The new Corporate Collective Investment Vehicle (CCIV) licensing regime commenced on 1 July 2022.
What does this mean for existing AFSL holders?
AFSL holders that want to advise or deal in CCIVs must be authorised to provide advisory and dealing services in relation to securities. In our previous blog article, we discussed how ASIC had contacted AFSL holders affected by the commencement of the regime and advised that existing AFSL holders which do not hold authorisations in relation to securities, would be contacted by ASIC to explain the process of an ASIC initiated AFSL variation application to add securities authorisations.
AFSL holders also need to consider whether they are required to vary their AFSL further to include advisory and dealing authorisations in relation to the CCIV's assets that are financial products where this is not covered on their existing AFSL. CCIV assets that are financial products include derivatives or other financial assets as described below.
AFSL holders that want to underwrite CCIV securities must be authorised to underwrite an issue of securities.
What does this mean for new AFSL holders?
An entity seeking to obtain an AFSL to be authorised to operate CCIVs will need to demonstrate to ASIC that they have at least one Responsible Manager with knowledge and skills in relation to CCIVs. This means the AFSL applicant must have one or more Responsible Managers with knowledge or skills in relation to:
- operating the business and conducting the affairs of a CCIV; and
- the assets under management.
If an AFSL is granted which includes the authorisation to operate a retail CCIV, ASIC has the discretion to limit the retail authorisation to one sub-fund. Where the AFSL holder is seeking to operate multiple sub-funds, a variation application to ASIC will need to be submitted.
What is a CCIV?
A CCIV is a type of company limited by shares that operates as a collective investment vehicle. A CCIV has a corporate director that is a public company and upon registration holds an AFSL authorising the corporate director to operate the business and conduct the affairs of the CCIV.
CCIVs operate as either retail or wholesale financial services providers and have at least one sub-fund registered. Sub-funds are operated as separate businesses and are allocated specific assets including:
- Commodities - raw materials, metals (including precious metals), agricultural products and energy products
- Crypto assets (which are not financial products)
- Derivatives whether for hedging or other purposes
- Direct real property
- Films (the sub fund has the sole purpose of producing and/or exploiting a cinematograph film)
- Financial assets - cash, cheques, orders for payment of money, bills of exchange, promissory notes, securities, deposit products and interests in managed investment schemes
- Mortgages; and
- Primary production - cattle breeding, forestry, horse breeding, horticulture, livestock grown for fleece, ratites, tea trees and viticulture.
ASIC is yet to release its guidance in relation to the following:
- Legislative instrument prescribing the applicable financial resources requirements for corporate directors of a retail CCIV (ASIC Regulatory Guide 166 will also be updated)
- Compensation and Insurance Requirements by updating ASIC Regulatory Guide 126
- Constitution Requirements by updating ASIC Regulatory Guide 134; and
- Product Disclosure Statements and other Disclosure Obligations by updating ASIC Regulatory Guide 168.