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Managed Investments Bill 1997
Schedule 2 Consequential amendments

Part 1 Amendment of the Corporations Law set out in section 82 of the Corporations Act 1989

1  After subparagraph 8(5)(c)(ix)

Insert:

                          (ixa)  Chapter 5C; or

2  Subparagraph 8(5)(c)(xiii)

Repeal the subparagraph.

3  Section 9

Insert:

ARSN (short for “Australian Registered Scheme Number”) is the number given by the ASC to a registered scheme on registration (see section 601EB).

4  Section 9 (definition of buy-back arrangements )

Repeal the definition.

5  Section 9 (definition of buy-back covenant )

Repeal the definition.

6  Section 9 (definition of cash management trust interest )

Repeal the definition, substitute:

cash management trust interest means an interest that:

                     (a)  is an interest in a registered scheme; and

                     (b)  relates to an undertaking of the kind commonly known as a cash management trust.

7  Section 9 (definition of class )

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

8  Section 9 (definition of constitution )

Repeal the definition, substitute:

constitution means (depending on the context):

                     (a)  a company’s constitution; or

                     (b)  a managed investment scheme’s constitution; or

                     (c)  in relation to any other kind of body:

                              (i)  the body’s charter or memorandum; or

                             (ii)  any instrument or law (other than this Law) constituting, or defining the constitution of, the body or governing the activities of the body or its members.

9  Section 9 (definition of deed )

Repeal the definition, substitute:

deed includes a document having the effect of a deed.

10  Section 9 (paragraph (b) of the definition of excluded security )

Omit “a prescribed interest”, substitute “an interest in a managed investment scheme”.

11  Section 9

Insert:

exempt managed investment scheme interest has the meaning given by section 68A.

12  Section 9 (definition of exempt prescribed interest )

Repeal the definition.

13  Section 9

Insert:

franchise means an arrangement under which a person earns profits or income by exploiting a right, conferred by the owner of the right, to use a trade mark or design or other intellectual property or the goodwill attached to it in connection with the supply of goods or services. An arrangement is not a franchise if the person engages the owner of the right, or an associate of the owner, to exploit the right on the person’s behalf.

14  Section 9

Insert:

interest in a managed investment scheme means a right to benefits produced by the scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not).

15  Section 9 (paragraph (a) of the definition of issue )

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

16  Section 9

Insert:

managed investment scheme means:

                     (a)  a scheme that has the following features:

                              (i)  people contribute money or money’s worth as consideration to acquire rights ( interests )to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not)

                             (ii)  any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members ) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders)

                            (iii)  the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions); or

                     (b)  a time-sharing scheme;

but does not include the following:

                     (c)  a partnership covered by an application order made for the purposes of section 115

                     (d)  a body corporate (other than a body corporate that operates as a time sharing scheme)

                     (e)  a scheme in which all the members are bodies corporate that are related to each other and to the body corporate that promotes the scheme

                      (f)  a franchise

                     (g)  a statutory fund maintained under the Life Insurance Act 1995

                     (h)  a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust, or a public sector superannuation scheme, within the meaning of the Superannuation Industry (Supervision) Act 1993

                      (i)  a scheme operated by an Australian bank in the ordinary course of its banking business

                      (j)  the issue of debentures or convertible notes by a body corporate

                     (k)  a barter scheme under which each participant may obtain goods or services from another participant for consideration that is wholly or substantially in kind rather than in cash

                      (l)  a retirement village scheme operating within or outside Australia:

                              (i)  under which the participants, or a majority of them, are provided, or are to be provided, with residential accommodation within a retirement village (whether or not the entitlement of a participant to be provided with accommodation derives from a proprietary interest held by the participant in the premises where the accommodation is, or is to be, provided); and

                             (ii)  which is not a time-sharing scheme

                    (m)  a scheme that is operated by a co-operative company registered under Part VI of the Companies (Co-operative) Act 1943 of Western Australia or under a previous law of Western Australia that corresponds to that Part

                     (n)  a scheme of a kind declared by the regulations not to be a managed investment scheme.

Note:          Paragraph (c)—A partnership with less than 20 members will usually not require registration because of paragraph 601ED(1)(a) and under section 115 a partnership with more than 20 members can only operate if covered by an application order.

17  Section 9 (definition of management company )

Repeal the definition.

18  Section 9 (definition of marketable security )

Omit “prescribed interest”, substitute “interest in a managed investment scheme”.

19  Section 9 (definition of member )

Insert before paragraph (a):

                    (aa)  in relation to a managed investment scheme ¾ means a person who holds an interest in the scheme; or

20  Section 9 (definition of of )

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

21  Section 9 (definition of officer )

Repeal the definition, substitute:

officer :

                     ( a)  in relation to the responsible entity of a registered scheme ¾ means a person who is a director, secretary or executive officer of the responsible entity; or

                     (b)  in any other case ¾ has the meaning given by section 82A.

22  Section 9 (definition of participation interest )

Repeal the definition.

23  Section 9 (definition of prescribed interest )

Repeal the definition.

24  Section 9 (paragraph (a) of the definition of public company )

Omit “in the definition of public corporation (in this section) and”.

25  Section 9 (definition of public corporation )

Repeal the definition.

26  Section 9

Insert:

registered scheme means a managed investment scheme that is registered under section 601EB.

27  Section 9

Insert:

responsible entity of a registered scheme means the company named in the ASC’s record of the scheme’s registration as the responsible entity or temporary responsible entity of the scheme.

28  Section 9

Insert:

scheme property of a registered scheme means:

                     (a)  contributions of money or money’s worth to the scheme; and

                     (b)  money that forms part of the scheme property under provisions of this Law or the ASC Law; and

                     (c)  money borrowed or raised by the responsible entity for the purposes of the scheme; and

                     (d)  property acquired, directly or indirectly, with, or with the proceeds of, contributions or money referred to in paragraph (a), (b) or (c); and

                     (e)  income and property derived, directly or indirectly, from contributions, money or property referred to in paragraph (a), (b), (c) or (d).

Note 1:      Paragraph (a)—if what a member contributes to a scheme is rights over property, the rights in the property that the member retains do not form part of the scheme property.

Note 2:      For provisions that are relevant to paragraph (b), see subsections 177(4), 1317HA(1A), 1317HB(3) and 1317HD(3) of this Law and subsection 93A(5) of the ASC Law.

29  Section 9 (definition of securities law )

After “Chapter” insert “5C,”.

30  Section 9 (definition of subscriber )

Repeal the definition, substitute:

subscriber for securities that are interests in a managed investment scheme means any person:

                     (a)  accepting an offer, or making an offer pursuant to an invitation, in respect of the interests; or

                     (b)  subscribing for or buying the interests.

31  Section 9 (definition of undertaking )

Repeal the definition, substitute:

undertaking , in relation to a managed investment scheme, means the undertaking, scheme, enterprise, contract or arrangement to which the scheme relates.

32  Section 9 (definition of unit )

Omit “(whether a prescribed interest or not)”.

33  Paragraph 53(e)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

34  Paragraph 53(h)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

35  Paragraph 53(j)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

36  Subsection 57(2)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

Note:       The heading to section 57 of the Corporations Law is altered by omitting “ prescribed interests ” and substituting “ interests in managed investment schemes ”.

37  Paragraph 66(2)(d)

Omit “prescribed interests or units of prescribed interests”, substitute “interests in an unregistered managed investment scheme”.

38  After paragraph 66(2)(d)

Insert:

                    (da)  the securities are interests in a managed investment scheme that is not registered under section 601EB and that is not required by section 601ED (disregarding subsection 601ED(2)) to be registered under section 601EB; or

39  Paragraph 66(2)(m)

Repeal the paragraph, substitute:

                    (m)  in the case of an issue of interests (in this paragraph called new interests ) in a registered scheme:

                              (i)  the issue was made to existing holders of interests (in this paragraph called existing interests ) in the scheme:

                                        (A)  in satisfaction in whole or in part of an amount payable to those holders in respect of their existing interests, whether the existing interests are of the same class as, or are of a different class from, the new interests; or

                                        (B)  in exchange for existing interests of a different class from the new interests; and

                             (ii)  the existing interests were issued under a prospectus; or

40  Paragraph 66(3)(d)

Omit “prescribed interests or units of prescribed interests”, substitute “interests in an unregistered managed investment scheme”.

41  After paragraph 66(3)(d)

Insert:

                    (da)  the securities are interests in a managed investment scheme that is not registered under section 601EB and that is not required by section 601ED (disregarding subsection 601ED(2)) to be registered under section 601EB; or

42  At the end of subsection 66(4)

Add:

             ; and (c)  an interest in a managed investment scheme is of the same class of interests as any other interest in the scheme or any other scheme that is declared by the ASC to be a closely related scheme under subsection 601ED(3).

43  Section 68A

Repeal, substitute:

68A   Exempt interests in managed investment schemes in relation to a jurisdiction

             (1)  Each of the following is an exempt interest in a managed investment scheme in relation to Western Australia:

                     (a)  an interest in a registered scheme that a registered co-operative company has issued, or proposes to issue, to a member of the company

                     (b)  an interest in a registered scheme in so far as a registered co-operative company

                              (i)  offers the interest to a member of the company for subscription or purchase; or

                             (ii)  invites such a member to subscribe for or buy the interest

                     (c)  an interest in a registered scheme in so far as:

                              (i)  a registered co-operative company:

                                        (A)  offers the interest to a person other than a member of the company; or

                                        (B)  invites a person other than a member to subscribe for or buy the interest; and

                             (ii)  the terms or circumstances of the offer or invitation are such that, if the offer, or an offer that the person makes because of the invitation, is accepted, the acceptance will result in the person becoming a member of the company.

             (2)  In subsection (1):

registered co-operative company means a body of the kind referred to in paragraph 66A(4)(c).

44  Paragraph 82(b)

Omit “prescribed interests”, substitute “interests in managed investment schemes”.

45  Section 85

Repeal the section.

46  Subsection 92(1) (paragraph (c) of the definition of securities )

Repeal the paragraph, substitute:

                     (c)  interests in a managed investment scheme; or

                    (ca)  in Parts 7.3 to 7.6 (inclusive)—interests that would be interests in a managed investment scheme but for paragraph (h) of the definition of managed investment scheme in section 9; or

47  S ubsection 92(1) (paragraph (d) of the definition of securities )

Omit “or of prescribed interests”.

48  Paragraph 92(2)(c)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

49  After paragraph 92(2)(c)

Insert:

                    (ca)  in Parts 7.3 to 7.6 (inclusive)—interests made available by the body that would be interests in a managed investment scheme but for paragraph (h) of the definition of managed investment scheme in section 9;

50  Paragraph 92(2)(d)

Omit “or prescribed interests”.

51  Paragraph 92(4)(a)

Omit “prescribed interests”, substitute “interests in a managed investment scheme”.

52  Paragraph 92(4)(b)

Omit “prescribed”.

53  Subsection 111AC(1)

Omit “prescribed interests and units of prescribed interests”, substitute “interests in a managed investment scheme”.

54  Subsection 111AC(2)

Omit “prescribed interests or units of prescribed interests”, substitute “interests in a managed investment scheme”.

55  Subsection 111AD(2)

Repeal the subsection, substitute:

             (2)  For the purposes of sections 111AE, 111AF, 111AG and 111AI, a class of shares or debentures is taken to include units of shares or debentures in that class.

56  Paragraph 111AR(1)(e)

Repeal the paragraph.

57  Before section 168

Insert in Chapter 2C:

167A   Who is covered by this Chapter

             (1)  This Chapter covers:

                     (a)  all companies; and

                     (b)  all registered schemes.

             (2)  A registered scheme’s responsible entity:

                     (a)  must perform the obligations imposed under this Chapter in respect of the scheme; and

                     (b)  may exercise the powers given by this Chapter in respect of the scheme.

58  Subsection 168(1)

After “A company”, insert “or registered scheme”.

59  Paragraph 168(1)(b)

After “the company”, insert “or scheme”.

60  Paragraph 168(1)(b)

After “shares”, insert “or interests”.

61  Subsection 169(2)

After “company” (wherever occurring), insert “or scheme”.

62  After subsection 169(6)

Insert:

Registered schemes

          (6A)  The register of a registered scheme must also show:

                     (a)  the date on which every issue of interests takes place; and

                     (b)  the number of interests in each issue; and

                     (c)  the interests held by each member; and

                     (d)  the class of interests; and

                     (e)  the amount paid, or agreed to be considered as paid, on the interests.

63  Paragraph 169(7)(a)

After “the company”, insert “or scheme”.

64  Subsection 169(7)

After “The company”, insert “or scheme”.

65  Subsection 169(8)

Repeal the subsection, substitute:

Joint holders

             (8)  For the purposes of this section, 2 or more persons who jointly hold shares in the company or interests in the scheme are taken to be a single member of the company or scheme in relation to those shares or interests. They may also be members of the company or scheme because of shares or interests that they hold in their own right or jointly with others.

66  Subsection 170(1)

After “unissued shares in the company”, insert “or unissued interests in the scheme”.

67  Paragraph 170(1)(d)

After “shares”, insert “or interests”.

68  Subsection 170(3)

After “The company”, insert “or scheme”.

69  Subsection 170(3)

Omit “in the company”, substitute “or interests”.

70  Subsection 170(4)

Repeal the subsection, substitute:

             (4)  The company or scheme must change the register to reflect the transfer of an option only if the person transferring the option gives the company or scheme written notice of the transfer.

71  Subsection 170(5)

Omit “company’s”.

72  Subsection 172(1)

After “this Part”, insert “that relates to a company”.

73  After subsection 172(1)

Insert:

          (1A)  A register kept under this Part that relates to a registered scheme must be kept at:

                     (a)  the responsible entity’s registered office; or

                     (b)  an office at the responsible entity’s principal place of business; or

                     (c)  an office (whether of the responsible entity or of someone else) where the work involved in maintaining the register is done; or

                     (d)  another office approved by the ASC.

The office must be in Australia.

74  Subsection 172(2)

After “The company”, insert “or scheme”.

75  Paragraph 172(2)(a)

Repeal the paragraph, substitute:

                     (a)  established at an office that is neither the registered office, nor at the principal place of business, of the company or responsible entity; or

76  Subsection 173(1)

After “A company”, insert “or registered scheme”.

77  Subsection 173(1)

After “company”, insert “or the responsible entity”.

78  Subsection 173(2)

After “a company”, insert “or a registered scheme”.

79  Subsection 173(2)

After “the company”, insert “or scheme”.

80  Subsection 173(3)

After “The company”, insert “or scheme”.

81  Paragraph 173(3)(a)

Omit “the company”.

82  Paragraph 173(3)(b)

After “the company”, insert “or scheme”.

83  Subsection 173(3)

Omit “allow the company”, substitute “allow”.

84  Subsection 173(3)

Omit “the company must give”, substitute “the company or scheme must give”.

85  Subsection 173(4)

Omit “a company’s options”, substitute “the”.

86  Section 174

After “company”, insert “or registered scheme”.

87  Subsection 175(1)

Repeal the subsection, substitute:

             (1)  A company or registered scheme or a person aggrieved may apply to the Court to have a register kept by the company or scheme under this Part corrected.

88  Subsection 175(2)

After “the company” (wherever occurring), insert “or scheme”.

89  Subsection 175(3)

After “company” (wherever occurring), insert “or scheme”.

90  Paragraph 177(1)(c)

After “the shares,”, insert “interests,”.

91  Paragraph 177(1)(d)

After “the company”, insert “or scheme”.

92  Subsection 177(3)

After “the company”, insert “or the scheme”.

93  At the end of section 177

Add:

             (4)  If a person owes a debt under subsection (3) to the scheme:

                     (a)  the debt may be recovered by the responsible entity as a debt due to it; and

                     (b)  any amount paid or recovered in respect of the debt forms part of the scheme property.

94  Paragraph 235(1)(b)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

95  Paragraph 235(1)(c)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

96  Paragraph 235(1)(d)

Repeal the paragraph, substitute:

                     (d)  contracts to which the director is a party or under which the director is entitled to a benefit and that confer a right to call for or deliver:

                              (i)  shares in; or

                             (ii)  debentures of; or

                            (iii)  interests in a registered scheme made available by;

                            the company or a related body corporate.

97  After subsection 235(1)

Insert:

          (1A)  If interests in a registered scheme are quoted on a stock market of a securities exchange, a director of the company that is the responsible entity must notify the securities exchange under subsections (3) and (4) of the following interests of the director:

                     (a)  relevant interests in interests in the scheme

                     (b)  rights or options over interests in the scheme

                     (c)  contracts to which the director is a party or under which the director is entitled to a benefit and that confer a right to call for or deliver interests in the scheme.

98  Subsection 235(2 )

After “or (b)”, insert “or (1A)(a)”.

99  Subsection 235(3 )

After “the exchange”, insert “as required by subsection (1)”.

100  Paragraph 235(3)(b)

After “the company”, insert “or responsible entity”.

101  After subsection 235(3 )

Insert:

          (3A)  The director must notify the exchange as required by subsection (1A) within 14 days after each of the following occasions:

                     (a)  the commencement of this subsection

                     (b)  the company becoming the responsible entity

                     (c)  appointment as a director of the company after that commencement or after the company becomes the responsible entity

                     (d)  the scheme becoming listed after that commencement or after the company becomes the responsible entity.

Paragraph (c) does not apply to a director who retires and is then re-appointed at the same meeting.

102  Heading to Division 1 of Part 3.7

After “auditors” insert “(companies)”.

103  After section 331

Insert:

Division 1A Appointment and removal of auditors (registered schemes )

331AA   Q ualifications of auditors

             (1)  Subject to this section, a person must not:

                     (a)  consent to be appointed as auditor of a registered scheme; or

                     (b)  act as auditor of a registered scheme; or

                     (c)  prepare a report required by this Law to be prepared by a registered company auditor or by an auditor of a registered scheme;

if:

                     (d)  the person is not a registered company auditor; or

                     (e)  the person, or a body corporate in which the person is a substantial shareholder for the purposes of Part 6.7, owes more than $5,000 to the scheme’s responsible entity, to a related body corporate or to an entity that the responsible entity controls; or

                      (f)  the person:

                              (i)  is an officer of the responsible entity; or

                             (ii)  is a partner, employer or employee of an officer of the responsible entity; or

                            (iii)  is a partner or employee of an employee of an officer of the responsible entity.

             (2)  Subject to this section, a firm must not:

                     (a)  consent to be appointed as auditor of a registered scheme; or

                     (b)  act as auditor of a registered scheme; or

                     (c)  prepare a report required by this Law to be prepared by a registered company auditor or by an auditor of a registered scheme;

unless:

                     (d)  at least 1 member of the firm is a registered company auditor who is ordinarily resident in Australia; and

                     (e)  the business name under which the firm is carrying on business is registered under a law of a State or Territory relating to the registration of business names or a return in the prescribed form has been lodged showing, in relation to each member of the firm, the member’s full name and address as at the time when the firm so consents, acts or prepares a report; and

                      (f)  no member of the firm, and no body corporate in which a member of the firm is a substantial shareholder for the purposes of Part 6.7, owes more than $5,000 to the scheme’s responsible entity or to an entity that the responsible entity controls; and

                     (g)  no member of the firm is:

                              (i)  an officer of the responsible entity; or

                             (ii)  a partner, employer or employee of an officer of the responsible entity; or

                            (iii)  a partner or employee of an employee of an officer of the responsible entity; and

                     (h)  no officer of the responsible entity receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters.

             (3)  Subsections 324(3), (4), (5) and (6) apply in relation to a registered scheme as if:

                     (a)  those subsections were part of this section; and

                     (b)  references in those subsections to a company were instead references to the registered scheme’s responsible entity.

             (4)  Subsections 324(7), (8), (9), (10), (11) and (16) apply in relation to a registered scheme as if:

                     (a)  those subsections were part of this subsection; and

                     (b)  references in those subsections to a company were instead references to the registered scheme.

331AB   A ppointment of auditors

             (1)  Within 1 month after the day on which a registered scheme is registered, the responsible entity must appoint a person or persons, a firm or firms, or a person or persons and a firm or firms, as auditor or auditors of the scheme.

             (2)  Within 1 month after a vacancy occurs in the office of auditor of a registered scheme, if there is no surviving or continuing auditor of the scheme, the responsible entity must appoint a person or persons, a firm or firms, or a person or persons and a firm or firms, to fill the vacancy.

             (3)  While a vacancy in the office of auditor of a registered scheme continues, the surviving or continuing auditor or auditors (if any) may act.

             (4)  The responsible entity of a registered scheme must not appoint a person or firm as auditor of the scheme unless that person or firm has, before the appointment, consented to act as auditor by notice in writing given to the responsible entity and has not withdrawn that consent by notice in writing given to the responsible entity.

             (5)  A notice given by a firm under subsection (4) is to be signed by a member of the firm who is a registered company auditor:

                     (a)  in the firm’s name; and

                     (b)  in the member’s name.

             (6)  If the responsible entity of a registered scheme appoints a person or firm as auditor of the scheme in contravention of subsection (4), the purported appointment does not have any effect and the responsible entity, and any officer of the responsible entity who is in default, are each guilty of an offence.

             (7)  If the responsible entity of a registered scheme does not appoint an auditor when required by this Law to do so, the ASC may, on application in writing by a member of the scheme, appoint as auditor or auditors of the scheme a person or persons, a firm or firms, or a person or persons and a firm or firms. An appointment can only be made with the consent of the person or firm concerned.

             (8)  If a director of the responsible entity of a registered scheme fails to take all reasonable steps to secure compliance with subsection (1) or (2), the director is guilty of an offence.

331AC   Re moval and resignation of auditors

             (1)  The responsible entity of a registered scheme may, with the ASC’s consent, remove the auditor of the scheme from office.

             (2)  An auditor of a registered scheme may, by notice in writing given to the responsible entity, resign as auditor of the scheme if:

                     (a)  the auditor:

                              (i)  has, by notice in writing given to the ASC, applied for consent to the resignation and stated the reasons for the application; and

                             (ii)  has, at or about the same time as giving the notice to the ASC, given the responsible entity notice in writing of the application to the ASC; and

                     (b)  the ASC has given its consent.

             (3)  As soon as practicable after the ASC receives a notice from an auditor under subsection (2), the ASC must notify the auditor, and the responsible entity of the registered scheme, whether it consents to the resignation.

             (4)  A statement made by an auditor in an application to the ASC under subsection (2) or in answer to an inquiry by the ASC relating to the reasons for the application:

                     (a)  is not admissible in evidence in any civil or criminal proceedings against the auditor; and

                     (b)  must not be made the ground of a prosecution, action or suit against the auditor.

A certificate by the ASC that the statement was made in the application or in answer to the inquiry by the ASC is conclusive evidence that the statement was so made.

             (5)  The resignation of an auditor takes effect:

                     (a)  on the day (if any) specified for the purpose in the notice of resignation; or

                     (b)  on the day on which the ASC gives its consent to the resignation; or

                     (c)  on the day (if any) fixed by the ASC for the purpose;

whichever occurs last.

             (6)  If, on the retirement or withdrawal of a member of a firm, the firm will no longer be capable of acting as auditor of a registered scheme because of paragraph 331AA(2)(d), the member is (if not disqualified from acting as auditor of the scheme) taken to be the auditor of the scheme until he or she obtains the consent of the ASC to his or her retirement or withdrawal.

             (7)  Within 14 days after:

                     (a)  the removal from office of an auditor of a registered scheme; or

                     (b)  the receipt of a notice of resignation from an auditor of a registered scheme;

the responsible entity must lodge with the ASC a notice of the removal or resignation in the prescribed form.

331AD   Effect of winding up an office of auditor

                   An auditor of a registered scheme ceases to hold office if:

                     (a)  the scheme’s constitution provides that the scheme is to be wound up at a specified time, in specified circumstances or on the happening of a specified event, and that time is reached, those circumstances occur or that event occurs; or

                     (b)  the members pass an extraordinary resolution directing the responsible entity to wind up the scheme; or

                     (c)  the Court makes an order directing the responsible entity to wind up the scheme; or

                     (d)  the members pass an extraordinary resolution to remove the responsible entity but do not, at the same meeting, pass an extraordinary resolution choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

331AE   F ees and expenses of auditors

                   The reasonable fees and expenses of an auditor of a registered scheme are payable by the responsible entity.

104  Section 603 (paragraph (d) of the definition of marketable security )

Omit “a prescribed interest”, substitute “an interest in a managed investment scheme”.

105  Subsection 770A(1)

Omit “management company”, substitute “responsible entity”.

106  Subsection 770A(1)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

107  Paragraph 770A(2)(a)

Omit “management company’s”, substitute “responsible entity’s”.

108  Paragraph 770A(2)(c)

Omit “management company” (twice occurring), substitute “responsible entity”.

109  Paragraph 770A(2)(d)

Omit “prescribed interests”, substitute “interests in the scheme”.

110  Paragraph 770A(2)(d)

Omit “facility; and”, substitute “facility.”

111  Paragraph 770A(2)(e)

Repeal the paragraph.

112  Paragraph 770A(3)(b)

Repeal the paragraph, substitute:

                     (b)  a condition that the responsible entity will comply with the requirements (if any) of the regulations for the lodging of documents containing information relating to the interests in the scheme; and

113  Paragraph 770A(3)(c)

Omit “management company’s”, substitute “responsible entity’s”.

114  Paragraph 770A(3)(d)

Omit “management company’s”, substitute “responsible entity’s”.

115  Subsection 770A(5) (definition of unquoted )

Omit “prescribed interests”, substitute “interests in a registered scheme”.

116  Subsection 770B(1)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

117  Paragraphs 770B(2)(a) and (b)

Repeal the paragraphs, substitute:

                     (a)  unless paragraph (b) applies, the interests in a registered scheme constitute a kind of interest in the scheme; and

                     (b)  if a particular scheme relates to a number of different undertakings in relation to interests—the interests in the scheme are taken to be divided into a number of kinds, with each kind consisting of the interests to which a particular one of those undertakings relates.

118  Subsection 777(3)

Repeal the subsection, substitute:

             (3)  For the purposes of subsection (1), if a disclosing entity that is an undertaking to which interests in a registered scheme relate is, with the responsible entity’s agreement, consent or acquiescence, included in the official list of a securities exchange, the responsible entity, or an associate of the responsible entity, is taken to be under an obligation to comply with the listing rules of that securities exchange to the extent to which those rules apply to the responsible entity or associate.

119  Heading to Division 1 of Part 7.3

Repeal the heading, substitute:

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

120  At the end of section 780

Add:

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

                     (a)  to carry on a securities business

                     (b)  to operate:

                              (i)  a managed investment scheme; or

                             (ii)  managed investment schemes of a particular kind.

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

121  At the end of subsection 784(2)

Add:

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

122  After subsection 784(2)

Insert:

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

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

          (2C)  In this section:

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

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

123  Subsection 788(1)

After “carried on” insert “, or the managed investment scheme operated,”.

124  After section 825

Insert:

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

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

125  Paragraph 827(1)(a)

Omit “or 825”, substitute “, 825 or 825A”.

126  Paragraph 837(1)(d)

Omit “or 825”, substitute “, 825 or 825A”.

127  Paragraph 838(1)(a)

Omit “or 825”, substitute “, 825 or 825A”.

128  Subsection 843(6)

Repeal the subsection.

129  Subsection 1001A(4)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

130  Subsection 1001A(4)

Omit “management company”, substitute “responsible entity”.

131  Subsection 1001B(4)

Omit “prescribed interests”, substitute “interests in a registered scheme”.

132  Subsection 1001B(4)

Omit “management company” (occurring 3 times), substitute “responsible entity”.

133  Subsection 1002A(1) (paragraph (c) of the definition of securities )

Omit “ prescribed interests”, substitute “interests in a managed investment scheme”.

134  Subsection 1002A(1) (paragraph (d) of the definition of securities )

Repeal the paragraph, substitute:

                     (d)  units of shares referred to in paragraph (a);

135  Section 1002H

Repeal the section, substitute:

1002H   Exception for withdrawal from registered scheme

                   Subsection 1002G(2) does not apply in respect of a member’s withdrawal from a registered scheme if the amount paid to the member on withdrawal is calculated (so far as is reasonably practicable) by reference to the underlying value of the assets of the financial or business undertaking or scheme, common enterprise, investment contract or time-sharing scheme to which the member’s interest relates, less any reasonable charge for buying the member’s interest.

136  Subsection 1006(3)

Repeal the subsection, substitute:

             (3)  A person who is named in the prospectus as a trustee for holders of debentures of the corporation is not taken, for that reason alone, to have authorised or caused the issue of the prospectus.

137  Subsection 1013(8)

Repeal the subsection, substitute:

             (8)  If:

                     (a)  the responsible entity for a registered scheme; or

                     (b)  the Commission in the name of, and for the benefit of, the responsible entity for a registered scheme;

brings an action in accordance with subsection (2) in respect of a subscription for, or any agreement to subscribe for, any interests in the scheme, any amount recovered in the action:

                     (c)  is to be held by the responsible entity on behalf of the persons who, at the time of the subscription or agreement, had rights or interests in the relevant financial or business undertaking or scheme, common enterprise, investment contract or time-sharing scheme; and

                     (d)  is to be held on their behalf in the respective proportions that, at that time, their individual rights or interests bore to the total of all those rights or interests.

          (8A)  If:

                     (a)  the responsible entity for a registered scheme; or

                     (b)  the Commission in the name of, and for the benefit of, the responsible entity for a registered scheme;

brings an action in accordance with subsection (5) in respect of a purchase or sale of, or an agreement to purchase or sell, interests in the scheme, any amount recovered in the action:

                     (c)  is to be held by the responsible entity on behalf of the persons who, at the time of the sale, purchase or agreement, had rights or interests in the relevant financial or business undertaking or scheme, common enterprise, investment contract or time-sharing scheme; and

                     (d)  is to be held on their behalf in the respective proportions that, at that time, their individual rights or interests bore to the total of all those rights or interests.

138  Subsection 1017A (paragraph (b) of the definition of approved unlisted corporation )

Repeal the paragraph, substitute:

                     (b)  in the case of interests in a managed investment scheme—the operations of the relevant undertaking to which the interests relate;

139  Subsection 1017A(4)

Omit “prescribed interests” (twice occurring), substitute “interests in managed investment schemes”.

140  At the end of section 1018

Add:

Note:         A contract resulting from an offer or invitation that contravenes this section and that relates to interests in a registered scheme may be voidable under section 601MB.

141  After subsection 1043(1)

Insert:

          (1A)  Where a corporation offers interests in a registered scheme, the corporation must, in all prospectuses and other representations relating to the interests in the scheme, direct that all cheques and other payment orders in respect of applications for interests be drawn in favour of the responsible entity, or custodian or trustee where there is one, on account of the particular scheme and the applicant.

142  Paragraph 1043D(2)(e)

Repeal the paragraph, substitute:

                     (e)  if the securities concerned are interests in a registered scheme—the undertaking to which the interests relate and the responsible entity for the scheme.

143  Divisions 5 and 5A of Part 7.12

Repeal the Divisions.

144  Subsection 1084(1)

Omit “, 5”.

145  Subsection 1089(1)

Omit “prescribed interests” (first occurring), substitute “interests in a managed investment scheme”.

146  Subsection 1089(1)

Omit “prescribed” (second occurring).

147  Paragraph 1089(3)(b)

Omit “prescribed”.

148  Paragraph 1089(4)(a)

Omit “prescribed”.

149  Section 1090 (definition of interest )

Omit “a prescribed interest”, substitute “an interest in a managed investment scheme”.

150  Subsection 1097(1) (definition of prescribed security )

Repeal the definition, substitute:

prescribed security means an interest in a managed investment scheme that is prescribed for the purposes of this definition.

151  Subsection 1109K(2)

Repeal the subsection, substitute:

             (2)  Subsection (1) has effect despite anything in:

                     (a)  the body’s constitution; or

                     (b)  a deed relating to debentures; or

                     (c)  the constitution of a registered scheme; or

                     (d)  a deed relating to interests.

152  At the end of section 1317DA

Add:

 

Subsection 601FC(1)

Subsection 601FD(1)

Subsection 601FE(1)

Section 601FG

Subsection 601JD(1)

153  Subsection 1317EA(2)

After “corporation”, insert “or registered scheme”.

154  Heading to Division 5 of Part 9.4B

Repeal the heading, substitute:

Division 5 Compensation for loss suffered by corporation or registered scheme

155  Paragraph 1317HA(1)(b)

Repeal the paragraph, substitute:

                     (b)  the act or omission constituting the contravention caused:

                              (i)  loss or damage to the corporation in relation to which the contravention was committed; or

                             (ii)  loss or damage to, or a diminution in the value of, the property of the scheme in relation to which the contravention was committed;

156  Subsection 1317HA(1)

Omit “pay to the corporation compensation of such an amount as the order specifies.”, substitute “compensate the corporation or scheme. The order must specify the amount of the compensation.”.

157  After subsection 1317HA(1)

Insert:

          (1A)  If the responsible entity for a registered scheme is ordered to compensate the scheme, the responsible entity must transfer the amount of the compensation to scheme property. If anyone else is ordered to compensate the scheme, the responsible entity may recover the compensation on behalf of the scheme.

158  Subsection 1317HA(2)

After “corporation”, insert “or a registered scheme’s responsible entity”.

159  Subsection 1317HA(3)

After “a corporation”, insert “or responsible entity”.

160  Paragraph 1317HA(3)(a)

Omit “that corporation”, substitute “the corporation or registered scheme”.

161  Paragraph 1317HA(3)(b)

Omit “pay compensation to the corporation”, substitute “compensate the corporation or scheme”.

162  Paragraph 1317HB(1)(a)

After “corporation”, insert “or registered scheme”.

163  Paragraph 1317HB(1)(b)

Repeal the paragraph, substitute:

                     (b)  the court is satisfied that the act or omission constituting the contravention caused:

                              (i)  loss or damage to the corporation in relation to which the contravention was committed; or

                             (ii)  loss or damage to, or a diminution in the value of, the property of the scheme in relation to which the contravention was committed;

164  Subsection 1317HB(1)

Omit “pay to the corporation compensation of such amount as the order specifies.”, substitute:

compensate the corporation or scheme. The order must specify the amount of the compensation.

165  Paragraph 1317HB(2)(b)

Repeal the paragraph, substitute:

                     (b)  the court is satisfied that the act or omission constituting the contravention caused:

                              (i)  loss or damage to the corporation in relation to which the contravention was committed; or

                             (ii)  loss or damage to, or a diminution in the value of, the property of the scheme in relation to which the contravention was committed;

166  Subsection 1317HB(2)

Omit “pay to the corporation compensation of such amount as the order specifies.”, substitute:

compensate the corporation or scheme. The order must specify the amount of the compensation.

167  At the end of section 1317HB

Add:

             (3)  If the responsible entity for a registered scheme is ordered to compensate the scheme, the responsible entity must transfer the amount of the compensation to scheme property. If anyone else is ordered to compensate the scheme, the responsible entity may recover the compensation on behalf of the scheme.

168  Subsection 1317HD(1)

Omit all the words from and including “Where” to and including “corporation:”, substitute:

If a person contravenes a civil penalty provision in relation to a corporation or a registered scheme, the person must account to the corporation or scheme for:

169  Paragraph 1317HD(1)(b)

After “corporation”, insert “or scheme”.

170  After subsection 1317HD(1)

Insert:

          (1A)  The amount for which the person is liable under subsection (1) may be recovered as a debt.

171  At the end of section 1317HD

Add:

             (3)  If the responsible entity for a registered scheme is liable under subsection (1), it must transfer the amount for which it is liable to scheme property. If anyone else is liable, the responsible entity may recover the debt on behalf of the scheme.

172  Paragraph 1317HE(a)

After “corporation”, insert “or registered scheme”.

173  Subparagraphs 1317HF(b)(i) and (ii)

After “corporation”, insert “or registered scheme”.

174  Paragraph 1317JA(2)(b)

After “corporation”, insert “, of a registered scheme’s responsible entity”.

175  After section 1343

Insert in Part 9.7:

1343A   Disposal of interests in registered scheme if whereabouts of member unknown

                   If, during a period of at least 6 years while a person has been shown in the register of members of a registered scheme as the holder of interests in the scheme:

                     (a)  the responsible entity has had reasonable grounds for believing that the person was not residing at the address shown in the register as their address; and

                     (b)  the responsible entity’s attempts to communicate with the person have been made using reasonable diligence but have all been unsuccessful;

the responsible entity may, by executing a transfer for and on behalf of the person, transfer the interests and any rights in respect of them to the ASC to be dealt with under this Part.

176  Schedule 3 (after the penalty relating to section 600)

Insert:

 

Subsection 601ED(5)

Penalty:       200 penalty units or imprisonment for 5 years, or both.

Subsection 601FF(2)

Penalty:       200 penalty units or imprisonment for 5 years, or both.

Subsection 601FL(4)

Penalty:       100 penalty units or imprisonment for 2 years, or both.

Subsection 601FM(3)

Penalty:       100 penalty units or imprisonment for 2 years, or both.

Subsection 601FQ(6)

Penalty:       100 penalty units or imprisonment for 2 years, or both.

Section 601HD

Penalty:       25 penalty units or imprisonment for 6 months, or both.

Subsection 601HG(6)

Penalty:       25 penalty units or imprisonment for 6 months, or both.

Subsection 601JA(1)

Penalty:       100 penalty units or imprisonment for 2 years, or both.

Section 601JA

Penalty:       25 penalty units or imprisonment for 6 months, or both.

Subsection 601JB(5)

Penalty:       25 penalty units or imprisonment for 6 months, or both.

Subsection 601KA(3)

Penalty:       25 penalty units or imprisonment for 6 months, or both.



 

Part 2 Amendment of the Australian Securities Commission Act 1989

177  Subparagraph 13(1)(b)(i)

After “body corporate”, insert “or managed investment scheme”.

178  Subparagraph 13(1)(b)(ii)

Omit “body corporate,”, substitute “body corporate or managed investment scheme or to”.

179  Section 28

Omit “and 36”, substitute “, 36 and 39A”.

180  At the end of section 30

Add:

             (2)  The Commission may give to:

                     (a)  the responsible entity of a registered scheme; or

                     (b)  an eligible person in relation to the responsible entity;

a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books relating to the operation of the scheme.

Note:       The heading to section 30 is altered by inserting “ or registered scheme ” after “ body corporate ”.

181  After paragraph 33(a)

Insert:

                    (ab)  affairs of a registered scheme; or

182  After section 39

Insert in Division 3 of Part 3:

39A   C ommission may give copy of book relating to registered scheme to another person

             (1)  The Commission may, subject to such conditions (if any) as it imposes, give to a person a copy of any book in its possession that relates to a registered scheme.

             (2)  If a copy of a book is given to a person under subsection (1) subject to conditions, the person, and any other person who has possession, custody or control of the copy or a copy of it, must comply with the conditions.

Penalty:  10 penalty units or imprisonment for 3 months, or both.

183  After Part 3

Insert:

Part 3A ¾ Enforceable undertakings in relation to registered schemes

   

93A   Undertakings by responsible entity

             (1)  The Commission may accept a written undertaking given by the responsible entity of a registered scheme in connection with a matter:

                     (a)  concerning the registered scheme; and

                     (b)  in relation to which the Commission has a power or function under a national scheme law of this jurisdiction.

             (2)  The responsible entity may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

             (3)  If the Commission considers that the responsible entity has breached any of the terms of the undertaking, the Commission may apply to the Court for an order under subsection (4).

             (4)  If the Court is satisfied that the responsible entity has breached a term of the undertaking, the Court may make all or any of the following orders:

                     (a)  an order directing the responsible entity to comply with that term of the undertaking;

                     (b)  an order directing the responsible entity to transfer to scheme property an amount up to the amount of any financial benefit that the responsible entity has obtained directly or indirectly and that is reasonably attributable to the breach;

                     (c)  any order that the Court considers appropriate directing the responsible entity to compensate any person who has suffered loss or damage as a result of the breach;

                     (d)  any other order that the Court considers appropriate.

             (5)  The Commission must keep a record of the full text of the undertaking.

             (6)  The Commission must make available to a person who asks for it a copy of the text of the undertaking, but the Commission must delete from the copy information:

                     (a)  that the responsible entity has asked it not to release; and

                     (b)  that the Commission is satisfied:

                              (i)  is commercial in confidence; or

                             (ii)  should not be disclosed because it would be against the public interest to do so; or

                            (iii)  consists of personal details of an individual.

             (7)  If the Commission makes available a copy that has information deleted from it, the copy must include a note stating that information has been deleted.



 

Part 3 Amendment of the Pooled Development Funds Act 1992

184  Paragraph 30(1)(e)

Repeal the paragraph, substitute:

                     (e)  issue or make available an interest in a managed investment scheme.

 

 

 

[ Minister's second reading speech made in

House of Representatives on 3 December 1997

Senate on 5 March 1998 ]

 

(247/97)