ASIC has issued a revised policy and regulatory framework for charities that raise investment funds. The framework removes regulatory barriers to the issue of financial products while strengthening protection for public investors.
The changes follow an ASIC review of the operation of exemptions available to charities from certain managed investment, debenture, fundraising and licensing provisions of the Corporations Act. The changes are aimed at ensuring the policy is consistent with our objectives of confident and informed investors and fair and efficient markets.
The review had identified difficulties in liquidity management by fundraisers and the effectiveness of their disclosure.
Following extensive consultation under Consultation Paper 207 Charitable investment fundraisers and further consultation with industry stakeholders on our proposals, ASIC has made a number of updates, including:
- from 1 January 2017, charitable investment fundraisers will not be permitted to issue at-call or investments with a term of less than 31 days to retail investors
- from 1 January 2018, charitable investment fundraisers that wish to issue investments to retail investors who are not associated with the charity will no longer be exempted from the requirement to hold for Australian financial services licence from ASIC. Further, additional restrictions apply that are designed to avoid the investments being used for transactional facilities.
The changes have been made in consultation with the Australian Prudential Regulation Authority (APRA) to ensure there are no inappropriate inconsistences in our policy position. ASIC notes that some charitable investment fundraisers are Religious Charitable Development Funds which rely on APRA’s exemption from the Banking Act.
To read the full announcement, click here.