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16-329MR ASIC updates regulatory framework for charitable investment fundraisers
ASIC has issued a revised policy and regulatory framework for charities that raise investment funds. The framework removes regulatory barriers to the issue of financial products while strengthening protection for public investors.
The changes follow an ASIC review of the operation of exemptions available to charities from certain managed investment, debenture, fundraising and licensing provisions of the Corporations Act. The changes are aimed at ensuring the policy is consistent with our objectives of confident and informed investors and fair and efficient markets.
The review had identified difficulties in liquidity management by fundraisers and the effectiveness of their disclosure.
Following extensive consultation under Consultation Paper 207 Charitable investment fundraisers (CP 207) and further consultation with industry stakeholders on our proposals, ASIC has made a number of updates, including:
- from 1 January 2017, charitable investment fundraisers will not be permitted to issue at-call or investments with a term of less than 31 days to retail investors
- from 1 January 2018, charitable investment fundraisers that wish to issue investments to retail investors who are not associated with the charity will no longer be exempted from the requirement to hold for Australian financial services licence from ASIC. Further, additional restrictions apply that are designed to avoid the investments being used for transactional facilities.
The changes have been made in consultation with the Australian Prudential Regulation Authority (APRA) to ensure there are no inappropriate inconsistences in our policy position. ASIC notes that some charitable investment fundraisers are Religious Charitable Development Funds which rely on APRA's exemption from the Banking Act.
In addition, we have applied disclosure, lodgement, breach reporting and financial reporting requirements although these requirements are less stringent than the equivalent provisions in the Corporations Act that apply to regulated entities.
The changes announced today are effected by repealing existing class order CO 02/184 Charitable investment schemes- fundraising and replacing it with ASIC Corporations (Charitable Investment Fundraising) Instrument 2016/813 and issuing a new version of Regulatory Guide 87 Charitable investment fundraising and school enrolment deposits.
The existing class order CO 02/151 School enrolment deposits has also been repealed and replaced with ASIC Corporations (School Enrolment Deposits) Instrument 2016/812 without substantive amendment. This will continue to permit schools accepting enrolment deposits to do so without the requirement to comply with the relevant provisions of the Corporations Act.
ASIC Commissioner Greg Tanzer said, 'We are satisfied that our policy strikes the right balance between exempting charitable investment fundraisers from applicable legal provisions where investors are motivated to support the charitable purposes while maintaining appropriate protections for investors.'
- Regulatory Guide 87 Charitable schemes and school enrolment deposits (RG 87)
- Consultation Paper 207 Charitable investment fundraisers (CP 207)
- Non-confidential submissions to CP 207
- Report 495 Response to submissions on CP 207 Charitable investment fundraisers (REP 495)
- ASIC Corporations Repeal instrument 2016/810 in respect of existing Class Order [CO 02/184]
- ASIC Corporations (Charitable Investment Fundraising) Instrument 2016/813 and related Explanatory Statement
- ASIC Corporations Repeal instrument 2016/819 in respect of existing Class Order [C0 02/151]
- ASIC Corporations (School Enrolment Deposits) Instrument 2016/812 and related Explanatory Statement