Commonwealth Repealed Acts
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This legislation has been repealed.
CORPORATIONS LAW
- SECT 846
Short selling
- (1)
- Subject to this section
and the regulations, a person shall not sell securities to a buyer unless, at
the time of the sale:
- (a)
- the person
has or, where the person is selling as agent, the person's principal has;
or
- (b)
- the person believes on
reasonable grounds that the person has, or where the person is selling as
agent, the person's principal has;
a presently exercisable and unconditional right to vest the securities in the
buyer.
- (2)
- For the purposes of
subsection (1):
- (a)
- a person
who, at a particular time, has a presently exercisable and unconditional right
to have securities vested in the person or in accordance with the directions
of the person has at that time a presently exercisable and unconditional right
to vest the securities in another person;
and
- (b)
- a right of a person to
vest securities in another person is not conditional merely because the
securities are charged or pledged in favour of another person to secure the
repayment of money.
- (3)
- Subsection (1) does not
apply in relation to:
- (a)
- a sale of
securities by the holder of a dealers licence who is a member of a securities
exchange and specialises in transactions relating to odd lots of securities,
being a sale made by the holder as principal solely for the purpose of:
- (i)
- accepting
an offer to buy an odd lot of securities;
or
- (ii)
- disposing of a parcel of
securities that is less than one marketable parcel of securities by means of a
sale of one marketable parcel of those securities;
- (b)
- a sale of securities as
part of an arbitrage
transaction;
- (c)
- a sale of securities by a
person who before the time of sale has entered into a contract to buy those
securities and who has a right to have those securities vested in the person
that is conditional only upon all or any of the following:
- (i)
- payment of
the consideration in respect of the
purchase;
- (ii)
- the receipt by the person
of a proper instrument of transfer in respect of the
securities;
- (iii)
- the receipt by the
person of the documents that are, or are documents of title to, the
securities;
- (d)
- a sale of securities
where:
- (i)
- the person
who sold the securities is not an associate of the body corporate that issued
or made available the
securities;
- (ii)
- arrangements are made
before the time of the sale that will enable delivery of securities of the
class sold to be made to the buyer within 3 business days after the date of
the transaction effecting the sale;
and
- (iii)
- if the sale is made on
the stock market of a securities exchange:
(A) the price per unit in respect of the sale is not below
the price at which the immediately preceding ordinary
sale was effected; and
(B) the price per unit is above the price at which the
immediately preceding ordinary sale was made unless the
price at which the immediately preceding ordinary sale
was made was higher than the next preceding different
price at which an ordinary sale had been
made;
and the securities exchange is informed as soon as practicable that the sale
has been made short in accordance with this subparagraph; or
- (e)
- a sale of securities
where:
- (i)
- the
securities are included in a class of securities in relation to which there is
in force a declaration, made by the board of a securities exchange as provided
by the business rules of the securities exchange, to the effect that the class
is a class of securities to which this paragraph
applies;
- (ii)
- the sale is made as
provided by the business rules of the securities exchange;
and
- (iii)
- at the time of the sale,
neither the person who sold the securities, nor any person on behalf of whom
the first-mentioned person sold the securities, was an associate, in relation
to the sale, of the body corporate that issued or made available the
securities.
- (4)
- A person
who requests a holder of a dealers licence to make a sale of securities that
would contravene subsection (1) but for paragraph (3)(b), (d) or (e) shall,
when making the request, inform the holder of the licence that the sale is a
short sale.
- (5)
- A person who, on a stock
market of a securities exchange, makes, whether as principal or agent, a sale
of securities that would contravene subsection
- (1)
- but for paragraph (3)(d)
shall endorse on any document evidencing the sale that is given to the person
who, whether as principal or agent, buys the securities a statement that the
sale was a short sale.
- (6)
- For the purposes of this
section, a person who:
- (a)
- purports to
sell securities;
- (b)
- offers to sell
securities;
- (c)
- holds himself, herself or
itself out as entitled to sell securities;
or
- (d)
- instructs a dealer to sell
securities;
shall be deemed to sell the securities.
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