Corporations Act 2001

CHAPTER 8B - CORPORATE COLLECTIVE INVESTMENT VEHICLES  

PART 8B.3 - CORPORATE GOVERNANCE OF CCIVs  

Division 1 - Governance rules  

Subdivision A - How a CCIV exercises company powers  

SECTION 1223   EXECUTION OF DOCUMENTS (INCLUDING DEEDS) BY THE CCIV ITSELF  

1223(1)    
A document is taken to have been signed in accordance with subsection 127(1) if the document is signed by:

(a)    2 directors of the corporate director of the CCIV; or

(b)    a director and a company secretary of the corporate director of the CCIV.

Note: If a document is signed in this way, a person will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the CCIV.

1223(2)    
A CCIV ' s common seal (if any) is taken to have been fixed to a document in accordance with subsection 127(2) if:

(a)    the CCIV ' s common seal is fixed to the document; and

(b)    the fixing of the seal is witnessed by:

(i) 2 directors of the corporate director of the CCIV; or

(ii) a director and a company secretary of the corporate director of the CCIV.

Note: If a CCIV executes a document in this way, a person will be able to rely on the assumptions in subsection 129(6) for dealings in relation to the CCIV.

1223(3)    
A CCIV may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection 127(1) or (2) , as affected by this section.

1223(4)    
This section does not limit the ways in which a CCIV may execute a document (including a deed).

1223(5)    
This section does not limit Part 2B.1 , as it applies to a CCIV subject to the modifications set out in this Chapter.

Note 1: A CCIV may appoint an agent: see section 126 .

Note 2: Some provisions of this Chapter modify section 124 , for example sections 1230 and 1231N .

Subdivision B - Constitution  

SECTION 1223A   REPLACEABLE RULES DO NOT APPLY TO A CCIV  

1223A(1)    
A section or subsection whose heading contains the words replaceable rule does not apply as a replaceable rule to a CCIV.

1223A(2)    
Subsection (1) applies despite paragraph 135(1)(a) .

SECTION 1223B   REQUIREMENT FOR A CCIV TO HAVE A CONSTITUTION  

1223B(1)    
A CCIV must have a constitution. A CCIV may not repeal its constitution unless it replaces the constitution with a new constitution.

Minimum content requirements for the constitution

1223B(2)    
The constitution of a CCIV must comply with the requirements applicable to the CCIV under Subdivision C .

Strict liability offence

1223B(3)    
A CCIV commits an offence of strict liability if it fails to ensure it has a constitution that complies with the requirements applicable to the CCIV under Subdivision C .

SECTION 1223C   RETAIL CCIV - ASIC MAY DIRECT CCIV TO MODIFY ITS CONSTITUTION  

1223C(1)    
ASIC may direct a retail CCIV to modify its constitution, as set out in the direction, to ensure that the CCIV ' s constitution complies with the content requirements applicable to the CCIV under Subdivision C . The direction is to be given by notice in writing to the CCIV.

1223C(2)    
ASIC may also direct a retail CCIV to modify its constitution, as set out in the direction, to ensure that the CCIV ' s constitution deals in adequate detail with:

(a)    the matters required to be included in the constitution under Subdivision C ; and

(b)    the specification (if any) of any rights of the corporate director to be paid fees out of assets of a sub-fund of the CCIV, as mentioned in section 1224N .

1223C(3)    
Despite section 1223D , the corporate director may modify the constitution to comply with the direction.

1223C(4)    
The CCIV must comply with the direction within 14 days after being given it.

1223C(5)    
The CCIV must lodge with ASIC a copy of the modified constitution within 14 days after the modification.

1223C(6)    
An offence based on subsection (4) or (5) is an offence of strict liability.

SECTION 1223D   ADOPTION, MODIFICATION AND REPEAL OF CONSTITUTION  

1223D(1)    
A CCIV adopts on registration the constitution lodged with the application to register the CCIV.

1223D(2)    
The constitution of a CCIV may be modified, or repealed and replaced with a new constitution:

(a)    if the CCIV is a retail CCIV:

(i) by special resolution of the members of the CCIV; or

(ii) by the corporate director, if the corporate director reasonably considers the change will not adversely affect members ' rights; or

(iii) by special resolution of the members of a sub-fund of the CCIV, if the corporate director reasonably considers the change will not adversely affect the rights of any member of any other sub-fund of the CCIV; or

(b)    if the CCIV is a wholesale CCIV - by complying with the requirements set out in the constitution for the modification or repeal.

1223D(3)    
If the constitution of a CCIV is modified, or repealed and replaced with a new constitution, the CCIV must lodge with ASIC:

(a)    a copy of the modification, or the new constitution; and

(b)    if the corporate director of the CCIV determines a later date mentioned in paragraph (5)(b) or (c) for the modification or replacement to take effect - notice of the later date;

within 14 days after the modification or replacement.

Note: The constitution may be modified or repealed by Court order: see section 233 .

1223D(4)    
An offence based on subsection (3) is an offence of strict liability.

1223D(5)    
If section 137 does not set the date on which the modification or repeal and replacement of a CCIV ' s constitution takes effect, it takes effect on the latest of the following:

(a)    the date on which the modification or the new constitution is lodged with ASIC;

(b)    if the CCIV is a retail CCIV, and the corporate director determines a later date for the modification or replacement to take effect - that later date;

(c)    if the CCIV is a wholesale CCIV, and a later date is determined in accordance with any requirements in the constitution of the CCIV - that later date.

1223D(6)    
Section 136 does not apply to a CCIV.

SECTION 1223E  

1223E   EFFECT OF CONSTITUTION  

In addition to the effect mentioned in subsection 140(1) , a CCIV ' s constitution also has effect as a contract between the corporate director and each member of the CCIV.

Subdivision C - Minimum content requirements for the constitution of a CCIV  

SECTION 1223F  

1223F   WHOLESALE CCIV - BASIC CONTENT REQUIREMENT  

A wholesale CCIV ' s constitution must specify the requirements that must be complied with for the CCIV to modify its constitution, or repeal its constitution and replace it with a new one.

SECTION 1223G  

1223G   RETAIL CCIV - BASIC CONTENT REQUIREMENTS  

A retail CCIV ' s constitution must do the following:

(a)    make provision for the establishment of sub-funds, and classes of shares referable to sub-funds;

(b)    make provision for the method by which complaints made by members in relation to the CCIV are to be dealt with;

(c)    state that the CCIV has the power to borrow or raise money;

(d)    if there are to be any limits on the CCIV ' s exercise of the power to borrow or raise money - sets out those limits;

(e)    if the CCIV is to acquire in respect of any of its sub-funds, one or more shares that are referable to another of its sub-funds - make provision for such acquisitions.

SECTION 1223H   RETAIL CCIV - ADDITIONAL CONTENT REQUIREMENT FOR REDEMPTION OF SHARES  

1223H(1)    
This section applies if all or some of the shares in a retail CCIV are redeemable shares or redeemable preference shares.

1223H(2)    
The CCIV ' s constitution must make provision for the shares to be redeemed. The provision must:

(a)    specify a period within which a redemption must ordinarily be satisfied while section 1230H (about when a sub-fund is liquid) applies to the sub-fund to which the share is referable; and

(b)    be fair and reasonable to the members of the sub-fund to which the share is referable; and

(c)    set out a price, or a method for determining a price, at which shares in the CCIV are to be redeemed if, at the time of the redemption, section 1230H (about when a sub-fund is liquid) applies to the sub-fund to which the shares are referable.

Division 2 - Officers and employees of the CCIV  

Subdivision A - Officers and employees generally  

SECTION 1224   A CCIV HAS A SINGLE CORPORATE DIRECTOR  

A CCIV may only have one director

1224(1)    
A CCIV must not appoint more than one director.

Note: For who can be the director of a CCIV, see sections 1224F and 1224G .

Position of director is the position of corporate director

1224(2)    
The position of director of a CCIV is the position of corporate director.

1224(3)    
Corporate director of a CCIV means the company named in ASIC ' s record of the CCIV ' s registration as the corporate director or temporary corporate director of the CCIV.

Note: The corporate director is first appointed through the registration process for the CCIV: see sections 1222A and 1222D .

No alternate directors

1224(4)    
There is no position of alternate director of a CCIV.

1224(5)    
The corporate director of a CCIV commits an offence if the corporate director appoints an alternate director.

Note: For the corporate director ' s power to appoint an agent, see section 1224L .

Definition of director not limited

1224(6)    
This section does not limit the operation of paragraph (b) of the definition of director in section 9 in relation to a CCIV.

SECTION 1224A   A CCIV HAS NO SECRETARY AND NO EMPLOYEES  

1224A(1)    
A CCIV must not appoint a secretary.

Note: The secretary of the corporate director is responsible for certain corporate contraventions by the CCIV: see Division 3 of this Part.

1224A(2)    
A CCIV must not have any employees.

Note: However, a CCIV may appoint an agent: see section 126 .

SECTION 1224B  

1224B   MEANING OF OFFICER OF A CCIV  

In this Act:

officer
of a corporation that is a CCIV means:

(a) a director of the CCIV; or

(b) a receiver, or receiver and manager, of the property of a sub-fund of the CCIV; or

(c) a liquidator of a sub-fund of the CCIV; or

(d) a trustee or other person administering a compromise or arrangement made between the CCIV and someone else.

Note: Part 8B.6 is about external administration of sub-funds.

SECTION 1224C   GENERAL DUTIES OWED BY OFFICERS  

1224C(1)    
Division 1 of Part 2D.1 (about general duties) applies to a CCIV with the modifications set out in this section.

1224C(2)    
In applying Division 1 of Part 2D.1 (about general duties) in relation to an officer (other than a director) of a CCIV:

(a)    treat references to the best interests of the corporation as instead being references to the best interests of the sub-fund referred to in subsection (3) ; and

(b)    treat references to causing detriment to the corporation as instead being references to causing detriment to the sub-fund referred to in subsection (3) ; and

(c)    treat references to the business operations of the corporation as instead being references to the business operations of the sub-fund referred to in subsection (3) .

1224C(3)    
The sub-fund is:

(a)    for a receiver, or receiver and manager, of the property of a sub-fund of the CCIV - the sub-fund; or

(b)    for a liquidator of a sub-fund of the CCIV - the sub-fund; or

(c)    for a trustee or other person administering a compromise or arrangement made between the CCIV and someone else - the sub-fund on whose members or creditors the compromise or arrangement is binding.

SECTION 1224D   DUTIES OWED BY DIRECTOR  

Duties owed by a director of any CCIV

1224D(1)    
A director of a CCIV must, in exercising its powers and carrying out its duties:

(a)    act honestly; and

(b)    act in the best interests of the members of the CCIV and, if there is a conflict between the interests of those members and its own interests, give priority to the members ' interests; and

(c)    act in the best interests of the members, as a whole, of each sub-fund of the CCIV and:

(i) if there is a conflict between the interests of the members, as a whole, of a sub-fund and its own interests, give priority to the members ' interests; and

(ii) if there is a conflict between the interests of the members, as a whole, of a sub-fund and the best interests of the members of the CCIV, give priority to the interests of the members of the CCIV; and

(d)    have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the director in exercising those powers and carrying out those duties; and

(e)    not make use of information acquired through being a director of the CCIV in order to:

(i) gain an improper advantage for the director or another person; or

(ii) cause detriment to the members of the CCIV.

Note: This subsection is a civil penalty provision (see section 1317E ).

Additional duties owed by a director of a retail CCIV

1224D(2)    
A director of a retail CCIV must, in exercising its powers and carrying out its duties:

(a)    exercise the degree of care and diligence that a reasonable person would exercise in the director ' s position; and

(b)    treat members of the CCIV who hold shares of the same class equally; and

(c)    treat members of the CCIV who hold shares of different classes fairly; and

(d)    treat members of different sub-funds of the CCIV fairly; and

(e)    ensure that the CCIV ' s constitution meets the requirements of this Act; and

(f)    ensure that the CCIV ' s compliance plan meets the requirements of section 1226A ; and

(g)    comply with the CCIV ' s compliance plan; and

(h)    ensure that:

(i) assets and liabilities of the sub-funds of the CCIV are clearly identified; and

(ii) any property of the CCIV to which section 1233K (about property that has to be converted) applies is clearly identified; and

(iii) any liabilities of the CCIV to which section 1233M (about liabilities allocated to 2 or more sub-funds) applies is clearly identified; and

(i)    ensure that assets of a sub-fund of the CCIV are held in the manner required by section 1234J ; and

(j)    ensure that the assets of a sub-fund of the CCIV are valued at regular intervals appropriate to the nature of the assets; and

(k)    ensure that all payments out of the assets of the CCIV are made in accordance with the CCIV ' s constitution and this Act; and

(l)    carry out or comply with any other duty, not inconsistent with this Act, that is conferred on the director by the CCIV ' s constitution.

Note: This subsection is a civil penalty provision (see section 1317E ).

Additional duties owed by a director of a wholesale CCIV

1224D(3)    
A director of a wholesale CCIV must, in exercising its powers and carrying out its duties:

(a)    exercise the degree of care and diligence that a reasonable person would exercise in the director ' s position; and

(b)    treat members of the CCIV who hold shares of the same class equally; and

(c)    treat members of the CCIV who hold shares of different classes fairly; and

(d)    treat members of different sub-funds of the CCIV fairly.

1224D(4)    
A director of a wholesale CCIV contravenes this subsection if:

(a)    the director contravenes paragraph (3)(a) , (b) , (c) or (d) ; and

(b)    either:

(i) the constitution of the CCIV does not exempt the director from liability for the contravention; or

(ii) the contravention was dishonest or involved a lack of good faith.

Note: This subsection is a civil penalty provision (see section 1317E ).

Duties under this section prevail in case of conflict

1224D(5)    
If there is a conflict between a duty owed by a director of a CCIV under this section and a duty owed by the director under Part 2D.1 , the duty owed under this section prevails.

Interaction with other laws etc.

1224D(6)    
Subsection (1) or (2) :

(a)    has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation; and

(b)    does not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a) .

Interaction with section 199A

1224D(7)    
Section 199A does not prevent a wholesale CCIV from exempting or indemnifying a director of the CCIV from a liability incurred in relation to a contravention of subsection (3) if the contravention:

(a)    is not dishonest; and

(b)    does not involve a lack of good faith.

To avoid doubt, this subsection does not affect the operation of section 199A in relation to a contravention of a duty owed under Part 2D.1 .

Interaction with section 199B

1224D(8)    
Section 199B applies to a CCIV as if paragraph 199B(1)(b) included a reference to this section.

Note: There are additional modifications of section 199B , relevant to officers and auditors of the corporate director, in section 1225E .

SECTION 1224E  

1224E   CERTAIN PROVISIONS IN CHAPTER 2D DO NOT APPLY TO CCIVs  

The following do not apply to a CCIV:

(a)    Part 2D.3 (about appointment, remuneration and cessation of appointment of directors);

(b)    Part 2D.4 (about appointment of secretaries);

(c)    Part 2D.5 (about public information about directors and secretaries);

(d)    Part 2D.6 (about disqualification from managing corporations);

(e)    Part 2D.7 (about ban on hedging remuneration of key management personnel);

(f)    Part 2D.8 (about remuneration recommendations in relation to key management personnel for disclosing entities).

Subdivision B - The corporate director of a CCIV  

SECTION 1224F  

1224F   WHO CAN BE THE DIRECTOR OF A CCIV  

The only kind of person who may be appointed as the director of a CCIV is a public company that:

(a)    holds an Australian financial services licence authorising it to operate the business and conduct the affairs of the CCIV; and

(b)    is not a Chapter 5 body corporate.

SECTION 1224G   RETAIL CCIV - ADDITIONAL RULES ABOUT WHO CAN BE THE DIRECTOR  

1224G(1)    
At least half of the directors of the corporate director of a retail CCIV must be external directors.

1224G(2)    
A director of the corporate director is an external director if the director:

(a)    is not, and has not been in the previous 2 years, an employee of the corporate director or a related body corporate; and

(b)    is not, and has not been in the previous 2 years, a senior manager of the corporate director or a related body corporate; and

(c)    is not, and has not been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the corporate director or a related body corporate; and

(d)    is not a member of a partnership that is, or has been in the previous 2 years, substantially involved in business dealings, or in a professional capacity, with the corporate director or a related body corporate; and

(e)    does not have a material interest in the corporate director or a related body corporate; and

(f)    is not a relative of a person who has a material interest in the corporate director or a related body corporate.

1224G(3)    
The corporate director of a retail CCIV must not fail to comply with subsection (1) for a period exceeding 14 days (or a longer period allowed in writing by ASIC).

Fault-based offence

1224G(4)    
A person commits an offence if the person intentionally or recklessly fails to comply with subsection (3) .

Strict liability offence

1224G(5)    
A person commits an offence of strict liability if the person fails to comply with subsection (3) .

1224G(6)    
In agreeing to a longer period under subsection (3) , ASIC may impose conditions to be complied with and the corporate director must comply with them.

1224G(7)    
An offence based on subsection (6) is an offence of strict liability.

SECTION 1224H   EFFECTIVENESS OF ACTS BY CORPORATE DIRECTOR  

1224H(1)    
An act done by the company named in ASIC ' s record of a CCIV ' s registration as the corporate director or temporary corporate director of the CCIV is effective even if:

(a)    the company ' s appointment as corporate director or temporary corporate director did not comply with the CCIV ' s constitution or any provision of this Act; or

(b)    the continuance of the company ' s appointment as corporate director or temporary corporate director does not comply with the CCIV ' s constitution or any provision of this Act.

1224H(2)    
Subsection (1) does not deal with the question whether an effective act by a corporate director:

(a)    binds the CCIV in its dealings with other people; or

(b)    makes the CCIV liable to another person.

Note: The kinds of acts that this section validates are those that are only legally effective if the person doing them is a director (for example, calling a meeting of the company ' s members). Sections 128 to 130 contain rules about the assumptions people are entitled to make when dealing with a company and its officers.

SECTION 1224J   CORPORATE DIRECTOR MUST OPERATE THE CCIV  

1224J(1)    
The corporate director of a CCIV is to:

(a)    operate the business and conduct the affairs of the CCIV; and

(b)    perform the functions conferred on the corporate director by the CCIV ' s constitution and this Act.

Note 1: If a CCIV commits an offence or contravenes a civil penalty provision, the corporate director is generally responsible: see Division 7 of this Part.

Note 2: Section 1224Q is about the exercise of powers by the corporate director while a sub-fund is in liquidation.

1224J(2)    
The corporate director of a CCIV may exercise all the powers of the CCIV except any powers that this Act or the CCIV ' s constitution requires:

(a)    the CCIV to exercise in general meeting; or

(b)    the members of a sub-fund of the CCIV to exercise in a meeting of members of the sub-fund.

SECTION 1224K  

1224K   CORPORATE DIRECTOR NOT REQUIRED TO DISCLOSE MATERIAL PERSONAL INTEREST  

Subject to section 1225C (about the directors of the corporate director), section 191 does not require a director of a CCIV to give notice of an interest.

Note: Section 1225C is about the obligations of the directors of the corporate director to disclose material personal interests relating to the affairs of the CCIV.

SECTION 1224L   CORPORATE DIRECTOR MAY APPOINT AN AGENT OR ENGAGE A PERSON  

Agents appointed by corporate director

1224L(1)    
The corporate director has power to appoint an agent, or otherwise engage a person, to do anything that the corporate director is authorised to do in connection with the CCIV.

Note: A CCIV may also have an agent: see section 126 .

Agents appointed by CCIV and sub-agents

1224L(2)    
An agent appointed, or a person otherwise engaged, by:

(a)    an agent or person referred to in subsection (1) ; or

(b)    the CCIV; or

(c)    a person who is taken under this subsection to be an agent of the corporate director;

to do anything that the corporate director is authorised to do in connection with the CCIV is taken to be an agent appointed by the corporate director to do that thing for the purposes of this section.

Delegation

1224L(3)    
Section 198D does not apply to a CCIV.

SECTION 1224M   RETAIL CCIV - RESPONSIBILITY OF CORPORATE DIRECTOR FOR CERTAIN ACTS OF AGENTS  

1224M(1)    
Subsection (2) applies in relation to a retail CCIV for the purpose of determining whether:

(a)    there is a liability to the CCIV or the CCIV ' s members; or

(b)    the corporate director has properly performed its duties for the purposes of section 1224N .

Note: A CCIV ' s constitution may provide for the corporate director to be indemnified for liabilities - see section 1224N .

Extended liability for acts of agents

1224M(2)    
If:

(a)    the corporate director appoints an agent, or otherwise engages a person, under section 1224L ; or

(b)    an agent or person is taken under subsection 1224L(2) (about sub-agents) to be an agent of the corporate director;

the corporate director is taken to have done (or failed to do) anything that the agent or person has done (or failed to do) because of the appointment or engagement, even if the person or agent was acting fraudulently or outside the scope of the authority or engagement.

Note: This subsection does not apply to receivers: see section 1236F .

SECTION 1224N  

1224N   RETAIL CCIV - LIMITATION ON RIGHT OF CORPORATE DIRECTOR TO FEES AND INDEMNITIES  

If the corporate director of a retail CCIV is to have any rights to be paid fees out of assets of a sub-fund of the CCIV, or to be indemnified out of assets of a sub-fund of the CCIV for liabilities or expenses incurred in relation to the performance of its duties, those rights:

(a)    must be specified in the CCIV ' s constitution; and

(b)    must be available only in relation to the proper performance of those duties;

and any other agreement or arrangement has no effect to the extent that it purports to confer such a right.

Note 1: ASIC may direct the CCIV to modify its constitution to ensure such rights are dealt with in adequate detail: see subsection 1223C(2) .

Note 2: Sections 199A to 199C may prohibit giving an indemnity for the corporate director of a CCIV. Those sections have extended operation in relation to a CCIV: see section 1225E .

SECTION 1224P   RETAIL CCIV - LIMITATION ON RIGHT OF CORPORATE DIRECTOR TO ACQUIRE SHARES IN CCIV  

1224P(1)    
The corporate director of a retail CCIV may acquire and hold a share in the CCIV, but the corporate director must only do so:

(a)    for not less than the consideration that would be payable if the share were acquired by another person; and

(b)    subject to terms and conditions that would not disadvantage other members.

Note: If the corporate director holds a share in the CCIV, the corporate director does so subject to section 253E , as affected by section 1228G (certain members cannot vote or be counted).

1224P(2)    
A corporate director who contravenes subsection (1) , and any person who is involved in a corporate director ' s contravention of that subsection, contravenes this subsection.

Note 1: Section 79 defines involved.

Note 2: This subsection is a civil penalty provision (see section 1317E ).

1224P(3)    
A person must not intentionally be involved in a corporate director ' s contravention of subsection (1) .

SECTION 1224Q   EXERCISE OF POWERS WHILE SUB-FUND IS IN LIQUIDATION  

Powers of corporate director while sub-fund in liquidation

1224Q(1)    
The corporate director of a CCIV contravenes this subsection if:

(a)    a sub-fund of the CCIV is being wound up, or a provisional liquidator of a sub-fund of the CCIV is acting; and

(b)    the corporate director purports to do any of the following:

(i) carry on the business of the sub-fund;

(ii) enter into a transaction or dealing on behalf of the CCIV affecting the property of the sub-fund.

1224Q(2)    
However, subsection (1) does not apply to the extent that the corporate director is acting:

(a)    with the written approval of the liquidator of the sub-fund or the Court; or

(b)    in circumstances in which, despite the fact that the sub-fund is being wound up, the corporate director is permitted by this Act to act.

1224Q(3)    
Despite subsection 13.3(3) of the Criminal Code , in a prosecution for an offence based on subsection (1) of this section, a defendant does not bear an evidential burden in relation to the matter in paragraph (2)(b) .

Fault-based offence

1224Q(4)    
A person commits an offence if the person contravenes subsection (1) .

Strict liability offence

1224Q(5)    
A person commits an offence of strict liability if the person contravenes subsection (1) .

Functions and powers of liquidator prevail in case of conflict

1224Q(6)    
If subsection (2) applies and there is a conflict between a function or power of the liquidator of the sub-fund and a function or power of the corporate director in relation to the CCIV, the liquidator ' s function or power prevails.

Effect of section

1224Q(7)    
This section does not remove the corporate director of a CCIV from office.

1224Q(8)    
Nothing in this section affects a secured creditor ' s right to realise or otherwise deal with the security interest.

1224Q(9)    
Section 198G does not apply to a CCIV.

1224Q(10)    
A provision of this Act that applies despite section 198G also applies despite this section.

Definitions

1224Q(11)    
In this section:

liquidator
includes a provisional liquidator.

Subdivision C - Replacing the corporate director  

SECTION 1224R  

1224R   CHANGES ONLY TAKE EFFECT WHEN ASIC ALTERS RECORD OF REGISTRATION  

Despite anything in this Subdivision, the company named in ASIC ' s record of registration as the corporate director or temporary corporate director of a CCIV remains the CCIV ' s corporate director until the record is altered to name another company as the CCIV ' s corporate director or temporary corporate director.

SECTION 1224S  

1224S   CCIV DOES NOT HAVE AN ELIGIBLE CORPORATE DIRECTOR  

If a CCIV does not have a corporate director that meets the requirements of section 1224F , an application to the Court for the appointment of a temporary corporate director of the CCIV under section 1224V may be made by any of the following:

(a)    ASIC;

(b)    a member, or group of members, of the CCIV.

SECTION 1224T   RETIREMENT OF CORPORATE DIRECTOR  

1224T(1)    
If the corporate director of a CCIV wants to retire as corporate director, it must call a members ' meeting to explain its reason for wanting to retire and to enable the members to vote on a resolution to choose a company to be the new corporate director. The resolution must be a special resolution.

1224T(2)    
The notice of meeting of the CCIV ' s members must:

(a)    set out the corporate director ' s reason for wanting to retire; and

(b)    nominate as the new corporate director a company (the nominated company ) that:

(i) meets the requirements of section 1224F ; and

(ii) has consented in writing to being chosen as the new corporate director of the CCIV.

1224T(3)    
If the members choose the nominated company to be the new corporate director, as soon as practicable and in any event within 2 business days after the day of the meeting, the current corporate director must lodge a notice with ASIC asking it to alter the record of the CCIV ' s registration to name the nominated company as the corporate director of the CCIV.

1224T(4)    
If:

(a)    the members choose the nominated company to be the new corporate director; and

(b)    the current corporate director does not lodge the notice required by subsection (3) ;

the nominated company may lodge that notice.

1224T(5)    
An offence based on subsection (3) is an offence of strict liability.

1224T(6)    
If the members do not choose the nominated company to be the new corporate director, an application to the Court for appointment of a temporary corporate director under section 1224V may be made by the current corporate director of the CCIV.

SECTION 1224U   REPLACEMENT OF CORPORATE DIRECTOR BY MEMBERS  

1224U(1)    
If members of a CCIV want to replace the corporate director, the members may take action under Part 2G.4 (as that Part applies to the CCIV under section 1228A ) for the calling of a meeting of the CCIV ' s members to consider and vote on:

(a)    a special resolution that the current corporate director should be removed; and

(b)    a special resolution choosing a company to be the new corporate director.

1224U(2)    
The notice of meeting of the CCIV ' s members must:

(a)    set out the intention to remove the current corporate director; and

(b)    nominate, as the new corporate director of the CCIV, a company that:

(i) meets the requirements of section 1224F ; and

(ii) has consented in writing to being appointed as the new corporate director of the CCIV.

1224U(3)    
If both resolutions are passed, the CCIV is taken, on the day of the meeting, to have appointed the company nominated in the notice as the new corporate director of the CCIV.

Note: See also section 1224R (when changes take effect).

1224U(4)    
The current corporate director must, as soon as practicable and in any event within 2 business days after the appointment, lodge a notice with ASIC asking it to alter the record of the CCIV ' s registration to name the company as the corporate director of the CCIV.

1224U(5)    
If the current corporate director does not lodge the notice required by subsection (4) , the company chosen by the members to be the new corporate director may lodge that notice.

1224U(6)    
An offence based on subsection (4) is an offence of strict liability.

SECTION 1224V   APPOINTMENT OF TEMPORARY CORPORATE DIRECTOR BY COURT  

1224V(1)    
On application under section 1224S or subsection 1224T(6) or 1224X(2) , the Court may:

(a)    if the CCIV has a current corporate director - order the removal of the current corporate director; and

(b)    order the appointment of a company as the temporary corporate director of the CCIV; and

(c)    make any further orders that the Court considers appropriate.

Note: See also section 1224R (when changes take effect).

1224V(2)    
The Court must not make an order under paragraph (1)(a) or (b) unless:

(a)    the Court is satisfied that:

(i) the appointment is in the interests of the members of the CCIV; and

(ii) the company meets the requirements of section 1224F ; and

(b)    the company consents in writing to becoming the CCIV ' s temporary corporate director.

1224V(3)    
The person who made the application for the order must, as soon as practicable and in any event within 2 days after the Court ' s order appointing the temporary corporate director, lodge a notice with ASIC informing ASIC of the appointment made by the Court.

1224V(4)    
If the person referred to in subsection (3) does not lodge the notice required by that subsection, the company appointed by the Court as the temporary corporate director may lodge that notice.

1224V(5)    
An offence based on subsection (3) is an offence of strict liability.

SECTION 1224W   TEMPORARY CORPORATE DIRECTOR TO INITIATE APPOINTMENT OF PERMANENT CORPORATE DIRECTOR  

1224W(1)    
This section applies if the Court appoints a temporary corporate director of a CCIV under section 1224V .

1224W(2)    
The temporary corporate director must, within the period applicable under subsection (3) , call a members ' meeting for the purpose of the members, by special resolution, choosing a company to be the new permanent corporate director.

1224W(3)    
The temporary corporate director must call the meeting within:

(a)    unless paragraph (b) applies - 3 months of the appointment; or

(b)    if the Court has extended the period under subsection (4) - the extended period.

1224W(4)    
The Courtmay, on application by the temporary corporate director, grant an extension of the period referred to in paragraph (3)(a) .

1224W(5)    
The temporary corporate director may, within the period applicable under subsection (3) , call further meetings of the CCIV ' s members to consider and vote on a special resolution choosing a company to be the permanent corporate director.

1224W(6)    
For the purposes of subsections (2) and (5) , the written notice of the meeting must nominate as the permanent corporate director a company (which may be the temporary corporate director) that:

(a)    meets the requirements of section 1224F ; and

(b)    has consented in writing to being appointed as the permanent corporate director of the CCIV.

1224W(7)    
If the resolution is passed, the CCIV is taken, on the day of the meeting, to have appointed the company nominated in the notice as the permanent corporate director of the CCIV.

Note: See also section 1224R (when changes take effect).

1224W(8)    
The current corporate director must, as soon as practicable and in any event within 2 business days after the appointment, lodge a notice with ASIC asking it to alter the record of the CCIV ' s registration to name the company as the corporate director of the CCIV.

1224W(9)    
If the current corporate director does not lodge the notice required by subsection (8) , the company chosen by the members to be the new corporate director may lodge that notice.

1224W(10)    
An offence based on subsection (2) or (8) is an offence of strict liability.

SECTION 1224X   TEMPORARY CORPORATE DIRECTOR FAILS TO INITIATE APPOINTMENT OF PERMANENT CORPORATE DIRECTOR  

1224X(1)    
This section applies if:

(a)    a temporary corporate director is appointed by the Court under section 1224V ; and

(b)    the temporary corporate director fails to call a members ' meeting to consider and vote on a special resolution choosing a company to be the permanent corporate director within the period applicable under subsection 1224W(3) .

1224X(2)    
An application to the Court for the appointment of a temporary corporate director of the CCIV under section 1224V may be made by any of the following:

(a)    ASIC;

(b)    a member, or group of members, of the CCIV.

SECTION 1224Y   MEMBERS FAIL TO APPOINT PERMANENT CORPORATE DIRECTOR  

1224Y(1)    
This section applies if:

(a)    a temporary corporate director is appointed by the Court under section 1224V ; and

(b)    within the period applicable under subsection 1224W(3) , the temporary corporate director calls one or more members ' meetings to consider and vote on a special resolution choosing a company to be the permanent corporate director; and

(c)    the CCIV ' s members do not pass a special resolution choosing a permanent corporate director.

1224Y(2)    
An application to the Court for a winding up of all the sub-funds of the CCIV must be made by the corporate director of the CCIV.

Note: For provisions about winding up a sub-fund of a CCIV, see Division 5 of Part 8B.6 .

1224Y(3)    
An application to the Court for a winding up of all the sub-funds of the CCIV may be made by any of the following, if the corporate director does not do so:

(a)    ASIC;

(b)    a member, or group of members, of the CCIV.

1224Y(4)    
On an application under this section, the Court may:

(a)    order the winding up of all the sub-funds of the CCIV; and

(b)    make any further orders that the Court considers appropriate.

SECTION 1224Z   FORMER CORPORATE DIRECTOR TO HAND OVER BOOKS AND PROVIDE REASONABLE ASSISTANCE  

1224Z(1)    
If the corporate director of a CCIV changes, the former corporate director must:

(a)    as soon as practicable give the new corporate director any books in the former corporate director ' s possession or control that this Act requires to be kept in relation to the CCIV; and

(b)    give other reasonable assistance to the new corporate director to facilitate the change of corporate director.

1224Z(2)    
An offence based on subsection (1) is an offence of strict liability.

SECTION 1224ZA   RIGHTS, OBLIGATIONS AND LIABILITIES OF FORMER CORPORATE DIRECTOR  

1224ZA(1)    
If the corporate director of a CCIV changes, the rights, obligations and liabilities of the former corporate director in relation to the CCIV become rights, obligations and liabilities of the new corporate director.

1224ZA(2)    
Despite subsection (1) , the following rights and liabilities remain rights and liabilities of the former corporate director:

(a)    any right of the former corporate director to be paid fees for the performance of its functions before it ceased to be the corporate director;

(b)    any right of the former corporate director to be indemnified for expenses it incurred before it ceased to be the corporate director;

(c)    any right, obligation or liability that the former corporate director had as a member of the CCIV;

(d)    any liability for which the former corporate director could not have been indemnified out of the assets of the CCIV if it had remained the CCIV ' s corporate director;

(e)    any liability arising out of a contravention by the former corporate director of a provision of this Act.

SECTION 1224ZB   EFFECT OF CHANGE OF CORPORATE DIRECTOR ON DOCUMENTS ETC. TO WHICH FORMER CORPORATE DIRECTOR IS PARTY  

1224ZB(1)    
If the corporate director of a CCIV changes, a document relating to the CCIV:

(a)    to which the former corporate director is a party, in which a reference is made to the former corporate director, or under which the former corporate director has acquired or incurred a right, obligation or liability, or might have acquired or incurred a right, obligation or liability if it had remained the corporate director; and

(b)    that is capable of having effect after the change;

has effect as if the new corporate director (and not the former corporate director) were a party to it, were referred to in it or had or might have acquired or incurred the right, obligation or liability under it.

1224ZB(2)    
Subsection (1) does not apply to a right, obligation or liability that remains a right, obligation or liability of the former corporate director because of subsection 1224ZA(2) .

Subdivision D - Termination payments  

SECTION 1224ZC  

1224ZC   MEMBER APPROVAL NOT NEEDED FOR BENEFIT SPECIFIED IN CONSTITUTION  

Despite subsection 200AB(1) , for the purposes of Division 2 of Part 2D.2 , a benefit does not include a payment made by the CCIV to its corporate director if:

(a)    the corporate director is entitled to the payment under provisions of the constitution; and

(b)    for a retail CCIV - the provisions comply with section 1224N .

SECTION 1224ZD   MODIFIED MEMBER APPROVAL FOR CCIVs  

1224ZD(1)    
Sections 200B and 200C apply in relation to a benefit given by a CCIV as if:

(a)    the members whose approval is required under those provisions were the members of the sub-fund of the CCIV that would be affected by the giving of the benefit; and

(b)    the member approval mentioned in paragraph (a) were required to be given under section 200E as modified by subsection (3) of this section.

Note: If the CCIV is a retail CCIV, there are additional restrictions on giving benefits: see section 1224N .

1224ZD(2)    
If the giving of the benefit would affect 2 or more sub-funds of the CCIV, then the approval of each affected sub-fund must be obtained in the way mentioned in subsection (1) .

Member approval

1224ZD(3)    
Section 200E applies in relation to a CCIV as if a reference to a general meeting were instead a reference to a meeting of the members of the affected sub-fund.

SECTION 1224ZE  

1224ZE   BENEFITS PAID TO CORPORATE DIRECTOR NOT COVERED BY EXEMPTIONS  

To avoid doubt, a benefit that is a payment to the corporate director of a CCIV is not a benefit to which paragraph 200F(1)(a) , subsection 200F(2) , or section 200G applies.

Division 3 - Officers, employees and auditors of the corporate director  

Subdivision A - Officers and auditors of the corporate director  

SECTION 1225   RETAIL CCIV - DUTIES OWED BY OFFICERS OF CORPORATE DIRECTOR  

1225(1)    
An officer of the corporate director of a retail CCIV must, in performing functions and exercising powers relating to the CCIV:

(a)    act honestly; and

(b)    exercise the degree of care and diligence that a reasonable person would exercise in the officer ' s position; and

(c)    act in the best interests of the members of the CCIV and, if there is a conflict between the interests of those members and the interests of the corporate director, give priority to the members ' interests; and

(d)    act in the best interests of the members, as a whole, of each sub-fund of the CCIV and:

(i) if there is a conflict between the interests of the members, as a whole, of a sub-fund and the interests of the corporate director, give priority to the members ' interests; and

(ii) if there is a conflict between the interests of the members, as a whole, of a sub-fund and the best interests of the members of the CCIV, give priority to the interests of the members of the CCIV; and

(e)    not make use of information acquired through being an officer of the corporate director in order to:

(i) gain an improper advantage for the officer or another person; or

(ii) cause detriment to the members of the CCIV; and

(f)    not make improper use of their position as an officer to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the CCIV; and

(g)    take all steps that a reasonable person would take, in the officer ' s position, to ensure that the corporate director complies with:

(i) this Act; and

(ii) any conditions imposed on the corporate director ' s Australian financial services licence; and

(iii) the CCIV ' s constitution; and

(iv) the CCIV ' s compliance plan.

Note: This subsection is a civil penalty provision (see section 1317E ).

1225(2)    
A person must not intentionally or recklessly contravene, or be involved in a contravention of, subsection (1) .

Duties under this section prevail in case of conflict

1225(3)    
If there is a conflict between a duty owed by an officer of the corporate director of a retail CCIV under this section and a duty owed by the officer under Part 2D.1 , the duty owed under this section prevails.

Interaction with other laws etc.

1225(4)    
Subsection (1) :

(a)    has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation; and

(b)    does not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a) .

SECTION 1225A  

1225A   RESPONSIBILITY OF SECRETARY OF CORPORATE DIRECTOR FOR CERTAIN CONTRAVENTIONS BY CCIV  

A secretary of the corporate director of a CCIV contravenes subsection 188(1) if the CCIV contravenes a corporate responsibility provision.

Note: Subsection 188(1) is a civil penalty provision (see section 1317E ).

SECTION 1225B  

1225B   RESPONSIBILITY OF SECRETARY OF CORPORATE DIRECTOR FOR CERTAIN CONTRAVENTIONS BY CORPORATE DIRECTOR  

For the purposes of subsection 188(1) as it applies to the secretary of the corporate director, the provisions identified in column 1 of the following table, in addition to the provisions mentioned in subsection 188(1) , are taken to be corporate responsibility provisions :

Provisions that are taken to be corporate responsibility provisions
Item	Column 1 Provision(s)	Column 2 Topic
1	(a)	subsection 1222L(3) ;	notifying ASIC of status as a retail CCIV or wholesale CCIV
	(b)	subsection 1222L(7)
2	(a)	subsection 1223C(5) ;	lodgement of modified or replaced constitution and notifying ASIC when changes takes effect
	(b)	subsection 1223D(3)
3	(a)	subsection 1224T(3) ;	lodgement of notices about the corporate director of a CCIV
	(b)	subsection 1224U(4) ;
	(c)	subsection 1224W(8)
4	(a)	subsection 1226(3) ;	lodgement of compliance plans etc. (retail CCIV only)
	(b)	subsection 1226D(4) ;
	(c)	subsection 1226E(3)
5	subsection 1226G(4)	lodgement of report of auditor of compliance plan (retail CCIV only)
6	subsection 1226K(1)	notifying ASIC when auditor of compliance plan changes (retail CCIV only)
7	subsection 1230J(5)	lodgement of a redemption offer
8	subsection 1230J(8)	notifying ASIC of the cancellation of a redemption offer

SECTION 1225C   EXTENDED OBLIGATIONOF DIRECTORS OF CORPORATE DIRECTOR  

1225C(1)    
For the purposes of Division 2 of Part 2D.1 , a material personal interest in a matter that relates to the affairs of a CCIV is treated as being a material personal interest in a matter that relates to the affairs of the corporate director of the CCIV.

Note: The effect of this subsection is that Division 2 of Part 2D.1 applies to directors of the corporate director of a CCIV in relation to material personal interests those directors have in matters relating to the affairs of the CCIV.

1225C(2)    
Subsection (1) does not affect the operation of Division 2 of Part 2D.1 in relation to an interest that, apart from that subsection, is a material personal interest in a matter that relates to the affairs of the corporate director.

1225C(3)    
For an offence based on subsection 191(1) , as it applies to the director of a corporate director as a result of subsection (1) of this section, strict liability applies to the circumstance, that the director of the corporate director has a material personal interest in a matter that relates to the affairs of the CCIV.

1225C(4)    
For the purposes of determining under subsection 191(2) whether the director does not need to give notice of the interest, references in that subsection to the company are taken to be references to the CCIV, unless the reference is to the director ' s position as director, or officer, of the company.

1225C(5)    
Nothing in this section limits:

(a)    the effect sections 191 and 192 have in relation to the director of the corporate director apart from this Subdivision; or

(b)    the effect section 193 has in relation to sections 191 and 192 as those sections apply as a result of this section.

Note: Section 193 is about the interaction of sections 191 and 192 with other laws etc.

SECTION 1225D   RIGHT OF ACCESS TO CCIV BOOKS  

1225D(1)    
Section 198F applies in relation to a director of a corporate director of a CCIV as if the person were a director of the CCIV.

1225D(2)    
For the purposes of subsection (1) , a person is taken to cease being a director of the CCIV if either of the following occurs:

(a)    the person ceases to be a director of the corporate director;

(b)    the company of which the person is a director ceases to be the corporate director of the CCIV.

SECTION 1225E   EXTENDED OPERATION OF SECTIONS 199A AND 199B (ABOUT INDEMNITIES AND INSURANCE)  

1225E(1)    
The operation of sections 199A and 199B in relation to a CCIV and a related body corporate of a CCIV is extended by:

(a)    treating an officer of the corporate director of the CCIV as an officer of the CCIV; and

(b)    treating an auditor of the corporate director of the CCIV as an auditor of the CCIV.

Note: If the CCIV is a retail CCIV, there are additional restrictions: see section 1224N .

1225E(2)    
For the purposes of subsection (1) , section 199B applies to a CCIV as if paragraph 199B(1)(b) included a reference to section 1225 .

Note: For the duties relevant to the actual director of the CCIV, see subsection 1224D(8) .

Subdivision B - Employees of the corporate director  

SECTION 1225F   RETAIL CCIV - DUTIES OWED BY EMPLOYEES OF CORPORATE DIRECTOR  

1225F(1)    
An employee of the corporate director of a retail CCIV must not, in performing functions and exercising powers relating to the CCIV:

(a)    make use of information acquired through being an employee of the corporate director in order to:

(i) gain an improper advantage for the employee or another person; or

(ii) cause detriment to members of the CCIV; or

(b)    make improper use of their position as an employee to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the CCIV.

Note: This subsection is a civil penalty provision (see section 1317E ).

1225F(2)    
A person must not intentionally or recklessly contravene, or be involved in a contravention of, subsection (1) .

Duties under this section prevail in case of conflict

1225F(3)    
If there is a conflict between a duty owed by an employee of the corporate director of a retail CCIV under this section and a duty owed by the employee under Part 2D.1 , the duty owed under this section prevails.

Interaction with other laws etc.

1225F(4)    
Subsection (1) :

(a)    has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation; and

(b)    does not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a) .

Division 4 - Compliance plan for retail CCIVs  

Subdivision A - Documenting the compliance plan  

SECTION 1226   REQUIREMENT FOR COMPLIANCE PLAN  

1226(1)    
A retail CCIV must have a compliance plan.

Note: A copy of the compliance plan must be lodged with ASIC with the application to register a CCIV that is to be a retail CCIV: see subsection 1222A(6) .

1226(2)    
A wholesale CCIV is not required to have a compliance plan.

1226(3)    
A CCIV must lodge a copy of its compliance plan with ASIC within 14 days of becoming a retail CCIV. The copy must be signed by all the directors of the corporate director.

Note: Section 1222J defines retail CCIV .

1226(4)    
An offence based on subsection (3) is an offence of strict liability.

SECTION 1226A  

1226A   CONTENTS OF THE COMPLIANCE PLAN  

The compliance plan of a retail CCIV must set out adequate measures that the corporate director is to apply in fulfilling its responsibilities in relation to the CCIV to ensure compliance with this Act and the CCIV ' s constitution.

SECTION 1226B   COMPLIANCE PLAN MAY INCORPORATE PROVISIONS FROM ANOTHER CCIV ' s PLAN  

1226B(1)    
The compliance plan of a retail CCIV may be expressed to incorporate specified provisions of a compliance plan of another CCIV, provided both CCIVs have the same corporate director. The provisions may be incorporated as in force at a specified time, or as in force from time to time.

1226B(2)    
The specified provisions, as in force at the specified time, or as in force from time to time (as the case requires) are taken to be included in the plan.

SECTION 1226C   ASIC MAY REQUIRE FURTHER INFORMATION ABOUT COMPLIANCE PLAN  

1226C(1)    
ASIC may give the corporate director of a retail CCIV a direction, in writing, to give ASIC information about the arrangements contained in the compliance plan. The direction must specify the period (which must be at least 14 days after the direction is given) within which the corporate director must give the information.

1226C(2)    
The corporate director must comply with the direction within the period specified.

1226C(3)    
An offence based on subsection (2) is an offence of strict liability.

SECTION 1226D   CHANGING THE COMPLIANCE PLAN  

Corporate director ' s powers

1226D(1)    
The corporate director of a CCIV may modify the CCIV ' s compliance plan or repeal it and replace it with a new compliance plan.

ASIC may require modifications

1226D(2)    
ASIC may give the corporate director of a retail CCIV a direction, in writing, to modify the CCIV ' s compliance plan, as set out in the direction, to ensure that the plan is consistent with section 1226A . The direction must specify the period (which must be at least 14 days after the direction is given) within which the corporate director must make the modification.

1226D(3)    
The corporate director must comply with the direction within the period specified.

Lodgement of modification or new plan

1226D(4)    
The corporate director must lodge with ASIC a copy of a modification of the CCIV ' s compliance plan or of a new compliance plan within 14 days after the modification is made or the old plan is repealed. The copy must be signed by all the directors of the corporate director.

1226D(5)    
An offence based on subsection (3) or (4) is an offence of strict liability.

SECTION 1226E   ASIC MAY REQUIRE CONSOLIDATION OF COMPLIANCE PLAN TO BE LODGED  

1226E(1)    
ASIC may give the corporate director of a retail CCIV a direction, in writing, to lodge a consolidated copy of the CCIV ' s compliance plan with ASIC. The direction must specify the period (which must be at least 14 days after the direction is given) within which the corporate director must lodge the consolidation.

1226E(2)    
The consolidation must set out:

(a)    the plan as modified to the time of lodgement; and

(b)    if required by ASIC ' s direction - the full text of provisions taken to be included in the plan by subsection 1226B(2) .

1226E(3)    
The corporate director must comply with the direction within the period specified in the notice.

1226E(4)    
An offence based on subsection (3) is an offence of strict liability.

Subdivision B - Auditing the compliance plan  

SECTION 1226F   ENGAGING AUDITOR  

1226F(1)    
The corporate director of a retail CCIV must ensure that at all times a registered company auditor, an audit firm or an authorised audit company is engaged to audit compliance with the CCIV ' s compliance plan in accordance with this section. This auditor, firm or company is referred to as the auditor of the compliance plan .

1226F(2)    
An offence based on subsection (1) is an offence of strict liability.

1226F(3)    
A person is not eligible to act as the individual auditor, lead auditor or review auditor of a CCIV ' s compliance plan if the person is:

(a)    the corporate director; or

(b)    an associate of the corporate director; or

(c)    a person who holds money or property of the CCIV; or

(d)    an associate of a person covered by paragraph (c) ; or

(e)    the auditor of the corporate director ' s financial statements.

1226F(4)    
However:

(a)    the auditor of the compliance plan and the auditor of the corporate director ' s financial statements may work for the same firm of auditors or audit company; and

(b)    the lead auditor or review auditor of the compliance plan (on the one hand) and the lead auditor or review auditor of the corporate director ' s financial statements (on the other hand) may work for the same firm of auditors or audit company.

1226F(5)    
This Subdivision does not prevent the corporate director from arranging for the auditor of the compliance plan to carry out audits in addition to those required by this Subdivision.

SECTION 1226G   AUDIT AND AUDIT REPORT  

1226G(1)    
Within 3 months after the end of a financial year of the retail CCIV, the auditor of the compliance plan must:

(a)    examine the CCIV ' s compliance plan; and

(b)    carry out:

(i) if the CCIV has only had one corporate director during the financial year - an audit of the corporate director ' s compliance with the compliance plan during the financial year; or

(ii) if the CCIV has had more than one corporate director during the financial year - an audit of each corporate director ' s compliance with the compliance plan during that part of the financial year when it was the CCIV ' s corporate director; and

(c)    give to the CCIV ' s current corporate director a report that states whether, in the auditor ' s opinion:

(i) the corporate director, or each corporate director, complied with the CCIV ' s compliance plan during the financial year or that part of the financial year when it was the CCIV ' s corporate director; and

(ii) the plan continues to meet the requirements of this Division.

1226G(2)    
The auditor of the compliance plan:

(a)    has a right of access at all reasonable times to the books of the CCIV; and

(b)    may require an officer of the corporate director to give the auditor information and explanations for the purposes of the audit.

1226G(3)    
An officer of the corporate director must:

(a)    allow the auditor of the compliance plan to have access to the books of the CCIV; and

(b)    give the auditor information or an explanation required under subsection (2) ; and

(c)    otherwise assist the conduct of the audit.

1226G(4)    
The corporate director must lodge the auditor ' s report under subsection (1) with ASIC at the same time as the financial statements and reports in respect of the CCIV are to be lodged with ASIC (see sections 292 , 319 and 1232C ).

1226G(5)    
The auditor of the compliance plan has qualified privilege in respect of:

(a)    a statement made in a report under subsection (1) ; or

(b)    a notification to ASIC under any of the following:

(i) paragraph 1226H(1)(c) ;

(ii) paragraph 1226H(2)(c) ;

(iii) paragraph 1226H(3)(d) .

1226G(6)    
An offence based on subsection (1) , (3) or (4) is an offence of strict liability.

SECTION 1226H   CONTRAVENTIONS BY AUDITOR  

Contravention by individual auditor

1226H(1)    
An individual auditor conducting an audit of a compliance plan contravenes this subsection if:

(a)    the auditor is aware of circumstances that:

(i) the auditor has reasonable grounds to suspect amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (7) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(b)    if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(c)    the auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the auditor becomes aware of those circumstances.

Contravention by audit company

1226H(2)    
An audit company conducting an audit of a compliance plan contravenes this subsection if:

(a)    the lead auditor for the audit is aware of circumstances that:

(i) the lead auditor has reasonable grounds to suspect amount to a contravention of this Act; or

(ii) amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (7) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(b)    if subparagraph (a)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the lead auditor believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(c)    the lead auditor does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the lead auditor becomes aware of those circumstances.

Contravention by lead auditor

1226H(3)    
A person contravenes this subsection if:

(a)    the person is the lead auditor for an audit of a compliance plan; and

(b)    the person is aware of circumstances that:

(i) the person has reasonable grounds to suspect amount to a contravention of this Act; or

(ii)amount to an attempt, in relation to the audit, by any person to unduly influence, coerce, manipulate or mislead a person involved in the conduct of the audit (see subsection (7) ); or

(iii) amount to an attempt, by any person, to otherwise interfere with the proper conduct of the audit; and

(c)    if subparagraph (b)(i) applies:

(i) the contravention is a significant one; or

(ii) the contravention is not a significant one and the person believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor ' s report or bringing it to the attention of the directors; and

(d)    the person does not notify ASIC in writing of those circumstances as soon as practicable, and in any case within 28 days, after the person becomes aware of those circumstances.

Significant contraventions

1226H(4)    
In determining for the purposes of this section whether a contravention of this Act is a significant one, have regard to:

(a)    the level of penalty provided for in relation to the contravention; and

(b)    the effect that the contravention has, or may have, on:

(i) the overall financial position of a sub-fund of the CCIV; or

(ii) the adequacy of the information available about the overall financial position of a sub-fund of the CCIV; and

(c)    any other relevant matter.

1226H(5)    
Without limiting paragraph (4)(a) , a penalty provided for in relation to a contravention of a provision of Part 2M.2 or 2M.3 includes a penalty for failing to take reasonable steps to comply with, or to secure compliance with, that provision imposed on each of the following:

(a)    the corporate director, because of the operation of sections 344 and 1232T ;

(b)    a director of the corporate director, because of the operation of sections 344 and 1232T .

Fault-based offence

1226H(6)    
A person commits an offence if the person contravenes subsection (1) , (2) or (3) .

Person involved in audit

1226H(7)    
In this section:

person involved in the conduct of an audit
means:

(a) the auditor; or

(b) the lead auditor for the audit; or

(c) the review auditor for the audit; or

(d) a professional member of the audit team for the audit; or

(e) any other person involved in the conduct of the audit.

SECTION 1226J   REMOVAL AND RESIGNATION OF AUDITORS  

Removal of auditor by corporate director

1226J(1)    
The corporate director of a retail CCIV:

(a)    must remove the auditor of the compliance plan if the auditor becomes ineligible under subsection 1226F(3) to act as auditor of the compliance plan; and

(b)    may, with ASIC ' s written consent, remove the auditor of the compliance plan.

1226J(2)    
An offence based on paragraph (1)(a) is an offence of strict liability.

Resignation of auditor

1226J(3)    
The auditor of the compliance plan may resign by written notice to the corporate director if:

(a)    the auditor:

(i) applies to ASIC in writing for its consent to the resignation; and

(ii) gives the corporate director written notice of the application at or about the same time as applying to ASIC; and

(b)    ASIC consents to the resignation.

1226J(4)    
As soon as practicable after receiving the application, ASIC must notify the auditor and the corporate director whether it consents to the resignation.

1226J(5)    
A statement by the auditor in the application or in answer to an inquiry by ASIC relating to the reasons for the application:

(a)    is not admissible in evidence in any civil or criminal proceedings against the auditor (other than proceedings for a contravention of section 1308 ); and

(b)    may not be made the ground of a prosecution (other than a prosecution for a contravention of section 1308 ), action or suit against the auditor.

A certificate by ASIC that the statement was made in the application, or in answer to an inquiry by ASIC, is conclusive evidence that the statement was so made.

1226J(6)    
The auditor ' s resignation takes effect on the later of:

(a)    the day (if any) specified in the notice of resignation; or

(b)    the day ASIC consents to the resignation; or

(c)    the day (if any) fixed by ASIC for the purpose.

SECTION 1226K   ACTION ON CHANGE OF AUDITOR OF COMPLIANCE PLAN  

1226K(1)    
If the auditor of the compliance plan of a retail CCIV changes, the corporate director must, within 7 days and in the prescribed form, ask ASIC to alter the record of the CCIV ' s registration to show the name of the new auditor as the auditor of the CCIV ' s compliance plan. ASIC must comply with the request if the change complies with this Act.

1226K(2)    
An offence based on subsection (1) is an offence of strict liability.

Division 5 - Member protection  

Subdivision A - Related party transactions by retail CCIVs to be approved at sub-fund level  

SECTION 1227   APPLICATION OF CHAPTER 2E TO RETAIL CCIVs  

1227(1)    
Subject to this Part, Chapter 2E applies:

(a)    to a retail CCIV in the same way as it applies to a public company; and

(b)    to an entity a retail CCIV controls in the same way as it applies to an entity a public company controls.

1227(2)    
In its application in relation to a retail CCIV, the members whose interests the rules in Chapter 2E are designed to protect are:

(a)    if one sub-fund would be affected by the giving of the relevant financial benefit to the related party - the members, as a whole, of that sub-fund; or

(b)    if 2 or more sub-funds would be affected by the giving of the relevant financial benefit to the related party - the members, as a whole, of each such sub-fund.

1227(3)    
Chapter 2E does not apply to a wholesale CCIV.

SECTION 1227A   NEED FOR MEMBER APPROVAL FOR FINANCIAL BENEFIT  

1227A(1)    
Section 208 applies in relation to a retail CCIV as if:

(a)    the members whose approval is required to be obtained under subparagraph 208(1)(a)(i) were the members of the sub-fund of the CCIV that would be affected by the giving of the financial benefit; and

(b)    the member approval mentioned in paragraph (a) were required to be given in the way set out in sections 217 to 227 (as modified by this Part).

Note 1: For the civil and criminal liability of a person involved in a contravention of section 208 as it applies to a retail CCIV under this section, see section 209 .

Note 2: For provisions about meetings of members of sub-funds, see section 1228A .

Note 3: Some kinds of financial benefits are prohibited by sections 199A to 199C . For CCIVs, those sections have an extended application: see section 1225E .

1227A(2)    
If the giving of a financial benefit would affect 2 or more sub-funds of the CCIV, paragraph 208(1)(a) applies as if it required the CCIV or entity to:

(a)    obtain the approval of each affected sub-fund in the way mentioned in subsection (1) of this section; and

(b)    give the benefit within 15 months after the first such approval is given.

Exception for certain fees and indemnities payable to corporate director

1227A(3)    
Subsection 208(1) does not apply in relation to a financial benefit if:

(a)    the financial benefit is fees, or an indemnity, to be given to the corporate director by the CCIV; and

(b)    the corporate director is entitled to the fees, or the indemnity, under provisions of the constitution; and

(c)    the provisions comply with section 1224N (about fees and indemnities must be available only in relation to the proper performance of duties).

SECTION 1227B   EXCEPTIONS NOT AVAILABLE FOR A RETAIL CCIV  

1227B(1)    
The following provisions of Division 2 of Part 2E.1 do not apply where the financial benefit is, or is to be, given by a retail CCIV:

(a)    section 211 (which deals with remuneration and reimbursement for an officer or employee);

(b)    section 213 (which deals with small amounts given to a related party);

(c)    section 214 (which deals with financial benefits given to a closely held subsidiary).

1227B(2)    
Subsection (1) does not affect the application of those provisions where the financial benefit is, or is to be, given by an entity the retail CCIV controls.

SECTION 1227C   REQUIREMENTS FOR EXPLANATORY STATEMENT TO MEMBERS  

1227C(1)    
Section 219 applies to a retail CCIV as if:

(a)    the requirements in paragraphs 219(1)(c) and (d) applied in relation to:

(i) the corporate director of the CCIV; and

(ii) each director of the corporate director of the CCIV; and

(b)    the requirement in paragraph 219(1)(e) were a requirement to set out all other information that:

(i) is reasonably required by members in order to decide whether or not it is in the sub-fund ' s interests to pass the proposed resolution; and

(ii) is known to the corporate director of the CCIV or to any of the directors of the corporate director of the CCIV.

1227C(2)    
An example of the kind of information referred to in paragraph (1)(b) is the kind of information mentioned in subsection 219(2) .

SECTION 1227D  

1227D   MODIFIED REFERENCES  

Division 3 of Part 2E.1 of Chapter 2E applies in relation to a retail CCIV as if:

(a)    a reference to a general meeting were instead a reference to a meeting of the members of the affected sub-fund; and

(b)    a reference to section 250D were instead a reference to section 253B .

SECTION 1227E   RELATED PARTIES OF A CCIV  

1227E(1)    
Section 228 does not apply in relation to a CCIV.

Corporate director etc

1227E(2)    
The following are related parties of a CCIV:

(a)    the corporate director of the CCIV;

(b)    an entity that controls the corporate director of the CCIV.

Directors and their spouses

1227E(3)    
The following persons are related parties of a CCIV:

(a)    directors of the corporate director of the CCIV;

(b)    directors (if any) of an entity that controls the corporate director of the CCIV;

(c)    if the corporate director of the CCIV is controlled by an entity that is not a body corporate - each of the persons making up the controlling entity;

(d)    spouses of the persons referred to in paragraphs (a) , (b) and (c) .

Relatives of directors and spouses

1227E(4)    
The following relatives of persons referred to in subsection (3) are related parties of the CCIV:

(a)    parents;

(b)    children.

Entities controlled by other related parties

1227E(5)    
An entity controlled by a related party referred to in subsection (2) , (3) or (4) is a related party of the CCIV unless the entity is also controlled by the CCIV.

Related party in previous 6 months

1227E(6)    
An entity is a related party of a CCIV at a particular time if the entity was a related party of the CCIV of a kind referred to in subsection (2) , (3) , (4) or (5) at any time within the previous 6 months.

Entity has reasonable grounds to believe it will become related party in future

1227E(7)    
An entity is a related party of a CCIV at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the CCIV of a kind referred to in subsection (2) , (3) , (4) or (5) at any time in the future.

Acting in concert with related party

1227E(8)    
An entity is a related party of a CCIV if the entity acts in concert with a related party of the CCIV on the understanding that the related party will receive a financial benefit if the CCIV gives the entity a financial benefit.

Subdivision B - Rights and remedies of members of a CCIV  

SECTION 1227F  

1227F   GROUNDS FOR COURT ORDER  

In addition to the grounds in section 232 , the Court may also make an order under section 233 , in respect of a CCIV, if a matter listed in paragraph 232(a) , (b) or (c) is contrary to the interests of the members as a whole of one or more sub-funds of the CCIV.

SECTION 1227G   ORDERS THE COURT CAN MAKE  

Court may appoint receiver etc. of any or all of a sub-fund ' s property

1227G(1)    
Paragraph 233(1)(h) has effect in relation to a CCIV as if the reference in that paragraph to the company ' s property were instead a reference to the property of a sub-fund of the CCIV.

Note: A receiver may only be appointed in relation to property of a particular sub-fund of a CCIV: see section 1236B .

Order altering constitution

1227G(2)    
Subsection 233(3) applies to a CCIV as if the reference to section 136 were instead a reference to:

(a)    if the CCIV is a retail CCIV - section 1223D ; or

(b)    if the CCIV is a wholesale CCIV - the CCIV ' s constitution.

SECTION 1227H   APPLYING FOR AND GRANTING LEAVE   View history reference