Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document

 Download WordDownload Word 


Bill home page
Table Of Contents
Previous Fragment    Next Fragment
Corporations Bill 2001

Part 7.3 Participants in the securities industry

Division 1 Dealers, investment advisers and operators of managed investment schemes

780   Dealers

             (1)  A person must not:

                     (a)  carry on a securities business; or

                     (b)  hold out that the person carries on a securities business;

unless the person holds a dealers licence or is an exempt dealer.

             (2)  A dealers licence may authorise a person to do either or both of the following:

                     (a)  to carry on a securities business;

                     (b)  to operate:

                              (i)  a managed investment scheme; or

                             (ii)  managed investment schemes of a particular kind.

Note:          Only public companies that hold a dealers licence can be responsible entities for registered managed investment schemes (see section 601FA).

781   Investment advisers

                   A person must not:

                     (a)  carry on an investment advice business; or

                     (b)  hold out that the person is an investment adviser;

unless the person is a licensee or an exempt investment adviser.

782   Application for a licence

             (1)  A person may apply to ASIC, in the prescribed form and manner, for a dealers licence or an investment advisers licence.

             (2)  ASIC may require an applicant for a licence to give ASIC such further information in relation to the application as ASIC thinks necessary.

783   Grant of licence to natural person

             (1)  This section has effect where a natural person applies for a licence.

             (2)  ASIC must grant the licence if:

                     (a)  the application was made in accordance with section 782; and

                     (b)  the person is not an insolvent under administration; and

                     (c)  it is satisfied that the person’s educational qualifications and experience are adequate having regard to the nature of the duties of a holder of a licence of the kind applied for; and

                     (d)  it has no reason to believe that the person is not of good fame and character; and

                     (e)  it has no reason to believe that the person will not perform those duties efficiently, honestly and fairly.

             (3)  Otherwise, ASIC must refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(d) or (e), ASIC must have regard to any conviction of the person, during the 10 years ending on the day of the application, of serious fraud.

784   Grant of licence to body corporate

             (1)  This section has effect where a body corporate applies for a licence.

             (2)  ASIC must grant the licence if:

                     (a)  the application was made in accordance with section 782; and

                     (b)  the applicant is not an externally-administered body corporate; and

                     (c)  ASIC is satisfied that the educational qualifications and experience of each responsible officer of the applicant are adequate having regard to the duties that the officer would perform in connection with the holding of the licence; and

                     (d)  ASIC has no reason to believe that the applicant will not perform efficiently, honestly and fairly the duties of a holder of a licence of the kind applied for; and

                     (e)  if the licence applied for is a licence to operate a managed investment scheme or schemes, the applicant meets the requirements of subsection (2A), and any additional requirements determined by ASIC under subsection (2B).

          (2A)  For the purpose of paragraph (2)(e), ASIC must be satisfied that the value of the net tangible assets of the applicant is and will be maintained at a minimum of $50,000 or, where the value of all scheme property is greater than $10,000,000, an amount equal to 0.5% of those assets shown in the latest accounts of the scheme lodged with ASIC, up to a maximum of $5,000,000.

          (2B)  ASIC may determine additional requirements for the purpose of paragraph (2)(e), including, but not limited to, a requirement that scheme property be held by an agent in particular circumstances.

          (2C)  In this section:

net tangible assets means the total tangible assets of the applicant, including any guarantee approved by ASIC, less any adjusted liabilities as shown in the latest accounts of the applicant lodged with ASIC.

          (2D)  ASIC, or a member of ASIC, may exempt an applicant from the requirements of subsection (2A). This power may not be delegated. ASIC is to provide details of any exemptions granted under this section in its annual report.

             (3)  Otherwise, ASIC must refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(d), ASIC must have regard, in relation to each responsible officer of the applicant, to:

                     (a)  whether or not the officer is an insolvent under administration; and

                     (b)  any conviction of the officer, during the 10 years ending on the day of the application, of serious fraud; and

                     (c)  any reason ASIC has to believe that the officer is not of good fame and character; and

                     (d)  any reason ASIC has to believe that the officer will not perform efficiently, honestly and fairly the duties that the officer would perform in connection with the holding of the licence.

785   Effect of certain provisions

             (1)  Sections 783 and 784 apply subject to sections 836, 837 and 839 and the regulations.

             (2)  Nothing in subsection 783(4) or 784(4) limits the matters to which ASIC may have regard:

                     (a)  in deciding on an application for a licence; or

                     (b)  in connection with performing or exercising any other function or power under this Part.

786   Conditions of licence

             (1)  A licence is subject to:

                     (a)  such conditions and restrictions as are prescribed; and

                     (b)  subject to section 837, such conditions and restrictions as ASIC imposes when granting the licence or at any time when the licence is in force.

             (2)  Without limiting the generality of subsection (1), conditions and restrictions referred to in paragraph (1)(a) or (b) may include:

                     (a)  conditions and restrictions relating to the limitation of the liability that may be incurred by the holder of a dealers licence in connection with a business of dealing in securities; and

                     (b)  conditions and restrictions relating to the incurring and disclosure of liabilities arising otherwise than in connection with a business of dealing in securities; and

                     (c)  conditions and restrictions relating to the financial position of the holder of a dealers licence, whether in relation to the business of dealing in securities carried on by the holder or otherwise; and

                     (d)  a condition requiring the holder of a dealers licence or of an investment advisers licence to lodge and maintain with ASIC a security approved by ASIC for such amount not exceeding the prescribed amount as is, from time to time, determined by ASIC in relation to the holder of that licence; and

                     (e)  conditions about what the holder of a licence is to do, by way of supervision and otherwise, in order to prevent the holder’s representatives from contravening:

                              (i)  a securities law; or

                             (ii)  another condition of the licence; and

                      (f)  conditions about what the holder of a licence is to do to ensure that each representative of the holder has adequate qualifications and experience having regard to what the representative will do on the holder’s behalf in connection with a securities business or investment advice business carried on by the holder.

             (3)  Without limiting the generality of paragraph (2)(c), the conditions referred to in that paragraph may include:

                     (a)  a condition that the assets of the holder of a dealers licence include, or do not include, assets of a particular kind or kinds; and

                     (b)  a condition that the sum of the values of the assets of a particular kind or kinds included in the assets of the holder of a dealers licence be not less than, or not more than, an amount ascertained in accordance with the condition.

             (4)  A condition referred to in paragraph (3)(b) may provide for the values of assets of a dealer for the purposes of the application of that condition to be ascertained in a manner specified in, or determined in accordance with, the condition.

             (5)  The provision that may be made in a condition referred to in paragraph (3)(b) for ascertaining the amount referred to in that paragraph may be, but is not limited to, a provision that the amount is to be:

                     (a)  a specified percentage of the sum of the values of all the assets of the holder of a dealers licence; or

                     (b)  a specified percentage of the sum of the values of all the assets of the holder of the dealers licence that are included in a specified class or classes of those assets; or

                     (c)  a specified percentage of the sum of the amounts of all the liabilities of the holder of the dealers licence; or

                     (d)  a specified percentage of the sum of the amounts of all the liabilities of the holder of the dealers licence that are included in a specified class or classes of those liabilities.

             (6)  A reference in this section to the assets of the holder of a dealers licence is a reference to all the assets of the holder of the licence, whether or not the assets are used in, or in connection with, the business of dealing in securities carried on by the holder.

             (7)  Subject to section 837, ASIC may, at any time, revoke or vary conditions or restrictions imposed under paragraph (1)(b).

             (8)  Where ASIC imposes, or varies or revokes, conditions or restrictions under this section in relation to a licence granted to a member of a securities exchange, ASIC must inform the securities exchange and, if the member is a partner in a member firm, the member firm.

             (9)  Where a security is lodged with ASIC pursuant to a condition to which a licence is subject in accordance with paragraph (2)(d), the security may be applied by ASIC in such circumstances, for such purposes and in such manner as is prescribed.

787   Licensee to notify breach of licence condition

             (1)  Within 1 day after the happening of an event constituting a contravention of a condition of a licence, the licensee must lodge a written notice setting out particulars of the event.

             (2)  It is a defence to a charge arising under subsection (1) if it is proved that:

                     (a)  when the licensee was required to lodge the notice, the licensee was unaware of a fact or occurrence that gave rise to the requirement; and

                     (b)  in a case where the licensee has since become aware of that fact or occurrence—the licensee lodged the notice as soon as practicable after becoming so aware.

788   Giving information and statements to ASIC

             (1)  The holder of a dealers licence must lodge such written information or statements in relation to the securities business carried on, or the managed investment scheme operated, by the licensee as ASIC from time to time directs.

             (2)  If ASIC requires the holder of a dealers licence to cause a statement specified in a direction given under subsection (1) to be audited by a registered company auditor before it is lodged, the licensee must comply with the requirement.

             (3)  ASIC may extend the period for compliance with a direction given under subsection (1).

789   Register of Licence Holders

             (1)  ASIC must keep a Register of Licence Holders for the purposes of this Chapter.

             (2)  ASIC must include in the Register, in relation to each licence, a copy of:

                     (a)  the licence; and

                     (b)  each instrument that imposes conditions on the licence, or revokes or varies conditions of the licence, after the licence is granted.

             (3)  ASIC must enter in the Register, in relation to each licence:

                     (a)  the name of the licensee; and

                     (b)  if the licensee is a body corporate—the name of each director, and of each secretary, of the body; and

                     (c)  the day on which the licence was granted; and

                     (d)  in relation to each business to which the licence relates:

                              (i)  the address of the principal place at which the business is carried on; and

                             (ii)  the addresses of the other places (if any) at which the business is carried on; and

                            (iii)  if the business is carried on under a name or style other than the name of the holder of the licence—that name or style; and

                     (e)  particulars of any suspension of the licence; and

                      (f)  any other prescribed matters.

             (4)  Where a person no longer holds a particular licence, ASIC must remove from the Register the documents included in it, and the particulars entered in it, in relation to that licence.

             (5)  A person may inspect and make copies of, or take extracts from, the Register.

790   Notifying change in particulars

                   The holder of a licence must, within 21 days after:

                     (a)  in the case of a dealers licence—the licensee ceases to carry on the business to which the licence relates; or

                     (b)  in the case of an investment advisers licence—the licensee ceases to act as, or to hold himself, herself or itself out to be, an investment adviser; or

                     (c)  there is a change in a matter particulars of which are required by virtue of paragraph 789(3)(a), (b), (d) or (f) to be entered, in relation to the licence, in the Register of Licence Holders;

lodge written particulars, in the prescribed form, of that fact, or of that change, as the case may be.

791   Annual statement of licensee

             (1)  The holder of a licence must lodge, in respect of each year or part of a year during which the licence is in force, a statement in the prescribed form that:

                     (a)  sets out the number of persons who, when the statement is lodged, hold proper authorities from the licensee; and

                     (b)  contains any other prescribed information.

             (2)  A person who has been, but is no longer, a licensee must lodge, in respect of each year or part of a year during which the licence was in force, a statement in the prescribed form that:

                     (a)  sets out the number of persons who, when the person last ceased to be a licensee, held proper authorities from the licensee; and

                     (b)  contains any other prescribed information.

792   Time for lodging annual statement

             (1)  A person required by subsection 791(1) to lodge a statement must lodge the statement:

                     (a)  if the licence is a dealers licence—during the period within which a profit and loss statement and balance sheet referred to in section 860 are required to be lodged; or

                     (b)  otherwise—within 1 month immediately before the anniversary of the date on which the licence was granted.

             (2)  A person required by subsection 791(2) to lodge a statement must lodge the statement within 1 month after ceasing to be a licensee.

             (3)  A person who fails to lodge a statement required by section 791 within the period specified in subsection (1) or (2), as the case requires, contravenes this section.

793   ASIC may extend period for lodging statement

                   ASIC may extend the period for lodging a statement under section 791.



 

Division 2 Agreements with unlicensed persons

Subdivision A Agreements affected

794   Certain persons not clients

                   A reference in this Division to a client does not include a reference to a person who is:

                     (a)  a dealer; or

                     (b)  an investment adviser; or

                     (c)  one of 2 or more persons who together constitute a dealer or investment adviser.

795   Agreements with unlicensed persons

             (1)  Subdivision B applies where, during a period when a person (in this section and Subdivision B called the non-licensee ) is unlicensed, the non-licensee and a client of the non-licensee enter into an agreement that:

                     (a)  constitutes, or relates to, a dealing or proposed dealing in securities; or

                     (b)  relates to advising the client about securities, or giving the client securities reports.

             (2)  Subdivision B applies to an agreement mentioned in subsection (1) whether or not anyone else is a party to the agreement.

             (3)  A person is unlicensed during a period when the person:

                     (a)  in contravention of section 780, carries on, or holds out that the person carries on, a securities business; or

                     (b)  in contravention of section 781, carries on an investment advice business or holds out that the person is an investment adviser.

Subdivision B Effect on agreements

798   Client may give notice of rescission

             (1)  Subject to this section, the client may, whether before or after completion of the agreement, give to the non-licensee a written notice stating that the client wishes to rescind the agreement.

             (2)  The client may only give a notice under this section within a reasonable period after becoming aware of the facts entitling the client to give the notice.

             (3)  The client is not entitled to give a notice under this section if the client engages in conduct by engaging in which the client would, if the entitlement so to give a notice were a right to rescind the agreement for misrepresentation by the non-licensee, be taken to have affirmed the agreement.

             (4)  The client is not entitled to give a notice under this section if, within a reasonable period before the agreement was entered into, the non-licensee informed the client (whether or not in writing) that:

                     (a)  the non-licensee did not hold a dealers licence; or

                     (b)  the non-licensee did not hold a dealers licence and did not hold an investment advisers licence;

as the case requires.

             (5)  If, at a time when a dealers licence or investment advisers licence held by the non-licensee was suspended, the non-licensee informed the client that the licence was suspended, the non-licensee is taken for the purposes of subsection (4) to have informed the client at that time that the non-licensee did not hold a dealers licence or investment advisers licence, as the case may be.

             (6)  None of subsections (2), (3) and (4) limits the generality of either of the others.

             (7)  Subject to this section, the client may give a notice under this section whether or not:

                     (a)  the notice will result under section 799 in rescission of the agreement; or

                     (b)  the Court will, if the notice so results, be empowered to make a particular order, or any order at all, under section 800.

799   Effect of notice under section 798

                   A notice given under section 798 rescinds the agreement unless rescission of the agreement would prejudice a right, or an estate in property, acquired by a person (other than the non-licensee) in good faith, for valuable consideration and without notice of the facts entitling the client to give the notice.

799A   Client may apply to Court for partial rescission

             (1)  If the client gives a notice under section 798 but the notice does not rescind the agreement because rescission of it would prejudice a right or estate of the kind referred to in section 799, the client may, within a reasonable period after giving the notice, apply to the Court for an order under subsection (4) of this section.

             (2)  The Court may extend the period for making an application under subsection (1).

             (3)  If an application is made under subsection (1), the Court may make such orders expressed to have effect until the determination of the application as it would have power to make if the notice had rescinded the agreement under section 799 and the application were for orders under section 800.

             (4)  On an application under subsection (1), the Court may make an order:

                     (a)  varying the agreement in such a way as to put the client in the same position, as nearly as can be done without prejudicing such a right or estate acquired before the order is made, as if the agreement had not been entered into; and

                     (b)  declaring the agreement to have had effect as so varied at and after the time when it was originally made.

             (5)  If the Court makes an order under subsection (4), the agreement is taken for the purposes of section 800 to have been rescinded under section 799.

             (6)  An order under subsection (4) does not affect the application of section 802 or 804 in relation to the agreement as originally made or as varied by the order.

800   Court may make consequential orders

             (1)  Subject to subsection (2), on rescission of the agreement under section 799, the Court, on the application of the client or the non-licensee, may make such orders as it would have power to make if the client had duly rescinded the agreement for misrepresentation by the non-licensee.

             (2)  The Court is not empowered to make a particular order under subsection (1) if the order would prejudice a right, or an estate in property, acquired by a person (other than the non-licensee) in good faith, for valuable consideration and without notice of the facts entitling the client to give the notice.

801   Agreement unenforceable against client

             (1)  This section:

                     (a)  applies while both of the following are the case:

                              (i)  the client is entitled to give a notice under section 798;

                             (ii)  a notice so given will result under section 799 in rescission of the agreement; and

                     (b)  applies after the agreement is rescinded under section 799;

but does not otherwise apply.

             (2)  The non-licensee is not entitled, as against the client:

                     (a)  to enforce the agreement, whether directly or indirectly; or

                     (b)  to rely on the agreement, whether directly or indirectly and whether by way of defence or otherwise.

802   Non-licensee not entitled to recover commission

             (1)  Without limiting the generality of section 801, this section:

                     (a)  applies while the client is entitled to give a notice under section 798; and

                     (b)  applies after the client so gives a notice, even if the notice does not result under section 799 in rescission of the agreement;

but does not otherwise apply.

             (2)  The non-licensee is not entitled to recover by any means (including, for example, set-off or a claim on a quantum meruit) any brokerage, commission or other fee for which the client would, but for this section, have been liable to the non-licensee under or in connection with the agreement.

803   Onus of establishing non-application of section 801 or 802

                   For the purposes of determining, in a proceeding in a court, whether or not the non-licensee is, or was at a particular time, entitled as mentioned in subsection 801(2) or 802(2), it is to be presumed, unless the contrary is proved, that section 801 or 802, as the case may be, applies, or applied at that time, as the case may be.

804   Client may recover commission paid to non-licensee

             (1)  Without limiting the generality of section 800, if the client gives a notice under section 798, the client may, even if the notice does not result under section 799 in rescission of the agreement, recover from the non-licensee as a debt the amount of any brokerage, commission or other fee that the client has paid to the non-licensee under or in connection with the agreement.

             (2)  ASIC may, if it considers that it is in the public interest to do so, bring an action under subsection (1) in the name of, and for the benefit of, the client.

805   Remedies under this Division additional to other remedies

                   The client’s rights and remedies under this Division are additional to, and do not prejudice, any other right or remedy of the client.



 

Division 3 Representatives

806   Representatives of dealers

                   A natural person must not do an act as a representative of a dealer (other than an exempt dealer) unless:

                     (a)  the dealer holds a dealers licence; and

                     (b)  the person holds a proper authority from the dealer.

807   Representatives of investment advisers

                   A natural person must not do an act as a representative of an investment adviser (other than an exempt investment adviser) unless:

                     (a)  the investment adviser:

                              (i)  is also a dealer and holds a dealers licence; or

                             (ii)  holds an investment advisers licence; and

                     (b)  the person holds a proper authority from the investment adviser.

808   Defence

                   It is a defence to a prosecution for a contravention of section 806 or 807 constituted by an act done by a person as a representative of another person if it is proved that:

                     (a)  but for the revocation or suspension of a licence held by the other person, the act would not have been such a contravention; and

                     (b)  when he or she did the act, the first-mentioned person:

                              (i)  believed in good faith that the other person held the licence; and

                             (ii)  was unaware of the revocation or suspension; and

                     (c)  in all the circumstances it was reasonable for the first-mentioned person so to believe and to be unaware of the revocation or suspension.

809   Body corporate not to act as representative

                   A body corporate must not do an act as a representative of a dealer or of an investment adviser.

810   Licensee to keep register of holders of proper authorities

             (1)  A licensee must establish a register of the persons who hold proper authorities from the licensee and must keep it in accordance with this section.

             (2)  The register must be in writing or in such other form as ASIC approves.

             (3)  The register must contain, in relation to each person (if any) who holds a proper authority from the licensee:

                     (a)  a copy of the proper authority; and

                     (b)  the person’s name; and

                     (c)  the person’s current residential address; and

                     (d)  unless the person’s current business address is the same as the licensee’s—the person’s current business address; and

                     (e)  any other prescribed information.

             (4)  A copy of a proper authority of a person from the licensee that subsection (3) provides for the register to contain must be included in the register within 2 business days after the person begins to hold that proper authority.

             (5)  Information that subsection (3) provides for the register to contain in relation to a person must be entered in the register within 2 business days after:

                     (a)  the person begins to hold a proper authority from the licensee; or

                     (b)  the licensee receives the information;

whichever happens later.

             (6)  Within 2 business days after a person ceases to hold a proper authority from the licensee, the licensee must:

                     (a)  in any case:

                              (i)  include, in a part of the register separate from the part in which copies of proper authorities are included under subsection (4); and

                             (ii)  remove from the last-mentioned part;

                            the copy of the proper authority that was included in the last-mentioned part; and

                     (b)  unless, at the end of those 2 business days, the person again holds a proper authority from the licensee:

                              (i)  enter, in a part of the register separate from the part in which information is entered under subsection (5); and

                             (ii)  remove from the last-mentioned part;

                            the information that has been entered in the last-mentioned part in relation to the person.

             (7)  Information that has been entered under paragraph (6)(b) in a separate part of the register is taken for the purposes of subsections (3) and (5) not to be contained or entered in the register.

             (8)  If a licensee whom subsection (1) requires to establish a register already keeps one under this section, the licensee need not establish a new register but must keep the existing one in accordance with this section.

811   Licensee to notify ASIC of location and contents of register

             (1)  In this section:

register , in relation to a licensee, means a register that the licensee keeps for the purposes of section 810.

             (2)  Within 14 days after establishing a register, the licensee must lodge written notice of where the register is kept.

             (3)  As soon as practicable after changing the place where a register is kept, the licensee must lodge written notice of the new place where the register is kept.

             (4)  Within 2 business days after the day on which a person begins to hold a particular proper authority from a licensee, the licensee must, whether or not the person has previously held a proper authority from the licensee, lodge:

                     (a)  a copy of the first-mentioned proper authority; and

                     (b)  a written notice stating that the person began to hold that proper authority on that day.

             (5)  The licensee must lodge a written notice, within the period provided by subsection (6):

                     (a)  setting out the information that the register is required to contain by paragraph 810(3)(b), (c), (d) or (e); and

                     (b)  stating that the information has been, or is to be, entered in the register.

             (6)  A notice under subsection (5) must be lodged within the period within which subsection 810(5) requires the information to be entered in the register.

             (7)  Within 2 business days after a person ceases to hold a proper authority from a licensee, the licensee must, unless at the end of those 2 business days the person again holds a proper authority from the licensee, lodge a written notice stating that the person has ceased to hold such a proper authority.

812   Inspection and copying of register

             (1)  In this section:

register in relation to a licensee, means a register that the licensee keeps for the purposes of section 810.

             (2)  A licensee must ensure that a register is open for inspection without charge.

             (3)  Where a person requests a licensee in writing to give to the person a copy of the whole, or of a specified part, of a register, the licensee must comply with the request within 2 business days after:

                     (a)  if the licensee requires the person to pay for the copy an amount of not more than the prescribed amount—receiving the amount from the person; or

                     (b)  in any other case—receiving the request.

813   Disclosure to non-dealer

                   A person (in this section called the representative ) must not do as a representative of another person (in this section called the principal ) an act by virtue of which the principal deals in securities with a non-dealer on the principal’s own account unless the representative has informed the non-dealer that the principal is acting in the transaction as principal and not as agent.

814   ASIC may require production of authority

             (1)  Where ASIC has reason to believe that a person:

                     (a)  holds a proper authority from a licensee; or

                     (b)  has done an act as a representative of another person;

then, whether or not ASIC knows who the licensee or other person is, it may require the first-mentioned person to produce:

                     (c)  any proper authority from a licensee; or

                     (d)  any invalid securities authority from a person;

that the first-mentioned person holds.

             (2)  A person must not, without reasonable excuse, refuse or fail to comply with a requirement under this section.

815   ASIC may give licensee information about representative

             (1)  Where ASIC believes on reasonable grounds that:

                     (a)  a person (in this section called the holder ) holds, or will hold, a proper authority from a licensee; and

                     (b)  having regard to that fact, ASIC should give to the licensee particular information that ASIC has about the person; and

                     (c)  the information is true;

ASIC may give the information to the licensee.

             (2)  Where ASIC gives information under subsection (1), the licensee or an officer of the licensee may, for a purpose connected with:

                     (a)  the licensee making a decision about what action (if any) to take in relation to the holder, having regard to, or to matters including, the information; or

                     (b)  the licensee taking action pursuant to such a decision;

or for 2 or more such purposes, and for no other purpose, give to another person, make use of, or make a record of, some or all of the information.

             (3)  A person to whom information has been given, in accordance with subsection (2) or this subsection, for a purpose or purposes may, for that purpose or one or more of those purposes, and for no other purpose, give to another person, make use of, or make a record of, that information.

             (4)  Subject to subsections (2) and (3), a person must not give to another person, make use of, or make a record of, information given by ASIC under subsection (1).

          (4A)  Subsection 8(3) does not apply in relation to a reference in subsection (2), (3) or (4) of this section to a provision of this section.

             (5)  A person has qualified privilege in respect of an act done by the person as permitted by subsection (2) or (3).

             (6)  A person to whom information is given in accordance with this section must not:

                     (a)  give any of the information to a court; or

                     (b)  produce in a court a document that sets out some or all of the information;

except:

                     (c)  for a purpose connected with:

                              (i)  the licensee making a decision about what action (if any) to take in relation to the holder, having regard to, or to matters including, some or all of the information; or

                             (ii)  the licensee taking action pursuant to such a decision; or

                            (iii)  proving in a proceeding in that court that particular action taken by the licensee in relation to the holder was so taken pursuant to such a decision;

                            or for 2 or more such purposes, and for no other purpose; or

                     (d)  in a proceeding in that court, in so far as the proceeding relates to an alleged contravention of this section; or

                     (e)  in a proceeding in respect of an ancillary offence relating to an offence against this section; or

                      (f)  in a proceeding in respect of the giving to a court of false information being or including some or all of the first-mentioned information.

             (7)  A reference in this section to a person taking action in relation to another person is a reference to the first-mentioned person:

                     (a)  taking action by way of making, terminating or varying the terms and conditions of a relevant agreement; or

                     (b)  otherwise taking action in relation to a relevant agreement;

in so far as the relevant agreement relates to the other person being employed by, or acting for or by arrangement with, the first-mentioned person in connection with a securities business or investment advice business carried on by the first-mentioned person.

             (8)  In addition, and without prejudice, to the effect it has of its own force, subsection (6) has by force of this subsection the effect it would have if:

                     (a)  the reference in it to information being given in accordance with this section were a reference to information being given in accordance with section 815; and

                     (b)  a reference in it to a court were a reference to a court of an external Territory or of a country outside Australia and the external Territories; and

                     (c)  paragraphs (6)(d) and (e) were omitted.

816   Holder of authority may be required to return it

             (1)  Where a person holds a proper authority from a licensee but is neither employed by, nor authorised to act for or by arrangement with, the licensee, the licensee may, by writing given to the person, require the person to give the proper authority to the licensee within a specified period of not less than 2 business days.

             (2)  Where a person holds an invalid securities authority from another person, the other person may, by writing given to the first-mentioned person, require the first-mentioned person to give the invalid securities authority to the other person within a specified period of not less than 2 business days.

             (3)  A person must not, without reasonable excuse, refuse or fail to comply with a requirement made of the person in accordance with subsection (1) or (2).



 

Division 4 Liability of principals for representatives’ conduct

817   Conduct engaged in as a representative

                   Where a person engages in conduct as a representative of another person (in this section called the principal ), then, as between the principal and a third person (other than ASIC), the principal is liable in respect of that conduct in the same manner, and to the same extent, as if the principal had engaged in it.

818   Liability where identity of principal unknown

             (1)  This section applies for the purposes of a proceeding in a court where:

                     (a)  whether in or outside this jurisdiction, a person (in this section called the representative ) engages in particular conduct while the person is a representative of 2 or more persons (in this section called the indemnifying principals ); and

                     (b)  it is proved for the purposes of the proceeding that the representative engaged in the conduct as a representative of some person (in this section called the unknown principal ) but it is not proved for those purposes who the unknown principal is.

             (2)  If only one of the indemnifying principals is a party to the proceeding, he, she or it is liable in respect of that conduct as if he, she or it were the unknown principal.

             (3)  If 2 or more of the indemnifying principals are parties to the proceeding, each of those 2 or more is liable in respect of that conduct as if he, she or it were the unknown principal.

819   Liability of principals where act done in reliance on representative’s conduct

             (1)  This section applies where:

                     (a)  at a time when a person (in this section called the representative ) is a representative of only one person (in this section called the indemnifying principal ) or of 2 or more persons (in this section called the indemnifying principals ), the representative, whether in or outside this jurisdiction:

                              (i)  engages in particular conduct; or

                             (ii)  proposes, or represents that the representative proposes, to engage in particular conduct; and

                     (b)  another person (in this section called the client ) does, or omits to do, a particular act, whether in or outside this jurisdiction, because the client believes at a particular time in good faith that the representative engaged in, or proposes to engage in, as the case may be, that conduct:

                              (i)  on behalf of some person (in this section called the assumed principal ) whether or not identified, or identifiable, at that time by the client; and

                             (ii)  in connection with a securities business or investment advice business carried on by the assumed principal; and

                     (c)  it is reasonable to expect that a person in the client’s circumstances would so believe and would do, or omit to do, as the case may be, that act because of that belief;

whether or not that conduct is or would be within the scope of the representative’s employment by, or authority from, any person.

             (2)  If:

                     (a)  subparagraph (1)(a)(i) applies; or

                     (b)  subparagraph (1)(a)(ii) applies and the representative engages in that conduct;

then, for the purposes of a proceeding in a court:

                     (c)  as between the indemnifying principal and the client or a person claiming through the client, the indemnifying principal is liable; or

                     (d)  as between any of the indemnifying principals and the client or a person claiming through the client, each of the indemnifying principals is liable;

as the case may be, in respect of that conduct in the same manner, and to the same extent, as if he, she or it had engaged in it.

             (3)  Without limiting the generality of subsection (2), the indemnifying principal, or each of the indemnifying principals, as the case may be, is liable to pay damages to the client in respect of any loss or damage that the client suffers as a result of doing, or omitting to do, as the case may be, the act referred to in paragraph (1)(b).

          (3A)  Subsection (3) does not apply unless:

                     (a)  the conduct was engaged in, the proposed conduct would have been engaged in, or the representation was made, in this jurisdiction; or

                     (b)  the act referred to in paragraph (1)(b) was done, or would have been done, as the case may be, in this jurisdiction; or

                     (c)  some or all of the loss or damage was suffered in this jurisdiction.

             (4)  If:

                     (a)  there are 2 or more indemnifying principals; and

                     (b)  2 or more of them are parties (in this subsection called the indemnifying parties ) to a proceeding in a court; and

                     (c)  it is proved for the purposes of the proceeding:

                              (i)  that the representative engaged in that conduct as a representative of some person; and

                             (ii)  who that person is; and

                     (d)  that person is among the indemnifying parties;

subsections (2) and (3) do not apply, for the purposes of the proceeding, in relation to the indemnifying parties other than that person.

820   Presumptions about certain matters

             (1)  Where it is proved, for the purposes of a proceeding in a court, that a person (in this subsection called the representative ) engaged in particular conduct, whether in or outside this jurisdiction, while the person was a representative of:

                     (a)  only one person (in this subsection called the indemnifying principal ); or

                     (b)  2 or more persons (in this subsection called the indemnifying principals );

then, unless the contrary is proved for the purposes of the proceeding, it is to be presumed for those purposes that the representative engaged in the conduct as a representative of:

                     (c)  the indemnifying principal; or

                     (d)  as a representative of some person among the indemnifying principals;

as the case may be.

             (2)  Where, for the purposes of establishing in a proceeding in a court that section 819 applies, it is proved that a person did, or omitted to do, a particular act because the person believed at a particular time in good faith that certain matters were the case, then, unless the contrary is proved for those purposes, it is to be presumed for those purposes that it is reasonable to expect that a person in the first-mentioned person’s circumstances would so believe and would do, or omit to do, as the case may be, that act because of that belief.

821   No contracting out of liability for representative’s conduct

             (1)  For the purposes of this section, a liability of a person:

                     (a)  in respect of conduct engaged in by another person as a representative of the first-mentioned person; or

                     (b)  arising under section 819 because another person has engaged in, proposed to engage in, or represented that the other person proposed to engage in, particular conduct;

is a liability of the first-mentioned person in respect of the other person.

             (2)  Subject to this section, an agreement is void in so far as it purports to exclude, restrict or otherwise affect a liability of a person in respect of another person, or to provide for a person to be indemnified in respect of a liability of the person in respect of another person.

             (3)  Subsection (2) does not apply in relation to an agreement in so far as it:

                     (a)  is a contract of insurance; or

                     (b)  provides for a representative of a person to indemnify the person in respect of a liability of the person in respect of the representative; or

                     (c)  provides for a licensee from whom a person holds a proper authority to indemnify another such licensee in respect of a liability of the other licensee in respect of the person.

             (4)  A person must not make, offer to make, or invite another person to offer to make, in relation to a liability of the first-mentioned person in respect of a person, an agreement that is or would be void, in whole or in part, by virtue of subsection (2).

822   Effect of Division

             (1)  Where 2 or more persons are liable under this Division in respect of the same conduct or the same loss or damage, they are so liable jointly and severally.

             (2)  Nothing in section 817, 818, or 819:

                     (a)  affects a liability arising otherwise than by virtue of this Division; or

                     (b)  notwithstanding paragraph (a) of this subsection, entitles a person to be compensated twice in respect of the same loss or damage; or

                     (c)  makes a person guilty of an offence.



 

Division 5 Excluding persons from the securities industry

824   Power to revoke, without a hearing, licence held by natural person

                   ASIC may, by written order, revoke a licence held by a natural person if the person:

                     (a)  becomes an insolvent under administration; or

                     (b)  is convicted of serious fraud; or

                     (c)  becomes incapable, through mental or physical incapacity, of managing his or her affairs; or

                     (d)  asks ASIC to revoke the licence.

825   Power to revoke, without a hearing, licence held by body corporate

                   ASIC may, by written order, revoke a licence held by a body corporate if:

                     (a)  the body ceases to carry on business; or

                     (b)  the body becomes an externally-administered body corporate; or

                     (c)  the body asks ASIC to revoke the licence; or

                     (d)  a director, secretary or executive officer of the body contravenes this Chapter because:

                              (i)  he or she does not hold a licence; or

                             (ii)  a licence held by him or her is suspended.

825A   Power to revoke responsible entity’s licence without a hearing

                   ASIC may, by written order, revoke a licence held by the responsible entity of a registered scheme if it is satisfied that the members of the scheme have suffered, or are likely to suffer, loss or damage because the responsible entity has contravened this Act.

826   Power to revoke licence after a hearing

             (1)  Subject to section 837, ASIC may, by written order, revoke a licence if:

                     (a)  the application for the licence contained matter that was false in a material particular or materially misleading; or

                     (b)  there was an omission of material matter from the application for the licence; or

                     (c)  the licensee contravenes a securities law; or

                     (d)  the licensee contravenes a condition of the licence; or

                     (e)  the licensee is a natural person and ASIC has reason to believe that he or she is not of good fame and character; or

                      (f)  the licensee is a body corporate and ASIC is satisfied that the educational qualifications or experience of a person who:

                              (i)  is an officer of the body; and

                             (ii)  was not an officer of the body when the licence was granted;

                            are or is inadequate having regard to the duties that the officer performs, or will perform, in connection with the holding of the licence; or

                     (g)  the licensee is a body corporate and ASIC is satisfied that:

                              (i)  an officer of the body performs, or will perform, in connection with the holding of the licence, duties that are or include duties (in this paragraph called the different duties ) other than those having regard to which ASIC was satisfied, before granting the licence, that the officer’s educational qualifications and experience were adequate; and

                             (ii)  the officer’s educational qualifications or experience are or is inadequate having regard to the different duties; or

                     (h)  the licensee is a body corporate and:

                              (i)  a licence held by a director, secretary or executive officer of the body is suspended or revoked; or

                             (ii)  an order is made under section 830 against such a director, secretary or executive officer; or

                      (j)  ASIC has reason to believe that the licensee has not performed efficiently, honestly and fairly the duties of a holder of a dealers licence or an investment advisers licence, as the case requires; or

                     (k)  ASIC has reason to believe that the licensee will not perform those duties efficiently, honestly and fairly.

             (2)  In determining whether or not it has reason to believe as mentioned in paragraph (1)(e) or (k) in relation to a licensee, ASIC is not precluded from having regard to a matter that arose before the time when the licence was granted unless ASIC was aware of the matter at that time.

827   Power to suspend licence instead of revoking it

             (1)  Subject to section 837, where:

                     (a)  section 824, 825 or 825A empowers ASIC to revoke a licence otherwise than because the licensee has asked for the revocation; or

                     (b)  ASIC is empowered by virtue of paragraph 826(1)(c), (d), (f), (g), (h), (j) or (k) to revoke a licence;

ASIC may, if it considers it desirable to do so, instead:

                     (c)  by written order, suspend the licence for a specified period; or

                     (d)  by written order, prohibit the licensee, either permanently or for a specified period, from doing specified acts, being acts that section 780 or 781 would prohibit the licensee from doing if he, she or it did not hold the licence.

             (2)  ASIC may at any time, by written order, vary or revoke an order in force under this section.

             (3)  For the purposes of sections 780, 781, 806 and 807, a licensee is taken not to hold the licence at any time during a period for which the licence is suspended.

             (4)  Where an order in force under this section prohibits the licensee as mentioned in paragraph (1)(d):

                     (a)  the licensee must not contravene the order; and

                     (b)  in relation to the doing by a person, as a representative of the licensee, of an act specified in the order, sections 806 and 807 apply, or apply during the period specified in the order, as the case requires, as if the licensee did not hold the licence.

828   Power to make banning order where licence revoked or suspended

                   Subject to section 837, where ASIC:

                     (a)  revokes under section 824; or

                     (b)  revokes by virtue of paragraph 826(1)(a), (b), (c), (d), (j) or (k); or

                     (c)  revokes by virtue of paragraph 826(1)(e); or

                     (d)  suspends by virtue of paragraph 827(1)(a); or

                     (e)  suspends by virtue of paragraph 827(1)(b);

a licence held by a natural person, it may also make a banning order against the person.

829   Power to make banning order against unlicensed person

                   Subject to section 837, ASIC may make a banning order against a natural person (other than a licensee) if:

                     (a)  he or she becomes an insolvent under administration; or

                     (b)  he or she is convicted of serious fraud; or

                     (c)  he or she becomes incapable, through mental or physical incapacity, of managing his or her affairs; or

                     (d)  he or she contravenes a securities law; or

                     (e)  ASIC has reason to believe that he or she is not of good fame and character; or

                      (f)  ASIC has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser; or

                     (g)  ASIC has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser.

830   Nature of banning order

             (1)  Where this Division empowers ASIC to make a banning order against a person, ASIC may, by written order, prohibit the person:

                     (a)  in any case—permanently; or

                     (b)  except where ASIC is empowered by virtue of paragraph 828(c) or 829(e) to make the order—for a specified period;

from doing an act as:

                     (c)  a representative of a dealer; or

                     (d)  a representative of an investment adviser; or

                     (e)  a representative of a dealer or of an investment adviser;

whichever the order specifies.

             (2)  ASIC must not vary or revoke a banning order except under section 831, 832, or 833.

831   Exceptions to banning order

             (1)  An order made against a person under subsection 830(1) may include a provision that permits the person, subject to such conditions (if any) as are specified, to do, or to do in specified circumstances, specified acts that the order would otherwise prohibit the person from doing.

             (2)  Subject to section 837, ASIC may, at any time, by written order, vary a banning order against a person:

                     (a)  by adding a provision that permits the person as mentioned in subsection (1); or

                     (b)  by varying such a provision in relation to conditions, circumstances or acts specified in the provision; or

                     (c)  by omitting such a provision and substituting another such provision; or

                     (d)  by omitting such a provision.

832   Variation or revocation of banning order on application

             (1)  Subject to sections 833 and 837, this section has effect where a person applies to ASIC to vary or revoke a banning order relating to the person.

             (2)  If:

                     (a)  the person is not an insolvent under administration; and

                     (b)  ASIC has no reason to believe that the person is not of good fame and character; and

                     (c)  ASIC has no reason to believe that the person will not perform efficiently, honestly and fairly the duties of:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser;

ASIC must, by written order:

                     (d)  if only one of subparagraphs (c)(i) and (ii) applies—vary the banning order so that it no longer prohibits the person from doing an act as a representative of a dealer, or of an investment adviser, as the case may be; or

                     (e)  in any other case—revoke the banning order.

             (3)  Otherwise, ASIC must refuse the application.

             (4)  In determining whether or not it has reason to believe as mentioned in paragraph (2)(b) or (c), ASIC must have regard to any conviction of the person, during the 10 years ending on the day of the application, of serious fraud.

             (5)  Nothing in subsection (4) limits the matters to which ASIC may have regard:

                     (a)  in deciding on the application; or

                     (b)  in connection with performing or exercising any other function or power under this Part.

833   Revocation of banning order in certain cases

                   Where:

                     (a)  section 832 requires ASIC to vary a banning order so that it no longer has a particular operation; and

                     (b)  the order has no other operation;

ASIC must, by written order, instead revoke the banning order.

834   Effect and publication of orders under this Division

             (1)  An order by ASIC under this Division takes effect when served on the person to whom the order relates.

             (2)  As soon as practicable on or after the day on which an order by ASIC under this Division takes effect, ASIC must publish in the Gazette a notice that sets out a copy of:

                     (a)  if the order is made under section 824, 825, 826, 827 or 830 or revokes a banning order—the first-mentioned order; or

                     (b)  if the order varies a banning order—the banning order as in force immediately after the first-mentioned order takes effect;

and states that the first-mentioned order, or the banning order as so in force, as the case may be, took effect on that day.

             (3)  Where:

                     (a)  but for this subsection, subsection (2) would require publication of a notice setting out a copy of a banning order as in force at a particular time; and

                     (b)  the banning order as so in force includes a provision that permits a person as mentioned in subsection 831(1); and

                     (c)  in ASIC’s opinion, the notice would be unreasonably long if it set out a copy of the whole of that provision;

the notice may, instead of setting out a copy of that provision, set out a summary of the provision’s effect.

835   Contravention of banning order

                   A person must not contravene a banning order relating to the person.

836   Banned person ineligible for licence

                   ASIC must not grant a dealers licence or an investment advisers licence to a person if a banning order prohibits the person (except as permitted by the order) from doing an act as a representative of a dealer, or of an investment adviser, as the case may be.

837   Opportunity for hearing

             (1)  ASIC must not:

                     (a)  refuse, otherwise than by virtue of section 836 or subsection 839(1), an application for a licence; or

                     (b)  impose conditions on a licence; or

                     (c)  vary the conditions of a licence; or

                     (d)  revoke or suspend a licence otherwise than by virtue of section 824, 825 or 825A or paragraph 827(1)(a); or

                     (e)  make, otherwise than by virtue of paragraph 828(a) or (d) or 829(a), (b) or (c), an order under section 830 against a person; or

                      (f)  make under subsection 831(2) an order varying a banning order against a person; or

                     (g)  refuse an application by a person under section 832;

unless ASIC complies with subsection (2) of this section.

             (2)  ASIC must give the applicant, licensee or person, as the case may be, an opportunity:

                     (a)  to appear at a hearing before ASIC that takes place in private; and

                     (b)  to make submissions and give evidence to ASIC in relation to the matter.

838   Disqualification by the Court

             (1)  Where ASIC:

                     (a)  revokes under section 824, 825 or 825A or subsection 826(1) a licence held by a person; or

                     (b)  makes under section 830 against a person an order that is to operate otherwise than only for a specified period;

ASIC may apply to the Court for an order or orders under this section in relation to the person.

             (2)  On an application under subsection (1), the Court may make one or more of the following:

                     (a)  an order disqualifying the person, permanently or for a specified period, from holding:

                              (i)  a dealers licence; or

                             (ii)  an investment advisers licence; or

                            (iii)  a dealers licence or an investment advisers licence;

                            whichever the order specifies;

                     (b)  an order prohibiting the person, permanently or for a specified period, from doing an act as:

                              (i)  a representative of a dealer; or

                             (ii)  a representative of an investment adviser; or

                            (iii)  a representative of a dealer or of an investment adviser;

                            whichever the order specifies;

                     (c)  such other order as it thinks fit;

or may refuse the application.

             (3)  The Court may revoke or vary an order in force under subsection (2).

839   Effect of orders under section 838

             (1)  ASIC must not grant a dealers licence or an investment advisers licence to a person whom an order in force under section 838 disqualifies from holding a dealers licence or an investment advisers licence, as the case may be.

             (2)  A person must not contravene an order that:

                     (a)  is of a kind referred to in paragraph 838(2)(b); and

                     (b)  is in force under section 838; and

                     (c)  relates to the person.