On 4 August 2023, Treasury published a Consultation Paper on its review of the regulatory framework for managed investment schemes. This Consultation Paper seeks feedback on the appropriateness of the existing regulatory settings for managed investment schemes, including:
- the thresholds that determine whether an investor is a wholesale client;
- whether certain managed investment schemes should be marketed and sold to retail clients;
- the roles and obligations of responsible entities;
- whether 'investor rights' are appropriate;
- liquidity requirements for managed investment schemes;
- whether an insolvency regime is required for managed investment schemes; and
- interactions between Commonwealth and State laws when regulating real estate investments by managed investment schemes.
Our team has made a formal submission on this consultation.
If you would like to read a copy of our full submission, download a copy here.
As a general comment with respect to the "wholesale client" definition, we strongly discourage implementing different definitions of "wholesale client" for managed investment schemes and for the rest of the Corporations Act 2001 (Cth) (Corporations Act). As noted in the ALRC's Interim Report A, the Corporations Act already contains several examples where the same defined term has more than one definition depending on which part of the Corporations Act it is applied to.
We consider that all market participants and their advisers would benefit from the Corporations Act containing one definition of "wholesale client" applicable for all purposes and classes of financial service, and therefore view our suggestions as having general application. We understand that Treasury intends to consult more broadly with other financial services stakeholders who apply and use the "wholesale client" concept (including superannuation trustees, foreign financial service providers and insurers) before implementing any change to the "wholesale client" test in relation to managed investment schemes and we would support that broader consultation.
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