What's next for the CCIV regime?
In an effort to make Australia more attractive to international investors, the Federal Government has been looking at the managed investment scheme provisions of the Corporations Act to determine whether the underlying trust structure is appropriate to attract international investment.
In concluding we need another type of investment vehicle that better attracts foreign investment, the proposed corporate collective investment vehicle (CCIV) laws may overtake the managed investment scheme as the preferred structure for developing financial products for both the retail and wholesale markets in Australia.
Public consultation on the proposed laws closed on 26 October 2018. We provided a submission to Treasury about the proposed laws a year ago, and have followed the development with articles in the December 2017, September 2018 and most recent edition of Fundamental.
We applaud the efforts to develop an investment structure that is not as difficult to understand as the trust law concepts applying to managed investment schemes. However, the proposed regulatory framework for the new CCIVs will be more cumbersome than the current flexibility applying to unregistered managed investment schemes. It will also require product issuers to engage the services of an independent depositary which, given the required standards, probably means having to rely on foreign depositary service providers. We assume the proposed design and distribution obligations on the financial services providers outlined above will apply to the new CCIV structure.