ASIC Corporations (Securities Lending Arrangements) Instrument 2021/821

The instrument rests on, and defines, a limited set of core concepts. Those definitions and the inserted mechanics are the primary legal levers in play.

• Securities lending arrangement (s 6 inserting 608(8A)): The instrument treats two classes of arrangement as “securities lending arrangements”. First, arrangements where a lender agrees to deliver securities and vest title to the borrower (or an entity nominated by the borrower), and the borrower agrees to return the securities (or equivalent securities) and vest title back to the lender (s 6, 608(8A)(a)(i)-(ii)). Second, arrangements where securities are held by the borrower (or an entity nominated by the borrower) on behalf of the lender, the lender authorises the borrower to deal in the securities on its own behalf, and the borrower agrees to return the securities (or equivalent securities) at a future time (s 6, 608(8A)(b)(i)-(iii)). The instrument treats the lender as taken to have a relevant interest if the borrower subsequently disposes of the securities such that the borrower ceases to have a relevant interest (s 6, 608(8A) operative text).

• Relevant interest attribution to lender (608(8A)): Where securities are subject to such a securities lending arrangement and the borrower disposes causing it to cease to have the relevant interest, the lender is taken to have a relevant interest in the securities (or equivalent securities) that the borrower agreed to return (s 6, 608(8A)).

• Agent lender and authorisation agreement (608(8B)-(8C)): The instrument recognises the agency lending market. An authorisation agreement is defined as an agreement under which a lender authorises an agent lender to negotiate, transfer securities, and terminate arrangements on the lender’s behalf (s 6, 608(8C)). If an agent lender acting under such an agreement transfers securities to a borrower and the borrower later disposes so it ceases to have a relevant interest, the agent lender is taken to have a relevant interest in the securities (s 6, 608(8B)).

• Service provider carve‑outs (s 7 inserting 609(10A)-(10D)): The instrument establishes that certain service providers (custodial businesses, prime broking businesses, agency lending businesses) do not acquire relevant interests under subsection 608(8) merely because they have borrowing rights or lending authority that arise in the ordinary course of those businesses, subject to conditions. The conditions require that the counterparty (the person whose securities are the subject) not be subject to any restriction other than a "permissible restriction", and that the rights be acquired as part of a bona fide arrangement in the ordinary course of the relevant business (s 7, 609(10A)-(10C)). The carve‑outs cease to apply once the service provider exercises the borrowing right or transfers the securities (609(10B), 10D(b)).

• Permissible restriction (609(10E)): The instrument clarifies the kinds of restrictions that will not defeat the carve‑out: a mortgage, charge or security taken in the ordinary course on ordinary commercial terms; or procedural/administrative restrictions about giving instructions (s 7, 609(10E), definition of permissible restriction).

• Business definitions (609(10E)): The instrument defines custodial business, prime broking business and agency lending business for the purpose of the carve‑outs. Each definition requires a package of specified services offered to wholesale clients (s 7, 609(10E)).

• Substantial holding disclosure modifications (s 8 inserting s 671B(3A), (4A)-(4C)): Where relevant interests arise, change or cease because of securities lending/authorisation, information about consideration paid need not be given (671B(3A)). Where securities lending contributed to the position, the person need not supply a copy of any master securities lending agreement with the substantial holding notice, provided the notice is accompanied by an explicit, specified statement about the arrangement (671B(4A)). Equivalently, where an authorisation agreement contributed, a statement about both the securities lending arrangement and the authorisation agreement can be furnished in lieu of the authorisation or master agreement (671B(4B)). If required, a true copy of the relevant agreement must be provided within two business days (671B(4A), (4B)). The instrument also defines what counts as a "master securities lending agreement" and lists standard market templates (Australian Master Securities Lending Agreement; Global Master Securities Lending Agreement; Global Master Repurchase Agreement; agreements on substantially the same terms; or certain prime broking agreements) (s 8, 671B(4C)).

• Interaction with other parts of the Act: The instrument states explicitly that its sections 6 and 7 do not have effect for the purposes of Chapter 6 or Part 6C.2 (note in s 7), indicating a deliberate limit on the scope of the modifications.

These concepts create a legal regime where lenders and agent lenders may be treated as holding relevant interests upon certain borrower disposals, while service providers that receive borrowing rights or lending authority as part of ordinary services are, in many cases, excluded from being treated as having relevant interests , provided specified conditions are satisfied. The substantial holding disclosure amendments reduce the immediate document production burden by allowing particular statements in place of producing master agreements, while preserving a short deadline to produce agreements if requested.

The instrument affects a range of market participants by changing the statutory incidence of "relevant interest" and the information required with substantial holding notices. Explicitly affected parties in the text include:

• Lenders under securities lending arrangements (s 6, 608(8A)). Where a borrower disposes so it ceases to have a relevant interest, the lender is taken to have a relevant interest in the securities (or equivalent securities) that the borrower agreed to return. That changes how lenders are positioned for the purposes of Part 6C.1.

• Agent lenders under authorisation agreements (s 6, 608(8B)-(8C)). Agent lenders conducting agency lending business and acting under an authorisation agreement are taken to have a relevant interest in situations where they deliver/vest title and the borrower later disposes.

• Borrowers (s 6, 608(8A)). The instrument’s mechanics track borrower disposals that cause them to cease having relevant interests; borrowers’ dispositions therefore remain relevant events that can shift who is treated as having a relevant interest.

• Service providers carrying on defined businesses: custodial business, prime broking business, agency lending business (s 7, 609(10E)). Those providers are advantaged by the carve‑outs: merely holding borrowing rights or lending authority in the ordinary course will not, by itself, result in a relevant interest being attributed to the service provider, provided the statutory conditions are met.

• Companies and responsible entities receiving substantial holding notices (s 8, 671B(4A)-(4B)). The instrument affects what they may receive with a prescribed form. It creates an alternative to attaching master securities lending agreements or authorisation agreements; companies and responsible entities may instead receive a specified statement and must be prepared to request the agreement (and receive the true copy within two business days if requested).

• Wholesale clients of service providers (s 7, 609(10E) and s 8 references). The carve‑outs and business‑definitions apply only to service providers dealing with wholesale clients (the instrument uses the Corporations Act definition of "wholesale client", s 761G, by reference).

• ASIC (s 8, 671B(4A)-(4B)): ASIC is an addressee authorised to request a copy of a master agreement or authorisation agreement, and the requester under the two‑business‑day requirement.

• Market intermediaries and compliance teams: those responsible for preparing substantial holding notices and maintaining records of securities lending, authorisation agreements, and master agreements will have new document and statement obligations if securities lending contributes to holdings or changes.

Who pays and who benefits from the modifications, in practical terms:

• Costs fall on lenders and market participants that will be newly classified as having relevant interests under the instrument’s mechanics only to the extent those new classifications cause additional reporting or behavioural constraints under Part 6C.1 (the instrument itself does not create fees or penalties, but attribution of a relevant interest can trigger existing Act obligations). The instrument’s text thus creates potential additional reporting burdens for lenders and agent lenders in certain circumstances.

• Benefits accrue to custodians, prime brokers and agency lenders that are service providers, because the instrument expressly prevents them from being taken to have relevant interests simply by holding borrowing rights or lending authority acquired in the ordinary course, subject to the conditions (s 7).

• Companies, responsible entities, and ASIC potentially bear administrative handling costs , they may request copies of master agreements/authorisation agreements; if they do, those documents must be provided within two business days (s 8).

• Wholesale clients may face contractual and operational consequences because the carve‑outs require that they are not subject to restrictions other than permissible restrictions, and that borrowing rights be acquired as part of bona fide arrangements (s 7).

Finally, the instrument is time‑limited (repeal date 1 October 2026, s 3). All affected parties must be aware that the legal treatment established by the instrument is not permanent and must prepare to adapt at or before repeal (e.g. through new arrangements, policy engagement, or operational changes).

The instrument primarily reshapes duties and rights that flow from existing provisions in Part 6C.1 and Chapter 6C by: (a) attributing relevant interests in specific securities lending scenarios; (b) denying attribution to certain service providers when conditions are met; and (c) relaxing documentary requirements for substantial holding notices where securities lending or authorisation agreements are implicated. The instrument does not itself create stand‑alone statutory duties or new powers; rather, it changes who is subject to the Act’s existing duties and reporting obligations.

Attribution duties and rights

• Lender’s taken‑to‑have relevant interest (s 6, insertion of 608(8A)): Where securities are subject to a securities lending arrangement and the borrower disposes such that it ceases to have a relevant interest, the lender is taken to have that relevant interest in the securities (or equivalent securities) the borrower agreed to deliver and vest in the lender. Practically, this means the lender will be treated under Part 6C.1 as the person with a relevant interest for the purposes of any duties that flow from having such an interest under the Act (the instrument itself inserts the attribution; the duties that follow are those in the Act).

• Agent lender’s taken‑to‑have relevant interest (s 6, insertion of 608(8B)): Similar attribution applies to agent lenders acting under authorisation agreements where they deliver and vest title and the borrower subsequently disposes. The authorisation agreement (definition in 608(8C)) may therefore create an operational right to be treated as holding a relevant interest in some scenarios; the agent lender must be aware of the consequential obligations.

Carve‑out duties and exceptions

• Service providers’ non‑attribution (s 7, insertion of 609(10A) and 609(10C)): A service provider does not have a relevant interest under 608(8) merely because they were given borrowing rights (borrowing right) or lending authority (lending authority) in the course of providing services as part of carrying on a prime broking, custodial, or agency lending business , provided that (a) the person who granted the right is not subject to any restriction other than a permissible restriction (609(10A)(c), 609(10C)(a)); and (b) the right was acquired as part of a bona fide arrangement in the ordinary course of carrying on that business (609(10A)(d), 609(10C)(b)). These conditions are material: service providers have a reduction in the risk of unintended attribution provided they can evidence the bona fide, ordinary course nature of the arrangement and the absence of non‑permissible restrictions.

• Termination of carve‑outs upon exercise or transfer (609(10B), 10D(b)): If the service provider exercises the borrowing right (or the agent lender transfers securities), the carve‑out ceases to apply to those particular securities. That creates an operational trigger; exercising rights converts the provider from being carved out to potentially being attributed with a relevant interest.

Disclosure duties and alternatives

• No obligation to disclose consideration paid in certain cases (s 8, inserted 671B(3A)): Where the relevant interest arises, changes or ceases because of a securities lending arrangement or authorisation terms, the usual requirement to give information about consideration paid is removed (671B(3A)). That reduces one element of the disclosure duty for persons affected by securities lending.

• Substitution of statements for master agreements (671B(4A)-(4B)): Persons who must give prescribed information need not attach a copy of any master securities lending agreement or authorisation agreement where the securities lending arrangement or authorisation agreement contributed to the situation. Instead, they must include a statement containing specified particulars (type of agreement, parties, circumstances of voting rights, expected delivery dates, scheduled dates for return, early delivery rights, circumstances where borrower is not required to deliver on settlement). If requested by the company, responsible entity or ASIC, the person must provide a copy of the agreement within two business days, endorsed as a true copy (671B(4A), (4B)). This creates a duty to be able to produce an accurate statement and to hold the underlying agreement available for rapid disclosure.

Documentation and record‑keeping duties implicit in the text

• To rely on the carve‑outs and the substitution statement regime, a person must be able to demonstrate that (a) the rights were acquired in the ordinary course of carrying on the defined business, and (b) the lender or borrower is not subject to non‑permissible restrictions. That requires record‑keeping and documentation to evidence the bona fides of the arrangement and the absence of problematic restrictions. The instrument defines what comprises a "master securities lending agreement" (671B(4C)), thereby signalling what documents the market expects to be retained and produced on request.

Limitations and boundaries

• The instrument itself contains a specific limitation: sections 6 and 7 do not have effect for the purposes of Chapter 6 or Part 6C.2 (see s 7 note). That means the attribution rules created by sections 6 and 7 are not intended to alter obligations and rights found elsewhere in the Act under those Parts.

In short, the instrument reallocates statutory exposure to Part 6C.1 in certain securities lending contexts: it creates a taken‑to‑have rule for lenders and agent lenders on borrower disposals, while providing exceptions for ordinary course service providers who take on borrowing rights or lending authority. It also substitutes streamlined documentary requirements for substantial holding notices where securities lending or authorisation agreements are implicated, while preserving the right of companies, responsible entities and ASIC to require production of the underlying agreements within a short timeframe.

The instrument itself does not create new penalty clauses or enforcement mechanisms. It operates by altering how pre‑existing statutory concepts (relevant interest and substantial holding disclosure) apply under the Corporations Act. Enforcement and penalties therefore arise from the Act’s existing compliance, civil and criminal framework applicable to Part 6C.1 and Chapter 6C, rather than from the instrument text. The instrument is explicit about its authority (made under s 673(1) of the Act, s 4) and about the scope of its effect (see the explicit "for the avoidance of doubt" note that sections 6 and 7 do not operate for the purposes of Chapter 6 or Part 6C.2).

Key enforcement‑related features or implications that follow from the instrument’s text include:

• Attribution changes affect who is potentially caught by existing statutory offences and civil obligations under the Act for failing to comply with duties that attach to having a relevant interest. The instrument’s taken‑to‑have rules for lenders and agent lenders (608(8A)-(8B) insertions via s 6) therefore alter the universe of persons who may be exposed to enforcement under the Act; however, the instrument itself does not list enforcement steps or sanctions.

• The carve‑outs for service providers are conditional. They apply only where the person granting the borrowing right or lending authority is not subject to any restriction other than a permissible restriction, and where the right was acquired as part of a bona fide arrangement in the ordinary course (609(10A), (10C)). Any dispute about whether these conditions were met would be litigable under the Act’s general enforcement framework, but the instrument does not provide specific dispute‑resolution procedures.

• The alternative documentary regime for substantial holding notices imposes operational deadlines that can trigger regulatory consequences if not met. Where an entity furnishes the substitute statement instead of an agreement, the company, responsible entity or ASIC can request a copy of the agreement; the requested party must provide a true copy within two business days of the request (671B(4A), (4B)). Failure to comply with existing obligations under Chapter 6C or Part 6C.1, including failing to provide documents demanded under Chapter 6C processes, is dealt with under the Act’s enforcement rules rather than by the instrument.

• ASIC’s role: the instrument empowers ASIC implicitly to request copies of agreements under the modified Chapter 6C disclosure provisions (671B(4A), (4B)). ASIC’s usual powers to investigate and enforce compliance with the Act will therefore be available where the modified disclosure obligations apply; the instrument does not extend or limit ASIC’s enforcement powers beyond their statutory scope.

• Temporal certainty and transition risk: because the instrument is time‑limited (repeal on 1 October 2026), enforcement questions may arise at the point of expiry if market participants assumed permanence. The instrument itself imposes no transitional enforcement rules; the statutory enforcement framework in the Act will govern any compliance failures during the instrument’s life and on expiry.

In sum, enforcement consequences are indirect: this instrument reallocates who the Corporations Act will treat as holding relevant interests and it adjusts what must accompany a substantial holding notice, thereby changing who may be subject to existing enforcement provisions and what documentary evidence they must supply when asked. The instrument contains no standalone penalty provisions; enforcement follows existing Act processes.

The instrument modifies how specific parts of the Corporations Act apply; it does not, on its face, create freestanding obligations outside that Act. Nevertheless, its changes have cross‑cutting implications because the Corporations Act is a foundational statute for corporate governance, takeovers, disclosure and market integrity. The instrument itself flags a limit on interactions: it specifies that sections 6 and 7 do not have effect for the purposes of Chapter 6 or Part 6C.2 (s 7 note), thereby excluding any intended effect on some other statutory regimes. Beyond that explicit carve‑out, interaction effects arise by changing who is taken to have a relevant interest and what is disclosed with a substantial holding notice.

Direct interactions (as stated in the instrument)

• Part 6C.1: The instrument inserts additional subsections into the Act as if sections 608 and 609 contained the new paragraphs and subsections. That is a direct interaction with the mechanics of that Part: attribution of relevant interests and the exclusion of service providers when conditions are met are effects that operate within Part 6C.1 (see s 6 and s 7).

• Chapter 6C (substantial holding disclosure): The instrument modifies s 671B to change what information need be given when securities lending arrangements or authorisation agreements contribute to a person’s relevant interest position (s 8). That directly changes the operation of Chapter 6C disclosure rules.

Limited or excluded interactions (explicit in the instrument)

• Chapter 6 and Part 6C.2 exclusion: The instrument expressly states that sections 6 and 7 do not have effect for the purposes of Chapter 6 or Part 6C.2 (s 7 note). This limits interaction with other regimes in the Corporations Act that may deal with control, takeovers, or particular disclosure constructs that fall in those Chapters/Parts. The instrument therefore preserves whatever the existing statutory treatment is under those other Chapters/Parts.

Potential practical cross‑statutory interactions (implications, not new law)

• Takeover and control regimes: The instrument’s treatment of relevant interest could interact in practice with other laws that rely on the concept of relevant interest as an input to calculating control, takeover obligations or compulsory bidding triggers. The instrument’s explicit exclusion of Chapter 6 and Part 6C.2 from the effect of ss 6 and 7 narrows that interaction, but practitioners should note that section 8 modifies Chapter 6C disclosure itself, which may feed information into concurrent obligations elsewhere. The instrument’s text does not purport to alter those other regimes directly; it only limits the scope of the new attributions to Part 6C.1 and Chapter 6C as specified.

• Contractual and property law: The instrument’s notions of delivery, vesting of title, and "equivalent securities" are operational contractual constructs. How courts interpret delivery and vesting for property law purposes remains governed by general law and by parties’ contracts; the instrument’s attribution provisions treat certain contractual transfers as giving rise to a statutory taken‑to‑have relevant interest. The instrument therefore overlays statutory attribution on top of private contract arrangements, potentially leading to interactions in disputes about legal title or equitable interests , but the instrument does not purport to change property law.

• Market rules and exchange listings: Listing rules, ASX requirements, or market conduct rules often reference relevant interest and substantial holding disclosure. The instrument changes who is treated as having relevant interests and what is disclosed under Chapter 6C; consequently, market participants must evaluate their obligations under exchange rules in light of these changes. The instrument itself makes no amendment to listing rules or market operator rules.

• Privacy and confidentiality: The instrument permits companies, responsible entities and ASIC to request master agreements and authorisation agreements to be produced within two business days (s 8). Those documents may contain commercially sensitive material, but the instrument contains no special confidentiality regime or carve‑out. Existing confidentiality protections under other laws or contractual protections remain relevant; the instrument does not modify them.

• International arrangements: The instrument recognises standard international master agreements (Global Master Securities Lending Agreement; Global Master Repurchase Agreement) as falling within the definition of a master securities lending agreement (s 8, 671B(4C)(b)-(c)). That reflects a designed interaction with international market documentation. The instrument itself does not alter any foreign law but facilitates Australian disclosure mechanics being aligned with common international documentation.

In short, the instrument interacts directly with Part 6C.1 and Chapter 6C of the Corporations Act, explicitly excludes certain other parts of the Act from being affected by ss 6 and 7, and has practical knock‑on effects for other legal regimes and operational rules that rely on "relevant interest" or substantial holding disclosure. Practitioners should map the instrument’s changes against exchange rules, contractual arrangements, and property law to assess cross‑regime compliance implications, but the instrument itself confines its legal amendments to the Corporations Act provisions specified.

The instrument as presented contains the instrument title, date (27 September 2021) and the operative provisions; it also sets a repeal date (1 October 2026) and states the legislative authority under which it was made (subsection 673(1) of the Corporations Act 2001) (see ss 1-4). The instrument’s text does not contain any subsequent amendment schedules or record of amendments within the instrument itself.

Key historical facts available in the instrument:

• Date of making: 27 September 2021 (signature by Anthony Graham as delegate, s 1 header and signature block).

• Commencement: Commences the day after registration on the Federal Register of Legislation (s 2). The instrument does not list the registration date itself in the printed text provided; the reader should consult the Federal Register for the registration entry to confirm the operative commencement date.

• Repeal: The instrument is explicitly repealed on 1 October 2026 (s 3). There are no transitional provisions in the text about what happens on repeal or whether provisions remain binding in respect of events occurring before repeal. The repeal timetable creates a definable policy window in which these modifications to the operation of Part 6C.1 and Chapter 6C apply.

• Authority: Made under subsection 673(1) of the Corporations Act 2001 (s 4). The instrument does not record any ancillary instruments (e.g. regulations, determinations) that further modify its effect.

There are no recorded amendments within the instrument text beyond the insertions described in Parts 2 and the preliminary material. The instrument’s structure is straightforward: Part 1 (preliminary provisions including name, commencement, repeal, authority, definitions) and Part 2 (the substantive declaration comprising ss 6-8).

What is not in the instrument text

• The instrument text provided does not include an explanatory memorandum, second reading speech extracts, or policy justifications. Those materials, if they exist, would be separately published and can assist in contemporaneous policy context, but are not part of the instrument text itself.

• There are no recorded subsequent instruments that amend this instrument in the text provided. Any amendment after the printed date would appear as a separate instrument or as an amendment schedule in the Federal Register; users should check the register for later action, extension, replacement or repeal earlier than 1 October 2026.

Practically, the repeal date signals that the instrument was intended as a time‑limited measure unless reissued or replaced. Stakeholders should track whether ASIC or the legislature extends, replaces or makes permanent these modifications prior to the sunset date.

The instrument text itself contains no references to litigation, no listed judicial determinations, and no case citations. It does not record prior court interpretation or any existing disputes concerning the insertions it makes to ss 608, 609 or s 671B. Therefore the instrument provides no internal litigation history.

Nevertheless, the legal issues the instrument addresses , attribution of "relevant interest" in securities lending contexts, the status of agent lenders and service providers, and the sufficiency of documentary disclosure for substantial holding notices , are topics that, as a matter of legal practice, have potential to generate litigation or contested statutory interpretation. The instrument frames several precise points that are likely to be contested in any dispute, and these are the areas where litigation could arise under the Act’s existing enforcement and civil mechanisms:

• Whether a disposal by a borrower results in the lender being "taken to have a relevant interest" in the precise securities or only in "equivalent securities" , the instrument uses the phrase "securities (or equivalent securities)" in multiple inserted subsections (s 6, 608(8A),(8B)). Disputes could arise over what qualifies as "equivalent securities" in particular transactions, and over the point in time at which the borrower is treated as having ceased to have a relevant interest.

• The scope of an authorisation agreement and the precise moment an agent lender becomes taken to have a relevant interest: 608(8B) applies to agent lenders acting under authorisation agreements when they deliver and vest title and the borrower subsequently disposes. Litigation could concern whether a particular clause in an authorisation agreement meets the instrument’s definition (s 6, 608(8C)) and whether an agent lender’s conduct falls within the authorised acts.

• The meaning of "bona fide arrangement entered into in the ordinary course of carrying on that business" for the carve‑outs (609(10A)(d), 609(10C)(b)): Courts may be asked to evaluate whether an arrangement was bona fide and ordinary course, which is a fact‑sensitive enquiry. Similarly, whether restrictions are "permissible restrictions" (609(10E)) may require judicial characterisation, especially where restrictions have both procedural and substantive effects.

• The point at which the carve‑outs cease to apply: the instrument provides that subsection (10A) stops applying when the service provider exercises the borrowing right in respect of particular securities (609(10B)), and that (10C) stops applying when the agent lender transfers the securities to the borrower (609(10D)(b)). Litigation could arise over what constitutes "exercise" or "transfer" and whether the conduct in question triggers the cessation of the carve‑out.

• Whether reliance on the substitute statement under s 671B(4A) or (4B) is adequate where parties allege the statement omitted material details: disputes could arise between substantial‑holding filers, the issuer or ASIC about the sufficiency and accuracy of the "full and accurate details" that the instrument requires.

Because the instrument introduces statutory wording as if inserted into the Act, any judicial interpretation of those insertions will become part of the case law that governs securities lending related relevant interest and disclosure obligations. At present, the instrument text contains no reports of such litigation. Practitioners should monitor court and tribunal decisions interpreting relevant interest, agency lending, bona fide ordinary course, permissible restrictions, and substantial holding disclosure statements in securities lending contexts for developments while the instrument is in force.

This instrument creates several concrete traps for the unwary. The points below are drawn directly from the inserted subsections and the definitions the instrument provides; they identify operational and compliance risks the instrument itself introduces or clarifies.

1. Taken‑to‑have rule applies on borrower disposals: The lender (or agent lender in certain circumstances) is "taken to have" a relevant interest if the borrower disposes such that the borrower ceases to have a relevant interest (s 6, 608(8A) and (8B)). That statutory attribution can catch lenders who thought title vesting during a loan would shield them from being treated as relevant holders, particularly where a disposal by a borrower is out of the lender’s control. Lenders must therefore monitor borrower activity and be prepared for attribution consequences following borrower disposals.

2. Service provider carve‑out is conditional and can stop applying: The non‑attribution protections for custodians, prime brokers, and agent lenders apply only if (a) the person is not subject to any restriction other than a "permissible restriction" and (b) rights were acquired as part of a bona fide arrangement in the ordinary course (s 7, 609(10A), (10C)). If either condition fails, the service provider can be taken to have a relevant interest. The safe harbour is therefore fragile: governance and contractual checks are required to ensure arrangements fall within those conditions.

3. The carve‑out stops upon exercising rights or transferring securities: Subsection (10B) stops applying when the service provider exercises the borrowing right in respect of particular securities; subsection (10D)(b) stops applying when the agent lender transfers the securities to the borrower. That means operational acts that may be routine in prime brokerage/custody workflows can convert a service provider into a holder of relevant interest for those securities. Providers must track when rights are exercised or transfers occur and be able to demonstrate the point at which the carve‑out ceases to apply.

4. Narrow definitions of "permissible restriction" may be determinative: Permissible restrictions are limited to a mortgage, charge or security taken in the ordinary course on ordinary commercial terms or procedural/administrative restrictions in relation to instructions (s 7, 609(10E), definition of permissible restriction). Any substantive contractual limitation on a lender’s or borrower’s ability to deal with securities that falls outside this narrow definition can negate the carve‑out.

5. Wholesale client requirement: The service provider carve‑outs apply in the context of businesses provided to wholesale clients (s 7, 609(10E) cross‑reference to s 761G). Retail clients are therefore outside the safe harbour. Contracts and onboarding processes must correctly classify clients as wholesale or retail, applying the Act’s definition in s 761G, because an incorrect classification could create a compliance breach.

6. Substantialholding statement must be "full and accurate": The substituted statement permitted by s 671B(4A)-(4B) must give "full and accurate details" of enumerated matters. If the statement is incomplete, a company, responsible entity or ASIC can request the underlying master agreement or authorisation agreement. The requester can then insist on a true copy within 2 business days (671B(4A), (4B)); failing to meet that deadline could precipitate regulatory scrutiny.

7. Two business day turnaround for documentation: If a company, responsible entity or ASIC requests the agreement, the instrument requires the copy to be given "within 2 business days after receiving the request" and to be endorsed as a true copy (671B(4A), (4B)). Operational systems must be in place to retrieve, verify and produce documents quickly. International time zones, cross‑jurisdictional custody chains and confidentiality checks can make the two business day deadline challenging.

8. Master agreement recognition list is prescriptive: The instrument lists accepted types of master securities lending agreements (Australian Master SLA, Global Master SLA, GMRA, agreements on substantially the same terms, or prime broking agreements of a specified type) (671B(4C)). Arrangements that do not conform to one of these formats may not qualify for the simplified statement route and could require full agreement production up front.

9. "Agent lender may be borrower itself": Subsection (10D)(a) explicitly contemplates that the agent lender may itself act as borrower under a securities lending arrangement. This is a specific structural possibility that can complicate attribution analysis and recuse assumptions that agent lenders are always independent intermediaries.

10. Sunset date requires transitional planning: The instrument is repealed on 1 October 2026 (s 3). Firms that change documentation, systems, or operational models to rely on these rules must plan for the repeal date , whether they will revert to previous practices, obtain longer term certainty from ASIC, or renegotiate contractual arrangements. Failure to plan could produce a compliance gap.

11. No express confidentiality mechanism for agreement disclosure: The instrument allows company, responsible entity or ASIC to request master agreements or authorisation agreements be supplied within two business days, but it does not create an express confidentiality regime or protective order. Agreements containing commercially sensitive clauses may be exposed to scrutiny. Parties should be prepared to manage confidentiality via pre‑existing statutory protections or seek negotiated protections, recognising the instrument imposes no additional confidentiality shield.

12. Interaction with other Act Parts is limited but not eliminated: The instrument expressly excludes effect for Chapter 6 and Part 6C.2 for ss 6 and 7, but does not exclude other possible cross‑references that rely on "relevant interest". Users must be careful mapping the statutory attribution to other obligations that use the relevant interest concept in different contexts.

Each of these "gotchas" is traceable to specific inserted wording in ss 6-8 of the instrument and should be managed through operational controls, contractual drafting, record keeping and legal review.

Compliance requires a combination of contractual drafting, record keeping, operational controls and disclosure process adjustments that are directly grounded in the instrument’s inserted subsections. Below are practical steps, tied to the instrument’s specific provisions, that entities in lenders, agent lender, borrower, service provider and issuer roles should adopt.

1. Map roles and contracts against statutory definitions (s 6, s 7, s 8)

• Identify which contracts qualify as "securities lending arrangements" under 608(8A)(a)-(b) as inserted by s 6. For each arrangement, record whether title is delivered and vested, or whether the borrower holds securities on behalf of the lender and is authorised to deal.

• For agent lenders, ensure there is a clear "authorisation agreement" that fits the instrument’s definition (608(8C)). Confirm that the agreement explicitly authorises negotiating and arranging loans, transferring securities without further notice, and terminating arrangements. Retain a copy of the authorisation agreement centrally.

• Determine whether your business qualifies as a custodial business, prime broking business or agency lending business as defined in 609(10E). If so, catalogue services provided to wholesale clients and ensure contracts reflect the package of services set out in the instrument.

2. Avoid or document non‑permissible restrictions (s 7, 609(10A), 10C, 10E)

• Ensure the parties granting borrowing rights or lending authority are not subject to restrictions beyond those the instrument accepts as "permissible" (mortgage/charge/security on ordinary commercial terms or procedural/administrative restrictions). Avoid inserting substantive contractual limitations on how clients may deal with securities if relying on service provider carve‑outs.

• Document the absence of non‑permissible restrictions in client onboarding files and maintain contemporaneous evidence that the arrangement is bona fide and entered into in the ordinary course of business.

3. Establish and maintain bona fide and ordinary course evidence (s 7, 609(10A)(d), 10C(b))

• Keep templates, standard operating procedures and contemporaneous records demonstrating that the rights were acquired in the ordinary course of business, including internal approvals, compliance sign‑offs and evidence of recurring market practice.

• Where arrangements deviate from standard templates, create a written justification and approvals trail confirming the business rationale and bona fides.

4. Operational monitoring for exercise/transfer triggers (s 7, 609(10B) and 10D(b))

• Build operational alerts to detect when a service provider exercises borrowing rights or when an agent lender transfers securities to a borrower, because those acts stop the carve‑outs for the securities concerned. When an exercise/transfer occurs, update compliance logs and consider whether relevant interest attribution to the provider now applies.

• Retain transaction records sufficient to demonstrate the timing of exercise/transfer events.

5. Substantial holding notice workflow and statement templates (s 8, 671B(3A), (4A), (4B))

• Prepare a standard, compliant statement template to accompany prescribed substantial‑holding forms when securities lending arrangements or authorisation agreements contributed to the relevant interest position. The statement must include the enumerated particulars in 671B(4A)(a)(i)-(viii) and 671B(4B)(b)(i)-(v), as applicable.

• Ensure statements are accurate, complete and capable of being endorsed as "full and accurate details", because the person sending the statement must produce a true copy on request within two business days (671B(4A), (4B)).

6. Document retention and fast‑production capability (s 8, 671B(4A), (4B))

• Store master securities lending agreements and authorisation agreements in a centralised, searchable repository. Implement procedures to retrieve and produce a true copy within two business days after a request by a company, responsible entity or ASIC, including an endorsement process to certify the copy as a true copy.

• Ensure that international custody chains, encryption, or legal privilege mechanisms do not prevent timely production. If overseas counterparts are required to provide copies, build contractual obligations or operational processes to ensure timely access.

7. Use accepted master agreement forms or ensure equivalence (s 8, 671B(4C))

• Where possible, use one of the instrument’s listed master agreement templates (Australian Master Securities Lending Agreement; Global Master Securities Lending Agreement; Global Master Repurchase Agreement; or a written agreement on substantially the same terms) or a prime broking agreement meeting the listed criteria. Doing so clarifies eligibility for the statement alternative and avoids arguments about whether the documentation qualifies as a "master securities lending agreement".

• If using bespoke agreements, maintain a legal memorandum linking the bespoke terms to the specified templates, showing substantial equivalence where relied upon.

8. Client classification and onboarding (s 7, 609(10E))

• Confirm client status under s 761G of the Corporations Act (wholesale vs retail). The instrument’s carve‑outs apply to wholesale clients; misclassification can jeopardise reliance on the carve‑out. Incorporate client classification checks into onboarding and periodic reviews.

9. Confidentiality planning

• Anticipate requests by companies, responsible entities or ASIC to produce agreements. If agreements contain sensitive commercial clauses, secure client consent where possible to produce redacted copies and have confidentiality protocols ready. The instrument does not create a special confidentiality regime for the two business day production requirement.

10. Governance and escalation

• Assign responsibility within compliance, legal, and operations for the obligations under the instrument. Define escalation paths for disputes about whether rights are permissible restrictions, whether an arrangement is bona fide, or whether an exercise/transfer has occurred.

11. Sunset and transition planning (s 3)

• Build a plan to address the repeal date (1 October 2026). Options include renegotiating contracts to remove reliance on the instrument, seeking a successor instrument or regulatory guidance before the sunset, or re‑engineering processes to operate under the pre‑instrument legal position once the instrument expires.

12. Training and internal controls

• Train front office, custody, prime broking and compliance personnel on the instrument’s triggers and on the need to avoid conduct that would cause a service provider to be treated as having a relevant interest (for example, avoid exercising borrowing rights in ways that create unexpected attribution).

13. Liaison with issuers and responsible entities

• Inform issuers of the possibility of receiving statements in lieu of master agreements and the availability of two business day production on request. Establish a points of contact so that requests can be processed efficiently.

14. Coordinate with external counsel

• Document legal positions about whether particular contractual mechanisms fall within the instrument’s safe harbours and maintain legal opinions where material risk exists.

Complying with the instrument is therefore a mixture of documentation, rapid document‑production capability, clear contractual drafting to ensure arrangements fit the statutory definitions and conditions, operational monitoring of exercise/transfer events, and planning for the instrument’s limited lifespan. The statutory text provides the precise trigger points and documentary obligations: adhere to those timings and content requirements (particularly the enumerated items demanded by ss 671B(4A)-(4B)) to rely on the streamlined disclosure paths and service provider carve‑outs.