ASIC finalises relief to smooth transition for responsible entities to implement new tax system for managed investment trusts
Following its announcement on 2 June 2016 (refer: 16-176MR), ASIC has granted relief to assist responsible entities of registered schemes to allow them to make changes to their constitutions without holding a members’ meeting to help them smoothly implement the new tax system for managed investment trusts should they make the choice to do so.
ASIC has also granted relief from the duty to treat members who hold interests of the same class equally where responsible entities attribute part of a determined trust component to a member under the new tax system.
This relief will reduce uncertainty and costs associated with the requirements that apply under the Corporations Act 2001 (Cth) in relation to making amendments to the constitution of a registered scheme. It will also reduce uncertainty about breaches of the duty to treat members equally without compromising fairness.
Under the relief, responsible entities may make changes to a scheme constitution to the extent that it is necessary or incidental to the scheme being able to be operated in a manner permitted by the new tax system. This could include modifications allowing the responsible entity to elect into the new tax system, treat different classes as separate attribution managed investment trusts and specify a right to be indemnified out of scheme assets in relation to the proper performance of its duties. The relief is designed to provide flexibility to responsible entities when making changes in order to apply the new tax system for managed investment trusts to their scheme.
Responsible entities wanting to make changes to the scheme’s constitution will need to publish a prominent notice on their website explaining that they intend to change the constitution, summarising the reasons for this and the effect of the changes. The notice must also include a statement that the responsible entity will change the scheme’s constitution in the way it has identified unless it receives a request to call and hold a meeting from members with at least 5% of the votes that could be cast on a special resolution.
Members will have at least 7 days from the date the responsible entity posts the notice on the website to request a meeting. If no members’ meeting is required, responsible entities can make the amendments without the need for member approval. For registered schemes where all interests are held by wholesale clients, responsible entities can choose to follow this website notice process, or alternatively, make changes where it has taken reasonable steps to consult with each member before making the changes.
Taking reasonable steps to consult may include speaking with the members or emailing them and inviting members to seek further information, discuss the changes or raise any concerns should they wish to do so.
Where a change is made, a copy of the amendments will need to be lodged with ASIC before the changes can take effect. Responsible entities will also need to give each member a further notice summarising the reasons for the changes and the effect of the changes the next time they send a communication to all members.
Where there is an opportunity, ASIC encourages responsible entities to also include a statement in any communications to members prior to the amendments being made about their intentions to make amendments to the constitution in reliance on the relief and that, where applicable, information about the amendments will be posted on their website.
Information about the new taxation system for managed investment trusts is available from the ATO website.
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