Commonwealth Numbered Regulations

1995 No. 222 CORPORATIONS REGULATIONS (AMENDMENT) - REG 7

7.1 After regulation 1.16, insert:

"PART 1.2-INTERPRETATION

"Division 1-Share ratio contracts

"Subdivision A-Preliminary What is a share ratio contract?

"1.2.01. (1) For the purposes of this Part, a share ratio contract is an
agreement under which:

   (a)  a particular person will be under an obligation to pay, or will have a
        right to receive, an amount of money; and

   (b)  whether the obligation or right exists will depend on a state of
        affairs at a future time, where:

        (i)    the future time is worked out in accordance with the agreement;
               and

        (ii)   the state of affairs includes, in particular, a state of
               affairs relating to fluctuations in the relevant ratio; and

   (c)  the amount will be calculated in a manner specified in accordance with
        the agreement by reference to that state of affairs; whether or not
        the agreement:

   (d)  has any other effect; or

   (e)  may be varied or discharged before that future time.

"(2) For the purposes of subparagraph (1) (b) (ii), a relevant ratio is worked
out in accordance with the ratio:
P : N where:
P is the price or value of a particular share listed for quotation on the
Exchange, expressed in cents; and
N is the relevant level of 1 of the following indexes expressed as a number:

   (a)  the Australian Stock Exchange All Ordinaries Share Price Index;

   (b)  the Australian Stock Exchange Fifty Leaders Share Price Index;

   (c)  the Australian Stock Exchange Twenty Leaders Share Price Index;

   (d)  the Australian Stock Exchange All Industrials Share Price Index;

   (e)  the Australian Stock Exchange All Resources Share Price Index;

   (f)  the Australian Stock Exchange Gold Share Price Index.

"Subdivision B-Application of Chapter 7 of the Corporations Law
to share ratio contracts Relevant agreements-paragraph 92A (1) (b) of the
Corporations Law

"1.2.02. A share ratio contract is prescribed for the purposes of paragraph
92A (1) (b) of the Corporations Law. Application of Chapter 7 of the
Corporations Law

"1.2.03. (1) Subject to subregulation (2) and regulations 1.2.04, 1.2.05 and
1.2.06, Chapter 7 of the Corporations Law applies to share ratio contracts as
if:

   (a)  the contracts were securities; and

   (b)  a reference to the sale of securities by a person were a reference to
        the disposal by the person of a share ratio contract; and

   (c)  a reference to the purchase of securities by a person were a reference
        to the person:

        (i)    entering into; or

        (ii)   taking an assignment of; a share ratio contract (whether or not
               on behalf of another person). (Note: This subregulation is made
               under subsection 92A (2) of the Corporations Law.)

"(2) For the purposes of paragraph (1) (b), a person disposes of a share ratio
contract if the person takes, or causes to be taken, action that closes out
the share ratio contract (whether the action is taken on behalf of that person
or of another person).

"(3) In this regulation:
'bought position', in relation to a share ratio contract, means the position
where, under the contract, a person has:

   (a)  if the value of the contract at a particular future time is less, by a
        particular amount, than the value of the contract at a particular
        earlier time-an obligation to pay that amount; and

   (b)  if the value of the contract at a particular future time is greater,
        by a particular amount, than the value of the contract at a particular
        earlier time-a right to receive that amount;
'close out', in relation to a share ratio contract, means:

   (a)  discharge the obligations of the person in the bought position, or
        sold position, under the share ratio contract as a result of the
        matching up of the share ratio contract with a share ratio contract of
        the same kind under which the person has assumed an offsetting sold
        position, or offsetting bought position, as the case may be; or

   (b)  otherwise discharge the obligations of a party to the share ratio
        contract;
'sold position', in relation to a share ratio contract, means the position
where, under the contract, a person has:

   (a)  if the value of the contract at a particular future time is greater,
        by a particular amount, than the value of the contract at a particular
        earlier time-an obligation to pay that amount; and

   (b)  if the value of the contract at a particular future time is less, by a
        particular amount, than the value of the contract at a particular
        earlier time-a right to receive that amount. Application of Division
        2A of Part 7.11 of the Corporations Law to share ratio contracts

"1.2.04. Division 2A of Part 7.11 of the Corporations Law applies to a share
ratio contract as if:

   (a)  the definition of 'securities' were omitted from subsection 1002A (1)
        of the Law; and

   (b)  the contract were securities of a body corporate, where the shares of
        that body corporate are the shares to which the contract relates.
        Application of certain provisions of Chapter 7 of the Corporations Law
        to share ratio contracts

"1.2.05. Sections 997, 1001 and 1013 of the Corporations Law apply to a share
ratio contract as if the contract were securities of a body corporate, where
the shares of that body corporate are the shares to which the contract
relates. Certain provisions of Chapter 7 of the Corporations Law not to apply
to share ratio contracts

"1.2.06. The following provisions of Chapter 7 of the Corporations Law do not
apply to share ratio contracts:

   (a)  sections 775, 842, 843 and 844;

   (b)  Division 2 of Part 7.4;

   (c)  Parts 7.12 and 7.13. Restrictions on dealers in share ratio contracts

"1.2.07. (1) In this Regulation and in regulation 1.2.08:
'deal', in relation to share ratio contracts, has the meaning that it has
under section 9 of the Corporations Law as if the contracts were securities.

"(2) The holder of a dealers licence may deal in a share ratio contract on
behalf of another person only if:

   (a)  the holder:

        (i)    is a member of the Exchange; or

        (ii)   holds a futures brokers licence; or

   (b)  the Commission approves, in writing, the holder to deal in those
        contracts; or

   (c)  subject to regulation 1.2.09, regulation 8.3.02 applies to the dealing
        in the contract.
(Note: The terms "dealers licence" and "futures brokers licence" are defined
in section 9 of the Corporations Law.) Restrictions on securities licensees in
providing investment advice in relation to share ratio contracts

"1.2.08. The holder of a securities licence may:

   (a)  carry on an investment advice business in relation to a share ratio
        contract; or

   (b)  hold himself or herself out as an investment adviser in relation to a
        share ratio contract; only if:

   (c)  the holder:

        (i)    is a member of the Exchange; or

        (ii)   holds a futures brokers licence or futures advisers licence; or

   (d)  the Commission approves, in writing, the holder to carry on that
        business, or hold himself or herself out as an investment adviser, in
        relation to that contract; or

   (e)  subject to regulation 1.2.09, regulation 8.3.02 applies to the dealing
        in the contract to which the business, or the holding out as an
        adviser, relates.
(Note: The terms "futures advisers licence", "futures brokers licence",

"investment advice business", "investment adviser" and "securities licence"
are defined in section 9 of the Corporations Law.)

"Subdivision C-Application of Chapter 8 of the Corporations Law
to share ratio contracts Application of Part 8.3 for certain purposes

"1.2.09. For the purposes of paragraphs 1.2.07 (2) (c) and 1.2.08 (e), Part
8.3 of the Corporations Law is taken to apply to a dealing in a share ratio
contract, being a dealing of a kind mentioned in either of those paragraphs,
as if a reference to a futures brokers licence in subparagraph 8.3.02 (2) (a)
(ii), (d) (iv), (e) (iii) or (f) (ii) of these Regulations were a reference to
a dealers licence.
(Note: The terms "dealers licence" and "futures brokers licence" are defined
in section 9 of the Corporations Law.) Application of Chapter 8 of the
Corporations Law

"1.2.10. (1) Chapter 8 of the Corporations Law, other than the following
provisions of that Chapter, does not apply to a share ratio contract:

   (a)  subject to subregulation (2)-sections 1137, 1138, 1205 to 1208 and
        1210;

   (b)  Part 8.7 (except sections 1258 and 1267). (Note: This subregulation is
        made under subsection 92A (2) of the Corporations Law.)

"(2) For the purposes of paragraph (1) (a):

   (a)  section 1207 applies as if paragraph 1207 (1) (a) were omitted; and

   (b)  section 1210 applies as if the words 'in the prescribed form' (in
        subparagraph 1210 (a) (iii)) were omitted.

"(3) The provisions of Chapter 8 of the Corporations Law specified in
paragraphs (1) (a) and (b) apply to a dealing in a share ratio contract as if:

   (a)  a reference to a futures advice business were a reference to an
        investment advice business; and

   (b)  a reference to a futures broker were a reference to a dealer; and

   (c)  a reference to a futures exchange were a reference to a local stock
        exchange or an approved securities organisation; and

   (d)  a reference to a futures market were a reference to a stock market;
        and

   (e)  a reference to a clearing house for a futures market or a futures
        exchange were a reference to a body corporate that provides facilities
        for the registration of share ratio contracts acquired, or disposed
        of, on a stock market of a securities exchange.

"Subdivision D-Miscellaneous Subsection 93 (7) of the Corporations Law not to
apply in certain circumstances

"1.2.11. Subsection 93 (7) of the Corporations Law does not apply, in relation
to a share ratio contract, to a person who does an act that constitutes, or
does acts that together constitute, a dealing in the contract.". (Note: This
regulation is made under subsection 92A (2) of the Corporations Law.)