ASIC told to act on REs
The Australian Securities and Investments Commission (ASIC) needs to institute rules to protect replacement responsible entities (REs) from liability and operational problems if they are asked to take over troubled companies, according to Equity Trustees head of funds management Harvey Kalman (pictured).
Speaking at a Deloitte funds management breakfast in Melbourne, Kalman said Equity Trustees had declined to replace troubled REs more than once because they had no protection from liability issues, no guarantee of fee payments, and no legal protection for any operations they conducted.
“There is no such concept as a replacement RE. So when there is an RE in trouble, ASIC can’t put in a receiver like it can do for a company structure because there are no rules in place to actually do so,” Kalman told the audience.
Kalman said he thought ASIC was working on the issue.
Kalman also called for REs to be able to offer Australian funds in foreign currency to draw in more foreign investment. Offshore investors want the diversification of an Australian bond strategy, he said.
Australian bond funds could draw in more foreign investment if they were able to offer their funds in US dollars, yen, and Australian dollars, Kalman said.
“I know that there’s Australian bond money out there that wants to come to Australia.
“Billions of yen are going into a Cayman fund run by Aussie style bond managers that we get no tax for, and no employment opportunities,” he said.
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