Central to the new CSF regime is the inclusion of the AFS licence holder who acts as the intermediary (i.e. the gatekeeper). The intermediary must hold an AFSL with the correct authorisations in order to carry out this role. After 28 September 2017, ASIC will be able to accept AFS licence applications from entities wanting to provide CSF services.
Considering acting as a CSF intermediary? There are a number of things you may wish to consider, including:
- AFSL: Do you have an AFSL with the appropriate authorisations? Existing AFSL holders will likely need to apply for a variation.
- Due Diligence: As a CSF intermediary you will need to conduct appropriate checks before publishing a CSF offer document. While the CSF intermediary generally takes no part in drafting the CSF offer document, it must not publish a CSF offer document unless it is satisfied that:
- the company making the offer exists and is eligible to utilise the CSF regime. You may consider performing ASIC company searches and request financial information to satisfy yourself of the eligibility status the company.
- the CSF offer document is not misleading or deceptive or likely to mislead or deceive. You may consider requiring the company’s directors to attest to the accuracy of the CSF offer document by asking them to complete a due diligence questionnaire and provide verification certificates and materials.
- the company’s officers are “of good fame or character”. While no guidance has been issued on what might satisfy this requirement, similar to ASX listing admission and Responsible Manager appointment requirements, it may be prudent to carry out bankruptcy searches on the officers of the Company and require police checks and statutory declarations from the officers attesting to their good fame and character.
- Liability: The CSF intermediary can in certain circumstances be held liable for loss or damage suffered by an investor due to a defective CSF offer document.
- Australian Market Licence (AML): If you are considered to be operating a market (e.g. because you facilitate secondary trading) then an AML may be required. ASIC has not yet given any guidance about when an AML will be needed.
- Pro-forma documentation: You will need to have adequate arrangements recorded in writing to ensure that you are complying with your obligations as a CSF intermediary.