CCIV update: new ASIC guidelines on the Corporate Collective Investment Vehicle regime

Earlier this year, we reported on the introduction of the corporate collective investment vehicle (CCIV) regime (see our paper ‘Just say “CC(IV)” – Australia’s Corporate Collective Investment Vehicle regime begins 1 July 2022’). The Australian Securities & Investments Commission (ASIC) has now published a report (REP 728) and an information sheet (INFO 272) and has updated several regulatory guides to support entities seeking to establish and offer investment products using the CCIV structure.¹

REP 728: ASIC’s response to stakeholder submissions

REP 728 outlines the key issues that arose from ASIC’s consultation on the implementation of the CCIV regime and its responses to those issues. Principally, this provides helpful guidance in understanding how ASIC will assess applications to grant or amend Australian Financial Services Licences (AFSLs) to enable fund managers to operate CCIVs.

Key takeaways include:²

• where the applicant already holds an AFSL authorising it to act as a responsible entity, ASIC will still exercise a reasonable degree of scrutiny in relation to the applicant’s request to add a corporate director authorisation to its licence;
• ASIC will accept re-lodgement of certain proof documents relating to competence, fitness and propriety previously provided to ASIC in respect of recent applications for a new or varied AFSL. However, there are certain additional proofs that will be required from all applicants, including in relation to the applicant’s business description and compliance arrangements particular to CCIVs;
• ASIC will be prioritising AFSL applications from prospective corporate directors of CCIVs for at least six months from the CCIV regime’s commencement. This has implications for timelines for other (non-CCIV) AFSL applications. In addition, due to the similarities between the managed investment scheme and CCIV regimes, ASIC expects that applications from existing responsible entities, and from trustees of wholesale schemes seeking a wholesale CCIV authorisation, will be able to be finalised more quickly;
• ASIC will generally not impose a limit of a single sub-fund on corporate directors of wholesale CCIVs (as it had originally proposed to do). However, this limit may be imposed on a corporate director of a retail CCIV who has not, in ASIC’s opinion, demonstrated the organisational competence and capacity to conduct broader operations;
• although it had originally proposed to impose separate obligations on CCIV AFSL holders to hold professional indemnity (PI) insurance additional to existing PI insurance held, ASIC has revised the position. Instead, an AFSL holder that is both a responsible entity and a corporate director is required to have adequate PI insurance having regard to the nature of its activities. The insurance must also cover claims amounting in aggregate to the lesser of:
  
  • $5 million; and
  • the sum of the value of all of its scheme property and (for retail CCIVs) the value of the CCIV assets; and
• an AFS licensee that is both a responsible entity and a corporate director will have a single net tangible asset (NTA) requirement (rather than separate requirements relating to its functions as a responsible entity and CCIV corporate director).

INFO 272: Guidance on registering CCIVs and sub-funds

INFO 272 explains the requirements and application process for registering a CCIV and sub-funds. A company seeking to be registered as a CCIV and register initial sub-fund(s) will need to:³

• meet the following CCIV registration requirements:
  
  • be limited by shares;
  • have a constitution which complies with Subdivision C of Part 8B.3 of the Corporations Act 2001 (Cth);
  • have a sole proposed director of the company (that is, the corporate director of the CCIV) which is a public company that holds an AFSL authorising it to operate the business and conduct the affairs of a CCIV;
  • have at least one sub-fund;
  • each sub-fund must have at least one member at the time of registration; and if the company is intended to be a retail CCIV – have a compliance plan and compliance plan auditor; and
• lodge a CCIV registration application, including the requisite application form, constitution and compliance plan (if a retail CCIV), and pay an application fee.

INFO 272 also provides guidance on the requirements for registering further sub-funds, after a CCIV has been registered.

Where to from here?

ASIC is continuing to update several of its regulatory guides to accommodate the CCIV regime and is expected to release a new legislative instrument prescribing the applicable financial resource requirements for corporate directors of retail CCIVs⁴. In the meantime, REP 728 and INFO 272 provide important insights into ASIC’s approach towards participants seeking to enter into this new area of Australia’s investment markets.

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