Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.4 - LIMITS ON INVOLVEMENT WITH LICENSEES  

Division 1 - Limit on control of certain licensees  

Subdivision A - 15% voting power limit  

SECTION 850A  

850A   MEANING OF WIDELY HELD MARKET BODY  


A widely held market body is a body corporate that:

(a)    either:


(i) has an Australian market licence or an Australian CS facility licence; or

(ii) is the holding company of a body corporate that has an Australian market licence or an Australian CS facility licence; and

(b)    is specified in regulations made for the purposes of this paragraph.

SECTION 850B   MEANING OF UNACCEPTABLE CONTROL SITUATION  

850B(1)    


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.


850B(2)    


Regulations made for the purposes of paragraph (1)(c) may not take effect before the first day those regulations are no longer liable to be disallowed, or to be taken to have been disallowed, under section 42 of the Legislation Act 2003 .

SECTION 850C  

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) ).

SECTION 850D   ORDERS TO REMEDY UNACCEPTABLE CONTROL SITUATION  

850D(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.

850D(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.

850D(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.

850D(4)    
Subsection (3) does not, by implication, limit subsection (1) .

850D(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.

850D(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.


SECTION 850E   INJUNCTIONS  

850E(1)   [ Person whose interests affected]  

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.

850E(2)   [ Limitation]  

Subsection (1) does not, by implication, limit the class of persons whose interests are affected by the conduct.

850E(3)   [ Powers of Minister]  

The Minister has the same powers as ASIC to apply for an injunction under section 1324 in relation to a contravention of this Division.

850E(4)   [ Limitation]  

The powers in sections 850D and 1324 do not, by implication, limit each other.

Subdivision B - Approval to exceed 15% voting power limit  

SECTION 851A   APPLICATION FOR APPROVAL TO EXCEED 15% VOTING POWER LIMIT  

851A(1)   [ Approval to exceed voting power limit]  

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 .

851A(2)   [ Application given to Minister]  

ASIC must give the application to the Minister as soon as possible.

SECTION 851B   APPROVAL OF APPLICATION  

851B(1)   [ Ministerial power to grant application]  

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.

851B(2)   [ Notice and scope of approval]  

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.

851B(3)   [ Notice of refusal]  

If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

851B(4)   [ Publication]  

As soon as practicable, the Minister must arrange for a copy of a notice of approval under this section to be:


(a) published in the Gazette ; and


(b) given to the body concerned.

SECTION 851C   DURATION OF APPROVAL  

851C(1)   [ Duration of approval]  

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.

851C(2)   Extension of approval.  

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 .

851C(3)   [ Application given to Minister]  

ASIC must give the application to the Minister as soon as possible.

851C(4)   [ Power to grant extension]  

If the Minister is satisfied that it is in the national interest to grant the extension, the Minister may grant the application.

851C(5)   [ Notice and duration of approval]  

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).

851C(6)   [ Notice of refusal]  

If the Minister refuses the application, the Minister must give written notice of the refusal to the applicant.

851C(7)   [ Publication]  

As soon as practicable, the Minister must arrange for a copy of a notice of extension under this section to be:


(a) published in the Gazette ; and


(b) given to the widely held market body concerned.

SECTION 851D   CONDITIONS OF APPROVAL  

851D(1)    
An approval under section 851B is subject to such conditions (if any) as are specified in the notice of approval.

851D(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.

851D(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.

851D(4)    


An application made by a person under paragraph (3)(b) must be lodged with ASIC in a prescribed form and must set out the person's reasons for making the application.

Note: For fees in respect of lodging applications, see Part 9.10 .


851D(5)    
ASIC must give the application to the Minister as soon as possible.

851D(6)    
If the Minister refuses an application under paragraph (3)(b) , the Minister must give written notice of the refusal to the applicant.

851D(7)    
As soon as practicable, the Minister must arrange for a copy of a notice under subsection (2) to be:

(a)    published in the Gazette ; and

(b)    given to the widely held market body concerned.

851D(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) ).


SECTION 851E   VARYING PERCENTAGE APPROVED  

851E(1)   Application by holder of approval.  

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 .

851E(2)   [ Application given to Minister]  

ASIC must give the application to the Minister as soon as possible.

851E(3)   [ Power to grant variation in percentage]  

If the Minister is satisfied that it is in the national interest to vary the percentage, the Minister may grant the application.

851E(4)   [ Notice and scope of variation]  

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).

851E(5)   [ Notice of refusal]  

If the Minister refuses an application, the Minister must give written notice of the refusal to the applicant.

851E(6)   Minister's own initiative.  

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.

851E(7)   Percentage varied upwards.  

If the Minister varies a percentage upwards, the variation takes effect on the day the notice of variation is given.

851E(8)   Percentage varied downwards.  

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.

851E(9)   Notification of variation.  

As soon as practicable, the Minister must arrange for a copy of a notice of variation under this section to be:


(a) published in the Gazette ; and


(b) given to the widely held market body concerned.

SECTION 851F   REVOKING AN APPROVAL  

851F(1)   [ Power to revoke approval]  

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.

851F(2)   [ When revocation takes effect]  

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.

851F(3)   [ Revocation at holder's request]  

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.

851F(4)   [ Publication]  

As soon as practicable, the Minister must arrange for a copy of a notice of revocation under this section to be:


(a) published in the Gazette ; and


(b) given to the widely held market body concerned.

SECTION 851G   FURTHER INFORMATION ABOUT APPLICATIONS  

851G(1)   [ Application]  

This section applies to an application under this Subdivision.

851G(2)   [ Further information]  

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.

851G(3)   [ Consideration of application]  

The Minister may refuse to consider the application until the applicant gives the Minister the information.

SECTION 851H   TIME LIMIT FOR MINISTER'S DECISION  

851H(1)   [ Deadline for decision]  

The Minister must make a decision on an application under this Subdivision within 30 days after receiving the application.

851H(2)   [ Extension of deadline]  

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.

851H(3)   [ Deemed approval and publication]  

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 the Gazette ; and


(b) given to the widely held market body concerned.

851H(4)   [ Cessation of time for making a decision]  

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.

851H(5)   [ Application]  

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.

SECTION 851I   PRESERVATION OF VOTING POWER IN RELATION TO BODIES SPECIFIED IN REGULATIONS MADE FOR PARAGRAPH 850A(b)  

851I(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.


851I(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.

851I(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 paragraph 850A(b) .


Subdivision C - Other matters  

SECTION 852A   ACQUISITION OF PROPERTY  

852A(1)   [ Unjust acquisition of property]  

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.

852A(2)   [ Limitation]  

Section 1350 does not apply in relation to the making of an order under section 850D .

852A(3)   [ Definitions]  

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.

SECTION 852B   ANTI-AVOIDANCE  

852B(1)   [ Anti-avoidance direction]  

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.

852B(2)   [ Compliance]  

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) ).

852B(3)   [ ``increase'']  

In this section:

increase
voting power includes increasing it from a starting point of nil.

Division 2 - Individuals who are not fit and proper are disqualified  

SECTION 853A  

853A   MEANING OF DISQUALIFIED INDIVIDUAL  


An individual is a disqualified individual 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 .

SECTION 853B  

853B   MEANING OF INVOLVED - IN SOME LICENSEES OR APPLICANTS FOR A LICENCE  


An individual is involved in a market licensee, a CS facility licensee, a derivative trade repository licensee or a benchmark administrator licensee, or an applicant for such a licence, if:

(a)    

the individual is a director, secretary or senior manager 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.

SECTION 853C   DECLARATION BY ASIC  

853C(1)    


ASIC may declare in writing that an individual who is involved in a market licensee, a CS facility licensee, a derivative trade repository licensee or a benchmark administrator licensee, or in an applicant for a licence of any of those kinds, is disqualified for the purposes of this Division.

853C(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.

853C(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.

853C(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 ).

SECTION 853D   PROCEDURE FOR DECLARATION  

853D(1)    
ASIC must not make a declaration under section 853C unless it has followed the procedure in this section.

853D(2)    
Within 42 days after:


(a) a body corporate applies for an Australian market licence, an Australian CS facility licence, an Australian derivative trade repository licence or a benchmark administrator 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, an Australian CS facility licence, an Australian derivative trade repository licence or a benchmark administrator 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.


853D(3)    
ASIC must give a copy of the notice to the individual and to the Minister.

853D(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.


853D(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.

853D(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.

SECTION 853E   REVOKING A DECLARATION  

853E(1)   [ Revocation of declaration]  

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.

853E(2)   [ Notice of revocation]  

ASIC must give a copy of the revocation to the relevant applicant or licensee, the individual and the Minister.

SECTION 853F   OBLIGATIONS ON DISQUALIFIED INDIVIDUALS  

853F(1)    


A disqualified individual must not become involved in a market licensee, a CS facility licensee, a derivative trade repository licensee or a benchmark administrator licensee.

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


853F(2)    


A disqualified individual who is involved in a market licensee, a CS facility licensee, a derivative trade repository licensee or a benchmark administrator 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) ).


853F(3)    


A person contravenes this subsection if the person contravenes subsection (2).

Note: This subsection is a civil penalty provision (see section 1317E ).


SECTION 853G  

853G   NOTIFICATION BY ASIC  


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

Division 3 - Miscellaneous  

SECTION 854A   RECORD-KEEPING AND GIVING OF INFORMATION  

854A(1)    
The regulations may make provision for and in relation to requiring a person:


(a) to keep and retain records that are relevant to whether a person has voting power in a widely held market body and, if so, how much; and


(b) to keep and retain records that are relevant to determining whether any disqualified individual is involved in a market licensee, a CS facility licensee or a derivative trade repository licensee; and


(c) to give the Minister or ASIC information that is relevant to the matters mentioned in paragraphs (a) and (b); and


(d) to give a widely held market body information that is relevant to the matter mentioned in paragraph (a).


854A(2)    
The regulations may provide that information given in accordance with a requirement covered by paragraph (1)(c) or (d) must be verified by statutory declaration.

854A(3)    
However, an individual is not required to give information in accordance with a requirement covered by paragraph (1)(c) or (d) if the information might tend to incriminate the individual or expose the individual to a penalty.

854A(4)    
A person contravenes this section if:


(a) the person makes or keeps a record in compliance, or purported compliance, with a requirement covered by subsection (1); and


(b) the person does so knowing that the record:


(i) is false or misleading; or

(ii) omits any matter or thing without which the record is misleading.

Note: A contravention of this subsection is an offence (see subsection 1311(1) ).


854A(5)    
Regulations made for the purposes of this section may make provision for or in relation to a matter by conferring a power on the Minister.


SECTION 854B   EXEMPTIONS AND MODIFICATIONS BY REGULATIONS  

854B(1)   [ Scope]  

The regulations may:


(a) exempt a person or class of persons from all or specified provisions of this Part; or


(b) provide that this Part applies as if specified provisions were omitted, modified or varied as specified in the regulations.

854B(2)    
(Repealed by No 141 of 2003, s 3, Sch 2 [ 18] (effective 18 December 2003).)

854B(3)   [ " provisions of this Part " ]  

For the purpose of this section, the provisions of this Part include:


(a) definitions in this Act, or in the regulations, as they apply to references in this Part; and


(b) any provisions of Part 10.2 (transitional provisions) that relate to provisions of this Part.