• A responsible manager is not deemed to be an officer of the licensee company by virtue of their appointment as a responsible manager.
  • In the early days of the financial services reform regime, the name given to the people, through whom the licensee demonstrated the competency to provide the authorised financial services, was "responsible officer". Following concern that this might suggest that a responsible officer might be considered an "officer" of the licensee company, ASIC changed the title to " responsible manager" to address such concerns.
  • Whether a person is an officer of a company or not, is not determined by their title or position. Rather, it is the functions they perform. Section 9 of the Corporations Act defines an officer"". The relevant parts of that section define an officer as:
    1. a director or secretary of the corporation; or
    2. a person:
      1. who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
      2. who has the capacity to affect significantly the corporation's financial standing; or
      3. in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation).
  • Officers of companies have obligations imposed upon them by the common law, equity and the Corporations Act. Examples of these obligations imposed by the Act include the duty to exercise care and diligence, act in good faith, not improperly use their position for personal gain, etc. Criminal and civil penalty consequences might be imposed if an officer contravenes these obligations.
  • The role of a responsible manager is to enable the licensee (usually a company) to demonstrate to ASIC that it has the competency to provide the authorised financial services. Any other function or obligations attributable to such persons in their capacity as responsible manager might arise from contractual obligations with the licensee but not from the legislation.
  • Accordingly, a responsible manager may or may not be an officer of the licensee company. Whether they are or not is determined by the functions they perform, not because they are designated as a responsible manager of the licensee.
  • Of course, in many licensees, officers of the licensee company have been nominated and appointed as responsible managers.
  • So where does the risk referred to above arise? It will only arise when a person who happens to be a responsible manager also carries out functions which might fall within the "officer" definition set out above.
  • That being so, if a responsible manager wants to ensure that they are nor deemed to be an officer of the corporate licensee, they should ensure that they do not exercise such functions.

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.