Corporations Amendment Regulations 2004 (No. 3) (Cth)

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Corporations Amendment Regulations 2004 (No. 3)1

Statutory Rules 2004 No. 262

I, PHILIP MICHAEL JEFFERY, Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the Corporations Act 2001.

Dated 19 February 2004

P. M. JEFFERY

Governor-General

By His Excellency’s Command

ROSS CAMERON

Parliamentary Secretary to the Treasurer

Contents

1Name of Regulations

These Regulations are the Corporations Amendment Regulations 2004 (No. 3).

2Commencement

These Regulations commence as follows:

  1. (a)

    on the date of their notification in the Gazette — regulations 1 to 3 and Schedule 1;

  2. (b)

    on 11 March 2004 — Schedule 2.

3Amendment of Corporations Regulations 2001

Schedules 1 and 2 amend the Corporations Regulations 2001.

Schedule 1Amendments commencing on gazettal

(regulation 3)

[1]After regulation 7.5.01

insert

7.5.01AModification of Act: compensation regimes

For subsection 893A (1) of the Act, Part 7.5 of the Act is modified in relation to a licensed market as set out in Schedule 8C.

[2]Part 10.2, after Division 51

insert

Division 52Winding up of fidelity funds if market ceases to operate

10.2.215Winding up of fidelity funds if market ceases to operate

  1. (1)

    For subsection 1416 (1) of the Act, section 886B of the Act applies in relation to a fidelity fund kept by the operator of a financial market that, at a time in the transition period for the market, ceases to operate (otherwise than because of a merger).

  2. (2)

    For paragraph 886B (c) of the Act, subsection (3) applies if, at a time during the transition period for a financial market on which derivatives are traded, a person (the first person) ceases to operate the market (other than because of a merger), and another person (the second person) that is a related body corporate operates a financial market:

    1. (a)

      in relation to which, or a segment of which, there are required, after the end of the transition period, to be compensation arrangements approved in accordance with Division 3 of Part 7.5 of the Act; and

    2. (b)

      on which derivatives are also traded.

  3. (3)

    The assets of the fidelity fund held by the first person for the market it had operated may be:

    1. (a)

      transferred to the fidelity fund held by the second person for the market, or segment of the market, that it operates; or

    2. (b)

      held as, or as part of, the fidelity fund held for the market, or segment of the market, operated by the second person.

[3]After Schedule 8B

insert

Schedule 8CModifications of Part 7.5 of the Act — compensation regimes

(regulation 7.5.01A)

1Subsection 880B (1), definition of fidelity fund, subparagraph (b) (ii)

omit

markets;

insert

markets; or

2Subsection 880B (1), definition of fidelity fund, after paragraph (b)

insert

  1. (c)

    the operator of the market or related body corporate of the operator of the market;

3Subsection 881A (2)

substitute

  1. (1A)

    If:

    1. (a)

      compensation arrangements under Division 4 apply to only some financial products acquired or disposed of through a licensed market; and

    2. (b)

      paragraphs (1) (a) and (b) are satisfied for the other products acquired or disposed of through the licensed market;

there must be compensation arrangements in relation to the other products that are approved in accordance with Division 3.

  1. (2)

    The compensation regime that applies to a financial market is:

    1. (a)

      for a financial product to which Division 3 applies — the compensation regime constituted by Division 3; and

    2. (b)

      for a financial product to which Division 4 applies — the compensation regime constituted by Division 4.

4Paragraph 885C (1) (b)

substitute

  1. (b)

    the money or other property, or the authority, was given to the participant in connection with effecting a transaction, or proposed transaction, that:

    1. (i)

      was covered by provisions of the operating rules of the market relating to transactions effected through the market; and

    2. (ii)

      related to a particular financial product that was not covered by the compensation regime constituted by Division 4; and

5Section 885D, heading

substitute

885DCertain losses that are or are not Division 3 losses

6Subsection 885D (2)

substitute

  1. (2)

    If, in relation to a loss suffered by a person:

    1. (a)

      the requirements of subsection 885C (1) are satisfied in relation to a participant and a financial market, except that it is not reasonably apparent whether the compensation regime constituted by Division 3 or by Division 4 covered the transaction, or proposed transaction; and

    2. (b)

      the relevant financial market has both Division 3 and Division 4 arrangements; and

    3. (c)

      either:

      1. (i)

        the person did not (expressly or impliedly) instruct the participant to use the money or other property to enter into a transaction that would be covered by the compensation regime constituted by Division 3 or by Division 4; or

      2. (ii)

        if the participant had authority to enter into transactions on the person’s behalf without specific authority, there is no evidence that the participant decided to use the money or other property to enter into a transaction that would be covered by the compensation regime constituted by Division 3 or by Division 4; and

    4. (d)

      the participant was permitted to trade in products that would be covered by the compensation regimes constituted by Division 3 and by Division 4; and

    5. (e)

      it is not reasonably apparent from the usual business practice of the participant which of those transactions the participant proposed to undertake;

the loss is taken to be a Division 3 loss and not to be a loss that is connected with a financial market to which Division 4 applies.

7Subsection 885J (1)

omit

adequate,

insert

adequate for the market, or segment of the market, for which the arrangements apply,

8Section 887A

substitute

887AMarkets to which this Division applies

  1. (1)

    This Division applies to a financial market that is operated by:

    1. (a)

      a body corporate that is a member of the SEGC; or

    2. (b)

      a body corporate that is a subsidiary of such a member.

  2. (2)

    However, this Division does not apply to a market mentioned in subsection (1):

    1. (a)

      that the regulations state is not covered by this Division; or

    2. (b)

      to the extent that it involves financial products covered by the compensation regime constituted by Division 3.

9After subsection 889J (1)

insert

  1. (1A)

    However, a levy is payable only by an operator or a participant (including a participant who is suspended), in a financial market to which this Division applies, who is permitted to trade on that market a financial product to which this Division applies.

10After subsection 889K (2)

insert

  1. (2A)

    However, a levy is payable only by a participant (including a participant who is suspended), in a financial market to which this Division applies, who is permitted to trade on that market a financial product to which this Division applies.

11Paragraph 892K (1) (a)

after

report

insert

for a set of compensation arrangements

Schedule 2Amendments commencing on 11 March 2004

(regulation 3)

[1]Subregulation 1.0.02 (1), after definition of non‑division 3 securities

insert

OCH means Options Clearing House Pty Limited.

[2]Subparagraphs 7.2.07 (e) (ii) and (iii)

substitute

  1. (ii)

    for a class of derivatives, if most of the terms of the arrangement constituting the derivative are determined in advance by the market operator (including price, if determined in advance):

    1. (A)

      the standard terms of the arrangement that constitutes the derivative; and

    2. (B)

      a description of the asset, rate, index, commodity or other thing that is used for the matters mentioned in paragraph 761D (1) (c) of the Act;

[3]Paragraph 7.4.01 (e)

omit

licence).

insert

licence);

[4]After paragraph 7.4.01 (e)

insert

  1. (f)

    OCH (in its capacity as a body corporate that has an Australian CS facility licence).

[5]Subregulation 7.5.01 (1), definition of obligations, subparagraph (a) (iii)

omit

[6]Subregulation 7.5.01 (1), definition of obligations, paragraph (b)

omit

Options Clearing House Pty Limited,

insert

OCH,

[7]Subregulation 7.5.01 (1), definition of obligations, subparagraph (b) (ii)

omit

Options Clearing House Pty Limited;

insert

OCH;

[8]Subregulation 7.5.01 (1), definition of obligations, subparagraph (b) (iii)

omit

[9]Subregulation 7.5.01 (1), definition of obligations, sub-subparagraphs (b) (iv) (B)

omit

Options Clearing House Pty Limited — the last-mentioned participant and the person.

insert

OCH — the last-mentioned participant and the person; and

[10]Subregulation 7.5.01 (1), definition of obligations, after paragraph (b)

insert

  1. (c)

    in relation to a participant of the licensed CS facility operated by ASTC, in relation to a person, includes obligations arising under:

    1. (i)

      a law; or

    2. (ii)

      the ASTC operating rules; or

    3. (iii)

      an agreement between:

      (A) in any case — the participant and the person; or

      1. (B)

        if the participant is a partner in a participant of the licensed CS facility operated by ASTC — the last-mentioned participant and the person.

[11]Subregulation 7.5.01 (1), definition of prescribed period, paragraph (a)

omit

a participating market licensee

insert

OCH or a participating market licensee,

[12]Subregulation 7.5.01 (1), definition of reportable transaction, paragraph (b)

substitute

  1. (b)

    is an agreement to buy or sell securities, because of the exercise of an option contract over securities, if:

    1. (i)

      the option contract was entered into on the financial market of a participating market licensee; and

    2. (ii)

      the agreement is required, by the operating rules of OCH or the participating market licensee, to be reported to the participating market licensee.

[13]Paragraph 7.5.03 (3) (b)

omit

Options Clearing House Pty Limited.

insert

OCH.

[14]Subregulation 7.5.04 (1)

after

licensee,

insert

or a participant of the licensed CS facility operated by OCH,

[15]Paragraph 7.5.04 (1) (d)

after

licensee

insert

or licensed CS facility

[16]After subparagraph 7.5.04 (1) (d) (v)

insert

  1. (vi)

    a person who is a participant of the licensed CS facility operated by OCH; or

[17]Paragraph 7.5.04 (1) (e)

after

licensee

insert

or licensed CS facility

[18]Subparagraph 7.5.04 (1) (e) (vi)

omit

interest.

insert

interest; or

[19]After subparagraph 7.5.04 (1) (e) (vi)

insert

  1. (vii)

    a person who is a participant of the licensed CS facility operated by OCH.

[20]Subregulation 7.5.04 (1A)

omit

[21]Subregulation 7.5.06 (3)

substitute

  1. (3)

    For this Part, an agreement to buy or sell securities, because of the exercise of an option contract over securities, if:

    1. (a)

      the option contract was entered into on the financial market of a participating market licensee; and

    2. (b)

      the agreement is required, by the operating rules of OCH or the participating market licensee, to be reported to the participating market licensee;

is taken to be a sale and purchase of securities.

[22]Subparagraph 7.5.16 (b) (i)

omit

Finance and Administration;

insert

the Treasury;

[23]Paragraphs 7.5.19 (3) (a) and (b)

omit

Options Clearing House Pty Limited

insert

OCH

[24]After subregulation 7.5.19 (3)

insert

  1. (3A)

    For Subdivision 4.3, if:

    1. (a)

      a participant of Australian Stock Exchange Limited (the transacting participant) enters into a reportable transaction; and

    2. (b)

      under the operating rules of Australian Stock Exchange Limited or OCH, a participant of the licensed CS facility operated by OCH (the clearing participant) has the obligation to complete the transaction and all obligations ancillary to that completion;

regulations 7.5.24 to 7.5.27 (inclusive) apply in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.

[25]Paragraphs 7.5.19 (4) (a) and (b)

omit

Options Clearing House Pty Limited

insert

OCH

[26]After subregulation 7.5.19 (4)

insert

  1. (5)

    For Subdivision 4.9, if:

    1. (a)

      a participant of Australian Stock Exchange Limited (the transacting participant) enters into a reportable transaction; and

    2. (b)

      under the operating rules of Australian Stock Exchange Limited or OCH, a participant of the licensed CS facility operated by OCH (the clearing participant) has the obligation to complete the transaction and all obligations ancillary to that completion;

regulation 7.5.66 applies in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.

[27]Subparagraph 7.5.24 (1) (d) (i)

omit

ASTC operating rules

insert

operating rules of a participating market licensee or OCH

[28]Subparagraph 7.5.24 (1) (d) (ii)

substitute

  1. (ii)

    the dealer has been suspended by the participating market licensee concerned or OCH, that suspension has not been removed and the selling client has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the operating rules of the participating market licensee or OCH to effect a transfer of the securities pursuant to the sale; and

[29]Subparagraphs 7.5.24 (5) (b) (i) and (ii)

omit

ASTC operating rules

insert

operating rules of OCH

[30]Subregulation 7.5.24 (7)

omit

ASTC operating rules.

insert

operating rules of OCH.

[31]Subparagraph 7.5.25 (1) (d) (ii)

omit

concerned,

insert

concerned or OCH,

[32]Subparagraphs 7.5.26 (1) (d) (ii) and 7.5.27 (1) (d) (ii)

substitute

  1. (ii)

    the dealer has been suspended by the participating market licensee concerned or OCH, that suspension has not been removed and the buying client has paid, or is ready, willing and able to pay, to the dealer the purchase price in relation to the purchase; and

[33]Subparagraph 7.5.68 (a) (ii)

omit

Options Clearing House Pty Limited;

insert

OCH;

[34]Paragraphs 7.5.81 (4) (aa) and (ab)

omit each occurrence of

Options Clearing House Pty Limited

insert

OCH

[35]Sub-subparagraphs 7.5.81 (4) (d) (i) (A) and (C)

omit

an officer or employee

insert

a representative

[36]Subparagraph 7.5.81 (4) (d) (ii)

omit

Options Clearing House Pty Limited:

insert

OCH:

[37]Sub-subparagraph 7.5.81 (4) (d) (ii) (A)

omit

an officer or employee

insert

a representative

[38]Sub-subparagraph 7.5.81 (4) (d) (ii) (A)

omit

Options Clearing House Pty Limited;

insert

OCH;

[39]Sub-subparagraph 7.5.81 (4) (d) (ii) (C)

omit

an officer or employee

insert

a representative

[40]Subparagraph 7.5.81 (4) (d) (iii)

omit

Options Clearing House Pty Limited:

insert

OCH:

[41]Sub-subparagraphs 7.5.81 (4) (d) (iii) (A) and (C)

omit

an officer or employee

insert

a representative

[42]Sub-subparagraph 7.5.81 (4) (d) (iii) (D)

substitute

  1. (D)

    a representative of OCH;

[43]Sub-subparagraph 7.5.81 (4) (d) (iii) (F)

omit

an officer or employee

insert

a representative

[44]Subparagraph 7.5.81 (4) (d) (iv)

omit

an officer or employee

insert

a representative

[45]Subparagraphs 7.5.83 (b) (i) and 7.5.84 (b) (i)

omit

Finance and Administration;

insert

the Treasury;

[46]Paragraph 7.5.85 (b)

substitute

  1. (b)

    OCH.

[47]After regulation 7.6.02

insert

7.6.02AA Modification of section 912B of the Act: professional indemnity insurance and security instead of compensation arrangements

  1. (1)

    For paragraph 926B (1) (c) of the Act, Part 7.6 of the Act applies as if section 912B of the Act were modified by substituting that section with the following:

‘912BFinancial services provided to persons as retail clients — requirements in certain circumstances

  1. (1)

    Subsection (2) applies in relation to a financial services licensee if the licensee’s financial services licence authorises the licensee to carry on an activity:

    1. (a)

      to which paragraph 19 (1) (b) or subparagraph 31B (1) (a) (ii) or (b) (ii) of the Insurance (Agents and Brokers) Act 1984 (the repealed Act) would have applied if that Act were not repealed; and

    2. (b)

      for which the licensee would have been required under those provisions to have in force an acceptable contract of professional indemnity insurance.

  2. (2)

    The repealed Act, and any associated provisions, continue to apply in relation to the licensee to the extent necessary to require the licensee to have in force an acceptable contract of professional indemnity insurance in relation to the activity.

  3. (3)

    Subsections (4) and (5) apply in relation to a financial services licensee if the licensee’s financial services licence authorises the licensee to carry on an activity:

    1. (a)

      to which Part 7.3 of the old Corporations Act would have applied if that Part were not repealed; and

    2. (b)

      for which the licensee would have been required under that Part to have a dealers licence or investment advisers licence that could have been subject to the condition specified in paragraph 786 (2) (d) of the old Corporations Act.

  4. (4)

    Section 914A of the Act is taken to authorise ASIC to impose the condition specified in paragraph 786 (2) (d) of the old Corporations Act as a condition of the licensee’s financial services licence.

  5. (5)

    If ASIC acts under subsection (4), Part 7.3 of the old Corporations Act, and any associated provisions, continue to apply to the extent necessary to specify the content of the condition specified in paragraph 786 (2) (d) of the old Corporations Act.’

  6. (6)

    In this section:

associated provisions, in relation to provisions (the core provisions) of a particular Act as in force at a particular time, include (but are not limited to):

  1. (a)

    any regulations or other instruments that are or were in force for the purposes of any of the core provisions at that time; and

  2. (b)

    any interpretation provisions that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and

  3. (c)

    any provisions relating to liability (civil or criminal) that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and

  4. (d)

    any provisions that limit or limited, or that otherwise affect or affected, the operation of any of the core provisions at that time (whether or not they also limit or limited, or affect or affected, the operation of other provisions).

old Corporations Act means this Act as in force immediately before the FSR commencement.’.

  1. (2)

    This regulation ceases to apply at the end of 10 March 2005.

[48]Schedule 2, Form 719A

omit

dealer who is claimed to have executed the document of transfer of securities

insert

the dealer who is claimed to have transferred securities

[49]Schedule 2, Form 721

omit

/the TDS nominee

[50]Schedule 2, Form 721

omit

or the nominee

[51]Schedule 9, item 5A

substitute

5A

AXA Trustees Limited

[52]Schedule 9, item 17

omit

[53]Schedule 9, after item 47

insert

47AA

Tower Trust Limited

[54]Schedule 10B, sub-subparagraph 7.1 (b) (ii) (B)

omit

member’s

insert

product holder’s

Notes

1. These Regulations amend Statutory Rules 2001 No. 193, as amended by 2001 Nos. 208, 318 and 319 (rr 7.9.10 and 7.9.11 were disallowed by the Senate on 16 September 2002); 2002 Nos. 15, 16 (rr 7.9.10, 7.9.11 (1), 7.9.11 (1) (a), 7.9.11 (1) (b) and 7.9.11 (2) were disallowed by the Senate on 16 September 2002), 41, 53, 126, 145, 182, 265 and 282; 2003 Nos. 31, 48, 85, 126, 127, 194, 202, 282, 367, 368 and 369; 2004 Nos. 10 and 25.

2. Notified in the Commonwealth of Australia Gazette on 26 February 2004.

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