Section 1020B — Corporations Act 2001: Prohibition of certain short sales of securities, managed investment products, foreign passport fund products and certain other financial products

(1) In this Act: 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.