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17-112MR ASIC updates guidance for strata schemes and management rights schemes
ASIC has updated Regulatory Guide 140 Strata schemes and management rights schemes (RG 140). This update follows ASIC issuing two legislative instruments in September 2016 to replace several class orders that dealt with relief for property, strata and management rights schemes.
The legislative instruments are the ASIC Corporations (Serviced apartment and like schemes) Instrument 2016/869 and the ASIC Corporations (Property Rental Schemes) Instrument 2016/870 (the Legislative Instruments). The Legislative Instruments replaced the ASIC class orders listed below that were due to expire under the Legislation Act 2003:
- Class Order [CO 99/463] Serviced strata scheme valuations
- Class Order [CO 02/185] Sale of strata units for $500,000 or more
- Class Order [CO 02/245] Closed schemes
- Class Order [CO 02/303] Management rights schemes—amendment;
- Class Orders [CO 02/304] Management rights schemes
- Class Order [CO 02/305] Management rights schemes
- Class Order [CO 07/189] Management rights schemes where the strata unit cannot be used as a residence
- Class Order [CO 02/183] Small Property Syndicates, and
- Class Order [CO 02/182] Real Property Rental Schemes.
RG 140 explains the key terms of the relief under the Legislative Instruments. In broad terms, the Legislative Instruments provide relief to various arrangements involving real property from the managed investment provisions, the Australian financial services licensing provisions, the product disclosure provisions and hawking provisions of the Corporations Act 2001 (the Act).
In addition, RG 140 provides general explanations of how the provisions of the Act relating to managed investment schemes apply to arrangements involving real property, including under strata or community title and certain freehold titles or leasehold interests, referred to in RG 140 as strata schemes. RG 140 explains the concepts of strata schemes, serviced strata schemes and management rights schemes and whether these types of arrangements may fall within the definition of a managed investment scheme under the Act. RG 140 also explains the obligations of operators and promoters for the various types of arrangements.