Download Appendix 9 - Managed Investments Act

SUBMISSION
BY
AUSTRALIAN SECURITIES & INVESTMENTS
COMMISSION
REVIEW OF THE
MANAGED INVESTMENTS ACT 1998
PART 1 OF SUBMISSION - APPENDICES
13 SEPTEMBER 2001
50
Appendix 1
Operation of managed investment schemes
Responsible entity ("RE") - There may be a separate custodian
A responsible entity must be a public company and have a dealer's licence which authorises
the responsible entity to operate a managed investment scheme under section 601FA. The
responsible entity may choose to use an independent custodian to hold scheme property.
The responsible entity may also use agents (in particular for special purpose entities) to
undertake any of its functions and duties.
Licensing requirements
Under Part 7.3 of the Corporations Act 2001, the responsible entity must have a dealer's
licence to operate 'a managed investment scheme' that is the particular scheme, or to operate
a scheme or schemes of a kind - depending upon the assets of the scheme.
The responsible entity must apply for a dealer's licence under section 782 of the
Corporations Act 2001. The adequacy of the educational qualifications and experience of
the applicant's responsible officers will be assessed by ASIC under section 784. ASIC will
have regard to the duties of the responsible officers and whether there is any reason to
believe that the applicant will not efficiently, honestly and fairly perform the duties of a
licence holder.
Under section 784(2A), the applicant must also have net tangible assets (section 784(2C))
which are kept by the applicant at a minimum level of $50,000 or (where all scheme
property is valued at more than $10 million and there is an amount equal to 0.5% of these
assets in the most recent accounts of the scheme lodged with ASIC) up to a maximum of $5
million.
Licence conditions are generally imposed by ASIC under section 786 to:

have adequate financial resources to meet cash needs of the scheme for at least three
months;

have in relation to its officers and agents professional indemnity insurance and fraud
insurance;

meet the requirements for custody of scheme assets;

be a member of an ASIC approved external complaints resolution scheme and have
mechamisms for complaints resolution procedures;
ASIC may revoke or suspend licences of responsible entities under sections 826 and 827.
51
Registration of managed investment scheme
An applicant must apply for registration of a managed investment scheme under section
601EA and Regulation 5C.1.01. ASIC must register the scheme unless the application does
not meet the requirements of sections 601EA and 601EB that is:

there is a responsible entity being a public company with a dealers licence;

there is a statement by the directors of the responsible entity stating that the
constitution and the compliance plan comply with the requirements of sections
601GA, 601GB and sec 601HA;

there is a name for the scheme;

there is a constitution which complies with sections 601GA and 601GB;

there is a compliance plan (which is audited under section 601HG) which complies
with the requirements of section 601HA;
If a managed investment scheme is not registered (when it is registrable under section
601ED(1) - that is the scheme has more than 20 members or was promoted by a person (or
their associate) who is in the business of promoting managed investment schemes - then the
operator will be contravening section 601ED(5) and the scheme may be wound by a court
under section 601EE. Any contracts to acquire interests in those schemes would be
voidable under section 601MB.
Compliance plan
The content requirements of section 601HA must be complied with in the compliance plan.
The directors must sign the compliance plan.
Under section 601 HG, the compliance plan must be audited by a registered company
auditor who will be the auditor of the compliance plan.
Constitution
There are rules between members and scheme operator which replaced the trust deed for a
prescribed interest scheme
Sections 601GA and 601GB regulated the constitution of the managed investment scheme.
Section 601GA sets out the content requirements of the constitution of the managed
investment scheme such as consideration to be paid for a scheme interest, fees for the
responsible entity, the powers of the responsible entity, complaints handling methods and
the manner of winding up for the scheme. The constitution must be legally enforceable
between the members and the responsible entity under section 601GB.
Under section 601FC(1)(m), the constitution must be complied with by the responsible
entity unless the constitution is not consistent with the Corporations Act 2001.
52
Under section 601FD, the responsible entity officers must take all reasonable steps to make
sure that the constitution is complied with by the responsible entity.
The constitution will be a trust deed for trusts and may be contractual documents for
non-trust schemes.
Under section 601GC, changes may only be made to the constitution of the scheme as
approved by a members' special resolution or if the responsible entity is of the view that the
amendment will not adversely affect the rights of members.
Timing – licence, scheme and disclosure document
A letter offering a licence is usually sent to a proposed responsible entity before an
application is lodged for scheme registration. The licence is issued and the scheme is
registered on the same day. The registered managed investment scheme will then be able to
raising funds under Chapter 6D by using disclosure documents.
Chapter 5C reporting requirements
The responsible entity must report breaches (that would materially adversely affect the rights
of members) of the Corporations Act 2001 under section 601FC(1)(l). In addition, there
must be reporting to ASIC by the auditor of the compliance plan of any contraventions of
the Corporations Act 2001 under section 601HG(4) and by the compliance committee under
section 601JC(1)(c).
53
Responsible Entities
Schemes
500
3000
450
2700
400
2400
350
2100
300
1800
250
1500
200
1200
c
150
900
100
600
50
300
0
Jul-98
Aug-98
Sep-98
Oct-98
Nov-98
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
0
Licensed Responsible Entities
Registered Schemes
Appendix 2.1
Overview of Managed Investment Industry – July 1998 to June 2001
Growth of Managed Investment Industry
Month
Licensed
Responsible
Entities
Registered
Schemes
Jul-98
Aug-98
Sep-98
Oct-98
0
0
1
3
0
0
2
18
Nov-98
Dec-98
Jan-99
6
10
12
29
33
38
Month
Jan-00
Feb-00
Mar-00
Apr-00
May-0
0
Jun-00
Jul-00
Licensed
Responsible
Entities
Registered
Schemes
205
215
242
264
1314
1415
1518
1650
290
344
358
1770
2152
2214
54
Feb-99
Mar-99
Apr-99
May-9
9
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
21
37
52
49
85
133
Aug-00
Sep-00
Oct-00
366
376
389
2270
2311
2352
64
84
96
115
127
142
274
428
477
597
740
928
398
400
405
412
419
424
2403
2441
2475
2568
2629
2671
Nov-99
Dec-99
165
185
1112
1243
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-0
1
Jun-01
426
431
2710
2778
55
Strata
2%
Property
19%
Time Share Derivatives
2%
0%
Film
1%
Financial Assets
31%
IDPS
1%
Primary Production
22%
Master Funds
1%
Other
5%
Mortgages
16%
Appendix 2.2
Industry Profile of Licensed Responsible Entities
Licensed Responsible Entities as at 16/8/01
Total = 441
Industry Type
# Of Responsible Entities
Derivatives
2
Film
3
Financial Assets
138
IDPS
3
Master Funds
5
Mortgages
71
Other
23
Primary Production
99
56
Property
83
Strata
7
Time Share
7
57
Appendix 2.3
Industry Profile of Registered Schemes
Registered Schemes as at 16/8/01
Total = 2,827
Strata Derivatives Film
0.3%
0.1%
0.7%
Time Share
Property
0.4%
12.2%
Primary Production
8.2%
Other
1.4%
Mortgages
3.4%
Master Funds
0.2%
IDPS
0.5%
Industry Type
Financial Assets
72.6%
# Of Schemes
Derivatives
4
Film
9
Financial Assets
2052
IDPS
14
Master Funds
5
Mortgages
96
58
Other
39
Primary Production
233
Property
345
Strata
20
Time Share
10
59
Appendix 2.4
Location of Licensed Responsible Entities
Licensed Responsible Entities as at 16/8/01
Total = 441
WA
14.2%
NT
ACT 0.2% SA
4.3%
0.5%
QLD
13.0%
VIC
24.0%
TAS
2.1%
NSW
41.6%
State
# Of Responsible Entities
NSW
186
VIC
105
60
WA
62
QLD
57
SA
19
TAS
9
ACT
2
NT
1
61
Appendix 2.5
Location of Registered Schemes
Registered Schemes as at 16/8/01
Total = 2,827
WA
6.2%
ACT
0.2%
VIC
22.8%
TAS
1.0%
NSW
60.8%
SA
2.0%
QLD
7.0%
NT
0.1%
State
# Of Registered Schemes
NSW
1,725
VIC
641
QLD
197
62
WA
173
SA
56
TAS
27
ACT
6
NT
2
63
60
50
40
30
20
10
May-01
Mar-01
Jan-01
Nov-00
Sep-00
Jul-00
May-00
Mar-00
Jan-00
Nov-99
Sep-99
Jul-99
May-99
Mar-99
Jan-99
Nov-98
Sep-98
Jul-98
0
Appendix 3.1
Work Load Volumes – July 1998 to June 2001
Licence Applications Received per Month
Total = 884
Month
Jul-98
Aug-98
Sep-98
Oct-98
Nov-98
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
May-99
# Of Licence
Applications
2
10
15
21
8
19
17
25
43
48
44
Month
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
# Of Licence
Applications
22
30
20
38
42
54
19
21
23
23
22
64
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
24
19
18
31
50
31
27
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
15
19
24
19
17
15
9
65
350
300
250
200
150
100
50
May-01
Mar-01
Jan-01
Nov-00
Sep-00
Jul-00
May-00
Mar-00
Jan-00
Nov-99
Sep-99
Jul-99
May-99
Mar-99
Jan-99
Nov-98
Sep-98
0
Appendix 3.2
Work Load Volumes – July 1998 to June 2001
Scheme Registrations Received per Month
Total = 2,938
Month
Sep-98
Oct-98
Nov-98
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
# Of Scheme
Registration
s
19
5
12
8
8
25
69
96
Month
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
# Of Scheme
Registration
s
138
141
90
180
324
36
48
51
66
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
178
82
110
96
245
184
118
137
57
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
35
55
58
49
74
67
34
70
39
67
Appendix 3.3
Work Load Volumes – July 1998 to June 2001
250
209
163
150
100
83
95
75
70
74
51
53
50
30
14 15
1
22
13 11
26
28
37
41
29
27
49
28
54
37
27
34
31
29
23
3
17
22
23
18
0
Ju
lAu 98
gSe 98
pO 98
ct
N 98
ov
-9
D 8
ec
Ja 98
nFe 99
bM 99
ar
Ap 99
r
M -99
ay
Ju 99
n9
Ju 9
lAu 99
gSe 99
pO 99
ct
N 99
ov
-9
D 9
ec
Ja 99
nFe 00
bM 00
ar
-0
Ap 0
r
M -00
ay
Ju 00
n0
Ju 0
l-0
Au 0
gSe 00
pO 00
ct
N 00
ov
D 00
ec
Ja 00
nFe 01
bM 01
ar
-0
Ap 1
r- 0
M 1
ay
Ju 01
n01
Number of relief application(s)
200
Months
All Relief Applications Received per Month
Total = 1,560
Month
Jul-98
Number of
Relief
Applications
1
Month
Jan-00
Number of
Relief
Applications
49
68
Aug-98
Sep-98
Oct-98
Nov-98
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
May-99
Jun-99
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
3
14
15
22
13
11
30
26
28
41
209
29
27
83
37
28
70
Feb-00
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
54
75
74
95
163
37
29
53
23
27
34
17
22
31
23
51
18
69
30
25
20
15
10
5
Jun-01
Apr-01
Feb-01
Dec-00
Oct-00
Aug-00
Jun-00
Apr-00
Feb-00
Dec-99
Oct-99
Aug-99
Jun-99
Apr-99
Feb-99
Dec-98
0
Appendix 3.4
Work Load Volumes – July 1998 to June 2001
Surveillance Activities started per Month
Total = 208
Month
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
May-99
Jun-99
Jul-99
Aug-99
# Of
Surveillance
Activities
Started
3
0
2
1
1
1
4
6
24
Month
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
# Of
Surveillance
Activities
Started
5
5
5
2
14
10
20
17
4
70
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
15
7
2
0
0
10
9
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
3
10
12
2
9
5
71
60
50
40
30
20
10
Mar-00
Feb-00
Jan-00
Dec-99
Nov-99
Oct-99
Sep-99
Aug-99
Jul-99
Jun-99
May-99
Apr-99
Mar-99
Feb-99
Jan-99
Dec-98
Nov-98
Oct-98
0
Appendix 3.5
Disclosure Document Registration
Managed Investment Prospectus Registration
From July 1998 to March 2000 (prior to Clerp 4)
Month
Oct-98
Nov-98
Dec-98
Jan-99
Feb-99
Mar-99
Apr-99
May-99
# Of
Prospectuse
s
1
6
4
7
5
18
28
48
Month
Jul-99
Aug-99
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
# Of
Prospectuse
s
15
25
18
31
29
43
26
28
72
Jun-99
34
Mar-00
30
73
120
100
80
60
40
20
Prospectus
Short Form Prospectus
Jun-01
May-01
Apr-01
Mar-01
Feb-01
Jan-01
Dec-00
Nov-00
Oct-00
Sep-00
Aug-00
Jul-00
Jun-00
May-00
Apr-00
Mar-00
0
Supplementary Disclosure Document
Appendix 3.6
Disclosure Document Lodgment
Managed Investment Disclosure Document Lodgment
Since March 2000 (post Clerp 4)
Month
# Of
Prospectuses
# Of Short Form
Prospectuses
Mar-00
Apr-00
May-00
Jun-00
Jul-00
Aug-00
Sep-00
21
49
47
55
64
33
43
1
2
22
2
5
45
27
# Of
Supplementary
Disclosure
Documents
2
13
12
5
12
14
74
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
49
47
30
24
107
49
51
39
36
48
52
44
36
66
109
18
38
26
5
20
11
26
47
46
25
31
48
Managed Investment Disclosure Actions July 2000 – June 2001
There have been 37 Interim Stop Orders placed across 28 different Entities.
There have been 6 Final Stop Orders placed across 4 different Entities.
There have been 120 Extensions of Exposure period across 81 Entities
75
Appendix 4
Summary of MIA relief granted – 1 July 1998 to 30 June 2001
Individual instruments issued
(i) Extending the transitional period and the date by which subsection 1457(1) meeting must be held for
prescribed interest schemes using PF 174, PF 203 and other types of instruments granting transitional relief
– (over 500 instruments)
(ii)
(iii)
Strata schemes:
 Well advanced schemes based on PF 186 - (over 190 instruments)
 Closed schemes, management rights and other types of relief involving strata schemes (about 40 instruments)
 Strata arrangements which incidentally involve a managed investment scheme (PF 184)
- ( 3 instruments)
 Management rights where the strata unit cannot be used as a residence (PF 187) – (4
instruments)
 Non-proforma – (1 instrument)
Relief from the registration requirements of Part 5C or s601EB in relation to employee schemes:
 Contribution plans – (over 60 instruments)
 Foreign employee schemes – (about 10 instruments)
 Notional investment (1 instrument)
 Others – (3 instruments)
(iv)Acting for trustee or representative of another scheme after registration (Based on PF 185) - (9
instruments)
(v) Foreign collective investment schemes – Chapter 5C relief (using PF 71 as modified under the new
Law) – ( over 15 instruments)
(vi)Differential fee arrangements involving s601FC(1)(d) and s601GA to allow offer of fees at different
rates to members - (over 40 instruments)
(vii)
Relief from either the whole or part of Chapter 5C:
 Private schemes involving partnerships – (6 instruments)
 Service trusts (2 instruments)
 Schemes previously offered under the old Law but could ony be offered under the new Law
to excluded offerees – limited to 12 in 12 months (1 instrument)

time share schemes
 PF 205 for time sharing schemes formerly exempt under State laws ( 4 instruments)
 PF 206 for time sharing schemes with Chapter 5C relief
(5 instruments)
 PF 207 for title based time sharing schemes– (27 instruments)






business research (1 instrument)
flight centre (1 instrument)
management of leased wine storage scheme (1 instrument)
redundancy fund (2 instruments)
golf club (2 instruments)
pooled bank account scheme (1 instrument)
76


















warrants (1 instrument)
Pittwater radiology scheme (1 instrument)
Charitable organization (1 instrument)
scheme for use of corporate suite at stadium (1 instrument)
Rugby union scheme (1 instrument);
Austraclear scheme (1 instrument)
membership in a Melbourne cricket club (1 instrument)
property syndicate (1 instrument)
unsecured notes that could involve a managed investment scheme (1 instrument)
Fighting Fund (1 instrument)
renounceable sales contracts (1 instrument)
put option over units in a residential development (1 instrument)
employee scheme involving stapled securities (1 instrument)
cooperative scheme (1 instrument)
strata scheme (1 instrument)
a lessee or sublessee under a registered lease from the Minister for the Environment for the
State of New South Wales (1 instrument)
surgery centre unit trust (1 instrument)
reward system (1 instrument)
(viii)
Relief from the duty to separate assets of a managed investment scheme – s601FC(1)(i). This
involves custodians holding financial assets in a way that does not separate scheme property for one
managed investment scheme from the scheme property of other managed investment schemes (2
instruments).
(ix)
Nomination of a related body as the proposed responsible entity such that the nominee becomes
the proposed responsible entity if chosen by the members or the members do not ask for a vote
after they have received notice of the nomination – amendment to s1456 and s1460 requirements
– similar to CO 99/374 (20 instruments).
(x) Amendment to s601JB(4) such that a person who has been a member of a compliance committee
established to ensure compliance with legal, statutory and ethical manner is not to be taken to have been
substantially involved in business dealings for purposes of membership in a compliance committee (1
instrument).
(xi)Amendment to s601GA(1)(a) for purposes of issue price determination where securities are stapled to
another form of security and where both stapled securities are included in the official list of the ASX and
remain traded as one security (over 10 instruments).
(xii)
Amendment to s601FC(1)(c) and s601FD(1)(c) for purposes of addressing problems associated
with stapling of two or more securities - ie. must act in the best interest of members, having regard to their
interests as stapled security holders as a whole, and if there is any conflict between the members' interests
and interests of the RE, must give priority to the members' interests (over 5 instruments).
(xiii)
Amendment to s601PA(2) for purposes of deregistering a trust following registration of a stapled
security as a managed investment scheme given that its preferable, once the stapled scheme is registered, to
deregister the individual scheme rather than leave them registered with separate ARSN (more than 1
instrument).
(xiv)
Relief from s601HG(3) – requirement to audit the compliance plan within 3 months after the end
of a financial year of the scheme – such that the requisite audit is done within 4 months after the end of the
financial year (1 instrument).
(xv)
Amendment to withdrawal provisions in s601GA(4) as part of merger arrangement where the
withdrawal proceeds are to be applied to subscribe for interests in a scheme in accordance with the
77
withdrawal mechanism described in the notice of meeting and explanatory memorandum put before the
members at a meeting to consider the merger proposal (over 10 instruments).
(xvi)
Exemption from the meeting requirements – ie. to have only a single meeting to satisfy meeting
requirements (ie. replace the responsible entity) for all the securities being stapled ( over 5 instruments).
(xvii)
Exemption from the meeting requirement – from s601FL and s601FM where the only member
(usually one or two members) has consented in writing to the proposal (either a change in the constitution
that would be adverse to members or a change in responsible entity)- (over 20 instruments).
(xviii)
Extension of time to establish compliance plan (PF 179) – (1 instrument).
(xix)
Extend the two-month period when one of the bodies receives a retirement notice pursuant to
s1456 (1 instrument).
(xx)
Vary licence condition pursuant to CO 99/558 for contractual rights, calculation of NTA, audited
trust account, etc (over 5 instruments).
(xxi)
Amendments to various provisions of the Law – removal of RE, amendment to constitution and
winding up – for special type of scheme (1 instrument).
(xxii)
Variation to the requirement of s601FL(2)(a) – ie the consent in writing to become the scheme's
responsible entity with effect from the date of completion of the proposal and the lodgement of the notice of
change of RE for the scheme with ASIC on the date of completion of the proposal rather than as required by
s601FL(2)(a) – (1 instrument).
(xxiii)
Relief from requirements of s601FL – related party transactions – for a limited time (and subject
to a number of conditions) in relation to contracts entered into between the RE and another related
company. – (1 instrument).
(xxiv)
Amendment to s1457 to clarify the uncertainty such that if a s1457 meeting does not result in a
decision about the future direction of a scheme, a second unit holder meeting may be convened and such
meeting may constitute a s1457 meeting for purposes of Division 11 of Part 11 of the Law. There is an
argument that s1457 does not provide for the holding of another meeting for purposes of transition.
(1 instrument).
(xxv)
Amendment to s601ED(4) for purposes of determining the number of members of a scheme – ie.
interest in the scheme held on trust for a beneficiary does not include income or a share of the trust estate
relating to a financial year. – (1 instrument)
Class Orders issued involving Chapter 5C and licence conditions (137)
CO 98/50] Incorporating parts of other compliance plans
[CO 98/51] Relief from duty to separate assets of a managed investment scheme
[CO 98/52] Relief from the consideration to acquire constitutional requirement
[CO 98/55] Investments in unregistered schemes
[CO 98/56] References to prescribed interests
[CO 98/57] Exemption from calling a meeting of unitholders under s1457
[CO 98/58] Relief for operations of foreign managed investment schemes
[CO 98/59] Transitional relief for one party prescribed interest schemes
[CO 98/60] Protecting class rights in a managed investment scheme
[CO 98/61] Excluded issue managed investment schemes
[CO 98/64] Participating property syndicates
[CO 98/65] Horse racing syndicates
78
[CO 98/66] Charitable investment schemes — fundraising
[CO 98/67] Charitable investment schemes — continuous disclosure
[CO 98/68] School enrolment deposits
[CO 98/69] Friendly societies — exemption from Chapter 5C
[CO 98/70] Horse breeding schemes — private broodmare syndication
[CO 98/71] Horse breeding schemes — private stallion syndication
[CO 98/72] Private ostrich schemes
[CO 98/74] Interests in film and theatrical ventures
[CO 98/75] Film investment schemes
[CO 98/76] Managed investment scheme interests not for money
[CO 98/77] Trustee companies common funds
[CO 98/78] Small property syndicates
[CO 98/1542] Finance Brokers Institute of SA — Ch 5C relief
[CO 98/1581] NSW solicitors' contributory mortgage schemes — Ch 5C relief
[CO 98/1582] Tasmanian solicitors' contributory mortgage schemes — Ch 5C relief
[CO 98/1583] Victorian solicitors' contributory mortgage schemes — Ch 5C relief
[CO 98/1584] Approved securities exchanges: s257B(7)
[CO 98/1789] Removing approved deed provisions
[CO 98/1803] Ordinary residential or commercial letting out arrangements
[CO 98/1805] Former representative on compliance committee
[CO 98/1806] Related bodies corporate and external members of compliance committee
[CO 98/1807] Exemption from Div 5 for excluded issue scheme
[CO 98/1808] Allowing constitutions to use Appendix 15A of the ASX Listing Rules
[CO 98/1809] Investments in unregistered schemes
[CO 98/1810] Relief from the consideration to acquire constitutional requirement
[CO 98/1931] Sale of strata units for $500,000 or more
[CO 98/2159] Removing approved deed provisions
[CO 98/2160] Amendment to earlier unitholders' meetings class order
[CO 98/2284] Closed schemes
[CO 98/2287] Management rights schemes
[CO 99/151] Film investment schemes
[CO 99/374] Nomination of a related body corporate as the proposed responsible entity
[CO 99/460] Management rights schemes
[CO 99/461] Closed schemes
[CO 99/462] Concise prospectuses — serviced strata schemes
[CO 99/463] Serviced strata schemes valuations
[CO 99/557] Registration of managed investment schemes in each jurisdiction
[CO 99/558] Determination of the additional requirements being pre-conditions to the issue of a licence
[CO 99/629] The Society of Lloyd's
[CO 99/673] Participating property syndicates
[CO 99/674] Investments in unregistered schemes
[CO 99/675] Sydney futures exchange — managed discretionary accounts
[CO 99/836] Relief for the 1998-1999 audit of the compliance plan
[CO 99/838] Transitional relief for timeshare schemes relief
[CO 99/839] Transitional relief for member discretionary master funds
[CO 99/840] Transitional relief and quorum requirements
[CO 99/1009] Investments to top up to $500,000 in a registered scheme
[CO 99/1010] Transitional relief for one party prescribed interest schemes
[CO 99/1011] Savings plans
[CO 99/1012] Business introduction or matching services
[CO 99/1013] Relief from the consideration to acquire constitutional requirement
[CO 99/1014] Ordinary residential or commercial letting out arrangements
[CO 99/1015] Management rights schemes
[CO 99/1016] Application if money more than one scheme
[CO 99/1203] Amendments to unregistered schemes and debt like securities orders
79
[CO 99/1206] Austraclear Limited
[CO 99/1639] Mortgage schemes — Chapter 5C relief
[CO 99/1705] Clarification of custodial capital requirements for mortgage investment schemes
[CO 99/2039] Modification of reg 12.4 meeting relief where material rights affected
CO 00/4] Transitional relief for member discretionary master funds
[CO 00/5] Investor directed portfolio services — deregistration of registered managed investment schemes
[CO 00/6] Member discretionary master funds
[CO 00/91] Mortgage schemes — clarification of Chapter 5C relief
[CO 00/99] Transitional relief for member discretionary master funds
[CO 00/186] Austraclear
[CO 00/191] Sale of strata units for $500,000 or more
[CO 00/192] Business introduction or matching services
[CO 00/196] Sydney Futures Exchange — managed discretionary accounts
[CO 00/197] Charitable investment schemes — fundraising
[CO 00/198] Managed investment schemes — interests not for money
[CO 00/199] Trustee companies common funds
[CO 00/200] Relief for operations of foreign managed investment schemes
[CO 00/201] Member discretionary master funds: transitional arrangements
[CO 00/203] Mortgage schemes — Chapter 5C and disclosure relief
[CO 00/204] Private ostrich schemes
[CO 00/205] Horse breeding schemes — private broodmare syndication
[CO 00/206] Horse breeding schemes — private stallion syndication
[CO 00/207] Horse racing syndicates
[CO 00/208] Managed investment schemes — no issue required disclosure
[CO 00/209] Managed investment schemes — no issue required disclosure
[CO 00/210] Investor directed portfolio services
[CO 00/211] Nominee and custody services
[CO 00/212] Investor directed portfolio-like services provided through a registered managed investment
scheme
[CO 00/213] Real estate companies
[CO 00/214] Foreign securities: listed foreign companies making 20 or fewer offers in Australia in 12 months
[CO 00/215] Small property syndicates
[CO 00/216] Closed service strata schemes
[CO 00/223] Employee share schemes— offers of shares through a trust
[CO 00/224] Employee share schemes— contribution plans
[CO 00/227] Time-sharing schemes: private arrangements
[CO 00/232] School enrolment deposits
[CO 00/233] Interests in film and theatrical ventures
[CO 00/234] Film investment schemes
[CO 00/236] Participating property syndicates — variation
[CO 00/237] Twenty issues in 12 months exemption — transitional aspects
[CO 00/239] Employee share schemes: contributions plans — variation
[CO 00/240] Treatment of offers of interests in managed investment schemes
[CO 00/451] Relevant interest in or voting power in relation to a security held by a call warrant issuer solely as
a result of holding warrant
[CO 00/570] Management rights scheme
[CO 00/657] Transitional relief for member discretionary master funds
[CO 00/842] Transitional relief from duty to separate assets of a managed investment scheme
[CO 00/1067] Trustee common funds
[CO 00/1068] Warrants: fundraising relief
[CO 00/1087] Fees and financial benefits for common fund operators
[CO 00/1100] Mortgage schemes: Chapter 5C and disclosure relief
[CO 00/1115] Time-sharing: temporary relief for fixed term schemes
[CO 00/1156] Employee redundancy funds: interim relief
[CO 00/1209] Participating property syndicates
80
[CO 00/1210] Investments in unregistered schemes
[CO 00/1211] Relief from duty to separate assets of a managed investment scheme
[CO 00/1212] Sydney Futures Exchange — managed discretionary accounts
[CO 00/1268] Sydney Futures Exchange — managed discretionary accounts
[CO 00/1502] Solicitors mortgage investment companies — amendment
[CO 00/1791] Time-sharing: temporary relief for fixed term schemes
[CO 00/2132] Solicitors mortgage investment companies — amendment
[CO 00/2181] Closed service strata schemes — amendment
[CO 00/2460] Time-sharing schemes — property valuations
[CO 01/50] Differential fees
[CO 01/51] Differential fees — variation
[CO 01/52] Relief from consideration to acquire constitutional requirement — fee arrangements
[CO 01/154] Employee share schemes: offer of shares through a trust — amendment
[CO 01/155] Employee share schemes: contribution plans
[CO 01/178] Time-sharing schemes — relief from custodial requirements for issue of licence
[CO 01/179] Time–sharing schemes — operation of rental pool
[CO 01/180] Time–sharing schemes — use of loose–leaf price list
Pro forma instruments for Chapter 5C and licensing conditions
[PF 71] Foreign collective investment schemes — Chapter 5C
[PF 143] Investments to top-up to $500,000 in a trust that is not a registered scheme
PF 173] Statutory declaration by guarantor (body corporate)
[PF 174] Extending the transitional period for prescribed interest schemes
[PF 175] Requiring a unitholders meeting to ratify modifications to an approved deed
[PF 176] Voting by interested members of a managed investments scheme
[PF 177] Consent to the resignation of the auditor of a compliance plan
[PF 178] Consent to resignation of the auditor of a managed investment scheme
[PF 179] Extension of time to establish a compliance committee
[PF 180] Extension of time to appoint a new member to a compliance committee
[PF 181] Determination that a number of managed investment schemes are closely related
[PF 183] Deed of subordination
[PF 184] Strata arrangements, which incidentally involve a managed investment scheme
[PF 185] Acting for trustee or representative of another scheme after registration
[PF 186] Well advanced schemes
[PF 187] Management rights schemes where the strata unit cannot be used as a residence
[PF 188] Approval of guarantee for responsible entity where guarantor is an Australian ADI or foreign bank
[PF 188A] Approval of guarantee for responsible entity where guarantor is not an Australian ADI or foreign
bank
[PF 189] Responsible entity authorisation and licence conditions
[PF 196] Investor directed portfolio service operator licence conditions
[PF 203] Extending the transitional period and the date by which a subsection 1457(1) meeting must be held for
time-sharing schemes
[PF 204] Time-sharing schemes — licence conditions
[PF 205] Time-sharing schemes formerly exempt under State laws
[PF 206] Time-sharing schemes — Chapter 5C relief
[PF 207] Title-based time-sharing schemes
[PF 208] Time-sharing schemes — cooling-off statement
81
Appendix 5
Surveillance of managed investments
Objectives of surveillance
While ASIC considers the following when planning surveillance, resources would not generally be available to
address each objective in full for every surveillance.
1. Regulatory objective

Ensure operators are performing their obligations under the Law.
2. Industry effectiveness objectives

Assess industry understanding of and commitment to compliance.

Assess the extent to which operators have developed and are following a systematic, consistent and
structured process in achieving effective compliance.

Assess the extent to which sectors of the managed investments industry are implementing best practice,
improving corporate performance and market behaviour and reducing the likelihood of responsible entity
and scheme failure.

Identify industry trends and issues which may require legislative reform, regulatory guidance or policy
revision.
3. ASIC effectiveness objectives

Enhance ASIC's understanding of, and ability to respond to, developments in financial markets

Evaluate the relevance of ASIC policy and practice in administering and enforcing the law.
82
Surveillance of managed investments
This chart shows the number of prescribed interest surveillances conducted from 1995 to 2001. 50 trustee
surveillances and 197 fund manager surveillances were conducted for the period July 1995 to June 2001.
Number of Surveillence conducted on Fund Managers & Trustees
100
90
Number of Surveillence conducted on Trustee
80
Number of Surveillence conducted on Fund Manager
Number(s)
70
60
57
52
50
40
36
29
30
20
13
14
12
13
10
10
3
7
1
0
1/7/1995 - 30/6/1996
1/7/1996 - 30/6/1997
1/7/1997 - 30/6/1998
1/7/1998 - 30/6/1999
1/7/1999 - 30/6/2000
1/7/2000 - 30/6/2001
Period
This chart shows the number of surveillances of responsible entities conducted from 1995 to 2001. 181
responsible entity surveillances were conducted for the period July 1998 to June 2001.
Number of Surveillence conducted on Responsible Entities
100
93
90
81
80
70
Number(s)
60
Number of Surveillence conducted on REs
50
40
30
20
10
7
0
1/7/1995 - 30/6/1996 1/7/1996 - 30/6/1997 1/7/1997 - 30/6/1998 1/7/1998 - 30/6/1999 1/7/1999 - 30/6/2000 1/7/2000 - 30/6/2001
Period
83
Appendix 6
Development of MIA policy
The following lists provide an overview of some of the policy and guidance ASIC has provided to industry from 1998 to the present - to explain how the law will be administered.
Policy and guidance on Chapter 5C, licensing and related issues
January 1998
Chapter 5C and licensing policy – industry consultation commences, consultants
appointed, 7 subjects identified for policy proposals:
1. Licensing
2. Financial requirements
3. Compliance plans
4. Scheme property arrangements
5. Constitutions
6. Transitional issues
7. Discretionary powers and closely related schemes
February 1998
Consultants report – received, on requirements for compliance plans, arrangements
to hold scheme property, financial requirements
March 1998
7 Policy proposals - released for public comment
To June 1998
Public comment - received by written submission and in meetings
July 1998
7 Policies – in use
1 November 1998
Financial reporting – guidance published
2 June 1999
7 Policies – updated and ongoing consultation.
23 June 1999
Transitional guidance – issued
13 October 1999
NTA calculation – policy updated
26 June 2000
Relief extended for some schemes – policy update
4 July 2000
Contracts with agents when RE changes – proposal for consultation
11 September 2000
Differential fees – policy issued
18 January 2001
NTA calculation – policy update
22 January 2001
Differential fees – policy update
84
Policy relating to specific asset types
6 October 1998
Serviced strata - interim policy issued
13 October 1998
Mortgage - industry and consumer consultation process commences
15 February 1999
Master funds and wrap accounts – consultation to review policy
19 February 1999
Mortgage – preliminary position published
5 May 1999
Serviced strata – final policy issued
27 May 1999
Non discretionary portfolio services – proposal published for consultation
23 June 1999
Time share – transition period extended
20 July 1999
Mortgage – policy released
4 November 1999
Mortgage – policy update
6 December 1999
Time share – proposal published for consultation
9 December 1999
Serviced strata – policy update
24 December 1999
Serviced strata – policy update
27 January 2000
Investor Directed Portfolio Service – policy issued
8 February 2000
Management rights – policy update
14 February 2000
Real estate agents – review complete
28 February 2000
Time share – policy update
18 April 2000
Mortgage – guidance published
20 April 2000
Time share – summary policy issued
14 June 2000
Redundancy – consultation and relief granted
15 June 2000
Time share – policy update
8 September 2000
Time share – policy update
13 November 2000
Serviced strata / Management rights – policy update
19 December 2000
Time share – policy update
18 January 2001
Primary production – policy update
18 January 2001
Redundancy – policy update
22 February 2001
Investor Directed Portfolio Service – policy update
85
Policy and guidance relating to complaints resolution schemes
February 1999
Complaints resolution schemes – policy proposal published
July 1999
Complaints resolution schemes – policy published
October 1999
Financial Industry Complaints Service – first scheme approved
November 1999
Financial Services Complaints Resolution Scheme – second scheme approved
January 2000
FICS and FSCRS – merge
Policy and guidance relating to compliance
9 July 1999
Compliance plan audit – requirement modified for first year to facilitate transition
6 April 2000
Compliance plan audit – guidance published
3 May 2000
Compliance plan – commentary published: financial assets, agriculture, property
18 January 2001
Compliance plan – policy update
86
Appendix 7
Access to Policy Statements via the ASIC website
1. Public access via website to ASIC Policy on licensing, NTA, Cash & Professional Indemnity insurance
requirements and custody arrangements : PS 130, PS 131 & PS 133
Mar-99
Apr-99 May-99 Jun-99
Jul-99
Aug-99 Sep-99
Oct-99 Nov-99 Dec-99
Jan-00 Feb-00 Mar-00
Apr-00
Total
PS 130
293
233
321
264
647
586
671
463
796
351
511
762
957
484
7,339
PS 131
301
153
265
230
400
445
367
495
874
322
337
753
685
325
5,952
PS 133
170
151
225
187
355
396
316
287
392
178
166
314
435
211
Total
764
537
811
681
1,402
1,427
1,354
1,245
2,062
851
1,014
1,829
2,077
1,020
3,783
17,074
2. Public access via website to ASIC Policy on compliance plan: PS 132
Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00
PS 132
201
183
234
279
314
249
315
206
260
145
137
278
Apr-00
206
164
Mar-99 Apr-99 May-99 Jun-99 Jul-99 Aug-99 Sep-99 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00
Apr-00
Total
3,171
3. Public access via website to ASIC Policy on constitiuitons and transitional arrangement : PS 134 & PS 135
Mar-99
Apr-99 May-99 Jun-99
Jul-99
Aug-99 Sep-99
Oct-99 Nov-99 Dec-99
Jan-00 Feb-00 Mar-00
Apr-00
Total
PS 134
152
117
203
107
217
257
320
125
266
115
134
261
260
151
2,685
PS 135
174
102
209
205
293
438
332
214
301
185
143
229
424
329
3,578
Total
326
219
412
312
510
695
652
339
567
300
277
490
684
480
6,263
4. Public access via website to ASIC Policy on relief: PS 136
Mar-99
PS 136
Apr-99 May-99 Jun-99
161
11
181
140
Jul-99
255
Aug-99 Sep-99
427
367
Oct-99 Nov-99 Dec-99
304
354
164
Jan-00 Feb-00 Mar-00
125
381
516
Apr-00
373
Total
3,759
5. Public access via website to ASIC Policy for particular types of product and service: PS 140, 144 & 148
PS 140
PS 144
132
116
366
374
514
794
395
Total
270
550
232
525
562
420
226
5,476
196
377
282
276
292
444
237
2,104
124
1,405
1,154
394
3,077
PS 148
PS 130 - Licensing
PS 131 – Financial requirements
PS 132 – Compliance plans
PS 133 – Scheme property arrangements
PS 134 – Constitutions
PS 135 – Transitional issues
PS 136 – Discretionary powers and closely related schemes
PS 140 – Serviced strata schemes
PS 144 – Mortgage investment schemes
PS 148 – Investor directed portfolio services
87
Appendix 8
Telephone enquiries handled by the managed investments national team
– 1 July 1998 to 30 June 2000
Charts show percentage of all calls received during that month.
Relating primarily to protection of investments
Number of Licencing & Financial Requirement Queries to ASIC
Feb-01
Dec-00
Oct-00
Aug-00
Financial
Requirements
Licencing
Jun-00
Apr-00
Feb-00
Dec-99
Oct-99
Aug-99
Jun-99
Apr-99
Feb-99
Dec-98
Oct-98
Aug-98
Jun-98
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Number of Custodian & Scheme Property Queries to ASIC
Apr-00
Feb-00
Dec-99
Custodian
Oct-99
Scheme Property
Aug-99
Jun-99
Apr-99
Feb-99
Dec-98
Oct-98
Aug-98
Jun-98
0%
2%
4%
6%
8%
10%
12%
88
Relating primarily to investor rights
Number of Transition & Constitution Queries to ASIC
Apr-00
Feb-00
Dec-99
Oct-99
Transition
Aug-99
Constitutions
Jun-99
Apr-99
Feb-99
Dec-98
Oct-98
Aug-98
Jun-98
0%
5%
10%
15%
20%
25%
30%
Relating primarily to compliance
Number of Compliance Queries to ASIC
Feb-01
Oct-00
Jun-00
Feb-00
Oct-99
Jun-99
Feb-99
Oct-98
Jun-98
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
89
Relating to specific asset types
Number of Strata & Mortgage Queries to ASIC
Apr-00
Mar-00
Feb-00
Jan-00
Mortgage
Dec-99
Strata
Nov-99
Oct-99
Sep-99
Aug-99
Jul-99
Jun-99
May-99
Apr-99
0%
5%
10%
15%
20%
25%
Relating to relief
Number of Relief Queries to ASIC
Feb-01
Dec-00
Oct-00
Aug-00
Jun-00
Apr-00
Feb-00
Dec-99
Oct-99
Aug-99
Jun-99
Apr-99
Feb-99
Dec-98
Oct-98
Aug-98
Jun-98
0%
5%
10%
15%
20%
25%
30%
35%
90
Appendix 9
Nature of complaints – July 1998 to June 2001

These complaints relate to trustees and managers as well as to responsible entities.

In some cases a number of complaints may relate to only one entity.
\

A complaint may have more than one characteristic - this means that the numbers in the chart below total more than 315.
91
Total Complaints = 315
92
Disclosure
52
Actions of manager
36
Distributions/redemptions
30
Meeting/voting rights
28
Advice
28
Complaints resolution
27
Advertising
25
Reporting to members
24
Fee disclosure/charges
24
Other
22
19
Restructure/wind-up
Member instructions
11
Possible illegal fundraising
4
Possible breach of law/licence
4
Costs of MIA compliance
3
Privacy
1
0
10
20
30
40
50
60
93
Note: The analysis in each of the appendix pages for Complaints relates to a different time period. The results in these three pages are not directly comparable
94
Appendix 9
Complaints – July 1998 to June 2001
Industry Split of Complaints
(Estimate based on Complaints taken between 1/7/00 and
1/3/01)
Timeshare
1%
Mortgages
12%
Other
7%
Primary Production
25%
Property
20%
Financial Assets
35%
Industry Type
Primary Production
# Of Complaints
41
95
Financial Assets
59
Property
32
Mortgages
20
Timeshare
1
Other
11
Note: The analysis in each of the Appendix pages relating to complaints refers to a different time period. The results in the 3 pages are not directly comparable
96
25
20
15
10
5
Managed Investments
Jun-01
May-01
Apr-01
Mar-01
Feb-01
Jan-01
Dec-00
Nov-00
Oct-00
Sep-00
Aug-00
Jul-00
Jun-00
May-00
Apr-00
Mar-00
Jan-00
Feb-00
Dec-99
Oct-99
Nov-99
Sep-99
0
Illegal Fundraising
Appendix 9
Complaints – July 1998 to June 2001
Number of Managed Investments Related Complaints
Total = 375
Month
Managed
Investments
Illegal
Fundraising
Sep-99
Oct-99
Nov-99
Dec-99
Jan-00
Feb-00
Mar-00
Apr-00
May-00
Jun-00
2
2
5
23
8
4
9
6
6
8
1
15
14
10
9
12
8
12
21
22
97
Jul-00
Aug-00
Sep-00
Oct-00
Nov-00
Dec-00
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
13
12
6
4
4
6
4
12
10
8
13
6
16
9
13
8
5
4
5
2
4
5
6
3
Note: The analysis in each of the Appendix pages relating to complaints refers to a different time period. The results in the 3 pages are not directly comparable
98
Appendix 10
Models for the structure of collective investments
The following major models for the structure of collective investments all meet the requirements of the IOSCO
principles, as does the Australian single responsible entity model.
This bears out the intention of IOSCO that the principles focus on regulatory outcomes rather than particular
structures. While it could be argued that it would be desirable to settle on a single structure, there seems to be no
compelling reason for such an outcome.
Investment company
This model is frequently used in the USA. It is based on company law and the requirement for the directors to act
in the best interests of shareholders. In the USA the selling of mutual funds is typically devolved to specialist
investment advisers.
Unit trust
This model is used in the UK and in other countries with an Anglo-Saxon based legal system. It is primarily
based on trust law, where the trustee is under a fiduciary obligation to act in the best interest of the beneficiaries,
who are the investors. However the investors have no individual rights with respect to particular property of the
trust until it is dissolved.
Contractual system
This model is used in many European jurisdictions. The rights and responsibilities of operators and investors are
governed by contract. This system tends to place heavy reliance on the role of independent third parties such as
the custodian and auditor to provide safeguards for investors.
99