Hedging arrangements (Act s 206J(3))
2D.7.01 Hedging arrangements (Act s 206J(3))
For subsection 206J(3) of the Act, an arrangement in the following table is to be treated as an arrangement that has the effect of limiting the exposure of a member mentioned in subsection 206J(1) of the Act to the risk mentioned in that subsection.
Item | Arrangement |
1 | A put option on incentive remuneration |
2 | A short position on shares that forms part of incentive remuneration |
3 | An income protection insurance contract in which the insurable risk event affects the financial value of remuneration or equity or an equity‑related instrument for the key management personnel |
For subsection 206J(3) of the Act, an arrangement in the following table is not to be treated as an arrangement that has the effect of limiting the exposure of a member mentioned in subsection 206J(1) of the Act to the risk mentioned in that subsection.
Item | Arrangement |
1 | An income protection insurance contract in which the insurable risk event is the death, incapacity or illness of any of the key management personnel |
2 | A foreign currency risk arrangement |
In this regulation, a short position is a position in relation to shares in a listed entity where the quantity of the shares that a person has is less than the quantity of the shares that the person has an obligation to deliver.
In subregulation (3), the person has the shares if:
the person is holding the shares on the person’s own behalf; or
another person is holding the shares on the person’s behalf; or
the person has entered into an agreement to buy the shares but has not received the shares; or
the person has vested title in the shares in a borrower, or in an entity nominated by the borrower, under a securities lending arrangement.
In subregulation (3), the shares that the person has an obligation to deliver are the shares that the person:
has an obligation to deliver under a sale agreement where the shares have not been delivered; or
has an obligation to vest title in a lender under a securities lending arrangement; or
has any other non‑contingent legal obligation to deliver.
This Act’s bill:Explanatory statement
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