Financial Markets Conduct Regulations
Second Exposure Draft
List of Provisions & Questions for Feedback
Part 1 - Preliminary provisions
3 Interpretation
4 Status of examples
Part 4 – Governance of financial products
Subpart 1 – Governance of debt secuirities
5 References to trust deeds and debt securities
Requirements for governing document for debt security
6 Trust deed for debt security must provide for certain matters
7 Terms implied into trust deed for debt security
Reports by NBDTs
8 Duty of NBDT to provide reports to supervisor
Meetings of product holders
9 Proceedings at meetings of holders of debt security
10 Resolution in lieu of meeting
Subpart 2 – Governance of managed investment products
Registration
11 Application for registration
12 Superannuation scheme rules
13 Additional initial and ongoing registration requirement for workplace savings schemes
Requirements for governing document for registered scheme
14 Governing document for registered scheme must provide for certain additional matters
15 Terms implied into governing document for registered scheme
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Custodianship of scheme property
16 Custodian’s records of scheme property
17 Procedures for reconciling records
18 Custodian must obtain audit and assurance engagement
19 Regulations of assurance engagement
Meetings of product holderss
20 Proceedings at meetings of scheme participants
21 Resolutions in lieu of meeting
22 Manager and associated persons may vote if interested in resolution to remove and replace
manager in certain circumstances
23 Annual meeting of closed-ended schemes
When statement of investment policy and objectives or change does not need to be lodged
24 Statement of investment policy and objectives or change does not need to be lodged in certain
circumstances
Limit breaks
25 Manager must provide report to supervisor (or FMA) in event of limit break
26 Manager must provide quarterly reports to supervisor (or FMA) about limit breaks
27 Contents of reports about limit breaks
Pricing error or failure to comply with pricing methodologies
28 Manager must report to supervisor (of FMA) about pricing error or failure to comply with pricing
methodologies
29 Contents of reports about pricing error or failure to comply with pricing methodologies
30 Other action that must be taken on pricing errors and failure to comply with pricing
methodologies
Related party transactions
31 Manager must provide report to supervisor (or FMA) on related party transaction certificates
32 Investments in Australian registered managed investment scheme is permitted related party
benefit transaction
33 Investment in Government securities is permitted related party benefit transaction
34 Transaction to acquire first property is permitted related party benefit transaction
35 Listed manager transaction is permitted related party transaction
36 Requirements for certificates as to related party benefits
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37 Circumstance in which restriction on acquisitions by restricted schemes of in-house assets do not
apply
Subpart 3 – Registers and keeping copies of documents
Registers of regulated products
38 Circumstances in which duty for issuer to keep register does not apply
39 Audit or review of registers
40 Audit or review of particular register
41 Collective audit or review of registers kept by registrar entity
42 Public inspection of register not required in certain circumstances
43 Inspection and copies of documents
Subpart 4 – Schedule 3 schemes
44 Reporting obligations for Schedule 3 schemes
45 Terms implied into trust deed of Schedule 3 scheme
Part 5 – Dealing in financial products on markets
Subpart 1 – Market manipulation
46 Interpretation
47 Exemption
48 Prohibited purpose
49 Size of IPO
50 Period of market stabilisation
51 Disclosure by offeror
52 Stabilisation agreement
53 Appointment of stabilisation manager
54 Stablisation manager must notify licensed market operator and FMA that market stabilisation to
begin
55 Duties and responsibilities of stabilisation manager
56 Stabilisation bids
57 Price of stabilisation bids: before any trades
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58 Price of stabilisation bids: after trades
59 Stabilisation manager must keep daily record of trading
60 Stabilisation manager’s report to licensed market operator
61 Over-allocation
Subpart 2 – Disclosure of interests of substantial product holders is listed
issuers
62 Interpretation
63 Person treated as holding financial products where person has relevant interest in certain
derivatives
Form and delivery method of event disclosures
64 How to make event disclosures to licensed market operator
65 How to make event disclosures to listed issuer
When event disclosures may be combined
66 How to disclose more than 1 type of event disclosure
67 How to disclose more than 1 substantial holding
68 How to disclose for more than 1 connected holder with similar or related substantial holding
What disclosure required for event disclosures
69 What information must be disclosed in event disclosures
70 When relevant agreement documents must be attached to event disclosures
71 Previously attached relevant agreement documents need not be attached again
72 Relevant agreement documents need not be attached for ownership relevant interests
73 Relevant agreement documents need not be attached if investment management contracts
Acknowledgement of event disclosure
74 How listed issuer must give acknowledgement of event disclosure
Exemption from event disclosure obligations
75 Exemption for substantial holdings in overseas issuer with only secondary listing on domestic
licensed markets
76 Exemption for substantial holdings held for hedging by derivatives issuer acting in client-serving
capacity
77 Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying
is disclosed
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Setting of licensed market operator’s form and delivery method for event disclosures
78 Setting of licensed market operator’s form and delivery method for event disclosures
Forms for tracing and disclosure of interests in listed issuers
79 Forms for tracing and disclosure of interests in listed issuers
Subpart 3 – Disclosure of relevant interests is quoted products or specified
derivatives by directors and senior managers of listed issuers
80 Interpretation
Form and delivery method for disclosures
81 Directors and senior managers must complete disclosure
82 What information must be disclosed
83 Aggregation of multiple transactions in disclosure notice
84 Method by which disclosure notice must be given
Exemptions from disclosure obligations
85 Exemption relating to overseas-regulated markets
86 Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying
is disclosed
Setting of licensed market operator’s form for disclosure
87 Setting of licensed market operator’s form for disclosure
Subpart 4 – Transfer of transferable products
88 Products transfer
89 Brokers transfer
Subpart 5 – Unsolicited offers
90 Interpretation
91 Application of subpart
92 Miscellaneous provisions relating to application
93 Obligations do not apply to offers to certain persons
Offeror obligations
94 Offeror must notify intention to make unsolicited offer
95 Contents of written notice to issuer
96 Unsolicited offer must be made in disclosure document
97 Restricted unsolicited offer communications
98 Disclosure document must be prominently identified if accompanied by other documents
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99 Contents of disclosure document
100 Presentation of information and statements
101 Offer period
102 Withdrawal of offer
103 Terms of offer cannot be varied
Cancellation
104 Right to cancel
105 Right to cancel does not apply if FMA has exempted offeror
106 Notice of cancellation
107 Offeror’s cancellation duties where offer to acquire financial products
108 Offeror’s cancellation duties where offer to acquire disposal power or other interests or rights
Miscellaneous provisions
109 Prohibition on inviting offers to sell
110 Unsolicited offer provisions
111 Protection from liability in connection with unsolicited offer obligations
Part 6 – Licensing and other regulation of market services
Additional regulation of DIMS
112 DIMS licensee must provide report to FMA in event of limit break
113 DIMS licensee must provider quarterly reports to FMA about limit breaks
114 Contents of reports about limit breaks
115 Investments in Australian registered managed investment scheme is permitted related party
benefit transaction
116 Investment in Government securities is permitted related party benefit transaction
117 Requirements for certificates as to related party benefits
Additional questions on transition to DIMS
Q1 What types of discretionary investment management services (if any) do you provide?
Q2 What changes have you identified that you will need to make to comply with the FMC Act to
provide discretionary investment management services, and what is the timing and sequence of
those changes?
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Q3 What are the key variables that will affect the timing or pathway to compliance? E.g. which
changes if any could not be implemented until the outcome of the licensing decision is known.
Schedule 1 – Clauses treated as implied into trust deed
Clauses treated as implied into all trust deeds
1 Duty concerning appointment, etc, of auditors
2 Terms of appointment of auditor
3 Duty to audit or review half-yearly financial statements
Clauses treated as implied into trust deeds for NBDTs
4 Duty to provide financial statements to supervisor
5 Additional term of appointment of auditor
Schedule 2 – Default provisions for proceedings at meetings of
product holders
1 Chairperson
2 Notice of meetings
3 Notice of meeting to approve related party benefit
4 Methods of holding meetings
5 Quorum
6 Product holder participation by electronic means
7 Voting
8 Who may demand poll and how poll is taken
9 Proxies
10 Votes sent by post, email, or other electronic means
11 Minutes
12 Product holder proposals
13 Corporations may act by representatives
14 Votes of joint holders
15 Loss of voting rights if calls unpaid
16 Other proceedings
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Schedule 3 – Superannuation scheme rules
1 Interpretation
2 Lock-in of funds to end payment date
3 Permitted withdrawal on permanent early retirement
4 Transition to retirement withdrawals
5 Manager or supervisor may reasonably require evidence to establish right to make permitted
withdrawal
6 Release of funds required under other enactments
7 Withdrawal on death
8 Withdrawal in case of significant financial hardship
9 Meaning of significant financial hardship
10 Withdrawal in cases of serious illness
11 Application for withdrawal for significant financial hardship or serious illness
12 Transfer of scheme participants
Schedule 4 – Clauses treated as implied into governing documents for
registered schemes
Clauses treated as implied into all governing documents
1 Duty concerning appointment, etc, of auditors
2 Terms of appointment of auditor
Clause implied into governing documents for restricted schemes
3 Independent trustee protected in relation to reports or disclosure to FMA
Schedule 5 – Default forms for event disclosure
Default form 1: Disclosure of beginning to have substantial holding
Default form 2: Disclosure of movement of 1% or more in substantial holding or change in nature of
relevant interest or both
Default form 3: Disclosure of ceasing to have substantial holding
Schedule 6 – Exemption for substantial holdings in issuers with listing
on financial product markets in overseas jurisdictions
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Schedule 7 – Forms for listed issuer requiring disclosure
Form 1: Notice to registered holder or relevant interest holder requiring disclosure of relevant
interests
Form 2: Notice to person who has relevant interests requiring disclosure of information
Schedule 8 – Default forms for disclosure of relevant interests in
quoted financial products or specified derivatives by directors and
senior managers of listed issuers
Default form 1: Disclosure of relevant interest on appointment of director or senior manager or
listing of issuer
Default form 2: Disclosure of acquisition or disposal of relevant interest by director or senior
manager
Schedule 9 – Financial product transfer forms
Form 1: Product transfer
Form 2: Brokers transfer
Schedule 10 – Form of information and statements at front of
unsolicited offer disclosure document
Form: information and statements at front of disclosure document
Schedule 11 – Statement in unsolicited offer disclosure document if
payment to be made more than 90 days after date of offer
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