Document ID: chunk:federal_register_of_legislation:F2023C00928:reg:8:p4
Version: federal_register_of_legislation:F2023C00928
Segment Type: reg
Provision Reference: reg 8 (pt 4/34)
Character Range: 21438–24271

paragraph (e) of the definition of managed investment scheme in section 9 of the Act; or
(c)  a non-limited recourse product.
(3)  Paragraph (2)(c) does not apply if the person is an adult and:
           (a) both:
(i) the person has previously given written consent separate to any agreement under which the MDA services are provided to the person to invest client contributions in the non-limited recourse product; and
(ii) when consent was given, the person was given a statement in writing about the non-limited recourse product that included the information required by subsection (4) and the person acknowledged the statement in the consent; or
           (b) consent and a written statement that comply with paragraph (a) for the same type of non-limited recourse product has previously been given by the person and has not fallen due for a review as required under subsection (6).
       (4) The following information is required for the purposes of subparagraph (3)(a)(ii):
(a) information about the key features of the product (including any significant risks associated with investing in the product) that may be material to the decision of a person as a retail client whether to acquire the product;
(b) information about the degree of leverage that may apply in relation to the product, including:
              (i) if the maximum potential liability of a person holding the product is unlimited—a statement to that effect; and
              (ii) otherwise—the maximum value of the ratio between the maximum potential liability of a person holding the product and the amount payable by the person to acquire the product;
(c) a clear and prominent example illustrating in dollars the risk of the potential liability of a person holding the product;
(d) information about the policy of the licensee for communicating and satisfying margin calls or requirements to provide collateral or make payments in relation to the product;
           (e) information about the policy of the licensee for closing positions at a loss in relation to the product.
(5) For the purposes of subsection (3), a person is taken to give written consent if the person would be taken to give written consent under section 9 of the Electronic Transactions Act 1999 if it applied to that subsection.
(6) If the licensee invests the client portfolio assets in non-limited recourse products or keeps non-limited recourse products as client portfolio assets in accordance with subsection (3), it or an external MDA adviser must give the person personal advice about whether the non-limited recourse product is suitable in light of the person's relevant personal circumstances at least once every 13 months.
       (7) A licensee who relies on the exemption in section 13 must not consent to a variation of a provision referred to in paragraph 13(2)(b).