Managed Investment Schemes

We have significant experience in acting as a Responsible Entity for Managed Investment Schemes. We can help you establish and operate a Managed Investment Scheme for retail and wholesale investors.

Managed Investment Schemes

The Management Investment Act 1998 (Cth) (MIA), which is incorporated into Chapter 5C of the Corporations Act 2001 (Act), contains within it the framework for Managed Investment Schemes (MIS).

All schemes established in Australia are regulated by the Act and can be either registered or unregistered.

Registered Schemes

A scheme must be registered with the Australian Securities and Investments Commission (ASIC) in any of the following situations:

  • It has more than 20 members.
  • It is promoted by a person who is in the business of promoting managed investment schemes.
  • ASIC has determined that the scheme, and one or more other schemes, are closely related and the total number of members of the combined schemes exceeds 20.

Unregistered Schemes

In situations where the above criteria are not met then the scheme does not need to be registered.  Generally, unregistered schemes are offered only to wholesale or professional investors.

Registered Schemes

Unregistered Schemes

Product Issuer

Responsible Entity

(Public Company)

Trustee or Manager

(Public Company or Proprietary Company)

Clients

Retail or wholesale

Generally only wholesale clients

Registered with ASIC

Yes

No

Establishment Requirements

Compliance Plan and Constitution.

Documents lodged with ASIC

Constitution/Trust Deed

Regulatory Requirements

Must comply with the Corporations Act which impacts on operation and promotion.

Corporations Act does not impose operational requirements, but it does impact on scheme promotion.

AFS Licence Requirements

Must be held to operate a scheme, deal in a financial product and provide advice (some exceptions exist).

Must be held to deal in a financial product and provide advice (some exceptions exist), provide a custodial service.

Financial Requirements

Must meet minimum financial requirements, including net tangible assets.

Must meet minimum financial requirements, no net tangible assets requirements.

Disclosure document

Product Disclosure Statement (retail clients) or Information Memorandum (wholesale clients)

Information Memorandum

Reporting requirements

Must lodge annual audited accounts with ASIC.

Compliance plan must be audited annually.

Annual reporting and periodic statements must be sent to investors.

Continuous disclosure obligations may be required.

No lodgement of accounts with ASIC.

No requirement for trust accounts to be audited.

Investor reporting frequency (if at all) is determined by the manager.

Custody requirements

Can be held by RE subject to minimum NTA requirements. Generally, an external custodian is appointed.

Trustee can hold trust assets.

An external custodian can be appointed

The Role of a Responsible Entity

The role of a Trustee and Responsible Entity are very similar in that they are the overall operator or supervisor of the scheme in order to protect investors.

The Responsible Entity must undertake the duties conferred on it by the Corporations Act 2001, its AFSL, the Constitution and the compliance plan (for a registered scheme) and the Product Disclosure Statement or information memorandum.

The RE role is designed to provide investor protection, as such the RE must:

  • Act honestly.
  • Exercise a reasonable degree of care and diligence.
  • Act in the best interest of members of the managed investment scheme.
  • Have adequate compliance arrangements in place to safeguard the interests of members.