The Australian Securities and Investments Commission (ASIC) today allowed managed investment schemes to change some references in their constitutions to accounting standards without a meeting of members, to help them move smoothly to the new Australian accounting standards equivalent to International Financial Reporting Standards (AEIFRS).
ASIC’s Class Order [CO 04/1575] allows responsible entities to make specified changes to their constitution without calling a meeting of members if the changes are for the limited purposes specified in the class order.
Under [CO 04/1575], responsible entities must ensure that investors’ rights are not affected by the changes ASIC has permitted. Calculations affecting investors will be done in the same way as they have been done up to now.
AEIFRS will apply to the financial reports of managed investment schemes progressively from 1 January 2005. Many scheme constitutions refer to accounting standards or generally accepted accounting principles for purposes other than a scheme’s financial reporting obligations.
Typically, constitutions refer to the standards for the purpose of working out the value of scheme assets and liabilities and these values are in turn used to set the price of new interests in a scheme, the amount a holder is entitled to if they exit the scheme, the fees paid to investment managers and so on.
[CO 04/1575] will permit responsible entities to make changes to constitutions so that these references continue to be to the current accounting standards, and are not affected by the changed standards that will apply when the scheme prepares financial reports under AEIFRS.
[CO 04/1575] will facilitate a smooth transition to the AEIFRS regime and avoid the need to change systems used for unit pricing and other purposes.
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