The Australian Securities and Investments Commission (ASIC) is seeking public comment on relief proposals that will permit certain indirect self-acquisitions by investment funds from entities such as investment banks, investment funds and insurance companies up until 30 July.
The Corporations Act states that indirect self-acquisition (where a company transfers some of its shares to an entity it controls) is void unless certain exceptions apply.
A consultation paper released by ASIC in October 1998 sought feedback about the circumstances in which the exceptions should be granted to investment funds and similar entities.
ASIC has since provided exceptions on a case-by-case basis, and has put in place a sunset clause that allows the regulator to periodically review the policy.
ASIC will now seek feedback on issues that have arisen since the 1998 paper was released, and will finalise its policy in the coming months.
Consultation Paper 137: Indirect self-acquisition by investment funds: Further consultation (CP 137) will seek feedback on several proposals.
ASIC is proposing to grant case-by-case relief without a sunset clause, because the regulator is satisfied that the policy settings and conditions in the original consultation paper are appropriate.
The regulator is also proposing additional relief for controlled trustees and responsible entities, which will limit the amount of units in the scheme or trust that can be held by controlled entities to a maximum of 20 per cent. ASIC will also seek feedback about whether there are circumstances where it may be necessary for a company to have more than a 20 per cent interest in an investment trust other than for the purpose of investing the company’s own funds.
The regulator will also seek feedback on proposed relief for investment-linked statutory funds that allows: participation in the placement of a company’s shares; allowing self-acquisition of shares in a listed company for the purpose of index arbitrage; and regular periodic disclosure as a condition of relief.
