Funds management is one of the most dynamic components of the Australian financial services industry.

We are passionate about assisting you to achieve your commercial objectives in regards to Operating a Fund (retail and/or wholesale) and Shares or Debentures.

Starting and Operating a Fund

Starting up a fund can be a daunting undertaking. Things to be considered in the process include:

• Trustee and Issuer – do you have the capacity to do this yourself or should you outsource it?  You will either need to obtain your own AFSL or find an external trustee (ask us for a list of companies we know that can do this).
• Investment Management – do you want to act as the Investment Manager of the fund?  To do this you can either obtain your own AFSL or become an authorised representative of another AFSL.
• Registry and Administration – do you have the capacity to do this yourself or do you need to outsource this? (Ask us for a list of companies we know that can do this).
• Alternatives to a fund – we will explain some alternatives to fund structures, including managed discretionary accounts.

Sophie Grace is able to assist you in starting up a fund that suits your particular circumstances and to provide you with appropriate referrals (in accordance with our no-commissions policy) to coordinate all of the appropriate elements.  We can also assist with ongoing fundraising and other requirements.

Funds in Australia

A fund in Australia is usually set up as a unit trust – where each interest in the trust is one unit.

All trusts must have:

• A trustee;
• An Investment manager (this may be the trustee or a separate entity);
• A Custodian (this may be the trustee or a separate entity).

Please refer to the diagram below which outlines a common trust structure.

The main requirements for all funds in Australia are set out in the Corporations Act and include:

• The requirement to hold an Australian Financial Services Licence (AFSL) (you can read more about this requirement here);
• Disclosure requirements; and
• Registration of the fund with ASIC.

Types of Managed Fund Businesses

For further information on the different types of structures and licensing which can be used in a funds management business, please see the following links:

• Wholesale Fund;
• Retail Fund;
• Issuing Shares or Debentures; and
• Managed Discretionary Accounts.

Funds management is one of the most dynamic components of the Australian financial services industry and there are issues that must be considered before establishing your fund. Please see our important information page to learn more about these issues.

AFS Licensing for Trustees of Unregistered Managed Investment Schemes

Generally, a trustee of an unregistered managed investment scheme must hold an Australian Financial Services Licence (AFSL) to deal in a financial product, allowing the trustee to issue, vary or dispose of interests in the scheme. In some circumstances, a trustee may be exempt from the requirement to hold an AFSL to act as trustee, by relying on the intermediary authorisation exemption in section 911(2)(b) of the Corporations Act. The intermediary authorisation is not equivalent to an authorised representative arrangement as the trustee (or “product provider”) cannot act as the authorised representative of an AFSL holder when relying on this exemption.

In order to rely on the intermediary authorisation exemption, the following must occur:

1. the trustee must enter into an intermediary agreement with an appropriately authorised AFSL holder;
2. the AFSL holder (or its Corporate Authorised Representative) distributes and promotes the scheme, making offers to investors to arrange to issue, vary or dispose of interests in the scheme;
3. the trustee issues, varies or disposes of interests in the scheme.

The AFSL holder, or its Corporate Authorised Representative, may also provide incidental custody services.

Contact us for further information on how we can assist you.