A Guide to the Law of Securitisation in Australia - Clayton Utz

Some of the more relevant exemptions for securitisation include:• the dealer exemption – section 911A(2)(b) provides anexemption for a person (the product provider) who provides aservice which is the issue, variation or disposal of a financialproduct by the product provider pursuant to an arrangementwith a person who has an AFSL, where the holder of theAFSL has made an offer on behalf of the product provider andproduct provider issues, varies or disposes of the financialproducts if the offer is accepted.• the hedging exemption – regulation 7.6.01(1)(m) providesthat an AFSL is not required with respect to the provision of afinancial service where:“– the service consists only of ... dealing in derivatives;– the service does not involve making a market inderivatives;– the dealing is entered into for the purpose of managinga financial risk that arises in the ordinary course of abusiness;– the person does not deal in derivatives ... as a significantpart of the person’s business; and– the dealing is entered into on the person’s behalf.”• the own debentures/securities exemptions – section 766C(4)excepts dealings in one’s own securities from the definitionof “dealing”. This exception in turn however, will not apply tocertain investment vehicles (but as a general rule will applyto securitisation vehicle issuers where the issue iswholesale).A number of other exemptions can also be relevant toparticipants in the securitisation industry.2.3.7 Consequences of a failure to have an AFSLSection 925A of the Corporations Act provides that if a party isrequired to but does not hold an AFSL, any agreement which ithas entered into with any other party in the course of carrying ona financial services business is rescindable by the other party.In addition, a breach of section 911A of the Corporations Act isan offence pursuant to section 1311(1), the penalty of which mayinclude a fine of up to 200 penalty units ($22,000) orimprisonment of up to two years or both.2.4 ConclusionThe provisions of the Corporations Act dealing with the securitiesmarket have become increasingly convoluted over the years tothe extent that the rationale for many provisions, and inparticular of definitions of certain financial instruments such as“debentures” and “managed investment schemes”, seems tohave been lost. The new FSR provisions add a further layer ofcomplexity and added compliance costs for industry participants.They can be particularly burdensome for foreign entities thatundertake a number of discrete transactions in Australia withoutestablishing an office (but who may nevertheless require an AFSLor be required to establish to ASIC’s satisfaction that they areadequately regulated in their home jurisdiction).The next section of this publication examines the disclosure andcivil liability provisions under the Corporations Act, theAustralian Securities and Investment Commission Act and theTrade Practices Act for information memorandums used by thesecuritisation industry.15