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16-176MR ASIC smooths transition for responsible entities to implement new tax system for managed investment trusts
ASIC has granted relief to assist responsible entities of registered schemes to allow them to make changes to their constitutions without automatically holding a members’ meeting.
The relief will assist responsible entities to smoothly implement the new tax system for managed investments trusts should they make the choice to do so. The new system was enacted on 5 May 2016.
In order to rely on relief, responsible entities will need to post a statement on their website explaining that they intend to amend the constitution, the reasons for this and the effect of the amendments. The statement will also need to explain that members can make a request within seven (7) days that a meeting be called and give an email address for members to make this request. If five per cent (5%) or more of the total number of members request a meeting within seven days of the statement being posted on the website, a members’ meeting will be required to approve the amendments. If no members' meeting is required after seven days since the statement was posted on the website, responsible entities can make the amendments without the need for member approval.
ASIC is currently drafting an instrument to give effect to this relief and intends to release it on or before 22 June 2016. This relief will reduce uncertainty and costs associated with the requirements that apply under the Corporations Act in relation to making amendments to the constitution of a registered scheme and to allow those responsible entities who wish to elect into and implement the new taxation regime for the 2015-2016 income year to do so.
In preparation for this instrument becoming effective, responsible entities wanting to implement the new tax system for managed investment trusts for the 2015-2016 income year should consider (1) drafting changes to the constitution (2) drafting the statement that will need to be placed on the website and (3) undertaking internal approval procedures.
Under the instrument, responsible entities will also be granted relief from the duty to treat members who hold interests of the same class equally to the extent that it prevents an attribution being made in accordance with the requirements under the new tax system.
A further media release will be issued when the instrument becomes effective.
*Editor's note 1: ASIC update on relief
On 8 June 2016, ASIC announced a decision to refine the form of the relief that will apply to registered wholesale schemes.
Responsible entities of registered schemes where all interests are held by wholesale clients will not need to publish such a statement on their website where they have taken reasonable steps to consult with each member before amending the constitution. Taking reasonable steps, can include speaking with the members or emailing them. Responsible entities of wholesale schemes can consult with members prior to ASIC’s instrument becoming effective.
All other schemes will still need to post such a statement on their website. Responsible entities can do this prior to ASIC’s instrument becoming effective.