Commonwealth Numbered Regulations

CORPORATIONS AMENDMENT REGULATIONS 2003 (NO. 1) 2003 NO. 31 - SCHEDULE 1

(regulation 3)

[1] Subregulation 1.0.02 (1), definition of warrant , subparagraph (a) (ii)

substitute

(ii)

a financial product that would, apart from the effect of paragraph 761D (3) (c) of the Act, be a derivative for section 761D of the Act, and is excluded by that paragraph only because:

(A) it is a security under paragraph (c) of the definition of security in section 761A of the Act; or
(B) it is a legal or equitable right or interest mentioned in subparagraph 764A (1) (b) (ii) of the Act; or
(C) it is a legal or equitable right or interest mentioned in subparagraph 764A (1) (ba) (ii) of the Act; and

[2] Regulation 5C.11.05A

substitute

5C.11.05A? Schemes not required to be registered (Act s 601ED)

Subsection 601ED (2) of the Act has effect as if the words `and Division 2 of Part 7.9 applied to the interests at that time' were inserted after the words `when the issues were made'.

[3] After regulation 7.1.06A

insert

7.1.06B Specific things that are not financial products: superannuation interests

For paragraph 765A (1) (q) of the Act, an exempt public sector superannuation scheme within the meaning of the SIS Act is prescribed.

[4] Regulation 7.1.08

renumber as regulation 7.1.07B

[5] Regulation 7.1.08A

substitute

7.1.07C Specific things that are not financial products: insurance under an overseas student health insurance contract

(1)

For paragraph 765A (1) (y) of the Act, insurance under an overseas student health insurance contract is not a financial product.

(2) In this regulation:

"overseas student health insurance contract "has the same meaning as in regulation 48 of the National Health Regulations 1954 .

7.1.07D Specific things that are not financial products: funeral expenses policy

(1)

For paragraph 765A (1) (y) of the Act, a funeral expenses policy is not a financial product.

(2)

In this regulation:

"funeral expenses policy" means a scheme or arrangement for the provision of a benefit consisting of the payment of money, payable only on the death of a person, for the sole purpose of meeting the whole or part of the expenses of, and incidental to the person's:

(a)

funeral; and

(b)

burial or cremation.

7.1.08 Meaning of financial product advice: exempt document or statement

(1)

For subparagraph (a) (ii) of the definition of exempt document or statement in subsection 766B (9) of the Act, the following documents and statements are prescribed (and so excluded from the definition):

(a)

a Product Disclosure Statement that:

(i)

contains personal advice; or

(ii)

contains general advice about a financial product other than a financial product to which the Statement relates;

(b)

a Financial Services Guide that contains personal advice;

(c)

a document or statement that would, but for this regulation, be an exempt document or statement only because it is prepared or given in accordance with section 1018A of the Act;

(d)

a record of advice mentioned in subsection 946B (3A) of the Act.

(2) For subregulation (1), if a person:

(a)

acquires a financial product ( product 1 ); and

(b)

will be able, by acquiring product 1, to give the product issuer an instruction to acquire a particular financial product or a financial product of a particular kind (within the meaning of section 1012IA of the Act) under a custodial arrangement (within the meaning of section 1012IA of the Act);

the Product Disclosure Statement for product 1 is taken to relate to the other financial product.

(3)

For paragraph (b) of the definition of exempt document or statement in subsection 766B (9) of the Act, documents, information and statements that:

(a)

do not contain personal advice; and

(b)

are required by, and prepared as a result of, a requirement under an Australian law; and

(c)

are included in a class of documents, information or statements specified by ASIC in a list published in the Gazette for this subregulation;

are prescribed (and so included in the definition).

Note
The effect of paragraph (b) of the definition of exempt document or statement in subsection 766B (9), is that a prescribed document or statement is an exempt document or statement.

[6] Subregulation 7.1.11 (1)

after

contract

insert

or part of a contract

[7] Subregulation 7.1.12 (1)

after

contract

insert

or part of a contract

[8] Subregulation 7.1.13 (1)

after

contract

insert

or part of a contract

[9] Subregulation 7.1.14 (1)

after

contract

insert

or part of a contract

[10] Subregulation 7.1.15 (1)

after

contract

insert

or part of a contract

[11] Subregulation 7.1.16 (1)

after

contract

insert

or part of a contract

[12] Subregulation 7.1.17 (1)

after

contract

insert

or part of a contract

[13] Subregulation 7.7.02 (2), including the examples and the note

substitute

(2)

For subsection 941C (4A) of the Act, public forum means:

(a)

an event, if:

(i)

any person is permitted to attend the event; and

(ii)

the event is attended by:

(A) more than 10 retail clients; or
(B) retail clients, the number of which could not reasonably be ascertained before the event commenced; or

(b)

a broadcast, if any person may view or hear the broadcast; or

(c)

a flyer or other promotional material that is displayed or otherwise available in a place that is accessible to the public.

Examples
1
Television broadcasts
2
Promotional material contained in newspapers and magazines
3
Radio broadcasts
4
Internet websites and webcasts
5
Public lectures or seminars

Note
If general advice is given in a public forum, the requirements of subsection 941C (5) of the Act must be complied with. Additionally, if general advice is provided to one or more retail clients, the providing entity must comply with section 949A of the Act.

[14] Paragraph 7.7.02 (3) (d)

substitute

(d)

person 2 makes arrangements for a document that is the equivalent of a Financial Services Guide to be given to person 1 no later than the start of the use to which the insurance product relates.

Example
The commencement of a journey of the rental vehicle is a use to which the insurance product relates.

[15] Subregulation 7.7.02 (4), including the example

substitute

(4)

For subsection 941C (8) of the Act, a Financial Services Guide does not have to be given to a client in respect of advice that:

(a)

is only general advice in relation to a financial product or a class of financial products; and

(b)

is provided by a providing entity that is:

(i)

a product issuer; or

(ii)

a related body corporate of a product issuer; or

(iii)

a product distributor; and

(c)

the financial product or class of financial products is, or includes, a financial product that is issued or distributed by the providing entity; and

(d)

is not provided during a meeting or telephone call.

(5)

If subregulation (4) applies and the providing entity does not give a Financial Services Guide to the client when the advice is provided, the providing entity must give to the client:

(a)

the information that would be required to be in the Financial Services Guide by paragraphs 942B (2) (a), (e) and (f) of the Act; or

(b)

the information that would be required to be in the Financial Services Guide by paragraphs 942C (2) (a), (c), (f) and (g) of the Act;

as the case requires.

Note
If general advice is provided to 1 or more retail clients, the providing entity must comply with section 949A of the Act.

(6)

In this regulation:

"product distributor" means a licensee that offers a financial product for sale.

[16] After regulation 7.8.20

insert

7.8.20A Dealings involving employees of financial service licensees — risk insurance products

For subsection 991F (1) of the Act, a financial services licensee and one or more employees of the financial services licensee may, on their own behalves, jointly acquire a financial product if it is a risk insurance product as defined in section 761A of the Act.

[17] Paragraphs 7.8.22 (a), (b) and (c)

substitute

(a)

any Sunday; and

(b)

New Year's Day; and

(c)

Australia Day; and

(d)

Good Friday; and

(e)

the Monday following Good Friday (Easter Monday); and

(f)

Anzac Day; and

(g)

Christmas Day; and

(h)

26 December (Boxing Day).

[18] Part 7.9, after Division 2B

insert

Division 2C Situations where a Product Disclosure Statement is not required
7.9.07D Product Disclosure Statement not required if insurance offer declined
For paragraph 1020G (1) (c) of the Act, section 1012D of the Act is modified by adding before subsection 1012D (10):

`(9G) In an issue situation or a sale situation, the regulated person does not have to give the client a Product Disclosure Statement for a financial product if:

(a)

the financial product is a general insurance product; and

(b)

the product would be provided to the person as a retail client; and

(c)

the financial product would be provided as part of a contract of insurance that offers more than one kind of insurance cover; and

(d)

the regulated person reasonably believes that the client does not intend to acquire the product.

[19] After regulation 7.9.13

insert

7.9.13A Product Disclosure Statement or Supplementary Product Disclosure Statement to correct deficiency

(1)

For paragraph 1020G (1) (c) of the Act, subsection 1016E (2) is modified by inserting after paragraph 1016E (2) (a):

`(aa) the responsible person must:

(i) give the applicant a Product Disclosure Statement that is correct and without any deficiency referred to in subsection (1); and
(ii) give the applicant 1 month to withdraw the application and be repaid;

(ab)

the responsible person must issue or sell the financial products to the applicant, and:

(i) give the applicant a Product Disclosure Statement that is correct and without any deficiency referred to in subsection (1); and
(ii) give the applicant 1 month to withdraw the application and be repaid;'.

(2)

For paragraph 1020G (1) (c) of the Act, section 1016E is modified by inserting after subsection 1016E (2):

`(2A) If a responsible person gives the applicant a Product Disclosure Statement or Supplementary Product Disclosure Statement under subsection (2), the responsible person must give the applicant a document (which may be the Supplementary Product Disclosure Document itself) that:

(a)

indicates how the Product Disclosure Statement or Supplementary Product Disclosure Statement is different from the Product Disclosure Statement mentioned in subsection (1); and

(b)

explains why the correction or change was required.'.

[20] Regulation 7.9.61C

substitute

7.9.61C Cheques

For paragraph 1020G (1) (c) of the Act, Part 7.9 applies as if section 1017E of the Act were modified by adding, after subsection 1017E (6):

`(7) For this section, if a payment is made by cheque, the payment is taken to have been paid to, and received by, the product provider when the cheque is honoured.'.

[21] After subregulation 7.9.62 (4)

insert

(5)

For paragraph 1017F (4) (e) of the Act, a transaction in relation to a financial product is not required to be confirmed if:

(a)

the transaction is debiting an amount from a basic deposit product in the circumstances in paragraph (3) (c); and

(b)

the transaction involves the use of a facility for making non-cash payments that is linked to the basic deposit product; and

(c)

the amount is debited from the basic deposit product for the purpose of making a payment.

(6)

For paragraph 1017F (4) (e) of the Act, a transaction in relation to a financial product is not required to be confirmed if:

(a)

the transaction is crediting an amount to a credit facility; and

(b)

the transaction involves the use of a facility for making non-cash payments that is linked to the credit facility; and

(c)

the amount is credited to the credit facility for the purpose of making a payment.

[22] Subregulation 7.9.65 (1)

omit

1019B (5)

insert

1019B (5A)

[23] After subregulation 7.9.65 (1), including the example

insert

(1A)

For subsection 1019B (5A) of the Act, if:

(a)

a person acquires an interest in a managed investment scheme; and

(b)

the interest is a managed investment product; and

(c)

the person acquires one or more other interests in that managed investment scheme in the course of the same transaction;

the person cannot exercise a right to return the product otherwise than by returning all of those interests.

[24] Regulation 10.2.36

substitute

10.2.35A? Streamlined licensing procedure for certain regulated principals

For subparagraph 1433 (1) (b) (i) of the Act, each of the following is a regulated principal to whom section 1433 of the Act applies:

(a)

a regulated principal mentioned in item 14 of the table in subregulation 10.2.38 (2);

(b)

a regulated principal mentioned in item 15 of the table in subregulation 10.2.38 (2).

10.2.36 Persons who are not covered by section 1433 of the Act

For subsection 1433 (3) of the Act, a person who is a member of a class of persons identified in an item in Schedule 10D is not covered by section 1433 of the Act:

(a)

if a period is mentioned in the item — during that period; or

(b)

if there is no period mentioned in the item — while the person remains a member of that class of persons.

[25] Subregulation 10.2.37 (1)

omit

at the same time,

insert

at any time before ASIC grants or refuses to grant the financial services licence,

[26] Subregulation 10.2.38 (1)

after

For

insert

item 9 of the table in

[27] Subregulation 10.2.38 (2), table, after item 12

insert

[28] Regulation 10.2.44A

substitute

10.2.44A? Obligation to cite licence number in documents
(1) This regulation applies if:

(a)

a person who has not been granted a financial services licence prepares a document in connection with the provision of financial services or the business of providing financial services; and

(b)

the document does not include a licence number for the person; and

(c)

the person is granted a licence after preparing the document.

(2)

For section 1444 of the Act, section 912F of the Act does not apply to the document.

(3)

Subregulation (2) ceases to apply at the end of 2 years after the FSR commencement.

[29] After regulation 10.2.87

insert

10.2.87A? Meaning of financial product advice: exempt document or statement
(1) For subsection 1409 (1) of the Act, this regulation applies to a document or statement about a financial product during the transition period that ceases on the earlier of:

(a)

the date that Part 7.9 of the Act applies to the regulated person; and

(b)

2 years after the FSR commencement.

(2) The following documents and statements are prescribed under paragraph (b) of the definition of exempt document or statement in subsection 766B (9) of the Act:

(a)

in relation to an interest in a managed investment scheme to which Division 2 of Part 7.9 of the Act does not apply — a disclosure document lodged under Chapter 6D of the Act;

(b)

in relation to a derivative to which Division 2 of Part 7.9 of the Act does not apply — information mentioned in section 1210 of the old Corporations Act;

(c)

in relation to a superannuation product to which Division 2 of Part 7.9 of the Act does not apply — information mentioned in section 153 or 159 of the SIS Act or Part 2 of the SIS Regulations as in force immediately before the FSR commencement;

(d)

in relation to an RSA product to which Division 2 of Part 7.9 of the Act does not apply — information mentioned in section 56 of the RSA Act, as in force immediately before the FSR commencement;

(e)

in relation to an investment life insurance product or a life risk insurance product — a document or statement that contains information given in accordance with Circular G.I.1, issued by the Insurance and Superannuation Commission in February 1996.

[30] Schedule 10A, clause 1.1, heading

substitute

1.1 Paragraph 1012D (10) (b)

[31] Schedule 10D, item 8

substitute