Managed investment schemes are schemes that are created to pool (or use in a common enterprise) resources contributed by members to produce financial benefits or proprietary rights for those members. There are specific inclusions and exclusions to the definition of a managed investment scheme.
Not all managed investment schemes are required to be registered.
To determine whether a scheme must be registered, the following issues should be considered:
-
whether the scheme constitutes a managed investment scheme;
-
whether the scheme falls into an excluded category;
-
whether the scheme was promoted by a person or its associate in the business of promoting schemes;
-
whether the scheme has more than 20 members;
-
whether there is an ASIC determination in force that the scheme is closely related to a number of other schemes and the total number of members in those schemes exceeds 20; and
-
whether all the interests in the scheme were issued in such a way that those issues would not have required the giving of a product disclosure statement under Pt 7.9 if the scheme had been registered.
It is important to accurately assess and determine whether a scheme is a managed investment scheme which is required to be registered, because the operation of an unregistered managed investment scheme which ought to have been registered is a criminal offence punishable by 200 penalty units ($180 per unit) or 5 years' imprisonment or both. The operation of an unregistered managed investment scheme in breach of the Corporations Act 2001 (Cth) may also result in contracts entered into by the scheme being voidable by the investor, an injunction restraining the operation of the scheme or compensation being ordered. Further, the unregistered scheme may be wound up by the court upon application by ASIC, the trustee or a member of the scheme. As such, care should still be taken to ensure that a contravention does not arise.
Many of the requirements specified in the Corporations Act 2001 (Cth) and in this guide only apply to registered managed investment schemes. Unregistered managed investment schemes are not required to comply with these statutory requirements. Having said that, in practice, these statutory provisions often should be used as a guide when operating the unregistered managed investment scheme to ensure best practices are followed and to minimise risks.
To register a managed investment scheme, an application must be lodged with ASIC and be accompanied by the scheme constitution, the scheme compliance plan, a statement signed by the proposed directors of the responsible entity that those documents comply with the prescribed requirements in the Corporations Act 2001 (Cth) and the consent of a person to be the auditor of the compliance plan at the time of lodgement. Care should be taken when choosing a name for the scheme to ensure it is not the same as another scheme or is a restricted name. Care should be taken when choosing a name for the scheme to ensure it is not the same as another scheme or is a restricted name.
Once the application and relevant documents are lodged with ASIC, provided they comply with the legislative requirements, the scheme must then be registered by ASIC within 14 days unless it appears to ASIC that there is non-compliance by the proposed scheme or in the application. Upon registration the scheme is provided an Australian Registered Scheme Number (ARSN).
Once the scheme is registered by ASIC, any documents lodged by the scheme with ASIC must include the scheme's ARSN or ABN.