Venture Investments Responsible Entity
Trustee Services Australia

Phone 08 9430 5262

What We Do
RSE

FAQ

RE Trustee Services

Questions:

  1. What are the functions of a responsible entity?
  2. What is a managed investment scheme?
  3. When must a managed investment scheme be registered under Chapter 5C of the Corporations Act?
  4. What is an unregistered scheme?
  5. What is the corporate regime for managed investments?
  6. Why is it beneficial to use a contract responsible entity?
  7. Why is the corporate regime for managed investments so strict?
  8. How to obtain?
  9. What is the refund policy on investor payments made by credit card?
  10. How do I make a complaint?
  11. What are the Terms and Condition of Use of the Website?

Answers:

1. What are the functions of a responsible entity?

A responsible entity is the overall operator or supervisor of the scheme for the purpose of protecting investors.

A responsible entity must be an Australian public company with at least $150,000 net tangible assets, or more depending on the value of the assets that are managed.

The responsible entity must hold an Australian Financial Service Licence (AFSL) authorising it to operate the managed investment scheme.

The responsible entity must perform the functions conferred on it by the Corporations Act 2001, its AFSL, the Constitution and the Compliance Plan of the managed investment scheme.

The responsible entity must:

  • Act honestly
  • Exercise a reasonable degree of care and diligence
  • Act in the best interest of members of the managed investment scheme
  • Treat all members of the managed investment scheme equally

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2. What is a managed investment scheme?

A managed investment scheme is any pooled direct investment in a venture that is managed by some other person.

By way of explanation, a direct investment is an investment where there is a direct involvement in the business or property as one of its owners or beneficial owners or where the owners have contracted for services to be carried out, as distinct from the holding of shares or debentures in a company which is not a direct investment, but is indirect because investors do not own the business or automatically receive profits from the business. Investors only receive such dividends as the directors determine or an agreed rate.

Examples of managed investment schemes are: 

  • Property, mortgage and investment trusts
  • Forestry and horticulture schemes

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3. When must a managed investment scheme be registered under Chapter 5C of the Corporations Act, 2001?

A managed investment scheme must be registered with ASIC as a managed investment scheme under Chapter 5C of the Corporations Act, 2001 where the units in the scheme are to be offered to retail investors beyond the $2 million / 20 investor / 12 month limit (Small Scale Offer Exemption) in section 1012E of the Corporations Act.

The registration of a scheme requires, among other things, that the scheme's constitution meet specific requirements in Chapter 5C of the Corporations Act, the scheme must have a compliance plan and a board and/or compliance committee that meets the "external" member requirements set out in Chapter 5C of the Corporations Act, 2001

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4. What is an unregistered scheme/wholesale trust?

A managed investment scheme that is only promoted to wholesale clients or where the units in the scheme are to be offered to retail investors under the $2 million / 20 investor / 12 month limit (Small Scale Offer Exemption) in section 1012E of the Corporations Act, 2001 is not required to be registered with ASIC.

A wholesale trust or unregistered scheme is established by means of a trust deed or constitution (which sets out the terms of the contractual and trust relationship between the trustee and investors in the trust).

Primary is authorised to operate both retail and wholesale schemes.

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5. What is the corporate regime for managed investments?

The corporate regime for managed investment schemes is supervised by ASIC

No registered managed investment scheme can be offered other than through a responsible entity which holds an AFSL entitling it to offer that specified managed investment or managed investments of that type. To obtain an AFSL, a proposed responsible entity must be an Australian public company and have a board of directors and experts who demonstrably have the relevant expertise and experience in the area of managed investments and the field of activity. It must also have a certain level of net tangible assets depending of the value of assets it will manage and be able to meet the prescribed cash flow requirements. Before any scheme can be registered, a constitution and compliance plan must be lodged which sets out in great detail the statutory obligations to be complied with, the risks involved for investors in relation to the relevant activity and how the responsible entity is able to meet those obligations and risks.

The responsible entity must take out professional indemnity insurance to protect the officers of the responsible entity in relation to the scheme. The insurance company takes into account the level of experience of the officers and staff of the responsible entity when assessing the premium. The responsible entity must appoint a compliance officer who must devote all the necessary time to compliance matters.

The responsible entity must also appoint a compliance committee of experts in the field which meets regularly to ensure that the responsible entity is complying with its statutory obligations in relation to each scheme.

The responsible entity must also appoint compliance auditors to check on the work of the responsible entity and the compliance committee as well as financial auditors.

The responsible entity must join a complaints resolution scheme.

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6. What are the benefits of using a responsible entity for hire?

The alternative to using a responsible entity for hire is for the promoters of a managed investment scheme to establish a new responsible entity. In addition to drafting scheme documentation and registration of the scheme (if necessary) this will involve:

  • establishing a public company
  • applying for an AFSL and obtaining ASIC approval (which process can take many months)
  • obtaining professional indemnity insurance (often difficult to obtain or more expensive for inexperienced responsible entities)
  • ensuring that net tangible asset levels are maintained
  • appointing a compliance officer
  • appointing a compliance committee
  • engaging financial auditors and compliance plan auditors
  • appointing experts
  • appointing a custodian

Plainly this can be a particularly costly and time consuming exercise.

The benefits of using Primary include:

  • there is no requirement for a new AFSL, Primary will simply vary its existing licence
  • professional indemnity insurance is usually more readily available and at a cheaper cost
  • compliance costs can be kept low due to economies of scale
  • our staff and consultants are experienced in all aspects of the registration and operating of managed investment schemes
  • our staff keep up to date in the law concerning managed investment schemes

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7. How to obtain further information?

Please contact the Managing Director of Primary, Robert Garton-Smith who has over thirty years' experience of the industry . He will be able to provide greater background information on specific requirements, and discuss the fees, costs and timelines involved. Please see the contact us page for details [link to contact us page].

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8. What is the refund policy on payments made by credit card?

The payment of fees by investors to the responsible entity are covered by the terms and conditions of your investment. For further information please contact the responsible entity. No refunds are payable except in the case of overpayments made in error.

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9. How do I make a complaint?

If you are dissatisfied please contact us to discuss how the matter can be resolved.

If you wish to make a complaint please contact the Primary's Complaints Officer. Complaints can be submitted by telephone, in writing, by email or in person.

You can contact the Complaints Officer:

  • By phone: +08 9430 5262
  • In writing: Complaints Officer, Primary Securities Ltd, PO Box 732, Fremantle WA 6959
  • By email: admin@primarysecurities.com.au

The Complaints Officer will handle your complaint in accordance with Primary's Complaints Procedures.

If an issue is not resolved within the appropriate time limit, the Complaints Officer will inform you of your right to pursue your complaint or dispute with the Financial Ombudsman Service (FOS). Primary is a member of FOS which is an external, independent body set up to assist in resolving certain complaints.

FOS contact details are:

  • Phone: 1 800 367 287
  • Fax: +61 3 9613 6399
  • Website: www.fos.org.au
  • Email: info@fos.org.au
  • Write to: GPO Box 3, Melbourne, VIC 3001

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11. What are the Terms and Condition of Use of the Website?

The following are the terms on which you may access the website of Primary including the investor information service. By viewing, accessing or downloading any information from this website you agree to be subject to the Terms and Conditions.

Disclaimer

  • This website has been designed for information and enquiry purposes only. While the information is provided in good faith by Primary it does not warrant that it is accurate, reliable, complete, or free from error or omission. Subject to any terms implied by statute which cannot be excluded, Primary, does not accept any responsibility for errors in, or omissions from the website.
  • In no event shall Primary be liable to any website user or any other entity for any direct, indirect, special, consequential or other damages that are related to the use of, or the inability to use, the content of this website.

General Information

  • This website provides general information only. If you need personal financial advice Primary recommends that you contact an appropriately qualified and licensed adviser.

Copyright

  • Copyright of all materials on the website belongs to Primary and does not pass to you when you download it. You may not alter the materials in any way or reproduce or otherwise use them for any public or commercial purpose unless you have prior written approval from Primary.

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