CORPORATIONS ACT 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

PART 7.9 - FINANCIAL PRODUCT DISCLOSURE AND OTHER PROVISIONS RELATING TO ISSUE, SALE AND PURCHASE OF FINANCIAL PRODUCTS  

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

SECTION 1017E   DEALING WITH MONEY RECEIVED FOR FINANCIAL PRODUCT BEFORE THE PRODUCT IS ISSUED  

1017E(1)  
This section applies to money paid to:


(a) an issuer (the product provider ) of financial products; or


(b) a seller (the product provider ) of financial products in relation to which the seller has prepared a Product Disclosure Statement;

if:


(c) the money is paid to acquire, or acquire an increased interest in, one or more of those financial products from the product provider (whether or not the acquisition would be by a person as a retail client); and


(d) the product provider does not, for whatever reason, issue or transfer the product or products, or the increased interest, immediately after receiving the money; and


(e) either:


(i) the financial product or increased interest was offered in this jurisdiction; or

(ii) the application for the financial product or increased interest was made in this jurisdiction; or

(iii) the money was received in this jurisdiction.

1017E(1A)  
However, this section does not apply in relation to money paid to an issuer (the product provider ) of foreign passport fund products if the money is paid to acquire, or acquire an increased interest in, one or more of those foreign passport fund products from the product provider (whether or not the acquisition would be by a person as a retail client).

1017E(2)  
The product provider must ensure that the money 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 section applies; or

(ii) interest on the amount from time to time standing to the credit of the account; and


(c) if regulations made for the purposes of this paragraph impose additional requirements - the requirements so imposed by the regulations.

The money must be paid into the account on the day it is received by the product provider, or on the next business day.

Note: See section 1021O for related offences.

1017E(2A)  


Subject to subsection (2C), the money is taken to be held in trust by the product provider for the benefit of the person who paid the money.

1017E(2B)  
(Repealed by No 141 of 2003, s 3, Sch 2 [ 90].)

1017E(2C)  
The regulations may:


(a) provide that subsection (2A) 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).

1017E(3)  
The money must only be taken out of the account if:


(a) it is taken out for the purpose of return to the person by whom it was paid; or


(b) the product is issued or transferred to, or in accordance with the instructions of, that person; or


(c) it is taken out for a purpose specified by regulations made for the purposes of this paragraph; or


(d) it is taken out in a situation specified by regulations made for the purposes of this paragraph.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

1017E(4)  
The product provider must:


(a) return the money; or


(b) issue or transfer the product to, or in accordance with the instructions of, the person who paid the money; or


(c) if the money is taken out:


(i) for a purpose specified by regulations made for the purposes of paragraph (3)(c); or

(ii) in a situation specified by regulations made for the purposes of paragraph (3)(d);
do any action required, by regulations made for the purposes of this paragraph, after taking out that money;

either:


(d) before the end of one month starting on the day on which the money was received; or


(e) if it is not reasonably practicable to do so before the end of that month - by the end of such longer period as is reasonable in the circumstances.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

1017E(5)  
The product provider may, for the purposes of this section, maintain a single account or 2 or more accounts.

1017E(6)  
Nothing in this section, or in regulations made for the purposes of this section, makes the body (not being the product provider) that the account is with under paragraph (2)(a) subject to any liability merely because of a failure by the product provider to comply with any of the provisions of this section or those regulations.


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