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Corporations Bill 2001

Part 5C.2 The responsible entity

Division 1 Responsibilities and powers

601FA   Responsible entity to be public company and hold dealers licence

                   The responsible entity of a registered scheme must be a public company that holds a dealers licence authorising it to operate a managed investment scheme.

601FB   Responsible entity to operate scheme

             (1)  The responsible entity of a registered scheme is to operate the scheme and perform the functions conferred on it by the scheme’s constitution and this Act.

             (2)  The responsible entity has power to appoint an agent, or otherwise engage a person, to do anything that it is authorised to do in connection with the scheme. For the purpose of determining whether:

                     (a)  there is a liability to the members; or

                     (b)  the responsible entity has properly performed its duties for the purposes of subsection 601GA(2);

the responsible entity 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 they were acting fraudulently or outside the scope of their authority or engagement.

Note:         A scheme’s constitution may provide for the responsible entity to be indemnified for liabilities ¾ see subsection 601GA(2).

             (3)  An agent appointed, or a person otherwise engaged, by:

                     (a)  the agent or person referred to in subsection (2); or

                     (b)  a person who is taken under this subsection to be an agent of the responsible entity;

to do anything that the responsible entity is authorised to do in connection with the scheme is taken to be an agent appointed by the responsible entity to do that thing for the purposes of subsection (2).

             (4)  If:

                     (a)  an agent holds scheme property on behalf of the responsible entity; and

                     (b)  the agent is liable to indemnify the responsible entity against any loss or damage that:

                              (i)  the responsible entity suffers as a result of a wrongful or negligent act or omission of the agent; and

                             (ii)  relates to a failure by the responsible entity to perform its duties in relation to the scheme;

any amount recovered under the indemnity forms part of the scheme property.

601FC   Duties of responsible entity

             (1)  In exercising its powers and carrying out its duties, the responsible entity of a registered scheme must:

                     (a)  act honestly; and

                     (b)  exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity’s position; and

                     (c)  act in the best interests of the members and, if there is a conflict between the members’ interests and its own interests, give priority to the members’ interests; and

                     (d)  treat the members who hold interests of the same class equally and members who hold interests of different classes fairly; and

                     (e)  not make use of information acquired through being the responsible entity in order to:

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

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

                      (f)  ensure that the scheme’s constitution meets the requirements of sections 601GA and 601GB; and

                     (g)  ensure that the scheme’s compliance plan meets the requirements of section 601HA; and

                     (h)  comply with the scheme’s compliance plan; and

                      (i)  ensure that scheme property is:

                              (i)  clearly identified as scheme property; and

                             (ii)  held separately from property of the responsible entity and property of any other scheme; and

                      (j)  ensure that the scheme property is valued at regular intervals appropriate to the nature of the property; and

                     (k)  ensure that all payments out of the scheme property are made in accordance with the scheme’s constitution and this Act; and

                      (l)  report to ASIC any breach of this Act that:

                              (i)  relates to the scheme; and

                             (ii)  has had, or is likely to have, a materially adverse effect on the interests of members;

                            as soon as practicable after it becomes aware of the breach; and

                    (m)  carry out or comply with any other duty, not inconsistent with this Act, that is conferred on the responsible entity by the scheme’s constitution.

Note:         Subsection (1) is a civil penalty provision as defined by section 1317DA and Part 9.4B provides for civil and criminal consequences of contravening it.

             (2)  The responsible entity holds scheme property on trust for scheme members.

Note:          Under subsection 601FB(2), the responsible entity may appoint an agent to hold scheme property separately from other property.

             (3)  A duty of the responsible entity under subsection (1) or (2) overrides any conflicting duty an officer or employee of the responsible entity has under Part 2D.1.

Investment of scheme property in other managed investment schemes

             (4)  The responsible entity may only invest scheme property, or keep scheme property invested, in another managed investment scheme if that other scheme is registered under this Chapter.

601FD   Duties of officers of responsible entity

             (1)  An officer of the responsible entity of a registered scheme must:

                     (a)  act honestly; and

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

                     (c)  act in the best interests of the members and, if there is a conflict between the members’ interests and the interests of the responsible entity, give priority to the members’ interests; and

                     (d)  not make use of information acquired through being an officer of the responsible entity in order to:

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

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

                     (e)  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 scheme; and

                      (f)  take all steps that a reasonable person would take, if they were in the officer’s position, to ensure that the responsible entity complies with:

                              (i)  this Act; and

                             (ii)  any conditions imposed on the responsible entity’s dealers licence; and

                            (iii)  the scheme’s constitution; and

                            (iv)  the scheme’s compliance plan.

Note:         Subsection (1) is a civil penalty provision as defined in section 1317DA and Part 9.4B provides for civil and criminal consequences of contravening it.

             (2)  A duty of an officer of the responsible entity under subsection (1) overrides any conflicting duty the officer has under Part 2D.1.

601FE   Duties of employees of responsible entity

             (1)  An employee of the responsible entity of a registered scheme must not:

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

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

                             (ii)  cause detriment to members of the scheme; 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 scheme.

Note:         Subsection (1) is a civil penalty provision as defined in section 1317DA and Part 9.4B provides for civil and criminal consequences of contravening it.

             (2)  A duty of an employee of the responsible entity under subsection (1) overrides any conflicting duty the employee has under Part 2D.1.

601FF   Surveillance checks by ASIC

             (1)  ASIC may, from time to time, check whether the responsible entity of a registered scheme is complying with the scheme’s constitution and compliance plan and with this Act.

Note:         For this purpose ASIC may exercise the powers set out in Division 3 of Part 3 of the ASIC Act .

             (2)  The responsible entity and its officers must take all reasonable steps to assist ASIC in carrying out a check under subsection (1).

601FG   Acquisition of interest in scheme by responsible entity

                   The responsible entity of a registered scheme may acquire and hold an interest in the scheme, but it must only do so:

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

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

Note 1:     If the responsible entity holds an interest in the scheme, it does so subject to section 253E (certain members cannot vote or be counted).

Note 2:     This section is a civil penalty provision as defined in section 1317DA and Part 9.4B provides for civil and criminal consequences of contravening it.

601FH   Liquidator etc. of responsible entity entitled to exercise indemnity rights

                   If the company that is a registered scheme’s responsible entity is being wound up, is under administration or has executed a deed of company arrangement that has not terminated:

                     (a)  a provision of the scheme’s constitution, or of another instrument, is void against the liquidator, or the administrator of the company or the deed, if it purports to deny the company a right to be indemnified out of the scheme property that the company would have had if it were not being wound up, were not under administration, or had not executed a deed of company arrangement; and

                     (b)  a right of the company to be indemnified out of the scheme property may only be exercised by the liquidator or the administrator of the company or the deed.



 

Division 2 Changing the responsible entity

601FJ   Changes only take effect when ASIC alters record of registration

             (1)  Despite anything in this Division, the company named in ASIC’s record of registration as the responsible entity or temporary responsible entity of a registered scheme remains the scheme’s responsible entity until the record is altered to name another company as the scheme’s responsible entity or temporary responsible entity.

             (2)  A purported change of the scheme’s responsible entity is ineffective unless it is in accordance with this Division.

601FK   Requirements of section 601FA must be met

                   A company cannot be chosen or appointed as the responsible entity or temporary responsible entity of a registered scheme unless it meets the requirements of section 601FA.

601FL   Retirement of responsible entity

             (1)  If the responsible entity of a registered scheme wants to retire, 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 responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed.

             (2)  If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity:

                     (a)  as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

                     (b)  if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

                     (c)  ASIC must comply with the notice when it is lodged.

             (3)  If the members do not choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the current responsible entity may apply to the Court for appointment of a temporary responsible entity under section 601FP.

             (4)  A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

601FM   Removal of responsible entity by members

             (1)  If members of a registered scheme want to remove the responsible entity, they may take action under Division 1 of Part 2G.4 for the calling of a members’ meeting to consider and vote on a resolution that the current responsible entity should be removed and a resolution choosing a company to be the new responsible entity. The resolutions must be extraordinary resolutions if the scheme is not listed.

             (2)  If the members vote to remove the responsible entity and, at the same meeting, choose a company to be the new responsible entity that consents, in writing, to becoming the scheme’s responsible entity:

                     (a)  as soon as practicable and in any event within 2 business days after the resolution is passed, the current responsible entity must lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity; and

                     (b)  if the current responsible entity does not lodge the notice required by paragraph (a), the company chosen by the members to be the new responsible entity may lodge that notice; and

                     (c)  ASIC must comply with the notice when it is lodged.

             (3)  A person must not lodge a notice under subsection (2) unless the consent referred to in that subsection has been given before the notice is lodged.

Note:         If the members vote to remove the responsible entity but do not, at the same meeting, choose a company to be the new responsible entity, or the company they choose does not consent to becoming the scheme’s responsible entity, the scheme must be wound up (see section 601NE).

601FN   ASIC or scheme member may apply to Court for appointment of temporary responsible entity

                   ASIC or a member of the registered scheme may apply to the Court for the appointment of a temporary responsible entity of the scheme under section 601FP if the scheme does not have a responsible entity that meets the requirements of section 601FA.

601FP   Appointment of temporary responsible entity by Court

             (1)  On application under section 601FL or 601FN, the Court may, by order, appoint a company as the temporary responsible entity of a registered scheme if the Court is satisfied that the appointment is in the interest of the members.

             (2)  The Court may make any further orders that it considers necessary.

             (3)  If the application was made by the current responsible entity, it must, as soon as practicable after the Court’s order appointing the temporary responsible entity, lodge a notice with ASIC informing ASIC of the appointment made by the Court.

             (4)  As soon as practicable after the appointment, ASIC must alter the record of the scheme’s registration to name the appointed company as the scheme’s temporary responsible entity.

601FQ   Temporary responsible entity to take steps for appointment of new responsible entity

             (1)  The temporary responsible entity of a registered scheme must call a members’ meeting for the purpose of the members, by resolution, choosing a company to be the new responsible entity. The resolution must be an extraordinary resolution if the scheme is not listed. The temporary responsible entity must call the meeting as soon as practicable and, in any event, within 3 months of becoming the temporary responsible entity.

             (2)  Within that 3 months, the temporary responsible entity may call further members’ meetings for the purpose of choosing a company to be the new responsible entity. Before the end of the 3 months, it may apply to the Court for an extension of that period. If the Court grants the extension, the temporary responsible entity may, within the extended period, call further members’ meetings for the purpose of choosing a company to be the new responsible entity.

             (3)  Provided it still meets the requirements in section 601FA, nothing prevents the company that is the temporary responsible entity from being chosen as the new responsible entity.

             (4)  If the members choose a company to be the new responsible entity and that company has consented, in writing, to becoming the scheme’s responsible entity, the temporary responsible entity must, as soon as practicable, lodge a notice with ASIC asking it to alter the record of the scheme’s registration to name the chosen company as the scheme’s responsible entity. ASIC must comply with the notice when it is lodged.

             (5)  The temporary responsible entity must apply to the Court for an order directing it to wind up the scheme, and the Court may make the order, if:

                     (a)  no meeting is called within the 3 months or extended period for the purpose of choosing a new company to be the responsible entity; or

                     (b)  the meeting or meetings called within that period for that purpose have not resulted in the members choosing a company to be the new responsible entity that consents to becoming the scheme’s responsible entity.

ASIC or a member of the scheme may apply for the order if the temporary responsible entity does not do so.

             (6)  The temporary responsible entity must not lodge a notice under subsection (4) unless the consent referred to in that subsection has been given before the notice is lodged.



 

Division 3 Consequences of change of responsible entity

601FR   Former responsible entity to hand over books and provide reasonable assistance

                   If the responsible entity of a registered scheme changes, the former responsible entity must:

                     (a)  as soon as practicable give the new responsible entity any books in the former responsible entity’s possession or control that this Act requires to be kept in relation to the scheme; and

                     (b)  give other reasonable assistance to the new responsible entity to facilitate the change of responsible entity.

601FS   Rights, obligations and liabilities of former responsible entity

             (1)  If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity.

             (2)  Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity:

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

                     (b)  any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and

                     (c)  any right, obligation or liability that the former responsible entity had as a member of the scheme; and

                     (d)  any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme’s responsible entity.

601FT   Effect of change of responsible entity on documents etc. to which former responsible entity is party

             (1)   If the responsible entity of a registered scheme changes, a document:

                     (a)  to which the former responsible entity is a party, in which a reference is made to the former responsible entity, or under which the former responsible entity 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 responsible entity; and

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

has effect as if the new responsible entity (and not the former responsible entity) 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.

             (2)  Subsection (1) does not apply to a right, obligation or liability that remains a right, obligation or liability of the former responsible entity because of subsection 601FS(2).