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 2

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 or a CS facility licensee, or an applicant for such a licence, if:

(a) the individual is a director, secretary or executive officer 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 licensed financial market operator or licensed CS facility operator, or in an applicant for a licence of either 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 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 or an Australian CS facility 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 or an Australian CS facility 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

(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.

853F Obligations on disqualified individuals

(1) A disqualified individual must not become involved in a market licensee or a CS 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 or CS 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)).

853G Notification by ASIC

If ASIC becomes aware that an individual who is involved in a market licensee or a CS facility licensee is disqualified because of paragraph 853A(b) or (c), ASIC must notify the individual, the licensee and the Minister as soon as practicable.