AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich
a “digital asset platform” and a “tokenised custody platform”. Persons providing relevant financial services in rela - tion to these new financial products will be required to hold an AFSL authorising them to do so. The gen - eral obligations applying to the AFSL holder will be relevant, including: • providing the services efficiently, honestly and fairly; • having in place adequate arrangements for the management of conflicts of interest; • having available adequate resources to provide the services; and • being subject to enforcement by ASIC. In addition to the general obligations, the draft legisla - tion proposes specific obligations to issuers of digi - tal asset platforms and tokenised custody platforms, including: • minimum standards made by ASIC for asset- holding functions and transactional and settlement functions; • platform rules that deal with activities or conduct of persons in relation to the platform; and • tailored disclosure obligations, including the requirement to give clients a Digital Asset Platform Guide or Tokenised Custody Platform Guide as a substitute for a product disclosure statement. 3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds Promoters or sponsors of alternative funds estab - lished in Australia typically come from Australia. To assist non-Australian promoters and sponsors, spe - cific Australian regulatory relief is available on applica - tion to ASIC, subject to the regulator’s approval. This relief is targeted at promoters or sponsors regulated in the UK, the USA, Singapore, Hong Kong, Germany and Luxembourg who wish to do business in Australia. Promoters or sponsors from other jurisdictions may also apply to ASIC for regulatory relief.
Australian placement agents and similar capital- sourcing partners (including Australian feeder fund operators) operate in Australia and assist foreign fund promoters and sponsors in a range of contexts. 3.2 Legal Structures Used by Managers Unit trusts are the most commonly used legal struc - ture by alternative fund managers in Australia, owing to their flexibility both in capital arrangements and permissible investments. They are widely used for real asset strategies, hedge strategies and credit strate - gies. VCLPs and ESVCLPs are also commonly used for venture capital strategies raising capital from foreign investors. This is due to the full CGT exemption for tax-exempt foreign residents or foreign venture capital funds on gains derived from the disposal of eligible venture capital investments. Individual personnel compensation or equity incentive arrangements can be accommodated regardless of the chosen fund structure. 3.3 Regulatory Regime for Managers There is an extensive regulatory regime applicable to alternative fund managers in Australia. Alternative fund managers should consider whether they require an AFSL or whether they can rely on an exemption from that requirement. Some examples of exemptions are referenced in 3.1 Origin of Promoters/ Sponsors of Alternative Funds . If an AFSL is required, managers will typically need an authorisation to (at least) “advise” and “deal” in all the financial products relevant to the investment strategy for which the manager has responsibility. In addition, managers will need to consider broader obli - gations under corporations legislation, trust law, AML laws, competition law, foreign investment regulations, privacy laws, sanctions regimes and taxation laws, among other regulatory laws. Trustees of funds owe fiduciary obligations to fund investors. The full scope of those obligations is typi - cally sought to be attenuated through the constituent
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