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
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
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
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.
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.
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
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.
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.
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: email@example.com
The Complaints Officer will handle your complaint in accordance with Primary’s Complaints Procedures as follows:
Complaints Handling Methods
For Complaints in relation to either a Scheme or a Class Primary will deal with these Complaints in compliance with the dispute resolution requirements in section 912A(2) of the Corporations Act and the following methods:
All complaints are to be acknowledged promptly;
Complaints that do not require investigation are to be resolved immediately or expeditiously;
(a) otherwise, within 21 days of the Complaint being made, the Complaint is to be investigated, the Complainant is to be given an opportunity to provide information, the Complaint is to be properly considered, and a report is to be prepared;
(b) a decision is to be made by the Managing Director and the decision communicated to the Complainant with the reasons for the decision within 28 days of the Complaint being made;
(c) at the same time of advising the Complainant of the outcome of the Complaint Primary will also advise the Complainant that they may complain to the Australian Financial Complaints Authority (AFCA) (or until 1 November 2018, the Financial Ombudsman Service) should the Complainant be unhappy with the outcome of Primary’s Complaint handling procedure.
The Australian Financial Complaints Authority (and the Financial Ombudsman Service as the case requires) may be contacted:
- by phone on 1300 931 678
- by email to firstname.lastname@example.org
- by writing to GPO Box 3, Melbourne, VIC 3001
The Australian Financial Complaints Authority (or the Financial Ombudsman Service as the case requires) will first invoke a conciliation process. If the Complainant still does not get a satisfactory outcome the Complainant has the right to have the matter arbitrated by an adjudicator or panel. Each Complaint is handled in confidence and without affecting any legal rights of the Complainant should they remain dissatisfied.
Any issue arising from Complaints that have material ramifications for other investors shall be reported by the Complaints Officer of Primary to the Board of Primary.
The Australian Financial Complaints Authority (or the Financial Ombudsman Service as the case requires) may not deal with all complaints from wholesale clients, in which case only arbitration or legal proceedings are available.
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