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 7.11 - Division 2

Division 2 - Transfer of certain securities

Subdivision A - General provisions

1071A Application of the Subdivision to certain securities

(1) This Subdivision applies to the following securities:

(a) shares in a company;

(b) debentures of a company;

(c) interests in a registered scheme.

(2) This Subdivision applies to an interest in a registered scheme as if:

(a) references to a company were instead references to the responsible entity of the registered scheme; and

(b) references to the constitution of a company were instead references to the constitution of the registered scheme; and

(c) references to members of a company were instead references to members of the registered scheme.

1071B Instrument of transfer

(1) This section does not apply to a transfer of a security through a prescribed CS facility.

(2) Subject to subsection (5), a company must only register a transfer of securities if a proper instrument of transfer (see subsections (3) and (4)) has been delivered to the company. This is so despite:

(a) anything in its constitution; or

(b) anything in a deed relating to debentures.

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

(3) An instrument of transfer is not a proper instrument of transfer for the purposes of subsection (2) if it does not show the details, specified in the regulations, in relation to the company concerned.

(4) If the transfer of the securities is covered by Division 3 of this Part, then (in addition to subsection (3)), the instrument is not a proper instrument of transfer for the purposes of subsection (2) unless it is a sufficient transfer of the securities under regulations made for the purposes of that Division.

(5) Subsection (2) does not prejudice the power of the company to register, as the holder of securities, a person to whom the right to the securities has devolved by will or by operation of law.

(6) Subsections (7) to (13) deal with a transfer of a security of a dead holder by the dead holder’s personal representative. They deal with the transfer differently depending on whether the personal representative is a local representative or not.

(7) The personal representative is a local representative if the representative is duly constituted as a personal representative under the law of the State or Territory in which the security is situated.

Note: Subsection 1070A(4) provides that the security is situated where the relevant register is kept.

(8) If the personal representative is a local representative, a transfer of the security by the representative is as valid as if the representative had been registered as the holder of the security at the time when the instrument of transfer was executed.

(9) If:

(a) the personal representative is not a local representative; and

(b) the representative:

(i) executes an instrument of transfer of the security to the representative or to another person; and

(ii) delivers the instrument to the company; and

(iii) delivers to the company with the instrument a statement in writing made by the representative to the effect that, to the best of the representative’s knowledge, information and belief, no grant of representation of the estate of the deceased holder has been applied for or made in the State or Territory in which the security is located and no application for such a grant will be made; and

(c) the statement is made within 3 months immediately before the date on which the statement is delivered to the company;

the company must (subject to subsection (10)) register the transfer and pay to the representative any dividends or other money accrued in respect of the security up to the time when the instrument was executed.

(10) Subsection (9) does not operate so as to require the company to do anything that it would not have been required to do if the personal representative were a local representative.

(11) A transfer or payment made under subsection (9) and a receipt or acknowledgment of such a payment is, for all purposes, as valid and effectual as if the personal representative were a local representative.

(12) For the purposes of this section, an application by a personal representative of a dead person for registration as the holder of a security in place of the dead person is taken to be an instrument of transfer effecting a transfer of the security to the personal representative.

(13) The production to a company of a document that is, under the law of a State or Territory, sufficient evidence of probate of the will, or letters of administration of the estate, of a dead person having been granted to a person, is sufficient evidence of the grant (for the company’s purposes). This is so despite:

(a) anything in its constitution; or

(b) in a deed relating to debentures.

1071C Occupation need not appear in transfer document, register etc.

(1) A document transferring securities need not state the occupation of the transferor or transferee and, if it is signed by a person, the signature need not be witnessed.

(2) Subsection (1) applies despite anything in:

(a) the constitution of:

(i) a company; or

(ii) a body referred to in paragraph 1073C(a) or (b); or

(b) the terms and conditions on which securities are created or issued.

(3) The omission from a register, certificate, document transferring securities or other document relating to a security, of a statement of the occupation of a person who is, or is entitled to be, registered as the holder of the security does not breach any law, constitution, trust deed or other document relating to the securities.

1071D Registration of transfer at request of transferor

(1) A written application by the transferor of a security of a company for the transferee’s name to be entered in the appropriate register is as effective (for the company’s purposes) as if it were an application by the transferee. The application is subject to the same conditions as it would be if it had been made by the transferee.

(2) If the transferor of a security of a company requests the company in writing to do so, the company must, by written notice, require a person who has possession, custody or control of either or both of the following:

(a) any title documents for the security;

(b) the instrument of transfer of the security;

to bring it or them into the office of the company within a specified period, to have the document cancelled or rectified and the transfer registered or otherwise dealt with.

(3) The period specified under subsection (2) must be not less than 7 and not more than 28 days after the date of the notice.

(4) If a person refuses or fails to comply with a notice given under subsection (2), the transferor may apply to the Court for the issue of a summons for that person to appear before the Court and show cause why the documents mentioned in the notice should not be delivered up or produced as required by the notice.

(5) The Court may:

(a) if the person appears:

(i) examine the person upon oath or affirmation; and

(ii) receive other evidence; and

(b) if the person does not appear after being duly served with the summons - receive evidence in the person’s absence; and

(c) in either case order the person to deliver up such documents to the company upon such terms or conditions as the Court considers just and reasonable.

The costs of the summons and of proceedings on the summons are in the discretion of the Court.

(6) Lists of documents required to be brought in under subsection (2) butnot brought in in accordance with a requirement made under subsection (2) or delivered up in accordance with an order under subsection (5), must be:

(a) exhibited in the office of the company; and

(b) advertised in theGazetteand in such newspapers and at such times as the company thinks fit.

1071E Notice of refusal to register transfer

If a company refuses to register a transfer of a security of the company, it must, within 2 months after the date on which the transfer was lodged with it, give the transferee notice of the refusal.

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

1071F Remedy for refusal to register transfer or transmission

(1) If a relevant authority in relation to a company:

(a) refuses or fails to register; or

(b) refuses or fails to give its consent or approval to the registration of;

a transfer or transmission of securities of the company, the transferee or transmittee may apply to the Court for an order under this section.

(2) If the Court is satisfied on the application that the refusal or failure was without just cause, the Court may:

(a) order that the transfer or transmission be registered; or

(b) make such other order as it thinks just and reasonable, including:

(i) in the case of a transfer or transmission of shares - an order providing for the purchase of the shares by a specified member of the company or by the company; and

(ii) in the case of a purchase by the company - an order providing for the reduction accordingly of the capital of the company.

(3) In this section:

relevant authority , in relation to a company, means:

(a) a person who has, 2 or more persons who together have, or a body that has, authority to register a transfer or transmission of securities of the company; or

(b) a person, 2 or more persons, or a body, whose consent or approval is required before a transfer or transmission of securities of the company is registered.

1071G Certification of transfers

(1) The certification by a company of an instrument of transfer of securities of the company:

(a) is taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show prima facietitle to the securities in the transferor named in the instrument of transfer; and

(b) is not taken as a representation that the transferor has any title to the securities.

(2) If a person acts on the faith of a false certification by a company made negligently, the company is under the same liability to the person as if the certification had been made fraudulently.

(3) A certification may be expressed to be limited to 42 days or any longer period from the date of certification. If it is, the company and its officers are not, in the absence of fraud, liable in respect of the registration of any transfer of securities comprised in the certification after the end of:

(a) the period so limited; or

(b) any extension of that period given by the company;

if the instrument of transfer has not, within that period, been lodged with the company for registration.

(4) For the purposes of this section:

(a) an instrument of transfer is taken to be certified if it bears the words “certificate lodged” or words to the like effect; and

(b) the certification of an instrument of transfer is taken to be made by a company if:

(i) the person issuing the instrument is a person authorised to issue certified instruments of transfer on the company’s behalf; and

(ii) the certification is signed by a person authorised to certify transfers on the company’s behalf or by an officer of the company or of a body corporate so authorised; and

(c) a certification that purports to be authenticated by a person’s signature or initials (whether handwritten or not) is taken to be signed by the person unless it is shown that the signature or initials:

(i) was not or were not placed there by the person; and

(ii) was not or were not placed there by any other person authorised to use the signature or initials;

for the purpose of certifying transfers on the company’s behalf.

1071H Duties of company with respect to issue of certificates

(1) Subject to subsection (2), within 2 months after a company issues a security, the company must:

(a) complete and have ready for delivery to the holder of the security all the appropriate certificates or other title documents in connection with the issue of the security; and

(b) unless otherwise instructed by the holder, send or deliver the completed certificates or other title documents to:

(i) the holder; or

(ii) if the holder has instructed the company in writing to send them to a nominated person - that person.

Paragraph (a) has effect in relation to shares subject to the conditions on which the shares are issued.

(2) If the operating rules of a prescribed CS facility include a provision to the effect that:

(a) no document is required by subsection (1) to be completed and delivered by a company in relation to the issue of a security in specified circumstances; or

(b) the only document required by subsection (1) to be completed and delivered by a company in relation to the issue of a security in specified circumstances is the document required by the provision;

the provision has effect accordingly.

(3) Within one month after the date on which a transfer of a security is lodged with a company, the company must:

(a) complete and have ready for delivery to the transferee all the appropriate transfer and title documents in connection with the transfer; and

(b) unless otherwise instructed by the transferee, send or deliver the completed documents to:

(i) the transferee; or

(ii) if the transferee has instructed the company in writing to send them to a nominated person - that person.

This subsection does not apply to a transfer that the company is for any reason entitled to refuse to register and does not register.

(4) The only document required by subsection (3) to be completed and delivered by a company in relation to a transfer covered by the operating rules of a prescribed CS facility is the document (if any) that those rules require to be completed and delivered.

(5) A company need not comply:

(a) with subsection (1) in relation to the issue of a security; or

(b) with subsection (3) in relation to a transfer of a security;

if the person to whom the security is issued, or the transferee, has:

(c) applied to ASIC for the making of a declaration under this subsection; and

(d) been declared by ASIC, by writing published in theGazette, to be a person in relation to whom this section does not apply.

(6) If:

(a) either:

(i) if subsection (1) applies - the holder referred to in that subsection serves a notice on the company requiring the company to remedy a contravention of that subsection; or

(ii) if subsection (3) applies - the transferee referred to in that subsection serves a notice on the company requiring the company to remedy a contravention of that subsection; and

(b) the company fails to remedy the contravention within 10 days after the service of the notice; and

(c) the person entitled to have the documents delivered to him or her applies to the Court for an order under this subsection;

the Court may make an order directing the company and any officer of the company to remedy the contravention within such period as is specified in the order.

(7) An order under subsection (6) may provide that all costs of, and incidental to, the application are to be borne by:

(a) the company; or

(b) any officer of the company who was involved in the contravention;

in such proportions as the Court thinks just and reasonable.

Subdivision B - Special provisions for shares

1072A Transmission of shares on death (replaceable rule - see section 135)

If shares not held jointly

(1) If a shareholder who does not own shares jointly dies, the company will recognise only the personal representative of the deceased shareholder as being entitled to the deceased shareholder’s interest in the shares.

(2) If the personal representative gives the directors the information they reasonably require to establish the representative’s entitlement to be registered as holder of the shares:

(a) the personal representative may:

(i) by giving a written and signed notice to the company, elect to be registered as the holder of the shares; or

(ii) by giving a completed transfer form to the company, transfer the shares to another person; and

(b) the personal representative is entitled, whether or not registered as the holder of the shares, to the same rights as the deceased shareholder.

(3) On receiving an election under subparagraph (2)(a)(i), the company must register the personal representative as the holder of the shares.

(4) A transfer under subparagraph (2)(a)(ii) is subject to the same rules (for example, about entitlement to transfer and registration of transfers) as apply to transfers generally.

If shares held jointly

(5) If a shareholder who owns shares jointly dies, the company will recognise only the survivor as being entitled to the deceased shareholder’s interest in the shares. The estate of the deceased shareholder is not released from any liability in respect of the shares.

1072B Transmission of shares on bankruptcy (replaceable rule - see section 135)

(1) If a person entitled to shares because of the bankruptcy of a shareholder gives the directors the information they reasonably require to establish the person’s entitlement to be registered as holder of the shares, the person may:

(a) by giving a written and signed notice to the company, elect to be registered as the holder of the shares; or

(b) by giving a completed transfer form to the company, transfer the shares to another person.

(2) On receiving an election under paragraph (1)(a), the company must register the person as the holder of the shares.

(3) A transfer under paragraph (1)(b) is subject to the same rules (for example, about entitlement to transfer and registration of transfers) as apply to transfers generally.

(4) This section has effect subject to theBankruptcy Act 1966.

1072C Rights of trustee of estate of bankrupt shareholder

(1) If:

(a) because of theBankruptcy Act 1966, a share in a company, being part of the property of a bankrupt, vests in the trustee of the bankrupt’s estate; and

(b) the bankrupt is the registered holder of that share;

this section applies whether or not the trustee has been registered as the holder of the share.

(2) On producing such information as the company’s directors properly require, the trustee is entitled to:

(a) the same dividends and other benefits; and

(b) the same rights, for example, but without limitation, rights in relation to:

(i) meetings of the company; or

(ii) documents, including notices of such meetings; or

(iii) voting; or

(iv) inspection of the company’s records;

as the bankrupt would be entitled to if he or she were not a bankrupt.

(3) The trustee has the same rights:

(a) to transfer the share; and

(b) to require a person to do an act or give a consent in connection with completing or registering a transfer of the share;

as the bankrupt would have if he or she were not a bankrupt.

(4) If the trustee transfers the share, the transfer is as valid as if the trustee had been registered as the holder of the share when the trustee executed the instrument of transfer.

(5) A person or body whose consent or approval is required for the transfer of shares in the company must not unreasonably withhold consent or approval for the transfer of the share by the trustee.

(6) If:

(a) the company’s constitution requires:

(i) the share to be offered for purchase to a member of the company; or

(ii) an invitation to buy the share to be issued to such a member; and

(b) as at the end of a reasonable period after the trustee so offers the share, or so issues such an invitation, no such member has agreed to buy the share from the trustee at a reasonable price;

the trustee may sell and transfer the share to a person other than such a member.

(7) A provision of the company’s constitution is void as against the trustee in so far as, apart from this section, it would affect rights attached to the share:

(a) because the bankrupt is a bankrupt; or

(b) because of some event that led to the bankrupt becoming, or that indicated that the bankrupt was about to become, or might be about to become, a bankrupt; or

(c) for reasons including a reason referred to in paragraph (a) or (b).

(8) Nothing in this section limits the generality of anything else in it.

(9) This section has effect despite anything in the company’s constitution.

1072D Transmission of shares on mental incapacity (replaceable rule - see section 135)

(1) If a person entitled to shares because of the mental incapacity of a shareholder gives the directors the information they reasonably require to establish the person’s entitlement to be registered as the holder of the shares:

(a) the person may:

(i) by giving a written and signed notice to the company, elect to be registered as the holder of the shares; or

(ii) by giving a completed transfer form to the company, transfer the shares to another person; and

(b) the person is entitled, whether or not registered as the holder of the shares, to the same rights as the shareholder.

(2) On receiving an election under subparagraph (1)(a)(i), the company must register the person as the holder of the shares.

(3) A transfer under subparagraph (1)(a)(ii) is subject to the same rules (for example, about entitlement to transfer and registration of transfers) as apply to transfers generally.

1072E Trustee etc. may be registered as owner of shares

(1) In this section:

share , in relation to a body corporate, means a share in the body that is registered in a register kept in this jurisdiction.

(2) A trustee, executor or administrator of the estate of a dead person who was the registered holder of a share in a corporation may be registered as the holder of that share as trustee, executor or administrator of that estate.

(3) A trustee, executor or administrator of the estate of a dead person who was entitled in equity to a share in a corporation may, with the consent of:

(a) the corporation; and

(b) the registered holder of that share;

be registered as the holder of that share as trustee, executor or administrator of that estate.

(4) If:

(a) a person (the administrator ) is appointed, under a law of a State or Territory relating to the administration of the estates of persons who, through mental or physical infirmity, are incapable of managing their affairs, to administer the estate of a person who is so incapable; and

(b) the incapable person is the registered holder of a share in a corporation;

the administrator may be registered as the holder of that share as administrator of that estate.

(5) If:

(a) a person (the administrator ) is appointed, under a law of a State or Territory relating to the administration of the estates of a person who, through mental or physical infirmity, are incapable of managing their affairs, to administer the estate of a person who is so incapable; and

(b) the incapable person is entitled in equity to a share in a corporation;

the administrator may, with the consent of the corporation and of the registered holder of that share, be registered as the holder of the share as administrator of that estate.

(6) If:

(a) by virtue of theBankruptcy Act 1966, a share in a body corporate, being the property of a bankrupt, vests in the Official Trustee in Bankruptcy; and

(b) the bankrupt is the registered holder of that share;

the Official Trustee may be registered as the holder of that share as the Official Trustee in Bankruptcy.

(7) If:

(a) by virtue of theBankruptcy Act 1966, a share in a body corporate, being the property of a bankrupt, vests in the Official Trustee in Bankruptcy; and

(b) the bankrupt is entitled in equity to that share;

the Official Trustee may, with the consent of the body and of the registered holder of that share, be registered as the holder of that share as the Official Trustee in Bankruptcy.

(8) A person registered under subsection (2), (3), (4), (5), (6) or (7), is, while registered as mentioned in that subsection:

(a) subject to the same liabilities in respect of the share as those to which he, she or it would have been subject if the share had remained, or had been, as the case requires, registered in the name of the dead person, the incapable person or the bankrupt, as the case may be; and

(b) subject to no other liabilities in respect of the share.

(9) Shares in a corporation registered in a register and held by a trustee in respect of a particular trust may, with the consent of the corporation, be marked in the register in such a way as to identify them as being held in respect of the trust.

(10) Except as provided in this section and section 169:

(a) no notice of a trust, whether express, implied or constructive, must be entered on a register kept in this jurisdiction or be receivable by ASIC; and

(b) no liabilities are affected by anything done under a preceding subsection of this section or under section 169; and

(c) nothing so done affects the body corporate concerned with notice of a trust.

(11) A person must, within one month after beginning to hold shares in a proprietary company as trustee for, or otherwise on behalf of or on account of, a body corporate, serve on the company notice in writing that the person so holds the shares.

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

1072F Registration of transfers (replaceable rule - see section 135)

(1) A person transferring shares remains the holder of the shares until the transfer is registered and the name of the person to whom they are being transferred is entered in the register of members in respect of the shares.

(2) The directors are not required to register a transfer of shares in the company unless:

(a) the transfer and any share certificate have been lodged at the company’s registered office; and

(b) any fee payable on registration of the transfer has been paid; and

(c) the directors have been given any further information they reasonably require to establish the right of the person transferring the shares to make the transfer.

(3) The directors may refuse to register a transfer of shares in the company if:

(a) the shares are not fully-paid; or

(b) the company has a lien on the shares.

(4) The directors may suspend registration of transfers of shares in the company at the times and for the periods they determine. The periods of suspension must not exceed 30 days in any one calendar year.

1072G Additional general discretion for directors of proprietary companies to refuse to register transfers (replaceable rule - see section 135)

The directors of a proprietary company may refuse to register a transfer of shares in the company for any reason.

1072H Notices relating to non-beneficial and beneficial ownership of shares

(1) If, upon registration of a transfer of shares in a company, the transferee would hold non-beneficially particular shares (the relevant shares ), being all or any of the shares to which the transfer relates, the transferee must only lodge the instrument of transfer with the company for registration of the transfer if the instrument of transfer includes a notice that:

(a) contains a statement to the effect that, upon registration of the transfer, the transferee will hold the relevant shares non-beneficially; and

(b) sets out particulars of the relevant shares; and

(c) is signed by or on behalf of the transferee.

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

(2) The fact that a person has failed to comply with subsection (1) does not affect the validity of the registration of a transfer of shares in a company.

(3) If:

(a) an instrument of transfer of shares in a company includes a notice of the kind referred to in paragraph (1)(c) and is lodged with the company for registration of the transfer; and

(b) upon registration of the transfer, the transferee holds beneficially particular shares (in this subsection called the relevant shares ), being all or any of the shares particulars of which are set out in the notice;

then, before the end of 14 days beginning on registration of the transfer, the transferee must, whether or not the transferee begins before the end of that period to hold all or any of the relevant shares non-beneficially, give to the company a notice that:

(c) sets out the name and address of the transferee; and

(d) contains a statement to the effect that, as from registration of the transfer, the transferee holds the relevant shares beneficially; and

(e) sets out particulars of the relevant shares; and

(f) is signed by or on behalf of the transferee.

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

(4) If:

(a) an instrument of transfer of shares in a company is lodged with the company for registration of the transfer; and

(b) upon registration of the transfer, the transferee holds non-beneficially particular shares (in this subsection called the relevant shares ), being all or any of the shares to which the instrument of transfer relates (other than, in a case in which the instrument of transfer includes a notice of the kind referred to in paragraph (1)(c), the shares particulars of which are set out in the notice);

then, before the end of 14 days beginning on registration of the transfer, the transferee must, whether or not the transferee begins before the end of that period to hold any of the relevant shares beneficially, give to the company a notice that:

(c) sets out the name and address of the transferee; and

(d) contains a statement to the effect that, as from registration of the transfer, the transferee holds the relevant shares non-beneficially; and

(e) sets out particulars of the relevant shares; and

(f) is signed by or on behalf of the transferee.

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

(5) If:

(a) at a particular time, a person holds beneficially shares in a company; and

(b) immediately after that time, the person holds non-beneficially particular shares (in this subsection called the relevant shares ), being all or any of the shares referred to in paragraph (a);

then, before the end of 14 days beginning at that time, the person must, whether or not the person recommences before the end of that period to hold any of the relevant shares beneficially, give to the company a notice that:

(c) sets out the name and address of the person; and

(d) contains a statement to the effect that, after that time, the person holds the relevant shares non-beneficially; and

(e) specifies that time and sets out particulars of the relevant shares; and

(f) is signed by or on behalf of the person.

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

(6) If:

(a) at a particular time, a person holds non-beneficially shares in a company; and

(b) immediately after that time, the person holds beneficially particular shares (in this subsection called the relevant shares ), being all or any of the shares referred to in paragraph (a);

then, before the end of 14 days beginning at that time, the person must, whether or not the person recommences before the end of that period to hold any of the relevant shares non-beneficially, give to the company a notice that:

(c) sets out the name and address of the person; and

(d) contains a statement to the effect that, after that time, the person holds the relevant shares beneficially; and

(e) specifies that time and sets out particulars of the relevant shares; and

(f) is signed by or on behalf of the person.

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

(7) In proceedings under, or for an offence based on a provision of, this section, a person is, unless the contrary is established, presumed to have been aware at a particular time of a circumstance of which an employee or agent of the person, being an employee or agent having duties or acting in relation to the transfer to, or ownership by, the person of a share or shares in the company concerned, was aware at that time.

(8) For the purposes of this section and of section 169:

(a) if, at a particular time, a person:

(i) holds shares in a capacity other than that of sole beneficial owner; or

(ii) without limiting the generality of subparagraph (i), holds shares as trustee for, as nominee for, or otherwise on behalf of or on account of, another person;

the first-mentioned person is taken to hold the shares non-beneficially at that time; and

(b) a person who holds shares at a particular time is taken to hold the shares beneficially at that time unless the person holds the shares non-beneficially at that time.