Running a registered scheme

Responsible entities must comply with certain requirements to run a registered managed investment scheme (registered scheme). Key obligations are outlined under Chapter 2, Chapter 5C and Chapter 7 of the Corporations Act.

If we become aware that a responsible entity is not complying with its obligations, we may conduct further inquiries. We may also take enforcement action as appropriate. The enforcement action may be administrative, civil or criminal action.

AFS licensee and responsible entity obligations

To operate a registered scheme, responsible entities must hold an AFS licence and comply with their AFS licensee and responsible entity obligations.

The relevant AFS licensee obligations under Chapter 7 of the Corporations Act are set out in Table 1.

Table 1: Summary of AFS licensee obligations

Obligation	Explanation	Corporations Act	Relevant guidance
General obligations	Acting efficiently, honestly and fairly, and comply with the conditions on the licence and the financial services laws. This includes obligations to: notify ASIC of significant breaches (section 912D) lodge annual financial statements and an auditor's report with ASIC (section 989B).	Sections 912A(1)(a), (b) and (c)	Regulatory Guide 132 Funds management: Compliance and oversight (RG 132)
Conflicts of interest	Having in place adequate arrangements to manage conflicts of interest.	Section 912A(1)(aa)	Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181)
Resource requirements	Having adequate financial, human and technological resources. Note: This obligation does not apply to responsible entities that are bodies regulated by the Australian Prudential Regulation Authority (APRA), unless they are certain registrable superannuation entities (RSE) licensees.	Section 912A(1)(d)	Regulatory Guide 166 Licensing: Financial requirements (RG 166)
Organisational competence	Maintaining the competence to provide the financial services.	Section 912A(1)(e)	Regulatory Guide 105 AFS licensing: Organisational competence (RG 105)
Risk management	Having adequate risk management systems. Note: This obligation does not apply to responsible entities that are bodies regulated by APRA, unless they are certain RSE licensees.	Section 912A(1)(h)	Regulatory Guide 259 Risk management systems of responsible entities (RG 259)
Compensation arrangements	Having adequate compensation arrangements.	Section 912B	Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126)
Dispute resolution	Having an internal and external dispute resolution system that complies with section 912A(2). Note: This obligation only applies to responsible entities that provide financial services to retail clients.	Section 912A(1)(g)	Regulatory Guide 165 Licensing: Internal and external dispute resolution (RG 165) Note: This guide applies to complaints received by financial firms before 5 October 2021, when Regulatory Guide 271 Internal dispute resolution (RG 271) comes into effect. We will withdraw RG 165 on 5 October 2022.
Financial reporting	Preparing annual audited financial statements as a licensee (in addition to the annual company financial statements prepared under Chapter 2)	Section 989B	Financial reporting and audit page Media Release (21-082MR) ASIC to extend deadlines for 30 June 2021 financial reports and amends ‘no action’ position on AGMs (23 April 2021)

The responsible entity of a registered scheme must also comply with the certain obligations under Chapter 5C of the Corporations Act when exercising its powers and carrying out its duties. It must, for example:

• act honestly and exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity’s position (see sections 601FC(1)(a) and (b) of the Corporations Act)
• act in the best interests of the members, and if there is a conflict between the members’ interests and its own interests, give priority to the members’ interests (see section 601FC(1)(c))
• treat members who hold interests of the same class equally, and members who hold interests of different classes fairly (see section 601FC(1)(d))
• ensure that the scheme’s constitution meets the requirements of the Corporations Act (see section 601FC(1)(f)), and
• ensure that the scheme’s compliance plan meets the requirements of the Corporations Act (see section 601FC(1)(g)).

Disclosure obligations

Responsible entities will need to comply with their disclosure obligations under Chapter 7 of the Corporations Act. These obligations include the obligation to provide a Product Disclosure Statement (PDS). Additional guidance is outlined in Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations) (RG 168), Regulatory Guide 221 Facilitating digital financial services disclosures (RG 221) and Regulatory Guide 97 Disclosing fees and costs in PDSs and periodic statements (RG 97).

Design and distribution obligations

Responsible entities will also need to comply with the design and distribution obligations from 5 October 2021.

For further information on these obligations see Design and distribution obligations for schemes.

Auditing compliance plans

Responsible entities must appoint an auditor for a registered scheme’s compliance plan. The auditor must audit the compliance plan within three months of the end of the financial year of the registered scheme and provide a report to the responsible entity.

Responsible entities must then lodge their compliance plan audit report with ASIC, together with a copy of Form 5111 Compliance plan audit report of a registered scheme. The form and audit report must be lodged within three months of the end of the financial year.

Note: We have extended the deadline for both listed and unlisted schemes to lodge financial reports by one month. This applies to financial reports with balance dates between 23 June and 7 July 2021 (inclusive). For responsible entities that rely on this relief, there is consequential relief that extends the deadline for lodging the compliance plan audit by a month – see  21-082MR.

We monitor the lodgement of these reports on an ongoing basis. If you have not lodged your report on time, or the report raises an issue of concern to us, we may contact you for an explanation.

Appointing or ceasing a scheme auditor

To appoint or cease a scheme auditor, download and complete the relevant form(s): see Table 2.

Table 2: Forms to appoint or cease a scheme auditor

Action	Form
Apply to appoint scheme auditor	Form 5131 Application for appointment of scheme auditor by member of a registered scheme
Approve resignation or removal of scheme auditor	Form 5132 Application for consent from ASIC for resignation or removal of scheme auditor
Notify ASIC of resignation, removal or cessation of scheme auditor	Form 5133 Notification of resignation, removal or cessation of a registered scheme auditor
Notify ASIC of appointment scheme auditor	Form 5137 Notification of appointment of scheme auditor

For more information on resignation or removal of auditors of registered schemes, read Information Sheet 64 Resignation and removal of auditors of registered scheme financial report or a compliance plan (INFO 64).

Annual statements

Within two weeks of your review date (usually the anniversary of your scheme's registration date) we will send you a copy of your annual statement. You only need to respond if the particulars in the annual statement are incorrect or we have asked questions to respond to. If you need to respond, you must respond within 28 days of receiving the annual statement. Further information on how to respond will be contained in the annual statement

• More information about annual statements

Lodging the financial accounts and audit of a scheme

Responsible entities must prepare a financial report, directors' report and auditor’s each financial year for all registered schemes. They must lodge these reports online with ASIC.

The reports must be lodged within three months after the end of the financial year.

Note: We have extended the deadline for both listed and unlisted schemes to lodge financial reports by one month. This relief applies to financial reports with balance dates between 23 June to 7 July 2021 (inclusive) – see 21-082MR.

We monitor the lodgement of these reports on an ongoing basis. If you have not lodged the reports on time, or we are concerned by issues in the report, we may contact you for an explanation.

• More information on financial reporting and auditing requirements
• Lodge your financial reports online

Risk management

Responsible entities must ensure they comply with their obligations under the Corporations Act as an AFS licensee and responsible entity.

One key obligation is to have adequate risk management systems in place. Responsible entities must have documented risk management systems that identify, assess and manage all material risks of the business and each registered scheme operated. Regulatory Guide 259 Risk management systems of responsible entities (RG 259) provides guidance for responsible entities on our expectations for compliance with this obligation, including liquidity management and cyber risk management.

Breach reporting

If an AFS licensee becomes aware of a significant breach (or likely breach) of their obligations under the Corporations Act, they must report to ASIC: see section 912D. Responsible entities also have an obligation to report breaches: see section 601FC(1)(l).

You must submit your report through the ASIC Regulatory Portal. You must report as soon as practicable, and within 10 business days. Failing to report a significant breach is an offence and may result in penalties. Regulatory Guide 78 Breach reporting by AFS licensees (RG 78) provides further guidance on the breach reporting obligations for AFS licensees and responsible entities and our assessment of breaches.  

Applying for relief

Responsible entities may apply for relief from the financial services provisions under certain circumstances.

• Applying for relief
• Financial services regulatory index

Changing the name of a registered scheme

To change the name of a registered scheme, its responsible entity must lodge a copy of Form 5140 Notification of proposed change of name of registered scheme with ASIC. The proposed name of the scheme must not be the same as the name of a current registered scheme, or the name of a proposed scheme that has already lodged an application with ASIC.

As the name of a registered scheme is reflected in the scheme's constitution, you must also lodge a modified or replacement constitution that shows the name change.

Modifying or replacing constitutions

The constitution of a registered scheme may be modified or repealed and replaced with a new constitution by a special resolution of members' of the scheme or by the responsible entity if it reasonably considers that the change will not adversely affect members’ rights (see section 601GC of the Corporations Act).

The responsible entity must lodge a copy of the modification or the replacement constitution with ASIC. The modification, or repeal and replacement, cannot take effect until the copy has been lodged.

You must also lodge a consolidated copy of the registered scheme's constitution if we direct you to do so.

Download and complete a copy of Form 5101 Notification of change to managed investment scheme's constitution and lodge it with a copy of the modification or replacement constitution.

For information on the requirements for executing the scheme documents, please see the FAQs for executing documents.

Modifying or replacing compliance plans

A responsible entity must lodge a copy of a modification or replacement compliance plan with ASIC. The plan must be lodged within 14 days after the modification is made or the compliance plan is repealed.

A modified or replacement compliance plan must still comply with the general content requirements for compliance plans. That is, it must set out adequate measures that the responsible entity will apply in operating the scheme to comply with its legal obligations and the constitution. For more information, see RG 132.

Each director of the responsible entity must sign the modification or replacement compliance plan for ASIC to accept lodgement. A modified or replacement compliance plan may be signed by an agent of the directors. In this case, the agent's authority or copy of the agent's authority verified by a director of the responsible entity must be lodged.

We may ask you to lodge a consolidated copy of a compliance plan with ASIC.

There is no prescribed form for notifying ASIC. Lodge your modification or replacement compliance plan by mailing it with a covering letter to:

Australian Securities & Investments Commission
GPO Box 9827
Brisbane QLD 4001

For information on the requirements for executing the scheme documents, please see the FAQs for executing documents.

Changing responsible entity

The responsible entity of a registered scheme can be changed:

• If the responsible entity wants to retire and members’ approve a replacement responsible entity at a members’ meeting
• If members seek to change the responsible entity and approve a replacement responsible entity at a members’ meeting or
• If the Court appoints a temporary responsible entity (see Part 5C.3 of the Corporations Act).

You must notify ASIC of a change of the responsible entity of a registered scheme. You must lodge Form 5107 Notification of change of responsible entity of a registered scheme.

A company cannot be chosen or appointed as a replacement responsible entity unless it both:

• is a public company
• holds an AFS licence authorising it to operate the registered scheme that is subject to the transfer 

Note: See section 601FA of the Corporations Act.

If an existing registered scheme is being transferred to a new responsible entity, the new responsible entity will generally need to apply for an AFS licence. The new licence must have an authorisation to operate a registered scheme of the same asset class of the scheme that is subject to the transfer.

If the replacement responsible entity already has an AFS licence, it may need to apply to vary its existing licence to authorise it to operate the registered scheme. The responsible entity does not need to vary its licence if its existing licence authorises it to operate assets of a particular kind and the assets of the scheme fall within that class.

If a licence application is required, the responsible entity should apply well before scheduling any member meetings (which are required to be held under section 601FL or 601FM of the Corporations Act). We will not accept a Form 5107 for lodgement unless:

• the replacement responsible entity has an AFS licence authorising the operation of the scheme
• the members' meetings as required under section 601FL or 601FM have been held.

A separate Form 5107 is required for each registered scheme.

What you need to lodge with Form 5107

When lodging Form 5107, you will need to also lodge copies of the following documents:

• notice of meeting of the members of the scheme (section 601FL(1) of the Corporations Act)
• minutes of the meeting, signed by the Chair, verifying that the resolution(s) to replace the incumbent responsible entity were passed.

Effective date

The change in the responsible entity only takes effect when we update the ASIC registers: see section 601FJ of the Corporations Act. This cannot be a retrospective date.

You may advise ASIC in an annexure to Form 5107 of a date in the future when you wish the change to take effect (and to the extent possible, we will seek to accommodate this request). Otherwise, the date of effect will be the date we proceed to process the Form 5107 in the ordinary course.

Lodgement due date

The outgoing responsible entity must notify ASIC of the change within two business days after the resolutions are passed. If the outgoing responsible entity does not do this, the new responsible entity may notify ASIC.

Given the short lodgement timeframe, the outgoing responsible entity should plan to provide the notification to ASIC and may wish to e-mail the Form 5107 and attachments to Licensing.AFSLProofs@asic.gov.au

Virtual meetings

In respect of holding virtual members’ meetings, see Treasury Laws Amendment (2021 Measures No. 1) Act 2021 and review the Government’s website for any future developments.

Further information

You can also subscribe to our publication ASIC Managed Investment Handbook. It contains these regulatory guides together with associated legislative instruments (including class orders) that grant relief from the relevant provisions of the law, and pro formas that can be used by professionals for specific situations including relief instruments, licence conditions, declarations, deeds, determinations, notices, waivers, approvals and consents.