The Australian Securities and Investments Commission has announced plans to develop a policy on listed managed investment scheme.
ASIC said the policy will allow buy-backs of interests in listed registered schemes in certain circumstances.
ASIC’s policy will take into account industry concerns that existing regulation of buy-back offers for managed investment schemes makes it difficult for listed schemes to use the capital management techniques available to listed companies.
Currently, on-market scheme buy-backs are difficult to implement due to the application of the withdrawal procedures under Part 5C.6 of the Corporations Act to schemes that have non-liquid assets.
ASIC recently approved relief from various requirements of the Act to an ASX-listed entity to facilitate a proposed on-market scheme buy-back. This relief was granted subject to a number of conditions, including that the number of interests to be acquired under the buy-back be limited to no greater than 10% of the smallest number, at any time during the last 12 months, of interests on issue.
The other conditions include a buy-back price ceilings to ensure that members who do not participate in the buy-back do not have the value of their holdings unfairly diluted as a result of the buy-back.
ASIC said these ceilings were calculated both by reference to net asset backing of the interests and by reference to the average market price of the interests, and that adequate notice of the intended buy-back be provided to allow equal opportunity to participate in the buy-back.
“In developing its final policy in this area, ASIC will seek to balance two main factors – maintaining the special protections the law provides for holders of interest in managed investment schemes, and the need for funds competing in an increasingly global market to have available some of the capital management techniques available to listed companies,” ASIC’s executive director of regulation Malcolm Rodgers said.
“Our preliminary thinking is that the availability of a reliable pricing mechanism through trading on ASX provides a way of balancing the interests of both exiting and remaining fund members,” Rodgers said.
In the interim, ASIC will consider any applications for relief in relation to on-market buy-backs by listed schemes on a case-by-case basis. Applications can be made by emailing a copy of your application and any attachments to applications.manager@asic.gov.au.
Further information is available at http://www.asic.gov.au/asic/asic.nsf
By Kathryn O’Meara
