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CORPORATIONS ACT 2001 - SECT 1020B

Prohibition of certain short sales of securities, managed investment products, foreign passport fund products and certain other financial products

             (1)  In this section and in Division 5B:

section 1020B products means:

                     (a)  securities; or

                     (b)  managed investment products; or

                   (ba)  foreign passport fund products; or

                     (c)  financial products referred to in paragraph 764A(1)(j); or

                     (d)  financial products of any other kind prescribed by regulations made for the purposes of this definition.

             (2)  Subject to this section and the regulations, a person must only, in this jurisdiction, sell section 1020B products to a buyer if, at the time of the sale:

                     (a)  the person has or, if the person is selling on behalf of another person, that other person has; or

                     (b)  the person believes on reasonable grounds that the person has, or if the person is selling on behalf of another person, that other person has;

a presently exercisable and unconditional right to vest the products in the buyer.

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

             (3)  For the purposes of subsection (2):

                     (a)  a person who, at a particular time, has a presently exercisable and unconditional right to have section 1020B products vested in the person, or in accordance with the directions of the person, has at that time a presently exercisable and unconditional right to vest the products in another person; and

                     (b)  a right of a person to vest section 1020B products in another person is not conditional merely because the products are subject to a security interest in favour of another person to secure the repayment of money.

             (4)  Subsection (2) does not apply in relation to a sale of section 1020B products by a person who, before the time of sale, has entered into a contract to buy those products and who has a right to have those products vested in the person that is conditional only upon all or any of the following:

                     (a)  payment of the consideration in respect of the purchase;

                     (b)  the receipt by the person of a proper instrument of transfer in respect of the products;

                     (c)  the receipt by the person of the documents that are, or are documents of title to, the products.

             (7)  For the purposes of this section, a person who:

                     (a)  purports to sell section 1020B products; or

                     (b)  offers to sell section 1020B products; or

                     (c)  holds himself, herself or itself out as entitled to sell section 1020B products; or

                     (d)  instructs a financial services licensee to sell section 1020B products;

is taken to sell the products.



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