Other publications: Report on Aspects of the Affairs of Max Resources Limited

Appendix A
SECURITIES AMENDMENT ACT 1998 - RELEVANT PROVISIONS

SECTION 2(1) - DEFINITION OF "SUBSTANTIAL SECURITY HOLDER"

"Substantial security holder" in relation to a public issuer or other body, means a person who has a relevant interest in 5 percent or more of the voting securities of that public issuer or body:

SECTION 5 - MEANING OF "RELEVANT INTEREST"

For the purposes of this Act a person has a relevant interest in a voting security (whether or not that person is the registered holder of it) if that person--
1. Is a beneficial owner of the voting security; or
2. Has the power to exercise any right to vote attached to the voting security; or
3. Has the power to control the exercise of any right to vote attached to the voting security; or
4. Has the power to acquire or dispose of the voting security; or
5. Has the power to control the acquisition or disposition of the voting security by another person; or
6. Under, or by virtue of, any trust, agreement, arrangement, or understanding relating to the voting security (whether or not that person is a party to it)--
  1. May at any time have the power to exercise any right to vote attached to the voting security; or
  2. May at any time have the power to control the exercise of any right to vote attached to the voting security; or
  3. May at any time have the power to acquire or dispose of, the voting security; or
  4. May at any time have the power to control the acquisition or disposition of the voting security by another person.
Where a person has a relevant interest in a voting security by virtue of subsection (1) of this section and-
1. That person or its directors are accustomed or under an obligation, whether legally enforceable or not, to act in accordance with the directions, instructions, or wishes of any other person in relation to--
  1. The exercise of the right to vote attached to the voting security; or
  2. The control of the exercise of any right to vote attached to the voting security; or
  3. The acquisition or disposition of the voting security; or
  4. The exercise of the power to control the acquisition or disposition of the voting security by another person; or
2. Another person has the power to exercise the right to vote attached to 20 percent or more of the voting securities of that person; or
3. Another person has the power to control the exercise of the right to vote attached to 20 percent or more of the voting securities of that person; or
4. Another person has the power to acquire or dispose of 20 percent or more of the voting securities of that person; or
5. Another person has the power to control the acquisition or disposition of 20 percent or more of the voting securities of that person--
  that other person also has a relevant interest in the voting security.
A body corporate or other body has a relevant interest in a voting security in which another body corporate that is related to that body corporate or other body has a relevant interest.
A person who has, or may have, a power referred to in any of paragraphs (b) to (f) of subsection (1) of this section, has a relevant interest in a voting security regardless of whether the power--
1. Is expressed or implied:
2. Is direct or indirect:
3. Is legally enforceable or not:
4. Is related to a particular voting security or not:
5. Is subject to restraint or restriction or is capable of being made subject to restraint or restriction:
6. Is exercisable presently or in the future:
7. Is exercisable only on the fulfilment of a condition:
8. Is exercisable alone or jointly with another person or persons.
A power referred to in subsection (1) of this section exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.
A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them, whether or not it is legally enforceable.
For the purposes of this Act, a body corporate is related to another body corporate if--
1. The other body corporate is its holding company or subsidiary within the meaning of--
  1. Sections 158 and 158A of the Companies Act 1955, in relation to any company registered under that Act; or
  2. Sections 5 and 6 of the Companies Act 1993, in relation to any other body corporate; or
2. More than half--
  1. In nominal value of its equity share capital (as defined in section 158 (5) of the Companies Act 1955) in relation to any company registered under that Act; or
  2. Of its issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital) in relation to any other body corporate,--
    is held by the other body corporate and bodies corporate related to that other body corporate (whether directly or indirectly, but other than in a fiduciary capacity); or
3. More than half--
  1. In nominal value of the equity share capital (as defined in section 158 (5) of the Companies Act 1955), in relation to any company registered under that Act; or
  2. Of the issued shares (other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital), in relation to any other body corporate,--
    of each of them is held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or
4. The businesses of the bodies corporate have been so carried on that the separate business of each body corporate, or a substantial part thereof, is not readily identifiable; or
5. There is another body corporate to which both bodies corporate are related.

Part II-Disclosure of interests of substantial security holders in public issuers

SECTION 20 - SUBSTANTIAL SECURITY HOLDERS TO NOTIFY RELEVANT INTERESTS IN PUBLIC ISSUERS-

Every person who, on the commencement of this section, is a substantial security holder in a public issuer, shall give notice that the person is a substantial security holder in the public issuer to--
1. The public issuer; and
2. Any stock exchange on which the securities of the public issuer are listed.
Every notice under subsection (1) of this section shall--
1. Be in the prescribed form; and
2. Contain the prescribed information; and
3. Be accompanied by, or have annexed, such documents, certificates, and statements as may be prescribed; and
4. Be given in the prescribed manner; and
5. Be given within 14 days after the commencement of this section.
Every person who, after the commencement of this section, becomes a substantial security holder in a public issuer shall give notice that the person is a substantial security holder in the public issuer to--
1. The public issuer; and
2. Any stock exchange on which the securities of the public issuer are listed.
Every notice under subsection (3) of this section shall--
1. Be in the prescribed form; and
2. Contain the prescribed information; and
3. Be accompanied by, or have annexed, such documents, certificates, and statements as may be prescribed; and
4. Be given in the prescribed manner; and
5. Be given as soon as the person knows, or ought to know, that the person is a substantial security holder in the public issuer.

SECTION 21 - SUBSTANTIAL SECURITY HOLDERS TO NOTIFY CHANGES IN RELEVANT INTERESTS IN PUBLIC ISSUERS--

Where--
1. There is a change in the total number of voting securities of a public issuer in which a substantial security holder has a relevant interest; and
2. The difference between the number of such securities immediately after the change and the number of securities required to be stated in the last notice given by the substantial security holder to the public issuer under this Part of this Act is equal to 1 percent or more of the total number of issued voting securities of the public issuer-
  the substantial security holder shall give notice of the change to-
3. The public issuer; and
4. Any stock exchange on which the securities of the public issuer are listed.
Every notice under subsection (1) of this section shall--
1. Be in the prescribed form; and
2. Contain the prescribed information; and
3. Be accompanied by, or have annexed, such documents, certificates, and statements as may be prescribed; and
4. Be given in the prescribed manner; and
5. Be given as soon as the person knows, or ought to know, of the change.
Where a person ceases to be a substantial security holder in a public issuer that person shall give notice that that person has ceased to be a substantial security holder in the public issuer to--
1. The public issuer; and
2. Any stock exchange on which the securities of the public issuer are listed.
Every notice under subsection (3) of this section shall--
1. Be in the prescribed form; and
2. Contain the prescribed information; and
3. Be accompanied by, or have annexed, such documents, certificates, and statements as may be prescribed; and
4. Be given in the prescribed manner; and
5. Be given as soon as the person knows, or ought to know, that the person has ceased to be a substantial security holder in the public issuer.

SECTION 22 - SUBSTANTIAL SECURITY HOLDERS TO NOTIFY CHANGES IN NATURE OF RELEVANT INTERESTS--

Where there is any change in the nature of any relevant interest held by a substantial security holder in the voting securities of a public issuer the substantial security holder shall give notice of the change to--
1. The public issuer; and
2. Any stock exchange on which the securities of the public issuer are listed.
Every notice under subsection (1) of this section shall--
1. Be in the prescribed form; and
2. Contain the prescribed information; and
3. Be accompanied by, or have annexed, such documents, certificates, and statements as may be prescribed; and
4. Be given in the prescribed manner; and
5. Be given as soon as the substantial security holder knows, or ought to know, of the change.

SECTION 24 - MEANS OF ASCERTAINING TOTAL VOTING SECURITIES OF PUBLIC ISSUER--

For the purposes of this Part of this Act, the most recent statement contained in a document published by a public issuer and distributed to the holders of its voting securities of the total number of voting securities issued by that public issuer may be taken by a person to be the total number of voting securities issued by it unless that person knows that number is not correct and knows the correct number.

SECTION 30 - JURISDICTION OF COURT TO MAKE CERTAIN ORDERS--

Where--

There are reasonable grounds to suspect that a substantial security holder has not complied with sections 20, 21, or 22 of this Act in relation to a public issuer; or
A person has not complied with section 28 or section 29 of this Act in relation to a public issuer; or
There are reasonable grounds to suspect that, in a case where a notice has been given under section 28 of this Act, the identity of every person who has a relevant interest in the voting securities of a public issuer and the nature of that interest have not been disclosed--

the Court may, on the application of a person referred to in section 31 of this Act, make 1 or more of the orders referred to in section 32 of this Act.

SECTION 31 - PERSONS WHO MAY APPLY-

The persons who may apply for an order are--

The Commission:
The public issuer:
A holder of securities in the public issuer:
A person who sold or purchased securities in the public issuer at a time when a substantial security holder had not complied with section 20 or section 21 or section 22 of this Act:
A person who has made--
1. A take-over offer in accordance with section 4 of the Companies Amendment Act 1963 for securities of the public issuer; or
2. An offer for securities of the public issuer pursuant to any takeovers code that is in force under section 28 of the Takeovers Act 1993,--
at a time when a substantial security holder had not complied with sections 20 to 22 of this Act (whether or not the offer has been accepted):
With the leave of the Court, any other person.

SECTION 32 - ORDERS--

The Court may make any of the following orders on an application under section 30 of this Act,--
1. An order directing a substantial security holder to comply with section 20 or section 21 or section 22 of this Act:
2. An order directing any person to comply with a notice under section 28 or section 29 of this Act:
3. An order directing any person named in the order to identify the persons who have relevant interests in any voting securities of the public issuer and the nature of those interests:
4. An order prohibiting the exercise of such period as the Court thinks fit of any right to vote attaching to any voting securities of the public issuer:
5. An order directing the public issuer not to make payment, or to defer making payment for such period as the Court thinks fit, of any sum or sums due from the public issuer in respect of any voting securities:
6. An order directing the public issuer not to register the transfer or transmission of all or any voting securities:
7. An order prohibiting the public issuer from issuing any securities in addition to, or in substitution for, or in replacement of, any voting securities:
8. An order restraining a substantial security holder from disposing of all or any voting securities of the public issuer or any relevant interest in them:
9. An order restraining a person who is, or who is entitled to be, registered as the holder of any voting securities of the public issuer from disposing of all or any voting securities or any relevant interest in them:
10. An order directing the disposal of any voting securities of the public issuer or any relevant interest in them:
11. An order directing the forfeiture of any voting securities of the public issuer:
12. An order declaring that the exercise of voting or other rights attaching to any voting securities of the public issuer is void and of no effect:
13. For the purposes of securing compliance with any other order made under this subsection, an order directing the public issuer, or any other person, to do or refrain from doing a specified act.
An order under subsection (1) of this section may be made on such terms and conditions as the Court thinks fit.
Without limiting subsection (2) of this section, an order made under subsection (1) (j) of this section may require--
1. That the voting securities are, or any interest in them is, disposed of within a time specified by the Court:
2. That neither the voting securities are, nor any interest in them is, disposed of to any specified person or class of persons:
3. That the voting securities are, or any interest in them is, disposed of in a manner and on terms specified by the Court:
4. That the proceeds of any disposition are--
  1. Applied towards the costs of the application; or
  2. Paid in such amounts and to such persons as the Court specifies.
Before making an order under subsection (1) of this section the Court may direct that-
1. Notice of the application for the order is given to such persons as it thinks fit; and
2. Notice of the application is published in such manner as it thinks fit.
The following persons are entitled to appear and be heard at the hearing of an application--
1. The applicant:
2. The substantial security holder:
3. The registered holder of the voting securities:
4. The public issuer:
5. A person directed to be given notice of the application:
6. With the leave of the Court, any other person.
An order under subsection (1) of this section may be revoked, varied or suspended and on such terms and conditions, as the Court thinks fit.

SECTION 35 - KNOWLEDGE OF RELEVANT INTEREST PRESUMED--

In any proceedings under this Part of this Act, it shall be presumed in the absence of proof to the contrary, that a person knew, at a material time, of the existence of a relevant interest in voting securities in a public issuer or of a fact or matter concerning the existence of a relevant interest in the securities if, at that time, an employee or agent of that person knew in his or her capacity as employee or agent of the existence of the relevant interest or of a fact or matter concerning the existence of it.

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Report of the Securities Commission on Aspects of the Affairs of Max Resources Limited

Appendix A SECURITIES AMENDMENT ACT 1998 - RELEVANT PROVISIONS