AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
3.2.2 Legal Structures Used by Fund Managers
constitution. Under Chapter 5C of the Corpo - rations Act, the responsible entity and its offic - ers will have certain statutory duties, including duties to: • act honestly; • exercise care and diligence; and • act in the best interests of members. Chapter 5C of the Corporations Act also governs the process by which a responsible entity may retire and be appointed as the responsible entity of the fund. CCIVs are subject to similar requirements under Chapter 8B of the Corporations Act. Notably, an Australian retail fund is not subject to any investment limitations or restrictions under the Corporations Act (although the introduction of the DDO in October 2021 means that some Australian retail funds may need to restrict the scope of their investments as part of consid - ering the suitability of the product for its target market – please see 4.1 Recent Developments and Proposals for Reform ). Rather, the scope of investments and permitted assets is governed by and documented in the constitution and associated disclosure documentation. Disclosure The offer of units in an Australian retail fund to retail investors will generally require a PDS (ie, a regulated offer document), except in certain limited circumstances. The PDS must comply with the prescribed content requirements in the Corporations Act and relevant ASIC guidance and include disclosure regarding the benefits, risks and fees associated with the fund. Please see 3.1.4 Disclosure Requirements for further discussion regarding PDSs.
Retail fund managers established in Australia are themselves typically structured as Australian proprietary companies limited by shares. How - ever, fund managers’ internal structures often provide that the Australian management entity may contract with other internal entities for the provision of investment management services to There are no restrictions on the types of inves - tors that may be or are eligible to invest in an Australian retail fund that is a registered man - aged investment scheme. Therefore, retail and wholesale clients could invest in an Australian retail fund. Please see 3.1.2 Common Process for Setting Up Investment Funds for further dis- cussion on the definitions of “retail client” and “wholesale client”. 3.3 Regulatory Environment 3.3.1 Regulatory Regime The regulatory regime governing Australian retail funds includes three key areas: registration, dis - closure and licensing requirements. Registration mitigate tax and legal exposure. 3.2.3 Restrictions on Investors A retail fund in Australia will generally be required to be registered with ASIC as a managed invest - ment scheme in accordance with Chapter 5C of the Corporations Act. A CCIV is also subject to registration requirements. Please see 3.1.2 Common Process for Setting Up Investment Funds for further discussion regarding the pro - cess and documentation involved in applying for registration with ASIC. As a registered managed investment scheme, the fund will be governed by the provisions in Chapter 5C of the Corporations Act and the fund
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