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 7.10 The National Guarantee Fund

Division 1 Interpretation

920   Interpretation

             (1)  In this Part, unless the contrary intention appears:

borrower , in relation to a guaranteed securities loan, has the meaning given by section 954B.

claim means a claim under Division 6, 6A, 6B, 6C, 7, 7A or 8.

clearing nominee , in relation to a settlement authority, means a subsidiary of the settlement authority operated for the purpose of facilitating the transfer of securities.

eligible exchange means:

                     (a)  the Exchange; or

                     (b)  a securities exchange that is neither the Exchange nor an Exchange subsidiary.

excluded person has the meaning given by section 921.

Fund provisions means the provisions of this Part.

guaranteed securities loan has the meaning given by section 954B.

minimum amount means:

                     (a)  if a determination is in force under section 936—the amount specified in the determination as the minimum amount of the Fund for the purposes of the Fund provisions; or

                     (b)  in any other case—$15,000,000.

obligations , in relation to a member or member organisation of a participating exchange, in relation to a person, includes obligations arising under a law, under the participating exchange’s business rules, under the SCH business rules or under an agreement between:

                     (a)  in any case—the member or member organisation and the person; or

                     (b)  if the member is a partner in a member organisation of the participating exchange—the last-mentioned member organisation and the person.

orderly market means an orderly market on a stock market of a participating exchange or of an Exchange subsidiary.

participating exchange means an eligible exchange that is a member of SEGC.

property includes money, securities and scrip.

relative , in relation to a person, means a parent or remoter lineal ancestor, son, daughter or remoter issue, or brother or sister, of the person.

relevant Act means the Australian Stock Exchange and National Guarantee Fund Act 1987 .

relevant commencement means 1 April 1987.

replacement agreement , in relation to an agreement that has been novated, has the meaning given by section 924A.

reportable transaction means a sale or purchase, by a member organisation (in this definition called the first dealer ) of a participating exchange, of securities, where the securities are quoted on a stock market of a participating exchange or of an Exchange subsidiary when the agreement for the sale or purchase is made and:

                     (a)  in any case—the participating exchange’s business rules, as in force when the agreement for the sale or purchase is made, require the first dealer to report the sale or purchase to the participating exchange; or

                     (b)  if the sale or purchase is to or from, as the case may be, a member organisation (in this definition called the second dealer ) of a participating exchange—the last-mentioned participating exchange’s business rules, as in force when the agreement for the sale or purchase is made, require the second dealer to report to the last-mentioned participating exchange the purchase or sale of the securities by the second dealer from or to, as the case may be, the first dealer.

securities :

                     (a)  except in Division 7—includes marketable securities, or marketable rights, within the meaning of Division 3 of Part 7.13; and

                     (b)  in Division 7—has the meaning given by subsection 955(1).

settlement authority means a participating exchange or the securities clearing house.

settlement documents , in relation to a transaction (other than a guaranteed securities loan), means documents the supply of which in accordance with the agreement for the transaction:

                     (a)  if the agreement has not been discharged—is sufficient; or

                     (b)  if the agreement has been discharged, whether by performance or otherwise—would, if the agreement had not been discharged, be sufficient;

to discharge the obligations of the seller under the agreement, in so far as those obligations relate to the supply of documents in connection with the transaction.

TDS nominee , in relation to the transfer delivery service provisions of a settlement authority, means the clearing nominee referred to in the definition of transfer delivery service provisions .

transaction , except in Division 6B, means a sale or purchase of securities or a guaranteed securities loan.

transfer , except in Division 7, has a meaning affected by section 924.

transfer delivery service provisions , in relation to a settlement authority, means provisions of the business rules of the settlement authority under which a person or partnership may elect to bring about a transfer of securities of a particular kind and number to another person or partnership by:

                     (a)  the first-mentioned person or partnership transferring securities of that kind and number to a clearing nominee of the settlement authority; and

                     (b)  the clearing nominee transferring securities of that kind and number to the other person or partnership.

transfer documents , except in Division 7, has the meaning given by section 924.

             (2)  For the purposes of this Part, a sale and purchase of securities are taken to consist of 2 distinct transactions, namely, the sale of the securities by the seller to the buyer and the purchase of the securities by the buyer from the seller.

             (3)  Except so far as the contrary intention appears, a reference in this Part to a sale, or to a purchase, includes a reference to a sale or purchase the agreement for which is made outside this jurisdiction, whether in Australia or not.

             (5)  A reference in this Part to a business being carried on in this jurisdiction includes a reference to the business being carried on both in this jurisdiction and outside it, whether in Australia or not.

             (6)  A person who, or a partner in a partnership that, contravenes a provision of this Part is not guilty of an offence.

921   Excluded persons

             (1)  In this Part, excluded person , in relation to a member of a participating exchange, means:

                     (a)  in any case—the member; or

                     (b)  if the member is a member organisation of the participating exchange and is not a body corporate:

                              (i)  a person who is the spouse, or who is a relative, of the member; or

                             (ii)  a trustee of a trust in relation to which the member or a person of a kind referred to in subparagraph (i) is capable of benefiting; or

                            (iii)  a body corporate of which the member is an officer, or in which the member or a person of a kind referred to in subparagraph (i) has, or the member and such a person, the member and 2 or more such persons, or 2 or more such persons, together have, a controlling interest; or

                     (c)  if the member is a member organisation of the participating exchange and is a body corporate:

                              (i)  a person who is an officer of the body corporate; or

                             (ii)  a body corporate that is related to the first-mentioned body corporate; or

                            (iii)  a person who is the spouse, or who is a relative, of a person of a kind referred to in subparagraph (i); or

                            (iv)  a trustee of a trust in relation to which a person of a kind referred to in subparagraph (i) or (iii) is capable of benefiting; or

                             (v)  a body corporate in which a person of a kind referred to in subparagraph (i) or (iii) has, or 2 or more such persons together have, a controlling interest; or

                     (d)  if the member is a partner in a member organisation of the participating exchange and is not a body corporate:

                              (i)  a person who is a partner in the member organisation; or

                             (ii)  a person who is the spouse, or who is a relative, of a partner (not being a body corporate) in the member organisation; or

                            (iii)  a trustee of a trust in relation to which a person of a kind referred to in subparagraph (i) or (ii) is capable of benefiting; or

                            (iv)  a person who is an officer of a body corporate that is a partner in the member organisation; or

                             (v)  a body corporate of which a person of a kind referred to in subparagraph (i), (ii) or (iii) is an officer, or in which such a person has, or 2 or more such persons together have, a controlling interest; or

                     (e)  if the member is a partner in a member organisation of the participating exchange and is a body corporate:

                              (i)  a person who is an officer of a body corporate that is a partner in the member organisation; or

                             (ii)  a body corporate that is related to the first-mentioned body corporate; or

                            (iii)  a person who is a partner in the member organisation; or

                            (iv)  a person who is the spouse, or who is a relative, of a person (other than a body corporate) of a kind referred to in subparagraph (i) or (iii); or

                             (v)  a trustee of a trust in relation to which a person of a kind referred to in subparagraph (i), (iii) or (iv) is capable of benefiting; or

                            (vi)  a body corporate in which a person of a kind referred to in subparagraph (i), (iii) or (iv) has, or 2 or more such persons together have, a controlling interest.

             (2)  A reference in subsection (1) to a relative of a person includes a reference to a relative of the spouse (if any) of the person.

             (3)  A reference in subsection (1) to an officer of a body corporate is a reference to:

                     (a)  a director, secretary or executive officer of the body corporate; or

                     (b)  a person who is an officer of the body corporate by virtue of paragraph (b), (c), (d) or (e) of the definition of officer in section 9.

922   Becoming insolvent

             (1)  For the purposes of this Part, a body corporate becomes insolvent at a particular time if, and only if, at that time:

                    (aa)  an administrator of the body corporate is appointed under section 436A, 436B or 436C; or

                     (a)  the body corporate commences to be wound up or ceases to carry on business; or

                     (b)  a receiver, or a receiver and manager, of property of the body corporate is appointed, whether by a court or otherwise; or

                     (c)  the body corporate enters into a compromise or arrangement with its creditors or a class of them.

             (3)  For the purposes of this Part, a natural person becomes insolvent at a particular time if, and only if, at that time:

                     (a)  a creditor’s petition or a debtor’s petition is presented under Division 2 or 3, as the case may be, of Part IV of the Bankruptcy Act 1966 against:

                              (i)  the person; or

                             (ii)  a partnership in which the person is a partner; or

                            (iii)  2 or more joint debtors who include the person; or

                     (b)  the person’s property becomes subject to control under Division 2 of Part X of the Bankruptcy Act 1966 ; or

                     (c)  the person executes a deed of assignment or deed of arrangement under Part X of the Bankruptcy Act 1966 ; or

                     (d)  the person’s creditors accept a composition under Part X of the Bankruptcy Act 1966 .

             (4)  A reference in subsection (3) to a Division or Part of the Bankruptcy Act 1966 includes a reference to provisions of a law of an external Territory, or a country other than Australia or an external Territory, that correspond to that Division or Part.

923   Permitted investments

                   For the purposes of this Part, money is taken to be invested in a permitted manner if, and only if, it is invested:

                     (a)  in a way in which trustees are for the time being authorised by a law of a State or Territory in this jurisdiction to invest trust funds; or

                     (b)  on deposit with an eligible money market dealer.

924   Transfer of securities etc. and payment of money

             (1)  This section has effect for the purposes of this Part (other than Division 7).

             (2)  A person (the transferor ) transfers securities to another person (the transferee ) if, and only if:

                     (a)  in the case of an SCH-regulated transfer—the transferor does, or causes to be done, all things that the SCH business rules require to be done by or on behalf of the transferor to effect the transfer; or

                     (b)  in any other case—the transferor delivers, or causes to be delivered, to the transferee documents ( transfer documents ) that are sufficient to enable the transferee:

                              (i)  except in the case of marketable rights within the meaning of Division 3 of Part 7.13—to become registered as the holder of the securities; or

                             (ii)  in the case of such marketable rights—to obtain the issue to the transferee of the securities to which the marketable rights relate;

                            without the transferor doing anything more, or causing anything more to be done, by way of executing or supplying documents.

             (3)  If a person:

                     (a)  causes property (other than securities or money) to be transferred to another person; or

                     (b)  causes documents that are sufficient to enable another person to become the legal owner of property (other than securities or money) to be delivered to another person;

the first-mentioned person is taken to have transferred the property to the other person.

             (4)  If a person causes money to be paid to another person, the first-mentioned person is taken to have paid the money to the other person.

             (5)  In this section:

person includes a partnership.

924A   Novation of agreements

                   For the purposes of this Part, an agreement is novated if, and only if, because of the operation of a settlement authority’s business rules, the agreement is discharged and replaced with one or more other agreements (each of which is called a replacement agreement ).

924B   Attributing securities and payments to transactions

                   If:

                     (a)  either:

                              (i)  a number of securities are transferred to a participating exchange or a member organisation of a participating exchange in respect of a number of transactions; or

                             (ii)  a payment is made to a participating exchange or a member organisation of a participating exchange in respect of a number of transactions; and

                     (b)  apart from this section, it is not possible to tell, for the purposes of this Part, how many of the securities are transferred, or how much of the payment is made, in respect of each of the transactions; and

                     (c)  the business rules of the participating exchange include provisions determining how many of the securities are transferred, or how much of the payment is made, in respect of each of the transactions;

those provisions have effect accordingly for the purposes of this Part.

925A   Minister to nominate SEGC

             (1)  Subject to subsection (3), the Minister may nominate in writing as the Securities Exchanges Guarantee Corporation a body corporate (whenever incorporated) that is, for the purposes of the national corporate laws, a company limited by guarantee.

             (2)  ASIC must cause a copy of a nomination by the Minister under subsection (1) to be published in the Gazette .

             (3)  The Minister may only nominate a body corporate under subsection (1) if he or she is satisfied that:

                     (a)  the Exchange is a member of the body corporate; and

                     (b)  none of the members of the body corporate is a person other than an eligible exchange; and

                     (c)  the body corporate’s constitution provides that no person, other than a person of a kind referred to in paragraph (b), may become or remain a member of the body corporate; and

                     (d)  the body corporate will, if nominated under subsection (1), be able to perform and exercise SEGC’s functions and powers under the Fund provisions adequately and with due regard to the interests of the public; and

                     (e)  the body corporate has obtained, or will within a reasonable period after being nominated under subsection (1) obtain, indemnity insurance in respect of its liabilities for:

                              (i)  negligence in; and

                             (ii)  defalcation, or fraudulent misuse of property, by an officer, employee or agent of the body corporate in connection with;

                            the performance or exercise of SEGC’s functions or powers under the Fund provisions, or has made or will make other satisfactory provisions for meeting those liabilities; and

                      (f)  the body corporate’s business rules make satisfactory provision:

                              (i)  for ensuring the safety of property received by the body corporate; and

                             (ii)  generally for the protection of the interests of the public.

926   SEGC’s functions and powers under this Part

             (1)  In addition to the legal capacity and powers it has because of section 124, SEGC has such functions and powers as are conferred, or expressed to be conferred, on it by this Part.

             (2)  Section 125 does not apply in relation to a function or power conferred, or expressed to be conferred, as mentioned in subsection (1) of this section.

             (3)  SEGC must perform the functions, and may exercise the powers, that are conferred, or expressed to be conferred, on it by or under this Part.

927   Management sub-committee

             (1)  The Board may, by resolution, appoint a management sub-committee of not fewer than 3 nor more than 5 persons, at least one of whom is a member of the Board.

             (2)  The Board may, by resolution, delegate to a sub-committee appointed by it under this section all or any of its powers, authorities and discretions under a provision of this Part (other than this section, section 944, and subsections 954(5), 954F(2), 954Q(2), 954Y(2), 959(3), 961E(3) and 969(3)).

             (3)  A power, authority or discretion delegated under subsection (2) may be exercised by members forming a majority of the sub-committee as if that power, authority or discretion had been conferred by this Part on a majority of the members of the sub-committee.

             (4)  A delegation by the Board under this section may, at any time, by resolution of the Board, be varied or revoked.

             (5)  The Board may at any time, by resolution, remove a member of a sub-committee appointed by it under this section and may, by resolution, fill a vacancy arising in the membership of the sub-committee.

          (5A)  A delegation under this section continues in force even if there is a change in the membership of the Board or of the sub-committee.

             (6)  Any power, authority or discretion exercised under this section by, or by a majority of, a sub-committee is taken to have been exercised by the Board.

             (7)  Any remuneration or expenses paid to a member of a sub-committee appointed under this section are taken to be expenses incurred in the administration of the Fund.

927A   Sub-delegation by management sub-committee

             (1)  A management sub-committee may delegate to:

                     (a)  a member of the Board; or

                     (b)  a member of the sub-committee; or

                     (c)  an officer of SEGC;

all or any of the powers, authorities and discretions that have been delegated under subsection 927(2) to the sub-committee.

             (2)  A delegation must be in writing signed by a majority of the members of the sub-committee.

             (3)  A delegation may be varied or revoked at any time by writing signed by a majority of the members of the sub-committee.

             (4)  A delegation continues in force even if there is a change in the membership of the sub-committee.

             (5)  A power, authority or discretion performed or exercised by a person under a delegation is taken to have been exercised by the Board.

             (6)  A delegation of a power, authority or discretion does not prevent the performance or exercise of the power, authority or discretion by the Board or by the sub-committee that made the delegation.

             (7)  Section 109ZE has effect in relation to a delegation subject to this section.

             (8)  In this section:

delegation means a delegation under this section.

management sub-committee means a management sub-committee appointed under subsection 927(1).

928   ASIC to be notified of amendments to business rules

             (1)  Where an amendment is made, by way of rescission, alteration or addition, to its business rules, SEGC must, as soon as practicable after the making of the amendment, give written notice of the amendment to ASIC.

             (2)  A notice under subsection (1) must:

                     (a)  set out the text of the amendment; and

                     (b)  specify the date on which the amendment was made; and

                     (c)  contain an explanation of the purpose of the amendment.

             (3)  If the notice required to be given by subsection (1) is not given within 21 days after the making of the amendment, the amendment ceases to have effect.

             (4)  Where ASIC receives a notice under this section, it must as soon as practicable send a copy of the notice to the Minister.

             (5)  The Minister may, within 28 days after the receipt by ASIC of a notice under this section, disallow the whole or a specified part of the amendment to which the notice relates.

             (6)  Where the Minister disallows the whole or a part of an amendment to which a notice under this section relates, ASIC must as soon as practicable give notice of the disallowance to SEGC and, upon receipt by SEGC of the notice of disallowance, the amendment, to the extent of the disallowance, ceases to have effect.



 

Division 3 The National Guarantee Fund

928A   Interpretation—borrowing

                   In this Division, a reference to borrowing money includes a reference to obtaining credit.

928B   Continuation of National Guarantee Fund

             (1)  The National Guarantee Fund established by the SEGC under the old Corporations Laws of the States and Territories continues in existence as the National Guarantee Fund for the purposes of this Part.

             (2)  Without limiting subsection (1), the assets of the National Guarantee Fund kept under the old Corporations Laws of the States and Territories immediately before the commencement of this Act are assets of the National Guarantee Fund kept under this Part.

929   SEGC to keep Fund

             (1)  SEGC must keep the Fund and the Board must administer it on SEGC’s behalf.

             (2)  The assets of the Fund are the property of SEGC, but must be kept separate from all other property and must be held in trust for the purposes set out in the Fund provisions.

930   Property constituting Fund

                   The Fund consists of:

                     (a)  the assets covered by subsection 928B(2); and

                     (b)  money paid into the Fund under subsection 985(1); and

                     (c)  property that has vested in SEGC, and become part of the Fund by virtue of subsection 985(2); and

                     (d)  money paid into the Fund under subsection 891(2); and

                     (e)  money paid into the Fund under section 938 or 940; and

                      (f)  the interest and profits from time to time accruing from the investment of the Fund and paid into the Fund under subsection 935(2); and

                    (fa)  money paid into the Fund under subsection 930B(2); and

                     (g)  money recovered by or on behalf of SEGC in the exercise of a right of action that SEGC has by virtue of the Fund provisions; and

                     (h)  money paid by an insurer under a contract of insurance or indemnity entered into by SEGC under section 982; and

                      (j)  money paid to SEGC for the purposes of a claim under Division 6, 6A or 6C; and

                     (k)  all other money or other property lawfully paid into, or forming part of, the Fund.

930A   Power to borrow etc. for purposes of the Fund

             (1)  If the Board considers that, in the interests of the sound financial management of the Fund, money should be borrowed for the purpose of meeting a payment due out of the Fund, SEGC may borrow money for that purpose on such terms and conditions as the Board thinks appropriate.

             (2)  SEGC may give security, including security over the assets of the Fund, in respect of SEGC’s obligations in relation to a borrowing under subsection (1).

             (3)  If:

                     (a)  money borrowed under subsection (1) is a loan from a participating exchange; and

                     (b)  the participating exchange borrowed money for the purpose of making the loan to SEGC;

SEGC may give security, including security over the assets of the Fund, in relation to the participating exchange’s obligations in respect of the borrowing referred to in paragraph (b).

930B   Money borrowed and paid to SEGC

             (1)  This section applies where money borrowed by SEGC under subsection 930A(1) is paid to SEGC.

             (2)  SEGC must pay the money into the Fund.

             (3)  If:

                     (a)  the money was borrowed for the purpose of meeting a payment due out of the Fund; and

                     (b)  the borrowed money has been paid into the Fund; and

                     (c)  the payment due out of the Fund has not yet been made;

then, for the purposes of Division 4, the amount in the Fund is taken to be reduced by the amount of the borrowed money.

930C   Money borrowed and not paid to SEGC

             (1)  This section applies where money borrowed by SEGC under subsection 930A(1) is not paid to SEGC but is payable to other persons at the direction of SEGC.

             (2)  SEGC must not direct that any of the money be paid to a person unless the payment is of a kind that can, under section 932, be made out of the Fund.

931   Fund to be kept in separate ADI account

                   The money in the Fund must, until invested or applied in accordance with the Fund provisions, be kept in an account, or, at the discretion of the Board, in 2 accounts, in an Australian ADI separate from any account or accounts in which money not forming part of the Fund is kept.

932   Payments out of Fund

             (1)  Subject to this Part, there must be paid out of the Fund, in such order as the Board considers appropriate:

                     (a)  amounts, including costs, disbursements and interest, that the Fund provisions require to be paid in connection with claims; and

                     (b)  all legal and other expenses incurred in investigating or defending claims or incurred in relation to the Fund or in the exercise by SEGC or the Board of the rights and powers vested in it by the Fund provisions in relation to the Fund; and

                   (ba)  money payable to a person or partnership under section 972A; and

                     (c)  money payable to a participating exchange under section 944; and

                   (da)  to the extent that the money referred to in section 935 is insufficient for the purpose, payments of principal, interest and other amounts payable by SEGC in respect of money borrowed, and security given, under section 930A; and

                     (d)  to the extent that the money referred to in section 935 is insufficient for the purpose, premiums payable in respect of contracts of insurance or indemnity entered into by SEGC under section 982; and

                     (e)  to the extent that the money referred to in section 935 is insufficient for the purpose, the expenses incurred in the administration of the Fund, including the salaries and wages of persons employed by SEGC or the Board in relation to the Fund; and

                      (f)  any other money payable out of the Fund in accordance with this Chapter.

             (2)  In paragraphs (1)(a) and (b), claim means a claim under Division 6, 6A, 6B, 6C, 7, 7A or 8 or a claim that, for the purposes of Division 10, is a transferred claim in relation to a joining exchange.

             (3)  Where:

                     (a)  an amount is payable out of the Fund in connection with a claim by a person against SEGC under Division 6, 6A, 6B, 6C, 7 or 7A that has been allowed; and

                     (b)  an amount is payable out of the Fund in connection with a claim by a person against SEGC under Division 8 that has been allowed;

then, regardless of the order in which those persons became respectively entitled to make those claims, the amount referred to in paragraph (a) must be paid out of the Fund in priority to the amount referred to in paragraph (b).

933   Accounts of Fund

             (1)  SEGC must establish and keep proper accounts of the Fund and must, before 31 August in each year, cause a balance sheet in respect of those accounts to be made out as at the preceding 30 June.

             (2)  SEGC must appoint a registered company auditor to audit the accounts of the Fund.

             (3)  The auditor must audit the accounts of the Fund and each balance sheet and must give a report on the accounts and balance sheet to the Board within one month after the balance sheet is made out.

             (4)  SEGC must, within 14 days after a report is given to the Board, give to ASIC a copy of the report and a copy of the balance sheet.

             (5)  SEGC must cause a copy of each report, and a copy of the balance sheet to which it relates, to be laid before the annual general meeting of each participating exchange next following the making of that report.

934   Investment of Fund

             (1)  Money in the Fund that, in the opinion of the Board, is not immediately required for the purposes of SEGC may be invested by SEGC in a permitted manner.

             (2)  Property in which money is invested under subsection (1) forms part of the Fund.

             (3)  Subject to subsection (4), the Board may, with the approval of ASIC, appoint a person to invest on behalf of SEGC money to which subsection (1) applies.

             (4)  ASIC must not grant approval to the appointment of a person under subsection (3) unless it is satisfied that:

                     (a)  the person has appropriate qualifications and expertise to perform the duties of the appointment; and

                     (b)  SEGC has adequate indemnity insurance in respect of its liabilities for any negligence, or any defalcation or fraudulent misuse of property, by the person in the performance of those duties or has made other satisfactory provisions for meeting those liabilities.

             (5)  A person appointed under subsection (3) must perform the duties of the appointment in accordance with the directions of the Board and subject to such conditions (if any) as the Board imposes.

935   Interest and profits from investment of Fund

             (1)  The interest and profits from time to time accruing from the investment of the Fund must be applied by SEGC to pay:

                     (a)  the expenses incurred in the administration of the Fund, including the salaries and wages of persons employed by SEGC or the Board in relation to the Fund; and

                     (b)  all premiums payable in respect of contracts of insurance or indemnity entered into by SEGC under section 982; and

                     (c)  principal, interest and other amounts payable by SEGC in respect of money borrowed, and security given, under section 930A.

             (2)  An amount of interest or profit that accrues from the investment of the Fund and is not immediately required for the purposes referred to in subsection (1) must be paid into the Fund.

936   Minimum amount of Fund

                   SEGC may, with the written approval of the Minister, determine, by notice published in the Gazette , an amount (whether greater than, or less than, $15,000,000) to be the minimum amount of the Fund for the purposes of the Fund provisions.



 

Division 4 Levies where Fund less than minimum amount

937   Definition

                   In this Division:

dealer means a member organisation of a participating exchange.

938   Levy on transactions

             (1)  In this section:

leviable dealer , in relation to a transaction, means:

                     (a)  if, when the transaction is entered into, a determination under subsection (10) is in force in relation to a class of transactions that includes the first-mentioned transaction—the dealer prescribed by the determination; or

                     (b)  otherwise:

                              (i)  in the case of a sale of securities—the dealer selling the securities; or

                             (ii)  in the case of a purchase of securities—the dealer buying the securities; or

                            (iii)  in the case of a guaranteed securities loan—the borrower.

leviable transaction means:

                     (a)  a sale or purchase of securities by a person or partnership where, as at the time when the agreement for the sale or purchase is made:

                              (i)  the sale or purchase is a reportable transaction as defined in subsection 920(1); and

                             (ii)  the person or partnership is a member organisation of a participating exchange and carries on a securities business in this jurisdiction; or

                     (b)  a guaranteed securities loan where, as at the time when the loan is entered into, the borrower carries on a securities business in this jurisdiction.

             (2)  If the amount in the Fund is less than the minimum amount, SEGC may, whether or not it also makes a determination under section 940, determine in writing that a levy is payable on leviable transactions. The levy is payable to the Commonwealth in accordance with this section.

Note:          For the imposition and rate of the levy, see the Corporations (National Guarantee Fund Levies) Act 2001 .

             (3)  A levy under subsection (2) is payable in respect of a leviable transaction included in a class of transactions, or in any of 2 or more classes of transactions, determined in writing by SEGC for the purposes of the levy.

             (4)  If SEGC makes or varies a determination under subsection (3), it must give to each participating exchange a copy of the determination, or of the variation and of the determination as varied, as the case may be.

             (5)  If an amount of levy is payable under this section in respect of a leviable transaction, the leviable dealer in relation to the transaction must:

                     (a)  pay the amount of the levy to a participating exchange of which the dealer is a member, as agent for the Commonwealth; and

                     (b)  if, but for this subsection, the dealer would not be required by a provision of a law or by the participating exchange’s business rules to give to the participating exchange particulars of the transaction sufficient to enable the participating exchange to ascertain the amount of levy—so give such particulars to the participating exchange;

within the period, and in the manner, specified by the participating exchange in writing either generally or in relation to a class of transactions that includes the first-mentioned transaction.

             (6)  Whenever an amount of levy (the levy amount ) is paid under this section, or under subsection 6(1) of the Corporations (National Guarantee Fund Levies) Act 2001 , to a participating exchange as agent for the Commonwealth:

                     (a)  the participating exchange must pay an amount equal to the levy amount to SEGC, as agent for the Commonwealth; and

                     (b)  SEGC must pay an amount equal to the amount so paid to it to the Commonwealth; and

                     (c)  the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to SEGC; and

                     (d)  the Commonwealth must pay the amount so appropriated to SEGC; and

                     (e)  SEGC must pay the amount it receives under paragraph (d) into the Fund.

             (7)  A payment of an amount to SEGC as required by paragraph (6)(d) in respect of a particular levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the levy amount, SEGC must pay to the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund. SEGC may pay, out of the Fund, any amount so required to be paid to the Commonwealth.

             (8)  The Financial Management and Accountability Act 1997 does not apply in relation to the payment of an amount of levy under this section to a participating exchange, or to SEGC, as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected.

                     (a)  the payment of an amount to the Commonwealth as required by paragraph (6)(b); or

                     (b)  the payment of an amount by the Commonwealth as required by paragraph (6)(d).

The participating exchange must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth.

             (9)  An amount payable by SEGC as required by paragraph (6)(b) may be set off against an amount payable to SEGC as required by paragraph (6)(d).

           (10)  SEGC may make a written determination prescribing, in relation to a class or classes of transactions, the dealer who is to be the leviable dealer in relation to a transaction in that class or in any of those classes.

939   Revocation of levy on transactions

                   If SEGC revokes a determination made under subsection 938(2), the revocation does not affect a liability to pay an amount of levy that became payable before the revocation.

940   Levy on participating exchanges

             (1)  If the amount in the Fund is less than the minimum amount, SEGC may, whether or not it also makes a determination under subsection 938(2), determine in writing:

                     (a)  if there are 2 or more participating exchanges that are securities exchanges:

                              (i)  that a specified participating exchange that is a securities exchange must pay a levy; or

                             (ii)  that each of 2 or more specified participating exchanges that are securities exchanges must pay a levy; or

                     (b)  otherwise—that the Exchange must pay a levy

The levy is payable to SEGC, as agent for the Commonwealth, in accordance with this section.

Note:          For the imposition and rate of the levy, see the Corporations (National Guarantee Fund Levies) Act 2001 .

             (2)  A levy payable under this section by a securities exchange must be paid within the period and in the manner determined in writing by SEGC for the purposes of the levy.

             (3)  If a levy is payable under this section, SEGC must give to each participating exchange a notice setting out the name of the participating exchange that must pay the levy and the amount of the levy.

             (4)  For the purpose of paying the whole or a part of a levy under this section, a participating exchange may borrow money on such terms as the board of the participating exchange thinks fit.

             (5)  Whenever an amount of levy (the levy amount ) is paid under this section, or under subsection 6(2) of the Corporations (National Guarantee Fund Levies) Act 2001 , to SEGC as agent for the Commonwealth:

                     (a)  SEGC must pay an amount equal to the levy amount to the Commonwealth; and

                     (b)  the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to SEGC; and

                     (c)  the Commonwealth must pay the amount so appropriated to SEGC; and

                     (d)  SEGC must pay the amount it receives under paragraph (c) into the Fund.

             (6)  A payment of an amount to SEGC as required by paragraph (5)(c) in respect of a particular levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the levy amount, SEGC must pay to the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund. SEGC may pay, out of the Fund, any amount so required to be paid to the Commonwealth.

             (7)  The Financial Management and Accountability Act 1997 does not apply in relation to the payment of an amount of levy under this section to SEGC as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected.

                     (a)  the payment of an amount to the Commonwealth as required by paragraph (5)(a); or

                     (b)  the payment of an amount by the Commonwealth as required by paragraph (5)(c).

SEGC must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth.

             (8)  An amount payable by SEGC as required by paragraph (5)(a) may be set off against an amount payable to SEGC as required by paragraph (5)(c).

941   Levy by participating exchange on members or member organisations

             (1)  A participating exchange by which a levy is payable under section 940 may determine that members, or member organisations, of the participating exchange must pay a levy for payment towards the first-mentioned levy. The levy is payable to the participating exchange as agent for the Commonwealth.

Note:          For the imposition and rate of the levy, see the Corporations (National Guarantee Fund Levies) Act 2001 .

             (2)  If a determination is made under subsection (1), a levy is payable by a member, or member organisation, as the case requires, of the participating exchange who or that, when the determination is made:

                     (a)  carries on a securities business; and

                     (b)  is included in a class, or in any of 2 or more classes, of members, or of member organisations, of the participating exchange determined in writing by the participating exchange for the purposes of the levy.

             (3)  The amount of a levy payable under a determination by a participating exchange under subsection (1) must be paid within the period, and in the manner, specified in writing by the participating exchange either generally or in relation to:

                     (a)  particular members; or

                     (b)  particular classes of members; or

                     (c)  particular member organisations; or

                     (d)  particular classes of member organisations;

of the participating exchange.

             (4)  Whenever an amount of levy (the levy amount ) is paid under this section, or under subsection 6(3) of the Corporations (National Guarantee Fund Levies) Act 2001 , to a participating exchange as agent for the Commonwealth:

                     (a)  the participating exchange must pay an amount equal to the levy amount to the Commonwealth; and

                     (b)  the Consolidated Revenue Fund is appropriated by that amount for the purpose of payment to the participating exchange; and

                     (c)  the Commonwealth must pay the amount so appropriated to the participating exchange; and

                     (d)  the participating exchange must pay an amount equal to the amount it receives under paragraph (c) in payment of the levy payable by it under section 940.

             (5)  A payment of an amount to a participating exchange as required by paragraph (4)(c) in respect of a particular levy amount is subject to a condition that, if the Commonwealth becomes liable to refund the whole or a part of the levy amount, the participating exchange must pay to the Commonwealth an amount equal to the amount that the Commonwealth is liable to refund.

             (6)  The Financial Management and Accountability Act 1997 does not apply in relation to the payment of an amount of levy under this section to a participating exchange as agent for the Commonwealth. However, the operation of that Act in relation to the following payments is not affected.

                     (a)  the payment of an amount to the Commonwealth as required by paragraph (4)(a); or

                     (b)  the payment of an amount by the Commonwealth as required by paragraph (4)(c).

The participating exchange must, in accordance with the regulations, notify the Commonwealth of payments of levy it receives as agent for the Commonwealth.

             (7)  An amount payable by a participating exchange as required by paragraph (5)(a) may be set off against an amount payable to the participating exchange as required by paragraph (5)(c).



 

Division 5 Securities industry development accounts

943   Interpretation

                   In this Division:

development account means an account kept for the purposes of subsection 945(1).

944   Payments where Fund exceeds minimum amount

             (1)  Where the amount in the Fund exceeds the minimum amount, the Board may, in its discretion, determine in writing that a specified amount equal to the whole or a part of the excess be paid out of the Fund:

                     (a)  if the Exchange is the only participating exchange—to the Exchange; or

                     (b)  if there are 2 or more participating exchanges:

                              (i)  to a specified participating exchange; or

                             (ii)  to 2 or more specified participating exchanges in specified proportions.

             (2)  Where there are 2 or more participating exchanges, a determination under subsection (1) must be fair and equitable having regard, in relation to each participating exchange, to:

                     (a)  the amounts that have been paid into the Fund and that are attributable to, or to members or member organisations of, that participating exchange; and

                     (b)  the amounts that have been paid out of the Fund and that are so attributable.

             (3)  Where a determination is made in accordance with this section, the amount specified in the determination must be paid out of the Fund in accordance with the determination.

             (4)  For the purposes of subsection (2), where:

                     (a)  money in the fidelity fund of a securities exchange has been paid into the Fund under subsection 985(1); or

                     (b)  property of the fidelity fund of a securities exchange (other than money in that fidelity fund) has vested in SEGC, and become part of the Fund, by virtue of subsection 985(2);

the amount of that money is taken, or an amount equal to the value of that property is taken, as the case may be, to have been paid into the Fund and to be attributable to:

                     (c)  in the case of an Exchange subsidiary—the Exchange; or

                     (d)  otherwise—that securities exchange.

             (5)  For the purposes of subsection (2), where an amount is paid out of the Fund in connection with a claim that is, for the purposes of Division 10, a transferred claim in relation to a securities exchange, the amount is taken to be attributable to:

                     (a)  in the case of an Exchange subsidiary—the Exchange; or

                     (b)  otherwise—that securities exchange.

945   Payments into and out of development account

             (1)  Subject to this section, a participating exchange must keep money paid to it under section 944 in a separate account designated as a securities industry development account.

             (2)  A participating exchange must not make a payment out of a development account unless the payment is made:

                     (a)  for a purpose in relation to which an approval is in force under subsection (3) in relation to the payment; or

                     (b)  into the Fund.

             (3)  The Minister may approve in writing, in relation to payments to be made out of development accounts, purposes that are permitted purposes when the approval is given.

             (4)  An approval under subsection (3) may include conditions relating to the payments to which the approval relates.

             (5)  A participating exchange that makes, in contravention of subsection (2), a payment out of a development account must pay into the account, from its general funds, an amount equal to the amount of the first-mentioned payment.

             (6)  A participating exchange that:

                     (a)  makes as permitted by virtue of paragraph (2)(a) a payment out of a development account; and

                     (b)  contravenes a condition that, when the payment was made, was included in an approval in force under subsection (3) in relation to the payment;

must pay into the account, from its general funds, an amount equal to the amount of the first-mentioned payment.

             (7)  In this section:

permitted purpose means:

                     (a)  a purpose relating to the development of the securities industry in Australia or in a part of Australia; or

                     (b)  a prescribed purpose; or

                     (c)  without limiting the generality of paragraph (a) or (b), a purpose of reimbursing a person in respect of money that the person spent, before the relevant commencement, for a purpose of a kind referred to in paragraph (a) or (b).

946   Investment

             (1)  Money that is in a development account kept by a participating exchange and is not immediately required for the purpose of making payments as permitted by subsection 945(2) may be invested by the participating exchange in a permitted manner.

             (2)  The interest and profits from time to time accruing from the investment of money in a development account must be paid into the account.

947   Accounts

                   A participating exchange that is a securities exchange must, in respect of each financial year at any time during which there is money in a development account kept by the participating exchange, lodge with ASIC, within 3 months after the end of that financial year, a statement containing, in relation to payments out of such an account during that year, such information as is prescribed.



 

Division 6 Contract guarantees

948   Definitions

                   In this Division, unless the contrary intention appears:

claim means a claim under this Division against SEGC.

completion period , in relation to a sale or purchase of securities by a dealer, means:

                     (a)  if the business rules of a participating exchange of which the dealer is a member organisation, being those business rules as in force when the agreement for the sale or purchase is made, prescribe a period, for the purposes of this paragraph, in relation to a class of sales or purchases that includes the sale or purchase—that period; or

                     (b)  otherwise—a period that is reasonable, having regard to all the circumstances relating to the sale or purchase.

dealer means a person who, or a partnership that, is or has at any time been a member organisation of a participating exchange.

Exchange body means the Exchange or a subsidiary of the Exchange.

prescribed period , in relation to a sale or purchase of securities by a dealer, means:

                     (a)  if the business rules of a participating exchange of which the dealer is a member organisation, being those business rules as in force when the agreement for the sale or purchase is made, prescribe a period, for the purposes of this paragraph, in relation to a class of sales or purchases that includes the sale or purchase—that period; or

                     (b)  otherwise—a period that is reasonable, having regard to all the circumstances relating to the sale or purchase.

purchase price , in relation to a purchase of securities by a dealer on behalf of a person, means the total of:

                     (a)  the amount of the consideration for the purchase; and

                     (b)  any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the person to the dealer in connection with the purchase.

reportable transaction means a transaction, entered into before or after the commencement of this Act in relation to securities, that is or has at any time been a reportable transaction as defined in subsection 920(1).

948A   Effect of using a transfer delivery service

                   If:

                     (a)  under an agreement for the sale or purchase of securities, or under a replacement agreement in relation to such an agreement that has been novated, a person or partnership is obliged to transfer securities of a particular kind and number to another person or partnership; and

                     (b)  for the purpose of discharging the obligation, the first-mentioned person or partnership:

                              (i)  elects, in accordance with the transfer delivery service provisions of a settlement authority, to bring about a transfer of securities of that kind and number to the other person or partnership by the means provided for in those provisions; and

                             (ii)  for the purpose of so bringing about that transfer, transfers securities of that kind and number to the TDS nominee;

then, for the purposes of the application of this Division in relation to the sale or purchase, the obligation of the first-mentioned person or partnership to supply settlement documents in relation to the sale or purchase is taken to be discharged by the transfer of securities to the TDS nominee.

949   Claim by selling dealer in respect of default by buying dealer

             (1)  Where, as at the end of the completion period in relation to a reportable transaction that is a sale by a dealer to another dealer:

                     (a)  the first-mentioned dealer:

                              (i)  if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer—has done, or is ready, willing and able to do, all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

                             (ii)  in any other case—has supplied, or is ready, willing and able to supply, to the other dealer, under the agreement for the sale, settlement documents in relation to the sale; and

                     (b)  the other dealer has not paid to the first-mentioned dealer, under that agreement, the consideration for the sale;

the first-mentioned dealer may make a claim in respect of the sale.

             (2)  A dealer may make a single claim under this section in respect of the total amount of the unpaid consideration in respect of 2 or more sales.

             (3)  If the business rules of an Exchange body purport to authorise that body to make under this section on behalf of a dealer who is a member organisation of the Exchange a claim that the dealer is entitled to make, that body is entitled to make that claim on behalf of that dealer.

             (4)  If an Exchange body is entitled under subsection (3) to make claims under this section on behalf of 2 or more dealers, that body is entitled to make a single claim under this section on behalf of both or all of those dealers in respect of the sum of the amounts in respect of which it is entitled to make separate claims on behalf of each of those dealers.

          (4A)  If the SCH business rules purport to authorise the securities clearing house to make under this section on behalf of a dealer who is or was an SCH participant a claim that the dealer is entitled to make, the securities clearing house is entitled to make that claim on behalf of that dealer.

          (4B)  If the securities clearing house is entitled under subsection (4A) to make claims under this section on behalf of 2 or more dealers, the securities clearing house is entitled to make a single claim under this section on behalf of both or all of those dealers in respect of the sum of the amounts in respect of which it is entitled to make separate claims on behalf of each of those dealers.

             (5)  Where a dealer, or an Exchange body or the securities clearing house on behalf of a dealer, makes a claim in respect of a sale of securities by the dealer to another dealer and the Board is satisfied that:

                     (a)  subsection (1), (3) or (4A) entitles the claimant to make the claim; and

                    (aa)  if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer—the dealer:

                              (i)  has done all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

                             (ii)  has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and

                     (b)  if paragraph (aa) does not apply—the dealer has:

                              (i)  for the purposes of the claim, supplied to SEGC; or

                             (ii)  under the agreement for the sale, supplied to the other dealer;

                            settlement documents in relation to the sale; and

                     (c)  the consideration for the sale has not been paid to the dealer under the agreement for the sale; and

                     (d)  the agreement has not been discharged or otherwise terminated;

SEGC must allow the claim and pay to the claimant an amount equal to the amount of the consideration.

             (6)  A claim made under subsection (2), (4) or (4B) is treated for the purposes of subsection (5) as if it consisted of a separate claim in respect of each of the sales to which it relates.

             (7)  If a dealer transfers securities to an Exchange body as mentioned in subparagraph (5)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.

950   Claim by buying dealer in respect of default by selling dealer

             (1)  Where, as at the end of the completion period in relation to a reportable transaction that is a purchase by a dealer from another dealer:

                     (a)  the first-mentioned dealer has supplied, or is ready, willing and able to supply, to the other dealer, under the agreement for the purchase, the consideration for the purchase; and

                     (b)  the other dealer:

                              (i)  if a transfer of the securities concerned pursuant to the purchase would be an SCH-regulated transfer—has not done all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the purchase; or

                             (ii)  in any other case—has not supplied to the first-mentioned dealer, under that agreement, settlement documents in relation to the purchase;

the first-mentioned dealer may make a claim in respect of the purchase.

          (1A)  A dealer may make a single claim under this section in respect of 2 or more purchases.

          (1B)  A claim made under subsection (1A) is to be treated for the purposes of subsection (2) as if it consisted of a separate claim in respect of each of the purchases to which it relates.

             (2)  Where a dealer makes a claim in respect of a purchase of securities by the claimant from another dealer and the Board is satisfied that:

                     (a)  subsection (1) entitles the claimant to make the claim; and

                     (b)  the claimant has:

                              (i)  for the purposes of the claim, paid to SEGC; or

                             (ii)  under the agreement for the purchase, paid to the other dealer;

                            the amount of the consideration for the purchase; and

                   (ba)  if a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer—the other dealer has not done all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the purchase; and

                     (c)  if paragraph (ba) does not apply—settlement documents in relation to the purchase have not been supplied to the claimant under the agreement for the purchase; and

                     (d)  the agreement has not been discharged or otherwise terminated;

SEGC must allow the claim.

             (3)  If:

                     (a)  SEGC allows under subsection (2) a claim in respect of a purchase of securities; and

                     (b)  a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer;

SEGC must, subject to section 952A, transfer to the claimant securities of the same kind and number as the first-mentioned securities.

             (4)  If:

                     (a)  SEGC allows under subsection (2) a claim in respect of a purchase of securities; and

                     (b)  subsection (3) does not apply;

SEGC must, subject to section 953, supply to the claimant settlement documents in relation to the purchase.

950A   Effect of novation, under business rules, of agreement for purchase

             (1)  Where:

                     (a)  a dealer (in this section called the buyer ) agrees to buy securities from another dealer (in this section called the seller ); and

                     (b)  the purchase is a reportable transaction; and

                     (c)  the agreement for the purchase is novated; and

                     (d)  under a replacement agreement, the seller becomes obliged to transfer securities to the buyer;

this section has effect for the purposes of:

                     (e)  making a claim under section 950 in respect of the purchase; and

                      (f)  the application of this Part (other than section 980) in relation to such a claim.

             (2)  Subject to subsections (3) and (4), the novation is to be disregarded.

             (3)  If:

                     (a)  the buyer’s obligation to supply to the seller, under the agreement for the purchase, the consideration for the purchase is replaced by an obligation under a replacement agreement to pay an amount; and

                     (b)  that obligation under the replacement agreement has been, or is to be, taken into account for the purposes of provisions of the business rules of a settlement authority that are of the kind referred to in subsection 954N(1);

the buyer is taken to have so supplied the consideration for the purchase.

             (4)  If the replacement agreement or agreements is or are discharged or otherwise terminated, the agreement for the purchase is taken to be discharged or otherwise terminated.

951   Claim by selling client in respect of default by selling dealer

             (1)  Where, as at the end of the prescribed period in relation to a reportable transaction that is a sale by a dealer on behalf of a person:

                    (aa)  if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer—the person:

                              (i)  in a case to which subparagraph (ii) does not apply—has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

                             (ii)  if the dealer has been suspended by the participating exchange concerned, or the dealer’s status as an SCH participant has been suspended under the SCH business rules, and that suspension has not been removed—has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; and

                     (a)  if paragraph (aa) does not apply—the person:

                              (i)  in a case to which subparagraph (ii) does not apply—has supplied to the dealer settlement documents for the purposes of the sale; or

                             (ii)  if the dealer has been suspended by the participating exchange concerned and the suspension has not been removed—has supplied, or is ready, willing and able to supply, to the dealer settlement documents for the purposes of the sale; and

                     (b)  the dealer’s obligations to the person in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged;

the person may make a claim in respect of the sale.

             (2)  Where a person is entitled to make claims under subsection (1) in respect of 2 or more sales by the one dealer, the person may make a single claim in respect of 2 or more of those sales but a claim so made is treated for the purposes of subsection (3) as if it consisted of a separate claim in respect of each of those sales.

             (3)  Where a person makes a claim in respect of a sale of securities by a dealer on behalf of the claimant and the Board is satisfied that:

                     (a)  subsection (1) entitles the claimant to make the claim; and

                    (aa)  if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer—the claimant:

                              (i)  has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

                             (ii)  has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and

                     (b)  if paragraph (aa) does not apply—the claimant has:

                              (i)  under the agreement for the sale, supplied to the dealer; or

                             (ii)  for the purposes of the claim, supplied to SEGC;

                            settlement documents in relation to the sale; and

                     (c)  the dealer’s obligations to the claimant in respect of the sale, in so far as they relate to the consideration for the sale, have not been discharged;

SEGC must allow the claim and pay to the claimant the amount of that consideration less so much (if any) of the total of any brokerage fees and other charges, and any stamp duty and other duties and taxes, payable by the claimant in connection with the sale as has not already been paid by the claimant.

             (4)  If a person transfers securities to an Exchange body as mentioned in subparagraph (3)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.

952   Claim by buying client in respect of default by buying dealer

             (1)  Where, as at the end of the prescribed period in relation to a reportable transaction that is a purchase by a dealer on behalf of a person:

                     (a)  the person:

                              (i)  in a case to which subparagraph (ii) does not apply—has paid to the dealer the purchase price in relation to the purchase; or

                             (ii)  if the dealer has been suspended by the participating exchange concerned, or the dealer’s status as an SCH participant has been suspended under the SCH business rules, and that suspension has not been removed—has paid, or is ready, willing and able to pay, to the dealer the purchase price in relation to the purchase; and

                    (aa)  if a transfer of the securities concerned pursuant to the purchase would be an SCH-regulated transfer—the dealer’s obligations to the person in respect of the purchase, in so far as they relate to the transfer of securities to the person, have not been discharged; and

                     (b)  if paragraph (aa) does not apply—the dealer’s obligations to the person in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged;

the person may make a claim in respect of the purchase.

             (2)  Where a person is entitled to make claims under subsection (1) in respect of 2 or more purchases by the one dealer, the person may make a single claim in respect of 2 or more of those purchases but a claim so made is treated for the purposes of subsection (3) as if it consisted of a separate claim in respect of each of those purchases.

             (3)  Where a person makes a claim in respect of a purchase of securities by a dealer on behalf of the claimant and the Board is satisfied that:

                     (a)  subsection (1) entitles the claimant to make the claim; and

                     (b)  the claimant has:

                              (i)  under the agreement for the purchase, paid to the dealer; or

                             (ii)  for the purposes of the claim, paid to SEGC;

                            the amount of the consideration for the purchase; and

                   (ba)  if a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer—the dealer’s obligations to the claimant in respect of the purchase, in so far as they relate to the transfer of securities to the claimant, have not been discharged; and

                     (c)  if paragraph (ba) does not apply—the dealer’s obligations to the claimant in respect of the purchase, in so far as they relate to settlement documents in relation to the purchase, have not been discharged;

SEGC must allow the claim.

             (4)  If:

                     (a)  SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and

                     (b)  a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer;

SEGC must, subject to section 952A, transfer to the claimant securities of the same kind and number as the first-mentioned securities.

             (5)  If:

                     (a)  SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and

                     (b)  subsection (4) does not apply;

SEGC must, subject to section 953, supply to the claimant settlement documents in relation to the purchase.

952A   Cash settlement of claims—SCH-regulated transfers

                   If:

                     (a)  SEGC:

                              (i)  allows under subsection 950(2) a claim in respect of a purchase of securities by the claimant from a dealer; or

                             (ii)  allows under subsection 952(3) a claim in respect of a purchase of securities by a dealer on behalf of the claimant; and

                     (b)  a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer; and

                     (c)  it is not reasonably practicable for SEGC to obtain securities of the same kind and number as the first-mentioned securities from the dealer before the end of:

                              (i)  if the SCH business rules, as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                             (ii)  otherwise—such period as the Board, having regard to all the circumstances of the claim, considers reasonable; and

                     (d)  it is not reasonably practicable for SEGC to obtain, otherwise than from the dealer, securities of that kind and number before the end of that period because:

                              (i)  whether because that dealing in those securities is suspended or for any other reason, there exists at no time during that period an orderly market in those securities; or

                             (ii)  the total number of those securities offered for sale on stock markets of participating exchanges or Exchange subsidiaries at times during that period when there exists an orderly market in those securities is insufficient;

SEGC must satisfy the claim by paying to the claimant the amount that, when the claimant became entitled to make the claim, was the amount of the actual pecuniary loss suffered by the claimant in respect of the purchase.

953   Cash settlement of claims—transfers other than SCH-regulated transfers

                   Where:

                     (a)  SEGC:

                              (i)  allows under subsection 950(2) a claim in respect of a purchase of securities by the claimant from a dealer; or

                             (ii)  allows under subsection 952(3) a claim in respect of a purchase of securities by a dealer on behalf of the claimant; and

                    (aa)  a transfer of the securities pursuant to the purchase would not be an SCH-regulated transfer; and

                     (b)  it is not reasonably practicable for SEGC to obtain from the dealer, before the end of:

                              (i)  if the business rules of a participating exchange of which the dealer is a member organisation, being those business rules as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                             (ii)  otherwise—such period as the Board, having regard to all the circumstances relating to the claim, considers reasonable;

                            settlement documents in relation to the purchase; and

                     (c)  because:

                              (i)  whether by reason that dealing in those securities is suspended or for any other reason, there exists at no time during that period an orderly market in those securities; or

                             (ii)  the total number of those securities offered for sale on stock markets of participating exchanges or Exchange subsidiaries at times during that period when there exists an orderly market in those securities is insufficient; and

                            it is not reasonably practicable for SEGC to obtain before the end of that period, otherwise than from the dealer, settlement documents in relation to the purchase;

SEGC must satisfy the claim by paying to the claimant the amount that, when the claimant became entitled to make the claim, was the amount of the actual pecuniary loss suffered by the claimant in respect of the purchase.

954   Making of claims

             (1)  Neither subsection 949(1) nor 950(1) entitles a person to make a claim in respect of:

                     (a)  a sale of securities by the person to another person; or

                     (b)  a purchase of securities by the person from another person;

as the case may be, unless, on the day on which the agreement for the sale or purchase was entered into:

                     (c)  the first-mentioned person was a member organisation of a participating exchange and carried on in this jurisdiction a securities business; and

                     (d)  the other person was a member organisation of a participating exchange.

             (2)  Neither subsection 951(1) nor 952(1) entitles a person to make a claim in respect of:

                     (a)  a sale of securities by another person on behalf of the first-mentioned person; or

                     (b)  a purchase of securities by another person on behalf of the first-mentioned person;

as the case may be, unless, on the day on which the agreement for the sale or purchase was entered into, the other person was a member organisation of a participating exchange and carried on in this jurisdiction a securities business.

             (3)  In subsections (1), (2) and (2A):

person includes a partnership.

             (4)  A claim must be in writing and must be served on SEGC within 6 months after the day on which the claimant became entitled to make the claim.

             (5)  A claim that is not made within the period prescribed by subsection (4) is barred unless the Board otherwise determines.



 

Division 6A Securities loans guarantees

954A   Interpretation—general definitions

             (1)  In this Division:

borrower , in relation to a guaranteed securities loan, has the meaning given by section 954B.

claim means a claim under this Division against SEGC.

compliance period , in relation to an obligation under a guaranteed securities loan, means:

                     (a)  if the business rules of the lender as in force when the loan is made prescribe a period in relation to the obligation for the purposes of this paragraph—that period; or

                     (b)  otherwise—a period that is reasonable having regard to the obligation and all the circumstances relating to the loan.

excluded amount , in relation to a guaranteed securities loan, means an amount payable by the borrower by way of a fee or charge, or by way of interest or a penalty, in respect of the loan.

guaranteed securities loan has the meaning given by section 954B.

lender , in relation to a guaranteed securities loan, has the meaning given by section 954B.

security benefit means:

                     (a)  property (other than securities) or money transferred or paid to a person because the person is or was the holder of a security; or

                     (b)  a right that a person has because the person is or was the holder of a security, including, for example:

                              (i)  a right to be paid an amount or to be issued with additional securities; or

                             (ii)  a right that arises out of a reduction in share capital, a scheme of arrangement or compromise or a takeover bid.

             (2)  A reference in the definition of security benefit in subsection (1) to a right is a reference to a right, whether existing or future, and whether contingent or not.

954B   Interpretation—guaranteed securities loan and related concepts

             (1)  For the purposes of this Part, an agreement is a guaranteed securities loan if:

                     (a)  under the agreement:

                              (i)  a participating exchange is to transfer securities of a specified kind and number to, or as directed by, a person or partnership; and

                             (ii)  in order to put the participating exchange in the same position (as nearly as practicable) as if the agreement had not been made, the person or partnership is later to transfer to, or as directed by, the participating exchange such securities and security benefits as the agreement requires; and

                     (b)  the person or partnership is a member organisation of the participating exchange on the day when the agreement is entered into; and

                     (c)  the agreement is or was entered into after 18 December 1991; and

                     (d)  the agreement is of a kind that, according to the business rules of the participating exchange, is to be guaranteed under this Division.

             (2)  For the purposes of the application of this Part in relation to a guaranteed securities loan:

                     (a)  the participating exchange referred to in subparagraph (1)(a)(i) is the lender ; and

                     (b)  the person or partnership referred to in subparagraph (1)(a)(i) is the borrower ; and

                     (c)  the securities transferred as mentioned in subparagraph (1)(a)(i) are borrowed securities .

             (3)  The fact that an agreement includes obligations in addition to those mentioned in subsection (1) does not prevent the agreement from being a guaranteed securities loan.

954C   Effect of using a transfer delivery service

                   If:

                     (a)  under a guaranteed securities loan, or under a replacement agreement in relation to a guaranteed securities loan that has been novated, a person or partnership is obliged to transfer securities of a particular kind to, or as directed by, another person or partnership; and

                     (b)  for the purpose of wholly or partly discharging the obligation, the first-mentioned person or partnership:

                              (i)  elects, in accordance with the transfer delivery service provisions of a settlement authority, to bring about a transfer of a particular number of securities of that kind to, or as directed by, the other person or partnership by the means provided for in those provisions; and

                             (ii)  for the purpose of so bringing about that transfer, transfers that number of securities of that kind to the TDS nominee;

then, for the purposes of the application of this Division in relation to the guaranteed securities loan, the obligations of the first-mentioned person or partnership to transfer securities under the loan are taken to be discharged, to the extent of that number of securities of that kind, by the transfer of securities to the TDS nominee.

954D   Claim by lender in respect of borrower’s failure to discharge obligation

             (1)  If, as at the end of the compliance period in relation to an obligation of the borrower under a guaranteed securities loan to transfer or pay securities or security benefits, or to pay some other amount (except an excluded amount):

                     (a)  the lender has transferred borrowed securities in accordance with the agreement; and

                     (b)  the obligation remains undischarged to any extent;

the lender may make a claim in respect of the obligation.

             (2)  A participating exchange may make a single claim under this section in respect of a number of obligations, whether arising under the same or different guaranteed securities loans.

             (3)  A claim made under subsection (2) is to be treated for the purposes of sections 954G and 954H as if it were a separate claim in respect of each of the obligations to which it relates.

954E   Effect of novation, under business rules, of guaranteed securities loan

             (1)  Where:

                     (a)  an agreement is novated; and

                     (b)  before the novation, the agreement was a guaranteed securities loan;

this section has effect for the purposes of:

                     (c)  making a claim under section 954D in respect of the loan; and

                     (d)  the application of this Part (other than section 980) in relation to such a claim.

             (2)  Subject to subsections (3) and (4), the novation is to be disregarded.

             (3)  If:

                     (a)  an obligation under the loan to pay an amount is replaced by an obligation under a replacement agreement to pay an amount; and

                     (b)  that obligation under the replacement agreement has been, or is to be, taken into account for the purposes of provisions of the business rules of a settlement authority that are of the kind referred to in subsection 954N(1);

the obligation to pay that amount under the loan is taken to be discharged.

             (4)  If the replacement agreement or agreements is or are discharged or otherwise terminated, the loan agreement is taken to be discharged or otherwise terminated.

954F   How and when claim to be made

             (1)  A claim must be in writing and must be served on SEGC within 6 months after the day when the claimant became entitled to make the claim.

             (2)  A claim that is not made within the period required by subsection (1) is barred unless the Board otherwise determines.

954G   How claim in respect of securities or non-money security benefits is to be satisfied

             (1)  SEGC must allow a claim in respect of an obligation under a guaranteed securities loan to transfer securities or security benefits (other than money) if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  the obligation is still undischarged to the extent of a particular number of securities or security benefits of a particular kind (in this section called the outstanding items ).

             (2)  Subject to subsection (3), if:

                     (a)  SEGC allows the claim; and

                     (b)  the claimant has:

                              (i)  under the guaranteed securities loan, paid as directed by the borrower; or

                             (ii)  for the purposes of the claim, paid to SEGC;

                            each amount (if any) required to be paid under the loan by the claimant upon the discharge of the obligation;

SEGC must transfer to, or as directed by, the claimant, securities or security benefits of the same kind and number as the outstanding items.

             (3)  If:

                     (a)  SEGC allows the claim; and

                     (b)  either:

                              (i)  paragraph (2)(b) is not satisfied; or

                             (ii)  paragraph (2)(b) is satisfied but the Board is satisfied that it is not reasonably practicable for SEGC to obtain securities or security benefits of the same kind and number as the outstanding items within the pre-cash settlement period;

SEGC must satisfy the claim by paying to the claimant the amount that, as at the time when the Board decides it is so satisfied, is the actual pecuniary loss suffered by the claimant in respect of the failure to discharge the obligation.

             (4)  In working out the amount of the actual pecuniary loss suffered in respect of the failure to discharge the obligation, regard may be had to the cost to the claimant of any securities or security benefits of the same kind as the outstanding items that the claimant obtained because the obligation was not discharged.

             (5)  In this section:

pre-cash settlement period means:

                     (a)  if the business rules of the claimant, as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                     (b)  otherwise—such period as the Board, having regard to all the circumstances of the claim, considers reasonable.

954H   How claim in respect of an amount of money is to be satisfied

             (1)  SEGC must allow a claim in respect of an obligation under a guaranteed securities loan to pay a security benefit that is an amount of money, or to pay some other amount, if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  the obligation is still undischarged to the extent of a particular amount (in this section called the outstanding amount ).

             (2)  If SEGC allows the claim, it must pay to, or as directed by, the claimant an amount equal to the outstanding amount.



 

Division 6B Claims in respect of net obligations

954L   Interpretation

                   In this Division:

claim means a claim under this Division against SEGC.

dealer , in relation to a participating exchange, means the participating exchange or a member organisation of the participating exchange.

954M   Effect of using a transfer delivery service

                   If:

                     (a)  a person or partnership (in this section called the transferor ) is, under provisions of a kind referred to in subsection 954P(1), obliged to transfer securities of a particular kind to another person or partnership (in this section called the transferee ); and

                     (b)  for the purpose of wholly or partly discharging the obligation, the transferor:

                              (i)  elects, in accordance with the transfer delivery service provisions of a settlement authority, to bring about a transfer of a particular number of securities of that kind to the transferee by the means provided for in those provisions; and

                             (ii)  for the purpose of so bringing about the transfer, transfers that number of securities of that kind to the TDS nominee;

then, for the purposes of the application of this Division, the obligation is taken to have been discharged, to the extent of that number of securities of that kind, by the transfer of securities to the TDS nominee.

954N   Claim in respect of failure to pay net amount in respect of transactions

             (1)  If:

                     (a)  under provisions of the business rules of a settlement authority, the total of the amounts that become due and payable to a dealer by a subsidiary of the settlement authority on a particular day in respect of transactions (as defined in the business rules) of a kind or kinds specified in the business rules is set off against the total of the amounts that become due and payable by the dealer to the subsidiary on that day in respect of transactions (as so defined) of that kind or those kinds; and

                     (b)  depending on which of those totals is the greater, the provisions oblige:

                              (i)  the dealer to pay to the subsidiary, or to some other person or persons nominated under the provisions; or

                             (ii)  the subsidiary, or some other dealer or dealers nominated under the provisions, to pay to the dealer, or to some other person or persons nominated under the provisions;

                            within a specified period, the difference between those totals; and

                     (c)  as at the end of that period, that obligation remains undischarged to the extent of a particular amount;

the person to which the amount is payable may make a claim in respect of the obligation.

             (2)  Entitlement to make the claim is not affected by a dealer ceasing to be a member organisation of a participating exchange after the obligation arose.

             (3)  For the purposes of this section, a total may be a nil amount.

             (4)  In this section:

person includes a partnership.

954P   Claim in respect of failure to transfer net number of securities in respect of transactions

             (1)  This section applies if:

                     (a)  under provisions of the business rules of a settlement authority, the total number of securities of a particular kind to be transferred on a particular day to a dealer by a subsidiary of the settlement authority in respect of transactions (as defined in the business rules) of a kind or kinds specified in the business rules is set off against the total number of securities of that kind to be transferred on that day by the dealer to the subsidiary in respect of transactions (as so defined) of that kind or those kinds; and

                     (b)  depending on which of those totals is the greater, the provisions oblige:

                              (i)  the dealer to transfer to some other person or persons nominated under the provisions; or

                             (ii)  some other dealer or dealers nominated under the provisions to transfer to the dealer, or to some other person or persons nominated under the provisions;

                            within a specified period, securities of that kind equal in number to the difference between those totals; and

                     (c)  as at the end of that period, the obligation to transfer, or any of the obligations to transfer, as the case requires, remains undischarged to the extent of a particular number of securities of that kind (in this section called the default securities ).

             (2)  If the settlement authority has not taken action as mentioned in subsection (3), the person to which the default securities should have been transferred may make a claim in respect of the failure to transfer the default securities.

             (3)  If, for the purpose of remedying the failure to transfer the default securities, the settlement authority has transferred securities of the same kind and number as the default securities to the person to which the default securities should have been transferred:

                     (a)  the settlement authority is subrogated to all the rights and remedies of the person in relation to the failure to transfer the default securities; and

                     (b)  the settlement authority may make a claim in respect of its actions to remedy the failure; and

                     (c)  any claim made under subsection (2) in respect of the failure is taken not to have been entitled to be made.

             (4)  Entitlement to make a claim is not affected by a dealer ceasing to be a member organisation of a participating exchange after the obligation to transfer arose.

             (5)  For the purposes of this section, a total number of marketable securities of a particular kind may be zero.

             (6)  In this section:

person includes a partnership.

954Q   How and when claim to be made

             (1)  A claim must be in writing and must be served on SEGC within 6 months after the day on which the claimant became entitled to make the claim.

             (2)  A claim that is not made within the period required by subsection (1) is barred unless the Board otherwise determines.

954R   How claim under subsection 954N(1) is to be satisfied

             (1)  SEGC must allow a claim under subsection 954N(1) if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  the obligation referred to in paragraph 954N(1)(c) still remains undischarged to the extent of a particular amount.

             (2)  If SEGC allows the claim, SEGC must pay to the claimant the amount referred to in paragraph (1)(b).

954S   How claim under subsection 954P(2) is to be satisfied

             (1)  SEGC must allow a claim under subsection 954P(2) if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  the obligation referred to in paragraph 954P(1)(c) still remains undischarged to the extent of a particular number of securities of a particular kind (in this section called the outstanding securities ).

             (2)  Subject to subsection (3), if SEGC allows the claim, it must transfer to the claimant securities of the same kind and number as the outstanding securities.

             (3)  If the Board is satisfied that it is not reasonably practicable for SEGC to obtain securities of the same kind and number as the outstanding securities within the pre-cash settlement period, SEGC must satisfy the claim by paying to the claimant the amount that, as at the time when the Board decides it is so satisfied, is the actual pecuniary loss suffered by the claimant in respect of the failure to transfer the outstanding securities.

             (4)  In working out the amount of the actual pecuniary loss suffered in respect of the failure to transfer the outstanding securities, regard may be had to the cost to the claimant of any securities of the same kind as the outstanding securities that the claimant obtained because the outstanding securities were not transferred.

             (5)  In this section:

pre-cash settlement period means:

                     (a)  if the business rules of the settlement authority that is referred to in paragraph 954P(1)(a), as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                     (b)  otherwise—such period as the Board, having regard to all the circumstances of the claim, considers reasonable.

954T   How claim under subsection 954P(3) is to be satisfied

             (1)  SEGC must allow a claim by a settlement authority under subsection 954P(3) if the Board is satisfied that:

                     (a)  the settlement authority is entitled to make the claim; and

                     (b)  the settlement authority has paid or transferred to SEGC any money or property it has obtained because of the right of subrogation given by paragraph 954P(3)(a) in relation to the failure to transfer the default securities.

             (2)  If SEGC allows the claim, it must pay to the settlement authority the amount that, as at the time when the claim is allowed, is the actual pecuniary loss suffered by the settlement authority because of the actions it has taken to remedy its subsidiary’s default.

             (3)  In working out the amount of the actual pecuniary loss suffered in respect of the actions taken by the settlement authority to remedy its subsidiary’s default, regard may be had to the cost to the settlement authority of obtaining the securities transferred as mentioned in subsection 954P(3).

             (4)  Money or property paid or transferred to SEGC under paragraph (1)(b) forms part of the Fund.



 

Division 6C Transfer delivery service guarantees

954W   Interpretation

                   In this Division:

claim means a claim under this Division against SEGC.

claimable obligation means:

                     (a)  an obligation to transfer securities under an agreement for the purchase of securities, where the purchase is, for the purposes of Division 6, a reportable transaction; or

                     (b)  an obligation to transfer securities under a replacement agreement in relation to an agreement of the kind referred to in paragraph (a) that has been novated; or

                     (c)  an obligation to transfer securities under a guaranteed securities loan; or

                     (d)  an obligation to transfer securities under a replacement agreement in relation to a guaranteed securities loan that has been novated; or

                     (e)  an obligation to transfer securities that arose as mentioned in paragraph 954P(1)(b).

discharge , in relation to an obligation, means:

                     (a)  except in the case of a purchase obligation—discharge the whole or a part of the obligation; or

                     (b)  in the case of a purchase obligation—discharge the whole of the obligation.

purchase obligation means an obligation of the kind referred to in paragraph (a) of the definition of claimable obligation .

954X   Claims in respect of default by TDS nominee

             (1)  This section applies if:

                     (a)  a person or partnership (in this Division called the transferor ) is obliged to transfer securities of a particular kind to, or as directed by, another person or partnership (in this Division called the transferee ); and

                     (b)  the obligation is a claimable obligation; and

                     (c)  for the purpose of discharging the obligation, the transferor:

                              (i)  elects, in accordance with the transfer delivery service provisions of a settlement authority, to bring about a transfer of a particular number of securities of that kind to, or as directed by, the transferee by the means provided for in those provisions; and

                             (ii)  for the purpose of so bringing about the transfer, transfers that number of securities of that kind to the TDS nominee; and

                     (d)  for the purpose of bringing about the transfer of securities referred to in subparagraph (c)(i) by the means provided for in those provisions, the TDS nominee later purports to transfer that number of securities of that kind to, or as directed by, the transferee; and

                     (e)  the TDS nominee is in default under the transfer delivery service provisions because the transfer documents in relation to the purported transfer, so far as they relate to a particular number of securities of that kind (in this Division called the default securities ), are not sufficient for the purpose referred to in subsection 924(2); and

                      (f)  if the obligation is a purchase obligation—the transferee has paid, or is ready, willing and able to pay, to the transferor, under the agreement for the purchase, the consideration for the purchase.

             (2)  If the settlement authority has not taken action as mentioned in paragraph (3)(a) or (b), the transferee (even if it is the settlement authority) may make a claim in respect of the TDS nominee’s default.

             (3)  If the settlement authority has, for the purpose of remedying the TDS nominee’s default:

                     (a)  where the settlement authority is also the transferee—obtained marketable securities of the same kind and number as the default securities; or

                     (b)  otherwise—transferred securities of the same kind and number as the default securities to, or as directed by, the transferee;

the following provisions have effect:

                     (c)  unless the settlement authority is also the transferee—the settlement authority is subrogated to all the rights and remedies of the transferee in relation to the purported transfer of securities by the TDS nominee; and

                     (d)  the settlement authority may make a claim in respect of its actions to remedy the default; and

                     (e)  any claim made under subsection (2) in respect of the TDS nominee’s default is taken not to have been entitled to be made.

             (4)  A person or partnership may make a single claim under subsection (2) or (3) in respect of 2 or more defaults.

             (5)  A claim made under subsection (4) is to be treated for the purposes of sections 954Z and 954ZA as if it were a separate claim in respect of each of the defaults to which it relates.

             (6)  Entitlement to make a claim in respect of a claimable obligation is not affected by a person or partnership ceasing after the obligation arose to be a member organisation of a participating exchange.

954Y   How and when claim to be made

             (1)  A claim must be in writing and must be served on SEGC within 6 months after the day on which the claimant became entitled to make the claim.

             (2)  A claim that is not made within the period required by subsection (1) is barred unless the Board otherwise determines.

954Z   How claim under subsection 954X(2) is to be satisfied

             (1)  SEGC must allow a claim under subsection 954X(2) if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  if paragraph 954X(1)(f) applies—the claimant has:

                              (i)  paid to the transferor; or

                             (ii)  for the purposes of the claim, paid to SEGC;

                            the consideration, under the agreement for the purchase, for the purchase.

             (2)  Subject to subsection (3), if SEGC allows the claim, it must transfer to, or as directed by, the claimant securities of the same kind and number as the default securities.

             (3)  If the Board is satisfied that it is not reasonably practicable for SEGC to obtain securities of the same kind and number as the default securities within the pre-cash settlement period, SEGC must satisfy the claim by paying to the claimant the amount that, as at the time when the Board decides that it is so satisfied, is the actual pecuniary loss suffered by the claimant in respect of the TDS nominee’s default.

             (4)  In working out the amount of the actual pecuniary loss suffered in respect of the TDS nominee’s default, regard may be had to the cost to the claimant of any securities of the same kind as the default securities that the claimant obtained because the TDS nominee failed to transfer the default securities.

             (5)  In this section:

pre-cash settlement period means:

                     (a)  if the business rules of the settlement authority concerned, as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                     (b)  otherwise—such period as the Board, having regard to all the circumstances of the claim, considers reasonable.

954ZA   How claim under subsection 954X(3) is to be satisfied

             (1)  Subject to section 954ZD, SEGC must allow a claim under subsection 954X(3) if the Board is satisfied that:

                     (a)  the claimant is entitled to make the claim; and

                     (b)  if paragraph 954X(1)(f) applies—the transferee has paid to the transferor the consideration payable, under the agreement for the purchase, for the purchase; and

                     (c)  the claimant has paid or transferred to SEGC any money or property it has obtained because of the right of subrogation given by paragraph 954X(3)(c) in relation to the purported transfer of securities by the TDS nominee.

             (2)  If SEGC allows the claim, it must pay to the claimant the amount that, as at the time when the claim is allowed, is the actual pecuniary loss suffered by the claimant because of the actions it has taken to remedy the TDS nominee’s default.

             (3)  In working out the amount of the actual pecuniary loss suffered in respect of actions taken by the claimant to remedy the TDS nominee’s default, regard may be had to the cost to the claimant of obtaining the securities obtained or transferred as mentioned in paragraph 954X(3)(a) or (b), as the case requires.

             (4)  Money or property paid or transferred to SEGC under paragraph (1)(c) forms part of the Fund.



 

Division 7 Unauthorised transfer

955   Interpretation

             (1)  In this Division, unless the contrary intention appears:

claim means a claim under this Division against SEGC.

dealer means a member of a participating exchange.

securities means marketable securities or marketable rights within the meaning of Division 3 of Part 7.13.

transferor has the meaning given by paragraph 956(3)(b).

transferred securities has the meaning given by paragraph 956(3)(c).

unauthorised execution has the meaning given by paragraph 956(3)(a).

             (2)  For the purposes of subsection 956(1), a dealer is taken to have executed a document of transfer in relation to securities on behalf of a person as transferor of the securities if the document states that the person is the transferor of the securities and purports to have been stamped with the dealer’s stamp as the transferor’s broker.

955A   Extended application of Division to non-marketable securities

             (1)  If a declaration by ASIC under subsection 1113A(1) is in force in relation to particular non-marketable securities, or a particular class of non-marketable securities:

                     (a)  this Division, including the regulations made for the purposes of the provisions of this Division, applies in relation to those non-marketable securities, or non-marketable securities of that class, as if they were securities as defined in subsection 955(1); and

                     (b)  ASIC may, by writing, declare that this Division, and regulations made for the purposes of this Division, are to have effect in relation to their application to those non-marketable securities, or non-marketable securities of that class, subject to modifications specified in the declaration.

             (2)  A declaration under paragraph (1)(b) has effect accordingly.

             (3)  ASIC must cause a copy of a declaration under paragraph (1)(b) to be published in the Gazette .

             (4)  In this section:

non-marketable securities has the same meaning as in section 1113A.

956   Situations to which Division applies

             (1)  This Division applies if:

                     (a)  a dealer executes a document of transfer of securities on behalf of a person as transferor of the securities; and

                     (b)  the transfer is not an SCH-regulated transfer; and

                     (c)  apart from the effect of paragraph 1105(3)(a), the person did not authorise the dealer to execute the document.

             (2)  This Division also applies if:

                     (a)  a dealer effects, or purports to effect, a proper SCH transfer of securities on behalf of a person; and

                     (b)  apart from the effect of section 1109B, the person did not authorise the dealer to effect the transfer.

             (3)  In this Division:

                     (a)  the dealer’s action referred to in whichever of paragraphs (1)(a) and (2)(a) is applicable is called the unauthorised execution ; and

                     (b)  the person referred to in whichever of those paragraphs is applicable is called the transferor ; and

                     (c)  the securities referred to in whichever of those paragraphs is applicable are called the transferred securities .

957   Claim by transferor

                   If, as a result of the unauthorised execution, the transferor suffers loss in respect of any of the transferred securities, the transferor may make a claim in respect of the loss.

958   Claim by transferee or sub-transferee

             (1)  If, as a result of the unauthorised execution, a person (in this section called the claimant ), being:

                     (a)  in any case:

                              (i)  if subsection 956(1) applies—the person stated in the document as the transferee of the transferred securities; or

                             (ii)  if subsection 956(2) applies—the person in whose favour the proper SCH transfer was effected, or purported to be effected; or

                     (b)  if that person has disposed of any of the transferred securities—a successor in title of that person to any of the transferred securities;

suffers loss in respect of any of the transferred securities, the claimant may make a claim in respect of that loss.

             (2)  A person is not entitled to make a claim under this section if the person:

                     (a)  had actual knowledge that the transferor did not in fact authorise the unauthorised execution; or

                     (b)  is an excluded person in relation to the dealer.

959   How and when claim may be made

             (1)  A claim must:

                     (a)  be in writing; and

                     (b)  be served on SEGC:

                              (i)  if a notice under subsection (4) applies to the claim—before the end of the last application day specified in the notice; or

                             (ii)  in any other case—within 6 months after the day on which the claimant first became aware that the claimant had suffered loss as a result of the unauthorised execution.

             (2)  For the purposes of subsection (1), a notice under subsection (4) applies to a claim if the claim is in respect of an unauthorised execution, by the dealer named in the notice, during the applicable period specified in the notice.

             (3)  A claim that is not served on SEGC by the time required by paragraph (1)(b) is barred unless the Board otherwise determines.

             (4)  SEGC may publish, in each State and Territory in a daily newspaper circulating in that State or Territory, a notice that:

                     (a)  is in the prescribed form; and

                     (b)  names a particular dealer; and

                     (c)  requires that all claims in respect of unauthorised executions, by the named dealer, during a period (in this section called the applicable period ) specified in the notice in accordance with subsection (5) must be served on SEGC before the day (in this section called the last application day ) specified in the notice in accordance with subsection (6).

             (5)  The applicable period must be a period that starts and ends before:

                     (a)  if each publication of the notice occurs on the same day—the day on which the notice is published; or

                     (b)  in any other case—the first day on which the notice is published.

             (6)  The last application day must be at least 3 months after:

                     (a)  if each publication of the notice occurs on the same day—the day on which the notice is published; or

                     (b)  in any other case—the last day on which the notice is published.

             (7)  SEGC, a member of the Board and any employee of, or person acting on behalf of, SEGC each have qualified privilege in respect of the publication of a notice under subsection (4).

960   How claim is to be satisfied

             (1)  Where the Board is satisfied that a claimant under section 957 or 958 is entitled to make the claim, SEGC must allow the claim.

             (2)  If SEGC allows the claim and the claimant has, as a result of the unauthorised execution, ceased to hold some or all of the transferred securities, SEGC must:

                     (a)  subject to paragraph (b), supply to the claimant securities of the same kind and number as those of the transferred securities that the claimant has so ceased to hold; or

                     (b)  if the Board is satisfied that it is not practicable for SEGC to obtain such securities, or to obtain such securities within a reasonable time—pay to the claimant the amount that, as at the time when the Board decides that it is so satisfied, is the actual pecuniary loss suffered by the claimant, in respect of the transferred securities, as a result of the unauthorised execution (other than loss suffered as mentioned in subsection (3)).

             (3)  If SEGC allows the claim, it must pay to the claimant the amount that, as at the time when the claim is allowed, or when the Board decides as mentioned in paragraph (2)(b), as the case requires, is the actual pecuniary loss suffered by the claimant, as a result of the unauthorised execution, in respect of payments or other benefits:

                     (a)  in any case—to which the claimant would have become entitled, as the holder of such of the transferred securities as the claimant has, as a result of the unauthorised execution, ceased to hold, if the claimant had continued to hold the securities concerned until that time; or

                     (b)  if the claim was made under section 958—that the claimant has received as holder of any of the transferred securities.

             (4)  For the purposes of this section, where securities are purportedly transferred from a person to another person, the first-mentioned person is taken to cease to hold, and the other person is taken to hold, the securities even if the other person did not by virtue of the transfer get a good title to the securities.

961   Discretionary further compensation to transferor

             (1)  If SEGC allows a claim made under section 957 and the Board is satisfied that the supply of securities, or the payment of money, or both, as the case requires, to the claimant in accordance with section 960 will not adequately compensate the claimant in respect of a pecuniary or other gain that the claimant might, if the claimant had continued to hold the transferred securities, have made but did not in fact make, the Board may determine in writing that there be paid to the claimant in respect of that gain a specified amount that the Board considers to be fair and reasonable in all the circumstances.

             (2)  If a determination is made under subsection (1), SEGC must pay to the claimant the amount specified in it.



 

Division 7A Contraventions of SCH certificate cancellation provisions

961C   Interpretation

                   In this Division:

claim means a claim under this Division against SEGC.

dealer means a member of a participating exchange.

961D   Claim in respect of contravention of SCH certificate cancellation provisions

             (1)  Subject to this section, a person who suffers pecuniary loss in respect of a contravention, by a dealer, of the SCH certificate cancellation provisions may make a claim in respect of the loss.

             (2)  The loss must not be a loss in respect of an unauthorised execution (within the meaning of section 956) in respect of which the person has made, or is entitled to make, a claim under Division 7.

             (3)  The person must not have been involved in the contravention.

             (4)  The dealer must have been a member of a participating exchange on the day of the contravention.

961E   How and when claim may be made

             (1)  A claim must:

                     (a)  be in writing; and

                     (b)  be served on SEGC:

                              (i)  if a notice under subsection (4) applies to the claim—before the end of the last application day specified in the notice; or

                             (ii)  in any other case—within 6 months after the day on which the claimant first became aware that the claimant had suffered loss as a result of the dealer’s contravention of the SCH certificate cancellation provisions.

             (2)  For the purposes of subsection (1), a notice under subsection (4) applies to a claim if the claim is in respect of a contravention of the SCH certificate cancellation provisions, by the dealer named in the notice, during the applicable period specified in the notice.

             (3)  A claim that is not served on SEGC by the time required by paragraph (1)(b) is barred unless the Board otherwise determines.

             (4)  SEGC may publish, in each State and Territory in a daily newspaper circulating in that State or Territory, a notice that:

                     (a)  is in the prescribed form; and

                     (b)  names a particular dealer; and

                     (c)  requires that all claims in respect of contraventions of the SCH certificate cancellation provisions, by the named dealer, during a period (the applicable period ) specified in the notice in accordance with subsection (5) must be served on SEGC before the day (the last application day ) specified in the notice in accordance with subsection (6).

             (5)  The applicable period must be a period that starts and ends before:

                     (a)  if each publication of the notice occurs on the same day—the day on which the notice is published; or

                     (b)  in any other case—the first day on which the notice is published.

             (6)  The last application day must be at least 3 months after:

                     (a)  if each publication of the notice occurs on the same day—the day on which the notice is published; or

                     (b)  in any other case—the last day on which the notice is published.

             (7)  SEGC, a member of the Board and any employee of, or person acting on behalf of, SEGC each have qualified privilege in respect of the publication of a notice under subsection (4).

961F   How claim is to be satisfied

             (1)  SEGC must allow a claim if the Board is satisfied that the claimant is entitled to make the claim.

             (2)  If SEGC allows the claim, it must pay to the claimant the amount that, when the claim is allowed, is the actual pecuniary loss suffered by the claimant because of the contravention in respect of which the claim was made.

             (3)  For the purposes of subsection (2), the actual pecuniary loss suffered by the claimant does not include any loss in respect of an unauthorised execution (within the meaning of section 956) in respect of which the claimant has made, or is entitled to make, a claim under Division 7.

961G   Discretionary further compensation

             (1)  If:

                     (a)  SEGC allows a claim; and

                     (b)  the Board is satisfied that the payment of money to the claimant under section 961F will not adequately compensate the claimant for a pecuniary or other gain that the claimant did not make, but might have made, were it not for the contravention in respect of which the claim was made;

the Board may determine in writing that the claimant should be paid in respect of that gain a specified amount that the Board considers to be fair and reasonable in all the circumstances.

             (2)  If a determination is made under subsection (1), SEGC must pay the claimant the specified amount.



 

Division 8 Claims in respect of insolvent members

962   Interpretation

             (1)  In this Division, unless the contrary intention appears:

claim means a claim against SEGC under this Division.

dealer means a member of a participating exchange.

member organisation means a member organisation of a participating exchange.

             (2)  A reference in this Part to property being entrusted to, or received by, a person or partnership includes a reference to the property being entrusted to, or received by, the person or partnership outside this jurisdiction, whether in Australia or not.

963   Claim in respect of property entrusted to, or received by, dealer before dealer became insolvent

             (1)  Subject to this Division, where:

                     (a)  a dealer has at a particular time, whether before or after the commencement of this Part, become insolvent; and

                     (b)  at an earlier time (whether before or after that commencement), property was, in the course of, or in connection with, the dealer’s business of dealing in securities, entrusted to, or received by:

                              (i)  if the dealer was, at the earlier time, a partner in a member organisation—the member organisation, or a partner in, or an employee of, the member organisation; or

                             (ii)  otherwise—the dealer or an employee of the dealer;

                            and was so entrusted or received on behalf of, or because the dealer was a trustee of the property for, a person (other than an excluded person in relation to the dealer); and

                     (c)  as at the first-mentioned time, the obligations of the dealer, or of a member organisation in which the dealer is a partner, as the case requires, to the person in respect of the property have not been discharged;

the person may make a claim in respect of the property.

             (2)  Where a person makes a claim in respect of property and, at a particular time, the Board is satisfied that:

                     (a)  because of a dealer having become insolvent, this Division entitles the claimant to make the claim; and

                     (b)  as at that time, the obligations of the dealer, or of a member organisation in which the dealer is a partner, as the case requires, to the claimant in respect of the property have not been discharged;

SEGC must allow the claim and:

                     (c)  if the property is, or includes, money—pay to the claimant an amount equal to the amount of that money; and

                     (d)  if the property is, or includes, property other than money—subject to subsection (3) and section 964, supply the last-mentioned property to the claimant.

             (3)  Where:

                     (a)  SEGC allows a claim that, because of a dealer having become insolvent, this Division entitles a person to make in respect of property that is, or includes, a number of securities of a particular kind or documents of title to a number of securities of a particular kind; and

                     (b)  it is not reasonably practicable for SEGC to obtain those securities, or those documents of title to securities, as the case may be, from the dealer or, if the dealer has disposed of them, from the dealer’s successor in title, before the end of:

                              (i)  if the business rules of a participating exchange of which the dealer is a member, being those business rules as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes that claim—that period; or

                             (ii)  otherwise—such period as the Board, having regard to all the circumstances relating to the claim, considers reasonable;

SEGC must, subject to section 964, supply to the person, instead of those securities, or those documents of title to securities, that number of securities of that kind, or documents of title to that number of securities of that kind, as the case may be.

964   Cash settlement of claims where property unobtainable

             (1)  Where:

                     (a)  SEGC allows a claim that, because of a dealer having become insolvent, this Division entitles a person to make in respect of property that is, or includes, a number of securities of a particular kind or documents of title to a number of securities of a particular kind; and

                     (b)  it is not reasonably practicable for SEGC to obtain those securities, or those documents of title to securities, as the case may be, from the dealer or, if the dealer has disposed of them, from the dealer’s successor in title, before the end of:

                              (i)  if the business rules of a participating exchange of which the dealer is a member, being those business rules as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or

                             (ii)  otherwise—such period as the Board, having regard to all the circumstances relating to the claim, considers reasonable; and

                     (c)  because:

                              (i)  whether by reason that dealing in securities of that kind is suspended or for any other reason, there exists at no time during that period an orderly market in such securities; or

                             (ii)  the total number of securities of that kind offered for sale on stock markets of participating exchanges or Exchange subsidiaries at times during that period when there exists an orderly market in such securities is insufficient; and

                            it is not reasonably practicable for SEGC to obtain that number of securities of that kind, or documents of title to that number of securities of that kind, as the case may be, before the end of that period;

the Board may decide to pay to the claimant the amount that, when the decision is made, is the actual pecuniary loss suffered by the claimant in respect of the first-mentioned securities, or the first-mentioned documents of title, as the case may be, and if the Board does so, SEGC must pay that amount to the claimant.

             (2)  Where:

                     (a)  the Board allows a claim that, because of a dealer having become insolvent, this Division entitles a person to make in respect of property that is, or includes, property (in this subsection called the relevant property ) other than money, securities or documents of title to securities; and

                     (b)  it is not reasonably practicable for SEGC to obtain the relevant property from the dealer or, if the dealer has disposed of it, from the dealer’s successor in title, before the end of such period as the Board considers reasonable;

the Board may decide to pay to the claimant the amount that, when the decision is made, is the actual pecuniary loss suffered by the claimant in respect of the relevant property, and if the Board does so, SEGC must pay that amount to the claimant.

965   Ordering of alternative claims and prevention of double recovery

             (1)  Where:

                     (a)  a member organisation has received under the agreement for a sale or purchase of securities by the member organisation on behalf of a person, the consideration for the sale or settlement documents in relation to the purchase, as the case may be; and

                     (b)  subsection 951(1) or 952(1), as the case may be, entitles the person to make a claim against SEGC under Division 6 in respect of the sale or purchase;

subsection (2) applies.

             (2)  This Division does not, because of:

                     (a)  a dealer, being the member organisation or a partner in the member organisation, having become insolvent at a particular time; and

                     (b)  the member organisation having received, under the agreement, the consideration or the settlement documents;

entitle the person to make a claim in respect of the consideration or the settlement documents, as the case may be, unless the member organisation’s obligations to the person in respect of the sale or purchase, as the case may be, in so far as those obligations related to the consideration or the settlement documents, were discharged before that time.

             (3)  Where:

                     (a)  because of a dealer having become insolvent on a particular day, this Division entitles a person to make a claim (in this subsection called the first claim ) in respect of property; and

                     (b)  because of a dealer having become insolvent on a later day, this Division entitles a person to make another claim in respect of the property;

SEGC must not allow the other claim unless:

                     (c)  the person has made the first claim and SEGC has allowed or disallowed it; or

                     (d)  the Board is satisfied that if the first claim had been made SEGC would have disallowed it; or

                     (e)  the Board is satisfied that, when the person first became aware of the dealer referred to in paragraph (b) having become insolvent on the later day:

                              (i)  the first claim was barred; or

                             (ii)  it was no longer reasonably practicable for the person to make the first claim before it became barred.

             (4)  Where:

                     (a)  at a particular time, SEGC allows a claim made by a person under this Division in respect of property; and

                     (b)  because of:

                              (i)  a dealer having become insolvent (whether before, at or after that time); and

                             (ii)  the property having, before that time, been entrusted or received as mentioned in paragraph 963(1)(b);

                            this Division entitles the person to make another claim in respect of the property;

SEGC must not allow the other claim.

966   No claim in respect of money lent to dealer

                   Where, as at the time when a dealer becomes insolvent:

                     (a)  a person has lent money to the dealer; and

                     (b)  the liability of the dealer to repay the money remains undischarged;

this Division does not, because of the dealer having become insolvent at that time, entitle the person to make a claim in respect of the money.

967   No claim in certain other cases

                   This Division does not, because of a dealer having become insolvent on a particular day, entitle a person to make a claim in respect of property if:

                     (a)  before that day the property had, in due course of the administration of a trust, ceased to be under the sole control of the dealer; or

                     (b)  the Board, or the Court, is satisfied that circumstances that materially contributed to the dealer becoming insolvent on that day were due to, or caused directly or indirectly by, an act or omission of the person.

968   Limits of compensation

             (1)  The total amounts paid out of the Fund in connection with claims that:

                     (a)  because of:

                              (i)  a dealer having become insolvent on a particular day; or

                             (ii)  if 2 or more partners in the same member organisation have become insolvent on a particular day—those partners having become insolvent on that day;

                            this Division entitles persons to make; and

                     (b)  are allowed by SEGC;

must not exceed an amount equal to 14% of the minimum amount of the Fund as at the end of that day.

             (2)  In determining, for the purposes of subsection (1), the total of the amounts paid out of the Fund in connection with claims in respect of property:

                     (a)  an amount paid out of the Fund in connection with any of the claims is, to the extent to which it is repaid to the Fund, to be disregarded; and

                     (b)  where, by virtue of the exercise of a right or remedy in relation to property that is, or is included in, the first-mentioned property, being a right or remedy of the claimant, or of any of the claimants, to which SEGC is, by virtue of section 980, subrogated, money or other property has been recovered by, or on behalf, of SEGC—so much of the amount, or of the total of the amounts, paid out of the Fund in connection with any of the claims as does not exceed:

                              (i)  the amount of that money; or

                             (ii)  the value of so much (if any) of that other property as has not been, and is not required to be, supplied under subsection 963(2) in respect of any of the claims;

                            as the case may be, is to be disregarded.

             (3)  In order to ensure compliance with subsection (1) as it applies in relation to particular claims:

                     (a)  the Board may, in relation to each of those claims, determine in writing an amount to be the maximum amount in relation to the claim; and

                     (b)  where paragraph (a) empowers the Board to make determinations in relation to the respective claims of 2 or more claimants—the Board must, in making those determinations:

                              (i)  take into account, in relation to each of those claimants, any money or other property that the claimant has received, or is likely to receive, from sources other than the Fund as compensation for property to which the claimant’s claim relates; and

                             (ii)  strive to ensure that the proportion of the property to which a claim relates that is represented by the money and other property received from all sources (including the Fund) as compensation for property to which the claim relates is, as nearly as practicable, the same for each of those claimants.

             (4)  Where a determination of an amount as the maximum amount in relation to a claim is in force under subsection (3), the amount, or the total of the amounts, paid out of the Fund in connection with the claim must not exceed the first-mentioned amount.

             (5)  In this section, claim means a claim under this Division.

969   Making of claims

             (1)  SEGC may publish, in each State and Territory, in a daily newspaper circulating generally in that State or Territory, a notice in the prescribed form specifying a day, not being earlier than 3 months after the publication of the notice, on or before which claims against SEGC may be made, being claims that, because of a dealer specified in the notice having become insolvent, this Division entitles persons to make.

             (2)  Where, because of a dealer having become insolvent on a particular day, this Division entitles a person to make a claim, the claim must be in writing and must be served on SEGC:

                     (a)  if there has been published in accordance with subsection (1) a notice specifying a day on or before which claims may be made, being claims that, because of the dealer having become insolvent on that day, this Division entitles persons to make—on or before that day; or

                     (b)  otherwise—within 6 months after the person becomes aware of the dealer having become insolvent on that day.

             (3)  A claim that is not made in accordance with subsection (2) is barred unless the Board otherwise determines.

             (4)  SEGC, a member of the Board and any employee of, or person acting on behalf of, SEGC each have qualified privilege in respect of the publication of a notice under subsection (1).



 

Division 9 General provisions relating to claims

970   Power of SEGC to allow and settle claim

                   Subject to this Part, SEGC may, at any time after a person becomes entitled to make a claim, allow and settle the claim.

970A   Claimant may be required to exercise right of set-off

                   If:

                     (a)  a person (in this section called the claimant ) has made a claim in respect of a liability of another person (in this section called the defaulter ); and

                     (b)  the claimant has a right, whether under an agreement or otherwise, to set off a liability of the claimant to the defaulter against the liability referred to in paragraph (a);

SEGC may refuse to allow the claim until the claimant has exercised the right.

970B   Effect of set-off on claim

             (1)  If:

                     (a)  SEGC allows a claim by a person (in this section called the claimant ) in respect of a liability of another person (in this section called the defaulter ); and

                     (b)  the liability of the defaulter to the claimant has been reduced, by an amount of money or a number of securities (in this section called the set-off reduction ), because of:

                              (i)  the exercise by the claimant or the defaulter of a right of set-off, whether under an agreement or otherwise; or

                             (ii)  the operation of an agreement so far as it provides for the automatic set-off of liabilities; and

                     (c)  but for this section, the reduction of the defaulter’s liability would not be taken into account when working out the obligations of SEGC in respect of the claim;

this section applies for the purposes of working out those obligations.

             (2)  If:

                     (a)  SEGC is required to satisfy the claim by paying an amount; and

                     (b)  the set-off reduction consists of an amount;

the amount SEGC must pay in respect of the claim is reduced by the amount of the set-off reduction.

             (3)  If:

                     (a)  SEGC is required to satisfy the claim by paying an amount; and

                     (b)  the set-off reduction consists of a number of securities;

then:

                     (c)  the Board must work out the value of the securities; and

                     (d)  the amount SEGC must pay in respect of the claim is reduced by the value worked out under paragraph (c).

             (4)  If:

                     (a)  SEGC is required to satisfy the claim by transferring securities of a particular kind; and

                     (b)  the set-off reduction consists of a number of securities of that kind;

the number of securities that SEGC must transfer in respect of the claim is reduced by the number referred to in paragraph (b).

             (5)  If:

                     (a)  SEGC is required to satisfy the claim by transferring securities of a particular kind; and

                     (b)  the set-off reduction consists of a number of securities that are not of that kind;

then:

                     (c)  the Board must work out:

                              (i)  the value of the securities that constitute the set-off reduction; and

                             (ii)  the number of securities of the kind referred to in paragraph (a) that are equal in value to the value worked out under subparagraph (i); and

                     (d)  the number of securities that SEGC is required to transfer in respect of the claim is reduced by the number worked out under subparagraph (c)(ii).

             (6)  If:

                     (a)  SEGC is required to satisfy the claim by transferring securities of a particular kind; and

                     (b)  the set-off reduction consists of an amount of money;

then:

                     (c)  the Board must work out the number of securities of that kind that are equal in value to that amount; and

                     (d)  the number of securities that SEGC must transfer in respect of the claim is reduced by the number worked out under paragraph (c).

971   Successful claimant entitled to costs and disbursements

                   Where a claim is allowed, then, in addition to the claimant’s other rights under this Part, the claimant is entitled to be paid out of the Fund an amount equal to the total of the reasonable costs of, and the reasonable disbursements incidental to, the making and proof of the claim.

972   Interest

             (1)  In addition to an amount that is payable to a person out of the Fund in respect of a claim, interest at the rate of 5% per annum or, if another rate is determined in writing by the Board, at that other rate, is payable to the person out of the Fund, on so much of that amount as is not attributable to costs and disbursements, in respect of the period beginning on the day on which the person became entitled to make the claim and ending on:

                     (a)  if the Board has made a determination under subsection 983(1) to pay that amount in instalments—the day on which that amount would, if no such determination had been made and the money in the Fund were unlimited, have been paid to the person; or

                     (b)  if, because of insufficiency of the Fund, no part of that amount is paid to the person on the day on which that amount would, if the money in the Fund were unlimited, have been so paid—that day; or

                     (c)  otherwise—the day on which that amount is paid to the person.

          (1A)  A rate of interest determined by the Board for the purposes of subsection (1):

                     (a)  must not exceed the rate that, when the determination is made, is fixed by Rules of Court for the purposes of paragraph 52(2)(a) of the Federal Court of Australia Act 1976 ; and

                     (b)  must not be less than 5% per year.

          (1B)  As soon as practicable after determining a rate of interest for the purposes of subsection (1), the Board must cause a copy of the determination to be published in the Gazette .

             (2)  Where:

                     (a)  under subsection (1), interest is payable to a person on an amount in respect of a period; and

                     (b)  that amount, or a part of that amount, remains unpaid throughout a period beginning immediately after the period referred to in paragraph (a);

then, in addition to that amount and that interest, interest at the prescribed rate is payable to the person out of the Fund on that amount, or on that part of that amount, as the case may be, in respect of that period first referred to in paragraph (b).

972A   Discretion to pay amounts not received etc. because of failure to transfer securities

             (1)  If the Board is satisfied that:

                     (a)  a person or partnership (in this section called the defaulter ) has failed to discharge an obligation to transfer securities to another person or partnership (in this section called the entitled entity ); and

                     (b)  the entitled entity:

                              (i)  has made a claim under Division 6, 6A, 6B or 6C in respect of the failure and has had securities transferred to it, or an amount paid to it, in satisfaction of the claim; or

                             (ii)  unless it is a settlement authority—would have been entitled to make a claim under Division 6B or 6C in respect of the failure if a settlement authority had not transferred securities to it for the purpose of remedying the failure; or

                            (iii)  if it is a settlement authority—would have been entitled to make a claim under Division 6C in respect of the failure if it had not obtained securities for the purpose of remedying the failure; and

                     (c)  if the defaulter had duly transferred securities in accordance with the obligation, an amount would have been paid, or property would have been transferred, to the entitled entity as the holder of the securities; and

                     (d)  the entitled entity has not received, and is not entitled to receive (otherwise than from the defaulter):

                              (i)  the amount or property; or

                             (ii)  an equivalent amount or equivalent property in respect of securities transferred or obtained as mentioned in paragraph (b); and

                     (e)  if subparagraph (b)(i) applies and an amount has been paid in satisfaction of the claim—the amount paid does not adequately compensate the entitled entity for the loss of the amount or property referred to in paragraph (c);

the Board may determine in writing that there be paid to the entitled entity, in respect of the loss of the amount or property referred to in paragraph (c), a specified amount that the Board considers to be fair and reasonable in all the circumstances.

             (2)  If a determination is made under subsection (1), SEGC must pay to the entitled entity the amount specified in it.

973   Application of Fund in respect of certain claims

             (1)  SEGC:

                     (a)  may buy securities for the purpose of complying with subsection 950(3), 950(4), 952(4), 952(5), 954G(2), 954S(2) or 954Z(2), paragraph 960(2)(a) or subsection 963(3); and

                     (b)  may pay money out of the Fund for the purpose of so buying securities or for any other purpose connected with complying with that subsection or paragraph.

             (2)  Securities bought by SEGC as mentioned in subsection (1) form part of the Fund until they are supplied in accordance with this Part to a claimant or sold in accordance with subsection (3).

             (3)  If:

                     (a)  SEGC buys securities for the purpose of complying, in relation to a claim, with a provision referred to in paragraph (1)(a); and

                     (b)  SEGC satisfies the claim by paying an amount to the claimant;

SEGC must, as soon as practicable after satisfying the claim, sell the securities and pay the proceeds of the sale into the Fund.

             (4)  In this section:

securities includes security benefits, within the meaning of Division 6A, other than amounts of money.

974   Allowing of claim not to constitute admission

                   Where SEGC allows a claim, neither the allowing of the claim, nor any act done by SEGC as a result of allowing the claim, is taken for any purpose to constitute an admission by any person of liability in respect of any matter, other than an admission of SEGC of its liability in respect of the claim.

975   SEGC to notify claimant where claim disallowed

                   SEGC must, after wholly or partly disallowing a claim, serve on the claimant, or on the claimant’s solicitor, notice of the disallowance in the prescribed form.

976   Proceedings in the Court

             (1)  Where SEGC has disallowed a claim, the claimant may, within 3 months after notice of the disallowance has been served on the claimant, or on the claimant’s solicitor, in accordance with section 975, bring proceedings in the Court to establish the claim.

             (2)  Where, as at the end of a reasonable period after a claim was made, SEGC has neither allowed nor disallowed the claim, the claimant may bring proceedings in the Court to establish the claim.

977   Arbitration of amount of cash settlement of certain claims

             (1)  Where:

                     (a)  a cash settlement provision requires SEGC to pay an amount in respect of a claim; and

                     (b)  that amount cannot be determined by agreement between SEGC and the claimant;

that amount must be determined by arbitration in accordance with this section.

          (1A)  Where:

                     (a)  in relation to a claim, paragraph 970B(3)(c), (5)(c) or (6)(c) requires the Board to work out the value of securities, or the number of securities that are equal in value to some other value or amount; and

                     (b)  the value or number cannot be determined by agreement between the Board and the claimant;

the value or number is to be determined by arbitration in accordance with this section.

             (2)  The reference to arbitration must be made to persons appointed, in accordance with subsection (3), for the purposes of the reference and the agreed arbitration law applies in relation to the reference.

          (2A)  Parties to the arbitration may agree on the State or Territory whose law is to govern the arbitration. The agreed arbitration law is the law of that State or Territory relating to commercial arbitration.

             (3)  The participating exchange must appoint, or the participating exchanges must jointly appoint, as the case requires, for the purposes of the reference to arbitration, 3 persons whose appointment under this subsection has been approved in writing by the Minister and at least 2 of whom are neither members of a participating exchange nor officers or employees of SEGC, of a participating exchange, or of a member organisation of a participating exchange.

             (7)  In this section:

cash settlement provision means section 952A or 953, subsection 954G(3), 954H(2), 954R(2), 954S(3), 954T(2), 954Z(3) or 954ZA(2), section 960 or 961F or subsection 964(1) or (2).

978   Form of order of Court establishing claim

             (1)  Where, in a proceeding to establish a claim, the Court is satisfied that the claim should be allowed, the Court:

                     (a)  must, by order, make a declaration accordingly and direct SEGC to allow the claim and deal with it in accordance with this Chapter; and

                     (b)  may, at any time after making the order, give, upon application made by the claimant or SEGC, such directions relating to the claim as the Court thinks just and reasonable.

             (2)  In a proceeding to establish a claim, or in an application under paragraph (1)(b), all questions of costs are in the discretion of the Court.

979   Power of Board to require production of securities etc.

             (1)  The Board may, by notice served on a person, require the person to give to SEGC specified securities, documents, or statements of evidence, necessary to support a claim or necessary for the purpose of:

                     (a)  exercising SEGC’s rights against a member, or a member organisation, of a participating exchange or against any other person; or

                     (b)  enabling criminal proceedings to be taken against a person.

          (1A)  The Board may, for the purposes of section 970A or 970B, by notice in writing served on a person, require the person to give SEGC specified information relating to the existence or exercise of rights of set-off.

             (2)  Where a person fails, without reasonable excuse, to comply with a requirement under subsection (1) or (1A), SEGC may disallow a claim made by the person.

980   Subrogation of SEGC to claimant’s rights etc.

             (1)  Where SEGC:

                     (a)  allows under subsection 949(5) or 951(3) a claim made under Division 6 in respect of a sale of securities; or

                     (b)  allows under subsection 950(2) or 952(3) a claim made under Division 6 in respect of a purchase of securities;

SEGC is subrogated to all the claimant’s rights and remedies in relation to the sale or purchase, as the case may be.

          (1A)  Where SEGC allows a claim under section 950 in respect of a purchase the agreement for which has been novated, SEGC is subrogated to all the rights and remedies of the claimant in relation to the replacement agreement or agreements.

          (1B)  Where SEGC allows a claim under Division 6A in respect of an obligation under a guaranteed securities loan, SEGC is subrogated to all the claimant’s rights and remedies in relation to that obligation.

          (1C)  Where SEGC allows a claim under section 954D in respect of an obligation under a guaranteed securities loan that has been novated, SEGC is subrogated to all the claimant’s rights and remedies in relation to the obligation, under a replacement agreement, that replaced the first-mentioned obligation.

          (1D)  Where SEGC allows a claim under subsection 954N(1) or 954P(2) in respect of an obligation to pay an amount or to transfer securities, SEGC is subrogated to all the claimant’s rights and remedies in relation to that obligation.

          (1E)  Where SEGC allows a claim under subsection 954P(3) in respect of a failure to transfer securities, SEGC is subrogated to all the rights and remedies that the claimant has in relation to that failure because of the subrogation effected by paragraph 954P(3)(a).

           (1F)  Where SEGC allows a claim under subsection 954Y(2) in respect of a purported transfer of securities, SEGC is subrogated to all the claimant’s rights and remedies in relation to that purported transfer.

          (1G)  Where SEGC allows a claim under subsection 954Y(3) in respect of a purported transfer of securities, SEGC is subrogated to:

                     (a)  if the claimant is also the transferee referred to in that subsection—all the claimant’s rights and remedies in relation to that purported transfer; or

                     (b)  otherwise—all the rights and remedies that the claimant has in relation to that purported transfer because of the subrogation effected by paragraph 954Y(3)(c).

             (2)  Where SEGC allows a claim made under Division 7 in respect of an unauthorised execution (within the meaning of that Division), SEGC is subrogated to all the claimant’s rights and remedies in relation to the conduct that constitutes the unauthorised execution.

          (2A)  Where SEGC allows a claim made under Division 7A in respect of a contravention of the SCH certificate cancellation provisions, SEGC is subrogated to all the claimant’s rights and remedies in relation to the contravention.

             (3)  Where SEGC allows a claim made under Division 8 in respect of property, SEGC is subrogated to all the claimant’s rights and remedies in relation to the property.

             (4)  Where, by virtue of this section, SEGC is subrogated to a right or remedy that a person has against another person, then:

                     (a)  if SEGC has reason to believe that an insurer may be liable to indemnify the other person in respect of the subject matter of the right or remedy—SEGC must serve a notice on the insurer setting out particulars of the right or remedy and stating that SEGC is, by virtue of this section, subrogated to the right or remedy; and

                     (b)  an insurer that considers that it may be liable so to indemnify the other person may, whether or not SEGC has served a notice on the insurer under paragraph (a), apply to be joined as a party to a proceeding that relates to the right or remedy and to which the first-mentioned person or SEGC is a party; and

                     (c)  the first-mentioned person or SEGC may, to the extent of the liability of an insurer so to indemnify the other person, enforce against the insurer a judgment or order obtained in such a proceeding in so far as the proceeding relates to the right or remedy.

             (5)  Except as provided in this section, nothing in this Part affects a right or remedy that a claimant under Division 6, 6A, 6B, 6C, 7, 7A or 8 has against a person other than SEGC.

981   Payment of claims only from Fund

                   Property of SEGC, other than property forming part of the Fund, is not available to be applied in respect of a claim that has been allowed by SEGC, whether or not under an order of the Court.

982   SEGC may enter into contracts of insurance or indemnity

             (1)  SEGC may enter into a contract with a person carrying on fidelity insurance business under which SEGC will be insured or indemnified, to the extent and in the manner provided by the contract, against liability in respect of claims.

             (2)  A contract entered into under subsection (1) may relate to dealers generally, particular classes of dealers specified in the contract, particular dealers so specified, or dealers generally with the exclusion of particular classes of dealers, or particular dealers, so specified.

             (3)  SEGC, a participating exchange, a member of the Board and any employee of SEGC or of a participating exchange each have qualified privilege in respect of the publication of a statement that a contract entered into under subsection (1) does or does not apply with respect to a dealer.

             (4)  Where SEGC has entered into a contract of insurance or indemnity with an insurer under this section, a person who has made a claim does not have a right of action against the insurer in respect of the contract or a right or claim in respect of money paid by the insurer in accordance with the contract.

             (5)  In this section:

dealer means a member, or a member organisation, of a participating exchange.

983   Instalment payments

             (1)  Where, at a particular time, the Board is of the opinion that, if all the amounts that, as at that time, are payable out of the Fund in connection with claims were so paid, the Fund would be exhausted or substantially depleted, the Board may determine in writing that amounts so payable as at that time must be so paid in instalments of specified amounts payable on specified days.

             (2)  In subsection (1):

claim means a claim under Division 6, 6A, 6B, 6C, 7, 7A or 8 or a claim that, for the purposes of Division 10, is a transferred claim in relation to a joining exchange.

             (3)  A determination under subsection (1) applies subject to subsection 932(3).

983A   ASIC’s power to modify effect of claims Divisions

             (1)  ASIC may, in writing, declare that the provisions of a claims Division are to have effect in their application in relation to a particular transaction, or a particular class of transactions, either generally or as otherwise provided in the declaration, as if specified modifications were made to the provisions.

             (2)  A declaration may relate to transactions whether entered into before or after the making of the declaration.

             (3)  A declaration has effect accordingly.

             (4)  ASIC must cause a copy of a declaration to be published in the Gazette .

             (5)  A reference in this section to the provisions of a claims Division includes a reference to regulations made for the purposes of the provisions, or any of the provisions, of the Division.

             (6)  In this section:

claims Division means Division 6, 6A, 6B, 6C, 7, 7A or 8.



 

Division 10 Transitional

984   Definitions

                   In this Division, unless the contrary intention appears:

joining day , in relation to a joining exchange, means the day on which the joining exchange became:

                     (a)  an Exchange subsidiary; or

                     (b)  a participating exchange.

joining exchange means:

                     (a)  a securities exchange that:

                              (i)  at a particular time after 1 January 1991 became or becomes an Exchange subsidiary; and

                             (ii)  was not, immediately before that time, an exchange subsidiary; or

                     (b)  a securities exchange that:

                              (i)  at a particular time after the commencement of this Part becomes a participating exchange; and

                             (ii)  was not, immediately before that time, a participating exchange.

liability provisions means sections 907 to 916, inclusive.

transferred claim , in relation to a joining exchange, means:

                     (a)  a claim made, before the joining day in relation to the joining exchange, for compensation from the joining exchange’s fidelity fund; or

                     (b)  a claim that, as at the time immediately before the joining day in relation to the joining exchange, the liability provisions entitled a person to make for compensation from the joining exchange’s fidelity fund, but that, as at that time, had not been made; or

                     (c)  a claim that purports to be a claim of a kind referred to in paragraph (b).

985   Assets and liabilities of joining exchange’s fidelity fund

             (1)  The money that at the end of the joining day in relation to a joining exchange was in the joining exchange’s fidelity fund must, as soon as practicable after that day, be paid out of that fidelity fund and into the Fund.

             (2)  At the beginning of the next day after the joining day in relation to a joining exchange:

                     (a)  the investments and other property of the joining exchange’s fidelity fund that at the end of the joining day were vested in the joining exchange vest in SEGC and become part of the Fund; and

                     (b)  the rights that at the end of the joining day the joining exchange had, whether under a previous law or otherwise, in connection with the administration of the joining exchange’s fidelity fund vest in SEGC; and

                     (c)  SEGC becomes liable to pay and discharge the debts, liabilities and obligations of the joining exchange that arose, whether under a previous law or otherwise, in connection with the administration of the joining exchange’s fidelity fund and that existed at the end of the joining day.

             (3)  A reference in subsection (2) to rights or to debts, liabilities and obligations does not include a reference to rights, or to debts, liabilities and obligations, as the case may be, arising under a contract of employment or under a contract for services.

             (4)  Investments that at the end of the joining day in relation to a joining exchange were held, by a person other than the joining exchange, for the purposes of the joining exchange’s fidelity fund are held after that day for the purposes of the Fund.

             (5)  After the joining day in relation to a joining exchange, an agreement (other than a contract of employment or a contract for services) that was entered into:

                     (a)  by or on behalf of the joining exchange as a party; and

                     (b)  in connection with the administration of the joining exchange’s fidelity fund;

and was in force at the end of that day applies, with such modifications as the circumstances require, as if:

                     (c)  SEGC were substituted for the joining exchange as a party to the agreement; and

                     (d)  a reference in the agreement to the joining exchange were, except in relation to a time on or before that day, a reference to SEGC.

             (6)  Without limiting the generality of another provision of this section, where, as at the end of the joining day in relation to a joining exchange, an amount advanced under subsection 905(1) by the joining exchange to its fidelity fund has not been repaid, an amount equal to the first-mentioned amount is, after that day, payable, on demand, by SEGC to the joining exchange.

             (7)  Where, at the end of the joining day in relation to a joining exchange, proceedings:

                     (a)  to which the joining exchange was a party; and

                     (b)  that arose out of, or were otherwise connected with, the administration of the joining exchange’s fidelity fund;

were pending in a court or tribunal, SEGC is, at the beginning of the next day after the joining day, substituted for the joining exchange as a party to the proceedings and has the same rights in the proceedings as the party for which it was substituted.

             (8)  An amount that, as a result of the operation of this section, is or becomes payable by SEGC is payable out of the Fund.

             (9)  This section applies subject to section 987.

986   Final accounts in respect of joining exchange’s fidelity fund

             (1)  A joining exchange must, as soon as practicable, and in any event within 2 months, after the joining day in relation to the joining exchange:

                     (a)  prepare a statement of the assets and liabilities of its fidelity fund as on that day; and

                     (b)  appoint a registered company auditor to audit the statement.

             (2)  Without limiting the generality of subsection (1), a statement prepared under that subsection must set out full particulars, so far as known when the statement is prepared, of all liabilities (including contingent liabilities) of the joining exchange’s fidelity fund in respect of transferred claims.

             (3)  An auditor appointed to audit a statement prepared under subsection (1) in relation to a joining exchange’s fidelity fund must, within 1 month after the statement is prepared:

                     (a)  audit the statement; and

                     (b)  cause a report on the statement to be given to the Board and a copy of the report to be given to the board of the joining exchange.

             (4)  The Board must give to ASIC a copy of a report given to the Board under this section, and a copy of the statement to which the report relates, within 14 days after the report is given to the Board.

987   Application of liability provisions in relation to transferred claims

                   On and after the joining day in relation to a joining exchange, the liability provisions apply, for the purposes of a transferred claim in relation to the joining exchange, as if, except in relation to a time before that day:

                     (a)  a reference in those provisions to the fidelity fund of a securities exchange were a reference to the Fund; and

                     (b)  a reference in those provisions to the board of a securities exchange were a reference to the Board; and

                     (c)  a reference in those provisions to a securities exchange were a reference to SEGC;

and with such other modifications as the circumstances require.