When a managed investment scheme must be registered

Offence title:

When a managed investment scheme must be registered

Act:

601ED Corporations Act

Offence:

(1)   Subject to ss. (2) and (2A), a managed investment scheme (MIS) must be registered under 601EB if:

(a)   It has more than 20 members; or

(b)   It was promoted by, or an associate of, a promoter of managed investment schemes; or

(c)    A determination has been made under ss. (3) and there are more than 20 members.

(2)   An MIS does not need to registered if all the issues of interests that have been made would not have required a PDS under Division 2 of Part 7.9 if the scheme were registered when the issues were made.

(2A) A notified foreign passport fund does not have to be registered.

(3)   ASIC may determine a number of schemes are closely associated and require each to be registered if the combined number of members exceeds 20. ASIC must give a written notice to the operator of each scheme.

(4)   For this section, the numbers of members of a scheme is calculated, in the following way:

(a)   Joint holders of an interest count as a single member; and

(b)   A trustee holding is taken as the beneficiary, rather than the trustee, if:

                                           i.         The trust beneficiary is presently entitled to a share of the trust or income of it; or

                                         ii.         The beneficiary is individually, or together with others, in a position to control the trust.

(5)   A person must not operate an MIS unless it is registered in accordance with s. 601EB. [Registration of managed investment scheme and the multiple references therein]

Penalty:

(5)   5 years imprisonment

Summary/Indictable/mixed:

Mixed

Jurisdiction:

Local, District or Supreme Court

How committed:

A promoter of a managed investment scheme fails to ensure compliance with the criteria in s. 601EB.

Important note:

Defence:

(6)   An MIS is not being operated merely because:

(a)   They are an agent or employee of another person; or

(b)   They are winding up the scheme or remedying a defect that led to the scheme being registered.

(7)   A person does not breach ss. (4)(b) because an interest in the scheme is held by 2 or more beneficiaries, if they prove they did not know, and had no respect to suspect, that was the case.

[The evidential burden in ss. (7) is upon the defendant.]

(8)   A person contravenes this subsection if the person contravenes subsection (5).

[This is a civil penalty provision – s. 1317E]