Financial Services Reform Act 2001 (122 of 2001)
Schedule 1 Financial Services and Markets
Part 1 Main amendments
Corporations Act 2001
1 Chapter 7 - Part 7.4 - Division 1
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.
(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 section 48 of theActs Interpretation Act 1901.
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:
(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.
(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:
(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 theGazette; 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
(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 theGazette; 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.
(7) As soon as practicable, the Minister must arrange for a copy of a notice under subsection (2) to be:
(a) published in theGazette; 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.
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 theGazette; 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.
(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 theGazette; 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 theGazette; and
(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.
(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 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.