Bankruptcy & Liquidation

Background

These notes are to be read in conjunction with the CHESS Procedure Guidelines - Participants. Similar to deceased estates there are other situations and circumstances where a holding passes by direction of the law to the control of another party and certain requirements should be met.

The most common occurrence of these include:

  • Company in Liquidation
  • Company in Receivership
  • Company Receiver Manager appointed
  • Company Administrator appointed
  • Bankruptcy of an individual or partnership

(All the above are defined in the SCH Business Rules under "Bankruptcy")

  • Protected Persons

Upon notification of any of the above, no action should be taken until the bona-fides of the legal representative are established, not only to protect the interests of the securityholder, but also to protect the company and their registry administrators, be it the company registry or participants.

In order to prevent unauthorised dealings in the securities, it may be prudent to apply a holding lock where such notification is received, in the case of bankruptcy, from The Insolvency and Trustee Service Australia "ITSA", or in another case from a recognisable and known trustee or liquidator.

The requirements that should be met before any changes are made to the registers may vary depending on the circumstances however, the following documentation should be sighted before permitting dealings in the securities.

All forms of company bankruptcy

  • Court order or an NP11 Certificate issued by ITSA
  • Statement from the representative stating that they are the persons named in the ITSA certificate

Individual and Partnership Bankruptcy

  • An NP11 certificate issued by ITSA
  • A statement from the trustee, if other than ITSA, stating that they are the persons named in the NP11 certificate

Protected Persons

  • Court or other order
  • Copy of the government Gazette notice
  • Statement from the trustee stating that they are the person named in the Gazette notice

When all requirements have been met no further dealings in the securities may be made by the original securityholder, or in the case of a company, by the director/s.

Apart from amending the address to C/- trustee, liquidators etc all movement of the securities must be made by way of transfer executed by the now legal representative except in the case of bankruptcy where the securities may be transmitted to the trustee.

Securities on the CHESS Subregister

Similar to deceased estates, the original sponsorship agreement continues for a period of 3 months following the removal of a holder record lock (receipt of requirements enabling the trustee, liquidator etc to deal with the securities) or until such time as the securities are either transferred, distributed or converted to the issuer sponsored subregister.

Where the notification is forwarded directly to the company in error, the notification should be on-forwarded to the controlling participant under cover of a letter or returned to the sender for forwarding to the controlling participant. Where the notification is on-forwarded to the controlling participant, a copy of the covering letter should be forwarded to the sender for information.

Refer: Form 14 "DOCUMENT FORWARDING"

The controlling participant (unless required to convert the securities to the issuer sponsored subregister) will, when satisfied they have received a bona fide notification, place a holding lock on the holding and change the address to care of the trustee, liquidator etc. until such time as further documents are received enabling dealings in the securities.

The trustee, liquidator, etc alternatively may request that the securities be converted to the Issuer Sponsored Subregister.

Upon receipt of a written request, the controlling participant should remove the holding from the CHESS subregister, cancel the sponsorship agreement, and forward the relevant notification to the issuer.

This notice should be in the standard format and include copies of all correspondence etc. received by the controlling participant.

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