The Corporations and Markets Advisory Committee (CAMAC) today [Tue 7.8.2012] released its report on Managed Investment Schemes. The report was in response to a request from the Government for advice on various matters concerning the regulation of managed investment schemes under Chapter 5C of the Corporations Act, following the failure in recent years of a number of high profile schemes, particularly in the agribusiness sector.
The report recommended:
- a prohibition on the creation of new common enterprise schemes;
- a new regulatory structure for the operation of schemes, described as the Separate Legal Entity Proposal (SLE Proposal). In essence, each scheme would involve the registration of a separate legal entity, to be known as the MIS. The MIS would be distinct from the responsible entity or members of the scheme. The MIS, not the responsible entity (as under the current legal framework), would hold legal title to all scheme property and would be the principal in all agreements entered into by the responsible entity as operator of the scheme.
- a requirement that new schemes be operated only by sole function responsible entities (unnecessary if the SLE Proposal is introduced);
- a series of other reforms, including:
- each scheme be required to have a definitive register of scheme agreements and a definitive register of scheme property;
- various ways to overcome the disincentives for an entity to act as a temporary responsible entity;
- facilitative provisions to permit a financially stressed scheme to be placed in voluntary administration;
- a liquidation procedure for insolvent schemes.
Source: CAMAC media release, 7 August 2012.
[FJM Note: This sounds like the old system where there had to be a trustee where a ‘prescribed interest’ was issued, to hold legal title for the members.]
[LTN 151, 7/8]