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The new approval regime for collective investment vehicles (CCIV) entered into force on July 1, 2022.
What does this mean for existing AFSL holders?
AFSL holders wishing to advise or trade in CCIVs must be licensed to provide securities advice and trading services. In our previous blog post, we explained how ASIC contacted AFSL holders affected by the regime’s entry into force and advised that existing AFSL holders who do not hold securities clearances will be contacted by ASIC to explain the process of an ASIC initiated AFSL variation application to add securities permissions.
AFSL holders should also consider whether they are required to further amend their AFSL to include advisory and trading permissions regarding CCIV assets that are financial products where this is not covered by their existing AFSL. Assets of CCIV that are financial products include derivatives or other financial assets as described below.
AFSL holders wishing to subscribe to CCIV securities must be authorized to subscribe to an issue of securities.
What does this mean for New AFSL holders?
An entity seeking an AFSL to be licensed to operate CCIV will need to demonstrate to ASIC that it has at least one manager with CCIV knowledge and skills. This means that the AFSL candidate must have one or more responsible managers with knowledge or skills in relation to:
- operate the business and direct the affairs of a CCIV; and
- assets under management.
If an AFSL is granted, which includes authorization to operate a retail CCIV, the ASIC has the discretion to limit the retail authorization to a single bucket. Where the AFSL holder seeks to operate multiple sub-funds, a change request to the ASIC will need to be submitted.
What is a CCIV?
A CCIV is a type of public limited company that operates as a collective investment vehicle. A CCIV has a company director who is a public company and, upon registration, holds an AFSL authorizing the company director to operate the business and direct the affairs of the CCIV.
CCIVs operate as retail or wholesale financial service providers and have at least one registered compartment. The sub-funds are operated as separate businesses and are allocated specific assets, including:
- Commodities – raw materials, metals (including precious metals), agricultural products and energy products
- Crypto assets (which are not financial products)
- Derivatives for hedging or other purposes
- Direct real estate
- Films (the sub-fund’s sole purpose is the production and/or exploitation of a cinematographic film)
- Financial assets – cash, checks, payment orders, bills of exchange, promissory notes, securities, deposit products and interests in managed investment funds
- Mortgages; and
- Primary production – cattle breeding, forestry, horse breeding, horticulture, fleece breeding, ratites, tea plants and viticulture.
And then ?
ASIC has not yet released its guidelines regarding the following:
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