Australian Securities and Investments Commission
Corporations Act 2001 – Paragraphs 655A(1)(b) and 673(1)(b) – Declaration
Under paragraphs 655A(1)(b) and 673(1)(b) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission declares that Chapters 6 and 6C of the Act apply to all persons as if:
1. section 609 of the Act were modified or varied by adding after subsection (10):
“(11) A listed company does not have a relevant interest in restricted securities merely because under Chapter 9 of the listing rules of Australian Stock Exchange Limited the company applies restrictions on the disposal of the securities by the holder.
(12) Australian Stock Exchange Limited does not have a relevant interest in restricted securities merely because under Chapter 9 of its listing rules it has the power to control the exercise of a power to dispose of the securities.
(13) For the purposes of subsections (11) and (12), restricted security has the same meaning as in the listing rules of Australian Stock Exchange Limited.”; and
2. Part 6C.1 of the Act were modified or varied by adding after section 671B:
“671BA For the purposes of section 671B and the definition of substantial holding in section 9, a person has a relevant interest in securities if the person would have a relevant interest in the securities but for subsection 609(11) (company that issues restricted securities).”.
Dated this 22nd day of September 2003
Signed by Stephen Yen, PSM
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, addresses the need for regulatory clarity and efficiency in financial markets. It seeks to ensure that listed companies and the Australian Stock Exchange Limited do not automatically hold a relevant interest in restricted securities simply by virtue of applying or having the power to control restrictions on the disposal of those securities, as outlined in the listing rules. This legislative instrument, F2007B00610, issued on 22 September 2003, modifies the Act to add specific provisions that clarify the conditions under which a relevant interest in securities is determined, thus ensuring that Chapters 6 and 6C apply comprehensively to all persons as if these modifications were part of the original Act. The policy objective is to provide certainty and reduce potential conflicts of interest within the financial sector, enhancing the overall integrity and efficiency of Australia’s securities market.
Scope and Application
The legislative instrument modifies the Corporations Act 2001 to clarify the application of Chapters 6 and 6C of the Act in relation to restricted securities as defined by the Australian Stock Exchange Limited's listing rules. This legislative instrument applies to all persons, including companies and other entities, that are subject to the Corporations Act. Specifically, it affects listed companies and Australian Stock Exchange Limited by altering the definition and implications of having a relevant interest in restricted securities. The changes are intended to ensure that listed companies and the Exchange do not automatically have a relevant interest in securities simply because of restrictions on the disposal of those securities under Chapter 9 of the ASX listing rules or the Exchange's power to control the exercise of a disposal power. The instrument also modifies Part 6C.1 of the Act to include a new section, 671BA, that clarifies when a person has a relevant interest in securities for the purposes of determining substantial holdings. The instrument extends the application of the Act by specifying modifications to sections 609 and 671B, thereby influencing the interpretation and enforcement of corporate securities laws within Australia. The changes are effective as if incorporated into the Act itself, thus extending the reach of the Act through this legislative instrument.
Key Provisions
The key provisions of this legislative instrument modify the Corporations Act 2001 by adjusting the definitions and applications of certain sections concerning restricted securities. Specifically, under paragraph 655A(1)(b) of the Act, the Australian Securities and Investments Commission has declared that a listed company does not have a relevant interest in restricted securities merely because it applies restrictions on the disposal of these securities under Chapter 9 of the listing rules of the Australian Stock Exchange Limited (ASEL) (subsection 609(11)). Similarly, ASEL does not have a relevant interest in restricted securities simply because it has the power to control the exercise of a disposal power under its listing rules (subsection 609(12)). These modifications clarify that the definition of "restricted security" in this context remains consistent with the listing rules of ASEL.
These modifications impose specific obligations on listed companies and the Australian Stock Exchange Limited. For listed companies, the new subsection 609(11) negates any assumed relevant interest in securities that are restricted under their own listing rules. This means that such companies are not automatically considered to have an interest in these securities, thereby potentially altering their obligations under the Act. For the Australian Stock Exchange Limited, subsection 609(12) ensures that the Exchange does not have a relevant interest in restricted securities merely because it has the power to control the disposal of these securities under its listing rules. This clarification helps in defining the scope of the Exchange’s regulatory oversight and influence over these securities.
The legislative instrument also introduces subsection 671BA, which modifies the definition of "substantial holding" in the Act. According to this new provision, a person has a relevant interest in securities if they would have such an interest but for the exception in subsection 609(11). This modification ensures that the determination of a substantial holding takes into account the exceptions outlined in the new subsections 609(11) and 609(12). Failure to comply with these provisions could result in civil or criminal penalties, depending on the nature and severity of the breach. The specific penalties are not detailed in this instrument but would be in line with the general sanctions provided under the Corporations Act 2001, which can include fines and, in some cases, imprisonment.