Australian securities law relates to

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

issued by

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...

s as well as other securities, including

debenture In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowl ...

stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

s and bonds issued by

government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...

s, and interests in

managed investment scheme An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

s. Australian securities regulation rests on the principle that "financial markets cannot function effectively unless participants act with integrity and there is adequate disclosure to facilitate informed judgements". As a result, many of the regulatory rules governing dealings in securities are part of a broader framework that governs

financial product Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, ...

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

and

financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets ...

. Mandatory disclosure and conduct regulation underlie much of Australia's securities regulation. False trading, fraudulent dealing, and

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...

are dealt with to prevent improper practices in connection with securities markets. A licensing system operates to ensure securities markets are fair, orderly and transparent. At the same time, securities law is also facilitative, allocating rights and duties in conjunction with general

contract law A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

. It also allows for a degree of self-regulation, by the operation for example of an independent

securities exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for the ...

. Australian securities law has been substantially modernised in recent years. The core of these laws are found in the ''

Corporations Act The ''Corporations Act 2001'' (Cth) is an Act of the Parliament of Australia, which sets out the laws dealing with business entities in the Commonwealth of Australia. The company is the Act's primary focus, but other entities, such as partners ...

'' 2001 (Cth), which contains provisions governing

takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to t ...

fundraising Fundraising or fund-raising is the process of seeking and gathering voluntary financial contributions by engaging individuals, businesses, charitable foundations, or governmental agencies. Although fundraising typically refers to efforts to gathe ...

, and financial products, services and markets.

Legal and regulatory framework

The main body of

substantive law Substantive law is the set of laws that governs how members of a society are to behave.Substantive Law vs. Procedural Law: Definitions and Differences, Study.com/ref> It is contrasted with procedural law, which is the set of procedures for making, ...

about securities is found in the ''

'' 2001 (Cth), as well as the regulations made under that Act. Whilst much of the law is derived from earlier regulation (especially the

bust Bust commonly refers to: * A woman's breasts * Bust (sculpture), of head and shoulders * An arrest Bust may also refer to: Places * Bust, Bas-Rhin, a city in France *Lashkargah, Afghanistan, known as Bust historically Media * ''Bust'' (magazin ...

in Australian mineral stocks of the late 1960s), the sections relating to securities regulation have been subject to recent amendment. The takeovers provisions were substantially re-written by the ''Corporation Law Economic Reform Program Act'' 1999. Changes to financial products, financial markets, and financial services were introduced by the ''Financial Services Reform Act'' 2001 (Cth), as a result of the ''Final Report of the Financial System Inquiry'', commonly referred to as "the Wallis report." Elements of securities law are also found in the general law governing

contracts A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

trusts A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settl ...

, and

torts A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...

. Securities regulation under the ''Corporations Act'' operates against the background of other Commonwealth legislation on

criminal law Criminal law is the body of law that relates to crime. It prescribes conduct perceived as threatening, harmful, or otherwise endangering to the property, health, safety, and moral welfare of people inclusive of one's self. Most criminal law i ...

administrative law Administrative law is the division of law that governs the activities of government agency, executive branch agencies of Forms of government, government. Administrative law concerns executive branch rule making (executive branch rules are gener ...

, and

statutory interpretation Statutory interpretation is the process by which courts interpret and apply legislation. Some amount of interpretation is often necessary when a case involves a statute. Sometimes the words of a statute have a plain and a straightforward meani ...

. Administration of the legislation is the responsibility of the Commonwealth Treasurer and the

Australian Securities and Investments Commission The Australian Securities and Investments Commission (ASIC) is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to pro ...

(ASIC), according to the ''

Australian Securities and Investments Commission Act Australian(s) may refer to: Australia * Australia, a country * Australians, citizens of the Commonwealth of Australia ** European Australians ** Anglo-Celtic Australians, Australians descended principally from British colonists ** Aboriginal Au ...

'' 2001 (Cth) and the ''Corporations Act'' 2001 (Cth). The market operator

Australian Stock Exchange Australian Securities Exchange Ltd or ASX, is an Australian public company that operates Australia's primary securities exchange, the Australian Securities Exchange (sometimes referred to outside of Australia as, or confused within Australia as, ...

also has an important regulatory role to play. The resolution of disputes is confided to the Federal Court and the Supreme Courts of the States and the Northern Territory, with other courts having some powers to apply the securities legislation.

Definitions

A security is "a thing in action", a claim enforceable by legal proceedings rather than owning some tangible property. To effect regulation the legislation adopts various definitions of "security" and "financial product" that are used. There is also no law which stipulates that no person in which authority is not given (anyone other the law enforcement or owners of an establishment) may restrict persons entering and leaving a premises.

Licensing

Only the holder of a market licence may operate a financial market.

Financial intermediaries

A person who carries on a financial services business in the jurisdiction must hold an Australian financial services licence.

Market misconduct

Prevention of fraud and other forms of market misconduct has its foundation in the

efficient-market hypothesis The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted bas ...

. General common law prohibitions against interfering with the free public market are strengthened by statutory prohibitions against various forms of market misconduct. One set of statutory prohibitions is upon trading activity which manipulates market prices. There are further prohibitions upon conduct that involves false trading or market rigging.
''Corporations Act'' 2001, s 1041B.

References

{{reflist, 2 Australian business law Financial regulation