ASIC has further extended the relief for business introduction services for registered managed investment schemes until 1 April 2025. This relief targets managed investment schemes which have less than 20 members and are seeking to raise funds of up to $5 million.
What are business introduction services and its relief?
Business introduction services are services that enable information sharing between potential investors, issuers and sellers of products through various channels including meetings and publications such as brochures and bulletins.
Without the relief, the Corporations Act imposes onerous obligations on providers of business introduction services when they advertise investment opportunities to potential investors. This includes the requirement to provide a disclosure document except where the investor is qualified as a sophisticated investor or professional investor under the Corporations Act.
What is the current relief for business introduction services?
ASIC gives extended conditional relief from the following obligations in the Corporations Act 2001:
- financial product disclosure,
- anti-hawking and
- advertising requirements.
ASIC gives extended conditional relief from the following obligations in the Corporations Act 2001:
- financial product disclosure,
- anti-hawking and
- advertising requirements.
The relief applies to the following persons:
- operators of business introduction services;
- issuers or sellers of scheme interests through the use of business introduction services;
- persons who endorse or verify information which appears in business introduction service publications ('endorsers'); and/or
- publishers of business introduction service publications;
whenever they conduct the following activities:
- offer scheme interests;
- advertise an offer or intended offer of scheme interests;
- recommend that a person acquire those scheme interests; and/or
- publish a statement that refers to the offer or intended offer or is reasonably likely to induce people to apply for a scheme interest.
ASIC currently has no plan to remake the relief when it expires on 1 April 2025.
The original relief for offers of securities under Ch 6D (Fundraising) and 2L(Debentures) expired from 1 October 2022.
Australian financial services licensing requirement
Despite the relief for business introduction services, the Australian financial services (AFS) licensing regime still applies. Therefore, providers of business introduction services should still consider whether they require an AFS licence where the relief does not cover their proposed activities.
If you would like to know more about AFS licensing, please contact us.
Notifying ASIC
From 1 October 2022, any person seeking to rely on the relief must notify ASIC in writing and set out the following:
- the name of the person;
- the capacity in which the person is acting in relation to the introduction service; and
- the date the person will start to rely on the relevant exemption in , being no earlier than the date of the reliance notice.
The notice should be sent by email to applications@asic.gov.au.
Application of the design and distribution obligations
ASIC clarified that the design and distribution obligations ("DDO") apply to persons who, but for the relief, would otherwise need to comply with the DDO.
Even though a business introduction service remains exempt from Pt 7.9 (financial product disclosure) of the Corporations Act under the current relief, a Product Disclosure Statement ("PDS") could still be required under certain circumstances. Anyone involved should ensure that they consider whether the PDS and DDO measures are required, regardless of whether they rely on the relief or not.
Background:
The previous relief for business introduction services expired on 1 October 2022. ASIC has made amendments to the relief after consulting the public in Consultation Paper 357 Remaking relief for business introduction services: ASIC Instrument 2017/186 (CP 357). By extending the conditional relief for offers of scheme interests, ASIC considers that the relief remains necessary to assist with economic recovery after the COVID-19 pandemic.