ASIC Class Order [CO 02/313]

Administered by Department of the Treasury

Legislation au F2007B00370 Not in force Legislative Instrument

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Australian Securities and Investments Commission
Corporations Act 2001 — Subsections 1073E(1) and (2)

Declaration

Under subsections 1073E(1) and (2) of the Corporations Act 2001 (the "Act") the Australian Securities and Investments Commission hereby declares that:

(a) the classes of securities referred to in Schedule A are securities to which Division 3 of Part 7.11 of the Act and regulations made for the purposes of section 1073D of the Act apply (as referred to paragraph 1073A(1)(e) of the Act);

(b) the regulations made for the purposes of section 1073D apply to the classes of securities mentioned in Schedule B as if the provisions of the regulations referred to in that Schedule were modified as specified in that Schedule.

SCHEDULE A

Shares in, or debentures of, a foreign company that are quoted on the financial market operated by Australian Stock Exchange Limited.

SCHEDULE B

1. For the securities mentioned in Schedule A:

(a) insert in regulation 7.11.01 of the Corporations Regulations 2001 (the "Regulations"), in the appropriate alphabetical order, the following definitions:

"absolute beneficial owner, in relation to Division 3 securities, means one or more beneficiaries of a trust to which a Division 3 security is subject, who has or who together have a presently enforceable and unconditional right to require the trustee of the trust to transfer the Division 3 security to them."; and

"securities loan means an agreement or arrangement under which:

(i) a person ("lender") undertakes to transfer or otherwise make available to another person ("borrower") Division 3 securities; and

(ii) the borrower undertakes to transfer or otherwise restore to the lender those Division 3 securities or the same quantity of equivalent Division 3 securities at an identifiable time in the future.";

(b) insert in subregulation 7.11.17(4) of the Regulations after paragraph 7.11.17(4)(a) the following paragraph:

"(ba) if a broker is given authority by or on behalf of the absolute beneficial owner of Division 3 securities to sell or transfer those Division 3 securities, the broker is taken to have authority from the transferor to:

(i) sell or transfer those Division 3 securities; and

(ii) execute an instrument of transfer of those Division 3 securities,

on the transferor's behalf, even if no authority is given by the transferor;";

(d) omit subregulation 7.11.40(1) of the Regulations and substitute the following subregulation:

“(1) A broker must not stamp with a broker's stamp a document (a transfer document) that relates to Division 3 securities and may be used as a sufficient transfer under this Part, unless the transfer document relates to:

(a) a sale or purchase of the Division 3 securities, in the ordinary course of the broker's business, for a consideration of not less than their unencumbered market value at the time of the sale or purchase;

(b) the performance of obligations under a securities loan; or

(c) a transfer from or to a broker's clearing account in accordance with the operating rules of the financial market in which the broker is a participant.”; and

(e) insert in paragraph 7.11.40(2)(b) of the Regulations after the words "paragraph 7.11.17(4)(a)" the words "or (ba)".

2. For Division 3 rights as defined in subregulation 1.0.02 of the Regulations:

(a) insert in regulation 7.11.01 of the Regulations, in the appropriate alphabetical order, the following definition:

"company option means a Division 3 right that is an assignable option to acquire by way of issue shares or debentures in a company upon payment of an exercise price.";

(b) insert after subregulation 7.11.10 of the Regulations the following regulation:

"7.11.10A Company options

For the purposes of regulations 7.11.11 to 7.11.14, and of the forms in

Schedule 2A to the Regulations, a Division 3 right that is a company option

shall be taken to be a Division 3 asset and not to be a Division 3 right.";

"(aa) to have agreed at the execution time to accept the rights subject to the terms and conditions on which the transferor held them immediately before that time, being the terms and conditions that are applicable as between the issuer in relation to, and the holder for the time being of, the rights;";

(d) insert at the beginning of paragraph 7.11.16(1)(a) of the Regulations the words:

"at the time at which the transferee subsequently makes payment to the issuer in relation to the Division 3 assets of the application monies or, in the case of company options, the exercise price (the payment time),"; and

(e) omit wherever appearing in paragraphs 7.11.16(1)(a) and(b) and subregulation (2) of the Regulations the words "at the execution time", and substitute the words "at the payment time".

Commencement

This instrument takes effect on the commencement of Schedule 1 to the Financial Services Reform Act 2001.

Dated this 9th day of March 2002

Signed by Brendan Byrne
as a delegate of the Australian Securities and Investments Commission

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Australian Parliament, was introduced to regulate securities markets and provide a framework for the disclosure of information to investors. It aims to ensure that the Australian financial system is sound, efficient, and fair. The legislative instrument F2007B00370, which came into effect on 9th March 2002, was created as a delegate of the Australian Securities and Investments Commission to address the need for modifications to certain regulations in relation to securities, specifically those quoted on the Australian Stock Exchange. The instrument modifies the Corporations Regulations 2001 to clarify the definitions of terms such as "absolute beneficial owner" and "securities loan," and to adjust the conditions under which brokers may execute transfers of these securities. This amendment was made to ensure the smooth functioning of the securities market and to provide greater clarity and certainty for market participants.

Scope and Application

This legislative instrument operates under the Corporations Act 2001, applying specifically to securities listed in Schedule A, which include shares or debentures of foreign companies quoted on the Australian Stock Exchange Limited. This declaration extends the application of Division 3 of Part 7.11 of the Corporations Act and the associated regulations to these securities, ensuring that they are subject to the same regulatory framework as other securities within Australia. The Act applies to the entities and individuals involved in the trading and transfer of these securities, thereby affecting market participants such as brokers, investors, and the companies themselves. Geographically, this legislative instrument has a national reach as it pertains to securities traded within Australia, regardless of the origin of the company issuing them. The instrument also modifies existing regulations to accommodate the unique characteristics of these securities, such as defining terms like "absolute beneficial owner" and "securities loan," and adjusting the conditions under which brokers may operate. The application of this legislation is comprehensive, extending through subordinate instruments to ensure uniformity and clarity in the regulatory environment for these securities.

Key Provisions

Under subsections 1073E(1) and (2) of the Corporations Act 2001, the Australian Securities and Investments Commission (ASIC) declares that certain securities are subject to specific provisions within Division 3 of Part 7.11 of the Act and the associated regulations. The securities in question are those referred to in Schedule A, specifically shares in, or debentures of, a foreign company that are quoted on the financial market operated by the Australian Stock Exchange Limited. This declaration means that these securities are governed by the regulatory framework established for these purposes, as outlined in paragraph 1073A(1)(e) of the Act. Additionally, the regulations made under section 1073D apply to the classes of securities mentioned in Schedule B, with modifications as specified in that Schedule. The obligations and requirements imposed by this legislative instrument are primarily aimed at ensuring that the securities are properly defined and regulated. For the securities mentioned in Schedule A, the Regulations are amended to include specific definitions such as "absolute beneficial owner" and "securities loan." Additionally, the authority of brokers is clarified in relation to the sale or transfer of these securities. For instance, if a broker has authority from the absolute beneficial owner to sell or transfer Division 3 securities, this is considered as authority from the transferor to execute the transfer, even if no such authority is explicitly given by the transferor. Furthermore, subregulations are modified to align with these changes, ensuring that brokers do not stamp documents relating to these securities unless certain conditions are met, such as a sale or purchase for at least the unencumbered market value or the performance of obligations under a securities loan. Breach of the provisions set out in this legislative instrument can lead to significant legal consequences. While the specific offences, penalties, and consequences are not detailed within the text provided, it is clear that non-compliance with the Corporations Act 2001 and the associated regulations can result in both civil and criminal penalties. Given the nature of financial regulation, penalties for breaches can be substantial, potentially including fines and imprisonment for individuals, as well as penalties for the entities involved. The exact penalties would depend on the nature and severity of the breach, as well as the relevant sections of the Act and Regulations that are contravened. It is essential for parties governed by this legislation to adhere strictly to the requirements to avoid these potential repercussions.

Area of Law: Corporate Law & Governance
Instrument: Legislative Instrument
Concepts: Definitions & Interpretation; Regulatory Standards; Reporting & Disclosure Obligations

Interactions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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