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This is a Bill, not an Act. For current law, see the Acts databases.

CORPORATIONS AMENDMENT (SHORT SELLING) BILL 2008

2008
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Corporations Amendment (Short Selling)
Bill 2008
No. , 2008
(Treasury)
A Bill for an Act to amend the Corporations Act
2001, and for related purposes
i Corporations Amendment (Short Selling) Bill 2008 No. , 2008
Contents
1
Short title ............................................................................................ 1
2
Commencement .................................................................................. 1
3
Schedule(s) ......................................................................................... 2
Schedule 1--Amendme nts commencing on Royal Assent
3
Corporations Act 2001
3
Schedule 2--Amendme nts commencing on the 28th day afte r
Royal Assent
5
Corporations Act 2001
5
Schedule 3--Amendme nts commencing on Proclamation
6
Corporations Act 2001
6
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 1
A Bill for an Act to amend the Corporations Act
1
2001, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act may be cited as the Corporations Amendment (Short
5
Selling) Act 2008.
6
2 Commence ment
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day on which this Act receives the
Royal Assent.
2. Schedule 1
The day on which this Act receives the
Royal Assent.
3. Schedule 2
The 28th day after the day on which this Act
receives the Royal Assent.
4. Schedule 3
A single day to be fixed by Proclamation.
However, if any of the provision(s) do not
commence with in the period of 12 months
beginning on the day on which this Act
receives the Royal Assent, they commence
on the first day after the end of that period.
Note:
This table relates only to the provisions of this Act as originally
1
passed by both Houses of the Parliament and assented to. It will not be
2
expanded to deal with provisions inserted in this Act after assent.
3
(2) Column 3 of the table contains additional information that is not
4
part of this Act. Information in this column may be added to or
5
edited in any published version of this Act.
6
3 Schedule(s)
7
Each Act that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
12
Amend ments commencing on Royal Assent Schedule 1
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 3
1
Schedule 1
--
Amendments commencing on
2
Royal Assent
3
4
Corporations Act 2001
5
1 At the end of section 1020F
6
Add:
7
(8) To avoid doubt, a declaration under paragraph (1)(c) may specify
8
omissions, modifications or variations that have any or all of the
9
following effects:
10
(a) suspending, prohibiting or limiting:
11
(i) any form of short selling of financial products; or
12
(ii) any transaction that has the same or substantially similar
13
market effect as a short sale of financial products;
14
(b) varying requirements under this Part that apply to:
15
(i) any form of short selling of financial products; or
16
(ii) any transaction that has the same or substantially similar
17
market effect as a short sale of financial products;
18
(c) removing some or all requirements under this Part that apply
19
to:
20
(i) any form of short selling of financial products; or
21
(ii) any transaction that has the same or substantially similar
22
market effect as a short sale of financial products;
23
(d) imposing requirements that apply to:
24
(i) any form of short selling of financial products; or
25
(ii) any transaction that has the same or substantially similar
26
market effect as a short sale of financial products.
27
2 At the end of Chapter 10
28
Add:
29
Part 10.10 Transitional provisions relating to the
30
Corporations Amendment (Short Selling) Act 2008
31
Schedule 1 A mendments commencing on Royal Assent
4 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
1484 Declarations under paragraph 1020F(1)(c) relating to short
1
selling
2
(1) To avoid doubt, an instrument mentioned in subsection (2) that was
3
made at a particular time was validly made under paragraph
4
1020F(1)(c) at that time.
5
(2) The instruments are as follows:
6
(a) ASIC Class Order [CO 08/751], registered on the Federal
7
Register of Legislative Instruments on 22 September 2008;
8
(b) ASIC Class Order [CO 08/752], registered on the Federal
9
Register of Legislative Instruments on 22 September 2008;
10
(c) ASIC Class Order [CO 08/753], registered on the Federal
11
Register of Legislative Instruments on 22 September 2008;
12
(d) ASIC Class Order [CO 08/763], registered on the Federal
13
Register of Legislative Instruments on 23 September 2008;
14
(e) ASIC Class Order [CO 08/801], registered on the Federal
15
Register of Legislative Instruments on 24 October 2008.
16
(3) To avoid doubt, an instrument (if any) that:
17
(a) was made at a time:
18
(i) after 24 October 2008; and
19
(ii) before the commencement of this section; and
20
(b) is of substantially the same nature as the instruments
21
mentioned in subsection (2); and
22
(c) was registered on the Federal Register of Legislative
23
Instruments:
24
(i) after 24 October 2008; and
25
(ii) before the commencement of this section;
26
was validly made under paragraph 1020F(1)(c) at that time.
27
(4) This section applies on and after 19 September 2008.
28
(5) In this section:
29
Federal Register of Legislative Instruments means the Federal
30
Register of Legislative Instruments established under the
31
Legislative Instruments Act 2003.
32
33
Amend ments commencing on the 28th day after Royal Assent Schedule 2
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 5
1
Schedule 2
--
Amendments commencing on
2
the 28th day after Royal Assent
3
4
Corporations Act 2001
5
1 Subsection 1020B(1)
6
Omit "In this section and section 1020C", substitute "In this section".
7
Note:
The heading to section 1020B is replaced by the heading "Prohibition of certain short
8
sales of securities, managed investment products and certain other financial
9
products".
10
2 Subsections 1020B(4), (5) and (6)
11
Repeal the subsections, substitute:
12
(4) Subsection (2) does not apply in relation to a sale of section 1020B
13
products by a person who, before the time of sale, has entered into
14
a contract to buy those products and who has a right to have those
15
products vested in the person that is conditional only upon all or
16
any of the following:
17
(a) payment of the consideration in respect of the purchase;
18
(b) the receipt by the person of a proper instrument of transfer in
19
respect of the products;
20
(c) the receipt by the person of the documents that are, or are
21
documents of title to, the products.
22
3 Section 1020C
23
Repeal the section.
24
4 Subsection 1200F(1) (table item 5)
25
Omit "sections 1020B and 1020C", substitute "section 1020B".
26
5 Schedule 3 (table items 301A, 301B and 301C)
27
Repeal the items.
28
29
Schedule 3 A mendments commencing on Proclamation
6 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
1
Schedule 3
--
Amendments commencing on
2
Proclamation
3
4
Corporations Act 2001
5
1 Subsection 1010A(1)
6
Omit "Divisions 5A and 6", substitute "Divisions 5A, 5B and 6".
7
2 Subsection 1010A(2)
8
Omit "Divisions 5A and 6", substitute "Divisions 5A, 5B and 6".
9
3 After Division 5A of Part 7.9
10
Insert:
11
Division 5B--Disclosure etc. in relation to short sales
12
covered by securities lending arrangement of
13
listed section 1020B products
14
Note:
Section 1020B prohibits certain short sales of section 1020B products.
15
1020AA Definitions
16
(1) In this Division:
17
crossing: a crossing of section 1020B products is a sale of
18
section 1020B products made by a financial services licensee:
19
(a) on behalf of both the buyer and the seller of the products; or
20
(b) on behalf of the buyer of the products and on its own behalf
21
as seller of the products; or
22
(c) on behalf of the seller of the products and on its own behalf
23
as buyer of the products.
24
section 1020B products has the meaning given by subsection
25
1020B(1).
26
securities lending arrangement means an arrangement under
27
which:
28
(a) one entity (the lender) agrees that it will:
29
Amend ments commencing on Proclamation Schedule 3
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 7
(i) deliver particular securities, managed investment
1
products or other financial products to another entity
2
(the borrower) or to an entity nominated by the
3
borrower; and
4
(ii) vest title in those products in the entity to which they
5
are delivered; and
6
(b) the borrower agrees that it will, after the lender does the
7
things mentioned in paragraph (a):
8
(i) deliver the products (or equivalent products) to the
9
lender or to an entity nominated by the lender; and
10
(ii) vest title in those products (or those equivalent
11
products) in the entity to which they are delivered.
12
(2) To avoid doubt, for the purposes of this Division, treat the entering
13
into of an agreement to sell section 1020B products as the sale of
14
the products.
15
(3) To avoid doubt, for the purposes of this Division, treat a financial
16
services licensee as making a sale on behalf of a person if the sale
17
is, in economic substance, made by the licensee for the person.
18
Example: A request that the sale be made is passed from the person to the
19
financial services licensee through a chain of intermediaries.
20
(4) For the purposes of this Division, treat a crossing of section 1020B
21
products as being made on a licensed market.
22
1020AB Seller disclosure
23
(1) Subsection (3) applies if:
24
(a) either:
25
(i) a financial services licensee, on behalf of a person (the
26
seller), makes a sale in this jurisdiction of
27
section 1020B products on a licensed market to a buyer;
28
or
29
(ii) a financial services licensee (the seller), on its own
30
behalf, makes a sale in this jurisdiction of section 1020B
31
products on a licensed market to a buyer; and
32
(b) before the time of the sale, the seller had entered into or
33
gained the benefit of a securities lending arrangement; and
34
Schedule 3 A mendments commencing on Proclamation
8 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
(c) at the time of the sale, the seller intends that the securities
1
lending arrangement will ensure that some or all the
2
section 1020B products can be vested in the buyer; and
3
(d) the following requirements are satisfied (if applicable):
4
(i) if regulations made for the purposes of this
5
subparagraph specify a kind of section 1020B product--
6
the section 1020B products are of that kind;
7
(ii) if regulations made for the purposes of this
8
subparagraph specify a kind of section 1020B product--
9
the section 1020B products are not of that kind;
10
(iii) if regulations made for the purposes of this
11
subparagraph specify circumstances in which the sale is
12
made--the sale is made in those circumstances.
13
(2) Subsection (3) applies regardless of whether the seller is inside or
14
outside Australia.
15
Offence
16
(3) The seller must:
17
(a) give the entity mentioned in subsection (4) particulars
18
specified in the regulations in relation to the circumstances
19
mentioned in paragraphs (1)(a), (b) and (c); and
20
(b) do so:
21
(i) on or before the time specified in the regulations; and
22
(ii) in the manner specified in the regulations.
23
Note:
Failure to comply with this subsection is an offence (see subsection
24
1311(1)).
25
(4) The entity is:
26
(a) if subparagraph (1)(a)(i) applies:
27
(i) the financial services licensee mentioned in that
28
subparagraph; or
29
(ii) if the regulations specify another entity--that entity; or
30
(b) if subparagraph (1)(a)(ii) applies:
31
(i) the operator of the licensed market mentioned in that
32
subparagraph; or
33
(ii) if the regulations specify another entity--that entity.
34
Amend ments commencing on Proclamation Schedule 3
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 9
1020AC Licensee disclosure
1
(1) Subsection (2) applies if:
2
(a) the seller mentioned in subparagraph 1020AB(1)(a)(i) gives a
3
financial services licensee information in accordance with
4
section 1020AB in relation to a sale of section 1020B
5
products on a licensed market; and
6
(b) the following requirements are satisfied (if applicable):
7
(i) if regulations made for the purposes of this
8
subparagraph specify a kind of section 1020B product--
9
the section 1020B products are of that kind;
10
(ii) if regulations made for the purposes of this
11
subparagraph specify a kind of section 1020B product--
12
the section 1020B products are not of that kind;
13
(iii) if regulations made for the purposes of this
14
subparagraph specify circumstances in which the sale is
15
made--the sale is made in those circumstances.
16
Offence
17
(2) The financial services licensee must:
18
(a) give the entity mentioned in subsection (3) particulars
19
specified in the regulations in relation to the circumstances
20
mentioned in paragraph (1)(a); and
21
(b) do so:
22
(i) on or before the time specified in the regulations; and
23
(ii) in the manner specified in the regulations.
24
Note:
Failure to comply with this subsection is an offence (see subsection
25
1311(1)).
26
(3) The entity is:
27
(a) the operator of the licensed market mentioned in
28
paragraph (1)(a); or
29
(b) if the regulations specify another entity--that entity.
30
1020AD Public disclosure of information
31
(1) Subsection (2) applies if:
32
(a) any of the following apply, in relation to a sale of
33
section 1020B products on a licensed market:
34
Schedule 3 A mendments commencing on Proclamation
10 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
(i) the seller mentioned in subparagraph 1020AB(1)(a)(ii)
1
gives information to the operator of a licensed market
2
(or to another entity) in accordance with
3
section 1020AB;
4
(ii) the financial services licensee mentioned in paragraph
5
1020AC(1)(a) gives information to the operator of a
6
licensed market (or to another entity) in accordance with
7
section 1020AC;
8
(iii) if regulations for the purposes of subparagraph
9
1020AB(4)(a)(ii) provide that the entity to which
10
information is to be given in accordance with
11
section 1020AB is the operator of a licensed market (or
12
another entity)--the seller mentioned in subparagraph
13
1020AB(1)(a)(i) gives information to the operator (or
14
other entity) in accordance with that section; and
15
(b) the following requirements are satisfied (if applicable):
16
(i) if regulations made for the purposes of this
17
subparagraph specify a kind of section 1020B product--
18
the section 1020B products are of that kind;
19
(ii) if regulations made for the purposes of this
20
subparagraph specify a kind of section 1020B product--
21
the section 1020B products are not of that kind;
22
(iii) if regulations made for the purposes of this
23
subparagraph specify circumstances in which the sale is
24
made--the sale is made in those circumstances.
25
Offence
26
(2) The operator (or the other entity) must:
27
(a) make a public disclosure of particulars specified in the
28
regulations in relation to the information mentioned in
29
paragraph (1)(a); and
30
(b) do so:
31
(i) on or before the time specified in the regulations; and
32
(ii) in the manner specified in the regulations.
33
Note:
Failure to comply with this subsection is an offence (see subsection
34
1311(1)).
35
Amend ments commencing on Proclamation Schedule 3
Corporations Amendment (Short Selling) Bill 2008 No. , 2008 11
1020AE Licensee's obligation to ask seller about short sale
1
The financial services licensee must not make a sale in this
2
jurisdiction of section 1020B products on a licensed market if:
3
(a) the sale is on behalf of a person (the seller); and
4
(b) the seller will be obliged under section 1020AB to give the
5
financial services licensee information in relation to the sale;
6
and
7
(c) either or both of the following apply:
8
(i) before making the sale, the financial services licensee
9
failed to ask the seller, orally or in writing, whether the
10
seller will be obliged under section 1020AB to give the
11
financial services licensee information in relation to the
12
sale;
13
(ii) before making the sale, the financial services licensee
14
failed to record, in writing, the seller's answer.
15
Note 1:
Failure to comply with this section is an offence (see subsection
16
1311(1)).
17
Note 2:
For the definition of writing, see section 25 of the Acts Interpretation
18
Act 1901. For the application of the Acts Interpretation Act 1901 to
19
this Act, see section 5C of this Act.
20
1020AF Regulations
21
(1) Regulations made for the purposes of this Division may specify a
22
matter or thing differently for different kinds of persons, things or
23
circumstances. For example, the regulations may:
24
(a) specify a matter or thing differently for different kinds of
25
sellers mentioned in subsection 1020AB(1) or 1020AC(1);
26
and
27
(b) specify a time differently for different kinds of
28
circumstances.
29
Note:
For specification by class, see subsection 13(3) of the Legislative
30
Instruments Act 2003.
31
(2) Subsection (1) does not limit the regulations that may be made for
32
the purposes of this Division.
33
4 Subsection 1020B(1)
34
Omit "In this section", substitute "In this section and in Division 5B".
35
Schedule 3 A mendments commencing on Proclamation
12 Corporations Amendment (Short Selling) Bill 2008 No. , 2008
5 Subsection 1200F(1) (table item 5)
1
Omit "other than section 1020B", substitute "other than
2
sections 1020AB, 1020AC, 1020AD and 1020B".
3
6 Schedule 3 (after table item 300A)
4
Insert:
5
300AA
Subsection 1020AB(3)
25 penalty units or imprisonment for 6 months,
or both.
300A B
Subsection 1020AC(2)
25 penalty units or imprisonment for 6 months,
or both.
300A C
Subsection 1020AD(2)
25 penalty units or imprisonment for 6 months,
or both.
300AD
Section 1020A E
25 penalty units or imprisonment for 6 months,
or both.
6

 

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