Australia: Managed investment schemes: regulatory changes and case law affecting scheme constitutions

If you operate a registered managed investment scheme (MIS) or intend to register a MIS, you need to know that:

  • there are new content requirements for scheme constitutions lodged from 1 October 2013 (under ASIC Regulatory Guide 134 and related class orders), and
  • the decision in ASIC v Wellington Capital1 reviewed the powers of responsible entities and will affect in specie distributions under the scheme constitution.

New requirements for MIS constitutions lodged from 1 October 2013

ASIC recently updated its guidance on the content requirements (contained in sections 601GA and 601GB of the Corporations Act 2001(Cth) (Corporations Act)) for constitutions of registered MISs. The new requirements will apply to constitutions lodged for scheme registration from 1 October 2013.

Responsible entities are not required to amend their current constitutions to comply with the revised guidance (provided that they comply with previous guidelines).

The below table outlines ASIC's new guidelines on constitution content requirements. The complete updated ASIC Regulatory Guide 134 (RG 134) can be accessed here.

Issue ASIC Guidance
Consideration to acquire an interest in a scheme ASIC has provided model "safe harbour" provisions, which will meet the content requirements. Alternatively, responsible entities may draft their own provisions, provided they meet the requirements under Class Order [CO 13/655].
Power and rights of the responsible entity, including its rights to be paid fees and rights to be indemnified from scheme assets

ASIC has confirmed that the constitution does not need to expressly identify a fixed fee that will be paid by members. ASIC has provided further guidance regarding the:

  • disclosure of benchmarked fees
  • prohibition on earning fees prior to the performance of the duties to which the fees relate, and
  • prohibition on withdrawing application monies received to pay fees before issuing the interests to which the application monies relate.
Complaints handling procedures for retail and wholesale clients

For retail clients, responsible entities may comply with the content requirements for complaints handling by referring to section 912A(2)(a) of the Corporations Act.

If the scheme is open to wholesale clients, ASIC confirms that the responsible entity can devise its own complaints handling procedures. The constitution should include provisions about the procedures.

Withdrawal rights Content requirements to disclose withdrawal rights and processes properly.
Winding up Content requirements to disclose winding up processes properly. ASIC has also confirmed that the constitution must include a provision that provides for an independent audit of the final accounts after the winding up of a scheme.
Legal enforceability Content requirements to ensure that a constitution is legally enforceable between the responsible entity and the scheme's members.

ASIC has also released the following new class orders in conjunction with the updated RG 134:

  • [CO 13/655] provisions about the amount of consideration to acquire interests and withdrawal amounts not covered by [CO 05/26]
  • [CO 13/656] equality of treatment impacting on the acquisition of interests, and
  • [CO 13/657] discretions affecting the amount of consideration to acquire interests and withdrawal amounts.

In specie distributions – decision of ASIC v Wellington Capital Limited

The Full Court of the Australian Federal Court has ruled that responsible entities cannot rely on broad general powers under a scheme's constitution to effect an in specie distribution of scheme property to unit holders. An in specie distribution involves the transfer of fund assets in their actual form to unit holders, rather than selling the assets to a third party and distributing the cash proceeds to unit holders.

In ASIC v Wellington Capital Ltd, the Federal Court held that the in specie transfer of shares in Asset Resolution Limited from Wellington Capital Limited (Wellington), as responsible entity of the Premium Income Fund (Fund), to the unit holders of the Fund was beyond the power of Wellington under the Fund's constitution. To make the in specie distribution, Wellington purported to rely on its broad powers which included "all the powers...that [it] is legally possible for a natural person or corporation to have and as though it where [sic] the absolute owner of the scheme property and acting in its personal capacity"2.

What does this mean?

Trustees should review their constitutions to ensure that they have an express power to distribute assets in specie, rather than an obligation to realise assets for cash prior to distributions of income or capital.

The decision also casts some doubt as to what actions fall within a responsible entity's general powers and what powers are beyond the scope of such a clause's operation and must, therefore, be expressly included into the scheme's constitution.

Further information

Our Funds and Financial Services team can assist with reviewing, updating and redrafting your scheme's constitution to ensure that it complies with these new requirements. We have extensive experience and expertise advising on Chapter 5C and Chapter 7 of the Corporations Act and assisting clients to establish funds, including property funds, equity trusts, mortgage funds, cash management trusts, fixed interest trusts, trusts with infrastructure assets, private equity funds and hedge funds. We also help clients to implement compliance and governance systems and procedures to meet their obligations.


1Ltd [2013] FCAFC 52 (28 May 2013)

2Ibid at 34

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.