Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 (44 of 1999)

Schedule 3   Amendment of the Corporations Law

Part 1   Transfer of financial institutions and friendly societies

1   At the end of the Corporations Law

Add:

Schedule 4 - Transfer of financial institutions and friendly societies

Note: See section 1465A.

Part 1 - Preliminary

1 Definitions

In this Schedule, except so far as the contrary intention appears:

AFIC Code of this jurisdiction means the Australian Financial Institutions Commission Code as set out in the Australian Financial Institutions Commission Act 1992 of Queensland as in force immediately before the transfer date and as applied as a law of this jurisdiction.

Financial Institutions Code of this jurisdiction means the Financial Institutions Code set out in the Financial Institutions (Queensland) Act 1992 as in force immediately before the transfer date and as applied as a law of this jurisdiction.

Friendly Societies Code means the Friendly Societies Code set out in Schedule 1 to the Friendly Societies (Victoria) Act 1996 as in force immediately before the transfer date.

Friendly Societies Code of this jurisdiction means:

(a) the Friendly Societies Code as applied as a law of this jurisdiction; or

(b) if this Law is being applied as a law of Western Australia - the Friendly Societies (Western Australia) Code set out in the Friendly Societies (Western Australia) Act 1999.

member of a transferring financial institution means a person who, immediately before the transfer date, is a member of the institution under:

(a) the previous governing Code; or

(b) the rules of the institution.

membership share has the meaning given in subclause 12(3).

previous governing Code for a transferring financial institution means the Code or law under which the institution is registered immediately before the transfer date.

State Supervisory Authority (SSA) for a transferring financial institution means:

(a) the SSA for the institution within the meaning of the previous governing Code; or

(b) in the case of The Cairns Cooperative Weekly Penny Savings Bank Limited - the Queensland Office of Financial Supervision.

transfer date means the date that is the transfer date for the purposes of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999.

transferring financial institution of this jurisdiction means:

(a) a building society of this jurisdiction (that is, a society that is registered under the Financial Institutions Code of this jurisdiction, and authorised to operate as a building society, immediately before the transfer date); or

(b) a credit union of this jurisdiction (that is, a society that is registered under the Financial Institutions Code of this jurisdiction, and authorised to operate as a credit union, immediately before the transfer date); or

(c) a friendly society of this jurisdiction (that is, a body that is registered as a friendly society under the Friendly Societies Code of this jurisdiction immediately before the transfer date); or

(d) a body registered as an association under Part 12 of the Financial Institutions Code of this jurisdiction immediately before the transfer date; or

(e) a body registered as a Special Services Provider under the AFIC Code of this jurisdiction immediately before the transfer date; or

(f) a body registered as an association under Part 12 of the Friendly Societies Code of this jurisdiction immediately before the transfer date; or

(g) The Cairns Cooperative Weekly Penny Savings Bank Limited referred to in section 263 of the Financial Intermediaries Act 1996 of Queensland if:

(i) this definition is being applied as a law of Queensland; and

(ii) a determination by APRA under subitem 7(2) of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 is in force immediately before the transfer date.

Note: If a determination is made, the Bank will be covered by the Banking Act 1959 from the transfer date. APRA may only make a determination if the Treasurer and the Queensland Minister responsible for the administration of the Financial Intermediaries Act 1996 of Queensland have agreed that the Bank should be covered by the Banking Act 1959.

transition period means the period of 18 months starting on the transfer date.

withdrawable share means a withdrawable share within the meaning of the Financial Institutions Code of this jurisdiction as in force immediately before the transfer date.

2 Objective

The objective of this Schedule is to facilitate the registration of:

(a) building societies and credit unions currently covered by the Financial Institutions Code of this jurisdiction; and

(b) friendly societies currently covered by the Friendly Societies Code of this jurisdiction; and

(c) related bodies and associations;

as Corporations Law companies with as little disturbance to the operations of, and as little conversion costs for, the bodies concerned as possible.

Part 2 - Transfer to Corporations Law registration

Division 1 - The transfer process

3 Registration of transferring financial institution as company

Registration as company on transfer date

(1) On the transfer date, each transferring financial institution of this jurisdiction is taken to become registered as a company under the Law of this jurisdiction under the name under which the institution was registered under the previous governing Code immediately before the transfer date.

(2) Subclause (1) applies even if the institution is an externally-administered body corporate immediately before the transfer date.

Type of company

(3) The following table sets out the types of company the institution may be registered as under subclause (1):

Note: To be registered as a proprietary company, the institution would need to comply with subsection 113(1) (no more than 50 non-employee shareholders). A proprietary company cannot engage in fundraising activities (see subsection 113(3)).

(4) The institution may elect which particular type of company it is to be registered as under subclause (1). The election:

(a) must be agreed to by a resolution of the board of the institution; and

(b) is to be made by written notice lodged with ASIC at least 7 days before the transfer date.

The election must be in the prescribed form.

(5) The institution is taken to be registered under subclause (1) as the following type of company:

(a) if the institution's board makes an election under subclause (4) - the type specified in the election; or

(b) if the institution's board does not make an election under subclause (4):

(i) if regulations under this subparagraph are in force for that type of institution on the transfer date - the type of company prescribed by the regulations; or

(ii) if no regulations under subparagraph (i) are in force for that type of institution on the transfer date - the type of company that is specified in the table in subclause (3) for that type of institution and is marked with an asterisk.

4 Documents to be lodged with ASIC by SSA

(1) The SSA for a transferring financial institution of this jurisdiction must lodge with ASIC:

(a) a notice that sets out:

(i) the institution's name; and

(ii) the address of the institution's registered office;

under the previous governing Code immediately before the transfer date; and

(b) a copy of the institution's rules as in force immediately before the transfer date; and

(c) a copy of any entry in its register of charges kept under section 265 of this Law (as applied by the previous governing Code) that relates to the institution; and

(d) any document lodged under section 263 or 264 of this Law (as applied by the previous governing Code) that relates to:

(i) the institution; and

(ii) a charge that is in force immediately before the transfer date.

(2) If the transferring financial institution is under external administration immediately before the transfer date, the notice referred to in paragraph (1)(a) must also set out:

(a) the type of external administration; and

(b) any other prescribed details.

5 Documents to be lodged with ASIC by transferring financial institution

(1) Within 1 month after a transferring financial institution of this jurisdiction is registered as a company under clause 3, it must lodge with ASIC a notice that sets out the personal details of each director and secretary of the company as at the transfer date. The notice must be in the prescribed form.

Penalty: 5 penalty units.

(2) The personal details of a director or secretary are the details that would need to be set out in the notice if it were being given under section 242.

6 Company to set up registers and minute books

Setting up registers and minute books

(1) A company registered under clause 3 must, within 14 days after the transfer date:

(a) set up the registers required by sections 168 (registers of members, debenture holders and options holders) and 271 (charges); and

(b) include in those registers all the information that is required to be in those registers and that is available to the company on registration; and

(c) set up the minute books required by section 251A.

Incorporation of prior minute books

(2) The minute books set up under paragraph (1)(c) must incorporate any minute books or similar records kept by the company prior to its registration under clause 3.

Access to registers and minute books

(3) During the 14 days, the company need not comply with a person's request to inspect or obtain a copy of:

(a) information in a register; or

(b) a minute of a general meeting.

However, the period within which the company must comply with the request begins at the end of the 14 days.

7 ASIC to complete formalities of registration

(1) As soon as practicable after a transferring financial institution of this jurisdiction is registered as a company under clause 3, ASIC must:

(a) give the company an ACN; and

(b) keep a record of the company's registration; and

(c) issue a certificate to the company that states:

(i) the company's name; and

(ii) the company's ACN; and

(iii) the company's type; and

(iv) that the company is registered as a company under the Corporations Law of this jurisdiction; and

(v) the transfer date as the date of registration.

Note: For the evidentiary value of a certificate of registration, see subsection 1274(7A).

(2) If:

(a) the company is registered with a name that does not include "Limited" or "Proprietary Limited" (as the type of company requires), or an acceptable abbreviation; and

(b) the company is not exempt from the requirement to use that word or those words in its name by or under section 150 or 151;

ASIC may change the company's name so that it includes the required words by altering the details of the company's registration to reflect that change.

Note: For acceptable abbreviations see section 149.

(3) Subsections 1274(2) and (5) apply to the record of the company's registration referred to in paragraph (1)(b) as if they were a document lodged with ASIC.

8 Registration of registered bodies

(1) If a registered body becomes registered as a company under clause 3, it ceases to be a registered body. ASIC must remove the body's name from the appropriate register kept for the purposes of Division 1 or 2 of Part 5B.2.

(2) ASIC may keep any of the documents relating to the company that were lodged because the company used to be a registered body.

Division 2 - The consequences of the transfer

Subdivision A - General

9 Effect of registration under clause 3

General effect of registration

(1) Registration of a transferring financial institution of this jurisdiction as a company under clause 3 does not:

(a) create a new legal entity; or

(b) affect the institution's existing property, rights or obligations (except as against the members in their capacity as members); or

(c) render defective any legal proceedings by or against the institution or its members.

Members, officers, constitution and registered office

(2) On registration of a transferring financial institution of this jurisdiction as a company under clause 3:

(a) each person who is a member of the institution immediately before the transfer date becomes a member of the company; and

(b) each person who was a director of the institution immediately before the transfer date becomes a director of the company; and

(c) each person who was a secretary of the institution immediately before the transfer date becomes a secretary of the company; and

(d) the institution's rules, as in force immediately before the transfer date, become the company's constitution; and

(e) the institution's registered office under the previous governing Code immediately before the transfer date becomes the company's registered office for the purposes of this Law.

Health benefits funds rules

(3) The institution's rules referred to in paragraph (2)(d) do not include rules within the meaning of the National Health Act 1953.

Note: These latter rules relate to the operation of health benefits funds.

Replaceable rules

(4) The replaceable rules (as described in section 135) do not apply to a company registered under clause 3, despite section 135, unless the company repeals its constitution.

10 Provisions applying to company limited by shares and by guarantee

Section 1416 applies to a company that is taken under clause 3 to be registered as a company limited by shares and by guarantee.

11 Transferring financial institution under external administration

(1) If, immediately before the transfer date, provisions of Chapter 5 applied to:

(a) a compromise or arrangement between a transferring financial institution of this jurisdiction and its creditors; or

(b) a reconstruction of a transferring financial institution of this jurisdiction; or

(c) a receiver or other controller of property of a transferring financial institution of this jurisdiction; or

(d) the winding-up or dissolution of a transferring financial institution of this jurisdiction;

because of Part 9 of the Financial Institutions Code, or Part 9 of the Friendly Societies Code, of this jurisdiction, those provisions of Chapter 5 continue to apply to that matter after the transfer date (but without any of the modifications made by the Code or the regulations made under the Code).

(2) Without limiting the generality of subclause (1), a matter referred to in paragraph (1)(a), (b) or (d) includes an application or other step preliminary to the matter.

(3) Subclause (1) does not limit the regulations that may be made under clause 28 or 39.

(4) Any act done before the transfer date under or for the purposes of the provisions of Chapter 5 as applied by the Code has effect as if it had been done under or for the purposes of Chapter 5 as it applies after the transfer date.

(5) If, before the transfer date, a liquidator of a transferring financial institution had been appointed under:

(a) section 341 of the Financial Institutions Code of this jurisdiction; or

(b) section 402 of the Friendly Societies Code of this jurisdiction;

the institution may be wound up in accordance with the provisions of Chapter 5.

(6) For the avoidance of doubt, if, before the transfer date, the SSA for a transferring financial institution of this jurisdiction had given a certificate under:

(a) section 341 of the Financial Institutions Code of this jurisdiction; or

(b) section 402 of the Friendly Societies Code of this jurisdiction;

but had not yet appointed a liquidator of the institution, neither the SSA nor ASIC may appoint a liquidator of the institution on the basis of the certificate.

Subdivision B - Membership

12 Institution becoming a company limited by shares

(1) If a transferring financial institution of this jurisdiction is taken to be registered as a company limited by shares under clause 3, the following apply:

(a) any shares in the institution on issue immediately before the transfer date (other than withdrawable shares) become shares of the company

(b) any withdrawable shares of the institution on issue immediately before the transfer date become redeemable preference shares of the company

(c) in the case of a building society - each person who was a member of the society immediately before the transfer date, other than by virtue of only holding shares in the society, is taken to have been issued with a membership share on the transfer date

(d) in any case other than that of a building society - any person:

(i) who was a member of the institution immediately before the transfer date; and

(ii) who did not hold any shares in the institution;

is taken to have been issued with a membership share on the transfer date.

(2) If a person who is taken to have been issued with a membership share is a joint member, they hold the membership share jointly with the other member or members of the joint membership. This is so, even if the other member, or another member, held shares in the institution immediately before the transfer date. However, the joint membership does not have any more votes because of the membership share or shares than it had immediately before the transfer date.

(3) In this Schedule:

building society means a transferring financial institution authorised under the Financial Institutions Code of its jurisdiction to operate as a building society immediately before the transfer date.

membership share means a share in a company that was a transferring financial institution:

(a) that is taken to have been issued under this clause; and

(b) that carries the rights and obligations that were conferred or imposed on the person in a capacity other than that of shareholder, by:

(i) the institution's rules (as in force immediately before the transfer date); and

(ii) the previous governing Code; and

(c) on which no amount is paid; and

(d) on which no amount is unpaid; and

(e) that is not:

(i) transferable or transmissible; or

(ii) capable of devolution by will or by operation of law; and

(f) that can be cancelled as set out in subclause (4).

(4) A membership share can be cancelled at the option of the holder or the company in the circumstances (if any):

(a) set out in the company's constitution; or

(b) in which the member who holds the share could have had their membership of the institution cancelled immediately before the transfer date.

Part 2J.1 does not apply to the cancellation of a membership share.

13 Institution becoming a company limited by guarantee

(1) If a transferring financial institution of this jurisdiction is taken to be registered as a company limited by guarantee under clause 3, the following apply:

(a) each person who is a member of the institution immediately before the transfer date is taken to have given a guarantee (but only for the purpose of determining whether the person is a member of the company)

(b) each person who becomes a member of the company after the transfer date and before the amount of the relevant guarantee is determined is taken to have given a guarantee (but only for the purpose of determining whether the person is a member of the company).

(2) If a person who is taken to have given a guarantee by subclause (1) is a joint member, they are taken to have given the guarantee jointly with the other member or members of the joint membership. However, the joint membership does not have any more votes because of giving the guarantee or guarantees than it had immediately before the transfer date.

14 Institution becoming a company limited by shares and guarantee

(1) If a transferring financial institution of this jurisdiction is taken to be registered as a company limited by shares and guarantee under clause 3, the following apply:

(a) each person who is a member of the institution immediately before the transfer date is taken to have given a guarantee (but only for the purpose of determining whether the person is a member of the company)

(b) each person who becomes a member of the company after the transfer date and before the amount of the relevant guarantee is determined is taken to have given a guarantee (but only for the purpose of determining whether the person is a member of the company)

(c) any shares in the institution on issue immediately before the transfer date (other than withdrawable shares) become shares of the company

(d) any withdrawable shares of the institution on issue immediately before the transfer date become redeemable preference shares of the company.

(2) If a person who is taken to have given a guarantee by subclause (1) is a joint member, they are taken to have given the guarantee jointly with the other member or members of the joint membership. However, the joint membership does not have any more votes because of giving the guarantee or guarantees than it had immediately before the transfer date.

15 Redeemable preference shares that were withdrawable shares

(1) This Law applies to a redeemable preference share that was a withdrawable share of a transferring financial institution of this jurisdiction immediately before the transfer date, except that:

(a) the share is redeemable on the same terms that the withdrawable share was withdrawable under the Financial Institutions Code of this jurisdiction and the institution's rules or constitution; and

(b) the holder of the share continues to have the same rights and obligations that they had by holding the withdrawable share.

(2) The provisions of this Law that apply to redeemable preference shares apply:

(a) subject to subclause (1), to redeemable preference shares of a company registered under clause 3; and

(b) to redeemable preference shares of a company (other than a company referred to in paragraph (a)) that is permitted to use the expression building society , credit union or credit society under section 66 of the Banking Act 1959;

even if the shares are the only class of shares issued by the company.

(3) For the purposes of this clause, this Law includes regulations made for the purposes of this Law.

16 Liability of members on winding up

(1) If a transferring financial institution of this jurisdiction that is registered under clause 3 is wound up, each person:

(a) who was a past member of the institution at the time it became registered; and

(b) who did not again become a member; and

(c) who had not held shares in the institution;

is not liable under Division 2 of Part 5.6 on the winding up.

Note: A person who was a past member at the time of registration and who held shares in the institution may be liable as a past member under Division 2 of Part 5.6.

(2) If a company that is registered under clause 3 is wound up, a person who is taken to have given a guarantee by subclause 13(1) or 14(1) is not liable under:

(a) section 515 merely because the person is or was a member who is taken to have given a guarantee; or

(b) section 517 or paragraph 518(b) merely because the person is taken to have given a guarantee.

Note: Section 1416 and clause 10 preserve the application of section 518 to transferring financial institutions that are taken to be registered as companies limited by shares and guarantee.

Subdivision C - Share capital

17 Share capital

Transfer of certain amounts to share capital

(1) On registration of a transferring financial institution of this jurisdiction as a company under clause 3:

(a) any amount of withdrawable share capital (within the meaning of the Financial Institutions Code of this jurisdiction); and

(b) any amount standing to the credit of its share premium account; and

(c) any amount standing to the credit of its capital redemption reserve;

immediately before the transfer date becomes part of the company's share capital.

Use of amount standing to credit of share premium account

(2) The company may use the amount standing to the credit of its share premium account immediately before the transfer date (if any) to:

(a) provide for the premium payable on redemption of debentures or redeemable preference shares issued before the transfer date; or

(b) write off:

(i) the preliminary expenses of the institution incurred before the transfer date; or

(ii) expenses incurred, payments made, or discounts allowed before the transfer date, in respect of any issue of shares in, or debentures of, the institution.

18 Application of no par value rule

(1) Section 254C applies to shares issued by a transferring financial institution of this jurisdiction before the transfer date as well as shares issued on and after that.

(2) In relation to a share issued by the institution before the transfer date:

(a) the amount paid on the share is the sum of all amounts paid to the institution at any time for the share (but not including any premium); and

(b) the amount unpaid on the share is the difference between the issue price of the share (but not including any premium) and the amount paid on the share (see paragraph (a)).

19 Calls on partly-paid shares

The liability of a shareholder for calls in respect of money unpaid on shares issued before the transfer date by a transferring financial institution of this jurisdiction (whether on account of the par value of the shares or by way of premium) is not affected by the share ceasing to have a par value.

20 References in contracts and other documents to par value

(1) This clause applies for the purpose of interpreting and applying the following after the transfer date:

(a) a contract entered into by a transferring financial institution of this jurisdiction before the transfer date (including the institution's constitution)

(b) a trust deed or other document executed by or in relation to the institution before the transfer date.

(2) A reference to the par value of a share issued by a transferring financial institution of this jurisdiction is taken to be a reference to:

(a) if the share is issued before the transfer date - the par value of the share immediately before then; or

(b) if the share is issued on or after the transfer date but shares of the same class were on issue immediately before then - the par value that the share would have had if it had been issued then; or

(c) if the share is issued on or after the transfer date and shares of the same class were not on issue immediately before then - the par value determined by the directors.

A reference to share premium is taken to be a reference to any residual share capital in relation to the share.

(3) A reference to a right to a return of capital on a share issued by the institution is taken to be a reference to a right to a return of capital of a value equal to the amount paid in respect of the share's par value.

(4) A reference to the aggregate par value of the institution's issued share capital is taken to be a reference to that aggregate as it existed immediately before the transfer date and:

(a) increased to take account of the par value of any shares issued after then; and

(b) reduced to take account of the par value of any shares cancelled after then.

Subdivision D - Charges

21 Registration of prior charges

(1) If, immediately before the transfer date, a charge on property of a transferring financial institution of this jurisdiction was registered under section 265 of this Law (as applied by the previous governing Code), ASIC is taken to have entered in the Australian Register of Company Charges the time, date and particulars entered in the register under the previous governing Code.

(2) ASIC is taken to have done so at the beginning of the transfer date, and in accordance with subsection 265(2).

(3) An act or thing done by or in relation to the institution under, or for the purposes of, a provision of sections 262 to 277 of this Law (as applied by the previous governing Code) is taken to have been done under, or for the purposes of, that provision of this Law.

Part 3 - Terminating the application of the Codes to financial institutions and friendly societies

22 Cancellation of Code registrations

On the transfer date, the registration of each transferring financial institution of this jurisdiction under the previous governing Code is cancelled.

23 No new registrations under the Codes

On and from the transfer date, there are to be no new registrations under:

(a) the Financial Institutions Code of this jurisdiction; or

(b) the AFIC Code of this jurisdiction; or

(c) the Friendly Societies Code of this jurisdiction.

Part 4 - The transition period

24 Modifications of constitution

(1) A company registered under clause 3 must modify its constitution before the end of the transition period so that the constitution:

(a) gives effect to this Schedule; and

(b) is consistent with this Law; and

(c) sets out the rights and obligations attaching to each class of shares on issue, including shares that are taken to have been issued by a provision of this Schedule.

(2) A company registered under clause 3 is not prevented from:

(a) modifying its constitution to change the rights and obligations attaching to any membership shares on issue; or

(b) redeeming any membership shares on issue and not providing for them in the constitution;

merely because 1 or more members of the company are deemed to have been issued with membership shares by clause 12.

25 ASIC may direct directors of a company to modify its constitution

(1) If a company registered under clause 3 has not modified its constitution so that it complies with subclause 24(1) by the end of the transition period, ASIC may direct, in writing, the directors of the company to:

(a) take the necessary or specified steps to:

(i) ensure that the company modifies its constitution so that it does comply; or

(ii) ensure that the company makes the modifications to its constitution that ASIC specifies; and

(b) take those steps within a specified time (which must be more than 28 days).

A direction may require the directors to take steps that are inconsistent with the company's constitution.

(2) ASIC may issue a direction under subclause (1) before the end of the transition period if requested by a majority of directors of the company.

(3) No civil or criminal liability arises from action taken by a director in good faith and in accordance with a direction issued under subclause (1).

(4) A person contravenes this subclause if, without reasonable excuse, they contravene a direction under subclause (1).

(5) A person who intentionally or recklessly contravenes a direction under subclause (1) is guilty of an offence.

Penalty: 100 penalty units or imprisonment for 2 years, or both.

26 ASIC's power to make exemption and modification orders for the transition period

(1) ASIC may:

(a) exempt a company registered under clause 3 from a provision of this Law; or

(b) declare that this Law applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.

The exemption or declaration ceases to have effect at the end of the transition period (the 18 months starting on the transfer date), unless ASIC specifies a shorter period in which it ceases to have effect.

(2) Without limiting subclause (1), the exemption or declaration may relate to:

(a) a change of company type; or

(b) a change to a company's constitution; or

(c) the issue and redemption of shares;

that is connected with a requirement of or under this Law, the Life Insurance Act 1995 or the Banking Act 1959.

(3) The exemption or declaration may:

(a) apply to specified provisions of this Law; or

(b) apply to a specified company registered under clause 3, a specified class of those companies, or all of those companies; and

(c) relate to any other matter generally or as specified.

(4) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order.

(5) The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette.

27 When certain modifications of a company's constitution under an exemption or declaration take effect

(1) If the constitution of a company registered under clause 3 is modified under an exemption or declaration made under clause 26, and that modification varies or cancels, or allows the variation or cancellation of:

(a) rights attached to shares in a class of shares; or

(b) rights of members in a class of members;

the following provisions apply, and to the exclusion of section 246D if it would otherwise apply.

(2) If the company is not required to lodge a copy of the modification with ASIC by or under any other provision of this Law, the company must lodge a copy of the modification with ASIC within 14 days of the modification being made.

(3) If:

(a) members in the class do not all agree (whether by resolution or written consent) to the modification of the company's constitution; or

(b) the members in the class did not have an opportunity to vote on or consent to the modification;

10% or more of the members in the class may apply to the Court to have the modification set aside.

Note: If a company has only 1 class of shares, all members are members of the class.

(4) An application may only be made within 1 month after the modification is lodged.

(5) The modification takes effect:

(a) if no application is made to the Court to have it set aside - 1 month after the modification is lodged; or

(b) if an application is made to the Court to have it set aside - when the application is withdrawn or finally determined.

(6) The members of the class who want to have the modification set aside may appoint 1 or more of themselves to make the application on their behalf. The appointment must be in writing.

(7) The Court may set aside the modification if it is satisfied that it would unfairly prejudice the applicants. However, the Court must confirm the modification if the Court is not satisfied of unfair prejudice.

(8) Within 14 days after the Court makes an order, the company must lodge a copy of it with ASIC.

28 Modification by regulations for the transition period

(1) For the purpose of facilitating the transfer of the registration of transferring financial institutions to this Law, the regulations may modify the operation of this Law (including the provisions applied by clause 36) in relation to:

(a) a company registered under clause 3; or

(b) a specified class of companies registered under clause 3.

(2) Regulations made for the purposes of this clause may not:

(a) create an offence with a penalty greater than 10 penalty units; or

(b) increase the penalty for an existing offence; or

(c) substitute for an existing offence an offence with a penalty greater than the penalty for the existing offence; or

(d) modify an obligation, contravention of which will result in committing an offence, so as to make it more difficult to comply with.

(3) Regulations made for the purposes of this clause cease to have effect at the end of the transition period (the 18 months starting on the transfer day).

Part 5 - Demutualisations

29 Disclosure for proposed demutualisation

(1) If a modification of the constitution of an unlisted company registered under clause 3 is proposed and the modification would have the effect of:

(a) varying or cancelling the rights of members, or a class of members, to the reserves of the company; or

(b) varying or cancelling the rights of members, or a class of members, to the assets of the company on a winding up; or

(c) varying or cancelling the voting rights of members or a class of members; or

(d) otherwise varying or cancelling rights so that Part 2F.2 (Class rights) applies; or

(e) allowing 1 of those variations or cancellations of rights;

the following rules apply:

(f) notice of the meeting of the company's members at which the proposed modification is to be considered must be accompanied by the documents listed in subclause (4);

(g) notice of the meeting may not be shortened under subsection 249H(2);

(h) the company must lodge with ASIC the notice and the documents referred to in paragraphs (4)(a) and (c) within 7 days after notice of the meeting is given.

(2) If:

(a) an issue of shares by an unlisted company registered under clause 3 would have the effect of varying or cancelling rights so that Part 2F.2 (Class rights) applies; and

(b) at least 1 of the following is required to approve the share issue, or variation or cancellation of rights:

(i) a meeting of the company's members;

(ii) a resolution passed at a meeting of the class of members concerned;

(iii) written consent of a specified proportion of members in the class concerned;

the following rules apply (in addition to those that apply under Part 2F.2):

(c) notice of the meeting or consent process must be accompanied by the documents listed in subclause (4);

(d) the company must lodge with ASIC the notice of the meeting or consent process and the documents referred to in paragraphs (4)(a) and (c) within 7 days after the notice is given;

(e) notice of the meeting may not be shortened under subsection 249H(2).

Paragraph (c) need not be complied with to the extent that a person has already been given the documents.

(3) ASIC may exempt a company from this Part under clause 30.

(4) The documents that must accompany the notice are:

(a) a disclosure statement that:

(i) satisfies clause 31; and

(ii) ASIC has registered under clause 32; and

(b) in the case of a proposed modification of the constitution of a company - an estimate of the financial benefits (if any) the member will be offered if the proposed modification occurs; and

(c) a report by an expert that:

(i) states whether, in the expert's opinion, the proposed modification or share issue is in the best interests of the members of the company as a whole; and

(ii) gives the expert's reasons for forming that opinion; and

(iii) complies with subclauses 33(2) and (3).

(5) If the company contravenes subclause (1) or (2) it is not guilty of an offence.

(6) A person contravenes this subclause if they are involved in a contravention of subclause (1) or (2).

Note 1: This subclause is a civil penalty provision.

Note 2: Section 79 defines involved .

(7) A person commits an offence if they are involved in a contravention of subclause (1) or (2) and the involvement is dishonest.

Penalty: 2,000 penalty units or imprisonment for 5 years, or both.

(8) In this clause:

reserves includes general reserves and retained earnings of the company.

unlisted company means a company (registered under clause 3) that does not have voting shares quoted on a stock market of a securities exchange.

30 ASIC's exemption power

(1) If ASIC is satisfied that a company does not have a mutual structure, it may exempt the company from this Part.

(2) If ASIC is satisfied that:

(a) a proposed modification of the constitution of a company will not result in or allow a modification of the mutual structure of the company; or

(b) an issue of shares would not result in or allow a modification of the mutual structure of the company;

it may exempt the company from this Part in relation to the proposed modification or share issue.

(3) In determining whether the company has a mutual structure, ASIC may take into account:

(a) the particular structure, circumstances and history of the company; and

(b) whether:

(i) each customer of the company (for example an account holder, mortgagor or policy holder) is required to be a member of the company; or

(ii) each member (or joint membership) has only 1 vote; and

(c) any other relevant matter in relation to the company or its members.

(4) In determining whether the proposed modification or share issue will result in or allow a modification of the mutual structure of the company, ASIC must take into account whether the proposed modification or share issue would have the effect of converting the company into a company run for the purpose of yielding a return to shareholders.

(5) An exemption under subclause (2) 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.

(6) The exemption must be in writing and ASIC must publish notice of it in the Gazette.

(7) For the purposes of this clause, the provisions of this Part include regulations made for the purposes of this Part.

31 Coverage of disclosure statement

The disclosure statement must give all the information that members would reasonably require and expect to be given to make an informed decision about the proposed modification or share issue.

32 Registration of disclosure statement

(1) ASIC must register the disclosure statement if satisfied that the statement adequately sets out or explains the following (if relevant):

(a) the variation or cancellation of members' rights

(b) that the proposed modification will allow the variation or cancellation of members' rights

(c) in relation to a share issue:

(i) who will and will not receive shares under the issue; and

(ii) the rights and obligations attached to the shares; and

(iii) the implications of the share issue for the management and structure of the company

(d) what financial benefits (if any) members will be offered if the proposed modification occurs and why the benefits are considered to be appropriate

(e) the basis upon which members' entitlement to the financial benefits will be determined, including:

(i) any minimum period of membership that a member must satisfy to receive benefits; or

(ii) whether members must pay an amount or provide other value to receive benefits

(f) any preferential allocation of benefits to members, or a class of members, and how that allocation is to be determined

(g) any benefits officers of the company (including retiring officers) may receive (whether directly or indirectly) in connection with the proposed modification or share issue

(h) any other proposed changes to the company that are related to the proposed modification or share issue (for example, whether the company proposes to list its securities for quotation on a securities market of a stock exchange or merge with another company)

(i) the new name of the company, if the company's name is to be changed in connection with the proposed modification or share issue, or that it is not proposed to change the company's name

(j) the procedural steps required to vary or cancel the members' rights

(k) the procedural steps required to issue the shares

(l) how voting on the proposed modification or share issue will take place.

(2) In deciding whether the disclosure statement adequately sets out or explains the matters in subclause (1), ASIC may also have regard to:

(a) the readability of the statement; and

(b) whether the statement would be readily comprehensible by the members of the company concerned.

(3) The disclosure statement must include a statement to the effect that registration of the disclosure statement:

(a) is on the basis that the statement adequately sets out or explains the matters in subclause (1); and

(b) does not mean that ASIC has considered whether the proposed modification or share issue is in the best interests of the members of the company as a whole.

(4) Subclause (1) does not limit clause 31.

33 Expert's report

(1) If the company obtains 2 or more reports each of which could be used for the purposes of paragraph 29(4)(c), a copy of each report must:

(a) be lodged with ASIC; and

(b) be given to each member entitled to receive a disclosure statement.

Penalty: 25 penalty units or imprisonment for 6 months, or both.

(2) The report must be by an expert who is not an associate of the company.

(3) The report must set out details of:

(a) any relationship between the expert and the company, including any circumstances in which the expert gives it advice, or acts on its behalf, in the proper performance of the functions attaching to the expert's professional capacity or business relationship with the company; and

(b) any financial or other interest of the expert that could reasonably be regarded as being capable of affecting the expert's ability to give an unbiased opinion; and

(c) any fee, payment or other benefit (whether direct or indirect) that the expert has received or will or may receive in connection with making the report.

34 Unconscionable conduct in relation to demutualisations

(1) A person must not engage in:

(a) conduct that is, in all the circumstances, unconscionable; or

(b) conduct that is misleading or deceptive or is likely to mislead or deceive;

in relation to:

(c) a modification of the constitution of an unlisted company that is a modification to which this Part applies; or

(d) anything done in reliance on, in conjunction with or in connection with the modification; or

(e) a share issue to which this Part applies.

(2) In determining whether a person has engaged in conduct that contravenes paragraph (1)(a), have regard to:

(a) whether the person, or someone acting for the person, exerted undue influence or pressure on, or used unfair tactics against, members of the company; and

(b) whether the person, or someone acting for the person, engaged in conduct that resulted in a member or someone else gaining, or being in a position to gain, a benefit that the members generally did not, or would not be in a position to, gain.

This subclause does not limit subclause (1).

(3) A person who contravenes subclause (1) is not guilty of an offence.

35 Orders the Court may make

(1) Without limiting the Court's powers under Part 9.5, if the Court is satisfied that a person has engaged in conduct constituting a contravention of subclause 34(1), the Court may make 1 or more of the following orders:

(a) an order requiring the person or a person involved in the contravention to disclose to the public, to a particular person or to a particular class of persons, in the manner specified in the order, specified information, or information of a specified kind, (being information that is in the possession of the person to whom the order is directed or to which that person has access)

(b) an order requiring the person or a person involved in the contravention to publish, at their own expense, in a manner and at times specified in the order, advertisements the terms of which are specified in, or are to be determined in accordance with, the order

(c) any order that it thinks necessary or desirable:

(i) to protect the rights or interests of any person affected by the conduct; or

(ii) to ensure, as far as possible, that a proposed modification or share issue proceeds in the manner in which it would have proceeded if the conduct had not been engaged in

(d) without limiting the generality of paragraph (c):

(i) an order prohibiting the exercise of voting or other rights attached to specified shares; or

(ii) an order directing a company not to make payment, or to defer making payment, of any amount or amounts due from the company in respect of specified shares; or

(iii) an order prohibiting the acquisition or disposal of, or of an interest in, specified shares; or

(iv) an order directing the disposal of, or of an interest in, specified shares; or

(v) an order directing a company not to register a transfer or transmission of specified shares; or

(vi) an order that an exercise of the voting or other rights attached to specified shares be disregarded; or

(vii) an order directing a company not to issue shares to a person who holds shares in the company, being shares that were proposed to be issued to the person because the person holds shares in the company or pursuant to an offer or invitation made or issued to the person because the person holds shares in the company.

(2) Without limiting the Court's powers under Part 9.5, if, in a proceeding, the Court is satisfied that:

(a) a person has engaged in conduct constituting a contravention of subclause 34(1); and

(b) a member of the company has suffered, or is likely to suffer, loss or damage because of that conduct;

the Court may make the orders that it thinks are appropriate to compensate the member (in whole or in part) or to prevent or reduce the loss or damage, including:

(c) an order directing the person or a person who was involved in the contravention to refund money or return property to the member

(d) an order directing the person or a person who was involved in the contravention to pay to the member the amount of the loss or damage

(e) an order listed in paragraph (1)(d).

(3) An application for an order under this clause may be made by ASIC or a member of the company.

Part 6 - Continued application of fundraising provisions of the Friendly Societies Code

36 Friendly Societies Code to apply to offers of interests in benefit funds

(1) The following apply as a law of this jurisdiction as from the transfer date:

(a) Divisions 2 and 3 of Part 4B of the Friendly Societies Code

(b) Division 2 of Part 1, and Division 1 of Part 4B, of that Code to the extent to which they provide for the interpretation of terms used in the Divisions referred to in paragraph (a)

(c) sections 28, 29 and 128 of that Code to the extent to which they apply for the purposes of the Divisions referred to in paragraph (a)

(d) the regulations in force immediately before the transfer date under Part 4B of that Code to the extent to which they were made for the purposes of the provisions referred to in paragraphs (a), (b) and (c)

(e) standards adopted by that Code for the purposes of the provisions referred to in paragraphs (a), (b) and (c).

(2) The provisions referred to in subclause (1) apply as if:

(a) references in the provisions to a society were references to a friendly society within the meaning of the Life Insurance Act 1996; and

(b) references to a benefit fund were references to an approved benefit fund within the meaning of the Life Insurance Act 1996; and

(c) references in the provisions to an SSA (whether of this jurisdiction or another jurisdiction) were references to ASIC; and

(d) references in the provisions to lodging a document were references to lodging the document with ASIC; and

(e) references in the provisions to the Code were references to this Law; and

(f) references in the provisions to Part 4B of the Code were references to the provisions applied by this clause; and

(g) references to a penalty of $20,000 were references to a penalty of 200 penalty units; and

(h) references to a penalty of $5,000 were references to a penalty of 50 penalty units; and

(i) references to a penalty of $2,500 were references to a penalty of 25 penalty units; and

(j) references to a penalty of $1,000 were references to a penalty of 10 penalty units; and

(k) subsection 135(2) of the Friendly Societies Code were omitted; and

(l) paragraph 137(1)(e) of the Friendly Societies Code were omitted and replaced with a provision that requires a disclosure document to contain any other information that ASIC requires to be included in the document; and

(m) subsection 137(3) of the Friendly Societies Code were omitted and replaced with a provision that requires each copy of a disclosure document to:

(i) state that the document has been lodged with ASIC; and

(ii) specify the date of lodgment; and

(iii) state that ASIC takes no responsibility as to the contents of the document.

(3) If there is an inconsistency between:

(a) the provisions of Division 2 of Part 1, or Division 1 of Part 4B, of the Friendly Societies Code; and

(b) the provisions of Chapter 1 of this Law;

the provisions of the Code prevail for the purposes of interpreting the provisions applied by subclause (1).

Part 7 - Transitional provisions

37 Unclaimed money

(1) On and from the transfer date, section 414 applies to a sum or other property that, immediately before the transfer date, is covered by section 414 as applied by:

(a) section 337 of the Financial Institutions Code of this jurisdiction; or

(b) section 399 of the Friendly Societies Code of this jurisdiction.

(2) On and from the transfer date, section 544 applies to an amount of money that, immediately before the transfer date, is covered by section 544 as applied by:

(a) section 342 of the Financial Institutions Code of this jurisdiction; or

(b) section 403 of the Friendly Societies Code of this jurisdiction.

(3) Sections 414 and 544, as applied by this clause, apply as if:

(a) references to Part 9.7 were references to the unclaimed money law of this jurisdiction; and

(b) references to the Commission or ASIC were references to the Minister administering the unclaimed money law of this jurisdiction.

(4) In this clause:

unclaimed money law means:

(a) the Unclaimed Money Act 1995 of New South Wales; or

(b) the Unclaimed Moneys Act 1962 of Victoria; or

(c) Part 8 of the Public Trustee Act 1978 of Queensland; or

(d) the Unclaimed Money Act 1990 of Western Australia; or

(e) the Unclaimed Moneys Act 1891 of South Australia; or

(f) the Unclaimed Moneys Act 1918 of Tasmania; or

(g) the Unclaimed Moneys Act 1950 of the Australian Capital Territory; or

(h) the Companies (Unclaimed Assets and Moneys) Act of the Northern Territory.

38 Modification by regulations

(1) The regulations may modify the operation of this Law (including the provisions applied by clause 36) in relation to:

(a) a company registered under clause 3; or

(b) a company that is permitted to use the expression building society , credit union or credit society under section 66 of the Banking Act 1959; or

(c) a company that is a friendly society for the purposes of the Life Insurance Act 1995; or

(d) a specified class of any of those companies.

(2) Regulations made for the purposes of this clause may only modify this Law in relation to the following matters:

(a) issuing, cancelling or redeeming membership shares or redeemable preference shares

(b) inspection of the register of members required by section 169

(c) giving notice of a meeting of a company's members

(d) members' rights to request the directors to hold a general meeting or to move a resolution at a general meeting

(e) issuing share certificates for membership shares or redeemable preference shares, or numbering those shares

(f) the publication of the names and addresses of members in the annual return

(g) the report to members required by section 314

(h) disposing of securities in a company if the whereabouts of the holder of the securities is unknown as described in section 1343

(i) the treatment of members who hold shares jointly or who have jointly given a guarantee

(j) selective buy-backs.

(3) Regulations made for the purposes of this clause may not:

(a) create an offence with a penalty greater than 10 penalty units; or

(b) increase the penalty for an existing offence; or

(c) substitute for an existing offence an offence with a penalty greater than the penalty for the existing offence; or

(d) modify an obligation, contravention of which will result in committing an offence, so as to make it more difficult to comply with.

39 Regulations may deal with transitional, saving or application matters

(1) The regulations may deal with matters of a transitional, saving or application nature relating to:

(a) the transfer of the registration of transferring financial institutions to this Law by this Schedule; or

(b) the amendments made by Schedule 3 to the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999.

(2) Without limiting subclause (1), the regulations may provide for a matter to be dealt with, wholly or partly, in any of the following ways:

(a) by applying (with or without modifications) to the matter:

(i) provisions of a law of the Commonwealth, or of a State or Territory; or

(ii) provisions of a repealed or amended law of the Commonwealth, or of a State or Territory, in the form that those provisions took before the repeal or amendment; or

(iii) a combination of provisions referred to in subparagraphs (i) and (ii)

(b) by otherwise specifying rules for dealing with the matter

(c) by specifying a particular consequence of the matter, or of an outcome of the matter, for the purposes of this Law.

(3) Without limiting subclause (1) or (2), the regulations may provide for the continued effect, for the purposes of this Law, of a thing done or instrument made, or a class of things done or instruments made, before the transfer date under or for the purposes of a provision of a previous governing Code of a transferring financial institution of this jurisdiction. In the case of an instrument, or class of instruments, the regulations may provide for the instrument or instruments to continue to have effect subject to modifications.

(4) Without limiting subclause (3), regulations providing for the continued effect of things done or instruments made may permit all or any of the following matters to be determined in writing by a specified person, or by a person in a specified class of persons:

(a) the identification of a thing done or instrument made, or a class of them, that is to continue to have effect

(b) the purpose for which a thing done or instrument made, or a class of them, is to continue to have effect

(c) any modifications subject to which an instrument made, or a class of instruments made, is to continue to have effect.

(5) Without limiting subclause (1) or (2), the regulations may provide for the application of Chapter 5 of this Law or a similar law about external administration (in whole or in part and with or without modification) to a transferring financial institution of this jurisdiction if, immediately before the transfer date:

(a) the institution is under external administration (however described); and

(b) the provisions of Chapter 5 are not already applied to it, or in relation to it, by a law of this jurisdiction.

(6) In this clause, a reference to a law , whether of the Commonwealth or of a State or Territory, includes a reference to an instrument made under such a law.

40 Court may resolve transitional difficulties

(1) If a difficulty arises in applying a provision of this Law to a transferring financial institution of this jurisdiction that is registered as a company under clause 3, the Court may, on the application of an interested person, make such orders as it thinks proper to remove the difficulty.

(2) An order under this clause has effect despite anything in a provision of this Law.

(3) This clause has effect subject to the Constitution.