Legal Licenses PDF

Licences 109. (1) A person shall not carry on business as a securities exchange, hedge fund, private equity fund, venture capital fund, nominee, credit rating agency, broker-dealer, primary dealer, investment adviser, fund manager, trustee, custodian, securities depository, clearing and settlement s...

Licences 109. (1) A person shall not carry on business as a securities exchange, hedge fund, private equity fund, venture capital fund, nominee, credit rating agency, broker-dealer, primary dealer, investment adviser, fund manager, trustee, custodian, securities depository, clearing and settlement services, registrar, underwriter, issuing house or as any other operator required to hold a licence as the Minister by notice in the Gazette may prescribe, or pose as carrying on the business unless that person holds a valid licence issued under the Act. (2) A person shall not act as a representative for a person referred to in subsection (1) unless that person is the holder of a relevant representative’s licence issued under this Act. (3) A person desirous of performing the functions of a market operator in the securities industry shall obtain a licence from the Commission and shall comply with the rules or guidelines issued by the Commission. A licence is an official document giving a person permission to own or to do something for a period of time. It is the limited period of the use of the licence that is why provision is made for renewal. The terms or conditions stated in the licence is made by the person giving the licence. The person giving the licence has the right to renew, suspend, revoke, cancel the licence given to the holder or even not to give the licence at all to the applicant. Exemption from obtaining licence of a representative 110. The Commission may exempt representatives of a person indicated in section 109 who do not deal directly with clients on behalf of the person from holding a licence of a representative. Application for licence or renewal 111. (1) An application for a licence or for the renewal of a licence shall be made to the Commission in the prescribed form and shall be accompanied by the prescribed fee and, in the case of an application for renewal of a licence, shall be made at least three months before the expiry of the licence. (2) The Commission may require an applicant to supply it with any further information that it considers necessary in relation to the application. (3) The Commission shall not refuse to grant or renew a licence without first giving the applicant or the holder of the licence an opportunity of being heard. (4) The fee paid for the processing of licensing of an application is not refundable. Grant or refusal of licence of a market operator 112. (1) Subject to subsection (3), where an applicant meets the requirements of section 111, the Commission shall grant that applicanta licence. (2) A licence to a market operator other than an investment adviser shall only be granted to a body corporate, including an incorporated private partnership. (3) A licence shall only be granted to a market operator if that market operator meets and continues to meet the minimum financial requirements determined by the Commission generally or specifically. (4) A licence granted by the Commission is subject to conditions specified in the licence. (5) Subject to section 111 (3) and the Regulations, where an application is made for the grant or renewal of a licence, the Commission shall refuse the application if in the case of an applicant who is an individual (a)the applicant has been adjudged bankrupt anywhere; (b) the applicant has been convicted, either within the Republic or elsewhere within the period of ten years immediately preceding the date on which the application is made, of an offence involving fraud or dishonesty punishable on conviction with imprisonment for a term of three months or more; (c)the Commission is not satisfied as to the educational qualifications or experience of the applicant having regard to the nature of the duties of a holder of the licence; (d)the Commission has reason to believe that the applicant is not of good reputation or character; or (e)the Commission has reason to believe that the applicant will not perform the function of a holder of the relevant licence efficiently, honestly and fairly. (6) Subject to section 111 (3) and the Regulations, where an application is made for the grant or renewal of a licence by a body corporate including an incorporated private partnership, the Commission shall refuse the application where (a) the body corporate or the partnership is in the course of being wound up under the Companies Act, 1963 (Act 179) or the Incorporated Private Partnership Act, 1962 (Act 152); (b) the body corporate is one in respect of which a receiver, or a receiver and manager, has been appointed under the Companies Act, 1963 (Act 179); (c) the body corporate or partnership has, whether within or outside the country, entered into a compromise or scheme of arrangement with its creditors, which is still in operation; (d) the Commission is not satisfied as to the educational qualifications or experience of the officers of, or partners of the applicant who are to perform functions in connection with the licence of the market operator; or (e) the Commission has reason to believe that the applicant will not perform the functions of a market operator efficiently, honestly and fairly. Grant or renewal of licence to representatives of market operators 113. Subject to section 111 (3) and the Regulations, the Commission shall grant or renew a licence granted to the representative of a market operator if after consideration of the application it considers that the applicant will perform the functions efficiently, honestly and fairly. Banks and other financial institutions doing business in the capital market 114.A bank or other financial institution which intends to do business in the capital market other than the business of trustee, custodian, primary dealer, nominee, registrar, issuing house and underwriter, shall incorporate a subsidiary company under the Companies Act, 1963 (Act 179) and apply for the relevant licence. Changes by the Commission to licensing requirements 115. The Commission may, in consultation with the Minister by notice published in the Gazette, alter the capital requirements as well as any other pre-licensing requirements. False statements 116. A person who, in connection with an application for a licence or for the renewal of a licence (a) wilfully and knowingly makes a statement which is false or misleading in a material particular; or (b) wilfully and knowingly omits to state a matter or thing without which the application is misleading in respect of a material particularcommits an offence and is liable on summary conviction to a fine of not less than one hundred and fifty penalty units and not more than two hundred and fifty penalty units or to a term of imprisonment of not less than one year and not more than two years or to both. Enquiries into securities transactions 117.(1) In deciding whether a market operator or a representative of a market operator is required to hold a licence under this Act, the Commission may enquire into the transactions involving the purchase or sale of securities entered into by that person, whether directly or indirectly, during a period of twelve months preceding the application for the licence or renewal of the licence to ascertain if that person has in a transaction or series of transactions used dishonest, unfair or unethical methods or trading practices, whether the method or trading practices constitute an offence under this Act or not. (2) For the purpose of subsection (1), the Commission may, in the form and within the time it may specify by notice in writing, require amarket operator or the representative of that market operator to submit detailed information of all or any transaction involving the purchase or sale of securities, whether the transactions were completed during the relevant period before or after the commencement of this Act. (3) A person who, without reasonable excuse, fails or refuses to submit information to the Commission within the time specified in the notice referred to in subsection (2) or who gives false or misleading information is liable in addition to any other penalty that may be imposed under this Act, in the case of an application for renewal of a licence to have the licence revoked under section 122 and in the case of first application for a licence to have the application refused. Imposition of conditions or restrictions 118. (1) The Commission may grant or renew a licence subject to the conditions or restrictions as it considers fit and the Commission may, at any time by written notice to a licence holder, vary a condition or restriction in relation to the licence. (2) Without limiting subsection (1), the Commission may in granting or renewing the licence of an investment adviser impose a condition or restriction as to the class of business that the investment adviser may carry on including a condition or restriction that the adviser (a) shall only carry on the class of business of advising others concerning securities; or (b) shall only carry on the class of business of issuing or promulgating analyses in reports concerning securities. (3) The Commission may by written notice to a licence holder suspend, cancel, restrict or impose terms and conditions on the right of the licence holder to (a) call at a residence; or (b) telephone a residence in the country for the purpose of dealing in any securities. (4) A person who contravenes or fails to comply with a condition of or restriction in the licence is liable to pay to the Commission an administrative penalty of five hundred penalty units. (5) In this section “residence” includes a building or part of a building where the occupant resides either permanently or temporarily. Period of licence 119.(1) Subject to subsection (2), a licence is valid for one year and is renewable on an annual basis. (2) The Commission may specify the schedule of licence renewals that will permit for licences to be renewed on a calendar year basis. Notification of change of particulars 120. Where (a) a market operator ceases to carry on the business to which a licence relates; (b) the holder of a representative’s licence ceases to be a representative of the market operator in relation to whom therepresentative’s licence was issued; or (c) a change occurs in any matter, particulars of which are required by section 121 to be entered in the register of licence holders in relation to the holder of a licence, the market operator or the holder of the licence shall, not later than fourteen days after the occurrence of the event give to the Commission, in the prescribed form, particulars in writing of the event. Register of licence holders 121. (1) The Commission shall keep in the appropriate form a register of the holders of current licences, specifying (a) in relation to each holder of a licence (i) the name of the holder; (ii) the names of the directors and principal officers of the holder, (iii) the address of the principal place of business at which the holder carries on the business; and (iv) where the business is carried on under a name or style other than the name of the holder of the licence, the name or style under which the business is carried on; and (b) in relation to each holder of therepresentative’s licence of a market operator (i) the name of the holder; (ii) the name of the market operator in relation to whom the licence was issued; and (iii) where the business of that market operator is carried on under a name or style other than the name of the market operator, the name or style under which that business is carried on. (2) A person may, on payment of the prescribed fee, inspect and take extracts from the register kept under subsection (1). Revocation or suspension of licences 122. (1) A licence is revoked in the case of (a) an individual, if the individual dies; or (b) a body corporate or incorporated private partnership, if it is wound up. (2) The Commission may revoke a licence (a) in the case of a licensed person who is an individual (i) if a levy of execution in respect of that individual has not been satisfied; (ii) if the individual ceases to carry on business for which the licence was granted; (iii) if the individual is adjudged bankrupt in any jurisdiction; (iii) if in the case of a representative, the licence of the market operator, in relation to whom the licence was granted, is revoked; (iv) if the Commission has reason to believe that the licensed person has not performed the functions of that person efficiently, honestly or fairly; or that the person has furnished the Commission with false or untruthful information; (v) if the licensed person is convicted of an offence involving fraud or dishonesty punishable by a term of imprisonment of not less than four months; (vi) if the licensed person contravenes or fails to comply with a condition or restriction applicable in respect of the licence or any other provision of this Act; or (vii) if the licensed person wilfully furnishes information or makes a statement that is false or misleading to the Commission; or (b) in the case of a body corporate or an incorporated private partnership (i) if it is being or will be wound up; (ii) if a levy of execution in respect of it has not been satisfied; (iii) if a receiver or a receiver and manager have been appointed whether by a Court or creditors in respect of its property; (iv) if it has entered into a composition or arrangement with its creditors; (v) if it ceases to carry on the business for which it was licensed; (vi) if the Commission has reason to believe that the licensed body or any of its directors or employees, has not performed its functions or the functions of the directors efficiently, honestly or fairly; or (vii) if the licensed body contravenes or fails to comply with a condition or restriction applicable in respect of the licence or any other provision of this Act. (3) In a case to which subsection (2) applies, the Commission may, instead of revoking a licence, suspend the licence for a specific period and may remove the suspension. (4) The Commission shall not revoke or suspend a licence under subsection (2) or (3) without first giving the licence holder an opportunity of being heard. (5) A person whose licence is revoked under this section shall, for the purpose of this Act be deemed not to be licensed from the date that the Commission revokes the licence. (6) A revocation or suspension of a licence of a person shall not operate so as to (a) avoid or affect an agreement, transaction or arrangement relating to the trading in securities entered into by that person, whether the agreement, transaction or arrangement was entered into before or after the revocation or suspension of the licence; or (b) affect a right, obligation or liability arising under an agreement, transaction or arrangement. (7) The Commission may revoke the licence of a person who fails to commence business within six months of being granted a licence. Power to reprimand or disqualify 123. (1)The Commission may with respect to a present or past licensee or a person who is a present or past officer, partner, shareholder, or controller of a licensee (a) issue a private warning; (b) issue a public censure; (c) disqualify a licensee from holding a licence or a licence of a specified kind for a specified period; or (d) in the case of an officer of a licensee, disqualify the officer from a specified office or position as a licensee for a specified period. (2) where the Commission is satisfied that a person has obtained moneys without a licence or contrary to the terms of the licence of the person, the Commission shall, in writing instruct that person to (a) repay all the moneys obtained and the profits accruing to that person; (b) return assets acquired as a result of the illegally obtained moneys or deposits; or (c ) pay any interest or other amounts which may be owed by that person in respect of those moneys, to the respective persons from whom the moneys were obtained. Operation pending renewal of licence 124. Where a person who holds a licence issued under this Act has before the expiration of the licence applied for a renewal of the licence and the licence has not been issued, that person shall not, until the licence is renewed or the application for the licence is refused or withdrawn, be held liable for not holding a licence. PART FIVE - REGISTER OF INTERESTS IN SECURITIES AND CONDUCT OF SECURITIES BUSINESS Register of Interests in Securities Application of this Part 125. (1) This Part applies to a person who is (a) broker-dealer; (b) a representative of a broker dealer; (c) a fund manager; (d) a representative of a fund manager; (e) an investment adviser; (f) a representative of an investment adviser, or (g) an independent financial analyst. (2) In this Part (a) “independent financial analyst” means a person who contributes advice concerning securities or prepares analysis or reports concerning securities for publication in a bona fide newspaper or periodical or any other media communication channel determined by the Commission; and (b) a reference to securities is a reference to securities of a body which is a public company within the meaning of the Companies Act, 1963 (Act 179) or securities which are quoted on a securities exchange in the Republic. Register of securities 126. (1) A person to whom this Part applies shall maintain a register in the prescribed form of the securities in which that person has an interest. (2) Particulars of the securities in which a person to whom this Partapplies has an interest and particulars of the interest in them shall be entered in the register within seven days of the acquisition of the interest. Notice of particulars to Commission 127. (1) A person to whom this Part applies shall notify the Commission in the prescribed form of the particulars that are prescribed including the place at which that person will keep the register. (2) The notice shall be given (a) in the case of a person who is required by this Act to hold a licence, as part of the application for the licence; or (b) in the case of any other person, if the person becomes a person to whom this Part applies, within fourteen days after becoming such a person. (3) The notice shall be given despite the fact that the person has ceased to be a person to whom this Part applies before the expiration of the period referred to in subsection (2). (4) Where a person ceases to be a person to whom this Part applies that person shall, within fourteen days after ceasing to be such a person, give notice of the fact to the Commission. (5) A person who fails or neglects to give notice as required by this section is liable to pay to the Commission an administrative penalty of one hundred penalty units. Defence to prosecution 128. (1) It is a defence to a prosecution for failing to comply with section 126 or 127 if the defendant proves that the failure was due to ignorance of a fact or an occurrence the existence of which constitutes the offence and that the defendant (a) was not aware of the date of the summons; or (b) became aware not less than fourteen days before the date of the summons and complied with the relevant section within fourteen days after becoming aware. (2) For the purposes of subsection (1), a person shall, in the absence of proof to the contrary, be conclusively presumed to have been aware of a fact or occurrence at the same time when an employee or agent of that person who has duties or acts in relation to the interest of the employer or principal in the securities concerned, became aware. Production of register 129. (1) The Commission or a person authorised by the Commission may require a person to whom this Part applies to produce for inspection the register required to be kept under section 126 and the Commission or a person authorised may make extracts from the register. (2) A person who fails to produce a register for inspection or fails to allow a person authorised under subsection (1) to make a copy or extracts from the register is liable to pay to the Commission an administrative penalty of (a) ten penalty units for each day that the default subsists; and (b) twenty penalty units for each day that the default subsists, where the default exceeds thirty days. Particulars of independent financial analysts 130. (1) The Commission or a person authorised by the Commission may by notice in writing require an issuer of financial analysis or report concerning securities to supply (a) the name and address of the independent financial analyst who has contributed an advice or prepared an analysis or report that has been issued; or (b) the names and addresses of all the independent financial analysts who have contributed advice or prepared an analysis or report within a period specified in the notice. (2) An issuer of financial analysis or report concerning securities who, without reasonable excuse, fails to comply with a notice under subsection (1) is liable to pay to the Commission a fine of five hundred penalty units. Extract of register 131. The Commission may supply a copy of the extract of a register obtained under section 129 to a person who in the opinion of the Commission, would, in the public interest, be informed of the dealing in securities disclosed in the register. Conduct of securities business Prohibited representations 132. (1) A holder of a licence shall not represent or imply or knowingly permit it to be represented or implied to any person that the abilities or qualifications of the holder have been approved by the Commission. (2) A statement that a person is the holder of a licence under this Act is not a contravention of subsection (1). Issue of contract notes 133. (1) A broker-dealer shall, in respect of a transaction of sale or purchase of securities, issue a contract note that complies with subsection (2) (a) to the person for whom the broker-dealer entered into the transaction where the transaction took place in the ordinary course of business at a stock exchange and the broker- dealer entered into the transaction otherwise than as a principal; (b) to the person for whom the broker-dealer entered into the transaction and the person with whom the broker-dealer entered into the transaction where the transaction does not take place in the ordinary course of business at a stock exchange and the broker-dealer entered into the transaction otherwise than as a principal; (c) to the person with whom the broker-dealer entered into the transaction where the transaction did not take place in the ordinary course of business at a stock exchange and the broker-dealer entered into the transaction as a principal. (2) A contract note given by a broker-dealer under subsection (1) shall include (a) the name or style under which the broker-dealer carries on business as a broker-dealer and the address of the principal place at which the business is carried on; (b) where the broker-dealer is dealing as a principal with a person who is not the holder of a licence of a broker-dealer, a statement that the broker-dealer is so acting; (c) the name and address of the person to whom the broker-dealer gives the contract note; (d) the day on which the transaction took place and if the transaction did not take place in the ordinary course of business at a stock exchange, a statement to that effect; (e) the number, or amount and description, of the securities that are the subject of the contract; (f) the price per unit of the securities; (g) the amount of the consideration; (h) the amounts of all stamp duties or other duties and taxes payable in connection with the contract; and (i) if an amount is to be added or deducted from the settlement amount in respect of the right to a benefit purchased or sold together with the securities, the amount and the nature of the benefit. (3) A broker-dealer shall not include in a contract note given under subsection (1), as the name of the person with or for whom the transaction was entered into, a name that the broker- dealer knows, or could reasonably be expected to know, is not the name by which that person is ordinarily known. (4) A reference in this section to a broker-dealer dealing, or entering into transaction, as a principal includes a reference to a person (a) dealing or entering into a transaction on behalf of a person associated with that broker-dealer; (b) dealing in securities on behalf of a body corporate in which the broker-dealer has a controlling interest; or (c) where the broker-dealer carries on business as a broker-dealer on behalf of a body corporate in which the interest of the broker-dealer and the interest of the directors together constitute a controlling interest. (5) For the purposes of this section, (a) a broker-dealer who is a member of a stock exchange shall not be taken to have entered into a transaction as a principal by reason only that the transaction was entered into with another broker-dealer who is a member of a stock exchange; and (b) a transaction takes place in the ordinary course of business at a stock exchange if it takes place in prescribed circumstances or is a transaction that is a prescribed transaction for the purposes of this section. (6) Despite section 212, a person is not associated with any other person for the purposes of this section by reason only of that person being a director of a body corporate of which that other person is also a director, whether or not the body corporate carries on a business of dealing in securities. A contract note is a legal document which is issued by a broker-dealer to an investor who invests in securities through them. It serves as a confirmation of the trade or the transaction done on a particular day on behalf of its client on the securities exchange.  When financial professionals (like brokers, fund managers, or investment advisers) send written recommendations about securities, they must clearly disclose any personal or professional interests they have in those securities. This disclosure must be easy to read and included in the communication at the time it is sent. This ensures transparency and helps recipients understand any potential conflicts Disclosure of interests in securities of interest behind the recommendation. 134. (1) Where a person who is (a) a broker-dealer, fund manager, investment adviser; or (b) a representative of a broker-dealer, a representative of a fund manager, or a representative of an investment adviser, sends circulars or other similar written communications in which that person makes a recommendation, whether expressly or by implication, with respect to securities or a class of securities, that person shall ensure that there is included in each circular or communication, in type, not less legible than that used in the remainder of the circular or communication, a concise statement of the nature of (c ) any interest in the securities or class of securities, or (d) any interest in the acquisition or disposal of those securities or securities included in that class, that that broker-dealer, fund manager, investment adviser or their representatives or a person associated with that broker-dealer, fund manager, investment adviser or their representatives has, at the date on which the circular or communication is sent. (2) It is a defence to a prosecution for the contravention of subsection (1) in relation to a failure to include in a circular or other communication a statement of the nature of an interest as provided in subsection (1), for the defendant to establish that, at the time when the circular or communication was sent, the defendant was not aware and could not necessarily be expected to have been aware (a) that the defendant has an interest in, or an interest in the acquisition or disposal of those securities or securities included in that class; or (b) that the person associated with the defendant had an interest in, or an interest in the acquisition or disposal of those securities or securities included in that class. (3) For the purposes of subsections (1) and (2) (a) an interest of a person in the disposal of securities includes a financial benefit or advantage that will, or is likely to, accrue directly or indirectly to that person on or arising out of the disposal of the securities; (b) without limiting the generality of paragraph (a), a person who has entered into an underwriting agreement in respect of securities shall be deemed to have an interest in the acquisition or disposal of those securities; and (c) despite section 212 a person is not associated with another person by reason only of that person being a director of a body corporate of which the other person is also a director, whether or not the body corporate carries on a business of dealing in securities unless they are acting jointly or together or in accordance with an arrangement made between them, in relation to the sending of the circular or communication or the making of the recommendation. (4) Where a person has subscribed for or purchased securities for sale and offers any of those securities for sale, that person shall not make a recommendation, whether orally or in writing and whether expressly or by implication, with respect to the securities offered for sale unless that person has informed each person to whom the recommendation is made of the acquisition of the securities for that purpose that that person acquired the securities for that purpose. (5) Where (a) securities have been offered for subscription or purchase; and (b) a person has subscribed for or purchased or will or may be required to subscribe for or purchase, any of those securities under an underwriting or sub-underwriting “agreement” that person shall not, during the period of ninety days after the close of the offer, (i)make an offer to sell those securities, otherwise than in the ordinary course of trading on a stock exchange; or (ii) make a recommendation with respect to those securities unless the offer or recommendation contains or is accompanied by a statement to the effect that the offer or recommendation relates to securities which that person has acquired, or will or may be required to acquire, under an underwriting or sub-underwriting agreement because some or all of the securities have not been subscribed for or purchased. (6) A person who is a broker-dealer, fund manager, investment adviser, representative of a broker-dealer, representative of a fund manager, or a representative of an investment adviser shall not send to a person a circular or other communication or written offer or recommendation to which subsections (1), (4) or (5) applies unless the circular or communication or the offer or recommendation is signed by (a) that person if an individual; (b) a director, executive officer or secretary of the body corporate if that person is a company; or (c) a partner if that person is an incorporated private partnership. (7) When a person who is a broker-dealer, fund manager, investment adviser, representative of a broker-dealer, representative of a fund manager, or representative of an investment adviser sends to any other person, a circular, communication, a written offer or recommendation to which subsections (1), (4) or (5) applies, that person shall preserve a copy of the circular, communication, the written offer or recommendation, duly signed as specified in subsection (6) for seven years from the date of signing. (8) A reference in this section to an offer of securities shall be construed to include a reference to a statement, however, expressed, that is not an offer but expressly or impliedly invites a person to whom it is made to offer to acquire securities. (9) For the purposes of this section, a circular, communication, a written offer or recommendation sent to a person is sent, if it is signed by a director, executive officer or secretary of a body corporate by the body corporate and if it is signed by a partner in an incorporated private partnership it shall be deemed to have been sent by the partnership. (10) The Commission may in the public interest, exempt a security or any class of securities from the application of this section. (11) A person who contravenes this section commits an offence and is liable on summary conviction to a fine of not less than two hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than two years and not more than three years or to both. Recommendations by adviser 135. (1) An adviser shall not make a recommendation with respect to securities or a class of securities to a person who may reasonably be expected to rely on the recommendation unless that adviser has a reasonable basis for making the recommendation to the person. (2) For the purposes of subsection (1), an adviser does not have a reasonable basis for making a recommendation to a person unless (a) the adviser has, for the purposes of ascertaining that the recommendation is appropriate, given consideration to, and conducted investigation on the subject matter of the recommendation as is reasonable in all the circumstances and having regard to the information possessed by the adviser concerning the investment objectives, financial situation and particular needs of that person; and (b) the recommendation is based on that consideration and investigation. (3) An adviser who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine of not less than two hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than two years and not more than three years or to both. (4) Where (a) an adviser contravenes subsection (1) by making a recommendation to a person; (b) the person relying on the recommendation does a particular act or refrains from doing a particular act; (c) it is reasonable, having regard to the recommendation and any other relevant circumstances for the person relying on the recommendation to have done that act or to have refrained from doing that act; and (d) the person suffers loss or damage as a result of doing that act or refraining from doing that act, the adviser is liable to pay damages to the person in respect of that loss or damage. (5) In this section, (a) a reference to an adviser is a reference to a person who is a broker-dealer, fund manager, investment adviser representative of a broker-dealer, or representative of an investment adviser; and (b) a reference to the making of a recommendation may be express or by implication. Dealing as principal 136. (1) Subject to subsection (4), a broker-dealer shall not deal in any securities as principal with a person, who is not a broker-dealer, unless that broker-dealer first informs the person with whom the broker-dealer is dealing that the broker-dealer is acting in the transaction as a principal and not as an agent. (2) A reference in this section to a broker-dealer dealing or entering into a transaction, as a principal includes a reference to a person (a) dealing or entering into a transaction on behalf of a person associated with the broker- dealer; (b) dealing in securities on behalf of a body corporate in which the broker-dealer has a controlling interest; or (c) where the broker-dealer carries on business as a broker-dealer on behalf of a body corporate in which the interest of the broker-dealer and the interests of the directors and the broker-dealer together constitute a controlling interest. (3) A broker-dealer who, as a principal, enters into a transaction of sale or purchase of securities with a person who is not a broker-dealer shall state in the contract note that that broker-dealer is acting in the transaction as a principal and not as an agent. (4) Subsection (1) does not apply in relation to a transaction entered into by a broker-dealer who is a member of a stock exchange and specialises in transactions relating to odd lots of securities, being a transaction of sale or purchase of an odd lot of securities. (5) Where a broker-dealer fails to comply with subsection (1) or (3) in respect of a contract for the sale of securities by the broker-dealer, the purchaser of the securities may, if the security has not been disposed of, rescind the contract by a notice of rescission in writing given to the broker-dealer not later than thirty days after the receipt of the contract note. (6) Where a broker-dealer fails to comply with subsection (1) or (3) in respect of a contract for the purchase of securities by the dealer, the vendor of the securities may, in a like manner, rescind the contract. (7) Subsections (5) and (6) do not affect a right that a person has apart from that provided under the subsection. (8) A person who contravenes or fails to comply with any of the provisions of this section commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units and not more than one hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than one year or to both. Provision of unsecured credit 137. (1) A broker-dealer, a fund manager or an investment adviser shall not give unsecured credit to a person where (a) the unsecured credit is given for the purpose of enabling or assisting the person to whom the unsecured credit is given to purchase or subscribe for securities; or (b) the person giving the unsecured credit knows or has reason to believe that the unsecured credit will be used to purchase or subscribe for securities. (2) Subsection (1) does not apply to margin trading. (3) A person who contravenes or fails to comply with a provision of subsection (1) is liable to pay to the Commission an administrative penalty of one thousand penalty units. Prevention of money laundering, terrorism financing and other illegal activities 138. A broker-dealer, a fund manager and any other licensed person shall ensure that it operates in a manner that will ensure compliance with the provisions of the Anti-Money Laundering Act, 2008 (Act 749), the Anti-Terrorism Act, 2008 (Act 762) and the Regulations made under these enactments. Broker-dealer to give priority to orders of clients 139. (1) A broker-dealer shall not, except as permitted by subsection (3), enter, as a principal or on behalf of a person associated with that broker-dealer, into a transaction of purchase or sale of securities that are permitted to be traded on a securities exchange if a client of the broker- dealer, who is not associated with the broker-dealer, has instructed the broker-dealer to purchase or sell, respectively, securities of the same class and the broker-dealer has not complied with the instruction. (2) A broker-dealer who contravenes this section commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units and not more than one hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than one year or to both. (3) Subsection (1) does not apply in relation to the entering into of a transaction by a broker- dealer as a principal or on behalf of a person associated with the broker-dealer where (a) the instructions from the client of the broker-dealer required the purchase or sale of securities on behalf of the client to be effected only on specified conditions at which the securities were to be purchased or sold and the broker-dealer has been unable to purchase or sell the securities because of those conditions; or (b) the transaction is entered into in the prescribed circumstances. Handling of money of client by broker-dealers and other licensees 140. (1) Where a client deposits money with a broker-dealer or any other licensee, that broker- dealer or other licensee shall (a) deposit the money in a trust account in a bank, not later than the next day on which the bank is open for business after the receipt of the money and the account shall not contain any money other than money deposited with the licensee; (b) furnish the client with a document, in the prescribed form, setting out the terms and conditions on which the deposit is made and accepted, including the purpose for which and the manner in which the money is to be used by the broker-dealer or licensee; (c) retain the money in the bank account until the client gives the dealer a written statement acknowledging that the client has received the document referred to in paragraph (b); and (d) use the money only (i) for the purpose and in the manner set out in the document referred to in paragraph (b); or (ii) for a purpose or in a manner agreed to by the client in writing after the document referred to in paragraph (b) was furnished to the client. (2) A person who contravenes subsection (1) is liable to pay to the Commission an administrative penalty of five hundred penalty units and shall in addition refund the money together with interest at the prevailing commercial bank rate to the client. (3) Where a broker-dealer or any other licensee becomes bankrupt, falls into liquidation or incurs a debt, a trust account operated by the broker-dealer or the licensee shall not be (a) subject to the bankruptcy or liquidation proceedings; or (b) used as a payment for the debt. Right to vest securities through sale 141. (1) Subject to this section and any guidelines made by the Commission, a person shall not sell securities to a purchaser unless, at the time when the securities are sold that person (a) has or, where selling as an agent, the principal has; or (b) believes on reasonable grounds as having or when selling as an agent, that the principal has an existing exercisable and unconditional right to vest the securities in the purchaser. (2) A person who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units and not more than one hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than one year or to both. (3) For the purposes of this section, a person sells securities where that person (a) implies the sale of securities; (b) offers to sell securities; (c) poses as entitled to sell securities; or (d) instructs a broker-dealer to sell securities. Securities lending and borrowing 142. (1) The Commission may issue guidelines in respect of securities lending or borrowing for the purpose of trading on an exchange or approved trading system. (2) Subject to this section and the guidelines issued by the Commission, a person shall not engage in securities lending or borrowing for the purpose of trading on an exchange or approved trading system unless that person enters into an agreement with an intermediary approved by the exchange or trading system to perform the function on behalf of that intermediary. (3) An agreement between a lender and an intermediary and a borrower and an intermediary shall provide for the following conditions: (a) the period of depositing or lending of securities; (b) charges or fees for depositing or lending and borrowing; (c) collateral securities for borrowing; (d) provisions for the return including the premature return of the securities deposited or lent; and (e) the provision for the return of all benefits. (4) A person shall not deposit a security with an intermediary for the purpose of lending unless that person is the bona fide owner of the security or is duly authorised by the person in whose name the security is registered. (5) A person who contravenes a guideline in respect of securities lending and borrowing is liable to payment of penalties prescribed in the guidelines issued by the Commission. Securities lending is the temporary exchange of securities which requires collateral generally in cash or other securities of at least an equivalent value, with an obligation to redeliver like quantity of the same securities on a future date and is in the nature of a securities loan, repurchase agreement and a self-back agreement. A repurchase agreement, also known as repo, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and buys them back shortly afterwards, usually the following day, a slightly higher price. Margin trading and financing 143. (1) The Commission may issue guidelines in respect of margin trading and financing. (2) Subject to this section and the guidelines issued by the Commission, a person shall not engage in margin trading or financing unless that person meets the capital requirements prescribed by the exchange of which that person is a member, and complies with the prescribed rules and procedures. (3) The Commission may prescribe, at any time additional guidelines for margin trading and financing. (4) A person who contravenes a guideline in respect of margin trading and financing is liable to the payment of penalties prescribed in the guidelines issued by the Commission. Margin trading refers to an arrangement between a broker-dealer and the client of that broker- dealer in which the broker-dealer provides the client with part of the funds to meet the full cost of the securities to be purchased by the client. Advertisements and protection of consumers of financial services 144. (1) A person, other than a person licensed, authorised or approved under this Act, shall not publish or cause to be published an advertisement in connection with the conduct of an activity or provision of a service which requires a licence, approval, authorisation or registration under this Act. (2) A person licensed, authorised or approved under this Act, shall not publish or cause to be published an advertisement in connection with the conduct of an activity or provision of a service which requires a licence, approval, authorisation or registration under this Act in a manner which is unclear, false or misleading in any material particular. (3) Where the Commission is satisfied that a person has contravened a provision of this section, the Commission may direct that person to immediately cease or modify the advertisement. (4) For the purposes of the performance of its functions under this Act, the Commission may develop and promote programmes and initiatives, where necessary in collaboration with financial institutions or bodies of the financial services industry, to inform and educate consumers or potential consumers of financial products and financial services. (5) A consumer of a financial product or of a financial service regulated by the Commission who is aggrieved by an act or omission of a licensee may make a complaint in writing to the Commission. Advertising includes every form of advertising, whether in a publication or by the display of notices or by means of circulars or other documents or by an exhibition of photographs or films or videos or by way of sound broadcasting or television or on computer screens or in any other manner. According to regulation 40 of the Securities and Exchange Commission Regulations, 2003 (L.I.1728) the general principles for advertising include the following: - an advertisement shall be based on principles of good faith and fair presentation and shall not in any way mislead or deceive prospective investors - an advertisement shall adhere to the highest standards of accuracy, - the language shall be clear and easily understood by the public at large, - the advertisement shall describe clearly and unambiguously the nature of the investment or the service offered, - the advertisement shall state sufficient relevant information in order that an adequate description of the investment or services offered is conveyed to the recipient - where applicable, statements of facts shall be clearly distinguished from statements of opinion - the advertisement to be disseminated to the public shall be signed by the individual issuing it in case of natural person; or by a director, executive officer or secretary in the case of a body of persons. Registration of securities 145. (1) A public company, closed-end collective investment scheme, statutory body, local government authority and any other organisation that issues securities to the public shall register its securities with the Commission on terms and conditions prescribed by the Commission. (2) Subsection (1) does not apply to the Government of Ghana. (3) The Commission shall issue a certificate of registration in respect of securities registered by the Commission. (4) Securities referred to under subsection (1) shall not be listed on a securities exchange or transferred, sold or offered for sale to the public on any secondary market without the prior registration of the securities with the Commission. (5) The issuer shall inform the Commission within twenty-one days of the cancellation or redemption of securities registered with the Commission. (6) Securities of maturity of up to one year are exempted from registration with the Commission. Professional service providers 146. The Commission may issue guidelines in respect of capital market services provided by the following professional service providers (a) legal practitioners; (b) accountants; (c) auditors; (d) engineers; (e) valuers; and (f) any other professional service provider that may be determined by the Commission Trading in securities and related offences False trading and market rigging transactions 147. (1) A person shall not create or cause to be created, or do anything that is calculated to create a false or misleading appearance of active trading in securities on a stock exchange in the country or a false or misleading appearance with respect to the market for, or the price of the securities. (2) A person shall not by means of purchases or sales of securities that do not involve a change in the beneficial ownership of those securities, or by fictitious transactions or devices, maintain, inflate, depress, or cause a fluctuation in the market price of any securities. (3) Without limiting subsection (1), a person who (a) effects, takes part in, is concerned in or carries out, directly or indirectly, a transaction of sale or purchase of securities being a transaction that does not involve a change in the beneficial ownership of the securities; or (b) makes or causes to be made an offer to sell or purchase securities at a specified price where that person has made or caused to be made or proposes to make, or knows that a person associated with that person has made or caused to be made or purports to make, an offer to sell or purchase the same number, or substantially the same number of securities at a price that is substantially the same as the specified price; has for the purposes of this section to section 153, created a false or misleading appearance of active trading in securities on a stock exchange. (4) When prosecuting a person for an act referred to in subsection (3), it is a defence if the defendant establishes that the purpose for which the act was done was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on the stock exchange. (5) A purchase or sale of securities does not involve a change in the beneficial ownership for the purposes of this section if a person who had an interest in the securities before the purchase or sale, or a person associated with that person, acquired an interest in the securities after the purchase or sale. (6) When prosecuting for an offence under subsection (2) in relation to a purchase or sale of securities that did not involve a change in the beneficial ownership of those securities, it is a defence if the defendant establishes that the purpose for which the defendant purchased or sold the securities was not, or did not include, the purpose of creating a false or misleading appearance with respect to the market for, or the price of securities. (7) The reference in subsection (3) to a transaction of sale or purchase of securities includes (a) a reference to the making of an offer to sell or purchase securities; and (b) a reference to the making of an invitation, however expressed, that expressly or impliedly invites a person to offer to sell or purchase securities. Stock market manipulation 148. (1) A person shall not effect, take part in, be concerned in or carry out, directly or indirectly, two or more transactions in securities of a body corporate which are transactions that have or are likely to have, the effect of raising, lowering, maintaining or stabilising the price of securities of the body corporate on a stock exchange in the country with intent to induce other persons to sell, purchase or subscribe for securities of the body corporate or of a related body corporate. (2) A reference in subsection (1) to a transaction in relation to securities of a body corporate, includes (a) a reference to the making of an offer to sell or purchase the securities of the body corporate; and (b) a reference to the making of an invitation, however expressed that expressly or impliedly invites a person to offer to sell or purchase the securities of the body corporate. False or misleading statements 149. A person shall not make a statement or disseminate information that is false or misleading in a material particular, that is likely to induce the sale or purchase of securities by any other person or is likely to have the effect of raising, lowering, maintaining or stabilising the market price of securities. Fraudulently inducing persons to deal in securities 150. (1) A person shall not induce or attempt to induce any other person to deal in securities (a) by making or publishing a statement, promise or forecast that that person knows to be misleading, false or deceptive; (b) by a dishonest concealment of material facts; (c) by the reckless making or publishing, dishonestly or otherwise, of a statement, promise or forecast that is misleading, false or deceptive; or (d) by recording or storing in, or by means of any mechanical, electronic or any other device, information which that person knows to be false or misleading in a material particular. (2) It is a defence to a prosecution for an offence under subsection (1) (d) to establish that, at the time when the defendant recorded or stored information the defendant had no reasonable grounds for expecting that the information would be available to any other person. Dissemination of information about illegal transactions 151. A person shall not circulate or disseminate or authorise or be concerned in the circulation or dissemination of a statement or information to the effect that, the price of any securities of a body corporate will or is likely to rise or fall or be maintained by reason of a transaction entered into or other act or thing done in relation to securities of that body corporate, or of a body corporate that is related to that body corporate, in contravention of a provision of section 147 to section 153 where (a) that person, or a person associated with that person, has entered into that transaction or done an act or thing; or (b) that person has received, or expects to receive directly or indirectly, a consideration or benefit for circulating or disseminating, or authorising or being concerned in the circulation or dissemination of the statement or information. Employment of manipulative and deceptive devices 152. A person shall not directly or indirectly in connection with the purchase or sale of securities (a) employ a device, scheme or artifice to defraud; (b) engage in an act, practice or course of business which operates or would operate as fraud or deceit on any other person; or (c) make an untrue statement of a material fact or omit to state a material fact necessary with the result that the statements made in the light of the circumstances under which they were made, appear truthful. Prohibition of dealings in securities by insiders 153. (1) A person who is, or has during the six months immediately before a dealing in the securities of a body corporate been connected with that body corporate shall not deal in securities of that body corporate if by reason of the association that person is in possession of information that is not generally available but, if it were, might materially affect the price of those securities. (2) A person who is, or has during the six months immediately before a dealing in the securities of a body corporate been connected with that body corporate shall not deal in the securities of any other body corporate if by reason of being, or having been connected with the first- mentioned body corporate that person is in possession of information that. (a) is not generally available but, if it were, would be likely to affect materially the price of those securities; and (b) relates to a transaction actual or expected involving both those bodies corporate or involving one of them and the securities of the other. (3) Where a person in possession of information as provided in subsection (1) or (2), is not precluded by either of those subsections from dealing in those securities, that person shall not deal in those securities if (a) that person has obtained the information directly from any other person and is aware, or ought reasonably to be aware of facts or circumstances by virtue of which that other person is precluded by subsection (1) or (2) from dealing in those securities; or (b) when the information was obtained, that person was associated with that other person or had with that person an arrangement for the communication of information of a kind to which those subsections apply with a view to dealing in securities by that person or with that other person. (4) A person shall not when precluded by subsection (1), (2) or (3) from dealing in securities (a) cause or procure any other person to deal in those securities; or (b) communicate that information to any other person if (i) trading in those securities is permitted on a stock exchange whether within or outside the country; and (ii) that person knows, or ought reasonably to know, that that other person will make use of the information for the purpose of dealing or causing or procuring another person to deal in those securities. (5) Without limiting subsection (3) but subject to subsections (6) and (7), a body corporate shall not deal in securities where an officer of that body corporate is precluded by subsection (1), (2) or (3) from dealing in those securities. (6) A body corporate is not precluded by subsection (5) from entering into a transaction by reason only of information in the possession of an officer of that body corporate if (a) the decision to enter into the transaction was taken on its behalf by a person other than that officer; (b) it had in operation at that time arrangements to ensure that the information was not communicated to any person and that an advice in respect of the transaction was given to that person by a person in possession of the information; and (c) the information was not communicated and the advice was not so given. (7) A body corporate is not precluded by subsection (5) from dealing in securities of any other body corporate by reason only of information in possession of its officer which was obtained by the officer in the course of duties as its officer but relates to proposed dealings by the first- mentioned body corporate in securities of the other body corporate. (8) For the purposes of this section, a person is connected with a body corporate if, being an individual, that person (a) is an officer of that body corporate or of a related body corporate; (b) is a substantial shareholder in that body corporate or a related body corporate; or (c) occupies a position that may reasonably be expected to give that person access to information of a kind which subsections (1) and apply by virtue of (i) a professional or business relationship existing between that person or the employer of that person or a body corporate of which that person is an officer and that body corporate or a related body corporate; or (ii) that person being an officer of a substantial shareholder in that body corporate or in a related body corporate. (9) This section does not preclude the holder of licence of a broker-dealer from dealing in securities or rights or interests in securities of a body corporate, where the securities, rights or interests are permitted by a stock exchange to be traded on the stock exchange, if (a) the holder of the licence enters into the transaction concerned as an agent for any other person in accordance with a specific instruction to effect that transaction; (b) the holder of the licence has not given an advice to the other person in relation to dealing in securities, or rights or interests in securities, of that body corporate that are included in the same class as the first-mentioned securities; and (c) the other person is not associated with the holder of the licence. (10) Where prosecution is instituted against a person for entering into a transaction whilst in possession of certain information contrary to this section, it is a defence if the person satisfies the Court that the other party to the transaction knew, or ought reasonably to have known, of the information before entering into the transaction. (11) For the purposes of subsection (7), “officer”, in relation to a body corporate, includes (a) a director, secretary, executive officer or employee of the body corporate; (b) a receiver or receiver and manager of property of the body corporate; (c) an official manager or a deputy official manager of that body corporate; (d) a liquidator of that body corporate; and (e) a trustee or other person administering a compromise or arrangement made between that body corporate and any other person. Penalties 154. A person who contravenes a provision of section 147 to section 153 commits an offence and is liable on summary conviction to a fine of not less than one thousand penalty units and not more than two thousand five hundred penalty units or to a term of imprisonment of not less than four years and not more than five years or to both. Convicted persons liable to pay compensation 155. (1) A person convicted of an offence under section 147 to section 153 is liable to pay compensation to a person who, in a transaction for the purchase or sale of securities entered into with the first mentioned person or with a person acting for or on behalf of that first mentioned person, suffers loss because of the difference between the price at which the securities were dealt in and the price at which they might have been dealt in at the time when the transaction took place if the contravention had not occurred. (2) The amount of compensation for which a person is liable under subsection (1) is the amount of the loss sustained by the person claiming the compensation. (3) Despite the Limitations Act, 1972 (N.R.C.D. 54) a person shall not commence an action under this section for the recovery of a loss after the expiration of two years after the date of completion of the transaction in which the loss occurred. (4) Subsection (1) does not affect any other liability that a person may incur under any other law. Accounts to be kept by broker-dealers 157. (1) A broker-dealer shall (a) keep the accounting records that will correctly record and explain the transactions and financial position of the business of dealing in securities carried on by that broker-dealer; (b) keep the accounting records in a manner that will enable a true and fair income statement and statement of financial position to be prepared from time to time; and (c) keep the accounting records in a manner that will enable the income statement and statement of financial position of the business of dealing in securities carried on by the broker- dealer to be conveniently and properly audited. (2) A broker-dealer who contravenes subsection (1) is liable to pay to the Commission an administrative penalty of two hundred and fifty penalty units. (3) A broker-dealer has not complied with subsection (1) in relation to the records unless those records (a) are kept in writing in the English language or in a manner that will enable them to be readily accessible and readily converted into writing in the English language; (b) are kept in sufficient detail to show particulars of (i) the moneys received or paid by that broker-dealer, including moneys paid to or disbursed from a trust account; (ii) the purchases and sales of securities made by the broker-dealer, the charges and credits arising from them and the names of the buyer and seller, respectively, of each of those securities; (iii) the incomes received from commissions, fees, interests, and other sources and expenses, commissions and interest paid, by the broker-dealer; (iv) the assets and liabilities, including contingent liabilities, of the broker-dealer; (v) the securities that are the property of the broker-dealer, showing by whom the securities, or the documents of title to the securities, are held and, where they are held by any other person, whether or not they are held as security against loans or advances; (vi) the securities that are not the property of the broker-dealer and for which the broker- dealer or any person controlled by the broker-dealer is accountable, showing by whom, and for whom, the securities or the documents of title to the securities are held and the extent to which they are either held for safe custody or deposited with a third party as security for loans or advances made to the broker-dealer; and (vii) underwriting transactions entered into by the broker-dealer; (a) are kept in sufficient detail to show separately particulars of every transaction by the broker-dealer; (b) specify the day on which or the period during which each transaction by the broker-dealer took place; and (c) contain copies of acknowledgements of the receipt of securities or of documents of title to securities received by the broker-dealer from clients for sale or safe custody clearly showing the name or names in which the particular securities are registered. (4) Without limiting subsection (3), a broker-dealer shall keep the records in sufficient detail to show separately, particulars of transactions undertaken by that broker-dealer with or for the account of (a) the clients of the broker-dealer excluding, where the broker-dealer carries on business in partnership, the partners of the firm; (b) the broker-dealer personally or where the broker-dealer carries on business in partnership, the partners of the firm; (c) other broker-dealers carrying on business within the country; (d) broker-dealers outside the country; and (e) employees of the broker-dealers. (5) An entry in the accounting and other records of a broker-dealer required to be kept in accordance with this section shall be deemed to have been made by or with the authority of that broker-dealer. (6) Where a record required by this section to be kept is not kept in writing in the English language, the broker-dealer shall, if required to convert the record into writing in the English language by a person who is entitled to examine the record, comply with the requirement within a reasonable time. (7) Despite any other provision of this section, a broker-dealer shall not be deemed to have failed to keep a record referred to in subsection (1) if the record is kept as a part of, or in conjunction with records that relate to a business other than dealing in securities that is carried on by that broker-dealer. (8) Where accounting or other records are kept by a broker-dealer at a place outside the country, the broker-dealer shall cause to be sent to and kept at a place in the country the particulars with respect to the business dealt with in those records that will enable true and fair income statement and statement of financialposition to be prepared. Securities documents in custody of broker-dealer 158. (1) Where a broker-dealer receives for safe custody documents that are securities or are documents of title to securities of a client and for which the broker-dealer or a person controlled by the broker-dealer is accountable, the broker-dealer shall (a) if the documents are not registered in the name of the client by the body corporate by whom the securities were issued, or made available and the client does not make a request as mentioned in paragraph (b) or (c), register the documents; (b) if the client requests that the registration of the documents by the body corporate by whom the securities were issued or made available in the name of a person controlled by the broker- dealer, register the documents; or (c)if the client requests that the deposit of the documents in safe custody with the bankers of the broker-dealer, deposit the documents. (2) A broker-dealer shall not deposit as security for a loan or advance, documents that are securities or are documents of title to securities of a client and for which the broker-dealer or a person controlled by the broker-dealer is accountable, unless an amount is owed to the broker- dealer by the client in connection with a transaction entered into on behalf of the client and the broker-dealer (a) gives a written notice to the client identifying the documents and stating that the broker- dealer intends to deposit the documents as security for a loan or advance made by the broker- dealer; and (b) deposits the documents as security for a loan or advance that does not exceed the amount owed to the broker-dealer on the day of the deposit by the client, in connection with a transaction entered into on behalf of the client by the broker-dealer. (3) Where (a) a broker-dealer has given notice to a person mentioned in subsection (2) and has deposited the documents referred to in the notice as a security for a loan or advance; and (b) the person pays the amount owed to the broker-dealer, the broker-dealer shall withdraw the documents from deposit as soon as practicable after the broker-dealer receives the amount owed to the broker- dealer. (4) Where a broker-dealer deposits, as security for a loan or advance made to the broker-dealer documents that are securities, or are documents of title of another person, and for which the broker-dealer or a person controlled by the broker-dealer is accountable, the broker-dealer shall, at the expiration of six months after the date on which the documents were deposited, and at the expiration of each subsequent period of six months, if the documents are still maintained on deposit, send to the other person written notice to that effect. (5) A broker-dealer who fails to comply with subsection (4) is liable to pay to the Commission an administrative penalty of four hundred penalty units. Trust account of broker-dealer 159. (1) A broker-dealer shall open and maintain with a bank in the country an account designated as a trust account. (2) A broker-dealer shall pay into the account the moneys held by the broker-dealer in trust for a client not later than the next day on which the bank is open for business following the day on which the moneys are received by the broker-dealer. (3) Despite subsection (1), where moneys that are required by this section to be paid into a trust account are received by a broker-dealer in a place outside the country, the broker-dealer shall pay those moneys into a trust account maintained by the broker-dealer in that place. (4) For the purposes of subsection (2), all moneys received by a broker-dealer from a client are moneys held in trust for that client and shall be deemed to be held in trust for that client. (5) Subsection (4) does not apply to (a) moneys received in respect of brokerage and other proper charges; or (b) moneys received in payment or part payment for securities delivered to the broker-dealer before the moneys are received. (6) Subsection (2) does not apply to a cheque, bank draft, money order or postal order made payable to or to the order of a specified person or bearer which is not a cheque, bank draft, money order or postal order in which the payee is the broker-dealer, a partner of the broker- dealer or the firm in which the broker-dealer is a partner received from or on behalf of a client with instructions, express or implied, that the cheque, bank draft, money order or postal order is to be delivered to the person to whom it is payable. (7) A person who contravenes a provision of this section is liable to pay to the Commission an administrative penalty of five hundred penalty units. (8) A person who, with intent to defraud, contravenes this section commits an offence and is liable on summary conviction to a fine of not less than two hundred and fifty penalty units and not more than five hundred penalty units or to a term of imprisonment of not less than two