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Financial services regulation

in Australia What you need to know

Financial services regulation in Australia February 2016 1

If so, you may need to be licensed in Australia. Read on to find out more.

Do you do business in Australia or have Australian customers?

A company incorporated outside of Australia which is "carrying on a business" in Australia must be registered with Australia's corporate regulatory body, the Australian Securities and Investments Commission ("ASIC").

The meaning of "carrying on a business" is broad and the level of your interaction and engagement with Australian investors may mean that your activities are regarded as carrying on a business in Australia. As a starting point, you will be carrying on a business in Australia if you have a place of business, establish or use a share transfer or registration office, or deal with property, in Australia.

Registration with ASIC involves filing relevant forms with ASIC and paying a fee. Foreign companies registered in Australia are subject to some local requirements.

Need to register? Our Australian team is here to help.

Do you provide financial services?

A person who carries on a financial services business in Australia is generally required to hold an Australian financial services licence ("AFSL"). Broadly speaking, a financial service includes:

• dealing in a financial product;

• providing financial product advice;

• making a market for a financial product; or

• providing a custodial or depository service.

It doesn’t matter if you are located outside of Australia— the regulatory regime will apply to you if your activities have a sufficient connection to Australia. This can include marketing in Australia.

Even if financial services only make up part of your business, you may need to be licensed for those particular activities.

What you need to know

Key points

• Do you do business in Australia or have Australian customers?

• Do you issue shares, notes or other financial products?

• Do you provide investment advice?

• Do you give quotes for financial products?

• Do you hold financial products on trust for others?

2 Financial services regulation in Australia February 2016

Do you issue shares, notes or other financial products?

If you, for example:

• issue securities, shares, debentures, bonds,

managed investment scheme interests or insurance

products in Australia or to people in Australia;

• underwrite securities or managed investment

scheme interests in Australia; or

• enter into derivatives transactions in Australia or with

people in Australia,

you may need to hold an AFSL.

Do you provide investment advice?

If you provide general or personal advice about financial products when you are in Australia or to Australian customers, you may also need to hold an AFSL.

Do you give quotes for financial products?

If you regularly quote prices at which people can buy or sell financial products when you are in Australia or to Australian customers, you may need to hold an AFSL.

Do you hold financial products on trust for others?

You may need to be licensed to hold a financial product, or a beneficial interest in a financial product, on trust in Australia or for an Australian customer.

What are your obligations if you hold an AFSL?

Your key obligations are to ensure that the financial services are provided efficiently, honestly and fairly, comply with your licence conditions, maintain resources and competence to provide the financial services and have adequate dispute resolution and risk management systems.

Higher standards apply to financial services provided to retail clients, including disclosure of particular information.

You could be exempted.

Numerous exemptions from holding an AFSL are available to foreign financial services providers and/or for financial services that are provided to wholesale clients. However, other Australian rules and legislation may apply to your activities.

Want to know more?

Drop us an email or give us a call.

Nicky Lester Partner, Australia T +61 2 9093 3502 +61 8 6208 6552 nicky.lester@hoganlovells.com

Kirsten Young Associate, Australia T +61 8 6208 6553 kirsten.young@hoganlovells.com

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