Managed Investments Act 1998 (62 of 1998)

Schedule 1   New managed investments provisions and transitional provisions

Corporations Law set out in section 82 of the Corporations Act 1989

2   After Division 10 of Part 11.2

Insert:

Division 11 - Changes resulting from the Managed Investments Act 1998

1451 Definitions

In this Division:

commencement means the commencement of Chapter 5C of this Law.

new Law means this Law as in force after the commencement.

old Law means this law as in force immediately before the commencement.

registered scheme means a managed investment scheme that is registered under section 601EB of the new Law.

registration application means an application for registration of a managed investment scheme under section 601EB of the new Law.

undertaking includes scheme, enterprise, contract or arrangement.

1452 Division applies to prescribed interests in existence immediately before commencement

This Division applies to interests that, immediately before the commencement, were prescribed interests to which:

(a) Division 5 of Part 7.12 of the old Law applied; or

(b) that Division would have applied but for the operation of subparagraph 7.12.04(c)(ii) of the Corporations Regulations;

and that are interests in a managed investment scheme as defined in section 9 of the new Law. It also applies to the undertaking to which the interests relate and to the trustee or representative and the management company in relation to the interests.

1453 Application of new Law to interests covered by approved deed immediately before commencement

The new Law applies to prescribed interests covered by an approved deed immediately before commencement as if paragraph 601ED(1)(a) (requirement for 20 members) were omitted. This section ceases to apply to the prescribed interests covered by the deed if all the people who hold the interests agree that this section should cease to apply to the interests.

1454 Old Law continues to apply for 2 years or until scheme registered

(1) The old Law continues to apply to the interests, the undertaking, the trustee or representative and the management company, for the period of 2 years starting on the commencement, unless, before then, the undertaking becomes a registered scheme.

(2) The ASC may extend that period of 2 years if the undertaking is to be wound up at a fixed time after the 2 years and the ASC thinks it would be unreasonable to require the undertaking to become a registered scheme before being wound up.

(3) Except for the purposes of applying to register the undertaking as a managed investment scheme under the new Law and dealing with the application, the new Law does not apply to the interests, the undertaking, the trustee or representative and the management company while the old Law continues to apply to them.

(4) If the undertaking becomes a registered scheme within the period of 2 years referred to in subsection (1), section 601FC(4) of the new Law applies to the registered scheme for the remainder of that period as if prescribed interests that are still covered by an approved deed because of subsection (1) of this section were interests in a registered scheme.

1455 Retirement from office of trustee or representative or management company

(1) This section provides for the bodies that hold the offices of trustee or representative and management company to retire from those offices. A retirement under this section takes effect if, and only if, the undertaking becomes a registered scheme.

(2) One of the bodies may retire from the office it holds by giving written notice of its retirement to the other body. The body giving the notice must lodge a copy of it with the ASC.

(3) Once one of the bodies has given a retirement notice to the other body, that other body cannot give a retirement notice. If both bodies give notices at the same time, the notice by the body that holds the office of management company is ineffective.

(4) A retirement notice may only be given:

(a) while Division 5 of Part 7.12 of the old Law continues to apply to the prescribed interests; and

(b) during the first year after the commencement.

(5) A retirement notice cannot be revoked.

(6) Section 1456 sets out what happens when one of the bodies gives the other a retirement notice.

(7) Section 1457 sets out what happens if neither of the bodies gives the other a retirement notice.

(8) Sections 1458 to 1461 only confer rights and impose obligations on a body for so long as:

(a) if the body is the trustee or representative or the management company¾the body continues to hold that office; and

(b) in any case¾the undertaking is not a registered scheme.

1456 What happens when one of the bodies receives a retirement notice

(1) If one of the bodies receives a retirement notice it must, within 2 months, decide either to:

(a) retire from the office it holds; or

(b) lodge a registration application in relation to the undertaking naming itself as the proposed responsible entity.

The body must lodge a notice of its decision with the ASC.

Note: For the powers of the body if it decides to become the responsible entity, see section 1460.

(2) If the body decides to retire:

(a) its retirement takes effect if, and only if, the undertaking becomes a registered scheme; and

(b) the body must, as soon as practicable after making its decision, convene a meeting of the holders of the prescribed interests to:

(i) choose a proposed responsible entity for the purpose of making a registration application; or

(ii) decide that the undertaking is to be wound up; and

(c) the body must lodge a notice with the ASC setting out the outcome of the meeting.

Note 1: For the powers of the proposed responsible entity, see section 1460.

Note 2: For the procedure at the meeting, see section 1460.

(3) If, at the meeting held under paragraph (2)(b), the holders of the prescribed interests do not either choose a proposed responsible entity or decide that the undertaking is to be wound up, the management company may apply to the Court for an order directing it to wind up the scheme.

1457 What happens if neither of the bodies gives a retirement notice

(1) If neither of the bodies gives a retirement notice during the first year after the commencement, the management company must:

(a) as soon as practicable after the end of that year, convene a meeting of the holders of the prescribed interests to:

(i) choose a proposed responsible entity for the purpose of making a registration application; or

(ii) decide that the undertaking is to be wound up; and

(b) lodge a notice with the ASC setting out the outcome of the meeting.

Note 1: For the powers of the proposed responsible entity, see section 1460.

Note 2: For the procedure at the meeting, see section 1460.

(1A) A resolution passed under subparagraph (1)(a)(i) may direct the proposed responsible entity to lodge with the registration application a compliance plan that provides for scheme property to be held by a person other than the responsible entity, or a person that is not related to the responsible entity, as the responsible entity's agent.

(2) If, at the meeting, the holders of the prescribed interests do not either choose a proposed responsible entity or decide that the undertaking is to be wound up, the management company may apply to the Court for an order directing it to wind up the scheme.

1458 Winding up of the undertaking

The trustee or representative for the purposes of the deed must ensure that the undertaking is wound up in accordance with the deed in relation to the prescribed interests and with any orders under subsection 1459(2) if:

(a) the holders of the prescribed interests decide, at a meeting convened for the purpose of paragraph 1456(2)(b) or 1457(1)(a), that the undertaking is to be wound up; or

(b) the Court makes an order directing the management company to wind up the undertaking pursuant to an application under subsection 1457(2).

1459 Other orders about winding up

(1) The Court may, by order, appoint a person to take responsibility for ensuring the undertaking is wound up in accordance with the deed and any orders under subsection (2) if the Court thinks it necessary to do so (including for the reason that the management company has ceased to exist or is not properly discharging its obligations in relation to the winding up).

(2) The Court may, by order, give directions about how the undertaking is to be wound up if the court thinks it necessary to do so (including for the reason that the provisions in the deed are inadequate or impracticable).

(3) An order under subsection (1) or (2) may be made on the application of:

(a) the management company or the trustee or representative; or

(b) a director of the management company or of the trustee or representative; or

(c) a holder of any of the prescribed interests; or

(d) the ASC.

1460 Powers of proposed responsible entity

(1) This section sets out the powers of:

(a) a body that decides under subsection 1456(1) to lodge a registration application in relation to the undertaking naming itself as the proposed responsible entity; or

(b) a body chosen by the holders of the prescribed interests as the proposed responsible entity at a meeting convened under paragraph 1456(2)(b) or 1457(1)(a).

(2) The body has power to lodge a registration application in relation to the undertaking on behalf of the holders of the prescribed interests, and has power to do all things necessary for the purpose of the application.

(3) The body has power to modify the deed in relation to the prescribed interests:

(a) if the purpose of the modification is to make the deed meet the requirements of section 601GA of the new Law for the constitution of a registered scheme; or

(b) the modification removes from the deed covenants that were included to satisfy the requirements of Division 5 of Part 7.12 of the old Law.

This is so despite any provision in the deed to the contrary.

(4) Section 1069A of the old Law does not apply to the body's power to modify the deed (except as provided in section 1461).

(5) The body must lodge a notice with the ASC setting out the modifications.

(6) The body's power to modify the deed is subject to the following qualifications:

(a) the modifications have effect if, and only if, the undertaking becomes a registered scheme; and

(b) within 28 days of lodgment of the notice setting out the modifications, the ASC may require the management company to convene a meeting of the holders of the prescribed interests to ratify all or any of the modifications; and

(c) if the ASC requires a modification to be ratified, it does not have effect under paragraph (a) unless it has been ratified and written notice of the ratification has been lodged with the ASC.

1461 Meeting procedures

Sections 1069A to 1069C of the old Law apply, with necessary modifications, for the purposes of convening, holding, and voting at meetings for the purpose of paragraph 1456(2)(b), 1457(1)(a) or 1460(6)(b).

1462 Transfer of rights, obligations and liabilities

If the undertaking becomes a registered scheme, Division 3 of Part 5C.2 of the new Law applies as if:

(a) references to the new responsible entity were references to the responsible entity of the scheme on registration; and

(b) references to the former responsible entity were references to either or both of the bodies that, immediately before the scheme's registration, held the offices of trustee or representative and management company (in their capacities as the holders of those offices).

1463 Indemnification of trustee or representative for transfer of scheme property

If the undertaking becomes a registered scheme but the trustee or representative does not become the responsible entity of the scheme, the trustee or representative is entitled to be indemnified out of the scheme property for reasonable expenses incurred in transferring the scheme property to the responsible entity.

1464 Application of paragraphs 601JA(2)(c) and 601JB(2)(b) of new Law to officers or employees of body that does not become scheme's responsible entity

If:

(a) the undertaking becomes a registered scheme; and

(b) on registration of the scheme, the scheme's responsible entity is one of the bodies referred to in subsection 1455(1);

then, in applying paragraph 601JA(2)(c) or 601JB(2)(b) of the new Law to the scheme, a person who was an officer or employee of the other of those bodies is not, merely because of things they did before the scheme's registration in the performance of their functions or duties as an officer or employee of that body, taken to have been substantially involved in business dealings, or in a professional capacity, with the responsible entity.

1465 References to prescribed interests etc. in existing laws and documents

A reference in any law of the Commonwealth or of a State or Territory, or in any document, to a term set out in the old term column of the table (within the meaning of this Law) is to be read after commencement as including a reference to the corresponding term set out in the new term column of the table (within the meaning of this Law) except so far as the contrary intention appears in the law or document.