Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

PART 7.1 - PRELIMINARY  

Division 3 - What is a financial product?  

Subdivision B - The general definition  

SECTION 763B   763B   WHEN A PERSON MAKES A FINANCIAL INVESTMENT  


For the purposes of this Chapter, a person (the investor ) makes a financial investment if:


(a) the investor gives money or money's worth (the contribution ) to another person and any of the following apply:


(i) the other person uses the contribution to generate a financial return, or other benefit, for the investor;

(ii) the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated);

(iii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and


(b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit.

Note 1: Examples of actions that constitute making a financial investment under this subsection are:

  • (a) a person paying money to a company for the issue to the person of shares in the company (the company uses the money to generate dividends for the person and the person, as a shareholder, does not have control over the day-to-day affairs of the company); or
  • (b) a person contributing money to acquire interests in a registered scheme from the responsible entity of the scheme (the scheme uses the money to generate financial or other benefits for the person and the person, as a member of the scheme, does not have day-to-day control over the operation of the scheme).
  • Note 2: Examples of actions that do not constitute making a financial investment under this subsection are:

  • (a) a person purchasing real property or bullion (while the property or bullion may generate a return for the person, it is not a return generated by the use of the purchase money by another person); or
  • (b) a person giving money to a financial services licensee who is to use it to purchase shares for the person (while the purchase of the shares will be a financial investment made by the person, the mere act of giving the money to the licensee will not of itself constitute making a financial investment).

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