Notifying ASIC of the change of control of the licensee

If you become aware of a "change in control" of your financial services licensee, it is a condition of your AFSL that you must, within 10 business days, lodge with ASIC, in prescribed form, particulars of the change that has occurred. The Form FS20 is the prescribed form for notifying ASIC of these changes.

ASIC requires this new information to monitor and ensure that any new management of a company is still compliant with its licensing requirements. Subsequently, any entity that is unable to comply with its licensing obligations after a change in control, incurs the risk of having its licence suspended or cancelled.

In our experience, ASIC tends to focus on changes in direct shareholdings of licensees when raising change of control issues. This is because ASIC keeps records of company shareholdings, and it is easy for ASIC to show that the AFSL holder should have been aware of the change.

For example, in June 2015, ASIC suspended the AFSL of retail OTC derivative provider Australian Capital Markets Advisory Services Pty Ltd (ACMAS) after the entity became a wholly owned subsidiary of Formax International Market Limited. The new management failed to demonstrate their ability to comply with the AFS licensing requirements.

Changes of control for companies

There is also an obligation to notify ASIC of changes to details of the company. These obligations arise under the Corporations Act and apply equally to all companies, not just licensees.

Companies must notify ASIC when:

  • there is change to their register of members (if you have more than 20 members, you only need to notify ASIC about the top 20 members);
  • there is a change to the share structure,
  • there is a change to the directors or secretaries of the company;
  • there is a change to the ultimate holding company of a proprietary company.

Such notifications are generally made to ASIC using a Form 484 and need to be made within 28 days of the change.

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.