Document ID: chunk:federal_register_of_legislation:C2025C00185:section:1020b
Version: federal_register_of_legislation:C2025C00185
Segment Type: section
Provision Reference: s 1020B
Character Range: 4477620–4480143

1020B  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.