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 7.9 - Division 2

Division 2 - Product Disclosure Statements

Subdivision A - Preliminary

1011A Jurisidictional scope of Division

(1) Subject to subsection (2), sections 1012A, 1012B and 1012C only apply in relation to offers and recommendations referred to in those sections that are received in this jurisdiction.

(2) Section 1012B also applies in relation to issues referred to in subparagraph 1012B(3)(a)(iii) that are madein this jurisdiction.

(3) The regulations may make provision dealing with the jurisdictional scope of some or all of the other provisions of this Division. The other provisions of this Division have effect subject to any such regulations.

1011B Definitions

In this Division:

issue Statement has the meaning given by subsection 1013A(1).

offer has a meaning affected by sections 1010C and 1011C.

regulated person , in relation a financial product, means:

(a) an issuer of the financial product; or

(b) a seller of the financial product if the sale takes place in circumstances described in subsection 1012C(5), (6) or (8) (secondary sales that require a Product Disclosure Statement); or

(d) any authorised representative of a financial services licensee; or

(f) any person who is not required to hold an Australian financial services licence because the person is covered by:

(i) paragraph 911A(2)(j); or

(ii) an exemption in regulations made for the purposes of paragraph 911A(2)(k); or

(iii) an exemption specified by ASIC for the purposes of paragraph 911A(2)(l); or

(g) any person who is required to hold an Australian financial services licence but who does not hold such a licence.

responsible person for a Product Disclosure Statement has the meaning given by subsection 1013A(3).

sale has a meaning affected by section 1010C.

sale Statement has the meaning given by subsection 1013A(2).

1011C Treatment of offers of options over financial products

For the purposes of this Division:

(a) an offer of an option over a financial product is not to be taken to be an offer of the underlying financial product; and

(b) the grant of an option without an offer of the option is taken to be an offer of the option; and

Subdivision B - Requirement for a Product Disclosure Statement to be given

1012A Obligation to give Product Disclosure Statement - personal advice recommending particular financial product

Section sets out recommendation situation in which Product Disclosure Statement required

(1) This section sets out the situations in which giving financial product advice that consists of, or includes, a recommendation to acquire a financial product gives rise to an obligation on a regulated person to give another person a Product Disclosure Statement for the product.

(2) For the purposes of this Division:

(a) each of the situations is a recommendation situation ; and

(b) the relevant conduct for that situation is the making of the recommendation; and

Personal advice recommending a particular financial product

(3) A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a) the regulated person provides financial product advice to the person that consists of, or includes, a recommendation that the person acquire the financial product; and

(b) the person would acquire the financial product by way of:

(i) the issue of the product to the person (rather than the transfer of the product to the person); or

(ii) the transfer of the product to the person in circumstances described in subsection 1012C(5), (6) or (8) (secondary sales that require a Product Disclosure Statement); and

(d) the financial product advice is personal advice to the client.

The Product Disclosure Statement must be given at or before the time when the regulated person provides the advice and must be given in accordance with this Division.

This section has effect subject to other provisions

(4) This section has effect subject to sections 1012D, 1012E, 1012F, 1012G and 1014E.

1012B Obligation to give Product Disclosure Statement - situations related to issue of financial products

Section sets out issue situations in which Product Disclosure Statement required

(1) This section sets out situations in which:

(a) an offer relating to the issue of a financial product; or

(b) the issue of a financial product;

gives rise to an obligation on a regulated person to give another person a Product Disclosure Statement for the product.

(2) For the purposes of this Division:

(a) each of the situations is an issue situation ; and

(b) the relevant conduct for that situation is the conduct by the regulated person that gives rise to the obligation to give the Product Disclosure Statement; and

The main issue situations

(3) A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a) the regulated person:

(i) offers to issue the financial product to the person; or

(ii) offers to arrange for the issue of the financial product to the person; or

(iii) issues the financial product to the person in circumstances in which there are reasonable grounds to believe that the person has not been given a Product Disclosure Statement for the product; and

(b) the financial product is, or is to be, issued to the person as a retail client.

The Product Disclosure Statement must be given at or before the time when the regulated person makes the offer, or issues the financial product, to the person and must be given in accordance with this Division.

Note: If a Product Disclosure Statement is given when the offer is made, it will not need to be given again when the product is issued to the person (see subsection 1012D(1)) unless the Product Disclosure Statement that was given is no longer up to date.

Receiving offer to acquire financial product

(4) A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a) the person makes an offer to the regulated person to acquire the financial product; and

(b) the person would acquire the financial product by way of the issue of the product to the person (rather than the transfer of the product to the person); and

The Product Disclosure Statement must be given to the person before the person becomes bound by a legal obligation to acquire the financial product pursuant to the offer and must be given in accordance with this Division.

This section has effect subject to other provisions

(5) This section has effect subject to sections 1012D, 1012E, 1012F, 1012G and 1014E.

1012C Obligation to give Product Disclosure Statement - offers related to sale of financial products

Section sets out sale situations in which Product Disclosure Statement required

(1) This section sets out situations in which an offer relating to the sale of a financial product gives rise to an obligation on a regulated person to give another person a Product Disclosure Statement for the product.

(2) For the purposes of this Division:

(a) each of the situations is a sale situation ; and

(b) the relevant conduct for that situation is the offer; and

Sale offers that require a Product Disclosure Statement

(3) A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a) the regulated person offers to sell the financial product to the person; and

(b) a sale of the product to the person pursuant to the offer would take place in circumstances covered by subsection (5), (6) or (8); and

The Product Disclosure Statement must be given at or before the time when the regulated person makes the offer and must be given in accordance with this Division.

(4) A regulated person must give a person a Product Disclosure Statement for a financial product if:

(a) the person makes an offer to the regulated person to acquire the financial product; and

(b) the person would acquire the financial product by way of the transfer of the product to the person; and

(c) a sale of the product to the person pursuant to the offer would take place in the circumstances described in subsection (5), (6) or (8); and

(d) the financial product is to be sold to the person as a retail client.

Off-market sale by controller

(5) This subsection covers the circumstances in which:

(a) the seller controls the issuer of the financial product; and

(b) either:

(i) the product is not able to be traded on any licensed market; or

(ii) although the product is able to be traded on a licensed market, the offer is not made in the ordinary course of trading on a licensed market.

Note: See section 50AA for when a person controls a body.

Sale amounting to indirect issue

(6) This subsection covers the circumstances in which:

(a) the offer is made within 12 months after the issue of the financial product; and

(b) the product was issued without a Product Disclosure Statement for the product being prepared; and

(i) the issuer issued the product with the purpose of the person to whom it was issued selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product; or

(ii) the person to whom the product was issued acquired it with the purpose of selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product.

The purpose test in subsection (6)

(7) For the purposes of subsection (6):

(a) a financial product is taken to be:

(i) issued with the purpose referred to in subparagraph (6)(c)(i); or

(ii) acquired with the purpose referred to in subparagraph (6)(c)(ii);

if there are reasonable grounds for concluding that the product was issued or acquired with that purpose (whether or not there were or may have been other purposes for the issue or acquisition); and

(b) without limiting paragraph (a), a financial product is taken to be:

(i) issued with the purpose referred to in subparagraph (6)(c)(i); or

(ii) acquired with the purpose referred to in subparagraph (6)(c)(ii);

if the financial product, or any financial product of the same kind that was issued at the same time, is subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the issue and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the product was issued or acquired with that purpose.

Sale amounting to indirect off-market sale by controller

(8) This subsection covers the circumstances in which:

(a) the offer is made within 12 months after the sale of the financial product by a person (the controller ) who controlled the issuer of the product at the time of the sale; and

(b) either:

(i) at the time of the sale by the controller, the product was not able to be traded on any licensed market; or

(ii) although the product was able to be traded on a licensed market at that time, the sale by the controller did not occur in the ordinary course of trading on a licensed market; and

(c) a Product Disclosure Statement was not prepared by, or on behalf of, the controller before the sale of the product by the controller; and

(d) either:

(i) the controller sold the product with the purpose of the person to whom it was sold selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product; or

(ii) the person to whom the controller sold the product acquired it with the purpose of selling or transferring the product, or granting, issuing or transferring interests in, or options or warrants over, the product.

Note: See section 50AA for when a person controls a body.

The purpose test in subsection (8)

(9) For the purposes of subsection (8):

(a) a financial product is taken to be:

(i) sold with the purpose referred to in subparagraph (8)(d)(i); or

(ii) acquired with the purpose referred to in subparagraph (8)(d)(ii);

if there are reasonable grounds for concluding that the product was sold or acquired with that purpose (whether or not there were or may have been other purposes for the sale or acquisition); and

(b) without limiting paragraph (a), a financial product is taken to be:

(i) sold with the purpose referred to in subparagraph (8)(d)(i); or

(ii) acquired with the purpose referred to in subparagraph (8)(d)(ii);

if the financial product, or any financial product of the same kind that was sold by the controller at the same time, is subsequently sold, or offered for sale, within 12 months after issue, unless it is proved that the circumstances of the initial sale and the subsequent sale or offer are not such as to give rise to reasonable grounds for concluding that the product was sold or acquired (in the initial sale) with that purpose.

This section has effect subject to other provisions

(10) This section has effect subject to sections 1012D, 1012E and 1014E.

1012D Situations in which Product Disclosure Statement is not required

Recommendation, issue or sale situation - client has already received an up to date Product Disclosure Statement

(1) In a recommendation situation, issue situation or sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) the client has already received a Product Disclosure Statement that contains all of the information that the first-mentioned Product Disclosure Statement would be required to contain; or

(b) the regulated person believes on reasonable grounds that paragraph (a) applies.

Recommendation, issue or sale situation - client has or has access to up to date information

(2) In a recommendation situation, issue situation or sale situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if:

(a) the client already holds a financial product of the same kind; and

(b) the regulated person believes on reasonable grounds that the client has received, or has, and knows that they have, access to, all of the information that the first-mentioned Product Disclosure Statement would be required to contain through:

(i) a Product Disclosure Statement; and

(ii) information provided to the client under section 1017B, 1017C or 1017D or through continuous disclosure under Chapter 6CA.

Note: Paragraph (a) - see subsection (10).

Recommendation or issue situation - certain offers to present holders

(3) In a recommendation situation or issue situation, the regulated person does not have to give the client a Product Disclosure Statement for the financial product if:

(a) the client already holds a financial product of the same kind; and

(b) either:

(i) in a recommendation situation - the advice that constitutes the relevant conduct relates to an offer made under a distribution reinvestment plan or switching facility; or

(ii) in an issue situation - the offer or issue that constitutes the relevant conduct is made under a distribution reinvestment plan or switching facility.

Note: Paragraph (a) - see subsection (10).

Recommendation, issue or sale situation - no consideration to be provided

(5) In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) no consideration is to be provided for the issue or sale of the financial product; and

(b) the financial product is not an option and is:

(i) a managed investment product; or

(ii) a financial product of a kind prescribed by regulations made for the purposes of this subparagraph.

(6) In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) the financial product is an option; and

(b) no consideration is to be provided for the issue or sale of the financial product; and

Issue or sale situation - takeovers

(7) In an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) the financial product is:

(i) a managed investment product; or

(ii) an option to acquire, by way of transfer, a share in a body, a debenture of a body or a legal or equitable right or interest in a share in a body or a debenture of a body; and

(b) the offer that constitutes the relevant conduct is made as consideration for an offer made under a takeover bid under Chapter 6; and

Note: Although a Product Disclosure Statement is not needed, disclosures must be made in the bidder’s document under section 636.

Recommendation, issue or sale situation - responsible entity an exempt body

(8) In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) the financial product is a financial product described in paragraph 764A(1)(ba) (which relates to certain managed investment schemes that are not registered schemes); and

(b) the holder of the office (by whatever name it is known), in relation to the managed investment scheme, that corresponds most closely to the office of responsible entity of a registered scheme is an exempt body; and

(i) the recommendation that constitutes the relevant conduct relates to an offer made by the office holder referred to in paragraph (b); or

(ii) the offer that constitutes the relevant conduct is made by or to the office holder referred to in paragraph (b).

Note 1: Section 66A defines exempt body .

Note 2: In the case of a sale situation, there is no additional requirement equivalent to paragraph (c).

Recommendation or issue situation - interim contracts of insurance

(9) In a recommendation situation or an issue situation, the regulated person does not have to give the client a Product Disclosure Statement if the financial product is an interim contract of insurance (as defined in subsection 11(2) of theInsurance Contracts Act 1984).

Note: This does not detract from the obligation to give a Product Disclosure Statement relating to any contract of insurance that replaces or supersedes the interim contract.

Recommendation, issue or sale situation - client is associated with registered scheme

(9A) In a recommendation situation, an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement if:

(a) the financial product is a managed investment product; and

(b) the client is associated (within the meaning of subsection (9B)) with the scheme’s responsible entity.

(9B) For the purposes of subsection (9A), the client is associated with the scheme’s responsible entity if the client is:

(a) an executive officer of the responsible entity or of a related body corporate; or

(b) a spouse, parent, child, brother or sister of a person who is an executive officer of the responsible entity or a related body corporate; or

(10) For the purposes of this section:

(a) a financial product (other than a managed investment product or a superannuation product) is of the same kind as another financial product only if they are both issued:

(i) by the same issuer; and

(ii) on the same terms and conditions (other than price); and

(b) a managed investment product, or a superannuation product, is of the same kind as another product only if the other product is an interest in the same scheme or fund.

1012E Small scale offerings of managed investment and other prescribed financial products (20 issues or sales in 12 months)

(1) This section applies only to financial products that are:

(a) managed investment products; or

(b) financial products of a kind prescribed by regulations made for the purposes of this paragraph.

(2) Personal offers of financial products do not need a Product Disclosure Statement under this Part if:

(a) all of the financial products are issued by the same person (the issuer ); and

(b) none of the offers results in a breach of the 20 purchasers ceiling (see subsections (6) and (7)); and

(3) Subsection (2) does not apply to an offer to which subsection 1012C(6) (sale amounting to indirect issue) or (8) (sale amounting to indirect sale by controller) applies.

Note: Under section 1012K, ASIC may make a determination aggregating the transactions of bodies that ASIC considers to be closely related.

(4) If subsection (2) applies to an offer of a financial product, a recommendation to a person to acquire a financial product in response to a personal offer of that kind does not need a Product Disclosure Statement under this Part.

(5) For the purposes of subsections (2) and (4), a personal offer is one that:

(a) may only be accepted by the person to whom it is made; and

(b) is made to a person who is likely to be interested in the offer, having regard to:

(i) previous contact between the person making the offer and that person; or

(ii) some professional or other connection between the person making the offer and that person; or

(iii) statements or actions by that person that indicate that they are interested in offers of that kind.

(6) An offer to issue, or arrange for the issue of, a financial product:

(a) results in a breach of the 20 purchasers ceiling if it results in the number of people to whom the issuer has issued financial products exceeding 20 in any 12 month period; and

(b) results in a breach of the $2 million ceiling if it results in the amount raised by the issuer from issuing financial products exceeding $2 million in any 12 month period.

(7) An offer by a person to sell a financial product:

(a) results in a breach of the 20 purchasers ceiling if it results in the number of people to whom the person sells financial products issued by the issuer of that financial product exceeding 20 in any 12 month period; and

(b) results in a breach of the $2 million ceiling if it results in the amount raised by the person from selling financial products issued by the issuer of that financial product exceeding $2 million in any 12 month period.

(8) In counting issues and sales of the financial products issued by the issuer, and the amount raised from issues and sales, for the purposes of subsection (2), disregard issues and sales that result from offers that:

(a) do not need a Product Disclosure Statement (otherwise than because of this section); or

(b) are made under a Product Disclosure Statement.

Note: Also see provisions on restrictions on advertising (section 1018A) and the anti-hawking provisions in section 992A.

(9) In counting issues and sales of the financial products issued by the issuer, and the amount raised from issues and sales, for the purposes of subsection (2), disregard any issues and sales made by a body if:

(a) the body was a managed investment scheme (but not a registered scheme) at the time that the offer of interests in the scheme that resulted in the issues or sales was made; and

(b) the body became a registered scheme within 12 months after that offer was made; and

(c) the offer would not have required a Product Disclosure Statement (otherwise than because of this section) if the managed investment scheme had been a registered scheme at the time that the offer was made.

(10) In working out the amount of money raised by the issuer from issuing financial products, include the following:

(a) the amount payable for the financial products at the time when they are issued;

(b) if the financial product is an option - any amount payable on the exercise of the option;

(c) if the financial products carry a right to convert the financial product into other financial products - any amount payable on the exercise of that right.

(11) If a person relies on subsection (2) to make offers of financial products without a Product Disclosure Statement under this Part, the person must not issue, arrange for the issue of, or transfer, financial products without a Product Disclosure Statement under this Part if the issue or transfer would result in a breach of the 20 purchasers ceiling or the $2 million ceiling (see subsections (6), (7), (8), (9) and (10)).

(12) For the purposes of this section, an offer of a financial product is an offer to:

(a) issue the financial product; or

(b) arrange for the issue of the financial product; or

1012F Product Disclosure Statement for certain superannuation products may be provided later

In a recommendation situation or an issue situation in which the financial product is a superannuation product of a kind specified in regulations made for the purposes of this section, the regulated person:

(a) need not give the client the Product Disclosure Statement at or before the time when it would otherwise be required to be given; and

(b) must give the client the Product Disclosure Statement as soon as is reasonably practicable and in any event within 3 months after the product is issued to the client; and

(c) need not give the client the Product Disclosure Statement at all if the client ceases to be a member of the superannuation fund concerned before the regulated person is required to give the Product Disclosure Statement under paragraph (b).

1012G Product Disclosure Statement may sometimes be provided later

(1) The regulated person may deal with a financial product under this section only if:

(a) the financial product is one for which an application form is not required under section 1016A and section 1019B (cooling off period) will apply if the client enters into a legal obligation to acquire the product pursuant to the recommendation or offer that constitutes the relevant conduct; or

(b) the financial product is:

(i) a basic deposit product; or

(ii) a facility for making non-cash payments (see section 763D) that is related to a basic deposit product; or

(iii) a financial product of a kind prescribed by regulations made for the purposes of this subparagraph.

(2) In a recommendation situation or an issue situation, the regulated person need not give the client a Product Disclosure Statement for the financial product at or before the time when it would otherwise be required to be given if:

(a) the client expressly instructs the regulated person that they require:

(i) in a recommendation situation - the advice constituting the recommendation; or

(ii) in an issue situation - the financial product;

to be provided or issued immediately, or by a specified time; and

(b) it is not reasonably practicable, while complying with the client’s instructions, to give the client the Product Disclosure Statement at or before the time when it would otherwise be required to be given.

The regulated person must comply with subsection (3) instead.

(3) The regulated person must:

(a) at or before the time referred to in paragraph (2)(b), read the client a statement, prepared by or on behalf of the product issuer, that contains:

(i) the name and contact details of the issuer of the financial product; and

(ii) information about the essential features of the financial product; and

(iii) the information that would be required to be in a Product Disclosure Statement for the financial product by paragraphs 1013D(1)(c), (d), (g) and (i); and

(b) give the client the Product Disclosure Statement as soon as practicable after that time, and in any event not later than:

(i) the time when the confirmation requirement (if applicable) is complied with; or

(ii) the end of the fifth day after the day on which the financial product was issued or sold to the client.

(4) For the purposes of paragraph (3)(b), the confirmation requirement is complied with when:

(a) the client receives confirmation, as mentioned in paragraph 1017F(5)(a), of the transaction by which they acquired the financial product; or

(b) confirmation of that transaction is available to the client by a facility as mentioned in paragraph 1017F(5)(b).

1012H Obligation to take reasonable steps to ensure that Product Disclosure Statement is given to person electing to be covered by group financial product

(1) This section covers the situation in which a financial product:

(a) is issued to a person; and

(b) covers, or is designed to cover, a group of people; and

(c) may cover a particular person (the new group member ) if the person elects to be covered by the financial product.

(2) The issuer must take reasonable steps to ensure that the new group member is given a Product Disclosure Statement for the financial product in accordance with this Division before the new group member makes an election to be covered by the financial product.

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

(3) For the purposes of this section, a person is covered by a financial product if benefits are, or may be, provided under the financial product directly to:

(a) the person; or

(b) a relative of the person; or

1012I Obligation to give employer a Product Disclosure Statement in relation to certain superannuation products and RSA products

(1) At or before the time when a person (the applicant ) becomes a standard employer-sponsor of a superannuation entity, the person (the issuer ) who is to provide the superannuation products to the applicant’s employees must give the applicant a Product Disclosure Statement in accordance with this Division for each of those superannuation products.

(2) If:

(a) a person (the applicant ) applies for the issue of an RSA product to the employee; and

(b) the applicant has not previously applied to the RSA provider for the issue to any employee of an RSA product of the same kind;

the person (the issuer ) who is to issue the RSA product to the employee must, at or before the time when the RSA product is issued to the employee, give the applicant a Product Disclosure Statement in accordance with this Division for the RSA product.

(2A) If:

(a) a trustee (the applicant ), under Part 24 of theSuperannuation Industry (Supervision) Act 1993, applies on behalf of a person for the issue of an interest in a relevant superannuation entity; and

(b) the applicant has not previously applied under that Part for the issue of an interest in that entity on behalf of any person;

the person (the issuer ) who is to issue the interest to the person must, at or before the time when the interest is issued to the person, give the applicant a Product Disclosure Statement in accordance with this Division for the interest.

(2B) If:

(a) a trustee (the applicant ), under Part 9 of theRetirement Savings Accounts Act 1997, applies on behalf of a person for the issue of an interest in a relevant superannuation entity; and

(b) the applicant has not previously applied under that Part for the issue of an interest in that entity on behalf of any person;

(3) The issuer does not have to give the applicant a Product Disclosure Statement under subsection (1), (2), (2A) or (2B) for a financial product if:

(a) the applicant has already received a Product Disclosure Statement for that financial product that contains all of the information that the first-mentioned Product Disclosure Statement would be required to contain; or

(b) the issuer believes on reasonable grounds that paragraph (a) applies.

Note: Information in a Supplementary Product Disclosure Statement is taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

(4) The issuer need not give the applicant a Product Disclosure Statement under subsection (1), (2), (2A) or (2B) in the circumstances specified in the regulations.

(5) In this section:

(a) terms used in subsection (1) that are defined for the purposes of theSuperannuation Industry (Supervision) Act 1993 have the same meanings as in that Act; and

(b) terms used in subsection (2) that are defined for the purposes of theRetirement Savings Accounts Act 1997have the same meanings as in that Act; and

1012IA Treatment of arrangements under which a person can instruct another person to acquire a financial product

Definitions

(1) In this section:

acquirer , in relation to a custodial arrangement, has the meaning given by the definition of custodial arrangement .

client , in relation to a custodial arrangement, has the meaning given by the definition of custodial arrangement .

custodial arrangement means an arrangement between a person (the provider ) and another person (the client ) (whether or not there are also other parties to the arrangement) under which:

(a) the client is, or is entitled, to give an instruction that a particular financial product, or a financial product of a particular kind, is to be acquired; and

(b) if the client gives such an instruction, a person (the acquirer ), being the provider or a person with whom the provider has or will have an arrangement, must (subject to any discretion they have to refuse) acquire the financial product, or a financial product of that kind; and

(c) if the acquirer acquires the financial product, or a financial product of that kind, pursuant to an instruction given by the client, either:

(i) the product is to be held on trust for the client or another person nominated by the client; or

(ii) the client, or another person nominated by the client, is to have rights or benefits in relation to the product or a beneficial interest in the product, or in relation to, or calculated by reference to, dividends or other benefits derived from the product.

instruction includes a direction or request.

provider , in relation to a custodial arrangement, has the meaning given by the definition of custodial arrangement .

regulated acquisition means an acquisition of a financial product pursuant to an instruction by the client under a custodial arrangement, being an acquisition:

(a) by way of issue by the issuer (the regulated person ); or

(b) pursuant to a sale by a person (the regulated person ) in circumstances described in subsection 1012C(5), (6) or (8).

regulated person , in relation to a regulated acquisition of a financial product, has the meaning given by paragraph (a) or (b) (as the case requires) of the definition of regulated acquisition .

Obligation on provider to give client a PDS

(2) Before a regulated acquisition of a financial product occurs pursuant to an instruction given by the client under a custodial arrangement, the provider must give the client a Product Disclosure Statement for the product if a Product Disclosure Statement for the product would, if there were an equivalent direct acquisition by the client, be required by subsection 1012B(3) or 1012C(3) (see subsection (3) of this section) to be given to the client by the regulated person before that acquisition occurred. For this purpose, an equivalent direct acquisition is an acquisition that would occur if:

(a) the product were instead being offered for issue or sale direct to the client by the regulated person for the same price (or for the appropriate proportion of that price, if the transaction for the regulated acquisition also covers other products); and

(b) the circumstances of that issue or sale to the client were otherwise the same as those in which the regulated acquisition will occur.

Determining whether a PDS would have to be given for an equivalent direct acquisition

(3) The following provisions apply for the purpose of determining whether the regulated person would be required by subsection 1012B(3) or 1012C(3) to give the client a Product Disclosure Statement for the financial product:

(a) the effect of the provisions referred to in subsection 1012B(5) or 1012C(10), as the case requires, as they have effect subject to the following paragraphs, must be taken into account;

(b) subsections 1012D(1) and (2) apply as if references in those subsections to the regulated person’s belief in relation to a matter were instead references to the provider’s belief in relation to that matter;

(c) subsections 1012D(2) and (3) apply as if references to the client already holding a financial product of the same kind also included a reference to a person already holding a financial product of the same kind as a result of an instruction given by the client under a custodial arrangement;

(d) sections 1012E and 1012F are to be disregarded;

(e) section 1012G has effect in accordance with subsection (4).

Modification of section 1012G

(4) The following provisions apply in relation to section 1012G:

(a) in determining for the purposes of subsection (2) whether the regulated person would be required by subsection 1012B(3) or 1012C(3) to give the client a Product Disclosure Statement for the financial product, subsection 1012G(2) applies as if the reference to the client instructing the regulated person (in an issue situation) that they require the financial product to be provided or issued immediately, or by a specified time, were instead a reference to the client instructing the provider that they require the financial product to be acquired immediately, or by a specified time;

(b) if, because of subsection 1012G(2) as it applies because of paragraph (a) of this subsection, the provider does not have to give the client a Product Disclosure Statement for a financial product before a regulated acquisition of the financial product occurs pursuant to an instruction given by the client under a custodial arrangement:

(i) subsection 1012G(2) applies in relation to the provider, the client and the regulated acquisition as if the obligation it imposes to comply with subsection 1012G(3) were imposed on the provider; and

(ii) subsection 1012G(3) applies in relation to the provider, the client and the regulated acquisition as if the reference to the regulated person were instead a reference to the provider, as if subparagraph 1012G(3)(b)(i) were omitted and as if the reference in subparagraph 1012G(3)(b)(ii) to the day on which the financial product was issued or sold to the client were instead a reference to the day on which the regulated acquisition occurs.

Modification of section 1013A

(5) Section 1013A applies in relation to a regulated acquisition as if:

(a) paragraph 1013A(1)(b) also covered a Product Disclosure Statement that is required to be given by subsection (2) of this section in relation to an acquisition covered by paragraph (a) of the definition of regulated acquisition in subsection (1) of this section; and

(b) paragraph 1013A(2)(b) also covered a Product Disclosure Statement that is required to be given by subsection (2) of this section in relation to an acquisition covered by paragraph (b) of the definition of regulated acquisition in subsection (1) of this section.

Provider is not an agent for the purposes of section 1015C

(6) For the purposes of the application of section 1015C in relation to a regulated acquisition, the provider in relation to the relevant custodial arrangement is taken not to be an agent of the client.

Provider is covered by sections 1015E, 1021F and 1021I

(7) Sections 1015E, 1021F and 1021I apply in relation to a regulated acquisition as if the references to a regulated person were instead references to the provider in relation to the relevant custodial arrangement.

Regulations may provide for other modifications

(8) The regulations may provide for other modifications of provisions of this Part that are to have effect in relation to regulated acquisitions.

1012J Information must be up to date

The information in a Product Disclosure Statement must be up to date as at the time when it is given.

Note: A Supplementary Product Disclosure Statement containing updated information may be given with a Product Disclosure Statement that has become out of date. The updated information is taken to be included in the Product Disclosure Statement (see section 1014D).

1012K Anti-avoidance determinations

(1) ASIC may determine in writing that a number of different bodies are closely related and that their transactions should be aggregated for the purposes of this Subdivision. If ASIC does so:

(a) an issue, sale or transfer of financial products of any other bodies is taken to also be an issue, sale or transfer of the financial products of each of the other bodies by those bodies; and

(b) any money received from an issue, sale or transfer of financial products of any of the bodies is taken to also be received by each of the other bodies from an issue, sale or transfer of its own financial products.

ASIC must give written notice of the determination to each of the bodies.

(2) ASIC may determine in writing that the transactions of a body and of a person who controls the body should be aggregated for the purposes of this Subdivision. If ASIC does so:

(a) an issue of financial products of the body is taken to also be the transfer of the financial products by the controller; and

(b) any money received from an issue of financial products of the body is taken to also be received by the controller from a transfer of the financial products; and

(c) a sale or transfer of financial products of the body by the controller is taken to also be the issue of the financial products by the body; and

(d) any money received from a sale or transfer of financial products of the body by the controller is taken to also be received by the body from an issue of the financial products.

ASIC must give written notice of the determination to the body and the controller.

Subdivision C - Preparation and content of Product Disclosure Statements

1013A Who must prepare Product Disclosure Statement

(1) A Product Disclosure Statement that:

(a) is required to be given by section 1012A (otherwise than in a situation in which the recommendation concerned relates to an offer described in subsection 1012C(3) or (4)); or

(b) is required to be given by section 1012B; or

(d) is required to be given by section 1012I;

must be a document that has been prepared by the issuer of the financial product. A Product Disclosure Statement of this kind is in this Division referred to as an issue Statement .

(2) A Product Disclosure Statement that:

(a) is required to be given by section 1012A in a situation in which the recommendation concerned relates to an offer described in subsection 1012C(3) or (4)); or

(b) is required to be given by section 1012C;

must be a document that has been prepared by the person making the offer to sell the financial product. A Product Disclosure Statement of this kind is in this Division referred to as a sale Statement .

(3) The person who, or on whose behalf, a Product Disclosure Statement for a financial product is required to be prepared is, in this Division, referred to as the responsible person for the financial product.

(4) For the purposes of this Part, a Product Disclosure Statement prepared on behalf of a person is taken to be prepared by the person.

1013B Title of Product Disclosure Statement

(1) The title “Product Disclosure Statement” must be used on the cover of, or at or near the front of, a Product Disclosure Statement.

(2) In any other part of a Product Disclosure Statement, “Product Disclosure Statement” may be abbreviated to “PDS”.

1013C Product Disclosure Statement content requirements

(1) A Product Disclosure Statement:

(a) must include the following statements and information required by this Subdivision:

(i) the statements and information required by section 1013D; and

(ii) the information required by section 1013E; and

(iii) the information required by the other provisions of this Subdivision; and

(b) may also:

(i) include other information; or

(ii) refer to other information that is set out in another document.

Note: A Supplementary Product Disclosure Statement containing additional information may be given with a Product Disclosure Statement that does not contain all the required information. The additional information is taken to be included in the Product Disclosure Statement (see section 1014D).

(2) The information required by sections 1013D and 1013E need only be included in the Product Disclosure Statement to the extent to which it is actually known to:

(a) the responsible person; and

(b) in the case of a sale Statement - the issuer of the financial product; and

(d) any person:

(i) named in the Statement as a financial services licensee providing services in relation to the issue or sale of the financial product; and

(ii) who participated in any way in the preparation of the Statement; and

(e) any person who has given a consent referred to in section 1013K in relation to a statement included in the Statement; and

(f) any person named in the Statement with their consent as having performed a particular professional or advisory function; and

(g) if any of the above persons is a body corporate - any director of that body corporate.

(3) The information included in the Product Disclosure Statement must be worded and presented in a clear, concise and effective manner.

(4) The responsible person may include in the Product Disclosure Statement a statement about the association between the financial product and another person.

(5) The responsible person must not include a statement about the association between the financial product and a person if:

(a) the statement creates the impression that the financial product is issued or sold by that other person; and

(b) the person has not issued or sold the product.

(6) The responsible person must not include a statement about the association between the financial product and a person if:

(a) the statement creates the impression that the financial product is guaranteed or underwritten by that other person; and

(b) the person has not guaranteed or underwritten the product.

(7) If the Product Disclosure Statement states that a person provides, or is to provide, services in relation to the financial product, the Product Disclosure Statement must clearly distinguish between the respective roles of that person and the issuer or seller of the financial product.

1013D Product Disclosure Statement content - main requirements

(1) Subject to this section, subsection 1013C(2) and section 1013F, a Product Disclosure Statement must include the following statements, and such of the following information as a person would reasonably require for the purpose of making a decision, as a retail client, whether to acquire the financial product:

(a) a statement setting out the name and contact details of:

(i) the issuer of the financial product; and

(ii) if the Statement is a sale Statement - the seller; and

(b) information about any significant benefits to which a holder of the product will or may become entitled, the circumstances in which and times at which those benefits will or may be provided, and the way in which those benefits will or may be provided; and

(d) information about:

(i) the cost of the product; and

(ii) any amounts that will or may be payable by a holder of the product in respect of the product after its acquisition, and the times at which those amounts will or may be payable; and

(iii) if the amounts paid in respect of the financial product and the amounts paid in respect of other financial products are paid into a common fund - any amounts that will or may be deducted from the fund by way of fees, expenses or charges; and

(e) if the product will or may generate a return to a holder of the product - information about any commission, or other similar payments, that will or may impact on the amount of such a return; and

(f) information about any other significant characteristics or features of the product or of the rights, terms, conditions and obligations attaching to the product; and

(g) information about the dispute resolution system that covers complaints by holders of the product and about how that system may be accessed; and

(h) general information about any significant taxation implications of financial products of that kind; and

(i) information about any cooling-off regime that applies in respect of acquisitions of the product (whether the regime is provided for by a law or otherwise); and

(j) if the product issuer (in the case of an issue Statement) or the seller (in the case of a sale Statement) makes other information relating to the product available to holders or prospective holders of the product, or to people more generally - a statement of how that information may be accessed; and

(k) any other statements or information required by the regulations; and

(l) if the product has an investment component - the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of the investment.

(2) For the purposes of paragraph (1)(d), an amount will or may be payable in respect of a financial product by the holder of the financial product if:

(a) the holder will or may have to pay an amount in respect of the product; or

(b) an amount will or may be deducted from:

(i) a payment to be made by the holder; or

(ii) a payment to be made to the holder; or

(iii) an amount held on the holder’s behalf under the financial product; or

It includes an amount that the holder will or may have to pay, or that will or may be deducted or debited, as a fee, expense or charge in relation to a particular transaction in relation to the financial product.

(2A) For the purposes of paragraph (1)(l), products which have an investment component include superannuation products, managed investment products and investment life insurance products.

(3) Subsection (1) requires information to be included in the Product Disclosure Statement only to the extent to which the requirement is applicable to the financial product. The Product Disclosure Statement does not need to indicate that a particular requirement is not applicable to the financial product.

(4) The regulations may:

(a) provide that a provision of subsection (1) does not apply in a particular situation; or

(b) provide that particular information is not required by a provision of subsection (1), either in a particular situation or generally; or

(c) provide a more detailed statement of the information that is required by a provision of subsection (1), either in a particular situation or generally.

1013DA Information about ethical considerations etc.

ASIC may develop guidelines that must be complied with where a Product Disclosure Statement makes any claim that labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realisation of the investment.

1013E General obligation to include other information that might influence a decision to acquire

Subject to subsection 1013C(2) and section 1013F, a Product Disclosure Statement must also contain any other information that might reasonably be expected to have a material influence on the decision of a reasonable person, as a retail client, whether to acquire the product.

1013F General limitations on extent to which information is required to be included

(1) Despite anything in section 1013D or 1013E, information is not required to be included in a Product Disclosure Statement if it would not be reasonable for a person considering, as a retail client, whether to acquire the product to expect to find the information in the Statement.

(2) In considering whether it would not be reasonable for a person considering, as a retail client, whether to acquire the product to expect to find particular information in the Statement, the matters that may be taken into account include, but are not limited to:

(a) the nature of the product (including its risk profile); and

(b) the extent to which the product is well understood by the kinds of person who commonly acquire products of that kind as retail clients; and

(d) if the product is an ED security - the effect of the following provisions:

(i) Chapter 2M as it applies to disclosing entities;

(ii) sections 674 and 675; and

(e) the way in which the product is promoted, sold or distributed; and

(f) any other matters specified in the regulations.

1013G Product Disclosure Statement must be dated

A Product Disclosure Statement must be dated. The date must be:

(a) if a copy of the Product Disclosure Statement has been lodged with ASIC (see section 1015B) - the date on which it was so lodged; or

(b) in any other case - the date on which the Product Disclosure Statement was prepared or its preparation was completed.

1013H Requirements if Product Disclosure Statement states or implies that financial product will be able to be traded

If a Product Disclosure Statement states or implies that the financial product will be able to be traded on a financial market (whether in Australia or elsewhere), the Statement must state that:

(a) the product is able to be traded on that market; or

(b) an application has been made to the operator of that market for the taking of such action as is necessary to enable the product to be traded on that market; or

(c) an application of a kind referred to in paragraph (b) will be made to the operator of that market within 7 days after the date of the Statement.

1013I Extra requirements if Product Disclosure Statement relates to managed investment products that are ED securities

(1) This section applies to a Product Disclosure Statement that relates to managed investment products that are ED securities.

(2) The Product Disclosure Statement must include a statement that:

(a) as a disclosing entity, the scheme is subject to regular reporting and disclosure obligations; and

(b) copies of documents lodged with ASIC in relation to the scheme may be obtained from, or inspected at, an ASIC office.

(3) The Product Disclosure Statement must either:

(a) inform people of their right to obtain a copy of the following documents:

(i) the annual financial report most recently lodged with ASIC by the scheme;

(ii) any half-year financial report lodged with ASIC by the scheme after the lodgment of that annual financial report and before the date of the Product Disclosure Statement;

(iii) any continuous disclosure notices given by the scheme after the lodgment of that annual report and before the date of the Product Disclosure Statement; or

(b) include, or be accompanied by, a copy of the relevant document or documents.

(4) If:

(a) the Product Disclosure Statement informs people of their right to obtain a copy of a document referred to in subsection (3); and

(b) a person asks the issuer (in the case of an issue Statement) or the seller (in the case of a sale Statement)for a copy of the document;

the issuer or seller must give (see subsection (5)) the person a copy of the document free of charge as soon as practicable, and in any event within 5 days, after receiving the person’s request.

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

(5) In subsection (4), give means give in a way that would satisfy the requirements of section 1015C if the copy of the document were a Statement to which that section applied.

1013J Requirements if Statement has been lodged with ASIC

A Product Disclosure Statement, a copy of which has been lodged with ASIC (see section 1015B), must include a statement that:

(a) a copy of the document has been lodged with ASIC; and

(b) ASIC takes no responsibility for the content of the document.

1013K Requirements relating to consents to certain statements

(1) A Product Disclosure Statement must only include a statement made by a person, or a statement said in the Product Disclosure Statement to be based on a statement made by a person, if:

(a) the person has consented to the statement being included in the Product Disclosure Statement in the form and context in which it is included; and

(b) the Product Disclosure Statement states that the person has given this consent; and

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

(2) The person who prepared the Product Disclosure Statement must not, without reasonable excuse, fail to keep the consent, or a copy of it, for the period, and in the manner, required by the regulations.

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

1013L Product Disclosure Statement may consist of 2 or more separate documents given at same time

(1) Subject to this section, a Product Disclosure Statement may be made up of 2 or more separate documents that are given at the same time.

(2) Each of the documents must have on the cover of the document, or at or near the front of the document, a statement:

(a) to the effect that the document is part of a Product Disclosure Statement; and

(b) that (subject to subsection (3)) identifies the other documents that make up the Product Disclosure Statement.

(3) If there are or may be different versions of a document referred to in paragraph (2)(b), the statement required by subsection (2) does not have to identify any particular one of those versions and may instead identify the document generically.

Note: For example, if a Product Disclosure Statement is made up of a core document that is not updated very frequently, and a separate document providing information about remuneration that is updated more frequently:

(a) the statement in the core document need only refer to the fact that it, and a separate document about remuneration, make up the Product Disclosure Statement; and

(b) the statement in the document about remuneration need only refer to the fact that it, and a separate document about all other required matters, make up the Product Disclosure Statement.

(4) The requirement of section 1013B (title of Product Disclosure Statement) is taken to be satisfied if the title “Product Disclosure Statement” is used on the cover of, or at or near the front of, at least one of the documents that make up the Product Disclosure Statement.

(5) The requirement of section 1013G (dating of Product Disclosure Statement) must be separately complied with in relation to each of the documents. If, for any purpose, a single date needs to be determined as the date of the Product Disclosure Statement as a whole, that date is the most recent of the dates of those documents.

(6) Section 1015E applies to an alteration to one of the documents as though the reference in that section to the date specified in the Product Disclosure Statement were a reference to the date specified in the document.

(7) The regulations may impose additional requirements to be complied with if a Product Disclosure Statement is made up of 2 or more documents.

Subdivision D - Supplementary Product Disclosure Statements

1014A What a Supplementary Product Disclosure Statement is

A Supplementary Product Disclosure Statement is a document by which a person who has prepared a Product Disclosure Statement (the PDS ) can:

(a) correct a misleading or deceptive statement in the PDS; or

(b) correct an omission from the PDS of information it is required to contain; or

(d) change a statement of a kind referred to in paragraph 1016E(1)(a) or (b).

1014B Title of Supplementary Product Disclosure Statement

(1) The title “Supplementary Product Disclosure Statement” must be used on the cover of, or at or near the front of, a Supplementary Product Disclosure Statement.

(2) In any other part of a Supplementary Product Disclosure Statement, “Supplementary Product Disclosure Statement” may be abbreviated to “SPDS”.

1014C Form of Supplementary Product Disclosure Statement

At the beginning of a Supplementary Product Disclosure Statement there must be:

(a) a statement that it is a Supplementary Product Disclosure Statement; and

(b) an identification of the Product Disclosure Statement that it supplements; and

(c) a statement that it is to be read together with that Product Disclosure Statement and any other specified Supplementary Disclosure Statements.

1014D Effect of giving person a Supplementary Product Disclosure Statement

If:

(a) a person is given a Product Disclosure Statement (the PDS ); and

(b) at the same time, or later, they are given a Supplementary Product Disclosure Statement (the SPDS ) that supplements the PDS;

the PDS is taken, from when the SPDS is given to the person, to include the information and statements contained in the SPDS.

1014E Situation in which only a Supplementary Product Disclosure Statement need be given

If:

(a) apart from this section, a person would be required to give another person (the client ) a Product Disclosure Statement (the new PDS ) relating to a financial product; and

(b) the client has, because of some previous conduct, already received a Product Disclosure Statement (the earlier PDS ) relating to the financial product; and

the person may, instead of giving the client the new PDS, give the client a Supplementary Product Disclosure Statement that contains the additional information.

1014F Application of other provisions in relation to Supplementary Product Disclosure Statements

Sections 1013A, 1013G, 1013H, 1013J and 1013K, and subsections 1013C(3) to (7), apply in relation to a Supplementary Product Disclosure Statement in the same way as they apply to a Product Disclosure Statement.

Subdivision E - Other requirements relating to Product Disclosure Statements and Supplementary Product Disclosure Statements

1015A Subdivision applies to Product Disclosure Statements and Supplementary Product Disclosure Statements

This Subdivision applies to Product Disclosure Statements and to Supplementary Product Disclosure Statements. Both kinds of document are referred to in this Subdivision as a Statement .

1015B Some Statements must be lodged with ASIC

(1) A copy of a Statement must have been lodged with ASIC (in accordance with the requirements of subsection (2) for consents) before the Statement is given to a person for the purposes of a provision of this Part if:

(a) the following subparagraphs apply:

(i) the financial product is a managed investment product; and

(ii) the Statement states or implies that the product will be able to be traded on a financial market; and

(iii) the Statement meets the requirements set out in section 1013H; or

(b) the financial product is a managed investment product that can be traded on a financial market; or

(c) the financial product is a financial product of a kind specified in regulations made for the purposes of this paragraph.

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

(2) The lodgment of a Statement with ASIC requires the consent of:

(a) whether it is an issue Statement or a sale Statement:

(i) if the responsible person is a body corporate - every director of the responsible person; or

(ii) otherwise - the responsible person; and

(b) if it is a sale Statement:

(i) if the issuer of the financial product concerned is a body corporate - every director of the issuer; or

(ii) otherwise - the issuer of the financial product concerned.

1015C How a Statement is to be given

(1) A Statement:

(a) must be:

(i) given to a person, or the person’s agent, personally; or

(ii) sent to the person, or the person’s agent, at an address (including an electronic address) or fax number nominated by the person or the agent; and

(b) may be printed or be in electronic form.

(2) For the purposes of this section, the Statement is sent to a person at an address if, and only if:

(a) the Statement is sent to the address; and

(b) either:

(i) the envelope or other container in which the Statement is sent; or

(ii) the message that accompanies the Statement;

is addressed to the person.

(3) The Statement may be given or sent to the person’s agent only if the agent is not acting as the person’s agent in one of the following capacities:

(a) a financial services licensee;

(b) an authorised representative of a financial services licensee;

(d) a person who is not required to hold an Australian financial services licence because the person is covered by:

(i) paragraph 911A(2)(j); or

(ii) an exemption in regulations made for the purposes of paragraph 911A(2)(k); or

(iii) an exemption specified by ASIC for the purposes of paragraph 911A(2)(l);

(e) a person who is required to hold an Australian financial services licence but who does not hold such a licence;

(f) an employee, director or other representative of a person referred to in paragraph (a), (b), (c), (d) or (e).

(4) The regulations may provide for alternative ways of giving a Statement to a person.

(5) The regulations may specify requirements as to:

(a) the manner in which a Statement may be given to a person; and

(b) the presentation, structure and format for a Statement that is to be given in electronic form.

The giving of the Statement is not effective unless those requirements are satisfied.

1015D Notice, retention and access requirements for Statement that does not need to be lodged

(1) This section applies to a Statement if section 1015B does not require a copy of the Statement to be lodged with ASIC.

(2) The responsible person for the Statement must lodge a notice with ASIC advising that the Statement is in use as soon as practicable, and in any event within 5 business days, after a copy of the Statement is first given to someone in a recommendation, issue or sale situation.

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

(3) The responsible person for the Statement must keep a copy of the Statement for the period of 7 years after the date of the Statement.

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

(4) During that period the responsible person:

(a) must make a copy of the Statement available to ASIC if asked to do so by ASIC; and

(b) must comply with any reasonable request from any other person for a copy of the Statement.

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

1015E Altering a Statement after its preparation and before giving it to a person

(1) A regulated person must not, in purported compliance with a provision of this Part, give a person a Statement that has been altered (otherwise than pursuant to paragraph (b)) after the date of the Statement if either or both of the following paragraphs applies:

(a) the alteration was not made by, or with the authority of, the issuer or seller, as the case requires, of the financial products;

(b) the alteration is a material alteration and the date of the Statement has not been changed to:

(i) if a copy of the altered Statement has been lodged with ASIC (see subsection (2)) - the date on which it was so lodged; or

(ii) in any other case - the date on which the alteration was made.

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

(2) If the alteration is a material alteration to a Statement that has been lodged with ASIC under section 1015B, that section applies to the altered Statement as if it were a new Statement.

Subdivision F - Other rights and obligations related to Product Disclosure Statements

1016A Provisions relating to use of application forms

(1) In this section:

eligible application , in relation to a restricted issue or restricted sale of a relevant financial product, means an application that satisfies the following requirements:

(a) the application is made using an application form; and

(b) the application form used to apply for the product:

(i) was included in, or accompanied, a Product Disclosure Statement given to the applicantthat contained all the information that would have been required to be contained in a Product Disclosure Statement for the product given at the time of the making of the application; or

(ii) was copied, or directly derived, by the applicant from a form referred to in subparagraph (i); and

(c) all other applicable requirements (if any) in regulations made for the purposes of this paragraph are satisfied in relation to the application.

Note: Information in a Supplementary Product Disclosure Statement is taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

relevant financial product means:

(a) a managed investment product; or

(b) a superannuation product; or

(d) an RSA product; or

(e) a financial product of a kind specified in regulations made for the purposes of this paragraph.

relevant superannuation entity means a superannuation entity of a kind specified in regulations made for the purposes of this definition.

restricted issue means an issue of a relevant financial product to a person as a retail client, other than an issue covered by either of the following paragraphs:

(a) an issue in a situation, or pursuant to an offer made in a situation, to which a subsection, other than subsection (1), of section 1012D applies; or

(b) an issue in a situation, or pursuant to an offer made in a situation, to which section 1012E or 1012F applies.

restricted sale means a sale of a relevant financial product pursuant to an offer that:

(a) is of a kind described in subsection 1012C(3) or (4); and

(b) is not made in a situation to which a subsection, other than subsection (1), of section 1012D applies.

RSA provider has the same meaning as in theRetirement Savings Accounts Act 1997.

standard employer-sponsor has the same meaning as in theSuperannuation Industry (Supervision) Act 1993.

standard employer-sponsored fund has the same meaning as in theSuperannuation Industry (Supervision) Act 1993.

standard employer-sponsored member has the same meaning as in theSuperannuation Industry (Supervision) Act 1993.

superannuation entity has the same meaning as in theSuperannuation Industry (Supervision) Act 1993.

(2) A person (the issuer or seller) must only make a restricted issue or a restricted sale of a relevant financial product to a person (the recipient ) if:

(a) the issue or sale is made pursuant to an eligible application made to the issuer or seller by the recipient; or

(b) it is a restricted issue in relation to which the following conditions are satisfied:

(i) the financial product is an interest in a relevant superannuation entity;

(ii) the interest is issued pursuant to an application made to the issuer by a standard employer-sponsor of the entity on the recipient’s behalf;

(iii) if the application is the first application for the issue of a superannuation interest made to the issuer by the standard employer-sponsor on behalf of any person - the application is an eligible application; or

(i) the financial product is an interest in a relevant superannuation entity;

(ii) the interest is issued pursuant to an application made to the issuer by another trustee under Part 24 of theSuperannuation Industry (Supervision) Act 1993on the recipient’s behalf;

(iii) if the application is the first application under Part 24 of that Act made to the issuer by the other trustee on behalf of any person - the application is an eligible application; or

(d) it is a restricted issue in relation to which the following conditions are satisfied:

(i) the financial product is an interest in a relevant superannuation entity;

(ii) the interest is issued pursuant to an application made to the issuer by an RSA provider under Part 9 of theRetirement Savings Accounts Act 1997on the recipient’s behalf;

(iii) if the application is the first application under Part 9 of that Act made to the issuer by the RSA provider on behalf of any person - the application is an eligible application; or

(e) it is a restricted issue in relation to which the following conditions are satisfied:

(i) the financial product is an RSA product;

(ii) the interest is issued pursuant to an application made to the issuer by an employer (within the meaning of theRetirement Savings Accounts Act 1997) of the recipient;

(iii) if the application is the first application for the issue of an RSA product of that kind made to the issuer by the employer on behalf of any person - the application is an eligible application;

(iv) all other applicable requirements (if any) in regulations made for the purposes of this subparagraph are satisfied in relation to the application; or

(f) it is a restricted issue that occurs in a situation covered by regulations made for the purposes of this paragraph.

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

(3) The trustee of a relevant superannuation entity must only permit a person to become a standard employer-sponsor of the entity if:

(a) the person applied to become a standard employer-sponsor of the entity using an application form; and

(b) the application form used to apply to become a standard employer-sponsor:

(i) was included in, or accompanied, a Product Disclosure Statement given to the personthat contained all the information that would have been required to be contained in a Product Disclosure Statement for an interest in the entity given at the time of the making of the application; or

(ii) was copied, or directly derived, by the person from a form referred to in subparagraph (i).

Note 1: Information in a Supplementary Product Disclosure Statement is taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(4) The regulations may:

(a) provide for defences to offences based on subsection (2) or (3); and

(b) provide for additional offences relating to the receipt or non-receipt of applications or application forms.

Note 1: A defendant bears an evidential burden in relation to a defence. See subsection 13.3(3) of theCriminal Code.

Note 2: For the limit on penalties for offences against the regulations, see paragraph 1364(2)(w).

1016B If Statement lodged with ASIC, financial product is not to be issued or sold before specified period

(1) If:

(a) a copy of a Product Disclosure Statement has been lodged with ASIC; and

(b) the financial product to which the Statement relates is not able to be traded on any financial market (whether in Australia or elsewhere);

the responsible person must not issue or sell a financial product to which the Statement applies until the period of 7 days (or that period as extended under subsection (2)) after lodgment of the Statement has ended.

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

(2) ASIC may extend the period by notice in writing to the responsible person. The period as extended must end no more than 14 days after lodgment.

1016C Minimum subscription condition must be fulfilled before issue or sale

If a Product Disclosure Statement for a financial product states that a financial product to which the Statement relates will not be issued or sold unless:

(a) applications for a minimum number of financial products of that kind are received; or

(b) a minimum amount is raised;

the responsible person must not issue or sell a financial product of that kind if that condition has not been satisfied. For the purpose of working out whether the condition has been satisfied, a person who has agreed to take a financial product as underwriter is taken to have applied for that product.

Note 1: Statements in a Supplementary Product Disclosure Statement are taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

Note 2: Failure to comply with this section is an offence (see subsection 1311(1)).

1016D Condition about ability to trade on a market must be fulfilled before issue or sale

(1) If a Product Disclosure Statement for a financial product states or implies that a financial product to which the Statement relates will be able to be traded on a financial market (whether in Australia or elsewhere), the responsible person must only issue or sell a financial product of that kind if:

(a) the product is able to be traded on that market; or

(b) an application has, within 7 days after the relevant date (see subsection (3)), been made to the operator of that market for the taking of such action as is necessary to enable financial products of that kind to be traded on that market.

Paragraph (b) ceases to apply to the financial product at the end of the period of 3 months starting on the relevant date.

Note 1: Statements in a Supplementary Product Disclosure Statement are taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Issue or transfer void if quotation condition not fulfilled

(2) If a Product Disclosure Statement for a financial product states or implies that the financial product is to be quoted on a financial market (whether in Australia or elsewhere) and:

(a) an application has not, within 7 days after the relevant date (see subsection (3)), been made to the operator of that market for the taking of such action as is necessary to enable financial products of that kind to be traded on that market; or

(b) the product is not able to be traded on that market at the end of 3 months after the relevant date;

then:

(c) an issue or transfer of a financial product of that kind to a person to whom the Statement was, or should have been, given is void; and

(d) the responsible person must return any money received from a person to whom the Statement was, or should have been, given as soon as practicable.

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

The relevant date

(3) For the purposes of this section, the relevant date in relation to an express or implied statement is:

(a) if the Statement is express or implied in a Product Disclosure Statement, disregarding the effect of section 1014D - the date of the Product Disclosure Statement; or

(b) if the Statement is express or implied in a Supplementary Product Disclosure Statement - the date of the Supplementary Product Disclosure Statement.

1016E Choices open to person making the offer if disclosure condition not met or Product Disclosure Statement defective

(1) This section applies if:

(a) a Product Disclosure Statement for a financial product states that a financial product to which the Statement relates will not be issued or sold unless:

(i) applications for a minimum number of financial products of that kind are received; or

(ii) a minimum amount is raised;

and that condition is not satisfied within 4 months after the relevant date (see subsections (3) and (4)); or

(b) a Product Disclosure Statement for a financial product states or implies that a financial product to which the Statement relates will be able to be traded on a financial market (whether in Australia or elsewhere) and:

(i) an application has not, within 7 days after the relevant date (see subsection (4)), been made to the operator of that market for the taking of such action as is necessary to enable financial products of that kind to be traded on that market; or

(ii) at the end of the period of 3 months starting on the relevant date, financial products of that kind are not able to be traded on that market; or

(i) the Statement contains a misleading or deceptive statement; or

(ii) there is an omission from the Statement of information it was required to contain;

that is materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to acquire a financial product to which the Statement relates; or

(d) in relation to a Product Disclosure Statement for a financial product, the responsible person becomes aware of a new circumstance that:

(i) has arisen since the Product Disclosure Statement was prepared; and

(ii) would have been required to be included in the Product Disclosure Statement if it had arisen before the Statement was prepared; and

(iii) is materially adverse from the point of view of a reasonable person deciding, as a retail client, whether to acquire a financial product to which the Statement relates.

Note: Information and statements in a Supplementary Product Disclosure Statement are taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

(2) If this section applies, the responsible person must, in relation to any application for financial products of the relevant kind that is made in response to the Product Disclosure Statement and that has not resulted in an issue or sale of financial products of that kind, comply with one of the following paragraphs:

(a) the responsible person must repay the money they received from the applicant;

(b) the responsible person must give the applicant:

(i) a Supplementary Product Disclosure Statement that changes the statement referred to in paragraph (1)(a) or (b), or that corrects the deficiency referred to in paragraph (1)(c) or (d); and

(ii) 1 month to withdraw their applications and be repaid; or

(i) a Supplementary Product Disclosure Statement that changes the statement referred to in paragraph (1)(a) or (b), or that corrects the deficiency referred to in paragraph (1)(c) or (d); and

(ii) 1 month to return the financial products and be repaid.

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

(3) For the purpose of working out whether the condition referred to in paragraph (1)(a) has been satisfied, a person who has agreed to take a financial product as an underwriter is taken to have applied for that financial product.

(4) For the purposes of paragraphs (1)(a) and (b), the relevant date in relation to an express or implied statement is:

(a) if the statement is express or implied in a Product Disclosure Statement, disregarding the effect of section 1014D - the date of the Product Disclosure Statement; or

(b) if the statement is express or implied in a Supplementary Product Disclosure Statement - the date of the Supplementary Product Disclosure Statement.

1016F Remedies for person acquiring financial product under defective Product Disclosure Document

(1) Subject to this section, if a financial product is issued or sold to a person (the client ) in contravention of section 1016E, the client has the right to return the product and to have the money they paid to acquire the product repaid. This is so even if the responsible person is being wound up.

(2) If the responsible person:

(a) is a body corporate; and

(b) does not repay the money as required by subsection (1);

the directors of the responsible person are personally liable to repay the money.

(3) The right to return the product must be exercised by notifying the responsible person in one of the following ways:

(a) in writing; or

(b) electronically; or

Also, if the regulations require the client to comply with other requirements in order to exercise the right to return the product, those other requirements must be complied with.

(4) The right to return the product can only be exercised during the period of 1 month starting on the date of the issue or sale of the product to the client.

(5) On the exercise of the right to return the product:

(a) if the product is constituted by a legal relationship between the client and the issuer of the product - that relationship is, by force of this section, terminated with effect from that time without penalty to the client; and

(b) any contract for the acquisition of the product by the client is, by force of this section, terminated with effect from that time without penalty to the client.

(6) The regulations may provide for consequences and obligations (in addition to those provided for by subsection (5)) to apply if the right to return a financial product is exercised.

(7) The regulations may do any or all of the following:

(a) provide that a specified subclass of financial products that would otherwise be covered by this section is excluded from this section;

(b) provide additional requirements to be satisfied before this section applies in relation to a class or subclass of financial products;

(c) provide that this section does not apply in relation to the provision of a financial product in specified circumstances.

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