Commonwealth: Corporations Legislation Amendment (Financial Services Modernisation) Act 2009 (Cth)

Corporations Legislation Amendment (Financial Services Modernisation) Act 2009 No. 108, 2009 An Act to amend the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, and for related purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Margin lending facilities Corporations Act 2001 Schedule 2—Trustee companies Australian Securities and Investments Commission Act 2001 Corporations Act 2001 Schedule 3—Debentures Corporations Act 2001 Schedule 4—Technical amendment Corporations Act 2001 Schedule 5—Application and transitional provisions Corporations Act 2001 Corporations Legislation Amendment (Financial Services Modernisation) Act 2009 No. 108, 2009 An Act to amend the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, and for related purposes [Assented to 6 November 2009] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Corporations Legislation Amendment (Financial Services Modernisation) Act 2009. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 6 November 2009 2. Schedule 1 A single day to be fixed by Proclamation. 1 January 2010 However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. (see F2009L04495) 3. Schedule 2 A single day to be fixed by Proclamation. 6 May 2010 However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. 4. Schedule 3, item 1 The day on which this Act receives the Royal Assent. 6 November 2009 5. Schedule 3, items 2 and 3 A single day to be fixed by Proclamation. 1 January 2010 However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives the Royal Assent, they commence on the first day after the end of that period. (see F2009L04495) 6. Schedule 4 The day on which this Act receives the Royal Assent. 6 November 2009 7. Schedule 5 The day on which this Act receives the Royal Assent. 6 November 2009 Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Margin lending facilities Corporations Act 2001 1 Section 760B (table item 8) Repeal the item, substitute: 8 7.8 other conduct requirements for financial services licensees (e.g. dealing with client money and property; financial records, statements and audit) special provisions relating to insurance special provisions relating to margin lending facilities 2 Section 761A Insert: current LVR: (a) in relation to a standard margin lending facility—has the meaning given by subsection 761EA(3); and (b) in relation to a non‑standard margin lending facility—has the meaning given by subsection 761EA(6). 3 Section 761A Insert: limit, in relation to a margin lending facility, has the meaning given by subsection 761EA(11). 4 Section 761A Insert: margin call: (a) in relation to a standard margin lending facility—has the meaning given by subsection 761EA(4); and (b) in relation to a non‑standard margin lending facility—has the meaning given by subsection 761EA(7); and (c) in relation to a facility that ASIC has declared to be a margin lending facility under subsection 761EA(8)—has the meaning given in the declaration. 5 Section 761A Insert: margin lending facility has the meaning given by subsection 761EA(1). 6 Section 761A Insert: non‑standard margin lending facility has the meaning given by subsection 761EA(5). 7 Section 761A Insert: standard margin lending facility has the meaning given by subsection 761EA(2). 8 Subsection 761E(3) (at the end of the table) Add: 4 margin lending facility the person enters into the legal relationship that constitutes the margin lending facility, as the client under the facility 9 After section 761E Insert: 761EA Meaning of margin lending facility, margin call and associated expressions (1) A margin lending facility is: (a) a standard margin lending facility; or (b) a non‑standard margin lending facility; or (c) a facility of a kind that has been declared by ASIC to be a margin lending facility under subsection (8); unless the facility is of a kind that has been declared by ASIC not to be a margin lending facility under subsection (9). Standard margin lending facilities (2) A standard margin lending facility is a facility under the terms of which: (a) credit is, or may be, provided by a person (the provider) to a natural person (the client); and (b) the credit provided is, or must be, applied wholly or partly: (i) to acquire one or more financial products, or a beneficial interest in one or more financial products; or (ii) to repay, wholly or partly, another credit facility (within the meaning of subparagraph 765A(1)(h)(i)), the credit provided under which was applied, wholly or partly, to acquire one or more financial products, or a beneficial interest in one or more financial products; and (c) the credit provided is, or must be, secured by property (the secured property); and (d) the secured property consists, or must consist, wholly or partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and (e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then: (i) the client becomes required to take action; or (ii) the provider becomes entitled to take action; or (iii) another person becomes required or entitled to take action; in accordance with the terms of the facility to reduce the current LVR of the facility. (3) The current LVR of a standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that: (a) is determined under the terms of the facility; and (b) under the terms of the facility, represents a particular relationship between: (i) the amount of the debt owing by the client, or credit provided by the provider, or both, under the facility at that time; and (ii) the value of the secured property determined at that time under the terms of the facility. (4) A standard margin lending facility is in margin call when paragraph (2)(e) applies in relation to the facility. Non‑standard margin lending facilities (5) A non‑standard margin lending facility is a facility under the terms of which: (a) a natural person (the client) transfers one or more marketable securities, or a beneficial interest in one or more marketable securities (the transferred securities) to another person (the provider); and (b) the provider transfers property to the client (the transferred property) as consideration or security for the transferred securities; and (c) the transferred property is, or must be, applied wholly or partly to acquire one or more financial products, or a beneficial interest in one or more financial products; and (d) the client has a right, in the circumstances determined under the terms of the facility, to be given marketable securities equivalent to the transferred securities; and (e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then: (i) the client becomes required to take action; or (ii) the provider becomes entitled to take action; or (iii) another person becomes required or entitled to take action; in accordance with the terms of the facility to reduce the current LVR of the facility. (6) The current LVR of a non‑standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that: (a) is determined under the terms of the facility; and (b) under the terms of the facility, represents a particular relationship between: (i) an amount determined at that time under the terms of the facility by reference to the value of the transferred property and any amount owing by the client to the provider; and (ii) the value of the transferred securities determined at that time under the terms of the facility. (7) A non‑standard margin lending facility is in margin call when paragraph (5)(e) applies in relation to the facility. ASIC declarations in relation to margin lending facilities (8) ASIC may declare that a particular kind of facility is a margin lending facility. The declaration must give the meanings of margin call and limit in relation to that kind of facility. (9) ASIC may declare that a particular kind of facility is not a margin lending facility. (10) A declaration made under subsection (8) or (9): (a) must be in writing; and (b) is a legislative instrument for the purposes of the Legislative Instruments Act 2003. Meaning of limit of a margin lending facility (11) The limit of a margin lending facility: (a) in relation to a standard margin lending facility—means the maximum amount of credit that may be provided by the provider to the client under the facility; and (b) in relation to a non‑standard margin lending facility—means the maximum amount of property that may be transferred by the provider to the client under the facility; and (c) in relation to a facility of a kind that ASIC has declared to be a margin lending facility under subsection (8)—has the meaning given in the declaration. 10 After paragraph 764A(1)(k) Insert: (l) a margin lending facility; 11 At the end of subparagraph 765A(1)(h)(i) Add "(other than a margin lending facility)". 11A After subsection 911A(5) Insert: (5A) Despite paragraph (2)(b), the regulations may provide that the exemption under that paragraph does not apply in relation to: (a) a particular financial product or a particular kind of financial product; or (b) a particular financial product or a particular kind of financial product that is issued, varied or disposed of by a particular person, or a particular kind of person. 12 After Division 4 of Part 7.8 Insert: Division 4A—Special provisions relating to margin lending facilities Subdivision A—Responsible lending conduct for margin lending facilities 985EA Application of this Subdivision This Subdivision applies to a financial services licensee (the provider) in relation to: (a) the issuing of a margin lending facility to a retail client; or (b) the increasing of the limit of a margin lending facility that was issued to a retail client. 985E Requirements before issuing etc. margin lending facility Requirement to make assessment of unsuitability (1) The provider must not: (a) issue the margin lending facility to the retail client; or (b) increase the limit of the margin lending facility that was issued to the retail client; on a day (the critical day) unless the provider has, within 90 days (or other period prescribed by the regulations) before the critical day: (c) made an assessment that: (i) is in accordance with section 985F; and (ii) covers a period in which the critical day occurs; and (d) made the inquiries and verification in accordance with section 985G. Note: This subsection is a civil penalty provision (see section 1317E). Increase in limit of standard margin lending facility (2) For the purposes of paragraph (1)(b), the limit of a standard margin lending facility is taken not to be increased if: (a) apart from this subsection, there would be an increase in the limit; and (b) the increase in the limit would result from an increase in the value, determined under the terms of the facility, of the secured property under the facility (as referred to in paragraph 761EA(2)(c)); and (c) the increase in the value of the secured property does not result from the client contributing additional property to the secured property. Regulations (3) For the purposes of paragraph (1)(b), the regulations may prescribe particular situations in which the limit of a margin lending facility is taken: (a) to be increased, despite subsection (2); or (b) not to be increased. 985F Assessment of unsuitability of margin lending facility For the purposes of paragraph 985E(1)(c), the provider must make an assessment that: (a) specifies the period the assessment covers; and (b) assesses whether the margin lending facility will be unsuitable for the retail client if the facility is issued or the limit is increased in that period. Note: The provider is not required to make the assessment if the margin lending facility is not issued or the limit is not increased. 985G Reasonable inquiries etc. about the retail client Requirement to make inquiries and take steps to verify (1) For the purposes of paragraph 985E(1)(d), the provider must, before making the assessment: (a) make reasonable inquiries about the retail client's financial situation; and (b) take reasonable steps to verify the retail client's financial situation; and (c) make any inquiries prescribed by the regulations about any matter prescribed by the regulations; and (d) take any steps prescribed by the regulations to verify any matter prescribed by the regulations. (2) The regulations may prescribe particular inquiries or steps that must be made or taken, or do not need to be made or taken, for the purposes of paragraph (1)(a) or (b). When not required to take steps to verify (3) Despite subsection (1), if: (a) a financial services licensee that is authorised to provide financial product advice in relation to margin lending facilities has prepared a statement of advice for the retail client; and (b) the statement of advice was prepared no more than 90 days before the critical day; and (c) the statement of advice recommends that: (i) the retail client acquire the particular margin lending facility; or (ii) the limit of the particular margin lending facility be increased; and (d) the limit of the facility, or the increase in the limit of the facility, is not greater than the limit, or the increase in the limit, recommended in the statement of advice; and (e) the statement of advice includes the information that was used for the purposes of preparing the statement of advice; then the provider is not required, for the purposes of paragraph (1)(b) or (d), to verify that information. 985H When margin lending facility must be assessed as unsuitable Requirement to assess the margin lending facility as unsuitable (1) The provider must assess that the margin lending facility will be unsuitable for the retail client if the margin lending facility will be unsuitable for the retail client under subsection (2). Note 1: This subsection is a civil penalty provision (see section 1317E). Note 2: Even if the margin lending facility will not be unsuitable for the retail client under subsection (2), the provider may still assess that the margin lending facility will be unsuitable for the retail client for other reasons. (2) The margin lending facility will be unsuitable for the retail client if, at the time of the assessment, it is likely that: (a) if the facility is issued or the limit increased in the period covered by the assessment, and the facility were to go into margin call, the retail client: (i) would be unable to comply with the retail client's financial obligations under the terms of the facility; or (ii) could only comply with substantial hardship; or (b) if the regulations prescribe circumstances in which a margin lending facility is unsuitable—those circumstances will apply to the margin lending facility if the facility is issued or the limit increased in the period covered by the assessment. Information to be used to make the assessment (3) For the purposes of determining under subsection (2) whether the margin lending facility will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account: (a) the information is about the retail client's financial situation, or any other matter prescribed by regulations under paragraph 985G(1)(c) or (d); (b) at the time of the assessment: (i) the provider had reason to believe that the information was true; or (ii) the provider would have had reason to believe that the information was true if it had made the inquiries or verification under section 985G. 985J Giving the retail client the assessment Requirement to give assessment if requested (1) If, before the margin lending facility is issued or the limit is increased, the retail client requests a copy of the assessment from the provider, the provider must give the retail client a written copy of the assessment before issuing the facility or increasing the limit. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: This subsection is a civil penalty provision (see section 1317E). Note 3: The provider is not required to give the retail client a copy of the assessment if the margin lending facility is not issued or the limit is not increased. (2) If, during the period that: (a) starts on the critical day referred to in subsection 985E(1); and (b) ends 7 years after that day; the retail client requests a copy of the assessment from the provider, the provider must give the retail client a written copy of the assessment: (c) if the request is made within 2 years of the critical day—before the end of 7 business days after the day the provider receives the request; and (d) otherwise—before the end of 21 business days after the day the provider receives the request. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: This subsection is a civil penalty provision (see section 1317E). Manner of giving assessment (3) The provider must give the retail client the copy of the assessment in the manner (if any) prescribed by the regulations. No payment for assessment (4) The provider must not request or demand payment of an amount for giving the retail client a copy of the assessment. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: This subsection is a civil penalty provision (see section 1317E). Strict liability (5) An offence based on subsection (1), (2) or (4) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 985K Unsuitable margin lending facilities Requirement not to issue unsuitable margin lending facilities etc. (1) The provider must not: (a) issue the margin lending facility to the retail client; or (b) increase the limit of the margin lending facility that was issued to the retail client; if the facility is unsuitable for the retail client under subsection (2). Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: This subsection is a civil penalty provision (see section 1317E). When a margin lending facility will be unsuitable (2) The margin lending facility is unsuitable for the retail client if, at the time it is issued or the limit is increased: (a) it is likely that, if the facility were to go into margin call, the retail client: (i) would be unable to comply with the retail client's financial obligations under the terms of the facility; or (ii) could only comply with substantial hardship; or (b) if the regulations prescribe circumstances in which a margin lending facility is unsuitable—those circumstances apply to the margin lending facility. Information to be used for the purposes of subsection (2) (3) For the purposes of determining under subsection (2) whether the margin lending facility will be unsuitable, only information that satisfies both of the following paragraphs is to be taken into account: (a) the information is about the retail client's financial situation, or any other matter prescribed by regulations under paragraph 985G(1)(c) or (d); (b) at the time the margin lending facility is issued or the limit is increased: (i) the provider had reason to believe that the information was true; or (ii) the provider would have had reason to believe that the information was true if it had made the inquiries or verification under section 985G. Regulations in relation to unsuitability of margin lending facility (4) The regulations may prescribe particular situations in which a margin lending facility is taken not to be unsuitable for a retail client, despite subsection (2). Increase in limit of standard margin lending facility (5) For the purposes of paragraph (1)(b), the limit of a standard margin lending facility is taken not to be increased if: (a) apart from this subsection, there would be an increase in the limit; and (b) the increase in the limit would result from an increase in the value, determined under the terms of the facility, of the secured property under the facility (as referred to in paragraph 761EA(2)(c)); and (c) the increase in the value of the secured property does not result from the client contributing additional property to the secured property. Regulations in relation to increase in limit (6) For the purposes of paragraph (1)(b), the regulations may prescribe particular situations in which the limit of a margin lending facility is taken: (a) to be increased, despite subsection (5); or (b) not to be increased. Subdivision B—Notice of margin calls under margin lending facilities 985L Issue of margin lending facility must not be conditional on agreement to receive communications through agent A financial services licensee must not require, as a condition of issuing a margin lending facility to a retail client, that the retail client enter into an agreement of the kind referred to in subsection 985M(2) (which deals with agreements about communications in relation to margin lending facilities). Note: This section is a civil penalty provision (see section 1317E). 985M Notification of margin calls Provider must notify retail client of margin call (1) A financial services licensee (the provider) that has issued a margin lending facility to a retail client must, when the facility goes into margin call, take reasonable steps to notify the retail client under the facility of the margin call in accordance with this section. Note: This subsection is a civil penalty provision (see section 1317E). When provider must notify retail client's agent, and agent must notify retail client, of margin call (2) However, if there is an agreement between the provider, the retail client, and another financial services licensee (the agent) that the agent will receive communications from the provider in relation to the margin lending facility on behalf of the retail client, then: (a) the provider must take reasonable steps to notify the agent (instead of the retail client) of the margin call in accordance with this section; and (b) the agent must take reasonable steps to notify the retail client of the margin call in accordance with this section. Note: This subsection is a civil penalty provision (see section 1317E). When and how notice must be given (3) A notice under this section must be given: (a) at a time determined by ASIC; or (b) if no time is determined by ASIC—as soon as practicable. (4) A notice under this section must be given: (a) if a manner in which the notice is to be given has been agreed between the person who is required to give the notice and the person to whom the notice is required to be given—in that manner; or (b) if there is no agreement and ASIC has determined the manner in which the notice is to be given—in that manner; or (c) otherwise—in a reasonable manner. ASIC may determine when and how notice must be given (5) ASIC may determine: (a) the time by which, and manner in which, a provider must notify a client or agent of a margin call under this section; and (b) the time by which, and manner in which, an agent must notify a client of a margin call under this section. (6) A determination made under subsection (5): (a) must be in writing; and (b) is a legislative instrument for the purposes of the Legislative Instruments Act 2003. 13 Subsection 1016A(1) (after paragraph (da) of the definition of relevant financial product) Insert: (db) a margin lending facility; or 14 After subparagraph 1017D(1)(b)(v) Insert: (va) a margin lending facility; or 15 After paragraph 1317E(1)(ja) Insert: (jaa) subsection 985E(1) (issuing or increasing limit of margin lending facility without having made assessment etc.); (jab) subsection 985H(1) (failure to assess a margin lending facility as unsuitable); (jac) subsection 985J(1) (failure to give assessment to retail client if requested before issue of facility or increase in limit); (jad) subsection 985J(2) (failure to give assessment to retail client if requested after issue of facility or increase in limit); (jae) subsection 985J(4) (demanding payment to give assessment to retail client); (jaf) subsection 985K(1) (issuing or increasing limit of margin lending facility if unsuitable); (jag) section 985L (making issue of margin lending facility conditional on retail client agreeing to receive communications through agent); (jah) subsection 985M(1) (failure to notify of margin call where there is no agent); (jai) subsection 985M(2) (failure to notify of margin call where there is an agent); 16 Schedule 3 (after table item 282BA) Insert: 282BB Subsection 985J(1) 50 penalty units. 282BC Subsection 985J(2) 50 penalty units. 282BD Subsection 985J(4) 50 penalty units. 282BE Subsection 985K(1) 100 penalty units, or imprisonment for 2 years, or both. Schedule 2—Trustee companies Australian Securities and Investments Commission Act 2001 1 Subsection 5(1) Insert: traditional trustee company services has the same meaning as in Chapter 5D of the Corporations Act. 2 Subsection 5(1) Insert: trustee company has the same meaning as in Chapter 5D of the Corporations Act. 2A Subsection 5(1) Insert: trust property, in relation to a trustee company, means property that is or was held by the trustee company as trustee. 3 After subsection 12BAB(1) Insert: (1A) Subject to paragraph (2)(b), the provision by a trustee company of a traditional trustee company service constitutes the provision, by the company, of a financial service for the purposes of this Division. Note: Trustee companies may also provide other kinds of financial service mentioned in subsection (1). (1B) The regulations may, in relation to a traditional trustee company service of a particular class, prescribe the person or persons to whom a service of that class is taken to be provided or supplied for the purposes of this Division. This subsection does not limit (and is not limited by) subsection (2). 3A Subsection 12CC(5) After "financial products", insert "or financial services". 3B Division 4 of Part 3 (heading) Repeal the heading, substitute: Division 4—Requirements to disclose information 3C Section 40 After "section 41", insert "or 42". 3D At the end of paragraph 40(c) Add: (iii) an alleged or suspected contravention, by a trustee company, of a law of the Commonwealth, or of a State or Territory, being a contravention that involves fraud or dishonesty and that relates to trust property; or 3E After section 41 Insert: 42 Acquisitions and disposals of trust property by trustee companies (1) ASIC may require a trustee company to disclose to it, in relation to an acquisition or disposal of trust property by the trustee company, all or any of the following: (a) the name of: (i) the person from or through whom the trust property was acquired; or (ii) the person to or through whom the trust property was disposed; (b) whether the acquisition or disposal was effected on the instructions of another person, and the nature of any such instructions; (c) the names of the beneficiaries of the trust. Note: Failure to comply with a requirement made under this subsection is an offence (see section 63). (2) Information required to be disclosed under this section need only be disclosed to the extent to which it is known to the person required to make the disclosure. Note: In criminal proceedings, a defendant bears an evidential burden in relation to the matters in subsection (2). (3) An offence under subsection 63(2) relating to subsection (1) of this section is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 3F After section 43 Insert: 44 Exercise of certain powers of ASIC in relation to trust property acquired or disposed of by trustee company (1) This section applies if ASIC considers that a contravention of a law of the Commonwealth, or of a State or Territory, may have been committed by a trustee company, being a contravention that involves fraud or dishonesty and that relates to trust property. (2) ASIC may require a director, secretary or senior manager of the trustee company to disclose to ASIC information of which he or she is aware and that may have affected an acquisition or disposal of trust property by the trustee company. Note: Failure to comply with a requirement made under this subsection is an offence (see section 63). (3) If ASIC believes on reasonable grounds that a person can give information about particular matters, being any or all of the following: (a) an acquisition or disposal of trust property by the trustee company; (b) the financial position of the trustee company; (c) an audit of, or a report of an auditor about, accounts or records of the trustee company; ASIC may require the person to disclose to it the information that the person has about those particular matters. Note: Failure to comply with a requirement made under this subsection is an offence (see section 63). (4) An offence under subsection 63(2) relating to subsection (2) or (3) of this section is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (5) ASIC must not exercise a power conferred by subsection (2) or (3) except for the purpose of investigating the possible contravention referred to in subsection (1). 3G Subsection 63(2) Omit "section 41 or 43", substitute "section 41, 42, 43 or 44". 3H After paragraph 71(b) Insert: or (c) trust property acquired or disposed of by a trustee company; 3J After subsection 73(1) Insert: (1A) If paragraph 71(c) applies, ASIC may make one or more of the following: (a) an order restraining a specified person from disposing of any interest in specified trust property; (b) an order restraining a specified person from acquiring any interest in specified trust property; (c) an order directing a body corporate not to pay, except in the course of winding up, a sum due from the body corporate in respect of specified trust property; (d) an order directing a body corporate not to register the transfer or transmission of specified trust property. Note: The heading to section 73 is altered by inserting "and trust property" after "financial products". 3K Subsections 73(2) and (3) After "subsection (1)", insert "or (1A)". Corporations Act 2001 4 Subsection 5A(4) After "Chapter", insert "5D,". 5 At the end of subsection 5D(2) Add: Note: This Part does not apply in relation to the trustee company provisions: see section 601RAE. 6 After paragraph 283AC(1)(a) Insert: (aa) a licensed trustee company (within the meaning of Chapter 5D); or 7 Section 490 Before "Except", insert "(1)". 8 At the end of section 490 Add: ; or (c) the company is a trustee company (within the meaning of Chapter 5D) that is in the course of administering or managing one or more estates. (2) A person with a proper interest (within the meaning of Chapter 5D) in the estate referred to in paragraph (1)(c), or who has any claim in respect of the estate, is entitled to be heard in a proceeding before the Court for leave under subsection (1). 9 After Chapter 5C Insert: Chapter 5D—Licensed trustee companies Part 5D.1—Preliminary 601RAA Definitions In this Chapter: client, in relation to a trustee company, has the meaning given by subsection 601RAB(3). estate management functions has the meaning given by subsection 601RAC(2). estate that is administered or managed, in relation to a trustee company, means all or any of the estate of a person (whether living or dead) that is administered or managed by the trustee company in the course of performing estate management functions. fees means fees in the nature of remuneration (including commission). law means a law of the Commonwealth or of a State or Territory, and includes a rule of common law or equity. licensed trustee company means a trustee company that holds an Australian financial services licence covering the provision of one or more traditional trustee company services. Note: Traditional trustee company services are financial services for the purpose of Chapter 7: see subsection 766A(1A). person with a proper interest, in relation to an estate, has the meaning given by section 601RAD. publish: if the regulations prescribe requirements to be complied with in relation to an obligation in a provision of this Part to publish something, publish (in that provision) means publish in accordance with those requirements. traditional trustee company services has the meaning given by subsection 601RAC(1). trustee company has the meaning given by section 601RAB. will includes a codicil and any other testamentary writing. 601RAB Meaning of trustee company and client of trustee company (1) A trustee company is a company: (a) that is a corporation to which paragraph 51(xx) of the Constitution applies; and (b) that is prescribed by the regulations as a trustee company for the purpose of this Act. (2) For the purpose of paragraph (1)(b), companies may (for example) be prescribed: (a) by setting out a list of companies in the regulations; or (b) by providing a mechanism in the regulations for the determination of a list of companies. (3) A client of a trustee company is a person to whom, within the meaning of Chapter 7, a financial service (being a traditional trustee company service) is provided by the trustee company. Note: Regulations made for the purpose of subsection 766A(1B) may prescribe the person or persons to whom a class of traditional trustee company services is taken to be provided. 601RAC Meaning of traditional trustee company services and estate management functions (1) The following are traditional trustee company services: (a) performing estate management functions (see subsection (2)); (b) preparing a will, a trust instrument, a power of attorney or an agency arrangement; (c) applying for probate of a will, applying for grant of letters of administration, or electing to administer a deceased estate; (d) establishing and operating common funds; (e) any other services prescribed by the regulations for the purpose of this paragraph. (2) The following are estate management functions (whether provided alone or jointly with another person or persons): (a) acting as a trustee of any kind, or otherwise administering or managing a trust; (b) acting as executor or administrator of a deceased estate; (c) acting as agent, attorney or nominee; (d) acting as receiver, controller or custodian of property; (e) otherwise acting as manager or administrator (including in the capacity as guardian) of the estate of an individual; (f) acting in any other capacity prescribed by the regulations for the purpose of this paragraph. (3) Subsections (1) and (2) do not apply to: (a) operating a registered scheme; or (b) providing a custodial or depository service (within the meaning of section 766E); or (c) acting as trustee for debenture holders under Chapter 2L; or (d) acting as a receiver or other controller of property of a corporation under Part 5.2; or (e) acting as trustee of a superannuation fund, an approved deposit fund or a pooled superannuation trust (within the meaning of the Superannuation Industry (Supervision) Act 1993); or (f) acting in any other capacity prescribed by the regulations for the purpose of this paragraph. 601RAD Meaning of person with a proper interest (1) A person with a proper interest, in relation to an estate, includes (but is not limited to) the following: (a) ASIC; (b) in relation to a charitable trust: (i) the settlor, or one of the settlors, of the trust; or (ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or (iii) a Minister of a State or Territory who has responsibilities relating to charitable trusts; or (iv) a person who is named in the instrument establishing the trust as a person who may receive payments on behalf of the trust; or (v) a person who is named in the instrument establishing the trust as a person who must, or may, be consulted by the trustee or trustees before distributing or applying money or other property for the purposes of the trust; or (vi) a person of a class that the trust is intended to benefit; (c) in the case of the estate of a deceased person: (i) if the person died testate—a beneficiary under the person's will; or (ii) if the person died intestate—a person who, under a law of a State or Territory, has, or is entitled to, an interest in the deceased's estate; (d) in the case of any other trust: (i) the settlor, or one of the settlors, of the trust; or (ii) a person who, under the terms of the trust, has power to appoint or remove a trustee of the trust or to vary (or cause to be varied) any of the terms of the trust; or (iii) a beneficiary of the trust; (e) in relation to an application to a court relating to the estate—a person that the court considers, in the circumstances of the case, has a proper interest in the estate; (f) a person prescribed by the regulations as having a proper interest in the estate; (g) if a person covered by any of the above paragraphs is under a legal disability—an agent of the person. (2) None of the paragraphs or subparagraphs of subsection (1) limits, or is limited by, any of the other paragraphs or subparagraphs of that subsection. 601RAE Interaction between trustee company provisions and State and Territory laws (1) The trustee company provisions are: (a) the provisions of this Chapter, and regulations or other instruments made for the purposes of this Chapter; and (b) the provisions of Chapter 7, and regulations or other instruments made for the purposes of Chapter 7, as they apply in relation to financial services that are traditional trustee company services. (2) Subject to subsections (3) and (4), the trustee company provisions are intended to apply to the exclusion of laws of a State or Territory of the following kinds: (a) laws that authorise or license companies to provide traditional trustee company services generally (as opposed to laws that authorise or license companies to provide a particular traditional trustee company service); (b) laws that regulate the fees that may be charged by companies for the provision of traditional trustee company services, and laws that require the disclosure of such fees; (c) laws that deal with the provision of accounts by companies in relation to traditional trustee company services that they provide; (d) laws that deal with the duties of officers or employees of companies that provide traditional trustee company services; (e) laws that regulate the voting power that people may hold in companies that provide traditional trustee company services, or that otherwise impose restrictions on the ownership or control of companies that provide traditional trustee company services; (f) laws (other than laws referred to in section 601WBC) that deal with what happens to assets and liabilities held by a company, in connection with the provision by the company of traditional trustee company services, if the company ceases to be licensed or authorised to provide such services. (3) Subject to subsection (4), the trustee company provisions are not intended to apply to the exclusion of laws of a State or Territory that require a company to have (or to have staff who have) particular qualifications or experience if the company is to provide traditional trustee company services of a particular kind. (4) The regulations may provide: (a) that the trustee company provisions are intended to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws; or (b) that the trustee company provisions are intended not to apply to the exclusion of prescribed State or Territory laws, or prescribed provisions of State or Territory laws. (5) The provisions of this Chapter have effect subject to this section. Note: For example, section 601SAC (which provides that the powers etc. conferred by or under this Chapter are in addition to other powers etc.) is to be interpreted subject to this section. (6) Part 1.1A does not apply in relation to the trustee company provisions. Part 5D.2—Powers etc. of licensed trustee companies Division 1—General provisions 601SAA Jurisdiction of courts not affected etc. (1) Any inherent power or jurisdiction of courts in respect of the supervision of the performance of traditional trustee company services is not affected by anything in this Chapter. (2) A licensed trustee company that is performing traditional trustee company services of a particular kind is subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of courts, in the same manner as any other person who performs traditional trustee company services of that kind. 601SAB Regulations may prescribe other powers etc. A licensed trustee company also has, in relation to the provision of traditional trustee company services, such other powers, functions, liabilities and obligations, and such privileges and immunities, as are prescribed by the regulations. 601SAC Powers etc. conferred by or under this Chapter are in addition to other powers etc. The powers, functions, liabilities and obligations, and the privileges and immunities, conferred or imposed on licensed trustee companies by or under this Chapter are in addition to, and not in derogation of, any powers, functions, liabilities and obligations, and any privileges and immunities, conferred or imposed by any other law: (a) on trustee companies; or (b) on persons who perform estate management functions or who provide other traditional trustee company services. Division 2—Accounts 601SBA Licensed trustee company not required to file accounts (1) A licensed trustee company, when acting alone in relation to any estate of a deceased person, is not required to file, or file and pass, accounts relating to the estate unless the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders. (2) If a licensed trustee company is appointed and acts jointly with any other person in relation to any estate of a deceased person, the trustee company and that other person are not required to file, or file and pass, accounts relating to the estate unless: (a) that other person intends to charge fees for acting in relation to the estate; or (b) the Court, of its own motion or on application by or on behalf of a person with a proper interest in the estate, so orders. 601SBB Licensed trustee company may be required to provide account in relation to estate (1) On application by a person with a proper interest in an estate that is administered or managed by a licensed trustee company, the trustee company must provide the person with an account of: (a) the assets and liabilities of the estate; and (b) the trustee company's administration or management of the estate; and (c) any investment made from the estate; and (d) any distribution made from the estate; and (e) any other expenditure (including fees and commissions) from the estate. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: Failure to comply with this subsection may also lead to the consequences set out in subsection (4) of this section. (2) If: (a) a licensed trustee company has provided an account to a person under this section; and (b) the person applies for a further account within 3 months from the date on which the person was provided with the previous account; the trustee company need not provide a further account in response to that application until the expiration of that period of 3 months. Note: A defendant bears an evidential burden in relation to the matter in subsection (2), see subsection 13.3(3) of the Criminal Code. (3) A licensed trustee company may charge a reasonable fee for providing an account under this section. (4) If a licensed trustee company fails to provide a proper account under this section, the Court may, on application by the person who sought the account or any other person with a proper interest in the estate, make any order that the Court considers appropriate, including an order requiring the preparation and delivery of proper accounts. 601SBC Court may order audit (1) The Court may, on any application under section 601SBB, in addition to or in substitution for any account to be provided by the licensed trustee company under that section, order that a person named in the order must examine the accounts of the trustee company relating to the estate in respect of which the order is made. (2) On the making of any such order, the trustee company must: (a) give to the person named in the order a list of all the accounts kept by the company relating to the estate; and (b) produce to the person, at an office of the trustee company at all reasonable times when required, all books in the company's possession relating to the estate; and (c) provide the person with all necessary information and all other necessary facilities for enabling the person to make the examination. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Division 3—Common funds 601SCA Common funds of licensed trustee companies (1) A licensed trustee company may, for the purposes of investment, pool together into a fund or funds money (estate money) from 2 or more estates that are administered or managed by the trustee company in the performance of estate management functions. (2) A fund into which money is pooled as mentioned in subsection (1) is a common fund. Note: A common fund may also be regulated under Chapter 5C (if the fund constitutes a managed investment scheme). (3) A common fund may also include other money. (4) This section has effect subject to regulations made for the purpose of section 601SCC. Note: For example, the regulations may limit the circumstances in which other money may be pooled together with estate money. 601SCB Obligations relating to common funds (1) If a licensed trustee company establishes more than one common fund, each must be allocated an appropriate distinguishing number. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (2) For each common fund, the licensed trustee company must keep accounts showing at all times the current amount for the time being at credit in the fund on account of each estate. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). (3) A licensed trustee company must not put estate money into a common fund if doing so is contrary to an express provision of the conditions subject to which the estate money is held by the trustee company. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). 601SCC Regulations relating to establishment or operation of common funds The regulations may include provisions relating to the establishment or operation of common funds. Part 5D.3—Regulation of fees charged by licensed trustee companies Division 1—Disclosure of fees 601TAA Schedule of fees to be published and available A licensed trustee company must ensure that an up‑to‑date schedule of the fees that it generally charges for the provision of traditional trustee company services: (a) is published at all times on a website maintained by or on behalf of the trustee company; and (b) is available free of charge at offices of the trustee company during the usual opening hours of those offices. Note 1: The schedule is of fees generally charged, and does not include fees that are agreed to etc. as mentioned in section 601TBB. Note 2: Failure to comply with this section is an offence (see subsection 1311(1)). 601TAB Disclosure to clients of changed fees (1) If, while a licensed trustee company continues to provide a particular traditional trustee company service to a client or clients, the trustee company changes the fees that it will charge for the provision of the service, the trustee company must, within 21 days of the change of fees taking effect, comply with paragraph (a) or (b) in relation to the client or each client: (a) if the client has requested to be sent copies of changed fees—send the client a copy of the changed fees in accordance with subsection (2); or (b) in any other case—directly notify the client, in writing, that the changed fees are available on the internet on a specified website maintained by or on behalf of the trustee company. Note 1: Initial disclosure to a client of the fees that a trustee company will charge for the provision of a trustee company service will generally occur through the provision to the client of a Financial Services Guide under Part 7.7. However, this section is not limited just to situations where there has been an initial disclosure through a Financial Services Guide. Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)). (2) A copy of changed fees that is sent to a client under paragraph (1)(a) must be: (a) an electronic copy, if that is what the client has requested; or (b) a hard copy, in any other case. (3) If a client to whom a traditional trustee company service is provided is under a legal disability, the following provisions have effect: (a) a copy of changed fees required by paragraph (1)(a), or a notice required by paragraph (1)(b), must instead be given to an agent of the client; (b) a request referred to in paragraph (1)(a) or (2)(a) may instead be made by an agent of the client. Division 2—General provisions about charging fees 601TBA Charging of fees for the provision of traditional trustee company services (1) Subject to this Part, a licensed trustee company may charge fees for the provision of traditional trustee company services. (2) If a provision of this Part limits the fees that a licensed trustee company may charge for the provision of a particular traditional trustee company service, the trustee company must not charge fees for that service in excess of that limit. Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)). Note 2: Excess fees may also be recovered under section 601XAA. 601TBB Part does not prevent charging of fees as agreed etc. (1) Nothing in this Part prevents a licensed trustee company from charging: (a) any fees that a testator, in his or her will, has directed to be paid; or (b) any fees that have been agreed on in accordance with subsection (2). (2) An agreement referred to in paragraph (1)(b) that relates to the fees that may be charged by a licensed trustee company for the provision of a particular traditional trustee company service must be between the trustee company and: (a) subject to paragraph (b) of this subsection—a person or persons who have authority to deal with the trustee company on matters relating to the provision of the service; or (b) if the regulations prescribe the person or persons with whom the agreement must be made—that person or those persons. 601TBC Part does not prevent charging fee for provision of account Nothing in the Part prevents a licensed trustee company from charging a fee permitted by subsection 601SBB(3) for the provision of an account. 601TBD Part does not prevent reimbursement Nothing in this Part prevents the reimbursement to a licensed trustee company of all disbursements properly made by the trustee company in the provision of a traditional trustee company service. 601TBE Estate management functions: payment of fees out of estate (1) This section applies to the performance by a licensed trustee company of an estate management function relating to a particular estate. (2) Subject to subsection (3), fees charged by the trustee company, in accordance with this Part, for the performance of the function are payable to the trustee company out of the capital or income of the relevant estate. (3) However: (a) a management fee referred to in section 601TDD can only come out of the income of the relevant estate; and (b) a common fund administration fee referred to in section 601TDE or 601TDI can only come out of the income received by the common fund on the assets of the charitable trust concerned that are included in the fund. Division 3—Fees otherwise than for being trustee or manager of a charitable trust 601TCA Fees otherwise than for being the trustee or manager of a charitable trust (1) This section applies to a particular provision of a traditional trustee company service by a licensed trustee company, unless: (a) the service consists of being the trustee or manager of a charitable trust (see Division 4); or (b) the provision of the service started before the commencement of this section. (2) The trustee company must not charge fees that are in excess of its schedule of fees that was most recently published as required by section 601TAA before the trustee company started to provide the service. (3) This section does not limit anything in Division 2. Division 4—Fees for being trustee or manager of a charitable trust Subdivision A—New client charitable trusts 601TDA Subdivision applies to new client charitable trusts This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if: (a) the service consists of being the trustee or manager of a charitable trust; and (b) the provision of the service started on or after the commencement of this section. 601TDB What the trustee company may charge (1) For the provision of the service, the trustee company must only charge: (a) either: (i) a capital commission, and an income commission, as provided for in section 601TDC; or (ii) a management fee as provided for in section 601TDD; and (b) if applicable, common fund administration fees under section 601TDE; and (c) if applicable, fees permitted by section 601TDF in respect of the preparation of returns etc. (2) This section does not limit anything in Division 2. 601TDC Option 1: capital commission and income commission One‑off capital commission (1) The trustee company may charge a capital commission (GST inclusive) at a rate not exceeding 5.5% of the gross value of the charitable trust's assets. (2) The capital commission must be charged only once during the period while the trustee company is trustee or manager of the charitable trust. (3) The regulations may make provision relating to the capital commission, including (but not limited to): (a) the calculation of the commission or of the gross value of the charitable trust's assets; and (b) when, during the period referred to in subsection (2), the commission may be charged. Annual income commission (4) The trustee company may charge an annual income commission (GST inclusive) at a rate not exceeding 6.6% of the income received on account of the charitable trust's assets. (5) The regulations may make provision relating to the income commission, including (but not limited to): (a) the calculation of the commission or of the income received on the charitable trust's assets; and (b) when, during a year, the commission may be charged; and (c) apportionment of the amount of the commission for part‑years. 601TDD Option 2: annual management fee (1) Instead of a capital commission and income commission under section 601TDC, the trustee company may charge an annual management fee (GST inclusive) at a rate not exceeding 1.056% of the gross value of the charitable trust's assets. (2) The regulations may make provision relating to the management fee, including (but not limited to): (a) the calculation of the management fee or of the gross value of the charitable trust's assets; and (b) when, during a year, the management fee may be charged; and (c) apportionment of the amount of the management fee for part‑years. 601TDE Additional amount if trust money is in a common fund (1) If any of the charitable trust's assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust's assets in the fund. (2) The regulations may make provision relating to the common fund administration fee, including (but not limited to): (a) the calculation of the common fund administration fee or of the gross value of the charitable trust's assets in the fund; and (b) when, during a year, the common fund administration fee may be charged; and (c) the apportionment of the common fund administration fee for part‑years. 601TDF Additional amount for preparation of returns etc. The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust. Subdivision B—Existing client charitable trusts 601TDG Subdivision applies to existing client charitable trusts This Subdivision applies to a particular provision of a traditional trustee company service by a licensed trustee company if: (a) the service consists of being the trustee or manager of a charitable trust; and (b) the provision of the service started before the commencement of this section. 601TDH Trustee company not to charge more than was being charged before section commenced Subject to section 601TDI and 601TDJ, the trustee company must not charge fees in excess of the fees than it could have charged in relation to the charitable trust immediately before the commencement of this section. 601TDI Additional amount if trust money is in a common fund (1) If any of the charitable trust's assets are included in a common fund operated by the trustee company, the trustee company may charge an annual common fund administration fee (GST inclusive) not exceeding 1.1% of the gross value of the charitable trust's assets in the fund. (2) The regulations may make provision relating to the common fund administration fee, including (but not limited to): (a) the calculation of the common fund administration fee or of the gross value of the charitable trust's assets in the fund; and (b) when, during a year, the common fund administration fee may be charged; and (c) the apportionment of the common fund administration fee for part‑years. 601TDJ Additional amount for preparation of returns etc. The trustee company may charge a reasonable fee for work involved in the preparation and lodging of returns for the purpose of, or in connection with, assessments of any duties or taxes (other than probate, death, succession or estate duties) related to the trust estate of the charitable trust. Division 5—Miscellaneous 601TEA Power of the Court with respect to excessive fees (1) If the Court is of the opinion that fees charged by a licensed trustee company in respect of any estate are excessive, the Court may review the fees and may, on the review, reduce the fees. (2) Subsection (1) does not apply to fees: (a) that are charged as permitted by section 601TBB; or (b) that relate to a charitable trust and that are charged as permitted by Subdivision A of Division 4. (3) In considering whether fees are excessive, the Court may consider any or all of the following matters: (a) the extent to which the work performed by the trustee company was reasonably necessary; (b) the extent to which the work likely to be performed by the trustee company is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the trustee company; (d) the quality of the work performed, or likely to be performed, by the trustee company; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the trustee company; (f) the extent (if any) to which the trustee company was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the trustee company was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case; (h) the value and nature of any property dealt with, or likely to be dealt with, by the trustee company; (i) if the fees are ascertained, in whole or in part, on a time basis—the time properly taken, or likely to be properly taken, by the trustee company in performing the work; (j) any other relevant matters. (4) The Court may exercise its powers under subsection (1) either on its own motion or on the ap