By Felicity Simpson

13 December 2016

The governance of the financial product and services sector is comprised of an integral and wide reaching web of obligations, exclusions and exceptions. An area often overlooked and misunderstood, is that of Managed Investment Schemes.

The old saying of “substance over form”, is central to the provisions which govern Managed Investment Schemes. Irrespective of how an arrangement is framed, where a structure provides for the pooling of resources for a common purpose, the promoters need to ask themselves – does this amount to a Managed Investment Scheme?

What is a Managed Investment Scheme?

In its simplified form, the governing regime is wide reaching and potentially captures any pooling of funds for a common purpose, where the investors do not have day to day management of the business/investment. By way of example, an investment into a unit trust structure, where the unit holders do not have control of the day to day management of the business or investment may be a Managed Investment Scheme.

Consequently, anyone who has engaged with passive investors, whether to purchase property, undertake a development etc, may find themselves inadvertently falling foul of the Managed Investment Schemes provisions set out in the Corporations Act (Cth) 2001 (Act). To minimize this risk and to ensure compliance with the Act, careful consideration should be given to any project or investment, involving passive investors.

What does it mean to be a Managed Investment Scheme?

An advice that a particular scheme, fund or trust amounts to a Managed Investment Scheme does not necessarily mean that it is controlled by the provision of the Act. Not all Managed Investment Schemes are required to be registered with ASIC.

There are many factors to be taken into consideration in advising upon whether registration is required depending upon the specific circumstances of the client.

Issues for consideration can include:

  • Who are the investors – retail or wholesale?
  • How many investors are there?
  • What is the value of the Managed Investment Scheme?
  • Is the controller (or any related entity) of the MIS in the business of conducting MIS?
  • What does the Managed Investment Scheme do? ie. does it own property for the purposes of development or lease, or does it invest in mortgages etc.

Given the breadth of structures which may be caught by the definition of a Managed Investment Scheme, there are an array of exemptions that may be available in different scenarios. Detailed instructions are required to enable us to form a legal opinion on the registration obligations (if any) in any given situation.

What does registration mean to the trustee/promoter?

If a Managed Investment Scheme is required to be registered, the Act sets out many formal requirements for consideration. We can provide detailed advice focused upon your specific circumstances.


If you operate in this area and are unsure of your obligations, please contact Felicity Simpson or a member of our business and corporate team to discuss.

Related Articles

View All
Business Law / Commercial Contracts & Agreements / Franchising & Licensing

Uncertainty: Does your franchise agreement have an enforceable option or an agreement to agree?

Kiraig concerned a master franchisee Its rights to renew for a further term were typical in the franchising space They...
Read More
Business Law / Construction / Employment Law

September 2018 Newsletter

September 2018 Newsletter See the full newsletter here Welcome TLFC Law are pleased to welcome Min Seetoh to the...
Read More
Business Law / Corporate Advisory and M&A / Insolvency

Changes to Director Liabilities: Understanding Your Exposure

In essence, the legislation broadens director liabilities to now include GST, luxury car taxes and wine equalisation...
Read More
Business Law / Property & Development / Developments

Tisher Liner FC Law finalists in the Australian Law Awards 2018

The 18th annual Australian Law Awards, in partnership with UNSW Law, recognises the outstanding contribution of...
Read More
Business Law / Employment Law / Real Estate Agents

Are you complying with the Real Estate Industry Award? Don’t get caught out!

Changes to the Real Estate Industry Award 2010 Important changes to the Award include: Classification of employees and...
Read More
Australia-Israel Legal Advice / Charities & Not-for-Profit / Technology and Start Ups

TLFC – Award Finalist for Law Firm of the Year (Medium Category)

Tisher Liner FC are proud to be nominated as an award finalist in the 14th annual Victorian Legal Awards Medium Law...
Read More
Business Law / Commercial Contracts & Agreements / Small to Medium Enterprises

Insolvent Parties – Be Careful of Terminating Contracts

From 1 July 2018 (or earlier if the date is moved forward), the Treasury Laws Amendment (2017 Enterprise Incentives No...
Read More
Charities & Not-for-Profit / Business Law / Charities & Not-For-Profits

Tax Effective Giving – Charitable Distributions Through Discretionary and Charitable Trusts

With a discretionary trust, the trustee determines which of the beneficiaries will receive trust income and the timing...
Read More
Business Law / Commercial Contracts & Agreements / Intellectual Property

It Won’t Happen To Us! We Know Each Other – We Don’t Need an Agreement

The material considerations relevant to your interest, whether it be a property development, joint venture,...
Read More
Business Law / Intellectual Property

Are you Aware of the New Cyber Security Legislation?

As a result, the Australian government has now introduced new legislation which comes into effect on 22 February 2018...
Read More
Business Law / Commercial Contracts & Agreements

Have you Executed and Dated the Documents Correctly?

How significant is it when parties you think have executed documents correctly haven’t It is vital that your...
Read More
Adverse Possession / Business Law / Compulsory Acquisition

Property Law Symposium – Wednesday 07 March

Tisher Liner FC Law Principal and Accredited Business Law Specialist, Phillip Leaman, will be sharing his expertise on...
Read More