CORPORATIONS ACT 2001
Ch 7 inserted by No 122 of 2001, s 3, Sch 1, Pt 1 (effective 11 March 2002).
As Act No 122 of 2001 repealed Ch 7 and 8 the history notes for Ch 7 use "inserted" and references to the former provisions have been removed.
For the purposes of this Chapter, subject to subsections (2), (3) and (4), a derivative is an arrangement in relation to which the following conditions are satisfied:
(a) under the arrangement, a party to the arrangement must, or may be required to, provide at some future time consideration of a particular kind or kinds to someone; and
(b) that future time is not less than the number of days, prescribed by regulations made for the purposes of this paragraph, after the day on which the arrangement is entered into; and
(c) the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:
(i) an asset;
(ii) a rate (including an interest rate or exchange rate);
(iii) an index;
(iv) a commodity.
761D(2) [Declaration by regulations]
Without limiting subsection (1), anything declared by the regulations to be a derivative for the purposes of this section is a derivative for the purposes of this Chapter. A thing so declared is a derivative despite anything in subsections (3) and (4).
Subject to subsection (2), the following are not derivatives for the purposes of this Chapter even if they are covered by the definition in subsection (1):
(a) an arrangement in relation to which subparagraphs (i), (ii) and (iii) are satisfied:
(i) a party has, or may have, an obligation to buy, and another party has, or may have, an obligation to sell, tangible property (other than Australian or foreign currency) at a price and on a date in the future; and
(ii) the arrangement does not permit the seller's obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and
but only to the extent that the arrangement deals with that purchase and sale;
(iii) neither usual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller's obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy;
(b) a contract for the future provision of services;
(c) anything that is covered by a paragraph of subsection 764A(1), other than paragraph (c) of that subsection;
(d) anything declared by the regulations not to be a derivative for the purposes of this Chapter.
Subject to subsection (2), an arrangement under which one party has an obligation to buy, and the other has an obligation to sell, property is not a derivative for the purposes of this Chapter merely because the arrangement provides for the consideration to be varied by reference to a general inflation index such as the Consumer Price Index.
S 761D inserted by No 122 of 2001, s 3, Sch 1, Pt 1 (effective 11 March 2002).