Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.1.40

Conduct that does not constitute the provision of a custodial or depository service

             (1)  For paragraph 766E(3)(e) of the Act, conduct that is mentioned in subsection 766E(1) of the Act does not constitute providing a custodial or depository service if:

                     (a)  the financial product held by the provider is a basic deposit product (within the definition in section 761A of the Act) or is an account mentioned in subsection 981B(1) of the Act; or

                     (b)  the client is an associate of the provider (within the meaning of Division 2 of Part 1.2 of the Act); or

                     (c)  the provider and its associates have no more than 20 clients in aggregate for all custodial or depository services that they provide; or

                     (d)  the financial product is held as part of the arrangements for securing obligations under:

                              (i)  a credit facility; or

                             (ii)  a debenture that is held as trustee under a trust deed:

                                        (A)  entered into under section 283AA of the Act or former section 260FA of the Corporations Law of a State or Territory; or

                                        (B)  mentioned in former section 1052 of the Corporations Law of a State or Territory; or

                     (e)  the provider is a participant in a licensed market and the financial product held is a derivative acquired on the licensed market by the provider on behalf of a client; or

                      (f)  the provider is a participant in a licensed clearing and settlement facility and the financial product held is a derivative registered on the licensed clearing and settlement facility by the provider on behalf of the client; or

                     (g)  the financial product is held under:

                              (i)  an order of a court; or

                             (ii)  an order of a board or tribunal established under a law of a State or Territory; or

                            (iii)  a direction by the holder of a statutory office established under a law of a State or Territory; or

                     (h)  the service is provided by a lawyer in the following circumstances:

                              (i)  the financial service consists of acquiring, holding or disposing of a cash management trust interest, being an interest to which a law of a State or Territory relating to the audit of trust or controlled monies applies;

                             (ii)  the lawyer is acting:

                                        (A)  on instructions from the client, an associate of the client or a relative of the client; and

                                        (B)  in his or her professional capacity; and

                                        (C)  in the ordinary course of his or her activities as a lawyer;

                            (iii)  the financial service can reasonably be regarded as a necessary part of those activities;

                            (iv)  the lawyer has not received, and will not receive, a benefit in connection with the activities other than:

                                        (A)  the payment of professional charges related to those activities; and

                                        (B)  reimbursement for expenses incurred or payment on account of expenses to be incurred on behalf of the client, an associate of the client or a relative of the client;

                                   from the client or from another person on behalf of the client; or

                      (i)  the financial product is held by a trustee appointed under:

                              (i)  a law of a State or Territory to administer monies awarded to a person as compensation; or

                             (ii)  a trust formed for a charitable purpose.

             (2)  For paragraph 766E(3)(e) of the Act, conduct that is mentioned in subsection 766E(1) of the Act does not constitute providing a custodial or depository service if the financial product is an Australian carbon credit unit that has been issued to:

                     (a)  a special native title account in accordance with section 49 of the Carbon Credits (Carbon Farming Initiative) Act 2011 ; or

                     (b)  a nominee account in accordance with section 141 of that Act.



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