2022 Jul 08 By era 0 comment

As part of the Australian Government’s commitment to progress the tax and regulatory framework for a corporate collective investment vehicle (CCIV) a new over-arching rule and regulation will commence on 1 July 2022.

So, what does this mean? Let’s break down the wording. The word ‘corporate’ comes from the Latin word for a body (corpus). In this case, it means a legal corporate entity (body), or a company, created under the Corporations Act 2001, for the purpose of conducting business. A company per this Act, must have a director and shareholders (the owners). Hence, in the case of our CCIV, it is a company limited by shares, which makes it a public company but has a single ‘corporate’ director. This corporate director must also be a public company (shares open to the public on the ASX); however, it is this company that must have an Australian financial services licence. Why? Let’s break down the wording again. A ‘collective investment scheme’ involves, for example, trusts and exchange traded funds (ETFs). Hence, investment and money management for several products, which are called sub-funds, plus strategies, all inside this new ‘vehicle’.

In Australia, such an enterprise as the CCIV acts must be registered with ASIC as a sub-fund. This provides regulatory security for investing activities. Such an investment structure already exists overseas. With Australia now having this same vehicle as well, enhances international recognition and familiarity. This will hopefully provide confidence for international investors to look at Australia more favourably. Therefore, the CCIV is an easier operation, with a single body, for both Australian and overseas investors. Plus, this new regulatory situation will benefit Australia’s competitiveness in the funds management industry.

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