The Australian Securities and Investments Commission (ASIC) has announced that it is drafting relief so that responsible entities do not need to obtain member approval to amend scheme constitutions for the recent enacted attribution managed investment trust changes (AMIT). Please see our previous alerts for further information:
- The AMIT: A New Breed of Fund Set to Shake up the Australian Funds Management Sector, 5 May 2016
- Proposed New MIT Tax Rules, 10 April 2016
What relief is available?
The responsible entity of a registered managed investment scheme can only amend the scheme's constitution where the amendments would adversely affect members' rights if the amendments have been approved by a special resolution of the scheme's members. ASIC's relief would allow the responsible entity to make the changes without incurring the expense of holding a members' meeting.
What does the RE need to do?
ASIC says that to rely on relief, a responsible entity will need to post a statement on its 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 7 days that a meeting be called and give an email address for members to make this request. If 5% 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 the statement was posted on the website, the responsible entity can make the amendments without the need for member approval.
ASIC also stated that it will also grant relief from the duty to treat members who hold interests of the same class equally to the extent that it prevents an attribution being made in accordance with the requirements under the new tax system
While the exact form of the relief has not been released, ASIC says that it is currently drafting the relief instrument and intends to release the instrument on or before 22 June 2016. When relying on the relief it will be important to ensure that the proposed constitution amendments are covered by the relief.
What action should REs take?
The AMIT changes mean that responsible entities should seek advice on whether their scheme constitutions allow the scheme to meet the AMIT requirements and to allow attribution of taxable income to members in accordance with the new rules. We can advise you on whether any amendments are required, what the amendments should be and help you implement them.