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CORPORATIONS ACT 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS    View history reference

PART 7.9 - FINANCIAL PRODUCT DISCLOSURE AND OTHER PROVISIONS RELATING TO ISSUE, SALE AND PURCHASE OF FINANCIAL PRODUCTS    View history reference

Division 2 - Product Disclosure Statements    View history reference

Subdivision F - Other rights and obligations related to Product Disclosure Statements    View history reference

SECTION 1016E  CHOICES OPEN TO PERSON MAKING THE OFFER IF DISCLOSURE CONDITION NOT MET OR PRODUCT DISCLOSURE STATEMENT DEFECTIVE  

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1016E(1)  [Disclosure conditions not met]  


This section applies if:


(a) a Product Disclosure Statement for a financial product states that a financial product to which the Statement relates will not be issued or sold unless:


(i) applications for a minimum number of financial products of that kind are received; or

(ii) a minimum amount is raised;
and that condition is not satisfied within 4 months after the relevant date (see subsections (3) and (4)); or


(b) a Product Disclosure Statement for a financial product states or implies that a financial product to which the Statement relates will be able to be traded on a financial market (whether in Australia or elsewhere) and:


(i) an application has not, within 7 days after the relevant date (see subsection (4)), been made to the operator of that market for the taking of such action as is necessary to enable financial products of that kind to be traded on that market; or

(ii) at the end of the period of 3 months starting on the relevant date, financial products of that kind are not able to be traded on that market; or


(c) in relation to a Product Disclosure Statement for a financial product, the responsible person becomes aware that the Product Disclosure Statement was defective as at the time when it was prepared, or that it became or has become defective as at some later time.
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(d) (Repealed)

Note: Information and statements in a Supplementary Product Disclosure Statement are taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).

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1016E(2)  [Remedial action]  

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If this section applies, the responsible person must, in relation to any application for financial products of the relevant kind that is made in response to the Product Disclosure Statement (the first Product Disclosure Statement) and that has not resulted in an issue or sale of financial products of that kind, comply with one of the following paragraphs:


(a) the responsible person must repay the money they received from the applicant; or


(aa) the responsible person must give the applicant:

(i) a new Product Disclosure Statement for the financial products, and an additional statement that identifies the respects in which the new Product Disclosure Statement is materially different from the first Product Disclosure Statement; and

(ii) 1 month to withdraw their application and be repaid; or
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(b) the responsible person must give the applicant:

(i) a Supplementary Product Disclosure Statement that changes the statement referred to in paragraph (1)(a) or (b), or that corrects the deficiency referred to in paragraph (1)(c); and

(ii) 1 month to withdraw their applications and be repaid; or
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(ba) the responsible person must issue or sell the financial products to the applicant and give them:

(i) a new Product Disclosure Statement for the financial products, and an additional statement that identifies the respects in which the new Product Disclosure Statement is materially different from the first Product Disclosure Statement; and

(ii) 1 month to return the financial products and be repaid; or
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(c) the responsible person must issue or sell the financial products to the applicant and give them:

(i) a Supplementary Product Disclosure Statement that changes the statement referred to in paragraph (1)(a) or (b), or that corrects the deficiency referred to in paragraph (1)(c); and

(ii) 1 month to return the financial products and be repaid.

Note 1: Failure to comply with this subsection is an offence (see subsection 1311(1)).

Note 2: If the responsible person chooses the option given by paragraph (aa) or (b), that option does not require the responsible person to wait until the end of the month referred to in subparagraph (aa)(ii) or (b)(ii) before going ahead and issuing or selling the financial products to the applicant if the applicant indicates before then that they still wish to proceed with the application.

Note 3: However, if the responsible person chooses the option given by paragraph (aa) or (b), whether the responsible person may go ahead and issue or sell the financial products to the applicant at the end of the month referred to in subparagraph (aa)(ii) or (b)(ii) (or earlier, as mentioned in note 2) is affected by this subsection and sections 1016A to 1016E (including as those provisions are affected by subsections (2A) and (2B) of this section).

Note 4: If the responsible person chooses the option given by paragraph (c), sections 1016A to 1016D do not prohibit the issue or sale of the financial products under that paragraph (see subsection (2C) of this section).

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1016E(2A)  [New Product Disclosure Statement]  

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If, in accordance with paragraph (2)(aa), the responsible person gives the applicant a new Product Disclosure Statement for the financial products and the additional statement referred to in subparagraph (2)(aa)(i):


(a) subsection (2), and sections 1016B, 1016C, 1016D and 1016E, apply in relation to the application, from the time when the applicant is given the new Product Disclosure Statement (the correction time), as if the application had been made in response to the new Product Disclosure Statement; and


(b) if:


(i) the reason for giving the new Product Disclosure Statement was that the responsible person became aware that the first Product Disclosure Statement was defective as at the time when it was prepared, or had become defective by the time the application was made; and

(ii) the financial products are relevant financial products as defined in section 1016A;
section 1016A applies in relation to the application, from the correction time, as if the first Product Disclosure Statement had instead contained the content of the new Product Disclosure Statement.

Note 1: Because of paragraph (a):

(a) if this section applies to the new Product Disclosure Statement, the responsible person's ability to proceed to issue or sell the financial products pursuant to the application will be affected by subsection (2), and by sections 1016B, 1016C and 1016D, as those provisions apply in relation to the new Product Disclosure Statement (even though the application was actually made in response to the first Product Disclosure Statement); and
(b) sections 1016B, 1016C and 1016D, as they relate to the first Product Disclosure Statement, cease to apply in relation to the application.

Note 2: Because of paragraph (b), the application may be an eligible application as defined in section 1016A, even though the first Product Disclosure Statement was actually defective as at the time when the application was made.

1016E(2B)  [Supplementary Product Disclosure Statement]  

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If:


(a) in accordance with paragraph (2)(b), the responsible person gives the applicant a Supplementary Product Disclosure Statement that relates to the financial products; and


(b) the reason for giving the Supplementary Product Disclosure Statement was that the responsible person became aware that the first Product Disclosure Statement was defective as at the time when it was prepared, or had become defective by the time the application was made; and


(c) the financial products are relevant financial products as defined in section 1016A;

section 1016A applies in relation to the application, from the time when the applicant is given the Supplementary Product Disclosure Statement, as if the Supplementary Product Disclosure Statement had been given to the applicant before the application was made.

Note 1: Because of this subsection and section 1014D (information in a Supplementary Product Disclosure Statement is taken to be contained in the Product Disclosure Statement it supplements), the application may be an eligible application as defined in section 1016A, even though the Supplementary Product Disclosure Statement was not actually given until after the time when the application was made.

Note 2: The responsible person's ability to proceed to issue or sell the financial products pursuant to the application will be affected by subsection (2), and by sections 1016B, 1016C and 1016D, as those provisions apply in relation to the first Product Disclosure Statement as affected by the Supplementary Product Disclosure Statement and any other Supplementary Product Disclosure Statements.

1016E(2BA)  [Replacement Product Disclosure Statement]  

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If Subdivision DA applies:


(a) for the purposes of subsection (2), instead of giving the applicant a Supplementary Product Disclosure Statement, the responsible person may give the applicant a Replacement Product Disclosure Statement; and


(b) if the responsible person gives the applicant a Replacement Product Disclosure Statement, subsection (2B) applies as if references in that subsection to a Supplementary Product Disclosure Statement were references to the Replacement Product Disclosure Statement.

[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[230] contained the following application provision (which was effective 28 June 2007):

Application of items 8, 70, 94, 146 to 150 and 156 to 158

The amendments made by items 8, 70, 94, 146 to 150 and 156 to 158 of this Schedule apply in relation to a Product Disclosure Statement that is lodged with ASIC whether the Statement is lodged before, on or after the day the amendments commence.

]

1016E(2C)  [Compliance]  

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If the responsible person chooses to comply with paragraph (2)(c), nothing in sections 1016A to 1016D applies to the issue or sale of the financial products under that paragraph.

Note: This subsection affects the elements of the offences under sections 1016A to 1016D, and so it is not an exception in relation to which a defendant bears an evidential burden under subsection 13.3(3) of the Criminal Code.

1016E(3)  [Deemed application]  


For the purpose of working out whether the condition referred to in paragraph (1)(a) has been satisfied, a person who has agreed to take a financial product as an underwriter is taken to have applied for that financial product.

1016E(4)  [Relevant date]  


For the purposes of paragraphs (1)(a) and (b), the relevant date in relation to an express or implied statement is:


(a) if the statement is express or implied in a Product Disclosure Statement, disregarding the effect of section 1014D - the date of the Product Disclosure Statement; or


(b) if the statement is express or implied in a Supplementary Product Disclosure Statement - the date of the Supplementary Product Disclosure Statement; or


(c) if the statement is express or implied in a Replacement Product Disclosure Statement (whether or not it is express or implied in the earlier Product Disclosure Statement it replaces) - the date of the Replacement Product Disclosure Statement.
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[CCH Note: Act No 101 of 2007, Sch 1, Pt 6[230] contained the following application provision (which was effective 28 June 2007):

Application of items 8, 70, 94, 146 to 150 and 156 to 158

The amendments made by items 8, 70, 94, 146 to 150 and 156 to 158 of this Schedule apply in relation to a Product Disclosure Statement that is lodged with ASIC whether the Statement is lodged before, on or after the day the amendments commence.

]

1016E(5)  [``defective'']  

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For the purposes of this section, defective, when used in relation to a Product Disclosure Statement at a particular time, means that the Product Disclosure Statement, if it had been given to a person at that time, would have been defective as defined in Subdivision A of Division 7.

Note: Information in a Supplementary Product Disclosure Statement is taken to be contained in the Product Disclosure Statement it supplements (see section 1014D).


 



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