On 10 February 2022, the Corporate Collective Investment Framework and Other Measures Bill 2021 (the CCIV Bill) was passed into law.
On 10 February 2022, the Corporate Collective Investment Framework and Other Measures Bill 2021 (the CCIV Bill) was passed into law. This is a long-awaited development for the Australian funds management industry, and one which it is hoped will bring Australia’s investment offering in line with other jurisdictions for global investments by providing foreign investors with a new and internationally recognised investments vehicle.
Key features of the new regime include:
- A CCIV will be a new type of company limited by shares with its own legal entity and regulated by the Corporations Act.
- A CCIV must have at least one sub-fund and sub-funds will not have a separate legal personality nor be a separate legal entity.
- All assets and liabilities of a CCIV must be allocated to one or more sub-fund, each of which must be segregated from the assets and liabilities of other sub-funds. Practically speaking this means that the assets from one sub-fund will not be able to be used to offset the liabilities in another sub-fund.
- A CCIV must be a public company, have a corporate director and hold an appropriate Australian financial services licence (AFSL) noting that a new AFSL authorisation will be introduced.
- A CCIV may be wholesale and retail, with retail CCIVs subject to more comprehensive regulatory protections, and wholesale CCIVs subject to a more limited regulatory framework.
- Broadly speaking, the Government intends that there will be regulatory parity between the treatment of CCIV's and the existing managed investment scheme (MIS) regime, though CCIV's will also be subject to the general rules applying to companies under the Corporations Act. A key distinction between CCIV's and MIS is that all CCIV's will need to be registered with ASIC, regardless of whether they target wholesale or retail investors. Currently, only retail MIS need to be registered with ASIC, meaning that the wholesale MIS market is subject to a much lower level of regulation. This may mean, from a regulatory arbitrage perspective, that the MIS remains a preferable structure in the wholesale market.
- CCIV’s will be able to list on a prescribed financial market in Australia with one sub-fund.
It’s a long-awaited development for the Australian funds management industry
The CCIV regime will commence on 1 July 2022. Fund managers will need to ensure they have a clear understanding of how CCIVs will operate in practice, and how they will be used as well as the regulatory and policy requirements of the new framework.
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