In this Appendix we reproduce the instrument of delegation by the National Companies and Securities Commission which indicates the principal features of the licensing system for private finance companies which was introduced in Victoria in 1984.

PURSUANT to Section 45 of the National Companies and Securities Commission Act 1979 of the Commonwealth and Section 12 of the National Companies and Securities Commission (State Provisions) Act 1981 of the State of Victoria and Section 12 of the National Companies and Securities Commission (State Provisions) Acts 1981 of the States of New South Wales, Queensland, South Australia, Tasmania and Western Australia and all other enabling legislation (if any) the NATIONAL COMPANIES AND SECURITIES COMMISSION HEREBY DELEGATES to the COMMISSIONER FOR CORPORATE AFFAIRS for the State of Victoria, an officer appointed pursuant to Section 6 of the Companies (Administration) Act 1981 of that State and an officer for the purposes of Section 45 and Section 12 aforesaid, all of those powers and functions conferred or expressed to be conferred on the NATIONAL COMPANIES AND SECURITIES COMMISSION by the provisions of the Companies Act 1981 of the Commonwealth and the corresponding laws of the participating States (collectively “the Act”) specified in Schedule A in relation to the persons referred to and on the conditions set out in Schedule B.

SCHEDULE A

(a) the power, pursuant to sub-section 215C(2) or (6), to exempt from compliance with or omit, modify or vary, as the case may be, Part IV Division 6 of the Act;

(b) the power to apply to the Court for an order pursuant to subsection 215C(5) of the Act; and

(c) the function of causing a copy of an instrument to be published in the Gazette in accordance with sub-section 215C(8).

SCHEDULE B

Solicitors Mortgage Investment Companies as defined below:

Conditions of Exemption

1. In these conditions of exemption unless inconsistent with the context or subject matter-

approved investments" means:

• Mortgages of interests in land
• authorized trustee investments
• real property where the total investment does not exceed shareholders' funds and ten per centum of funds deposited with the company
• solicitors mortgage investment companies holding a licence under the Securities Industry (Victoria) Code
• cash management trusts
• such other investments as may be authorized by the Commissioner.

“associated company” with respect to a licensee means a company

(a) the composition of the board of directors of which or

(b) more than half the issued share capital of which is controlled or held by directors or members of that licensee or persons associated with that licensee.

“associated trustee” with respect to a licensee means a person who holds property on trust for a director or member of that licensee or for a person associated with that licensee.

“Commissioner” means the Commissioner for Corporate Affairs established under the Companies (Administration) Act 1981.

"half yearly date" means the last day of June or December in each year or such other half yearly date as the Commissioner may approve.

"interest in land" shall have the same meaning as the expression "prescribed interest' has from time to time in the Housing Loans Insurance Corporation Act 1965.

"licensee" means a Solicitor’s Mortgage Investment Company which has been granted a licence under the Securities Industry (Victoria) Code.

“person associated with a licensee” includes a person who is a partner spouse parent grand parent childchild's spouse grand child or grandchild's spouse of a director or member of that licensee.

“shareholders' funds” means the excess of tangible assets over total liabilities.

"Solicitor’s Mortgage Investment Company” means a company all the directors of which hold full practising certificates under the Legal Profession Practice Act 1958 or are approved by the Commissioner to act as directors, the business or principal business of which is or is intended to be that of borrowing or accepting moneys on deposit and the investment of those moneys mainly on mortgage security.

2. It shall be a condition of each exemption granted that:

(a) the licensee shall not invest funds deposited with it in other than approved investments.

(b) the licensee shall not carry on a business other than a business in accordance with these conditions.

(c) the licensee shall not be a Solicitor’s Nominee Company as defined in the Mortgage and Nominee Company Rules 1977.

(d) the licensee shall not carry on business in trust for any person or persons or hold any property in trust for any person or persons;

(e) each director of the licensee shall hold a full practising certificate under the Legal Profession -Practice Act 1958 or be a person approved by the Commissioner.

(f) each shareholder who has a right to vote at a meeting of the licensee shall be:


(i) a director; or

(ii) the executor or administrator of a deceased shareholder who was a director; or

(iii) a person approved by the Commissioner.


(g) the auditor of the licensee shall be the auditor who audits under the Legal Profession Practice Act 1958 the trust accounts of each director.

(h) the licensee shall within three months of each half yearly date lodge financial statements made up for a period ending on such half yearly date preceding the date of lodging with the Commissioner including a statement setting out the amount and the percentage of funds invested in each category of approved investments.

(i) before the licensee accepts any deposit of money from any person for any separate account with the licensee (other than a licensed Solicitor's Mortgage Investment Company) the licensee shall give to the depositor a duplicate notice in the form of Schedule I hereto completed in both Parts 1 and 2 and shall obtain an acknowledgment in the form of Part 3 thereto signed by the depositor and one copy returned to the licensee.

(j) the licensee shall advise the depositor in writing of any intended changes in the terms or conditions of such deposit at least seven (7) days prior to effecting the change.

(k) at six (6) monthly intervals the licensee shall advise the depositor in writing of the balance of the depositor s account with the licensee including any interest compounded thereon.

(l) no loan shall be made by the licensee except a loan:


(i) which is secured by a mortgage over an interest in land situated in the Commonwealth of Australia in respect of which the principal sum secured together with the aggregate of any other principal sums secured pursuant to any prior mortgages over that interest in land does not exceed whichever is the greater of an amount equal to 70% of the value of the interest in land subject to the mortgage or an amount equal to the amount in respect of which a licensee is insured for repayment of that mortgage under an enforceable policy issued by the Housing Loans Insurance Corporation or other person approved by the Commissioner.

For the purposes of this sub-paragraph the expression "value of the interest in land" means the current capital improved value of that land as fixed by the municipality in which the land is situated or the value of the land as sworn to by a registered valuer within six (6) months of the making of the loan.

(ii) which is secured in such other matter as the Commissioner may in writing approve; or

(iii) which is made for temporary purposes to a person approved in writing by the Commissioner.


(m) no loan shall be made to a director or to a member of a I icensee or to an associated company or an associated trustee without the prior approval in writing of the Commissioner.

(n) no loan shall be made to any person except with the prior approval in writing of the Commissioner if the result would be that the total of all loans made by the licensee to that person would equal or exceed an amount equal to ten per cent of all loans made by the licensee and outstanding;

(o) all mortgages of Interests in land shall (in the case of land situated in the State of Victoria) be registered under the transfer of Land Act 1958 or the Property Law Act 1958 or other enactments which permit the registration of such mortgages and (in the case of land situated in another State or Territory of Australia) be registered under the legislation of that other State or Territory which permits the registration of such mortgages except:


(i) as otherwise permitted by the Commissioner;

(ii) where all moneys secured under a mortgage have been repaid or are required to be repaid to the licensee within ninety (90) days of the making of the loan; or

(iii) where the mortgage is incapable of being registered under the laws of the State or Territory in which the mortgage is granted.


(p) no security shall be given by the licensee over all or any of its property except for stand-by facilities approved by the Commissioner or in such other circumstances as the Commissioner may approve.

(q) the directors of the licensee shall lodge with the Commissioner a duly executed guarantee in a form approved by the Commissioner under which the directors jointly and severally guarantee the due payment by the licensee of all its liabilities from time to time PROVIDED THAT where in the opinion of the Commissioner the non payment by the licensee of a liability in respect of a deposit or interest thereon is caused by the inability of the licensee to enforce a security because of a moratorium or similar stay imposed by law with respect to that security and the licensee has substantially observed all licence conditions and all legal requirements with respect to that security the Commissioner shall not enforce the guarantee against the guarantors with respect to that liability during the period of that moratorium or stay.

(r) the licensee shall keep a register of mortgages and other investments (herein referred to as the “Security Register”) and enter in that register within one month after the date on which each loan or other investment by the licensee is made:


(i) where the loan is secured by a mortgage, the particulars specified in Schedule II, and

(ii) in any other case, such particulars as may be prescribed by the Commissioner,

PROVIDED THAT if for any substantial reason it is not possible to complete any part of the register within the period of one month the licensee shall complete the register as required omitting the particulars not then available.

(s) the licensee shall keep a Depositor’s Register in which is recorded the name and address of the depositor and the number of his account.

(t) the licensee shall notify the Commissioner in writing within fourteen days of each of the following events:


(i) a change in the directors or voting shareholdings of the licensee;

(ii) a change in the registered office of the licensee.


(u) If a director who has given a guarantee of the obligations of a licensee under paragraph 2(o hereof dies or ceases to be a director of the licensee or ceases to be a shareholder of the licensee the Commissioner may at any time prior to the expiration of twelve (12) months from the date of death or the date of cessation and shall at the expiration of twelve (12) months from such date release him or his personal representatives as the case may be from liability under that guarantee; provided that the Commissioner is satisfied that

(i) either at the date of such death or cessation or at the date that application for release is made the licensee is solvent and is not in breach of any of the prescribed conditions or is in breach but such breach is not likely to affect the solvency of the licensee; or

(ii) in all the circumstances the director or his personal representatives as the case may be ought to be released.


(v) Any release given by the Commissioner under the preceding sub-paragraph shall be given on terms (whether or not expressed in such release) that:

(i) the director named as released (the “retiring guarantee”) shall be released but all the other directors (the "continuing guarantors") shall remain jointly and severally liable as guarantors of the liabilities of the licensee, and

(ii) all rights are reserved against the continuing guarantors and the licensee to the intent that as regards the continuing guarantors and the licensee such release shall operate as a covenant not to require payment from the retiring guarantor.

Schedule I

NOTICE TO DEPOSITOR: (Name and Address of Solicitor's Mortgage

Investment Company) ("the Company")

TO: (Name and Address of Depositor)

PART 1

The particulars of the proposed deposit by you are:

(1) Amount of Deposit;

(2) Date Deposit to be made;

(3) Date Deposit repayable;

(4) Rate of interest;

(5) Dates interest payable.

PART 2:

ALSO PLEASE TAKE NOTE:

1. The company holds a dealer s licence under the Securities Industry (Victoria) Code. Deposits with it are guaranteed personally by its directors who remain liable under such guarantee until they cease to be directors of the company and are released by the Commissioner. A copy of the licence is available on request

2. (name of solicitor or name of firm of Solicitor) has/have an interest in the Company and he/she/they are entitled to participate in the profits of the company.

3. Depositors do not participate in profits of the company and are entitled only to the return of their deposits on the agreed date and the agreed interest payments thereon.

4. The Company intends to invest in the following:

Mortgages of Interests in land Authorized Trustee investments Real property where the total investment does not exceed shareholders funds and ten per centum.

5. The deposit will be a loan to the company and your right of recovery of your deposit and any interest thereon is against the assets of the company. Your deposit is not secured by mortgage, debenture or charge. You may have no recourse to the Solicitors' Guarantee Fund.

6. (Such other matters as are prescribed or permitted by the Commissioner).

PART 3

ACKNOWLEDGEMENT:

I the above Depositor ACKNOWLEDGE:

(1) Receipt of a copy of this Notice.

(2) That the above particulars accord with my understanding of the proposed deposit.

PART 4

Directions as to payment of interest.

Schedule II

Particulars to be specified in Security Register with respect to each investment or advance:

(1) Name and address of borrower.

(2) Amount of principal sum lent

(3) The date of which the principal sum was lent.

(4) The date on which the principal sum is repayable.

(5) The rate of interest and the dates on which each instalment of interest will fall due for payment.

(6) The security for the payment of the loan in sufficient detail to enable the security to be readily identified and where applicable title particulars.

(7) The registration or dealing number, certification number or other specification as is relevant.

(8) Where relevant, insurance particulars of the subject property.

(9) Whether the loan is insured and if so with whom and the number of the relevant policy.

(10) The amount of any valuation of the subject property and the name of the valuer.

(11) Any other. relevant information.

Trust Security Investment Authority

(To be completed and obtained for each Trust Security)

To: (insert name and address of Lenders Solicitor(s))

(1) Total principal sum to be advanced $................. in one lump sum (or by a first advance of $ ......................... and, further advances on the following terms:- ).

(2) My contribution ...........................$

(3) Estimated value of security $.................... established by (e.g. last sale price and date valuation or opinion of (name) and brief details)

(4) Details of Security:-

(5) Borrower- (Name and address)

(6) Term of loan months/years

(7) Interest rate .............% per annum payable (quarterly/yearly etc.).

(8) Lender- the advance is to be made in the name of:- (Name and address)

(9) The total principal sum Is to be advanced by way of a first mortgage (or by way of a mortgage, or by way of a (insert description of other Trust Security) the amount of $.....................being secured by any prior mortgage or other Trust Security).

(10) All correspondence is to be sent to me/us at my/our above address until further notice:-

(11) (Insert any other special conditions or circumstances and additional instructions).

(Where this Authority is provided in relation to a second or subsequent Trust Security the following additional paragraph must be inserted and underlined).

I ACCEPT THAT ANY RIGHTS OF THE LENDER UNDER THIS TRUST SECURITY (WHICH INCLUDES MY RIGHTS) ARE SUBJECT TO AND SECONDARY TO THE RIGHTS OF THE LENDER(S) UNDER ANY PRIOR TRUST SECURITY AS NOTED ABOVE.

(Signatures).........................................

Lender(s).............................................

Date.....................................................

NB: If the borrower is related to the Solicitor, directly or indirectly, the Lender ought to obtain independent advice and/or. representation. Details of the obligations imposed on the Solicitor are obtainable from the Solicitor or the Law Society.

General Mortgage Investment Authority

(To be obtained only where a continuing instruction is to be given to a Solicitor to advance moneys on freehold first mortgage investments without the Lender previously specifying any particular first mortgage security).

To: (Insert name and address of Lender’s Solicitor(s))

I/We (name and address) confirm my/our instructions to you to advance at your discretion the sum of $......................... now held by you on my/our behalf on freehold first mortgage security to be held in the name of (name and address of Nominee) and I/We acknowledge that the loan moneys to be advanced under any such first mortgage may be provided by two or more Contributors (including myself/ourselves) but will not exceed per centum of the valuation of the Security and that as soon as practicable after payment of each such advance you will forward a Summary of the mortgage.

(delete and initial if inapplicable)

I/We do not authorise you to advance the said sum to a borrower who is related to you, directly or indirectly.

All correspondence is to be sent to me/us at my/our above address until further notice.

I/We may cancel this authority at any time by written instructions to you.

(Signatures)....................................

Lender(s)........................................

Date................................................

NB: A Lender ought to obtain independent advice and/or representation before authorising the Solicitor to advance moneys to a borrower related to the Solicitor. Details of the obligations imposed on the Solicitor are obtainable from the Solicitor or the Law Society.

Licence Conditions

1. The licensee shall not carry on a business other than a business for which an exemption has been granted pursuant to Section 215C of the Companies (Victoria) Code.

2. The licensee shall at all times comply with the conditions of the exemption referred to in condition 1, which apply from time to time.

3. The licence certificate shall upon request be made available for inspection by any person who transacts or intends to transact any business with the licensee.

4. The licensee shall immediately in writing inform the Commissioner for Corporate Affairs of any change in the name, style or manner under which its business of dealing is carried on.

5. The licensee shall ensure that the company’s net tangible assets as defined in Appendix A hereto shall not be less than $50,000.00, or an amount equal to 2.5 per centum of the company’s adjusted liabilities, whichever is the greater.

6. The licensee shall ensure that subject to paragraph (7) hereof not less than 10 per centum of depositors' funds is retained in the following form:-

(a) At least 5 per centum invested in deposits at call or n deposits which will fall due for repayment within 90 days with one or more of the following:

(i) a banking corporation as defined in the Securities Industry (Victoria) Code;

(ii) a corporation that is declared by the Governor in Council by notice in the Government Gazette to be an authorized money market dealer;

(iii) a building society in respect of which there is in force a declaration under sub-section 4(5) of the Trustee Act 1958 as amended by the Trustee (Investments) Act 1981 (or its equivalent), authorizing trustees to make deposits or term deposits with the building society; or

(iv) a cash management trust the trust deed of which has been approved and filed with a Local Authority.


(b) Where the total of the deposits specified in paragraph (a) is less than 10 per centum, the remainder of the 10 per centum is:-

(i) invested in bank- accepted or endorsed bills of exchange;

(ii) placed on loan by registered first mortgage over real estate for a period not exceeding three months and for an amount not exceeding 70 per centum of the valuation of the security as sworn to by a registered valuer within six (6) months of the making of the loan or not exceeding 70 per centum of the current improved value of that land as fixed by the municipality in which the land is situated;

(iii) deposited with a solicitors mortgage investment company holding a licence under the Securities Industry (Victoria) Code and being a deposit due for repayment no later than ninety (90) days from the date of investment; or

(iv) invested in Government or semi-Government securities.

7. The licensee may cause part of the funds that have been invested in compliance with paragraphs 6(a) and 6(b) hereof to be released to repay depositors provided the licensee shall re-establish the fund within ninety (90) days or such further period as the Commissioner may in writing allow and in priority to any other investments.

8. The licensee shall lodge and maintain with the Commissioner for Corporate Affairs an approved security of $20,000.

9. If the licence is revoked or suspended the licence certificate shall be returned to the Commissioner for Corporate Affairs immediately.

NOTES:

A. Sub-clause 18(l) of the Securities Industry (Victoria) Regulations provides:

"For the purpose of section 51 of the Code, a licence is granted subject to a condition that the holder of the licence shall immediately notify the local authority in writing of any matter that may adversely affect the financial position of the holder of the licence."

B. Sub-section 52(1) of the Securities Industry (Victoria) Code provides:

"If an event occurs that constitutes a contravention of, or a failure to comply with a condition or restriction applicable in respect of a licence, the holder of the licence shall, not later than the day after the day on which the event occurred, give notice in writing to the Commission setting out particulars of the event"

APPENDIX A

(1) Net Tangible Assets

Net tangible assets shall mean the excess of total tangible assets over total liabilities.

(2) Total Tangible Assets

Total tangible assets shall mean the total assets of the licensee adjusted for any exclusions listed below.

(2.2) Exclusions.

(a) amounts owing to the licensee, the recovery of which is doubtful,

(b) loans or advances made to:

(i) (1) directors, or immediate families, family companies and trusts of directors of the licensee;

(2) employees or immediate families, family companies and trusts of employees of the licensee;

(3) persons associated with a licensee; or

(4) associated companies or associated trustees

and which are not secured adequately to the satisfaction of the Commissioner for Corporate Affairs provided that loans or advances excluded in their own right shall not be included simply because they are secured by way of a guarantee or an indemnity from a proprietary company;

(c) assets lodged with the Commissioner for Corporate Affairs for the purpose of a security pursuant to Section 51(2) (d) of the Securities Industry (Victoria) Code;

(d) assets to the amount which they have been charged or pledged for the purposes of arranging a security pursuant to Section 51(2) (d) of the Securities Industry (Victoria) Code;

(e) funds available on demand by way of a letter of guarantee,

(f) any asset which may be regarded on the basis of generally accepted accounting principles as being intangible; and

(g) any asset which the Commissioner for Corporate Affairs in writing declares may not be included.

(2.3) Method of valuation of tangible assets:

(a) All trading stock and like assets are to be valued at the lower of cost or net realisable value.

(b) All other assets are to be valued at a fair value always providing that all securities, promissory notes and bills of exchange having a ready market are to be valued at a fair value but not in excess of market value.

(3) Adjusted Liabilities

Adjusted liabilities shall mean total liabilities less any liability which the Commissioner for Corporate Affairs in writing agrees may be an acceptable deduction from total liabilities.

(4) Other Definitions

(4.1) Associated Person

The term “person associated with a person” shall have the meaning expressed in the Securities Industry (Victoria) Code.

(4.2) Secured Adequately

Loans or advances shall be deemed to be secured adequately if secured by way of a charge, legal or equitable, of a recognised nature over securities for which there exist a ready market provided that the market value of these securities always equals no less than 105 per cent of the said loans or advances.

Loans or advances secured by way of a registered first mortgage over real estate that has a fair market valuation at least equal to the said loan or advance shall be deemed to be secured adequately.

GIVEN under the Common Seal of the NATIONAL COMPANIES AND SECURITIES COMMISSION the 13th day of February 1984.

The COMMON SEAL of the NATIONAL COMPANIES AND SECURITIES COMMISSION hereunto affixed pursuant to a direction of the commission in the presence of: .............................. ..........................