What Makes A Registered Managed Investment Scheme A Disclosing Entity?

A managed investment scheme is a scheme that enables a group of investors to pool their money for investment to produce a financial benefit. A managed investment scheme can be either registered or unregistered. A registered managed investment scheme must be registered with the Australian Securities and Investments Commission (ASIC) if it has more than 20 members or is promoted by a person in the business of promoting such schemes. Registered schemes have additional compliance and governance responsibilities. This includes the appointment of a Responsible Entity, which must be an Australian public company with an AFS Licence and minimum net tangible assets of $50,000 or 0.5% of the value of the scheme's gross assets, up to $5 million assuming a custodian is appointed (otherwise $10 million is required).

Registration requirements

A managed investment scheme can be either registered or unregistered. However, all managed investment schemes must be operated by a manager with an Australian Financial Services (AFS) Licence, authorising them to run the scheme.

A managed investment scheme must be registered with the Australian Securities and Investments Commission (ASIC) if:

• The scheme has 20 or more members.
• The scheme is promoted by a person in the business of promoting managed investment schemes.
• ASIC has otherwise determined that the scheme must be registered.

Registered schemes have additional compliance and governance responsibilities. For example, a Responsible Entity must be appointed, and they must be a registered Australian public company holding an AFS Licence authorising them to act as a Responsible Entity. The Responsible Entity must also meet certain financial requirements, such as having minimum net tangible assets of $50,000 or 0.5% of the value of the scheme's gross assets, up to $5 million if a custodian is appointed, or $10 million if not.

To apply to register a managed investment scheme, the responsible entity will need to submit an application using Form 5100 Application for registration of a managed investment scheme. The application must include:

• A copy of the scheme's constitution.
• A copy of the scheme's compliance plan.
• Form 5103 Directors' statement relating to the application, signed by the directors of the proposed responsible entity.
• An annexure that cross-references the contents of the constitution to the equivalent provisions in the scheme's constitution.
• If necessary, agent's authorities appointing another person to sign the compliance plan.

The application and accompanying documents can be lodged online through the AFS licensee portal or the registered agent portal.

Compliance and oversight

Registered managed investment schemes have additional compliance and governance responsibilities. Compliance and oversight obligations are outlined in Regulatory Guide 132 Funds Management.

To register a managed investment scheme, the proposed responsible entity must be a registered Australian public company and hold an Australian Financial Services (AFS) licence. The AFS licence authorises the responsible entity to operate the scheme and provide any other relevant financial services in relation to the scheme and its underlying assets.

The responsible entity must meet minimum net tangible asset requirements, which are $50,000 or 0.5% of the value of the scheme's gross assets, up to a maximum of $5 million if a custodian is appointed. If no custodian is appointed, the minimum net tangible asset requirement is $10 million.

A Compliance Plan must be created and lodged with ASIC, outlining the measures the Responsible Entity must undertake to ensure compliance with the Corporations Act and the scheme's constitution.

Additionally, a Compliance Committee must be created if the board of directors of the Responsible Entity consists of less than half external directors. This committee must have a minimum of three members, with the majority being external.

Registered managed investment schemes also have ongoing reporting and disclosure obligations, including lodging annual audited accounts with ASIC, annual reporting to investors, and periodic statements to investors.

Investor eligibility

To be eligible to invest in a managed investment scheme, individuals typically need to meet certain criteria, including:

• Minimum investment amount: There is often a minimum amount that investors must contribute to participate in the scheme.
• Investor type: Some schemes are open to all types of investors, while others may be restricted to wholesale or sophisticated investors only.
• Risk profile: Investors should assess their risk tolerance and ensure that the scheme aligns with their investment goals and risk appetite.
• Investor knowledge: Understanding the nature of the scheme, the underlying assets, and the associated risks is crucial. Investors should conduct thorough due diligence before participating.
• Compliance with regulations: Investors must ensure they comply with any regulatory requirements, such as anti-money laundering and know-your-customer (KYC) regulations.
• Country-specific eligibility: Eligibility criteria can vary by country, and investors should consult local regulations and seek professional advice to ensure compliance.

It is important to note that the specific eligibility requirements can vary depending on the jurisdiction, the nature of the scheme, and the regulations applicable to the particular managed investment scheme. Investors should carefully review the scheme's offering documents and seek independent financial advice to ensure they meet the eligibility criteria and understand the risks involved.

Regulatory bodies

The regulatory body overseeing registered managed investment schemes in Australia is the Australian Securities and Investments Commission (ASIC). According to the Corporations Act 2001, a managed investment scheme must be registered with ASIC if it meets certain criteria: namely, if the scheme has 20 or more members, or if it is promoted by someone in the business of promoting such schemes.

ASIC provides detailed guidance on its website regarding the requirements for registering, operating, and closing a registered managed investment scheme. The regulatory body also outlines the compliance and oversight obligations that entities such as responsible entities must meet under the Corporations Act.

In New Zealand, the regulatory body for managed investment schemes is the Companies Office, where financial products and managed investment schemes offered under the Financial Markets Conduct Act 2013 can be registered and maintained.

In both Australia and New Zealand, there are specific registration processes and requirements that must be adhered to when establishing a managed investment scheme. These processes are overseen by the respective regulatory bodies, ASIC and the Companies Office, to ensure compliance with relevant legislation.

Application process

The application process for registering a managed investment scheme varies depending on the country and specific regulations. Here is a detailed overview of the process based on the information provided:

Australia

In Australia, the application process for registering a managed investment scheme is outlined by the Australian Securities and Investments Commission (ASIC). The responsible entity must meet specific requirements, including being a registered Australian public company and holding an Australian Financial Services (AFS) licence. The scheme must be registered if it has more than 20 members or is promoted by a person in the business of promoting managed investment schemes. To apply, the responsible entity must submit an application (Form 5100) and select the type of scheme from the following categories:

• Financial asset schemes
• Direct real property schemes
• Stable property trusts or syndicates
• Listed property trusts
• Service strata schemes
• Primary production schemes
• Time-sharing schemes

The application must also include supporting documents, such as the scheme's constitution, compliance plan, and directors' statements. Digital signatures are accepted on specific forms and documents.

New Zealand

In New Zealand, the Companies Office maintains the Disclose Register, where all managed investment schemes under the Financial Markets Conduct Act 2013 (FMC Act) must be registered online. The application process is as follows:

• Ensure you have a RealMe® login and are a registered user of your organisation's online services account.
• Gather all the required information and documents before starting your application. You will have 120 days to complete it once started.
• Check your scheme name to ensure it doesn't contravene legislation or exist under the FMC Act.
• Log in to your organisation's online services account and select the 'Register' tab.
• Select the type of managed investment scheme (managed fund investment scheme or other managed investment scheme).
• Enter the scheme name and check for any error messages.
• Obtain consent for the use of the name if required.
• Provide details of all scheme participants, ensuring they exist on another register or directory. Some participants may need to be registered as Financial Service Providers (FSPs) and licensed accordingly.
• Complete the online form and upload the necessary documents.
• Review your application for completeness and correctness.
• Pay the registration fee, if applicable.
• Submit your application by selecting the 'Continue' button. You will receive onscreen confirmation.

Frequently asked questions