Companies And Securities Legislation Amendment (Futures Industry) Act 1986

Administered by Department of the Treasury

Legislation au C2004A03315 In force Act

Select Document

Companies and Securities Legislation Amendment (Futures Industry) Act 1986

No. 74 of 1986

TABLE OF PROVISIONS

PART I—PRELIMINARY

Section

1. Short title

2. Commencement

PART II—AMENDMENT OF COMPANIES (ACQUISITION OF SHARES) ACT 1980

3. Principal Act

4. Service of documents and publication of notices

PART III—AMENDMENTS OF NATIONAL COMPANIES AND SECURITIES COMMISSION ACT 1979

5. Principal Act

6. Interpretation

7. Functions and powers of Commission

8. Register of financial interests

9. Restrictions on dealings in securities and futures contracts

10. Notification of interests

PART IV—AMENDMENTS OF SECURITIES INDUSTRY ACT 1980

11. Principal Act

12. Interpretation

13. Register of Licence Holders

14. Application of Part

15. Removal and resignation of auditors

16. Insertion of new section—

103a. Payment to the credit of the fidelity fund of a futures exchange or futures association

17. Restrictions on use of titles “stockbroker”, “sharebroker” and “stock exchange”

Companies and Securities Legislation Amendment (Futures Industry) Act 1986

No. 74 of 1986

An Act to amend laws relating to companies and securities in consequence of the enactment of the Futures Industry Act 1986

[Assented to 24 June 1986]

BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:

PART I—PRELIMINARY

Short title

1. This Act may be cited as the Companies and Securities Legislation Amendment (Futures Industry) Act 1986.

Commencement

2. This Act shall come into operation, or shall be deemed to have come into operation, as the case requires, on the day on which the Futures Industry Act 1986 comes into operation.

PART II—AMENDMENT OF COMPANIES (ACQUISITION OF

SHARES) ACT 1980

Principal Act

3. The Companies (Acquisition of Shares) Act 19801 is in this Part referred to as the Principal Act.

Service of documents and publication of notices

4. Section 56 of the Principal Act is amended—

(a) by inserting in sub-section (1) “, facsimile service” after “telex”; and

(b) by inserting after sub-section (1) the following sub-section:

“(1a) The amendment of sub-section (1) of this section made by section 4 of the Companies and Securities Legislation Amendment (Futures Industry) Act 1986 is for the avoidance of doubt, and shall not be taken to affect by implication the interpretation of that sub-section as in force at any time before the commencement of that section.”.

PART III—AMENDMENTS OF NATIONAL COMPANIES AND SECURITIES COMMISSION ACT 1979

Principal Act

5. The National Companies and Securities Commission Act 19792 is in this Part referred to as the Principal Act.

Interpretation

6. Section 3 of the Principal Act is amended by inserting after the definition of “functions” in sub-section (1) the following definition:

“ ‘futures contract’ means a futures contract within the meaning of the Futures Industry Act 1986 or of the provisions of a law of a participating State or participating Territory that correspond with that Act;”.

Functions and powers of Commission

7. Section 6 of the Principal Act is amended by omitting from sub-section (3) “or the regulation of the securities industry” and substituting “, the regulation of the securities industry or the regulation of the futures industry”.

8. Section 19 of the Principal Act is amended—

(a) by omitting sub-section (2) and substituting the following sub-section:

“(2) For the purposes of this section—

(a) a person has a financial interest if, and only if, the person—

(i) is a director of a body corporate;

(ii) has a relevant interest in securities other than securities of a government, of a government authority or of a local government authority; or

(iii) has a relevant interest in a futures contract; and

(b) the question whether a person has a relevant interest in securities, or in a futures contract, shall be determined as prescribed.”; and

(b) by inserting in paragraph (9) (b) “, or in a futures contract” after “securities”.

Restrictions on dealings in securities and futures contracts

9. Section 48 of the Principal Act is amended—

(a) by omitting sub-sections (1) and (2) and substituting the following sub-sections:

“(1) A person who—

(a) is, or has at any time been—

(i) appointed for the purposes of this Act or any other prescribed Act;

(ii) engaged as a member of the staff of the Commission; or

(iii) authorised to perform or exercise any function or power of the Commission or any function or power on behalf of the Commission; and

(b) has, by reason that the person is, or has at any time been, so appointed, engaged or authorised, information that is not generally available but, if it were, would be likely materially to affect—

(i) the price of securities; or

(ii) the price for dealing in a futures contract,

shall not—

(c) in a case where sub-paragraph (b) (i) applies—deal in, or cause or procure any other person to deal in, those securities; or

(d) in a case where sub-paragraph (b) (ii) applies—deal in, or cause or procure any other person to deal in, that futures contract or a futures contract of the same kind as that futures contract.

Penalty: $20,000 or imprisonment for 5 years.

“(2) Where a person to whom sub-section (1) applies has information as mentioned in that sub-section and, in contravention of that sub-section—

(a) deals in, or causes or procures another person to deal in, securities; or

(b) deals in, or causes or procures another person to deal in, a futures contract,

the first-mentioned person is liable to compensate any other party to the transaction for any loss sustained by that party by reason of—

(c) any difference between the price at which the securities were dealt in in that transaction and the price at which they would be likely to have been dealt in in such a transaction at the time when the first-mentioned transaction took place if the information had been generally available; or

(d) any difference between the price at which that dealing in that futures contract took place and the price at which it would be likely to have taken place if the information had been generally available,

as the case may be.”;

(b) by omitting sub-section (5) and substituting the following sub-section:

“(5) An action under this section for recovery of compensation for a loss is not maintainable after the end of the period of 2 years commencing on the day of completion of—

(a) the transaction in which securities were dealt in and in which the loss occurred; or

(b) the dealing in a futures contract, being the dealing in which the loss occurred,

as the case requires.”; and

“(8) An expression (other than a reference to a futures contract) used—

(a) in sub-paragraph (1) (b) (ii), or paragraph (1) (d), (2) (b), (2) (d) or (5) (b), of this section; and

(b) in the Futures Industry Act 1986,

has the same meaning in that sub-paragraph or paragraph, as the case may be, as in that Act.”.

Notification of interests

10. Section 49 of the Principal Act is amended—

(a) by inserting after paragraph (1) (c) the following paragraphs:

“(ca) a futures contract in which the person has a relevant interest;

(cb) a futures contract that is of the same kind as a futures contract in which the person has a relevant interest;”;

(b) by omitting from sub-section (3) “or particular securities” and substituting “, particular securities, or a particular futures contract,”; and

(c) by inserting in sub-section (4) “, or in a futures contract, whether a futures contract is of the same kind as another futures contract” after “securities”.

PART IV—AMENDMENTS OF SECURITIES INDUSTRY ACT 1980

Principal Act

11. The Securities Industry Act 19803 is in this Part referred to as the Principal Act.

Interpretation

12. Section 4 of the Principal Act is amended—

(a) by inserting after paragraph (e) of the definition of “securities” in sub-section (1) the following paragraph:

“(ea) a futures contract within the meaning of the Futures Industry Act 1986 or of the provisions of a law of a participating State or participating Territory that correspond with that Act;”; and

(b) by inserting after sub-section (5) the following sub-sections:

“(5a) In determining for the purposes of this Act whether or not a person deals in securities, carries on a business of dealing in securities, or holds himself, herself or itself out as carrying on a business of dealing in securities, an act done by the person that constitutes, or 2 or more acts done by the person that together constitute, for the purposes of the Futures Industry Act 1986 or of the provisions of a law of a participating State or participating Territory that correspond with that Act, a dealing by the person in a futures contract, shall be disregarded.

“(5b) In determining for the purposes of this Act whether a market, exchange, place or facility is a stock market, regard shall not be had to the making at that market, exchange or other place, or by means of that facility, as the case may be, of futures contracts within the meaning of the Futures Industry Act 1986 or the provisions of a law of a participating State or participating Territory that correspond with that Act.”.

13. Section 54 of the Principal Act is amended by omitting from sub-paragraph (2) (a) (ii) “names of the directors and secretary” and substituting “name of each person who is a director, and the name of each person who is a secretary,”.

Application of Part

14. Section 70 of the Principal Act is amended—

(a) by omitting “This” and substituting “(1) This”; and

(b) by adding at the end the following sub-section:

“(2) This Part does not affect, and shall be deemed never to have affected, the operation of Part VI of the Companies Act 1981 in relation to a company within the meaning of that Act that is the holder of a dealers licence or in relation to a business of dealing in securities that is carried on by such a company.”.

Removal and resignation of auditors

15. Section 76 of the Principal Act is amended—

(a) by omitting sub-section (7); and

(b) by omitting sub-section (9) and substituting the following sub-sections:

“(9) This section does not apply in relation to a body corporate (other than an exempt proprietary company) in relation to which section 282 of the Companies Act 1981, or a provision of a law of a participating State or participating Territory that corresponds with that section, applies.

“(10) In sub-section (9), ‘exempt proprietary company’ means a body corporate that is an exempt proprietary company within the meaning of the Companies Act 1981 or of the provisions of a law of a participating State or participating Territory that correspond with that Act.”.

16. After section 103 of the Principal Act the following section is inserted:

Payment to the credit of the fidelity fund of a futures exchange or futures association

“103a. Where a body corporate that is a securities exchange, or that is related to a securities exchange, becomes a relevant organisation for the purposes of Part VII of the Futures Industry Act 1986, or for the purposes of the provisions of a law of a participating State or participating Territory that correspond with that Part—

(a) the Ministerial Council may approve in writing, on such conditions (if any) as are specified in the approval—

(i) the payment of an amount so specified out of the fidelity fund kept under this Part by the body corporate, or by the securities exchange, as the case may be; and

(ii) the payment of that amount to the credit of the fidelity fund established or to be established by the body corporate under that Part, or under those provisions, as the case may be; and

(b) if the Ministerial Council does so, the amount so specified shall, in accordance with the conditions (if any) so specified—

(i) be paid out of the fidelity fund referred to in sub-paragraph (a) (i); and

(ii) be paid to the credit of the fidelity fund referred to in sub-paragraph (a) (ii).”.

Restrictions on use of titles “stockbroker”, “sharebroker” and “stock exchange”

17. Section 133 of the Principal Act is amended by adding the following at the end of sub-section (2):

“Penalty: $2,500 or imprisonment for 6 months, or both.”.

NOTES

1. No. 64, 1980, as amended. For previous amendments, see Nos. 2, 94 and 153, 1981; No. 26, 1982; No. 108, 1983; No. 192, 1985; and No. 68, 1986.

2. No. 173, 1979, as amended. For previous amendments, see Nos. 1 and 153, 1981; No. 108, 1983; No. 63, 1984; and No. 192, 1985.

3. No. 66, 1980, as amended. For previous amendments, see Nos. 3, 96 and 153, 1981; No. 26, 1982; No. 108, 1983; No. 13, 1984; and No. 192, 1985.

[Minister’s second reading speech made in—

House of Representatives on 16 April 1986

Senate on 7 May 1986]

Overview

The Companies and Securities Legislation Amendment (Futures Industry) Act 1986No. 74 of 1986 was enacted to address the legislative gaps and inconsistencies arising from the introduction of the Futures Industry Act 1986. This Act amends various existing laws, including the Companies (Acquisition of Shares) Act 1980, the National Companies and Securities Commission Act 1979, and the Securities Industry Act 1980, to ensure they are aligned with the new regulatory framework for the futures industry. The Act was passed by the Commonwealth Parliament, with the objective of integrating the futures industry into the broader regulatory scheme for companies and securities. The Act includes amendments to the definition and regulation of securities to include futures contracts, the establishment of a register of financial interests to encompass futures contracts, and restrictions on dealing in securities and futures contracts to prevent insider trading. Additionally, the Act modifies the notification requirements for interests in securities and futures contracts and introduces provisions for the payment of amounts from the fidelity fund of a futures exchange or futures association. It also restricts the use of specific titles such as "stockbroker", "sharebroker", and "stock exchange" to ensure they are not misapplied within the context of the futures industry.

Scope and Application

The Companies and Securities Legislation Amendment (Futures Industry) Act 1986 amends several pieces of legislation to incorporate and align with the provisions of the Futures Industry Act 1986. This Act applies to various entities and individuals involved in the securities and futures markets within the Commonwealth of Australia. It amends the Companies (Acquisition of Shares) Act 1980, the National Companies and Securities Commission Act 1979, and the Securities Industry Act 1980 to incorporate the definitions and regulatory requirements of futures contracts as established by the Futures Industry Act 1986. The amendments cover aspects such as the service of documents, the functions and powers of the National Companies and Securities Commission, the register of financial interests, restrictions on dealings in securities and futures contracts, and the notification of interests. Additionally, it includes provisions regarding the use of certain titles such as "stockbroker" and "sharebroker." The Act also provides for the payment to the credit of the fidelity fund of a futures exchange or futures association. The amendments are intended to ensure consistency and comprehensiveness in the regulatory framework governing the securities and futures industries in Australia. The Act extends its application through subordinate instruments as necessary to implement the changes outlined in the amendments.

Key Provisions

The Companies and Securities Legislation Amendment (Futures Industry) Act 1986 (C2004A03315) primarily amends existing legislation to integrate the futures industry into the existing legal framework governing companies and securities in Australia. Specifically, it amends the Companies (Acquisition of Shares) Act 1980, the National Companies and Securities Commission Act 1979, and the Securities Industry Act 1980 to accommodate provisions related to futures contracts. Section 4 of Part II amends the Companies (Acquisition of Shares) Act 1980 to include facsimile service as a means for serving documents and publishing notices. The addition of this method aims to enhance the efficiency and flexibility of communication in compliance with the Act. Section 56 of the Principal Act is updated to incorporate this change. Part III introduces several amendments to the National Companies and Securities Commission Act 1979. It begins with a redefinition of terms, particularly adding "futures contract" to the list of definitions in Section 3 (subsection 1). The scope of the Commission’s functions and powers is expanded in Section 6 (subsection 3) to include the regulation of the futures industry alongside securities. The Act also modifies the Register of Financial Interests (Section 19) to include directors’ interests in futures contracts, thereby ensuring comprehensive oversight of financial activities. Additionally, Section 48 outlines restrictions on dealings in securities and futures contracts for individuals who possess non-public information that could materially affect prices. Violators face significant penalties, including fines up to $20,000 or imprisonment for up to 5 years, and are also liable for compensation for any losses incurred by other parties due to their actions. Part IV of the Act amends the Securities Industry Act 1980 by integrating futures contracts into the definition of securities and business activities (Section 12). It also adjusts the Register of Licence Holders (Section 54) to accurately reflect the names of directors and secretaries. The application of Part IV is clarified in Section 70 to ensure it does not interfere with the operation of other related Acts. Auditors’ roles and responsibilities are modified in Section 76, with particular exclusions for certain types of companies. The Act inserts a new section (Section 103a) to govern the transfer of funds from the fidelity fund of a securities exchange to the fidelity fund of a futures exchange or association under specific conditions. Finally, Part IV imposes restrictions on the use of titles such as “stockbroker,” “sharebroker,” and “stock exchange” (Section 133). Breaches of these restrictions carry penalties of up to $2,500, imprisonment for up to 6 months, or both. These provisions collectively ensure that the legal framework is robust and capable of effectively regulating both securities and futures markets.

Area of Law: Corporate Law & Governance; Commercial Law; Financial Services Law
Instrument: Act
Concepts: Commencement Provisions; Repeal & Amendment; Definitions & Interpretation; Licensing & Registration; Reporting & Disclosure Obligations; Regulatory Standards

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.

Legislation content

Overview

Scope and Application

Key Provisions

Legal classification tags

Interactions

Authorises

All Versions