The Government has today released an exposure draft of legislation introducing corporate collective investment vehicles into the Australian market for the first time.
This is the result of significant collaboration between the Government and the Australian investment management industry to introduce a new form of collective investment vehicle competitive with international standards.
The new form of corporate collective investment vehicles, to be known as CCIVs, will more closely reflect the form of fund vehicles used internationally and will provide a more efficient form of fund vehicle for fund managers, while at the same time as providing enhanced consumer protections.
Key features of a CCIV
The key features of a CCIV will be:
- the CCIV will be a separate legal entity
- a CCIV may be wholesale or retail
- the CCIV will have a sole corporate director (CD)
- the CD will be required to have a majority external board
- the CD will be entitled, but not obliged, to delegate functions
- a retail CCIV must have an independent depository which will hold custody of CCIV assets and have oversight functions
- the depository of a retail CCIV will be entitled to delegate custody of CCIV assets but will not be entitled to delegate its oversight functions
- the CCIV will have a constitution and compliance plan (and compliance plan auditor) but will not have a compliance committee (as a result of the requirement that the CD have a majority external board)
- a CCIV will have legally segregated sub-funds
- the CCIV will be tax transparent, similarly to registered managed investment schemes.
The diagram below depicts the proposed legal framework for a CCIV.
In the coming weeks the Government will be consulting on the exposure draft legislation that will implement the CCIV regime, the Treasury Laws Amendment (Corporate Collective Investment Vehicle) Bill 2017: (Regulatory Framework). K&L Gates intends to make submissions to Treasury in relation to aspects of the exposure draft legislation, including in respect of appropriate rollover arrangements for existing managed investment schemes into the new CCIV structure. Consultation closes on 21 September 2017.
Asia Region Funds Passport
Today the Government also released exposure draft implementing legislation for the Asia Region Funds Passport regime due to commence on 1 January 2018, the Corporations Amendments (Asia Region Funds Passport) Bill 2017: Chapter 8A.
Once passed, the Corporations Amendments (Asia Region Funds Passport) Act will fulfill the Government's undertaking to participate in the Asia Region Funds Passport, together with New Zealand, Japan, South Korea and Thailand. For further information on the Asia Region Funds Passport, please read our previous articles here and here.
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