Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.8.16

When person is ineligible to act as auditor of financial services licensee

             (1)  For section 990C of the Act, a person is ineligible to act as auditor of a financial services licensee in any of the following circumstances:

                     (a)  the person is not a registered company auditor;

                     (b)  the person is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate--to a body corporate related to the financial services licensee;

                     (c)  a body corporate in which the person has a substantial holding is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate--to a body corporate related to the financial services licensee;

                     (d)  the person is a partner or employee of the financial services licensee;

                     (e)  if the financial services licensee is a body corporate--the person is:

                              (i)  an officer of the body; or

                             (ii)  a partner, employer or employee of an officer of the body; or

                            (iii)  a partner or employee of an employee of an officer of the body.

             (2)  For section 990C of the Act, a firm is ineligible to act as auditor of a financial services licensee at a particular time unless:

                     (a)  at least 1 member of the firm is a registered company auditor who is ordinarily resident in Australia; and

                     (b)  if the business name under which the firm is carrying on business is not registered under a law of a State or Territory--a return has been lodged in the prescribed form showing, in relation to each member of the firm:

                              (i)  the member's full name; and

                             (ii)  the member's address at that time; and

                     (c)  no member of the firm is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate--to a body corporate related to the financial services licensee; and

                     (d)  no body corporate in which any member of the firm has a substantial holding is indebted in an amount exceeding $5 000 to:

                              (i)  the financial services licensee; or

                             (ii)  if the financial services licensee is a body corporate--to a body corporate related to the financial services licensee; and

                     (e)  no member of the firm is a partner or employee of the financial services licensee; and

                      (f)  if the financial services licensee is a body corporate--no member of the firm is:

                              (i)  an officer of the body; or

                             (ii)  a partner, employer or employee of an officer of the body; or

                            (iii)  a partner or employee of an employee of an officer of the body; and

                     (g)  if the financial services licensee is a body corporate--no officer of the financial services licensee receives any remuneration from the firm for acting as a consultant to it on accounting or auditing matters.

             (3)  For paragraphs (1)(b), (1)(c), (2)(c) and (2)(d), a debt owed by a natural person to a body corporate is to be disregarded if:

                     (a)  the body corporate is:

                              (i)  an Australian ADI; or

                             (ii)  a body corporate registered under the Life Insurance Act 1995 ; and

                     (b)  the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and

                     (c)  the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence.

             (4)  For subregulations (1) and (2), a person is taken to be an officer of a body corporate if:

                     (a)  the person is an officer of a related body corporate; or

                     (b)  unless ASIC directs that this paragraph not apply in relation to the person--the person has, at any time within the immediately preceding period of 12 months, been an officer or promoter of the body corporate or of a related body corporate.

             (5)  For this regulation, a person is not taken to be an officer of a body corporate by reason only of being or having been the liquidator of the body corporate or of a related body corporate.

             (6)  For this regulation, a person is not taken to be an officer of a body corporate:

                     (a)  by reason only of having been appointed as an auditor of that body corporate or of a related body corporate; or

                     (b)  for any purpose relating to taxation, a public officer of a body corporate; or

                     (c)  by reason only of being or having been authorised to accept on behalf of the body corporate or a related body corporate:

                              (i)  service of process; or

                             (ii)  any notices required to be served on the body corporate or related body corporate.



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