New South Wales: Loan Fund Companies Act 1976 (NSW)

Loan Fund Companies Act 1976 No 94 An Act to prohibit persons, other than exempted persons and companies declared under this Act to be loan fund companies, from operating loan fund schemes; and to regulate the affairs and activities of companies so declared. Part 1 Preliminary 1 Name of Act This Act may be cited as the Loan Fund Companies Act 1976. 2 Commencement (1) This section and section 1 shall commence on the date of assent to this Act. (2) Except as provided in subsection (1), the several provisions of this Act shall commence on such day or days as may be appointed by the Governor in respect thereof and as may be notified by proclamation published in the Gazette. 3 (Repealed) 4 Definitions (1) In this Act, except in so far as the context or subject-matter otherwise indicates or requires: actuary means: (a) a Fellow of the Institute of Actuaries incorporated by Royal Charter on 29 July 1884, (b) a Fellow of the Faculty of Actuaries in Scotland, or (c) the holder of a prescribed qualification as an actuary, who has practised as an actuary for a continuous period of not less than 5 years. advertisement means an advertisement in any form or medium, and includes an advertisement in or in the form of a circular, poster, handbill, brochure or other document or in a newspaper, magazine or other periodical publication or in the form of a statement or announcement on radio or television or in the form of a gramophone or tape recording or a cinematographic or videotape film. Advisory Committee means the Loan Fund Companies Advisory Committee constituted under this Act. banker's books means: (a) books of a bank, building society or credit union, (b) cheques, orders for the payment of money, bills of exchange and promissory notes in the possession or under the control of a bank, building society or credit union, and (c) securities or documents of title to securities in the possession or under the control of a bank, building society or credit union whether by way of pledge or otherwise. Court means the Supreme Court of New South Wales. Deputy Supervisor means the Deputy Supervisor of Loan Fund Companies under this Act. executive officer, in relation to a loan fund company, means any person, by whatever name called and whether or not the person is a director of a company, who is concerned, or takes part, in the management of the company. fee, in relation to any option to acquire loan entitlement shares in a loan fund company or to any qualifying shares, loan entitlement shares or other shares in a loan fund company, includes any brokerage or commission, or any application fee, payable in connection with the granting of that option or, as the case may be, those shares and includes any management fee or service fee payable in connection with the holding of that option or those shares. foreign company has the meaning ascribed to that expression by section 5 (1) of the Companies (New South Wales) Code. inspector means an inspector appointed, or deemed to have been appointed, under this Act. issue, in relation to an advertisement, includes disseminate, circulate and distribute. loan entitlement shares means shares, whether ordinary shares, redeemable preference shares or shares of any other description, which confer on the holder of the shares at the time of allotment a contingent right to receive a loan. loan fund company means a company in respect of which an order made under section 14 is in force. loan fund scheme means a scheme which, in substance and irrespective of its form, involves the contribution or subscription of money, directly or indirectly, by persons to a fund and confers on each of those contributors or subscribers or on each of a substantial proportion of them an entitlement to receive out of the fund at some date, whether ascertainable or not, a loan the amount of which is determined by reference to the amount of money that each contributor or subscriber has contributed or subscribed or agreed to contribute or subscribe to the fund. member, in relation to a loan fund company, means a person who is the holder of shares in the company. officer, in relation to a loan fund company, includes: (a) a director, secretary, executive officer or employee of the company, (b) a receiver and manager of the property or any part of the property of the company appointed under a power contained in an instrument, (c) an official manager or deputy official manager of the company, (d) a liquidator of the company appointed in a voluntary winding up of the company, and (e) a trustee or other person administering a compromise or arrangement made between the company and another person or other persons, but does not include: (f) a receiver who is not also a manager, (g) a receiver and manager appointed by a court, (h) a liquidator appointed by a court, or (i) an administrator appointed in respect of the company under section 60. option nomination, in relation to loan entitlement shares, means the right of the person who holds the option nomination, subject to the fulfilment of the terms and conditions on which the option nomination was granted, to acquire those loan entitlement shares, whether allotted or to be allotted, by virtue of an agreement between that person and another person who is the holder of an option to acquire those shares. option to acquire, in relation to loan entitlement shares, means an option conferring on its holder a right, subject to the fulfilment of the terms and conditions on which it was granted, to acquire those shares. penalty, in relation to a penalty imposed by a loan fund company, includes a fine. promote includes advertise. prospectus has the meaning ascribed to that expression by section 5 (1) of the Companies (New South Wales) Code. public company has the meaning ascribed to that expression by section 5 (1) of the Companies (New South Wales) Code. qualifying shares means shares, whether ordinary shares, redeemable preference shares or shares of any other description, which confer on the holder of the shares a right, subject to the fulfilment of the terms and conditions on which they were allotted, to apply for and receive an allotment of loan entitlement shares. recognised company has the meaning ascribed to the expression "recognized company" by section 5 (1) of the Companies (New South Wales) Code. recognised foreign company has the meaning ascribed to the expression "recognized foreign company" by section 5 (1) of the Companies (New South Wales) Code. records includes books, accounts, minutes, registers, deeds, writings or documents and any other sources of information compiled, recorded or stored in written form or on microfilm, or by electronic process, or in any other manner or by any other means. regulations means regulations made under this Act. Supervisor means the Supervisor of Loan Fund Companies under this Act and includes the Deputy Supervisor when performing or exercising the duties, powers and authorities of the Supervisor. vested loan entitlement, in relation to loan entitlement shares in a loan fund company, means a right vested in the holder of those shares to obtain from the company a loan of an amount which, having regard to the memorandum and articles of association of the company or the prospectus under which those shares were allotted, is appropriate to those shares. (2) For the purposes of this Act: (a) the holder of loan entitlement shares in a loan fund company is deemed to have a vested right to receive a loan from the company when: (i) the company has offered the holder such a loan, being an offer which is attributable to the holding of those shares, and (ii) the holder has accepted the offer and the conditions (if any) subject to which the offer was made, (b) a reference to an offer of a loan includes a reference to an invitation to apply for a loan, and (c) a reference to the acceptance of an offer of a loan includes a reference to the making of an application for a loan in response to an invitation to make such an application. Part 2 Administration 5 Supervisor (1) The Supervisor is the person employed in the Public Service as the Supervisor of Loan Fund Companies. (2) (Repealed) (3) All documents lodged by a loan fund company under this Act with the Supervisor shall be kept in the office of the Supervisor. (4) The Supervisor shall have an official seal and shall have such duties, powers and authorities as are prescribed. 6 Deputy Supervisor (1) The duties, powers and authorities of the Supervisor may be performed and exercised by the person employed in the Public Service as the Deputy Supervisor of Loan Fund Companies. (2) The Deputy Supervisor shall exercise the Deputy Supervisor's office subject to such conditions and restrictions, if any, as the Supervisor may impose: (a) generally, (b) in relation to any specified matter or class of matters, or (c) in relation to all matters other than any specified matter or class of matters. (3) No person shall be concerned to see or inquire whether, in the case of any dealing or transaction with the Deputy Supervisor, any condition or restriction has been imposed on the exercise of the powers of the Deputy Supervisor or to inquire as to the Deputy Supervisor's authority. (4) All acts or things done or omitted by the Deputy Supervisor in the administration of this Act shall be as valid and effectual, and shall have the same consequences, as if the acts or things had been done or omitted by the Supervisor. 7 Inspectors (1) The Minister may appoint inspectors for the purposes of this Act. (2) A person appointed as an inspector under section 492 of the Co-operatives National Law (NSW) is deemed by virtue of that appointment to be an inspector appointed under subsection (1). (3) An inspector shall be provided by the Supervisor with a certificate of the inspector's authority as an inspector. (4) An inspector, on exercising in any place a power conferred on the inspector by or under this Act, shall, if so requested by a person apparently in charge of that place or of any work being performed there, produce the certificate of the inspector's authority as an inspector. (5) Notwithstanding any other provision of this Act, neither the Supervisor nor an inspector has authority under this Act to enter a dwelling-house or other residential premises without the consent of the occupier thereof unless the business of a loan fund company or an activity connected with the operation, management, control or promotion of a loan fund scheme is carried on in that house or in those premises, as the case may be. 8 Delegation (1) The Supervisor may, by instrument in writing, delegate such of the Supervisor's duties, powers (other than this power of delegation) and authorities as may be specified in the instrument of delegation to any officer or employee employed in the Supervisor's office and may, by a similar instrument revoke any such delegation either wholly or in part. (2) A delegation under subsection (1) may be made subject to such conditions or such limitations as to the performance or exercise of any of the duties, powers or authorities that have been delegated, or as to time or circumstance, as may be specified in the instrument of delegation. (3) A duty, power or authority, the performance or exercise of which has been delegated under subsection (1) may, while the delegation remains unrevoked, be performed or exercised by the delegate from time to time in accordance with the terms of the delegation. (4) Notwithstanding the making of any delegation under subsection (1), the Supervisor may continue to perform or exercise all or any of the duties, powers or authorities that have been delegated. (5) Any act, omission or thing done, omitted or undergone by a delegate while acting pursuant to a delegation made under subsection (1) shall have the same force and effect as if the act, omission or thing had been done, omitted or undergone by the Supervisor. 9–11 (Repealed) Part 3 Conduct of loan fund schemes 12 Operation etc of loan fund schemes prohibited except by certain persons (1) After the expiration of 3 months from the commencement of this section, a person shall not operate, or manage, control or promote the operation of, a loan fund scheme, or invite, either by the issue of advertisements or other means of communication, persons to contribute or subscribe to or participate in, whether by the allotment of shares or the granting of options to acquire shares or otherwise, a loan fund scheme, unless that person is: (a) a loan fund company, or (b) a person for the time being declared by the Minister by order published in the Gazette to be a person exempt from the application of this subsection or a person belonging to a class of persons so declared. Maximum penalty: 20 penalty units and, in the case of a continuing offence, a further penalty not exceeding 2 penalty units for each day during which the offence continues. (2) The Minister may, by order published in the Gazette, declare any person or class of persons to be exempt from the application of subsection (1). Editorial note— For declaration under this subsection, see Gazette No 11 of 4.2.1977, p 424. From April 2021, PCO is no longer updating notes in provisions of in force titles about related gazette notices. To search for related gazette notices, please use the Gazette Search functionality. (3) A person does not contravene subsection (1) by reason of doing any act referred to in that subsection if, at the time of doing that act, the person is acting in the capacity of officer or employee of a person mentioned in subsection (1) (a) or (b). 13 Restrictions on use of certain descriptions A person other than a person mentioned in section 12 (1) (a) or (b) shall not: (a) in the name, title or description under which that person is carrying on business, take or use or by reference adopt any words indicating or implying that that person is operating a loan fund scheme, or (b) take or use, or have attached to or exhibited at any place, a name, title or description implying or tending to lead to the belief that that person is operating a loan fund scheme. Maximum penalty: 10 penalty units and, in the case of a continuing offence, a further penalty not exceeding 1 penalty unit for each day during which the offence continues. Part 4 Management and operation of loan fund companies Division 1 Power to declare public companies etc to be loan fund companies 14 Power of Minister to declare public company etc to be a loan fund company subject to this Act (1) The Minister may, by order published in the Gazette, declare to be a loan fund company subject to the provisions of this Act: (a) any public company having a share capital, or (b) any recognised company or foreign company having a share capital which would, if it were incorporated in New South Wales, be a public company, if that public company, recognised company or foreign company is operating or promoting the operation of, or proposes to operate or promote the operation of, a loan fund scheme. (2) Every order made under subsection (1) shall take effect from the date of its publication in the Gazette or from such later date as may be specified in the order. (3) Where: (a) a loan fund company, being a company within the meaning of the Companies (New South Wales) Code has been wound up under Part XII of that Code or the registration of that company has been cancelled under section 459 of that Code, (b) a loan fund company, being a recognised company: (i) lodges with the National Companies and Securities Commission a notice under the provisions of the law of the State or Territory where it is incorporated that correspond with section 503 of that Code, to the effect that it has ceased to have a place of business or to carry on business in New South Wales, or (ii) is dissolved in the State or Territory where it is incorporated, (c) a loan fund company, being a recognised foreign company: (i) lodges with the National Companies and Securities Commission a notice under the provisions of the law of the State or Territory where it is incorporated that correspond with section 503 of that Code, to the effect that it has ceased to have a place of business or to carry on business in New South Wales, (ii) is dissolved in the place where it is incorporated, or (iii) has its registration as a foreign company in a State or Territory cancelled under the provisions of the law of the State or Territory that correspond with Division 5 of Part XIII of that Code, or (d) a loan fund company, being a foreign company (other than a recognised foreign company): (i) lodges with the National Companies and Securities Commission a notice under section 518 of that Code to the effect that it has ceased to have a place of business or to carry on business in New South Wales, (ii) is dissolved in the place where it is incorporated, or (iii) has its name removed from or struck off the register, pursuant to section 518 of that Code, the order made under subsection (1) with respect to that company shall thereupon be deemed to be revoked. Division 2 Obligations etc of loan fund companies 15 Certain persons prohibited from managing etc affairs or activities of loan fund company (1) Subject to this section, a loan fund company shall not enter into any contract, agreement, arrangement or understanding with a person by virtue of which the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by a corporation or by a person who is not employed by the company as an officer under a contract of service. (2) Any contract, agreement, arrangement or understanding entered into in contravention of subsection (1) shall be void. (3) Subject to this section, where at the time at which a company becomes a loan fund company any contract, agreement, arrangement or understanding exists between the company and another person which would, if the contract, agreement, arrangement or understanding had been entered into after that date, have been entered into in contravention of subsection (1), that contract, agreement, arrangement or understanding shall, notwithstanding any of its provisions to the contrary, be deemed to be terminated from that time. (4) Where after a company becomes a loan fund company the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by a corporation or by a person who is not employed by the company as an officer under a contract of service, the company and that corporation or person are each guilty of an offence and are each liable on conviction to a penalty not exceeding 10 penalty units, and, in the case of a continuing offence, to a further penalty not exceeding 1 penalty unit for each day during which the offence continues. (5) An offence against subsection (4) is not committed by reason only that a corporation or a person not employed by a loan fund company as an officer under a contract of service undertakes or performs any activity on behalf of the company in the capacity of banker, accountant, auditor, legal adviser, actuary, underwriter or advertising agent or in any other prescribed capacity. (6) Where under any contract, agreement, arrangement or understanding referred to in subsection (3) any money has become due and payable by or to a loan fund company before the contract, agreement, arrangement or understanding is deemed to have been terminated by that subsection, that money may, to the extent that it might have been recoverable apart from that termination, be recovered in proceedings brought in a court of competent jurisdiction. (7) Where, immediately before a company becomes a loan fund company there is in existence any contract, agreement, arrangement or understanding between the company and a person whereby the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by that person and, by virtue of that contract, agreement, arrangement or understanding, that person is holding loan entitlement shares in the company or options over loan entitlement shares in the company, whether allotted or to be allotted, and has granted to any other person an option to acquire any of those loan entitlement shares or, as the case may be, an option nomination in respect of that option, the following provisions shall, on the contract, agreement, arrangement or understanding being deemed to have been terminated, apply with respect to the option or option nomination so granted: (a) the option or option nomination, as the case may be, shall be deemed to have been granted by the company on the date on which it was granted by the first mentioned person and shall be exercisable against the company subject to and in accordance with the same terms and conditions as those subject to and in accordance with which the option or option nomination was granted by, and would, but for this subsection, be exercisable against, that first mentioned person, (b) the company shall be deemed to be subrogated to all the rights and remedies of that first mentioned person in the person's capacity as grantor of the option or option nomination, (c) in the case of an option to acquire loan entitlement shares held by that first mentioned person, those shares shall be disposable only by or at the direction of the company, and (d) in the case of an option nomination, the option nomination shall be deemed for the purposes of this Act to be an option to acquire the loan entitlement shares to which the option nomination relates. (8) Where any contract, agreement, arrangement or understanding between a loan fund company and a person is deemed to be terminated by virtue of subsection (3), all records held by that person which relate to any of the affairs or activities of the company and of the holder of any option to acquire loan entitlement shares in the company or of any option nomination in respect of any such option shall be deemed to belong to the company, and that person shall, within 14 days after that termination, take all practicable steps necessary to transfer those records to the control of the company. Maximum penalty: 10 penalty units. (9) A person required to transfer any record to a loan fund company in accordance with subsection (8) shall not: (a) conceal, destroy, mutilate or alter any such record, or (b) send, attempt to send or conspire with another person to send such a record out of New South Wales. Maximum penalty: 20 penalty units or imprisonment for a term of 6 months. (10) It is a defence to a prosecution under subsection (9) to prove that the person charged did not act with intent to defeat the purposes of this section. 16 Loan fund company not to discriminate against or in favour of persons Subject to sections 17 and 19, a loan fund company shall not: (a) discriminate against or in favour of a person: (i) by granting to the person an option to acquire loan entitlement shares in the company, (ii) by allotting to the person qualifying shares in the company, or (iii) by allotting to the person loan entitlement shares in the company, on terms and conditions that are less favourable or, as the case may be, more favourable than those on which the company grants any such options, or allots any such qualifying shares or loan entitlement shares, to other persons, or (b) in making or offering a loan to the holder of loan entitlement shares in the company: (i) discriminate against the holder by making or offering the loan on terms and conditions less favourable, or (ii) discriminate in the holder's favour by making or offering the loan on terms and conditions more favourable, than those on which loans are made or offered to other holders of loan entitlement shares in the company. Maximum penalty: 10 penalty units. 17 Allocation of loan priority numbers (1) A loan fund company shall: (a) on granting an option to acquire loan entitlement shares in the company, (b) on allotting qualifying shares in the company, or (c) on allotting loan entitlement shares in the company without there having previously been granted any such option, or there having previously been allotted any such qualifying shares, with respect to those loan entitlement shares, allocate in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, a loan priority number in accordance with subsection (3). (2) Where immediately after the time at which a company becomes a loan fund company there is or are in existence: (a) any option to acquire loan entitlement shares in the company, (b) any qualifying shares in the company, or (c) any loan entitlement shares in the company with respect to which the company has not made an offer of a loan, not later than 14 days after the date on which the company becomes a loan fund company, the company shall, except as provided in subsection (6), allocate in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, a loan priority number in accordance with subsection (3). (3) All loan priority numbers allocated by a loan fund company under subsections (1) and (2) shall, whether they are allocated in respect of options to acquire loan entitlement shares or qualifying shares or loan entitlement shares, be consecutive cardinal numbers commencing with the number "1" and each such number: (a) shall be allocated successively in chronological order by reference: (i) in the case of an option referred to in subsection (1) (a) or (2) (a), to the time at which the application for the granting of that option was made, (ii) in the case of qualifying shares referred to in subsection (1) (b) or (2) (b) or loan entitlement shares referred to in subsection (1) (c), to the time at which the application for the allotment of those shares was made, or (iii) in the case of loan entitlement shares referred to in subsection (2) (c), to the time at which the application for the allotment of those shares was made or, if those shares were acquired pursuant to the exercise of a right conferred by an option granted by the company or by a person referred to in subsection (2) (a) or pursuant to the exercise of a right conferred by qualifying shares in the company, to the time at which the application for the granting of that option or for the allotment of those qualifying shares was made, and (b) shall, subject to this Act and to the terms and conditions of the memorandum and articles of association of the company and, in the case of a loan priority number allocated or deemed to be allocated in respect of any such option or qualifying shares, subject to the acquisition of the relevant loan entitlement shares pursuant to the right conferred by that option or those qualifying shares, determine the order of priority in which the company is required to offer loans to holders of loan entitlement shares in the company. (4) Where a person acquires loan entitlement shares in a loan fund company pursuant to the exercise of an option granted, or deemed to have been granted, by the company or pursuant to the exercise of a right conferred by qualifying shares in the company, the loan priority number allocated in respect of that option or, as the case may be, those qualifying shares shall be deemed to have been allocated in respect of the loan entitlement shares so acquired. (5) Where: (a) the holder of an option to acquire loan entitlement shares in a loan fund company is subsequently granted a further option by the company to acquire any such shares, (b) the holder of qualifying shares in a loan fund company is subsequently allotted further qualifying shares in the company, or (c) the holder of loan entitlement shares in a loan fund company is subsequently allotted further loan entitlement shares in the company, the company shall not: (d) allocate in respect of that further option, or those further qualifying shares or loan entitlement shares, the same loan priority number as that allocated in respect of the option, qualifying shares or loan entitlement shares, as the case may be, already held by the holder, or (e) tack that further option or those further qualifying shares or loan entitlement shares to the option, qualifying shares or loan entitlement shares, as the case may be, already held by the holder so that that further option has or those further qualifying shares or loan entitlement shares have the same loan priority number as that allocated in respect of the option, qualifying shares or loan entitlement shares already held by the holder. (6) A loan fund company shall not be required to comply with subsection (2) in respect of any option, qualifying shares or loan entitlement shares referred to in that subsection if, before it became a loan fund company, a loan priority number had been allocated in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, and that allocation would have satisfied the requirements of subsection (3) if that subsection had, at the time of the allocation, been in force in respect of the company, and a loan priority number so allocated shall be deemed to have been allocated by the company under subsection (2). (7) A loan fund company which: (a) fails to comply with subsection (1) or (2), or (b) contravenes subsection (5), is guilty of an offence and is liable on conviction to a penalty not exceeding 5 penalty units. 18 Register of loan priority numbers (1) A loan fund company: (a) shall: (i) if it is a company within the meaning of the Companies (New South Wales) Code, keep at the place at which the register of members is kept, (ii) if it is a recognised company or a foreign company and keeps a branch register in New South Wales of members who are resident in New South Wales, keep at the place where that branch register is kept, or (iii) if it is a recognised company or a foreign company to which subparagraph (ii) does not apply, keep at its principal or registered office in New South Wales, a register of loan priority numbers, and (b) shall enter in that register in the prescribed manner and in order of allocation: (i) not later than 21 days after the date on which the company becomes a loan fund company, all loan priority numbers deemed by section 17 (6) to be allocated by the company under section 17 (2), other than those numbers that have previously been entered in a register referred to in subsection (2), and (ii) not later that 7 days after allocation, all loan priority numbers allocated by the company under section 17 (1) and (2), together with such particulars with respect to the options to acquire loan entitlement shares or to the qualifying shares or loan entitlement shares to which those numbers relate as are prescribed. (2) A loan fund company shall not be required to comply with subsection (1) in respect of the entry in the register required to be kept under that subsection of loan priority numbers referred to in section 17 (6) if, before it became a loan fund company, it was keeping a register similar to the register required to be kept under subsection (1) and had entered in that register the particulars with respect to those loan priority numbers and the option, qualifying shares or loan entitlement shares to which the numbers related that it would have been required to enter in the register if that subsection had, at the time of the entry, been in force in respect of the company, and the register so kept shall be deemed to be or to form part of the register required to be kept under subsection (1). (3) The register kept or deemed to be kept under subsection (1) shall be evidence of any matters entered in it as required or authorised by or under this Act. (4) Any person who is the holder of an option to acquire loan entitlement shares in a loan fund company, or who is the holder of qualifying shares or loan entitlement shares in a loan fund company, without payment of any fee, and any other person, on the payment of a fee determined by the company, being a fee not exceeding the maximum amount prescribed for the purpose of this subsection, may inspect the register kept or deemed to be kept by the company under subsection (1) at any time during which the register of members or, if the company keeps a branch register in New South Wales of members who are resident in New South Wales, that register is open for inspection and may make copies of, or take extracts from, the register so kept or deemed to be kept. (5) A loan fund company which fails to comply with subsection (1) is guilty of an offence and is liable on conviction to a penalty not exceeding 5 penalty units and, in the case of a continuing failure to comply with subsection (1) (a), to a further penalty not exceeding 0.5 penalty unit for each day during which the offence continues. 19 Offers of loans to holders of loan entitlement shares in loan fund companies (1) In this section, loan, in relation to loan entitlement shares in a loan fund company, means a loan of an amount which, having regard to the memorandum and articles of association of the company or the prospectus under which those shares were allotted, is appropriate to those shares. (2) Subject to this section, a loan fund company shall not offer a loan to the holder of loan entitlement shares in the company which have a higher loan priority number than that allocated or deemed to have been allocated in respect of other loan entitlement shares in the company unless: (a) the company has made a loan in relation to those other loan entitlement shares, either to the holder or to a former holder, or (b) where the company has not made a loan in relation to those other loan entitlement shares: (i) the company has offered a loan in relation to those shares, but the holder of those shares has refused the loan or has failed or has been unable to comply with the terms and conditions or any of the terms or conditions on which the loan is offered, or (ii) the holder of those shares is for the time being in arrear with the payment of calls or instalments in respect of those shares or has failed to pay any penalty or other amount that is for the time being due in respect of those shares. (3) A loan fund company shall not offer a loan to the holder of loan entitlement shares in the company which have a higher loan priority number than that allocated in respect of an option to acquire loan entitlement shares in the company or qualifying shares in the company unless: (a) the company has given notice in writing, by letter sent to the holder at the holder's address last known to the company, to the holder of that option or those qualifying shares (being an option or qualifying shares in respect of which the holder is not for the time being in arrear with the payment of calls or instalments and in respect of which the holder has paid all penalties and other amounts (if any) that are for the time being due) advising the holder that, if the holder does not acquire the loan entitlement shares to which the holder's option relates or, as the case may be, the holder's qualifying shares relate within such period as is specified in the notice, being a period of not less than 21 days, the company proposes to offer the loan to that holder of loan entitlement shares, and (b) the holder of that option or those qualifying shares fails within that period to acquire the loan entitlement shares to which the holder's option relates or the holder's qualifying shares relate. (4) Where the holder of loan entitlement shares in a loan fund company is offered a loan in relation to those shares and the holder refuses the offer, or fails or is unable to comply with the terms and conditions or any of the terms or conditions on which the loan is offered, the company may offer the loan to the holder of the loan entitlement shares in the company which have the next highest loan priority number and so on until the offer is accepted, but any such refusal, failure or inability shall not affect the loan priority number allocated or deemed to have been allocated in respect of the loan entitlement shares of the first mentioned holder or the company's obligation to offer to the holder a loan in relation to those shares on the next occasion that the company makes offers of loans in relation to loan entitlement shares. (5) If a loan has been offered by a loan fund company to all of the holders of loan entitlement shares in the company who are eligible by virtue of the memorandum and articles of association of the company to be offered loans by the company and none of those holders has accepted the loan, the company may vary the terms and conditions on which the loan is offered (including the rate of interest at which the loan is to be repayable), but, if the company exercises that power, the provisions of this section shall apply to the offer of the loan as if the loan had not previously been offered and the terms and conditions on which the loan is offered had not been varied. (6) A loan fund company which contravenes subsection (2) or (3) is guilty of an offence and is liable on conviction to a penalty not exceeding 5 penalty units. 20 Loan fund company to publish certain information (1) A loan fund company shall, not later than 14 days after the last day of each month, publish in the Gazette and in such newspaper or newspapers circulating in New South Wales as the Supervisor may have specified or approved for the purpose, either generally or specifically: (a) the particulars specified in subsection (2) of every offer of a loan made during that month to a person holding loan entitlement shares in the company or, if during that month the company has not made any such offer, a statement to that effect, and (b) the particulars specified in subsection (3) of every loan made during that month to a person holding loan entitlement shares in the company or, if during that month the company has not made any such loan, a statement to that effect. (2) The particulars referred to in subsection (1) (a) are: (a) the date on which the offer was made, (b) the loan priority number allocated or deemed to be allocated in respect of the loan entitlement shares held by the person to whom the offer was made, (c) the amount offered to that person as a loan, and (d) the rate of interest expressed as a percentage per annum that will be payable with respect to the loan if made and the period within which the loan will, if made, be required to be repaid. (3) The particulars referred to in subsection (1) (b) are: (a) the date on which the loan was made, (b) the loan priority number allocated or deemed to be allocated in respect of the loan entitlement shares held by the person to whom the loan was made, (c) the amount of the loan, and (d) the rate of interest expressed as a percentage per annum that is payable with respect to the loan and the period within which the loan is required to be repaid. Maximum penalty: 5 penalty units. 21 Register of option holders (1) Subject to this section, a loan fund company which is a company within the meaning of the Companies (New South Wales) Code shall, if it has granted or, by virtue of section 15 (7), is deemed to have granted options to acquire loan entitlement shares in the company, keep a register of persons who hold such options and shall, within the period specified in subsection (3), enter in the register with respect to each such person and the option of which the person is the holder: (a) the person's name and address, (b) the date on which the person's option was or is deemed to have been granted and the date by which it is required to be exercised, (c) the loan priority number allocated in respect of the option and such particulars (if any) with respect to the loan entitlement shares to which the option relates as are prescribed, and (d) if the person subsequently acquires the shares pursuant to that option, such particulars (if any) of the acquisition, or if the person subsequently forfeits or surrenders the option, such particulars (if any) of the forfeiture or surrender, as are prescribed. (2) Subject to this section, a loan fund company which is a recognised company or a foreign company shall, if it has granted or, by virtue of section 15 (7), is deemed to have granted options to acquire loan entitlement shares in the company, keep a register of persons who are resident in New South Wales and who hold such options and shall, within the period specified in subsection (3), enter in the register with respect to each such person and the option of which the person is the holder the particulars specified in subsection (1). (3) The period within which a loan fund company is required to make an entry referred to in subsection (1) or (2), whichever is applicable, is: (a) in the case of a person to whom the company has granted an option to acquire loan entitlement shares in the company before the company became a loan fund company or to whom the company is deemed, by virtue of section 15 (7), to have granted such an option, 7 days after the date on which the company became a loan fund company, and (b) in the case of a person to whom the company grants such an option after the company became a loan fund company, 7 days after the date on which the option is granted. (4) The register required to be kept by a loan fund company under this section: (a) shall: (i) if the company is incorporated under the Companies (New South Wales) Code, be kept at the place at which the register of members is kept, (ii) if the company is a recognised company or a foreign company and keeps a branch register in New South Wales of members who are resident in New South Wales, be kept at the place where that branch register is kept, or (iii) if the company is a recognised company or a foreign company to which subparagraph (ii) does not apply, be kept at its principal or registered office in New South Wales, and (b) shall be kept in the manner prescribed by Division 4 of Part V of the Companies (New South Wales) Code as if the register were a register of members referred to in section 256 of that Code, and: (c) transfers of options entered in the register shall be effected therein in the same manner and at the same charges as transfers of shares effected in the register of members or, where the company is a recognised company or a foreign company, the principal register of members, (d) all such transfers of options lodged at the company's registered office or, where the company is a recognised company or a foreign company, at the company's principal or, as the case may be, registered office in New South Wales shall be binding on the company, and (e) the Court shall have the same powers in relation to the rectification of the register as it has in respect of the register of members referred to in that section. (5) Sections 256, 257 and 547 of the Companies (New South Wales) Code shall, with any necessary modifications, apply respectively to holders of options to acquire loan entitlement shares in a loan fund company and to the register of holders of such options in the same way as they apply to members and to the register of members of the company or, in the case of a company which keeps a branch register in New South Wales of members who are resident in New South Wales, to those members and to the branch register of those members. (6) Sections 183, 184, 185 (1) and 259 of the Companies (New South Wales) Code shall, with any necessary modifications, apply respectively to the transfer of options to acquire loan entitlement shares in a loan fund company and to the rectification of the register of persons who are the holders of such options in the same way as they apply to the transfer of shares in the company and to the rectification of the register of members or, where the company keeps a branch register in New South Wales of members who are resident in New South Wales, to the transfer of shares of those members and to the rectification of the branch register of those members. (7) The register kept by a loan fund company under this section shall be evidence of any matters entered in it as required or authorised by or under this Act. (8) A certificate under the seal of a loan fund company certifying that a person whose name appears in the register of the company kept under this section is the holder of an option to acquire loan entitlement shares specified in the certificate shall be evidence for all purposes of the right of that person to acquire those shares and of the registration in the register of the holding of the option. (9) Any loan fund company which fails to comply with a provision of this section which is applicable to it is guilty of an offence and is liable on conviction to a penalty not exceeding 2 penalty units and, in the case of a continuing offence, to a further penalty not exceeding 0.5 penalty unit for each day during which the offence continues. (10) Nothing in this section affects the operation of section 131 of the Companies (New South Wales) Code. 22 Additional requirements with respect to register of members (1) A loan fund company which is a company within the meaning of the Companies (New South Wales) Code shall, within the period specified in subsection (3), enter in the register of members kept pursuant to section 256 of that Code: (a) in respect of each member (if any) who holds qualifying shares in the company, the loan priority number allocated in respect of those shares and such other particulars (if any) as are prescribed, and (b) in respect of each member who holds loan entitlement shares in the company: (i) the loan priority number allocated or deemed to be allocated in respect of those shares, (ii) when an offer of a loan is made to the member with respect to those shares, the fact that such a loan has been offered, the date of the offer, the amount of the loan offered, the rate of interest expressed as a percentage per annum payable in respect of the loan and the period within which the loan is to be repaid, (iii) when a loan is made to the member with respect to those shares, the fact that such a loan has been made, the date on which the loan was made, the amount of the loan, the rate of interest expressed as a percentage per annum payable in respect of the loan and the period within which the loan is repayable, (iv) when a loan referred to in subparagraph (iii) is repaid, the fact and date of repayment, and (v) such other particulars (if any) as are prescribed. (2) A loan fund company which, pursuant to section 262 or, as the case may be, section 521 of the Companies (New South Wales) Code, keeps a branch register in New South Wales of members who are resident in New South Wales, within the period specified in subsection (3), enter in that branch register: (a) in respect of each such member (if any) who holds qualifying shares in the company, the particulars referred to in subsection (1) (a), and (b) in respect of each such member who holds loan entitlement shares in the company, the particulars referred to in subsection (1) (b). Maximum penalty: 2 penalty units and, in the case of a continuing offence, a further penalty not exceeding 0.5 penalty unit for each day during which the offence continues. (3) The period within which a loan fund company is required to make an entry referred to in subsection (1) or (2), whichever is applicable, is: (a) in the case of a person who became a member before the company became a loan fund company, 7 days after the date on which the company became a loan fund company, and (b) in the case of a person who becomes a member after the company became a loan fund company, 7 days after the date on which the person becomes a member. 23 Returns (1) A loan fund company shall: (a) within 2 months after the date on which the company becomes a loan fund company or within such further period as the Supervisor may in any particular case allow, and (b) in each year within 3 months after the last day of the company's financial year or within such further period as the Supervisor may in any particular case allow, lodge with the Supervisor a return containing the particulars specified in subsection (2) and accompanied by such documents as are specified in subsection (3). (2) The particulars required to be contained in the return under subsection (1) are: (a) the address, as at the date of lodgment of the return, of: (i) the registered office of the loan fund company, (ii) where the company is a recognised company, the principal office of the company in New South Wales, and (iii) where the company is a foreign company, the registered office of the company in New South Wales, (b) if the company, being a company within the meaning of the Companies (New South Wales) Code, keeps the register of members and the register (if any) kept by the company under section 21 (1) at a place other than its registered office, the address, as at the date of lodgment of the return, at which that register is or those registers are kept, (c) if the company, being a recognised company or a foreign company, keeps the branch register (if any) of members who are resident in New South Wales and the register (if any) kept by the company under section 21 (2) at a place other than its principal office or, as the case may be, its registered office in New South Wales, the address, as at the date of lodgment of the return, at which that register is or those registers are kept, (d) all such particulars with respect to the persons who, as at the date of lodgment of the return, are directors of the company and any person who, as at that date, is a principal executive officer or secretary of the company as are required by section 238 of the Companies (New South Wales) Code to be contained in the register of directors, principal executive officers and secretaries of the company, or, where the company is a recognised company or a foreign company, would be so required if the company were incorporated under the Companies (New South Wales) Code, (e) the name and address of every person who, as at the date of lodgment of the return, is an auditor of the company, (f) the name and address of every bank, building society and credit union at which the company, as at the date of lodgment of the return, maintains an account or keeps any of its funds, and (g) such other particulars (if any) as are prescribed. (3) The documents required to accompany the return under subsection (1) are: (a) a copy, certified by a director, or by the principal executive officer or secretary, of the loan fund company to be a true copy of all accounts relating to the company required by section 269 of the Companies (New South Wales) Code, to be made out for or with respect to its financial year immediately preceding the date on which the return is required to be lodged with the Supervisor under subsection (1) or, where the company is a recognised company or a foreign company, a copy so certified of all accounts relating to the company which would be required by that section if the company were a public company incorporated under the Companies (New South Wales) Code, (b) a copy of the statements required by section 269 of the Companies (New South Wales) Code to be attached to those accounts or, where the company is a recognised company or a foreign company, which would be so required to be attached to those accounts if the company were a public company incorporated under the Companies (New South Wales) Code, (c) a copy of the auditor's report or reports required to be made by section 285 of the Companies (New South Wales) Code on those accounts or, where the company is a recognised company or a foreign company, which would be required to be made on those accounts if the company were a public company incorporated under the Companies (New South Wales) Code, (d) a list in or to the effect of the prescribed form containing the prescribed particulars of loans made by the company during the financial year referred to in paragraph (a), and (e) a list in or to the effect of the prescribed form containing the particulars of all vested loan entitlements held by members as at the last day of the financial year referred to in paragraph (a). (4) A loan fund company shall, not later than 14 days after a change occurs in any particular referred to in subsection (2) in relation to the company, lodge with the Supervisor details in writing of the change. Maximum penalty: 2 penalty units and, in the case of a continuing offence, a further penalty not exceeding 0.5 penalty unit for each day during which the offence continues. 24 Loan fund company etc to provide information in certain cases (1) The Supervisor may, by notice in writing served on a loan fund company or on any officer or agent of any such company, require the company or that officer or agent to lodge with the Supervisor, within such period as is specified in the notice: (a) such particulars as may be so specified with respect to: (i) the granting of options to acquire loan entitlement shares in the company, (ii) the allotment of qualifying shares or loan entitlement shares in the company, (iii) the allocation by the company of loan priority numbers, (iv) the offering of loans by or on behalf of the company, (v) the making of loans by or on behalf of the company, or (vi) the borrowing of money by the company or its methods of raising its funds, whether by means of the allotment of shares or otherwise, (b) a report by an actuary appointed by the company on the company's financial position, or (c) a special return containing such information with respect to the company or to any of its officers or agents or to its affairs or activities as may be so specified. (2) A loan fund company on which, or an officer or agent of a loan fund company on whom, a notice under subsection (1) has been served shall not neglect or fail to comply with a requirement contained in the notice when it is within the power of the company or, as the case may be, the officer or agent to comply with that requirement. Maximum penalty: 5 penalty units. (3) Any information provided pursuant to a requirement contained in a notice served under subsection (1) shall not, if the person providing the information objected, at the time of providing it, to doing so on the ground that it might tend to incriminate the person, be admissible in evidence in any proceedings against that person for any offence, not being the offence of contravening subsection (2). (4) Any requirement contained in a notice served under subsection (1) may be varied or revoked by a later notice served under that subsection. 25 Powers of company with respect to fees and penalties (1) Subject to this section, a loan fund company may, if authorised by its articles of association to do so, impose a penalty: (a) on any member for the non-payment of calls or instalments due with respect to shares, whether qualifying shares or loan entitlement shares or shares of any other description, in the company, or (b) on any person who is the holder of an option to acquire loan entitlement shares in the company for failure to comply with the terms subject to which the option was granted, or was deemed to have been granted, by the company, but no penalty exceeding 0.1 penalty unit, or such larger amount as may be prescribed, shall be imposed until written notice of intention to impose the penalty and of the reason therefor has been transmitted to that member or person and the member or person has had an opportunity of sending to the company a written statement for the purpose of showing cause why the penalty should not be imposed. (2) The regulations may fix a maximum amount that a loan fund company may, if authorised by its articles of association to do so: (a) charge as a fee for or with respect to any prescribed matter, or (b) impose as a penalty on any member, or on any person who holds an option to acquire loan entitlement shares in the company, for or with respect to any prescribed matter. (3) A loan fund company shall not: (a) charge a fee which exceeds the maximum amount fixed under subsection (2) (a) for or with respect to any prescribed matter, or (b) impose on a member, or on any person who holds an option to acquire loan entitlement shares in the company, a penalty which exceeds the maximum amount fixed under subsection (2) (b) for or with respect to any prescribed matter. Maximum penalty: 2 penalty units. (4) Where a loan fund company: (a) imposes a penalty without complying with subsection (1), or (b) charges a fee, or imposes a penalty, in excess of the maximum amount fixed under subsection (2) (a) or (b) for or with respect to any prescribed matter, that penalty or, as the case may be, that fee or penalty, to the extent that it exceeds the amount so fixed, shall not be enforceable against or be recoverable from the member or person in respect of whom it was charged or imposed or, if the penalty or fee has been paid to the company, shall be recoverable in a court of competent jurisdiction by the person who made the payment as a debt due from the company. Division 3 Provisions relating to funds of loan fund companies 26 Borrowing powers of loan fund company (1) Subject to this section, a loan fund company may, unless prohibited or restricted by its memorandum or articles of association from so doing, receive money on deposit or loan, either at interest or at no interest, from any member or from any other person to be applied for the purposes of the company. (2) A loan fund company shall not receive any money by way of deposit or loan if by so doing the total amount of money so received by the company would exceed an amount equivalent to four-fifths, or such other proportion as may be prescribed, of the unpaid principal secured to the company by mortgage from its members. Maximum penalty: 10 penalty units. (3) Every acknowledgment or security of any kind given by a loan fund company with respect to the receipt of a deposit or loan shall have printed or written on it a statement that the company is only entitled to receive deposits or loans within the limits prescribed by this section. Maximum penalty: 2 penalty units. (4) No member or other person depositing money with or lending money to a loan fund company shall be concerned with the application of that money by the company or be in any way affected or prejudiced by the fact that the company, in receiving the deposit or loan, has contravened the provisions of this or any other Act or the company's memorandum or articles of association. 27 Investment of surplus funds (1) Subject to subsection (2), a loan fund company may invest any of its funds that are not immediately required for the purpose of operating a loan fund scheme or for any purpose incidental to that purpose in: (a) securities authorised by law for the investment of trust funds, or (b) any securities, or any securities of a class, prescribed for the purposes of this paragraph. (2) A loan fund company shall not invest any of the funds of the company referred to in subsection (1): (a) in securities, by way of mortgage or charge, over real or leasehold property, or (b) in securities that are not redeemable within a period of 3 years after the date of their acquisition by or on behalf of the company or, where some other period is prescribed, within the prescribed period. Maximum penalty: 10 penalty units. (3) Subsection (2) does not affect the validity of any investment of any of the funds of a loan fund company before it became a loan fund company, but on the redemption or disposal of any such investment, the company shall not re-invest the proceeds from the redemption or disposal in contravention of that subsection or in contravention of section 28. 28 (Repealed) Division 4 Other provisions relating to operation of loan fund companies 29 Loan fund company not to represent or indicate that it has special status A loan fund company or person representing or acting on behalf of a loan fund company shall not by any statement made to a person or made in an advertisement represent or indicate, expressly or impliedly, that the company: (a) has any special status by virtue of being a loan fund company, (b) has in any respect been approved by the Supervisor, or (c) is supervised or in any way guaranteed or otherwise supported by the Government of New South Wales or any of its agencies or instrumentalities. Maximum penalty: 10 penalty units. 30 Liens over options and shares A loan fund company which, whether by its memorandum or articles of association or otherwise, has a lien over any option to acquire loan entitlement shares in the company or over any qualifying shares or loan entitlement shares in the company shall not, by virtue of that lien, have a power to sell the option, qualifying shares or loan entitlement shares, but with that exception the company may enforce the lien by the exercise of any other power conferred on it whether by its memorandum or articles of association or otherwise. 31 Certain provisions of memorandum or articles of association of loan fund company void Any provision contained in the memorandum or articles of association of a loan fund company which is inconsistent with a provision of this Act or of the regulations shall, to the extent of the inconsistency, be void. Part 5 Rights with respect to shares and options to acquire shares in loan fund companies Division 1 Rights of persons acquiring shares and options 32 Interpretation for the purposes of this Division (1) In this Division, shares, unless the context otherwise requires, means