Part 5IMPLEMENTING THE CLEARING HOUSE SUBREGISTER SYSTEM

PART 5—IMPLEMENTING THE CLEARING HOUSE SUBREGISTER SYSTEM 126. Section 9 of the Corporations Law is amended: (a) by adding at the end of the definition of “document” the following note: “Note: In Division 3 of Part 7.13. ‘document’ has a meaning affected by the definition of ‘document’ in subsection 1097(1).”; (b) by adding at the end of the definition of “prospectus” the following note: “Note: A written notice or instrument issued by the securities clearing house will not generally constitute a prospectus—see subsection 779J(1).”: (c) by adding at the end of the definition of “relevant interest” the following note: “Note: The activities of the securities clearing house will not generally give rise to a relevant interest—see subsection 779J(2).”; (d) by adding at the end of the definition of “securities business” the following note: “Note: The activities of the securities clearing house will not generally constitute a securities business—see subsection 779J(1).”: (e) by inserting the following definitions: “‘proper SCH transfer’ means: (a) an SCH-regulated transfer of a quoted security or quoted right effected in accordance with the SCH business rules; or (b) a transfer that is taken by section 1097D to be a proper SCH transfer; ‘quoted right’ has the meaning given by section 1097A; Note: The meaning of ‘quoted right’ may be extended by the SCH business rules (under section 1097B) or by a Commission declaration (under section 1097C). ‘quoted security’ has the meaning given by section 1097A; Note: The meaning of ‘quoted security’ may be extended by the SCH business rules (under section 1097B) or by a Commission declaration (under section 1097C). ‘SCH’ is short for securities clearing house; ‘SCH business rules’ means the business rules (within the meaning of Chapter7) of the securities clearing house; ‘SCH participant’ means a person who, or a partnership that, under the SCH business rules, is entitled to participate in the facilities provided by the securities clearing house; ‘SCH-regulated transfer’ means a transfer (within the meaning of Division 3 of Part 7.13) of a quoted security or a quoted right that, according to the SCH business rules, is an SCH-regulated transfer; ‘securities clearing house’ means the body corporate in relation to which an approval under section 779B is in force;”. Application not to be granted unless applications also made under corresponding laws 127. Section 102A of the Corporations Law is amended by inserting in subsection (3) “779B,” after “770,”. 128. The Corporations Law is amended by inserting after section 779 the following Part: “PART 7.2A—THE SECURITIES CLEARING HOUSE “779A. In this Part, unless the contrary intention appears: ‘disciplinary proceeding’, in relation to the securities clearing house, means: (a) a proceeding under the SCH business rules that may result in the disciplining of an SCH participant; or (b) an appeal under the SCH business rules from such a proceeding; ‘disciplining’, in relation to a person in the person’s capacity as an SCH participant, includes, but is not limited to, taking action that has the effect of revoking or suspending the person’s status as an SCH participant. Approval of securities clearing house “779B.(1) A body corporate may apply to the Commission in writing for approval by the Minister as the securities clearing house. “(2) Subject to section 102A, if a body so applies, the Minister may by writing approve the body as the securities clearing house if, and only if, he or she is satisfied that: (a) the body’s business rules: (i) include satisfactory provisions about: (A) the facilities that the body proposes to provide for the settlement of transactions involving quoted securities or quoted rights; and (B) the facilities that the body proposes to provide for the registration of transfers (within the meaning of Division 3 of Part 7.13) of quoted securities or quoted rights; and (C) any other facilities that the body proposes to provide (such as facilities in relation to dealings in quoted securities or quoted rights); and (ii) include satisfactory provisions about the disciplining of persons (being persons who will be SCH participants if the approval is given) who contravene the business rules or this Chapter; and (iii) are otherwise satisfactory; and (b) the interests of the public will be served by granting the application. “(3) An approval comes into force on the day specified in the instrument giving the approval, being the day on which the approval is given or a later day. “(4) In exercising his or her powers under subsection (2), the Minister must ensure that no more than one approval is in force at any particular time. “(5) The Commission must cause a copy of an instrument under this section to be published in the Gazette. Commission to be notified of amendments of business rules “779C.(1) As soon as practicable after the SCH business rules are amended (whether by way of rescission, alteration or addition), the securities clearing house must give written notice of the amendment to the Commission. “(2) A notice must: (a) set out the text of the amendment; and (b) specify the day on which the amendment was made; and (c) explain the purpose of the amendment. “(3) If a notice is not given as required within 21 days after an amendment is made, the amendment ceases to have effect. “(4) The Commission must send a copy of a notice to the Minister as soon as practicable after receiving it. “(5) The Minister may, within 28 days after the Commission receives a notice, disallow the whole or a specified part of the amendment to which the notice relates. “(6) If the Minister disallows the whole or a part of an amendment, the Commission must, as soon as practicable, give notice of the disallowance to the securities clearing house and, when the securities clearing house receives the notice, the amendment ceases to have effect to the extent of the disallowance. Securities clearing house to assist Commission “779D. The securities clearing house must provide such assistance to the Commission, or to a person acting on behalf of, or with the authority of, the Commission, as the Commission reasonably requires for the performance of its functions. Securities clearing house to notify Commission of disciplinary action “779E. If the securities clearing house decides to discipline an SCH participant, it must, as soon as practicable, lodge written particulars of the participant’s name and of the reason for, and nature of, the disciplinary action taken or to be taken. Issuers of quoted securities and quoted rights to comply with SCH business rules “779F. If: (a) a provision of the SCH business rules purports to apply in relation to the issuing body, within the meaning of Division 3 of Part 7.13, in relation to quoted securities or quoted rights; and (b) the issuing body is not otherwise bound to comply with the provision; the issuing body is, by force of this section, bound to comply with the provision. Power of Court to order compliance with provisions of SCH business rules “779G.(1) If: (a) a person is bound to comply with a provision of the SCH business rules; and (b) the person contravenes the provision; then, subject to subsection (2), the Court may, on the application of the securities clearing house, of the Commission, or of a person aggrieved by the contravention, make an order giving directions to the first-mentioned person about complying with the provision. “(2) The Court may not make an order giving directions to a person unless the person has been given an opportunity of being heard. Qualified privilege in respect of disciplinary proceedings “779H.(1) The securities clearing house, or a member, officer or employee of the securities clearing house, or an SCH participant, has qualified privilege in respect of a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with, a disciplinary proceeding of the securities clearing house. “(2) A person has qualified privilege in respect of the publication of: (a) a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with; or (b) a document prepared, given or produced by a person, in the course of, or otherwise for the purposes of or in connection with; a disciplinary proceeding of the securities clearing house. Provision of settlement facilities not a securities business etc. “779J.(1) Nothing that the securities clearing house does in the course of, or in connection with, providing facilities for the settlement of transactions constitutes, for the purposes of this Law: (a) a securities business; or (b) an offer of securities for subscription or purchase; or (c) an invitation to subscribe for or buy securities. “(2) The securities clearing house does not, for the purposes of this Law, have a relevant interest in a share or a security merely because of its provision of facilities for the settlement of transactions.”. 129\. Section 920 of the Corporations Law is amended: (a) by omitting “participating exchange” (wherever occurring) from the definition of “clearing nominee” in subsection (1) and substituting “settlement authority”; (b) by inserting “, under the SCH business rules” after “rules” in the definition of “obligations” in subsection (1); (c) by omitting “quoted securities, where:” from the definition of “reportable transaction” in subsection (1) and substituting “securities, where the securities are quoted on a stock market of a participating exchange or of an Exchange subsidiary when the agreement for the sale or purchase is made and:”; (d) by omitting “participating exchange” from the definition of “TDS nominee” in subsection (1) and substituting “settlement authority”; (e) by omitting “participating exchange” (wherever occurring) from the definition of “transfer delivery service provisions” in subsection (1) and substituting “settlement authority”; (f) by omitting from subsection (1) the definition of “quoted securities”; (g) by inserting in subsection (1) the following definition: “ ‘settlement authority’ means a participating exchange or the securities clearing house;”. Transfer of securities etc. and payment of money 130. Section 924 of the Corporations Law is amended by omitting subsection (2) and substituting the following subsection: “(2) A person (‘the transferor’) transfers securities to another person (‘the transferee’) if, and only if: (a) in the case of an SCH-regulated transfer—the transferor does, or causes to be done, all things that the SCH business rules require to be done by or on behalf of the transferor to effect the transfer; or (b) in any other case—the transferor delivers, or causes to be delivered, to the transferee documents (‘transfer documents’) that are sufficient to enable the transferee: (i) except in the case of marketable rights within the meaning of Division 3 of Part 7.13—to become registered as the holder of the securities; or (ii) in the case of such marketable rights—to obtain the issue to the transferee of the securities to which the marketable rights relate; without the transferor doing anything more, or causing anything more to be done, by way of executing or supplying documents.”. Novation of agreements 131. Section 924A of the Corporations Law is amended by omitting “participating exchange’s” and substituting “settlement authority’s”. Definitions 132. Section 948 of the Corporations Law is amended by inserting the following definition: “ ‘Exchange body’ means the Exchange or a subsidiary of the Exchange;”. 133. Section 948A of the Corporations Law is amended by omitting from subparagraph (b)(i) “participating exchange” and substituting “settlement authority”. Claim by selling dealer in respect of default by buying dealer 134. Section 949 of the Corporations Law is amended: (a) by omitting paragraph (1)(a) and substituting the following paragraph: “(a) the first-mentioned dealer: (i) if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer— is done, or is ready, willing and able to do, all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or (ii) in any other case—has supplied, or is ready, willing and able to supply, to the other dealer, under the agreement for the sale, settlement documents in relation to the sale; and”; (b) by inserting after subsection (4) the following subsections: “(4A) If the SCH business rules purport to authorise the securities clearing house to make under this section on behalf of a dealer who is or was an SCH participant a claim that the dealer is entitled to make, the securities clearing house is entitled to make that claim on behalf of that dealer. “(4B) If the securities clearing house is entitled under subsection (4A) to make claims under this section on behalf of 2 or more dealers, the securities clearing house is entitled to make a single claim under this section on behalf of both or all of those dealers in respect of the sum of the amounts in respect of which it is entitled to make separate claims on behalf of each of those dealers.”; (c) by inserting in subsection (5) “or the securities clearing house” after “body”; (d) by omitting from paragraph (5)(a) “or (3)” and substituting “, (3) or (4A)”; (e) by inserting after paragraph (5)(a) the following word and paragraph: “and (aa) if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer—the dealer: (i) has done all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or (ii) has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and”; (f) by inserting in paragraph (5)(b) “if paragraph (aa) does not apply—” before “the dealer”; (g) by adding at the end of paragraph (5)(b) “and”; (h) by omitting from subsection (6) “or (4)” and substituting “, (4) or (4B)”; (i) by omitting subsection (7) and substituting the following subsection: “(7) If a dealer transfers securities to an Exchange body as mentioned in subparagraph (5)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.”. Claim by buying dealer in respect of default by selling dealer 135\. Section 950 of the Corporations Law is amended: (a) by omitting paragraph (1)(b) and substituting the following paragraph: “(b) the other dealer: (i) if a transfer of the securities concerned pursuant to the purchase would be an SCH\-regulated transfer—has not done all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the purchase; or (ii) in any other case—has not supplied to the first-mentioned dealer, under that agreement, settlement documents in relation to the purchase;”; (b) by adding at the end of paragraph (2)(a) “and”; (c) by inserting after paragraph (2)(b) the following word and paragraph: “and (ba) if a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer—the other dealer has not done all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the purchase; and”; (d) by inserting in paragraph (2)(c) “if paragraph (ba) does not apply—” before “settlement”; (e) by omitting from subsection (2) all the words after “allow the claim”; (f) by adding at the end the following subsections: (a) SEGC allows under subsection (2) a claim in respect of a purchase of securities; and (b) a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer; SEGC must, subject to section 952A, transfer to the claimant securities of the same kind and number as the first-mentioned securities. (a) SEGC allows under subsection (2) a claim in respect of a purchase of securities; and (b) subsection (3) does not apply; SEGC must, subject to section 953, supply to the claimant settlement documents in relation to the purchase.”. Effect of novation, under business rules, of agreement for purchase 136. Section 950A of the Corporations Law is amended by omitting from paragraph (3)(b) “participating exchange” and substituting “settlement authority”. Claim by selling client in respect of default by selling dealer 137. Section 951 of the Corporations Law is amended: (a) by inserting before paragraph (1)(a) the following paragraph: “(aa) if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer—the person: (i) in a case to which subparagraph (ii) does not apply—has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or (ii) if the dealer has been suspended by the participating exchange concerned, or the dealer’s status as an SCH participant has been suspended under the SCH business rules, and that suspension has not been removed—has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; and”; (b) by inserting in paragraph (1)(a) “if paragraph (aa) does not apply—” before “the person”; (c) by inserting after paragraph (3)(a) the following word and paragraph: “and (aa) if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer—the claimant: (i) has done all things necessary to enable the dealer to do all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or (ii) has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and”; (d) by inserting in paragraph (3)(b) “if paragraph (aa) does not apply—” before “the claimant”; (e) by adding at the end the following subsection: “(4) If a person transfers securities to an Exchange body as mentioned in subparagraph (3)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.”. Claim by buying client in respect of default by buying dealer 138\. Section 952 of the Corporations Law is amended: (a) by omitting from subparagraph (1)(a)(ii) “and the suspension” and substituting “, or the dealer’s status as an SCH participant has been suspended under the SCH business rules, and that suspension”; (b) by inserting after paragraph (1)(a) the following paragraph: “(aa) if a transfer of the securities concerned pursuant to the purchase would be an SCH-regulated transfer—the dealer’s obligations to the person in respect of the purchase, in so far as they relate to the transfer of securities to the person, have not been discharged; and”; (c) by inserting in paragraph (1)(b) “if paragraph (aa) does not apply—” before “the dealer’s”; (d) by adding at the end of paragraph (3)(a) “and”; (e) by inserting after paragraph (3)(b) the following paragraph: “(ba) if a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer—the dealer’s obligations to the claimant in respect of the purchase, in so far as they relate to the transfer of securities to the claimant, have not been discharged; and”; (f) by inserting in paragraph (3)(c) “if paragraph (ba) does not apply—” before “the dealer’s”; (g) by omitting from subsection (3) all the words after “allow the claim”; (h) by adding at the end the following subsections: (a) SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and (b) a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer; SEGC must, subject to section 952A, transfer to the claimant securities of the same kind and number as the first-mentioned securities. “(5) If: (a) SEGC allows under subsection (3) a claim in respect of a purchase of securities by a dealer on behalf of a person; and (b) subsection (4) does not apply; SEGC must, subject to section 953, supply to the claimant settlement documents in relation to the purchase.”. 139\. After section 952 of the Corporations Law the following section is inserted: Cash settlement of claims—SCH-regulated transfers “952A. If: (a) SEGC: (i) allows under subsection 950(2) a claim in respect of a purchase of securities by the claimant from a dealer; or (ii) allows under subsection 952(3) a claim in respect of a purchase of securities by a dealer on behalf of the claimant; and (b) a transfer of the securities pursuant to the purchase would be an SCH-regulated transfer; and (c) it is not reasonably practicable for SEGC to obtain securities of the same kind and number as the first-mentioned securities from the dealer before the end of: (i) if the SCH business rules, as in force when the Board allows the claim, prescribe a period, for the purposes of this section, in relation to a class of claims that includes the claim—that period; or (ii) otherwise—such period as the Board, having regard to all the circumstances of the claim, considers reasonable; and (d) it is not reasonably practicable for SEGC to obtain, otherwise than from the dealer, securities of that kind and number before the end of that period because: (i) whether because that dealing in those securities is suspended or for any other reason, there exists at no time during that period an orderly market in those securities; or (ii) the total number of those securities offered for sale on stock markets of participating exchanges or Exchange subsidiaries at times during that period when there exists an orderly market in those securities is insufficient; SEGC must satisfy the claim by paying to the claimant the amount that, when the claimant became entitled to make the claim, was the amount of the actual pecuniary loss suffered by the claimant in respect of the purchase.”. Cash settlement of claims—transfers other than SCH-regulated transfers 140. Section 953 of the Corporations Law is amended by inserting after paragraph (a) the following word and paragraph: “and (aa) a transfer of the securities pursuant to the purchase would not be an SCH-regulated transfer; and”. 141. Section 954C of the Corporations Law is amended by omitting from subparagraph (b)(i) “participating exchange” and substituting “settlement authority”. Effect of novation, under business rules, of guaranteed securities loan 142. Section 954E of the Corporations Law is amended by omitting from paragraph (3)(b) “participating exchange” and substituting “settlement authority”. 143. Section 954M of the Corporations Law is amended by omitting from subparagraph (b)(i) “participating exchange” and substituting “settlement authority”. Claim in respect of failure to pay net amount in respect of transactions 144. Section 954N of the Corporations Law is amended: (a) by omitting from paragraph (1)(a) “participating exchange” (wherever occurring) and substituting “settlement authority”; (b) by omitting from subparagraph (1)(b)(i) “dealer or dealers” and substituting “person or persons”; (c) by inserting in subparagraph (1)(b)(ii) “, or to some other person or persons nominated under the provisions” after “the dealer”; (d) by omitting from subsection (1) “or partnership”; (e) by omitting from subsection (2) “the participating” and substituting “a participating”; (f) by adding at the end the following subsection: ‘person’ includes a partnership.”. Claim in respect of failure to transfer net number of securities in respect of transactions 145. Section 954P of the Corporations Law is amended: (a) by omitting from paragraph (1)(a) “participating exchange” (wherever occurring) and substituting “settlement authority”; (b) by omitting from subparagraph (1)(b)(i) “dealer or dealers” and substituting “person or persons”; (c) by inserting in subparagraph (1)(b)(ii) “, or to some other person or persons nominated under the provisions” after “the dealer”; (d) by omitting from subsection (2) “participating exchange” and substituting “settlement authority”; (e) by omitting from subsection (2) “or partnership”; (f) by omitting from subsection (3) “participating exchange” (wherever occurring) and substituting “settlement authority”; (g) by omitting from subsection (3) “or partnership” (wherever occurring); (h) by omitting from subsection (4) “the participating” and substituting “a participating”; (i) by adding at the end the following subsection: “(6) In this section: ‘person’ includes a partnership.”. How claim under subsection 954P(2) is to be satisfied 146. Section 954S of the Corporations Law is amended by omitting “participating exchange” from paragraph (a) of the definition of “pre-cash settlement period” in subsection (5) and substituting “settlement authority”. How claim under subsection 954P(3) is to be satisfied 147. Section 954T of the Corporations Law is amended by omitting “participating exchange” (wherever occurring) and substituting “settlement authority”. Claims in respect of default by TDS nominee 148. Section 954X of the Corporations Law is amended by omitting from subparagraph (1)(c)(i) and subsections (2) and (3) “participating exchange” (wherever occurring) and substituting “settlement authority”. How claim under subsection 954X(2) is to be satisfied 149. Section 954Z of the Corporations Law is amended by omitting “participating exchange” from paragraph (a) of the definition of “pre-cash settlement period” in subsection (5) and substituting “settlement authority”. Nexus with this jurisdiction 150. Section 954ZB of the Corporations Law is amended by omitting from paragraph (a) “participating exchange” (wherever occurring) and substituting “settlement authority”. 151. Section 955 of the Corporations Law is amended: (a) by inserting in subsection (1) the following definitions: “ ‘transferor’ has the meaning given by paragraph 956(3)(b); ‘transferred securities’ has the meaning given by paragraph 956(3)(c); ‘unauthorised execution’ has the meaning given by paragraph 956(3)(a).”; (b) by omitting from subsection (2) “A” and substituting “For the purposes of subsection 956(1), a”. 152. Section 956 of the Corporations Law is repealed and the following section is substituted: Situations to which Division applies “956.(1) This Division applies if: (a) a dealer executes a document of transfer of securities on behalf of a person as transferor of the securities; and (b) the transfer is not an SCH-regulated transfer; and (c) apart from the effect of paragraph 1105(3)(a), the person did not authorise the dealer to execute the document. “(2) This Division also applies if: (a) a dealer effects, or purports to effect, a proper SCH transfer of securities on behalf of a person; and (b) apart from the effect of section 1109B, the person did not authorise the dealer to effect the transfer. “(3) In this Division: (a) the dealer’s action referred to in whichever of paragraphs (l)(a) and (2)(a) is applicable is called the ‘unauthorised execution’; and (b) the person referred to in whichever of those paragraphs is applicable is called the ‘transferor’; and (c) the securities referred to in whichever of those paragraphs is applicable are called the ‘transferred securities’.”. Claim by transferee or sub-transferee 153. Section 958 of the Corporations Law is amended: (a) by omitting paragraph (1)(a) and substituting the following paragraph: “(a) in any case: (i) if subsection 956(1) applies—the person stated in the document as the transferee of the transferred securities; or (ii) if subsection 956(2) applies—the person in whose favour the proper SCH transfer was effected, or purported to be effected; or”; (b) by omitting from paragraph (1)(b) “the person so stated” and substituting “that person”; (c) by omitting from paragraph (2)(a) “execution of the document” and substituting “unauthorised execution”. Discretion to pay amounts not received etc. because of failure to transfer securities 154. Section 972A of the Corporations Law is amended by omitting from paragraph (1)(b) “participating exchange” (wherever occurring) and substituting “settlement authority”. Application of Fund in respect of certain claims 155. Section 973 of the Corporations Law is amended by omitting from paragraph (1)(a) “950(2), 952(3),” and substituting “950(3), 950(4), 952(4), 952(5),”. Arbitration of amount of cash settlement of certain claims 156. Section 977 of the Corporations Law is amended by inserting “952A or” before “953” in the definition of “cash settlement provision” in subsection (7). Subrogation of SEGC to claimant’s rights etc. 157. Section 980 of the Corporations Law is amended: (a) by omitting from subsection (2) “of a document of transfer” and substituting “(within the meaning of that Division)”; (b) by omitting from subsection (2) “that execution of that document” and substituting “the conduct that constitutes the unauthorised execution”. Nature of shares and other interests 158. Section 1085 of the Corporations Law is amended: (a) by inserting in paragraph (1)(b) “, or, if they are applicable, the SCH business rules” after “articles”; (b) by inserting in paragraph (1)(c) “and, if they are applicable, the SCH business rules,” after “articles,”. Numbering shares 159. Section 1086 of the Corporations Law is amended: (a) by omitting from paragraph (2)(a) “or” (last occurring) and substituting “and”; (b) by adding at the end of subsection (2) the following word and paragraph: “; and (c) a share need not have a distinguishing number if the SCH business rules provide that it need not have such a number.”. Instrument of transfer 160. Section 1091 of the Corporations Law is amended: (a) by inserting before subsection (1) the following subsection: “(1AA) This section does not apply to an SCH-regulated transfer.”; (b) by omitting from paragraph (1A)(b) “other”. Duties of company with respect to issue of certificates 161. Section 1096 of the Corporations Law is amended: (a) by omitting from subsection (1) “Within” and substituting “Subject to subsection (1A), within”; (b) by inserting after subsection (1) the following subsection: “(1A) If the SCH business rules include a provision to the effect that: (a) no document is required by subsection (1) to be completed and delivered by a company in relation to the allotment, issue or making available of a share, debenture or interest in specified circumstances; or (b) the only document required by subsection (1) to be completed and delivered by a company in relation to the allotment, issue or making available of a share, debenture or interest in specified circumstances is such document as the provision requires; the provision has effect accordingly.”; (c) by inserting after subsection (2) the following subsection: “(2A) The only document required by subsection (2) to be completed and delivered by a company in relation to an SCH-regulated transfer is such document (if any) as the SCH business rules require to be so completed and delivered.”. Insertion of heading 162. Before section 1097 of the Corporations Law the following heading is inserted in Division 3 of Part 7.13: “Subdivision A—Interpretation”. 163. Section 1097 of the Corporations Law is amended: (a) by inserting “or made available” after “issued” in the definition of “issuing body” in subsection (1); (b) by inserting “or make available” after “issue” in the definition of “issuing body” in subsection (1); (c) by omitting from subsection (1) the definition of “transfer” and substituting the following definition: “ ‘transfer’, in relation to a marketable security or a marketable right, includes: (a) in the case of a quoted security or a quoted right—any change in the ownership of the security or right; and (b) in the case of a marketable right—the renunciation and transfer of the right;”; (c) by inserting in subsection (1) the following definitions: “ ‘Division 3 transfer’ means: (a) a sufficient transfer under this Division of marketable securities or marketable rights; or (b) a proper SCH transfer; ‘document’, in relation to a transfer, includes, in the case of an SCH-regulated transfer, an electronic message or other electronic communication; ‘identification code’, in relation to a member organisation, means a code that, for the purposes of the SCH business rules, is the member organisation’s identification code, or one of its identification codes, as the case may be; ‘member organisation’ means a member organisation of a securities exchange; ‘transfer document’, in relation to a proper SCH transfer, means the document that is taken under the SCH business rules to effect the transfer.”; (e) by adding at the end the following subsection: “(4) If the SCH business rules include provisions determining: (a) which member organisation effected a proper SCH transfer; or (b) when a proper SCH transfer takes effect; those provisions have effect for the purposes of this Division.”. 164\. After section 1097 of the Corporations Law the following sections are inserted: Quoted securities and rights “1097A.(1) A quoted security is a marketable security in a class of marketable securities listed for quotation on a stock market of a securities exchange. “(2) A quoted right is a marketable right in a class of marketable rights listed for quotation on a stock market of a securities exchange. “(3) For the purposes of subsections (1) and (2), securities or rights in a class of marketable securities or marketable rights are not taken to have stopped being listed for quotation on a stock market of a securities exchange merely because of a temporary suspension of quotation of securities or rights in that class. (a) there is a suspension of the quotation, on a stock market of a securities exchange, of marketable securities in a class of marketable securities, or of marketable rights in a class of marketable rights; and (b) during the suspension, the issuing body in relation to the securities or rights ceases to be included in an official list of the securities exchange; then, for the purposes of subsections (1) and (2), marketable securities or marketable rights in that class are taken to stop being listed for quotation on a stock market of the securities exchange when the issuing body ceases to be so included. “(5) Subsection (4) does not limit the circumstances in which marketable securities in a class of marketable securities, or marketable rights in a class of marketable rights, may be taken to have stopped being listed for quotation on a stock market of a securities exchange. SCH business rules may provide that securities or rights continue to be quoted securities or rights “1097B. If the SCH business rules provide that marketable securities or marketable rights that stop being quoted securities or quoted rights are to be taken to continue to be quoted securities or quoted rights for a specified period, then, for the purposes of: (a) the definitions of ‘proper SCH transfer’ and ‘SCH-regulated transfer’ in section 9; and (b) Parts 7.2A and 7.13, and any regulations made for the purposes of any of the provisions of those Parts; those securities are taken to be quoted securities or quoted rights during that period. Commission may declare Law applies to securities as if they were quoted securities or rights “1097C.(1) The Commission may, by writing, declare that this Law, and the regulations, or that specified provisions of this Law and the regulations, have effect (subject to any modifications specified in the declaration) in relation to particular securities, or a particular class of securities, that are not quoted securities or quoted rights as if those securities, or securities of that class, were quoted securities or quoted rights. “(2) A declaration under subsection (1) has effect accordingly. “(3) The Commission must cause a copy of a declaration under subsection (1) to be published in the Gazette. Transfer that substantially complies with SCH business rules “1097D. For the purposes of this Division, if the securities clearing house determines under the SCH business rules that an SCH-regulated transfer substantially complies with the applicable provisions of those business rules, the transfer is taken to be, and always to have been, a proper SCH transfer.”. 165. After section 1099 of the Corporations Law the following heading and section are inserted: “Subdivision B—Sufficient transfers (transfers other than SCH-regulated transfers) Subdivision does not apply to SCH-regulated transfers “1099A. Nothing in this Subdivision applies in relation to: (a) an SCH-regulated transfer; or (b) a document that relates to such a transfer.”. 166. After section 1109 of the Corporations Law the following headings and sections are inserted: “Subdivision C—SCH\-regulated transfers Member organisation’s authority to enter into transaction continues despite client’s death “1109A. If: (a) a person authorises a member organisation to enter into a transaction (for example, a sale) involving the disposal of quoted securities or quoted rights; and (b) the person dies before the member organisation enters into the transaction; and (c) the authority is still in force immediately before the person dies; (d) the authority continues, despite the person’s death, as if the person were still alive, but can be revoked by the person’s legal representative just as the person could revoke it if the person were still alive; and (e) if the member organisation enters into the transaction while the authority so continues—the transaction is binding on the person’s legal representative. Authority to enter into transaction gives authority to transfer “1109B.(1) If a person authorises a member organisation to enter into a transaction (for example, a sale) involving the disposal of quoted securities or quoted rights, the person is taken also to have authorised the member organisation to effect any proper SCH transfer of all or any of those securities or rights that the member organisation effects, even if the transfer has no connection with the transaction. Note: The transfer may have no connection with the transaction because of the operation of the provisions of the SCH business rules referred to in subsection 954P(1). “(2) The authority that the person is taken, by subsection (1), to have given: (a) is revoked if, before the transaction is entered into, the authority to enter into the transaction is revoked or otherwise ceases to have effect; and (b) cannot otherwise be revoked; and (c) if the person dies after the transaction is entered into—continues in force, despite the person’s death, as if the person were still alive (but cannot be revoked). Effect of proper SCH transfer “1109C.(1) A proper SCH transfer of quoted securities is valid and effective for the purposes of any law or instrument governing or relating to the securities. “(2) A proper SCH transfer of quoted rights is valid and effective for the purposes of any law or instrument governing or relating to the rights or the marketable securities to which they relate. Effect of proper SCH transfer on transferee “1109D.(1) If a proper SCH transfer of quoted securities takes effect at a particular time: (a) the transferee is taken to have agreed at that time to accept the securities subject to the terms and conditions on which the transferor held them immediately before that time, being the terms and conditions applicable as between the issuing body in relation to, and the holder for the time being of, the securities; and (b) if the securities are shares—the transferee is also taken to have agreed at that time to become a member of the issuing body and to be bound by the issuing body’s constitution. “(2) If a proper SCH transfer of quoted rights relating to marketable securities takes effect at a particular time: (a) the transferee is taken: (i) to have applied at that time to the issuing body in relation to the securities for the allotment to him, her or it of the marketable securities; and (ii) to have agreed at that time to accept the marketable securities subject to the terms and conditions on which the issuing body offers them for subscription; and (b) if the marketable securities are shares—the transferee is also taken to have agreed, at that time, to become a member of the issuing body and to be bound, on being registered as the holder of the shares, by the issuing body’s constitution. Warranties by member organisation whose identification code is included in transfer document “1109E.(1) This section applies if the transfer document for a proper SCH transfer of quoted securities or quoted rights includes a member organisation’s identification code as the identification code of the member organisation effecting the transfer. “(2) If the member organisation is the transferor, the member organisation or, if it is a partnership, each of the partners in the member organisation, is taken to have warranted that: (a) the transfer was effected by the member organisation; and (b) the transferor was legally entitled or authorised to transfer the securities or rights. (a) the member organisation is not the transferor; and (b) the transfer is pursuant to a transaction in relation to which, or to transactions in relation to each of which, one of the following conditions is satisfied: (i) the transaction was entered into in the ordinary course of trading on a stock market; (ii) the transaction is, under the business rules or listing rules of a stock exchange, described, or to be described, as ‘special’ when it is reported to the stock exchange; the member organisation or, if it is a partnership, each of the partners in the member organisation, is taken to have warranted that: (c) the transferor was legally entitled or authorised to transfer the securities or rights; and (d) the transfer was effected by the member organisation; and (e) the member organisation was authorised by the transferor to effect the transfer. (a) the member organisation is not the transferor; and (b) subsection (3) does not apply; the member organisation or, if it is a partnership, each of the partners in the member organisation, is taken to have warranted that: (c) the transfer was effected by the member organisation; and (d) the member organisation was authorised by the transferor to effect the transfer. Indemnities in respect of warranted matters “1109F.(1) If: (a) a member organisation, or each of the partners in a partnership that is a member organisation, is taken by section 1109E to have warranted, in relation to a proper SCH transfer of quoted securities or quoted rights, that the transfer was effected by the member organisation; and (b) the transfer was not effected by the member organisation; the member organisation, or, if it is a partnership, each of the partners in the member organisation, is liable to indemnify: (d) the transferor; and (e) the transferee; and (f) if a member organisation acted as the transferee’s agent in the transfer—that member organisation; and (g) the securities clearing house; against any loss or damage arising from the transfer not having been effected by the first-mentioned member organisation. (a) a member organisation, or each of the partners in a partnership that is a member organisation, is taken by section 1109E to have warranted, in relation to a proper SCH transfer of quoted securities or quoted rights, that the transferor was legally entitled or authorised to transfer the securities or rights; and (b) the transferor was not legally entitled or authorised to transfer the securities or rights; the member organisation, or, if it is a partnership, each of the partners in the member organisation, is liable to indemnify: (d) the transferee; and (e) if a member organisation acted as the transferee’s agent in the transfer—that member organisation; and (f) the securities clearing house; against any loss or damage arising from the transferor not having been legally entitled or authorised to transfer the securities or rights. (a) a member organisation, or each of the partners in a partnership that is a member organisation, is taken by section 1109E to have warranted, in relation to a proper SCH transfer of quoted securities or quoted rights, that the member organisation was authorised by the transferor to effect the transfer; and (b) the member organisation was not authorised by the transferor to effect the transfer; the member organisation or, if it is a partnership, each of the partners in the member organisation, is liable to indemnify: (d) the transferor; and (e) the transferee; and (f) if a member organisation acted as the transferee’s agent in the transfer—that member organisation; and (g) the securities clearing house; against any loss or damage arising from the first-mentioned member organisation not having been authorised by the transferor to effect the transfer. “(4) The effect of section 1109B is to be disregarded in determining, for the purposes of this section, whether a person or partnership: (a) was legally entitled or authorised to transfer quoted securities or quoted rights; or (b) was authorised by another person or partnership to effect a transfer of quoted securities or quoted rights. Joint and several warranties and liabilities “1109G.(1) If 2 or more persons are taken to have warranted as mentioned in subsection 1109E(2), (3) or (4), they are taken to have so warranted jointly and severally. “(2) If 2 or more persons are liable as mentioned in subsection 1109F(1), (2) or (3), they are so liable jointly and severally. Quoted securities and rights from other jurisdictions: effect of sections 1109E, 1109F and 1109G “1109H.(1) Sections 1109E, 1109F and 1109G apply in relation to quoted securities and quoted rights, within the meaning of the Corporations Law of another jurisdiction, and, for the purposes of those sections as so applying: (a) subject to paragraph (b), an expression has the same meaning in those sections as in Division 3 of Part 7.13 of that Law; and (b) a reference in section 1109E to a transfer document is taken to be a reference to a transfer document, within the meaning of that Division, that purports to have been completed in this jurisdiction. “(2) The effect that a provision has because of subsection (1) is additional to, and does not prejudice, the effect the provision otherwise has. Securities clearing house entitled to assume its business rules complied with “1109J.(1) The securities clearing house is entitled to assume without inquiry, in the absence of knowledge to the contrary, that anything purporting to be done under the SCH business rules in connection with a transfer of a quoted security or quoted right has been done in accordance with those rules. “(2) If, in reliance on subsection (1), the securities clearing house assumes that a thing was done in accordance with the SCH business rules then, for the purposes of this Law (including the definition of ‘proper SCH transfer’ in section 9), the thing is taken to have been done in accordance with those rules. “(3) If the securities clearing house is acting on behalf of the issuing body in relation to quoted securities or quoted rights when, in reliance on subsection (1), it assumes that a thing was done in accordance with the SCH business rules, then the issuing body is also taken to assume, and to be entitled to assume, that the thing was so done. SCH-regulated transfer not to be registered unless proper SCH transfer “1109K.(1) The issuing body in relation to a quoted security or quoted right must not register, or otherwise give effect to, an SCH-regulated transfer of the security or right unless the transfer is a proper SCH transfer. “(2) Subsection (1) has effect despite anything in the body’s constitution or in a deed relating to debentures or interests (including prescribed interests). Issuing body not to refuse to register proper SCH transfer “1109L. The issuing body in relation to a quoted security or a quoted right must not refuse or fail to register, or to give effect to, a proper SCH transfer of the security or right. Trustees and legal representatives may be SCH participants etc. “1109M.(1) A trustee, or a legal representative of a dead person, who, as trustee or legal representative, holds a quoted security or a quoted right may: (a) subject to the requirements of the SCH business rules, be an SCH participant; and (b) have the security or right converted into, and hold it in, a form in which it may be transferred in accordance with the SCH business rules. “(2) Nothing in subsection (1) authorises the trustee or legal representative to do a thing that the trustee or legal representative is expressly prohibited from doing by any law or by the terms and conditions on which he, she or it holds office. “Subdivision D—Miscellaneous”. Operation of Division 167\. Section 1110 of the Corporations Law is amended: (a) by inserting in subsection (3) “(other than section 1109L)” after “Division”; (b) by omitting from subsection (3) “instrument that is lodged with” and substituting “document that is lodged with or sent to”; (c) by omitting from subsections (4) and (6) “sufficient transfer under this Division” and substituting “Division 3 transfer”; (d) by omitting from subsection (5) “This Division does not prevent or affect” and substituting “Nothing in this Division (except section 1109K) prevents or affects”; (e) by omitting from paragraph (5)(b) “an instrument of transfer of” and substituting “a document transferring”. Occupation need not appear in transfer document, register etc. 168. Section 1111 of the Corporations Law is amended by omitting subsection (1) and substituting the following subsection: “(1) A document transferring marketable securities or marketable rights need not state the occupation of the transferor or transferee and, if the document is signed by a person, the signature need not be witnessed.”. 169. After section 1112 of the Corporations Law the following section is inserted in Division 3 of Part 7.13: Offences: inclusion of identification codes in proper SCH transfers “1112A. A person must not, in this jurisdiction or elsewhere, include a member organisation’s identification code in a document that may be used to effect a proper SCH transfer unless: (a) the person: (i) is the member organisation or, if it is a partnership, is a partner in the member organisation; or (ii) is authorised so to include the identification code by the member organisation; and (b) if: (i) the identification code is so included as the identification code of the member organisation effecting the transfer; and (ii) the member organisation is not the transferor; the member organisation is, apart from the effect of section 1109B, authorised by the transferor to effect the transfer.”. Power of Court to make certain orders 170. Section 1114 of the Corporations Law is amended: (a) by omitting from subparagraph (1)(a)(ii) “or the business rules or listing rules of a securities exchange” and substituting “, the business rules or listing rules of a securities exchange, or the SCH business rules”; (b) by inserting after paragraph (1)(b) the following word and paragraph: “or (ba) on the application of the securities clearing house, it appears to the Court that a person has contravened the SCH business rules;”; (c) by omitting from paragraph (1)(c) “or of the business rules or listing rules of a securities exchange” and substituting “of the business rules or listing rules of a securities exchange, or of the SCH business rules”; (d) by adding at the end the following subsection: “(10) In this section: ‘securities’ includes marketable securities and marketable rights within the meaning of Division 3 of Part 7.10.”. 171\. Section 1301 of the Corporations Law is repealed and the following section is substituted: Location of books on computers “1301.(1) This section applies if: (a) a corporation records, otherwise than in writing, matters (‘the stored matters’) this Law requires to be contained in a book; and (b) the record of the stored matters is kept at a place (‘the place of storage’) other than the place (‘the place of inspection’) where the book is, apart from this section, required to be kept; and (c) at the place of inspection means are provided by which the stored matters are made available for inspection in written form; and (d) the corporation has lodged a notice: (i) stating that this section is to apply in respect of: (A) except where sub-subparagraph (B) applies—the book; or (B) if the stored matters are only some of the information that is required to be contained in the book—the book and matters that are of the same kind as the stored matters; and (ii) specifying the situation of the place of storage and the place of inspection. “(2) Subject to subsection (4), the corporation is taken to have complied with the requirements of this Law as to the location of the book, but only in so far as the book is required to contain the stored matters. “(3) Subject to subsection (4), for the purposes of the application of subsection 1085(3) and section 1300 in relation to the corporation and the book, the book is taken to be kept at the place of inspection, even though the record of the stored matters is kept at the place of storage. (a) the situation of the place of storage or the place of inspection changes; and (b) the corporation does not lodge notice of the change within 14 days after the change; this section, as it applies to the corporation because of the lodging of the notice referred to in paragraph (1)(d), ceases to so apply at the end of that period of 14 days.”. Form and evidentiary value of books 172. Section 1306 of the Corporations Law is amended: (a) by omitting subsection (5) and substituting the following subsections: “(4A) The regulations may provide for how up to date the information contained in an instrument prepared for the purposes of subsection (4) must be. “(5) If: (a) because of this Law, a book that this Law requires to be kept or prepared is prima facie evidence of a matter; and (b) the book, or a part of the book, is kept or prepared by recording or storing matters (including that matter) by means of a mechanical, electronic or other device; a written reproduction of that matter as so recorded or stored is prima facie evidence of that matter.”; (b) by omitting from subsection (6) “matters” (first occurring) and substituting “a matter”; (c) by omitting from subsection (6) “those matters” and substituting “that matter”. 173. Schedule 3 to the Corporations Law is amended by inserting before “Subsection 1114(8)” the following: “Section 1112A: Penalty: $2,500 or imprisonment for 6 months, or both.”.