02 June 2016

ASIC green light on AMIT changes

The Australian Securities and Investment Commission (ASIC) has today issued a press release indicating that general class order relief will be provided to responsible entities for registered schemes to facilitate their entry into the new attribution managed investment trust regime.

The instrument is expected to be released before 22 June 2016.

What does the relief cover?

The relief will provide much needed certainty for industry to make the necessary changes to their constitutions.

It should facilitate the amendment of constitutions in order to make the changes which may be necessary for entry into the regime or to properly operate under the regime.

The instrument will also grant relief from the duty under section 601FC(1)(d) of the Corporations Act 2001 (Cth) to treat the members who hold interests of the same class equally to the extent that it would prevent attribution being made in accordance with the requirements under the new managed investment trust regime.

What do I need to do?

After determining the constitutional amendments you wish to make, it is necessary to satisfy the conditions of the relief.

In order to rely on the relief, responsible entities will need to post a statement on their website explaining that they intend to amend the constitution, the reasons for this and the effect of the amendments. The statement will also need to explain that members can make a request within seven days that a meeting be called and give an email address for members to make this request.

If five per cent or more of the total number of members request a meeting within seven days of the statement being posted on the website, a members’ meeting will be required to approve the amendments.

If no members' meeting is required after seven days since the statement was posted on the website, responsible entities can make the amendments without the need for member approval.

Why is it important?

The amendments are important to ensure that proper risk management and compliance processes are able to be undertaken in relation to the new regime.

The relief is very important as there were real concerns that the narrow amending power under the Corporations Act would preclude a number of the amendments which are appropriate to be made before entering into the regime.

The relief will facilitate entry into the regime and amendments to constitutions without the expense of unitholder meetings.

Timing of relief

The timing of the relief can facilitate amendments to constitutions for funds which wish to elect into the regime as early as 1 July 2015.

It will provide a very limited window for those who wish to elect in from 1 July 2015.

Entities who wish to make an early election should consider the next steps as a matter of urgency.

Importantly, the scope of the relief is limited to matters associated with registered schemes. It will continue to be necessary to review the amending powers for unregistered schemes.

The relief will provide much needed certainty for industry to make the necessary changes to their constitutions.

If you wish to discuss the proposed relief or what you should do before entering into the regime, please do not hesitate to contact a member of our AMIT team.

The ASIC press release can be found here.

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