Late yesterday, the Australian Securities and Investment Commission (ASIC) granted general class order relief to responsible entities for registered schemes to facilitate their entry into the new attribution managed investment trust regime (AMIT regime).
The relief essentially allows for certain changes to the constitutions to facilitate entry into the AMIT regime to be made without approval at a members’ meeting, provided that a specific notification procedure is complied with.
The relief will provide much needed certainty for industry to make the necessary changes to their constitutions.
The instrument commences from today, 22 June 2016.
The ASIC instrument can be found here.
What does the relief cover?
Amendment of constitutions
The relief is drafted in broad terms.
It covers amendments to constitutions that are necessary or incidental to the operation of the relevant scheme in a manner permitted by the AMIT regime. The relief also contains certain examples of amendments that fall within this category, including amendments that:
- enable the election to apply the AMIT regime to be made;
- enable an election under the AMIT regime for a class of interests in the scheme to be treated as a separate attribution managed investment trust (AMIT) to be made; and
- ensure that the responsible entity is able to be indemnified out of the trust assets in respect of certain liabilities connected with the operation of the scheme as an AMIT.
Responsible entities seeking to rely on the relief will need to provide notice to members of the proposed amendments, and will be relieved of the requirement to hold a members’ meeting provided that the responsible entity does not receive a request for a meeting by a specified percentage of members. A simpler notification process applies under the relief where all members of the scheme are wholesale clients.
Accordingly, the relief should facilitate the amendment of constitutions in order to make changes necessary to enter the AMIT regime.
It should also facilitate the amendment of constitutions in order to make any changes necessary to make use of the additional functionality available under the AMIT regime.
It will, however, be important for responsible entities to carefully review the terms of any amendments made to facilitate entry into the AMIT regime or utilise functionality provided by the AMIT regime to ensure that they come within the scope of the relief.
Equivalent treatment covenant
The instrument will also grant relief from the duty under section 601FC(1)(d) of the Corporations Act 2001 (Cth) (Corporations Ac”) 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 AMIT regime.
Limited to registered schemes
The relief is limited to registered schemes. Trustees of unregistered schemes will need to look to the amendment power under their trust deed to assess whether amendments necessary for the AMIT regime can be made, and how they must be made.
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.
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 the entry of registered schemes into the AMIT regime without the expense of unitholder meetings. It will also enable registered schemes to make use of the additional functionality provided under the AMIT regime without this expense.
What do I need to do?
Managers will need to consider whether the constitutional amendments they wish to make will be covered by the relief.
After determining the constitutional amendments you wish to make, it is necessary to satisfy the conditions of the relief. Managers will need to consider the most appropriate basis for satisfying the conditions of the relief. Further information regarding the conditions is set out above and can also be found in our previous alert here.
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.
However, the window available for those who wish to elect in from 1 July 2015 is very narrow.
Entities who wish to make an early election should consider the next steps as a matter of urgency.