As part of its ongoing review of the sector, the Australian Securities and Investments Commission (ASIC) has released updated regulatory guidance for operators of registered managed investment schemes (MIS) and their advisers.
The guidance details the regulator's views on the content requirements for the constitution of a scheme, which sets out the obligations of the responsible entity (RE) and the rights of members.
This includes the investment and borrowing powers of the RE, the rights of members to withdraw, and their rights in the event of a winding-up of a scheme, ASIC stated.
In addition to RE powers and member's rights, Regulatory Guide 134, ‘Managed investments: Constitutions' sets out the action the regulator may take in assessing constitutional provisions relating to the consideration to acquire an interest in the scheme, complaints handling for retail and wholesale clients, winding-up the scheme and the constitution's legal enforceability.
The new guidance follows a formal public consultation that commenced in September last year with the release of ASIC's consultation paper (188).
Prior to this, the regulator had identified key areas of non-compliance after commencing a review of the unlisted property MIS sector because it said the schemes represented a popular investment vehicle for retail investors and posed some risks, particularly in regards to illiquidity.
RG 134 will come into effect from 1 October 2013. For schemes registered before 1 October, ASIC will not require REs to amend their constitutions, as outlined in three separate ASIC Class Orders (13/655, 13/656 and 13/657).
Acknowledging that there may be legal, operational and cost implications in implementing the regulatory changes, ASIC Commissioner Greg Tanzer said existing schemes will not be required to amend their constitutions if they meet the current RG 134 obligations.
"Ultimately, (the new guidance) goes to our strategic priority of ensuring efficient registration and licensing, and aims to improve the overall efficient registration and licensing — and efficiency and accessibility — of the process," he said.
