means) in circumstances where:
(a) the provider of the advice has considered one or more of the
person’s objectives, financial situation and needs (otherwise
than for the purposes of compliance with the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 or
with regulations, or AML/CTF Rules, under that Act); or
(b) a reasonable person might expect the provider to have
considered one or more of those matters.
(4) For the purposes of this Chapter, general advice is financial
product advice that is not personal advice.
(5) The following advice is not financial product advice:
(a) advice given by a lawyer in his or her professional capacity,
about matters of law, legal interpretation or the application of
the law to any facts;
(b) except as may be prescribed by the regulations—any other
advice given by a lawyer in the ordinary course of activities
as a lawyer, that is reasonably regarded as a necessary part of
those activities;
(c) except as may be prescribed by the regulations—advice
given by a registered tax agent or BAS agent (within the
meaning of the Tax Agent Services Act 2009), that is given in
the ordinary course of activities as such an agent and that is
reasonably regarded as a necessary part of those activities.
(6) If:
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(a) in response to a request made by a person (the inquirer) to
another person (the provider), the provider tells the inquirer
the cost, or an estimate of the likely cost, of a financial
product (for example, an insurance product); and
(b) that cost or estimate is worked out, or said by the provider to
be worked out, by reference to a valuation of an item (for
example, a house or car to which an insurance policy would
relate), being a valuation that the provider suggests or
recommends to the inquirer;
the acts of telling the inquirer the cost, or estimated cost, and
suggesting or recommending the valuation, do not, of themselves,
constitute the making of a recommendation (or the provision of any
other kind of financial product advice) relating to the financial
product.
(7) If:
(a) in response to a request made by a person (the inquirer) to
another person (the provider), the provider tells the inquirer
information about:
(i) the cost of a financial product; or
(ii) the rate of return on a financial product; or
(iii) any other matter identified in regulations made for the
purposes of this subparagraph; and
(b) the request could also have been complied with (but was not
also so complied with) by telling the inquirer equivalent
information about one or more other financial products;
the act of telling the inquirer the information does not, of itself,
constitute the making of a recommendation (or the provision of any
other kind of financial product advice) in relation to the financial
product referred to in paragraph (a).
(8) Subsections (5), (6) and (7) are not intended to affect, in any way,
the determination of whether situations not covered by those
subsections do, or do not, constitute the provision of financial
product advice.
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Part 7.1 Preliminary
Division 4 When does a person provide a financial service?
Section 766C
56 Corporations Act 2001
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(9) In this section:
exempt document or statement means:
(a) a document prepared, or a statement given, in accordance
with requirements of this Chapter, other than:
(i) a Statement of Advice; or
(ii) a document or statement of a kind prescribed by
regulations made for the purposes of this subparagraph;
or
(b) any other document or statement of a kind prescribed by
regulations made for the purposes of this paragraph.
outside expert, in relation to an exempt document or statement,
means an expert who is not:
(a) the person by whom, or on whose behalf, the exempt
document or statement was prepared; or
(b) an employee or director of that person.
766C Meaning of dealing
(1) For the purposes of this Chapter, the following conduct (whether
engaged in as principal or agent) constitutes dealing in a financial
product:
(a) applying for or acquiring a financial product;
(b) issuing a financial product;
(c) in relation to securities and interests in managed investment
schemes—underwriting the securities or interests;
(d) varying a financial product;
(e) disposing of a financial product.
(2) Arranging for a person to engage in conduct referred to in
subsection (1) is also dealing in a financial product, unless the
actions concerned amount to providing financial product advice.
(2A) Despite subsections (1) and (2), providing a crowd-funding service
does not constitute dealing in a financial product.
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(3) A person is taken not to deal in a financial product if the person
deals in the product on their own behalf (whether directly or
through an agent or other representative), unless:
(a) the person is an issuer of financial products; and
(b) the dealing is in relation to one or more of those products.
(3A) For the purposes of subsection (3), a person (the agent) who deals
in a product as an agent or representative of another person (the
principal) is not taken to deal in the product on the agent’s own
behalf, even if that dealing, when considered as a dealing by the
principal, is a dealing by the principal on the principal’s own
behalf.
(4) Also, a transaction entered into by a person who is, or who
encompasses or constitutes in whole or in part, any of the
following entities:
(a) a government or local government authority;
(b) a public authority or instrumentality or agency of the Crown;
(c) a body corporate or an unincorporated body;
is taken not to be dealing in a financial product by that person if
the transaction relates only to:
(d) securities of that entity; or
(e) if the entity is a government—debentures, stocks or bonds
issued or proposed to be issued by that government.
(5) Paragraph (4)(c) does not apply if the entity:
(a) carries on a business of investment in securities, interests in
land or other investments; and
(b) in the course of carrying on that business, invests funds
subscribed, whether directly or indirectly, after an offer or
invitation to the public (within the meaning of section 82)
made on terms that the funds subscribed would be invested.
(6) A transaction entered into by a sub-underwriter of an issue of
securities that relates only to the sub-underwriting is taken not to
be dealing in a financial product.
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Part 7.1 Preliminary
Division 4 When does a person provide a financial service?
Section 766D
58 Corporations Act 2001
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(7) The regulations may prescribe conduct that is taken to be, or not to
be, dealing in a financial product. Regulations made for the
purposes of this subsection have effect despite anything else in this
section.
766D Meaning of makes a market for a financial product
(1) For the purposes of this Chapter, a person makes a market for a
financial product if:
(a) either through a facility, at a place or otherwise, the person
regularly states the prices at which they propose to acquire or
dispose of financial products on their own behalf; and
(b) other persons have a reasonable expectation that they will be
able to regularly effect transactions at the stated prices; and
(c) the actions of the person do not, or would not if they
happened through a facility or at a place, constitute operating
a financial market because of the effect of
paragraph 767A(2)(a).
(2) Paragraph (1)(a) does not apply to a person stating prices at which
they propose to acquire or dispose of financial products if:
(a) the person is the issuer of the products; and
(b) the products are:
(i) superannuation products; or
(ii) managed investment products; or
(iii) financial products referred to in paragraph 764A(1)(ba)
(which relates to certain managed investment schemes
that are not registered schemes); or
(iv) foreign passport fund products.
766E Meaning of provide a custodial or depository service
(1) A person (the provider) provides a custodial or depository service
to another person (the client) if, under an arrangement between the
provider and the client, or between the provider and another person
with whom the client has an arrangement, (whether or not there are
also other parties to any such arrangement), a financial product, or
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a beneficial interest in a financial product, is held by the provider
in trust for, or on behalf of, the client or another person nominated
by the client.
(2) The following provisions apply in relation to a custodial or
depository service:
(a) subject to paragraph (b), the time at which a custodial or
depository service is provided is the time when the financial
product or beneficial interest concerned is first held by the
provider as mentioned in subsection (1);
(b) for the purposes of Part 7.6, and of any other provisions of
this Act prescribed by regulations made for the purposes of
this paragraph, the continued holding of the financial product
or beneficial interest concerned by the provider as mentioned
in subsection (1) also constitutes the provision of a custodial
or depository service.
Note: Because of paragraph (a) (subject to regulations made for the purposes
of paragraph (b)), the requirements of Part 7.7 relating to financial
services disclosure need only be complied with before the product or
interest is first held by the provider. However, because of
paragraph (b), the provider will be subject to the licensing and related
requirements of Part 7.6 for so long as they continue to hold the
product or interest.
(3) However, the following conduct does not constitute providing a
custodial or depository service:
(a) the operation of a clearing and settlement facility;
(b) the operation of a registered scheme, or the holding of the
assets of a registered scheme;
(ba) the operation of a notified foreign passport fund;
(bb) the holding of the assets of a notified foreign passport fund;
(c) the operation of a regulated superannuation fund, an
approved deposit fund or a pooled superannuation trust
(within the meaning of the Superannuation Industry
(Supervision) Act 1993) by the trustees of that fund or trust;
(ca) the operation of a statutory fund by a life company (within
the meaning of the Life Insurance Act 1995);
(d) the provision of services to a related body corporate;
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Section 766F
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(e) any other conduct of a kind prescribed by regulations made
for the purposes of this paragraph.
766F Meaning of provides a crowd-funding service
Meaning of provides a crowd-funding service
(1) A person provides a crowd-funding service if:
(a) a CSF offer document for a CSF offer of securities of a
company is published on a platform operated by the person;
and
(b) applications may be made to the person for the issue, by the
company, of securities pursuant to the offer.
Note: CSF offers are dealt with in Part 6D.3A (Crowd-sourced funding).
(2) The financial service constituted by providing a crowd-funding
service is taken to include (in addition to the matters mentioned in
subsection (1)), performing all other aspects of the role of a CSF
intermediary under Part 6D.3A.
To whom, and when, a crowd-funding service is provided
(3) A person who uses the application facility for the CSF offer to
make an application pursuant to the offer is a person to whom the
crowd-funding service is provided. The time at which the
crowd-funding service is provided to the person is the time when
the person first uses the application facility to make an application
pursuant to the offer.
Note: For the meaning of application facility, see subsection 738ZA(3).
(4) The company making the CSF offer is a person to whom the
crowd-funding service is provided. The time at which the
crowd-funding service is provided to the company is the time when
the company enters into the hosting arrangement for the offer.
Note: For the meaning of hosting arrangement, see subsection 738L(2).
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Division 5—What is a financial market?
767A What is a financial market?
(1) For the purposes of this Chapter, a financial market is a facility
through which:
(a) offers to acquire or dispose of financial products are regularly
made or accepted; or
(b) offers or invitations are regularly made to acquire or dispose
of financial products that are intended to result or may
reasonably be expected to result, directly or indirectly, in:
(i) the making of offers to acquire or dispose of financial
products; or
(ii) the acceptance of such offers.
(2) However, the following conduct does not constitute operating a
financial market for the purposes of this Chapter:
(a) a person making or accepting offers or invitations to acquire
or dispose of financial products on the person’s own behalf,
or on behalf of one party to the transaction only, unless the
regulations specify circumstances in which such conduct
does constitute operating a financial market and the person’s
conduct occurs in circumstances so specified;
(b) conducting treasury operations between related bodies
corporate;
(c) a person, being the holder of a licence under an Australian
law relating to the licensing of auctioneers, conducting an
auction of forfeited shares;
(d) any other conduct of a kind prescribed by regulations made
for the purposes of this paragraph.
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Division 6 What is a clearing and settlement facility?
Section 768A
62 Corporations Act 2001
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Division 6—What is a clearing and settlement facility?
768A What is a clearing and settlement facility?
(1) For the purposes of this Chapter, a clearing and settlement facility
is a facility that provides a regular mechanism for the parties to
transactions relating to financial products to meet obligations to
each other that:
(a) arise from entering into the transactions; and
(b) are of a kind prescribed by regulations made for the purposes
of this paragraph.
Example 1: A facility that provides a regular mechanism for stockbrokers to pay
for the shares they buy and to be paid for the shares they sell, and for
records of those transactions to be processed to facilitate registration
of the new ownership of the shares, would be a clearing and
settlement facility (assuming that the relevant obligations are of a kind
prescribed by regulations made for the purposes of this section).
Example 2: A facility that provides a regular mechanism for registering trade in
derivatives on a futures market and that enables the calculation of
payments that market participants owe by way of margins would also
be a clearing and settlement facility (assuming that the relevant
obligations are of a kind prescribed by regulations made for the
purposes of this section).
(2) However, the following conduct does not constitute operating a
clearing and settlement facility for the purposes of this Chapter:
(a) an ADI (within the meaning of the Banking Act 1959) acting
in the ordinary course of its banking business;
(b) a person acting on their own behalf, or on behalf of one party
to a transaction only;
(c) a person who provides financial services to another person
dealing with the other person’s accounts in the ordinary
course of the first person’s business activities;
(d) the actions of a participant in a clearing and settlement
facility who has taken on the delivery or payment
obligations, in relation to a particular financial product, of
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another person who is a party to a transaction relating to a
financial product;
(e) conducting treasury operations between related bodies
corporate;
(h) operating a facility for the exchange and settlement of
non-cash payments (see section 763D) between providers of
non-cash payment facilities;
(i) any other conduct of a kind prescribed by regulations made
for the purposes of this paragraph.
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Division 7 General provisions relating to civil and criminal liability
Section 769A
64 Corporations Act 2001
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Division 7—General provisions relating to civil and
criminal liability
769A Part 2.5 of Criminal Code does not apply
Despite section 1308A, Part 2.5 of the Criminal Code does not
apply to any offences based on the provisions of this Chapter.
Note: For the purposes of offences based on provisions of this Chapter,
corporate criminal responsibility is dealt with by section 769B, rather
than by Part 2.5 of the Criminal Code.
769B People are generally responsible for the conduct of their
agents, employees etc.
(1) Subject to subsections (7) and (8), conduct engaged in on behalf of
a body corporate:
(a) by a director, employee or agent of the body, within the
scope of the person’s actual or apparent authority; or
(b) by any other person at the direction or with the consent or
agreement (whether express or implied) of a director,
employee or agent of the body, where the giving of the
direction, consent or agreement is within the scope of the
actual or apparent authority of the director, employee or
agent;
is taken, for the purposes of a provision of this Chapter, or a
proceeding under this Chapter, to have been engaged in also by the
body corporate.
(2) Conduct engaged in by a person (for example, the giving of money
or property) in relation to:
(a) a director, employee or agent of a body corporate, acting
within the scope of their actual or apparent authority; or
(b) any other person acting at the direction or with the consent or
agreement (whether express or implied) of a director,
employee or agent of a body corporate, where the giving of
the direction, consent or agreement is within the scope of the
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actual or apparent authority of the director, employee or
agent;
is taken, for the purposes of a provision of this Chapter, or a
proceeding under this Chapter, to have been engaged in also in
relation to the body corporate.
(3) If, in a proceeding under this Chapter in respect of conduct
engaged in by a body corporate, it is necessary to establish the state
of mind of the body, it is sufficient to show that a director,
employee or agent of the body, being a director, employee or agent
by whom the conduct was engaged in within the scope of the
person’s actual or apparent authority, had that state of mind. For
this purpose, a person acting as mentioned in paragraph (1)(b) is
taken to be an agent of the body corporate concerned.
(4) Subject to subsections (7) and (8), conduct engaged in on behalf of
a person other than a body corporate:
(a) by an employee or agent of the person, acting within the
scope of the actual or apparent authority of the employee or
agent; or
(b) by any other person acting at the direction or with the
consent or agreement (whether express or implied) of an
employee or agent of the first-mentioned person, where the
giving of the direction, consent or agreement is within the
scope of the actual or apparent authority of the employee or
agent;
is taken, for the purposes of a provision of this Chapter, or of a
proceeding under this Chapter, to have been engaged in also by the
first-mentioned person.
(5) Conduct engaged in by a person (for example, the giving of money
or property) in relation to:
(a) an employee or agent of a person (the principal) other than a
body corporate, acting within the scope of their actual or
apparent authority; or
(b) any other person acting at the direction or with the consent or
agreement (whether express or implied) of an employee or
agent of a person (the principal) other than a body corporate,
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where the giving of the direction, consent or agreement is
within the scope of the actual or apparent authority of the
employee or agent;
is taken, for the purposes of a provision of this Chapter, or of a
proceeding under this Chapter, to have been engaged in also in
relation to the principal.
(6) If, in a proceeding under this Chapter in respect of conduct
engaged in by a person other than a body corporate, it is necessary
to establish the state of mind of the person, it is sufficient to show
that an employee or agent of the person, being an employee or
agent by whom the conduct was engaged in within the scope of the
employee’s or agent’s actual or apparent authority, had that state of
mind. For this purpose, a person acting as mentioned in
paragraph (4)(b) is taken to be an agent of the person first referred
to in subsection (4).
(7) Nothing in this section, or in any other law (including the common
law), has the effect that, for the purposes of a provision of Part 7.7
or 7.7A, or a proceeding under this Chapter that relates to a
provision of Part 7.7 or 7.7A, a financial service provided by a
person in their capacity as an authorised representative of a
financial services licensee is taken, or taken also, to have been
provided by that financial services licensee.
(8) Nothing in this section, or in any other law (including the common
law), has the effect that, for the purposes of a provision of
Division 2 of Part 7.9, or a proceeding under this Chapter that
relates to a provision of Division 2 of Part 7.9, conduct engaged in
by a person in their capacity as a regulated person (within the
meaning of section 1011B) is taken, or taken also, to have been
engaged in by another such regulated person.
(8A) Nothing in this section, other than subsections (7) and (8), excludes
or limits the operation of subsection 601FB(2) in relation to the
provisions of this Chapter or to proceedings under this Chapter.
(9) The regulations may provide that this section, or a particular
provision of this section, has effect for specified purposes subject
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to modifications specified in the regulations. The regulations have
effect accordingly.
(10) In this section:
(a) a reference to a proceeding under this Chapter includes a
reference to:
(i) a prosecution for an offence based on a provision of this
Chapter; and
(ii) a proceeding under a provision of Part 9.4B that relates
to a provision of this Chapter; and
(iii) any other proceeding under any other provision of
Chapter 9 that relates to a provision of this Chapter; and
(b) a reference to conduct is a reference to an act, an omission to
perform an act, or a state of affairs; and
(c) a reference to the state of mind of a person includes a
reference to the knowledge, intention, opinion, belief or
purpose of the person and the person’s reasons for the
person’s intention, opinion, belief or purpose.
Note: For the meaning of offence based on a provision, see the definition in
section 9.
769C Representations about future matters taken to be misleading if
made without reasonable grounds
(1) For the purposes of this Chapter, or of a proceeding under this
Chapter, if:
(a) a person makes a representation with respect to any future
matter (including the doing of, or refusing to do, any act);
and
(b) the person does not have reasonable grounds for making the
representation;
the representation is taken to be misleading.
(2) Subsection (1) does not limit the circumstances in which a
representation may be misleading.
(3) In this section:
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proceeding under this Chapter has the same meaning as it has in
section 769B.
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Part 7.2—Licensing of financial markets
Division 1—Preliminary
790A Definition
In this Part:
clearing and settlement arrangements, for transactions effected
through a financial market, means arrangements for the clearing
and settlement of those transactions. The arrangements may be part
of the market’s operating rules or be separate from those operating
rules.
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Chapter 7 Financial services and markets
Part 7.2 Licensing of financial markets
Division 2 Requirement to be licensed
Section 791A
70 Corporations Act 2001
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Division 2—Requirement to be licensed
791A Need for a licence
(1) A person must only operate, or hold out that the person operates, a
financial market in this jurisdiction if:
(a) the person has an Australian market licence that authorises
the person to operate the market in this jurisdiction; or
(b) the market is exempt from the operation of this Part.
Note 1: A market licensee may also provide financial services incidental to the
operation of the market: see paragraph 911A(2)(d).
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) For the purposes of an offence based on subsection (1), strict
liability applies to paragraph (1)(b).
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
791B Other prohibitions on holding out
A person must not hold out:
(a) that the person has an Australian market licence; or
(b) that the operation of a financial market by the person in this
jurisdiction is authorised by an Australian market licence; or
(c) that a financial market is exempt from the operation of this
Part; or
(d) that the person is a participant in a licensed market;
if that is not the case.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 791C
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791C Exemptions by Minister
(1) The Minister may exempt a particular financial market, or a class
of financial market, from all or specified provisions of this Part. An
exemption may be unconditional, or subject to conditions specified
in the exemption.
Note: The provisions of this Part include regulations made for the purposes
of this Part (see section 761H).
(2) The Minister may, at any time:
(a) vary an exemption to:
(i) impose conditions, or additional conditions, on the
exemption; or
(ii) vary or revoke any of the conditions on the exemption;
or
(b) revoke an exemption.
(3) However, the Minister may only take action under subsection (2)
after:
(a) giving notice, and an opportunity to make submissions on the
proposed action, to the operator of each financial market
known by the Minister to be covered by the exemption; and
(b) if the exemption covers a class of financial markets—a notice
has been published on ASIC’s website allowing a reasonable
period within which the operator of each financial market
covered by the exemption may make submissions on the
proposed action, and that period has ended.
(4) If an exemption is expressed to apply in relation to a class of
financial markets (whether or not it is also expressed to apply in
relation to one or more financial markets otherwise than by
reference to membership of a class), then the exemption, and any
variation or revocation of the exemption, is a legislative
instrument.
(5) If subsection (4) does not apply to an exemption, then the
exemption, and any variation or revocation of the exemption, must
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Part 7.2 Licensing of financial markets
Division 2 Requirement to be licensed
Section 791D
72 Corporations Act 2001
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be in writing and the Minister must publish notice of it in the
Gazette.
791D When a market is taken to be operated in this jurisdiction
(1) For the purposes of this Chapter, a financial market is taken to be
operated in this jurisdiction if it is operated by a body corporate
that is registered under Chapter 2A.
(2) Subsection (1) does not limit the circumstances in which a
financial market is operated in this jurisdiction for the purposes of
this Chapter.
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Regulation of market licensees Division 3
Section 792A
Corporations Act 2001 73
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Division 3—Regulation of market licensees
Subdivision A—Licensee’s obligations
792A General obligations
(1) A market licensee must:
(a) to the extent that it is reasonably practicable to do so, do all
things necessary to ensure that the market is a fair, orderly
and transparent market; and
(b) comply with the conditions on the licence; and
(c) have adequate arrangements (which may involve the
appointment of an independent person or related entity) for
operating the market, including arrangements for:
(i) handling conflicts between the commercial interests of
the licensee and the need for the licensee to ensure that
the market operates in the way mentioned in
paragraph (a); and
(ii) monitoring and enforcing compliance with the market’s
operating rules; and
(d) have sufficient resources (including financial, technological
and human resources) to operate the market properly; and
(e) if section 881A requires there to be compensation
arrangements in relation to the market that are approved in
accordance with Division 3 of Part 7.5—ensure that there are
such approved compensation arrangements in relation to the
market; and
(f) if the licensee is a foreign body corporate—be registered
under Division 2 of Part 5B.2; and
(g) if the licence was granted under subsection 795B(2)
(overseas markets)—both:
(i) remain authorised to operate a financial market in the
foreign country in which the licensee’s principal place
of business is located; and
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Division 3 Regulation of market licensees
Section 792B
74 Corporations Act 2001
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(ii) get the Minister’s approval under section 792H before
that principal place of business becomes located in any
other foreign country; and
(h) if the licensee, or a holding company of the licensee, is a
widely held market body (within the meaning of Division 1
of Part 7.4)—take all reasonable steps to ensure that an
unacceptable control situation (within the meaning of that
Division) does not exist in relation to the body; and
(i) take all reasonable steps to ensure that no disqualified
individual becomes, or remains, involved in the licensee (see
Division 2 of Part 7.4).
(2) A person contravenes this subsection if the person contravenes
paragraph (1)(a), (c), (d), (e), (f), (g), (h) or (i).
Note: This subsection is a civil penalty provision (see section 1317E).
792B Obligation to notify ASIC of certain matters
(1) A market licensee must give written notice to ASIC, as soon as
practicable, if it becomes aware that it may no longer be able to
meet, or has breached, an obligation under section 792A. If ASIC
considers it appropriate to do so, ASIC may give the Minister
advice about the matter.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A market licensee must give written notice to ASIC, as soon as
practicable, as required by the following paragraphs:
(a) if the licensee provides a new class of financial service
incidental to the operation of the market, the licensee must
give notice that includes details of the new class;
(b) if the licensee takes any kind of disciplinary action against a
participant in the market, the licensee must give notice that
includes:
(i) the participant’s name; and
(ii) the reason for and nature of the action taken;
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(c) if the licensee has reason to suspect that a person has
committed, is committing, or is about to commit a significant
contravention of the market’s operating rules or this Act, the
licensee must give notice that includes:
(i) the person’s name; and
(ii) details of the contravention or impending contravention;
and
(iii) the licensee’s reasons for that belief.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) If a market licensee becomes aware of:
(a) a matter that the licensee considers has adversely affected, is
adversely affecting, or may adversely affect the ability of a
participant in the market, who is a financial services licensee,
to meet the participant’s obligations as a financial services
licensee; or
(b) a matter, concerning a participant in the market who is a
financial services licensee, that is of a kind prescribed by
regulations made for the purposes of this paragraph;
the market licensee must give a written report to ASIC on the
matter and send a copy of it to the participant.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) A market licensee whose licence was granted under
subsection 795B(2) (overseas markets) must, as soon as
practicable, give written notice to ASIC if:
(a) the licensee ceases to be authorised to operate a financial
market in the foreign country in which the licensee’s
principal place of business is located; or
(b) there is a significant change to the regulatory regime
applying in relation to the market in the foreign country in
which the licensee’s principal place of business is located.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Division 3 Regulation of market licensees
Section 792C
76 Corporations Act 2001
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(5) As soon as practicable after:
(a) a person becomes or ceases to be a director, secretary or
senior manager of a market licensee or of a holding company
of a market licensee (including when a person changes from
one of those positions to another); or
(b) a market licensee becomes aware that a person has come to
have, or has ceased to have, more than 15% of the voting
power in the licensee or in a holding company of the
licensee;
the licensee must give written notice of this to ASIC. The notice
must include such other information about the matter as is
prescribed by regulations made for the purposes of this subsection.
Note 1: To the extent that the licensee is required to give the notice and
information under any other provision of this Act, the licensee may
comply with this subsection by doing so. It need not provide the same
information twice.
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(7) A person contravenes this subsection if the person contravenes
subsection (1), (2), (3), (4) or (5).
Note: This subsection is a civil penalty provision (see section 1317E).
792C Giving ASIC information about a listed disclosing entity
(1) If a market licensee makes information about a listed disclosing
entity available to participants in the market (whether or not the
licensee also makes the information available to anyone else), the
licensee must give ASIC the same information as soon as
practicable.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) However, the licensee is not required to give ASIC any
information of a kind that is excluded by the regulations.
(3) ASIC may require the information to be given in a particular form.
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Section 792D
Corporations Act 2001 77
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792D Obligation to assist ASIC
(1) A market licensee must give such assistance to ASIC, or a person
authorised by ASIC, as ASIC or the authorised person reasonably
requests in relation to the performance of ASIC’s functions.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Such assistance may include showing ASIC the licensee’s books or
giving ASIC other information.
792E Obligation to give ASIC access to market facilities
A market licensee must give a person authorised by ASIC such
reasonable access to the market’s facilities as the person requests
for any of the purposes of this Chapter.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
792F Annual report
(1) A market licensee must, within 3 months after the end of its
financial year, give ASIC an annual report on the extent to which
the licensee complied with its obligations as a market licensee
under this Chapter.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) The licensee must ensure that the annual report is accompanied by
any information and statements prescribed by regulations made for
the purposes of this subsection.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) The licensee must also ensure that the annual report is
accompanied by any audit report that the Minister requires under
subsection (4).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Chapter 7 Financial services and markets
Part 7.2 Licensing of financial markets
Division 3 Regulation of market licensees
Section 792G
78 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(4) The Minister may, by giving written notice to a market licensee,
require the licensee to obtain an audit report on the annual report
and on any information or statements accompanying it. The
Minister must nominate to prepare the audit report:
(a) ASIC; or
(b) a specified person or body that is suitably qualified.
(5) ASIC must give the annual report and accompanying material to
the Minister.
792G Obligations to notify people about clearing and settlement
arrangements in certain circumstances
(1) If, in relation to a category of transactions, being all transactions or
a class of transactions effected through a licensed market, the
market licensee:
(a) does not have any clearing and settlement arrangements for
transactions in that category; or
(b) has clearing and settlement arrangements for transactions in
that category, but they are not arrangements with the operator
of a clearing and settlement facility for the clearing and
settlement of such transactions through the facility;
the market licensee must, before a person becomes a participant in
the market, give the person written advice:
(c) if paragraph (a) applies—that the licensee does not have any
clearing and settlement arrangements for transactions in that
category, and that it is the responsibility of the parties to such
transactions to make their own arrangements for the clearing
and settlement of such transactions; or
(d) if paragraph (b) applies—setting out particulars of the
clearing and settlement arrangements for transactions in that
category.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Within a reasonable time before a market licensee ceases, in
relation to a category of transactions, being all transactions or a
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class of transactions effected through a licensed market, to have
clearing and settlement arrangements (the terminating
arrangements) with the operator of a particular clearing and
settlement facility for the clearing and settlement of such
transactions through the facility, the market licensee must give the
participants in the market written advice:
(a) if the terminating arrangements are not being replaced by any
other clearing and settlement arrangements—that the licensee
will no longer have clearing and settlement arrangements for
that category of transactions, and that it will be the
responsibility of the parties to such transactions to make their
own arrangements for the clearing and settlement of such
transactions; or
(b) if the terminating arrangements are being replaced by new
clearing and settlement arrangements—setting out particulars
of the new arrangements.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
792H Change of country by foreign licensee
(1) In the case of a licence granted under subsection 795B(2), the
Minister may approve the location of the licensee’s principal place
of business in a new country only if:
(a) the new country is not Australia; and
(b) the operation of the market in that country will be subject to
requirements and supervision that are sufficiently equivalent,
in relation to the degree of investor protection and market
integrity they achieve, to the requirements and supervision to
which financial markets are subject under this Act in relation
to those matters.
(2) If, in relation to a licence granted under subsection 795B(2), the
licensee’s principal place of business changes to become a place in
Australia:
(a) the licence ceases to be in force from the time of the change;
and
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Division 3 Regulation of market licensees
Section 792I
80 Corporations Act 2001
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(b) if the licensee wishes the market to continue to be licensed,
the licensee may apply for the grant of a new licence under
subsection 795B(1); and
(c) the application must be assessed in accordance with
Subdivision A of Division 4, subject to such modifications (if
any) of that Subdivision as are set out in regulations made for
the purposes of this paragraph.
(3) An application referred to in paragraph (2)(b) may be made in
advance of the change of location of the principal place of
business, and a decision on the application may be made before
that time. However, any licence granted pursuant to the application
does not come into force until the change occurs.
792I Making information about compensation arrangements
publicly available
A market licensee must take reasonable steps to ensure that
information about the compensation arrangements that are in place
under Part 7.5 is available to the public free of charge.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
Subdivision B—The market’s operating rules and procedures
793A Content of the operating rules and procedures
(1) The operating rules of a licensed market must deal with the matters
prescribed by regulations made for the purposes of this subsection.
(2) The regulations may also prescribe matters in respect of which a
licensed market must have written procedures.
(3) However, subsections (1) and (2) do not apply if the licensee is
also authorised to operate the market in the foreign country in
which its principal place of business is located and the licence was
granted under subsection 795B(2) (overseas markets).
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(4) In a subsection (3) case, ASIC may determine, by giving written
notice to the licensee, matters in respect of which the licensed
market must have written procedures.
793B Legal effect of operating rules
(1) The operating rules (other than listing rules) of a licensed market
have effect as a contract under seal:
(a) between the licensee and each participant in the market; and
(b) between a participant and each other participant;
under which each of those persons agrees to observe the operating
rules to the extent that they apply to the person and to engage in
conduct that the person is required by the operating rules to engage
in.
(2) However, if there is an inconsistency between the operating rules
of a financial market, and any of the following other rules:
(a) the market integrity rules;
(b) the derivative transaction rules;
(c) the derivative trade repository rules;
(d) the client money reporting rules;
those other rules prevail over the operating rules to the extent of
the inconsistency.
Note 1: If there is an inconsistency between the market integrity rules and the
derivative transaction rules or the derivative trade repository rules, the
market integrity rules prevail: see subsection 798H(3).
Note 2: If there is an inconsistency between the derivative transaction rules
and the derivative trade repository rules, the derivative transaction
rules prevail: see subsection 901E(2).
Note 3: If there is an inconsistency between the market integrity rules, the
derivative transaction rules or the derivative trade repository rules and
the client money reporting rules, the market integrity rules, the
derivative transaction rules or the derivative trade repository rules
prevail: see subsection 981M(2).
(3) Subsection (2) does not apply in relation to a financial market the
operator of which is licensed under subsection 795B(2) (overseas
markets).
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Division 3 Regulation of market licensees
Section 793C
82 Corporations Act 2001
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793C Enforcement of operating rules
(1) If a person who is under an obligation to comply with or enforce
any of a licensed market’s operating rules fails to meet that
obligation, an application to the Court may be made by:
(a) ASIC; or
(b) the licensee; or
(c) the operator of a clearing and settlement facility with which
the licensee has clearing and settlement arrangements; or
(d) a person aggrieved by the failure.
(2) After giving an opportunity to be heard to the applicant and the
person against whom the order is sought, the Court may make an
order giving directions to:
(a) the person against whom the order is sought; or
(b) if that person is a body corporate (other than a notified
foreign passport fund)—the directors of the body corporate;
about compliance with, or enforcement of, the operating rules.
(3) For the purposes of this section, a body corporate (other than a
notified foreign passport fund) that is, with its agreement, consent
or acquiescence, included in the official list of a licensed market,
or an associate of such a body corporate, is taken to be under an
obligation to comply with the operating rules of that market to the
extent to which those rules purport to apply to the body corporate
or associate.
(4) For the purposes of this section, if a disclosing entity that is an
undertaking to which interests in a registered scheme relate is, with
the responsible entity’s agreement, consent or acquiescence,
included in the official list of a licensed market, the responsible
entity, or an associate of the responsible entity, is taken to be under
an obligation to comply with the operating rules of that market to
the extent to which those rules purport to apply to the responsible
entity or associate.
(4A) For the purposes of this section, if a disclosing entity that is an
undertaking to which interests in a notified foreign passport fund
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relate is, with the agreement, consent or acquiescence of the
operator of the fund, included in the official list of a licensed
market, the operator of the fund, or an associate of the operator, is
taken to be under an obligation to comply with the operating rules
of that market to the extent to which those rules purport to apply to
the operator or associate.
(5) For the purposes of this section, if a body corporate fails to comply
with or enforce provisions of the operating rules of a licensed
market, a person who holds financial products of the body
corporate that are able to be traded on the market is taken to be a
person aggrieved by the failure.
(6) There may be other circumstances in which a person may be
aggrieved by a failure for the purposes of this section.
793D Changing the operating rules
Licensed markets other than subsection 795B(2) markets
(1) As soon as practicable after a change is made to the operating rules
of a licensed market, other than a market licensed under
subsection 795B(2) (overseas markets), the licensee must lodge
with ASIC written notice of the change. The notice must:
(a) set out the text of the change; and
(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
(2) If no notice is lodged as required by subsection (1) with ASIC
within 21 days after the change is made, the change ceases to have
effect at the end of that period.
Subsection 795B(2) markets
(3) As soon as practicable after a change is made to the operating rules
of a market the operation of which is licensed under
subsection 795B(2) (overseas markets), the licensee must lodge
with ASIC written notice of the change. The notice must:
(a) set out the text of the change; and
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(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
793E Disallowance of changes to operating rules
(1) This section does not apply in respect of an Australian market
licence granted under subsection 795B(2) (overseas markets).
(2) As soon as practicable after receiving a notice under section 793D
from a market licensee, ASIC must send a copy of the notice to the
Minister.
(3) Within 28 days after ASIC receives the notice from the licensee,
the Minister may disallow all or a specified part of the change to
the operating rules.
(4) In deciding whether to do so, the Minister must have regard to the
consistency of the change with the licensee’s obligations under this
Part (including in particular the obligation mentioned in
paragraph 792A(1)(a)).
Note: The Minister must also have regard to the matters in section 798A.
(5) As soon as practicable after all or a part of a change is disallowed,
ASIC must give notice of the disallowance to the licensee. The
change ceases to have effect, to the extent of the disallowance,
when the licensee receives the notice.
Subdivision C—Powers of the Minister and ASIC
794A Minister’s power to give directions
(1) If the Minister considers that a market licensee is not complying
with its obligations as a market licensee under this Chapter, the
Minister may give the licensee a written direction to do specified
things that the Minister believes will promote compliance by the
licensee with those obligations.
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(2) The licensee must comply with the direction.
(3) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) The Minister may vary or revoke a direction at any time by giving
written notice to the licensee.
794B Minister’s power to require special report
(1) The Minister may give a market licensee a written notice requiring
the licensee to give ASIC a special report on specified matters.
ASIC must give the report to the Minister.
(2) The notice may also require the licensee to give ASIC an audit
report on the special report. The Minister must nominate to prepare
the audit report:
(a) ASIC; or
(b) a specified person or body that is suitably qualified.
(3) The licensee must give the special report, and audit report (if any),
to ASIC within the time required by the notice.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
794C ASIC assessment of licensee’s compliance
(1) ASIC may do an assessment of how well a market licensee is
complying with any or all of its obligations as a market licensee
under this Chapter. In doing the assessment, ASIC may take
account of any information and reports that it thinks appropriate,
including information and reports from an overseas regulatory
authority.
(2) If the market licensee is prescribed by the regulations for the
purpose of this subsection, ASIC must, in respect of the obligation
in paragraph 792A(1)(c), do such an assessment at least once a
year.
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(3) As soon as practicable after doing an assessment under this section,
ASIC must give a written report on the assessment to the licensee
and to the Minister.
(4) If an assessment, or part of an assessment, relates to any other
person’s affairs to a material extent, ASIC may, at the person’s
request or of its own motion, give the person a copy of the written
report on the assessment or the relevant part of the report.
(5) If an assessment, or part of an assessment, relates to a serious
contravention of a law of the Commonwealth or of a State or
Territory, ASIC may give a copy of the written report on the
assessment, or the relevant part of the report, to:
(a) the Australian Federal Police; or
(b) the Chief Executive Officer of the Australian Crime
Commission or a member of the staff of the ACC (within the
meaning of the Australian Crime Commission Act 2002); or
(c) the Director of Public Prosecutions; or
(d) an agency prescribed by regulations made for the purposes of
this paragraph.
(6) Either the Minister or ASIC may cause the written report on an
assessment, or part of the report on an assessment, to be printed
and published.
794D ASIC’s power to give directions
(1) If ASIC is of the opinion that it is necessary, or in the public
interest, to protect people dealing in a financial product or class of
financial products by:
(a) giving a direction to a market licensee to suspend dealings in
the financial product or class of financial products; or
(b) giving some other direction in relation to those dealings;
ASIC may give written advice to the licensee of that opinion and
the reasons for it.
Example: Under paragraph (b), ASIC could give a direction to limit the kinds of
dealings that are allowed in the financial product or class of financial
products or to require a participant in the market to act in a specified
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manner in relation to dealings in the financial product or class of
financial products.
(2) If, after receiving ASIC’s advice and reasons, the licensee does not
take:
(a) in the case of a proposed direction to suspend dealings in the
financial products—action to prevent such dealings; or
(b) in any other case—such other action as in ASIC’s view is
adequate to address the situation raised in the advice;
and ASIC still considers that it is appropriate to give the direction
to the licensee, ASIC may give the licensee the written direction
with a statement setting out its reasons for making the direction.
(3) The direction has effect for the period specified in it (which may be
up to 21 days). During that period, the licensee must comply with
the direction and must not allow any dealings to take place
contrary to it.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(5) As soon as practicable after making or varying (see subsection (7))
a direction, ASIC must:
(a) give a copy of the direction or variation to the operator of
each clearing and settlement facility with which the market
licensee has clearing and settlement arrangements for
transactions effected through the market; and
(b) give a written report to the Minister setting out ASIC’s
reasons for making the direction or variation; and
(c) give a copy of the report to the licensee.
(6) If, at any time after the licensee receives ASIC’s advice under
subsection (1), the licensee requests in writing that ASIC refer the
matter to the Minister, ASIC must do so immediately. In that event,
the Minister may, if he or she considers it appropriate, require
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ASIC not to make, or to revoke, the direction. ASIC must
immediately comply with such a requirement.
(7) ASIC may vary a direction by giving written notice to the licensee
if ASIC is of the opinion that the variation is necessary, or in the
public interest, to protect people dealing in a financial product or
class of financial products.
(8) ASIC may revoke a direction by giving written notice to the
licensee. ASIC must also give written notice of the revocation to
the operator of each clearing and settlement facility with which the
market licensee has clearing and settlement arrangements for
transactions effected through the market.
794E Additional directions to clearing and settlement facilities
(1) If ASIC gives a direction under section 794D, it may also give a
written direction to the operator of each clearing and settlement
facility with which the market licensee has clearing and settlement
arrangements for transactions effected through the market:
(a) prohibiting the operator from acting in a manner inconsistent
with the section 794D direction; and
(b) requiring the operator to do all that the operator is reasonably
capable of doing to give effect to the section 794D direction.
(2) The operator must comply with the direction given to it under this
section.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) If the operator fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the
operator comply with the direction.
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Corporations Act 2001 89
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Division 4—The Australian market licence
Subdivision A—How to get a licence
795A How to apply for a licence
(1) A body corporate may apply for an Australian market licence by
lodging with ASIC an application that:
(a) includes the information required by regulations made for the
purposes of this paragraph; and
(b) is accompanied by the documents (if any) required by
regulations made for the purposes of this paragraph; and
(c) complies with the requirements of section 881B (relating to
compensation arrangements).
Note: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must, within a reasonable time, give the application to the
Minister with advice about the application.
795B When a licence may be granted
General
(1) The Minister may grant an applicant an Australian market licence
if the Minister is satisfied that:
(a) the application was made in accordance with section 795A;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) the applicant has adequate operating rules, and procedures,
(see Subdivision B of Division 3) to ensure, as far as is
reasonably practicable, that the market will operate as
mentioned in paragraph 792A(1)(a); and
(d) the applicant has adequate arrangements (which may involve
the appointment of an independent person or related entity)
for operating the market, including arrangements for:
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(i) handling conflicts between the commercial interests of
the licensee and the need for the licensee to ensure that
the market operates in the way mentioned in
paragraph 792A(1)(a); and
(ii) monitoring and enforcing compliance with the market’s
operating rules; and
(e) the applicant has adequate clearing and settlement
arrangements for transactions effected through the market, if
the Minister considers that the applicant should have such
arrangements; and
(f) neither subsection 881D(2) nor 882A(2) (relating to
compensation arrangements) requires the Minister to reject
the application; and
(g) no unacceptable control situation (see Division 1 of Part 7.4)
is likely to result if the licence is granted; and
(h) no disqualified individual appears to be involved in the
applicant (see Division 2 of Part 7.4).
This subsection has effect subject to subsections (3) and (4).
Note: The Minister must also have regard to the matters in section 798A in
deciding whether to grant a licence.
Alternative criteria for granting licence for overseas market
(2) If an applicant is authorised to operate a financial market in the
foreign country in which its principal place of business is located,
the Minister may grant the applicant an Australian market licence
authorising the applicant to operate the same market in this
jurisdiction. The Minister must be satisfied that:
(a) the application was made in accordance with section 795A;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) the operation of the market in that country is subject to
requirements and supervision that are sufficiently equivalent,
in relation to the degree of investor protection and market
integrity they achieve, to the requirements and supervision to
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which financial markets are subject under this Act in relation
to those matters; and
(d) the applicant undertakes to cooperate with ASIC by sharing
information and in other appropriate ways; and
(e) no unacceptable control situation (see Division 1 of Part 7.4)
is likely to result if the licence is granted; and
(f) no disqualified individual appears to be involved in the
applicant (see Division 2 of Part 7.4); and
(g) any other requirements that are prescribed by regulations
made for the purposes of this paragraph are satisfied.
This subsection has effect subject to subsections (3) and (4).
Note: The Minister must also have regard to the matters in section 798A in
deciding whether to grant a licence.
Foreign bodies
(3) If the applicant is a foreign body corporate, the Minister:
(a) must not grant the applicant a licence unless the applicant is
registered under Division 2 of Part 5B.2; and
(b) may otherwise grant a licence under either subsection (1) or
(2) (if the relevant criteria are satisfied).
Disqualified individuals
(4) The Minister must not grant the applicant a licence unless:
(a) ASIC has notified the Minister that, as far as ASIC is aware,
no disqualified individual is involved in the applicant (see
Division 2 of Part 7.4); or
(b) 42 days have passed since the application was made and
ASIC has not given a notice under subsection 853D(2) to the
applicant within that 42 days.
795C Publication of notice of licence grant
If the Minister grants an Australian market licence, the Minister
must publish a notice in the Gazette stating:
(a) the name of the licensee; and
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(b) when the licence was granted; and
(c) the conditions on the licence.
795D More than one licence in the same document
If the Minister grants a person 2 or more of the following:
(a) an Australian market licence;
(b) an Australian CS facility licence;
they may be included in the same document.
795E More than one market covered by the same licence
(1) The same Australian market licence may authorise the licensee to
operate 2 or more financial markets.
(2) In that case, a reference in this Chapter to the market to which an
Australian market licence relates is taken instead to be a reference
to each of those financial markets severally.
(3) Before varying the conditions on an Australian market licence so
as to add another market that the licensee is authorised to operate,
the Minister must be satisfied of the matters listed in
subsection 795B(1) or (2) (as appropriate) in relation to the market.
(4) An Australian market licence that authorises the licensee to operate
2 or more financial markets may be suspended or cancelled under
Subdivision C in respect of one or some of those markets only, as
if the licensee held a separate licence for each of the markets.
Subdivision B—The conditions on the licence
796A The conditions on the licence
(1) The Minister may, at any time:
(a) impose conditions, or additional conditions, on an Australian
market licence; or
(b) vary or revoke conditions imposed on such a licence;
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by giving written notice to the licensee. The Minister must also
publish a notice in the Gazette with details of the action and when
it took effect.
Note: As well as the requirements in this section, the Minister must also
have regard to the matters in section 798A.
(2) The Minister may do so:
(a) on his or her own initiative, subject to subsection (3); or
(b) if the licensee lodges with ASIC an application for the
Minister to do so, which is accompanied by the prescribed
documents, if any.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) The Minister may only impose conditions or additional conditions,
or vary the conditions, on the licence on his or her own initiative if:
(a) he or she considers it appropriate to do so having regard to:
(i) the licensee’s obligations as a market licensee under this
Chapter; and
(ii) any change in market operations or the conditions in
which the market is operating; and
(b) the Minister gives the licensee written notice of the proposed
action and an opportunity to make a submission before it
takes effect.
This subsection does not apply to the Minister imposing conditions
when a licence is granted.
(4) The Minister must ensure that each Australian market licence is
subject to conditions that specify:
(a) the particular market that the licensee is authorised to
operate; and
(b) the class or classes of financial products that can be dealt
with on the market; and
(c) if the Minister considers that the licensee should have
clearing and settlement arrangements for transactions
effected through the market—the type of clearing and
settlement arrangements that are adequate.
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Note: If compensation arrangements in relation to the market are approved
under Division 3 of Part 7.5, there must also be conditions as required
by subsection 882A(4) or paragraph 882B(4)(b).
(6) ASIC must give the Minister any application and documents
lodged under subsection (2).
Subdivision C—When a licence can be varied, suspended or
cancelled
797A Varying licences
(1) The Minister may vary an Australian market licence to take
account of a change in the licensee’s name if the licensee lodges
with ASIC an application for the variation, accompanied by the
prescribed documents, if any.
Note 1: The conditions on the licence can be varied under section 796A.
Note 2: For fees in respect of lodging applications, see Part 9.10.
(2) The Minister must give written notice of the variation to the
licensee.
(3) ASIC must give the Minister any application and documents
lodged under subsection (1).
797B Immediate suspension or cancellation
The Minister may, by giving written notice to a market licensee,
suspend the licence for a specified period, or cancel it, if:
(a) the licensee ceases to carry on the business of operating the
market; or
(b) the licensee becomes a Chapter 5 body corporate; or
(c) the licensee asks the Minister to do so; or
(d) in the case of a licence granted under subsection 795B(2)
(overseas markets):
(i) the licensee ceases to be authorised to operate a
financial market in the foreign country in which the
licensee’s principal place of business is located; or
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(ii) there is a change to the regulatory regime applying in
relation to the market to which the licence relates in the
country in which the licensee’s principal place of
business is located, and, because of that change, the
Minister is no longer satisfied as mentioned in
paragraph 795B(2)(c); or
(e) in the case of a licensee that is a leviable entity (within the
meaning of the ASIC Supervisory Cost Recovery Levy Act
2017)—the following have not been paid in full at least 12
months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
(ii) an amount of late payment penalty payable (if any) in
relation to the levy;
(iii) an amount of shortfall penalty payable (if any) in
relation to the levy.
797C Suspension or cancellation following hearing and report
(1) If the Minister considers that a market licensee has breached, or is
in breach of, one or more of its obligations as a market licensee
under this Chapter, the Minister may give the licensee a written
notice that requires the licensee to show cause, at a hearing before
a specified person, why the licence should not be suspended or
cancelled.
(2) The notice must specify:
(a) the grounds on which it is proposed to suspend or cancel the
licence; and
(b) a reasonable time and place at which the hearing is to be
held.
However, if the licensee consents, the person conducting the
hearing may fix a different time or place.
(3) The person conducting the hearing must:
(a) give the licensee an opportunity to be heard at the hearing;
and
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(b) give the Minister:
(i) a report about the hearing; and
(ii) a recommendation about the grounds in the notice on
which it is proposed to suspend or cancel the licence.
(4) After considering the report and recommendation, the Minister
may:
(a) decide to take no further action in relation to the matter and
give written advice of that decision to the licensee; or
(b) suspend the licence for a specified period, or cancel the
licence, by giving written notice to the licensee.
Note: The Minister must also have regard to the matters in section 798A.
797D Effect of suspension
(1) A person whose Australian market licence is suspended is taken
not to hold that licence while it is suspended.
(2) However, the Minister may specify in the written notice to the
licensee that subsection (1) does not apply for specified purposes.
797E Variation or revocation of suspension
The Minister may at any time vary or revoke a suspension of an
Australian market licence by giving written notice to the licensee.
797F Publication of notice of licence suspension or cancellation
(1) If the Minister:
(a) suspends, or varies or revokes a suspension of, an Australian
market licence; or
(b) cancels an Australian market licence;
the Minister must publish a notice in the Gazette to that effect.
(2) The notice must state when the action took effect.
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797G Suspension and cancellation only in accordance with this
Subdivision
An Australian market licence cannot be varied, suspended or
cancelled otherwise than in accordance with this Subdivision.
Note: The conditions on the licence can be varied under section 796A.
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Division 5—Other matters
798A Matters to be taken into account by the Minister
(1) The Minister must have regard to certain matters in deciding
whether to:
(a) grant an applicant an Australian market licence under
section 795B; or
(b) impose, vary or revoke conditions on such a licence under
section 796A; or
(c) suspend or cancel such a licence under section 797C; or
(d) disallow a change to the operating rules of a licensed market
under section 793E.
(2) These are the matters the Minister must have regard to:
(a) the structure, or proposed structure, of the market;
(b) the nature of the activities conducted, or proposed to be
conducted, on the market;
(c) the size, or proposed size, of the market;
(d) the nature of the financial products dealt with, or proposed to
be dealt with, on the market;
(e) the participants, or proposed participants, in the market and:
(i) whether those participants, in effecting transactions
through the market, are, or will be, providing financial
services to other persons; and
(ii) whether those participants acquire or dispose, or will
acquire or dispose, of financial products through the
market as retail clients or as wholesale clients; and
(iii) whether those participants are also, or will also be,
participants in any other financial markets;
(f) the technology used, or proposed to be used, in the operation
of the market;
(g) whether it would be in the public interest to take the action
referred to in subsection (1);
(h) any relevant advice received from ASIC.
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The Minister may also have regard to any other matter that the
Minister considers relevant.
(3) If the Minister is deciding whether to take the action referred to in
paragraph (1)(a), (b) or (c) in respect of an Australian market
licence granted under subsection 795B(2) (overseas markets), the
Minister must also have regard to:
(a) the criteria that the licensee or applicant satisfied to obtain an
authorisation to operate the same market in the foreign
country in which their principal place of business is located;
and
(b) the obligations they must continue to satisfy to keep the
authorisation; and
(c) the level of supervision to which the operation of the market
in that country is subject; and
(d) whether adequate arrangements exist for cooperation
between ASIC and the authority that is responsible for that
supervision.
798B ASIC may give advice to Minister
ASIC may give advice to the Minister in relation to:
(a) any matter in respect of which the Minister has a discretion
under this Part; or
(b) any other matter concerning financial markets.
Note: In some cases, the Minister must have regard to ASIC’s advice: see
paragraph 798A(2)(h).
798C Market licensee or related body corporate etc. listing on
market
(1) Any of the following kinds of entity, scheme or fund (the listed
entity) may be included in a market’s official list:
(a) the market licensee for the market;
(b) a related body corporate of the market licensee;
(c) a registered scheme whose responsible entity is a related
body corporate of the market licensee;
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(ca) a notified foreign passport fund whose operator is a related
body corporate of the market licensee;
(d) a trust whose trustee is a related body corporate of the market
licensee.
Note: There are certain matters that must be included in the market’s listing
rules before such an entity, scheme or fund is included in the official
list (see subsection (4)).
(2) In such a case, the financial products of the listed entity may be
traded on the market, if either or both the listed entity and the
market licensee have entered into such arrangements as ASIC
requires:
(a) for dealing with possible conflicts of interest that might arise
from the listed entity’s financial products being able to be
traded on the market; and
(b) for the purposes of ensuring the integrity of trading in the
listed entity’s financial products.
Note: For fees in respect of ASIC performing functions under such
arrangements, see Part 9.10.
(3) The listed entity, and the market licensee (if applicable), with
whom ASIC has entered into arrangements for the purposes of
subsection (2) must comply with the arrangements.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) Before, and at all times while, the listed entity is included in the
market’s official list, the market’s listing rules must provide for
ASIC, instead of the market licensee, to make decisions and to take
action (or to require the market licensee to take action on ASIC’s
behalf) in relation to these matters, and matters related to these
matters:
(a) the admission of the listed entity to the market’s official list;
and
(b) the removal of the listed entity from that list; and
(c) allowing, stopping or suspending the trading on the market of
the listed entity’s financial products.
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Note: For fees in respect of ASIC performing this function, see Part 9.10.
(5) ASIC has the powers and functions that are provided for it in any
listing rules or arrangements made for the purposes of this section.
(6) The products of an entity, scheme or fund referred to in
subsection (1) must not be traded on the market licensee’s market
otherwise than as allowed by this section.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(7) This section does not apply if the licence of the market licensee
was granted under subsection 795B(2) (overseas markets). Instead,
the law of the country in which the market licensee’s principal
place of business is located applies for all purposes connected with
the inclusion of the listed entity in the market’s official list.
798D Exemptions and modifications for self-listing licensees or
related bodies corporate etc.
(1) ASIC may:
(a) exempt an entity, scheme or fund referred to in
subsection 798C(1) whose financial products are able to be
traded on the market from a modifiable provision (see
subsection (7)); or
(b) declare that a modifiable provision applies to an entity,
scheme or fund referred to in subsection 798C(1) whose
financial products are able to be traded on the market as if
specified provisions were omitted, modified or varied as
specified in the declaration.
(2) An exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(3) An exemption may apply unconditionally or subject to specified
conditions.
(4) If an exemption is granted subject to specified conditions, the
entity, scheme or fund must comply with those conditions.
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Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(5) If an exemption is granted subject to specified conditions, the
Court may, on ASIC’s application, order the entity, scheme or fund
to comply with one or more of those conditions in a specified way.
(6) If conduct (including an omission) of a person would not have
constituted an offence if:
(a) a particular condition had not been imposed on an exemption
under paragraph (1)(a); or
(b) 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 gazettal
requirement of subsection (2)), ASIC gave written notice setting
out the text of the condition or the declaration to the person. In a
prosecution for an offence to which this subsection applies, the
prosecution must prove that this additional notification requirement
was complied with before the conduct occurred.
(7) In this section:
modifiable provision means:
(a) section 205G and any of the provisions of Chapter 6, 6A, 6B,
6C, 6CA or 7; or
(b) regulations made for the purposes of that section or any of
those provisions.
798DA Market licensee, related body corporate etc. or competitor
participating in market
(1) This section applies if any of the following is a participant (the
participant) in a market:
(a) the market licensee;
(b) a related body corporate of the market licensee;
(c) a partnership if a partner in the partnership is a related entity
of the market licensee;
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(d) an entity if:
(i) the entity conducts, or participates in, a business that is
in competition with a business conducted by the market
licensee, or by a related body corporate of the market
licensee; and
(ii) the entity requests that ASIC make decisions and take
action in relation to the matters referred to in
subsection (2).
(2) Before, and at all times while, the participant is participating in the
market, the market’s operating rules must provide for ASIC,
instead of the market licensee, to make decisions and to take action
(or to require the market licensee to take action on ASIC’s behalf)
in relation to these matters, and matters related to these matters:
(a) the admission of the participant to the market; and
(b) the expulsion and suspension of the participant from the
market; and
(c) the disciplining of the participant; and
(d) the participant’s compliance with the operating rules or this
Act, including:
(i) the method of determining whether the participant has
complied with those rules or this Act; and
(ii) any action (including the imposition of a fine or
penalty) to be taken in respect of contraventions of
those rules or this Act.
Note: For fees in respect of ASIC performing this function, see Part 9.10.
(3) ASIC has the powers and functions that are provided for it in any
operating rules made for the purposes of this section.
(4) A participant referred to in subsection (1) must not participate in
the market licensee’s market otherwise than as allowed by this
section.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(5) This section does not apply if the licence of the market licensee
was granted under subsection 795B(2) (overseas markets). Instead,
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Part 7.2 Licensing of financial markets
Division 5 Other matters
Section 798E
104 Corporations Act 2001
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the law of the country in which the market licensee’s principal
place of business is located applies for all purposes connected with
the participation of the participant in the market.
(6) To avoid doubt, subsection (1) does not authorise a market licensee
to participate in its own market.
798E Other potential conflict situations
(1) The regulations may make provision in relation to the rules and
procedures that are to apply in the case of conflicts, or potential
conflicts, between the commercial interests of the licensee and the
need for the licensee to ensure that the market operates in the way
mentioned in paragraph 792A(1)(a).
(2) In particular, such regulations may deal with the following:
(a) identifying when such a conflict, or potential conflict, is
taken to arise;
(b) empowering ASIC, instead of the licensee, to make decisions
and to take action under the market’s operating rules in
relation to such a conflict or potential conflict;
(c) empowering ASIC to require the licensee to take action
under the market’s operating rules (whether or not on ASIC’s
behalf) in relation to such a conflict or potential conflict.
Note: For fees in respect of ASIC performing this function, see Part 9.10.
(3) Subsection (2) does not limit the generality of subsection (1).
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Part 7.2A—Supervision of financial markets
798F ASIC to supervise financial markets
ASIC has the function of supervising financial markets the
operators of which are licensed under subsection 795B(1).
798G Market integrity rules
(1) ASIC may, by legislative instrument, make rules (the market
integrity rules) that deal with the following:
(a) the activities or conduct of licensed markets;
(b) the activities or conduct of persons in relation to licensed
markets;
(c) the activities or conduct of persons in relation to financial
products traded on licensed markets.
Note: The market integrity rules will not apply in relation to all licensed
markets: see subsection 798H(2).
(3) ASIC must not make a market integrity rule unless the Minister has
consented, in writing, to the making of the rule.
Emergency rules
(4) Despite subsection (3), ASIC may make a market integrity rule
without the consent of the Minister if ASIC is of the opinion that it
is necessary, or in the public interest, to protect people dealing in a
financial product or class of financial products.
(5) However, if ASIC does so, ASIC must:
(a) provide the Minister, on the following day, with a written
explanation of the need for the rule; and
(b) amend or revoke the rule in accordance with any written
directions of the Minister.
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Section 798H
106 Corporations Act 2001
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Minister’s instruments are not legislative instruments
(6) None of the following is a legislative instrument:
(a) a consent given under subsection (3);
(b) a direction given under paragraph (5)(b).
798H Complying with market integrity rules
(1) The following entities must comply with the market integrity rules:
(a) operators of licensed markets;
(b) participants in licensed markets;
(c) entities prescribed by the regulations for the purposes of this
paragraph.
Note: 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.
(2) Subsection (1) does not apply in relation to a financial market the
operator of which is licensed under subsection 795B(2) (overseas
markets).
(3) If there is an inconsistency between the market integrity rules and
the derivative transaction rules or the derivative trade repository
rules, the market integrity rules prevail to the extent of the
inconsistency.
798J Directions by ASIC
(1) If ASIC is of the opinion that it is necessary, or in the public
interest, to protect people dealing in a financial product or class of
financial products by:
(a) giving a direction to an entity to suspend dealings in the
financial product or class of financial products; or
(b) giving some other direction in relation to those dealings;
ASIC may give written advice to the entity of that opinion and the
reasons for it.
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Note: ASIC may also give directions to entities that are market licensees
under section 794D. A failure to comply with a direction under that
section is an offence (see subsection 1311(1)).
(2) If, after receiving ASIC’s advice and reasons, the entity does not
take:
(a) in the case of a proposed direction to suspend dealings in the
financial products—action to prevent such dealings; or
(b) in any other case—such other action as in ASIC’s view is
adequate to address the situation raised in the advice;
and ASIC still considers that it is appropriate to give the direction
to the entity, ASIC may give the entity the written direction with a
statement setting out its reasons for making the direction.
(3) The direction has effect for the period specified in it (which may be
up to 21 days). During that period, the entity must comply with the
direction and must not allow any dealings to take place contrary to
it.
(4) If the entity fails to comply with the direction, ASIC may apply to
the Court for, and the Court may make, an order that the entity
comply with the direction.
(5) If, at any time after the entity receives ASIC’s advice under
subsection (1), the entity requests in writing that ASIC refer the
matter to the Minister, ASIC must do so immediately. In that event,
the Minister may, if he or she considers it appropriate, require
ASIC not to make, or to revoke, the direction. ASIC must
immediately comply with such a requirement.
(6) ASIC may vary a direction by giving written notice to the entity if
ASIC is of the opinion that the variation is necessary, or in the
public interest, to protect people dealing in a financial product or
class of financial products.
(7) ASIC may revoke a direction by giving written notice to the entity.
(8) A direction given under subsection (2) is not a legislative
instrument.
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Section 798K
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798K Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have
contravened subsection 798H(1) (complying with market integrity
rules) to do one or more of the following as an alternative to civil
proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education
programs);
(c) accept sanctions other than the payment of a penalty to the
Commonwealth;
(d) enter into a legally enforceable undertaking.
(2) The penalty payable under regulations made under paragraph (1)(a)
in relation to an alleged contravention of a market integrity rule
must not exceed:
(a) for an individual—3,000 penalty units; and
(b) for a body corporate—15,000 penalty units.
(3) Without limiting regulations that may be made under
paragraph (1)(d), those regulations may provide for one or more of
the following kinds of undertakings:
(a) an undertaking to take specified action within a specified
period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified
period to the Commonwealth or to some other specified
person.
798L Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial market or class of financial markets from
all or specified provisions of this Part; or
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(c) provide that this Part applies in relation to a person or a
financial market, or a class of persons or financial markets, as
if specified provisions were omitted, modified or varied as
specified in the regulations.
(2) For the purpose of this section, the provisions of this Part include
definitions in this Act, or in the regulations, as they apply to
references in this Part.
798M Exemptions by Minister
(1) The Minister may exempt a particular financial market, or class of
financial markets, from all or specified provisions of this Part. An
exemption may be unconditional, or subject to conditions specified
in the exemption.
Note: The provisions of this Part include regulations made for the purposes
of this Part (see section 761H).
(2) The Minister may, at any time:
(a) vary an exemption to:
(i) impose conditions, or additional conditions, on the
exemption; or
(ii) vary or revoke any of the conditions on the exemption;
or
(b) revoke an exemption.
(3) However, the Minister may only take action under subsection (2)
after:
(a) giving notice, and an opportunity to make submissions on the
proposed action, to the operator of each financial market
known by the Minister to be covered by the exemption; and
(b) if the exemption covers a class of financial markets—a notice
has been published on ASIC’s website allowing a reasonable
period within which the operator of each financial market
covered by the exemption may make submissions on the
proposed action, and that period has ended.
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Section 798M
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(4) If an exemption is expressed to apply in relation to a class of
financial markets (whether or not it is also expressed to apply in
relation to one or more financial markets otherwise than by
reference to membership of a class), then the exemption, and any
variation or revocation of the exemption, is a legislative
instrument.
(5) If subsection (4) does not apply to an exemption, then the
exemption, and any variation or revocation of the exemption, must
be in writing and the Minister must publish notice of it in the
Gazette.
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Requirement to be licensed Division 1
Section 820A
Corporations Act 2001 111
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Part 7.3—Licensing of clearing and settlement
facilities
Division 1—Requirement to be licensed
820A Need for a licence
(1) A person must only operate, or hold out that the person operates, a
clearing and settlement facility in this jurisdiction if:
(a) the person has an Australian CS facility licence that
authorises the person to operate the facility in this
jurisdiction; or
(b) the facility is exempt from the operation of this Part.
Note 1: A CS facility licensee may also provide financial services incidental to
the operation of the facility: see paragraph 911A(2)(d).
Note 2: Failure to comply with this subsection is an offence: see
subsection 1311(1).
(2) For the purposes of an offence based on subsection (1), strict
liability applies to paragraph (1)(b).
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
820B Other prohibitions on holding out
A person must not hold out:
(a) that the person has an Australian CS facility licence; or
(b) that the operation of a clearing and settlement facility by the
person in this jurisdiction is authorised by an Australian CS
facility licence; or
(c) that a clearing and settlement facility is exempt from the
operation of this Part;
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if that is not the case.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
820C Exemptions by Minister
(1) The Minister may exempt a particular clearing and settlement
facility, or class of clearing and settlement facilities, from all or
specified provisions of this Part. An exemption may be
unconditional, or subject to conditions specified in the exemption.
Note: The provisions of this Part include regulations made for the purposes
of this Part (see section 761H).
(2) The Minister may, at any time:
(a) vary an exemption to:
(i) impose conditions, or additional conditions, on the
exemption; or
(ii) vary or revoke any of the conditions on the exemption;
or
(b) revoke an exemption.
(3) However, the Minister may only take action under subsection (2)
after:
(a) giving notice, and an opportunity to make submissions on the
proposed action, to the operator of each clearing and
settlement facility known by the Minister to be covered by
the exemption; and
(b) if the exemption covers a class of clearing and settlement
facilities—a notice has been published on ASIC’s website
allowing a reasonable period within which the operator of
each clearing and settlement facility covered by the
exemption may make submissions on the proposed action,
and that period has ended.
(4) If an exemption is expressed to apply in relation to a class of
clearing and settlement facilities (whether or not it is also
expressed to apply in relation to one or more clearing and
settlement facilities otherwise than by reference to membership of
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a class), then the exemption, and any variation or revocation of the
exemption, is a legislative instrument.
(5) If subsection (4) does not apply to an exemption, then the
exemption, and any variation or revocation of the exemption, must
be in writing and the Minister must publish notice of it in the
Gazette.
820D When a clearing and settlement facility is taken to be operated
in this jurisdiction
(1) For the purposes of this Chapter, a clearing and settlement facility
is taken to be operated in this jurisdiction if it is operated by a
body corporate that is registered under Chapter 2A.
(2) Subsection (1) does not limit the circumstances in which a clearing
and settlement facility is operated in this jurisdiction for the
purposes of this Chapter.
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Division 2 Regulation of CS facility licensees
Section 821A
114 Corporations Act 2001
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Division 2—Regulation of CS facility licensees
Subdivision A—Licensee’s obligations
821A General obligations
(1) A CS facility licensee must:
(aa) to the extent that it is reasonably practicable to do so:
(i) comply with standards determined under section 827D;
and
(ii) do all other things necessary to reduce systemic risk;
and
(a) to the extent that it is reasonably practicable to do so, do all
things necessary to ensure that the facility’s services are
provided in a fair and effective way; and
(b) comply with the conditions on the licence; and
(c) have adequate arrangements (whether they involve a
self-regulatory structure or the appointment of an
independent person or related entity) for supervising the
facility, including arrangements for:
(i) handling conflicts between the commercial interests of
the licensee and the need for the licensee to ensure that
the facility’s services are provided in a fair and effective
way; and
(ii) enforcing compliance with the facility’s operating rules;
and
(d) have sufficient resources (including financial, technological
and human resources) to operate the facility properly and for
the required supervisory arrangements to be provided; and
(e) if the licensee is a foreign body corporate—be registered
under Division 2 of Part 5B.2; and
(f) if the licence was granted under subsection 824B(2)
(overseas clearing and settlement facilities)—both:
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(i) remain authorised to operate a clearing and settlement
facility in the foreign country in which the licensee’s
principal place of business is located; and
(ii) get the Minister’s approval under section 821F before
that principal place of business becomes located in any
other foreign country; and
(g) if the licensee, or a holding company of the licensee, is a
widely held market body (within the meaning of Division 1
of Part 7.4)—take all reasonable steps to ensure that an
unacceptable control situation (within the meaning of that
Division) does not exist in relation to the body; and
(h) take all reasonable steps to ensure that no disqualified
individual becomes, or remains, involved in the licensee (see
Division 2 of Part 7.4).
(2) A person contravenes this subsection if the person contravenes
paragraph (1)(aa), (a), (c), (d), (e), (f), (g) or (h).
Note: This subsection is a civil penalty provision (see section 1317E).
821B Obligation to notify ASIC of certain matters
(1) A CS facility licensee must give written notice to ASIC, as soon as
practicable, if it becomes aware that it may no longer be able to
meet, or has breached, an obligation under section 821A. If ASIC
considers it appropriate to do so, ASIC may give the Minister
advice about the matter.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A CS facility licensee must give written notice to ASIC, as soon as
practicable, as required by the following paragraphs:
(a) if the licensee provides a new class of financial service
incidental to the operation of the facility, the licensee must
give notice that includes details of the new class;
(b) if the licensee takes any kind of disciplinary action against a
participant in the facility, the licensee must give notice that
includes:
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(i) the participant’s name; and
(ii) the reason for and nature of the action taken;
(c) if the licensee has reason to suspect that a person has
committed, is committing, or is about to commit a significant
contravention of the facility’s operating rules or this Act, the
licensee must give notice that includes:
(i) the person’s name; and
(ii) details of the contravention or impending contravention;
and
(iii) the licensee’s reasons for that belief.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A CS facility licensee whose licence was granted under
subsection 824B(2) (overseas clearing and settlement facilities)
must, as soon as practicable, give written notice to ASIC if:
(a) the licensee ceases to be authorised to operate a clearing and
settlement facility in the foreign country in which the
licensee’s principal place of business is located; or
(b) there is a significant change to the regulatory regime
applying in relation to the facility in the foreign country in
which the licensee’s principal place of business is located.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) As soon as practicable after:
(a) a person becomes or ceases to be a director, secretary or
senior manager of a CS facility licensee or of a holding
company of a CS facility licensee (including when a person
changes from one of those positions to another); or
(b) a CS facility licensee becomes aware that a person has come
to have, or has ceased to have, more than 15% of the voting
power in the licensee or in a holding company of the
licensee;
the licensee must give written notice of this to ASIC. The notice
must include such other information about the matter as is
prescribed by regulations made for the purposes of this subsection.
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Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: To the extent that the licensee is required to give the notice and
information under any other provision of this Act, the licensee may
comply with this subsection by doing so. It need not provide the same
information twice.
(6) A person contravenes this subsection if the person contravenes
subsection (1), (2), (3) or (4).
Note: This subsection is a civil penalty provision (see section 1317E).
821BA Obligation to notify Reserve Bank of certain matters
(1) A CS facility licensee must give written notice to the Reserve Bank
of Australia (the Reserve Bank), as soon as practicable, if:
(a) the licensee becomes aware that it has failed to comply with
standards determined under section 827D, or is likely to fail
to comply with such standards; or
(b) the licensee becomes aware that it may no longer be able to
meet, or has breached, its obligation under
subparagraph 821A(1)(aa)(ii).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) If the Reserve Bank considers it appropriate to do so, the Reserve
Bank may give the Minister advice about the matter.
821C Obligation to assist
ASIC
(1) A CS facility licensee must give such assistance to ASIC, or a
person authorised by ASIC, as ASIC or the authorised person
reasonably requests in relation to the performance of ASIC’s
functions.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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(2) Such assistance may include showing ASIC the licensee’s books or
giving ASIC other information.
Reserve Bank
(3) A CS facility licensee must give such assistance to the Reserve
Bank of Australia (the Reserve Bank), or a person authorised by
the Reserve Bank, as the Reserve Bank or the authorised person
reasonably requests in relation to the performance of the Reserve
Bank’s functions under this Part.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) Such assistance may include showing the Reserve Bank the
licensee’s books or giving the Reserve Bank other information.
821D Obligation to give ASIC access to the facility
A CS facility licensee must give a person authorised by ASIC such
reasonable access to the facility as the person requests for any of
the purposes of this Chapter.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
821E Annual report
(1) A CS facility licensee must, within 3 months after the end of its
financial year, give ASIC an annual report on the extent to which
the licensee complied with its obligations as a CS facility licensee
under this Chapter.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) The licensee must ensure that the annual report is accompanied by
any information and statements prescribed by regulations made for
the purposes of this subsection.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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(3) The licensee must also ensure that the annual report is
accompanied by any audit report that the Minister requires under
subsection (4).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) The Minister may, by giving written notice to a CS facility
licensee, require the licensee to obtain an audit report on the annual
report and on any information or statements accompanying it. The
Minister must nominate to prepare the audit report:
(a) ASIC; or
(b) a specified person or body that is suitably qualified.
(5) ASIC must give the annual report and accompanying material to
the Minister.
821F Change of country by foreign licensee
(1) In the case of a licence granted under subsection 824B(2), the
Minister may approve the location of the licensee’s principal place
of business in a new country only if:
(a) the new country is not Australia; and
(b) the operation of the facility in that country will be subject to
requirements and supervision that are sufficiently equivalent,
in relation to the degree of protection from systemic risk and
the level of effectiveness and fairness of services they
achieve, to the requirements and supervision to which
clearing and settlement facilities are subject under this Act in
relation to those matters.
(2) If, in relation to a licence granted under subsection 824B(2), the
licensee’s principal place of business changes to become a place in
Australia:
(a) the licence ceases to be in force from the time of the change;
and
(b) if the licensee wishes the facility to continue to be licensed,
the licensee may apply for the grant of a new licence under
subsection 824B(1); and
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(c) the application must be assessed in accordance with
Subdivision A of Division 3, subject to such modifications (if
any) of that Subdivision as are set out in regulations made for
the purposes of this paragraph.
(3) An application referred to in paragraph (2)(b) may be made in
advance of the change of location of the principal place of
business, and a decision on the application may be made before
that time. However, any licence granted pursuant to the application
does not come into force until the change occurs.
Subdivision B—The facility’s operating rules and procedures
822A Content of the operating rules and procedures
(1) The operating rules of a licensed CS facility must deal with the
matters prescribed by regulations made for the purposes of this
subsection.
(2) The regulations may also prescribe matters in respect of which a
licensed CS facility must have written procedures.
(3) However, subsections (1) and (2) do not apply if the licensee is
also authorised to operate the facility in the foreign country in
which its principal place of business is located and the licence was
granted under subsection 824B(2) (overseas clearing and
settlement facilities).
(4) In a subsection (3) case, ASIC may determine, by giving written
notice to the licensee, matters in respect of which the licensed CS
facility must have written procedures.
822B Legal effect of operating rules
(1) The operating rules of a licensed CS facility have effect as a
contract under seal:
(a) between the licensee and each issuer of financial products in
respect of which the facility provides its services; and
(b) between the licensee and each participant in the facility; and
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(c) between each issuer of financial products in respect of which
the facility provides its services and each participant in the
facility; and
(d) between a participant in the facility and each other participant
in the facility;
under which each of those persons agrees to observe the operating
rules to the extent that they apply to the person and to engage in
conduct that the person is required by the operating rules to engage
in.
(2) However, if there is an inconsistency between the operating rules
of a licensed CS facility and any of the following other rules:
(a) the derivative transaction rules;
(b) the derivative trade repository rules;
(c) the client money reporting rules;
those other rules prevail over the operating rules to the extent of
the inconsistency.
Note 1: If there is an inconsistency between the derivative transaction rules
and the derivative trade repository rules, the derivative transaction
rules prevail: see subsection 901E(2).
Note 2: If there is an inconsistency between the derivative transaction rules or
the derivative trade repository rules and the client money reporting
rules, the derivative transaction rules or the derivative trade repository
rules prevail: see subsection 981M(2).
822C Enforcement of operating rules
(1) If a person who is under an obligation to comply with or enforce
any of a licensed CS facility’s operating rules fails to meet that
obligation, an application to the Court may be made by:
(a) ASIC; or
(b) the licensee; or
(c) the operator of a financial market with which the facility has
arrangements to provide services for transactions effected
through the market; or
(d) a person aggrieved by the failure.
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Section 822D
122 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) After giving an opportunity to be heard to the applicant and the
person against whom the order is sought, the Court may make an
order giving directions to:
(a) the person against whom the order is sought; or
(b) if that person is a body corporate—the directors of the body
corporate;
about compliance with, or enforcement of, the operating rules.
822D Changing the operating rules
Licensed CS facilities other than subsection 824B(2) facilities
(1) As soon as practicable after a change is made to the operating rules
of a licensed CS facility, other than a facility licensed under
subsection 824B(2) (overseas clearing and settlement facilities),
the licensee must lodge with ASIC written notice of the change.
The notice must:
(a) set out the text of the change; and
(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
(2) If no notice is lodged with ASIC, as required by subsection (1),
within 21 days after the change is made, the change ceases to have
effect at the end of that period.
Subsection 824B(2) facilities
(3) As soon as practicable after a change is made to the operating rules
of a clearing and settlement facility the operation of which is
licensed under subsection 824B(2) (overseas clearing and
settlement facilities), the licensee must lodge with ASIC written
notice of the change. The notice must:
(a) set out the text of the change; and
(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 822E
Corporations Act 2001 123
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
822E Disallowance of changes to operating rules
(1) This section does not apply in respect of an Australian CS facility
licence granted under subsection 824B(2) (overseas clearing and
settlement facilities).
(2) As soon as practicable after receiving a notice under section 822D
from a CS facility licensee, ASIC must send a copy of the notice to
the Minister.
(3) Within 28 days after ASIC receives the notice from the licensee,
the Minister may disallow all or a specified part of the change to
the operating rules.
(4) In deciding whether to do so, the Minister must have regard to the
consistency of the change with the licensee’s obligations under this
Part (including in particular the obligations mentioned in
paragraphs 821A(1)(aa) and (a)).
Note: The Minister must also have regard to the matters in section 827A.
(5) As soon as practicable after all or a part of a change is disallowed,
ASIC must give notice of the disallowance to the licensee. The
change ceases to have effect, to the extent of the disallowance,
when the licensee receives the notice.
Subdivision C—Powers of the Minister, ASIC and the Reserve
Bank in relation to licensees
823A Minister’s power to give directions
(1) If the Minister considers that a CS facility licensee is not
complying with its obligations as a CS facility licensee under this
Chapter, the Minister may give the licensee a written direction to
do specified things that the Minister believes will promote
compliance by the licensee with those obligations.
(2) The licensee must comply with the direction.
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Section 823B
124 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) The Minister may vary or revoke a direction at any time by giving
written notice to the licensee.
823B Minister’s power to require special report
(1) The Minister may give a CS facility licensee a written notice
requiring the licensee to give ASIC a special report on specified
matters. ASIC must give the report to the Minister.
(2) The notice may also require the licensee to give ASIC an audit
report on the special report. The Minister must nominate to prepare
the report:
(a) ASIC; or
(b) a specified person or body that is suitably qualified.
(3) The licensee must give the special report, and audit report (if any),
to ASIC within the time required by the notice.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
823C ASIC assessment of licensee’s compliance
(1) ASIC may do an assessment of how well a CS facility licensee is
complying with its obligations as a CS facility licensee under this
Chapter (other than its obligation under paragraph 821A(1)(aa)). In
doing the assessment, ASIC may take account of any information
and reports that it thinks appropriate, including information and
reports from an overseas regulatory authority.
(2) If the CS facility licensee is prescribed by the regulations for the
purpose of this subsection, ASIC must, in respect of the obligation
in paragraph 821A(1)(c), do such an assessment at least once a
year.
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Section 823CA
Corporations Act 2001 125
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(3) As soon as practicable after doing an assessment under this section,
ASIC must give a written report on the assessment to the Minister
and a copy of the written report to the Reserve Bank of Australia.
(4) If an assessment, or part of an assessment, relates to any other
person’s affairs to a material extent, ASIC may, at the person’s
request or of its own motion, give the person a copy of the written
report on the assessment or the relevant part of the report.
(5) If an assessment, or part of an assessment, relates to a serious
contravention of a law of the Commonwealth or of a State or
Territory, ASIC may give a copy of the written report on the
assessment, or the relevant part of the report, to:
(a) the Australian Federal Police; or
(b) the Chief Executive Officer of the Australian Crime
Commission or a member of the staff of the ACC (within the
meaning of the Australian Crime Commission Act 2002); or
(c) the Director of Public Prosecutions; or
(d) an agency prescribed by regulations made for the purposes of
this paragraph.
(6) Either the Minister or ASIC may cause the written report on an
assessment, or part of the report on an assessment, to be printed
and published.
823CA Reserve Bank assessment of licensee’s compliance
(1) The Reserve Bank of Australia (the Reserve Bank) may do an
assessment of how well a CS facility licensee is complying with its
obligation under paragraph 821A(1)(aa). In doing the assessment,
the Reserve Bank may take account of any information and reports
that it thinks appropriate, including information and reports from
an overseas regulatory authority.
(1A) If the CS facility licensee is prescribed by the regulations for the
purpose of this subsection, the Reserve Bank must do such an
assessment at least once a year.
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Section 823D
126 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) As soon as practicable after doing an assessment under this section,
the Reserve Bank must give a written report on the assessment to
the Minister and a copy of the written report to ASIC.
(3) If an assessment, or part of an assessment, relates to any other
person’s affairs to a material extent, the Reserve Bank may, at the
person’s request or of its own motion, give the person a copy of the
written report on the assessment or the relevant part of the report.
(4) If an assessment, or part of an assessment, relates to a serious
contravention of a law of the Commonwealth or of a State or
Territory, the Reserve Bank may give a copy of the written report
on the assessment, or the relevant part of the report, to:
(a) the Australian Federal Police; or
(b) the Chief Executive Officer of the Australian Crime
Commission or a member of the staff of the ACC (within the
meaning of the Australian Crime Commission Act 2002); or
(c) the Director of Public Prosecutions; or
(d) an agency prescribed by regulations made for the purposes of
this paragraph.
(5) Either the Minister or the Reserve Bank may cause the written
report on an assessment, or part of the report on an assessment, to
be printed and published.
823D Directions power—protecting dealings in financial products
and ensuring fair and effective provision of services by
CS facilities
(1) If ASIC:
(a) considers that it is necessary, or in the public interest, to
protect people dealing in a financial product or class of
financial products; or
(b) considers that a CS facility licensee has not done all things
reasonably practicable to ensure the facility’s services are
provided in a fair and effective way;
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Section 823D
Corporations Act 2001 127
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ASIC may give the licensee written advice that it intends to give
the licensee a specified direction under this section. The advice
must include the reasons for ASIC’s intention to give the direction.
(2) As soon as practicable after giving the advice to the licensee, ASIC
must give notice of the advice to the operator of each financial
market with which the facility has arrangements to provide
services for transactions effected through the market.
(3) For the purpose of remedying the matter mentioned in
subsection (1), ASIC may give the following directions to the
licensee under this section:
(a) a direction not to provide the licensee’s services in relation to
any transactions, of which the licensee receives notice after
the direction takes effect, that relate to a specified financial
product or class of financial products;
(b) any other direction concerning dealings with transactions that
relate to a specified financial product or class of financial
products.
(4) If, after receiving ASIC’s advice and reasons:
(a) the licensee does not take steps that in ASIC’s view are
adequate to address the situation; and
(b) ASIC still considers that it is appropriate to give the direction
to the licensee;
ASIC may give the licensee the direction, in writing, with a
statement setting out the reasons for giving the direction.
(5) The direction has effect until the earlier of the following times:
(a) the time ASIC revokes the direction in accordance with
subsection (10);
(b) the end of the period (which may be up to 21 days) specified
in the direction as the period during which the direction is
effective ends.
While the direction has effect, the licensee must comply with the
direction and must not provide any services contrary to it.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 823E
128 Corporations Act 2001
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(6) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(7) As soon as practicable after making or varying (see subsection (9))
a direction, ASIC must:
(a) give a copy of the direction or variation to:
(i) if the direction relates to a specified financial product—
the issuer of that product; and
(ii) each of the operators mentioned in subsection (2); and
(b) give a written report to the Minister setting out ASIC’s
reasons for making the direction or variation; and
(c) give a copy of the report to the licensee.
(8) If, at any time after the licensee receives ASIC’s advice under
subsection (1), the licensee requests in writing that ASIC refer the
matter to the Minister, ASIC must do so immediately. In that event,
the Minister may, if he or she considers it appropriate, require
ASIC not to make, or to revoke, the direction. ASIC must
immediately comply with such a requirement.
(9) ASIC may vary a direction by giving written notice to the licensee.
(10) ASIC may revoke a direction by giving written notice to the
licensee. ASIC must also give written notice of the revocation to
each of the operators mentioned in subsection (2).
823E Directions power—reduction of systemic risk
(1) If ASIC considers that a CS facility licensee has not done all things
reasonably practicable to reduce systemic risk in the provision of
the facility’s services, ASIC may give the licensee a direction, in
writing, to take:
(a) specified measures to comply with the whole or a part of a
standard determined under section 827D; or
(b) any other action that ASIC considers will reduce systemic
risk in the provision of the facility’s services.
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Section 823E
Corporations Act 2001 129
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(2) The direction may deal with the time by which, or period during
which, it is to be complied with. The time or period must be
reasonable.
(3) The licensee must comply with the direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3A) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) ASIC may vary the direction by giving written notice to the
licensee.
(5) The direction has effect until ASIC revokes it by giving written
notice to the licensee.
(6) ASIC may revoke the direction if, at the time of revocation, it
considers that the direction is no longer necessary or appropriate.
(7) Before giving, varying or revoking the direction, ASIC must
consult the Reserve Bank of Australia. However, a failure to
consult the Reserve Bank of Australia does not invalidate the
direction, variation or revocation.
(8) The Reserve Bank of Australia may at any time request ASIC to
make a direction under this section. However, ASIC is not required
to comply with the request.
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Division 3 The Australian CS facility licence
Section 824A
130 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 3—The Australian CS facility licence
Subdivision A—How to get a licence
824A How to apply for a licence
(1) A body corporate may apply for an Australian CS facility licence
by lodging with ASIC an application that:
(a) includes the information required by regulations made for the
purposes of this paragraph; and
(b) is accompanied by the documents (if any) required by
regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must, within a reasonable time, give the application to the
Minister with advice about the application.
824B When a licence may be granted
General
(1) The Minister may grant an applicant an Australian CS facility
licence if the Minister is satisfied that:
(a) the application was made in accordance with section 824A;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) the applicant has adequate operating rules, and procedures,
(see Subdivision B of Division 2) for the facility to ensure, as
far as is reasonably practicable, that systemic risk is reduced
and the facility is operated in a fair and effective way; and
(d) the applicant has adequate arrangements (whether they
involve a self-regulatory structure or the appointment of an
independent person or related entity) for supervising the
facility, including arrangements for:
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(i) handling conflicts between the commercial interests of
the licensee and the need for the licensee to reduce
systemic risk and ensure that the facility’s services are
provided in a fair and effective way; and
(ii) enforcing compliance with the facility’s operating rules;
and
(e) no unacceptable control situation (see Division 1 of Part 7.4)
is likely to result if the licence is granted; and
(f) no disqualified individual appears to be involved in the
applicant (see Division 2 of Part 7.4).
This subsection has effect subject to subsections (3) and (4).
Note: The Minister must also have regard to the matters in section 827A in
deciding whether to grant a licence.
Alternative criteria for granting licence to overseas clearing and
settlement facility
(2) If an applicant is authorised to operate a clearing and settlement
facility in the foreign country in which its principal place of
business is located, the Minister may grant the applicant an
Australian CS facility licence authorising the applicant to operate
the same facility in this jurisdiction. The Minister must be satisfied
that:
(a) the application was made in accordance with section 824A;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) the operation of the facility in that country is subject to
requirements and supervision that are sufficiently equivalent,
in relation to the degree of protection from systemic risk and
the level of effectiveness and fairness of services they
achieve, to the requirements and supervision to which
clearing and settlement facilities are subject under this Act in
relation to those matters; and
(d) the applicant undertakes to cooperate with ASIC and the
Reserve Bank of Australia by sharing information and in
other ways; and
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(e) no unacceptable control situation (see Division 1 of Part 7.4)
is likely to result if the licence is granted; and
(f) no disqualified individual appears to be involved in the
applicant (see Division 2 of Part 7.4); and
(g) any other requirements that are prescribed by regulations
made for the purposes of this subsection are satisfied.
This subsection has effect subject to subsections (3) and (4).
Note: The Minister must also have regard to the matters in section 827A in
deciding whether to grant a licence.
Foreign bodies
(3) If the applicant is a foreign body corporate, the Minister:
(a) must not grant the applicant a licence unless the applicant is
registered under Division 2 of Part 5B.2; and
(b) may otherwise grant a licence under either subsection (1) or
(2) (subject to the relevant criteria being satisfied).
Disqualified individuals
(4) The Minister must not grant the applicant a licence unless:
(a) ASIC has notified the Minister that, as far as ASIC is aware,
no disqualified individual is involved in the applicant (see
Division 2 of Part 7.4); or
(b) 42 days have passed since the application was made and
ASIC has not given a notice under subsection 853D(2) to the
applicant within that 42 days.
824C Publication of notice of licence grant
If the Minister grants an Australian CS facility licence, the
Minister must publish a notice in the Gazette stating:
(a) the name of the licensee; and
(b) the date on which the licence was granted; and
(c) the conditions on the licence.
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Section 824D
Corporations Act 2001 133
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824D More than one licence in the same document
If the Minister grants a person 2 or more of the following:
(a) an Australian CS facility licence;
(b) an Australian market licence;
they may be included in the same document.
824E More than one CS facility covered by the same licence
(1) The same Australian CS facility licence may authorise the licensee
to operate 2 or more clearing and settlement facilities.
(2) In that case, a reference in this Chapter to the clearing and
settlement facility to which an Australian CS facility licence relates
is taken instead to be a reference to each of those facilities
severally.
(3) Before varying the conditions on an Australian CS facility licence
so as to add another facility that the licensee is authorised to
operate, the Minister must be satisfied of the matters listed in
subsection 824B(1) or (2) (as appropriate) in relation to the facility.
(4) An Australian CS facility licence that authorises the licensee to
operate 2 or more clearing and settlement facilities may be
suspended or cancelled under Subdivision C in respect of one or
some of those facilities only, as if the licensee held a separate
licence for each of the facilities.
Subdivision B—The conditions on the licence
825A The conditions on the licence
(1) The Minister may, at any time:
(a) impose conditions, or additional conditions, on an Australian
CS facility licence; or
(b) vary or revoke conditions imposed on such a licence;
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by giving written notice to the licensee. The Minister must also
publish a notice in the Gazette with details of the action and when
it took effect.
Note: As well as the requirements in this section, the Minister must also
have regard to the matters in section 827A.
(2) The Minister may do so:
(a) on the Minister’s own initiative, subject to subsection (3); or
(b) if the licensee lodges with ASIC an application for the
Minister to do so, which is accompanied by the documents, if
any, required by regulations made for the purposes of this
paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) The Minister may only impose conditions or additional conditions,
or vary the conditions, on the licence on his or her own initiative if:
(a) he or she considers it appropriate to do so having regard to:
(i) the licensee’s obligations as a CS facility licensee under
this Chapter; and
(ii) any change in the facility’s operations or the conditions
in which the facility is operating; and
(b) the Minister gives the licensee written notice of the proposed
action and an opportunity to make a submission before it
takes effect.
This subsection does not apply to the Minister imposing conditions
when a licence is granted.
(4) The Minister must ensure that each Australian CS facility licence is
subject to conditions that specify:
(a) the particular facility that the licensee is authorised to
operate; and
(b) the class or classes of financial products in respect of which
the facility can provide services.
(5) ASIC must give the Minister any application and documents
lodged under subsection (2).
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Corporations Act 2001 135
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Subdivision C—When a licence can be varied, suspended or
cancelled
826A Varying licences
(1) The Minister may vary an Australian CS facility licence to take
account of a change in the licensee’s name if the licensee lodges
with ASIC an application for the variation, accompanied by the
documents, if any, required by regulations made for the purposes
of this subsection.
Note 1: The conditions on the licence can be varied under section 825A.
Note 2: For fees in respect of lodging applications, see Part 9.10.
(2) The Minister must give written notice of the variation to the
licensee.
(3) ASIC must give the Minister any application and documents
lodged under subsection (1).
826B Immediate suspension or cancellation
The Minister may, by giving written notice to a CS facility
licensee, suspend the licence for a specified period, or cancel it, if:
(a) the licensee ceases to carry on the business of operating the
facility; or
(b) the licensee becomes a Chapter 5 body corporate; or
(c) the licensee asks the Minister to do so; or
(d) in the case of a licence granted under subsection 824B(2)
(overseas clearing and settlement facilities):
(i) the licensee ceases to be authorised to operate a clearing
and settlement facility in the foreign country in which
the licensee’s principal place of business is located; or
(ii) there is a change to the regulatory regime applying in
relation to the facility to which the licence relates in the
country in which the licensee’s principal place of
business is located, and, because of that change, the
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Minister is no longer satisfied as mentioned in
paragraph 824B(2)(c); or
(e) in the case of a licensee that is a leviable entity (within the
meaning of the ASIC Supervisory Cost Recovery Levy Act
2017)—the following have not been paid in full at least 12
months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
(ii) the amount of late payment penalty payable (if any) in
relation to the levy;
(iii) the amount of shortfall penalty payable (if any) in
relation to the levy.
826C Suspension or cancellation following hearing and report
(1) If the Minister considers that a CS facility licensee has breached
one or more of its obligations as a CS facility licensee under this
Chapter, the Minister may give the licensee a written notice that
requires the licensee to show cause, at a hearing before a specified
person, why the licence should not be suspended or cancelled.
(2) The notice must specify:
(a) the grounds on which it is proposed to suspend or cancel the
licence; and
(b) a reasonable time and place at which the hearing is to be
held.
However, if the licensee consents, the person conducting the
hearing may fix a different time or place.
(3) The person conducting the hearing must:
(a) give the licensee an opportunity to be heard at the hearing;
and
(b) give the Minister:
(i) a report about the hearing; and
(ii) a recommendation about the grounds in the notice on
which it is proposed to suspend or cancel the licence.
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(4) After considering the report and recommendation, the Minister
may:
(a) decide to take no further action in relation to the matter and
give written advice of that decision to the licensee; or
(b) suspend the licence for a specified period, or cancel the
licence, by giving written notice to the licensee.
Note: The Minister must have regard to the matters in section 827A.
826D Effect of suspension
(1) A person whose Australian CS facility licence is suspended is
taken not to hold that licence while it is suspended.
(2) However, the Minister may specify in the written notice to the
licensee that subsection (1) does not apply for specified purposes.
826E Variation or revocation of suspension
The Minister may at any time vary or revoke a suspension of an
Australian CS facility licence by giving written notice to the
licensee.
826F Publication of notice of licence suspension or cancellation
(1) If the Minister:
(a) suspends, or varies or revokes a suspension of, an Australian
CS facility licence; or
(b) cancels an Australian CS facility licence;
the Minister must publish a notice in the Gazette to that effect.
(2) The notice must state when the action took effect.
826G Suspension and cancellation only in accordance with this
Subdivision
An Australian CS facility licence cannot be varied, suspended or
cancelled otherwise than in accordance with this Subdivision.
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Part 7.3 Licensing of clearing and settlement facilities
Division 3 The Australian CS facility licence
Section 826G
138 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: The conditions on the licence can be varied under section 825A.
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Other matters Division 4
Section 827A
Corporations Act 2001 139
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Division 4—Other matters
827A Matters to be taken into account by the Minister
(1) The Minister must have regard to certain matters in deciding
whether to:
(a) grant an applicant an Australian CS facility licence under
section 824B; or
(b) impose, vary or revoke conditions on such a licence under
section 825A; or
(c) suspend or cancel such a licence under section 826C; or
(d) disallow a change to the operating rules of a licensed CS
facility under section 822E.
(2) These are the matters the Minister must have regard to:
(a) the structure, or proposed structure, of the facility;
(b) the nature of the services provided, or proposed to be
provided, by the facility;
(c) the size, or proposed size, of the facility;
(d) the nature of the financial products in respect of which the
facility provides services or proposes to provide services;
(e) the participants, or proposed participants, in the facility and
whether those participants:
(i) in using the facility’s services, are, or will be, providing
financial services to other persons; or
(ii) use, or will use, the facility’s services in respect of
financial products they acquire or dispose of as retail
clients or as wholesale clients; or
(iii) are, or will be, participants in a financial market, or
other clearing and settlement facilities, as well;
(f) the technology used, or proposed to be used, in the operation
of the facility;
(g) whether it would be in the public interest to take the action
referred to in subsection (1);
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Section 827B
140 Corporations Act 2001
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(h) any relevant advice received from ASIC or the Reserve Bank
of Australia.
The Minister may also have regard to any other matter that the
Minister considers relevant.
(3) If the Minister is deciding whether to take the action mentioned in
paragraph (1)(a), (b) or (c) in respect of an Australian CS facility
licence granted under subsection 824B(2) (overseas clearing and
settlement facilities), the Minister must also have regard to:
(a) the criteria that the licensee or applicant satisfied to obtain an
authorisation to operate the same facility in the foreign
country in which their principal place of business is located;
and
(b) the obligations they must continue to satisfy to keep the
authorisation; and
(c) the level of supervision to which the facility is subject in that
country; and
(d) whether adequate arrangements exist for cooperation
between ASIC, the Reserve Bank of Australia and the
authority, or authorities, that are responsible for that
supervision.
827B ASIC may give advice to Minister
ASIC may give advice to the Minister in relation to:
(a) any matter in respect of which the Minister has a discretion
under this Part; or
(b) any other matter concerning clearing and settlement facilities.
Note: In some cases, the Minister must have regard to ASIC’s advice: see
paragraph 827A(2)(h).
827C Reserve Bank may give advice to Minister
The Reserve Bank of Australia may give advice to the Minister in
relation to any matter concerning clearing and settlement facilities.
Note: In some cases, the Minister must have regard to the Reserve Bank’s
advice: see paragraph 827A(2)(h).
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Other matters Division 4
Section 827D
Corporations Act 2001 141
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827D Reserve Bank may determine financial stability standards
(1) The Reserve Bank of Australia (the Reserve Bank) may, in
writing, determine standards for the purposes of ensuring that CS
facility licensees conduct their affairs in a way that causes or
promotes overall stability in the Australian financial system.
(2) The standards are to be complied with by:
(a) all CS facility licensees; or
(b) a specified class of CS facility licensees, in the case of a
standard that is expressed to apply only in relation to that
class.
(2A) If there is an inconsistency between the standards and the
derivative transaction rules or the derivative trade repository rules,
the standards prevail to the extent of the inconsistency.
(3) Before the Reserve Bank determines a standard, it must consult
with:
(a) the CS facility licensees that will be required to comply with
the standard; and
(b) ASIC.
(4) A standard may impose different requirements to be complied with
in different situations or in respect of different activities.
(5) A standard:
(a) comes into force:
(i) unless subparagraph (ii) applies—on the day on which
the determination of the standard is made; or
(ii) if that determination specifies a later day as the day on
which the standard comes into force—on the day so
specified; and
(b) continues in force until it is revoked.
(6) The Reserve Bank may vary a standard in writing. Before it does
so, it must consult with:
(a) the CS facility licensees that will be required to comply with
the standard if it is varied as proposed; and
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(b) ASIC.
(7) If the Reserve Bank determines or varies a standard, it must, as
soon as practicable:
(a) cause a notice advising of the determination of the standard,
or of the variation of the standard, and summarising the
purpose and effect of the standard or variation, to be
published in the Gazette; and
(b) make the text of the notice available on the internet; and
(c) give a copy of the standard, or of the variation, to the
following:
(i) each CS facility licensee to which the standard applies;
(ii) the Minister;
(iii) ASIC.
(8) The Reserve Bank may revoke a standard in writing. Before it does
so, it must consult with ASIC.
(9) If the Reserve Bank revokes a standard, it must, as soon as
practicable:
(a) cause a notice advising of the revocation of the standard to be
published in the Gazette; and
(b) make the text of the notice available on the internet; and
(c) give notice of the revocation of the standard to the following:
(i) each CS facility licensee to which the standard applied;
(ii) the Minister;
(iii) ASIC.
(10) The Reserve Bank must take reasonable steps to ensure that copies
of the current text of the standards are available for inspection and
purchase.
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Limit on control of certain licensees Division 1
Section 850A
Corporations Act 2001 143
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Part 7.4—Limits on involvement with licensees
Division 1—Limit on control of certain licensees
Subdivision A—15% voting power limit
850A Scope of Division
(1) This Division applies in relation to a body corporate that:
(a) has an Australian market licence or an Australian CS facility
licence; or
(b) is the holding company of a body corporate that has an
Australian market licence or an Australian CS facility
licence;
and that is specified in regulations made for the purposes of this
section.
(2) In this Division, such a body is called a widely held market body.
850B Meaning of unacceptable control situation
(1) For the purposes of this Division, an unacceptable control
situation exists in relation to a widely held market body and in
relation to a particular person if the person’s voting power in the
body is more than:
(a) 15%; or
(b) in relation to a body other than the Australian Stock
Exchange Limited—if an approval of a higher percentage is
in force under Subdivision B in relation to the body and in
relation to the person, that higher percentage; or
(c) in relation to the Australian Stock Exchange Limited—if the
regulations prescribe a higher percentage in relation to the
Australian Stock Exchange Limited in relation to the person,
that higher percentage.
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Section 850C
144 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) Regulations made for the purposes of paragraph (1)(c) may not
take effect earlier than the day after the last day on which the
regulations may be disallowed under Part 5 of the Legislative
Instruments Act 2003.
850C 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 widely held
market body, that:
(i) an unacceptable control situation comes into existence
in relation to the body and in relation to a person; or
(ii) if an unacceptable control situation already exists in
relation to the body and in relation to a person—there is
an increase in the voting power of the person in the
body;
the person or persons mentioned in paragraph (a) contravene this
section.
Note: A contravention of this section is an offence (see subsection 1311(1)).
850D Remedial orders
(1) If an unacceptable control situation exists in relation to a widely
held market body, 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 body; or
(d) a person who has any voting power in the body.
(3) The Court’s orders may include:
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Corporations Act 2001 145
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(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:
(a) rescind, vary or discharge an order made by the Court under
this section; or
(b) suspend the operation of such an order.
850E Injunctions
(1) If any conduct (including a refusal or failure to act) amounts or
would amount to a contravention of this Division in relation to a
particular widely held market body, the body 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.
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Section 851A
146 Corporations Act 2001
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(3) The Minister has the same powers as ASIC to apply for an
injunction under section 1324 in relation to a contravention of this
Division.
(4) The powers in sections 850D and 1324 do not, by implication,
limit each other.
Subdivision B—Approval to exceed 15% voting power limit
851A 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 widely held market body (other than the
Australian Stock Exchange Limited) by lodging with ASIC an
application that:
(a) specifies the percentage of voting power (if any) the person
currently has in the widely held market body; and
(b) specifies the percentage of voting power the person is
seeking approval to have in the body; 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.
851B Approval of application
(1) If the Minister is satisfied that it is in the national interest to
approve the applicant having voting power in the widely held
market body of more than 15%, the Minister may grant the
application.
(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 widely held market body
(which may or may not be the percentage the applicant
applied for); and
(c) either:
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(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.
(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 body concerned.
851C Duration of approval
(1) An approval under section 851B 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 851B 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) If the Minister is satisfied that it is in the national interest to grant
the extension, the Minister may grant the application.
(5) If the Minister grants the application, the Minister must:
(a) give written notice of the extension to the applicant; and
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Section 851D
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(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:
(a) published in the Gazette; and
(b) given to the widely held market body concerned.
851D Conditions of approval
(1) An approval under section 851B 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 851B:
(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.
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Section 851E
Corporations Act 2001 149
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(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 widely held market body concerned.
(8) A person who holds an approval under section 851B must give
written notice to ASIC if they become 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)).
851E Varying percentage approved
Application by holder of approval
(1) A person who holds an approval under section 851B 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 widely held market body concerned; and
(b) specifies the percentage of the voting power the person is
seeking approval to have in the body; 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) If the Minister is satisfied that it is in the national interest to vary
the percentage, the Minister may grant the application.
(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.
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Section 851F
150 Corporations Act 2001
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Minister’s own initiative
(6) The Minister may, by written notice given to a person who holds
an approval under section 851B, vary the percentage specified in
the approval if the Minister is satisfied that it is in the national
interest to do so.
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 widely held market body concerned.
851F Revoking an approval
(1) The Minister may, by written notice given to a person who holds
an approval under section 851B in relation to a widely held market
body, revoke the approval if the Minister is satisfied that:
(a) it is in the national interest to do so; or
(b) an unacceptable control situation exists in relation to the
widely held market body and in relation to the person; or
(c) there has been a contravention of a condition to which the
approval is subject.
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Section 851G
Corporations Act 2001 151
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(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.
(3) If a person who holds an approval under section 851B requests the
Minister to revoke 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 widely held market body concerned.
851G Further information about applications
(1) This section applies to an application under this Subdivision.
(2) The Minister may, by written notice given to the applicant, require
the applicant to give the Minister, within a specified period, further
information about the application.
(3) The Minister may refuse to consider the application until the
applicant gives the Minister the information.
851H Time limit for Minister’s decision
(1) The Minister must make a decision on an application under this
Subdivision 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.
(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
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Section 851I
152 Corporations Act 2001
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(b) given to the widely held market body concerned.
(4) The time for making the decision stops running if the Minister
gives a notice under section 851G 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 851A or 851E if an unacceptable control situation exists in
relation to the applicant and in relation to the relevant widely held
market body at any time before the Minister makes a decision.
851I Preservation of voting power in relation to bodies specified in
regulations made for section 850A
(1) A person holding a particular percentage of voting power in a body
at its specification time (see subsection (3)) is taken at that time to
be granted an approval under section 851B to hold that percentage
of voting power in the body if:
(a) in a case where the body’s specification time occurs at the
same time as the commencement of this section—the person
holding the percentage of voting power in the body
immediately before the specification time did not, to any
extent, constitute a contravention of previous law (see
subsection (3)); and
(b) whether the body’s specification time occurs at the same time
as, or after, the commencement of this section—on the
body’s specification time, the person holding that percentage
of voting power in the body would (apart from this section)
constitute an unacceptable control situation.
Note: Conditions can be imposed on the approval under section 851D and
then varied or revoked in accordance with that section.
(2) The Minister is taken to have complied with the Minister’s
obligations under section 851B in relation to the granting of the
approval to the person.
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Section 852A
Corporations Act 2001 153
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(3) In this section:
contravention of previous law means a contravention of a
provision of Part 7.1A of this Act as in force immediately before
the commencement of this section.
specification time, in relation to a body, means the time a body
first becomes specified in regulations made for the purposes of
section 850A.
Subdivision C—Other matters
852A Acquisition of property
(1) The Court must not make an order under section 850D 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 850D.
(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.
852B 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
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dominant purpose of avoiding the application of any
provision of Subdivision A in relation to any person or
persons (whether or not mentioned in paragraph (a)); and
(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
widely held market body;
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 written direction under subsection (1)
must comply with the direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) In this section:
increase voting power includes increasing it from a starting point
of nil.
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Section 853A
Corporations Act 2001 155
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Division 2—Individuals who are not fit and proper are
disqualified
853A Who is disqualified
For the purposes of this Division, an individual is disqualified if:
(a) a declaration by ASIC that the individual is disqualified is in
effect under section 853C; or
(b) the individual is disqualified from managing a corporation
under section 206B; or
(c) the individual is on the Register that ASIC must keep under
section 1274AA.
853B When an individual is involved in an operator
For the purposes of this Division, an individual is involved in a
market licensee, a CS facility licensee, a derivative trade repository
licensee or a benchmark administrator licensee, or an applicant for
such a licence, if:
(a) the individual is a director, secretary or senior manager of the
licensee or applicant, or in a holding company of the licensee
or applicant; or
(b) the individual has more than 15% of the total voting power in
the licensee or applicant, or in a holding company of the
licensee or applicant.
853C Declaration by ASIC
(1) ASIC may declare in writing that an individual who is involved in
a market licensee, a CS facility licensee, a derivative trade
repository licensee or a benchmark administrator licensee, or in an
applicant for a licence of any of those kinds, is disqualified for the
purposes of this Division.
(2) ASIC may make such a declaration only if ASIC is satisfied that,
because the individual is unfit to be involved in the licensee or
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Section 853D
156 Corporations Act 2001
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applicant, there is a risk that the licensee or applicant will breach
its obligations under this Chapter if the declaration is not made.
(3) In deciding whether an individual is unfit as mentioned in
subsection (2), ASIC must take into account such matters as the
individual’s fame, character and integrity, rather than his or her
competence, experience, knowledge or other such attributes.
(4) A declaration may be expressed to remain in effect for a specified
period or until a specified event occurs. Otherwise, it remains in
effect indefinitely (unless it is revoked under section 853E).
853D Procedure for declaration
(1) ASIC must not make a declaration under section 853C unless it has
followed the procedure in this section.
(2) Within 42 days after:
(a) a body corporate applies for an Australian market licence, an
Australian CS facility licence, an Australian derivative trade
repository licence or a benchmark administrator licence; or
(b) ASIC receives other information that may be relevant to
deciding whether to make a declaration under section 853C
about an individual who is involved in an applicant for an
Australian market licence, an Australian CS facility licence,
an Australian derivative trade repository licence or a
benchmark administrator licence, or in an existing licensee;
ASIC may give the applicant or licensee written notice that ASIC
proposes to make a declaration under section 853C about the
individual in question.
(3) ASIC must give a copy of the notice to the individual and to the
Minister.
(4) The notice must:
(a) state the grounds on which ASIC proposes to make the
declaration; and
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(b) require the applicant or licensee, and the individual, to show,
at a hearing before a specified person, why the declaration
should not be made; and
(c) specify a reasonable time and place at which the hearing is to
be held.
However, if the applicant or licensee, and the individual, consent,
the person conducting the hearing may fix a different time or place.
(5) The person conducting the hearing must:
(a) give the applicant or licensee, and the individual, an
opportunity to be heard at the hearing; and
(b) give ASIC:
(i) a report about the hearing; and
(ii) a recommendation about the grounds in the notice on
which it is proposed to make the declaration.
(6) As soon as practicable after the hearing, ASIC must:
(a) decide whether to make the declaration; and
(b) give each of the following persons a copy of the declaration,
or a written notice of its decision not to make the declaration:
(i) the applicant or licensee;
(ii) the individual;
(iii) the Minister.
853E Revoking a declaration
(1) ASIC may, in writing, revoke a declaration under section 853C if it
is no longer satisfied as mentioned in subsection 853C(2) in
relation to the individual in question.
(2) ASIC must give a copy of the revocation to the relevant applicant
or licensee, the individual and the Minister.
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Division 2 Individuals who are not fit and proper are disqualified
Section 853F
158 Corporations Act 2001
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853F Obligations on disqualified individuals
(1) A disqualified individual must not become involved in a market
licensee, a CS facility licensee, a derivative trade repository
licensee or a benchmark administrator licensee.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A disqualified individual who is involved in a market licensee, a
CS facility licensee, a derivative trade repository licensee or a
benchmark administrator licensee must take all reasonable steps to
ensure that he or she ceases to be involved in the licensee.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A person contravenes this subsection if the person contravenes
subsection (2).
Note: This subsection is a civil penalty provision (see section 1317E).
853G Notification by ASIC
If ASIC becomes aware that an individual who is involved in a
market licensee, a CS facility licensee, a derivative trade repository
licensee or a benchmark administrator licensee is disqualified
because of paragraph 853A(b) or (c), ASIC must notify the
individual, the licensee and the Minister as soon as practicable.
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Miscellaneous Division 3
Section 854A
Corporations Act 2001 159
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Division 3—Miscellaneous
854A Record-keeping and giving of information
(1) The regulations may make provision for and in relation to requiring
a person:
(a) to keep and retain records that are relevant to whether a
person has voting power in a widely held market body and, if
so, how much; and
(b) to keep and retain records that are relevant to determining
whether any disqualified individual is involved in a market
licensee, a CS facility licensee or a derivative trade
repository licensee; and
(c) to give the Minister or ASIC information that is relevant to
the matters mentioned in paragraphs (a) and (b); and
(d) to give a widely held market body information that is
relevant to the matter mentioned in paragraph (a).
(2) The regulations may provide that information given in accordance
with a requirement covered by paragraph (1)(c) or (d) must be
verified by statutory declaration.
(3) However, an individual is not required to give information in
accordance with a requirement covered by paragraph (1)(c) or (d)
if the information might tend to incriminate the individual or
expose the individual to a penalty.
(4) A person contravenes this section if:
(a) the person makes or keeps a record in compliance, or
purported compliance, with a requirement covered by
subsection (1); and
(b) the person does so knowing that the record:
(i) is false or misleading; or
(ii) omits any matter or thing without which the record is
misleading.
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Section 854B
160 Corporations Act 2001
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Note: A contravention of this subsection is an offence (see
subsection 1311(1)).
(5) Regulations made for the purposes of this section may make
provision for or in relation to a matter by conferring a power on the
Minister.
854B Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) provide that this Part applies as if specified provisions were
omitted, modified or varied as specified in the regulations.
(3) For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
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Preliminary Division 1
Section 880A
Corporations Act 2001 161
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Part 7.5—Compensation regimes for financial
markets
Division 1—Preliminary
880A Part does not apply to markets licensed under special
provisions about overseas markets
Nothing in this Part applies in relation to:
(a) a financial market the operation of which is licensed under
subsection 795B(2); or
(b) an application for the grant of a licence under that subsection.
880B Definitions
(1) In this Part:
adequate has a meaning affected by subsection (2).
borrowing includes obtaining credit.
compensation arrangements are arrangements that consist of:
(a) a set of rules about compensation; and
(b) a source of funds from which compensation is payable; and
(c) associated administrative and monitoring arrangements.
compensation rules means rules referred to in paragraph (a) of the
definition of compensation arrangements.
Division 3 arrangements means compensation arrangements
approved under Division 3.
Division 3 loss means a loss described in section 885C, other than
a loss that section 885D provides is to be taken not to be a
Division 3 loss.
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Division 1 Preliminary
Section 880B
162 Corporations Act 2001
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Division 4 arrangements means the arrangements constituted by
Division 4.
fidelity fund, in relation to a financial market, means a fund
consisting principally of contributions made by:
(a) participants and past participants in the market; or
(b) participants and past participants in:
(i) the market; and
(ii) one or more other financial markets;
the purpose, or the main purpose, of which is to provide a source of
funds for the payment of compensation to clients of participants.
Any investments made using money in the fund are taken to form
part of the fund.
NGF means the National Guarantee Fund that continues in
existence under section 889A.
operating rules, in relation to the SEGC, means the rules referred
to in section 890D.
Part 7.5 arrangements means Division 3 arrangements or
Division 4 arrangements.
pay compensation includes provide compensation in a form other
than money.
SEGC means the body corporate in relation to which a nomination
as the Securities Exchanges Guarantee Corporation is in force
under section 890A.
(2) For the purposes of this Part, the question whether proposed
compensation arrangements, compensation arrangements as
proposed to be changed, or compensation arrangements that have
been approved, are adequate is to be determined in accordance
with Subdivision D of Division 3.
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When there must be a compensation regime Division 2
Section 881A
Corporations Act 2001 163
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Division 2—When there must be a compensation regime
881A Licensed markets through which participants provide services
for retail clients must generally have a compensation
regime
(1) If:
(a) any of the participants in a licensed market, in effecting
transactions through the market, provide financial services
for persons as retail clients; and
(b) in connection with the provision of those financial services,
those persons will or may give money or other property, or
authority over property, to those participants; and
(c) the market is not a financial market to which Division 4
applies;
there must be compensation arrangements in relation to the market
that are approved in accordance with Division 3.
(2) The compensation regime applicable in relation to financial
markets to which Division 4 applies is as constituted by that
Division.
881B Additional requirements for the licence application
(1) A person who is applying for an Australian market licence must
state in their application:
(a) whether any of the participants in the market, in effecting
transactions through the market, will provide financial
services for persons as retail clients; and
(b) if any participants will so provide financial services to
persons as retail clients—whether, in connection with the
provision of those financial services, those persons will or
may give money or other property, or authority over
property, to those participants.
(2) If:
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Division 2 When there must be a compensation regime
Section 881C
164 Corporations Act 2001
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(a) participants in the market will provide financial services to
persons as retail clients as mentioned in paragraph (1)(a); and
(b) in connection with the provision of those financial services,
those persons will or may give money or property, or
authority over property, to those participants;
the application must:
(c) contain the information, in relation to the proposed
compensation arrangements, required by regulations made
for the purposes of this paragraph and be accompanied by a
copy of the proposed compensation rules; or
(d) state that the market is or will be covered by Division 4, and
set out evidence, in accordance with the requirements (if any)
of the regulations, in support of that statement.
881C What happens if an application contains information in
accordance with paragraph 881B(2)(c)
If a licence application contains information in relation to proposed
compensation arrangements as required by paragraph 881B(2)(c),
the Minister must deal with the application in accordance with
section 882A.
881D What happens if an application contains a statement in
accordance with paragraph 881B(2)(d)
(1) If a licence application contains a statement in accordance with
paragraph 881B(2)(d), the Minister must consider whether he or
she is satisfied that the market will be covered by Division 4.
(2) If the Minister is not so satisfied, the application for the licence
must be rejected.
(3) If the Minister is so satisfied, the Minister may (subject to the other
provisions about granting licences) grant the licence.
Note: The other provisions about granting licences are in Subdivision A of
Division 4 of Part 7.2.
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Approved compensation arrangements Division 3
Section 882A
Corporations Act 2001 165
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Division 3—Approved compensation arrangements
Subdivision A—Approval of compensation arrangements
882A How to get compensation arrangements approved with grant
of licence
(1) If an application for an Australian market licence contains
information in relation to proposed compensation arrangements in
accordance with paragraph 881B(2)(c), the Minister must treat the
application as also being an application for approval of the
compensation arrangements and, for that purpose, must consider
whether the proposed arrangements are adequate.
(2) If the Minister does not consider that the proposed compensation
arrangements are adequate, the application for the licence must be
rejected.
(3) If the Minister considers that the proposed compensation
arrangements are adequate, the Minister may (subject to the other
provisions about granting licences) grant the licence. On the
granting of the licence, the Minister is taken to have approved the
compensation arrangements.
Note: The other provisions about granting licences are in Subdivision A of
Division 4 of Part 7.2.
(4) In the conditions of the licence, the Minister must:
(a) deal with the minimum amount of cover required in relation
to the compensation arrangements in such manner as the
Minister thinks appropriate; and
(b) identify the source of funds available to cover claims, on the
basis of which the Minister approves the arrangements (see
section 885H).
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Division 3 Approved compensation arrangements
Section 882B
166 Corporations Act 2001
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882B How to get compensation arrangements approved after licence
is granted
(1) If the operator of a licensed market wants to have compensation
arrangements for the market approved after the licence has been
granted, the operator must apply for approval in accordance with
this section.
(2) The application must:
(a) contain the information, in relation to the proposed
compensation arrangements, required by regulations made
for the purposes of this paragraph and be accompanied by a
copy of the proposed compensation rules; and
(b) be made to the Minister by lodging the application with
ASIC.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) If the Minister does not consider that the proposed compensation
arrangements are adequate, the application for approval must be
rejected.
(4) If the Minister considers that the proposed compensation
arrangements are adequate, the Minister must:
(a) approve the compensation arrangements in writing; and
(b) vary the conditions of the operator’s licence so as to:
(i) deal with the minimum amount of cover required in
relation to the compensation arrangements in such
manner as the Minister thinks appropriate; and
(ii) identify the source of funds available to cover claims,
on the basis of which the Minister approves the
arrangements (see section 885H).
(5) In varying licence conditions as mentioned in paragraph (4)(b), the
Minister must proceed under section 796A as though the licensee
had applied for the variation to be made.
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Corporations Act 2001 167
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882C Revocation of approval
The Minister may at any time revoke an approval of compensation
arrangements if the Minister considers that the arrangements are
not adequate.
882D Minister’s power to give directions
(1) If the Minister considers that a market licensee’s approved
compensation arrangements are no longer adequate, the Minister
may give the licensee a written direction to do specified things that
the Minister believes will ensure that the arrangements become
adequate once more.
(2) The licensee must comply with the direction.
(3) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) The Minister may vary or revoke a direction at any time by giving
written notice to the licensee.
Subdivision B—Effect of compensation rules forming part of
Division 3 arrangements
883A Legal effect of compensation rules
Compensation rules forming part of Division 3 arrangements for a
financial market have effect as a contract under seal between the
operator of the market and each participant in the market under
which each of those persons agrees to observe the rules to the
extent that they apply to the person and engage in conduct that the
person is required by the rules to engage in.
883B Enforcement of compensation rules
(1) If a person who is under an obligation to comply with or enforce
any of the compensation rules forming part of Division 3
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168 Corporations Act 2001
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arrangements for a financial market fails to meet that obligation, an
application to the Court may be made by:
(a) ASIC; or
(b) the operator of the market; or
(c) the operator of a clearing and settlement facility, if:
(i) there are clearing and settlement arrangements (as
defined in section 790A) for some or all transactions
effected through the market; and
(ii) those arrangements are with the operator of the facility;
or
(d) a person aggrieved by the failure.
(2) After giving an opportunity to be heard to the applicant and the
person against whom the order is sought, the Court may make an
order giving directions to:
(a) the person against whom the order is sought; or
(b) if that person is a body corporate—the directors of the body
corporate;
about compliance with, or enforcement of, the compensation rules.
(3) For the purposes of this section, if the operator of the market fails
to comply with or enforce provisions of the compensation rules, a
person who is, under the rules, entitled to make a claim for
compensation is (whether or not they have actually made a claim)
taken to be a person aggrieved by the failure.
(4) There may be other circumstances in which a person may be
aggrieved by a failure for the purposes of this section.
883C Other sources of funds for compensation
Nothing in this Division makes the operator of a financial market
liable to pay compensation from any source of funds other than the
source identified in the licence conditions under
paragraph 882A(4)(b) or subparagraph 882B(4)(b)(ii).
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Section 883D
Corporations Act 2001 169
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883D Payment of levies
(1) This section applies if, under the compensation rules forming part
of Division 3 arrangements for a particular financial market, a levy
is payable by all or some of the participants in the market in order
to ensure that adequate funds are available for the purposes of the
arrangements.
(2) The levy is payable to the operator of the market, as agent for the
Commonwealth, by each of the participants affected.
Note: For the imposition and amount of the levy, see the Corporations
(Compensation Arrangements Levies) Act 2001.
(3) An amount of levy payable under subsection (2) must be paid
within the time and in the manner specified by the operator either
generally or in relation to a particular case.
(4) Whenever an amount of levy (the levy amount) is paid under this
section, or under section 6 of the Corporations (Compensation
Arrangements Levies) Act 2001, to the operator of a market as
agent for the Commonwealth:
(a) the operator must pay an amount equal to the levy amount to
the Commonwealth; and
(b) the Consolidated Revenue Fund is appropriated by that
amount for the purpose of payment to the operator; and
(c) the Commonwealth must pay the amount so appropriated to
the operator; and
(d) the operator must deal with the amount it receives under
paragraph (c) in accordance with the compensation rules.
(5) A payment of an amount to the operator of a market as required by
paragraph (4)(c) in respect of a particular levy amount is subject to
a condition that, if the Commonwealth becomes liable to refund the
whole or a part of the levy amount, the operator must pay the
Commonwealth an amount equal to the amount that the
Commonwealth is liable to refund.
(6) The Financial Management and Accountability Act 1997 does not
apply in relation to the payment of an amount of levy under this
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Section 884A
170 Corporations Act 2001
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section to the operator of a market as agent for the Commonwealth.
However, the operation of that Act in relation to the following
payments is not affected:
(a) the payment of an amount to the Commonwealth as required
by paragraph (4)(a); or
(b) the payment of an amount by the Commonwealth as required
by paragraph (4)(c).
The operator must, in accordance with the regulations, notify the
Commonwealth of payments of levy it receives as agent for the
Commonwealth.
(7) An amount payable by an operator as required by paragraph (4)(a)
may be set off against an amount payable to the operator as
required by paragraph (4)(c).
Subdivision C—Changing Division 3 arrangements
884A Division 3 arrangements must generally only be changed in
accordance with this Subdivision
(1) The operator of a financial market in relation to which there are
Division 3 arrangements must not change those arrangements
except in accordance with this Subdivision.
(2) However, a change may be made to Division 3 arrangements
otherwise than in accordance with this Subdivision if:
(a) the change is not to a matter required by section 885B to be
dealt with in the compensation rules; and
(b) the change is merely a minor administrative change.
884B Changing Division 3 arrangements—matters required to be
dealt with in the compensation rules
(1) If the proposed change is to a matter required by section 885B to
be dealt with in the compensation rules, the change may only be
made by changing the rules.
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Section 884C
Corporations Act 2001 171
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(2) As soon as practicable after the change is made, the operator must
lodge with ASIC written notice of the change.
(3) The notice must:
(a) set out the text of the change; and
(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
(4) If no notice is lodged with ASIC within 21 days after the change is
made, the change ceases to have effect.
(5) As soon as practicable after receiving a notice under
subsection (2), ASIC must send a copy of the notice to the
Minister.
(6) Within 28 days after receiving the copy of the notice, the Minister
may disallow all or a specified part of the change to the
compensation rules.
(7) The Minister must not disallow all or part of the change unless the
Minister considers that, because of the change, or that part of the
change, the compensation arrangements are not adequate.
(8) As soon as practicable after all or part of a change is disallowed,
ASIC must give notice of the disallowance to the operator of the
market concerned. The change ceases to have effect, to the extent
of the disallowance, when the operator receives the notice.
884C Changing Division 3 arrangements—matters not required to
be dealt with in the compensation rules
(1) If:
(a) the proposed change is to a matter that is not required by
section 885B to be dealt with in the compensation rules
(including a matter that is dealt with in the compensation
rules even though it is not required to be dealt with in those
rules); and
(b) the change is not merely a minor administrative change;
the operator must not make the change unless:
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(c) the operator has applied for approval of the change; and
(d) the change has been approved by the Minister.
(2) The application for approval must:
(a) include the information, required by regulations made for the
purposes of this paragraph, in relation to the proposed
change; and
(b) be made to the Minister by lodging the application with
ASIC.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) If the Minister does not consider that the compensation
arrangements as proposed to be changed are adequate, the
application for approval must be rejected.
(4) If the Minister considers that the compensation arrangements as
proposed to be changed are adequate, the Minister must approve
the change.
(5) If:
(a) the proposed change is to a matter that is dealt with in the
compensation rules even though it is not required to be dealt
with in those rules; and
(b) the change is approved;
the operator may make any change to the compensation rules that
is necessary to give effect to the change that has been approved or
that is incidental to giving effect to that change.
(6) If a change to the compensation rules is made as permitted by
subsection (5), the operator must, as soon as practicable after the
change is made, give ASIC written notice of the change.
(7) A notice required by subsection (6) must:
(a) set out the text of the change; and
(b) specify the date on which it was made; and
(c) contain an explanation of why it is a change that is permitted
to be made by subsection (5).
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Section 885A
Corporations Act 2001 173
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Subdivision D—Are compensation arrangements adequate?
885A Purpose of this Subdivision
(1) This Subdivision applies for the purpose of determining, for the
purposes of a provision of this Division:
(a) whether:
(i) proposed compensation arrangements are adequate; or
(ii) compensation arrangements as proposed to be changed
are adequate; or
(b) whether compensation arrangements that have been approved
are adequate.
(2) A reference in this Subdivision to the arrangements is a reference
to the proposed arrangements, the arrangements as proposed to be
changed, or the arrangements that have been approved, as the case
requires.
(3) A reference in this Subdivision to the compensation rules is a
reference to the compensation rules, or the proposed compensation
rules, forming part of the arrangements under consideration.
885B Requirements to be complied with for arrangements to be
adequate
(1) The arrangements are adequate if, and only if, the Minister is
satisfied that:
(a) the compensation rules provide adequate coverage for
Division 3 losses (see sections 885C and 885D); and
(b) the compensation rules provide for adequate compensation to
be paid in respect of Division 3 losses (see section 885E);
and
(c) the compensation rules deal adequately with how
compensation in respect of Division 3 losses is to be paid
(see section 885F); and
(d) the compensation rules deal adequately with the making and
determination of claims in respect of Division 3 losses, and
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with the notification of the outcome of such claims (see
section 885G); and
(e) the arrangements provide for an adequate source of funds for
paying compensation in respect of Division 3 losses and in
respect of any other losses covered by the arrangements (see
section 885H); and
(f) the arrangements include adequate arrangements for
administration and monitoring (see section 885I); and
(g) under the arrangements, potential claimants have reasonable
and timely access to the compensation regime; and
(h) if the licensee ceases (for whatever reason) to be required to
have Division 3 arrangements, the rights of people to seek
compensation under the arrangements, being rights that
accrued while the licensee was required to have such
arrangements, will be adequately protected.
(2) In considering the matters mentioned in subsection (1), the
Minister must also have regard to the matters mentioned in
section 885J.
(3) The matters that may be dealt with in compensation rules are not
limited to matters mentioned in this section.
885C The losses to be covered
(1) Subject to section 885D, the compensation rules must cover losses
(Division 3 losses) of a kind described in the following paragraphs:
(a) a person (the client) gave money or other property, or
authority over property, to a person (the participant):
(i) who was a participant in the market at that time; or
(ii) who the client reasonably believed to be a participant in
the market at that time and who was a participant in the
market at some earlier time; and
(b) the money or other property, or the authority, was given to
the participant in connection with effecting a transaction, or
proposed transaction, covered by provisions of the operating
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rules of the market relating to transactions effected through
the market; and
(c) the effecting of the transaction through the market constitutes
or would constitute the provision of a financial service to the
client as a retail client; and
(d) the client suffers a loss because of:
(i) if the client gave the participant money or other
property—the defalcation or fraudulent misuse of the
money or other property by the participant; or
(ii) if the client gave the participant authority over
property—the fraudulent misuse of that authority by the
participant.
(2) The compensation rules must provide that a claim relating to an
alleged loss caused by defalcation or fraudulent misuse may be
allowed even if:
(a) the person against whom the defalcation or misuse is alleged
has not been convicted or prosecuted; and
(b) the evidence on which the claim is allowed would not be
sufficient to establish the guilt of that person on a criminal
trial in respect of the defalcation or fraudulent misuse.
(3) The compensation rules may exclude losses of a kind described
above that occur in specified situations. However, the
compensation arrangements will not be adequate unless the
Minister is satisfied that those exclusions are appropriate.
885D Certain losses that are not Division 3 losses
(1) If, in relation to a loss suffered by a person:
(a) the requirements of subsection 885C(1) are satisfied in
relation to a participant and 2 or more financial markets; and
(b) the person did not (expressly or impliedly) instruct the
participant to use a particular one of those markets; and
(c) it is not reasonably apparent from the usual business practice
of the participant which of those markets the participant
would use when acting for the person;
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Section 885E
176 Corporations Act 2001
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the loss is taken not to be a Division 3 loss.
(2) If, in relation to a loss suffered by a person:
(a) the requirements of subsection 885C(1) are satisfied in
relation to a participant and a financial market; and
(b) the loss is also connected (see section 888A) with a financial
market to which Division 4 applies; and
(c) the person did not (expressly or impliedly) instruct the
participant to use a particular one of those markets; and
(d) it is not reasonably apparent from the usual business practice
of the participant which of those markets the participant
would use when acting for the person;
the loss is taken not to be a Division 3 loss.
(3) If, in relation to a loss suffered by a person:
(a) the transaction referred to in paragraph 885C(1)(b) could
have been effected otherwise than through a financial market;
and
(b) the person did not (expressly or impliedly) instruct the
participant concerned to effect the transaction through a
financial market; and
(c) it is not reasonably apparent from the usual business practice
of the participant that the transaction would be effected
through a financial market;
the loss is taken not to be a Division 3 loss.
885E The amount of compensation
(1) Subject to this section, the compensation rules must provide that
the amount of compensation to be paid in respect of a Division 3
loss is to be not less than the sum of:
(a) the actual pecuniary loss suffered by the claimant, calculated
by reference to the market value of any relevant assets or
liabilities as at the date on which the loss was suffered; and
(b) the claimant’s reasonable costs of, and disbursements
incidental to, the making and proof of the claim.
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Section 885F
Corporations Act 2001 177
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(2) The compensation rules may provide for the amount of
compensation payable in respect of a Division 3 loss to be reduced
by reference to a right of set-off available to the claimant.
(3) The compensation rules may impose an upper limit on the amount
of compensation to which a person is entitled in respect of a claim
in particular circumstances, or an upper limit on the total amount of
compensation to which persons are entitled in respect of claims
referable to a particular event or circumstance.
(4) That upper limit may be specified in the compensation rules or
determined by a method specified in the rules.
(5) The compensation rules must also provide for the payment to the
claimant of interest at the rate applicable under the regulations on
the amount of the actual pecuniary loss, or so much of that loss as
from time to time has not been compensated by an instalment or
instalments of compensation, in respect of the period starting on
the day when the loss was suffered and ending on the day when the
compensation, or the last instalment of compensation, is paid.
(6) The compensation rules may provide for what is to happen if there
are insufficient funds to meet claims in respect of Division 3 losses
and in respect of any other losses covered by the arrangements. For
example, they may provide for the prioritisation of claims, or the
apportionment of available funds between claims.
(7) In other provisions of this Division a reference to compensation in
respect of a Division 3 loss includes (unless the contrary intention
appears) a reference to interest referred to in subsection (5).
885F Method of payment of compensation
(1) The compensation rules must deal with how compensation in
respect of Division 3 losses is to be paid.
(2) Without limiting subsection (1), the compensation rules may
provide for compensation to be paid in a lump sum or by
instalments.
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Division 3 Approved compensation arrangements
Section 885G
178 Corporations Act 2001
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885G Making and determination of claims
(1) The compensation rules must provide for how claims in respect of
Division 3 losses are to be made and determined, and for how
claimants are notified of the outcome of their claims.
(2) Without limiting subsection (1), the compensation rules may:
(a) require a person making a claim to pay money, or transfer
other property, in support of a claim; and
(b) provide for claims to be disallowed unless persons exercise
rights of set-off; and
(c) set time limits for the making of claims; and
(d) provide for claims to be partially allowed (including, for
example, in a case where the operator considers that the
claimant’s conduct contributed to the loss).
885H The source of funds—general
There must be an adequate source of funds available to cover
claims made under the compensation arrangements in respect of
Division 3 losses and in respect of any other losses covered by the
arrangements.
Note 1: For example, the source of funds may consist of:
(a) a fidelity fund; or
(b) insurance arrangements; or
(c) an irrevocable letter of credit.
Note 2: The source of funds does not have to consist of a single thing. It may
consist of a combination of different things.
885I Administration and monitoring
(1) The arrangements must include arrangements for:
(a) the administration of the compensation arrangements; and
(b) monitoring compliance with the compensation arrangements
and reporting breaches of the arrangements to the board of
the operator of the market; and
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(c) monitoring the adequacy of the arrangements and reporting
to the board of the operator of the market on the need for, or
desirability of, changes to the compensation arrangements.
(2) Without limiting subsection (1), the arrangements may give
responsibilities to:
(a) the operator of the market, or a related company, or a director
or employee of the operator or a related company; or
(b) a committee; or
(c) another person acting under an arrangement with the
operator.
(3) The people who may be members of a committee referred to in
paragraph (2)(b) include, but are not limited to:
(a) participants in the market, or representatives of such
participants; and
(b) members of the board of the operator of the market.
885J The losses to be covered—other matters to be taken into
account
(1) In considering whether the arrangements are adequate, the Minister
must also have regard to:
(a) the services provided by the market and by the participants in
the market; and
(b) any risk assessment report in relation to the market given to
the Minister under section 892K.
(2) The Minister may take into account such other matters as the
Minister thinks appropriate.
Subdivision E—Other provisions about Division 3
arrangements
886A Only one claim in respect of the same loss
If:
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Section 886B
180 Corporations Act 2001
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(a) a claim by a person for compensation in respect of a
particular Division 3 loss suffered by the person has been
allowed under Division 3 arrangements; and
(b) the person makes or has made another claim under those
Division 3 arrangements, or under other Division 3
arrangements, in respect of the same loss;
that other claim must not be allowed.
886B Regulations relating to fidelity funds
The regulations may include provisions relating to how a fidelity
fund, or part of a fidelity fund, is to be dealt with if:
(a) the operator of a financial market becomes insolvent, within
the meaning of the regulations; or
(b) a financial market merges with another financial market; or
(c) a financial market ceases to operate (otherwise than because
of a merger), or ceases to be required by subsection 881A(1)
to have approved compensation arrangements.
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NGF Compensation regime Division 4
Section 887A
Corporations Act 2001 181
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Division 4—NGF Compensation regime
Subdivision A—Application of Division
887A Markets to which this Division applies
This Division applies to a financial market that is operated by:
(a) a body corporate that is a member of the SEGC; or
(b) a body corporate that is a subsidiary of such a member;
other than any such market that the regulations state is not covered
by this Division.
Subdivision B—Claims for and payment of compensation
888A The situations in which compensation may be claimed
(1) The situations in which compensation may be claimed in respect of
a loss that is connected with a financial market to which this
Division applies are as specified in the regulations.
(2) Without limiting subsection (1), a loss is connected with a financial
market if it is caused by a participant, or past participant, in the
market.
888B Kinds of compensation available
The regulations may provide that compensation under this Division
is to take the form of a payment of money or some other form (for
example, a transfer of financial products).
888C Amount of compensation payable
(1) The amount of compensation (including the value of any
non-monetary compensation) to which a person is entitled in
respect of a claim that is allowed is to be as determined in
accordance with the regulations.
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Section 888D
182 Corporations Act 2001
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(2) Without limiting subsection (1), the regulations may do all or any
of the following:
(a) provide for the amount of compensation to be determined by
agreement with the claimant, or by arbitration if agreement
cannot be reached; and
(b) provide for the payment of interest on the amount of the
claimant’s loss; and
(c) provide for the amount of compensation to be reduced by
reference to a right of set-off available to the claimant or by
reference to the extent to which the claimant was responsible
for causing the loss; and
(d) impose an upper limit on the amount of compensation to
which a person is entitled in respect of a claim in particular
circumstances, or an upper limit on the total amount of
compensation to which persons are entitled in respect of
claims referable to a particular event or circumstance.
(3) An upper limit referred to in paragraph (2)(d) may be specified in
the regulations or determined by a method specified in the
regulations.
(4) The regulations may also provide for a claimant to be paid an
amount in respect of the claimant’s reasonable costs of, and
disbursements incidental to, the making and proof of the claim
(whether or not the claim is allowed in whole or in part).
(5) The regulations may also provide for a claimant to be paid an
amount in respect of the claimant’s reasonable costs of, and
disbursements incidental to, attempting to recover the loss
(whether or not the claim is allowed in whole or in part).
888D Payment of compensation
(1) The regulations may provide for the compensation to be paid in a
lump sum or by instalments.
(2) The regulations may make other provisions in relation to how
compensation is to be paid.
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Section 888E
Corporations Act 2001 183
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888E Making and determination of claims
(1) Claims are to be made and determined in accordance with:
(a) the regulations; and
(b) any relevant provisions of the SEGC’s operating rules.
(2) Without limiting subsection (1), the regulations, or the SEGC’s
operating rules, may do all or any of the following:
(a) require a person making a claim to pay money, or transfer
other property, to the SEGC in support of a claim;
(b) provide for claims to be disallowed unless persons exercise
rights of set-off;
(c) set time limits for the making of claims;
(d) provide for claims to be partially allowed (including, for
example, in a case where the SEGC considers that the
claimant’s conduct contributed to the loss).
(3) The regulations, or the SEGC’s operating rules, may impose other
requirements to be complied with by the SEGC in relation to
claims (including, for example, requirements to notify claimants
whether their claims have been allowed).
(4) If a provision of the SEGC’s operating rules is wholly or partly
inconsistent with regulations made for the purposes of this section,
the provision of the SEGC’s operating rules is, to the extent of the
inconsistency, of no effect.
888F The SEGC has power to determine claims
The SEGC has power to determine claims in accordance with this
Division.
888G Allowing a claim does not constitute an admission of any other
liability
If the SEGC allows a claim, neither the allowance of the claim, nor
any other act done by SEGC as a result of allowing the claim,
constitutes an admission (by anyone) of any liability, other than the
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Section 888H
184 Corporations Act 2001
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liability to provide compensation in respect of the claim in
accordance with this Division.
888H Claimant may apply to Court if claim disallowed
(1) If the SEGC has disallowed a claim, the claimant may bring
proceedings in the Court to establish the claim. The proceedings
must be brought within 3 months of notice of the disallowance of
the claim.
(2) If the SEGC has neither allowed nor disallowed a claim within a
reasonable period after it was made, the claimant may bring
proceedings in the Court to establish the claim.
(3) If, in proceedings under subsection (1) or (2), the Court is satisfied
that the claim should be allowed, the Court:
(a) must, by order, make a declaration accordingly and direct the
SEGC to allow the claim and deal with it in accordance with
this Division; and
(b) may, at any time after the order is made, on application made
(whether before or after the order is made) by the claimant or
the SEGC, give such directions relating to the claim as the
Court thinks just and reasonable.
(4) In proceedings to establish a claim, all questions of costs are in the
discretion of the Court.
888I Non-NGF property of the SEGC not available to meet claims
Money or other property of the SEGC that is not part of the NGF is
not available to be applied in respect of a claim that has been
allowed by the SEGC, whether or not under an order of the Court.
888J The SEGC may enter into contracts of insurance or indemnity
(1) The SEGC may enter into a contract with a person (the insurer)
carrying on a fidelity insurance business under which the SEGC
will be insured or indemnified against liability in respect of claims
to the extent and in the manner provided by the contract.
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Section 888K
Corporations Act 2001 185
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(2) The contract may relate to all claims or only to certain claims as
specified in the contract. The contract may, for example, exclude
claims relating to the conduct of a particular financial services
licensee.
(3) The following persons each have qualified privilege in respect of
the publication of a statement that the contract does not apply with
respect to claims relating to the conduct of a particular financial
services licensee:
(a) the SEGC and the members of its board;
(b) any body corporate that is a member of the SEGC;
(c) any subsidiary of such a member;
(d) any employee of a body covered by paragraph (a), (b) or (c).
(4) A person who has made a claim does not have a right of action
against the insurer in respect of the contract or a right or claim in
respect of money paid by the insurer in accordance with the
contract.
888K NGF may be used to acquire financial products to be
transferred as compensation
The SEGC may pay money out of the NGF to acquire financial
products for the purpose of providing compensation (in accordance
with the regulations) that takes the form of a transfer of financial
products.
Subdivision C—The NGF
889A Continuation of the National Guarantee Fund
The National Guarantee Fund that continued to exist under
section 928B of this Act before the repeal of that section by the
Financial Services Reform Act 2001 continues in existence as the
National Guarantee Fund for the purposes of this Part.
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Section 889B
186 Corporations Act 2001
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889B Compensation to be provided out of the NGF
Compensation payable under this Division is to be paid out of the
NGF.
889C The SEGC to keep the NGF
(1) The SEGC must keep and administer the NGF.
(2) The assets of the NGF are the property of SEGC, but must be kept
separate from all other property and must be held on trust by the
SEGC for the purposes of this Division.
889D What the NGF consists of
The NGF consists of:
(a) money and other property constituting the NGF before the
commencement of this Chapter; and
(b) money paid into the NGF in accordance with section 889J or
889K; and
(c) money paid to the SEGC in accordance with regulations
referred to in section 888E in support of a claim; and
(d) money paid to the SEGC under a contract of insurance or
indemnity referred to in section 888J; and
(e) money paid into the NGF under subsection 889F(2); and
(f) the interest and profits from time to time accruing from the
investment of the NGF; and
(g) money recovered by or on behalf of the SEGC in the exercise
of a right of action that the SEGC has by virtue of a provision
of this Part; and
(h) money and other property paid or transferred to the SEGC for
inclusion in the NGF in accordance with regulations referred
to in section 891B; and
(i) all other money and other property lawfully paid into, or
forming part of, the NGF.
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Section 889E
Corporations Act 2001 187
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889E Power to borrow etc. for purposes of the NGF
(1) If the SEGC considers that, in the interests of the sound financial
management of the NGF, money should be borrowed for the
purpose of meeting a payment due out of the NGF, the SEGC may
borrow money for that purpose on such terms and conditions as the
SEGC thinks appropriate.
(2) The SEGC may give security, including over the assets of the
NGF, in respect of the SEGC’s obligations in relation to a
borrowing under subsection (1).
(3) If:
(a) money borrowed under subsection (1) is a loan from a body
corporate that is a member of the SEGC; and
(b) the body corporate borrowed money for the purpose of
making the loan to the SEGC;
the SEGC may give security, including over the assets of the NGF,
in relation to the body corporate’s obligations in respect of the
borrowing referred to in paragraph (b).
889F Money borrowed and paid to the SEGC
(1) This section applies if money borrowed by the SEGC under
subsection 889E(1) is paid to the SEGC.
(2) The SEGC must pay the money into the NGF.
(3) If:
(a) the money was borrowed for the purpose of meeting a
payment due out of the NGF; and
(b) the borrowed money has been paid into the NGF; and
(c) the payment due out of the NGF has not yet been made;
then, for the purposes of section 889J, the amount in the NGF is
taken to be reduced by the amount of the borrowed money.
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Section 889G
188 Corporations Act 2001
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889G Money borrowed and not paid to the SEGC
(1) This section applies if money borrowed by the SEGC under
subsection 889E(1) is not paid to the SEGC but is payable to other
persons at the direction of the SEGC.
(2) The SEGC must not direct that any of the money be paid to a
person unless the payment is of a kind that can, under
section 889H, be made out of the NGF.
889H Payments out of the NGF
Subject to regulations made for the purposes of this section, the
following are to be paid out of the NGF, in such order as the SEGC
considers appropriate:
(a) amounts, including costs, disbursements and interest, that any
provision of this Part requires to be paid in connection with
claims;
(b) all legal and other expenses incurred:
(i) in investigating or defending claims; or
(ii) in relation to the NGF; or
(iii) in the exercise by the SEGC of the rights and powers
vested in it by any provision of this Part in relation to
the NGF;
(c) money payable out of the NGF under regulations referred to
in subsection 892G(2);
(d) amounts to be paid to acquire financial products as
mentioned in section 888K;
(e) premiums payable in respect of contracts of insurance or
indemnity entered into by the SEGC under section 888J;
(f) payments of principal, interest and other amounts payable by
the SEGC in respect of money borrowed, and security given,
under section 889E;
(g) the expenses incurred in the administration of the NGF,
including the salaries and wages of persons employed by the
SEGC in relation to the NGF;
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Section 889I
Corporations Act 2001 189
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(h) amounts to be paid to a body corporate in accordance with a
direction of the Minister under section 891A;
(i) any other money payable out of the NGF in accordance with
a provision of this Part.
889I Minimum amount of the NGF
(1) The minimum amount in relation to the NGF is:
(a) unless paragraph (b) applies—$80,000,000; or
(b) if a determination is in force under subsection (2)—the
amount specified in the determination.
(2) The SEGC may, in writing, determine an amount (whether greater
than, or less than, $80,000,000) to be the minimum amount in
relation to the NGF. The determination does not come into force
until it has been approved by the Minister.
(3) The SEGC must publish in the Gazette notice of a determination
that has come into force under subsection (2). The notice must
specify the date when the determination came into force.
(4) If the amount in the NGF falls below the minimum amount, the
SEGC must consider what action needs to be taken.
889J Levy by the SEGC
(1) If the amount in the NGF is less than the minimum amount
applicable under section 889I, the SEGC may determine in writing
that:
(a) the operators of all, or a class, of the financial markets to
which this Division applies; or
(b) all, or a class, of the participants in any of these markets;
must pay a levy to the SEGC.
(2) The levy is payable to the SEGC, as agent for the Commonwealth,
in accordance with this section.
Note: For the imposition and amount of the levy, see the Corporations
(National Guarantee Fund Levies) Act 2001. There is a limit on the
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Section 889J
190 Corporations Act 2001
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amount of levy that is payable to the SEGC in a financial year under
that Act.
(3) A levy payable under this section must be paid within the period
and in the manner determined in writing by the SEGC.
(4) Whenever an amount of levy (the levy amount) is paid under this
section, or under subsection 6(2) of the Corporations (National
Guarantee Fund Levies) Act 2001, to the SEGC as agent for the
Commonwealth:
(a) the SEGC must pay an amount equal to the levy amount to
the Commonwealth; and
(b) the Consolidated Revenue Fund is appropriated by that
amount for the purpose of payment to the SEGC; and
(c) the Commonwealth must pay the amount so appropriated to
the SEGC; and
(d) the SEGC must pay the amount it receives under
paragraph (c) into the NGF.
(5) Whenever an amount of levy (the levy amount) is paid under
subsection 6(1) of the Corporations (National Guarantee Fund
Levies) Act 2001, to the operator of a financial market as agent for
the Commonwealth:
(a) the operator must pay an amount equal to the levy amount to
the SEGC; and
(b) the SEGC must pay an amount equal to the amount so paid to
it to the Commonwealth; and
(c) the Consolidated Revenue Fund is appropriated by that
amount for the purpose of payment to the SEGC; and
(d) the Commonwealth must pay the amount so appropriated to
the SEGC; and
(e) the SEGC must pay the amount it receives under
paragraph (d) into the NGF.
(6) A payment of an amount to the SEGC as required by
paragraph (4)(c) or (5)(d) in respect of a particular levy amount is
subject to a condition that, if the Commonwealth becomes liable to
refund the whole or a part of the levy amount, the SEGC must pay
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Section 889K
Corporations Act 2001 191
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the Commonwealth an amount equal to the amount that the
Commonwealth is liable to refund. The SEGC may pay, out of the
NGF, any amount so required to be paid to the Commonwealth.
(7) The Financial Management and Accountability Act 1997 does not
apply in relation to the payment of an amount of levy under this
section to the SEGC, or the operator of a financial products market,
as agent for the Commonwealth. However, the operation of that
Act in relation to the following payments is not affected:
(a) the payment of an amount to the Commonwealth as required
by paragraph (4)(a) or (5)(b); or
(b) the payment of an amount by the Commonwealth as required
by paragraph (4)(c) or (5)(d).
The SEGC must, in accordance with the regulations, notify the
Commonwealth of payments of levy it receives as agent for the
Commonwealth, and the operator of a financial market must, in
accordance with the regulations, notify the Commonwealth of
payments it receives as agent for the Commonwealth as mentioned
in paragraph (5)(a).
(8) An amount payable by the SEGC as required by paragraph (4)(a)
may be set off against an amount payable to the SEGC as required
by paragraph (4)(c), and an amount payable by the SEGC as
required by paragraph (5)(b) may be set off against an amount
payable to the SEGC as required by paragraph (5)(d).
889K Levy by market operator
(1) An operator of a financial market who must pay an amount of levy
(the primary levy amount) under section 889J may determine in
writing that participants in the market must pay a levy (the
contributory levy). The determination must be such that the total of
the amounts of contributory levy payable by the participants does
not exceed the primary levy amount. The contributory levy is
payable to the operator as agent for the Commonwealth.
Note: For the imposition and amount of the levy, see the Corporations
(National Guarantee Fund Levies) Act 2001.
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Section 889K
192 Corporations Act 2001
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(2) If a determination is made under subsection (1), the contributory
levy is payable by each participant in the market who, when the
determination is made, is in a class of participants in the market
determined in writing by the operator for the purposes of the levy.
(3) The amount of contributory levy payable by a participant under a
determination under subsection (1) must be paid within the period,
and in the manner, specified in writing by the operator either
generally or in relation to particular participants or classes of
participants.
(4) Whenever an amount of levy (the levy amount) is paid under this
section, or under subsection 6(3) of the Corporations (National
Guarantee Fund Levies) Act 2001, to the operator of a financial
market as agent for the Commonwealth:
(a) the operator must pay an amount equal to the levy amount to
the Commonwealth; and
(b) the Consolidated Revenue Fund is appropriated by that
amount for the purpose of payment to the SEGC; and
(c) the Commonwealth must pay the amount so appropriated to
the SEGC; and
(d) the SEGC must pay the amount it receives under
paragraph (c) into the NGF; and
(e) the operator’s liability to pay the primary levy amount is
reduced by the amount paid into the NGF under
paragraph (d).
(5) A payment of an amount to the SEGC as required by
paragraph (4)(c) in respect of a particular contributory levy amount
is subject to a condition that, if the Commonwealth becomes liable
to refund the whole or a part of the contributory levy amount, the
SEGC must pay the Commonwealth an amount equal to the
amount that the Commonwealth is liable to refund. The SEGC may
pay, out of the NGF, any amount so required to be paid to the
Commonwealth.
(6) The Financial Management and Accountability Act 1997 does not
apply in relation to the payment of an amount of levy under this
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Section 890A
Corporations Act 2001 193
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section to the operator of a financial market as agent for the
Commonwealth. However, the operation of that Act in relation to
the following payments is not affected:
(a) the payment of an amount to the Commonwealth as required
by paragraph (4)(a); or
(b) the payment of an amount by the Commonwealth as required
by paragraph (4)(c).
The operator must, in accordance with the regulations, notify the
Commonwealth of payments of levy it receives as agent for the
Commonwealth.
Subdivision D—The SEGC
890A Minister to nominate the SEGC
(1) Subject to subsection (3), the Minister may nominate in writing as
the Securities Exchanges Guarantee Corporation a body
corporate (whenever incorporated) that is, for the purposes of the
national corporate laws, a company limited by guarantee.
(2) ASIC must cause a copy of a nomination by the Minister under
subsection (1) to be published in the Gazette.
(3) The Minister may only nominate a body corporate under
subsection (1) if he or she is satisfied that:
(a) the Australian Stock Exchange Limited is a member of the
body corporate; and
(b) each of the other members of the body corporate is a market
licensee; and
(c) the body corporate’s constitution provides that only market
licensees may become or remain members of the body
corporate; and
(d) the body corporate will, if nominated under subsection (1),
be able to perform and exercise the SEGC’s functions and
powers under this Division adequately and with due regard to
the interests of the public; and
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Section 890B
194 Corporations Act 2001
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(e) the body corporate has obtained, or will within a reasonable
period after being nominated under subsection (1) obtain,
indemnity insurance in respect of its liabilities for:
(i) negligence in; and
(ii) defalcation, or fraudulent misuse of property, by an
officer, employee or agent of the body corporate in
connection with;
the performance or exercise of the SEGC’s functions or
powers under this Division, or has made or will make other
satisfactory provisions for meeting those liabilities; and
(f) the body corporate’s business rules make satisfactory
provision:
(i) for ensuring the safety of property received by the body
corporate; and
(ii) generally for the protection of the interests of the public.
890B The SEGC’s functions and powers
(1) In addition to the legal capacity and powers it has because of
section 124, the SEGC has such functions and powers as are
conferred, or expressed to be conferred, on it by or under this Part.
(2) Section 125 does not apply in relation to a function or power
conferred, or expressed to be conferred, as mentioned in
subsection (1) of this section.
(3) The SEGC is to perform the functions, and may exercise the
powers, that are conferred on it by or under this Part.
(4) The SEGC is to administer the arrangements constituted by this
Division.
890C Delegation
(1) Subject to this section, all decisions of the SEGC in relation to the
performance of its functions, and the exercise of its powers, under
this Part must be made by the board of the SEGC.
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Section 890D
Corporations Act 2001 195
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(2) The board of the SEGC must not delegate any of the following
powers of the SEGC:
(a) the power to borrow under section 889E;
(b) the power to determine the order of payments under
section 889H;
(c) the power to determine a minimum amount under
section 889I;
(d) the power to make operating rules under section 890D;
(e) the power (or duty) to make a payment under section 891A.
(3) Otherwise, the board of the SEGC may delegate any of their
powers under this Part in accordance with section 198D.
890D Operating rules of the SEGC
The SEGC may make rules (operating rules) relating to the
performance or exercise of its powers or duties under this Part, or
relating to matters permitted by this Part to be dealt with in its
operating rules.
890E Legal effect of the SEGC’s operating rules
The SEGC’s operating rules have effect as a contract under seal
between the SEGC and each member of the SEGC under which
each of those persons agrees to observe the operating rules to the
extent that they apply to the person and engage in conduct that the
person is required by the operating rules to engage in.
890F Enforcement of the SEGC’s operating rules
(1) If a person who is under an obligation to comply with or enforce
any of the SEGC’s operating rules fails to meet that obligation, an
application to the Court may be made by:
(a) ASIC; or
(b) the SEGC; or
(c) a member of the SEGC; or
(d) a person aggrieved by the failure.
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Division 4 NGF Compensation regime
Section 890G
196 Corporations Act 2001
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(2) After giving an opportunity to be heard to the applicant and the
person against whom the order is sought, the Court may make an
order giving directions to:
(a) the person against whom the order is sought; or
(b) if that person is a body corporate—the directors of the body
corporate;
about compliance with, or enforcement of, the operating rules.
890G Changing the SEGC’s operating rules
(1) As soon as practicable after a change is made to the SEGC’s
operating rules, the SEGC must lodge with ASIC written notice of
the change.
(2) The notice must:
(a) set out the text of the change; and
(b) specify the date on which the change was made; and
(c) contain an explanation of the purpose of the change.
(3) If no notice is lodged with ASIC within 21 days after the change is
made, the change ceases to have effect.
890H Disallowance of changes to the SEGC’s operating rules
(1) As soon as practicable after receiving a notice under section 890G,
ASIC must send a copy of the notice to the Minister.
(2) Within 28 days after ASIC received the notice under section 890G,
the Minister may disallow all or a specified part of the change to
the SEGC’s operating rules.
(3) As soon as practicable after all or part of a change is disallowed,
ASIC must give notice of the disallowance to the SEGC. The
change ceases to have effect, to the extent of the disallowance,
when the SEGC receives the notice.
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NGF Compensation regime Division 4
Section 891A
Corporations Act 2001 197
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Subdivision E—Other provisions relating to compensation
under this Division
891A Payment out of the NGF to prescribed body with
arrangements covering clearing and settlement facility
support
(1) If the Minister is satisfied that a body corporate specified in
regulations made for the purposes of this section has made
adequate arrangements covering all or part of the clearing and
settlement system support that this Division provides for, the
Minister may, in writing, direct the SEGC to pay a specified
amount to that body corporate out of the NGF.
(2) The Minister may, in writing, impose conditions to be complied
with by the SEGC or the body corporate, or both, in relation to the
payment.
(3) The SEGC and the body corporate must comply with the direction
and with any applicable conditions to which the direction is
subject.
(4) Before giving a direction under subsection (1), the Minister must
be satisfied that, after the payment is made, the NGF will still have
an adequate amount of assets to meet claims.
891B Markets operated by bodies corporate that become members
of the SEGC—regulations may deal with transitional
provisions and other matters
(1) In this section:
joining market means a financial market that:
(a) is operated by a body corporate that becomes a member of
the SEGC after the commencement of this Division, or by a
subsidiary of such a body corporate; and
(b) is a financial market to which this Division applies.
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Division 4 NGF Compensation regime
Section 891C
198 Corporations Act 2001
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(2) The regulations may make provisions of a transitional or saving
nature dealing with the transition, in relation to a joining market,
from the compensation regime previously applicable in relation to
the market to the arrangements constituted by this Division.
(3) Without limiting subsection (2), the regulations may require money
or other property (including money or other property in a fidelity
fund) to be paid or transferred to the SEGC for inclusion in the
NGF.
(4) The regulations may also provide for the allocation of part of the
NGF as being for use for the purposes of claims arising in
connection with the joining market.
(5) The regulations may make modifications of provisions of this
Division and Division 5 that are necessary or convenient to take
account of allocations of a kind referred to in subsection (4).
891C Regulations may make different provision in respect of
different markets etc.
Regulations made for the purposes of a provision of this Division
may make different provision in respect of different financial
markets to which this Division applies and in respect of different
circumstances.
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Section 892A
Corporations Act 2001 199
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Division 5—Provisions common to both kinds of
compensation arrangements
892A Definitions
In this Division:
regulated fund means:
(a) a fidelity fund that is the source, or a source, of funds under
Division 3 arrangements; or
(b) the NGF; or
(c) an account kept as required by subsection 892B(3).
relevant authority, in relation to Part 7.5 arrangements, means:
(a) if the arrangements are Division 3 arrangements of a
financial market—the operator of the market; or
(b) if the arrangements are Division 4 arrangements—the SEGC.
892B How regulated funds are to be kept
(1) Money in:
(a) a fidelity fund that is the source, or a source, of funds under
Division 3 arrangements; or
(b) the NGF;
must, until applied in paying claims or otherwise spent for the
purposes of this Part, or invested in accordance with section 892C,
be kept by the relevant authority in an account or accounts:
(c) with an Australian ADI; or
(d) of a kind prescribed by regulations made for the purposes of
this paragraph;
separate from any account or accounts in which other money is
kept.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Division 5 Provisions common to both kinds of compensation arrangements
Section 892C
200 Corporations Act 2001
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(2) The regulations may impose additional requirements to be
complied with in relation to the keeping of a regulated fund that
covers 2 or more financial markets.
(3) If:
(a) a source of funds under Division 3 arrangements for a
financial market is something other than a fidelity fund; and
(b) the operator of the market, or a person involved in the
administration of the arrangements, receives money from that
source of funds;
the money received must, until applied in paying claims or
otherwise spent for the purposes of this Part, or invested in
accordance with section 892C, be kept by the relevant authority in
an account or accounts:
(c) with an Australian ADI; or
(d) of a kind prescribed by regulations made for the purposes of
this paragraph;
separate from any account or accounts in which other money is
kept.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
892C Money in regulated funds may be invested
(1) Money in a regulated fund that is not immediately required for the
purposes of meeting claims may be invested in any way in which
trustees are for the time being authorised by law in force in a State
or Territory in this jurisdiction to invest trust funds.
(2) The relevant authority may, with the approval of ASIC, appoint a
person to invest on behalf of the relevant authority money to which
subsection (1) applies.
(3) ASIC must not grant approval to the appointment of a person under
subsection (2) unless it is satisfied that:
(a) the person has appropriate qualifications and expertise to
perform the duties of the appointment; and
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Section 892D
Corporations Act 2001 201
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(b) the relevant authority has adequate indemnity insurance in
respect of its liabilities for any negligence, or any defalcation
or fraudulent misuse of property, by the person in the
performance of those duties, or has made other satisfactory
provisions for meeting those liabilities.
(4) A person appointed under subsection (2) must perform the duties
of the appointment in accordance with the directions of the relevant
authority and subject to such conditions (if any) as the relevant
authority imposes.
892D Powers of relevant authority to require production or delivery
of documents or statements
(1) The relevant authority in relation to Part 7.5 arrangements may
require a person:
(a) to deliver to the relevant authority documents or copies of
documents, including documents of, or evidencing, title to
financial products; or
(b) to make out and deliver to the relevant authority a statement
of evidence;
that the relevant authority considers will assist it in determining a
claim for compensation that has been made, or that the relevant
authority considers are necessary for the purpose of exercising the
subrogated rights and remedies it has in relation to a claim (see
section 892F).
(2) The requirement must be made by notice in writing given to the
person. The notice must:
(a) so far as it requires documents or copies referred to in
paragraph (1)(a)—identify or describe the documents or
copies that are required; and
(b) so far as it requires a statement referred to in
paragraph (1)(b)—describe the matters in relation to which
the person’s evidence is required, and set out any
requirements to be complied with in relation to how the
statement is made out.
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Section 892E
202 Corporations Act 2001
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(3) The person must comply with the requirement.
(4) If the person fails, without reasonable excuse, to comply with the
requirement, the relevant authority may apply to the Court for, and
the Court may make, an order that the person comply with the
direction.
(5) If the person fails, without reasonable excuse, to comply with the
requirement, the relevant authority may disallow a claim made by
the person.
Note: This subsection would not apply if the person subject to the
requirement were someone other than a claimant.
(6) The relevant authority may, in writing, delegate the power given by
this section to a person involved in the administration of the
Part 7.5 arrangements.
(7) The relevant authority must return any documents (other than
copies of documents) provided to it under this section as soon as
practicable after the claim referred to in subsection (1) has been
determined, and any proceedings relating to the determination of
the claim (including any arising from the subrogation of the
relevant authority for the claimant) have been completed.
(8) Subsection (7) does not apply if:
(a) another law prohibits or prevents the return of the
documents; or
(b) the documents are no longer in the custody of the relevant
authority; or
(c) the person tells the relevant authority that the person does not
want the documents back.
892E Power to require assistance for purpose of dealing with a claim
(1) If Division 3 arrangements give responsibilities (as mentioned in
paragraph 885I(2)(c)) to a person acting under an arrangement with
the operator of the market concerned, the person may give the
operator a written request to give such assistance as the person
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requires for the purpose of fulfilling the person’s responsibilities
under the arrangement.
(2) The SEGC may give a member of the SEGC, or a subsidiary of a
member of the SEGC, a written request to give such assistance as
the SEGC requires for the purpose of:
(a) dealing with a claim; or
(b) the assessment of risks to the NGF.
(3) A requirement for assistance under subsection (1) or (2) must be
reasonable.
(4) A person who is required under this section to give assistance must
give the assistance.
(5) If the person fails to give the assistance, the person who required
the assistance may apply to the Court for, and the Court may make,
an order that the other person give the assistance.
892F Relevant authority’s right of subrogation if compensation is
paid
(1) If compensation in respect of a claim is paid under Part 7.5
arrangements, the relevant authority in relation to the arrangements
is subrogated, to the extent of that payment, to all the claimant’s
rights and remedies in relation to the loss to which the claim
relates.
(2) The relevant authority may also recover from the participant or
participants who caused the loss the costs it incurred in
determining the claim.
892G Excess money in compensation funds
(1) The regulations may determine, or provide a method for
determining, when there is excess money in a regulated fund.
(2) The regulations may make provision in relation to how excess
money in a regulated fund may be, or is to be, dealt with. The
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Section 892H
204 Corporations Act 2001
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regulations may make different provision in relation to different
funds.
892H Accounting and reporting for regulated funds
(1) The relevant authority in relation to Part 7.5 arrangements must, in
relation to each regulated fund established in connection with the
arrangements, keep written financial records that:
(a) correctly record and explain the fund’s transactions and
financial position and performance; and
(b) would enable true and fair financial statements to be prepared
and audited;
and must retain the financial records for 7 years after the
transactions covered by the records are completed.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Within 2 months after the end of each financial year of the relevant
authority, the authority must cause financial statements and notes
to those financial statements (within the meaning of section 295)
for the regulated fund to be made out as at the end of that financial
year.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A registered company auditor, or authorised audit company, must
be appointed to audit the accounts of the regulated fund in
accordance with whichever of the following paragraphs applies:
(a) if there is only one relevant authority for the fund, that
relevant authority must appoint a registered company auditor,
or authorised audit company, to audit the fund’s accounts;
(b) if there is more than one relevant authority for the fund:
(i) each of those relevant authorities must ensure that a
registered company auditor, or authorised audit
company, is appointed in accordance with
subparagraph (ii) to audit the fund’s accounts; and
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Corporations Act 2001 205
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(ii) the appointment is to be made by one or more of the
relevant authorities, with the consent of such of the
relevant authorities (if any) as do not make the
appointment; and
(iii) a relevant authority must not purport to appoint a person
to audit the fund’s accounts unless each other relevant
authority (if any) who has not also made the
appointment has consented to the appointment.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) If there is more than one relevant authority for a fund and they
cannot agree on which auditor to appoint, ASIC may, on the
written application of any of the authorities, appoint an auditor
who consents to being so appointed.
(5) The auditor must:
(a) audit the accounts of the regulated fund and the financial
statements; and
(b) do the things required by sections 307 and 308 in relation to
those documents, as if the audit were being done under
Chapter 2M.
(6) The relevant authority for the regulated fund must, within 14 days
after receiving the auditor’s report, lodge with ASIC a copy of the
report and a copy of the financial statements. If there is more than
one relevant authority for the regulated fund, the copy must be
given to ASIC by at least one of those authorities, or else they all
contravene this subsection.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(7) If the regulated fund is the NGF, the relevant authority (being the
SEGC) must:
(a) give a copy of the audited financial statements to each
member of the SEGC; and
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Section 892I
206 Corporations Act 2001
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(b) cause a copy of the audited financial statements to be laid
before the annual general meeting of each member of the
SEGC next following the making of that report.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
892I Division 3 arrangements—reporting in situations where
compensation does not come out of a regulated fund
The regulations may impose reporting requirements to be complied
with by the relevant authority in relation to Division 3
arrangements in relation to situations in which compensation under
the arrangements is provided otherwise than out of a regulated
fund.
892J Regulations may provide for qualified privilege in respect of
certain matters
The regulations may provide for specified persons to have
qualified privilege in respect of specified things done:
(a) under compensation rules forming part of Division 3
arrangements; or
(b) under regulations made for the purposes of a provision or
provisions of Subdivision B of Division 4.
892K Risk assessment report
(1) For the purposes of monitoring compliance with, and the operation
of, this Part, the Minister may, by giving the operator of a financial
market written notice, require the operator:
(a) to cause a risk assessment report to be prepared in relation to
the market in accordance with the requirements specified in
the notice; and
(b) to give that report to the Minister by the time specified in the
notice.
(2) The operator must comply with the notice.
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Section 892K
Corporations Act 2001 207
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Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Part 7.5 Compensation regimes for financial markets
Division 6 Miscellaneous
Section 893A
208 Corporations Act 2001
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Division 6—Miscellaneous
893A Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial market or class of financial markets from
all or specified provisions of this Part; or
(c) provide that this Part applies in relation to a person or a
financial market, or a class of persons or financial markets, as
if specified provisions were omitted, modified or varied as
specified in the regulations.
(2) For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 7.2 that refer to provisions of this Part;
and
(c) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
893B Exemptions by Minister
(1) The Minister may exempt a particular financial market, or class of
financial markets, from all or specified provisions of this Part. An
exemption may be unconditional, or subject to conditions specified
in the exemption.
Note: The provisions of this Part include regulations made for the purposes
of this Part (see section 761H).
(2) The Minister may, at any time:
(a) vary an exemption to:
(i) impose conditions, or additional conditions, on the
exemption; or
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(ii) vary or revoke any of the conditions on the exemption;
or
(b) revoke an exemption.
(3) However, the Minister may only take action under subsection (2)
after:
(a) giving notice, and an opportunity to make submissions on the
proposed action, to the operator of each financial market
known by the Minister to be covered by the exemption; and
(b) if the exemption covers a class of financial markets—a notice
has been published on ASIC’s website allowing a reasonable
period within which the operator of each financial market
covered by the exemption may make submissions on the
proposed action, and that period has ended.
(4) If an exemption is expressed to apply in relation to a class of
financial markets (whether or not it is also expressed to apply in
relation to one or more financial markets otherwise than by
reference to membership of a class), then the exemption, and any
variation or revocation of the exemption, is a legislative
instrument.
(5) If subsection (4) does not apply to an exemption, then the
exemption, and any variation or revocation of the exemption, must
be in writing and the Minister must publish notice of it in the
Gazette.
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Part 7.5A Regulation of derivative transactions and derivative trade repositories
Division 1 Application of Part
Section 900A
210 Corporations Act 2001
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Part 7.5A—Regulation of derivative transactions
and derivative trade repositories
Division 1—Application of Part
900A Derivatives and transactions etc. to which this Part applies
(1) Unless an express contrary intention appears, this Part applies, on
the basis specified in section 3, to derivatives, derivative
transactions, facilities, persons, bodies and other matters located in
or otherwise connected with:
(a) a referring State; or
(b) the Northern Territory or the Capital Territory; or
(c) a place outside Australia.
(2) This section does not, by implication, affect the interpretation of
provisions of this Act outside this Part (except to the extent
appropriate for any provisions outside this Part apply or relate to
matters covered by this Part).
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Section 901A
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Division 2—Regulation of derivative transactions:
derivative transaction rules
Subdivision A—Power to make derivative transaction rules
901A ASIC may make derivative transaction rules
Power to make derivative transaction rules
(1) Subject to this Division, ASIC may, by legislative instrument,
make rules (derivative transaction rules) dealing with matters as
permitted by this section.
Note: Subdivision C deals with the process of making derivative transaction
rules.
Main matters that may be dealt with in derivative transaction rules
(2) The derivative transaction rules may (subject to this Division)
impose any of the following kinds of requirements:
(a) execution requirements (see subsection (5));
(b) reporting requirements (see subsection (6));
(c) clearing requirements (see subsection (7));
(d) requirements that are incidental or related to execution
requirements, reporting requirements or clearing
requirements.
Note: Paragraph (2)(d): the derivative transaction rules may (for example)
impose requirements on the operator of a licensed derivative trade
repository to facilitate compliance, by other persons, with reporting
requirements.
Other matters that may be dealt with in derivative transaction rules
(3) The derivative transaction rules may also (subject to this Division)
deal with matters incidental or related to requirements referred to
in subsection (2), including any of the following:
(a) specifying the classes of derivative transactions in relation to
which particular requirements apply;
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Section 901A
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(b) for execution requirements—specifying the licensed market
or prescribed facility (or the class of licensed market or
prescribed facility) on which derivative transactions in a
particular class must be entered into;
(c) for reporting requirements:
(i) specifying the licensed derivative trade repository or
prescribed derivative trade repository (or the class of
licensed derivative trade repository or prescribed
derivative trade repository), to which information about
derivative transactions, or positions, in a particular class
must be reported; and
(ii) specifying the information that is required to be
reported;
(d) for clearing requirements:
(i) specifying the licensed CS facility or prescribed facility
(or the class of licensed CS facility or prescribed
facility) through which derivative transactions in a
particular class must be cleared; and
(ii) specifying a period within which transactions must be
cleared;
(e) specifying the persons who are required to comply with
requirements imposed by the rules;
(f) the manner and form in which persons must comply with
requirements imposed by the rules;
(g) the circumstances in which persons are, or may be, relieved
from complying with requirements in the rules that would
otherwise apply to them;
(h) the keeping of records, or the provision of records or other
information, relating to compliance with (or determining
whether there has been compliance with) the rules;
(i) any other matters that the provisions of this Act provide may
be dealt with in the derivative transaction rules.
Note: Paragraph (e): subject to section 901D, the persons who are required
to comply with requirements imposed by the rules may (for example)
be:
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(a) persons who are parties to derivative transactions, or who are intermediaries or agents who facilitate or are otherwise involved in derivative transactions; or
(b) operators of financial markets on which derivative transactions are entered into; or
(c) operators of clearing and settlement facilities through which derivative transactions are cleared; or
(d) operators of licensed or prescribed derivative trade repositories.
Meaning of execution requirements
(5) For the purpose of this Chapter, execution requirements are
requirements for derivative transactions not to be entered into
otherwise than on:
(a) a licensed market, the licence for which authorises a class of
financial products that includes the derivatives to which the
transactions relate to be dealt with on the market; or
(b) a facility that is (or that is in a class of facilities that is)
prescribed by the regulations for the purpose of this
paragraph in relation to a class of derivatives that includes
the derivatives to which the transactions relate.
Meaning of reporting requirements
(6) For the purpose of this Chapter, reporting requirements are
requirements for information about derivative transactions, or
about positions relating to derivative transactions, to be reported to:
(a) a licensed derivative trade repository, the licence for which
authorises the repository to provide services in respect of a
class of derivatives that includes the derivatives to which the
transactions relate; or
(b) a facility that is (or that is in a class of facilities that is)
prescribed by the regulations for the purpose of this
paragraph in relation to a class of derivatives that includes
the derivatives to which the transactions relate.
Meaning of clearing requirements
(7) For the purpose of this Chapter, clearing requirements are
requirements for derivative transactions to be cleared through:
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(a) a licensed CS facility, the licence for which authorises the
facility to provide services in respect of a class of financial
products that includes the derivatives to which the
transactions relate; or
(b) a facility that is (or that is in a class of facilities that is)
prescribed by the regulations for the purpose of this
paragraph in relation to a class of derivatives that includes
the derivatives to which the transactions relate.
Rules cannot generally impose requirements retrospectively
(8) The derivative transaction rules:
(a) cannot impose an execution requirement on a person in
relation to a derivative transaction entered into before the
requirement started to apply to the person; and
(b) cannot impose a reporting requirement on a person in relation
to a derivative transaction entered into before the requirement
started to apply to the person, or in relation to a position as it
was at a time before the requirement started to apply to the
person; and
(c) cannot impose a clearing requirement on a person in relation
to a derivative transaction entered into before the requirement
started to apply to the person, unless the transaction has not
been cleared by the time the requirement starts to apply to the
person.
901B Derivatives in relation to which rules may impose
requirements
Requirements can only be imposed in relation to derivatives
covered by a determination under this section
(1) The derivative transaction rules cannot impose execution
requirements, reporting requirements, or clearing requirements, in
relation to derivative transactions unless the derivatives to which
the transactions relate are covered by a determination under this
section that relates to requirements of that kind.
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Section 901B
Corporations Act 2001 215
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Minister may determine classes of derivatives in relation to which
requirements may be imposed
(2) The Minister may, by legislative instrument, determine one or
more classes of derivatives in relation to which execution
requirements, reporting requirements, or clearing requirements,
may be imposed.
Note 1: Different determinations may be made in relation to the different
kinds of requirements.
Note 2: A class of derivatives can be described by reference to any matter,
including (for example):
(a) the kind of asset, rate, index or commodity to which the derivatives relate; or
(b) the time when the derivatives were issued, or their date of maturity.
Making determinations: matters to which the Minister has regard
(3) In considering whether to make a determination under
subsection (2) that would have the effect of allowing the derivative
transaction rules to impose requirements of a particular kind in
relation to certain derivatives, the Minister:
(a) must have regard to:
(i) the likely effect on the Australian economy, and on the
efficiency, integrity and stability of the Australian
financial system, of allowing the derivative transaction
rules to impose requirements of that kind in relation to
those derivatives; and
(ii) the likely regulatory impact of allowing the derivative
transaction rules to impose requirements of that kind in
relation to those derivatives; and
(iii) if those derivatives are or include commodity
derivatives—the likely impact, on any Australian
market or markets on which the commodities concerned
may be traded, of allowing the derivative transaction
rules to impose requirements of that kind in relation to
those commodity derivatives; and
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Section 901B
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(b) may have regard to any other matters that the Minister
considers relevant.
Note: Matters that the Minister may have regard to under paragraph (b) may,
for example, include:
(a) any relevant international standards and international commitments; and
(b) matters raised in consultations under subsection (4), or in advice under subsection (6).
Making determinations: obligation to consult
(4) The Minister must not make a determination under subsection (2)
unless the Minister has consulted ASIC, APRA and the Reserve
Bank of Australia about the proposed determination.
(5) A failure to consult as required by subsection (4) does not
invalidate a determination.
ASIC, APRA or Reserve Bank may advise Minister
(6) ASIC, APRA or the Reserve Bank of Australia may (on its own
initiative or at the request of the Minister):
(a) consider whether a determination should be made under
subsection (2) that would have the effect of allowing the
derivative transaction rules to impose requirements of a
particular kind in relation to certain derivatives; and
(b) advise the Minister accordingly.
Amendment and revocation of determinations
(7) The Minister may amend or revoke a determination under
subsection (2) in like manner and subject to like conditions (see
subsections 33(3) and (3AA) of the Acts Interpretation Act 1901).
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Section 901C
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901C Regulations may limit the transactions in relation to which
rules may impose requirements
The regulations may provide that the derivative transaction rules:
(a) cannot impose requirements (or certain kinds of
requirements) in relation to certain classes of derivative
transactions; or
(b) can only impose requirements (or certain kinds of
requirements) in relation to certain classes of derivative
transactions in certain circumstances.
Note: A class of derivative transactions can be described by reference to any
matter, including (for example):
(a) the derivatives to which transactions relate; or
(b) the circumstances in which transactions were entered into; or
(c) the time when, or place where, transactions were entered into; or
(d) the parties to transactions.
901D Regulations may limit the persons on whom requirements may
be imposed
The regulations may provide that the derivative transaction rules:
(a) cannot impose requirements (or certain kinds of
requirements) on certain classes of persons; or
(b) can only impose requirements (or certain kinds of
requirements) on certain classes of persons in certain
circumstances.
Note: A class of persons may be described by reference to any matter,
including (for example):
(a) the volume of derivative transactions entered into by persons over a period; or
(b) the characteristics or nature of persons or of their businesses; or
(c) the place of residence or business of persons.
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Section 901E
218 Corporations Act 2001
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Subdivision B—Compliance with derivative transaction rules
901E Obligation to comply with derivative transaction rules
(1) A person must comply with provisions of the derivative transaction
rules that apply to the person.
Note: This section is a civil penalty provision (see section 1317E). For relief
from liability to a civil penalty relating to this section, see
section 1317S.
(2) If there is an inconsistency between the derivative transaction rules
and the derivative trade repository rules, the derivative transaction
rules prevail to the extent of the inconsistency.
Note 1: If there is an inconsistency between the market integrity rules and the
derivative transaction rules, the market integrity rules prevail: see
subsection 798H(3).
Note 2: If there is an inconsistency between the standards determined under
section 827D and the derivative transaction rules, the standards
prevail: see subsection 827D(2A).
Note 3: If there is an inconsistency between the derivative transaction rules
and the client money reporting rules, the derivative transaction rules
prevail: see subsection 981M(2).
901F Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have
contravened section 901E to do one or more of the following as an
alternative to civil proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education
programs);
(c) accept sanctions other than the payment of a penalty to the
Commonwealth;
(d) enter into a legally enforceable undertaking.
(2) The penalty payable under regulations made under paragraph (1)(a)
in relation to an alleged contravention of a derivative transaction
rule must not exceed:
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(a) for an individual—200 penalty units; and
(b) for a body corporate—1,000 penalty units.
(3) Without limiting regulations that may be made for the purpose of
paragraph (1)(d), those regulations may provide for one or more of
the following kinds of undertakings:
(a) an undertaking to take specified action within a specified
period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified
period to the Commonwealth or to some other specified
person.
901G Failure to comply with derivative transaction rules does not
invalidate transaction etc.
A failure, in relation to a derivative transaction, to comply with a
requirement of the derivative transaction rules does not invalidate
the transaction or affect any rights or obligations arising under, or
relating to, the transaction.
Subdivision C—The process of making derivative transaction
rules
901H Matters to which ASIC must have regard when making rules
In considering whether to make a derivative transaction rule,
ASIC:
(a) must have regard to:
(i) the likely effect of the proposed rule on the Australian
economy, and on the efficiency, integrity and stability
of the Australian financial system; and
(ii) the likely regulatory impact of the proposed rule; and
(iii) if the transactions to which the proposed rule would
relate would be or include transactions relating to
commodity derivatives—the likely impact of the
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Section 901J
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proposed rule on any Australian market or markets on
which the commodities concerned may be traded; and
(b) may have regard to any other matters that ASIC considers
relevant.
Note: Matters that ASIC may have regard to under paragraph (b) may, for
example, include:
(a) any relevant international standards and international commitments; and
(b) matters raised in consultations (if any) under section 901J.
901J ASIC to consult before making rules
(1) ASIC must not make a derivative transaction rule unless ASIC:
(a) has consulted the public about the proposed rule; and
(b) has also consulted the following about the proposed rule:
(i) APRA;
(ii) the Reserve Bank of Australia;
(iii) any other person or body as required by regulations
made for the purpose of this subparagraph.
Note: In some situations, consultation is not required: see section 901L.
(2) Without limiting the ways in which ASIC may comply with the
obligation in paragraph (1)(a) to consult the public about a
proposed rule, ASIC is taken to comply with that obligation if
ASIC, on its website:
(a) makes the proposed rule, or a description of the content of
the proposed rule, available; and
(b) invites the public to comment on the proposed rule.
(3) A failure to consult as required by subsection (1) does not
invalidate a derivative transaction rule.
901K Ministerial consent to rules required
(1) ASIC must not make a derivative transaction rule unless the
Minister has consented, in writing, to the making of the rule.
Note: In some situations, consent is not required: see section 901L.
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(2) A consent under subsection (1) is not a legislative instrument.
901L Emergency rules: consultation and consent not required
(1) ASIC may make a derivative transaction rule without consulting as
required by section 901J, and without the consent of the Minister
as required by section 901K, if ASIC is of the opinion that it is
necessary, or in the public interest, to do so in order to protect:
(a) the Australian economy; or
(b) the efficiency, integrity and stability of the Australian
financial system.
(2) However, if ASIC does so, ASIC must:
(a) provide the Minister, on the following day, with a written
explanation of the need for the rule; and
(b) amend or revoke the rule in accordance with any written
directions of the Minister.
(3) A direction under paragraph (2)(b) is not a legislative instrument.
901M Amendment and revocation of derivative transaction rules
(1) ASIC may amend or revoke a derivative transaction rule in like
manner and subject to like conditions (see subsections 33(3) and
(3AA) of the Acts Interpretation Act 1901).
(2) However, the requirements of sections 901H, 901J and 901K do
not apply in relation to an amendment or revocation pursuant to a
direction by the Minister under paragraph 901L(2)(b).
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Section 902A
222 Corporations Act 2001
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Division 3—Regulation of licensed derivative trade
repositories: supervision by ASIC
902A ASIC to supervise licensed derivative trade repositories
(1) ASIC has the function of supervising licensed derivative trade
repositories.
(2) If a licensed derivative trade repository is wholly or partly operated
in a foreign country, ASIC may, to such extent as ASIC considers
appropriate, perform the function of supervising the repository by
satisfying itself:
(a) that the regulatory regime that applies in relation to the
repository in that country provides for adequate supervision
of the repository; or
(b) that adequate cooperative arrangements are in place with an
appropriate authority of that country to ensure that the
repository will be adequately supervised by that authority.
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Division 4—Regulation of licensed derivative trade
repositories: derivative trade repository rules
Subdivision A—Power to make derivative trade repository
rules
903A ASIC may make derivative trade repository rules
Power to make derivative trade repository rules
(1) Subject to this Division, ASIC may, by legislative instrument,
make rules (derivative trade repository rules) dealing with matters
as permitted by this section.
Note: Subdivision C deals with the process of making derivative trade
repository rules.
Main matters that may be dealt with in derivative trade repository
rules
(2) The derivative trade repository rules may (subject to this Division)
deal with all or any of the following matters (including by
imposing requirements for or relating to any of the following
matters):
(a) the manner in which licensed derivative trade repositories
provide their services;
(b) the handling or use of derivative trade data by licensed
derivative trade repositories and their officers and employees,
including the following:
(i) the acceptance and retention of derivative trade data;
(ii) the creation of statistical data from derivative trade data;
(iii) the use and disclosure of, and provision of access to,
derivative trade data (including statistical data referred
to in subparagraph (ii));
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Section 903A
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(c) the governance, management and resources (including
financial, technological and human resources) of licensed
derivative trade repositories, including the following:
(i) the handling of conflicts of interest;
(ii) the monitoring and enforcement of compliance with
obligations;
(iii) the resources that licensed derivative trade repositories
should have (including requirements relating to the
experience, qualifications or fitness for office of
operators and their officers and employees);
(iv) the integrity and security of computer systems and other
systems;
(v) operational reliability;
(vi) business continuity planning;
(vii) the operational separation of functions;
(viii) the outsourcing of functions to other entities;
(d) the disclosure of conditions (including fees) on which
licensed derivative trade repositories provide their services;
(e) the reporting to ASIC or other regulators of matters related to
licensed derivative trade repositories.
Note: Paragraph (a): the rules may (for example) require licensed derivative
trade repositories to provide open and non-discriminatory access to
their services.
Other matters that may be dealt with in derivative trade repository
rules
(3) The derivative trade repository rules may also (subject to this
Division) deal with matters incidental or related to matters referred
to in subsection (2), including any of the following:
(a) specifying the persons (being persons referred to in
section 903B) who are required to comply with requirements
imposed by the rules;
(b) the manner and form in which persons must comply with
requirements imposed by the rules;
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Section 903B
Corporations Act 2001 225
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(c) the circumstances in which persons are, or may be, relieved
from complying with requirements in the rules that would
otherwise apply to them;
(d) the keeping of records, or the provision of records or other
information, relating to compliance with (or determining
whether there has been compliance with) the rules;
(e) any other matters that the provisions of this Act provide may
be dealt with in the derivative trade repository rules.
Rules may provide that derivative trade data is taken to be given to
ASIC in confidence
(5) The derivative trade repository rules may provide, either generally
or in circumstances specified in the rules, that information given to
ASIC, by the operator (or an officer of the operator) of a licensed
derivative trade repository, under a provision of:
(a) this Part; or
(b) regulations made for the purpose of this Part; or
(c) the derivative transaction rules or the derivative trade
repository rules;
is to be taken, for the purpose of section 127 (confidentiality) of
the ASIC Act, to be given to ASIC in confidence in connection
with the performance of ASIC’s functions under this Act.
(6) Derivative trade repository rules that provide as mentioned in
subsection (5) have effect accordingly for the purpose of
section 127 of the ASIC Act.
Note: Subsections (5) and (6) do not limit the circumstances in which
information given to ASIC by a licensed derivative trade repository
may, for the purpose of section 127 of the ASIC Act, be regarded as
having been given to ASIC in confidence in connection with the
performance of ASIC’s functions under this Act.
903B Rules may only impose requirements on operators and officers
of licensed derivative trade repositories
The only persons on whom the derivative trade repository rules
may impose requirements are:
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(a) operators of licensed derivative trade repositories; and
(b) officers of licensed derivative trade repositories.
Note: Requirements may also be imposed on these persons by the derivative
transaction rules.
903C Regulations may limit how rules may deal with matters related
to derivative trade data
The regulations may prescribe limits on the extent to which, or the
way in which, the derivative trade repository rules may deal with
matters referred to in paragraph 903A(2)(b).
Subdivision B—Compliance with derivative trade repository
rules
903D Obligation to comply with derivative trade repository rules
A person must comply with provisions of the derivative trade
repository rules that apply to the person.
Note 1: This section is a civil penalty provision (see section 1317E). For relief
from liability to a civil penalty relating to this section, see
section 1317S.
Note 2: The only persons on whom derivative trade repository rules may
impose requirements are operators of licensed derivative trade
repositories, and officers of such operators (see section 903B).
Note 3: If there is an inconsistency between the market integrity rules and the
derivative trade repository rules, the market integrity rules prevail: see
subsection 798H(3).
Note 4: If there is an inconsistency between the standards determined under
section 827D and the derivative trade repository rules, the standards
prevail: see subsection 827D(2A).
Note 5: If there is an inconsistency between the derivative transaction rules
and the derivative trade repository rules, the derivative transaction
rules prevail: see subsection 901E(2).
Note 6: If there is an inconsistency between the derivative trade repository
rules and the client money reporting rules, the derivative trade
repository rules prevail: see subsection 981M(2).
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Section 903E
Corporations Act 2001 227
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903E Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have
contravened section 903D to do one or more of the following as an
alternative to civil proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education
programs);
(c) accept sanctions other than the payment of a penalty to the
Commonwealth;
(d) enter into a legally enforceable undertaking.
(2) The penalty payable under regulations made under paragraph (1)(a)
in relation to an alleged contravention of a derivative trade
repository rule must not exceed:
(a) for an individual—200 penalty units; and
(b) for a body corporate—1,000 penalty units.
(3) Without limiting regulations that may be made for the purpose of
paragraph (1)(d), those regulations may provide for one or more of
the following kinds of undertakings:
(a) an undertaking to take specified action within a specified
period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified
period to the Commonwealth or to some other specified
person.
Subdivision C—The process of making derivative trade
repository rules
903F Matters to which ASIC has regard when making rules
In considering whether to make a derivative trade repository rule,
ASIC:
(a) must have regard to:
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(i) the likely effect of the proposed rule on the Australian
economy, and on the efficiency, integrity and stability
of the Australian financial system; and
(ii) the likely regulatory impact of the proposed rule; and
(b) may have regard to any other matters that ASIC considers
relevant.
Note: Matters that ASIC may have regard to under paragraph (b) may, for
example, include:
(a) any relevant international standards and international commitments; and
(b) matters raised in consultations (if any) under section 903G.
903G ASIC to consult before making rules
(1) ASIC must not make a derivative trade repository rule unless
ASIC:
(a) has consulted the public about the proposed rule; and
(b) has also consulted any other person or body as required by
regulations made for the purpose of this paragraph.
Note: In some situations, consultation is not required: see section 903J.
(2) Without limiting the ways in which ASIC may comply with the
obligation in paragraph (1)(a) to consult the public about a
proposed rule, ASIC is taken to comply with that obligation if
ASIC, on its website:
(a) makes the proposed rule, or a description of the content of
the proposed rule, available; and
(b) invites the public to comment on the proposed rule.
(3) A failure to consult as required by subsection (1) does not
invalidate a derivative trade repository rule.
903H Ministerial consent to rules required
(1) ASIC must not make a derivative trade repository rule unless the
Minister has consented, in writing, to the making of the rule.
Note: In some situations, consent is not required: see section 903J.
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Section 903J
Corporations Act 2001 229
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(2) A consent under subsection (1) is not a legislative instrument.
903J Emergency rules: consultation and consent not required
(1) ASIC may make a derivative trade repository rule without
consulting as required by section 903G, and without the consent of
the Minister as required by section 903H, if ASIC is of the opinion
that it is necessary, or in the public interest, to do so in order to
protect:
(a) the Australian economy; or
(b) the efficiency, integrity and stability of the Australian
financial system; or
(c) the security or confidentiality of derivative trade data.
(2) However, if ASIC does so, ASIC must:
(a) provide the Minister, on the following day, with a written
explanation of the need for the rule; and
(b) amend or revoke the rule in accordance with any written
directions of the Minister.
(3) A direction under paragraph (2)(b) is not a legislative instrument.
903K Amendment and revocation of derivative trade repository
rules
(1) ASIC may amend or revoke a derivative trade repository rule in
like manner and subject to like conditions (see subsections 33(3)
and (3AA) of the Acts Interpretation Act 1901).
(2) However, the requirements of sections 903F, 903G and 903H do
not apply in relation to an amendment or revocation pursuant to a
direction by the Minister under paragraph 903J(2)(b).
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Section 904A
230 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 5—Regulation of licensed derivative trade
repositories: other obligations and powers
Subdivision A—Obligations
904A General obligations
(1) A derivative trade repository licensee must:
(a) comply with the conditions on the licence; and
(b) if the licensee is a foreign body corporate—be registered
under Division 2 of Part 5B.2; and
(c) take all reasonable steps to ensure that no disqualified
individual becomes, or remains, involved in the operator (see
Division 2 of Part 7.4).
Note: Derivative trade repository licensees must also comply with other
provisions of this Part that apply to them.
(2) A person contravenes this subsection if the person contravenes
paragraph (1)(b) or (c).
Note: This subsection is a civil penalty provision (see section 1317E).
904B Obligations relating to derivative trade data
Obligation relating to use or disclosure of derivative trade data
(1) A derivative trade repository licensee, or an officer or employee of
a derivative trade repository licensee, may use or disclose
derivative trade data only if:
(a) the use or disclosure:
(i) is for the purpose of, or occurs in the course of, the
provision of the repository’s services, or the
performance of the duties of the officer or employee as
an officer or employee of the licensee; and
(ii) is not excluded by regulations made for the purpose of
this subparagraph; or
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Section 904B
Corporations Act 2001 231
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(b) the use or disclosure is required or permitted by any of the
following:
(i) another provision of this Act;
(ii) the derivative transaction rules or the derivative trade
repository rules;
(iii) another law of the Commonwealth, or a law of a State
or Territory.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Obligation to comply with requests from regulators for derivative
trade data
(2) Any of the following persons or bodies may request a derivative
trade repository licensee to provide the person or body with
derivative trade data that is retained in the derivative trade
repository:
(a) ASIC;
(b) APRA;
(c) the Reserve Bank of Australia;
(d) a person or body prescribed by the regulations for the
purpose of this paragraph;
(e) another derivative trade repository licensee.
(3) Regulations must not be made prescribing a person or body for the
purpose of paragraph (2)(d) unless the Minister is satisfied that
there are adequate controls on the use or disclosure of any
derivative trade data provided to the person or body pursuant to
requests under subsection (2).
(4) The regulations may require that certain information must not be
included in derivative trade data provided pursuant to requests, or a
class of requests, under subsection (2).
(5) If:
(a) a derivative trade repository licensee receives a request for
derivative trade data under subsection (2); and
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Section 904C
232 Corporations Act 2001
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(b) the licensee is not excused or prohibited from complying
with the request by:
(i) regulations made for the purpose of this subparagraph;
or
(ii) the derivative trade repository rules or the derivative
transaction rules;
the licensee must comply with the request, subject to any
requirements of regulations made for the purpose of subsection (4).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Obligations relating to the creation of statistical data
(6) The regulations may:
(a) impose obligations on operators of licensed derivative trade
repositories to:
(i) create statistical information from derivative trade data;
and
(ii) to provide that statistical information to a person or
persons, or to make it available, in accordance with the
regulations; and
(b) provide for offences in relation to those obligations.
Note: For the limit on penalties for offences against the regulations, see
paragraph 1364(2)(w).
904C Obligation to notify ASIC of certain matters
Notification of inability to meet obligations under 904A
(1) A derivative trade repository licensee must give written notice to
ASIC, as soon as practicable, if the licensee becomes aware that it
may no longer be able to meet, or has breached, an obligation
under section 904A.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 904D
Corporations Act 2001 233
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(1A) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
(2) If ASIC receives a notice under subsection (1), ASIC may give the
Minister advice about the matter to which the notice relates.
Notification of changes to directors, secretaries or senior
managers
(3) As soon as practicable after a person becomes or ceases to be a
director, secretary or senior manager of a derivative trade
repository licensee or of a holding company of a derivative trade
repository licensee (including when a person changes from one of
those positions to another), the licensee must give written notice of
this to ASIC. The notice must include such other information about
the matter as is prescribed by the regulations for the purpose of this
subsection.
Note 1: To the extent that the licensee is required to give the notice and
information under any other provision of this Act, the licensee may
comply with this subsection by doing so. It need not provide the same
information twice.
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
904D Obligation to assist ASIC, APRA and the Reserve Bank
(1) Each of the following is a regulator to which this section applies:
(a) ASIC;
(b) APRA;
(c) the Reserve Bank of Australia.
(2) A derivative trade repository licensee must give such assistance to
a regulator to which this section applies as the regulator reasonably
requests in relation to the performance of the regulator’s functions.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 904E
234 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) Such assistance may include showing the regulator the licensee’s
books or giving the regulator derivative trade data or other
information.
904E Obligation to give ASIC access to derivative trade repository
facilities
A derivative trade repository licensee must give ASIC such
reasonable access to the repository’s facilities as ASIC requests for
any of the purposes of this Part.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
Subdivision B—Powers of Minister and ASIC to give directions
etc.
904F Minister’s power to give directions to licensee not complying
with obligations
(1) If the Minister considers that a derivative trade repository licensee
is not complying with its obligations as a derivative trade
repository licensee under this Part, the Minister may give the
licensee a written direction to do specified things that the Minister
believes will promote compliance by the licensee with those
obligations.
(2) The licensee must comply with the direction.
(3) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) The Minister may vary or revoke a direction at any time by giving
written notice to the licensee.
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Section 904G
Corporations Act 2001 235
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
904G ASIC’s power to give directions to licensee not complying with
obligations
(1) If ASIC considers that a derivative trade repository licensee is not
complying with its obligations as a derivative trade repository
licensee under this Part, ASIC may give the licensee written advice
that it intends to give the licensee a specified direction to do
specified things that ASIC believes will promote compliance by
the licensee with those obligations. The advice must include the
reasons for ASIC’s intention to give the direction.
(2) As soon as practicable after giving the advice to the licensee, ASIC
must give notice of the advice to the operator of each financial
market, and of each clearing and settlement facility, with which the
licensed derivative trade repository has arrangements to provide
services relating to derivative trade data.
(3) If:
(a) after receiving ASIC’s advice and reasons, the licensee does
not take steps that in ASIC’s view are adequate to address the
situation; and
(b) ASIC still considers that it is appropriate to give the direction
to the licensee;
ASIC may give the licensee the direction, in writing, with a
statement setting out the reasons for giving the direction.
(4) The direction has effect until the earlier of the following times:
(a) the time ASIC revokes the direction under subsection (9);
(b) the end of the period (which may be up to 21 days) specified
in the direction as the period during which the direction is
effective.
(5) While the direction has effect, the licensee must comply with the
direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 904H
236 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(6) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(7) As soon as practicable after making or varying (see subsection (8))
the direction, ASIC must give a copy of the direction or variation
to each of the operators referred to in subsection (2).
(8) ASIC may vary the direction by giving written notice to the
licensee.
(9) ASIC may revoke the direction by giving written notice to the
licensee. ASIC must also give written notice of the revocation to
each of the operators mentioned in subsection (2).
904H ASIC’s power to give directions requiring special reports
(1) ASIC may give a derivative trade repository licensee a written
direction requiring the licensee to give ASIC a special report on
specified matters. ASIC may give a copy of the report to the
Minister.
(2) The direction may also require the licensee to give ASIC an audit
report on the special report. ASIC must nominate a specified
person or body that is suitably qualified to prepare the audit report.
(3) The licensee must give the special report, and audit report (if
required), to ASIC within the time required by the direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
904J ASIC may assess licensee’s compliance
(1) ASIC may do an assessment of how well a derivative trade
repository licensee is complying with any or all of its obligations
as a derivative trade repository licensee under this Part. In doing
the assessment, ASIC may take account of any information and
reports that it thinks appropriate.
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Section 904K
Corporations Act 2001 237
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) As soon as practicable after doing an assessment under this section,
ASIC must give a written report on the assessment to the licensee.
ASIC may give a copy of the report to the Minister.
(3) If an assessment, or part of an assessment, relates to any other
person’s affairs to a material extent, ASIC may, at the person’s
request or on its own initiative, give the person a copy of the report
on the assessment or the relevant part of the report.
(4) If an assessment, or part of an assessment, relates to a serious
contravention of a law of the Commonwealth or of a State or
Territory, ASIC may give a copy of the report on the assessment,
or the relevant part of the report, to:
(a) the Australian Federal Police; or
(b) the Chief Executive Officer of the Australian Crime
Commission or a member of the staff of the ACC (within the
meaning of the Australian Crime Commission Act 2002); or
(c) the Director of Public Prosecutions; or
(d) a person or body prescribed by the regulations for the
purpose of this paragraph.
(5) The written report on an assessment, or part of the report, may be
published in any way that ASIC thinks appropriate.
(6) A report on an assessment is not a legislative instrument.
904K Directions relating to derivative trade data if repository ceases
to be licensed
(1) This section applies to derivative trade data that was being retained
in a derivative trade repository before the repository ceased to be a
licensed derivative trade repository.
(2) ASIC may give a written direction to a person referred to in
subsection (3):
(a) requiring the person to deal, in a specified way, with
derivative trade data to which this section applies; or
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Section 904K
238 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) imposing limitations on the use or disclosure by the person of
derivative trade data to which this section applies.
Note: A direction could, for example, require the person:
(a) to destroy all records of the data over which the person has control; or
(b) to transfer all records of the data over which the person has control to a licensed derivative trade repository or a prescribed derivative trade repository.
(3) The direction may be given to:
(a) the operator, or former operator, of the repository; or
(b) an officer or employee, or a former officer or employee, of
the operator, or former operator, of the repository.
(4) While the direction has effect, the person to whom the direction is
given must comply with the direction.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(5) If the person to whom the direction is given fails to comply with
the direction, ASIC may apply to the Court for, and the Court may
make, an order that the person comply with the direction.
(6) The direction has effect until it is revoked under subsection (7).
(7) ASIC may vary or revoke the direction by giving written notice to
the person to whom the direction was given.
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Section 905A
Corporations Act 2001 239
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 6—Regulation of licensed derivative trade
repositories: licensing
Subdivision A—Requirement for some trade repositories to be
licensed
905A Regulations may identify derivative trade repositories as being
required to be licensed
(1) The regulations may identify one or more classes of derivative
trade repositories as being required to be licensed under this Part.
Note: Subject to this Part, derivative trade repositories may be licensed
under this Part even if they are not required to be licensed.
(2) If the regulations identify a class of derivative trade repositories as
being required to be licensed under this Part, a person must not
operate, or hold out that the person operates, a repository in the
class if the person does not have an Australian derivative trade
repository licence that authorises the person to operate the
repository.
Note 1: Failure to comply with this subsection is an offence: see
subsection 1311(1).
Note 2: For other offences dealing with holding out, see section 907A.
(3) A person contravenes this subsection if the person contravenes
subsection (2).
Note: This subsection is a civil penalty provision (see section 1317E).
Subdivision B—Granting of licences
905B How to apply for a licence
A body corporate may, by lodging an application with ASIC in the
prescribed form, apply for a licence (an Australian derivative trade
repository licence) authorising the body corporate to operate a
derivative trade repository.
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Section 905C
240 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note 1: See section 350 for how to lodge an application in the prescribed
form.
Note 2: For fees in respect of lodging applications, see Part 9.10.
905C When a licence may be granted
General
(1) ASIC may grant an applicant an Australian derivative trade
repository licence if ASIC is satisfied that:
(a) the application was made in accordance with section 905B;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) no disqualified individual appears to be involved in the
applicant (see Division 2 of Part 7.4).
This subsection has effect subject to subsections (2) and (3).
Note: ASIC must also have regard to the matters in section 905P in deciding
whether to grant a licence.
Foreign bodies
(2) If the applicant is a foreign body corporate, ASIC must not grant
the applicant a licence unless the applicant is registered under
Division 2 of Part 5B.2.
Disqualified individuals
(3) ASIC must not grant the applicant a licence unless 42 days have
passed since the application was made and ASIC has not given a
notice under subsection 853D(2) to the applicant within that 42
days.
905D Publication of notice of licence grant
If ASIC grants an Australian derivative trade repository licence,
ASIC must publish a notice in the Gazette stating:
(a) the name of the licensee; and
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Section 905E
Corporations Act 2001 241
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(b) when the licence was granted; and
(c) the conditions on the licence.
905E More than one derivative trade repository covered by the same
licence
(1) The same Australian derivative trade repository licence may
authorise the licensee to operate 2 or more derivative trade
repositories.
(2) In that case, a reference in this Chapter to the derivative trade
repository to which an Australian derivative trade repository
licence relates is taken instead to be a reference to each of those
derivative trade repositories severally.
(3) Before varying the conditions on an Australian derivative trade
repository licence so as to add another derivative trade repository
that the licensee is authorised to operate, ASIC must be satisfied of
the matters listed in subsection 905C(1) in relation to the
repository.
(4) An Australian derivative trade repository licence that authorises the
licensee to operate 2 or more derivative trade repositories may be
suspended or cancelled under Subdivision D in respect of one or
some of those repositories only, as if the licensee held a separate
licence for each of the repositories.
Subdivision C—The conditions on a licence
905F The conditions on the licence
(1) ASIC may, at any time:
(a) impose conditions, or additional conditions, on an Australian
derivative trade repository licence; or
(b) vary or revoke conditions imposed on such a licence;
by giving written notice to the licensee. ASIC must also publish a
notice in the Gazette with details of the action and when it took
effect.
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Section 905F
242 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: As well as the requirements in this section, ASIC must also have
regard to the matters in section 905P.
(2) ASIC may do so:
(a) on its own initiative, subject to subsection (3); or
(b) if the licensee lodges an application with ASIC in the
prescribed form, seeking the imposition of the conditions or
additional conditions, or seeking the variation or revocation
of conditions.
Note 1: See section 350 for how to lodge an application in the prescribed
form.
Note 2: For fees in respect of lodging applications, see Part 9.10.
(3) ASIC may only impose conditions or additional conditions, or vary
or revoke conditions, on the licence on ASIC’s own initiative if:
(a) ASIC considers it appropriate to do so having regard to:
(i) the licensee’s obligations as a derivative trade
repository licensee under this Part; and
(ii) any change in the operations of the derivative trade
repository, or in the conditions in which the repository
is operating; and
(b) ASIC gives the licensee written notice of the proposed action
and an opportunity to make a submission before it takes
effect.
This subsection does not apply to ASIC imposing conditions when
a licence is granted.
(4) ASIC must ensure that each Australian derivative trade repository
licence is subject to conditions that specify:
(a) the particular derivative trade repository that the licensee is
authorised to operate; and
(b) the class or classes of derivatives in respect of which the
repository can provide services for the purposes of this Part.
Note: The licence condition required by paragraph (b) does not apply to
services that a licensed derivative trade repository provides otherwise
than for the purposes of this Part.
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Section 905G
Corporations Act 2001 243
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision D—When a licence can be varied, suspended or
cancelled
905G Varying licences
ASIC may vary an Australian derivative trade repository licence to
take account of a change in the licensee’s name if the licensee
lodges an application with ASIC in the prescribed form, seeking
the variation.
Note 1: The conditions on the licence can be varied under section 905F.
Note 2: See section 350 for how to lodge an application in the prescribed
form.
Note 3: For fees in respect of lodging applications, see Part 9.10.
905H Immediate suspension or cancellation
ASIC may, by giving written notice to a derivative trade repository
licensee, suspend the licence for a specified period, or cancel it, if:
(a) the licensee ceases to carry on the business of operating the
derivative trade repository; or
(b) the licensee becomes a Chapter 5 body corporate; or
(c) the licensee asks ASIC to do so; or
(d) in the case of a licensee that is a leviable entity (within the
meaning of the ASIC Supervisory Cost Recovery Levy Act
2017)—the following have not been paid in full at least 12
months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
(ii) the amount of late payment penalty payable (if any) in
relation to the levy;
(iii) the amount of shortfall penalty payable (if any) in
relation to the levy.
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Section 905J
244 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
905J Suspension or cancellation following hearing and report
(1) If ASIC considers that a derivative trade repository licensee has
breached, or is in breach of, one or more of its obligations as a
derivative trade repository licensee under this Part, ASIC may give
the licensee a written notice that requires the licensee to show
cause, at a hearing before a specified person, why the licence
should not be suspended or cancelled.
(2) The notice must specify:
(a) the grounds on which it is proposed to suspend or cancel the
licence; and
(b) a reasonable time and place at which the hearing is to be
held.
However, if the licensee consents, the person conducting the
hearing may fix a different time or place.
(3) The person conducting the hearing must:
(a) give the licensee an opportunity to be heard at the hearing;
and
(b) give ASIC:
(i) a report about the hearing; and
(ii) a recommendation about the grounds in the notice on
which it is proposed to suspend or cancel the licence.
(4) After considering the report and recommendation, ASIC may:
(a) decide to take no further action in relation to the matter and
give written advice of that decision to the licensee; or
(b) suspend the licence for a specified period, or cancel the
licence, by giving written notice to the licensee.
Note: ASIC must also have regard to the matters in section 905P.
(5) None of the following is a legislative instrument:
(a) a notice under subsection (1);
(b) a report under subsection (3) (if it is in writing).
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Section 905K
Corporations Act 2001 245
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
905K Effect of suspension
(1) A person whose Australian derivative trade repository licence is
suspended is taken not to hold that licence while it is suspended.
(2) However, ASIC may specify in the written notice to the licensee
under section 905H, or paragraph 905J(4)(b), that subsection (1) of
this section does not apply for specified purposes.
905L Variation or revocation of suspension
ASIC may at any time vary or revoke a suspension of an Australian
derivative trade repository licence by giving written notice to the
licensee.
905M Publication of notice of licence suspension or cancellation
(1) If ASIC:
(a) suspends, or varies or revokes a suspension of, an Australian
derivative trade repository licence; or
(b) cancels an Australian derivative trade repository licence;
ASIC must publish a notice in the Gazette to that effect.
(2) The notice must state when the action took effect.
905N Suspension and cancellation only in accordance with this
Subdivision
An Australian derivative trade repository licence cannot be varied,
suspended or cancelled otherwise than in accordance with this
Subdivision.
Note: The conditions on the licence can be varied under section 905F.
Subdivision E—Other matters
905P Matters to be taken into account by ASIC
(1) ASIC must have regard to certain matters in deciding whether to:
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Section 905P
246 Corporations Act 2001
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(a) grant an applicant an Australian derivative trade repository
licence under section 905C; or
(b) impose, vary or revoke conditions on such a licence under
section 905F; or
(c) suspend or cancel such a licence under section 905J.
(2) The matters ASIC must have regard to are as follows:
(a) the structure, or proposed structure, of the derivative trade
repository;
(b) the nature of the activities conducted, or proposed to be
conducted, by the derivative trade repository;
(c) the size, or proposed size, of the derivative trade repository;
(d) the persons who are, or may be, required to report derivative
trade data to the derivative trade repository;
(e) the technology used, or proposed to be used, in the operation
of the derivative trade repository;
(f) whether it would be in the public interest to take the action
referred to in subsection (1).
ASIC may also have regard to any other matter that ASIC
considers relevant.
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Section 906A
Corporations Act 2001 247
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 7—Regulation of prescribed derivative trade
repositories
906A Regulations may impose obligations and confer powers
(1) The regulations may:
(a) impose obligations on operators of prescribed derivative
trade repositories, and on their officers and employees; and
(b) confer powers on ASIC in relation to prescribed derivative
trade repositories; and
(c) provide for offences in relation to those obligations and
powers.
Note: For the limit on penalties for offences against the regulations, see
paragraph 1364(2)(w).
(2) Without limiting the obligations and powers that may be conferred
or imposed, they may include obligations and powers of similar
kinds to those that apply under the derivative trade repository rules,
or under Division 5, in relation to licensed derivative trade
repositories.
(3) The regulations may provide, either generally or in circumstances
specified in the regulations, that information given to ASIC, by the
operator (or an officer of the operator) of a prescribed derivative
trade repository, under a provision of the regulations is to be taken,
for the purpose of section 127 (confidentiality) of the ASIC Act, to
be given to ASIC in confidence in connection with the
performance of ASIC’s functions under this Act.
(4) Regulations that provide as mentioned in subsection (3) have effect
accordingly for the purpose of section 127 of the ASIC Act.
Note: Subsections (3) and (4) do not limit the circumstances in which
information given to ASIC by a prescribed derivative trade repository
may, for the purpose of section 127 of the ASIC Act, be regarded as
having been given to ASIC in confidence in connection with the
performance of ASIC’s functions under this Act.
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Part 7.5A Regulation of derivative transactions and derivative trade repositories
Division 8 Other matters
Section 907A
248 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 8—Other matters
907A Other prohibitions on holding out
A person must not hold out:
(a) that the person has an Australian derivative trade repository
licence; or
(b) that the operation of a derivative trade repository by the
person is authorised by an Australian derivative trade
repository licence; or
(c) that a facility is prescribed by the regulations for the purpose
of paragraph 901A(5)(b); or
(d) that a facility is prescribed by the regulations for the purpose
of paragraph 901A(6)(b); or
(e) that a facility is prescribed by the regulations for the purpose
of paragraph 901A(7)(b);
if that is not the case.
Note 1: Failure to comply with this subsection is an offence: see
subsection 1311(1).
Note 2: Section 905A contains other offences relating to derivative trade
repositories that are required to be licensed.
907B Making provision by reference to instruments as in force from
time to time
(1) This section applies to the following instruments:
(a) determinations made by the Minister under section 901B;
(b) regulations made for the purpose of a provision of this Part;
(c) derivative transaction rules;
(d) derivative trade repository rules.
(2) An instrument to which this section applies may make provision in
relation to a matter by applying, adopting or incorporating any
matter contained in an instrument or other writing:
(a) as in force or existing at a particular time; or
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Section 907C
Corporations Act 2001 249
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(b) as in force or existing from time to time.
(3) Subsection (2) has effect despite subsection 14(2) of the
Legislation Act 2003.
907C Compliance with requirements to provide derivative trade
data or other information: protection from liability
If:
(a) a person (the protected person):
(i) provides derivative trade data, or other information, to
another person; or
(ii) otherwise allows another person access to derivative
trade data, or other information; and
(b) the protected person does so, in good faith, in compliance
with a requirement imposed by or under:
(i) a provision of this Part, or of regulations made for the
purpose of a provision of this Part; or
(ii) a provision of the derivative transaction rules or the
derivative trade repository rules;
the protected person is not liable to an action or other proceeding,
whether civil or criminal, for or in relation to that conduct.
907D Exemptions by ASIC
(1) The provisions covered by this section are:
(a) the following provisions:
(i) the provisions of this Part;
(ii) the provisions of regulations made for the purposes of
the provisions of this Part;
(iii) the provisions of the derivative transaction rules and the
derivative trade repository rules; and
(b) definitions in this Act, or in the regulations, as they apply to
references in provisions referred to in paragraph (a).
(2) ASIC may:
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Section 907E
250 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) exempt a person or class of persons from all or specified
provisions covered by this section; or
(b) exempt a facility or class of facilities from all or specified
provisions covered by this section; or
(c) exempt a derivative transaction or class of derivative
transactions from all or specified provisions covered by this
section.
(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) An exemption is a legislative instrument if the exemption is
expressed to apply in relation to a class of persons, a class of
facilities or a class of derivative transactions (whether or not it is
also expressed to apply in relation to one or more persons, facilities
or transactions identified otherwise than by reference to
membership of a class).
(5) If subsection (4) does not apply to an exemption, the exemption
must be in writing and ASIC must publish notice of it in the
Gazette.
907E Exemptions and modifications by regulations
(1) The provisions covered by this section are:
(a) the following provisions:
(i) the provisions of this Part;
(ii) the provisions of regulations made for the purposes of
the provisions of this Part;
(iii) the provisions of the derivative transaction rules and the
derivative trade repository rules; and
(b) definitions in this Act, or in the regulations, as they apply to
references in provisions referred to in paragraph (a).
(2) The regulations may:
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Section 907E
Corporations Act 2001 251
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(a) exempt a person or class of persons from all or specified
provisions covered by this section; or
(b) exempt a facility or class of facilities from all or specified
provisions covered by this section; or
(c) exempt a derivative transaction or class of derivative
transactions from all or specified provisions covered by this
section; or
(d) declare that provisions covered by this section apply in
relation to a person, facility or derivative transaction, or a
class of persons, facilities or derivative transactions, as if
specified provisions were omitted, modified or varied as
specified in the declaration.
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Chapter 7 Financial services and markets
Part 7.5B Regulation of financial benchmarks
Division 1 Preliminary
Section 908AA
252 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Part 7.5B—Regulation of financial benchmarks
Division 1—Preliminary
908AA Simplified outline of this Part
Administrators of significant financial benchmarks must be
licensed under this Part. Administrators of other financial
benchmarks may voluntarily opt in to the same licensing scheme.
Licensees are subject to certain obligations.
ASIC may make financial benchmark rules that apply in relation to
licensees and the financial benchmarks they administer.
ASIC may also make compelled financial benchmark rules to deal
with circumstances such as the failure of a licensee to administer a
significant financial benchmark specified in its licence.
Offences and civil penalty provisions apply to conduct that could
unduly manipulate a financial benchmark.
908AB Meaning of financial benchmark
(1) A financial benchmark is a price, estimate, rate, index or value
that:
(a) is made available to users (whether or not for a fee); and
(b) is calculated periodically from one or more:
(i) transactions, instruments, currencies, prices, estimates,
rates, indices, values, financial products, bank accepted
bills or negotiable certificates of deposit; or
(ii) other interests or goods (whether tangible or intangible);
and
(c) is referenced or otherwise used for purposes that include one
or more of the following:
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Corporations Act 2001 253
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(i) calculating the interest, or other amounts, payable under
financial products, bank accepted bills or negotiable
certificates of deposit;
(ii) calculating the price at which a financial product, bank
accepted bill or negotiable certificate of deposit may be
traded, redeemed or dealt in;
(iii) calculating the value of a financial product, bank
accepted bill or negotiable certificate of deposit;
(iv) measuring the performance of a financial product, bank
accepted bill or negotiable certificate of deposit.
(2) However, the regulations, or ASIC by written instrument, may
provide that a price, estimate, rate, index or value is not a financial
benchmark.
(3) Such an instrument by ASIC is a legislative instrument if it is
expressed to apply in relation to a class of prices, estimates, rates,
indices or values (whether or not it is also expressed to apply in
relation to one or more prices, estimates, rates, indices or values
identified otherwise than by reference to membership of a class).
(4) If subsection (3) does not apply to an instrument by ASIC under
subsection (2), ASIC must publish the instrument.
908AC Meaning of significant financial benchmark
(1) A significant financial benchmark is a financial benchmark that is
declared under subsection (2).
(2) ASIC may, by legislative instrument, declare a financial
benchmark to be a significant financial benchmark if ASIC is
satisfied that:
(a) the benchmark is systemically important to the Australian
financial system; or
(b) there is a material risk of financial contagion, or systemic
instability, in Australia if the availability or integrity of the
benchmark were disrupted; or
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Part 7.5B Regulation of financial benchmarks
Division 1 Preliminary
Section 908AD
254 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) there would be a material impact on retail or wholesale
investors in Australia if the availability or integrity of the
benchmark were disrupted.
Note 1: For declaration by class, see subsection 13(3) of the Legislation Act
2003.
Note 2: For variation and revocation of a declaration, see subsection 33(3) of
the Acts Interpretation Act 1901.
(3) ASIC must not make a declaration under subsection (2) unless
consent for it has been given under subsection (4).
(4) The Minister may, in writing, consent to the making of a
declaration under subsection (2).
908AD Emergency declarations: consultation and consent not
required
(1) Despite subsection 908AC(3), ASIC may make a declaration under
subsection 908AC(2) without the consent of the Minister if ASIC
is of the opinion that it is necessary, or in the public interest, to do
so in order to protect:
(a) the Australian economy; or
(b) the efficiency, integrity and stability of the Australian
financial system.
(2) If ASIC makes a declaration under subsection 908AC(2) without
the consent of the Minister, ASIC must:
(a) provide the Minister, on the following day, with a written
explanation of the need for the declaration; and
(b) revoke the declaration in accordance with any direction under
subsection (3).
(3) The Minister may give ASIC a written direction to revoke a
declaration made as described in subsection (1).
(4) A direction under subsection (3) is not a legislative instrument.
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Preliminary Division 1
Section 908AE
Corporations Act 2001 255
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
908AE Notifying administrator about declarations
ASIC must, as soon as practicable, give the administrator of a
financial benchmark written notice of:
(a) any declaration of the financial benchmark under
subsection 908AC(2); or
(b) any variation, or revocation, under subsection 908AC(2) of a
declaration of the financial benchmark under that subsection;
or
(c) any revocation under subsection 908AD(2)(b) of a
declaration of the financial benchmark under
subsection 908AC(2).
908AF ASIC to supervise financial benchmarks that are specified in
benchmark administrator licences
(1) ASIC has the function of supervising financial benchmarks that are
specified in benchmark administrator licences.
(2) If such a financial benchmark is wholly or partly generated or
administered in a foreign country, ASIC may, to such extent as
ASIC considers appropriate, perform the function of supervising
the financial benchmark by satisfying itself:
(a) that the regulatory regime that applies in relation to the
financial benchmark in that country provides for adequate
supervision of the financial benchmark; or
(b) that adequate cooperative arrangements are in place with an
appropriate authority of that country to ensure that the
financial benchmark will be adequately supervised by that
authority.
908AG Extraterritorial application
Subject to sections 908BB and 908DD, this Part applies to acts,
omissions, matters and things in Australia or outside Australia.
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Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BA
256 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 2—Licensing of financial benchmarks
Subdivision A—Requirement to be licensed
908BA Administrators of significant financial benchmarks must be
licensed
(1) A person commits an offence if:
(a) the person:
(i) administers a significant financial benchmark; or
(ii) holds out that the person administers a significant
financial benchmark; and
(b) the person does not hold a benchmark administrator licence
that specifies the financial benchmark; and
(c) the period applying under subsection (2) for the financial
benchmark has ended.
Penalty: 5 years imprisonment.
(2) The period for the purposes of paragraph (1)(c):
(a) starts on the day (the start day) the financial benchmark is
declared under subsection 908AC(2) to be a significant
financial benchmark; and
(b) ends as described in subsection (3).
(3) The period ends at the end of the later of the following days:
(a) the 90th day after the start day;
(b) if, before the end of that 90th day, the person applies for a
benchmark administrator licence specifying the financial
benchmark—either:
(i) the day the person withdraws the application; or
(ii) the day the person is notified under
subsection 908BC(4) of ASIC’s decision to grant or
refuse to grant the licence.
(4) Absolute liability applies to paragraph (1)(c).
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Section 908BB
Corporations Act 2001 257
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Note: For absolute liability, see section 6.2 of the Criminal Code.
908BB Other prohibitions on holding out
A person commits an offence if:
(a) in Australia, the person holds out that:
(i) the person holds a benchmark administrator licence; or
(ii) the administration of a financial benchmark by the
person is authorised by a benchmark administrator
licence; or
(iii) a financial benchmark is specified in a benchmark
administrator licence; or
(iv) a financial benchmark is a significant financial
benchmark; or
(v) a financial benchmark is not a significant financial
benchmark; and
(b) this is not the case.
Penalty: 5 years imprisonment.
Subdivision B—Granting licences
908BC When a licence may be granted
Granting licences—general
(1) ASIC may grant an applicant a licence (a benchmark
administrator licence) to administer a specified financial
benchmark if ASIC is satisfied that:
(a) the application was made in accordance with section 908BD;
and
(b) the applicant will comply with the obligations that will apply
if the licence is granted; and
(c) no disqualified individual appears to be involved in the
applicant.
The licence may be granted subject to conditions.
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Division 2 Licensing of financial benchmarks
Section 908BD
258 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note 1: ASIC must also have regard to the matters in section 908BO in
deciding whether to grant a licence.
Note 2: A licence is required if the benchmark is a significant financial
benchmark (see section 908BA). Licences are not required, but can
still be granted, for other financial benchmarks.
Foreign bodies
(2) Despite subsection (1), if the applicant is a foreign body corporate,
ASIC must not grant the applicant a licence unless the applicant is
registered under Division 2 of Part 5B.2.
Disqualified individuals
(3) Despite subsection (1), ASIC must not grant the applicant a licence
unless:
(a) 42 days have passed since the application was made; and
(b) if ASIC gives a notice under subsection 853D(2) to the
applicant within those 42 days, ASIC decides not to make a
declaration under section 853C about any individual who is
involved in the applicant.
Notice of decision
(4) ASIC must give the applicant written notice of:
(a) ASIC’s decision whether to grant the applicant a licence; and
(b) if the licence is granted—any conditions to which the licence
is subject.
908BD Applying for a licence
(1) A body corporate may, by lodging an application with ASIC that is
in a form approved by ASIC in writing, apply for a benchmark
administrator licence for a particular financial benchmark.
Note: For fees for lodging applications, see Part 9.10.
(2) ASIC may, by written notice given to an applicant, require the
applicant to lodge with ASIC, within the period specified in the
notice, further information in connection with the application.
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Licensing of financial benchmarks Division 2
Section 908BE
Corporations Act 2001 259
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) If the applicant fails to lodge the further information as required,
ASIC may, by written notice given to the applicant:
(a) refuse to consider the application; or
(b) refuse to take any action, or any further action, in relation to
the application.
908BE More than one financial benchmark may be specified in the
same licence
(1) The same benchmark administrator licence may specify 2 or more
financial benchmarks.
(2) In that case, a reference in this Chapter to the financial benchmark
specified in the licence is taken instead to be a reference to each of
those financial benchmarks severally.
(3) A benchmark administrator licence that specifies 2 or more
financial benchmarks may be suspended or cancelled under
Subdivision D in respect of one or some of those financial
benchmarks only, as if the licensee held a separate licence for each
of the financial benchmarks.
908BF Publishing details of licences
If ASIC grants a benchmark administrator licence, ASIC must
publish a notice stating:
(a) the name of the licensee and of the financial benchmark
specified in the licence; and
(b) when the licence was granted; and
(c) any conditions to which the licence is subject; and
(d) when the licence takes effect.
Subdivision C—Conditions on licences
908BG Conditions, including varying and revoking conditions
(1) ASIC may, at any time, take action to:
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Section 908BG
260 Corporations Act 2001
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(a) impose conditions, or additional conditions, on a benchmark
administrator licence; or
(b) vary or revoke any conditions to which a benchmark
administrator licence is subject (whether imposed under
paragraph (a) or under subsection 908BC(1));
by giving written notice to the licensee. ASIC must also publish a
notice with details of the action and when it took effect.
Note 1: As well as complying with the requirements in this section, ASIC
must have regard to the matters in section 908BO.
Note 2: A licensee is also subject to other obligations in this Part (for example,
see Divisions 3 and 4).
(2) ASIC may take action under subsection (1):
(a) on its own initiative, subject to subsection (3); or
(b) if the licensee lodges an application with ASIC, in a form
approved by ASIC in writing, seeking:
(i) the imposition of conditions; or
(ii) the variation or revocation of conditions.
Note: For fees for lodging applications, see Part 9.10.
(3) ASIC may only take action on its own initiative to impose
conditions or additional conditions, or to vary or revoke conditions,
to which the licence is subject if:
(a) ASIC considers it appropriate to do so having regard to:
(i) the licensee’s obligations under this Part; and
(ii) the licensee’s obligations under rules made under
Division 3; and
(iii) any change in the administration of the financial
benchmark specified in the licence; and
(b) ASIC gives the licensee written notice of the proposed action
and an opportunity to make a submission before the proposed
action is to take effect.
This subsection does not apply to ASIC imposing conditions when
a licence is granted.
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Licensing of financial benchmarks Division 2
Section 908BH
Corporations Act 2001 261
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Subdivision D—When a licence can be varied, suspended or
cancelled
908BH Varying licences
ASIC may vary a benchmark administrator licence to:
(a) take account of a change in the licensee’s name; or
(b) take account of a change in the financial benchmark specified
in the licence; or
(c) specify one or more further financial benchmarks;
if the licensee seeks the variation by lodging an application with
ASIC in a form approved by ASIC in writing.
Note 1: The conditions on the licence can be varied under section 908BG.
Note 2: For a variation referred to in paragraph (b) or (c), ASIC must also
have regard to the matters in section 908BO.
Note 3: For fees for lodging applications, see Part 9.10.
908BI Immediate suspension or cancellation
(1) ASIC may, by giving written notice to a benchmark administrator
licensee, suspend the licensee’s licence for a specified period, or
cancel it, if:
(a) the licensee ceases to carry on the business of administering
the financial benchmark specified in the licence; or
(b) the licensee is a Chapter 5 body corporate, or under a foreign
law is in a similar position to a Chapter 5 body corporate; or
(c) the licensee asks ASIC to do so; or
(d) in the case of a licensee that is a leviable entity (within the
meaning of the ASIC Supervisory Cost Recovery Levy Act
2017)—the following have not been paid in full at least 12
months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
(ii) the amount of late payment penalty payable (if any) in
relation to the levy;
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Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BJ
262 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(iii) the amount of shortfall penalty payable (if any) in
relation to the levy.
(2) However, before doing so, ASIC must have regard to anything that
is required, or could be required, of the licensee under the
compelled financial benchmark rules.
908BJ Suspension or cancellation following hearing and report
(1) If ASIC considers that a benchmark administrator licensee has
breached, or is in breach of:
(a) any conditions to which the licence is subject; or
(b) any of its obligations under this Part; or
(c) any of its obligations under rules made under Division 3;
ASIC may give the licensee a written notice that requires the
licensee to show cause, at a hearing before a specified person, why
the licence should not be suspended or cancelled.
(2) The notice must specify:
(a) the grounds on which it is proposed to suspend or cancel the
licence; and
(b) a reasonable time and place at which the hearing is to be
held.
However, if the licensee consents, the person conducting the
hearing may fix a different time or place.
(3) The person conducting the hearing must:
(a) give the licensee an opportunity to be heard at the hearing;
and
(b) give ASIC:
(i) a report about the hearing; and
(ii) a recommendation about the grounds in the notice on
which it is proposed to suspend or cancel the licence.
(4) After considering the report and recommendation, ASIC may:
(a) decide to take no further action in relation to the matter and
give written advice of that decision to the licensee; or
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Section 908BK
Corporations Act 2001 263
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(b) suspend the licence for a specified period, or cancel the
licence, by giving written notice to the licensee.
Note: ASIC must also have regard to the matters in section 908BO.
(5) A notice under subsection (1) is not a legislative instrument.
908BK Effect of suspension
(1) A person whose benchmark administrator licence is suspended is
taken not to hold that licence while it is suspended.
(2) However, ASIC may specify in the written notice to the licensee
under section 908BI, or paragraph 908BJ(4)(b), that subsection (1)
of this section does not apply for specified purposes.
908BL Varying or revoking a suspension
ASIC may at any time vary or revoke a suspension of a benchmark
administrator licence by giving written notice to the licensee.
908BM Publishing details of suspensions or cancellations of licences
(1) If ASIC takes action to:
(a) suspend, or vary or revoke a suspension of, a benchmark
administrator licence; or
(b) cancel a benchmark administrator licence;
ASIC must publish a notice to that effect.
(2) The notice must state when the action took effect.
908BN Variations, suspensions or cancellations only in accordance
with this Subdivision
A benchmark administrator licence cannot be varied, suspended or
cancelled otherwise than in accordance with this Subdivision.
Note: The conditions on the licence can be varied under section 908BG.
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Chapter 7 Financial services and markets
Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BO
264 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision E—Matters to which ASIC must have regard
908BO Matters to which ASIC must have regard
(1) ASIC must have regard to certain matters in deciding whether to
take any of the following actions in relation to a financial
benchmark:
(a) grant under section 908BC a benchmark administrator
licence that specifies the financial benchmark;
(b) impose, vary or revoke conditions on such a licence under
section 908BC or 908BG;
(c) vary such a licence under section 908BH for a change
referred to in paragraph 908BH(b) or (c);
(d) suspend or cancel such a licence under section 908BJ.
(2) The matters ASIC must have regard to are as follows:
(a) how the financial benchmark is, or is to be, administered;
(b) the nature and purpose of the financial benchmark;
(c) the manner in which the financial benchmark is, or is to be,
used;
(d) the persons who are, or may be, required to report data or
other information to the licensee for the purposes of
generating or administering the financial benchmark;
(e) for an entity that is authorised to administer the same or a
similar financial benchmark in the foreign country in which
its principal place of business is located:
(i) the criteria that the entity satisfied to obtain an
authorisation to administer that financial benchmark in
that country; and
(ii) the obligations the entity must continue to comply with
to keep the authorisation; and
(iii) the level of supervision to which the administration of
that financial benchmark in that country is subject; and
(iv) whether adequate arrangements exist for cooperation
between ASIC and the authority that is responsible for
that supervision;
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Corporations Act 2001 265
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(f) whether it would be in the public interest to take the action
referred to in subsection (1).
(3) ASIC may also have regard to any other matter that ASIC
considers relevant.
Subdivision F—Other obligations of licensees
908BP General obligations
A benchmark administrator licensee must:
(a) comply with the conditions on the licence; and
(b) if the licensee is a foreign body corporate—be registered
under Division 2 of Part 5B.2; and
(c) take all reasonable steps to ensure that no disqualified
individual becomes, or remains, involved in the
administration of the financial benchmark specified in the
licence.
Note: The licensee also needs to comply with the rules made under
Division 3 (see section 908CF).
908BQ Obligation to notify ASIC of certain matters
(1) A person commits an offence if:
(a) the person is a benchmark administrator licensee; and
(b) the licensee becomes aware of any of the following events:
(i) that the licensee may no longer be able to comply with
an obligation under section 908BP;
(ii) that the licensee has failed to comply with an obligation
under section 908BP;
(iii) that a person becomes or ceases to be a director,
secretary or senior manager of the licensee;
(iv) that a person becomes or ceases to be a director,
secretary or senior manager of a holding company of the
licensee; and
(c) the licensee fails to give written notice to ASIC of:
(i) the event; and
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Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BR
266 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ii) such related information (if any) as is prescribed by the
regulations for the purposes of this subparagraph;
as soon as practicable after becoming aware of the event.
Penalty: 100 penalty units.
(2) Without limiting subparagraph (1)(b)(iii) or (iv), that subparagraph
applies to the case where a person:
(a) changes from one of the positions mentioned in that
subparagraph to another; or
(b) changes from a position mentioned in that subparagraph to a
position mentioned in the other subparagraph.
908BR Obligation to assist ASIC, APRA and the Reserve Bank
(1) ASIC, APRA and the Reserve Bank of Australia are each a
regulator to which this section applies.
(2) A person commits an offence if:
(a) the person is a benchmark administrator licensee; and
(b) a regulator to which this section applies reasonably requests,
in writing, the person to:
(i) give the regulator access to the person’s books that
relate to the person’s capacity as such a licensee; or
(ii) give other assistance to the regulator in relation to the
performance of the regulator’s functions; and
(c) the person fails to comply with the request.
Penalty: 100 penalty units.
908BS Obligation to give ASIC access to licensee’s facilities
A person commits an offence if:
(a) the person is a benchmark administrator licensee; and
(b) ASIC requests, in writing, the person to provide reasonable
access to any of the person’s facilities for any of the purposes
of this Part; and
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Corporations Act 2001 267
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(c) the facilities relate to the person’s capacity as such a licensee;
and
(d) the person fails to comply with the request.
Penalty: 100 penalty units.
Subdivision G—Directions to licensees
908BT ASIC’s power to give directions to licensee not complying
with obligations
(1) If ASIC considers that a benchmark administrator licensee is not
complying with:
(a) any of its obligations under this Part; or
(b) any of its obligations under rules made under Division 3;
ASIC may give the licensee a written direction to do specified
things that ASIC believes will promote the licensee’s compliance
with those obligations.
(2) The licensee must comply with the direction.
(3) If the licensee fails to comply with the direction, ASIC may apply
to the Court for, and the Court may make, an order that the licensee
comply with the direction.
(4) ASIC may vary or revoke a direction at any time by giving written
notice to the licensee.
(5) A direction under subsection (1) is not a legislative instrument.
908BU Minister may disallow all or part of an ASIC direction etc.
(1) As soon as practicable after giving the benchmark administrator
licensee:
(a) a direction under subsection 908BT(1); or
(b) a notice of variation or revocation under
subsection 908BT(4);
ASIC must give the Minister a copy of the direction or notice.
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Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BV
268 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) Within 30 days after ASIC gives the Minister the copy of the
direction or notice, the Minister may, by written instrument,
disallow all or a specified part of that direction or notice.
(3) In deciding whether to do so, the Minister must have regard to:
(a) the consistency of the direction or notice with the licensee’s
obligations referred to in subsection 908BT(1); and
(b) the matters referred to in subsection 908BO(2).
(4) As soon as practicable after all or a part of a direction or notice is
disallowed, ASIC must give notice of the disallowance to the
licensee. The direction or notice ceases to have effect, to the extent
of the disallowance, when the licensee receives notice of the
disallowance.
(5) An instrument under subsection (2) is not a legislative instrument.
908BV ASIC’s power to give directions requiring reports
(1) ASIC may, in writing, direct a benchmark administrator licensee to
give ASIC a report that:
(a) deals with specified matters; and
(b) if ASIC requires—includes an audit statement on the
licensee’s report on those matters.
(2) A direction under subsection (1) must specify:
(a) a reasonable period for giving ASIC the report; and
(b) if paragraph (1)(b) applies—a person or body that is suitably
qualified to prepare the audit statement.
(3) ASIC may give a copy of the report to the Minister.
(4) A person commits an offence if:
(a) the person is a benchmark administrator licensee; and
(b) the person is given a direction under subsection (1); and
(c) the person fails to comply with the direction.
Penalty: 100 penalty units.
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Licensing of financial benchmarks Division 2
Section 908BW
Corporations Act 2001 269
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(5) A direction under subsection (1) is not a legislative instrument.
Subdivision H—Other matters
908BW ASIC may assess licensee’s compliance
(1) ASIC may do an assessment of how well a benchmark
administrator licensee is complying with one or more of its
obligations:
(a) under this Part; or
(b) under rules made under Division 3.
In doing the assessment, ASIC may take account of any
information and reports that it thinks appropriate.
(2) As soon as practicable after doing an assessment under this section,
ASIC must give a written report on the assessment to the licensee.
ASIC may give a copy of the report to the Minister.
(3) If an assessment, or part of an assessment, relates to any other
person’s affairs to a material extent, ASIC may, at the person’s
request or on its own initiative, give the person a copy of the report
on the assessment or the relevant part of the report.
(4) If an assessment, or part of an assessment, relates to a serious
contravention of a law of the Commonwealth or of a State or
Territory, ASIC may give a copy of the report on the assessment,
or the relevant part of the report, to:
(a) the Australian Federal Police; or
(b) the Chief Executive Officer of the Australian Crime
Commission or a member of the staff of the ACC (within the
meaning of the Australian Crime Commission Act 2002); or
(c) the Director of Public Prosecutions; or
(d) a person or body prescribed by the regulations for the
purposes of this paragraph.
(5) ASIC may publish all or part of the written report on an
assessment.
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Part 7.5B Regulation of financial benchmarks
Division 2 Licensing of financial benchmarks
Section 908BX
270 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
908BX Basis of licences
(1) A benchmark administrator licence is granted under this Part on the
basis that:
(a) the licence may be varied, suspended or cancelled, or made
subject to conditions (or additional conditions), by or under:
(i) this Division; or
(ii) later legislation; and
(b) no compensation is payable if the licence is varied,
suspended or cancelled, or made subject to conditions (or
additional conditions), as mentioned in paragraph (a).
(2) Subsection (1) does not, by implication, affect the interpretation of
any other provision:
(a) of this Act; or
(b) of an instrument made under this Act.
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Financial benchmark rules and compelled financial benchmark rules Division 3
Section 908CA
Corporations Act 2001 271
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 3—Financial benchmark rules and compelled
financial benchmark rules
Subdivision A—Power to make financial benchmark rules
908CA ASIC may make financial benchmark rules
Subject to this Division, ASIC may, by legislative instrument,
make rules (the financial benchmark rules) dealing with one or
more of the matters permitted by this Subdivision.
Note: Subdivision D deals with the process of making the rules.
908CB Main permitted matters that may be dealt with in the rules
The main permitted matters are the following:
(a) the responsibilities of benchmark administrator licensees,
including for their oversight of internal and external parties
who have a role in the generation and administration of the
financial benchmarks specified in those licences;
(b) the generation and administration of financial benchmarks
specified in benchmark administrator licences, including:
(i) the design of the financial benchmarks; and
(ii) the use of data or information in generating the financial
benchmarks; and
(iii) the method for generating the financial benchmarks; and
(iv) the approach for changing the design referred to in
subparagraph (i) or changing the method referred to in
subparagraph (iii); and
(v) the public disclosure of one or more of the matters
referred to in this paragraph;
(c) the manner in which benchmark administrator licensees may
or must provide their services, including the manner and
conditions (including fees) on which they provide access to
the financial benchmarks specified in those licences;
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Section 908CB
272 Corporations Act 2001
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(d) business continuity planning for financial benchmarks
specified in benchmark administrator licences, including the
possible transition of such benchmarks to new licensees;
(e) the governance, management and resources (including
financial, technological and human resources) of benchmark
administrator licensees, including the following:
(i) the handling of conflicts of interest;
(ii) the handling of complaints;
(iii) the monitoring and enforcing of compliance with
obligations;
(iv) the resources that benchmark administrator licensees
must have (including requirements relating to the
experience, qualifications or fitness for office of their
officers and employees);
(v) the integrity and security of computer systems and other
systems;
(vi) operational reliability;
(vii) business continuity planning;
(viii) the operational separation of functions;
(ix) the outsourcing of functions to other entities;
(f) the public disclosure of conditions (including fees) on which
benchmark administrator licensees provide their services;
(g) the handling or use of financial benchmark data by
benchmark administrator licensees and their officers and
employees, including the following:
(i) the acceptance and retention of such data;
(ii) the creation of statistical data from such data;
(iii) the use and disclosure of, and provision of access to,
such data (including statistical data referred to in
subparagraph (ii));
(h) the responsibilities of entities whose activities result in the
provision of data or information to benchmark administrator
licensees for the generation or administration of the financial
benchmarks specified in those licences;
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Section 908CC
Corporations Act 2001 273
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(i) the reporting to ASIC or other regulators of matters relating
to:
(i) benchmark administrator licensees; or
(ii) the generation or administration of financial
benchmarks specified in benchmark administrator
licences;
(j) a matter prescribed by the regulations for the purposes of this
paragraph.
Note: For paragraph (c), the rules may (for example) require benchmark
administrator licensees to provide open and non-discriminatory access
to their financial benchmarks, including as to price.
908CC Other permitted matters that may be dealt with in the rules
The other permitted matters are matters incidental or related to the
matters permitted under section 908CB, including the following:
(a) subject to section 908CP, the persons who are obliged to
comply with requirements imposed by the rules;
(b) the manner and form in which persons must comply with
requirements imposed by the rules;
(c) the circumstances in which persons are, or may be, relieved
from complying with requirements in the rules that would
otherwise apply to them;
(d) the keeping of records, or the provision of records or other
information, relating to compliance with (or determining
whether there has been compliance with) the rules;
(e) any other matters that the provisions of this Act provide may
be dealt with in the financial benchmark rules.
Subdivision B—Power to make compelled financial benchmark
rules
908CD ASIC may make compelled financial benchmark rules
Subject to this Division, ASIC may, by legislative instrument,
make rules (the compelled financial benchmark rules) conferring
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Division 3 Financial benchmark rules and compelled financial benchmark rules
Section 908CE
274 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
one or more of the powers, or dealing with one or more of the
matters, permitted by this Subdivision.
Note: Subdivision D deals with the process of making the rules.
908CE Permitted powers and matters that may be dealt with in the
rules
(1) The permitted powers and matters are the following:
(a) the power for ASIC to require, by written notice, an entity
referred to in paragraph 908CB(h):
(i) to provide data or information to a benchmark
administrator licensee, or to another entity, for the
generation or administration of a significant financial
benchmark specified in that licence; and
(ii) to provide ASIC with some or all of that data or
information for purposes relating to the generation or
administration of that significant financial benchmark;
(b) the power for ASIC to require, by written notice, a
benchmark administrator licensee:
(i) to continue to generate or administer a significant
financial benchmark specified in that licence; or
(ii) to generate or administer in a particular way a
significant financial benchmark specified in that licence;
(c) powers or matters incidental or related to:
(i) one or more of the above powers; or
(ii) the compulsory generation or administration of a
significant financial benchmark specified in a
benchmark administrator licence;
including a power or matter prescribed by the regulations for
the purposes of this paragraph.
(2) However, ASIC may only require something under a power
referred to in subsection (1) if:
(a) ASIC reasonably believes it is in the public interest to do so;
and
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Section 908CF
Corporations Act 2001 275
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(b) in the case of paragraph (1)(a)—the activities of the entity
concerned have previously resulted in the provision of data
or information to that licensee for the generation or
administration of that significant financial benchmark.
Subdivision C—Compliance with each set of rules etc.
908CF Obligation to comply with each set of rules
(1) A person (whether a benchmark administrator licensee or
otherwise) must comply with:
(a) provisions of the financial benchmark rules; and
(b) provisions of the compelled financial benchmark rules;
that apply to the person.
Note 1: This subsection is a civil penalty provision (see section 1317E). For
the maximum penalty for contravening a civil penalty provision, see
section 1317G. For relief from liability to a civil penalty relating to
this subsection, see section 1317S.
Note 2: The regulations may limit the persons on whom each set of rules may
impose requirements (see section 908CP).
(2) If there is an inconsistency between the financial benchmark rules
and the compelled financial benchmark rules, the compelled
financial benchmark rules prevail to the extent of the
inconsistency.
(3) If there is an inconsistency between any of the rules made under
this Division and any of the other rules made under other
provisions of this Chapter, those other rules prevail to the extent of
the inconsistency.
908CG Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have
contravened subsection 908CF(1) to do one or more of the
following as an alternative to civil proceedings:
(a) pay a penalty to the Commonwealth;
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Division 3 Financial benchmark rules and compelled financial benchmark rules
Section 908CH
276 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) undertake or institute remedial measures (including education
programs);
(c) accept sanctions other than the payment of a penalty to the
Commonwealth.
(2) The penalty payable under regulations made under paragraph (1)(a)
in relation to an alleged contravention of a provision of the
financial benchmark rules or the compelled financial benchmark
rules must not exceed:
(a) for an individual—1,110 penalty units; and
(b) for a body corporate—5,550 penalty units.
908CH Infringement notices
(1) Subsection 908CF(1) is subject to an infringement notice under
Part 5 of the Regulatory Powers Act.
Infringement officer
(2) For the purposes of Part 5 of the Regulatory Powers Act, each staff
member of ASIC who holds, or is acting in, an office or position
that is equivalent to an SES employee is an infringement officer in
relation to subsection 908CF(1) of this Act.
Relevant chief executive
(3) For the purposes of Part 5 of the Regulatory Powers Act, each
member of ASIC (within the meaning of section 9 of the ASIC
Act) is the relevant chief executive in relation to
subsection 908CF(1) of this Act.
908CI Enforceable undertakings
(1) Subsection 908CF(1) is enforceable under Part 6 of the Regulatory
Powers Act (about enforceable undertakings).
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Section 908CJ
Corporations Act 2001 277
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Authorised person
(2) For the purposes of Part 6 of the Regulatory Powers Act, each staff
member of ASIC who holds, or is acting in, an office or position
that is equivalent to an SES employee is an authorised person in
relation to subsection 908CF(1) of this Act.
Relevant courts
(3) For the purposes of Part 6 of the Regulatory Powers Act, each of
the following courts is a relevant court in relation to
subsection 908CF(1) of this Act:
(a) the Federal Court of Australia;
(b) the Federal Circuit Court of Australia;
(c) a court of a State or Territory that has jurisdiction in relation
to the matter.
908CJ Protection from liability for compliance in good faith
If:
(a) a person (the protected person):
(i) provides financial benchmark data, or other information,
to another person; or
(ii) otherwise allows another person access to financial
benchmark data, or other information; or
(iii) generates or administers in a particular way a significant
financial benchmark specified in a benchmark
administrator licence; and
(b) the protected person does so, in good faith, in compliance
with a requirement imposed by the compelled financial
benchmark rules;
the protected person is not liable to an action or other proceeding,
whether civil or criminal, for or in relation to that conduct.
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Chapter 7 Financial services and markets
Part 7.5B Regulation of financial benchmarks
Division 3 Financial benchmark rules and compelled financial benchmark rules
Section 908CK
278 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision D—Matters relating to the making of each set of
rules
908CK Matters to which ASIC has regard when making rules
In considering whether to make a rule under this Division, ASIC:
(a) must have regard to:
(i) the final report titled “Principles for Financial
Benchmarks”, dated July 2013 and published by the
Board of the International Organization of Securities
Commissions, as amended from time to time; and
(ii) the likely effect of the proposed rule on the Australian
economy, and on the efficiency, integrity and stability
of the Australian financial system; and
(iii) the likely regulatory impact of the proposed rule; and
(b) may have regard to any other matters that ASIC considers
relevant.
Note 1: The Principles for Financial Benchmarks could in 2018 be viewed on
the International Organization of Securities Commissions website
(https://www.iosco.org/).
Note 2: Matters that ASIC may have regard to under paragraph (b) could, for
example, include foreign laws relating to financial benchmarks, and
any matters raised in consultations under section 908CL.
908CL ASIC to consult before making rules
(1) ASIC must not make a rule under this Division unless ASIC:
(a) has consulted the public about the proposed rule; and
(b) has also consulted any other person or body as required by
regulations made for the purposes of this paragraph.
Note: In some situations, consultation is not required (see section 908CN).
(2) Without limiting the ways in which ASIC may comply with the
obligation in paragraph (1)(a) to consult the public about a
proposed rule, ASIC is taken to comply with that obligation if
ASIC, on its website:
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Section 908CM
Corporations Act 2001 279
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(a) makes the proposed rule, or a description of the content of
the proposed rule, available; and
(b) invites the public to comment on the proposed rule.
(3) A failure to consult as required by subsection (1) does not
invalidate a rule.
908CM Ministerial consent to rules required
(1) ASIC must not make a rule under this Division unless consent for
it has been given under subsection (2).
Note: In some situations, consent is not required (see section 908CN).
(2) The Minister may, in writing, consent to the making of a rule under
this Division.
908CN Emergency rules: consultation and consent not required
(1) ASIC may make a rule under this Division without consulting as
required by section 908CL, and without the consent of the Minister
as required by section 908CM, if ASIC is of the opinion that it is
necessary, or in the public interest, to do so in order to protect:
(a) the Australian economy; or
(b) the efficiency, integrity or stability of the Australian financial
system; or
(c) the security or confidentiality of financial benchmark data.
(2) However, if ASIC does so, ASIC must:
(a) provide the Minister, on the following day, with a written
explanation of the need for the rule; and
(b) vary or revoke the rule in accordance with any direction
under subsection (3).
(3) The Minister may give ASIC a written direction to vary or revoke a
rule made as described in subsection (1).
(4) A direction under subsection (3) is not a legislative instrument.
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Part 7.5B Regulation of financial benchmarks
Division 3 Financial benchmark rules and compelled financial benchmark rules
Section 908CO
280 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
908CO Requirements
Each of the financial benchmark rules and compelled financial
benchmark rules may deal with a matter by imposing requirements.
908CP Regulations may limit how rules may deal with certain
matters
(1) The regulations may prescribe limits on:
(a) the extent to which, or the way in which, the financial
benchmark rules may deal with matters permitted by
Subdivision A; or
(b) the classes of persons on whom those rules may impose
requirements; or
(c) the extent to which those rules may impose requirements (or
certain kinds of requirements) on certain classes of persons.
(2) The regulations may prescribe limits on:
(a) the extent to which, or the way in which, the compelled
financial benchmark rules may deal with matters permitted
by Subdivision B; or
(b) the classes of persons on whom those rules may impose
requirements; or
(c) the extent to which those rules may impose requirements (or
certain kinds of requirements) on certain classes of persons.
908CQ Varying or revoking the rules
(1) ASIC may vary or revoke a rule made under this Division in like
manner and subject to like conditions (see subsections 33(3) and
(3AA) of the Acts Interpretation Act 1901).
(2) However, the requirements of sections 908CK, 908CL and 908CM
do not apply in relation to a variation or revocation pursuant to a
direction by the Minister under subsection 908CN(3).
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Offences and civil penalties relating to manipulation of financial benchmarks Division
4
Section 908DA
Corporations Act 2001 281
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Division 4—Offences and civil penalties relating to
manipulation of financial benchmarks
908DA Manipulation of financial benchmarks
Civil penalty provisions
(1) A person contravenes this subsection if:
(a) the person does, or omits to do, one or more acts; and
(b) the acts or omissions have or are likely to have the effect of
influencing the level at which a financial benchmark is
generated or administered; and
(c) the person intends for the acts or omissions to have that
effect (whether or not the person also intends for the acts or
omissions to have another effect).
Note 1: This is a civil penalty provision (see section 1317E). For relief from
liability, see section 1317S.
Note 2: Section 908DD (about geographical scope) causes this subsection to
be read down so that it covers persons who are Australian entities, or
persons whose acts or omissions occur wholly or partly in Australia
etc.
(2) A person contravenes this subsection if:
(a) paragraphs (1)(a) to (c) apply in relation to the person, one or
more acts or omissions, and a financial benchmark; and
(b) the acts or omissions result, or are likely to result, in an
Australian entity suffering financial or other disadvantage
from use of the financial benchmark.
Note 1: This is a civil penalty provision (see section 1317E). For relief from
liability, see section 1317S.
Note 2: This subsection extends subsection (1) so that persons, who are not
otherwise covered, will be covered if a result of their acts or omissions
occurs wholly or partly in Australia etc.
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Chapter 7 Financial services and markets
Part 7.5B Regulation of financial benchmarks
Division 4 Offences and civil penalties relating to manipulation of financial
benchmarks
Section 908DB
282 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Offence
(3) A person commits an offence if the person contravenes
subsection (1) or (2).
Note: For the penalty for the offence, see section 908DC. For its
geographical scope, see section 908DD.
908DB False or misleading statements or information that could
affect financial benchmarks
Civil penalty provisions
(1) A person contravenes this subsection if:
(a) the person makes one or more statements, or disseminates
information; and
(b) the statements or information:
(i) are false or misleading; or
(ii) omit any matter or thing without which the statements
or information are misleading; and
(c) the person knows the statements or information could be
used in the generation or administration of a financial
benchmark.
Note 1: This is a civil penalty provision (see section 1317E). For relief from
liability, see section 1317S.
Note 2: Section 908DD (about geographical scope) causes this subsection to
be read down so that it covers persons who are Australian entities, or
persons whose conduct occurs wholly or partly in Australia etc.
(2) A person contravenes this subsection if:
(a) paragraphs (1)(a) to (c) apply in relation to the person, one or
more statements or information, and a financial benchmark;
and
(b) making the statements or disseminating the information
results, or is likely to result, in an Australian entity suffering
financial or other disadvantage from use of the financial
benchmark.
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Section 908DC
Corporations Act 2001 283
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note 1: This is a civil penalty provision (see section 1317E). For relief from
liability, see section 1317S.
Note 2: This subsection extends subsection (1) so that persons, who are not
otherwise covered, will be covered if a result of their conduct occurs
wholly or partly in Australia etc.
Offence
(3) A person commits an offence if the person contravenes
subsection (1) or (2).
Note: For the penalty for the offence, see section 908DC. For its
geographical scope, see section 908DD.
908DC Penalties for offences against this Division
The penalty for an offence against this Division is 15 years
imprisonment.
Note: However, sections 1311A to 1311E will apply in relation to the
penalty in the usual way.
908DD Geographical scope of offences and civil penalty provisions
Offences
(1) Section 15.2 of the Criminal Code (extended geographical
jurisdiction—category B) applies to each offence against this
Division.
Contraventions of civil penalty provisions
(2) A declaration of contravention by a person must not be made under
section 1317E relating to an alleged contravention by the person of
a civil penalty provision in this Division unless:
(a) the person’s conduct that allegedly contravenes the provision
occurs:
(i) wholly or partly in Australia; or
(ii) wholly or partly on board an Australian aircraft or an
Australian ship; or
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Division 4 Offences and civil penalties relating to manipulation of financial
benchmarks
Section 908DD
284 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) the person’s conduct that allegedly contravenes the provision
occurs wholly outside Australia and a result of the conduct
occurs:
(i) wholly or partly in Australia; or
(ii) wholly or partly on board an Australian aircraft or an
Australian ship; or
(c) the person’s conduct that allegedly contravenes the provision
occurs wholly outside Australia and, at the time of the
alleged contravention, the person is an Australian entity.
Defences relating to contraventions of civil penalty provisions
(3) In proceedings under section 1317E for a declaration of
contravention by a person relating to an alleged contravention by
the person of a civil penalty provision in this Division, it is a
defence if:
(a) the conduct constituting the alleged contravention occurs
wholly in a foreign country, but not on board an Australian
aircraft or an Australian ship; and
(b) the person is neither:
(i) an Australian citizen; nor
(ii) a body corporate incorporated by or under a law of the
Commonwealth or of a State or Territory; and
(c) there is not in force in:
(i) the foreign country where the conduct constituting the
alleged contravention occurs; or
(ii) the part of the foreign country where the conduct
constituting the alleged contravention occurs;
a law of that foreign country, or a law of that part of that
foreign country, that provides for a pecuniary or criminal
penalty for such conduct.
(4) A defendant bears an evidential burden in relation to the matter in
subsection (3).
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Section 908DD
Corporations Act 2001 285
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Attorney-General’s consent needed for certain proceedings
(5) The Attorney-General’s prior written consent must be obtained to
commence proceedings under section 1317E for a declaration of
contravention by a person relating to an alleged contravention by
the person of a civil penalty provision in this Division if:
(a) the conduct constituting the alleged contravention occurs
wholly in a foreign country; and
(b) at the time of the alleged contravention, the person is neither:
(i) an Australian citizen; nor
(ii) a body corporate incorporated by or under a law of the
Commonwealth or of a State or Territory.
When conduct taken to occur partly in Australia
(6) For the purposes of (but without limiting) this section, if a person
sends a thing, or causes a thing to be sent:
(a) from a point outside Australia to a point in Australia; or
(b) from a point in Australia to a point outside Australia;
that conduct is taken to have occurred partly in Australia.
(7) For the purposes of (but without limiting) this section, if a person
sends, or causes to be sent, an electronic communication:
(a) from a point outside Australia to a point in Australia; or
(b) from a point in Australia to a point outside Australia;
that conduct is taken to have occurred partly in Australia.
Definitions
(8) In this section:
Australian aircraft has the same meaning as in the Criminal Code.
Australian ship has the same meaning as in the Criminal Code.
conduct has the same meaning as in the Criminal Code.
electronic communication has the same meaning as in the
Criminal Code.
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benchmarks
Section 908DD
286 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
evidential burden has the same meaning as in the Criminal Code.
foreign country has the same meaning as in the Criminal Code.
point has the same meaning as in section 16.2 of the Criminal
Code.
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Other provisions Division 5
Section 908EA
Corporations Act 2001 287
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 5—Other provisions
908EA Making provision by referring to instruments as in force
from time to time
(1) This section applies to the following instruments:
(a) regulations made for the purposes of a provision of this Part;
(b) rules made under Division 3.
(2) An instrument to which this section applies may make provision in
relation to a matter by applying, adopting or incorporating any
matter contained in an instrument or other writing:
(a) as in force or existing at a particular time; or
(b) as in force or existing from time to time.
(3) Subsection (2) has effect despite subsection 14(2) of the
Legislation Act 2003.
908EB Exemptions by the regulations or by ASIC
(1) The provisions covered by this section are:
(a) the following provisions:
(i) the provisions of this Part;
(ii) the provisions of regulations made for the purposes of
provisions of this Part;
(iii) the provisions of rules made under Division 3; and
(b) definitions in this Act, or in the regulations, as they apply to
references in provisions referred to in paragraph (a).
(2) The regulations, or ASIC by written instrument, may:
(a) exempt a person or class of persons from all or specified
provisions covered by this section; or
(b) exempt a financial benchmark or class of financial
benchmarks from all or specified provisions covered by this
section.
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Part 7.5B Regulation of financial benchmarks
Division 5 Other provisions
Section 908EB
288 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(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, on application by ASIC, order the person to comply with the
condition in a specified way.
(4) An exemption by ASIC is a legislative instrument if the exemption
is expressed to apply in relation to:
(a) a class of persons; or
(b) a class of financial benchmarks;
(whether or not it is also expressed to apply in relation to one or
more persons or financial benchmarks identified otherwise than by
reference to membership of a class).
(5) If subsection (4) does not apply to an exemption by ASIC, ASIC
must publish the exemption.
(6) If there is an inconsistency between:
(a) an exemption prescribed by regulations made for the
purposes of subsection (2); and
(b) an exemption by ASIC under that subsection;
(including in relation to any conditions specified by ASIC), the
regulations prevail to the extent of the inconsistency.
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Licensing of providers of financial services Part 7.6
Preliminary Division 1
Section 910A
Corporations Act 2001 289
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Part 7.6—Licensing of providers of financial
services
Division 1—Preliminary
910A Definitions
In this Part, unless the contrary intention appears:
basic banking product has the meaning given by section 961F.
body corporate licensee means a body corporate that:
(a) is a financial services licensee; and
(b) is authorised to provide personal advice to retail clients in
relation to relevant financial products.
class of product advice means financial product advice about a
class of products, but does not include a recommendation about a
specific product in the class.
Code of Ethics means the Code of Ethics, as in force from time to
time, made by the standards body under paragraph 921U(2)(b).
compliance scheme has the meaning given by section 921G.
consumer credit insurance has the meaning given by section 11 of
the Insurance Contracts Act 1984.
control, in relation to a body corporate licensee, means:
(a) having the capacity to cast, or control the casting of, more
than one half of the maximum number of votes that might be
cast at a general meeting of the licensee; or
(b) directly or indirectly holding more than one half of the issued
share capital of the licensee (not including any part of the
issued share capital that carries no right to participate beyond
a specified amount in a distribution of either profits or
capital, and not including MCIs); or
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290 Corporations Act 2001
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(c) the capacity to control the composition of the licensee’s
board or governing body; or
(d) the capacity to determine the outcome of decisions about the
licensee’s financial and operating policies, taking into
account:
(i) the practical influence the person can exert (rather than
the rights it can enforce); and
(ii) any practice or pattern of behaviour affecting the
licensee’s financial or operating policies (whether or not
it involves a breach of an agreement or a breach of
trust).
covers, in relation to a compliance scheme, has the meaning given
by section 921J.
CPD year (short for continuing professional development year): a
financial services licensee’s CPD year is the 12-month period
beginning on the day of the year included in the most recent notice
given by the licensee under section 922HA.
education and training standards has the meaning given by
section 921B.
foreign qualification means a bachelor or higher degree, or
equivalent qualification, awarded by a tertiary education institution
outside Australia.
limited-service time-sharing adviser: a person is a limited-service
time-sharing adviser if:
(a) the person is a relevant provider; and
(b) the only relevant financial product that the person provides
advice in relation to is a time-sharing scheme; and
(c) the person has not met any one or more of the education and
training standards in subsections 921B(2) to (4).
monitoring body for a compliance scheme means the person that
monitors and enforces compliance with the Code of Ethics under
the scheme.
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Corporations Act 2001 291
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notice provision means section 922D, 922H, 922HA, 922HB,
922HD, 922J or 922K.
professional association means a body or association that
represents a section of the financial services industry.
provisional relevant provider means a relevant provider who is
undertaking work and training in accordance with
subsection 921B(4).
Note: For rules relating to provisional relevant providers, see Subdivision C
of Division 8A and section 923C.
recent advising history has the meaning given by section 922G.
Register of Relevant Providers means the Register of Relevant
Providers maintained under section 922Q.
relevant financial products means financial products other than:
(a) basic banking products; or
(b) general insurance products; or
(c) consumer credit insurance; or
(d) a combination of any of those products.
relevant provider: a person is a relevant provider if the person:
(a) is an individual; and
(b) is:
(i) a financial services licensee; or
(ii) an authorised representative of a financial services
licensee; or
(iii) an employee or director of a financial services licensee;
or
(iv) an employee or director of a related body corporate of a
financial services licensee; and
(c) is authorised to provide personal advice to retail clients, as
the licensee or on behalf of the licensee, in relation to
relevant financial products.
Note: For rules about when relevant providers can use the expressions
“financial adviser” and “financial planner”, see section 923C.
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Section 910A
292 Corporations Act 2001
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representative of a person means:
(a) if the person is a financial services licensee:
(i) an authorised representative of the licensee; or
(ii) an employee or director of the licensee; or
(iii) an employee or director of a related body corporate of
the licensee; or
(iv) any other person acting on behalf of the licensee; or
(b) in any other case:
(i) an employee or director of the person; or
(ii) an employee or director of a related body corporate of
the person; or
(iii) any other person acting on behalf of the person.
standards body means the body corporate in relation to which a
declaration under section 921X is in force.
supervisor of a provisional relevant provider has the meaning
given by subsection 921F(2).
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Section 911A
Corporations Act 2001 293
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Division 2—Requirement to be licensed or authorised
911A Need for an Australian financial services licence
(1) Subject to this section, a person who carries on a financial services
business in this jurisdiction must hold an Australian financial
services licence covering the provision of the financial services.
Note 1: Also, a person must not provide a financial service contrary to a
banning order or disqualification order under Division 8.
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) However, a person is exempt from the requirement to hold an
Australian financial services licence for a financial service they
provide in any of the following circumstances:
(a) the person provides the service as representative of a second
person who carries on a financial services business and who:
(i) holds an Australian financial services licence that
covers the provision of the service; or
(ii) is exempt under this subsection from the requirement to
hold an Australian financial services licence that covers
the provision of the service;
Note: However, representatives must still comply with section 911B even if they are exempted from this section by this paragraph.
(b) the service is the issue, variation or disposal of a financial
product by the person (the product provider) pursuant to an
arrangement (an intermediary authorisation) between the
product provider and a financial services licensee under
which:
(i) the financial services licensee, or their authorised
representatives, may make offers to people to arrange
for the issue, variation or disposal of financial products
by the product provider; and
(ii) the product provider is to issue, vary or dispose of
financial products in accordance with such offers, if
they are accepted;
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Section 911A
294 Corporations Act 2001
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provided that the offer pursuant to which the issue, variation
or disposal is made was covered by the financial services
licensee’s Australian financial services licence;
(ba) the service is the entry into of an intermediary authorisation
referred to in paragraph (b);
(c) all of the following apply:
(i) the service is the variation or disposal of a financial
product by the person;
(ii) the same person issued the original product;
(iii) the person provides the service at the direct request of
the person to whom it is provided (rather than through
an intermediary);
(d) the service is, or is provided incidentally to, the operation of
a licensed market, or a licensed CS facility, operated by the
person;
(ea) the service is the provision of general advice and all of the
following apply:
(i) the advice is provided in a newspaper or periodical of
which the person is the proprietor or publisher;
(ii) the newspaper or periodical is generally available to the
public otherwise than only on subscription;
(iii) the sole or principal purpose of the newspaper or
periodical is not the provision of financial product
advice;
(eb) the service is the provision of general advice and all of the
following apply:
(i) the advice is provided in the course of, or by means of,
transmissions that the person makes by means of an
information service (see subsection (6)), or that are
made by means of an information service that the
person owns, operates or makes available;
(ii) the transmissions are generally available to the public;
(iii) the sole or principal purpose of the transmissions is not
the provision of financial product advice;
(ec) the service is the provision of general advice and all of the
following apply:
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(i) the advice is provided in sound recordings, video
recordings, or data recordings;
(ii) the person makes the recordings available to the public
by supplying copies of them to the public and/or by
causing the recordings (if they are sound recordings) to
be heard by the public, causing the recordings (if they
are video recordings) to be seen and heard by the public,
or the contents of the recordings (if they are data
recordings) to be displayed or reproduced for the public;
(iii) the sole or principal purpose of the recordings is not the
provision of financial product advice;
(ed) both of the following apply:
(i) the service is the provision of general advice by the
person in connection with an offer of financial products
under an eligible employee share scheme;
(ii) the person is the corporation whose financial products
are being issued or sold under the scheme, or an entity
that that corporation controls;
(ee) all of the following apply:
(i) the service is dealing in a financial product by the
person in connection with an offer of the financial
product under an eligible employee share scheme;
(ii) the scheme requires that any purchase or disposal of the
financial product under the scheme occurs through a
person who holds an Australian financial services
licence to deal in financial products, or a person outside
this jurisdiction who is licensed or otherwise authorised
to deal in financial products in that jurisdiction;
(iii) the person is the corporation whose financial products
are being issued or sold under the scheme, or an entity
that that corporation controls;
(ef) both of the following apply:
(i) the service is, or is provided incidentally to, a custodial
or depository service that is provided by the person in
connection with an eligible employee share scheme;
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Section 911A
296 Corporations Act 2001
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(ii) the person is the corporation whose financial products
are being issued or sold under the scheme, or an entity
that that corporation controls;
(eg) both of the following apply:
(i) the service is dealing in an interest in a contribution plan
operated by the person in relation to an eligible
employee share scheme;
(ii) the person is the corporation whose financial products
are being issued or sold under the scheme, or an entity
that that corporation controls;
(eh) the service is the acquisition of a financial product as an
investment of the assets of a notified foreign passport fund
by:
(i) the operator of the fund; or
(ii) another person acting on the direction of the operator of
the fund, or the direction of an agent of the operator of
the fund;
(ei) the service is the disposal of a financial product that was
acquired as an investment of the assets of a notified foreign
passport fund by:
(i) the operator of the fund; or
(ii) another person acting on the direction of the operator of
the fund, or the direction of an agent of the operator of
the fund;
(ej) the service is the issuing, acquisition or disposal of a
derivative or foreign exchange contract by:
(i) the operator of a notified foreign passport fund; or
(ii) another person acting on the direction of the operator of
a notified foreign passport fund, or the direction of an
agent of the operator of a notified foreign passport fund;
for the purposes of managing the financial consequences to
the fund of particular circumstances happening, or avoiding
or limiting the financial consequences of fluctuations in, or in
the value of, receipts or costs (including prices or interest
rates);
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Section 911A
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(f) the person provides the service while performing functions,
or exercising powers, in any of the following capacities or
circumstances:
(i) as an official receiver or trustee within the meaning of
the Bankruptcy Act 1966;
(ii) as a receiver, receiver and manager, or liquidator
(whether appointed by a court or otherwise);
(iii) as a person appointed by a court to carry on a financial
services business;
(iv) as the Public Trustee acting under a law, prescribed by
regulations made for the purposes of this paragraph, of a
State or Territory;
(v) as an administrator of a body corporate;
(vi) as an administrator of a deed of company arrangement
executed by a body corporate;
(vii) as a trustee or person administering a compromise or
arrangement between a body corporate and another
person or persons;
(viii) as a personal representative of a deceased person other
than a deceased financial services licensee;
(ix) subject to subsection (3), as a personal representative of
a deceased financial services licensee;
(x) in the administration of a bankrupt estate or in the
winding up of a body corporate or partnership;
(g) all of the following apply:
(i) the person is a body regulated by APRA;
(ii) the service is one in relation to which APRA has
regulatory or supervisory responsibilities;
(iii) the service is provided only to wholesale clients;
(h) all of the following apply:
(i) the person is regulated by an overseas regulatory
authority;
(ii) the provision of the service by the person is covered by
an exemption specified by ASIC in writing under this
subparagraph and published in the Gazette; and
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Section 911A
298 Corporations Act 2001
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(iii) the service is provided only to wholesale clients;
(i) the person provides the service only to related bodies
corporate of the person;
(j) the person provides the service in the person’s capacity as
trustee of a self managed superannuation fund;
(k) the provision of the service is covered by an exemption
prescribed in regulations made for the purposes of this
paragraph;
(l) the provision of the service is covered by an exemption
specified by ASIC in writing and published in the Gazette.
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
(3) Subparagraph (2)(f)(ix) only applies until whichever of these
happens first:
(a) the end of 6 months after the death of the licensee;
(b) the removal or discharge of the personal representative;
(c) the final distribution of the licensee’s estate.
(4) A person is not exempt under any paragraph of subsection (2) for a
financial service they provide if the service is:
(a) the operation of a registered scheme; or
(b) a traditional trustee company service.
(5) The exemption under paragraph (2)(ea), (eb) or (ec), or an
exemption under subparagraph (2)(h)(ii) or under paragraph (2)(k)
or (l), may apply unconditionally or subject to conditions:
(a) in the case of the exemption under paragraph (2)(ea), (eb) or
(ec), or an exemption under paragraph (2)(k)—specified in
regulations made for the purposes of this paragraph; or
(b) in the case of an exemption under subparagraph (2)(h)(ii) or
under paragraph (2)(l)—specified by ASIC in writing
published in the Gazette.
(5A) Despite paragraph (2)(b), the regulations may provide that the
exemption under that paragraph does not apply in relation to:
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Section 911B
Corporations Act 2001 299
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(a) a particular financial product or a particular kind of financial
product; or
(b) a particular financial product or a particular kind of financial
product that is issued, varied or disposed of by a particular
person, or a particular kind of person.
(5B) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
(6) In this section:
information service means:
(a) a broadcasting service; or
(b) an interactive or broadcast videotext or teletext service or a
similar service; or
(c) an online database service or a similar service; or
(d) any other service identified in regulations made for the
purposes of this paragraph.
911B Providing financial services on behalf of a person who carries
on a financial services business
(1) A person (the provider) must only provide a financial service in
this jurisdiction on behalf of another person (the principal) who
carries on a financial services business if one or more of the
following paragraphs apply:
(a) these conditions are satisfied:
(i) the principal holds an Australian financial services
licence covering the provision of the service; and
(ii) the provider is an employee or director of the principal
or of a related body corporate of the principal; and
(iii) the provider is not an employee or director, or
authorised representative, of any other person who
carries on a financial services business and who is not a
related body corporate of the principal; and
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Section 911B
300 Corporations Act 2001
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(iv) the provider is not an employee or director, or
authorised representative, of a related body corporate of
a person of the kind mentioned in subparagraph (iii);
(b) these conditions are satisfied:
(i) the principal holds an Australian financial services
licence covering the provision of the service; and
(ii) the provider is an authorised representative of the
principal; and
(iii) the authorisation covers the provision of the service by
the provider; and
(iv) in the case of a provider who is an employee or director
of any other person (the second principal) who carries
on a financial services business, or of a related body
corporate of such a second principal—if the provider
provides any financial services in this jurisdiction on
behalf of the second principal, the provider does so as
an authorised representative of the second principal;
(c) these conditions are satisfied:
(i) the principal holds an Australian financial services
licence covering the provision of the service; and
(ii) the provider is an employee of an authorised
representative of the principal; and
(iii) the authorisation covers the provision of the service by
the authorised representative; and
(iv) the service is the provision of a basic deposit product or
of a facility for making non-cash payments (see
section 763D) that is related to a basic deposit product,
or is the provision of a financial product of a kind
prescribed by regulations made for the purposes of this
subparagraph;
(d) the provider holds their own Australian financial services
licence covering the provision of the service;
Note: However, in general a financial services licensee cannot be the authorised representative of another financial services licensee: see sections 916D and 916E.
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(e) if the principal (rather than the provider) provided the
service, the principal would not need an Australian financial
services licence because the provision of the service would
be exempt under subsection 911A(2).
Note 1: Also, a person must not provide a financial service on behalf of
another person contrary to a banning order or disqualification order
under Division 8.
Note 2: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Paragraphs (1)(a), (b) and (c) do not apply if the provider is a
financial services licensee, unless the principal is an insurer and the
provider is acting under a binder given by the principal.
(3) If, as mentioned in paragraph (1)(d), the provider holds their own
Australian financial services licence covering the provision of the
service, then, for the purposes of the other provisions of this
Chapter, the service is taken to be provided by the provider (and
not by the principal) unless regulations made for the purposes of
this subsection provide otherwise.
(4) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
911C Prohibition on holding out
A person must not hold out:
(a) that the person has an Australian financial services licence; or
(b) that a financial service provided by the person or by someone
else is exempt from the requirement to hold an Australian
financial services licence; or
(c) that, in providing a financial service, the person acts on
behalf of another person; or
(d) that conduct, or proposed conduct, of the person is within
authority (within the meaning of Division 6) in relation to a
particular financial services licensee;
if that is not the case.
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Division 2 Requirement to be licensed or authorised
Section 911D
302 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
911D When a financial services business is taken to be carried on in
this jurisdiction
(1) For the purposes of this Chapter, a financial services business is
taken to be carried on in this jurisdiction by a person if, in the
course of the person carrying on the business, the person engages
in conduct that is:
(a) intended to induce people in this jurisdiction to use the
financial services the person provides; or
(b) is likely to have that effect;
whether or not the conduct is intended, or likely, to have that effect
in other places as well.
(2) This section does not limit the circumstances in which a financial
services business is carried on in this jurisdiction for the purposes
of this Chapter.
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Corporations Act 2001 303
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Division 3—Obligations of financial services licensees
912A General obligations
(1) A financial services licensee must:
(a) do all things necessary to ensure that the financial services
covered by the licence are provided efficiently, honestly and
fairly; and
(aa) have in place adequate arrangements for the management of
conflicts of interest that may arise wholly, or partially, in
relation to activities undertaken by the licensee or a
representative of the licensee in the provision of financial
services as part of the financial services business of the
licensee or the representative; and
(b) comply with the conditions on the licence; and
(c) comply with the financial services laws; and
(ca) take reasonable steps to ensure that its representatives
comply with the financial services laws; and
(cb) if the licensee is the operator of an Australian passport fund,
or a person with responsibilities in relation to an Australian
passport fund, comply with the law of each host economy for
the fund; and
(d) subject to subsection (4)—have available adequate resources
(including financial, technological and human resources) to
provide the financial services covered by the licence and to
carry out supervisory arrangements; and
(e) maintain the competence to provide those financial services;
and
(f) ensure that its representatives are adequately trained
(including by complying with section 921D), and are
competent, to provide those financial services; and
(g) if those financial services are provided to persons as retail
clients:
(i) have a dispute resolution system complying with
subsection (2); and
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(ii) give ASIC the information specified in any instrument
under subsection (2A); and
(h) subject to subsection (5)—have adequate risk management
systems; and
(j) comply with any other obligations that are prescribed by
regulations made for the purposes of this paragraph.
(2) To comply with this subsection, a dispute resolution system must
consist of:
(a) an internal dispute resolution procedure that:
(i) complies with standards, and requirements, made or
approved by ASIC in accordance with regulations made
for the purposes of this subparagraph; and
(ii) covers complaints against the licensee made by retail
clients in connection with the provision of all financial
services covered by the licence; and
(c) membership of the AFCA scheme.
(2A) ASIC may, by legislative instrument, specify information that
financial services licensees must give ASIC relating to their
internal dispute resolution procedures and the operation of their
internal dispute resolution procedures.
(2B) An instrument under subsection (2A) must not specify any
information that is personal information within the meaning of the
Privacy Act 1988.
(3) Regulations made for the purposes of subparagraph (2)(a)(i) may
also deal with the variation or revocation of:
(a) standards or requirements made by ASIC; or
(b) approvals given by ASIC.
(4) Paragraph (1)(d):
(a) does not apply to a body regulated by APRA, unless the body
is an RSE licensee; and
(b) does not apply to an RSE licensee, unless the RSE licensee is
also the responsible entity of a registered scheme.
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Corporations Act 2001 305
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(5) Paragraph (1)(h):
(a) does not apply to a body regulated by APRA, unless the body
is an RSE licensee that is also the responsible entity of a
registered scheme; and
(b) does not apply to an RSE licensee that is also the responsible
entity of a registered scheme, to the extent that the risk
relates solely to the operation of a regulated superannuation
fund by the RSE licensee.
(5A) A person contravenes this subsection if the person contravenes
paragraph (1)(a), (aa), (ca), (d), (e), (f), (g), (h) or (j).
Note: This subsection is a civil penalty provision (see section 1317E).
(6) In this section:
person with responsibilities in relation to an Australian passport
fund means a person (other than a regulator) who has functions or
duties in relation to the fund under the Passport Rules for this
jurisdiction.
regulated superannuation fund has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
RSE licensee has the same meaning as in the Superannuation
Industry (Supervision) Act 1993.
912B Compensation arrangements if financial services provided to
persons as retail clients
(1) If a financial services licensee provides a financial service to
persons as retail clients, the licensee must have arrangements for
compensating those persons for loss or damage suffered because of
breaches of the relevant obligations under this Chapter by the
licensee or its representatives. The arrangements must meet the
requirements of subsection (2).
(2) The arrangements must:
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(a) if the regulations specify requirements that are applicable to
all arrangements, or to arrangements of that kind—satisfy
those requirements; or
(b) be approved in writing by ASIC.
(3) Before approving arrangements under paragraph (2)(b), ASIC must
have regard to:
(a) the financial services covered by the licence; and
(b) whether the arrangements will continue to cover persons after
the licensee ceases carrying on the business of providing
financial services, and the length of time for which that cover
will continue; and
(c) any other matters that are prescribed by regulations made for
the purposes of this paragraph.
(4) Regulations made for the purposes of paragraph (3)(c) may, in
particular, prescribe additional details in relation to the matters to
which ASIC must have regard under paragraphs (3)(a) and (b).
912C Direction to provide a statement
(1) ASIC may, by giving written notice to a financial services licensee,
direct the licensee to give to ASIC a written statement containing
the specified information about:
(a) the financial services provided by the licensee or its
representatives; or
(b) the financial services business carried on by the licensee.
(1A) Notices under subsection (1):
(a) may be sent out at any time; and
(b) may be sent to one or more particular licensees, or to each
licensee in one or more classes of licensee, or to all licensees;
and
(c) may all require the same information, or may contain
differences as to the information they require; and
(d) may require a statement containing information to be
provided on a periodic basis, or each time a particular event
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or circumstance occurs, without ASIC having to give a
further written notice; and
(e) may require a statement containing information to be given
in a specified manner (including in electronic form).
(2) ASIC may also, by giving written notice to the licensee, direct the
licensee to obtain an audit report, prepared by a suitably qualified
person specified in the notice, on a statement, or each statement in
a class of statements, under subsection (1) before the statement is
given to ASIC.
(3) The licensee must comply with a direction given under this section:
(a) within the time specified in the direction if that is a
reasonable time; or
(b) in any other case—within a reasonable time.
ASIC may extend the time within which the licensee must comply
with the direction by giving written notice to the licensee.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
912CA Regulations may require information to be provided
The regulations may require a financial services licensee, or each
financial services licensee in a class of financial services licensees,
to provide ASIC with specified information about:
(a) the financial services provided by the licensee or its
representatives; or
(b) the financial services business carried on by the licensee.
912D Obligation to notify ASIC of certain matters
(1) A financial services licensee must comply with subsection (1B) if:
(a) the licensee breaches, or is likely to breach:
(i) any of the obligations under section 912A or 912B,
other than the obligation under paragraph 912A(1)(c);
or
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(ii) the obligation under paragraph 912A(1)(c), so far as it
relates to provisions of this Act or the ASIC Act
referred to in paragraphs (a), (b), (ba) and (c) of the
definition of financial services law in section 761A; or
(iii) in relation to financial services, other than traditional
trustee company services provided by a licensed trustee
company—the obligation under paragraph 912A(1)(c),
so far as it relates to Commonwealth legislation that is
covered by paragraph (d) of that definition and that is
specified in regulations made for the purposes of this
subparagraph; or
(iv) in relation to traditional trustee company services
provided by a licensed trustee company—the obligation
under paragraph 912A(1)(c), so far as it relates to
Commonwealth, State or Territory legislation, or a rule
of common law or equity, that is covered by
paragraph (d) or (e) of that definition; and
(b) the breach, or likely breach, is significant, having regard to
the following:
(i) the number or frequency of similar previous breaches;
(ii) the impact of the breach or likely breach on the
licensee’s ability to provide the financial services
covered by the licence;
(iii) the extent to which the breach or likely breach indicates
that the licensee’s arrangements to ensure compliance
with those obligations is inadequate;
(iv) the actual or potential financial loss to clients of the
licensee, or the licensee itself, arising from the breach or
likely breach;
(v) any other matters prescribed by regulations made for the
purposes of this paragraph.
(1A) For the purposes of subsection (1), a financial services licensee is
likely to breach an obligation referred to in that subsection if, and
only if, the person is no longer able to comply with the obligation.
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(1B) The financial services licensee must, as soon as practicable and in
any case within 10 business days after becoming aware of the
breach or likely breach mentioned in subsection (1), lodge a
written report on the matter with ASIC.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(1C) A report that a licensee is required to lodge under subsection (1B)
is taken to have been lodged with ASIC if:
(a) the licensee is a body regulated by APRA; and
(b) the report is received by APRA in accordance with the terms
of an agreement between APRA and ASIC under which
APRA is to act as ASIC’s agent in relation to such reports.
(1D) Subsection (1B) does not apply to a financial services licensee that
is a body regulated by APRA in relation to a breach if:
(a) the auditor or actuary of the licensee gives APRA a written
report about the breach; and
(b) the report is given before, or within 10 business days after,
the licensee becomes aware of the breach.
(2) A financial services licensee must give written notice to ASIC, as
soon as practicable, if the licensee becomes a participant in a
licensed market or a licensed CS facility, or ceases to be such a
participant. The notice must say when this happened and identify
the market or facility.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A person contravenes this subsection if the person contravenes
subsection (1B) or (2).
Note: This subsection is a civil penalty provision (see section 1317E).
912E Surveillance checks by ASIC
(1) A financial services licensee and its representatives must give such
assistance to ASIC, or a person authorised by ASIC, as ASIC or
the authorised person reasonably requests in relation to whether the
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licensee and its representatives are complying with the financial
services laws, and in relation to the performance of ASIC’s other
functions.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Such assistance may include showing ASIC the licensee’s books or
giving ASIC other information.
912F Obligation to cite licence number in documents
(1) Whenever a financial services licensee identifies itself in a
document of a kind specified in regulations made for the purposes
of this subsection, the document must include the licensee’s licence
number (see section 913C).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(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 913A
Corporations Act 2001 311
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Division 4—Australian financial services licences
Subdivision A—How to get a licence
913A Applying for a licence
A person may apply for an Australian financial services licence by
lodging an application with ASIC that:
(a) includes the information required by regulations made for the
purposes of this paragraph; and
(b) is accompanied by the documents (if any) required by
regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
913B When a licence may be granted
(1) ASIC must grant an applicant an Australian financial services
licence if (and must not grant such a licence unless):
(a) the application was made in accordance with section 913A;
and
(b) ASIC has no reason to believe that the applicant is likely to
contravene the obligations that will apply under section 912A
if the licence is granted; and
(c) the requirement in whichever of subsection (2) or (3) of this
section applies is satisfied; and
(ca) the applicant has provided ASIC with any additional
information requested by ASIC in relation to matters that,
under this section, can be taken into account in deciding
whether to grant the licence; and
(d) the applicant meets any other requirements prescribed by
regulations made for the purposes of this paragraph.
Note 1: ASIC must not grant an Australian financial services licence to a
person contrary to a banning order or disqualification order (see
Division 8).
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Section 913B
312 Corporations Act 2001
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Note 2: There are limitations on ASIC granting an individual an Australian
financial services licence that covers the provision of certain personal
advice if the individual does not meet the education and training
standards in subsections 921B(2) to (4) (see section 921C).
(2) If the applicant is a natural person, ASIC must be satisfied that
there is no reason to believe that the applicant is not of good fame
or character.
(3) If the applicant is not a single natural person, ASIC must be
satisfied:
(a) that:
(i) if the applicant is a body corporate—there is no reason
to believe that any of the applicant’s responsible officers
are not of good fame or character; or
(ii) if the applicant is a partnership or the trustees of a
trust—there is no reason to believe that any of the
partners or trustees who would perform duties in
connection with the holding of the licence are not of
good fame or character; or
(b) if ASIC is not satisfied of the matter in paragraph (a)—that
the applicant’s ability to provide the financial services
covered by the licence would nevertheless not be
significantly impaired.
(4) In considering whether there is reason to believe that a person is
not of good fame or character, ASIC must (subject to Part VIIC of
the Crimes Act 1914) have regard to:
(a) any conviction of the person, within 10 years before the
application was made, for an offence that involves dishonesty
and is punishable by imprisonment for at least 3 months; and
(b) whether the person has held an Australian financial services
licence that was suspended or cancelled; and
(c) whether a banning order or disqualification order under
Division 8 has previously been made against the person; and
(d) any other matter ASIC considers relevant.
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain
circumstances, relieve persons from the requirement to disclose spent
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convictions and require persons aware of such convictions to
disregard them.
(5) However, ASIC may only refuse to grant a licence after giving the
applicant an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that
takes place in private; and
(b) to make submissions to ASIC in relation to the matter.
913C Licence numbers
(1) ASIC must give each Australian financial services licence a unique
licence number when it is granted, and must notify the licensee of
that number.
(2) If:
(a) a person is granted an Australian financial services licence;
and
(b) the person holds an Australian credit licence (within the
meaning of the National Consumer Credit Protection Act
2009);
the licence number that ASIC gives to the Australian financial
services licence held by that person must be the same number as
the person’s Australian credit licence number (within the meaning
of that Act).
Subdivision B—The conditions on the licence
914A The conditions on the licence
(1) Subject to this section, ASIC may, at any time, by giving written
notice to a financial services licensee:
(a) impose conditions, or additional conditions, on the licence;
and
(b) vary or revoke conditions imposed on the licence.
Note: Subsection 923B(3) restricts the circumstances in which ASIC can
impose a condition authorising a person to assume or use a restricted
word or expression under that section.
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Section 914A
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(2) ASIC may do so:
(a) on its own initiative; or
(b) if the licensee lodges with ASIC an application for ASIC to
do so, which is accompanied by the documents, if any,
required by regulations made for the purposes of this
paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) ASIC may only impose conditions or additional conditions, or vary
the conditions, on the licence after giving the licensee an
opportunity:
(a) to appear, or be represented, at a hearing before ASIC that
takes place in private; and
(b) to make submissions to ASIC in relation to the matter.
This subsection does not apply to ASIC imposing conditions when
a licence is granted.
(4) If the licensee, or a related body corporate, is a body (the APRA
body) regulated by APRA, other than an ADI (within the meaning
of the Banking Act 1959), then the following provisions apply:
(a) ASIC cannot:
(i) impose, vary or revoke a condition on the licence that,
in ASIC’s opinion, has or would have the result of
preventing the APRA body from being able to carry on
all or any of its usual activities (being activities in
relation to which APRA has regulatory or supervisory
responsibilities); or
(ii) vary a condition so that it would, in ASIC’s opinion,
become a condition that would have a result as
described in subparagraph (i);
unless ASIC has first consulted APRA about the proposed
action;
(b) if ASIC imposes, varies or revokes a condition on the licence
and paragraph (a) does not apply to that action, ASIC must,
within one week, inform APRA of the action that has been
taken.
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(5) If the licensee, or a related body corporate, is an ADI (within the
meaning of the Banking Act 1959), then the following provisions
apply:
(a) subject to paragraphs (b) and (c), the powers that ASIC
would otherwise have under this section:
(i) to impose, vary or revoke a condition on the licence
that, in ASIC’s opinion, has or would have the result of
preventing the ADI from being able to carry on all or
any of its banking business (within the meaning of the
Banking Act 1959); or
(ii) to vary a condition so that it would, in ASIC’s opinion,
become a condition that would have a result as
described in subparagraph (i);
are instead powers of the Minister;
(b) the following provisions apply in relation to a power to
which paragraph (a) applies:
(i) the procedures for the exercise of the power are the
same as would apply if ASIC could exercise the power,
except that the Minister must not exercise the power
unless he or she has first considered advice from ASIC
on the proposed action, being advice given after ASIC
has consulted APRA about the proposed action;
(ii) ASIC (rather than the Minister) must still conduct any
hearing required under paragraph (3)(a) and receive any
submissions under paragraph (3)(b);
(c) if ASIC imposes, varies or revokes a condition on the licence
and paragraph (a) does not apply to that action, ASIC must,
within one week, inform APRA of the action that has been
taken.
(5A) A failure to comply with a requirement of subsection (4) or (5) to
consult or inform APRA about, or to consider advice from ASIC
about, an imposition, variation or revocation of a condition does
not invalidate the action taken.
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Section 915A
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(6) ASIC must ensure that the licence is subject to a condition that
specifies the particular financial services or class of financial
services that the licensee is authorised to provide.
(7) The financial services or class of financial services may be
specified by reference to particular financial products, or classes of
financial products.
(8) The licence is subject to such other conditions as are prescribed by
regulations made for the purposes of this subsection. However,
ASIC cannot vary or revoke those conditions.
Subdivision C—When a licence can be varied, suspended or
cancelled
915A Varying licences
(1) ASIC may vary an Australian financial services licence to take
account of a change in the licensee’s name if the licensee lodges
with ASIC an application for the variation, accompanied by the
documents, if any, required by regulations made for the purposes
of this subsection.
Note 1: The conditions on the licence can be varied under section 914A.
Note 2: For fees in respect of lodging applications, see Part 9.10.
(2) ASIC must give written notice of the variation to the licensee.
915B Immediate suspension or cancellation
Licence held by a natural person
(1) ASIC may suspend or cancel an Australian financial services
licence held by a natural person, by giving written notice to the
person, if the person:
(a) ceases to carry on the financial services business; or
(b) becomes an insolvent under administration; or
(c) is convicted of serious fraud; or
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(d) becomes incapable of managing their affairs because of
mental or physical incapacity; or
(e) lodges with ASIC an application for ASIC to do so, which is
accompanied by the documents, if any, required by
regulations made for the purposes of this paragraph; or
(f) is liable to pay levy imposed by the ASIC Supervisory Cost
Recovery Levy Act 2017 and has not paid in full at least 12
months after the due date for payment:
(i) the amount of levy; and
(ii) the amount of any late payment penalty payable in
relation to the levy; and
(iii) the amount of any shortfall penalty payable in relation
to the levy.
Note: For fees in respect of lodging applications, see Part 9.10.
Licence held by a partnership
(2) ASIC may suspend or cancel an Australian financial services
licence held by a partnership, by giving written notice to the
partnership, if:
(a) the partnership ceases to carry on the financial services
business; or
(b) a creditor’s petition or a debtor’s petition is presented under
Division 2 or 3 of Part IV of the Bankruptcy Act 1966 against
the partnership; or
(c) one or more of the partners is convicted of serious fraud; or
(d) the partnership lodges with ASIC an application for ASIC to
do so, which is accompanied by the documents, if any,
required by regulations made for the purposes of this
paragraph; or
(e) in the case of a partnership that is a leviable entity (within the
meaning of the ASIC Supervisory Cost Recovery Levy Act
2017)—the following have not been paid in full at least 12
months after the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
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Section 915B
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(ii) an amount of late payment penalty payable (if any) in
relation to the levy;
(iii) an amount of shortfall penalty payable (if any) in
relation to the levy.
Note: For fees in respect of lodging applications, see Part 9.10.
Licence held by a body corporate
(3) ASIC may suspend or cancel an Australian financial services
licence held by a body corporate, by giving written notice to the
body, if the body:
(a) ceases to carry on the financial services business; or
(b) becomes a Chapter 5 body corporate; or
(c) is a responsible entity of a registered scheme whose members
have suffered, or are likely to suffer, loss or damage because
the body has breached this Act; or
(caa) is an operator of a notified foreign passport fund whose
members have suffered, or are likely to suffer, loss or
damage because the body has breached this Act; or
(ca) is a trustee company whose clients have suffered, or are
likely to suffer, loss or damage because the company has
breached:
(i) this Act; or
(ii) a financial services law referred to in paragraph (e) of
the definition of financial services law in section 761A;
or
(d) lodges with ASIC an application for ASIC to do so, which is
accompanied by the documents, if any, required by
regulations made for the purposes of this paragraph; or
(e) is liable to pay levy imposed by the ASIC Supervisory Cost
Recovery Levy Act 2017 and has not paid in full at least 12
months after the due date for payment:
(i) the amount of levy; and
(ii) the amount of any late payment penalty payable in
relation to the levy; and
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(iii) the amount of any shortfall penalty payable in relation
to the levy.
Note: For fees in respect of lodging applications, see Part 9.10.
(4) ASIC may suspend or cancel an Australian financial services
licence held by the trustees of a trust, by giving written notice to
the trustees, if:
(a) the trustees of the trust cease to carry on the financial
services business; or
(b) a trustee who is a natural person:
(i) becomes an insolvent under administration; or
(ii) is convicted of serious fraud; or
(iii) becomes incapable of managing their affairs because of
physical or mental incapacity; or
(c) a trustee that is a body corporate becomes a Chapter 5 body
corporate; or
(d) the trustees lodge with ASIC an application for ASIC to do
so, which is accompanied by the documents, if any, required
by regulations made for the purposes of this paragraph; or
(e) in the case of a licensee that is a single legal entity under
section 761FA and also a leviable entity (within the meaning
of the ASIC Supervisory Cost Recovery Levy Act 2017)—the
following have not been paid in full at least 12 months after
the due date for payment:
(i) an amount of levy (if any) payable in respect of the
licensee;
(ii) an amount of late payment penalty payable (if any) in
relation to the levy;
(iii) an amount of shortfall penalty payable (if any) in
relation to the levy.
Note 1: For fees in respect of lodging applications, see Part 9.10.
Note 2: If there is only one trustee, subsection (1) will apply (if the trustee is a
natural person), and subsection (3) will apply (if the trustee is a body
corporate).
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Part 7.6 Licensing of providers of financial services
Division 4 Australian financial services licences
Section 915C
320 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
915C Suspension or cancellation after offering a hearing
(1) ASIC may suspend or cancel an Australian financial services
licence (subject to complying with subsection (4)) in any of the
following cases:
(a) the licensee has not complied with their obligations under
section 912A;
(aa) ASIC has reason to believe that the licensee is likely to
contravene their obligations under section 912A;
(b) ASIC is no longer satisfied of the matter in whichever of
subsection 913B(2) or (3) applied at the time the licence was
granted (about whether the licensee, or the licensee’s
representatives, are of good fame or character);
(c) a banning order or disqualification order under Division 8 is
made against the licensee;
(d) a banning order or disqualification order under Division 8 is
made against a representative of the licensee and ASIC
considers that the representative’s involvement in the
provision of the licensee’s financial services will
significantly impair the licensee’s ability to meet its
obligations under this Chapter;
(e) the licensee is the operator of an Australian passport fund, or
a person with responsibilities in relation to an Australian
passport fund, and each of the following is satisfied:
(i) a host regulator for the fund has notified ASIC in
writing that it is of the opinion that the person or the
fund has not complied, is not complying or is not likely
to comply with the law of that host economy to the
extent that the law is administered by the host regulator
for the fund (including the Passport Rules for the host
economy for the fund);
(ii) ASIC is of the opinion that it should suspend or cancel
the licence, given the potential impact of the failure, or
potential failure, to comply on members or potential
members of the fund.
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Corporations Act 2001 321
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(2) ASIC may also cancel an Australian financial services licence
(subject to complying with subsection (4)) if:
(a) the application for the licence was false in a material
particular or materially misleading; or
(b) there was an omission of a material matter from the
application.
(3) An Australian financial services licence is suspended or cancelled
by ASIC giving written notice to the licensee.
(4) However, ASIC may only suspend or cancel an Australian
financial services licence under this section after giving the
licensee an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that
takes place in private; and
(b) to make submissions to ASIC on the matter.
(5) In this section:
person with responsibilities in relation to an Australian passport
fund means a person (other than a regulator) who has functions or
duties in relation to the fund under the Passport Rules for this
jurisdiction.
915D Effect of suspension
(1) A suspended Australian financial services licence has no effect
while it remains suspended.
(2) Subsection (1) has effect subject to section 915H.
915E Revocation of suspension
ASIC may at any time revoke the suspension of an Australian
financial services licence by giving written notice to the licensee.
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Section 915F
322 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
915F Date of effect and publication of cancellation or suspension
(1) A variation, suspension, revocation of a suspension, or
cancellation, of an Australian financial services licence takes effect
when the written notice of that action is given to the licensee.
(2) As soon as practicable after the notice is given to the licensee,
ASIC must:
(a) publish a notice of the action in the Gazette; and
(b) if the licensee is a participant in a licensed market or a
licensed CS facility—give written notice of the action to the
operator of the market or facility.
A notice under this subsection must state when the action took
effect.
915G Statement of reasons
A notice of suspension or cancellation given to a licensee under
this Subdivision must be accompanied by a statement of reasons
for the action taken.
915H ASIC may allow licence to continue in effect
In the written notice of suspension or cancellation that ASIC gives
to the licensee, ASIC may specify that the licence continues in
effect as though the suspension or cancellation had not happened
for the purposes of specified provisions of this Act in relation to
specified matters, a specified period, or both.
915I Special procedures for APRA-regulated bodies
(1) If a financial services licensee, or a related body corporate, is a
body (the APRA body) regulated by APRA, other than an ADI
(within the meaning of the Banking Act 1959), the following
provisions apply:
(a) ASIC cannot suspend or cancel the licensee’s licence if doing
so would, in ASIC’s opinion, have the result of preventing
the APRA body from being able to carry on all or any of its
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usual activities (being activities in relation to which APRA
has regulatory or supervisory responsibilities), unless ASIC
has first consulted APRA about the proposed action;
(b) if ASIC suspends or cancels the licensee’s licence and
paragraph (a) does not apply to that action, ASIC must,
within one week, inform APRA of the action that has been
taken.
(2) If:
(a) a financial services licensee is an ADI (within the meaning of
the Banking Act 1959); or
(b) a related body corporate of a financial services licensee is an
ADI (within the meaning of the Banking Act 1959), and
cancellation or suspension of the licensee’s licence would, in
ASIC’s opinion, have the result of preventing the ADI from
being able to carry on all or any of its banking business
(within the meaning of the Banking Act 1959);
the following provisions have effect:
(c) subject to paragraph (d), the powers that ASIC would
otherwise have under this Subdivision to cancel or suspend
the licensee’s licence, or to subsequently revoke a suspension
to which this subsection applied, are instead powers of the
Minister;
(d) the procedures for the exercise of a power to which
paragraph (c) applies are the same as would apply if ASIC
could exercise the power, except that the Minister must not
exercise the power unless he or she has first considered
advice from ASIC on the proposed action, being advice given
after ASIC has consulted APRA about the proposed action;
(e) ASIC (rather than the Minister) must still conduct any
hearing required under paragraph 915C(4)(a) and receive any
submissions under paragraph 915C(4)(b).
(3) A failure to comply with a requirement of subsection (1) or (2) to
consult or inform APRA about, or to consider advice from ASIC
about, a cancellation or suspension, or a revocation of a
suspension, of a licence does not invalidate the action taken.
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Division 4 Australian financial services licences
Section 915J
324 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
915J Variation, suspension and cancellation only under this
Subdivision
An Australian financial services licence cannot be varied,
suspended or cancelled otherwise than under this Subdivision.
Note: The conditions on the licence can be varied under section 914A.
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Section 916A
Corporations Act 2001 325
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Division 5—Authorised representatives
916A How representatives are authorised
(1) A financial services licensee may give a person (the authorised
representative) a written notice authorising the person, for the
purposes of this Chapter, to provide a specified financial service or
financial services on behalf of the licensee.
Note: There are limitations on a financial services licensee authorising an
individual to provide certain personal advice if the individual does not
meet the education and training standards in subsections 921B(2) to
(4) (see section 921C).
(2) The financial services specified may be some or all of the financial
services covered by the licensee’s licence.
(3) An authorisation under subsection (1) is void to the extent that it
purports to authorise a person to provide a financial service:
(a) that is not covered by the licensee’s licence; or
(b) contrary to a banning order or disqualification order under
Division 8; or
(c) in contravention of subsection 921C(2).
(3A) A person must not give a purported authorisation if that purported
authorisation is void to any extent under subsection (3).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) An authorisation may be revoked at any time by the licensee giving
written notice to the authorised representative.
916B Sub-authorisations
(1) Subject to subsection (3), an authorised representative of a
financial services licensee cannot, in that capacity, make a person
their authorised representative or an authorised representative of
the licensee.
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Section 916B
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(2) A purported authorisation contrary to this section or
subsection 921C(3) is void.
(2A) A person must not give a purported authorisation if that purported
authorisation is contrary to this section or subsection 921C(3).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A body corporate that is an authorised representative of a financial
services licensee may, in that capacity, give an individual a written
notice authorising that individual, for the purposes of this Chapter,
to provide a specified financial service or financial services on
behalf of the licensee, but only if the licensee consents in writing
given to the body corporate.
Note: There are limitations on sub-authorising an individual to provide
certain personal advice if the individual does not meet the education
and training standards in subsections 921B(2) to (4) (see
section 921C).
(4) The financial services specified may be some or all of the financial
services covered by the licensee’s licence.
(5) The licensee may give consent under subsection (3) in respect of
either a specified individual or a specified class of individuals (the
membership of which might change from time to time).
(5A) If a licensee gives consent under subsection (3) to a body
corporate, the licensee must keep a copy of the consent for 5 years
after the day on which it ceases to have effect.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(6) An individual who is authorised as mentioned in subsection (3) is
an authorised representative of the relevant licensee.
(7) An authorisation of an individual as mentioned in subsection (3)
may be revoked at any time by:
(a) the licensee; or
(b) the body corporate that gave the individual the authorisation;
giving written notice to the individual.
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Section 916C
Corporations Act 2001 327
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(8) If a person revokes the authorisation of an individual under
subsection (7), that person must inform, in writing, the other
person who could have revoked the authorisation.
(9) To avoid doubt, an authorisation given as mentioned in
subsection (3) is taken, for the purposes of sections 916C to 916F,
to be given by the body corporate, not the licensee.
916C Authorised representative of 2 or more licensees
(1) One person can be the authorised representative of 2 or more
financial services licensees, but only if:
(a) each of those licensees has consented to the person also being
the authorised representative of each of the other licensees; or
(b) each of those licensees is a related body corporate of each of
the other licensees.
(2) A purported authorisation given in breach of this requirement is
void.
(3) A person must not give a purported authorisation if that purported
authorisation is in breach of this requirement.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
916D Licensees cannot authorise other licensees
(1) A financial services licensee cannot be the authorised
representative of another financial services licensee.
Note 1: Instead, the first licensee could use their own licence to provide
financial services on behalf of the second licensee (assuming that the
first licensee’s licence covered the provision of those services). See
paragraph 911B(1)(d).
Note 2: There is an exception to this rule in section 916E.
(2) A purported authorisation given in breach of this requirement is
void.
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Section 916E
328 Corporations Act 2001
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(2A) A person must not give a purported authorisation if that purported
authorisation is given in breach of this requirement.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2B) The requirement in subsection (1) does not prohibit a financial
services licensee from being an authorised representative in
circumstances covered by section 916E.
Note: In a prosecution for an offence based on subsection (2A), a defendant
bears an evidential burden in relation to the matters in this subsection.
See subsection 13.3(3) of the Criminal Code.
(3) As well, an authorisation that starts to breach this requirement,
because the person authorised is subsequently granted an
Australian financial services licence, is void.
916E Licensees acting under a binder
(1) Despite section 916D, a financial services licensee (the authorised
licensee) may be the authorised representative of another financial
services licensee who is an insurer, if the authorised licensee acts
under a binder given by the insurer.
(2) For all purposes connected with contracts that are risk insurance
products, or with claims against the insurer, in respect of which the
authorised licensee acts under the binder:
(a) the authorised licensee is taken to act on behalf of the insurer
and not the insured; and
(b) if the insured in fact relied in good faith on the conduct of the
authorised licensee, the authorised licensee is taken to act on
behalf of the insurer regardless of the fact that the authorised
licensee did not act within the scope of the binder.
916F Obligation to notify ASIC etc. about authorised
representatives
(1) A person must lodge with ASIC a written notice (in accordance
with subsection (2)), within 15 business days, if the person
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Corporations Act 2001 329
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authorises a representative to provide a financial service as
mentioned in section 916A or 916B.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(1AA) Subsection (1) does not apply to an authorisation of a
representative if:
(a) the authorisation is by a body corporate and is given as
mentioned in section 916B; and
(b) the relevant consent under subsection 916B(5) was given in
respect of a specified class of individuals of which the
representative is a member; and
(c) the representative is an employee of the body corporate; and
(d) the only financial services that the representative is
authorised to provide are either or both of the following:
(i) general advice that relates to financial products covered
by regulations made for the purposes of this paragraph;
(ii) dealing in financial products covered by regulations
made for the purposes of this paragraph.
Note 1: Regulations made for the purposes of paragraph (d) may be expressed
to cover all financial products, or only one or more specified kinds of
financial products.
Note 2: A defendant bears an evidential burden in relation to the matters in
subsection (1AA). See subsection 13.3(3) of the Criminal Code.
(1A) A person who authorises an individual to provide a financial
service on behalf of a financial services licensee as mentioned in
section 916B must give the licensee written notice (in accordance
with subsection (2)), within 15 business days of the individual
being authorised to provide the financial service, if the licensee’s
consent to the authorisation was given in respect of a specified
class of individuals.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) The notice must include the following details:
(a) the name and business address of the representative;
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(b) details of the authorisation, including the date on which it
was made and what the representative is authorised to do on
behalf of the relevant licensee;
(c) details of each other financial services licensee on behalf of
whom the representative is an authorised representative.
(3) A person must notify ASIC, by lodging a written notice, within 10
business days if:
(a) the person authorised a representative under section 916A or
916B and there is a change in any details relating to the
representative that are required to be included under
subsection (2); or
(b) the person revokes an authorisation to which subsection (1)
applied.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) For the purposes of an offence based on subsection (3), strict
liability applies to the physical element of circumstance of the
offence, that the details mentioned in subsection (3) changed.
Note: For strict liability, see section 6.1 of the Criminal Code.
916G ASIC may give licensee information about representatives
(1) If ASIC considers it appropriate to do so, it may give information
to a financial services licensee about a person who ASIC believes
is, or will be, a representative of the licensee. However, ASIC may
only do so if it believes, on reasonable grounds, that the
information is true.
(2) A financial services licensee to whom the information is given may
only make use of, make a record of, or give to another person, the
information for a purpose connected with:
(a) the licensee making a decision about what action (if any) to
take in relation to the representative, as a consequence of
receiving the information; or
(b) the licensee taking action pursuant to such a decision.
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Section 916G
Corporations Act 2001 331
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Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) A person to whom information has been given for a purpose or
purposes under subsection (2) or this subsection, may only make
use of, make a record of, or give to another person, that
information for that purpose or any of those purposes.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) A person has qualified privilege in respect of an act done by the
person under subsection (2) or (3).
(5) A person to whom information is given in accordance with this
section must not give any of the information to a court, or produce
in a court a document that sets out some or all of the information,
except:
(a) for a purpose connected with:
(i) a financial services licensee making a decision about
what action (if any) to take in relation to the
representative, as a consequence of receiving some or
all of the information; or
(ii) a financial services licensee taking action pursuant to
that decision; or
(iii) proving in a proceeding in that court that particular
action taken by a financial services licensee in relation
to the representative was taken pursuant to that decision;
or
(b) in a proceeding in that court, in so far as the proceeding
relates to an alleged breach of this section; or
(c) in a proceeding in respect of an ancillary offence relating to
an offence based on this section; or
(d) in a proceeding about giving to a court false information
some, at least, of which was the information given under this
section.
(6) A reference in this section to a financial services licensee taking
action in relation to a representative is a reference to the licensee:
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(a) taking action by way of making, terminating or varying the
terms and conditions of an agreement; or
(b) otherwise taking action in relation to an agreement;
to the extent that the agreement relates to the representative acting
on behalf of the licensee.
(7) Subsection (5) also has the effect it would have if:
(a) a reference in it to a court were a reference to a court of an
external Territory or of a country outside Australia and the
external Territories; and
(b) paragraphs (5)(b) and (c) were omitted.
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Section 917A
Corporations Act 2001 333
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Division 6—Liability of financial services licensees for
representatives
917A Application of Division
(1) This Division applies to any conduct of a representative of a
financial services licensee:
(a) that relates to the provision of a financial service; and
(b) on which a third person (the client) could reasonably be
expected to rely; and
(c) on which the client in fact relied in good faith.
(2) In this Division, a reference to a representative’s conduct being
within authority in relation to a particular financial services
licensee is, subject to subsection (3), a reference to:
(a) if the representative is an employee of the licensee or of a
related body corporate of the licensee—conduct being within
the scope of the employee’s employment; or
(b) if the representative is a director of the licensee or of a
related body corporate of the licensee—conduct being within
the scope of the director’s duties as director; or
(c) in any other case—conduct being within the scope of the
authority given by the licensee.
(3) If:
(a) a person is the representative of more than one financial
services licensee in respect of a particular class of financial
service; and
(b) the person engages in conduct relating to that class of
service; and
(ba) the conduct relates to a particular kind of financial product
prescribed by regulations made for the purposes of
paragraph 917C(3)(ba); and
(c) any one or more of the licensees issues or transfers a
financial product of that kind as a result of the conduct;
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Division 6 Liability of financial services licensees for representatives
Section 917B
334 Corporations Act 2001
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then, for the purposes of this Division:
(d) the person is taken, in respect of the conduct, to have acted
within authority in relation to the licensee or to each licensee
who issued or transferred a financial product of that kind as a
result of the conduct; and
(e) the person is, in respect of the conduct, taken not to have
acted within authority in relation to any licensee who did not
issue or transfer a financial product of that kind as a result of
the conduct.
917B Responsibility if representative of only one licensee
If the representative is the representative of only one financial
services licensee, the licensee is responsible, as between the
licensee and the client, for the conduct of the representative,
whether or not the representative’s conduct is within authority.
917C Representatives of multiple licensees
(1) This section applies if the representative is the representative of
more than one financial services licensee.
Financial service covered by only one authority
(2) If:
(a) the representative is the representative of one of the licensees
only in respect of a particular class of financial service; and
(b) the conduct relates to that class of service;
that licensee is responsible for the conduct, as between that
licensee and the client, whether or not the conduct is within
authority.
Financial service covered by multiple authorities: conduct within
authority for one or more of them
(3) If:
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(a) the representative is the representative of more than one of
the licensees in respect of a particular class of financial
service; and
(b) the conduct relates to that class of service; and
(ba) the conduct relates to a particular kind of financial product
prescribed by regulations made for the purposes of this
paragraph; and
(c) the conduct is within authority in relation to:
(i) only one of those licensees (the authorising licensee);
or
(ii) two or more of those licensees (the authorising
licensees);
then:
(d) if subparagraph (c)(i) applies—the authorising licensee is
responsible for the conduct, as between that licensee and the
client; or
(e) if subparagraph (c)(ii) applies—the authorising licensees are
jointly and severally responsible for the conduct, as between
themselves and the client.
All other cases
(4) In any other case, all of the licensees are jointly and severally
responsible for the conduct, as between themselves and the client,
whether or not the representative’s conduct is within authority in
relation to any of them.
917D Exception if lack of authority is disclosed to client
A financial services licensee is not responsible under section 917B
or 917C for the conduct of their representative if:
(a) the conduct is not within authority in relation to the licensee
(or in relation to any of the licensees, if there were more than
one); and
(b) the representative disclosed that fact to the client before the
client relied on the conduct; and
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Section 917E
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(c) the clarity and the prominence of the disclosure was such as a
person would reasonably require for the purpose of deciding
whether to acquire the relevant financial service.
Note: A person must not hold out that conduct, or proposed conduct, of the
person is within authority in relation to a particular financial services
licensee, unless that is the case. See section 911C.
917E Responsibility extends to loss or damage suffered by client
The responsibility of a financial services licensee under this
Division extends so as to make the licensee liable to the client in
respect of any loss or damage suffered by the client as a result of
the representative’s conduct.
917F Effect of Division
(1) If a financial services licensee is responsible for the conduct of
their representative under this Division, the client has the same
remedies against the licensee that the client has against the
representative.
(2) The licensee and the representative (along with any other licensees
who are also responsible) are all jointly and severally liable to the
client in respect of those remedies.
(3) However, nothing in this Division imposes:
(a) any criminal responsibility; or
(b) any civil liability under a provision of this Act apart from this
Division;
on a financial services licensee that would not otherwise be
imposed on the licensee.
(4) This Division does not relieve a representative of a financial
services licensee of any liability they have to the client or the
licensee.
(5) An agreement is void in so far as it purports to alter or restrict the
operation of section 917B, 917C, 917D or 917E.
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(6) However, subsection (5) does not apply to the extent that the
agreement:
(a) provides for a representative of a financial services licensee
to indemnify the licensee for a liability of the licensee in
respect of the representative; or
(b) provides for a financial services licensee, for whom a
representative acts, to indemnify another financial services
licensee for a liability in respect of the representative.
(7) A financial services licensee must not make, or offer to make, an
agreement that is, or would be, void under subsection (5).
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Part 7.6 Licensing of providers of financial services
Division 8 Banning or disqualification of persons from providing financial services
Section 920A
338 Corporations Act 2001
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Division 8—Banning or disqualification of persons from
providing financial services
Subdivision A—Banning orders
920A ASIC’s power to make a banning order
(1) ASIC may make a banning order against a person, by giving
written notice to the person, if:
(a) ASIC suspends or cancels an Australian financial services
licence held by the person; or
(b) the person has not complied with their obligations under
section 912A; or
(ba) ASIC has reason to believe that the person is likely to
contravene their obligations under section 912A; or
(bb) the person becomes an insolvent under administration; or
(c) the person is convicted of fraud; or
(d) ASIC has reason to believe that the person is not of good
fame or character; or
(da) ASIC has reason to believe that the person is not adequately
trained, or is not competent, to provide a financial service or
financial services; or
(db) the person has not complied with any one or more of his or
her obligations under section 921F (requirements relating to
provisional relevant providers); or
(dc) both of the following apply:
(i) a supervisor referred to in section 921F has not
complied with any one or more of his or her obligations
under that section in relation to a provisional relevant
provider;
(ii) both the supervisor and the provisional relevant
provider are authorised to provide personal advice to
retail clients, on behalf of the person, in relation to
relevant financial products; or
(dd) both of the following apply:
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(i) a provisional relevant provider has not complied with
his or her obligations under subsection 921F(7);
(ii) the provisional relevant provider is authorised to
provide personal advice to retail clients, on behalf of the
person, in relation to relevant financial products; or
(de) ASIC has reason to believe that the person was authorised, in
contravention of subsection 921C(2), (3) or (4), to provide
personal advice to retail clients in relation to relevant
financial products; or
(e) the person has not complied with a financial services law
(other than section 921E (relevant providers to comply with
the Code of Ethics)); or
(f) ASIC has reason to believe that the person is likely to
contravene a financial services law; or
(g) the person has been involved in the contravention of a
financial services law by another person; or
(h) ASIC has reason to believe that the person is likely to
become involved in the contravention of a financial services
law by another person; or
(i) the person is the operator of, or another person connected
with, an Australian passport fund, and each of the following
is satisfied:
(i) a host regulator for the fund has notified ASIC in
writing that it is of the opinion that the person or the
fund has not complied, is not complying or is not likely
to comply with the law of that host economy to the
extent that the law is administered by the host regulator
for the fund (including the Passport Rules for the host
economy for the fund);
(ii) ASIC is of the opinion that it should make the banning
order, given the potential impact of the failure, or
potential failure, to comply on members or potential
members of the fund.
(1A) In considering whether, at a particular time, there is reason to
believe that a person is not of good fame or character, ASIC must
(subject to Part VIIC of the Crimes Act 1914) have regard to:
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Section 920B
340 Corporations Act 2001
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(a) any conviction of the person, within 10 years before that
time, for an offence that involves dishonesty and is
punishable by imprisonment for at least 3 months; and
(b) whether the person has held an Australian financial services
licence that was suspended or cancelled; and
(c) whether a banning order or disqualification order under
Division 8 has previously been made against the person; and
(d) any other matter ASIC considers relevant.
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain
circumstances, relieve persons from the requirement to disclose spent
convictions and require persons aware of such convictions to
disregard them.
(1B) To avoid doubt, a person contravenes a financial services law if a
person fails to comply with a duty imposed under that law, even if
the provision imposing the duty is not an offence provision or a
civil penalty provision.
(2) However, ASIC may only make a banning order against a person
after giving the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that
takes place in private; and
(b) to make submissions to ASIC on the matter.
(3) Subsection (2) does not apply in so far as ASIC’s grounds for
making the banning order are or include the following:
(a) that the suspension or cancellation of the relevant licence
took place under section 915B;
(b) that the person has been convicted of serious fraud.
920B What is a banning order?
(1) A banning order is a written order that prohibits a person from
providing any financial services or specified financial services in
specified circumstances or capacities.
(2) The order may prohibit the person against whom it is made from
providing a financial service:
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(a) permanently; or
(b) for a specified period, unless ASIC has reason to believe that
the person is not of good fame or character.
(3) A banning order may include a provision allowing the person
against whom it was made, subject to any specified conditions:
(a) to do specified acts; or
(b) to do specified acts in specified circumstances;
that the order would otherwise prohibit them from doing.
920C Effect of banning orders
(1) A person against whom a banning order is made cannot be granted
an Australian financial services licence contrary to the banning
order.
(2) A person against whom a banning order is made must not engage
in conduct in breach of the banning order.
Fault-based offence
(3) A person commits an offence if the person contravenes
subsection (2).
Civil liability
(4) A person contravenes this subsection if the person contravenes
subsection (2).
Note: This subsection is a civil penalty provision (see section 1317E).
920D Variation or cancellation of banning orders
(1) ASIC may vary or cancel a banning order, by giving written notice
to the person against whom the order was made, if ASIC is
satisfied that it is appropriate to do so because of a change in any
of the circumstances based on which ASIC made the order.
(2) ASIC may do so:
(a) on its own initiative; or
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Division 8 Banning or disqualification of persons from providing financial services
Section 920E
342 Corporations Act 2001
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(b) if the person against whom the order was made lodges with
ASIC an application for ASIC to do so, which is
accompanied by the documents, if any, required by
regulations made for the purposes of this paragraph.
Note: For fees in respect of lodging applications, see Part 9.10.
(3) If ASIC proposes not to vary or cancel a banning order in
accordance with an application lodged by a person under
paragraph (2)(b), ASIC must give the person an opportunity:
(a) to appear, or be represented, at a hearing before ASIC that
takes place in private; and
(b) to make submissions to ASIC on the matter.
920E Date of effect and publication of banning order, variation or
cancellation
(1) A banning order, or variation or cancellation of a banning order,
takes effect when it is given to the person against whom the order
is or was made.
(2) ASIC must publish a notice in the Gazette as soon as practicable
after making, varying or cancelling a banning order. The notice
must state when the action took effect and:
(a) in the case of the making of a banning order—set out a copy
of the banning order; or
(b) in the case of the variation of a banning order—set out a copy
of the banning order as varied.
(3) However, if the banning order contains a provision of the kind
referred to in subsection 920B(3) and ASIC considers that the
Gazette notice would be unreasonably long if that provision were
included, the notice may instead set out a summary of the
provision’s effect.
(4) If ASIC makes a banning order against a person who is a
participant in a licensed market or a licensed CS facility, or varies
a banning order against such a person, ASIC must give the operator
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of the market or facility written notice of the making of the order
or the variation.
920F Statement of reasons
(1) A banning order given to a person must be accompanied by a
statement of reasons for the order.
(2) If ASIC varies a banning order made against a person, ASIC must,
on request by the person, give the person a statement of reasons for
the variation.
Subdivision B—Disqualification by the Court
921A Disqualification by the Court
(1) ASIC may apply to the Court for an order or orders under this
section in relation to a person if ASIC:
(a) cancels an Australian financial services licence held by the
person; or
(b) makes a banning order against the person that is to operate
permanently.
(2) The Court may make:
(a) an order disqualifying the person, permanently or for a
specified period, from providing any financial services, or
specified financial services, in specified circumstances or
capacities; or
(b) any other order the Court considers appropriate.
(3) The Court may revoke or vary an order made under subsection (2).
(4) A person against whom such an order is made cannot be granted an
Australian financial services licence contrary to the order.
(5) If the Court makes or varies an order under this section in relation
to a person who is a participant in a licensed market or a licensed
CS facility, ASIC must give the operator of the market or facility
written notice of the making of the order or the variation.
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Division 8A Professional standards for relevant providers
Section 921B
344 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 8A—Professional standards for relevant providers
Subdivision A—Education and training standards
921B Meaning of education and training standards
(1) This section sets out the education and training standards for a
person who is, or is to be, a relevant provider.
Conditions for relevant providers
(2) The first standard is that:
(a) the person has completed a bachelor or higher degree, or
equivalent qualification, approved by the standards body
under section 921U; or
(b) both of the following conditions are satisfied:
(i) the person has completed a foreign qualification;
(ii) the standards body has approved the foreign
qualification under section 921V.
(3) The second standard is that the person has passed an exam
approved by the standards body.
(4) The third standard is that the person has undertaken at least 1 year
of work and training that meets the requirements set by the
standards body.
Note: A relevant provider who is undertaking work and training in
accordance with this subsection is a provisional relevant provider (see
the definition of provisional relevant provider in section 910A). For
rules relating to provisional relevant providers, see Subdivision C.
Continuing standard for relevant providers
(5) The fourth standard is that the person meets the requirements for
continuing professional development set by the standards body.
Note: A provisional relevant provider is not required to meet this standard
(see section 921D).
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Section 921C
Corporations Act 2001 345
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921C Limitation on authorisation to provide personal advice unless
conditions met
Financial services licensees
(1) ASIC must not grant an applicant an Australian financial services
licence that covers the provision of personal advice to retail clients
in relation to relevant financial products if:
(a) the applicant is an individual; and
(b) the applicant has not met any one or more of the education
and training standards in subsections 921B(2) to (4).
Note: Subsections 921B(2) to (4) set out the conditions for education and
training for relevant providers.
Authorised representatives
(2) A financial services licensee must not, under section 916A, give a
person a written notice authorising the person to provide personal
advice to retail clients, on behalf of the licensee, in relation to
relevant financial products if:
(a) the person is an individual; and
(b) either or both of the following subparagraphs apply:
(i) the person has not met either or both of the education
and training standards in subsections 921B(2) and (3);
(ii) the person has not met the education and training
standard in subsection 921B(4), and is not undertaking
work and training in accordance with that subsection.
Sub-authorisations
(3) An authorised representative of a financial services licensee must
not, under subsection 916B(3), give an individual a written notice
authorising that individual to provide personal advice to retail
clients, on behalf of the licensee, in relation to relevant financial
products if either or both of the following paragraphs apply:
(a) the individual has not met either or both of the education and
training standards in subsections 921B(2) and (3);
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Division 8A Professional standards for relevant providers
Section 921D
346 Corporations Act 2001
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(b) the individual has not met the education and training standard
in subsection 921B(4), and is not undertaking work and
training in accordance with that subsection.
Employees and directors
(4) A financial services licensee must not authorise an employee or
director of the licensee, or of a related body corporate of the
licensee, to provide personal advice to retail clients, on behalf of
the licensee, in relation to relevant financial products if either or
both of the following paragraphs apply:
(a) the employee or director has not met either or both of the
education and training standards in subsections 921B(2) and
(3);
(b) the employee or director has not met the education and
training standard in subsection 921B(4), and is not
undertaking work and training in accordance with that
subsection.
Exemption in relation to time-sharing schemes
(5) This section does not apply in relation to a person who is to
provide personal advice to retail clients in relation to relevant
financial products if the only relevant financial product in relation
to which the person is to provide personal advice to retail clients is
a time-sharing scheme.
921D Relevant providers to meet continuing professional
development standard
(1) A relevant provider must comply with subsection 921B(5):
(a) if the relevant provider is a financial services licensee—
during the licensee’s CPD year; or
(b) if the relevant provider is authorised to provide personal
advice to retail clients, on behalf of a financial services
licensee, in relation to relevant financial products—during
the licensee’s CPD year.
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Section 921E
Corporations Act 2001 347
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Note 1: Subsection 921B(5) requires a relevant provider to meet the
continuing professional development standard.
Note 2: Section 922HB requires a notice to be given at the end of a financial
services licensee’s CPD year if a relevant provider has not complied
with this section during that year.
Exemptions
(2) Subsection (1) does not apply in relation to a person if:
(a) the person is a provisional relevant provider; or
(b) the only relevant financial product in relation to which the
person provides personal advice to retail clients is a
time-sharing scheme.
Subdivision B—Ethical standards
921E Relevant providers to comply with the Code of Ethics
A relevant provider must comply with the Code of Ethics.
Note: A failure to comply with the Code of Ethics must be notified under
section 922HD.
Subdivision C—Provisional relevant providers
921F Requirements relating to provisional relevant providers
(1) This section sets out the requirements in relation to a person who is
a provisional relevant provider.
Meaning of supervisor
(2) A supervisor of a provisional relevant provider is an individual
who:
(a) has supervisory responsibility for the provisional relevant
provider; and
(b) is a relevant provider; and
(c) is not a provisional relevant provider; and
(d) is not a limited-service time-sharing adviser.
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Division 8A Professional standards for relevant providers
Section 921F
348 Corporations Act 2001
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Role of supervisors
(3) A supervisor of a provisional relevant provider must ensure that
appropriate supervision is provided to the provisional relevant
provider.
(4) A supervisor of a provisional relevant provider must approve, in
writing, any Statement of Advice provided by the provisional
relevant provider to a retail client.
Personal advice provided by provisional relevant providers
(5) For the purposes of this Act, personal advice provided (whether
orally or in writing) by a provisional relevant provider at a
particular time to a retail client in relation to a relevant financial
product is taken to have been provided to the client by each person
who is, at that time, a supervisor of the provisional relevant
provider (instead of by the provisional relevant provider).
Retail clients to be informed of certain matters
(6) A supervisor of a provisional relevant provider must ensure that a
retail client is informed:
(a) of the name of each supervisor of the provisional relevant
provider (even if the retail client has been informed of the
name of each previous supervisor); and
(b) that the provisional relevant provider is undertaking work
and training in accordance with subsection 921B(4); and
(c) that each supervisor is responsible for any personal advice
provided by the provisional relevant provider to the client in
relation to a relevant financial product.
Provisional relevant providers not to obstruct or hinder
supervision
(7) A provisional relevant provider must not obstruct or hinder a
supervisor of the provisional relevant provider in ensuring that
appropriate supervision is provided to the provisional relevant
provider.
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Section 921F
Corporations Act 2001 349
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Note: Under section 921U, the standards body may provide further for the
purposes of this section.
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Part 7.6 Licensing of providers of financial services
Division 8B Compliance schemes
Section 921G
350 Corporations Act 2001
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Division 8B—Compliance schemes
Subdivision A—Compliance schemes to cover relevant
providers
921G Meaning of compliance scheme
(1) A compliance scheme is a scheme:
(a) that meets the requirements of this section; and
(b) under which compliance with the Code of Ethics by relevant
providers covered by the scheme is monitored and enforced.
Monitoring body of compliance scheme
(2) A monitoring body for a compliance scheme must monitor and
enforce compliance with the Code of Ethics by any relevant
provider covered by the scheme.
(3) A monitoring body for a compliance scheme must not be:
(a) a financial services licensee; or
(b) an associate of a financial services licensee.
(4) A compliance scheme must name the monitoring body for the
scheme.
Disputes and complaints
(5) A compliance scheme must set out how a dispute is to be resolved
between the monitoring body for the scheme and a relevant
provider covered by the scheme.
(6) A compliance scheme must set out how a person may make a
complaint to the monitoring body for the scheme in relation to a
failure to comply with, or possible failure to comply with, the Code
of Ethics by a relevant provider covered by the scheme.
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Compliance schemes Division 8B
Section 921H
Corporations Act 2001 351
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Name of compliance scheme
(7) A compliance scheme must have a name.
921H Financial services licensees to ensure compliance scheme
covers relevant providers
(1) A financial services licensee must ensure that a compliance scheme
covers:
(a) if the licensee is a relevant provider—the licensee; and
(b) in any case—any relevant provider authorised to provide
personal advice to retail clients, on behalf of the licensee, in
relation to relevant financial products.
Note: For when a compliance scheme covers a relevant provider, see
section 921J.
(2) A compliance scheme must cover a relevant provider within 30
business days of the following:
(a) the day the person becomes a relevant provider;
(b) if the relevant provider was previously covered by only one
compliance scheme that has ceased to cover the relevant
provider—the day that scheme ceased to cover the relevant
provider.
921J When a compliance scheme covers a relevant provider
(1) A compliance scheme covers a relevant provider if:
(a) an approval is in force under section 921K in relation to the
compliance scheme; and
(b) the condition in subsection (2) of this section is met for the
relevant provider; and
(c) if the monitoring body for the compliance scheme is a
professional association—the relevant provider is a member
of the professional association.
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Division 8B Compliance schemes
Section 921K
352 Corporations Act 2001
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Notifying ASIC of the compliance scheme that covers a relevant
provider
(2) The condition in this subsection is met for a relevant provider in
relation to a compliance scheme if:
(a) both of the following apply:
(i) the notice lodged under section 922D in relation to the
relevant provider stated that the compliance scheme is
to cover the relevant provider;
(ii) no notice has been lodged under section 922H stating
that another compliance scheme is to cover the relevant
provider; or
(b) the most recent notice lodged under section 922H, in relation
to particulars entered on the Register of Relevant Providers
about the compliance scheme that is to cover the relevant
provider, stated that the compliance scheme is to cover the
relevant provider.
Note: A notice must be lodged under section 922H when there is a change in
a matter for a relevant provider.
Subdivision B—Approval of compliance schemes
921K Approval of compliance schemes
(1) A monitoring body for a compliance scheme may apply to ASIC
for approval of the compliance scheme.
Note: A monitoring body for a compliance scheme may propose to modify
the scheme (see section 921R).
(2) The application must set out details of the scheme, including:
(a) the name of the monitoring body for the scheme; and
(b) arrangements for monitoring compliance with the Code of
Ethics by relevant providers covered by the scheme; and
(c) sanctions for failures to comply with the Code of Ethics by
relevant providers covered by the scheme; and
(d) arrangements for resolving disputes between the monitoring
body and relevant providers covered by the scheme; and
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Section 921K
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(e) arrangements for making complaints to the monitoring body
in relation to failures to comply with, or possible failures to
comply with, the Code of Ethics by relevant providers
covered by the scheme.
(3) The application must include evidence that the monitoring body
has sufficient resources and expertise to appropriately monitor and
enforce compliance with the Code of Ethics under the scheme.
Approval of compliance scheme
(4) ASIC may approve the scheme if it is satisfied that:
(a) compliance with the Code of Ethics will be appropriately
monitored and enforced under the scheme; and
(b) the monitoring body has sufficient resources and expertise to
appropriately monitor and enforce compliance with the Code
of Ethics under the scheme.
(5) ASIC may approve the scheme subject to any one or more
conditions ASIC considers appropriate.
(6) ASIC must, within a reasonable period, decide the application and
notify the monitoring body of:
(a) the decision; and
(b) any condition mentioned in subsection (5).
Revocation of approval, imposition of additional conditions etc.
(7) ASIC may, in accordance with subsection (8), take an action
specified under subsection (9) if ASIC is satisfied:
(a) that compliance with the Code of Ethics is not being
appropriately monitored or enforced under the scheme; or
(b) that the monitoring body has not complied with:
(i) section 921N (obligation to notify licensee of failure to
comply with Code of Ethics); or
(ii) a request under section 921Q (obligation to provide
ASIC with information); or
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Division 8B Compliance schemes
Section 921K
354 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(iii) section 921T (obligation to notify ASIC of changes to
monitoring body); or
(iv) section 922HD (obligation to notify ASIC in relation to
failures to comply with the Code of Ethics); or
(c) that the monitoring body does not have sufficient resources
or expertise to appropriately monitor or enforce compliance
with the Code of Ethics under the scheme.
(8) ASIC must not take an action specified under subsection (9)
unless:
(a) ASIC gives a written notice to the monitoring body:
(i) providing reasons why ASIC is considering taking the
action; and
(ii) stating that the monitoring body has 90 business days to
make submissions to ASIC, in accordance with the
notice, about the possible action; and
(b) ASIC has considered any submissions made by the
monitoring body in accordance with the notice.
(9) The following actions are specified:
(a) revoking the approval of the scheme;
(b) varying a condition imposed in relation to the approval of the
scheme;
(c) imposing an additional condition in relation to the approval
of the scheme.
Revocation of conditions etc.
(10) ASIC may revoke or vary a condition imposed in relation to the
approval of the scheme if ASIC is satisfied that compliance with
the Code of Ethics will continue to be appropriately monitored and
enforced under the scheme if ASIC revokes or varies the condition.
(11) ASIC must, within a reasonable period, notify the monitoring body
if ASIC revokes or varies a condition under subsection (10).
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Compliance schemes Division 8B
Section 921L
Corporations Act 2001 355
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision C—Investigations by monitoring body
921L Investigations by monitoring body
Investigation into failure, or possible failure, to comply with Code
of Ethics
(1) The monitoring body for a compliance scheme must determine, in
writing, whether a relevant provider covered by the scheme has
failed to comply with the Code of Ethics if the monitoring body
becomes aware of the failure, or possible failure, by the relevant
provider to comply with the Code of Ethics.
Notifying relevant provider of investigation
(2) Within a reasonable period of becoming so aware, the monitoring
body must notify the relevant provider that the monitoring body:
(a) has become so aware; and
(b) is to make a determination under subsection (1).
Note: A monitoring body that fails to comply with this subsection may
commit an offence (see subsection 921M(1)).
Request for information
(3) After becoming so aware, the monitoring body may request, in
writing, any one or more of the following persons to provide
information, documents or any other reasonable assistance to the
monitoring body, within a reasonable specified period:
(a) if the relevant provider is a financial services licensee—the
licensee;
(b) if the relevant provider is not a financial services licensee:
(i) the relevant provider; or
(ii) the financial services licensee on whose behalf the
relevant provider is authorised to provide personal
advice to retail clients in relation to relevant financial
products; or
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Division 8B Compliance schemes
Section 921L
356 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(iii) if the relevant provider is a relevant provider as a result
of section 916B—the authorised representative who
authorised the relevant provider under that section.
Note: A person who fails to comply with a request under this subsection
may commit an offence (see subsection 921M(2)).
Restriction on relevant provider leaving compliance scheme
(4) The relevant provider must not cause a notice to be lodged under
section 922H stating that another compliance scheme is to cover
the relevant provider before the monitoring body has made a
determination under subsection (1).
Note: A relevant provider who fails to comply with this subsection may
commit an offence (see subsection 921M(3)).
Completion of investigation
(5) The monitoring body must make the determination:
(a) if the relevant provider notifies the monitoring body that the
relevant provider intends to cause a notice to be lodged under
section 922H stating that another compliance scheme is to
cover the relevant provider—within 160 days of receiving the
notice; or
(b) otherwise—within a reasonable period of becoming aware of
the failure, or possible failure, by the relevant provider to
comply with the Code of Ethics.
Note: A monitoring body that fails to comply with this subsection may
commit an offence (see subsection 921M(1)).
Determination by monitoring body not a legislative instrument
(6) The determination is not a legislative instrument.
Offence
(7) A person commits an offence if:
(a) the person is a monitoring body for a compliance scheme;
and
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Compliance schemes Division 8B
Section 921M
Corporations Act 2001 357
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(b) information is disclosed to the person in accordance with
subsection 70-40(3AA) of the Tax Agent Services Act 2009;
and
(c) the person uses or discloses the information for a purpose
other than monitoring or enforcing compliance with the Code
of Ethics under the scheme.
Penalty: 30 penalty units.
921M Offences relating to investigations by monitoring body
Failure by monitoring body to notify relevant provider of
investigation or complete investigation
(1) A person commits an offence if:
(a) the person is a monitoring body for a compliance scheme;
and
(b) the person fails to comply with subsection 921L(2) or (5).
Penalty: 30 penalty units.
Failure to comply with request for information
(2) A person commits an offence if:
(a) a request is made of the person under subsection 921L(3);
and
(b) the person fails to comply with the request within the period
specified.
Penalty: 30 penalty units.
Leaving compliance scheme before investigation completed
(3) A person commits an offence if:
(a) the person is a relevant provider; and
(b) the person is covered by a compliance scheme; and
(c) the monitoring body for the scheme notifies the person that
the monitoring body has become aware of a failure, or
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Division 8B Compliance schemes
Section 921N
358 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
possible failure, by the person to comply with the Code of
Ethics; and
(d) the person contravenes subsection 921L(4).
Penalty: 30 penalty units.
921N Obligation to notify licensee of failure to comply with Code of
Ethics
(1) A monitoring body for a compliance scheme that covers a relevant
provider must notify a financial services licensee if:
(a) either:
(i) the monitoring body determines under
subsection 921L(1) that the relevant provider has failed
to comply with the Code of Ethics; or
(ii) the monitoring body imposes a sanction on the relevant
provider in relation to a failure to comply with the Code
of Ethics; and
(b) the relevant provider is authorised by the licensee to provide
personal advice to retail clients in relation to relevant
financial products.
(2) The monitoring body must notify the licensee within 30 days after
making the determination or imposing the sanction.
Note 1: The approval for a compliance scheme may be revoked if the
monitoring body for the scheme does not comply with this section
(see subsection 921K(7)).
Note 2: ASIC must be notified if a monitoring body becomes aware of a
failure, or possible failure, to comply with the Code of Ethics by a
relevant provider, or if a sanction is imposed on a relevant provider
under a compliance scheme (see section 922HD).
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Compliance schemes Division 8B
Section 921P
Corporations Act 2001 359
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision D—Other provisions
921P Obligation to ensure that compliance scheme is publicly
available
(1) A monitoring body for a compliance scheme must ensure that the
scheme is publicly available while any approval given under
section 921K is in force in relation to the scheme.
Offence
(2) A person commits an offence if:
(a) the person is a monitoring body for a compliance scheme;
and
(b) an approval given under section 921K is in force in relation
to the scheme; and
(c) the scheme is not publicly available.
Penalty: 30 penalty units.
921Q Obligation to provide ASIC with information
(1) ASIC may request, in writing, a monitoring body for a compliance
scheme to give ASIC any specified information or documents
about the compliance scheme within a reasonable specified period.
(2) The monitoring body must comply with the request within the
period specified.
Note: The approval for a compliance scheme may be revoked if the
monitoring body for the scheme does not comply with this section
(see subsection 921K(7)).
921R Modification of compliance scheme
(1) While an approval given under section 921K is in force in relation
to a compliance scheme, the monitoring body for the scheme may,
by written notice given to ASIC, propose to modify the scheme.
(2) The notice must:
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Division 8B Compliance schemes
Section 921S
360 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) set out the text of the proposed modification; and
(b) contain an explanation of the purpose of the proposed
modification.
Disallowance of modification
(3) Within the 28-day period beginning on the day ASIC receives the
notice, ASIC may, by written notice given to the monitoring body,
disallow all or a specified part of the proposed modification if
ASIC is satisfied on reasonable grounds that:
(a) compliance with the Code of Ethics will not be appropriately
monitored or enforced under the scheme as modified; or
(b) if the proposed modification is a new monitoring body for the
scheme—the new monitoring body does not have sufficient
resources or expertise to appropriately monitor or enforce
compliance with the Code of Ethics under the scheme.
Effect of disallowance
(4) If ASIC disallows the proposed modification within the 28-day
period, the proposed modification does not take effect.
(5) If ASIC disallows a specified part of the proposed modification
within the 28-day period:
(a) the specified part does not take effect; and
(b) the proposed modification without the specified part takes
effect at the end of the period.
No disallowance
(6) Otherwise, the proposed modification takes effect at the end of the
28-day period.
921S Obligation to review compliance scheme
(1) A monitoring body for a compliance scheme must cause another
person to complete a review of the scheme before the end of:
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Compliance schemes Division 8B
Section 921T
Corporations Act 2001 361
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(a) the 5-year period beginning on the day ASIC approves the
scheme under section 921K; and
(b) each subsequent 5-year period.
(2) The other person mentioned in subsection (1) must not be:
(a) an associate of the monitoring body; or
(b) a person covered by the scheme; or
(c) if a relevant provider covered by the scheme is authorised to
provide personal advice to retail clients, on behalf of a
financial services licensee, in relation to relevant financial
products—the licensee; or
(d) if a relevant provider covered by the scheme is a member of a
professional association—the professional association.
(3) As soon as reasonably practical after the review has been
completed, the monitoring body must:
(a) make the review publicly available; and
(b) give a copy of the review to ASIC.
921T Obligation to notify ASIC of changes to monitoring body
A monitoring body for a compliance scheme must notify ASIC if
the monitoring body significantly reduces the resources or
expertise that it uses to monitor or enforce compliance with the
Code of Ethics under the scheme.
Note: The approval for a compliance scheme may be revoked if the
monitoring body for the scheme does not comply with this section
(see subsection 921K(7)).
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Division 8C The standards body
Section 921U
362 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 8C—The standards body
Subdivision A—Functions of the standards body
921U Functions of the standards body
(1) The functions of the standards body are:
(a) to make the legislative instruments mentioned in
subsections (2), (3) and (5); and
(b) to review those instruments regularly; and
(c) if an application is made under subsection 921V(1) for
approval of a foreign qualification—to approve, or refuse to
approve, the foreign qualification; and
(d) if an exam approved for the purposes of subsection 921B(3)
is to be administered by the standards body—to administer
the exam; and
(e) any other function prescribed by this Act.
Legislative instruments
(2) The standards body must, by legislative instrument:
(a) do any or all of the following in one or more determinations:
(i) approve bachelor or higher degrees, or equivalent
qualifications, for the purposes of
paragraph 921B(2)(a);
(ii) approve an exam for the purposes of
subsection 921B(3);
(iii) set requirements for work and training for the purposes
of subsection 921B(4);
(iv) set requirements for continuing professional
development for the purposes of subsection 921B(5) in
relation to the CPD year of a financial services licensee,
the period mentioned in subsection 1546E(5), or any
other period determined by the standards body;
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The standards body Division 8C
Section 921U
Corporations Act 2001 363
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(v) specify a word or expression to refer to a provisional
relevant provider; and
(b) make a Code of Ethics for the purposes of section 921E.
(3) The standards body may, by legislative instrument, in one or more
determinations, modify the operation of a provision in this Part in
relation to a period determined by the standards body under
subparagraph (2)(a)(iv).
(4) A determination made under subsection (3) has effect according to
its terms, despite any other provision of this Act.
(5) The standards body may, by legislative instrument, do either or
both of the following in one or more determinations:
(a) provide further in relation to the requirements set out in
section 921F (requirements relating to provisional relevant
providers);
(b) set other requirements in relation to a person who is a
provisional relevant provider.
Consultation
(6) Before making a legislative instrument under subsection (2), (3) or
(5), or when reviewing a legislative instrument under
paragraph (1)(b), the standards body must consult:
(a) financial services licensees; and
(b) relevant providers; and
(c) associations representing consumers of financial services;
and
(d) professional associations; and
(e) ASIC and the Department; and
(f) any other person or body that the standards body considers it
appropriate to consult.
(7) Without limiting subsection (6), the standards body is taken to
have consulted the persons and bodies mentioned in that subsection
if, on its website, the standards body:
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Division 8C The standards body
Section 921V
364 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) before making a legislative instrument under subsection (2),
(3) or (5):
(i) makes the proposed legislative instrument, or a
description of the content of the proposed legislative
instrument, available; and
(ii) invites those persons and bodies to comment on the
proposed legislative instrument; or
(b) when reviewing a legislative instrument under
paragraph (1)(b)—invites those persons and bodies to
comment on the legislative instrument.
(8) A failure to comply with subsection (6) does not affect the validity
or enforceability of a legislative instrument made under
subsection (2), (3) or (5).
Fees
(9) The standards body may charge fees for things done in performing
its functions.
Note: For the treatment of legislative instruments made under this section
when the declaration of a body corporate to be the standards body is
revoked, see section 921Y.
921V Approval of foreign qualifications
Application for approval
(1) A person who has completed a foreign qualification may apply to
the standards body for approval of the foreign qualification.
(2) An application under subsection (1) must be in a form approved, in
writing, by the standards body.
Approval or refusal to approve
(3) The standards body must either:
(a) approve the foreign qualification in accordance with
subsection (4); or
(b) refuse to approve the foreign qualification.
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Section 921V
Corporations Act 2001 365
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(4) The standards body may approve the foreign qualification only if:
(a) the standards body is satisfied that the foreign qualification
gives the person qualifications equivalent to a degree or
qualification approved by the standards body for the purposes
of paragraph 921B(2)(a); or
(b) both of the following apply:
(i) the standards body specifies one or more courses to be
completed by the person under subsection (5) of this
section;
(ii) the person completes each of those courses.
(5) The standards body may specify one or more courses for the
purposes of paragraph (4)(b) only if the standards body is satisfied
that (together with the person’s foreign qualification) the course or
courses will give the person qualifications equivalent to a degree or
qualification approved by the standards body for the purposes of
paragraph 921B(2)(a).
When approval takes effect
(6) An approval under paragraph (3)(a) comes into force:
(a) if the standards body specifies one or more courses to be
completed by the person under subsection (5)—when the
person has completed all of those courses; or
(b) otherwise—when it is given.
Review of decision
(7) A person may apply to the Tribunal for review of:
(a) a decision by the standards body under paragraph (3)(b) to
refuse to approve the person’s foreign qualification; or
(b) a decision by the standards body under subsection (5) to
specify one or more courses to be completed by the person.
Notice of reviewable decision and review rights
(8) Section 1317D applies in relation to a decision mentioned in
paragraph (7)(a) or (b) of this section as if:
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Division 8C The standards body
Section 921W
366 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) the standards body were a decision maker for the purposes of
section 1317D; and
(b) the decision were a decision to which section 1317B applied.
921W Commencement of Code of Ethics and amendments of Code
of Ethics
(1) The Code of Ethics must not commence earlier than 30 days after
the Code is registered under the Legislation Act 2003.
(2) An amendment of the Code of Ethics must not commence earlier
than 30 days after the amendment is registered under the
Legislation Act 2003.
Subdivision B—Declaration of the standards body
921X Minister to declare a body corporate to be the standards body
(1) The Minister may (subject to subsection (2)), by notifiable
instrument, declare a body corporate to be the standards body.
(2) The Minister may make a declaration under subsection (1) only if
the following requirements are met:
(a) the body is a company limited by guarantee;
(b) the Minister is satisfied that the body is likely to comply with
its obligations under this Act and other laws of the
Commonwealth;
(c) the body’s constitution provides the following:
(i) the functions of the body mentioned in section 921U;
(ii) the body must not be operated for profit;
(iii) the body must have 9 directors;
(iv) at least 3 directors (excluding the chair of the board of
directors) must have experience in carrying on a
financial services business or providing a financial
service;
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Section 921Y
Corporations Act 2001 367
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(v) at least 3 directors (excluding the chair of the board of
directors) must have experience in representing
consumers of financial services;
(vi) at least one director (excluding the chair of the board of
directors) must have experience in the field of ethics;
(vii) at least one director (excluding the chair of the board of
directors) must have experience in designing, or the
requirements of, educational courses or qualifications;
(viii) a director must not hold a managerial or executive
office in a professional association or association
representing consumers of financial services;
(ix) a director must not represent any professional
association, or association representing consumers of
financial services, to which the director belongs;
(x) the Minister must appoint each director;
(xi) a director may resign his or her appointment by giving
the Minister, and the body, a written resignation;
(xii) the resignation takes effect on the day it has been
received by both the Minister and the body or, if a later
day is specified in the resignation, on that later day.
(3) The declaration must specify the time at which it takes effect.
(4) The Minister must table the declaration in each House of the
Parliament as soon as practicable.
921Y Minister may revoke declaration under section 921X
(1) The Minister may, at any time, by notifiable instrument, revoke a
declaration under section 921X.
(2) The revocation must specify:
(a) the time at which it takes effect; and
(b) which legislative instruments made by the standards body
under subsection 921U(2), (3) or (5) continue in force, and
which are taken to be revoked at that time; and
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Division 8C The standards body
Section 921Y
368 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) which approvals (if any) given by the standards body under
paragraph 921V(3)(a) continue in force (or are to come into
and continue in force), and which are taken to be revoked at
that time.
(3) A revocation under subsection (1) that specifies that a legislative
instrument, or an approval, is taken to be revoked at a particular
time has effect according to its terms.
Tabling of revocation
(4) The Minister must table the revocation in each House of the
Parliament as soon as practicable.
Performance by Minister of certain functions of standards body
when no declaration is in force
(5) If no declaration under section 921X is in force at a particular time,
the Minister may make a legislative instrument or decision as if the
Minister were performing the functions of the standards body
under paragraph 921U(1)(a) or (c).
Instruments and decisions made by Minister etc.
(6) If a declaration under section 921X comes into force after the
Minister has made a legislative instrument or decision for the
purposes of subsection (5) of this section, the standards body may
vary or revoke the legislative instrument or decision.
Relationship with Acts Interpretation Act 1901
(7) This section does not limit the operation of subsection 33(3) of the
Acts Interpretation Act 1901.
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The standards body Division 8C
Section 921Z
Corporations Act 2001 369
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision C—Other provisions relating to the standards body
921Z Modification of the standards body’s constitution
(1) As soon as practicable after a significant modification of the
standards body’s constitution takes effect, the standards body must
notify the Minister in writing of the modification.
(2) The notice must:
(a) set out the text of the modification; and
(b) specify the date on which the modification takes effect; and
(c) contain an explanation of the purpose of the modification.
(3) If no notice is lodged with the Minister within 21 days after the
modification takes effect, the modification ceases to have effect.
(4) A notice made under this section is not a legislative instrument.
921ZA Disallowance of modifications of the standards body’s
constitution
(1) Within 28 days after receiving a notice under section 921Z, the
Minister may disallow all or a specified part of the modification of
the standards body’s constitution.
(2) As soon as practicable after all or part of a modification is
disallowed, the Minister must give notice of the disallowance to
the standards body. The modification ceases to have effect, to the
extent of the disallowance, when the standards body receives the
notice.
921ZB Minister may direct the standards body to do certain things
(1) The Minister may give a written direction to the standards body if
the Minister considers that the standards body is not complying
with its obligations under this Act or under any arrangement it has
with the Commonwealth.
(2) The standards body must comply with the direction.
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Division 8C The standards body
Section 921ZC
370 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) The Minister may, at any time, vary or revoke a direction.
(4) Despite paragraph (b) in the definition of director in section 9, the
Minister is not a director of the standards body.
921ZC Annual report
As soon as practicable after the end of a financial year, the
standards body must:
(a) publish on its website the annual report for the financial year
prepared under Chapter 2M; and
(b) give a copy of the report to the Minister.
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Registers relating to financial services Division 9
Section 922A
Corporations Act 2001 371
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 9—Registers relating to financial services
Subdivision A—Registers generally
922A Registers relating to financial services
(1) ASIC must establish and maintain one or more registers relating to
financial services.
(2) The regulations may prescribe the way in which the register or
registers must be established or maintained, including the details
that ASIC must enter in the register or registers in respect of the
following persons or bodies:
(a) financial services licensees;
(b) authorised representatives of financial services licensees;
(c) persons against whom a banning order or disqualification
order under Division 8 is made;
(e) any other persons or bodies that are prescribed by regulations
made for the purposes of this paragraph.
Note: The Register of Relevant Providers is maintained under Subdivision C
of this Division.
922B Fees for searching registers
The regulations may prescribe the fees that a person must pay to
ASIC to do the things mentioned in section 1274A in relation to a
register mentioned in section 922A or the Register of Relevant
Providers.
Note: Section 1274A provides that ASIC may permit a person to search
certain registers kept by ASIC for prescribed information.
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Division 9 Registers relating to financial services
Section 922D
372 Corporations Act 2001
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Subdivision B—Notice requirements relating to the Register of
Relevant Providers
922D Obligation to notify ASIC about a person who becomes a
relevant provider
Notice to include details about relevant provider
(1) A notice must be lodged under this section, in accordance with
section 922L, if a person becomes a relevant provider.
Note: A financial services licensee required to lodge a notice under this
section may obtain information from a relevant provider under
section 922N.
Content of notice
(2) The notice must include:
(a) for a relevant provider who is a financial services licensee—
the information in section 922E; or
(b) for a relevant provider who is not a financial services
licensee—the information in section 922F.
922E Information about a relevant provider who is a financial
services licensee
(1) For the purposes of paragraph 922D(2)(a), the notice must include
the following:
(a) the relevant provider’s name;
(b) the address of the relevant provider’s principal place of
business;
(c) the licence number given to the relevant provider under
subsection 913C(1);
(d) the year in which the relevant provider first provided
personal advice to retail clients in relation to relevant
financial products in accordance with the law (including the
law of a State or Territory);
(e) if applicable, the ABN of the relevant provider;
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Section 922F
Corporations Act 2001 373
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(f) information about both of the following:
(i) the relevant financial products in relation to which the
relevant provider is authorised to provide personal
advice to retail clients;
(ii) whether the relevant provider is authorised to provide
class of product advice in relation to some or all of
those products;
(g) the recent advising history of the relevant provider for the 5
years ending immediately before the time the notice is
lodged;
(h) information about both of the following:
(i) the educational qualifications of, and any training
courses completed by, the relevant provider, to the
extent that the qualifications and training courses are
relevant to the provision of financial services;
(ii) the relevant provider’s membership (if any) of a
professional association if an approval is in force under
section 921K in relation to a compliance scheme
monitored and enforced by the association;
(i) the name of the compliance scheme that is to cover the
relevant provider.
Note: For the meaning of recent advising history, see section 922G.
Educational qualifications and memberships
(2) For the purposes of subparagraph (1)(h)(i), if a relevant provider
has more than 5 educational qualifications or has completed more
than 5 training courses, the notice must include the 5 qualifications
or training courses that the person lodging the notice believes, on
reasonable grounds, are most relevant to the provision of financial
services.
922F Information about a relevant provider who is not a financial
services licensee
(1) For the purposes of paragraph 922D(2)(b), the notice must include
the following:
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(a) the relevant provider’s name;
(b) the address of the relevant provider’s principal place of
business;
(c) the relevant provider’s date and place of birth;
(d) the name of the financial services licensee on whose behalf
the relevant provider is authorised to provide personal advice
to retail clients in relation to relevant financial products;
(e) the licence number given to that licensee under
subsection 913C(1);
(f) if the relevant provider is a provisional relevant provider—
the fact that the relevant provider is a provisional relevant
provider;
(g) if the relevant provider is a provisional relevant provider—
the day the relevant provider began undertaking work and
training in accordance with subsection 921B(4);
(h) except in relation to provisional relevant providers—the year
in which the relevant provider first provided personal advice
to retail clients in relation to relevant financial products in
accordance with the law (including the law of a State or
Territory);
(i) if the relevant provider is a relevant provider as a result of
section 916B—each of the following:
(i) the name of the authorised representative who
authorised the relevant provider under that section;
(ii) the number allocated to the authorised representative by
ASIC;
(j) if applicable, the ABN of any of the following:
(i) the relevant provider;
(ii) the licensee referred to in paragraph (d);
(iii) the authorised representative referred to in
paragraph (i);
(k) details of both of the following:
(i) the relevant financial products in relation to which the
relevant provider is authorised to provide personal
advice to retail clients;
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Section 922F
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(ii) whether the relevant provider is authorised to provide
class of product advice in relation to some or all of
those products;
(l) the recent advising history of the relevant provider for the 5
years ending immediately before the time the notice is
lodged;
(m) information about both of the following:
(i) the educational qualifications of, and any training
courses completed by, the relevant provider, to the
extent that the qualifications and training courses are
relevant to the provision of financial services;
(ii) the relevant provider’s membership (if any) of a
professional association if an approval is in force under
section 921K in relation to a compliance scheme
monitored and enforced by the association;
(n) the name of the compliance scheme that is to cover the
relevant provider.
Note: For the meaning of recent advising history, see section 922G.
Educational qualifications and memberships
(2) For the purposes of subparagraph (1)(m)(i), if a relevant provider
has more than 5 educational qualifications or has completed more
than 5 training courses, the notice must include the 5 qualifications
or training courses that the person lodging the notice believes, on
reasonable grounds, are most relevant to the provision of financial
services.
Information already registered
(3) The notice does not need to include the information referred to in
paragraph (1)(h), (l) or (m) if:
(a) the person required under subsection 922L(4) to cause the
notice to be lodged believes on reasonable grounds that the
information has previously been lodged; or
(b) the information is already entered on the Register of Relevant
Providers.
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Section 922G
376 Corporations Act 2001
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Provisional relevant providers
(4) The notice does not need to include the information referred to in
paragraph (1)(k) in relation to a provisional relevant provider if
that information is not known at the time the notice relating to the
provisional relevant provider is lodged by the licensee.
Note: A notice must be lodged under section 922H once this information is
known.
922G Meaning of recent advising history
The recent advising history of a relevant provider is the following
information:
(a) for a relevant provider who is or was a financial services
licensee authorised to provide personal advice to retail clients
in relation to relevant financial products—each period during
which the relevant provider was such a licensee;
(b) for a relevant provider who is or was authorised to provide
personal advice to retail clients, on behalf of one or more
financial services licensees, in relation to relevant financial
products—the following information:
(i) the name of each licensee;
(ii) if the relevant provider is or was a relevant provider as a
result of section 916B—the name of each authorised
representative who authorised the relevant provider
under that section;
(iii) each period during which the relevant provider was
authorised by each licensee or each authorised
representative to provide such advice.
Note: If a relevant provider is covered by paragraphs (a) and (b) of this
section, the relevant provider’s recent advising history includes all the
information required under those paragraphs.
922H Ongoing obligation to notify ASIC when there is a change in a
matter for a relevant provider
(1) A notice must be lodged under this section, in accordance with
section 922L, if:
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Section 922HA
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(a) there is a change in a matter, particulars of which are entered
for a relevant provider in the Register of Relevant Providers
(other than a change that is a direct consequence of an act by
ASIC); or
(b) both of the following apply:
(i) a notice is lodged under section 922D in relation to a
relevant provider by a financial services licensee
without including the information referred to in
paragraph 922F(1)(k);
(ii) the information becomes known to the licensee after the
notice is lodged.
Note: For paragraph (1)(a) of this section, an example of a change in a
matter would be a person ceasing to be a relevant provider. Another
example would be a change in the compliance scheme that covers a
relevant provider.
(2) The notice must include the following information:
(a) the new particulars or information to be entered in the
Register;
(b) the relevant provider’s name;
(c) if applicable, the number given to the relevant provider under
section 922R.
922HA Obligation to notify ASIC of financial services licensee’s
CPD year
(1) A notice must be lodged under this subsection, in accordance with
section 922L, if ASIC grants an applicant an Australian financial
services licence that covers the provision of personal advice to
retail clients in relation to relevant financial products.
(2) A notice lodged under subsection (1) must include the day on
which the licensee’s CPD year is to begin.
(3) A notice must be lodged under this subsection, in accordance with
section 922L, if a financial services licensee:
(a) has previously lodged a notice under subsection (1) or this
subsection specifying a particular day of the year; and
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(b) decides that the licensee’s CPD year is to begin on another
day of the year; and
(c) has not lodged a notice under subsection (1) or this
subsection in the 12-month period preceding that decision.
(4) A notice lodged under subsection (3) must include the day on
which the licensee’s CPD year is to begin.
922HB Obligation to notify ASIC of non-compliance with
continuing professional development standard
(1) A notice must be lodged under this section, in accordance with
section 922L, in relation to a person if, at the end of a financial
services licensee’s CPD year:
(a) the person:
(i) is the licensee; or
(ii) is authorised to provide personal advice to retail clients,
on behalf of the licensee, in relation to relevant financial
products; and
(b) the person is a relevant provider; and
(c) the relevant provider has not complied with section 921D
during the licensee’s CPD year.
Note 1: A financial services licensee may obtain information from a relevant
provider under section 922N for the purposes of determining whether
to lodge a notice under this section.
Note 2: Subsection 921D(1) requires certain relevant providers to meet the
continuing professional development standard in subsection 921B(5).
(2) The notice must state that the relevant provider has not complied
with section 921D during the licensee’s CPD year.
922HC Requirement to retain information
(1) A financial services licensee must retain evidence of the continuing
professional development undertaken during the licensee’s CPD
year by:
(a) if the licensee is a relevant provider—the licensee; and
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(b) if a relevant provider is authorised to provide personal advice
to retail clients, on behalf of the licensee, in relation to
relevant financial products—the relevant provider.
(2) The evidence must be retained for 12 months after the end of the
CPD year.
Offence
(3) A person commits an offence if:
(a) the person is required to retain evidence under this section;
and
(b) the person fails to retain the evidence in accordance with this
section.
Penalty: 50 penalty units.
922HD Obligation to notify ASIC in relation to failures to comply
with the Code of Ethics
(1) A notice must be lodged under this subsection, in accordance with
section 922L, if:
(a) a monitoring body for a compliance scheme determines
under subsection 921L(1) that a relevant provider covered by
the scheme has failed to comply with the Code of Ethics; or
(b) a sanction is imposed on a relevant provider covered by a
compliance scheme in relation to a failure to comply with the
Code of Ethics by the relevant provider.
(2) The notice must include the following information:
(a) if the relevant provider is a financial services licensee—the
name of the licensee;
(b) if the relevant provider is not a financial services licensee:
(i) the name of the relevant provider; and
(ii) the name of the financial services licensee on whose
behalf the relevant provider is authorised to provide
personal advice to retail clients in relation to relevant
financial products;
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(c) if paragraph (1)(a) applies—details of the failure to comply;
(d) if paragraph (1)(b) applies—details of the sanction imposed.
(3) If, in relation to the same failure to comply, the events mentioned
in paragraphs (1)(a) and (b) occur within 30 business days of one
another:
(a) a single notice may be lodged under subsection (1) within 30
business days of the later of those events; and
(b) only one notice is taken to be required to be caused to be
lodged for the purposes of subsection 922M(1).
922J Obligation to notify ASIC about a person who starts to have
control of a body corporate licensee
(1) A notice must be lodged under this section, in accordance with
section 922L, if a person starts to have control of a body corporate
licensee.
Note: Subsection 922P(3) provides that a notice is not required to be lodged
when a person starts and then ceases to have control of a body
corporate licensee within 30 business days.
(2) The notice must include the following information:
(a) the name of the licensee;
(b) the licence number given to the licensee under
subsection 913C(1);
(c) the name of the person who starts to have control of the
licensee;
(d) the day the person starts to have control of the licensee.
922K Obligation to notify ASIC about a person who ceases to have
control of a body corporate licensee
(1) A notice must be lodged under this section, in accordance with
section 922L, if a person ceases to have control of a body corporate
licensee.
Note: Subsection 922P(3) provides that a notice is not required to be lodged
when a person starts and then ceases to have control of a body
corporate licensee within 30 business days.
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Section 922L
Corporations Act 2001 381
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(2) The notice must include the following information:
(a) the name of the licensee;
(b) the licence number given to the licensee under
subsection 913C(1);
(c) the name of the person who ceases to have control of the
licensee;
(d) the day the person ceases to have control of the licensee.
922L Requirement for notice to be lodged
Notice in prescribed form
(1) A notice under a notice provision must be in the prescribed form.
Note 1: Under section 350, a document that this Act requires to be lodged with
ASIC in a prescribed form must:
(a) if a form for the document is prescribed in the regulations—be in that prescribed form; and
(b) if a form for the document is not prescribed in the regulations but ASIC has approved a form for the document—be in that approved form.
Note 2: The prescribed form may deal with information that is required under
more than one section of this Act.
When notice must be lodged
(2) A notice under a notice provision must be lodged within 30
business days of the following day:
(a) if the notice is lodged under subsection 922HA(1)—the day
ASIC grants the Australian financial services licence
mentioned in that subsection;
(b) if the notice is lodged under subsection 922HA(3)—the day
the financial services licensee mentioned in that subsection
decides that the licensee’s CPD year is to begin on another
day of the year;
(c) if the notice is lodged under subsection 922HB(1)—the last
day of the CPD year of the financial services licensee
mentioned in that subsection;
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(d) if the notice is lodged under subsection 922HD(1)—(subject
to subsection 922HD(3)) the day the monitoring body
mentioned in subsection 922HD(1) determines under
subsection 921L(1) that a relevant provider has failed to
comply with the Code of Ethics or a sanction is imposed;
(e) if the notice is lodged under any other notice provision—the
day of the event mentioned in subsection (1) of the notice
provision.
(3) The information contained in the notice must be accurate as at the
day mentioned in paragraph (2)(a), (b), (c), (d) or (e).
Who must cause notice to be lodged
(4) The following person must cause a notice under section 922D,
922H or 922HB to be lodged in relation to a relevant provider:
(a) if the relevant provider is a financial services licensee—the
licensee;
(b) otherwise—the financial services licensee on whose behalf
the relevant provider is authorised to provide personal advice
to retail clients in relation to relevant financial products.
(5) A notice under subsection 922HA(1) or (3) must be lodged by the
financial services licensee mentioned in that section.
(6) A notice under section 922HD must be lodged by the monitoring
body mentioned in subsection 922HD(1).
(7) A notice under section 922J or 922K relating to a person who starts
or ceases to have control of a body corporate licensee must be
lodged by the licensee.
922M Failing to comply with obligation to notify ASIC
Failing to comply with obligation to notify ASIC
(1) A person contravenes this subsection if:
(a) the person is required to cause a notice to be lodged under a
notice provision; and
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(b) the person fails to cause the notice to be lodged in accordance
with that provision.
Note: A notice must be lodged in accordance with section 922L in order to
be lodged in accordance with a notice provision (see subsection (1) of
the notice provision).
(2) However, subsection (1) does not apply if:
(a) the person fails to cause the notice to be lodged in accordance
with section 922D; and
(b) the only reason the person fails to cause the notice to be
lodged in accordance with that section is because the
information referred to in paragraph 922F(1)(h), (l) or (m) is
not included in the notice; and
(c) subsection 922F(3) provides that the notice does not need to
include that information.
Note: In criminal proceedings, a defendant bears an evidential burden in
relation to the matter in subsection (2) (see subsection 13.3(3) of the
Criminal Code).
Fault-based offence
(3) A person commits an offence if the person contravenes
subsection (1).
(4) Subsection 4K(2) of the Crimes Act 1914 does not apply to
subsection (1) of this section.
Note: A person may commit an offence if the person knowingly gives false
or misleading information (see section 1308 of this Act and
section 137.1 of the Criminal Code).
Civil liability
(5) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
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Section 922N
384 Corporations Act 2001
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922N Obligation for relevant providers to provide information to
financial services licensees
Information about relevant provider
(1) A person must provide information to a financial services licensee
in accordance with this section if:
(a) the person is a relevant provider; and
(b) the person has been authorised to provide personal advice to
retail clients, on behalf of the licensee, in relation to relevant
financial products; and
(c) the licensee has asked the person to provide the information
so that the licensee can:
(i) comply with its obligation to lodge a notice relating to
the person in accordance with section 922D; or
(ii) comply with its obligation to lodge, under section 922H,
a notice relating to the person for the purposes of
section 921H; or
(iii) determine whether the licensee has an obligation to
lodge a notice under section 922HB.
Note: A person may commit an offence if the person knowingly gives false
or misleading information (see section 1308 of this Act and
section 137.1 of the Criminal Code).
When information must be given
(2) The information must be given to the licensee within a period that
allows the licensee to comply with the obligation referred to in
paragraph (1)(c).
922P Change in matter within 30 business days
(1) Notices must be given under sections 922D, 922H and 922HD in
relation to a person who was a relevant provider even if the person
ceases to be a relevant provider before a notice has been lodged
under section 922D.
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Section 922Q
Corporations Act 2001 385
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(2) A notice is not required to be given under section 922HB in
relation to a person if:
(a) the person was a relevant provider at the end of a financial
services licensee’s CPD year; and
(b) the person was authorised at that time to provide personal
advice to retail clients, on behalf of the licensee, in relation to
relevant financial products; and
(c) the person ceases to be a relevant provider within 30 business
days of becoming a relevant provider.
(3) A notice is not required to be given under sections 922J and 922K
in relation to a person who starts or ceases to have control of a
body corporate licensee if the person ceases to have control of the
licensee within 30 business days of starting to have control of the
licensee.
Subdivision C—Register of Relevant Providers
922Q Register of Relevant Providers
Register to include details of relevant providers
(1) ASIC must enter details on a Register of Relevant Providers in
respect of each person who is or was a relevant provider.
Contents of Register
(2) The details that must be entered on the Register include the
following:
(a) the relevant provider’s name;
(b) the relevant provider’s principal place of business;
(c) the name of each financial services licensee on whose behalf
the relevant provider is or was authorised to provide personal
advice to retail clients in relation to relevant financial
products;
(d) if applicable, each person who has control of the licensee;
(e) the relevant provider’s date and place of birth;
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(f) the licence number given under subsection 913C(1) to the
relevant provider and each licensee referred to in
paragraph (c);
(g) if applicable, the number given under section 922R;
(h) if the relevant provider is a relevant provider as a result of
section 916B:
(i) the name of the authorised representative who
authorised the relevant provider under that section; and
(ii) the number allocated to the authorised representative by
ASIC;
(i) the recent advising history of the relevant provider;
(j) if the relevant provider is a provisional relevant provider:
(i) the fact that the relevant provider is a provisional
relevant provider; and
(ii) the day the relevant provider began undertaking work
and training in accordance with subsection 921B(4); and
(iii) a statement that the relevant provider is required to be
supervised in accordance with Subdivision C of
Division 8A;
(k) except in relation to provisional relevant providers—the year
in which the relevant provider first provided personal advice
to retail clients in relation to relevant financial products in
accordance with the law (including the law of a State or
Territory);
(l) whether the person is currently, or has ceased to be, a
relevant provider;
(m) if a financial services licensee has lodged a notice under
section 922HB in relation to the relevant provider—that the
relevant provider did not comply with section 921D during
the licensee’s CPD year;
(n) if the relevant provider has been disqualified from managing
corporations—information contained on the register
established under section 1274AA;
(o) if the relevant provider has been banned or disqualified under
section 80 or 86 of the National Consumer Credit Protection
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Act 2009—information about that banning or
disqualification;
(p) if the relevant provider has been banned, disqualified or
suspended under Division 8 of Part 7.6, or under
section 130F of the Superannuation Industry (Supervision)
Act 1993—information about that banning, disqualification
or suspension;
(q) if the relevant provider has given an undertaking under either
or both section 93AA of the ASIC Act and section 322 of the
National Consumer Credit Protection Act 2009—information
about that undertaking;
(r) if a monitoring body for a compliance scheme determines
under subsection 921L(1) that the relevant provider who is
covered by the scheme has failed to comply with the Code of
Ethics:
(i) details of the failure to comply; and
(ii) details of any sanction imposed on the relevant provider
in relation to the failure to comply;
(s) if applicable, information about both of the following:
(i) the relevant financial products in relation to which the
relevant provider is authorised to provide personal
advice to retail clients;
(ii) whether the relevant provider is authorised to provide
class of product advice in relation to some or all of
those products;
(t) if applicable, the ABN of any of the following:
(i) the relevant provider;
(ii) each licensee referred to in paragraph (c);
(iii) if applicable, the authorised representative referred to in
paragraph (h);
(u) information about both of the following:
(i) the educational qualifications of, and any training
courses completed by, the relevant provider (but not
courses completed for the purposes of
subsection 921B(5)), to the extent that the qualifications
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and training courses are relevant to the provision of
financial services;
(ii) the relevant provider’s membership (if any) of a
professional association if an approval is in force under
section 921K in relation to a compliance scheme
monitored and enforced by the association;
(v) the name of the compliance scheme that is to cover the
relevant provider;
(w) any other information that ASIC believes should be included
in the Register that relates to the provision of financial
services by the relevant provider.
Note 1: Not all of the Register’s contents are publicly available. However,
section 1274A provides that ASIC may permit a person to search
certain registers kept by ASIC for prescribed information.
Note 2: Information in paragraph (2)(s) may not be known in relation to a
provisional relevant provider (see subsection 922F(4)).
922R Relevant provider number
ASIC may give a unique number (or any unique combination of
numbers, characters, symbols and letters) to a person who is a
relevant provider.
922S Correcting the Register
ASIC may correct any error in, or omission from, the Register of
Relevant Providers.
Note: Australian Privacy Principle 13 applies to ASIC and requires it to take
reasonable steps to correct personal information that is wrong or
misleading so that the information is accurate, up to date, complete,
relevant and not misleading (see Schedule 1 to the Privacy Act 1988).
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Restrictions on use of terminology Division 10
Section 923A
Corporations Act 2001 389
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 10—Restrictions on use of terminology
923A Restriction on use of certain words or expressions
(1) A person contravenes this subsection if:
(a) either:
(i) the person carries on a financial services business or
provides a financial service (whether or not on behalf of
another person); or
(ii) another person (the provider) provides a financial
service on behalf of the first person; and
(b) the first person assumes or uses, in this jurisdiction, a
restricted word or expression in relation to that business or
service.
Note 1: For the meanings of restricted word or expression and assume or use,
see subsection (5).
Note 2: A contravention of this subsection is an offence (see
subsection 1311(1)).
(2) However, it is not a contravention of subsection (1) for a person to
assume or use a restricted word or expression if:
(a) the person does not receive any of the following:
(i) commissions (apart from commissions that are rebated
in full to the person’s clients);
(ii) forms of remuneration calculated on the basis of the
volume of business placed by the person with an issuer
of a financial product;
(iii) other gifts or benefits from an issuer of a financial
product which may reasonably be expected to influence
the person; and
(b) none of the following persons receives any of the things
covered by paragraph (a):
(i) the person’s employer (if any);
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Division 10 Restrictions on use of terminology
Section 923A
390 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ii) if the person provides the financial service on behalf of
another person (as mentioned in
subparagraph (1)(a)(i))—that other person;
(iii) any other person identified (whether by reference to a
class of person or otherwise) in regulations made for the
purposes of this subparagraph; and
(c) if subparagraph (1)(a)(ii) applies in relation to a financial
service—the provider mentioned in that subparagraph does
not receive any of the things mentioned in paragraph (a) of
this subsection in respect of the provision of that service; and
(d) in carrying on a financial services business, or providing
financial services, the person operates free from direct or
indirect restrictions relating to the financial products in
respect of which they provide financial services; and
(e) in carrying on that business, or providing those services, the
person operates without any conflicts of interest that might:
(i) arise from their associations or relationships with
issuers of financial products; and
(ii) reasonably be expected to influence the person in
carrying on the business or providing the services.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (2). See subsection 13.3(3) of the Criminal Code.
(3) The reference in paragraph (2)(d) to direct or indirect restrictions
does not include a reference to restrictions imposed on a person by:
(a) the conditions on an Australian financial services licence; or
(b) this Chapter or regulations made for the purposes of this
Chapter.
(4) If a person assumes or uses a word or expression in circumstances
that give rise to the person committing an offence based on
subsection (1) of this section, the person is guilty of such an
offence in respect of:
(a) the first day on which the offence is committed; and
(b) each subsequent day (if any) on which the circumstances that
gave rise to the person committing the offence continue
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Restrictions on use of terminology Division 10
Section 923B
Corporations Act 2001 391
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(including the day of conviction for any such offence or any
later day).
(5) In this section:
(a) a reference to a restricted word or expression is a reference
to:
(i) the word independent, impartial or unbiased; or
(ii) any other word or expression specified in the
regulations as a restricted word or expression for the
purposes of this section; or
(iii) any other word or expression (whether or not in
English) that is of like import to a word or expression
covered by any of the previous subparagraphs; and
(b) a reference to a word or expression being assumed or used
includes a reference to the word or expression being assumed
or used:
(i) as part of another word or expression; or
(ii) in combination with other words, letters or other
symbols.
923B Restriction on use of certain words or expressions unless
authorised in licence conditions
(1) A person contravenes this subsection if:
(a) the person carries on a financial services business or provides
a financial service (whether or not on behalf of another
person); and
(b) the person assumes or uses, in this jurisdiction, a restricted
word or expression in relation to that business or service; and
(c) the person is not authorised, by the conditions on an
Australian financial services licence held by the person, or by
a person in relation to whom they are a representative, to
assume or use that word or expression (see subsection (3)).
Note 1: For the meanings of restricted word or expression and assume or use,
see subsection (4).
Note 2: A contravention of this subsection is an offence (see
subsection 1311(1)).
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Part 7.6 Licensing of providers of financial services
Division 10 Restrictions on use of terminology
Section 923B
392 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) If a person assumes or uses a word or expression in circumstances
that give rise to the person committing an offence based on
subsection (1), the person is guilty of such an offence in respect of:
(a) the first day on which the offence is committed; and
(b) each subsequent day (if any) on which the circumstances that
gave rise to the person committing the offence continue
(including the day of conviction for any such offence or any
later day).
(3) ASIC can only impose a condition on an Australian financial
services licence authorising a person to assume or use a restricted
word or expression in these circumstances:
(a) in the case of a word or expression covered by
subparagraph (4)(a)(i)—if the person:
(i) can, under the licence, provide a financial service
relating to securities (whether or not the person can
provide other financial services under the licence as
weln( � and
(ii) is a participant in a licensed market whose licence
covers dealings in securities;
(b) in the case of a word or expression covered by
subparagraph (4)(a)(ii)—if the person:
(i) can, under the licence, provide a financial service
relating to derivatives (whether or not the person can
provide other financial services under the licence as
weln( � and
(ii) is a participant in a licensed market whose licence
covers dealings in derivatives;
(c) in the case of a word or expression covered by
subparagraph (4)(a)(iii)—if the person:
(i) can, under the licence, provide a financial service
relating to contracts of insurance (whether or not the
person can provide other financial services under the
licence as weln( � and
(ii) in providing that service, acts on behalf of intending
insureds;
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Restrictions on use of terminology Division 10
Section 923B
Corporations Act 2001 393
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(d) in the case of a word or expression covered by
subparagraph (4)(a)(iv)—if the person:
(i) can, under the licence, provide a financial service
relating to contracts of general insurance (whether or
not the person can provide other financial services under
the licence as weln( � and
(ii) in providing that service, acts on behalf of intending
insureds;
(e) in the case of a word or expression covered by
subparagraph (4)(a)(v)—if the person:
(i) can, under the licence, provide a financial service
relating to contracts of life insurance (whether or not the
person can provide other financial services under the
licence as weln( � and
(ii) in providing that service, acts on behalf of intending
insureds;
(f) in the case of a word or expression covered by
subparagraph (4)(a)(vi)—in the circumstances (if any) that
are prescribed by regulations made for the purposes of this
paragraph, or after ASIC has considered the matters (if any)
that are so prescribed.
(4) In this section:
(a) a reference to a restricted word or expression is a reference
to:
(i) the expression stockbroker or sharebroker, or any other
word or expression (whether or not in English) that is of
like import to that expression; or
(ii) the expression futures broker, or any other word or
expression (whether or not in English) that is of like
import to that expression; or
(iii) the expression insurance broker or insurance broking,
or any other word or expression (whether or not in
English) that is of like import to that expression; or
(iv) the expression general insurance broker, or any other
word or expression (whether or not in English) that is of
like import to that expression; or
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Division 10 Restrictions on use of terminology
Section 923C
394 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(v) the expression life insurance broker, or any other word
or expression (whether or not in English) that is of like
import to that expression; or
(vi) any other expression or word specified in the
regulations as a restricted word or expression for the
purposes of this section, or any other word or expression
(whether or not in English) that is of like import to such
a word or expression; and
(b) a reference to a word or expression being assumed or used
includes a reference to the word or expression being assumed
or used:
(i) as part of another word or expression; or
(ii) in combination with other words, letters or other
symbols; and
(c) contract of insurance and insured have the same meanings
as in Division 4 of Part 7.8.
923C Restriction on use of terms “financial adviser” and “financial
planner”
(1) A person contravenes this subsection if:
(a) the person carries on a financial services business or provides
a financial service (whether or not on behalf of another
person); and
(b) the person assumes or uses, in this jurisdiction, a restricted
word or expression in relation to the service; and
(c) any of the following apply:
(i) the person is not a relevant provider;
(ii) the person is a provisional relevant provider;
(iii) the person is a limited-service time-sharing adviser.
Note 1: For the meanings of restricted word or expression and assume or use,
see subsections (8) and (9) of this section.
Note 2: A contravention of this subsection is an offence (see
subsection 1311(1)).
(2) A person (the first person) contravenes this subsection if:
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Restrictions on use of terminology Division 10
Section 923C
Corporations Act 2001 395
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) the first person carries on a financial services business or
provides a financial service; and
(b) another person provides a financial service on behalf of the
person; and
(c) the first person assumes or uses, in this jurisdiction, a
restricted word or expression in relation to the service; and
(d) any of the following apply:
(i) the first person is not a relevant provider;
(ii) the first person is a provisional relevant provider;
(iii) the first person is a limited-service time-sharing adviser.
Note 1: For the meanings of restricted word or expression and assume or use,
see subsections (8) and (9) of this section.
Note 2: A contravention of this subsection is an offence (see
subsection 1311(1)).
Advice to wholesale clients
(3) It is not a contravention of subsection (1) for a person to assume or
use a restricted word or expression if:
(a) the person provides advice to wholesale clients; and
(b) the person assumes or uses the restricted word or expression
only in relation to that advice.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (3). See subsection 13.3(3) of the Criminal Code.
(4) It is not a contravention of subsection (2) for a person to assume or
use a restricted word or expression if:
(a) another person (the adviser) provides a financial service on
behalf of the person; and
(b) the adviser provides advice to wholesale clients; and
(c) the person assumes or uses the restricted word or expression
only in relation to that advice.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (4). See subsection 13.3(3) of the Criminal Code.
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Part 7.6 Licensing of providers of financial services
Division 10 Restrictions on use of terminology
Section 923C
396 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Advice as employee or director
(5) It is not a contravention of subsection (1) for a person to assume or
use a restricted word or expression if:
(a) the person is an employee or director of a body; and
(b) the person provides advice to the body; and
(c) the person assumes or uses the restricted word or expression
only in relation to that advice.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (5). See subsection 13.3(3) of the Criminal Code.
(6) It is not a contravention of subsection (2) for a person to assume or
use a restricted word or expression if:
(a) another person (the adviser) is an employee or director of a
body; and
(b) the adviser provides advice to the body; and
(c) the person assumes or uses the restricted word or expression
only in relation to that advice.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (6). See subsection 13.3(3) of the Criminal Code.
Continuing contravention
(7) If a person assumes or uses a word or expression in circumstances
that give rise to the person committing an offence under
subsection (1) or (2), the person commits the offence in respect of:
(a) the first day on which the offence is committed; and
(b) each subsequent day (if any) on which the circumstances that
gave rise to the person committing the offence continue
(including the day of conviction for any such offence or any
later day).
References to restricted word or expression
(8) In this section:
(a) a reference to a restricted word or expression is a reference
to:
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Restrictions on use of terminology Division 10
Section 923C
Corporations Act 2001 397
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(i) the expression financial adviser or financial planner;
or
(ii) any other word or expression specified in the
regulations as a restricted word or expression for the
purposes of this section; or
(iii) any other word or expression (whether or not in
English) that is of like import to a word or expression
covered by any of the previous subparagraphs; and
(b) a reference to a restricted word or expression being assumed
or used includes a reference to the restricted word or
expression being assumed or used:
(i) as part of another word or expression; or
(ii) in combination with other words, letters or other
symbols.
(9) However, a reference in this section to a restricted word or
expression does not include a reference to a word or expression
mentioned in paragraph (8)(a) if:
(a) the word or expression mentioned in that paragraph is
assumed or used in relation to a provisional relevant
provider; and
(b) the word or expression is assumed or used as part of a word
or expression specified by the standards body for the
purposes of subparagraph 921U(2)(a)(v).
Contravention does not affect compensation arrangements
(10) To avoid doubt, this section does not affect the obligation of a
financial services licensee to have arrangements in place under
section 912B.
Note: Section 912B requires financial services licensees to have in place
compensation arrangements if the licensee provides financial services
to retail clients.
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Chapter 7 Financial services and markets
Part 7.6 Licensing of providers of financial services
Division 11 Agreements with unlicensed persons relating to the provision of financial
services
Section 924A
398 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 11—Agreements with unlicensed persons relating
to the provision of financial services
Subdivision A—Agreements affected
924A Agreements with certain unlicensed persons
(1) Subdivision B applies to an agreement entered into by a person (in
this section and Subdivision B called the non-licensee) and another
person (in this section and Subdivision B called the client) (not
being a financial services licensee) that constitutes, or relates to,
the provision of a financial service by the non-licensee if:
(a) the agreement is entered into in the course of a financial
services business carried on by the non-licensee; and
(b) the non-licensee does not hold an Australian financial
services licence covering the provision of the financial
service, and is not exempt from the requirement to hold such
a licence.
Note: It does not matter whether the financial service is provided to the
client as a wholesale client or as a retail client.
(2) Subdivision B applies to the agreement whether or not anyone else
is a party to the agreement.
Subdivision B—Effect on agreements
925A Client may give notice of rescission
(1) Subject to this section, the client may, whether before or after
completion of the agreement, give to the non-licensee a written
notice stating that the client wishes to rescind the agreement.
(2) The client may only give a notice under this section within a
reasonable period after becoming aware of the facts entitling the
client to give the notice.
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Agreements with unlicensed persons relating to the provision of financial services
Division 11
Section 925B
Corporations Act 2001 399
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) The client is not entitled to give a notice under this section if the
client engages in conduct by engaging in which the client would, if
the entitlement so to give a notice were a right to rescind the
agreement for misrepresentation by the non-licensee, be taken to
have affirmed the agreement.
(4) The client is not entitled to give a notice under this section if,
within a reasonable period before the agreement was entered into,
the non-licensee informed the client (whether or not in writing) that
the non-licensee did not hold an Australian financial services
licence.
(5) If, at a time when an Australian financial services licence held by
the non-licensee was suspended, the non-licensee informed the
client that the licence was suspended, the non-licensee is to be
taken for the purposes of subsection (4) to have informed the client
at that time that the non-licensee did not hold the licence.
(6) None of subsections (2), (3) and (4) limits the generality of either
of the others.
(7) Subject to this section, the client may give a notice under this
section whether or not:
(a) the notice will result under section 925B in rescission of the
agreement; or
(b) the Court will, if the notice so results, be empowered to make
a particular order, or any order at all, under section 925D.
925B Effect of notice under section 925A
A notice given under section 925A rescinds the agreement unless
rescission of the agreement would prejudice a right, or an estate in
property, acquired by a person (other than the non-licensee) in
good faith, for valuable consideration and without notice of the
facts entitling the client to give the notice.
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Division 11 Agreements with unlicensed persons relating to the provision of financial
services
Section 925C
400 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
925C Client may apply to Court for partial rescission
(1) If the client gives a notice under section 925A but the notice does
not rescind the agreement because rescission of it would prejudice
a right or estate of the kind referred to in section 925B, the client
may, within a reasonable period after giving the notice, apply to
the Court for an order under subsection (4) of this section.
(2) The Court may extend the period for making an application under
subsection (1).
(3) If an application is made under subsection (1), the Court may make
such orders expressed to have effect until the determination of the
application as it would have power to make if the notice had
rescinded the agreement under section 925B and the application
were for orders under section 925D.
(4) On an application under subsection (1), the Court may make an
order:
(a) varying the agreement in such a way as to put the client in
the same position, as nearly as can be done without
prejudicing such a right or estate acquired before the order is
made, as if the agreement had not been entered into; and
(b) declaring the agreement to have had effect as so varied at and
after the time when it was originally made.
(5) If the Court makes an order under subsection (4), the agreement is
to be taken for the purposes of section 925D to have been
rescinded under section 925B.
(6) An order under subsection (4) does not affect the application of
section 925F or 925H in relation to the agreement as originally
made or as varied by the order.
925D Court may make consequential orders
(1) Subject to subsection (2), on rescission of the agreement under
section 925B, the Court, on the application of the client or the
non-licensee, may make such order or orders as it would have
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Agreements with unlicensed persons relating to the provision of financial services
Division 11
Section 925E
Corporations Act 2001 401
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
power to make if the client had duly rescinded the agreement
because of misrepresentation by the non-licensee.
(2) The Court is not empowered to make a particular order under
subsection (1) if the order would prejudice a right, or an estate in
property, acquired by a person (other than the non-licensee) in
good faith, for valuable consideration and without notice of the
facts entitling the client to give the notice.
925E Agreement unenforceable against client
(1) This section:
(a) applies while both of the following are the case:
(i) the client is entitled to give a notice under section 925A;
(ii) a notice so given will result under section 925B in
rescission of the agreement; and
(b) applies after the agreement is rescinded under section 925B;
but does not otherwise apply.
(2) The non-licensee is not entitled, as against the client:
(a) to enforce the agreement, whether directly or indirectly; or
(b) to rely on the agreement, whether directly or indirectly and
whether by way of defence or otherwise.
925F Non-licensee not entitled to recover commission
(1) Without limiting the generality of section 925E, this section:
(a) applies while the client is entitled to give a notice under
section 925A; and
(b) applies after the client so gives a notice, even if the notice
does not result under section 925B in rescission of the
agreement;
but does not otherwise apply.
(2) The non-licensee is not entitled to recover by any means
(including, for example, set-off or a claim on a quantum meruit)
any brokerage, commission or other fee for which the client would,
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Division 11 Agreements with unlicensed persons relating to the provision of financial
services
Section 925G
402 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
but for this section, have been liable to the non-licensee under or in
connection with the agreement.
925G Onus of establishing non-application of section 925E or 925F
For the purposes of determining, in a proceeding in a court,
whether or not the non-licensee is, or was at a particular time,
entitled as mentioned in subsection 925E(2) or 925F(2), it is to be
presumed, unless the contrary is proved, that section 925E or 925F,
as the case may be, applies, or applied at that time, as the case may
be.
925H Client may recover commission paid to non-licensee
(1) Without limiting the generality of section 925D, if the client gives
a notice under section 925A, the client may, even if the notice does
not result under section 925B in rescission of the agreement,
recover from the non-licensee as a debt the amount of any
brokerage, commission or other fee that the client has paid to the
non-licensee under or in connection with the agreement.
(2) ASIC may, if it considers that it is in the public interest to do so,
bring an action under subsection (1) in the name of, and for the
benefit of, the client.
925I Remedies under this Division additional to other remedies
The client’s rights and remedies under this Division are additional
to, and do not prejudice, any other right or remedy of the client.
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Miscellaneous Division 12
Section 926A
Corporations Act 2001 403
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 12—Miscellaneous
926A Exemptions and modifications by ASIC
(1) The provisions to which this section applies are all provisions of
this Part other than Divisions 4 and 8.
(2) ASIC may:
(a) exempt a person or class of persons from all or specified
provisions to which this section applies; or
(b) exempt a financial product or class of financial products from
all or specified provisions to which this section applies; or
(c) declare that provisions to which this section applies apply in
relation to a person or financial product, or a class of persons
or financial products, as if specified provisions were omitted,
modified or varied as specified in the declaration.
(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) An exemption or declaration is a legislative instrument if the
exemption or declaration is expressed to apply in relation to a class
of persons or a class of financial products (whether or not it is also
expressed to apply in relation to one or more persons or products
identified otherwise than by reference to membership of a class).
(4A) If subsection (4) 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.
(5) If conduct (including an omission) of a person would not have
constituted an offence if a particular declaration under
paragraph (2)(c) 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 Legislation Act
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Division 12 Miscellaneous
Section 926B
404 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
2003 (if the declaration is of a kind referred to in subsection (4)),
or with the gazettal requirement of subsection (4A), as the case
may be):
(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 to which this section
applies include:
(a) definitions in this Act, or in the regulations, as they apply to
references in those provisions; and
(b) any provisions of Part 10.2 or 10.23A (transitional
provisions) that relate to those provisions.
Note: Because of section 761H, a reference to the provisions to which this
section applies, or to provisions of Part 10.2, also includes a reference
to regulations or other instruments made for the purposes of those
provisions.
926B Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial product or a class of financial products
from all or specified provisions of this Part; or
(c) provide that this Part applies as if specified provisions were
omitted, modified or varied as specified in the regulations.
(2) For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
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Section 940A
Corporations Act 2001 405
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Part 7.7—Financial services disclosure
Division 1—Preliminary
940A How Part applies if a financial services licensee is acting as
authorised representative
If a financial services licensee is, in providing a financial service,
acting as the authorised representative of another financial services
licensee (see section 916E), this Part applies to the first-mentioned
licensee, in relation to the service, in the capacity of authorised
representative (rather than the capacity of licensee).
940B What if there is no reasonable opportunity to give a document,
information or statement required by this Part?
(1) If:
(a) apart from this section, a person (the providing entity) would
be required by a provision of this Part to give another person
(the client) a particular document (for example, a Financial
Services Guide or a Statement of Advice), or particular
information or a particular statement; and
(b) the providing entity has not had a reasonable opportunity to
give (in accordance with section 940C) the client the
document, information or statement by the time they are
required by this Part to give it to the client;
the fact that the providing entity has not given the document,
information or statement to the client as required by the provision
is not a contravention of the provision.
Note: In a prosecution for an offence, a defendant bears an evidential burden
in relation to the matters in this section (see subsection 13.3(3) of the
Criminal Code).
(2) For the purposes of subsection (1), the providing entity is not taken
not to have had a reasonable opportunity to provide the document,
information or statement if:
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Section 940C
406 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) section 940C (or regulations made for the purposes of that
section) permit the document, information or statement to be
sent to an address (including an electronic address) or fax
number nominated by the client; and
(b) the client has not given the providing entity an address
(including an electronic address) or fax number to which the
document, information or statement can be sent; but
(c) the providing entity has had a reasonable opportunity to
make, but has not made, reasonable enquiries of the client to
obtain such an address or fax number.
940C How documents, information and statements are to be given
(1) For the purposes of this Part (unless a contrary intention appears), a
Financial Services Guide, a Supplementary Financial Services
Guide or a Statement of Advice is given by a person (the providing
entity) to another person (the client) if (and only if):
(a) it is:
(i) given to the client, or to the client’s agent, personally; or
(ii) sent to the client, or the client’s agent, at an address
(including an electronic address) or fax number
nominated by the client or the client’s agent; or
(iii) otherwise made available to the client, or the client’s
agent, as agreed between the client, or the client’s agent,
and the providing entity; and
(b) it is in printed or electronic form.
(2) For the purposes of this Part (unless a contrary intention appears),
information that subsection 941C(7) or 946B(6) requires to be
given by a person (the providing entity) to another person (the
client) is given by the providing entity to the client if (and only if):
(a) it is given to the client, or the client’s agent, orally; or
(b) it is in printed or electronic form and is:
(i) given to the client, or the client’s agent, personally; or
(ii) sent to the client, or the client’s agent, at an address
(including an electronic address) or fax number
nominated by the client or the client’s agent; or
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(iii) otherwise made available to the client, or the client’s
agent, as agreed between the client or the client’s agent
and the providing entity; or
(c) it is given by some other method permitted by regulations
made for the purposes of this paragraph.
(3) For the purposes of this Part (unless a contrary intention appears),
information that subsection 941C(5), paragraph 946AA(5)(b) or
subsection 946B(3) or (8) requires to be given by a person (the
providing entity) to another person (the client) is given by the
providing entity to the client if (and only if) it is given to the client,
or the client’s agent, in accordance with the applicable
requirements of regulations made for the purposes of this
subsection.
(4) For the purposes of this Part (unless a contrary intention appears), a
statement that subsection 941D(2) or 946C(2) requires to be given
by a person (the providing entity) to another person (the client) is
given by the providing entity to the client if (and only if) it is given
orally to the client or the client’s agent.
(5) For the purposes of this section, a document, information or
statement to which this section applies is sent to a person at an
address if, and only if:
(a) the document, information or statement is sent to the address;
and
(b) either:
(i) the envelope or other container in which it is sent; or
(ii) the message that accompanies it;
is addressed to the person.
(6) A document, information or statement to which this section applies
may be given or sent to a person’s agent only if the agent is not
acting as the person’s agent in one of the following capacities:
(a) a financial services licensee;
(b) an authorised representative of a financial services licensee;
(d) a person who is not required to hold an Australian financial
services licence because the person is covered by:
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408 Corporations Act 2001
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(i) paragraph 911A(2)(j); or
(ii) an exemption in regulations made for the purposes of
paragraph 911A(2)(k); or
(iii) an exemption specified by ASIC for the purposes of
paragraph 911A(2)(n( �
(e) a person who is required to hold an Australian financial
services licence but who does not hold such a licence;
(f) an employee, director or other representative of a person
referred to in paragraph (a), (b), (c), (d) or (e).
(7) The regulations may specify requirements as to:
(a) the manner in which a document, information or statement
may be given to a person; and
(b) the presentation, structure and format for a document,
information or statement that is to be given in electronic
form.
The giving of the document, information or statement is not
effective unless those requirements are satisfied.
940D General approach to offence provisions
Subdivision A of Division 7 contains provisions creating offences
by reference to various rules contained in Divisions of this Part.
However, it does not create all the offences relating to those rules,
as some offences are created by subsection 1311(1). Where
offences are created by subsection 1311(1) in relation to a rule, this
is indicated by a note at the end of the provision containing the
rule.
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Person provided with financial service as retail client to be given a Financial Services
Guide Division 2
Section 941A
Corporations Act 2001 409
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 2—Person provided with financial service as retail
client to be given a Financial Services Guide
Subdivision A—Requirement for a Financial Services Guide to
be given
941A Obligation on financial services licensee to give a Financial
Services Guide if financial service provided to person as a
retail client
(1) A financial services licensee (the providing entity) must give a
person a Financial Services Guide in accordance with this Division
if the providing entity provides a financial service to the person
(the client) as a retail client.
(2) This section has effect subject to section 941C.
(3) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
941B Obligation on authorised representative to give a Financial
Services Guide if financial service provided to person as a
retail client
(1) An authorised representative (the providing entity) of a financial
services licensee (the authorising licensee), or of 2 or more
financial services licensees (the authorising licensees), must give a
person a Financial Services Guide in accordance with this Division
if the providing entity, as a representative of the authorising
licensee, or one or more of the authorising licensees, provides a
financial service to the person (the client) as a retail client.
Note: If the providing entity is the authorised representative of 2 or more
financial services licensees, each of those licensees is, for the purposes
of this Division, an authorising licensee in relation to the financial
service provided to the client, even though the providing entity may
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Section 941C
410 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
not have been acting as representative of each of those licensees in
providing the service to the client.
(2) A Financial Services Guide must not be given to the person by the
providing entity unless the authorising licensee, or each of the
authorising licensees, has authorised its distribution by the
providing entity.
(3) This section has effect subject to section 941C.
(4) A person contravenes this subsection if the person contravenes
subsection (1) or (2).
Note: This subsection is a civil penalty provision (see section 1317E).
941C Situations in which a Financial Services Guide is not required
Client has already received the information
(1) The providing entity does not have to give the client a Financial
Services Guide (the new FSG) if the client has already received a
Financial Services Guide that contains all of the information that
the new FSG is required to contain.
Providing entity is product issuer dealing in own products
(2) The providing entity does not have to give the client a Financial
Services Guide if:
(a) the providing entity is an issuer of financial products; and
(b) the financial service is a dealing (see section 766C) in
financial products, other than derivatives able to be traded on
a licensed market, issued by the providing entity, and does
not also relate to financial products issued by someone else.
Note: The issuer will however have to comply with the Product Disclosure
Statement requirements (see Division 2 of Part 7.9).
Providing entity is merely operating a registered scheme
(3) The providing entity does not have to give the client a Financial
Services Guide if:
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Corporations Act 2001 411
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(a) the providing entity is the responsible entity of a registered
scheme; and
(b) the financial service consists only of the operation of that
scheme by the providing entity.
Providing entity is merely operating a notified foreign passport
fund
(3A) The providing entity does not have to give the client a Financial
Services Guide if:
(a) the providing entity is the operator of a notified foreign
passport fund; and
(b) the financial service consists only of the operation of that
fund by the operator.
Financial product advice given to the public
(4) The providing entity does not have to give the client a Financial
Services Guide if the financial service is general advice provided to
the public, or a section of the public, in the manner prescribed by
regulations made for the purposes of this subsection.
(5) However, if subsection (4) applies and the client is not given a
Financial Services Guide before the advice is provided, the client
must instead, before the advice is provided, be given the
information that would be required to be in the Financial Services
Guide by paragraphs 942B(2)(a), (e) and (f), or paragraphs
942C(2)(a), (c), (f) and (g), as the case requires.
Certain basic deposit and other products
(6) The providing entity does not have to give the client a Financial
Services Guide if the financial service is a dealing (see
section 766C) in, is the provision of financial product advice (see
section 766B) about, or in any other way relates to, any of the
following:
(a) a basic deposit product;
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Section 941D
412 Corporations Act 2001
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(b) a facility for making non-cash payments (see section 763D)
that is related to a basic deposit product;
(c) a financial product of a kind prescribed by regulations made
for the purposes of this paragraph.
(7) However, if subsection (6) applies and the client is not given a
Financial Services Guide before the service is provided, the client
must instead, before the service is provided, be given the
information that would be required to be in the Financial Services
Guide by paragraphs 942B(2)(a) and (h), or paragraphs 942C(2)(a)
and (i), as the case requires.
Regulations may specify other exemptions
(8) A Financial Services Guide does not have to be given to the client
in circumstances specified in regulations made for the purposes of
this subsection.
941D Timing of giving Financial Services Guide
General rule
(1) Subject to this section, the Financial Services Guide must be given
to the client as soon as practicable after it becomes apparent to the
providing entity that the financial service will be, or is likely to be,
provided to the client, and must in any event be given to the client
before the financial service is provided.
Time critical cases
(2) If:
(a) the client expressly instructs that they require the financial
service to be provided immediately, or by a specified time;
and
(b) it is not reasonably practicable to give the Financial Services
Guide to the client before the service is provided as so
instructed;
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Section 941E
Corporations Act 2001 413
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the providing entity must instead give the client a statement that
complies with subsection (3) before the service is provided.
(3) The statement must contain:
(a) the information that would be required to be in the Financial
Services Guide by paragraphs 942B(2)(e), (f) and (i), or
paragraphs 942C(2)(f), (g) and (j), as the case requires; and
(b) such other information as would be required to be in the
Financial Services Guide as is particularly relevant to the
financial service to be provided.
(4) The client must then be given the Financial Services Guide within
5 days after being given the statement, or sooner if practicable.
941E Information must be up to date
The information in the Financial Services Guide must be up to date
as at the time when it is given to the client.
Note: A Supplementary Financial Services Guide containing updated
information may be given with a Financial Services Guide that has
become out of date. The updated information is taken to be included
in the Financial Services Guide (see section 943D.)
941F Obligation to give updated Financial Services Guide
If:
(a) the Financial Services Guide is given to the client before the
financial service is provided; and
(b) the following conditions are satisfied:
(i) there is a change in circumstances before the service is
provided, and the Financial Services Guide does not
contain the information it would be required to contain
if it were given to a person immediately after that
change;
(ii) the fact that the Financial Services Guide does not
contain the up to date information is materially adverse
from the point of view of a reasonable person deciding,
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Section 942A
414 Corporations Act 2001
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as a retail client, whether to proceed to be provided with
the financial service;
the providing entity must, before the service is provided, give the
client:
(c) another Financial Services Guide that contains the up to date
information before the service is provided; or
(d) a Supplementary Financial Services Guide (see Subdivision
C) that updates the information in the Financial Services
Guide.
Subdivision B—Content and authorisation of Financial
Services Guide
942A Title of Financial Services Guide
(1) The title “Financial Services Guide” must be used on the cover of,
or at or near the front of, a Financial Services Guide.
(2) In any other part of a Financial Services Guide, “Financial Services
Guide” may be abbreviated to “FSG”.
942B Financial Services Guide given by financial services licensee—
main requirements
(1) This section applies if the providing entity is a financial services
licensee.
(2) Subject to subsection (3) and to the regulations (see
subsection (4)), the Financial Services Guide must include the
following statements and information:
(a) a statement setting out the name and contact details of the
providing entity; and
(b) a statement setting out any special instructions about how the
client may provide instructions to the providing entity; and
(c) information about the kinds of financial services (the
authorised services) that the providing entity is authorised by
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Section 942B
Corporations Act 2001 415
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its licence to provide, and the kinds of financial products to
which those services relate; and
(d) information about who the providing entity acts for when
providing the authorised services; and
(e) information about the remuneration (including commission)
or other benefits that any of the following is to receive in
respect of, or that is attributable to, the provision of any of
the authorised services:
(i) the providing entity;
(ii) a related body corporate of the providing entity;
(iii) a director or employee of the providing entity or a
related body corporate;
(iv) an associate of any of the above;
(v) any other person in relation to whom the regulations
require the information to be provided;
(f) information about any associations or relationships between
the providing entity, or any related body corporate, and the
issuers of any financial products, being associations or
relationships that might reasonably be expected to be capable
of influencing the providing entity in providing any of the
authorised services; and
(g) if the providing entity provides further market-related advice
(see subsection 946B(1)) or advice to which
subsection 946B(7) applies—a statement in relation to which
the following requirements are satisfied:
(i) the statement must indicate that the client may request a
record of that advice, if they have not already been
provided with a record of that advice;
(ii) the statement must set out particulars of how the client
may request such a record;
(iii) any limitations in those particulars on the time within
which the client may request such a record must be
consistent with any applicable requirements in
regulations made for the purposes of this subparagraph
or, if there are no such applicable requirements, must be
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Section 942B
416 Corporations Act 2001
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such as to allow the client a reasonable opportunity to
request a record of the advice; and
(h) information about the dispute resolution system that covers
complaints by persons to whom the providing entity provides
financial services, and about how that system may be
accessed; and
(i) if the providing entity acts under a binder in providing any of
the authorised services—a statement that:
(i) identifies the services provided under the binder; and
(ii) states that they are provided under a binder; and
(iii) explains the significance of the services being provided
under a binder; and
(j) if the providing entity is a participant in a licensed market or
a licensed CS facility—a statement that the providing entity
is a participant in that market or facility; and
(k) any other statements or information required by the
regulations.
Note: A Supplementary Financial Services Guide containing additional
information may be given with a Financial Services Guide that does
not contain all the required information. The additional information is
taken to be included in the Financial Services Guide (see
section 943D.)
(3) Subject to subsection (4), the level of information about a matter
that is required is such as a person would reasonably require for the
purpose of making a decision whether to acquire financial services
from the providing entity as a retail client.
(4) The regulations may provide all or any of the following:
(a) that a provision of subsection (2) does not apply in a
particular situation;
(b) that particular information is not required by a provision of
subsection (2), either in a particular situation or generally;
(c) a more detailed statement of the information that is required
by a provision of subsection (2), either in a particular
situation or generally;
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Section 942C
Corporations Act 2001 417
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(d) that certain supplementary information must be given or
made available to the client in some other way.
(5) The Financial Services Guide must be dated. The date must be the
date on which the Financial Services Guide was prepared or its
preparation was completed.
(6) The Financial Services Guide may also contain other information.
(6A) The information included in the Financial Services Guide must be
worded and presented in a clear, concise and effective manner.
(7) The regulations may require the providing entity, in circumstances
specified in the regulations, to provide the client, on request, with
more detailed information about remuneration (including
commission) or other benefits of a kind referred to in
paragraph (2)(e).
(8) If:
(a) the Financial Services Guide includes a statement to the
effect that a client may request a record of further
market-related advice or advice to which subsection 946B(7)
applies; and
(b) the client is provided with advice to which that statement
applies; and
(c) the client has not already been provided with a record of that
advice;
the providing entity must comply with a request made in
accordance with that statement for a record of that advice.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
942C Financial Services Guide given by authorised representative—
main requirements
(1) This section applies if the providing entity is an authorised
representative.
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Section 942C
418 Corporations Act 2001
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(2) Subject to subsection (3) and to the regulations (see
subsection (4)), the Financial Services Guide must include the
following statements and information:
(a) a statement setting out the name and contact details of the
providing entity; and
(b) a statement setting out any special instructions about how the
client may provide instructions to the providing entity; and
(c) a statement:
(i) setting out the name and contact details of the
authorising licensee, or of each of the authorising
licensees; and
(ii) stating that the providing entity is the authorised
representative of that licensee or those licensees; and
(d) information, in relation to the authorising licensee or each of
the authorising licensees, about the kinds of financial
services (the authorised services) that the providing entity
provides as representative of the authorising licensee, and the
kinds of financial products to which those services relate; and
(e) information about who the authorising licensee, or each of
the authorising licensees, acts for when financial services are
provided on their behalf by the providing entity; and
(f) information about the remuneration (including commission)
or other benefits that any of the following is to receive in
respect of, or that is attributable to, the provision of any of
the authorised services:
(i) the providing entity;
(ii) an employer of the providing entity;
(iii) the authorising licensee, or any of the authorising
licensees;
(iv) an employee or director of the authorising licensee, or
of any of the authorising licensees;
(v) an associate of any of the above;
(vi) any other person in relation to whom the regulations
require the information to be provided; and
(g) information about any associations or relationships between:
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(i) the providing entity, or any employer of the providing
entity, and the issuers of any financial products; or
(ii) the authorising licensee, or any of the authorising
licensees, or any related body corporate of the
authorising licensee or any of the authorising licensees,
and the issuers of any financial products;
being associations or relationships that might reasonably be
expected to be capable of influencing the providing entity in
providing any of the authorised services; and
(h) if the providing entity, when acting as representative of the
authorising licensee or any of the authorising licensees,
provides further market-related advice (see
subsection 946B(1)) or advice to which subsection 946B(7)
applies—a statement in relation to which the following
requirements are satisfied:
(i) the statement must indicate that the client may request a
record of that advice, if they have not already been
provided with a record of that advice;
(ii) the statement must set out particulars of how the client
may request such a record;
(iii) any limitations in those particulars on the time within
which the client may request such a record must be
consistent with any applicable requirements in
regulations made for the purposes of this subparagraph
or, if there are no such applicable requirements, must be
such as to allow the client a reasonable opportunity to
request a record of the advice; and
(i) information about the dispute resolution system that covers
complaints by persons to whom the providing entity provides
financial services when acting as representative of the
authorising licensee or any of the authorising licensees, and
about how that system may be accessed; and
(j) if the providing entity acts under a binder in providing any of
the authorised services—a statement that:
(i) identifies the services provided under the binder; and
(ii) states that they are provided under a binder; and
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Section 942C
420 Corporations Act 2001
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(iii) explains the significance of the services being provided
under a binder; and
(k) if the providing entity, or the authorising licensee or any of
the authorising licensees, is a participant in a licensed market
or a licensed CS facility—a statement that the providing
entity or authorising licensee is a participant in that market or
facility; and
(l) a statement to the effect that the distribution of the Financial
Services Guide by the providing entity has been authorised
by the authorising licensee, or by each of the authorising
licensees; and
(m) any other statements or information required by the
regulations.
Note: A Supplementary Financial Services Guide containing additional
information may be given with a Financial Services Guide that does
not contain all the required information. The additional information is
taken to be included in the Financial Services Guide (see
section 943D.)
(3) Subject to subsection (4), the level of detail of information about a
matter that is required is such as a person would reasonably require
for the purpose of making a decision whether to acquire financial
services from the providing entity as a retail client.
(4) The regulations may provide all or any of the following:
(a) that a provision of subsection (2) does not apply in a
particular situation;
(b) that particular information is not required by a provision of
subsection (2), either in a particular situation or generally;
(c) a more detailed statement of the information that is required
by a provision of subsection (2), either in a particular
situation or generally;
(d) that certain supplementary information must be given or
made available to the client in some other way.
(5) The Financial Services Guide must be dated. The date must be the
date on which the Financial Services Guide was prepared or its
preparation was completed.
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Section 942D
Corporations Act 2001 421
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(6) The Financial Services Guide may also contain other information.
(6A) The information included in the Financial Services Guide must be
worded and presented in a clear, concise and effective manner.
(7) The regulations may require the providing entity, in circumstances
specified in the regulations, to provide the client, on request, with
more detailed information about remuneration (including
commission) or other benefits of a kind referred to in
paragraph (2)(f).
(8) If:
(a) the Financial Services Guide includes a statement to the
effect that a client may request a record of further
market-related advice or advice to which subsection 946B(7)
applies; and
(b) the client is provided with advice to which that statement
applies; and
(c) the client has not already been provided with a record of that
advice;
the providing entity must comply with a request made in
accordance with that statement for a record of that advice.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
942D Financial Services Guide may consist of 2 or more separate
documents given at same time
(1) Subject to this section, a Financial Services Guide may be made up
of 2 or more separate documents that are given at the same time.
(2) Each of the documents must have on the cover of the document, or
at or near the front of the document, a statement:
(a) to the effect that the document is part of a Financial Services
Guide; and
(b) that (subject to subsection (3)) identifies the other documents
that make up the Financial Services Guide.
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Division 2 Person provided with financial service as retail client to be given a Financial
Services Guide
Section 942D
422 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) If there are or may be different versions of a document referred to
in paragraph (2)(b), the statement required by subsection (2) does
not have to identify any particular one of those versions and may
instead identify the document generically.
Note: For example, if a Financial Services Guide is made up of a core
document that is not updated very frequently, and a separate document
providing information about remuneration that is updated more
frequently:
(a) the statement in the core document need only refer to the fact that it, and a separate document about remuneration, make up the Financial Services Guide; and
(b) the statement in the document about remuneration need only refer to the fact that it, and a separate document about all other required matters, make up the Financial Services Guide.
(4) The requirement of section 942A (title of Financial Services
Guide) is taken to be satisfied if the title “Financial Services
Guide” is used on the cover of, or at or near the front of, at least
one of the documents that make up the Financial Services Guide.
(5) The requirement of subsection 942B(5) or 942C(5) (dating of
Financial Services Guide) must be separately complied with in
relation to each of the documents. If, for any purpose, a single date
needs to be determined as the date of the Financial Services Guide
as a whole, that date is the most recent of the dates of those
documents.
(6) Section 942E applies to an alteration to one of the documents as
though the reference in that section to the date specified in the
Financial Services Guide were a reference to the date specified in
the document.
(7) The regulations may impose additional requirements to be
complied with if a Financial Services Guide is made up of 2 or
more documents.
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Person provided with financial service as retail client to be given a Financial Services
Guide Division 2
Section 942DA
Corporations Act 2001 423
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
942DA Combining a Financial Services Guide and a Product
Disclosure Statement in a single document
(1) A Financial Services Guide and a Product Disclosure Statement
may be combined in a single document (a combined FSG and
PDS) in circumstances specified in regulations made for the
purposes of this section.
(2) Those regulations may also provide that this Chapter applies in
relation to a combined FSG and PDS as if specified provisions
were omitted, modified or varied as specified in the regulations.
(3) A Financial Services Guide and a Product Disclosure Statement
must not be combined in a single document except as permitted
under subsection (1).
942E Altering a Financial Services Guide after its preparation and
before giving it to a person
A financial services licensee, or an authorised representative of a
financial services licensee, must not, in purported compliance with
a provision of this Part, give a person a Financial Services Guide
(the FSG) that has been altered (otherwise than pursuant to
paragraph (b)) after the date specified in the FSG as required by
subsection 942B(5) or 942C(5) unless:
(a) the alteration was made by, or with the authority of:
(i) if section 942B applies to the FSG—the financial
services licensee to which the FSG relates; or
(ii) if section 942C applies to the FSG—the financial
services licensee, or each of the financial services
licensees, who authorised the distribution of the FSG;
and
(b) if the alteration is a material alteration—the date of the FSG
has been changed to the date on which the alteration was
made.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
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Part 7.7 Financial services disclosure
Division 2 Person provided with financial service as retail client to be given a Financial
Services Guide
Section 943A
424 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision C—Supplementary Financial Services Guides
943A What a Supplementary Financial Services Guide is
(1) A Supplementary Financial Services Guide is a document by
which a person who has prepared a Financial Services Guide (the
FSG) can:
(a) correct a misleading or deceptive statement in the FSG; or
(b) correct an omission from the FSG of information it is
required to contain; or
(c) update the information contained in the FSG.
(2) A Supplementary Financial Services Guide must not be given to a
person by an authorised representative of a financial services
licensee unless the licensee has authorised its distribution by the
authorised representative.
943B Title of Supplementary Financial Services Guide
(1) The title “Supplementary Financial Services Guide” must be used
on the cover of, or at or near the front of, a Supplementary
Financial Services Guide.
(2) In any other part of a Supplementary Financial Services Guide,
“Supplementary Financial Services Guide” may be abbreviated to
“SFSG”.
943C Form of Supplementary Financial Services Guide
(1) At the beginning of a Supplementary Financial Services Guide
there must be:
(a) a statement that it is a Supplementary Financial Services
Guide; and
(b) an identification of the Financial Services Guide that it
supplements; and
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Person provided with financial service as retail client to be given a Financial Services
Guide Division 2
Section 943D
Corporations Act 2001 425
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) a statement that it is to be read together with that Financial
Services Guide and any other specified Supplementary
Financial Services Guides.
(2) The Supplementary Financial Services Guide must be dated. The
date must be the date on which the Supplementary Financial
Services Guide was prepared or its preparation was completed.
(3) If the Supplementary Financial Services Guide will or may be
distributed by an authorised representative of a financial services
licensee, it must contain a statement to the effect that its
distribution by the authorised representative has been authorised by
the licensee.
943D Effect of giving a person a Supplementary Financial Services
Guide
If:
(a) a person is given a Financial Services Guide (the FSG); and
(b) at the same time, or later, they are given a Supplementary
Financial Services Guide (the SFSG) that supplements the
FSG;
the FSG is taken, from when the SFSG is given to the person, to
include the information and statements contained in the SFSG.
943E Situation in which only a Supplementary Financial Services
Guide need be given
If:
(a) apart from this section, a person (the providing entity) would
be required to give another person (the client) a Financial
Services Guide (the new FSG); and
(b) the client has, because of some previous conduct, already
been given a Financial Services Guide (the earlier FSG)
containing some, but not all, of the information that the new
FSG is required to contain;
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Division 2 Person provided with financial service as retail client to be given a Financial
Services Guide
Section 943F
426 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
the provider may, instead of giving the client the new FSG, give
the client a Supplementary Financial Services Guide that contains
the additional information.
943F Altering a Supplementary Financial Services Guide after its
preparation and before giving it to a person
A financial services licensee, or an authorised representative of a
financial services licensee, must not, in purported compliance with
a provision of this Part, give a person a Supplementary Financial
Services Guide (the SFSG) that has been altered (otherwise than
pursuant to paragraph (b)) after the date specified in the SFSG as
required by subsection 943C(2) unless:
(a) the alteration was made by, or with the authority of:
(i) if section 942B applies to the Financial Services Guide
that the SFSG supplements—the financial services
licensee to which the Guide relates; or
(ii) if section 942C applies to the Financial Services Guide
that the SFSG supplements—the financial services
licensee, or each of the financial services licensees, who
authorised the distribution of the SFSG; and
(b) if the alteration is a material alteration—the date of the SFSG
has been changed to the date on which the alteration was
made.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
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Additional requirements for personal advice provided to a retail client Division 3
Section 944A
Corporations Act 2001 427
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 3—Additional requirements for personal advice
provided to a retail client
Subdivision A—When this Division applies
944A Situation in which Division applies
This Division applies in relation to the provision of personal advice
(the advice) in the following circumstances:
(a) the advice is provided:
(i) by a financial services licensee (the providing entity); or
(ii) by a person (the providing entity) in their capacity as
authorised representative of a financial services licensee
(the authorising licensee), or of 2 or more financial
services licensees (the authorising licensees); and
(b) the advice is provided to a person (the client) as a retail
client.
Subdivision C—Requirement for a Statement of Advice to be
given
946A Obligation to give client a Statement of Advice
(1) The providing entity must give the client a Statement of Advice in
accordance with this Subdivision and Subdivision D.
(2) The Statement of Advice may be:
(a) the means by which the advice is provided; or
(b) a separate record of the advice.
(3) This section has effect subject to sections 946AA and 946B.
(4) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
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Division 3 Additional requirements for personal advice provided to a retail client
Section 946AA
428 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
946AA Small investments—Statement of Advice not required
Small investments generally
(1) The providing entity does not have to give the client a Statement of
Advice for particular advice (the small investment advice) if:
(a) both of the following apply:
(i) an amount (the threshold amount) has been prescribed
by regulations made for the purposes of this paragraph;
(ii) the total value of all financial investments in relation to
which the advice is provided, as worked out under
subsection (2), does not exceed the threshold amount;
and
(b) the advice does not relate to any of the following:
(i) a derivative;
(ii) a general insurance product;
(iii) a life risk insurance product (except to the extent that
advice about a superannuation product relates to a life
risk insurance product); and
(c) the advice does not relate to any superannuation product or
RSA product, unless the client already has an interest in the
product.
Total value of investments
(2) For the purposes of paragraph (1)(a), the total value of investments
in relation to which the small investment advice is provided is:
(a) if the advice solely relates to the acquisition of all (or part) of
one or more financial products, or of an increased interest in
one or more financial products—the sum of the values (the
total acquisition value) of each acquisition; or
(b) if the advice solely relates to the disposal of all (or part) of
one or more financial products, or of a part of an interest in
one or more financial products—the sum of the values (the
total disposal value) of each disposal; or
(c) if the advice relates to both an acquisition, and a disposal,
mentioned in paragraphs (a) and (b):
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(i) the total acquisition value; or
(ii) if the total disposal value exceeds the total acquisition
value—the total disposal value.
Method for working out threshold amount
(3) Regulations made for the purposes of paragraph (1)(a) may
prescribe how the threshold amount is to be worked out in relation
to particular kinds of financial products.
Record of advice
(4) The providing entity must keep a record of the small investment
advice and, in doing so, must comply with any applicable
requirements of regulations made for the purposes of this
subsection.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(5) The providing entity must, at the applicable time, give the client:
(a) a copy of the record of the small investment advice; and
(b) the information that would, if a Statement of Advice were to
be given, be required to be in the Statement by paragraphs
947B(2)(d) and (e), or 947C(2)(e) and (f), as the case
requires.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(6) For the purposes of subsection (5), the applicable time for
something to be given relating to the small investment advice is the
time:
(a) when, or as soon as practicable after, the advice is provided;
and
(b) in any event—before the providing entity provides the client
with any further financial service arising out of, or connected
with, the advice.
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Part 7.7 Financial services disclosure
Division 3 Additional requirements for personal advice provided to a retail client
Section 946B
430 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
946B Other situations in which a Statement of Advice is not
required
Further market-related advice
(1) The providing entity does not have to give the client a Statement of
Advice for particular advice (the further market-related advice) if:
(a) the providing entity is a participant in a licensed market, or is
an authorised representative of a participant in a licensed
market; and
(b) the providing entity has previously given the client a
Statement of Advice that set out the client’s relevant personal
circumstances in relation to the advice (the previous advice)
set out in that Statement; and
(c) the further market-related advice recommends that the client:
(i) acquire or dispose of, or not acquire or dispose of; or
(ii) accept or refuse an offer or invitation which, if
accepted, would result in the client acquiring or
disposing of, or offering to acquire or dispose of;
securities, managed investment products, foreign passport
fund products or derivatives that are able to be traded on a
licensed market; and
(d) the following conditions are satisfied:
(ia) the providing entity has, either immediately before the
further market-related advice is given, or within the
preceding 12 months, checked with the client whether
the client’s objectives, financial situation and needs
have changed since the last time the providing entity
checked with the client about those matters; and
(i) the client’s relevant personal circumstances in relation
to the further market-related advice (determined having
regard to the client’s objectives, financial situation and
needs as currently known to the providing entity) are
not significantly different from the client’s relevant
personal circumstances in relation to the previous
advice; and
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(ii) so far as the basis on which advice is given relates to
other matters—the basis on which the further
market-related advice is given is not significantly
different from the basis on which the previous advice
was given; and
(e) the providing entity has a reasonable belief that:
(i) the client requires the further market-related advice to
be provided promptly; or
(ii) it is in the client’s interests that the further
market-related advice be provided promptly; and
(f) either:
(i) the further market-related advice does not contain any
other kind of financial product advice; or
(ii) the only other kind of financial product advice
contained in the further market-related advice is cash
management facility advice; and
(g) the further market-related advice is given:
(i) by telephone; or
(ii) by fax; or
(iii) by email; or
(iv) by another kind of electronic communication specified
in regulations made for the purposes of this
subparagraph.
Note: Paragraphs 947B(2)(b) and 947C(2)(b) require a Statement of Advice
to include information about the basis on which the advice is or was
given, which may include the client’s relevant personal circumstances,
in which case paragraph (b) of this subsection would be satisfied.
(2) For the purposes of subsection (1):
able to be traded on a licensed market means:
(a) in relation to securities, managed investment products or
foreign passport fund products—either:
(i) the securities or products are admitted to quotation on a
licensed market and their admission to quotation is not
suspended; or
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Section 946B
432 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ii) the securities or products are not admitted to quotation
on a licensed market, but are further securities or
products of a kind that are already admitted to quotation
on the market and whose admission to quotation is not
suspended; and
(b) in relation to derivatives:
(i) the standard terms of the arrangement that constitutes
the derivative are set out in the operating rules of a
licensed market; and
(ii) under the operating rules of that market, the derivatives
are able to be dealt with on the market.
cash management facility means:
(a) an interest in a registered scheme or a notified foreign
passport fund of a kind commonly known as a cash common
fund or a cash management trust; or
(b) a basic deposit product; or
(c) a bank accepted bill.
cash management facility advice means advice about the use (but
not the establishment) of a cash management facility in connection
with an acquisition or disposal of securities, managed investment
products, foreign passport fund products or derivatives to which
the further market-related advice relates.
(3) However, in the same communication as is used to provide the
further market-related advice to the client, the client must be given
the information that would, if a Statement of Advice were to be
given, be required to be in the Statement by paragraphs 947B(2)(d)
and (e), or 947C(2)(e) and (f), as the case requires.
(3A) The providing entity must keep a record of the further
market-related advice and, in doing so, must comply with any
applicable requirements of regulations made for the purposes of
this subsection.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Section 946B
Corporations Act 2001 433
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Note 2: For the client’s right to a record of the advice, see
subsections 942B(8) and 942C(8).
Certain basic deposit and other products
(5) The providing entity does not have to give the client a Statement of
Advice if the advice relates to any or all of the following:
(a) a basic deposit product;
(b) a facility for making non-cash payments (see section 763D)
that is related to a basic deposit product;
(c) a financial product of a kind prescribed by regulations made
for the purposes of this paragraph.
(6) However, if subsection (5) applies and the client is not given a
Statement of Advice, the client must instead, when, or as soon as
practicable after, the advice is provided, be given the information
that would be required to be in the Statement of Advice by
paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case
requires.
Where advice does not recommend the purchase or sale of
products
(7) The providing entity does not have to give the client a Statement of
Advice for particular advice if:
(a) the advice does not recommend or state an opinion in respect
of:
(i) the acquisition or disposal of any specific financial
product, or the products of a specific issuer; nor
(ii) a modification to an investment strategy or a
contribution level in relation to a financial product held
by the client; and
(b) the following persons do not directly receive any
remuneration (other than remuneration that is currently being
received for an earlier acquisition of a product) or other
benefit for, or in relation to, the advice:
(i) the providing entity;
(ii) an employer of the providing entity;
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Section 946C
434 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(iii) the authorising licensee, or any of the authorising
licensees;
(iv) an employee or director of the authorising licensee, or
of any of the authorising licensees;
(v) an associate of any of the above;
(vi) any other person prescribed by regulations made for the
purposes of this paragraph.
(8) However, in the same communication as is used to provide to the
client the advice referred to in subsection (7), the client must be
given the information that would, if a Statement of Advice were to
be given, be required to be in the Statement by paragraphs
947B(2)(d) and (e), or 947C(2)(e) and (f), as the case requires.
(9) The providing entity must keep a record of the advice and, in doing
so, must comply with any applicable requirements of regulations
made for the purposes of this subsection.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: For the client’s right to a record of the advice, see
subsections 942B(8) and 942C(8).
946C Timing of giving Statement of Advice
General rule
(1) Subject to this section, if the Statement of Advice is not the means
by which the advice is provided, the Statement of Advice must be
given to the client when, or as soon as practicable after, the advice
is provided and, in any event, before the providing entity provides
the client with any further financial service that arises out of or is
connected with that advice.
Statement of certain information if Statement of Advice not given
when advice provided
(2) If the Statement of Advice is not given to the client when the
advice is provided, the providing entity must, when the advice is
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provided, give the client a statement that contains the information
that would be required to be in a Statement of Advice by
paragraphs 947B(2)(d) and (e), or 947C(2)(e) and (f), as the case
requires, and by section 947D, if applicable.
Time critical cases
(3) If:
(a) the client expressly instructs that they require a further
financial service that arises out of, or is connected with, the
advice to be provided immediately, or by a specified time;
and
(b) it is not reasonably practicable to give the Statement of
Advice to the client before that further service is provided as
so instructed;
the providing entity must give the client the Statement of Advice:
(c) unless paragraph (d) applies—within 5 days after providing
that further service, or sooner if practicable; or
(d) if that further service is the provision to the person of a
financial product and section 1019B (cooling-off period) will
apply to the acquisition of the product by the person—before
the start of the period applicable under subsection 1019B(3),
or sooner if practicable.
Subdivision D—Content of Statement of Advice
947A Title of Statement of Advice
(1) The title “Statement of Advice” must be used on the cover of, or at
or near the front of, a Statement of Advice.
(2) In any other part of a Statement of Advice, “Statement of Advice”
may be abbreviated to “SoA”.
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Division 3 Additional requirements for personal advice provided to a retail client
Section 947B
436 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
947B Statement of Advice given by financial services licensee—main
requirements
(1) This section applies if the providing entity is a financial services
licensee.
(2) Subject to subsection (3) and to the regulations (see
subsection (4)), the Statement of Advice must include the
following statements and information:
(a) a statement setting out the advice; and
(b) information about the basis on which the advice is or was
given; and
(c) a statement setting out the name and contact details of the
providing entity; and
(d) information about any remuneration (including commission)
or other benefits that any of the following is to receive that
might reasonably be expected to be or have been capable of
influencing the providing entity in providing the advice:
(i) the providing entity;
(ii) a related body corporate of the providing entity;
(iii) a director or employee of the providing entity or a
related body corporate;
(iv) an associate of any of the above;
(v) any other person in relation to whom the regulations
require the information to be provided; and
(e) information about:
(i) any other interests, whether pecuniary or not and
whether direct or indirect, of the providing entity or of
any associate of the providing entity; and
(ii) any associations or relationships between the providing
entity or any associate of the providing entity and the
issuers of any financial products;
that might reasonably be expected to be or have been capable
of influencing the providing entity in providing the advice;
and
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(f) if section 961H requires a warning to be given to the client in
relation to the advice—a statement setting out, or recording,
the warning required by that section; and
(g) any other statements or information required by the
regulations; and
(h) unless in accordance with the regulations, for information to
be disclosed in accordance with paragraph (d) and
subparagraph (e)(i), any amounts are to be stated in dollars.
(3) Subject to subsection (4), the level of detail about a matter that is
required is such as a person would reasonably require for the
purpose of deciding whether to act on the advice as a retail client.
(4) The regulations may provide all or any of the following:
(a) that a provision of subsection (2) does not apply in a
particular situation;
(b) that particular information is not required by a provision of
subsection (2), either in a particular situation or generally;
(c) a more detailed statement of the information that is required
by a provision of subsection (2), either in a particular
situation or generally.
(5) The Statement of Advice:
(a) must also include any information required by section 947D,
if applicable; and
(b) may also include other information.
(6) The statements and information included in the Statement of
Advice must be worded and presented in a clear, concise and
effective manner.
947C Statement of Advice given by authorised representative—main
requirements
(1) This section applies if the providing entity is an authorised
representative.
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Section 947C
438 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) Subject to subsection (3) and to the regulations (see
subsection (4)), the Statement of Advice must include the
following statements and information:
(a) a statement setting out the advice; and
(b) information about the basis on which the advice is or was
given; and
(c) a statement setting out the name and contact details of the
providing entity; and
(d) a statement
(i) setting out the name and contact details of the
authorising licensee, or of each of the authorising
licensees; and
(ii) stating that the providing entity is the authorised
representative of that licensee or those licensees; and
(e) information about the remuneration (including commission)
or other benefits that any of the following is to receive that
might reasonably be expected to be or have been capable of
influencing the providing entity in providing the advice:
(i) the providing entity;
(ii) an employer of the providing entity;
(iii) the authorising licensee, or any of the authorising
licensees;
(iv) an employee or director of the authorising licensee, or
of any of the authorising licensees;
(v) an associate of any of the above;
(vi) any other person in relation to whom the regulations
require the information to be provided; and
(f) information about:
(i) any other interests, whether pecuniary or not and
whether direct or indirect, of the providing entity, any
employer of the providing entity, the authorising
licensee or any of the authorising licensees, or of any
associate of any of those persons; and
(ii) any associations or relationships between the providing
entity, any employer of the providing entity, the
authorising licensee or any of the authorising licensees,
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Corporations Act 2001 439
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or any associate of any of those persons, and the issuers
of any financial products;
that might reasonably be expected to be or have been capable
of influencing the providing entity in providing the advice;
and
(g) if section 961H requires a warning to be given to the client in
relation to the advice—a statement setting out, or recording,
the warning required by that section; and
(h) any other statements or information required by the
regulations; and
(i) unless in accordance with the regulations, for information to
be disclosed in accordance with paragraph (e) and
subparagraph (f)(i), any amounts are to be stated in dollars.
(3) Subject to subsection (4), the level of detail about a matter that is
required is such as a person would reasonably require for the
purpose of deciding whether to act on the advice as a retail client.
(4) The regulations may provide all or any of the following:
(a) that a provision of subsection (2) does not apply in a
particular situation;
(b) that particular information is not required by a provision of
subsection (2), either in a particular situation or generally;
(c) a more detailed statement of the information that is required
by a provision of subsection (2), either in a particular
situation or generally.
(5) The Statement of Advice:
(a) must also include any information required by section 947D,
if applicable; and
(b) may also include other information.
(6) The statements and information included in the Statement of
Advice must be worded and presented in a clear, concise and
effective manner.
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Division 3 Additional requirements for personal advice provided to a retail client
Section 947D
440 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
947D Additional requirements when advice recommends
replacement of one product with another
(1) This section applies (subject to subsection (4)) if the advice is or
includes a recommendation that:
(a) the client dispose of, or reduce the client’s interest in, all or
part of a particular financial product and instead acquire all
or part of, or increase the client’s interest in, another financial
product; or
(b) the client dispose of, or reduce the client’s interest in, a
MySuper product offered by a regulated superannuation fund
and instead acquire an interest, or increase the client’s
interest, in another MySuper product or a choice product
offered by the fund.
(2) The following additional information must be included in the
Statement of Advice:
(a) information about the following, to the extent that the
information is known to, or could reasonably be found out
by, the providing entity:
(i) any charges the client will or may incur in respect of the
disposal or reduction;
(ii) any charges the client will or may incur in respect of the
acquisition or increase;
(iii) any pecuniary or other benefits that the client will or
may lose (temporarily or otherwise) as a result of taking
the recommended action;
(b) information about any other significant consequences for the
client of taking the recommended action that the providing
entity knows, or ought reasonably to know, are likely;
(c) any other information required by regulations made for the
purposes of this paragraph;
(d) unless in accordance with the regulations, for information to
be disclosed in accordance with paragraph (a), any amounts
are to be stated in dollars.
(3) If:
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Section 947E
Corporations Act 2001 441
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(a) the providing entity knows that, or is reckless as to whether:
(i) the client will or may incur charges as mentioned in
subparagraph (2)(a)(i) or (ii); or
(ii) the client will or may lose benefits as mentioned in
subparagraph (2)(a)(iii); or
(iii) there will or may be consequences for the client as
mentioned in paragraph (2)(b); but
(b) the providing entity does not know, and cannot reasonably
find out, what those charges, losses or consequences are or
will be;
the Statement of Advice must include a statement to the effect that
there will or may be such charges, losses or consequences but the
providing entity does not know what they are.
(4) The regulations may provide either or both of the following:
(a) that this section does not apply in relation to a financial
product or a class of financial products;
(b) that this section does not require the provision of information
of a particular kind, whether generally or in relation to a
particular situation, financial product or class of financial
products.
(5) In this section:
MySuper product has the same meaning as in the Superannuation
Industry (Supervision) Act 1993.
947E Statement of Advice not to be combined with Financial
Services Guide or Product Disclosure Statement
A Statement of Advice must not be combined in a single document
with a Financial Services Guide or a Product Disclosure Statement.
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Part 7.7 Financial services disclosure
Division 3 Additional requirements for personal advice provided to a retail client
Section 948A
442 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision E—Other matters
948A Qualified privilege if providing entity complies with this
Division
The providing entity has qualified privilege in respect of a
statement made to the client, whether orally or in writing, in the
course of, or in connection with, providing the advice if the
providing entity has complied with all material requirements of this
Division in relation to the advice.
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Other disclosure requirements Division 4
Section 949A
Corporations Act 2001 443
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 4—Other disclosure requirements
949A General advice provided to retail client—obligation to warn
client that advice does not take account of client’s
objectives, financial situation or needs
(1) This section applies in relation to the provision of general advice
if:
(a) the advice is provided:
(i) by a financial services licensee (the providing entity); or
(ii) by an authorised representative (the providing entity) of
a financial services licensee, or of 2 or more financial
services licensees; and
(b) the advice is provided to a person (the client) as a retail
client; and
(c) the advice is not provided in circumstances specified in
regulations made for the purposes of this paragraph.
(2) The providing entity must, in accordance with subsection (3), warn
the client that:
(a) the advice has been prepared without taking account of the
client’s objectives, financial situation or needs; and
(b) because of that, the client should, before acting on the advice,
consider the appropriateness of the advice, having regard to
the client’s objectives, financial situation and needs; and
(c) if the advice relates to the acquisition, or possible acquisition,
of a particular financial product—the client should:
(i) if the product is not a CGS depository interest—obtain a
Product Disclosure Statement (see Division 2 of
Part 7.9) relating to the product and consider the
Statement before making any decision about whether to
acquire the product; or
(ii) if the product is a CGS depository interest—obtain each
information statement (see Division 5C of Part 7.9) for
the class of CGS depository interests that includes the
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Division 4 Other disclosure requirements
Section 949B
444 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
product and consider the statement before making any
decision about whether to acquire the product.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) The warning must be given to the client at the same time as the
advice is provided and by the same means as the advice is
provided.
(4) In any proceedings against an authorised representative of a
financial services licensee for an offence based on subsection (1), it
is a defence if:
(a) the licensee had provided the authorised representative with
information or instructions about the requirements to be
complied with in relation to the giving of personal advice;
and
(b) the representative’s failure to comply with subsection (1)
occurred because the representative was acting in reliance on
that information or those instructions; and
(c) the representative’s reliance on that information or those
instructions was reasonable.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (4). See subsection 13.3(3) of the Criminal Code.
(5) A financial services licensee must take reasonable steps to ensure
that an authorised representative of the licensee complies with
subsection (2).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
949B Regulations may impose disclosure requirements in certain
situations
(1) The regulations may impose disclosure requirements, or additional
disclosure requirements, to be complied with in any of the
following situations:
(a) a financial service related to a risk insurance product or an
investment life insurance product is provided to a person as a
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retail client by a financial services licensee, or an authorised
representative of a financial services licensee, acting under a
binder;
(b) a financial services licensee, or an authorised representative
of a financial services licensee, arranges for a person’s
instructions to be carried out through a financial market or a
clearing and settlement facility (whether inside or outside
Australia) that is not a licensed market or a licensed CS
facility;
(d) a financial service is provided by a person who does not need
an Australian financial services licence because the person is
covered by an exemption under paragraph 911A(2)(k) or (n( �
(e) a financial service is provided to a person as a wholesale
client.
(2) A person to whom regulations made for the purposes of
subsection (1) apply must comply with any applicable
requirements in those regulations.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) In any proceedings against an authorised representative of a
financial services licensee for an offence based on subsection (2), it
is a defence if:
(a) the licensee had provided the authorised representative with
information or instructions about the requirements to be
complied with in relation to the matter dealt with in the
requirement in the regulations; and
(b) the representative’s failure to comply with the requirement in
the regulations occurred because the representative was
acting in reliance on that information or those instructions;
and
(c) the representative’s reliance on that information or those
instructions was reasonable.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (3). See subsection 13.3(3) of the Criminal Code.
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Division 4 Other disclosure requirements
Section 949B
446 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(4) A financial services licensee must take reasonable steps to ensure
that an authorised representative of the licensee complies with
subsection (2).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Miscellaneous Division 6
Section 951A
Corporations Act 2001 447
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 6—Miscellaneous
951A Part cannot be contracted out of
A condition of a contract for the acquisition of a financial product,
or for the provision of a financial service, is void if it provides that
a party to the contract is:
(a) required or bound to waive compliance with any requirement
of this Part; or
(b) taken to have notice of any contract, document or matter not
specifically referred to in a Financial Services Guide,
Statement of Advice or other document given to the party.
951B Exemptions and modifications by ASIC
(1) ASIC may:
(a) exempt a person or a class of persons from all or specified
provisions of this Part; or
(b) exempt a financial product or class of financial products from
all or specified provisions of this Part; or
(c) declare that this Part applies in relation to a person or a
financial product, or a class of persons or financial products,
as if specified provisions of this Part were omitted, modified
or varied as specified in the declaration.
(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) An exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(5) If conduct (including an omission) of a person would not have
constituted an offence if a particular declaration under
paragraph (1)(c) had not been made, that conduct does not
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Division 6 Miscellaneous
Section 951C
448 Corporations Act 2001
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constitute an offence unless, before the conduct occurred (in
addition to complying with the gazettal requirement of
subsection (4)):
(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 Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
Note: Because of section 761H, a reference to this Part or Part 10.2 also
includes a reference to regulations or other instruments made for the
purposes of this Part or Part 10.2 (as the case requires).
951C Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial product or a class of financial products
from all or specified provisions of this Part; or
(c) provide that this Part applies as if specified provisions were
omitted, modified or varied as specified in the regulations.
(2) For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
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Enforcement Division 7
Section 952A
Corporations Act 2001 449
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 7—Enforcement
Subdivision A—Offences
952A Overview
This Subdivision contains provisions creating offences by
references to various rules contained in preceding Divisions of this
Part. However, it does not create all the offences relating to those
rules, as some offences are created by subsection 1311(1). Where
offences are created by subsection 1311(1) in relation to a rule, this
is indicated by a note at the end of the provision containing the
rule.
952B Definitions
(1) In this Subdivision:
defective, in relation to a disclosure document or statement, means:
(a) if the disclosure document or statement is a Financial
Services Guide, a Supplementary Financial Services Guide,
or is information or a statement required by
subsection 941C(5), 941C(7) or 941D(2):
(i) there is a misleading or deceptive statement in the
disclosure document or statement; or
(ii) if it is a Financial Services Guide—there is an omission
from the Financial Services Guide of material required
by section 942B or 942C; or
(iii) if it is a Supplementary Financial Services Guide that is
given for the purposes of paragraph 941F(d)—there is
an omission from the Supplementary Financial Services
Guide of material required by that paragraph; or
(iv) if it is information or a statement required by
subsection 941C(5), 941C(7) or 941D(2)—there is an
omission from the document or statement of material
required by that subsection;
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Section 952B
450 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
being a statement, or an omission, that is or would be
materially adverse from the point of view of a reasonable
person considering whether to proceed to be provided with
the financial service concerned; or
(b) if the disclosure document or statement is a Statement of
Advice, or is information, a statement or a copy of a record
required by subsection 946AA(5), 946B(3), (6) or (8) or
946C(2):
(i) there is a misleading or deceptive statement in the
disclosure document or statement; or
(ii) if it is a Statement of Advice—there is an omission from
the Statement of advice of material required by
section 947B, 947C or 947D; or
(iii) if it is information, a statement or a copy of a record
required by subsection 946AA(5), 946B(3), (6) or (8) or
946C(2)—there is an omission from the information,
statement or copy of material required by that
subsection or section;
being a statement, or an omission, that is or would be
materially adverse from the point of view of a reasonable
person considering whether to act in reliance on the advice
concerned.
Note: In determining whether a Financial Services Guide is defective, the
effect of section 943D must be taken into account (section 943D takes
information and statements in a Supplementary Financial Services
Guide to be included in the Financial Services Guide it supplements).
disclosure document or statement means:
(a) a Financial Services Guide; or
(b) a Supplementary Financial Services Guide; or
(c) a Statement of Advice; or
(d) information, a statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6)
or (8) or 946C(2).
(1A) For the avoidance of doubt, if section 941E (information must be
up to date) is not complied with in relation to a Financial Services
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Guide, then, for the purposes of the definition of defective in
subsection (1):
(a) if the circumstance constituting the non-compliance is that
particular information included in the Financial Services
Guide is not as up to date as section 941E requires it to be—
the information so included constitutes a misleading
statement in the Financial Services Guide; and
(b) if the circumstance constituting the non-compliance is a
failure to include particular information that was not
previously required to be included in the Financial Services
Guide—the failure to include the information constitutes an
omission from the Statement of material required by
section 942B or 942C.
Note 1: The effect of section 943D (information in a Supplementary Financial
Services Guide is taken to be contained in the Financial Services
Guide it supplements) must be taken into account in determining
whether section 941E is complied with in relation to a Financial
Services Guide.
Note 2: Whether the inclusion of out of date information, or the failure to
include information, results in the Financial Services Guide being
defective as defined in subsection (1) depends on whether the
materiality test set out in that definition is satisfied.
(2) In this Subdivision, a reference (including in the definitions in
subsection (1)) to a document or statement of a kind referred to in a
paragraph of the definition of disclosure document or statement in
subsection (1) includes a reference to something purporting to be a
document or statement of that kind.
952C Offence of failing to give a disclosure document or statement
Strict liability offence
(1) A person (the providing entity) commits an offence if:
(a) the providing entity is required by a provision of this Part to
give another person a disclosure document or statement (the
required disclosure document or statement); and
(b) the providing entity does not give (within the meaning of
section 940C) the other person anything purporting to be the
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Section 952C
452 Corporations Act 2001
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required disclosure document or statement by the time they
are required to do so.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(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.
Ordinary offence
(3) A person (the providing entity) commits an offence if:
(a) the providing entity is required by a provision of this Part to
give another person a disclosure document or statement (the
required disclosure document or statement); and
(b) the providing entity does not give (within the meaning of
section 940C) the other person anything purporting to be the
required disclosure document or statement by the time they
are required to do so.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
Defence for authorised representative
(4) In any proceedings against an authorised representative of a
financial services licensee for an offence based on subsection (1) or
(3), it is a defence if:
(a) the licensee had provided the representative with information
or instructions about the giving of disclosure documents or
statements; and
(b) the representative’s failure to give the required disclosure
document or statement occurred because the representative
was acting in reliance on that information or those
instructions; and
(c) the representative’s reliance on that information or those
instructions was reasonable.
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Section 952D
Corporations Act 2001 453
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Note: A defendant bears an evidential burden in relation to the matters in
subsection (4). See subsection 13.3(3) of the Criminal Code.
952D Offence of giving a disclosure document or statement knowing
it to be defective
(1) A person (the providing entity), being a financial services licensee,
commits an offence if:
(a) the providing entity:
(i) gives (see subsection (3)) another person a disclosure
document or statement in circumstances in which the
document or statement is required by a provision of this
Part to be given to the other person; or
(ii) is a financial services licensee and gives (see
subsection (3)), or makes available to, another person a
disclosure document or statement, being a Financial
Services Guide or a Supplementary Financial Services
Guide, reckless as to whether the other person will or
may rely on the information in it; and
(b) the providing entity knows that the disclosure document or
statement is defective.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(2) An authorised representative of a financial services licensee
commits an offence if:
(a) the representative:
(i) gives (see subsection (3)) a person a disclosure
document or statement in circumstances in which the
document or statement is required by a provision of this
Part to be given to the person; or
(ii) gives (see subsection (3)), or makes available to, a
person a disclosure document or statement, being a
Financial Services Guide or a Supplementary Financial
Services Guide, reckless as to whether the person will or
may rely on the information in it; and
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Section 952E
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(b) the representative knows that the disclosure document or
statement is defective.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(3) In this section, give means give by any means (including orally),
and is not limited to the meaning it has because of section 940C.
952E Giving a defective disclosure document or statement (whether
or not known to be defective)
Financial services licensee gives a defective disclosure document
or statement
(1) A person (the providing entity), being a financial services licensee,
contravenes this subsection if:
(a) the providing entity:
(i) gives (see subsection (5)) another person a disclosure
document or statement in circumstances in which the
document or statement is required by a provision of this
Part to be given to the other person; or
(ii) is a financial services licensee and gives (see
subsection (5)), or makes available to, another person a
disclosure document or statement, being a Financial
Services Guide or a Supplementary Financial Services
Guide, reckless as to whether the other person will or
may rely on the information in it; and
(b) the disclosure document or statement is defective.
Note: In criminal proceedings, a defendant bears an evidential burden in
relation to the matters in subsections 941C(1), (2), (3) and (3A). See
subsection 13.3(3) of the Criminal Code.
Authorised representative gives a defective disclosure statement or
document
(2) An authorised representative of a financial services licensee
contravenes this subsection if:
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(a) the representative gives (see subsection (5)) a person a
disclosure document or statement, being a Statement of
Advice, or information, a statement or a copy of a record
required by subsection 941C(5) or (7), 941D(2), 946AA(5),
946B(3), (6) or (8) or 946C(2), in circumstances in which the
document or statement is required by a provision of this Part
to be given to the person; and
(b) the disclosure document or statement is defective.
Note: In criminal proceedings, a defendant bears an evidential burden in
relation to the matters in subsections 941C(1), (2), (3) and (3A). See
subsection 13.3(3) of the Criminal Code.
Exceptions
(3) A person does not contravene subsection (1) or (2) if the person
took reasonable steps to ensure that the disclosure document or
statement would not be defective.
Note: In criminal proceedings, a defendant bears an evidential burden in
relation to the matters in subsection (3). See subsection 13.3(3) of the
Criminal Code.
(4) A person does not contravene subsection (2) if the disclosure
document or statement:
(a) was provided to the person by a financial services licensee
for whom they were, at that time, an authorised
representative; or
(b) was defective because of information, or an omission from
information, provided to them by a financial services licensee
for whom they were, at that time, an authorised
representative.
Note: In criminal proceedings, a defendant bears an evidential burden in
relation to the matters in subsection (4). See subsection 13.3(3) of the
Criminal Code.
Meaning of give
(5) In this section, give means give by any means (including orally),
and is not limited to the meaning it has because of section 940C.
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Fault-based offence
(6) A person commits an offence if the person contravenes
subsection (1) or (2).
(7) For the purposes of an offence based on subsection (1), strict
liability applies to the physical element of the offence specified in
paragraph (1)(b).
(8) For the purposes of an offence based on subsection (2), strict
liability applies to the physical element of the offence specified in
paragraph (2)(b).
Civil liability
(9) A person contravenes this subsection if the person contravenes
subsection (1) or (2).
Note: This subsection is a civil penalty provision (see section 1317E).
952F Offences of financial services licensee knowingly providing
defective disclosure material to an authorised
representative
(1) For the purposes of this section, a financial services licensee
provides disclosure material to an authorised representative of the
licensee if:
(a) the licensee authorises the distribution by the representative
of a disclosure document or statement, being a Financial
Services Guide or a Supplementary Financial Services
Guide; or
(b) the licensee provides the representative with a disclosure
document or statement, being a Statement of Advice, or
information, a statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6)
or (8) or 946C(2); or
(c) the licensee provides the representative with information:
(i) for the purpose of it being included by the
representative in a disclosure document or statement,
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being a Statement of Advice, or information, a
statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5),
946B(3), (6) or (8) or 946C(2); or
(ii) knowing that it is likely that it will be so included in
such a document.
(2) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being a disclosure
document or statement) to an authorised representative of the
licensee as mentioned in paragraph (1)(a) or (b); and
(b) the licensee knows that the disclosure document or statement
is defective.
(3) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being information)
to an authorised representative of the licensee as mentioned
in paragraph (1)(c); and
(b) the licensee knows that, if the information is included by the
representative as mentioned in that paragraph, the disclosure
document or statement concerned will be defective.
(4) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being information)
to an authorised representative of the licensee as mentioned
in paragraph (1)(c); and
(b) the information relates to a matter or matters, but the licensee
knows that it is only some of the information relating to the
matter or matters that the disclosure document or statement
concerned is required to contain; and
(c) the licensee is reckless as to whether the representative will
or may prepare the disclosure document or statement on the
basis that the information is all the information relating to the
matter or matters that the disclosure document or statement is
required to contain.
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Section 952G
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952G Offences of financial services licensee providing disclosure
material to an authorised representative (whether or not
known to be defective)
(1) For the purposes of this section, a financial services licensee
provides disclosure material to an authorised representative of the
licensee if:
(a) the licensee authorises the distribution by the representative
of a disclosure document or statement, being a Financial
Services Guide or a Supplementary Financial Services
Guide; or
(b) the licensee provides the representative with a disclosure
document or statement, being a Statement of Advice, or
information, a statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6)
or (8) or 946C(2); or
(c) the licensee provides the representative with information:
(i) for the purpose of it being included by the
representative in a disclosure document or statement,
being a Statement of Advice, or information, a
statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5),
946B(3), (6) or (8) or 946C(2); or
(ii) knowing that it is likely that it will be so included in
such a document.
(2) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being a disclosure
document or statement) to an authorised representative of the
licensee as mentioned in paragraph (1)(a) or (b); and
(b) the disclosure document or statement is defective in a respect
that does not relate to material required to be in the document
or statement only because the representative is also the
authorised representative of another financial services
licensee.
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(3) For the purposes of an offence based on subsection (2), strict
liability applies to the physical element of the offence specified in
paragraph (2)(b).
Note: For strict liability, see section 6.1 of the Criminal Code.
(4) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being information)
to an authorised representative of the licensee as mentioned
in paragraph (1)(c); and
(b) the authorised representative includes the information in the
disclosure document or statement concerned; and
(c) the disclosure document or statement is defective because it
includes that information (whether or not it is also defective
for other reasons).
(5) For the purposes of an offence based on subsection (4), strict
liability applies to the physical element of the offence specified in
paragraph (4)(c).
Note: For strict liability, see section 6.1 of the Criminal Code.
(6) A financial services licensee commits an offence if:
(a) the licensee provides disclosure material (being information)
to an authorised representative of the licensee as mentioned
in paragraph (1)(c); and
(b) the information relates to a matter or matters, but it is only
some of the information relating to the matter or matters that
the disclosure document or statement concerned is required
to contain; and
(c) the representative prepares the disclosure document or
statement on the basis that the information is all the
information relating to the matter or matters that the
disclosure document or statement is required to contain; and
(d) the disclosure document or statement is defective because it
includes only that information about the matter or matters
(whether or not it is also defective for other reasons).
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(7) For the purposes of an offence based on subsection (6), strict
liability applies to the physical elements of the offence specified in
paragraphs (6)(b) and (d).
Note: For strict liability, see section 6.1 of the Criminal Code.
(8) In any proceedings against a person for an offence based on
subsection (2), it is a defence if the person took reasonable steps to
ensure that the disclosure document or statement would not be
defective.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (8). See subsection 13.3(3) of the Criminal Code.
(9) In any proceedings against a person for an offence based on
subsection (4), it is a defence if the person took reasonable steps to
ensure that the information they provided would not be such as to
make the disclosure document or statement defective.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (9). See subsection 13.3(3) of the Criminal Code.
(10) In any proceedings against a person for an offence based on
subsection (6), it is a defence if the person took reasonable steps to
ensure that the information they provided about the matter or
matters would be all the information about the matter or matters
that the disclosure document or statement would be required to
contain.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (10). See subsection 13.3(3) of the Criminal Code.
952H Financial services licensee failing to ensure authorised
representative gives disclosure documents or statements
as required
Obligation
(1) A financial services licensee contravenes this subsection if the
licensee does not take reasonable steps to ensure that an authorised
representative of the licensee:
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(a) complies with their obligations under this Part to give
disclosure documents or statements as and when required;
and
(b) without limiting paragraph (a), does not, in purported
compliance with obligations under this Part, give disclosure
documents or statements that are defective.
Fault-based offence
(2) A person commits an offence if the person contravenes
subsection (1).
Civil liability
(3) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
952I Offences if a Financial Services Guide (or Supplementary FSG)
does not comply with certain requirements
(1) A financial services licensee commits an offence if:
(a) the licensee:
(i) gives (see subsection (6)) a person a Financial Services
Guide in circumstances in which it is required by a
provision of this Part to be given to the person; or
(ii) gives (see subsection (6)), or makes available to, a
person a Financial Services Guide, reckless as to
whether the person will or may rely on the information
in it; and
(b) the Financial Services Guide does not comply with
section 942A, subsection 942B(5) or 942DA(3) or
paragraph 942E(b).
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(2) A financial services licensee commits an offence if:
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(a) the financial services licensee authorises the distribution of a
Financial Services Guide by an authorised representative of
the licensee; and
(b) the Financial Services Guide does not comply with
section 942A, subsection 942B(5) or 942DA(3) or
paragraph 942E(b).
(3) A financial services licensee commits an offence if:
(a) the licensee:
(i) gives (see subsection (6)) a person a Supplementary
Financial Services Guide in circumstances in which it is
required by a provision of this Part to be given to the
person; or
(ii) gives (see subsection (6)), or makes available to, a
person a Supplementary Financial Services Guide,
reckless as to whether the person will or may rely on the
information in it; and
(b) the Supplementary Financial Services Guide does not comply
with section 943B or 943C.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(4) A financial services licensee commits an offence if:
(a) the financial services licensee authorises the distribution of a
Supplementary Financial Services Guide by an authorised
representative of the licensee; and
(b) the Supplementary Financial Services Guide does not comply
with section 943B or 943C.
(5) For the purposes of an offence based on subsection (1), (2), (3) or
(4), strict liability applies to paragraph (b) of that subsection.
Note: For strict liability, see section 6.1 of the Criminal Code.
(6) In this section, give means give by any means (including orally),
and is not limited to the meaning it has because of section 940C.
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952J Offence if a Statement of Advice does not comply with certain
requirements
(1) A financial services licensee, or an authorised representative of a
financial services licensee, commits an offence if:
(a) the licensee or representative gives (see subsection (3)) a
person a Statement of Advice in circumstances in which it is
required by a provision of this Part to be given to the person;
and
(b) the Statement of Advice does not comply with section 947A
or 947E.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
(2) For the purposes of an offence based on subsection (1), strict
liability applies to paragraph (b) of that subsection.
Note: For strict liability, see section 6.1 of the Criminal Code.
(3) In this section, give means give by any means (including orally),
and is not limited to the meaning it has because of section 940C.
952K Offence if authorised representative gives out unauthorised
Financial Services Guide (or Supplementary FSG)
An authorised representative of a financial services licensee
commits an offence if:
(a) the representative:
(i) gives a person a Financial Services Guide, or a
Supplementary Financial Services Guide, in
circumstances in which it is required by a provision of
this Part to be given to the person; or
(ii) gives, or makes available to, a person a Financial
Services Guide, or a Supplementary Financial Services
Guide, reckless as to whether the person will or may
rely on the information in it; and
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(b) the licensee has not authorised the distribution by the
representative of the Financial Services Guide or the
Supplementary Financial Services Guide.
Note: A defendant bears an evidential burden in relation to the matters in
subsections 941C(1), (2), (3) and (3A). See subsection 13.3(3) of the
Criminal Code.
952L Offences if financial services licensee or authorised
representative becomes aware that a Financial Services
Guide (or Supplementary FSG) is defective
(1) A financial services licensee commits an offence if:
(a) the licensee has authorised an authorised representative of the
licensee to distribute a Financial Services Guide or a
Supplementary Financial Services Guide; and
(b) the licensee becomes aware that the Financial Services
Guide, or the Supplementary Financial Services Guide, is
defective; and
(c) the licensee does not, as soon as practicable, give the
representative a direction that satisfies one or more of the
following subparagraphs:
(i) a direction not to distribute the Financial Services Guide
or the Supplementary Financial Services Guide;
(ii) a direction not to distribute the Financial Services Guide
unless it is accompanied by a Supplementary Financial
Services Guide that corrects the deficiency;
(iii) a direction not to distribute the Financial Services Guide
or the Supplementary Financial Services Guide without
first altering it in a way that is specified in the direction,
being a way that corrects the deficiency and that
complies with section 942E or 943F.
(2) An authorised representative commits an offence if:
(a) the representative is given a direction under subsection (1);
and
(b) the representative does not comply with the direction.
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(3) An authorised representative of a financial services licensee
commits an offence if:
(a) the licensee has authorised the representative to distribute a
Financial Services Guide or a Supplementary Financial
Services Guide; and
(b) the representative becomes aware that the Financial Services
Guide, or the Supplementary Financial Services Guide, is
defective; and
(c) the representative does not, as soon as practicable, notify the
licensee of the particulars of the deficiency.
(4) In this section, a reference to distributing a Financial Services
Guide or a Supplementary Financial Services Guide includes (but
is not limited to) giving or reading the document or statement to
another person in purported compliance with a requirement of this
Part.
952M Offence of unauthorised alteration of Financial Services
Guide or Supplementary Financial Services Guide
A person commits an offence if:
(a) the person engages in conduct that results in an alteration of a
Financial Services Guide or a Supplementary Financial
Services Guide that:
(i) has been prepared by or on behalf of a particular
financial services licensee; or
(ii) the distribution of which by the person has been
authorised by a particular financial services licensee;
and
(b) the alteration results in the Financial Services Guide or
Supplementary Financial Services Guide becoming defective,
or more defective than it previously was; and
(c) the alteration is not made with the authority of the licensee;
and
(d) the person, in purported compliance with a provision of this
Part, gives the altered Financial Services Guide or
Supplementary Financial Services Guide to another person.
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Section 953A
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Subdivision B—Civil liability
953A Definitions
(1) In this Subdivision:
defective, in relation to a disclosure document or statement, means:
(a) if the disclosure document or statement is a Financial
Services Guide, a Supplementary Financial Services Guide,
or is information or a statement required by
subsection 941C(5), 941C(7) or 941D(2):
(i) there is a misleading or deceptive statement in the
disclosure document or statement; or
(ii) if it is a Financial Services Guide—there is an omission
from the Financial Services Guide of material required
by section 942B or 942C; or
(iii) if it is a Supplementary Financial Services Guide that is
given for the purposes of paragraph 941F(d)—there is
an omission from the Supplementary Financial Services
Guide of material required by that paragraph; or
(iv) if it is information or a statement required by
subsection 941C(5), 941C(7) or 941D(2)—there is an
omission from the document or statement of material
required by that subsection; or
(b) if the disclosure document or statement is a Statement of
Advice, or is information, a statement or a copy of a record
required by subsection 946AA(5), 946B(3), (6) or (8) or
946C(2):
(i) there is a misleading or deceptive statement in the
disclosure document or statement; or
(ii) if it is a Statement of Advice—there is an omission from
the Statement of Advice of material required by
section 947B, 947C or 947D; or
(iii) if it is information, a statement or a copy of a record
required by subsection 946AA(5), 946B(3), (6) or (8) or
946C(2)—there is an omission from the information,
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statement or copy of material required by that
subsection or section.
Note: In determining whether a Financial Services Guide is defective, the
effect of section 943D must be taken into account (section 943D takes
information and statements in a Supplementary Financial Services
Guide to be included in the Financial Services Guide it supplements).
disclosure document or statement means:
(a) a Financial Services Guide; or
(b) a Supplementary Financial Services Guide; or
(c) a Statement of Advice; or
(d) information, a statement or a copy of a record required by
subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6)
or (8) or 946C(2).
(1A) For the avoidance of doubt, if section 941E (information must be
up to date) is not complied with in relation to a Financial Services
Guide, then, for the purposes of the definition of defective in
subsection (1):
(a) if the circumstance constituting the non-compliance is that
particular information included in the Financial Services
Guide is not as up to date as section 941E requires it to be—
the information so included constitutes a misleading
statement in the Financial Services Guide; and
(b) if the circumstance constituting the non-compliance is a
failure to include particular information that was not
previously required to be included in the Financial Services
Guide—the failure to include the information constitutes an
omission from the Statement of material required by
section 942B or 942C.
Note: The effect of section 943D (information in a Supplementary Financial
Services Guide is taken to be contained in the Financial Services
Guide it supplements) must be taken into account in determining
whether section 941E is complied with in relation to a Financial
Services Guide.
(2) In this Subdivision, a reference (including in the definitions in
subsection (1)) to a document or statement of a kind referred to in a
paragraph of the definition of disclosure document or statement in
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subsection (1) includes a reference to something purporting to be a
document or statement of that kind.
953B Civil action for loss or damage
(1) This section applies in the following situations:
(a) a person:
(i) is required by a provision of this Part to give another
person (the client) a disclosure document or statement
(the required disclosure document or statement); and
(ii) does not give (within the meaning of section 940C) the
client anything purporting to be the required disclosure
document or statement by the time they are required to
do so; or
(b) a person:
(i) gives another person (the client) a disclosure document
or statement that is defective in circumstances in which
a disclosure document or statement is required by a
provision of this Part to be given to the client; or
(ii) is a financial services licensee and gives, or makes
available to, another person (the client) a disclosure
document or statement, being a Financial Services
Guide or a Supplementary Financial Services Guide,
that is defective, reckless as to whether the client will or
may rely on the information in it; or
(c) a person contravenes section 949A or 949B.
In paragraph (b), give means give by any means (including orally),
and is not limited to the meaning it has because of section 940C.
(2) In a situation to which this section applies, if a person suffers loss
or damage:
(a) if paragraph (1)(a) applies—because the client was not given
the disclosure document or statement that they should have
been given; or
(b) if paragraph (1)(b) applies—because the disclosure document
or statement the client was given was defective; or
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(c) if paragraph (1)(c) applies—because of the contravention
referred to in that paragraph;
the person may, subject to subsection (6), recover the amount of
the loss or damage by action against the, or a, liable person (see
subsections (3) and (4)), whether or not that person (or anyone
else) has been convicted of an offence in respect of the matter
referred to in paragraph (a), (b) or (c).
(3) For the purposes of subsection (2), the, or a, liable person is:
(a) if the person first-referred to in paragraph (1)(a), (b) or (c) is
a financial services licensee—subject to subsection (4), that
person; or
(b) if the person first-referred to in paragraph (1)(a), (b) or (c) is
an authorised representative of only one financial services
licensee—that financial services licensee; or
(c) if the person first-referred to in paragraph (1)(a), (b) or (c) is
an authorised representative of more than one financial
services licensee:
(i) if, under the rules in section 917C, one of those
licensees is responsible for the person’s conduct—that
licensee; or
(ii) if, under the rules in section 917C, 2 or more of those
licensees are jointly and severally responsible for the
person’s conduct—each of those licensees.
(3A) For the purposes of paragraph (3)(c):
(a) section 917C is taken to apply, despite section 917F; and
(b) section 917D is taken not to apply.
(4) If:
(a) paragraph (1)(b) applies; and
(b) an alteration was made to the disclosure document or
statement before it was given to the client; and
(c) the alteration made the disclosure document or statement
defective, or more defective than it would otherwise have
been; and
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(d) the alteration was not made by, or with the authority of, the
person who would, but for this subsection, be the liable
person because of paragraph (3)(a);
then, so far as a person has suffered loss or damage because the
disclosure document or statement was defective because of the
alteration, the liable person is the person who made the alteration,
rather than the person referred to in paragraph (d).
(5) An action under subsection (2) may be begun at any time within 6
years after the day on which the cause of action arose.
(6) A person is not liable under subsection (2) in a situation described
in paragraph (1)(b) if the person took reasonable steps to ensure
that the disclosure document or statement would not be defective.
(7) This section does not affect any liability that a person has under
any other law.
953C Additional powers of court to make orders
(1) The court dealing with an action under subsection 953B(2) may, in
addition to awarding loss or damage under that subsection and if it
thinks it necessary in order to do justice between the parties:
(a) make an order declaring void a contract entered into by the
client referred to in that subsection for or relating to a
financial product or a financial service; and
(b) if it makes an order under paragraph (a)—make such other
order or orders as it thinks are necessary or desirable because
of that order.
(2) Without limiting paragraph (1)(b), an order under that paragraph
may include an order for the return of money paid by a person,
and/or an order for payment of an amount of interest specified in,
or calculated in accordance with, the order.
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Preliminary Division 1
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Part 7.7A—Best interests obligations and
remuneration
Division 1—Preliminary
960 Definitions
In this Part:
asset-based fee has the meaning given by section 964F.
basic banking product has the meaning given by section 961F.
benefit ratio, for a benefit given to a financial services licensee, or
a representative of a financial services licensee, in relation to a life
risk insurance product, or life risk insurance products, for a year,
has the meaning given by subsection 963B(3A).
conflicted remuneration has the meaning given by section 963A,
as affected by sections 963AA, 963B, 963C and 963D.
consumer credit insurance has the same meaning as in the
Insurance Contracts Act 1984.
custodian, in relation to a registrable superannuation entity, has the
same meaning as in the Superannuation Industry (Supervision) Act
1993.
disclosure day has the meaning given by section 962J.
fee disclosure statement has the meaning given by
subsection 962H(1).
fee recipient has the meaning given by section 962C.
group life policy for members of a superannuation entity has the
meaning given by subsection 963B(2).
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Part 7.7A Best interests obligations and remuneration
Division 1 Preliminary
Section 960
472 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
life policy for a member of a default superannuation fund has the
meaning given by subsection 963B(3).
ongoing fee has the meaning given by section 962B.
ongoing fee arrangement has the meaning given by section 962A.
policy cost, for a life risk insurance product, or life risk insurance
products, for a year has the meaning given by
subsections 963B(3B) and (3C).
reasonable investigation has a meaning affected by section 961D.
reasonably apparent:
(a) in Division 2—has the meaning given by section 961C; and
(b) in Subdivision B of Division 5—has the meaning given by
section 964H.
registrable superannuation entity has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
regulated superannuation fund has the same meaning as in the
Superannuation Industry (Supervision) Act 1993.
renewal notice has the meaning given by subsection 962K(2).
renewal notice day has the meaning given by subsection 962L(1).
renewal period has the meaning given by subsection 962L(2).
representative of a financial services licensee has the same
meaning as in Part 7.6 (see section 910A).
responsible licensee, in relation to a contravention of a provision
of this Part, has the meaning given by section 961P.
RSE licensee has the same meaning as in the Superannuation
Industry (Supervision) Act 1993.
volume-based shelf-space fee has a meaning affected by
section 964A.
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Preliminary Division 1
Section 960A
Corporations Act 2001 473
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
960A No contracting out
A condition of a contract or other arrangement is void if it provides
that a party to the contract is required or bound to waive any right
under this Part, or waive the compliance with any requirement of
this Part.
960B Obligations under this Part in addition to other obligations
The obligations imposed on a person under this Part are in addition
to any other obligations to which the person is subject under this
Act or any other law.
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Part 7.7A Best interests obligations and remuneration
Division 2 Best interests obligations
Section 961
474 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 2—Best interests obligations
Subdivision A—Preliminary
961 Application of this Division
(1) This Division applies in relation to the provision of personal advice
(the advice) to a person (the client) as a retail client.
(2) The individual who is to provide the advice is referred to in this
Division as the provider.
(3) If 2 or more individuals are to provide the advice, each of those
individuals is referred to in this Division as the provider.
(4) An individual is a provider for the purposes of this Division even if
the individual is a representative of a financial services licensee
and is to provide the advice on behalf of that licensee.
(5) If it is not reasonably possible to identify the individual who is to,
or individuals who are to, provide the advice, the person who is to
provide the advice is the provider for the purposes of this Division.
(6) A person who offers personal advice through a computer program
is taken to be the person who is to provide the advice, and is the
provider for the purposes of this Division.
961A Application to a financial services licensee acting as an
authorised representative
If a financial services licensee is acting as an authorised
representative of another financial services licensee in relation to
the advice, this Division applies to the first licensee in relation to
the advice in that licensee’s capacity as an authorised
representative (rather than in the capacity of licensee).
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Best interests obligations Division 2
Section 961B
Corporations Act 2001 475
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision B—Provider must act in the best interests of the
client
961B Provider must act in the best interests of the client
(1) The provider must act in the best interests of the client in relation
to the advice.
(2) The provider satisfies the duty in subsection (1), if the provider
proves that the provider has done each of the following:
(a) identified the objectives, financial situation and needs of the
client that were disclosed to the provider by the client
through instructions;
(b) identified:
(i) the subject matter of the advice that has been sought by
the client (whether explicitly or implicitly); and
(ii) the objectives, financial situation and needs of the client
that would reasonably be considered as relevant to
advice sought on that subject matter (the client’s
relevant circumstances);
(c) where it was reasonably apparent that information relating to
the client’s relevant circumstances was incomplete or
inaccurate, made reasonable inquiries to obtain complete and
accurate information;
(d) assessed whether the provider has the expertise required to
provide the client advice on the subject matter sought and, if
not, declined to provide the advice;
(e) if, in considering the subject matter of the advice sought, it
would be reasonable to consider recommending a financial
product:
(i) conducted a reasonable investigation into the financial
products that might achieve those of the objectives and
meet those of the needs of the client that would
reasonably be considered as relevant to advice on that
subject matter; and
(ii) assessed the information gathered in the investigation;
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Section 961B
476 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(f) based all judgements in advising the client on the client’s
relevant circumstances;
(g) taken any other step that, at the time the advice is provided,
would reasonably be regarded as being in the best interests of
the client, given the client’s relevant circumstances.
Note: The matters that must be proved under subsection (2) relate to the
subject matter of the advice sought by the client and the circumstances
of the client relevant to that subject matter (the client’s relevant
circumstances). That subject matter and the client’s relevant
circumstances may be broad or narrow, and so the subsection
anticipates that a client may seek scaled advice and that the inquiries
made by the provider will be tailored to the advice sought.
Advice given by Australian ADIs—best interests duty satisfied if
certain steps are taken
(3) If:
(a) the provider is:
(i) an agent or employee of an Australian ADI; or
(ii) otherwise acting by arrangement with an Australian
ADI under the name of the Australian ADI; and
(b) the subject matter of the advice sought by the client relates
only to the following:
(i) a basic banking product;
(ii) a general insurance product;
(iii) consumer credit insurance;
(iv) a combination of any of those products;
the provider satisfies the duty in subsection (1) in relation to the
advice given in relation to the basic banking product and the
general insurance product if the provider takes the steps mentioned
in paragraphs (2)(a), (b) and (c).
General insurance products—best interests duty satisfied if certain
steps are taken
(4) To the extent that the subject matter of the advice sought by the
client is a general insurance product, the provider satisfies the duty
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Section 961C
Corporations Act 2001 477
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
in subsection (1) if the provider takes the steps mentioned in
paragraphs (2)(a), (b) and (c).
Regulations
(5) The regulations may prescribe:
(a) a step, in addition to or substitution for the steps mentioned
in subsection (2), that the provider must, in prescribed
circumstances, prove that the provider has taken, to satisfy
the duty in subsection (1); or
(b) that the provider is not required, in prescribed circumstances,
to prove that the provider has taken a step mentioned in
subsection (2), to satisfy the duty in subsection (1); or
(c) circumstances in which the duty in subsection (1) does not
apply.
961C When is something reasonably apparent?
Something is reasonably apparent if it would be apparent to a
person with a reasonable level of expertise in the subject matter of
the advice that has been sought by the client, were that person
exercising care and objectively assessing the information given to
the provider by the client.
961D What is a reasonable investigation?
(1) A reasonable investigation into the financial products that might
achieve those of the objectives and meet those of the needs of the
client that would reasonably be considered relevant to advice on
the subject matter sought by the client does not require an
investigation into every financial product available.
(2) However, if the client requests the provider to consider a specified
financial product, a reasonable investigation into the financial
products that might achieve those of the objectives and meet those
of the needs of the client that would reasonably be considered
relevant to advice on the subject matter sought by the client
includes an investigation into that financial product.
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Division 2 Best interests obligations
Section 961E
478 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
961E What would reasonably be regarded as in the best interests of
the client?
It would reasonably be regarded as in the best interests of the client
to take a step, if a person with a reasonable level of expertise in the
subject matter of the advice that has been sought by the client,
exercising care and objectively assessing the client’s relevant
circumstances, would regard it as in the best interests of the client,
given the client’s relevant circumstances, to take that step.
961F What is a basic banking product?
Each of the following is a basic banking product:
(a) a basic deposit product;
(b) a facility for making non-cash payments (see section 763D);
(d) a facility for providing traveller’s cheques;
(e) any other product prescribed by regulations for the purposes
of this paragraph.
Subdivision C—Resulting advice must be appropriate to the
client
961G Resulting advice must be appropriate to the client
The provider must only provide the advice to the client if it would
be reasonable to conclude that the advice is appropriate to the
client, had the provider satisfied the duty under section 961B to act
in the best interests of the client.
Note: A responsible licensee or an authorised representative may contravene
a civil penalty provision if a provider fails to comply with this section
(see sections 961K and 961Q). The provider may be subject to a
banning order (see section 920A).
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Best interests obligations Division 2
Section 961H
Corporations Act 2001 479
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision D—Where resulting advice still based on
incomplete or inaccurate information
961H Resulting advice still based on incomplete or inaccurate
information
(1) If it is reasonably apparent that information relating to the
objectives, financial situation and needs of the client on which the
advice is based is incomplete or inaccurate, the provider must, in
accordance with subsections (2) and (3), warn the client that:
(a) the advice is, or may be, based on incomplete or inaccurate
information relating to the client’s relevant personal
circumstances; and
(b) because of that, the client should, before acting on the advice,
consider the appropriateness of the advice, having regard to
the client’s objectives, financial situation and needs.
(2) The warning must be given to the client at the same time as the
advice is provided and, subject to subsection (3), by the same
means as the advice is provided.
(3) If a Statement of Advice is the means by which the advice is
provided, or is given to the client at the same time as the advice is
provided, the warning may be given by including it in the
Statement of Advice.
Note: The Statement of Advice must at least contain a record of the warning
(see paragraphs 947B(2)(f) and 947C(2)(g)).
(4) If 2 or more individuals provide the advice and one of those
individuals provides a warning in accordance with this section, the
other individuals are taken to have complied with this section.
(5) Nothing in this section affects the duty of the provider under
section 961B to make reasonable inquiries to obtain complete and
accurate information.
Note: A responsible licensee or an authorised representative may contravene
a civil penalty provision if a provider fails to comply with this section
(see sections 961K and 961Q). The provider may be subject to a
banning order (see section 920A).
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Part 7.7A Best interests obligations and remuneration
Division 2 Best interests obligations
Section 961J
480 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision E—Provider to give priority to the client’s interests
961J Conflict between client’s interests and those of provider,
licensee, authorised representative or associates
(1) If the provider knows, or reasonably ought to know, that there is a
conflict between the interests of the client and the interests of:
(a) the provider; or
(b) an associate of the provider; or
(c) a financial services licensee of whom the provider is a
representative; or
(d) an associate of a financial services licensee of whom the
provider is a representative; or
(e) an authorised representative who has authorised the provider,
under subsection 916B(3), to provide a specified financial
service or financial services on behalf of a financial services
licensee; or
(f) an associate of an authorised representative who has
authorised the provider, under subsection 916B(3), to provide
a specified financial service or financial services on behalf of
a financial services licensee;
the provider must give priority to the client’s interests when giving
the advice.
Note: A responsible licensee or an authorised representative may contravene
a civil penalty provision if a provider fails to comply with this section
(see sections 961K and 961Q). The provider may be subject to a
banning order (see section 920A).
(2) If:
(a) the provider is:
(i) an agent or employee of an Australian ADI; or
(ii) otherwise acting by arrangement with an Australian
ADI under the name of the Australian ADI; and
(b) the subject matter of the advice sought by the client relates
only to the following:
(i) a basic banking product;
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Section 961K
Corporations Act 2001 481
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ii) a general insurance product;
(iii) consumer credit insurance;
(iv) a combination of any of those products;
subsection (1) does not apply to the extent that the advice relates to
a basic banking product or a general insurance product or a
combination of those 2 products.
(3) Subsection (1) does not apply to the extent that the subject matter
of the advice sought by the client is a general insurance product.
Subdivision F—Responsibilities of licensees under this Division
961K Civil penalty provision—sections 961B, 961G, 961H and 961J
(1) A financial services licensee contravenes this section if the licensee
contravenes section 961B, 961G, 961H or 961J.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of
the licensee contravenes section 961B, 961G, 961H or 961J;
and
(b) the licensee is the, or a, responsible licensee in relation to
that contravention.
Note: This subsection is a civil penalty provision (see section 1317E).
961L Licensees must ensure compliance
A financial services licensee must take reasonable steps to ensure
that representatives of the licensee comply with sections 961B,
961G, 961H and 961J.
Note: This section is a civil penalty provision (see section 1317E).
961M Civil action for loss or damage
(1) This section applies if the client suffers loss or damage because of
a contravention of a provision of this Division.
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Section 961M
482 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) A Court may order that one or more of the following persons
compensate the client for the amount of the loss or damage:
(a) if the person who contravenes the provision is a financial
services licensee—that licensee;
(b) if the person who contravenes the provision is a
representative of a financial services licensee, or 2 or more
financial services licensees—the, or a, responsible licensee in
relation to the contravention.
(3) The Court may make the order under this section:
(a) on its own initiative, during proceedings before the Court; or
(b) on the application of ASIC; or
(c) on the application of the client.
(4) In determining the damage suffered by the client, the Court may
include profits resulting from the contravention that are made by:
(a) if the person who contravenes the provision is a financial
services licensee—the licensee; or
(b) if the person who contravenes the provision is a
representative of a financial services licensee, or 2 or more
financial services licensees:
(i) the representative; and
(ii) where the Court’s order under subsection (2) relates to a
financial services licensee that is the, or a, responsible
licensee in relation to the contravention—the licensee.
(5) An order under this section may be made whether or not the
licensee against whom the order is made (or anyone else) has been
convicted of an offence, or been the subject of a civil penalty order,
in respect of the matter.
(6) An action to recover the amount of the loss or damage may be
begun at any time within 6 years after the contravention.
(7) An order under this section may be enforced as if it were a
judgement of the Court.
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Best interests obligations Division 2
Section 961N
Corporations Act 2001 483
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(8) This section does not affect any liability that a person has under
any other law.
961N Additional powers of Court to make orders
(1) The Court dealing with an action under subsection 961M(2) may,
in addition to awarding loss or damage under that subsection and if
it thinks it necessary in order to do justice between the parties:
(a) make an order declaring void a contract entered into by the
client for or relating to a financial product or a financial
service; and
(b) if it makes an order under paragraph (a)—make such other
order or orders as it thinks are necessary or desirable because
of that order.
(2) Without limiting paragraph (1)(b), an order under that paragraph
may include either or both of the following:
(a) an order for the return of money paid by a person;
(b) an order for the payment of an amount of interest specified
in, or calculated in accordance with, the order.
961P Responsible licensee
For the purposes of this Part, the, or a, responsible licensee, in
relation to a contravention of a provision of this Part, is:
(a) if the person who contravenes the provision is a
representative of only one financial services licensee—that
financial services licensee; or
(b) if the person who contravenes the provision is a
representative of more than one financial services licensee:
(i) if, under the rules in section 917C, one of those
licensees is responsible for the person’s conduct—that
licensee; or
(ii) if, under the rules in section 917C, 2 or more of those
licensees are jointly and severally responsible for the
person’s conduct—each of those licensees.
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Section 961Q
484 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision G—Responsibilities of authorised representatives
under this Division
961Q Civil penalty provision—sections 961B, 961G, 961H and 961J
(1) An authorised representative of a financial services licensee
contravenes this section if the authorised representative
contravenes section 961B, 961G, 961H or 961J.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) Subsection (1) does not apply if:
(a) the licensee had provided the authorised representative with
information or instructions about the requirements to be
complied with in relation to the giving of personal advice;
and
(b) the authorised representative’s failure to comply with
section 961B, 961G, 961H or 961J occurred because the
representative was acting in reliance on that information or
those instructions; and
(c) the representative’s reliance on that information or those
instructions was reasonable.
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Charging ongoing fees to clients Division 3
Section 962
Corporations Act 2001 485
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 3—Charging ongoing fees to clients
Subdivision A—Preliminary
962 Application of this Division
(1) This Division applies in a case where:
(a) a financial services licensee, or a representative of a financial
services licensee, enters into an ongoing fee arrangement
with another person (the client); and
(b) the arrangement has not terminated for any reason.
(2) This Division also applies in a case where:
(a) the rights of a financial services licensee, or a representative
of a financial services licensee, under an ongoing fee
arrangement are assigned to another person; and
(b) the arrangement has not terminated for any reason.
962A Ongoing fee arrangements
Ongoing fee arrangements
(1) If:
(a) a financial services licensee gives personal advice to a person
as a retail client; and
(b) that person enters into an arrangement with the financial
services licensee, or a representative of the financial services
licensee; and
(c) under the terms of the arrangement, a fee (however described
or structured) is to be paid during a period of more than 12
months;
the arrangement is an ongoing fee arrangement.
(2) If:
(a) a representative of a financial services licensee gives
personal advice to a person as a retail client; and
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Section 962A
486 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) that person enters into an arrangement with the representative
or the financial services licensee; and
(c) under the terms of the arrangement, a fee (however described
or structured) is to be paid during a period of more than 12
months;
the arrangement is an ongoing fee arrangement.
Paying for advice by instalments
(3) Despite subsections (1) and (2), an arrangement is not an ongoing
fee arrangement if each of the following is satisfied:
(a) the total of the fees payable under the terms of the
arrangement is fixed at the time the arrangement is entered
into;
(b) the total of the fees payable under the terms of the
arrangement is specified in the arrangement;
(c) the fees payable under the terms of the arrangement are to be
paid by instalments over a fixed period specified in the
arrangement;
(d) the fees payable under the terms of the arrangement can
reasonably be characterised as relating to personal advice
given to the person before the arrangement is entered into;
(e) under the terms of the arrangement, there is no fee payment
of which, or the amount of which, is dependent on the
amount invested by the person, or the amount in relation to
which personal advice is given;
(f) the person cannot opt out of payment of any of the fees
payable under the terms of the arrangement.
Insurance premiums
(4) Despite subsections (1) and (2), an arrangement is not an ongoing
fee arrangement if the only fee payable under the arrangement is
an insurance premium.
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Section 962B
Corporations Act 2001 487
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Other prescribed arrangements
(5) Despite subsections (1) and (2), an arrangement is not an ongoing
fee arrangement if it is an arrangement of a prescribed kind that
relates to a fee that is prescribed as a product fee.
962B Ongoing fees
A fee that is payable under an ongoing fee arrangement is referred
to in this Division as an ongoing fee.
962C Fee recipients
(1) Where:
(a) a financial services licensee enters into an ongoing fee
arrangement; and
(b) the rights of the licensee under the arrangement have not
been assigned to another person;
the licensee is the fee recipient in relation to the arrangement.
(2) Where:
(a) a representative of a financial services licensee enters into an
ongoing fee arrangement; and
(b) the rights of the representative under the arrangement have
not been assigned to another person;
the representative is the fee recipient in relation to the
arrangement.
(3) Where the rights of a financial services licensee, or a representative
of a financial services licensee, under an ongoing fee arrangement
have been assigned to another person, the person who currently
holds those rights is the fee recipient in relation to the
arrangement.
962CA Exemption from application of opt-in requirement
(1) ASIC may exempt a person, or a class of persons, from
section 962K (the opt-in requirement), if ASIC is satisfied that the
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Section 962D
488 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
person is, or persons of that class are, bound by a code of conduct
approved by ASIC for the purposes of this section.
(2) A code of conduct is approved by ASIC for the purposes of this
section if:
(a) the code of conduct is approved by ASIC under
section 1101A; and
(b) ASIC is satisfied that the code of conduct obviates the need
for persons bound by the code to be bound by the opt-in
requirement; and
(c) ASIC is satisfied of any other matters prescribed by the
regulations.
(3) The exemption must be in writing and ASIC must publish notice of
it in the Gazette.
Subdivision B—Termination, disclosure and renewal
962D Application of this Subdivision
(1) This Subdivision only applies where:
(a) the client has not been provided with personal advice as a
retail client before the application day by:
(i) in a case where the client has entered into an ongoing
fee arrangement with a financial services licensee—the
financial services licensee or a person acting as a
representative of the financial services licensee; or
(ii) in a case where the client has entered into an ongoing
fee arrangement with a person acting as a representative
of a financial services licensee—the representative or
the financial services licensee; and
(b) the client enters into the ongoing fee arrangement on or after
the application day.
(2) In this section:
application day means:
(a) where:
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Section 962E
Corporations Act 2001 489
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(i) the client enters into the ongoing fee arrangement with a
financial services licensee, or a person acting as a
representative of a financial services licensee; and
(ii) the financial services licensee has lodged notice with
ASIC in accordance with subsection 967(1) that the
obligations and prohibitions under this Part are to apply
to the licensee and persons acting as representatives of
the licensee, on and from a day specified in the notice;
the day specified in the notice; or
(b) in any other case—1 July 2013.
962E Client may terminate arrangement at any time
(1) It is a condition of the ongoing fee arrangement that the client may
terminate the arrangement at any time.
(2) Any condition of the ongoing fee arrangement, or any other
arrangement, that requires the client to pay an amount on
terminating the ongoing fee arrangement is void to the extent that
the amount exceeds the sum of:
(a) any liability that the client has accrued but not satisfied under
the ongoing fee arrangement before the termination; and
(b) the costs of the current fee recipient incurred solely and
directly because of the termination.
962F Arrangement terminates if this Subdivision not complied with
(1) It is a condition of the ongoing fee arrangement that the
arrangement terminates if section 962G (the disclosure obligation)
or section 962K (the renewal notice obligation) has not been
complied with in relation the arrangement, whether by the current
or a previous fee recipient.
(2) The client is not taken to have waived the client’s rights under the
condition (subject to subsection (3)), or to have entered into a new
ongoing fee arrangement, if the client makes a payment of an
ongoing fee after a failure to comply with section 962G or
section 962K in relation to the ongoing fee arrangement.
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Division 3 Charging ongoing fees to clients
Section 962G
490 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) However, if the client makes a payment of an ongoing fee after a
failure to comply with section 962G or section 962K in relation to
the ongoing fee arrangement, the fee recipient is not obliged to
refund the payment.
Note: A Court may order that the fee recipient refund the amount (see
section 1317GA).
962G Fee recipient must give fee disclosure statement
(1) The current fee recipient in relation to an ongoing fee arrangement
must, before the end of a period of 60 days beginning on the
disclosure day for the arrangement, give the client a fee disclosure
statement in relation to the arrangement.
(2) The regulations may provide that subsection (1) does not apply in a
particular situation.
962H Fee disclosure statements
(1) A fee disclosure statement, in relation to an ongoing fee
arrangement, is a statement in writing that:
(a) includes the information required under this section; and
(b) relates to:
(i) a period of 12 months (the previous year) that ends on a
day that is no more than 60 days before that on which
the statement is given; and
(ii) any other period prescribed by the regulations.
(2) The following information is required for a fee disclosure
statement in relation to an ongoing fee arrangement, subject to
subsection (3):
(a) the amount of each ongoing fee paid under the arrangement
by the client in the previous year, expressed in Australian
dollars unless an alternative is provided in the regulations;
(c) information about the services that the client was entitled to
receive from the current and any previous fee recipient under
the arrangement during the previous year;
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Section 962J
Corporations Act 2001 491
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(d) information about the services that the client received from
the current and any previous fee recipient under the
arrangement during the previous year;
(f) information about any other prescribed matters, including
information that relates to a period that begins after the
previous year.
(3) The regulations may provide either or both of the following:
(a) that particular information is not required for a fee disclosure
statement, either in a particular situation or generally;
(b) a more detailed statement of the information that is required
for a fee disclosure statement, either in a particular situation
or generally.
962J Disclosure day
The disclosure day for an ongoing fee arrangement is:
(a) if no fee disclosure statement has been given to the client in
relation to the arrangement since the arrangement was
entered into—the anniversary of the day on which the
arrangement was entered into; and
(b) if a fee disclosure statement in relation to the arrangement
has been given to the client since the arrangement was
entered into—the anniversary of the day immediately after
the end of the earliest period of 12 months to which the last
fee disclosure statement given to the client related.
962K Fee recipient must give renewal notice
(1) The current fee recipient in relation to an ongoing fee arrangement
must, before the end of a period of 60 days beginning on the
renewal notice day for the arrangement, give the client a renewal
notice and a fee disclosure statement in relation to the arrangement.
(2) A renewal notice, in relation to an ongoing fee arrangement, is a
notice in writing that includes:
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Section 962L
492 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) a statement that the client may renew the arrangement by
giving the current fee recipient notice in writing of the
election; and
(b) a statement that the arrangement will terminate, and no
further advice will be provided or fee charged under it, if the
client does not elect to renew the arrangement; and
(c) a statement that the client will be taken to have elected not to
renew the arrangement if the client does not give the current
fee recipient notice in writing of an election to renew before
the end of the renewal period; and
(d) a statement that the renewal period is a period of 30 days
beginning on the day on which the renewal notice and fee
disclosure statement is given to the client.
(3) The regulations may provide that subsection (1) does not apply in a
particular situation.
962L Renewal notice day and renewal period
(1) The renewal notice day for an ongoing fee arrangement means:
(a) if the arrangement has not previously been renewed—the
second anniversary of the day on which the arrangement was
entered into; and
(b) if the arrangement has previously been renewed—the second
anniversary of the last day on which the arrangement was
renewed.
(2) The renewal period for an ongoing fee arrangement is a period of
30 days beginning on the day on which the current fee recipient in
relation to the arrangement gives the client a renewal notice and a
fee disclosure statement in relation to the arrangement.
962M If client notifies fee recipient that client does not wish to
renew
If the client notifies the current fee recipient in relation to the
ongoing fee arrangement in writing within the renewal period for
the arrangement that the client does not wish to renew the
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Section 962N
Corporations Act 2001 493
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
arrangement, the arrangement terminates on the day on which the
notification is given.
962N If client does not notify fee recipient that client wishes to
renew
If the client does not notify the current fee recipient in relation to
the ongoing fee arrangement in writing within the renewal period
for the arrangement that the client wishes to renew the
arrangement, the arrangement terminates at the end of a further
period of 30 days after the end of the renewal period for the
arrangement.
962P Civil penalty provision—charging ongoing fees after
arrangement terminated
If an ongoing fee arrangement terminates for any reason, the
current fee recipient in relation to the arrangement must not
continue to charge an ongoing fee.
Note: This section is a civil penalty provision (see section 1317E).
962Q Effect of termination
To avoid doubt, if, under an ongoing fee arrangement, the
continued provision of a service to the client by the fee recipient in
relation to the arrangement is dependent on the continued payment
of an ongoing fee, on termination of the arrangement, the
obligation to continue to provide the service also terminates.
Subdivision C—Disclosure for arrangements to which
Subdivision B does not apply
962R Application of this Subdivision
(1) This Subdivision applies, on and from the application day, to an
ongoing fee arrangement to which Subdivision B does not apply.
(2) In this section:
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Section 962S
494 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
application day means:
(a) where:
(i) the client has entered into the ongoing fee arrangement
with a financial services licensee, or a person acting as a
representative of a financial services licensee; and
(ii) that licensee or representative is the fee recipient in
relation to the arrangement on 1 July 2012; and
(iii) the financial services licensee has lodged notice with
ASIC in accordance with subsection 967(1) that the
obligations and prohibitions under this Part are to apply
to the licensee and persons acting as representatives of
the licensee, on and from a day specified in the notice;
the day specified in the notice; or
(b) where:
(i) the client has entered into the ongoing fee arrangement
with a financial services licensee, or a person acting as a
representative of a financial services licensee; and
(ii) because the rights of the licensee or representative under
the arrangement have been assigned, another person is
the fee recipient in relation to the arrangement on 1 July
2012; and
(iii) a notice has been lodged with ASIC in accordance with
subsection 967(1) or (3) that the obligations and
prohibitions under this Part are to apply to the other
person, on and from a day specified in the notice;
the day specified in the notice; or
(c) in any other case—1 July 2013.
962S Fee recipient must give fee disclosure statement
(1) The current fee recipient in relation to the ongoing fee arrangement
must, before the end of a period of 60 days beginning on the
disclosure day for the arrangement, give the client a fee disclosure
statement in relation to the arrangement.
Note: This subsection is a civil penalty provision (see section 1317E).
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Section 962S
Corporations Act 2001 495
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) The regulations may provide that subsection (1) does not apply in a
particular situation.
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Part 7.7A Best interests obligations and remuneration
Division 4 Conflicted remuneration
Section 963
496 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 4—Conflicted remuneration
Subdivision A—Preliminary
963 Application to a financial services licensee acting as an
authorised representative
If a financial services licensee is acting as an authorised
representative of another financial services licensee in relation to
financial product advice, this Division applies to the first licensee
in relation to the advice in that licensee’s capacity as an authorised
representative (rather than in the capacity of licensee).
Subdivision B—What is conflicted remuneration?
963A Conflicted remuneration
Conflicted remuneration means any benefit, whether monetary or
non-monetary, given to a financial services licensee, or a
representative of a financial services licensee, who provides
financial product advice to persons as retail clients that, because of
the nature of the benefit or the circumstances in which it is given:
(a) could reasonably be expected to influence the choice of
financial product recommended by the licensee or
representative to retail clients; or
(b) could reasonably be expected to influence the financial
product advice given to retail clients by the licensee or
representative.
Note: A reference in this Subdivision (including sections 963A, 963AA,
963B, 963C and 963D) to giving a benefit includes a reference to
causing or authorising it to be given (see section 52).
963AA Benefits given in relation to life risk insurance products
The regulations may prescribe circumstances, in addition to those
set out in section 963A, in which a benefit given to a financial
services licensee, or a representative of a financial services
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Section 963B
Corporations Act 2001 497
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
licensee, in relation to a life risk insurance product, or life risk
insurance products, is conflicted remuneration.
963B Monetary benefit given in certain circumstances not conflicted
remuneration
(1) A monetary benefit given to a financial services licensee, or a
representative of a financial services licensee, who provides
financial product advice to persons as retail clients is not conflicted
remuneration in the circumstances set out in any of the following
paragraphs:
(a) the benefit is given to the licensee or representative solely in
relation to a general insurance product;
(b) each of the following is satisfied in relation to the benefit:
(i) the benefit is given to the licensee or representative in
relation to a life risk insurance product or life risk
insurance products;
(ii) none of the products is a group life policy for members
of a superannuation entity (see subsection (2)) or a life
policy for a member of a default superannuation fund
(see subsection (3));
(iii) either:
(A) the benefit ratio for the benefit is the same for
the year in which the product or products are
issued as it is for each year in which the product
or products are continued; or
(B) the benefit ratio requirements and clawback
requirements in section 963BA are satisfied in
relation to the benefit;
(ba) the benefit is given to the licensee or representative in
relation to consumer credit insurance;
(c) each of the following is satisfied in relation to a financial
product other than a life risk insurance product:
(i) the benefit is given to the licensee or representative in
relation to the issue or sale of the financial product to a
person;
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Section 963B
498 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ii) financial product advice in relation to the product, or
products of that class, has not been given to the person
as a retail client by the licensee or representative in the
12 months immediately before the benefit is given;
(d) the benefit is given to the licensee or representative by a
retail client in relation to:
(i) the issue or sale of a financial product by the licensee or
representative to the client; or
(ii) financial product advice given by the licensee or
representative to the client;
(e) the benefit is a prescribed benefit or is given in prescribed
circumstances.
Note: Under the governing rules of some regulated superannuation funds, a
member may seek advice on the basis that the trustee of the fund will
pay the licensee or representative for the advice and then recover the
amount paid from the assets of the fund attributed to that member. In
that case, the member has caused or authorised the amount to be paid
to the licensee or representative and so, because of section 52 of this
Act, paragraph (1)(d) would apply to that amount. This does not affect
the trustee’s obligations under section 62 of the Superannuation
Industry (Supervision) Act 1993 (which deals with the purposes for
which a trustee may act in maintaining a regulated superannuation
fund).
(2) A life risk insurance product is a group life policy for members of
a superannuation entity if the product is issued to an RSE licensee
of a registrable superannuation entity, or a custodian in relation to a
registrable superannuation entity, for the benefit of a class of
members of the entity.
(3) A life risk insurance product is a life policy for a member of a
default superannuation fund if:
(a) the product is issued to an RSE licensee of a registrable
superannuation entity, or a custodian in relation to a
registrable superannuation entity, for the benefit of a person
who is a member of the entity; and
(b) the person has not given written notice to an employer of the
person that the fund is the person’s chosen fund, but the
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Section 963B
Corporations Act 2001 499
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
employer of the person makes contributions to the fund for
the benefit of the person.
Note: Superannuation guarantee surcharge may be imposed on an employer
if the employer does not make contributions to a superannuation fund
for the benefit of its employees. If an employee does not notify the
employer of the employee’s chosen fund, the employer is still able to
satisfy its obligations by making contributions to certain funds (see the
Superannuation Guarantee (Administration) Act 1992).
(3A) The benefit ratio for a benefit given to a financial services
licensee, or a representative of a financial services licensee, in
relation to a life risk insurance product, or life risk insurance
products, for a year is the ratio between:
(a) the benefit; and
(b) the policy cost payable for the product or products, or that
part of the policy cost payable for the product or products to
which the benefit relates, for the year.
(3B) The policy cost for a life risk insurance product, or products, for a
year is the sum of:
(a) the premiums payable for the product, or products, for that
year; and
(b) any fees payable for that year to the issuer of the product or
products for that issue; and
(c) any additional fees payable because the premium for the
product, or products, is paid periodically rather than in a
lump sum; and
(d) any other amount prescribed by the regulations for the
purposes of this paragraph.
(3C) However, the policy cost for a life risk insurance product, or
products, does not include any amount prescribed by the
regulations for the purposes of this subsection.
(4) The regulations may prescribe circumstances in which, despite a
provision of this section, all or part of a benefit is to be treated as
conflicted remuneration.
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Division 4 Conflicted remuneration
Section 963BA
500 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(5) This section applies despite section 963A and any regulations
made for the purposes of section 963AA.
Note: The expression intrafund advice is often used to describe financial
product advice given by a trustee (or an employee of, or another
person acting under arrangement with, the trustee) of a regulated
superannuation fund to its members, where that advice is not of a kind
to which the prohibition in section 99F of the Superannuation Industry
(Supervision) Act 1993 applies. (Section 99F of that Act prohibits
trustees of regulated superannuation funds from passing on the cost of
providing certain kinds of financial product advice in relation to one
member of the fund to another.)
963BA Benefit ratio and clawback requirements
Benefit ratio requirements
(1) The benefit ratio requirements are satisfied in relation to a benefit
given to a financial services licensee, or a representative of a
financial services licensee, in relation to a life risk insurance
product, or life risk insurance products, if the benefit ratio for the
benefit for:
(a) the year in which the product or products are issued; and
(b) each year during which the product or products are
continued;
is equal to or less than that determined by ASIC under
subsection (2) as an acceptable benefit ratio for that year.
(2) ASIC may, by legislative instrument, determine an acceptable
benefit ratio, or a way of working out an acceptable benefit ratio,
for a benefit for a year.
Clawback requirements
(3) The clawback requirements are satisfied in relation to a benefit
given to a financial services licensee, or a representative of a
financial services licensee, in relation to a life risk insurance
product, or life risk insurance products, if:
(a) the arrangement under which the benefit is payable includes
an obligation to repay all or part of the benefit if:
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Section 963C
Corporations Act 2001 501
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(i) the product, or one of the products, is cancelled or is not
continued, other than because a claim is made under the
insurance policy or because other prescribed
circumstances exist; or
(ii) the policy cost for the product, or one of the products,
during a year or across 2 years is reduced, other than in
prescribed circumstances;
within 2 years after the product is first issued to a retail
client; and
(b) the amount to be repaid under the obligation is equal to or
greater than the amount determined by ASIC under
subsection (4) as an acceptable repayment.
(4) ASIC may, by legislative instrument, determine the amount, or a
way of working out the amount, that is an acceptable repayment for
the purposes of paragraph (3)(b).
963C Non-monetary benefit given in certain circumstances not
conflicted remuneration
(1) A non-monetary benefit given to a financial services licensee, or a
representative of a financial services licensee, who provides
financial product advice to persons as retail clients is not conflicted
remuneration in the circumstances set out in any of the following
paragraphs:
(a) the benefit is given to the licensee or representative solely in
relation to a general insurance product;
(b) each of the following is satisfied:
(i) the benefit is of less than an amount prescribed;
(ii) identical or similar benefits are not given on a frequent
or regular basis;
(c) the benefit satisfies each of the following:
(i) the benefit has a genuine education or training purpose;
(ii) the benefit is relevant to the carrying on of a financial
services business;
(iii) the benefit complies with regulations made for the
purposes of this subparagraph;
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Section 963D
502 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(d) the benefit satisfies each of the following:
(i) the benefit is the provision of information technology
software or support;
(ii) the benefit is related to the provision of financial
product advice to persons as retail clients in relation to
the financial products issued or sold by the benefit
provider;
(iii) the benefit complies with regulations made for the
purposes of this subparagraph;
(e) the benefit is given to the licensee or representative by a
retail client in relation to:
(i) the issue or sale of a financial product by the licensee or
representative to the client; or
(ii) financial product advice given by the licensee or
representative to the client;
(f) the benefit is a prescribed benefit or is given in prescribed
circumstances.
(2) The regulations may prescribe circumstances in which, despite
subsection (1), all or part of a benefit is to be treated as conflicted
remuneration.
(3) This section applies despite section 963A and any regulations
made for the purposes of section 963AA.
963D Benefits for employees etc. of ADIs
(1) This section applies if:
(a) a monetary or non-monetary benefit is given to a financial
services licensee, or a representative of a financial services
licensee; and
(b) the benefit is in whole or in part remuneration for work
carried out, or to be carried out, by the licensee or
representative:
(i) as an agent or employee of an Australian ADI; or
(ii) in otherwise acting by arrangement with an Australian
ADI under the name of the Australian ADI.
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Section 963E
Corporations Act 2001 503
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(2) If:
(a) access to the benefit, or the amount of the benefit, is in whole
or in part dependent on the licensee or representative
recommending:
(i) a basic banking product; or
(ii) a general insurance product; or
(iii) consumer credit insurance; and
(b) the licensee or representative does not, in the course of
recommending any, or any combination, of those products
give other financial product advice that does not relate to any
of those products;
to the extent that the benefit relates to the recommendation of any,
or any combination of, the products mentioned in paragraph (a),
the benefit is not conflicted remuneration.
(3) The regulations may prescribe circumstances in which, despite
subsection (2), all or part of a benefit is to be treated as conflicted
remuneration.
(4) This section applies despite section 963A and any regulations
made for the purposes of section 963AA.
Subdivision C—Ban on conflicted remuneration
963E Licensee must not accept conflicted remuneration
(1) A financial services licensee must not accept conflicted
remuneration.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of
the licensee accepts conflicted remuneration; and
(b) the licensee is the, or a, responsible licensee in relation to the
contravention.
Note: This subsection is a civil penalty provision (see section 1317E).
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Section 963F
504 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
963F Licensee must ensure compliance
A financial services licensee must take reasonable steps to ensure
that representatives of the licensee do not accept conflicted
remuneration.
Note: This section is a civil penalty provision (see section 1317E).
963G Authorised representative must not accept conflicted
remuneration
(1) An authorised representative of a financial services licensee must
not accept conflicted remuneration.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) Subsection (1) does not apply if:
(a) the licensee had provided the authorised representative with
information about the nature of the benefit to be accepted by
the authorised representative; and
(b) at the time the authorised representative accepted the benefit,
the representative was not aware that the benefit was
conflicted remuneration because the representative was
acting in reliance on that information; and
(c) the representative’s reliance on that information was
reasonable.
963H Other representatives must not accept conflicted
remuneration
A representative, other than an authorised representative, of a
financial services licensee must not accept conflicted remuneration
unless it is in circumstances for which an employer of the licensee
or representative is liable under section 963J.
Note: A representative who contravenes this section may be subject to a
banning order (see section 920A).
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Section 963J
Corporations Act 2001 505
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
963J Employer must not give employees conflicted remuneration
An employer of a financial services licensee, or a representative of
a financial services licensee, must not give the licensee or
representative conflicted remuneration for work carried out, or to
be carried out, by the licensee or representative as an employee of
the employer.
Note: This section is a civil penalty provision (see section 1317E).
963K Product issuer or seller must not give conflicted remuneration
An issuer or seller of a financial product must not give a financial
services licensee, or a representative of a financial services
licensee, conflicted remuneration.
Note: This section is a civil penalty provision (see section 1317E).
963L Volume-based benefits presumed to be conflicted
remuneration
It is presumed for the purposes of this Division that a benefit of
one of the following kinds is conflicted remuneration, unless the
contrary is proved:
(a) a benefit access to which, or the value of which, is wholly or
partly dependent on the total value of financial products of a
particular class, or particular classes:
(i) recommended by a financial services licensee, or a
representative of a financial services licensee, to retail
clients, or a class of retail clients; or
(ii) acquired by retail clients, or a class of retail clients, to
whom a financial services licensee, or a representative
of a financial services licensee, provides financial
product advice;
(b) a benefit access to which, or the value of which, is wholly or
partly dependent on the number of financial products of a
particular class, or particular classes:
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Section 963L
506 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(i) recommended by a financial services licensee, or a
representative of a financial services licensee, to retail
clients, or a class of retail clients; or
(ii) acquired by retail clients, or a class of retail clients, to
whom a financial services licensee, or a representative
of a financial services licensee, provides financial
product advice.
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Other banned remuneration Division 5
Section 964
Corporations Act 2001 507
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 5—Other banned remuneration
Subdivision A—Volume-based shelf-space fees
964 Application
(1) This Subdivision applies if:
(a) a financial services licensee or an RSE licensee (the platform
operator) is, or offers to be, the provider of a custodial
arrangement; and
(b) a monetary or non-monetary benefit is given, or to be given,
by a financial services licensee, RSE licensee or the operator
of a notified foreign passport fund (the funds manager) to
the platform operator; and
(c) a financial product to which the custodial arrangement relates
is a financial product in which the funds manager deals (the
funds manager’s financial product).
(2) In this Subdivision:
custodial arrangement has the same meaning as it has in
subsection 1012IA(1), subject to subsection (3).
provider has the same meaning as in subsection 1012IA(1).
(3) The definition of custodial arrangement in subsection 1012IA(1)
is to be read as if the reference in that definition to an instruction
included a reference to:
(a) a direction of the kind mentioned in paragraph 58(2)(d) or
(da) of the Superannuation Industry (Supervision) Act 1993
that will involve the acquisition of a particular financial
product, or a financial product of a particular kind; and
(b) a direction of the kind mentioned in subsection 52B(4) of the
Superannuation Industry (Supervision) Act 1993 that will
involve the acquisition of a particular financial product, or a
financial product of a particular kind.
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Chapter 7 Financial services and markets
Part 7.7A Best interests obligations and remuneration
Division 5 Other banned remuneration
Section 964A
508 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(4) A reference to a kind of financial product in subsection (3) has the
same meaning in that subsection as it has in the definition of
custodial arrangement in subsection 1012IA(1).
964A Platform operator must not accept volume-based shelf-space
fees
(1) The platform operator must not accept the benefit if it is a
volume-based shelf-space fee.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) Subject to subsection (3), the benefit is presumed to be a
volume-based shelf-space fee if the benefit, or the value of benefit,
is wholly or partly dependent on the total number or value of the
funds manager’s financial products of a particular class, or
particular classes, to which the custodial arrangement relates.
(3) If it is proved that all or part of the benefit is of a kind specified in
one of the following paragraphs then, to the extent that the benefit
is of that kind, it is not presumed to be a volume-based shelf space
fee:
(a) a reasonable fee for a service provided to the funds manager
by the platform operator or another person;
(b) a discount on an amount payable, or a rebate of an amount
paid, to the funds manager by the platform operator, the
value of which does not exceed an amount that may
reasonably be attributed to efficiencies gained by the funds
manager because of the number or value of financial products
in relation to which the funds manager provides services to
the platform operator, or through the platform operator to
another person.
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Other banned remuneration Division 5
Section 964B
Corporations Act 2001 509
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision B—Asset-based fees on borrowed amounts
964B Application
This Subdivision applies where a financial services licensee, or a
representative of a financial services licensee, provides financial
product advice (the advice) to a person (the client) as a retail client.
964C Application to a financial services licensee acting as an
authorised representative
If a financial services licensee is acting as an authorised
representative of another financial services licensee in relation to
the advice, this Subdivision applies to the first licensee in relation
to the advice in that licensee’s capacity as an authorised
representative (rather than in the capacity of licensee).
964D Financial services licensees must not charge asset-based fees
on borrowed amounts
(1) The financial services licensee must not charge an asset-based fee
on a borrowed amount used or to be used to acquire financial
products by or on behalf of the client.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) A financial services licensee contravenes this section if:
(a) a representative, other than an authorised representative, of
the licensee charges an asset-based fee on a borrowed amount
used or to be used to acquire financial products by or on
behalf of the client; and
(b) the licensee is the, or a, responsible licensee in relation to the
contravention.
Note: This subsection is a civil penalty provision (see section 1317E).
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Chapter 7 Financial services and markets
Part 7.7A Best interests obligations and remuneration
Division 5 Other banned remuneration
Section 964E
510 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Exceptions
(3) Subsections (1) and (2) do not apply in relation to a borrowed
amount if it is not reasonably apparent that the amount has been
borrowed.
(4) The regulations may provide that subsections (1) and (2) do not
apply in prescribed circumstances.
Duty to make reasonable inquiries
(5) Nothing in this section affects the duty of the financial services
licensee, or the representative of the financial services licensee,
under section 961B to make reasonable inquiries to obtain
complete and accurate information.
964E Authorised representatives must not charge asset-based fees
on borrowed amounts
(1) The authorised representative of the financial services licensee
must not charge an asset-based fee on a borrowed amount used or
to be used to acquire financial products by or on behalf of the
client.
Note: This subsection is a civil penalty provision (see section 1317E).
Exceptions
(2) Subsection (1) does not apply in relation to a borrowed amount if it
is not reasonably apparent that the amount has been borrowed.
(3) The regulations may provide that subsection (1) does not apply in
prescribed circumstances.
Duty to make reasonable inquiries
(4) Nothing in this section affects the duty of the authorised
representative under section 961B to make reasonable inquiries to
obtain complete and accurate information.
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Other banned remuneration Division 5
Section 964F
Corporations Act 2001 511
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
964F What is an asset-based fee?
A fee for providing financial product advice to a person as a retail
client is an asset-based fee to the extent that it is dependent upon
the amount of funds used or to be used to acquire financial
products by or on behalf of the person.
964G Meaning of borrowed
(1) In this Subdivision:
borrowed means borrowed in any form, whether secured or
unsecured, including through:
(a) a credit facility within the meaning of the regulations; and
(b) a margin lending facility.
(2) To avoid doubt, an amount is no longer borrowed to the extent that
it has been repaid.
964H When is something reasonably apparent?
Something is reasonably apparent if it would be apparent to a
person with a reasonable level of expertise in the subject matter of
the advice that has been sought by the client, were that person
exercising care and objectively assessing the information given to
the financial services licensee, or the representative of the financial
services licensee, by the client.
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Chapter 7 Financial services and markets
Part 7.7A Best interests obligations and remuneration
Division 6 Anti-avoidance
Section 965
512 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 6—Anti-avoidance
965 Anti-avoidance
(1) Subject to subsection (2), a person must not, either alone or
together with one or more other persons, enter into, begin to carry
out or carry out a scheme if:
(a) 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 purpose
or for a purpose (that is not incidental) of avoiding the
application of any provision of this Part in relation to any
person or persons (whether or not a person or persons who
entered into, began to carry out or carried out the scheme or
any part of the scheme); and
(b) the scheme or the part of the scheme has achieved, or apart
from this section, would achieve, that purpose.
Note: This section is a civil penalty provision (see section 1317E).
(2) Subsection (1) does not apply to a scheme to the extent that the
operation of the subsection would result in an acquisition of
property (within the meaning of paragraph 51(xxxi) of the
Constitution) from a person otherwise than on just terms (within
the meaning of that paragraph of the Constitution).
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Transition Division 7
Section 966
Corporations Act 2001 513
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 7—Transition
966 Transition period
In this Division:
transition period means the period beginning on 1 July 2012 and
ending on 30 June 2013.
967 Best interests obligations and remuneration provisions to apply
during transition period
(1) A financial services licensee may, during the transition period,
lodge notice in the prescribed form with ASIC that the obligations
and prohibitions imposed under this Part are to apply to the
licensee, and any person acting as a representative of the licensee,
on and from a day that:
(a) falls on or after the day on which the notice is lodged with
ASIC; and
(b) is specified in the notice.
(2) If a notice is lodged with ASIC in accordance with subsection (1),
ASIC must, on its website:
(a) publish the name of the financial services licensee who
lodged the notice; and
(b) include a statement that the obligations and prohibitions
imposed under this Part are to apply to the licensee, and any
person acting as a representative of the licensee; and
(c) state the day on and from which those obligations and
prohibitions are to apply.
(3) A person:
(a) who would be subject to an obligation or prohibition under
this Part, if it applied; and
(b) who would not be subject to the obligation or prohibition as a
financial services licensee, or a person acting as a
representative of a financial services licensee;
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Chapter 7 Financial services and markets
Part 7.7A Best interests obligations and remuneration
Division 7 Transition
Section 968
514 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
may, during the transition period, lodge notice in the prescribed
form with ASIC that the obligations and prohibitions imposed
under this Part are to apply to the person on and from a day that:
(c) falls on or after the day on which the notice is lodged with
ASIC; and
(d) is specified in the notice.
(4) If a notice is lodged with ASIC in accordance with subsection (3),
ASIC must, on its website:
(a) publish the name of the person who lodged the notice; and
(b) include a statement that the obligations and prohibitions
imposed under this Part are to apply to the person; and
(c) state the day on and from which those obligations and
prohibitions are to apply.
968 Notice to clients in transition period
(1) A financial services licensee who lodges a notice with ASIC in
accordance with subsection 967(1) must ensure that any person in
relation to whom the licensee, or a person acting as a representative
of the licensee, has an obligation or is subject to a prohibition
under this Part during the transition period (the client) is given a
notice that complies with this section.
(2) The notice:
(a) must be in writing; and
(b) must be given to the client on or before the notice day for the
client; and
(c) must state that the obligations and prohibitions imposed
under this Part begin to apply to the licensee, and any person
acting as a representative of the licensee, on a day specified
in the notice given to the client.
(3) The day specified in the notice given to the client must be the same
as the day specified in the notice lodged with ASIC in accordance
with subsection 967(1).
(4) The notice day is:
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Section 968
Corporations Act 2001 515
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) for a person (the client) in relation to whom the licensee, or a
person acting as a representative of the licensee, has an
obligation or is subject to a prohibition under Division 2 of
this Part in relation to personal advice provided on or after a
day that falls in the transition period—the first day on which
personal advice is provided to the client during the transition
period; and
(b) for a person to whom the licensee, or a person acting as a
representative of the licensee, is obliged to give a fee
disclosure statement during the transition period:
(i) unless subparagraph (ii) applies—the disclosure day for
the arrangement in relation to which the fee disclosure
statement is to be given that falls within the transition
period; and
(ii) if a fee disclosure statement is given before the end of a
period of 30 days beginning on that disclosure day—the
day on which it is given; and
(c) for a person (the client) in relation to whom the licensee, or a
person acting as a representative of the licensee, has an
obligation or is subject to a prohibition under Subdivision B
of Division 5 of this Part in relation to the charging of an
asset-based fee during the transition period—the first day on
which the client is charged an asset-based fee during the
transition period; and
(d) for a person in relation to whom more than one of
paragraphs (a), (b) and (c) is satisfied—the earliest of the
days specified as the notice day under the paragraphs that are
satisfied for that person.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 1 Preliminary
Section 980A
516 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Part 7.8—Other provisions relating to conduct etc.
connected with financial products and
financial services, other than financial
product disclosure
Division 1—Preliminary
980A Matters covered by this Part
This Part contains:
(a) provisions (see Divisions 2 to 7) relating to conduct etc. of
financial services licensees; and
(b) miscellaneous provisions (see Division 8) relating to other
conduct connected with financial products and financial
services.
It does not deal with financial product disclosure (which is dealt
with in Part 7.9).
980B General approach to offence provisions
Division 9 contains provisions creating offences by reference to
various rules contained in Divisions of this Part. However, it does
not create all the offences relating to those rules, as some offences
are created by subsection 1311(1). Where offences are created by
subsection 1311(1) in relation to a rule, this is indicated by a note
at the end of the provision containing the rule.
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Dealing with clients’ money Division 2
Section 981A
Corporations Act 2001 517
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 2—Dealing with clients’ money
Subdivision A—Money other than loans
981A Money to which Subdivision applies
(1) This Subdivision applies (subject to subsections (2), (3) and (4)) to
money paid to a financial services licensee (the licensee) in the
following circumstances:
(a) the money is paid in connection with:
(i) a financial service that has been provided, or that will or
may be provided, to a person (the client); or
(ii) a financial product held by a person (the client); and
(b) the money is paid:
(i) by the client; or
(ii) by a person acting on behalf of the client; or
(iii) to the licensee in the licensee’s capacity as a person
acting on behalf of the client.
(2) This Subdivision does not apply to money paid as mentioned in
subsection (1) to the extent that:
(a) the money is paid by way of remuneration payable to the
licensee, or the licensee is entitled to deduct such
remuneration from the money; or
(b) the money is paid:
(i) to reimburse the licensee for payments made to acquire,
or acquire an increased interest in, a financial product;
or
(ii) to discharge a liability incurred by the licensee in
respect of the acquisition of a financial product or an
increased interest in a financial product, or to indemnify
the licensee in respect of such a liability; or
(c) the money is paid to acquire, or acquire an increased interest
in, a financial product from the licensee, whether by way of
issue or sale by the licensee; or
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 2 Dealing with clients’ money
Section 981B
518 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(ca) the licensee is a licensed trustee company, and the money is
paid to the licensee in connection with traditional trustee
company services provided by the licensee; or
(d) Subdivision B (loan money) applies to the money.
Note: Money excluded by paragraph (c) is covered by section 1017E.
(3) If a person pays money to a financial services licensee in order for
it to be deposited to the credit of a deposit product held by the
person or another person with the licensee, that payment does not
constitute money to which this Subdivision applies.
(4) The regulations may:
(a) exempt money paid in specified circumstances from some or
all of the provisions of this Subdivision; or
(b) declare that this Subdivision applies in relation to money
paid in specified circumstances as if specified provisions of
this Subdivision were omitted, modified or varied as set out
in the regulations.
(5) An exemption in regulations made for the purposes of
paragraph (4)(a) may be made subject to conditions specified in, or
imposed in accordance with, the regulations. The regulations may
provide for consequences of a contravention of a condition.
981B Obligation to pay money into an account
(1) The licensee must ensure that money to which this Subdivision
applies is paid into an account that satisfies these requirements:
(a) the account is:
(i) with an Australian ADI; or
(ii) of a kind prescribed by regulations made for the
purposes of this paragraph;
and is designated as an account for the purposes of this
section of this Act; and
(b) the only money paid into the account is:
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Dealing with clients’ money Division 2
Section 981C
Corporations Act 2001 519
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(i) money to which this Subdivision applies (which may be
money paid by, on behalf of, or for the benefit of,
several different clients); or
(ii) interest on the amount from time to time standing to the
credit of the account; or
(iii) interest, or other similar payments, on an investment
made in accordance with regulations referred to in
section 981C, or the proceeds of the realisation of such
an investment; or
(iv) other money permitted to be paid into the account by the
regulations; and
(c) if regulations made for the purposes of this paragraph impose
additional requirements—the requirements so imposed by the
regulations; and
(d) if the licence conditions of the licensee’s licence impose
additional requirements—the requirements so imposed by the
licence conditions.
The money must be paid into such an account on the day it is
received by the licensee, or on the next business day.
(2) The licensee may, for the purposes of this section, maintain a
single account or 2 or more accounts.
(3) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
981C Regulations may deal with various matters relating to
accounts maintained for the purposes of section 981B
(1) The regulations may deal with all or any of the following in
relation to accounts, or a class of accounts, maintained for the
purposes of section 981B:
(a) the circumstances in which payments may be made out of an
account (including the circumstances in which money may be
withdrawn and invested, and the kinds of investment that
may be made);
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Division 2 Dealing with clients’ money
Section 981D
520 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) the minimum balance to be maintained in an account;
(c) how interest on an account is to be dealt with;
(d) how interest or other earnings on an investment of money
withdrawn from an account, or the proceeds of the realisation
of such an investment, are to be dealt with.
(2) A person contravenes this subsection if the person contravenes
regulations made for the purposes of subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
981D Money related to derivatives may be used for general
margining etc. purposes
(1) Despite anything in regulations made for the purposes of
section 981C, if:
(a) the financial service referred to in
subparagraph 981A(1)(a)(i) is or relates to a dealing in a
derivative; or
(b) the financial product referred to in
subparagraph 981A(1)(a)(ii) is a derivative;
the money concerned may also be used for the purpose of meeting
obligations incurred by the licensee in connection with margining,
guaranteeing, securing, transferring, adjusting or settling dealings
in derivatives by the licensee (including dealings on behalf of
people other than the client).
(2) However, if the money is derivative retail client money,
subsection (1) only applies to an obligation if:
(a) the entry into of the derivative referred to in paragraph (1)(a)
or (b) was or will be cleared through an authorised clearing
and settlement facility; and
(b) the licensee incurred the obligation, in connection with the
derivative, under the operating rules of the facility.
981E Protection of money from attachment etc.
(1) This section applies to:
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Dealing with clients’ money Division 2
Section 981F
Corporations Act 2001 521
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) money to which this Subdivision applies that has been paid to
the licensee, both while it is in an account maintained for the
purposes of section 981B and before and after it is paid into
such an account; and
(b) other money in such an account as permitted by
paragraph 981B(1)(b); and
(c) investments made in accordance with regulations made for
the purposes of section 981C.
(2) Money and investments to which this section applies are not
capable:
(a) of being attached or otherwise taken in execution; or
(b) of being made subject to a set-off, security interest or
charging order, or to any process of a similar nature;
except at the suit of a person who is otherwise entitled to the
money or investment.
981F Regulations may deal with how money to be dealt with if
licensee ceases to be licensed etc.
The regulations may include provisions dealing with how money in
an account maintained for the purposes of section 981B, or an
investment of such money, is to be dealt with if:
(a) the licensee ceases to be a financial services licensee; or
(b) the licensee becomes insolvent, within the meaning of the
regulations; or
(c) the licensee merges with another financial services licensee;
or
(d) the licensee ceases to carry on some or all of the activities
authorised by their licence.
981G Account provider not liable merely because of licensee’s
contravention
Nothing in this Subdivision, or in regulations made for the
purposes of this Subdivision, makes the body (not being the
licensee) that the account is with under paragraph 981B(1)(a)
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Division 2 Dealing with clients’ money
Section 981H
522 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
subject to any liability merely because of a failure by the licensee
to comply with any of the provisions of this Subdivision or those
regulations.
981H Money to which Subdivision applies taken to be held in trust
(1) Subject to subsection (3), money to which this Subdivision applies
that is paid to the licensee:
(a) by the client; or
(b) by a person acting on behalf of the client; or
(c) in the licensee’s capacity as a person acting on behalf of the
client;
is taken to be held in trust by the licensee for the benefit of the
client.
(3) The regulations may:
(a) provide that subsection (1) does not apply in relation to
money in specified circumstances; and
(b) provide for matters relating to the taking of money to be held
in trust (including, for example, terms on which the money is
taken to be held in trust and circumstances in which it is no
longer taken to be held in trust).
Subdivision AA—Client money reporting rules
981J Client money reporting rules
(1) ASIC may, by legislative instrument, make rules (the client money
reporting rules) dealing with matters as permitted by this
Subdivision, for purposes relating to derivative retail client money.
(2) The regulations may provide that the client money reporting rules:
(a) cannot impose requirements (or certain kinds of
requirements) in relation to certain classes of persons or
money; or
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Section 981K
Corporations Act 2001 523
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) can only impose requirements (or certain kinds of
requirements) in relation to certain classes of persons or
money in certain circumstances.
981K Matters that may be dealt with in client money reporting rules
(1) The client money reporting rules may impose any of the following
kinds of requirements:
(a) requirements to report information (see also
paragraph (2)(b));
(b) reconciliation requirements (see also paragraph (2)(c));
(c) requirements that are incidental or related to the requirements
mentioned in paragraph (a) or (b).
(2) The client money reporting rules may also deal with matters
incidental or related to requirements referred to in subsection (1),
including any of the following:
(a) the classes of money in relation to which particular
requirements apply;
(b) for requirements to report information:
(i) to whom information is required to be reported; and
(ii) the information that is required to be reported;
(c) for reconciliation requirements:
(i) the information that is required to be reconciled; and
(ii) how reconciliations are required to be reviewed or
approved, including who is required to review or
approve reconciliations; and
(iii) to whom reconciliations are required to be submitted;
(d) the financial services licensees who are required to comply
with requirements imposed by the rules;
(e) the manner and form in which persons must comply with
requirements imposed by the rules;
(f) the circumstances in which persons are, or may be, relieved
from complying with requirements in the rules that would
otherwise apply to them;
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Division 2 Dealing with clients’ money
Section 981L
524 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(g) the keeping of records, or the provision of records or other
information, relating to accounts maintained for the purposes
of section 981B;
(h) the keeping of records, or the provision of records or other
information, relating to compliance with (or determining
whether there has been compliance with) the rules;
(i) any matters that the regulations provide, for the purposes of
this paragraph, may be dealt with in the client money
reporting rules;
(j) any other matters that the provisions of this Act provide may
be dealt with in the client money rules.
981L ASIC to consult before making rules
(1) ASIC must not make a client money reporting rule unless ASIC
has consulted the public about the proposed rule.
(2) Without limiting the ways in which ASIC may comply with the
obligation in subsection (1) to consult the public about a proposed
rule, ASIC is taken to comply with that obligation if ASIC, on its
website:
(a) makes the proposed rule, or a description of the content of
the proposed rule, available; and
(b) invites the public to comment on the proposed rule.
(3) A failure to consult as required by subsection (1) does not
invalidate a client money reporting rule.
981M Complying with client money reporting rules
(1) Financial services licensees must comply with the client money
reporting rules.
Note: 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.
(2) If there is an inconsistency between the client money reporting
rules, and any of the following other rules:
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Dealing with clients’ money Division 2
Section 981N
Corporations Act 2001 525
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) the market integrity rules;
(b) the derivative transaction rules;
(c) the derivative trade repository rules;
those other rules prevail to the extent of the inconsistency.
Note: If there is an inconsistency between the client money reporting rules
and the operating rules of a licensed market or of a licensed CS
facility, the client money reporting rules prevail: see
subsections 793B(2) and 822B(2).
981N Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have
contravened subsection 981M(1) (complying with client money
reporting rules) to do one or more of the following as an alternative
to civil proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education
programs);
(c) accept sanctions other than the payment of a penalty to the
Commonwealth;
(d) enter into a legally enforceable undertaking.
(2) The penalty payable under regulations made under paragraph (1)(a)
in relation to an alleged contravention of a provision of client
money reporting rules must not exceed:
(a) for an individual—3,000 penalty units; and
(b) for a body corporate—15,000 penalty units.
(3) Without limiting regulations that may be made for the purposes of
paragraph (1)(d), those regulations may provide for one or more of
the following kinds of undertakings:
(a) an undertaking to take specified action within a specified
period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified
period to the Commonwealth or to some other specified
person.
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 2 Dealing with clients’ money
Section 981P
526 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
981P Compliance with requirements to provide data or other
information to ASIC: protection from liability
If:
(a) a financial services licensee, or a person acting on behalf of a
financial services licensee:
(i) provides data or information to ASIC; or
(ii) otherwise allows ASIC access to data or information;
and
(b) the licensee or person does so, in good faith, in compliance
with a requirement imposed by or under a provision of the
client money reporting rules;
the licensee or person is not liable to an action or other proceeding,
whether civil or criminal, for or in relation to the conduct
mentioned in paragraph (a).
Subdivision B—Loan money
982A Money to which this Subdivision applies
(1) Subject to subsection (2), this Subdivision applies to money paid to
a financial services licensee (the licensee) by way of a loan from a
person (the client) in connection with activities authorised by the
licensee’s licence.
(2) If a person pays money to a financial services licensee:
(a) in order for it to be deposited to the credit of a deposit
product held by the person or another person with the
licensee; or
(b) on condition that it is to be repaid to the person by the
licensee, as a debt, pursuant to the terms of a debenture or
other financial product issued by the licensee;
that payment does not constitute money to which this Subdivision
applies.
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Dealing with clients’ money Division 2
Section 982B
Corporations Act 2001 527
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
982B Obligation to pay money into an account
(1) The licensee must ensure that money to which this Subdivision
applies is paid into an account that satisfies these requirements:
(a) the account is:
(i) with an Australian ADI; or
(ii) of a kind prescribed by regulations made for the
purposes of this paragraph;
and is designated as an account for the purposes of this
section of this Act; and
(b) the only money paid into the account is:
(i) money to which this Subdivision applies (which may be
money lent by several different persons); or
(ii) interest on the amount from time to time standing to the
credit of the account.
The money must be paid into such an account on the day it is
received by the licensee, or on the next business day.
(2) The licensee may, for the purposes of this section, maintain a
single account or 2 or more accounts.
982C Licensee to give client statement setting out terms of loan etc.
Obligation to give client a statement
(1) The licensee must, in accordance with the regulations, give the
client a statement setting out:
(a) the terms and conditions on which the loan is made and
accepted; and
(b) the purpose for which, and the manner in which, the licensee
is to use the money.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 2 Dealing with clients’ money
Section 982D
528 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Obligation to keep money in account until receive acknowledgment
of receipt of statement
(2) The licensee must not take money out of the account before the
client has given the licensee a written acknowledgment that the
client has received the statement required by subsection (1).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
982D Permitted use of loan
The licensee must only use the money:
(a) for the purpose, and in the manner, set out in the statement
given under section 982C; or
(b) for another purpose, or in another manner, agreed on in
writing by the licensee and the client after the licensee gave
the client the statement.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
Subdivision C—Powers of Court
983A Court may freeze certain accounts
(1) The Court may, by order, restrain dealings in respect of specified
accounts with financial institutions that a person holds or maintains
(whether in Australia or elsewhere), subject to such terms and
conditions as the Court imposes, if subsection (2) or (3) applies in
relation to the person.
(2) This subsection applies to a person if, on application by ASIC, the
Court is satisfied that the person holds, or has at any time held, an
Australian financial services licence and that:
(a) there are reasonable grounds for believing that there is a
deficiency in an account maintained by the person for the
purposes of section 981B or 982B, whether the account is
maintained in this jurisdiction or elsewhere; or
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Section 983B
Corporations Act 2001 529
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) there has been undue delay, or unreasonable refusal, on the
person’s part in paying, applying or accounting for money as
provided for by this Division, by a condition of the licence,
or by the operating rules of a licensed market or a licensed
CS facility in which the person is or has been a participant; or
(c) without limiting the generality of paragraph (a) or (b), the
person has contravened section 981B or 982B.
(3) This subsection applies to a person if, on application by ASIC, the
Court is satisfied that the person holds, or has at any time held, an
Australian financial services licence and that:
(a) the licence has been revoked or suspended; or
(b) the person is incapable, through mental or physical
incapacity, of managing his or her affairs; or
(c) the person no longer carries on a financial services business;
or
(d) the person has died.
983B Interim order freezing accounts
(1) Before considering an application under section 983A, the Court
may, if it considers it desirable to do so, grant an interim order that
is an order of the kind applied for and is expressed to apply until
the application is determined.
(2) The Court must not require ASIC or any other person, as a
condition of granting an order under subsection (1), to give an
undertaking as to damages.
983C Duty of person to whom order directed to make full disclosure
If an order made under section 983A is directed to a financial
institution, the institution must:
(a) disclose to ASIC every account kept at the institution in the
name of the person to whom the order relates, and any
account that the institution reasonably suspects is held or
kept at the institution for the benefit of that person; and
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 2 Dealing with clients’ money
Section 983D
530 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) permit ASIC to make a copy of, or to take an extract from,
any account of the person to whom the order relates or any of
the institution’s books relating to that person.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
983D Further orders and directions
(1) If an order is made under section 983A or 983B, the Court may, on
application by ASIC or a person whom the order affects, make a
further order that does one or more of the following:
(a) deals with such ancillary matters as the Court thinks
necessary or desirable;
(b) directs that specified amounts in an account affected by the
first-mentioned order be paid to ASIC or a person nominated
by ASIC;
(c) varies or discharges the first-mentioned order or an order
under this section.
(2) An order under this section may be made subject to such terms and
conditions as the Court imposes.
983E Power of Court to make order relating to payment of money
(1) An order made under section 983D may include directions to a
person to whom money is ordered to be paid directing that the
person:
(a) must pay the money into a separate account; or
(b) is authorised to prepare a scheme for distributing the money
to persons who claim, within 6 months after the person
receives the money, to be entitled to the money and satisfy
the person that they are so entitled; or
(c) if the money received is insufficient to pay all proved claims,
may, despite any rule of law or equity to the contrary,
apportion the money among the claimants in proportion to
their proved claims and show in the scheme how the money
is so apportioned.
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Dealing with clients’ money Division 2
Section 983E
Corporations Act 2001 531
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(2) If a person prepares a scheme for a distribution of money under
subsection (1), the person must apply to the Court for approval of
the scheme and for directions in respect of it.
(3) The Court may, in relation to money held in a separate account
under subsection (1), give such directions as the Court thinks fit as
to:
(a) the persons to whom that money is to be paid, and in what
amounts the whole or any portion of that money is to be paid;
and
(b) the payment of the balance of the money (if any) remaining
in the account.
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 3 Dealing with other property of clients
Section 984A
532 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 3—Dealing with other property of clients
984A Property to which Division applies
(1) Subject to subsection (2), this Division applies to property other
than money (for example, share certificates) given to a financial
services licensee (the licensee) in the following circumstances:
(a) the property is given in connection with:
(i) a financial service that has been provided, or that will or
may be provided, to a person (the client); or
(ii) a financial product held by a person (the client); and
(b) the property is given:
(i) by the client; or
(ii) by a person acting on behalf of the client; or
(iii) for the benefit of the client; and
(c) the licensee is accountable for the property.
(2) The regulations may:
(a) exempt property given in specified circumstances from some
or all of the provisions of this Division; or
(b) declare that this Division applies in relation to property given
in specified circumstances as if specified provisions of this
Division were omitted, modified or varied as set out in the
regulations.
The circumstances that may be specified include (but are not
limited to) that the property was given in connection with a
specified class of financial product or financial service.
(3) An exemption in regulations made for the purposes of
paragraph (2)(a) may be made subject to conditions specified in, or
imposed in accordance with, the regulations. The regulations may
provide for consequences of a contravention of a condition.
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Dealing with other property of clients Division 3
Section 984B
Corporations Act 2001 533
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
984B How property to which this Division applies is to be dealt with
(1) Subject to subsection (2), the licensee must ensure that property to
which this Division applies is only dealt with in accordance with:
(a) the requirements (if any) specified in regulations made for
the purposes of this paragraph; and
(b) subject to those requirements:
(i) the terms and conditions on which the property was
given to the licensee; and
(ii) any subsequent instructions given by the client.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) If:
(a) the financial service referred to in
subparagraph 984A(1)(a)(i) is or relates to a dealing in a
derivative; or
(b) the financial product referred to in
subparagraph 984A(1)(a)(ii) is a derivative;
the property concerned may also be used for the purpose of
meeting obligations incurred by the licensee in connection with
margining, guaranteeing, securing, transferring, adjusting or
settling dealings in derivatives by the licensee (including dealings
on behalf of people other than the client).
(3) However, if the property is derivative retail client property,
subsection (2) only applies to an obligation if:
(a) the entry into of the derivative referred to in paragraph (2)(a)
or (b) was or will be cleared through an authorised clearing
and settlement facility; and
(b) the licensee incurred the obligation, in connection with the
derivative, under the operating rules of the facility.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 4 Special provisions relating to insurance
Section 985A
534 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 4—Special provisions relating to insurance
985A Definitions etc.
(1) In this Division:
contract of insurance includes a contract of life insurance.
Note: Contract of life insurance has a meaning affected by subsection (2).
insured, in relation to a contract of life insurance, means a person
(other than the insurer) who is entitled to a benefit under the
contract, whether that person is the life insured or some other
person.
Note: Intending insured has a corresponding meaning.
(2) For the purposes of this Division, if:
(a) a life policy (within the meaning of the Life Insurance Act
1995) would not ordinarily be regarded as a contract of life
insurance; and
(b) liability under the policy is borne by a company registered
under section 21 of that Act; and
(c) the policy was entered into after the commencement of
section 9D of the Insurance (Agents and Brokers) Act 1984
as in force before the commencement of this Chapter;
the policy is taken to be a contract of life insurance.
985B Status of amounts paid to financial services licensees in respect
of contracts of insurance
(1) If:
(a) a contract of insurance is arranged or effected by a financial
services licensee; and
(b) the licensee is not the insurer;
payment to the licensee of money payable (whether in respect of a
premium or otherwise) by the insured under or in relation to the
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Section 985C
Corporations Act 2001 535
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
contract is a discharge, as between the insured and the insurer, of
the liability of the insured to the insurer in respect of that money.
(2) Payment to a financial services licensee by or on behalf of an
intending insured of money (whether in respect of a premium or
otherwise) in respect of a contract of insurance to be arranged or
effected by the licensee with an insurer (not being the licensee) is a
discharge, as between the insured and the insurer, of any liability
of the insured under or in respect of the contract, to the extent of
the amount of the payment.
(3) Payment by an insurer to a financial services licensee of money
payable to an insured, whether in respect of a claim, return of
premiums or otherwise, under or in relation to a contract of
insurance, does not discharge any liability of the insurer to the
insured in respect of that money.
(4) An agreement, so far as it purports to alter or restrict the operation
of subsection (1), (2) or (3), is void.
(5) Subsection (4) does not make void an agreement between a
financial services licensee and an insured in so far as the agreement
allows the licensee to set off against money payable to the insured
money payable by the insured to the licensee in respect of
premiums.
985C Regulations may impose other requirements etc. if financial
services licensee is not the insurer
(1) The regulations may impose requirements to be complied with by a
financial services licensee in relation to, or make other provision
dealing with, a situation specified in subsection (2) that arises in
relation to a contract or proposed contract of insurance under
which the licensee is not the insurer.
(2) The situations are as follows:
(a) the licensee receives an amount as a premium or instalment
of premium;
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Division 4 Special provisions relating to insurance
Section 985D
536 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) the licensee does not receive an amount as a premium or
instalment of premium by a particular time;
(c) the licensee is not aware of the amount of a premium or
instalment of premium that is to be paid;
(d) the licensee receives money from the insured or intending
insured but the risk or part of the risk has not been accepted
by a particular time;
(e) the licensee receives money from the insurer for payment to
or on behalf of the insured.
985D Financial services licensees etc. not to deal in general
insurance products from unauthorised insurers etc.
(1) A financial services licensee, or an authorised representative of a
financial services licensee, must not deal in a general insurance
product if the insurer for the product, or (if there is more than one
insurer for the product) each insurer for the product, is not at least
one of the following:
(a) a general insurer within the meaning of the Insurance Act
1973;
(b) a Lloyd’s underwriter within the meaning of that Act;
(c) a person in respect of whom a determination is in force,
under subsection 7(1) of that Act, that subsection 9(1) or
10(1) or (2) of that Act does not apply (the effect of which is
the effect referred to in paragraph 9(1)(c), 10(1)(c) or
10(2)(c) of that Act (as the case requires)).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Subsection (1) does not apply in relation to a general insurance
product if, because of section 3A of the Insurance Act 1973,
undertaking liability under the contract of insurance concerned is
not, or would not be, insurance business for the purposes of that
Act.
Note: A defendant bears an evidential burden in relation to the matters in
subsection (2) (see subsection 13.3(3) of the Criminal Code).
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Special provisions relating to insurance Division 4
Section 985D
Corporations Act 2001 537
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(3) Paragraph (1)(b) ceases to apply after section 93 of the Insurance
Act 1973 has ceased to have effect.
(4) 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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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 4A Special provisions relating to margin lending facilities
Section 985EA
538 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 4A—Special provisions relating to margin lending
facilities
Subdivision A—Responsible lending conduct for margin
lending facilities
985EA Application of this Subdivision
This Subdivision applies to a financial services licensee (the
provider) in relation to:
(a) the issuing of a margin lending facility to a retail client; or
(b) the increasing of the limit of a margin lending facility that
was issued to a retail client.
985E Requirements before issuing etc. margin lending facility
Requirement to make assessment of unsuitability
(1) The provider must not:
(a) issue the margin lending facility to the retail client; or
(b) increase the limit of the margin lending facility that was
issued to the retail client;
on a day (the critical day) unless the provider has, within 90 days
(or other period prescribed by the regulations) before the critical
day:
(c) made an assessment that:
(i) is in accordance with section 985F; and
(ii) covers a period in which the critical day occurs; and
(d) made the inquiries and verification in accordance with
section 985G.
Note: This subsection is a civil penalty provision (see section 1317E).
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Special provisions relating to margin lending facilities Division 4A
Section 985F
Corporations Act 2001 539
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Increase in limit of standard margin lending facility
(2) For the purposes of paragraph (1)(b), the limit of a standard margin
lending facility is taken not to be increased if:
(a) apart from this subsection, there would be an increase in the
limit; and
(b) the increase in the limit would result from an increase in the
value, determined under the terms of the facility, of the
secured property under the facility (as referred to in
paragraph 761EA(2)(c)); and
(c) the increase in the value of the secured property does not
result from the client contributing additional property to the
secured property.
Regulations
(3) For the purposes of paragraph (1)(b), the regulations may prescribe
particular situations in which the limit of a margin lending facility
is taken:
(a) to be increased, despite subsection (2); or
(b) not to be increased.
985F Assessment of unsuitability of margin lending facility
For the purposes of paragraph 985E(1)(c), the provider must make
an assessment that:
(a) specifies the period the assessment covers; and
(b) assesses whether the margin lending facility will be
unsuitable for the retail client if the facility is issued or the
limit is increased in that period.
Note: The provider is not required to make the assessment if the margin
lending facility is not issued or the limit is not increased.
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 4A Special provisions relating to margin lending facilities
Section 985G
540 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
985G Reasonable inquiries etc. about the retail client
Requirement to make inquiries and take steps to verify
(1) For the purposes of paragraph 985E(1)(d), the provider must,
before making the assessment:
(a) make reasonable inquiries about the retail client’s financial
situation; and
(b) take reasonable steps to verify the retail client’s financial
situation; and
(c) make any inquiries prescribed by the regulations about any
matter prescribed by the regulations; and
(d) take any steps prescribed by the regulations to verify any
matter prescribed by the regulations.
(2) The regulations may prescribe particular inquiries or steps that
must be made or taken, or do not need to be made or taken, for the
purposes of paragraph (1)(a) or (b).
When not required to take steps to verify
(3) Despite subsection (1), if:
(a) a financial services licensee that is authorised to provide
financial product advice in relation to margin lending
facilities has prepared a statement of advice for the retail
client; and
(b) the statement of advice was prepared no more than 90 days
before the critical day; and
(c) the statement of advice recommends that:
(i) the retail client acquire the particular margin lending
facility; or
(ii) the limit of the particular margin lending facility be
increased; and
(d) the limit of the facility, or the increase in the limit of the
facility, is not greater than the limit, or the increase in the
limit, recommended in the statement of advice; and
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Section 985H
Corporations Act 2001 541
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(e) the statement of advice includes the information that was
used for the purposes of preparing the statement of advice;
then the provider is not required, for the purposes of
paragraph (1)(b) or (d), to verify that information.
985H When margin lending facility must be assessed as unsuitable
Requirement to assess the margin lending facility as unsuitable
(1) The provider must assess that the margin lending facility will be
unsuitable for the retail client if the margin lending facility will be
unsuitable for the retail client under subsection (2).
Note 1: This subsection is a civil penalty provision (see section 1317E).
Note 2: Even if the margin lending facility will not be unsuitable for the retail
client under subsection (2), the provider may still assess that the
margin lending facility will be unsuitable for the retail client for other
reasons.
(2) The margin lending facility will be unsuitable for the retail client
if, at the time of the assessment, it is likely that:
(a) if the facility is issued or the limit increased in the period
covered by the assessment, and the facility were to go into
margin call, the retail client:
(i) would be unable to comply with the retail client’s
financial obligations under the terms of the facility; or
(ii) could only comply with substantial hardship; or
(b) if the regulations prescribe circumstances in which a margin
lending facility is unsuitable—those circumstances will apply
to the margin lending facility if the facility is issued or the
limit increased in the period covered by the assessment.
Information to be used to make the assessment
(3) For the purposes of determining under subsection (2) whether the
margin lending facility will be unsuitable, only information that
satisfies both of the following paragraphs is to be taken into
account:
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 4A Special provisions relating to margin lending facilities
Section 985J
542 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(a) the information is about the retail client’s financial situation,
or any other matter prescribed by regulations under
paragraph 985G(1)(c) or (d);
(b) at the time of the assessment:
(i) the provider had reason to believe that the information
was true; or
(ii) the provider would have had reason to believe that the
information was true if it had made the inquiries or
verification under section 985G.
985J Giving the retail client the assessment
Requirement to give assessment if requested
(1) If, before the margin lending facility is issued or the limit is
increased, the retail client requests a copy of the assessment from
the provider, the provider must give the retail client a written copy
of the assessment before issuing the facility or increasing the limit.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: This subsection is a civil penalty provision (see section 1317E).
Note 3: The provider is not required to give the retail client a copy of the
assessment if the margin lending facility is not issued or the limit is
not increased.
(2) If, during the period that:
(a) starts on the critical day referred to in subsection 985E(1);
and
(b) ends 7 years after that day;
the retail client requests a copy of the assessment from the
provider, the provider must give the retail client a written copy of
the assessment:
(c) if the request is made within 2 years of the critical day—
before the end of 7 business days after the day the provider
receives the request; and
(d) otherwise—before the end of 21 business days after the day
the provider receives the request.
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Other provisions relating to conduct etc. connected with financial products and financial
services, other than financial product disclosure Part 7.8
Special provisions relating to margin lending facilities Division 4A
Section 985K
Corporations Act 2001 543
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: This subsection is a civil penalty provision (see section 1317E).
Manner of giving assessment
(3) The provider must give the retail client the copy of the assessment
in the manner (if any) prescribed by the regulations.
No payment for assessment
(4) The provider must not request or demand payment of an amount
for giving the retail client a copy of the assessment.
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: This subsection is a civil penalty provision (see section 1317E).
Strict liability
(5) An offence based on subsection (1), (2) or (4) is an offence of strict
liability.
Note: For strict liability, see section 6.1 of the Criminal Code.
985K Unsuitable margin lending facilities
Requirement not to issue unsuitable margin lending facilities etc.
(1) The provider must not:
(a) issue the margin lending facility to the retail client; or
(b) increase the limit of the margin lending facility that was
issued to the retail client;
if the facility is unsuitable for the retail client under subsection (2).
Note 1: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Note 2: This subsection is a civil penalty provision (see section 1317E).
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 4A Special provisions relating to margin lending facilities
Section 985K
544 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
When a margin lending facility will be unsuitable
(2) The margin lending facility is unsuitable for the retail client if, at
the time it is issued or the limit is increased:
(a) it is likely that, if the facility were to go into margin call, the
retail client:
(i) would be unable to comply with the retail client’s
financial obligations under the terms of the facility; or
(ii) could only comply with substantial hardship; or
(b) if the regulations prescribe circumstances in which a margin
lending facility is unsuitable—those circumstances apply to
the margin lending facility.
Information to be used for the purposes of subsection (2)
(3) For the purposes of determining under subsection (2) whether the
margin lending facility will be unsuitable, only information that
satisfies both of the following paragraphs is to be taken into
account:
(a) the information is about the retail client’s financial situation,
or any other matter prescribed by regulations under
paragraph 985G(1)(c) or (d);
(b) at the time the margin lending facility is issued or the limit is
increased:
(i) the provider had reason to believe that the information
was true; or
(ii) the provider would have had reason to believe that the
information was true if it had made the inquiries or
verification under section 985G.
Regulations in relation to unsuitability of margin lending facility
(4) The regulations may prescribe particular situations in which a
margin lending facility is taken not to be unsuitable for a retail
client, despite subsection (2).
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Financial services and markets Chapter 7
Other provisions relating to conduct etc. connected with financial products and financial
services, other than financial product disclosure Part 7.8
Special provisions relating to margin lending facilities Division 4A
Section 985L
Corporations Act 2001 545
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Increase in limit of standard margin lending facility
(5) For the purposes of paragraph (1)(b), the limit of a standard margin
lending facility is taken not to be increased if:
(a) apart from this subsection, there would be an increase in the
limit; and
(b) the increase in the limit would result from an increase in the
value, determined under the terms of the facility, of the
secured property under the facility (as referred to in
paragraph 761EA(2)(c)); and
(c) the increase in the value of the secured property does not
result from the client contributing additional property to the
secured property.
Regulations in relation to increase in limit
(6) For the purposes of paragraph (1)(b), the regulations may prescribe
particular situations in which the limit of a margin lending facility
is taken:
(a) to be increased, despite subsection (5); or
(b) not to be increased.
Subdivision B—Notice of margin calls under margin lending
facilities
985L Issue of margin lending facility must not be conditional on
agreement to receive communications through agent
A financial services licensee must not require, as a condition of
issuing a margin lending facility to a retail client, that the retail
client enter into an agreement of the kind referred to in
subsection 985M(2) (which deals with agreements about
communications in relation to margin lending facilities).
Note: This section is a civil penalty provision (see section 1317E).
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 4A Special provisions relating to margin lending facilities
Section 985M
546 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
985M Notification of margin calls
Provider must notify retail client of margin call
(1) A financial services licensee (the provider) that has issued a
margin lending facility to a retail client must, when the facility
goes into margin call, take reasonable steps to notify the retail
client under the facility of the margin call in accordance with this
section.
Note: This subsection is a civil penalty provision (see section 1317E).
When provider must notify retail client’s agent, and agent must
notify retail client, of margin call
(2) However, if there is an agreement between the provider, the retail
client, and another financial services licensee (the agent) that the
agent will receive communications from the provider in relation to
the margin lending facility on behalf of the retail client, then:
(a) the provider must take reasonable steps to notify the agent
(instead of the retail client) of the margin call in accordance
with this section; and
(b) the agent must take reasonable steps to notify the retail client
of the margin call in accordance with this section.
Note: This subsection is a civil penalty provision (see section 1317E).
When and how notice must be given
(3) A notice under this section must be given:
(a) at a time determined by ASIC; or
(b) if no time is determined by ASIC—as soon as practicable.
(4) A notice under this section must be given:
(a) if a manner in which the notice is to be given has been agreed
between the person who is required to give the notice and the
person to whom the notice is required to be given—in that
manner; or
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Financial services and markets Chapter 7
Other provisions relating to conduct etc. connected with financial products and financial
services, other than financial product disclosure Part 7.8
Special provisions relating to margin lending facilities Division 4A
Section 985M
Corporations Act 2001 547
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) if there is no agreement and ASIC has determined the manner
in which the notice is to be given—in that manner; or
(c) otherwise—in a reasonable manner.
ASIC may determine when and how notice must be given
(5) ASIC may determine:
(a) the time by which, and manner in which, a provider must
notify a client or agent of a margin call under this section;
and
(b) the time by which, and manner in which, an agent must
notify a client of a margin call under this section.
(6) A determination made under subsection (5):
(a) must be in writing; and
(b) is a legislative instrument for the purposes of the Legislative
Instruments Act 2003.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 5 Obligations to report
Section 986A
548 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 5—Obligations to report
986A Reporting in relation to money to which Subdivision A or B of
Division 2 applies or property to which Division 3 applies
The regulations may impose reporting requirements to be complied
with by a financial services licensee in relation to money to which
Subdivision A or B of Division 2 applies or property to which
Division 3 applies.
986B Reporting in relation to dealings in derivatives
The regulations may impose reporting requirements to be complied
with by a financial services licensee in relation to dealings in
derivatives on behalf of other people.
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Financial services and markets Chapter 7
Other provisions relating to conduct etc. connected with financial products and financial
services, other than financial product disclosure Part 7.8
Financial records, statements and audit Division 6
Section 987A
Corporations Act 2001 549
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 6—Financial records, statements and audit
Subdivision A—Preliminary
987A Application of Division
(1) This Division applies in relation to a financial services licensee and
a financial services business carried on by the licensee, whether
that business is carried on in this jurisdiction or elsewhere.
(2) This Division does not affect, and is to be taken never to have
affected, the operation of Chapter 2M in relation to a company that
is a financial services licensee or in relation to a financial services
business that is carried on by such a company.
Subdivision B—Financial records of financial services licensees
988A Obligation to keep financial records
(1) A financial services licensee must (subject to subsection (2)):
(a) keep financial records that correctly record and explain the
transactions and financial position of the financial services
business carried on by the licensee; and
(b) keep those records in accordance with the requirements of
this Subdivision; and
(c) comply with the requirements of this Subdivision in relation
to conversion of records into the English language (see
subsection 988C(2)).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) The licensee does not contravene a requirement of this Subdivision
merely because some or all of the records are kept as a part of, or
in conjunction with, the records relating to any other business that
is carried on by the licensee.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 6 Financial records, statements and audit
Section 988B
550 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
988B Records to be kept so that profit and loss statements and
balance sheet can be prepared and audited
The records must be kept in a way that:
(a) enables true and fair profit and loss statements, and balance
sheets, of the financial services business of the licensee to be
prepared from time to time; and
(b) allows those statements and balance sheets to be
conveniently and properly audited.
988C Language of records
(1) The records must be kept in writing in the English language, or in a
manner that enables them to be readily accessible and readily
converted into writing in the English language.
(2) If any of the records are not kept in writing in the English
language, the licensee must, if required to convert the records
concerned into writing in the English language by a person who is
entitled to examine the records concerned, comply with the
requirement within a reasonable time.
988D Location of records
If any of the records are kept outside this jurisdiction, the licensee
must:
(a) cause to be sent to and kept at a place in this jurisdiction such
particulars with respect to the business dealt with in those
records as will enable true and fair profit and loss statements
and balance sheets to be prepared; and
(b) if required by ASIC to produce those records at a place in
this jurisdiction, comply with the requirement not later than
28 days after the requirement is made.
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services, other than financial product disclosure Part 7.8
Financial records, statements and audit Division 6
Section 988E
Corporations Act 2001 551
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
988E Particular categories of information to be shown in records
The records must be kept in sufficient detail to show particulars of:
(a) all money received or paid by the licensee, including money
paid to, or disbursed from, an account maintained for the
purposes of section 981B or 982B; and
(b) all acquisitions and disposals of financial products made by
the licensee, the charges and credits arising from them, and
the names of the person acquiring or disposing of each of
those products; and
(c) all income received by the licensee from commissions,
interest, and other sources, and all expenses, commissions,
and interest paid by the licensee; and
(d) all the assets and liabilities (including contingent liabilities)
of the licensee; and
(e) all securities, managed investment products or foreign
passport fund products that are the property of the licensee,
showing by whom the securities or products, or the
documents of title to the securities or products, are held and,
if they are held by some other person, whether or not they are
held as security against loans or advances; and
(f) all securities, managed investment products or foreign
passport fund products that are not the property of the
licensee and for which the licensee or a nominee controlled
by the licensee is accountable, showing:
(i) by whom, and for whom, the securities or products, or
the documents of title to the securities or products, are
held; and
(ii) the extent to which they are either held for safe custody
or deposited with a third party as security for loans or
advances made to the licensee; and
(g) such other matters (if any) as are specified in regulations
made for the purposes of this paragraph.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 6 Financial records, statements and audit
Section 988F
552 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
988F Regulations may impose additional requirements
The regulations may impose additional requirements to be
complied with in relation to the records including, for example,
requirements for things to be contained in the records, and
requirements relating to the level of detail to be shown in the
records.
988G Records taken to be made with licensee’s authority
An entry in the records is, unless the contrary is proved, to be taken
to have been made by, or with the authority of, the licensee.
Subdivision C—Financial statements of financial services
licensees
989A Meaning of financial year
In this Subdivision:
financial year, in relation to a financial services licensee, means:
(a) if the licensee is not a body corporate—a year ending on
30 June; and
(b) if the licensee is a body corporate—a financial year of the
body corporate.
989B Financial services licensee to prepare and lodge annual profit
and loss statement and balance sheet
(1) A financial services licensee must, in respect of each financial
year, prepare a true and fair profit and loss statement and balance
sheet in accordance with this Subdivision.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1).
(2) The licensee must lodge the statement and balance sheet with
ASIC in accordance with this Subdivision.
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Financial records, statements and audit Division 6
Section 989C
Corporations Act 2001 553
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1).
(3) The licensee must, with the statement and balance sheet, lodge an
auditor’s report with ASIC containing the information and matters
required by the regulations.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1).
989C Requirements as to contents and applicable accounting
principles
The profit and loss statement and the balance sheet must:
(a) contain the information that is required by the regulations;
and
(b) be prepared in accordance with any requirements in the
regulations as to the accounting principles to be used.
989CA Audit to be conducted in accordance with auditing standards
(1) If an individual auditor, or an audit company, conducts an audit of
a profit and loss statement and balance sheet for the purposes of
this Subdivision, the individual auditor or audit company must:
(a) conduct the audit in accordance with the auditing standards;
and
(b) include in the audit report on the profit and loss statement,
and balance sheet, any statements or disclosures required by
the auditing standards.
(2) If an audit firm, or an audit company, conducts an audit of a profit
and loss statement and balance sheet for the purposes of this
Subdivision, the lead auditor for the audit or review must ensure
that:
(a) the audit is conducted in accordance with the auditing
standards; and
(b) the audit report on the profit and loss statement, and balance
sheet, includes any statements or disclosures required by the
auditing standards.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 6 Financial records, statements and audit
Section 989D
554 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Fault-based offence
(3) A person commits an offence if the person contravenes
subsection (1) or (2).
Strict liability offence
(4) A person commits an offence of strict liability if the person
contravenes subsection (1) or (2).
989D Time of lodgment
(1) Unless an extension is granted under subsection (3), the profit and
loss statement and the balance sheet must be lodged before:
(a) if the licensee is not a body corporate—the day that is 2
months after the end of that financial year; or
(b) if the licensee is a body corporate—the day that is 3 months
after the end of that financial year.
(2) If an extension is granted under subsection (3), the profit and loss
statement and the balance sheet must be lodged before the end of
the extended period.
(3) ASIC may, on application made:
(a) by a financial services licensee and the licensee’s auditor;
and
(b) before the end of the period that would otherwise apply;
approve an extension of the period for lodging the profit and loss
statement and balance sheet. The extension may be of the period
originally applicable or the period applicable under a previous
extension.
(4) An approval under subsection (3) may be given subject to such
conditions (if any) as ASIC imposes.
(5) If an approval under subsection (3) is given subject to conditions,
the licensee must comply with those conditions.
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services, other than financial product disclosure Part 7.8
Financial records, statements and audit Division 6
Section 990A
Corporations Act 2001 555
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Subdivision D—Appointment etc. of auditors
990A Sections 990B to 990H not to apply to public companies
Sections 990B to 990H do not apply to a financial services licensee
that is a public company.
990B Appointment of auditor by licensee
(1) A financial services licensee must, within 1 month after beginning
to hold the licence, appoint as auditor or auditors to audit the
licensee’s financial statements:
(a) a person or persons; or
(b) a firm or firms; or
(c) a person or persons and a firm or firms.
Subsections (4) and (5) must be complied with in relation to the
appointment.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Within 14 days after a vacancy occurs in the office of an auditor of
the licensee, if there is no surviving or continuing auditor of the
licensee, the licensee must appoint:
(a) a person or persons; or
(b) a firm or firms; or
(c) a person or persons and a firm or firms;
to fill the vacancy. Subsections (4) and (5) must be complied with
in relation to the appointment.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) While a vacancy in the office of an auditor of the licensee
continues, the surviving or continuing auditor or auditors (if any)
may act.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 6 Financial records, statements and audit
Section 990B
556 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(4) The licensee must not appoint as auditor a person who, or firm that,
is ineligible by virtue of regulations made for the purposes of
section 990C to act as auditor of the licensee.
(5) The licensee must not appoint a person or firm as auditor of the
licensee unless that person or firm has, before the appointment,
consented by written notice given to the licensee to act as auditor
and has not withdrawn the consent by written notice given to the
licensee.
(6) The licensee must, within 14 days after an appointment of a person
or firm as auditor, lodge a written notice with ASIC stating that the
licensee has made the appointment and specifying the name of the
person or firm.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(7) The regulations may include provisions (including provisions
imposing obligations) dealing with matters related to the
appointment of a firm as auditor, including, for example:
(a) taking certain members of the firm to have been appointed as
auditors; and
(b) the effect of a dissolution and reconstitution of the firm; and
(c) requiring a member of the firm who retires or withdraws to
continue to act as auditor in certain circumstances; and
(d) how a report, notice or other document is to be made or
given.
(8) Regulations made for the purposes of subsection (7) may also
include provisions modifying the effect of provisions of this
Subdivision in relation to matters dealt with in those regulations.
(9) In this section:
person means:
(a) an individual auditor; or
(b) an authorised audit company.
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Financial services and markets Chapter 7
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services, other than financial product disclosure Part 7.8
Financial records, statements and audit Division 6
Section 990C
Corporations Act 2001 557
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
990C When a person or firm is ineligible to act as auditor
A person or firm is ineligible to act as auditor of the licensee if
regulations made for the purposes of this section provide that the
person or firm is ineligible so to act.
990D Ineligible person or firm must not consent to act or disqualify
themselves etc.
(1) A person or firm, while ineligible to act as auditor of the licensee,
must not:
(a) consent to be appointed as auditor of the licensee; or
(b) act as auditor of the licensee; or
(c) prepare a report that an auditor of the licensee is to prepare
under this Part.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) A person must not:
(a) if the person has been appointed auditor of the licensee—
disqualify himself or herself, while the appointment
continues, from acting as auditor of the licensee; or
(b) if the person is a member of a firm that has been appointed
auditor of the licensee—disqualify the firm, while the
appointment continues, from acting as auditor of the licensee.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
990E Duration of appointment of auditors
An auditor of the licensee holds office until:
(a) death; or
(b) removal in accordance with section 990F; or
(c) resignation in accordance with sections 990G and 990H; or
(d) becoming prohibited by subsection 990D(1) from acting as
auditor of the licensee;
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 6 Financial records, statements and audit
Section 990F
558 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
whichever occurs first.
990F Removal of auditors
The licensee:
(a) must remove an auditor of the licensee from office if the
auditor becomes ineligible to act as auditor of the licensee;
and
(b) may, with ASIC’s consent, remove an auditor of the licensee
from office.
Note: Failure to comply with paragraph (a) is an offence (see
subsection 1311(1)).
990G Resignation of auditors—requirements for resignation
(1) An auditor of the licensee may, by written notice given to the
licensee, resign as auditor of the licensee if:
(a) the auditor has, by written notice given to ASIC, applied for
consent to the resignation and, at or about the same time as
the auditor gave notice to ASIC, gave written notice of the
application to the licensee; and
(b) ASIC has consented and the auditor has received notice of
ASIC’s consent.
(2) ASIC must, as soon as practicable after receiving an application
from an auditor under subsection (1), notify the auditor and the
licensee whether it consents to the resignation.
(3) A statement by an auditor in an application under subsection (1), 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 in a court 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.
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Financial records, statements and audit Division 6
Section 990H
Corporations Act 2001 559
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(4) A certificate by ASIC that a statement was made in an application
under subsection (1), or in answer to an inquiry by ASIC relating
to the reasons for such an application, is conclusive evidence that
the statement was so made.
990H Resignation of auditors—when resignation takes effect
The resignation of an auditor of the licensee takes effect on:
(a) if the notice of resignation specifies a date as the date the
resignation is to take effect—the date so specified; or
(b) the date on which ASIC gives its consent to the resignation;
or
(c) if ASIC has fixed a date as the date the resignation is to take
effect—the date so fixed;
whichever last occurs.
990I Auditor’s right of access to records, information etc.
(1) An auditor of the licensee has a right of access at all reasonable
times to the financial records or other records (including any
register) of the licensee.
(2) An auditor of the licensee is entitled to require:
(a) from the licensee; or
(b) if the licensee is a body corporate—from any director,
secretary or senior manager of the licensee;
such assistance and explanations as the auditor desires for the
purposes of audit.
(3) The licensee, or a director, secretary or senior manager of the
licensee if it is a body corporate, must not:
(a) refuse or fail to allow an auditor of the licensee access, in
accordance with subsection (1), to financial records or other
records of the licensee; or
(b) refuse or fail to give assistance, or an explanation, to an
auditor of the licensee as and when required under
subsection (2); or
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 6 Financial records, statements and audit
Section 990J
560 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) otherwise hinder, obstruct or delay an auditor of the licensee
in the performance or exercise of the auditor’s duties or
powers.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
990J Auditor’s fees and expenses
(1) The reasonable fees and expenses of an auditor of the licensee are
payable by the licensee.
(2) The auditor may recover those fees by action against the licensee.
990K Auditor to report on certain matters
(1) If an auditor, in the performance of duties as auditor of the
licensee, becomes aware of a matter referred to in subsection (2),
the auditor must, within 7 days after becoming aware of the matter,
lodge a written report on the matter with ASIC and send a copy of
the report to the licensee, and to each licensed market (if any) and
each licensed CS facility (if any) in which the licensee is a
participant.
Note: Failure to comply with this section is an offence (see
subsection 1311(1)).
(2) A report must be given in relation to any matter that, in the opinion
of the auditor:
(a) has adversely affected, is adversely affecting or may
adversely affect the ability of the licensee to meet the
licensee’s obligations as a licensee; or
(b) constitutes or may constitute a contravention of:
(i) a provision of Subdivision A or B of Division 2 (or a
provision of regulations made for the purposes of such a
provision); or
(ii) a provision of Division 3 (or a provision of regulations
made for the purposes of such a provision); or
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Section 990L
Corporations Act 2001 561
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(iii) a provision of Subdivision B or C of this Division (or a
provision of regulations made for the purposes of such a
provision); or
(iv) a condition of the licensee’s licence; or
(c) constitutes an attempt to unduly influence, coerce,
manipulate or mislead the auditor in the conduct of the audit.
990L Qualified privilege for auditor etc.
Qualified privilege for auditor
(1) An auditor of the licensee has qualified privilege in respect of:
(a) a statement that the auditor makes, orally or in writing, in the
course of the auditor’s duties as auditor; or
(b) the lodging of a report under subsection 990K(1); or
(c) the sending of a report to:
(i) the licensee; or
(ii) a licensed market or a licensed CS facility;
under subsection 990K(1); or
(d) a disclosure made by the auditor in response to a notice given
to the auditor under subsection 225A(5) of the ASIC Act.
Note: If the auditor is an audit company, the company has qualified privilege
under this subsection in respect of statements made, and reports
lodged or sent, by individuals on behalf of the company if those
statements and notices can be properly attributed to the company.
Qualified privilege for registered company auditor acting on
behalf of audit company
(2) If the auditor of the licensee is an audit company, a registered
company auditor acting on behalf of the company has qualified
privilege in respect of:
(a) a statement that the registered company auditor makes (orally
or in writing) in the course of the performance, on behalf of
the company, of the company’s duties as auditor; or
(b) the lodging by the registered company auditor, on behalf of
the company, of a report under subsection 990K(1); or
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Section 990L
562 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) the sending by the registered company auditor, on behalf of
the company, of a report to:
(i) the licensee; or
(ii) a licensed market or a licensed CS facility;
under subsection 990K(1); or
(d) a disclosure made by the registered company auditor in
response to a notice given to the audit company under
subsection 225A(5) of the ASIC Act.
Qualified privilege for subsequent publication
(3) A person has qualified privilege in respect of the publishing of a
document:
(a) prepared by an auditor of the licensee in the course of the
auditor’s duties as auditor; or
(b) required by or under this Chapter to be lodged with ASIC
(whether or not the document has been so lodged).
(4) A person has qualified privilege in respect of the publishing of a
statement:
(a) made by an auditor of the licensee as mentioned in
subsection (1); or
(b) a statement made by a registered company auditor as
mentioned in subsection (2).
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Other rules about conduct Division 7
Section 991A
Corporations Act 2001 563
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 7—Other rules about conduct
991A Financial services licensee not to engage in unconscionable
conduct
(1) A financial services licensee must not, in or in relation to the
provision of a financial service, engage in conduct that is, in all the
circumstances, unconscionable.
(2) If a person suffers loss or damage because a financial services
licensee contravenes subsection (1), the person may recover the
amount of the loss or damage by action against the licensee.
(3) An action under subsection (2) may be begun at any time within 6
years after the day on which the cause of action arose.
(4) This section does not affect any liability that a person has under
any other law.
991B Financial services licensee to give priority to clients’ orders
(1) This section applies if:
(a) a person (the client) has instructed a financial services
licensee to buy or sell financial products of a particular class
that are able to be traded on a licensed market; and
(b) the licensee has not complied with the instruction; and
(c) the client is not an associate of the licensee; and
(d) regulations made for the purposes of this paragraph do not
exclude those financial products from this section.
(2) The financial services licensee must not, except as permitted by
subsection (3):
(a) enter into a transaction of purchase or sale of financial
products of that class either on their own behalf or on behalf
of an associate of the licensee; or
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Division 7 Other rules about conduct
Section 991C
564 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(b) instruct another person to enter into a transaction of purchase
or sale of financial products of that class on behalf of the
licensee or an associate of the licensee.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) Subsection (2) does not apply in relation to the entering into of a
transaction, or the giving of an instruction, by the licensee if:
(a) the client’s instructions required the purchase or sale to be
effected only on specified conditions relating to price and the
licensee has been unable to comply with the instructions
because of those conditions; or
(b) the transaction, or the giving of the instruction, is permitted
by regulations made for the purposes of this paragraph.
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
991C Regulations may deal with various matters relating to
instructions to deal through licensed markets
The regulations may do all or any of the following in relation to
instructions received by financial services licensees to deal in
financial products through licensed markets:
(a) impose requirements relating to the order in which
instructions are to be transmitted to a licensed market or to
another financial services licensee who is a participant in a
licensed market;
(b) impose requirements relating to the order in which dealings
that have been effected on a licensed market are to be
allocated to instructions;
(c) prohibit the disclosure of instructions in specified
circumstances.
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Other rules about conduct Division 7
Section 991D
Corporations Act 2001 565
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
991D Regulations may require records to be kept in relation to
instructions to deal on licensed markets and foreign
markets
The regulations may impose requirements for the keeping of
records relating to all or any of the following:
(a) instructions received by financial services licensees to deal in
financial products through licensed markets or through other
financial markets (whether inside or outside Australia);
(b) the execution of such instructions;
(c) the transmission of such instructions.
991E Obligations of financial services licensee in relation to dealings
with non-licensees
Obligation to disclose if acting on own behalf
(1) Subject to the regulations, a financial services licensee must not,
either personally or through an authorised representative, enter into
a financial product transaction on their own behalf:
(a) that relates to a financial product that is able to be traded on a
licensed market; and
(b) that is with a person (the non-licensee) who is not a financial
services licensee or an authorised representative;
if:
(c) the licensee has not (in accordance with any applicable
regulations made for the purposes of paragraph (2)(a))
disclosed to the non-licensee the fact that the licensee will be
acting on their own behalf in the proposed dealing; or
(d) the non-licensee has not (in accordance with any applicable
regulations made for the purposes of paragraph (2)(b))
consented to the licensee so acting in the proposed dealing.
If the licensee is acting through an authorised representative, the
disclosure referred to in paragraph (c) may instead be given by the
representative.
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 7 Other rules about conduct
Section 991E
566 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) The regulations may deal with either or both of the following:
(a) how a disclosure referred to in paragraph (1)(c) is to be
made;
(b) how a consent referred to in paragraph (1)(d) is to be given.
Obligation not to charge fee
(3) If a financial services licensee, either personally or through an
authorised representative, enters into a transaction of sale or
purchase of financial products on their own behalf:
(a) that relates to a financial product that is able to be traded on a
licensed market; and
(b) that is with a person (the non-licensee) who is not a financial
services licensee or an authorised representative;
the licensee must only charge the non-licensee a brokerage,
commission or other fee in respect of the transaction if the charge
is permitted by the regulations.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
Person may rescind contract if section contravened
(4) If subsection (1) or (3) is contravened in relation to a transaction
(whether or not anyone is convicted of an offence in respect of the
contravention), the non-licensee may, subject to subsection (5),
rescind the contract effecting the transaction, unless the contract
was for the purchase of financial products by the non-licensee and
the non-licensee has disposed of those products.
(5) The right under subsection (4) to rescind the contract:
(a) can only be exercised during the period of 14 days starting
on:
(i) unless subparagraph (ii) applies—the day on which the
contract was entered into; or
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Section 991F
Corporations Act 2001 567
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(ii) if regulations made for the purposes of this
subparagraph specify a later day—that later day; and
(b) is to be exercised by notice in writing to the licensee.
(6) Nothing in subsections (4) and (5) affects any other right that a
person has.
Regulations may require records to be kept in relation to
transactions entered into by licensee on own behalf
(7) The regulations may impose requirements for the keeping of
records relating to financial products transactions entered into by a
financial services licensee on their own behalf.
991F Dealings involving employees of financial services licensees
(1) Subject to the regulations, a financial services licensee and an
employee of the licensee must not, on their own behalves, jointly
acquire a financial product.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Subject to the regulations, a financial services licensee must not
give credit to an employee of the licensee, or to a person who they
know is an associate of an employee of the licensee, if:
(a) the credit is given for the purpose of enabling the person to
whom the credit is given to acquire a financial product; or
(b) the licensee knows or has reason to believe that the credit
will be used for the purpose of acquiring a financial product.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3) Subject to the regulations, a person:
(a) who is an employee of a financial services licensee that is a
participant in a licensed market; and
(b) who is so employed in connection with a business of dealing
in financial products;
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Division 7 Other rules about conduct
Section 991F
568 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
must only, on their own behalf, acquire or agree to acquire a
financial product of a kind that is able to be traded on that market if
the licensee acts as the agent of the person in respect of the
acquisition.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(4) In this section, a reference to an employee of a financial services
licensee includes, for a licensee that is a body corporate, a
reference to an officer of the body.
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Miscellaneous Division 8
Section 992A
Corporations Act 2001 569
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 8—Miscellaneous
992A Prohibition on hawking of certain financial products
(1) A person must not offer financial products for issue or sale in the
course of, or because of, an unsolicited meeting with another
person.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Subsection (1) does not apply to offering of securities, hawking of
which is prohibited by section 736, or to offering interests in
managed investment schemes, hawking of which is prohibited by
section 992AA.
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
(3) A person must not make an offer to issue or sell a financial product
in the course of, or because of:
(aa) an unsolicited telephone call to another person; or
(ab) an unsolicited contact with another person in another way
that is prescribed by the regulations for the purposes of this
paragraph;
unless the other person has been:
(a) contacted only during the hours prescribed by the regulations
and only if the person is not listed on the “No Contact/No
Call” register in relation to the person making the contact;
and
(b) given an opportunity to:
(i) register on a “No Contact/No Call” register maintained
by the person making the contact at no cost to that
person; and
(ii) select the time and frequency of any future contacts; and
(c) given a Product Disclosure Statement before becoming
bound to acquire a financial product; and
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Section 992A
570 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(d) clearly informed of the importance of using the information
in the Product Disclosure Statement when making a decision
to acquire a financial product; and
(e) given the option of having the information in the Product
Disclosure Statement read out to that person.
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(3A) Neither subsection (1) nor (3) applies to an offer of financial
products if the offer is not to a retail client.
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
(3B) Neither subsection (1) nor (3) applies to an offer of financial
products that is made under an eligible employee share scheme.
Note: A defendant bears an evidential burden in relation to the matters in
this subsection. See subsection 13.3(3) of the Criminal Code.
(4) In addition to other penalties for breaches of this section, a failure
to comply with this section gives the other person a right of return
and refund exercisable within 1 month after the expiry date of the
relevant cooling-off period for the financial product, or one month
and fourteen days in the event that no cooling-off period applies to
the financial product, subject to the following provisions:
(a) on the exercise of the right to return the product:
(i) if the product is constituted by a legal relationship
between the client and the issuer of the product—that
relationship is, by force of this subsection, terminated
with effect from that time without penalty to the client;
and
(ii) any contract for the acquisition of the product by the
client is, by force of this subsection, terminated with
effect from that time without penalty to the client;
(b) the regulations may provide for consequences and
obligations (in addition to those provided for in
paragraph (a)) to apply if the right to return a financial
product is exercised;
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Section 992AA
Corporations Act 2001 571
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(c) the regulations may do any or all of the following:
(i) provide that a specified subclass of financial products
that would otherwise be covered by this subsection is
excluded from this subsection;
(ii) provide additional requirements to be satisfied before
this subsection applies in relation to a class or subclass
of financial products;
(iii) provide that this subsection does not apply in relation to
the provision of a financial product in specified
circumstances.
(5) For the purposes of this section:
(a) a reference to offering a financial product for issue (or
offering to issue a financial product) includes a reference to
inviting an application for the issue of the financial product;
and
(b) a reference to offering a financial product for sale (or
offering to sell a financial product) includes a reference to
inviting an offer to purchase the financial product.
992AA Prohibition on hawking of interests in managed investment
schemes
(1) A person must not offer interests in managed investment schemes
for issue or sale in the course of, or because of:
(a) an unsolicited meeting with another person; or
(b) an unsolicited telephone call to another person;
unless the offer is exempted under subsection (2).
Note: Failure to comply with this subsection is an offence (see
subsection 1311(1)).
(2) Subsection (1) does not apply to an offer of interests in managed
investment schemes if:
(a) the offer is not to a retail client;
(b) the offer is an offer of interests in a listed managed
investment scheme made by telephone by a financial services
licensee; or
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 8 Miscellaneous
Section 992B
572 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
(c) the offer is made to a client by a financial services licensee
through whom the client has acquired or disposed of an
interest in a managed investment scheme in the previous 12
months; or
(d) the offer is made under an eligible employee share scheme.
(3) For the purposes of this section:
(a) a reference to offering interests in a managed investment
scheme for issue includes a reference to inviting an
application for the issue of interests in the scheme; and
(b) a reference to offering interests in a managed investment
scheme for sale includes a reference to inviting an offer to
purchase interests in the scheme.
992B Exemptions and modifications by ASIC
(1) ASIC may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial product or class of financial products from
all or specified provisions of this Part; or
(c) declare that this Part applies in relation to a person or a
financial product, or a class of persons or financial products,
as if specified provisions of this Part were omitted, modified
or varied as specified in the declaration.
(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) An exemption or declaration must be in writing and ASIC must
publish notice of it in the Gazette.
(5) If conduct (including an omission) of a person would not have
constituted an offence if a particular declaration under
paragraph (1)(c) had not been made, that conduct does not
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Section 992C
Corporations Act 2001 573
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
constitute an offence unless, before the conduct occurred (in
addition to complying with the gazettal requirement of
subsection (4)):
(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 Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
Note: Because of section 761H, a reference to this Part or Part 10.2 also
includes a reference to regulations or other instruments made for the
purposes of this Part or Part 10.2 (as the case requires).
992C Exemptions and modifications by regulations
(1) The regulations may:
(a) exempt a person or class of persons from all or specified
provisions of this Part; or
(b) exempt a financial product or a class of financial products
from all or specified provisions of this Part; or
(c) provide that this Part applies as if specified provisions were
omitted, modified or varied as specified in the regulations.
(2) For the purpose of this section, the provisions of this Part include:
(a) definitions in this Act, or in the regulations, as they apply to
references in this Part; and
(b) any provisions of Part 10.2 (transitional provisions) that
relate to provisions of this Part.
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Chapter 7 Financial services and markets
Part 7.8 Other provisions relating to conduct etc. connected with financial products
and financial services, other than financial product disclosure
Division 9 Enforcement
Section 993A
574 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Division 9—Enforcement
993A Overview
This Division contains provisions creating offences by reference to
various rules contained in preceding Divisions of this Part.
However, it does not create all the offences relating to those rules,
as some offences are created by subsection 1311(1). Where
offences are created by subsection 1311(1) in relation to a rule, this
is indicated by a note at the end of the provision containing the
rule.
993B Offence of failing to pay client money into an account as
required
Strict liability offence
(1) A financial services licensee commits an offence if:
(a) the licensee is required by subsection 981B(1) to pay
particular money into an account in accordance with that
subsection; and
(b) the licensee does not pay the money into an account in
accordance with that subsection.
(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.
Ordinary offence
(3) A financial services licensee commits an offence if:
(a) the licensee is required by subsection 981B(1) to pay
particular money into an account in accordance with that
subsection; and
(b) the licensee does not pay the money into an account in
accordance with that subsection.
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Enforcement Division 9
Section 993C
Corporations Act 2001 575
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
993C Offence of failing to comply with requirements relating to
client money account
Strict liability offence
(1) A financial services licensee commits an offence if the licensee
contravenes a requirement in regulations made for the purposes of
section 981C.
(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.
Ordinary offence
(3) A financial services licensee commits an offence if:
(a) a requirement in regulations made for the purposes of
section 981C applies to the licensee; and
(b) the licensee contravenes the requirement.
993D Failing to pay loan money into an account as required
Failing to pay loan money into account as required
(1) A financial services licensee contravenes this subsection if:
(a) the licensee is required by subsection 982B(1) to pay
particular money into an account in accordance with that
subsection; and
(b) the licensee does not pay the money into an account in
accordance with that subsection.
Fault-based offence
(2) A person commits an offence if the person contravenes
subsection (1).
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Part 7.8 Other provisions relating to conduct etc. connected with financial products
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Division 9 Enforcement
Section 993D
576 Corporations Act 2001
Compilation No. 94 Compilation date: 6/4/19 Registered: 14/5/19
Strict liability offence
(3) A person commits an offence of strict liability if the person
contravenes subsection (1).
Civil liability
(4) A person contravenes this subsection if the person contravenes
subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
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