ASIC today released revised regulatory guidance to assist operators of registered managed investment schemes (schemes) and their advisers understand ASIC’s views on the content requirements of constitutions for schemes.
The constitution of a scheme is an important document that sets out a number of 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 the scheme.
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Key points:
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The revised guidance is contained in an updated version of Regulatory Guide 134 Managed investments: Constitutions (RG 134), and the relief is contained in ASIC Class Order [CO 13/655] Provisions about the amount of consideration to acquire interests and withdrawal amounts not covered by [CO 05/26], ASIC Class Order [CO 13/656] Equality of treatment impacting on the acquisition of interests and ASIC Class Order [CO 13/657] Discretions affecting the amount of consideration to acquire interests and withdrawal amounts.
RG 134 sets out ASIC’s policy and the action it may take in assessing constitutional provisions relating to:
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the consideration to acquire an interest in the scheme
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the powers and rights of the responsible entity
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complaints handling for retail clients and wholesale clients
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withdrawal rights of members of the scheme
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winding up the scheme, and
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the legal enforceability of the constitution.
ASIC Commissioner Greg Tanzer said the release of today’s updated policy guidance provides clarity to operators of schemes and their advisers by specifically outlining ASIC’s view on the constitutional content requirements, and how ASIC will apply these requirements in deciding whether to register a scheme.
‘Ultimately, this goes to our strategic priority of ensuring efficient registration and licensing, and aims to improve the overall efficiency and accessibility of the process.’
The updates to RG 134 follow a public consultation process (refer: 12-230MR and Consultation Paper 188 Managed investments: Constitutions – Updates to RG 134 (CP 188)), and take into account industry and regulatory developments that have occurred since the guide was last updated in 2000.
ASIC recognises that the managed investments industry will need to make some changes to comply with the updated guidance.
‘There will be a transition period of three months to allow operators of schemes and their advisers to consider the updated guidance and to draft constitutions taking into account the new requirements,’ Mr Tanzer said.
‘In addition, we acknowledge that for existing schemes, there may be legal, operational and cost implications in implementing changes to comply with our revised guidance. As such, we will not require responsible entities of existing schemes to amend their constitution if it already meets the requirements of our previous policy in RG 134.’
Background
ASIC issued CP 188 in September 2012. We received 11 written responses to CP 188 from a variety of sources including responsible entities, leading industry bodies and several law firms. The proposed guidance in CP 188 was refined in the updated RG 134 to take into account the feedback in the submissions we received.
A feedback report on this consultation process and a summary of the key issues that arose out of consultation with industry, Report 347 Response to submissions on CP 188 Managed investments: Constitutions – Updates to RG 134 (REP 347), has also been released today.
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